Annual Report
2022
UBS Group AG and UBS AG
Our external reporting approach
Our external reporting approach
The scope and content of our external reports are determined by Swiss legal and regulatory requirements, accounting
standards, relevant stock and debt listing rules, including regulations promulgated by the Swiss Financial Market
Supervisory Authority (FINMA), the SIX Swiss Exchange, the US Securities and Exchange Commission (the SEC) and other
The scope and content of our external reports are determined by Swiss legal and regulatory requirements, accounting
regulatory requirements, as well as by our financial reporting policies.
standards, relevant stock and debt listing rules, including regulations promulgated by the Swiss Financial Market
Supervisory Authority (FINMA), the SIX Swiss Exchange, the US Securities and Exchange Commission (the SEC) and other
At the center of our external reporting approach is the annual report of UBS Group AG, which consists of disclosures for
regulatory requirements, as well as by our financial reporting policies.
UBS Group AG and its consolidated subsidiaries. We also provide a combined annual report for UBS Group AG and
UBS AG consolidated, which additionally includes the consolidated financial statements of UBS AG, as well as
At the center of our external reporting approach is the annual report of UBS Group AG, which consists of disclosures for
supplemental disclosures required under SEC regulations, and is the basis for our SEC Form 20-F filing.
UBS Group AG and its consolidated subsidiaries. We also provide a combined annual report for UBS Group AG and
UBS AG consolidated, which additionally includes the consolidated financial statements of UBS AG, as well as
supplemental disclosures required under SEC regulations, and is the basis for our SEC Form 20-F filing.
Annual Report
UBS AG
2022
UBS Group AG
Standalone financial statements and regulatory
information for the year ended 31 December 2022
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Sustainability
Report 2022
In accordance with the GRI standards
Diversity, Equity &
Inclusion Report 2022
Pillar 3 Report
31 December 2022
UBS Group and significant regulated subsidiaries
and sub-groups
UBS AG
UBS AG
Standalone financial statements and regulatory
information for the year ended 31 December 2022
Standalone financial statements and regulatory
information for the year ended 31 December 2022
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Annual Reports
Annual Reports
Sustainability Report
DE&I Report
Standalone reports of
signifi cant regulated entities
Pillar 3 Report
The 2022 Annual Reports (the UBS Group AG Annual Report 2022 and the combined UBS Group AG and UBS AG Annual
Annual Reports
Report 2022) include the consolidated financial statements of UBS Group AG and UBS AG, respectively, and provide
comprehensive information about our firm, including our strategy, businesses, financial and operating performance, and
The 2022 Annual Reports (the UBS Group AG Annual Report 2022 and the combined UBS Group AG and UBS AG Annual
other key information. The reports are presented in US dollars. The UBS Group AG Annual Report 2022 is partly translated
Report 2022) include the consolidated financial statements of UBS Group AG and UBS AG, respectively, and provide
into German, with the German translation available as of 10 March 2023 under “Annual reporting” at ubs.com/investors.
comprehensive information about our firm, including our strategy, businesses, financial and operating performance, and
other key information. The reports are presented in US dollars. The UBS Group AG Annual Report 2022 is partly translated
The consolidated financial statements of UBS Group AG and UBS AG have been prepared in accordance with International
into German, with the German translation available as of 10 March 2023 under “Annual reporting” at ubs.com/investors.
Financial Reporting Standards (IFRS). The sections within “Risk, capital, liquidity and funding, and balance sheet“ include
certain audited financial information, which forms part of the consolidated financial statements. The Annual Reports also
The consolidated financial statements of UBS Group AG and UBS AG have been prepared in accordance with International
include the statutory financial statements of UBS Group AG, which are the basis for our appropriation of profit and the
Financial Reporting Standards (IFRS). The sections within “Risk, capital, liquidity and funding, and balance sheet“ include
proposed distribution of dividends, subject to shareholder approval at the Annual General Meeting.
certain audited financial information, which forms part of the consolidated financial statements. The Annual Reports also
include the statutory financial statements of UBS Group AG, which are the basis for our appropriation of profit and the
Sustainability Report
proposed distribution of dividends, subject to shareholder approval at the Annual General Meeting.
The Sustainability Report, which will be available from 6 March 2023, provides disclosures on environmental, social and
Sustainability Report
governance topics for UBS Group. Selected information on environmental, social and governance is also included in our
Annual Report.
The Sustainability Report, which will be available from 6 March 2023, provides disclosures on environmental, social and
governance topics for UBS Group. Selected information on environmental, social and governance is also included in our
Standalone reports of significant regulated entities
Annual Report.
We publish separate standalone reports for UBS AG and UBS Switzerland AG. Selected financial and regulatory key
Standalone reports of significant regulated entities
figures for these entities, as well as for UBS Europe SE and UBS Americas Holding LLC, are also included in our annual
reports. The UBS Europe SE 2022 financial statements and complementary disclosures will be published on our website
We publish separate standalone reports for UBS AG and UBS Switzerland AG. Selected financial and regulatory key
in the first half of 2023.
figures for these entities, as well as for UBS Europe SE and UBS Americas Holding LLC, are also included in our annual
reports. The UBS Europe SE 2022 financial statements and complementary disclosures will be published on our website
Pillar 3 Report
in the first half of 2023.
The Pillar 3 Report provides detailed quantitative and qualitative information about risk, capital, leverage and liquidity
Pillar 3 Report
and funding for UBS Group and prudential key figures and regulatory information for UBS AG standalone,
UBS Switzerland AG standalone, UBS Europe SE consolidated and UBS Americas Holding LLC consolidated.
The Pillar 3 Report provides detailed quantitative and qualitative information about risk, capital, leverage and liquidity
and funding for UBS Group and prudential key figures and regulatory information for UBS AG standalone,
Diversity, Equity and Inclusion Report
UBS Switzerland AG standalone, UBS Europe SE consolidated and UBS Americas Holding LLC consolidated.
The first global Diversity, Equity and Inclusion (DE&I) Report, which will be available in the second quarter of 2023, details
Diversity, Equity and Inclusion Report
our DE&I priority areas of focus, our strategic goals and our approach to achieving them at UBS.
The first global Diversity, Equity and Inclusion (DE&I) Report, which will be available in the second quarter of 2023, details
our DE&I priority areas of focus, our strategic goals and our approach to achieving them at UBS.
A firm driven by purpose
We have to constantly adapt, innovate, create and simplify to bring the best to our clients.
But one thing never changes. Our purpose. Our purpose guides us, challenges us, excites us.
It tells our clients, investors and communities who we are and what we stand for.
Reimagining
It is about proactively finding ways to
fundamentally change how the world
looks at finance and investing.
The power of investing
We know finance has a powerful influence
on the world. We believe it is something we
can leverage as a positive force as stewards of
capital for our clients and, together with them,
for society and for our planet.
Reimagining the power of investing.
Connecting people for a better world.
Connecting people
It is about more than just us. It is about convening
a global ecosystem that connects people and
businesses to ideas, partners and opportunities,
so they can achieve more together.
For a better world
It is about contributing, in both the
short term and long term, to a more
prosperous economy, a healthier
environment and a fairer society.
What our purpose means for our stakeholders
For clients, both existing and
potential, it means that our
focus is clear. They know who
we are. They know what we
stand for. They know what
is important to us beyond
traditional financing. And they
know our promise: to deliver
products and services that are
personalized, relevant, on-time
and seamless.
For investors, it means there is
clarity behind our decisions.
All initiatives are aligned with
our purpose and executed
with discipline.
For employees, it means that
everyone – from those who
advise clients, to those who
research investments, to those
who manage technology
platforms – knows why we do
what we do, and how they can
contribute to our purpose and
use it to drive decision-making.
For society, it means that our role
is broader than finance. We act
responsibly and are committed to
our communities, to sustainability
and to supporting the world
in tackling its biggest challenges.
ubs.com/purpose
Our approach to long-term value creation
As of or for the year ended 31 December 2022
What is put into the equation
Input
Financial capital
– 14.2% common equity tier 1 (CET1) capital ratio
– 4.42% CET1 leverage ratio
– 5.7% going concern leverage ratio
– USD 105.3bn total loss-absorbing capacity
– USD 45.5bn CET1 capital
Relationships and intellectual capital
– 160 years’ experience in banking
– Presence in major financial centers worldwide
– Around USD 4bn spent on technology in 2022
– Automation, simplification and digitalization of processes
(a scalable operating model)
– Dedicated research, differentiated insight and content offerings, and
bespoke solutions
Human capital
– 74,022 employees (72,597 FTE) across 48 countries and 150 nationalities
– 12,693 new hires in 2022 (>1,900 in junior talent programs)
– 59% men and 41% women
– A high-performing workforce driven to create positive impact for their
colleagues, clients and communities
– A collaborative culture and inclusive work environment
– Training and career development to help ensure employees are ready for
a more agile future
Social and natural capital
– Committed to net zero across our business by 2050
– 288 employees (FTE) globally work in the field of sustainability and impact
– UBS Social Impact and Philanthropy offering that makes it possible for clients
to engage in impactful philanthropy via the UBS Optimus Foundation network
and our donor-advised funds
– Sustainability and climate risk standards governing client and vendor
relationships worldwide
– ISO 14001-certified environmental management system
What we do
Business activities
Purpose
Reimagining the power of investing.
Connecting people for a better world.
Client promise
Vision
Convene THE global ecosystem for investing
where thought leadership is impactful, people
and ideas are connected, and opportunities
are brought to life.
Personalized
Relevant
On-time
Seamless
Strategic imperatives
Clients, Connections, Contributors
Simplification & Efficiency
Culture
Focus
Technology
What we offer
The results we deliver
How our stakeholders benefit
The impact we create
Output
Investors
– USD 7.6bn net profit attributable to shareholders
– USD 2.25 diluted earnings per share
– 17.0% return on CET1 capital
– USD 3,957bn invested assets
– 72.1% cost / income ratio
Clients
– Simple and scalable processes and interactions through digital tools and
platforms, such as UBS Neo, key4 and wealth management platforms
– An investment ecosystem with around USD 4.0trn in invested assets, bringing
thought leadership, products and investable solutions to individuals and
businesses around the world
– Partnership for a seamless client service accompanying clients all through
their lives
– Established procedures and policies to handle, process and incorporate
feedback and any potential complaints
– Providing high-quality execution, market access, bespoke financing, global
capital markets, private markets, and portfolio solutions, delivered as one firm
and with selected external partners
Employees
Outcome
Impact
– USD 7.3bn total capital to be returned to shareholders for the 2022
financial year, amounting to a 95% payout ratio of our net profit
attributable to shareholders
– USD 0.55 proposed dividend per share for the 2022 financial year
– USD 5.6bn of our shares were bought back in 2022
– We intend to buy back more than USD 5bn of shares by the
end of 2023
– Increased value for our investors through attractive risk-adjusted returns
and sustainable performance, targeting cost- and capital-efficient growth
– Long-term relationships built on mutual trust and integrity
– Access to tailored financial advice, solutions and services from
around the globe; striving for attractive and risk-adjusted investment
performance
– Improved satisfaction through the offering of personalized products
and services, combined with convenient access and customer journeys
– Services accessible across various channels: traditionally through
our branches and client advisor network, well complemented by our
constantly evolving remote and digital channels
– An outstanding value proposition for our clients: understanding their evolving
needs and expectations, focusing on convenience and personalization, serving
their best interests, and being well positioned to capture growth in global
wealth pools
– Securing a better future: we do this by providing funds to help finance
the economic transition toward a more sustainable tomorrow
– Bridging between generations: as an organization in constant evolution,
we stay relevant by adapting to the emerging needs of future
generations, striving and working toward being their trusted advisor
of choice
– Numerous business and employer awards that highlight our expertise and
innovative solutions
– Wide-ranging talent management processes mean employees can
build skills, capabilities and satisfying careers
– An inclusive culture, where diversity in gender, race, ethnicity and other
factors is valued and appreciated
– Fair and equitable pay, confirmed by EQUAL-SALARY Foundation certifications
in all major locations
– Employee flexibility, including hybrid work options, promotes
engagement, increased productivity and commitment
– An engaged and committed workforce, as evidenced by regular feedback
and survey scores
– Women hold 27.8% of Director and above roles
– Ethnic minorities hold 20.4% of Director and above roles in the US and
23.0% in the UK
– More than 1,327,000 learning activities build skills and digital and agile
capabilities
– Agile@UBS transforming how we work and increase our speed in
finding solutions for clients
– Health and well-being initiatives foster resilience and ensure we
maintain a cohesive culture
– Wide recognition as an employer of choice
– Commitments to fair pay and people management ensure
employees have equal opportunities to achieve success
– Employees are sought-after talent as a result of our multi-faceted
approach to talent development and learning
– Employees worldwide benefit from working for a high-quality,
responsible employer
– A workplace that offers flexibility, career growth and holistic support
for employees’ health and well-being
Wealth and asset management services, along with personal,
corporate and investment banking capabilities
Society and environment
– USD 268bn in sustainability focus and impact investments
(6.8% of total invested assets)
– USD 10.1bn private clients’ money in SDG-related impact investments
– USD 76m donated to local programs by UBS, including affiliated
foundations
– 177,000 hours invested by UBS staff in community projects
– USD 274m donations raised by the UBS Optimus Foundation network in 2022
– 99% of electricity sourced from renewable energy
– 7.5% exposure to carbon-related sectors on our banking balance sheet
– Impact of our net-zero commitment
– 13% total reduction of our greenhouse gas footprint (scope 1 and 2
emissions) compared with 2021
– Setting standards across the industry, challenging ourselves to raise the
bar and inspiring others to join
– 370,916 young people and adults across the regions in which
we operate benefited from our strategic community investments
– Committed USD 150m in grants from the UBS Optimus Foundation
network
– 5.9m people received support thanks to the UBS Optimus Foundation
network
– Contributing as a taxpayer and an employer
– Within Switzerland, our size, scale and reputation contribute to economic
stability and reliability
– Supporting the transition to a low-carbon world
– Helping clients and employees to maximize their philanthropic impact
Contents
Letter to shareholders
2
7 Highlights of the 2022 financial year
8 Our key figures
10 Our Board of Directors
12 Our Group Executive Board
14 Our evolution
4 Corporate governance
and compensation
164 Corporate governance
200 Compensation
1 Our strategy, business model and
environment
5 Financial
statements
Targets, aspirations and capital guidance
15 Our strategy
17
18 Our businesses
28 Our environment
33 How we create value for our stakeholders
50
Regulation and supervision
Regulatory and legal developments
Risk factors
53
56
2 Financial and
operating performance
67 Accounting and financial reporting
68 Group performance
74 Global Wealth Management
76
78 Asset Management
Investment Bank
80
81 Group Functions
Personal & Corporate Banking
3 Risk, capital, liquidity and funding,
and balance sheet
Risk management and control
83
134 Capital, liquidity and funding, and balance sheet
257 UBS Group AG consolidated financial statements
383 UBS AG consolidated financial statements
503
Standalone financial statements
6 Significant regulated subsidiary and sub-
group information
521
Financial and regulatory key figures for our significant
regulated subsidiaries and sub-groups
7 Additional
regulatory information
524 UBS Group AG consolidated supplemental disclosures
required under SEC regulations
532 UBS AG consolidated supplemental disclosures
required under SEC regulations
AppendixA
540 Alternative performance measures
543 Abbreviations frequently used in our financial reports
545
546 Cautionary statement
Information sources
Dear shareholders,
In 2022, the world was impacted by Russia’s invasion of Ukraine, which led to a humanitarian crisis and wide-ranging
sanctions. The war contributed to higher commodity prices, adding to inflation, which reached multi-decade highs in
most major economies. This prompted central banks to tighten monetary policy at a pace not seen since the 1980s.
As a consequence, equity and bond markets fell in tandem. Global equities delivered a total negative return of 18.4%,
and global GDP growth decelerated to 3.1% from 6.4% in 2021.
Our 2022 financial performance
Our globally diversified business, with strong positions across Switzerland, Asia Pacific, EMEA and the US, allowed us to
deliver value for both our clients and you, our shareholders, in this challenging environment. Our outstanding client
franchises are underpinned by a balance sheet for all seasons, a strong risk culture and an intense focus on costs. This
enabled us to deliver good results in 2022 and achieve our Group financial targets for the full year, with a net profit of
USD 7.6bn, a return on CET1 capital of 17.0% and a cost / income ratio of 72.1%. We also maintained a strong capital
position, ending the year with a CET1 capital ratio of 14.2% and a CET1 leverage ratio of 4.42%, both significantly
above our guidance.
Throughout 2022, our clients turned to us for stability and advice. We helped them reposition their portfolios and take
advantage of longer-term opportunities. This resulted in USD 60bn of net new fee-generating assets in 2022. Net new
money from our asset management clients reached USD 25bn for the year. And we saw continued interest in our
separately managed account (SMA) offering in the US and in alternatives, contributing to our strong momentum.
Leveraging our position as Switzerland’s leading universal bank
In our home market of Switzerland, we benefited from the stability of the economy and strengthened our position as
the country’s #1 universal bank. In 2022, we expanded our offering, with a focus on real estate, sustainability and pension
solutions. Additionally, for our corporate clients, we launched a one-stop marketplace for partner products and services.
All this helped us deliver above-market growth. And we plan to continue to do so. We will further invest in our strategic
technology initiatives and support our clients’ transition to mobile banking, where we have seen a 10 percentage point
increase in active mobile clients. At the same time, we remain disciplined on expenses.
After the initial launch of UBS key4 in Switzerland, we continued to expand our digital product range. Increasingly, clients
want to invest and manage their money more independently, preferably using their smartphones. With UBS key4 smart
investing, clients can now do everything themselves – from opening an account to buying and selling selected funds –
easily, intuitively and all online. Our focus on enhancing user experience has resulted in excellent client feedback and
interest in engaging with our digital product range.
Building on our scale in the Americas
Regionally, more than half of our invested assets in wealth management come from clients in the US, which is the largest
wealth pool globally. In 2022, we remained focused on delivering our entire firm to our core wealth, global family and
institutional wealth clients by leveraging our investment banking and asset management capabilities as well as our
thought leadership.
We will add to our scale and efficiencies by continuing to develop tailored solutions for global family and institutional
wealth clients, expanding our banking capabilities with the long-term goal of becoming our clients’ primary bank,
recruiting highly productive advisors, and increasing the efficiency and effectiveness of our advisors, processes
and controls.
Advisor recruitment is an important component of our organic growth strategy in the US. We have over 20% of Barron’s
Top 100 Private Wealth Management teams and we continued to recruit high-quality advisors in 2022 to support our
industry-leading advisor productivity. By improving our use of digitalization, data and analytics, we are enhancing our
financial advisors’ ability to spend more time with clients, and offering a more personalized, relevant, on-time and
seamless client experience. While we continue to simplify processes and invest in infrastructure and controls, we are also
taking strategic and tactical actions on costs to strengthen profitability.
Annual Report 2022 | Letter to shareholders
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2
Capturing growth opportunities in Asia Pacific
Asia Pacific is the fastest-growing wealth market, and our long-term commitment to this region is a cornerstone of our
strategy. UBS is by far the largest wealth manager in the region, and we are #1 in equity capital markets for non-domestic
banks. In 2022, we delivered the best mergers and acquisitions year on record and were recently named both the Best
Investment Bank in Asia and Australia by FinanceAsia and the Best Equity House in Asia and Australia by IFR. This gives
us confidence in our ability to grow further. Our diversified business streams and multi-shoring capabilities enable us to
mitigate short-term geopolitical and macroeconomic headwinds and focus on longer-term opportunities.
The easing of COVID-19 restrictions in China has led to a more positive outlook for 2023, and we are well positioned to
support clients both onshore and offshore in China and the rest of Asia Pacific when client activity levels increase. Our
launch of WE.UBS in October 2022 marked the first digital-led wealth management platform by a global wealth manager
in China. Here, our goal is to be the provider of choice for digital-first wealth advisory for our targeted clients. And in
Southeast Asia, we are expanding our global family and institutional wealth business to better serve family offices,
entrepreneurs and Asian technology firms.
Driving focused growth in EMEA
In EMEA, we made further progress on improving profitability and driving focused growth. In 2022, we completed the
sale of our domestic wealth management business in Spain, following the sale of our domestic Austrian business in 2021.
We are continuing to pursue growth opportunities across Europe and the Middle East, especially by providing holistic
coverage for entrepreneurs. In the Investment Bank, our Global Markets business had its best year on record, and we
outperformed the fee pool in Global Banking.
Making technology a differentiator
We made further progress in leveraging technology as a differentiator, through simplification, automation and user-
experience improvements. We removed around 39,000 legacy technology components and decommissioned over 600
applications in an effort to modernize our technology estate and enhance our cybersecurity position. As part of our
approximately USD 1.1bn cumulative gross cost savings aspiration, we expect our technology strategy to help us achieve
USD 200m in gross cost savings for 2023, which we intend to reinvest.
We are also supporting the development of new financial market infrastructure and are exploring new ideas to create
better solutions for our clients. For example, digital assets and distributed ledger technology have the potential to radically
transform our industry, and we expect the market for digital assets to continue to grow and evolve. In 2022, we launched
and issued the world’s first digital bond that is publicly traded and settled on both blockchain-based and traditional
exchanges. Investors can buy this bond regardless of whether they have blockchain infrastructure, removing a hurdle in
the adoption of the new and disruptive technology that can make issuing bonds faster and more efficient.
Investing in talent and new ways of working
In 2022, we focused on hiring talent with the right capabilities and agile mindsets. And our adoption of flexible ways of
working has made us an even more attractive employer. As of year-end, around 18,500 employees across the firm are
working in agile teams, which is helping us deliver faster, better and in a more connected way.
We are also making progress toward our aspiration of increasing female and ethnic minority representation. Five of the
twelve members of our Group Executive Board, and four of the twelve members of our Board of Directors, are female.
Women held 28% of Director and above roles globally as of the end of 2022, while ethnic minority employees held 20%
of Director and above roles in the US and 23% in the UK.
We are committed to ongoing education of our workforce. We invested USD 78m in training in 2022, and our permanent
employees completed an average of two training days each. We are also investing in the next generation. We welcomed
more than 1,900 graduates, trainees, apprentices and interns to our firm through our junior talent programs worldwide.
We also run multi-year apprenticeship programs in Switzerland, Australia and the UK, along with summer internship
programs in numerous locations globally. In 2022, for the 14th consecutive year, we were recognized among the top 50
of the World’s Most Attractive Employers by employer-branding expert Universum.
Annual Report 2022 | Letter to shareholders
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3
Colm Kelleher
Chairman of the Board of Directors
Ralph Hamers
Group Chief Executive Officer
A leader in sustainability
The transition to net zero will be one of the most consequential trends in the coming years. Technological advances and
the need for new infrastructure and new products in carbon markets and agriculture are just some examples of the
opportunities ahead. Blended finance vehicles that leverage philanthropic capital bring public–private partnerships to the
fore. We have made good progress on the execution of our sustainability strategy, as outlined in our Sustainability
Report 2022.
Our progress is also reflected in feedback from our stakeholders. At our 2022 Annual General Meeting (AGM), our
shareholders supported our climate roadmap, including our net-zero targets. And we have made progress toward those
targets across many areas of the firm, from our lending business to supply chains to our own operations. At the upcoming
2023 AGM, we will ask you to express your view on our 2022 non-financial reporting in an advisory vote. This is set out
in our Sustainability Report 2022, which describes our sustainability strategy, ambitions, governance and achievements.
A number of key sustainability ratings have reconfirmed our leading position. We were again included in the Dow Jones
Sustainability Index and the CDP Climate A list. We maintained our MSCI ESG rating of AA, and saw an improvement in
ESG risk rating by Sustainalytics, which now considers our firm as “low risk.”
Our commitment to society and communities
UBS is committed to giving back to the communities where we live and work through long-standing partnerships and
community-based engagement of our employees. We focus on education and skill development, which is where our
resources can have the most impact. In 2022, 34% of our global workforce engaged in volunteering, and 45% of the
177,000 volunteer hours were skills-based.
In 2022, our UBS Optimus Foundation network raised USD 274m in donations, including UBS matching contributions,
and committed USD 150m in grants. Donations and grants committed increased by 70% and 39%, respectively.
As of year-end 2022, the Ukraine Relief Fund had disbursed over half of the more than USD 50m committed by clients,
employees, UBS and our strategic partner XTX Markets for relief and recovery efforts. The fund is supporting more than
25 organizations and their local partners in Ukraine and the neighboring countries of Poland, Moldova and Romania.
Annual Report 2022 | Letter to shareholders
4
4
Our commitment to capital returns, today and in the future
We remain committed to delivering attractive capital returns and creating long-term sustainable value for our
shareholders. For the 2022 financial year, the Board of Directors is proposing a dividend to UBS Group AG shareholders
of USD 0.55 per share, an increase of 10% year over year. Having also repurchased USD 5.6bn of shares in 2022, we are
returning USD 7.3bn of capital to our shareholders for the financial year.
Looking ahead, we will remain focused on the disciplined execution of our strategy to create value for our shareholders.
We entered 2023 from a position of strength. We remain committed to a progressive dividend and expect to buy back
more than USD 5bn of shares in 2023.
Thank you for your ongoing support. We look forward to your feedback and to welcoming you in person to this year’s
AGM, which will take place on 5 April in Basel, Switzerland.
Yours sincerely,
Colm Kelleher
Ralph Hamers
Chairman of the Board of Directors
Group Chief Executive Officer
Annual Report 2022 | Letter to shareholders
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5
Corporate information
UBS Group AG is incorporated and domiciled in Switzerland and operates
under Art. 620ff. of the Swiss Code of Obligations as an Aktiengesellschaft, a
corporation limited by shares. Its registered office is at Bahnhofstrasse 45,
CH-8001 Zurich, Switzerland, telephone +41-44-234 11 11, and its corporate
identification number is CHE-395.345.924. UBS Group AG was incorporated
on 10 June 2014 and was established in 2014 as the holding company of the
UBS Group. UBS Group AG shares are listed on the SIX Swiss Exchange and
on the New York Stock Exchange (ISIN: CH0244767585; CUSIP: H42097107).
UBS Group AG owns 100% of the outstanding shares in UBS AG.
UBS AG is incorporated and domiciled in Switzerland and operates under
Art. 620ff. of the Swiss Code of Obligations as an Aktiengesellschaft, a
corporation limited by shares. 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
P.O. 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
P.O. 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
P.O. Box 505000
Louisville, KY 40233-5000, USA
Shareholder online inquiries:
www-us.computershare.com/
investor/contact
Shareholder website:
computershare.com/investor
Calls from the US
+1-866-305-9566
Calls from outside the US
+1-781-575-2623
TDD for hearing impaired
+1-800-231-5469
TDD for foreign shareholders
+1-201-680-6610
Corporate calendar UBS Group AG
Imprint
Publication of the Sustainability Report 2022: Monday, 6 March 2023
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Annual General Meeting 2023:
Wednesday, 5 April 2023
Language: English
© UBS 2023. The key symbol and UBS are among the registered and
unregistered trademarks of UBS. All rights reserved.
Publication of the first quarter 2023 report:
Tuesday, 25 April 2023
Publication of the second quarter 2023 report: Tuesday, 25 July 2023
Publication of the third quarter 2023 report:
Tuesday, 24 October 2023
Corporate calendar UBS AG
Publication of the first quarter 2023 report:
Thursday, 27 April 2023
Publication of the second quarter 2023 report: Thursday, 27 July 2023
Additional publication dates of quarterly and annual reports
will be made available as part of the corporate calendar of UBS AG at
ubs.com/investors.
Highlights of the
2022 fi nancial year
We delivered good full-year results in a diffi cult
macroeconomic and geopolitical environment.
Group results
Resources
Profi tability
USD bn
7.6
Net profi t attributable
to shareholders
USD bn
56.9
Equity attributable
to shareholders
%
17.0
Return on common
equity tier 1 capital
(2021: USD 7.5bn)
(2021: USD 60.7bn)
(2021: 17.5%)
USD
2.25
Diluted earnings
per share
(2021: USD 2.06)
%
14.2
Common equity tier 1
capital ratio
(2021: 15.0%)
%
14.9
Return on
tangible equity
(2021: 14.1%)
Annual Report 2022
7
7
Our key figures
As of or for the year ended
3311..1122..2222
31.12.20
31.12.21
12.6
14.1
17.5
3.4
73.6
21.1
13.7
1133..33
1144..99
1177..00
33..33
7722..11
2200..22
22..33
33,084
694
24,235
8,155
6,557
1.77
3344,,556633
2299
2244,,993300
99,,660044
77,,663300
22..2255
35,393
(148)
26,058
9,484
7,457
2.06
USD m, except where indicated
GGrroouupp rreessuullttss
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Net profit / (loss) attributable to shareholders
Diluted earnings per share (USD)1
PPrrooffiittaabbiilliittyy aanndd ggrroowwtthh22
Return on equity (%)
Return on tangible equity (%)
Return on common equity tier 1 capital (%)
Return on leverage ratio denominator, gross (%)3
Cost / income ratio (%)
Effective tax rate (%)
Net profit growth (%)
RReessoouurrcceess22
Total assets
Equity attributable to shareholders
Common equity tier 1 capital4
Risk-weighted assets4
Common equity tier 1 capital ratio (%)4
Going concern capital ratio (%)4
Total loss-absorbing capacity ratio (%)4
Leverage ratio denominator3,4
Common equity tier 1 leverage ratio (%)3,4
Liquidity coverage ratio (%)5
Net stable funding ratio (%)6
OOtthheerr
Invested assets (USD bn)7
Personnel (full-time equivalents)
Market capitalization8
Total book value per share (USD)8
Tangible book value per share (USD)8
11 Refer to “Share information and earnings per share” in the “Consolidated financial statements” section of this report for more information. 22 Refer to the “Targets, aspirations and capital guidance” section of
this report for more information about our performance targets. 33 Leverage ratio denominators and leverage ratios for year 2020 do not reflect the effects of the temporary exemption that applied from 25 March
2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 44 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. 55 The disclosed ratios represent averages
for the fourth quarter of each year presented, which are calculated based on an average of 63 data points in the fourth quarter of 2022, 66 data points in the fourth quarter of 2021 and 63 data points in the fourth
quarter of 2020. Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information. 66 The final Swiss net stable funding ratio (NSFR) regulation became effective on 1 July
2021. Prior to this date, the NSFR was based on estimated pro forma reporting. Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information. 77 Consists of invested
assets for Global Wealth Management, Asset Management 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. 88 Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information.
11,,110044,,336644
5566,,887766
4455,,445577
331199,,558855
1144..22
1188..22
3333..00
11,,002288,,446611
44..4422
116633..77
111199..88
1,117,182
60,662
45,281
302,209
15.0
20.0
34.7
1,068,862
4.24
155.5
118.5
1,125,765
59,445
39,890
289,101
13.8
19.4
35.2
1,037,150
3.85
152.1
119.2
33,,995577
7722,,559977
5577,,884488
1188..3300
1166..2288
4,187
71,551
50,013
16.74
14.91
4,596
71,385
61,230
17.84
15.97
11.3
12.8
17.4
3.4
73.3
19.4
52.3
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or future financial performance, financial
position or cash flows other than a financial measure defined or specified in the applicable recognized accounting
standards or in other applicable regulations. We report a number of APMs in the discussion of the financial and operating
performance of the Group, our business divisions and our Group Functions. We use APMs to provide a more complete
picture of our operating performance and to reflect management’s view of the fundamental drivers of our business
results. A definition of each APM, the method used to calculate it and the information content are presented under
“Alternative performance measures” in the appendix to this report. Our APMs may qualify as non-GAAP measures as
defined by US Securities and Exchange Commission (SEC) regulations.
11
Annual Report 2022
8
8
Terms used in this report, unless the context requires otherwise
“UBS,” “UBS Group,” “UBS Group AG consolidated,”
“Group,” “the Group,” “we,” “us” and “our”
UBS Group AG and its consolidated subsidiaries
“UBS AG consolidated”
UBS AG and its consolidated subsidiaries
“UBS Group AG” and “UBS Group AG standalone”
UBS Group AG on a standalone basis
“UBS AG” and “UBS AG standalone”
UBS AG on a standalone basis
“UBS Switzerland AG” and “UBS Switzerland AG
standalone”
UBS Switzerland AG on a standalone basis
“UBS Europe SE consolidated”
UBS Europe SE and its consolidated subsidiaries
“UBS Americas Holding LLC” and
“UBS Americas Holding LLC consolidated”
UBS Americas Holding LLC and its consolidated
subsidiaries
“1m”
“1bn”
“1trn”
One million, i.e., 1,000,000
One billion, i.e., 1,000,000,000
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.
Annual Report 2022
9
9
Our Board of Directors
1 Colm Kelleher
Chairman of the Board of Directors / Chairperson of the
Corporate Culture and Responsibility Committee /
Chairperson of the Governance and Nominating Committee
2 Mark Hughes
Chairperson of the Risk Committee / member of the
Corporate Culture and Responsibility Committee
3 Jeanette Wong
Member of the Audit Committee / member of the
Compensation Committee
4 Jeremy Anderson
Senior Independent Director / Chairperson of the
Audit Committee / member of the Governance and
Nominating Committee
5 Fred Hu
Member of the Governance and Nominating Committee
6 Lukas Gähwiler
Vice Chairman of the Board of Directors
7 Claudia Böckstiegel
Member of the Corporate Culture and
Responsibility Committee
8 Patrick Firmenich
Member of the Audit Committee / member of the
Corporate Culture and Responsibility Committee
9 Nathalie Rachou
Member of the Governance and Nominating Committee /
member of the Risk Committee
10 Julie G. Richardson
Chairperson of the Compensation Committee /
member of the Risk Committee
11 William C. Dudley
Member of the Corporate Culture and
Responsibility Committee / member of the Risk Committee
12 Dieter Wemmer
Member of the Audit Committee /
member of the Compensation Committee
2
4
3
5
7
8
10
11
12
6
9
1
The Board of Directors (the BoD) of UBS Group AG, under the leadership of the Chairman, consists of between 6 and 12 members
as per our Articles of Association. The BoD decides on the strategy of the Group upon recommendation by the Group Chief
Executive Officer (the Group CEO) and is responsible for the overall direction, supervision and control of the Group and its
management, as well as for supervising compliance with applicable laws, rules and regulations. The BoD exercises oversight over
UBS Group AG and its subsidiaries and is responsible for establishing a clear Group governance framework to provide effective
steering and supervision of the Group, taking into account the material risks to which UBS Group AG and its subsidiaries are
exposed. The BoD has ultimate responsibility for the success of the Group and for delivering sustainable shareholder value within
a framework of prudent and effective controls, approves all financial statements for issue, and appoints and removes all Group
Executive Board (GEB) members.
10 – 11
Our Group Executive Board
UBS Group AG operates under a strict dual-board structure, as mandated by Swiss banking law, and therefore the BoD
delegates the management of the business to the GEB. Under the leadership of the Group CEO, the GEB was composed of
12 members as of 31 December 2022 and has executive management responsibility for the steering of the Group and its
business. It develops the strategies of the Group, the business divisions and Group Functions, and implements the BoD-
approved strategies.
› Refer to “Board of Directors” and “Group Executive Board” in the “Corporate governance” section of this report or to ubs.com/bod and
ubs.com/geb for the full biographies of our BoD and GEB members
1
2
543
6
7
10
8
9
11
12
1 Ralph Hamers
Group Chief Executive Officer
2 Sabine Keller-Busse
President Personal & Corporate Banking and
President UBS Switzerland
3 Naureen Hassan
President UBS Americas
4 Edmund Koh
President UBS Asia Pacific
5 Barbara Levi
Group General Counsel
6 Markus Ronner
Group Chief Compliance and Governance
Officer
7 Robert Karofsky
President Investment Bank
8 Sarah Youngwood
Group Chief Financial Officer
9 Suni Harford
President Asset Management
10 Mike Dargan
Group Chief Digital and Information Officer
11 Iqbal Khan
President Global Wealth Management and
President UBS Europe, Middle East and Africa
12 Christian Bluhm
Group Chief Risk Officer
12 – 13
Our evolution
Since our origins in the mid-19th century, many financial institutions have become part of the history of our firm and
helped shape our development. 1998 was a major turning point: two of the three largest Swiss banks, Union Bank of
Switzerland and Swiss Bank Corporation (SBC), merged to form UBS. Both banks were well established and successful in
their own right. Union Bank of Switzerland had grown organically to become the largest Swiss bank. In contrast, SBC
had grown mainly through strategic partnerships and acquisitions, including S.G. Warburg in 1995.
In 2000, we acquired PaineWebber, a US brokerage and asset management firm with roots going back to 1879,
establishing us as a significant player in the US. For nearly 60 years, we have been building our strong presence in the
Asia Pacific region, where we are by far the largest wealth manager,1 with asset management and investment banking
capabilities.
After incurring significant losses in the 2008 financial crisis, we sought to return to our roots, emphasizing a client-centric
model that requires less risk-taking and capital. In 2011, we started a strategic transformation of our business model to
focus on our traditional businesses: wealth management globally, and personal and corporate banking in Switzerland.
Today, we are a leading and truly global wealth manager,2 a leading Swiss personal and corporate bank, a global, large-
scale and diversified asset manager, and a focused investment bank.
In 2014, we began adapting our legal entity structure in response to too-big-to-fail requirements and other regulatory
initiatives. First, we established UBS Group AG as the ultimate parent holding company for the Group. In 2015, we
transferred personal and corporate banking and Swiss-booked wealth management businesses from UBS AG to the
newly established UBS Switzerland AG. That same year, we set up UBS Business Solutions AG as the Group’s service
company. In 2016, UBS Americas Holding LLC became the intermediate holding company for our US subsidiaries and
our wealth management subsidiaries across Europe were merged into UBS Europe SE, our Germany-headquartered
European subsidiary. In 2019, we merged UBS Limited, our UK-headquartered subsidiary, into UBS Europe SE.
The chart below gives an overview of our principal legal entities and our legal entity structure.
› Refer to ubs.com/history for more information
› Refer to the “Risk factors” and “Regulatory and legal developments” sections of this report for more information
The legal structure of the UBS Group
UBS Group AG consolidated
UBS Group AG 1
100%
UBS AG consolidated
UBS AG
100%
UBS Business
Solutions AG
UBS
Switzerland AG
UBS Americas
Holding LLC
UBS Europe SE
UBS Asset
Management AG
Other signifi cant
non-US subsidiaries
2
100%
UBS Americas Inc.
100%
UBS Bank USA
UBS Business
Solutions US LLC
UBS Financial
Services Inc.
UBS Securities LLC
3
Other signifi cant
4
US subsidiaries
Holding company and signifi cant regulated subsidiaries and sub-groups subject to disclosure in UBS Group AG annual and quarterly reporting.
1 Refer to “Note 28 Interests in subsidiaries and other entities” in the “Consolidated fi nancial statements” section of this report for more information
about UBS’s subsidiaries. 2 Other signifi cant non-US subsidiaries are generally held either directly by UBS AG or indirectly through UBS Switzerland AG
or UBS Asset Management AG. 3 Of which 99% directly held by UBS Americas Inc. and 1% held by UBS Americas Holding LLC. 4 Other signifi cant
US subsidiaries are generally held either directly by UBS Americas Inc. or indirectly through UBS Financial Services Inc.
11 Private banking assets under management excluding China onshore in 2021, according to Asian Private Banker.
22 Statements of market position for Global Wealth Management are based on UBS’s internal estimates and publicly available information about competitors’ invested assets.
Annual Report 2022
14
14
Our strategy, business model
and environment
Management report
Our strategy
UBS – who we are
UBS is a leading and truly global wealth manager with focused asset management and investment banking capabilities,
and the leading universal bank in Switzerland. We enable people, institutions and corporations to achieve their goals by
providing financial advice and solutions. We have a capital-light, cash-generative and well-diversified business model, a
strong culture, a balance sheet for all seasons, and a respected brand with over 160 years of history.
At UBS, we are driven by a common purpose: Reimagining the power of investing. Connecting people for a better
world. This focus provides direction on the way forward and helps us build on our strengths.
We are focused on driving long-term growth while maintaining risk and cost discipline
Our objective is to generate value for our shareholders and clients by driving long-term growth. To accomplish this, we
are building on our scale, content and solutions, while remaining disciplined on risk and costs. This will give us the
capacity to invest strategically and will enable us to deliver against our financial targets and commercial aspirations, which
are outlined in the “Targets, aspirations and capital guidance” section of this report.
Moreover, we are aiming to maximize our and our clients’ impact to create long-term sustainable value. We also have a
responsibility toward our communities and employees. We have outlined selected environmental, social and governance
(ESG) aspirations, which should support our financial and commercial targets.
Our business model helps us to achieve our growth ambitions
In early 2022, we set out our strategy, which we have been executing on since. Our growth plans aim to increase the
value of our network of clients, connections and contributors, in which UBS’s scale, global reach and capabilities play a
central role.
Our invested assets of USD 4.0trn are regionally diversified across the globe, making us a highly attractive partner to
many sophisticated and specialized contributors. This enables us to give our clients access to a broader, more relevant
and customizable range of solutions, which, together with our thought leadership and capabilities, position us well to
become their partner of choice. Our plans are a reflection of the outlook on long-term demographic and social trends
affecting wealth distribution, product demand and client experience. As we see clients’ needs changing, we also expect
continued growth in alternatives and ESG products.
Clients are at the center of everything we do
Helping clients to achieve their financial goals is the essence of what we do. We aim to differentiate our service by
delivering a client experience that is personalized, relevant, on-time and seamless. This is our promise to clients.
With evolving client needs, we are adapting by making our wealth coverage more needs-based, digital and effective. In
wealth management, our focus remains on our core wealth, global family and institutional wealth clients, while
expanding our coverage of entrepreneurs, women and the next generation of wealthy individuals. We are launching and
scaling digitally customizable services, enhancing personally advised wealth with digital support, and expanding our
custom offerings for global family and institutional wealth to cater for the different needs of our clients.
› Refer to “Clients” in the “How we create value for our stakeholders” section of this report for more information
We have a global, diversified business model
Regionally, more than half of our wealth management clients’ invested assets are in the US, which is the largest wealth
pool globally. Here, we are focused on improving scale and profitability by deepening our relationships with core clients
and by building out Global Wealth Management’s digital-led capabilities and banking platform.
In Asia Pacific, which is the fastest-growing wealth market, we are by far the largest wealth manager1 and are building
on that scale to drive growth. We are further developing our onshore business in China and working to offer our
capabilities in a more cohesive way to our clients in Southeast Asia.
Annual Report 2022 | Our strategy, business model and environment | Our strategy
15
15
In EMEA, we are focused on improving profitability and driving focused growth, by streamlining our domestic footprint
and providing holistic coverage for entrepreneurs.
Finally, in Switzerland, we have a highly integrated business and aim to expand our lead as the #1 universal bank. We
are driving the digital transformation, improving the client experience, and focusing on capturing selected growth
opportunities.
Our growth plans are underpinned by our asset management and investment banking capabilities
Our asset management business provides clients with a broad offering and exclusive access to premium customized
services, while our investment banking capabilities support our growth plans across the client franchise with unique
insights, execution and risk management. Close collaboration between our businesses also adds value for clients,
including in private markets, alternatives and ESG products, and we are actively looking for additional such opportunities.
Sustainability drives our ambitions and informs our purpose
We partner with our clients to help them mobilize their capital toward a more sustainable world. At UBS, we want to
meet clients’ demands for a credible sustainable offering. We want to be the financial provider of choice for clients that
wish to mobilize capital toward the achievement of the United Nations Sustainable Development Goals and the orderly
transition to a low-carbon economy. In Switzerland, as the leading universal bank, we are helping finance the country’s
transition to net zero.
We are investing in our technology
The trusted and personal relationship with our clients across our businesses is evolving. Today, our clients expect us to
provide our services more seamlessly across the firm in a personalized, relevant and timely fashion, with increasing demand
for services that are digital first, anytime and anywhere. This presents an opportunity for us to fully embrace technology
and make it a differentiator for our firm. To support our ambitions, we have established our technology strategy based
on five key pillars: (i) Agile@UBS, a unified approach to working in an agile way across the firm to become faster and
more adaptable; (ii) engineering excellence, as, in order to succeed in making technology a differentiator for our firm,
we must attract and retain the best engineers, which is only possible by creating and fostering an engineering and digital
culture of excellence; (iii) quarterly business reviews and digital roadmaps that help us to manage our technology
investment portfolio in a more strategic and flexible way; (iv) automation, which increases efficiency and effectiveness;
and (v) modern technology, which accelerates digitalization and efficiency.
We are becoming simpler and more efficient
In order to continuously increase efficiency and our capacity to invest, we are working to become simpler, by further
streamlining and standardizing our functions, processes, entities and general ways of doing business, including our
Agile@UBS approach, to ultimately improve the client experience.
11 Private banking assets under management excluding China onshore in 2021, according to Asian Private Banker.
Our focus on technology
The world is faster, more digital and more data-driven than ever before, with clients increasingly demanding services that
are digital first, anytime, anywhere, and underpinned by first-class technology. Through our technology strategy and five
key pillars (Agile@UBS; engineering excellence; quarterly business reviews and digital roadmaps; automation; and modern
technology), we aim to make technology a differentiator for our clients and employees, helping to deliver on our client
promise. We are championing the adoption of a single, consistent, agile setup across the firm, driving transformational
and sustainable approaches to our real estate and technology, building an engineering culture to be proud of, and
fostering firm-wide operational resilience.
In 2022, our unified agile approach helped us drive greater business value, enhance the client experience and be more
responsive and adaptable, with faster delivery of client digital solutions. Overall, approximately 18,500 employees
transitioned to working in new Agile@UBS ways, and we continued our efforts to create and foster an engineering
culture of excellence, in order to attract and retain the best engineers. Currently, approximately two-thirds of our global
technology team within the Chief Digital and Information Office (CDIO) are engineers that are instrumental to responding
to our clients’ digital needs, while the remaining part of the technology team manages critical operational functions at
UBS.
› Refer to “Clients” in the “How we create value for our stakeholders” section of this report for more information about client
digital solutions
› Refer to “Employees” in the “How we create value for our stakeholders” section of this report for more information about agile
ways of working
Annual Report 2022 | Our strategy, business model and environment | Our strategy
16
16
We are using the quarterly business reviews and digital roadmaps to help us manage our technology investment portfolio
in a more strategic and flexible way. During 2022, we aligned 70% of our technology investments to agile teams that
deliver incremental and continuous value to our clients. In addition, we also moved from multiple to one single UBS
DevCloud toolchain and we are increasingly adopting an industry-standard set of metrics (DORA) to measure the
efficiency of our software development process.
We believe the bank of the future will leverage a lean, modern technology estate and Cloud-based applications to provide
clients with flexible, best-in-class service. As such, in 2022, we removed approximately 39,000 legacy technology
components and decommissioned more than 600 applications, as a step to modernize our technology estate and enhance
our cybersecurity position. We also announced the landmark expansion of our partnership with Microsoft, to accelerate
our Cloud footprint over the next five years. As of 31 December 2022, 65% of our applications were on the public Cloud
(i.e., servers not on UBS’s premises) or on our private Cloud (i.e., servers on UBS’s premises).
Targets, aspirations and capital guidance
We aim to create sustainable value through the cycle, which is reflected by our financial targets. In addition, we have
outlined selected commercial aspirations, which support these targets.
Our capital guidance remains unchanged. We intend to operate with a common equity tier 1 (CET1) capital ratio of
around 13% and a CET1 leverage ratio of greater than 3.7%. The Investment Bank is expected to represent up to one-
third of Group risk-weighted assets and leverage ratio denominator.
Performance against targets, aspirations and capital guidance is taken into account when determining variable
compensation.
The table below shows our targets, guidance and aspirations, based on reported results. Our aspirations on
environmental, social and governance (ESG) are set forth in “Our focus on sustainability and climate” in the “How we
create value for our stakeholders” section of this report.
› Refer to “Society” and “Our focus on sustainability and climate” in the “How we create value for our stakeholders” section and to
the “Corporate governance” section of this report for more information about ESG
› Refer to the “Compensation” section of this report for more information about variable compensation
› Refer to “Alternative performance measures” in the appendix to this report for definitions of and further information about our
performance measures
Financial
Targets
Capital
Guidance
Commercial
Selected aspirations
15–18%
Return on CET1 capital
~13%
CET1 capital ratio
>6trn
Invested assets, in USD
across GWM, AM and P&C
70–73%
Cost / income ratio
>3.7%
CET1 leverage ratio
>5%
NNFGA¹ growth
GWM, over the cycle
10–15%
GWM PBT² growth
over the cycle
> 5bn
Share repurchases,
2023 fi nancial year, in USD
1 Net new fee-generating asset. 2 Profi t before tax.
Annual Report 2022 | Our strategy, business model and environment | Our strategy
17
17
Our businesses
Delivering one ecosystem
We operate through four business divisions: Global Wealth Management, Personal & Corporate Banking, Asset
Management and the Investment Bank. Our global reach and the breadth of our expertise are the major assets setting us
apart from our competitors.
We see joint efforts as key to our growth, both within and between business divisions. We combine our strengths to
provide our clients with better, innovative solutions and differentiated offerings, for example, our Global Family &
Institutional Wealth (GFIW) offering with integrated global coverage. Initiatives such as the Group Franchise Awards
encourage employees to look for ways to connect across teams and offer the whole firm to our clients.
How we deliver the whole firm to our clients – examples
Global Family & Institutional Wealth
Wealth management platforms
Separately managed accounts (SMAs)
Shifts and referrals
Global Lending Unit
Unified Global Markets
GFIW is a cross-divisional offering that leverages capabilities from the Investment Bank and client
coverage from Global Wealth Management to address the execution, investment, risk management,
financing and banking needs of family offices and their corporate entities, as well as entrepreneurs.
Drawing on UBS’s client ecosystem, we aim to connect clients with like-minded peers and recognized
experts to exchange ideas and bring opportunities to life for a return and impact. Client coverage is
managed via regional cross-functional teams (GFIW market pods).
In our major booking centers outside the Americas, we use the Wealth Management Platform, which is
shared between Global Wealth Management and Personal & Corporate Banking in Switzerland. In the
Americas, we continue to build out our Wealth Management Americas digital capabilities. All our
platforms can be navigated intuitively and support strong advisory capabilities across channels, helping
our clients to benefit from a broader universe of products and services, simplified onboarding, and a
better banking experience.
We offer Global Wealth Management clients access to selected separately managed account strategies in
the Americas with no additional management fees, including an extensive range of strategies managed
by Asset Management. This enables our advisors to focus on delivering the best ideas, solutions and
capabilities to our clients, regardless of where they originate.
To best serve our clients according to their needs, and to foster growth, we operate a holistic
collaboration framework within our universal bank delivery model in Switzerland. We initiate client shifts
from Personal Banking to Global Wealth Management as their needs become more complex. Examples of
referrals include corporate and institutional clients being introduced to Asset Management for mandate
solutions or to the Investment Bank for capital market transactions, thus providing access to our global
expertise, and entrepreneurs being introduced to Global Wealth Management, ensuring holistic coverage
of their corporate and private needs.
The Global Lending Unit delivers lending capabilities to clients of both the Investment Bank and Global
Wealth Management. The unit provides product expertise to clients through collaboration with
Investment Bank bankers and Global Wealth Management advisors. It is organized with a regional focus
by grouping existing regional resources and competencies to best serve respective markets and clients.
We continue to develop the cross-divisional strategic partnership between Global Wealth Management
and the Investment Bank, focused on providing differentiated content that helps our clients identify the
best trading opportunities, uncover new evidence, and generate fresh insights to meet their investment
needs. Through our integrated approach, we provide structured, scalable investment products, asset and
liability management solutions, financing alternatives and other value-added bespoke solutions that
deliver a quality client experience and outcome by catering to specific coverage needs.
Annual Report 2022 | Our strategy, business model and environment | Our businesses
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Global Wealth Management
As a leading and truly global wealth manager,1 we help our clients pursue what matters most to them. More than 20,000
employees around the world help to manage our clients’ finances from locations in the Americas, Europe, the Middle
East and Asia. Clients look to us to provide them with the tailored advice, expertise and solutions that they need, to
protect and grow their wealth, today, tomorrow and for generations to come. The size and diversification of our global
franchise, our bespoke cross-divisional solutions, and our premium brand and reputation set us apart.
We have strong positions in the largest and the fastest-growing regions – respectively, the US and Asia Pacific – and
clearly defined regional priorities: scaling our franchise in the US; capturing growth in Asia Pacific; increasing profitability
in EMEA; and increasing market share in Switzerland, our home market. Our focus remains on our core client base of
ultra high and high net worth individuals through trusted relationships with our advisors, while expanding our coverage
of entrepreneurs, women and the next generation of wealthy individuals. We are also strengthening our capabilities to
serve our clients with the most sophisticated needs through our Global Family & Institutional Wealth (GFIW) offering.
As our clients’ needs are changing, we are adapting our capabilities and coverage. We are therefore launching and
scaling digitally customizable services, enhancing our personally advised wealth management offering with digital support
and expanding our custom offerings for global family and institutional wealth to cater for the different needs of our
clients.
Organizational changes
On 3 October 2022, Iqbal Khan became sole President Global Wealth Management. Since joining UBS in 2019, Mr. Khan
had served as Co-President Global Wealth Management with Tom Naratil, who stepped down after nearly four decades
with UBS.
In April 2022, to better cater to our clients with institutional-like needs that require a more bespoke offering, we created
GFIW, a cross-divisional offering that leverages capabilities from the Investment Bank and client coverage from Global
Wealth Management.
In August 2022, UBS and Wealthfront mutually agreed to terminate the merger agreement first announced in January
2022, under which Wealthfront was to be acquired by UBS Americas Inc. The two organizations will continue to explore
ways to work together, and, as part of that process, UBS purchased a USD 69.7m note convertible into
Wealthfront shares.
In the second half of 2022, we completed the sales of our wholly owned subsidiary UBS Swiss Financial Advisers AG, our
domestic wealth management business in Spain and our US alternative investments administration business.
How we do business
Our distinctive approach to wealth management is designed to help our clients pursue what matters most to them by
offering advice, expertise and solutions and delivering on our client promise to be personalized, relevant, on-time and
seamless.
Our Chief Investment Office (the CIO) produces the UBS House View, identifying investment opportunities designed to
protect and increase our clients’ wealth over the longer term, directing the investment advice for and management of
more than USD 1trn in fee-generating assets globally. Close integration between idea generation and product
development enables us to deliver to clients CIO-aligned investment solutions, such as the investment modules in UBS
Manage Advanced [My Way]. 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.
› Refer to “Clients” in the “How we create value for our stakeholders” section and to “Our focus on technology” in the “Our
strategy” section of this report for more information about innovation and digitalization
Regional Chief Investment Officers leverage direct client feedback and insights from Client Analytics to deepen our
understanding of clients’ needs. Our product specialists deliver investment solutions, including our flagship investment
mandates, as well as innovative long-term themes and sustainable investment offerings.
In addition to our investment products, we offer extensive mortgage, securities-based and structured lending expertise.
We provide clients with advice on wealth planning, sustainability and impact investing, and corporate and banking
services, while specialist teams also advise on art and collecting, family strategy and governance, philanthropy, next
generation, and wealth transition.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about
sustainability matters
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Chief Investment Offi ce-led value chain
Clients
Listening to our clients’ views, considering their risk profi les and their investment goals
Ideas in a UBS
House View context
Well-researched
investment advice,
thought leadership
Design of solutions
Solutions aligned to
the UBS House View:
discretionary and advisory
mandates, alternatives,
structured solutions, etc.
Communications
Transmission to clients
and advisors
Implementation
& Execution
Positioning of solutions
by advisors, seamless
execution. Tailored advice
to the clients
The investment advice for and management of more than USD 1trn in fee-generating assets globally,
underpinned by robust risk management
Note: CIO develops a clear, concise and consistent investment assessment – the UBS House View, consisting of strategic asset allocation and tactical asset allocation.
Our private markets business gives clients access to investments in private equity funds, hedge funds and real estate.
Furthermore, we have increased our offering of institutional-grade products, such as our Co-Investment STRIPE (strategic
investments in private equity) opportunities, a feeder structure to enable clients to invest in closed-ended institutional
private market funds. We have made it easier for private clients to access investment products and services suited to their
individual preferences, e.g., by expanding access to our Advice SI and separately managed accounts (SMA) solutions in
the US, and new targeted sustainability focus and impact offerings. Our Global Wealth Management clients have invested
more than USD 20bn in discretionary mandates aligned to our sustainable investing strategic asset allocation.
Additionally, we continue to broaden our offering across asset classes and themes, collaborating with external partners,
such as Robeco Asset Management, Ambienta, Rockefeller Asset Management, Rethink Impact and Bridge Investment
Group, to provide clients with access to differentiated sustainable- and impact-investing opportunities.
We are investing in our operating platforms and tools to better serve our clients’ needs, improve their experience and
enhance overall advisor productivity. As of 31 December 2022, more than 80% of invested assets outside the Americas
were booked on our Wealth Management Platform. In the US, we are enhancing the Wealth Management Americas
workstation for advisors, by delivering new functionalities, as well as driving simplification and improving our
banking capabilities.
› Refer to “Clients” in the “How we create value for our stakeholders” section and to “Our focus on technology” in the “Our
strategy” section of this report for more information about innovation and digitalization
Our digital transformation aims to make us faster and more responsive and our services more convenient for our clients.
Our clients benefit from a more seamless service across platforms and devices, and our advisors and the teams that
support them are aspiring to deliver best-in-class content and solutions with increasing speed, relevance and
personalization. We are developing new service models through which we seek to serve our clients according to their
individual needs and preferences, based on scalable digital platforms, and underpinned by our client promise: providing
service that is personalized, relevant, on-time and seamless.
For clients with complex financial needs, our GFIW offering addresses the execution, investment, risk management,
financing and banking needs of family offices and their corporate entities, as well as entrepreneurs. In our core personally
advised service model, we focus on expanding our coverage of entrepreneurs, women and next-generation clients,
alternative investments as a differentiated source of returns, and increasing digital convenience for all our clients. We are
making continuous improvements to our digital platforms, and have rolled out innovative new solutions, such as Circle
One (in 2022), a global ecosystem that connects clients to experts, thought leaders and actionable investment ideas, and
UBS My Way (in 2021), a next-generation portfolio management solution that enables clients to tailor their investments
to their individual preferences. We have introduced the UBS My Way solution in Germany, Italy and Japan, and plan to
also offer it in other markets. We have launched WE.UBS, the first digital-only offering launched by a global wealth
manager in China, and we are planning the launch of further regional solutions.
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We closely collaborate across business divisions to deliver UBS’s best capabilities to our clients. Joint efforts with the
Investment Bank, Asset Management and selected external partners enable us to offer clients broad access to financing,
global capital markets and bespoke portfolio solutions. For example, we launched an SMA initiative in 2020 with Asset
Management in the US and continued to expand our SMA offering throughout 2022. The initiative generated USD 21bn
in net new money inflows in 2022, bringing total invested assets from this initiative to USD 125bn.
› Refer to “Delivering one ecosystem” in this section for examples of the joint efforts of the business divisions
Our operations and our competitors
We operate a global business tailored to both regional and local clients, combining scale with an ability to provide local
offerings to best serve our clients’ needs. We are regularly recognized as a leading wealth manager by independent
industry awards on a global, regional and country level.
The US is our largest market, accounting for around half of our invested assets, and we are recognized as the industry-
leading firm in terms of overall client satisfaction.2 In Asia Pacific, we are by far the largest wealth manager3 and have
received numerous independent industry awards for several years in a row,4 recognizing our long-term commitment to
the region. In our home market of Switzerland, we are the leading wealth manager5 and continue to extend our leading
market position with above-market growth and investments into digitalizing our core business. In Western Europe, we
have a strong footprint, which we further optimized with the sales of our domestic businesses in Spain (in 2022) and
Austria (in 2021), and have been recognized as the best bank for wealth management several years in a row.6 In Latin
America, we continue to expand our strategic partnership with Banco do Brasil, helping us remain the best bank for
wealth management in the region.7 We were able to deliver a strong performance in Central & Eastern Europe, Greece
and Israel despite substantial geopolitical challenges in parts of the region, supported by our GFIW offering. In the Middle
East and Africa, we are building out our offering with further investment in local offices, such as Dubai and Qatar,
emphasizing our commitment to the region and building on our local strength.8
Our competitors fall into two categories: competitors with a strong position in the Americas but more limited global
footprints, such as Morgan Stanley and JPMorgan Chase; and competitors with similar international footprints but with
a smaller presence than UBS in the US, such as Credit Suisse and Julius Baer. We have strong positions in the largest and
the fastest-growing regions (respectively, the US and Asia Pacific). The size and diversification of our global franchise,
bespoke cross-divisional solutions, and premium brand and reputation set us apart and would be difficult for our
competitors to replicate.
2022 selected highlights
As of or for the year ended 31 December 2022
USD 60bn of net new
fee-generating assets
Best Private Bank
for alternatives1 globally
(PWM / The Banker 2022)
USD 5.3bn of net interest
income, 24% growth
USD 2.8trn in invested assets
More than 80% of our clients
are very or extremely satisfi ed
with UBS (UBS client survey 2022)
Invested assets in alternatives1
reached USD 150bn,
with USD 14bn in net new
commitments
1 Hedge fund businesses and private markets.
11 Statements of market position for Global Wealth Management are based on UBS’s internal estimates and publicly available information about competitors’ invested assets.
22 Highest in client satisfaction with full-service brokerage firms in the J.D. Power 2022 survey.
33 Private banking assets under management excluding China onshore in 2021, according to Asian Private Banker.
44 Awards won in two or more consecutive years include the Private Banker International Global Wealth Awards, PWM / The Banker Private Banking Awards, Euromoney Private Banking Awards, Asiamoney Asia Private
Banking Awards, WealthBriefingAsia Awards and Asian Private Banker Awards.
55 Recognized as “Best Private Bank Switzerland” by Euromoney Private Banking Awards in 2022.
66 Recognized as “Western Europe’s Best Bank for Wealth Management” by Euromoney Awards for Excellence in 2020, 2021 and 2022.
77 Recognized as “Latin America’s Best Bank for Wealth Management” by Euromoney Awards for Excellence in 2022.
88 Recognized as “Middle East’s Best Bank for Wealth Management” by Euromoney Awards for Excellence in 2020, 2021 and 2022.
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Personal & Corporate Banking
As the #1 Swiss universal bank, we provide a comprehensive range of financial products and services to private, corporate
and institutional clients. Personal & Corporate Banking is the core of our universal bank in Switzerland. As a market leader
across all our business areas, we strive to grow at a rate faster than the Swiss market. We aim to be digital at the core
by enabling our clients to satisfy most of their banking needs via our apps, while offering a user experience that is
personalized, relevant, on-time and seamless.
How we do business
Our personal banking clients have 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. In 2022, we were once again named the “Best
Bank in Switzerland” by Euromoney. Our offering is complemented by our UBS KeyClub reward program, which provides
clients in Switzerland with exclusive and attractive offers, some of which are offered in collaboration with our external
partners. We also work closely with Global Wealth Management to provide our clients with access to leading wealth
management services.
Our corporate and institutional clients benefit from our 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.
› Refer to “Delivering one ecosystem” in this section for examples of the joint efforts of the business divisions
While continuing to focus on the needs of our clients, we need to better connect business and technology and develop
new solutions in an agile way through fully empowered teams. The agile transformation is essential for every part of our
organization. In 2022, we accelerated Agile@UBS, a unified approach to agile ways of working, which now includes
approximately 5,000 colleagues based in Switzerland.
› Refer to “Clients” and “Employees” in the “How we create value for our stakeholders” section and to “Our focus on technology”
in the “Our strategy” section of this report for more information about innovation and digitalization
In 2022, we continued to support our clients in the transition to a low-carbon economy. For example, we introduced two
new products: UBS Mortgage Energy for our private clients and UBS Loan Energy for income-producing real estate, both
providing preferential conditions for energy-efficient buildings. Furthermore, we entered into two partnerships with Swiss
start-ups to remove greenhouse gas emissions from the atmosphere.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about
sustainability-related topics
We collaborate with other companies to better satisfy our clients’ diverse needs. For example, in 2022, we further
expanded our strategic partnership with Baloise. We both increased our stakes in the digital homeowner platform Houzy,
which offers prospective and existing homeowners advice about financing, insurance and other property planning and
management matters, and Brixel, which provides our clients real estate sales advice and services.
Our operations and our competitors
We operate primarily in our Swiss home market. With our Personal Banking and Corporate & Institutional Clients business
units, we are 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.
In Personal Banking, our main competitors are Raiffeisen, the cantonal banks, Credit Suisse, 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 Corporate & Institutional Clients, the cantonal banks, Credit Suisse and globally active 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. No other Swiss bank offers its corporate clients local banking
capabilities abroad.
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2022 selected highlights
As of or for the year ended 31 December 2022
~2.6 million
clients¹ served by
Personal Banking
Best Bank in
Switzerland
(Euromoney 2022)
>100,000
corporate and
institutional clients²
194
branches in Switzerland
>90%
of large Swiss corporations
served
>30%
of Swiss households served
1 “Clients” refers to the number of unique business relationships operated by Personal Banking. 2 “Clients” refers to the number of unique business relationships
or legal entities operated by Corporate & Institutional Clients.
Asset Management
Asset Management is a global, large-scale and diversified asset manager, with USD 1.1trn in invested assets. We offer
investment capabilities and styles across all major traditional and alternative asset classes, as well as advisory support to
institutions, wholesale intermediaries and our Global Wealth Management clients.
Our strategy is focused on capitalizing on the areas where we have a leading position and differentiated capabilities –
including sustainability, alternatives, indexed customization, and key markets in Asia Pacific – in order to drive further
profitable growth.
Organizational changes
In April 2022, we completed the sale of our 49% shareholding in our Japanese real estate joint venture, Mitsubishi Corp.-
UBS Realty Inc., to KKR & Co.
How we do business
We offer clients a wide range of investment products and services in different asset classes, in the form of segregated,
pooled or advisory mandates, as well as registered investment funds in various jurisdictions. Our traditional and alternative
capabilities include equities, fixed income, hedge funds (single- and multi-manager), real estate and private markets, and
indexed and alternative beta strategies, including exchange-traded funds (ETFs), as well as sustainable- and impact-
investing products and solutions.
Our Investment Solutions business draws 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.
Sustainable and impact investing remains a key area, as clients increasingly seek solutions that combine their investment
goals with sustainability objectives. We are continuing the expansion of our capabilities through: product and service
innovation; dedicated research; integrating environmental, social and governance risk factors into our investment
processes by leveraging our proprietary analytics; and active corporate engagement.
During 2022, our Real Estate & Private Markets business launched a number of new innovative strategies, including UK
Life Sciences and Cold Storage, and again achieved strong results in the latest GRESB Assessments,1 with 100% of our
submitted strategies (representing 96% of Real Estate & Private Markets’ direct pooled real estate and infrastructure
strategies) achieving four- or five-star ratings.
We also continue to develop our award-winning2 indexed businesses globally, including ETFs in Europe, Switzerland and
Asia. To meet increasing client demand, we have focused on sustainable investing across our product range and provide
customized solutions. Aligned with our purpose and strength in building partnerships, in 2022, we launched the UBS
Global Equity Climate Transition Fund, in partnership with Aon, and the UBS Life Global Equity Sustainable Transition
Fund, in collaboration with the Essex Pension Fund and Hymans Robertson. These funds provide investors with the ability
to mitigate climate-related investment risks while also aiming to make a positive social impact aligned with specific United
Nations Sustainable Development Goals.
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Stewardship is a fundamental element of our sustainability strategy, and we are firmly committed to engaging with
companies to support them on their transition journey. During 2022, we extended our Climate Engagement Program to
include more industry sectors and built out our research to further extend the program to include natural capital. We
also launched our new Social Engagement Program, with a focus on human and labor rights, diversity, equity and
inclusion, and health, to enable us to provide clients with products that meet their criteria in these areas as well.
As a founding member of the Net Zero Asset Managers3 initiative, we are working on the foundational pillars required
to deliver on our net-zero interim target, committing to align 20% of total assets under management to achieve a 50%
carbon emissions reduction by 2030. In parallel, we are continuing to work with our clients, standard setters and industry
bodies to help develop the new methodologies, tools and data needed by investors to mitigate risks and
capture opportunities.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about
sustainability matters
To support our growth, we are focused on disciplined execution of our operational excellence initiatives. This includes
further automation, simplification, process optimization and offshoring or nearshoring of selected activities,
complemented by continued enhancements to our platform and development of our analytics and data capabilities.
We have also continued our joint efforts with the other business divisions, enabling our teams to draw on the best ideas,
solutions and capabilities from across the firm in order to deliver high-quality investment performance and experiences
for our clients. For example, we launched a separately managed accounts (SMA) initiative in 2020 with Global Wealth
Management in the US. We continued to expand our SMA offering throughout 2022, including the launch of new index
SMA portfolios offering personalized tax management, and also a sustainable investing overlay enabling clients to select
from six major themes, including climate change, pollution and governance. The initiative generated USD 21bn in net
new money inflows in 2022, bringing total invested assets from this initiative to USD 125bn.
› Refer to “Delivering one ecosystem” in this section for examples of the joint efforts of the business divisions
Our operations and our competitors
Our business division is organized into five areas: Client Coverage; Investments; Real Estate & Private Markets; Products;
and the COO area. We cover the main asset management markets globally, and have a local presence in 23 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.
Geographically, we are building on our extensive and long-standing presence in the Asia Pacific region, including China,
where we continue to invest in our products and presence, both on- and off-shore.
In the rapidly evolving and attractive wholesale segment, we aim to further expand our market share through a
combination of measures: a continued increase in the share of clients’ business; expansion of our strategic partnerships
with distributors; the building-out of our client service and product shelf offerings; and the launch of new white-labeling
and portfolio implementation capabilities.
› Refer to “Clients” in the “How we create value for our stakeholders” section and to “Our focus on technology” in the “Our
strategy” section of this report for more information about innovation and digitalization
Our main competitors are global firms with wide-ranging capabilities and distribution channels, such as AllianceBernstein,
Allianz Asset Management, Amundi, BlackRock, Credit Suisse Asset Management, DWS, Franklin Templeton, Invesco,
JPMorgan Asset Management, Morgan Stanley Investment Management, Schroders, SSGA Funds Management and
T. Rowe Price, as well as firms with a specific market or asset-class focus.
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2022 selected highlights
As of or for the year ended 31 December 2022
USD 1.1trn
total invested assets
Passive Manager
of the Year
(Insurance Asset
Management Awards, 2022)
USD 21bn
net new money from the
SMA¹ initiative
USD 25bn
total net new money
USD 157bn
assets invested in
alternatives²
USD 178bn
in sustainability focus and
impact invested assets
1 Separately managed accounts. 2 Hedge fund businesses, real estate and private markets.
11 GRESB is an independent organization providing validated ESG performance data and peer benchmarks.
22 Passive Manager of the Year 2022, Insurance Asset Management Awards; ETF Provider of the Year, European Pensions Awards; UBS MSCI UK IMI SRI ETF, Winner: Ethical / Sustainable – Passive, AJ Bell FIT Awards;
ETP Award 2022, Best Provider of Sustainable ETFs; and ranked fifth largest ETF provider in Europe as of December 2022 (source: ETFBook.com).
33 netzeroassetmanagers.org
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 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 UBS’s capabilities
to our clients. We do so with a disciplined approach to balance sheet deployment and costs.
Our priority is providing high-quality execution and seamless client service, through an integrated, solutions-led approach,
with disciplined growth in the capital-light 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.
Organizational changes
In January 2022, Global Research and the Strategic Insights teams, formerly part of Evidence Lab Innovations, were
integrated into the Investment Bank, as Investment Bank Research. With this new setup, we intend to better align our
research coverage with the needs of our clients, while continuing to provide research and analytical services across
the firm.
In April 2022, we created Global Family & Institutional Wealth (GFIW), a cross-divisional offering that leverages capabilities
from the Investment Bank and client coverage from Global Wealth Management to address the execution, investment,
risk management, financing and banking needs of family offices and their corporate entities, as well as entrepreneurs.
How we do business
Our business division consists of two areas: Global Banking and Global Markets, which are supported by Investment Bank
Research. Our global coverage model utilizes our international industry expertise and product capabilities to meet clients’
emerging needs.
Our Global Banking business advises clients on strategic business opportunities, such as mergers, acquisitions and related
strategic matters, and helps them raise capital, both on public and private markets, to fund their activities.
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Our Global Markets business 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.
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 22 countries and with coverage of more than 3,000 stocks in 49 different countries. The Strategic
Insights team provides timely and relevant information and insights to help clients quickly make decisions regarding their
most important questions.
We seek to develop new products and solutions consistent with our capital-efficient business model, typically related to
new technologies or changing market standards.
› Refer to “Clients” in the “How we create value for our stakeholders” section and to “Our focus on technology” in the “Our
strategy” section of this report for more information about innovation and digitalization
The Investment Bank is focused on meeting clients’ needs, including those 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, such as thematic portfolio and investment solutions. We have also developed products related to carbon, such
as emissions futures, and we joined Carbonplace as a founding member. Carbonplace is a platform that seeks to build
infrastructure to scale voluntary carbon markets, with the aim of enabling firms such as UBS to offer clients the ability to
buy, sell, hold and retire voluntary carbon credits.
Following the formation of the Global ESG Advisory team within Global Banking in 2021, in 2022, we provided strategic
advisory and capital-raising services by specifically recognizing the structural shift in investor preferences toward ESG
investment opportunities. To do so, we built our capabilities to assess a firm’s sustainability profile and to link such profiles
to ESG investor demand. During 2022, we facilitated USD 48bn of green, social, sustainability and sustainability-linked
(GSSS) bonds financing through 77 bond deals for our clients, including corporate clients, financial firms and sovereign
issuers. UBS has a market-leading share of the Swiss franc GSSS bond market (Bloomberg, 2022), supporting domestic
issuers and bringing international names to the Swiss market.
Our independent ESG research team collaborates with UBS sector analysts and UBS Evidence Lab primary research
experts. The ESG research team works to identify touchpoints between markets, society and the environment, and to
respond to ESG issues as they move onto investors’ agenda. By December 2022, the ESG team had published more than
90 ESG Sector Radar reports, which assessed the impact of ESG factors at the sector level (up from about 30 in 2021).
In 2022, we launched our ESG Company Radar research reports (more than 30 published by December 2022), which
assess the impact of ESG factors at company level, and we have seen a very positive client response to those reports.
Other types of ESG content include thematic and cross-sectoral collaborations, ESG Keys (which covers sustainable
investing topics), and an increasing number of regional perspectives from our expanded ESG team, which works out of
our offices in London, New York, the Hong Kong SAR, Tokyo and Sydney.
As part of our efforts to enhance governance and oversight, the Sustainable Investment Review Group was launched in
June 2022 with the responsibility for reviewing ESG products within Global Markets. The Investment Bank Sustainable
Finance Guidelines were established in 2022 to set out minimum criteria for ESG products, which are to be applied to
new products. In addition, as part of the Group’s net-zero commitments, the Investment Bank has developed emission
targets for 2030 for its lending business.
› Refer to the “Environment” section of our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors,
for more information about the Investment Bank’s targets for its lending business
Our digital strategy harnesses technology to provide access to a wide range of sources of global liquidity and
differentiated content. The Investment Bank strives to be the digital investment bank of the future, with innovation-led
businesses driving efficiencies and solutions. We aim to develop new products and solutions consistent with our capital-
efficient business model, which are most often related to new technologies or changing market standards.
In 2021, we announced the creation of a single Digital Platforms business area within the Investment Bank, utilizing
digital competencies to benefit all products and maximizing the return on our technology spend in close partnership with
our Chief Digital and Information Office. Digital Platforms combines product expertise with deep technical know-how,
aiming to reduce the number of systems and increase automation, maximizing client impact, revenue and digital
adoption. Digital Platforms was an early adopter of Agile@UBS, an evolution of the historically close collaboration with
our Chief Digital and Information Office, creating long-lived teams that learn and continuously improve, which in turn
attracts the best talent.
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Our ambition is to have a simplified and modern technology landscape that is secure and stable, where we re-use more
of everything and where the platforms work together to drive progress toward our overall strategic imperatives.
› Refer to “Clients” in the “How we create value for our stakeholders” section and to “Our focus on technology” in the “Our
strategy” section of this report for more information about innovation and digitalization
Joint efforts between the Investment Bank and the other business divisions (for example, our work with Global Wealth
Management on our new GFIW offering) and, externally, strategic partnerships (for example, UBS BB jointly with Banco
do Brasil, focused on Latin America) continue to be key strategic priorities. Partnership with Global Wealth Management
and Asset Management enables 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.
› Refer to “Delivering one ecosystem” in this section for examples of the joint efforts of the business divisions
Our operations and our competitors
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 global reach gives 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, opportunities arise mainly from expected market internationalization and growth in China, where we plan to
grow by strengthening our presence, both onshore and offshore. In EMEA, we plan to leverage our strong base and
brand recognition even further.
Competing firms operate in many of our markets, but our strategy differentiates us, with our focus on 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, Credit Suisse and Goldman
Sachs) and corporate investment banks (e.g., Bank of America, Barclays, Citigroup, BNP Paribas, Deutsche Bank and
JPMorgan Chase). We also compete with boutique investment banks and fintech firms in certain regions and products.
2022 selected highlights
As of or for the year ended 31 December 2022
15% return on
attributed equity
The Best
Investment Bank
in Asia Pacifi c and Australia
(FinanceAsia, 2022)
GFIW launched in
April 2022
#1 among international
banks in Asia Pacifi c
equity capital markets¹
ESG
Environmental
Social
Governance
Completed formation
of our Global
ESG Advisory team
USD 3.7bn of
Derivatives & Solutions
revenues, 7% growth
1 Dealogic, 2022.
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Group Functions
Group Functions provides services to the Group, focusing on effectiveness, risk mitigation and efficiency. Group Functions
also includes the Non-core and Legacy Portfolio unit.
How we are organized
Group Functions
Group Functions is made up of the following major areas: Group Services (which consists of Chief Digital and Information
Office, Communications & Branding, Compliance, Finance, Group Sustainability and Impact, Human Resources, Group
Legal, Regulatory & Governance, and Risk Control), Group Treasury and Non-core and Legacy Portfolio.
In recent years, we have aligned support functions and business divisions. The vast majority of such functions are fully
aligned or shared among the business divisions, where they have full management responsibility. By keeping the activities
of the businesses and support functions close, we improve efficiency and create a working environment built on
accountability and collaboration.
Certain activities are retained centrally, where not directly related to the businesses, such as: Non-core and Legacy
Portfolio; a small residual set of 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.
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 four
business divisions, and its risk management is integrated into the Group risk governance framework.
Non-core and Legacy Portfolio
Non-core and Legacy Portfolio consists of residual trades from businesses exited by the Investment Bank, mainly in 2012.
Positions are typically left to run to contractual maturity, although trades are terminated early where such action is
economically prudent, and the portfolio continues to be actively hedged. The portfolio also includes positions relating to
legal matters arising from businesses transferred to it at the time of its formation.
› Refer to “Note 17 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more
information about litigation, regulatory and similar matters
Our environment
Market climate
Global economic developments in 20221
2022 was a challenging year for the global economy and most markets. After rebounding in 2021 from the COVID-19
pandemic, economic momentum slowed in 2022. The Russia–Ukraine war contributed to higher commodity prices,
adding to rising inflation, which reached multi-decade highs in most major economies. This led to the fastest pace of
monetary tightening by many leading central banks since the 1980s.
Against this backdrop, global GDP growth decelerated to 3.3% in 2022, from 6.5% in 2021, with headwinds continuing
to mount in 2023. US GDP growth slowed to 2.1% in 2022, from 5.9% in 2021, as the Federal Reserve raised interest
rates. Reduced energy supplies from Russia and tighter monetary policy from the European Central Bank added to
headwinds for the Eurozone economy, where growth was down to 3.5% in 2022, from 5.3% in 2021. Weakness in the
Eurozone contributed to a slowdown in Switzerland. Swiss GDP growth was down to 2.0% in 2022, from 4.2% in 2021.
UK GDP grew by 4.0% in 2022, down from 7.6% in 2021, with momentum undermined by higher inflation, interest
rate increases by the Bank of England (the BoE) and weaker global demand.
China’s economy grew by 3.0% in 2022, down from 8.4% in 2021, reflecting an economic drag from the government’s
zero-COVID policy, along with a downturn in the nation’s real estate sector. Other leading Asian economies slowed less
markedly, with GDP growth in India of 7.0% in 2022, down from 8.7% in 2021. South Korea’s GDP grew by 2.6% in
2022, down from 4.1% in 2021.
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Inflation remained elevated in 2022. Exceptionally strong demand for goods emerged as economies reopened,
overwhelming supply, and creating inflation. Just as this pressure faded, the Russia–Ukraine war led to a rise in energy
and food prices, further boosting inflation. High inflation affected many major economies, averaging 8.5% globally in
2022. US inflation reached a high in June 2022 of 9.1% year on year, having risen at the fastest pace since 1982.
However, inflation remained relatively muted in China, at 3%, and Japan, at 1.1%, with neither country experiencing an
exceptional post-pandemic surge in demand. Inflation in Switzerland was also more muted, at 2% for 2022, due to a
less-pronounced profit margin expansion than elsewhere.
Equity and bond markets fell in tandem in 2022, impacted by the combination of high inflation, monetary tightening
and slowing growth. In 2022, the MSCI USA index fell by 19.8% and the MSCI Eurozone, the MSCI Switzerland and the
MSCI China indices fell by 12.5%, by 17.1% and by 20.7% respectively (in local currency terms). However, more
defensive markets outperformed, such as the MSCI UK index, which increased by 7.1%. Globally, value stocks proved
more resilient, with the MSCI World Value index down 6.5%, compared with a 29.2% decrease in the MSCI World
Growth index.
Bond markets also experienced negative returns, amid headwinds from higher inflation and central bank tightening. The
Bloomberg Global Aggregate Bond index decreased by 16.2% in 2022. The yield on 10-year US Treasuries ended the
year at 3.9%, up from 1.5% at the end of 2021. The yield on the 10-year Swiss government bonds increased from –
0.2% at the start of 2022 to 1.6% by year-end, and the yield on 10-year German Bunds increased to 2.6%, up from –
0.2% at the end of 2021.
Economic and market outlook for 2023
We expect 2023 to be a year of inflections, as investors try to identify turning points for inflation, interest rates, economic
growth and financial markets against a complex geopolitical backdrop.
We expect inflation to be lower at the end of 2023 than it was at the end of 2022, as tighter monetary policy slows
demand and squeezes profit margins. In addition, a repeat of the 2022 commodity price surge is, in our view, unlikely.
Although future economic data will be key, and recent data suggests the decline in inflation has been slower than
forecast in some economies, we expect the Federal Reserve, the European Central Bank, the Swiss National Bank, and
the BoE to conduct the final interest rate increases of this cycle in 2023.
We expect the impact of higher interest rates to weigh on economic growth and earnings. Economic growth should hit
bottom later in the year, if, as we expect, financial conditions start to ease. For 2023 as a whole, we expect the US
economy to grow by 0.8%, with the Eurozone expanding 0.8% and Switzerland 0.4%. We forecast a contraction of
0.4% in UK GDP, with inflation still high, given the prospect of tighter fiscal and monetary policy. The relaxation of
China’s COVID-19 restrictions means a rebound of the Chinese economy is likely over the course of 2023. We expect
China’s GDP to expand 4.9% in 2023.
Geopolitical events look likely to remain a concern for investors. The Russia–Ukraine war poses energy and security threats
to Europe and fosters the risk of a broader war. US–China tensions are unlikely to recede, given Beijing’s focus on self-
sufficiency, the Biden administration’s moves to restrict trade on security grounds, and the potential for further discord
over Taiwan. In addition, we are cognizant of an elevated risk of political tensions within and across countries, as well as
their impact on society and financial markets.
11 Comparative figures as of 28 February 2023.
Industry trends
Although our industry has been heavily affected by various regulatory developments over the past decade, technological
transformation and changing client expectations are further emerging as key drivers of change today, increasingly
affecting the competitive landscape, as well as our products, service models and operations. In parallel, our industry
continues to be materially driven by changes in financial markets and macroeconomic and geopolitical conditions.
Digitalization
While the technological maturity of the financial services sector increased greatly throughout the COVID-19 pandemic,
digitalization in our industry is still developing at a rapid pace. The world is faster, more digital and more data-driven
than ever before, with clients increasingly demanding even more seamless, personalized digital products and services
tailored to their needs. Following the COVID-19 pandemic, regional and demographic differences in the acceptance and
use of digital technologies are narrowing, thus continuing a high rate of digital adoption across all client segments. As a
result, we see a gradual shift from digitalizing and automating existing processes to digital-as-default solutions, while still
allowing for human interaction, a component that continues to be an important competitive advantage.
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Digital communication, with clients and employees alike, has established new remote ways of working, enabling financial
services providers to attract an even wider array of talent than before. The digitalization of the financial services sector
has led to a structural shift in the workforce: more and better engineers are required to keep banks at the forefront of
technology, thus putting them into direct competition with technology companies beyond the borders of the financial
sector.
Continuous investment in technology is driving automation and simplification of labor-intensive processes, improving
banks’ operational efficiency and freeing up resources to focus on client needs. Decision-making is becoming increasingly
data-driven, with advanced analytics and artificial intelligence (AI) enabling banks to address client needs in an even more
targeted manner. In a consistently connected, open, and location-independent financial services ecosystem, the focus
lies on adopting open-source technology, including cloud-native and modular architecture, to drive innovation and open
exchange.
An open-finance environment combined with a shift in business models from in-person to digital channels bears the risk
of increased digital vulnerability. Clients and other stakeholders are demanding ethical and responsible data gathering,
storage and usage, making the protection of the firm’s data a continued priority and focus. We also place great
importance on managing the risk of cyberattacks.
Decentralized finance applications, including digital cash solutions, are gradually being adopted by the banking industry.
Nascent technologies, such as distributed ledger technology, are expected to mature over the coming years and may
reshape our industry. They provide opportunities to overcome friction within the existing financial system, increase
banking efficiency, broaden access to underserved communities and make previously unviable products or services
available to the financial services sector. They also further enable early-stage concepts, such as Web 3.0 and the
metaverse, which could lead to an enhanced digital user experience.
Sustainability
The evolution of corporate business models, the growth in investors factoring the transition to a low-carbon economy
and other sustainability themes into investment risk-and-return expectations, the ongoing shifts in societal values, and
greater regulation are all increasing client demand for sustainable investing strategies.
In 2022, due to the challenging environment for investments, global open-ended fund and exchange-traded fund (ETF)
total net assets decreased by 19%.1 Despite this downturn, the industry overall saw continued inflows into sustainable
investing products, while funds and ETFs that were not specifically categorized as sustainable faced outflows throughout
most of 2022.1
Our view is that the long-term growth trajectory for sustainable funds and ETFs plays to UBS’s strengths, as we have been
at the forefront of sustainable finance for over two decades, making us well placed to build on our offering and continue
to develop the innovative products and solutions our institutional and private clients need.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about
sustainability matters
Client expectations
As technology progresses, clients more rapidly redefine the way they live, work and interact with others. This is reshaping
clients’ expectations toward financial services firms, as their reference points are increasingly influenced by experiences
with companies outside our sector, where technology-supported and data-driven solutions are progressively enabling a
more personalized, relevant, on-time and seamless client experience. These services often focus on convenience, flexibility
and personalization, and drive toward holistically addressing clients’ needs and facilitating community building.
Therefore, our franchise needs to evolve, as clients measure us against new standards. While the global pandemic further
sharpened our industry’s focus on digital-led solutions, recent geopolitical, macroeconomic and societal shifts have
highlighted values such as security, stability and a credible plan toward a sustainable future. Additionally, many clients
not only expect net-zero commitments from their financial services provider of choice, but they are also increasingly
demanding investment, financing and advisory products and services that fit their own sustainability preferences
and ambitions.
Consolidation
Many regions and businesses in the financial services sector are still highly fragmented. We expect further consolidation,
with the key drivers being ongoing margin pressure, a push for cost efficiencies and increasing scale advantages resulting
from fixed technology costs and regulatory requirements. Many players in financial services continue to seek increasing
exposure and access to regions with attractive growth profiles, such as Asia and other emerging markets, through local
acquisitions or partnerships, as well as acquiring new capabilities addressing changes in market dynamics and overall client
demands. The increased focus on core capabilities and geographical footprint, as well as the ongoing simplification of
business models to reduce operational and compliance risks, is likely to drive further disposals of non-core businesses and
assets. While banks already face increasing challenges from digitalization needs and intensified competition, tightening
macroeconomic conditions across major economies may create further pressure if a recessionary environment cannot be
avoided.
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New competitors
Our competitive environment is evolving. In addition to traditional competitors in the asset-gathering businesses, new
entrants are targeting selected parts of the value chain. However, we have not yet seen a fundamental unbundling of
the value chain and client relationships, which might ultimately result in the further disintermediation of banks by new
competitors. Over the long term, we believe large platform companies entering the financial services sector could pose a
larger competitive threat, given their strong client franchises and access to client data, if they decide to broaden the
scope of their services. While fintech firms have gained greater momentum during the COVID-19 pandemic, recent
macroeconomic developments have slowed down the trend, as funding appetite and valuations have trended downward.
Although we expect our industry to recover in the near term, we do not expect a material disruption of our asset-
gathering businesses. The trend for forging partnerships between new entrants and incumbent banks is continuing, as
technology and innovation help banks overcome new challenges.
Regulation
In 2022, regulators further progressed in their policy developments with a focus on regulations around digital innovation
and sustainable finance along with finalizing and implementing the remaining Basel III requirements.
Regulators increased their focus on AI, data and, particularly, digital assets, as a result of market turbulence. In the area
of digital assets, the attention by regulators was on stablecoins, crypto assets and the prudential treatment of banks’
exposures to digital assets, with recent efforts by supranational standard setters aiming to coordinate relevant national
regulations. Central banks also continued to work on central bank digital currencies, which aim to provide new digital
payment instruments that would be a direct liability of the central bank.
Sustainable finance and climate-related risks continued to be a key focus of policymakers in 2022, where we noted
significant activity, particularly in the areas of disclosures regarding the impact of climate-related risks and corporate
sustainability actions, classification or taxonomies of sustainability-related efforts and activities, and risk management of
climate-related financial risks. The multitude of developments at the jurisdictional level has the potential to create a
fragmented policy landscape. These developments add to the rapidly evolving societal expectations toward financial
institutions.
The national implementation of the remaining Basel III elements continues to be another important focus area. The
authorities in Switzerland and the UK launched consultations on their approaches in 2022 and Switzerland changed the
expected date on which the final Basel III guidelines are to enter into force, from 1 July 2024 to 1 January 2025. The EU
authorities continued with the parliamentary debates. We expect the US authorities also to start their consultation process
in the first half of 2023. Although the timing of the implementation seems broadly aligned across Switzerland, the EU
and the UK at this stage, we still see a significant risk of divergence regarding the content of the provisions.
In addition, regulatory authorities continued to refine existing regulations, including the finalization of the Swiss too-big-
to-fail framework and revision of the EU anti-money laundering framework, as well as efforts to enhance operational
resilience. Following Brexit, the UK started a holistic review of its regulatory framework for financial services, while both
the EU and the UK are updating their wholesale markets and investor protection rules. Furthermore, the focus of
regulatory authorities is also increasingly moving toward corporate responsibility, diversity and inclusion. Finally,
digitalization and shifts in the macroeconomic and interest rate environment increased the focus on operational resilience
and financial stability risks, including the assessment of existing policy gaps relating to the non-bank financial
intermediation sector.
Many of these developments are taking place in an environment characterized by significant political uncertainties,
including increasing geopolitical tensions and the Russia–Ukraine war which resulted in the adoption of unprecedented
sanctions packages introduced by various jurisdictions against Russia and Belarus. This led to significant implementation
efforts that were closely coordinated between authorities to ensure consistency in interpretation and implementation.
Political uncertainties and geopolitical tensions are posing additional challenges to the provision of cross-border financial
services.
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 changes to the regulatory environment.
› Refer to the “Regulatory and legal developments” and “Capital, liquidity and funding, and balance sheet” sections of this report
for more information
Wealth creation2
2022 began with the global high net worth individual population and financial wealth both at record highs, with surging
financial markets and recovering economies enabling the global high net worth individual population and financial wealth
to increase 7.8% and 8.0%, respectively, in 2021.
Since then, falling equity and bond markets, slowing economic growth, and US dollar strength, mean that global wealth
growth in 2022 was likely substantially lower, or negative, although we continue to see the longer-term outlook for
wealth creation and financial asset appreciation as positive.
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As of the end of 2021, 46% of global financial wealth was concentrated in North America, followed by Asia (26%) and
Europe (21%).3
By segment, approximately one-third of global high net worth individual wealth is held by individuals with wealth in
excess of USD 30m, 23% by individuals with wealth ranging from USD 5m to USD 30m and the remaining 43% is within
the wealth segment between USD 1m and USD 5m.
Wealth is being created at a faster rate for certain key client groups, including female clients and entrepreneurs. We also
see significant wealth transition to the next generation over the coming decade.
Wealth transfer
Demographic and socioeconomic developments continue to generate shifts in wealth. Over the next few decades, more
than USD 30trn of wealth will be passed between generations. The majority will move from the silent generation and
older baby boomers to younger baby boomers and Gen X (jointly encompassing individuals currently between the ages
of 42 and 65).2
As a group, these “next gens” are likely to have a longer investment horizon, a greater appetite for risk, often combined
with a desire to use wealth to create a positive societal impact alongside investment returns. Meanwhile, as shown in the
Wealth-X report “World Ultra Wealth Report 2022,” the proportion of ultra-wealthy4 women is gradually rising, reflecting
changing cultural attitudes and growth in female entrepreneurship, as well as wealth transfers between generations.
We are responding to the evolving wealth landscape with a framework that addresses all aspects of our clients’ financial
lives, called UBS Wealth Way. It begins with discovery questions and a conversation with clients about what is most
important to them. We help clients organize their financial life along three key strategies: Liquidity to help provide cash
flow for short-term expenses; Longevity for long-term needs; and Legacy for needs that go beyond their own and help
improve the lives of others, a key part of wealth transfer planning.
Investing in an inflationary world
As a result of the major macroeconomic shocks in 2022, investors are facing a very different landscape to the one seen
over the past decade, with significant market volatility, higher interest rates and inflation levels not seen for a generation.
This environment has created opportunities in the bond market, and investors are once again being rewarded for taking
risks in fixed income. Investors also continue to diversify into illiquid alternatives (including private equity, property, hedge
funds and infrastructure) that can deliver compelling longer-term risk-adjusted returns, while also looking for low-cost,
efficient passive strategies across liquid markets. The breadth of our investment expertise and capabilities enables us to
find the right solutions for clients across asset classes and regions.
11 Morningstar Direct, as of or for the year ended 31 December 2022. Encompasses worldwide open-ended funds and exchange-traded funds, excluding money market funds. Sustainable funds are identified on the basis
of Morningstar’s Sustainable-Investment framework. © Morningstar 2023. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and / or its content providers; (2) may not be copied,
adapted or distributed; (3) is not warranted to be accurate, complete or timely; and (4) does not constitute advice of any kind, whether investment, tax, legal or otherwise. User is solely responsible for ensuring that it
complies with all laws, regulations and restrictions applicable to it. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information, except where such
damages or losses cannot be limited or excluded by law in your jurisdiction. Past performance is no guarantee of future results.
22 All the figures are from the Capgemini World Wealth Report 2022 unless otherwise stated and refer to the 2021 financial year. The Capgemini World Wealth Report 2022 segments wealth as follows: those with
wealth of greater than USD 30m are classified as ultra high net worth individuals; USD 1m to USD 30m for high net worth individuals.
33 Based on BCG Global Wealth Report 2022, which refers to the 2021 financial year. Wealth concentration is based on financial assets by regions and excludes real assets and liabilities.
44 World Ultra Wealth Report 2022, Altrata. The report defines those with wealth of greater than USD 30m as ultra high net worth individuals (also referred to as the “ultra wealthy”).
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A mix of personal interaction with our
advisors in combination with digital
and remote services (convenient,
seamless digital banking)
High-quality solutions and the highest
standards in terms of asset safety,
data and information security,
confidentiality, and privacy
A combination of global reach and
local capabilities targeting positive
investment outcomes
Competitively priced products and
services, risk management, and the
provision of liquidity
Disciplined execution of our strategy
leading to attractive capital returns
through dividends and share
repurchases
Comprehensive and clear disclosures
on quantitative and qualitative data
necessary to make informed
investment decisions
Recognizing and proactively
addressing strategic opportunities
and challenges
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How we create value for our stakeholders
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Advice on a broad range of products
and services from trusted advisors,
addressing increasingly complex
needs
Delivering tailored advice and
customized solutions, using our
intellectual capital and digital
platforms
Investing in times of uncertainty: high
inflation, market volatility, rising
interest rates, slowing economic
growth and increasing geopolitical
tensions
Holistic goal-based financial planning
Sustainable finance and investing
opportunities
Data privacy and security
Products and services, including those
around digital banking
Personalized meetings
A blend of virtual and in-person client
events and conferences, including
information about key developments
and opportunities
Client satisfaction surveys
Increasing levels of digital interaction
with clients
Monitor client feedback and complaint
handling
Developing new products, solutions
and strategic partnerships in response
to clients’ evolving needs
Providing access to global capital
markets and bespoke financing
solutions
Meeting increasing sustainable
investment and private markets
demand from clients
Implementing cross-divisional offering
with fully aligned front-to-back setup
Executing our strategy with discipline
and agility as the external
environment evolves, while aiming to
deliver cost- and capital-efficient
growth
Strategic plans and targets, and
execution against them
Structural growth in and return
potential of our businesses
Providing relevant, transparent, timely
and reliable public disclosures
Cost efficiency and ability to generate
positive operating leverage
Ability to protect or grow profits in a
higher-inflation and rising-interest-
rate environment
Incorporation of environmental, social
and governance (ESG) factors into the
business model, compensation and
risk management
Living up to our purpose and culture,
enabled by our three keys to success
Fair and equitable pay practices
Focusing on impact and outcome in
our performance management
processes
Hybrid-, flexible- and home-working
arrangements
Building a diverse, equitable and
inclusive workplace
Fostering internal mobility and
providing long-term career prospects
Accelerating new ways of working,
particularly through Agile@UBS
EEmmppllooyyeeeess
A world-class employer with the
expertise and breadth of opportunity
to empower successful careers
Hiring talented, diverse employees
and investing in development, now
and for the future
A collaborative, engaging, inclusive
and supportive workplace culture
An environment that provides a sense
of belonging and opportunities to
positively impact colleagues, clients,
shareholders and society
Engaging work and career growth
opportunities, including future-
capabilities development, and
rewards for performance and impact
Fair, effective people management
and compensation policies and
practices
Further strengthening our workplace
culture to live up to our purpose, and
providing a framework for employees
to develop their careers
Hybrid- and flexible-working
arrangements, along with holistic
support to empower employees and
foster resilience
Comprehensive data analytics that
enable leaders to make better and
faster decisions to meet business needs
SSoocciieettyy
Facilitation of economic development
that is sustainable for the planet and
humankind
Promoting significant and lasting
improvements to the well-being of
communities in which we operate
Sustainable finance
Our climate strategy
Maximization of our positive effects
and minimization of any negative
effects on society and the
environment
Taking an active role in the transition
of our economy toward
environmentally and socially
sustainable solutions
Our client and corporate philanthropy
efforts
Furthering the economic and social
inclusion of those we support
Proactive management of the
environmental and societal impacts of
our businesses
Advising clients to align their business
models with ESG parameters and the
United Nations Sustainable
Development Goals
Financial reports, investor and analyst
conference calls, and webcasts, as
well as media updates about our
performance or other disclosures
General meetings of shareholders
Investor and analyst meetings
Digital interactions with investors as a
result of COVID-19 pandemic
restrictions and hybrid-working patterns
in the industry, with limited impact on
pre-pandemic meeting schedules and
participation, given reliable virtual
solutions; the 2022 Annual General
Meeting was held virtually
Regular CEO and senior leadership
communications and events, along
with divisional, regional and
functional sessions with employees
Group-wide targeted surveys and
other employee engagement activities
Group Franchise Awards and the
Kudos peer-to-peer recognition
program
Health and well-being events and
offerings, employee networks and
volunteering opportunities, and
hybrid- and flexible-working
arrangements
Grant making and volunteering
through strategic community partners
Participation in forums and round
tables, as well as industry-, sector-
and topic-specific debates
Dialogues with regulators and
governments; interaction with NGOs
Launch of our Ukraine and Pakistan
Relief Funds
Support for COVID-19-related aid
projects across our communities
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Clients
Our clients are the heart of our business. We are committed to building and sustaining long-term relationships based on
mutual respect, trust and integrity. Understanding our clients’ needs and expectations enables us to best serve their
interests and to create value for them, underpinned by our client promise that we aim to differentiate our service by
delivering a client experience that is personalized, relevant, on-time and seamless.
Our clients and what matters most to them
There is no typical UBS client, but each of our clients expects outstanding advice and service, a range of choices, and an
excellent client experience.
Global Wealth Management focuses on serving the unique and sophisticated needs of wealthy families and individuals.
We give them access to outstanding advice, global service and investment opportunities, delivered by experts they can
trust and based on the expertise and insights of our Chief Investment Office (the CIO). Using a holistic, goals-based
approach to financial planning, we deliver a personalized wealth management experience, working closely with clients
to help them realize their ambitions, and we make our wealth coverage more client-centric, digital and effective. Our
client-facing advisors and the global teams supporting them focus on developing long-term client relationships, which
often span generations. Clients look to us for expertise in helping them to grow, protect and transfer their wealth, as
well as helping them make some of the most important decisions in their lives. From significant liquidity events to
professional milestones and personal turning points, we aim to give clients the confidence to move forward and achieve
their goals. Through extensive research into clients’ preferences and goals, and broader analysis of investor sentiment
globally, we constantly evolve our offerings to meet the shifting priorities of today’s wealthy clients. This includes investing
in digital capabilities and developing products to help clients fund their lifestyles and manage their cash flow, as well as
offering guidance on how they can create a lasting and positive impact for their communities and the causes they care
about most. We are the leading global wealth manager for clients interested in sustainable investing,1 with a commitment
to developing solutions that enable them to align their financial goals with their personal values.
› Refer to “Global Wealth Management” in the “Our businesses” section of this report for more information about sustainable
investment offerings
Personal & Corporate Banking serves a total of approximately 2.6 million retail clients2 and more than 100,000 corporate
clients,3 companies ranging from start-ups to multi-nationals, including specialized entities, such as pension funds and
insurers, real estate companies, commodity traders and banks. Our clients include more than 30% of Swiss households,
more than 90% of the 250 largest Swiss corporations and more than 50% of midsize to large pension funds in
Switzerland. They look for financial advice based on their needs at each stage of their individual or corporate journey.
We aim to deliver outstanding advice to all via a multi-channel approach. Clients have access to digital banking, a wide
network of branches and remote advice. These channels are designed to deliver a quality and convenient client experience
with 24/7 availability, security and value for money, resulting in high levels of client satisfaction. Clients are also offered
a broad range of products and services in all relevant areas: basic banking, investing, financing (including mortgages),
retirement planning, cash management, trade and export finance, global custody, and company succession, among
others.
In Asset Management, we manage relationships with institutional clients (including sovereign institutions, central banks,
pension funds and insurers), wholesale intermediaries and Global Wealth Management and its clients. By building long-
term, personalized relationships with our clients and partners, underpinned by disciplined execution, we aim to achieve a
deep understanding of their needs and to earn their trust. We combine our global scale with the independent thinking of
our distinct investment teams to utilize innovative ideas, drawing on the breadth and depth of our investment capabilities,
across traditional and alternative, active and indexed, to deliver the solutions that clients need.
The Investment Bank provides corporate, institutional and wealth management clients with expert advice, financial
solutions, deal execution and access to the world’s capital markets. Our business model is specifically built around our
clients and their needs. Corporate clients can access advisory services, debt and equity capital market solutions, and
bespoke financing through our Global Banking business. Our Global Markets business focuses on helping institutional
clients engage with local markets around the world, offering equities and equity-linked products, and foreign exchange,
rates and credit products and services. Our differentiated content offering is underpinned by Investment Bank Research.
The differentiated nature of our research provides access to insight-ready data sets for thousands of companies, and aims
to give clients an informational edge. In 2022, our experts produced more than 40,000 research reports, attracting seven
million reads.
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We know the security and confidentiality of our clients’ data is of utmost importance to them, as it is for UBS. That is
why we put the highest priority on having comprehensive measures in place that are seeking to ensure client data
confidentiality and integrity are maintained. We continually assess and improve our control environment to mitigate
emerging cyber threats and meet expanding legal and regulatory expectations. Investments in our digital platforms
preserve and improve our security standards, with a focus on giving clients secure access to their data via our digital
channels and protecting that data from unauthorized access. Although the level of sophistication and the impact and
volume of cyberattacks continue to grow worldwide, we are ever vigilant, maintaining a strong and agile cybersecurity
and information security program to mitigate and manage cyber risk by providing robust, consistent, secure and resilient
business processes.
Enhancing the client experience through innovation and digitalization
We streamline and simplify interactions with clients through front-to-back digitalization and innovation.
In Global Wealth Management, we develop and deploy digital tools that help deepen and enhance the relationships we
have built with our clients, a factor that differentiates UBS. Clients expect the convenience and speed that technology
offers but, at the same time, they feel that a personal experience with advisors is more important than ever. Our advisors
use digital tools to spend more time with clients and better evaluate the full scope of their financial lives. Our clients
appreciate digital tools that improve their experience. They also want multiple ways in which to interact conveniently
with their advisors. Clients increasingly embrace the use of digital and mobile tools. We continue to introduce new and
better tools to meet and exceed clients’ expectations. For example, our UBS Manage Advanced [My Way] solution offers
clients in selected markets access to more than 60 professionally managed investment modules. Clients can personalize
beyond what they can normally do in a discretionary solution while continuing to reap the benefits of continuous portfolio
monitoring and risk management. The app is interactive; clients can work with their advisors to design their own portfolio
based on individual preferences and priorities, easily including elements such as sustainable investing modules or themes.
We intend to further extend access and upgrade client convenience and experience with UBS Manage Advanced [My
Way]. In 2022, UBS Circle One was launched in Asia Pacific. This digital platform aims to bring to clients the best of UBS’s
global ecosystem for investing, connecting them with experts, thought leaders and actionable ideas delivered by the CIO
in an engaging and convenient way. As a trusted brand offering premium content, we see opportunities to deliver our
expertise to a broader set of clients, combining digital experience with human advice. Progress continues on our multi-
year strategy to serve clients via two platforms: the Wealth Management Americas Platform in the US and the Wealth
Management Platform outside the US.
In Personal & Corporate Banking, we further strengthened our leadership position as the leading digital bank in
Switzerland by continuing to develop simple, smart, secure and sustainable solutions for our clients. In 2022, an average
of 74% of Personal Banking clients used Digital Banking, and an average of 56% logged in via Mobile Banking. This
demonstrates that our clients are engaging more frequently with us through our online and mobile capabilities. Our
continued growth in digital enrollment and engagement led us to take the next evolutionary step, the introduction of a
dedicated digital assortment line: UBS key4. Within six months of its launch in May 2022, we introduced a comprehensive
digital product shelf. UBS key4 banking offers new Personal Banking clients 24/7 mobile account opening via secure,
biometric self-identification and instant credit card availability, with attractive exchange rates. With UBS key4 smart
investing, UBS key4 gold, UBS key4 pension 3a and UBS key4 FX, our Swiss clients benefit from new seamless digital-
only investing, pension and payment solutions. We have also delivered products and personalized care for our corporate
clients, whose digital adoption has accelerated further in recent years, with an average of 80% of such clients using
Digital Banking in 2022. With UBS key4 business, small and medium-sized enterprises that are in the process of being
formed can open their accounts more quickly and entirely paperlessly, and access comprehensive solutions beyond
banking via our UBS key4 business marketplace. Complementing our dedicated digital offering, we also continued to
further build out our hybrid touchpoints with clients, such as Remote Sales & Advice for private clients and our Corporate
Hybrid Bank. In addition, to give clients access to market-leading solutions beyond banking, we have expanded our
network of partnerships, such as our targeted long-term collaboration with Baloise, investing in homeowner platforms,
such as Houzy and Brixel. Furthermore, we entered into a strategic partnership with ETH Zurich, a Swiss Federal Institute
of Technology, to promote innovation and entrepreneurship in Switzerland. We have also continuously developed our
sustainability offerings, such as UBS Mortgage Energy, which helps clients with the transition to more sustainable heating,
and UBS Loan Energy, thanks to which clients benefit from attractive interest rates and comprehensive advice for their
low-energy investment properties.
In Asset Management, we are accelerating our investment in digitalization. We have extended our digital client
relationship management pilot tools, technologies and data capabilities to enhance the experience of, and service for,
our clients, to foster innovation and to support alpha generation. For example, we are developing a scalable platform to
enable more efficient development and management of theme-based investment products to meet growing client
demand. To simplify and enhance our client service, we are introducing improvements in client and data analytics.
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The Investment Bank strives to be the digital investment bank of the future, with innovation-led businesses driving
efficiencies and solutions. In 2021, we announced the creation of a Digital Platforms business area within the Investment
Bank, to work on transformation through innovation, experimentation and external partnerships. In Global Markets, our
Technology-Enhanced Sales (TES) teams work in close partnership with our Data Intelligence, Chief Digital and
Information Office and Client Coverage teams to embed our data and technology capabilities across all client teams and
enhance our client service. TES enables clients to choose where and how we deliver content and uses data modeling to
personalize the content they receive. UBS Neo, our award-winning multi-channel platform and enterprise ecosystem for
digital clients, lets our professional and institutional clients access a comprehensive suite of products and services covering
the full investment life cycle. Investment Bank DigiOps, our Operations team working in collaboration with the Chief
Digital and Information Office on digital innovation projects, is enhancing the client experience through a digital platform
that continues to make progress on simplifying Operations’ technology infrastructure, increasing front-to-back efficiency
and enhancing our decision-making and relevance to clients. By utilizing distributed ledger technology, Global Markets
is transforming the business models of products where the Investment Bank has been strong historically. One example is
UBS key4 gold, our global physical gold transaction network of retail investors, gold merchants, institutional investors
and vault providers that enables clients to buy and sell at interbank prices, which saw growth in 2022. A tokenized
representation of underlying physical gold provides fractional ownership with low-friction transactional capability. Our
vision is to accelerate the tokenization of financial products traded by UBS clients. In November 2022, we launched and
issued the world’s first digital bond that is publicly traded and settled on both blockchain-based and traditional
exchanges. Global Banking has also prioritized the client experience. Global Banking Strategic Development Lab uses
data science, predictive analytics and quantitative models to develop solutions for our businesses. UBS-GUARD applies
data science and predictive analytics to Global Banking business users, predicting the risk of companies becoming the
targets of activists, identifying deal opportunities and helping navigate client pitches.
Engaging with our clients
Our clients’ needs and their preferred communication channels continually evolve. Our objective is to engage with clients
in the ways most convenient for them. We use a variety of channels to engage with clients, including regular client
relationship and service meetings, as well as various corporate roadshows and dedicated events. In the post-COVID “new
normal,” we observe an increase in client interaction across all channels, and have changed to a mix of hybrid and in-
person events.
Global Wealth Management interacted with clients via various settings in 2022, from personalized private briefings with
subject matter experts to segment-specific virtual and in-person events and large-scale initiatives. We utilize marketing
campaigns, events, advertising, publications and digital-only solutions to help drive greater awareness of UBS among
prospective clients and reinforce trust-based relationships between advisors and clients.
Personal & Corporate Banking holds regular client events (leveraging a number of formats such as webcasts and in-
person, virtual or hybrid events), covering a wide range of topics. In 2022, we increasingly engaged with clients via online
channels, such as social media, online displays and search engines, and further decreased our use of traditional channels.
In Asset Management, we have a consistent program of client events and engagement activities throughout the year.
These include our flagship conferences, such as the annual UBS Reserve Management Seminar, and we held our second
annual Alternatives Conference in 2022. Alongside this, our teams continued the high level of interaction with clients
globally in 2022, facilitated by new digital tools, and our publication of macro insights and thought leadership to provide
timely insights into rapidly evolving markets. We also hosted a broad range of hybrid events, including our investment
series, to help our clients better understand market challenges and opportunities, and we continued to engage with
clients through our social media and online channels.
The Investment Bank hosted more than 175 investor conferences and educational seminars globally in 2022, covering a
broad range of macro, sector, regional and regulatory topics. Almost all of those conferences were held virtually. More
than 40,000 clients took part in such events in 2022, providing insight and access to our own opinion leaders, policy
makers and leading industry experts. We leverage our intellectual capital and relationships and use our execution
capabilities, differentiated research content, bespoke solutions, client franchise model and global platform to expand
coverage across a broad set of clients. UBS Neo Question Bank is the largest global database of market-related questions
asked by professional investors, while UBS Live Desk, built within the UBS Neo platform, provides clients with a stream
of fast-paced commentary from UBS traders. Our clients’ needs and their preferred communication channels have
continued to evolve. Our objective is to engage with clients in the manner most convenient for them. Following the
pandemic, we have observed an increase in client interaction through all channels, both digital and in-person.
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How we measure client satisfaction
We use multiple techniques to regularly assess our achievements and the satisfaction of our clients.
Global Wealth Management is increasingly using technology and analytics capabilities to collect and respond to client
feedback. Our digital client feedback tool lets clients submit, via mobile and the web, input about overall satisfaction
with advisors and UBS, and share key topics they wish to discuss with their advisors. Advisors and their teams have
seamless, real-time access to client feedback, enabling them to be highly responsive. The tool is available in the US and
Asia Pacific, as well as most EMEA countries. In 2022, our client satisfaction level and net promoter score (NPS) remained
high.
Personal & Corporate Banking has conducted annual surveys of clients in Switzerland since 2008, consistently covering
all private and corporate client segments annually since 2015. Clients provide feedback on their satisfaction with regard
to various topics (e.g., UBS overall, branches, client advisors, products and services) and indicate further product or
advisory needs. Survey responses are distributed to client advisors, who follow up with each respondent individually. In
2022, our client satisfaction levels and NPS remained high, with client satisfaction regarding mobile banking at an all-
time high.
The Quality Feedback system in Global Wealth Management and Personal & Corporate Banking provides a comprehensive
and systematic platform to receive and process client feedback and suggestions. We receive feedback in various forms
and through different client touchpoints. Client feedback, including complaints and suggestions, is vitally important, as
it shows direct and unfiltered client needs, supports the development and introduction of new products and services,
and, therefore, fosters the optimization of our offering in a client-focused manner. By addressing client feedback, we
aim to strengthen client relationships, improve client satisfaction and make tangible improvements to our services. By
sharing their views, clients contribute to quality improvements at all levels. We aim to respond to each individual who
provides feedback. In 2022, key topics and enhancements centered mostly around services rendered by our hotlines and
in our branches, cards, and Digital Banking features.
In Asset Management, we have an integrated process to record and manage client feedback through our client
relationship management tool. We also conduct regular surveys, covering our wholesale and institutional clients globally,
inviting them to assess their satisfaction with our client service, products and solutions, as well as other factors relevant
to their investments. The results are analyzed to identify focus areas for improvement, and our client relationship
managers follow up with respondents to address specific feedback where required.
The Investment Bank closely monitors client satisfaction via individual product coverage points. Direct client feedback is
actively captured and tracked in our systems. Internal regional forums serve as a platform for senior management to
discuss client relationships, possibilities for improvement, potential opportunities and specific client issues. Other
processes are in place to enable consolidated findings to be shared within UBS as appropriate. The Investment Bank also
closely monitors external surveys, which provide feedback across a range of investment banking services. We continue
to make progress in simplifying our technology infrastructure, focusing on increasing front-to-back efficiency and
enhancing our decision-making and relevance to clients. In the second quarter of 2022, we extended our Annual Global
Markets Client Survey to a broader population looking to measure client satisfaction, and the ease and frequency of
doing business. We also looked to understand the key drivers of each measure, both to refine individual coverage but
also as an additional input into our investment and development plans. The most significant drivers of client satisfaction
remain relationship management coverage and connectivity, liquidity and competitive pricing. We thoroughly evaluate
the feedback we receive, including complaints from clients, and take measures to address key themes identified.
11 Euromoney Private Banking and Wealth Management Survey 2022: No. 1 in ESG / Sustainable Investing.
22 “Clients” refers to the number of unique business relationships operated by Personal Banking.
33 “Clients” refers to the number of unique business relationships or legal entities operated by Corporate & Institutional Clients.
Investors
We aim to create sustainable, long-term value for our investors by executing our strategy with discipline, maintaining risk
and cost discipline, and delivering attractive shareholder returns.
Investor base
Our investor base is well diversified. A substantial proportion of our institutional shareholders are based in the US, the
UK and Switzerland.
› Refer to the “Corporate governance” section of this report for more information about disclosed shareholdings
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Alignment of interests
We aim to align the interests of our employees with those of our equity and debt investors, and this approach is reflected
in our compensation philosophy and practices.
› Refer to “Our compensation philosophy” in the “Compensation” section of this report for more information
We are focused on driving long-term growth while maintaining risk and cost discipline
Our objective is to generate value for our shareholders and clients by driving long-term growth. To accomplish this, we
are building on our scale, content and solutions, while remaining disciplined on risk and costs. This will give us the
capacity to invest strategically, and will enable us to deliver against our financial and commercial targets.
Moreover, we are aiming to maximize our and our clients’ impact to create long-term sustainable value. We also have a
responsibility toward our communities and employees. We have outlined selected environmental, social and governance
aspirations, which should support our financial and commercial targets.
Our primary measurement of performance for the Group is return on common equity tier 1 (CET1), as regulatory capital
is our binding constraint and drives our ability to return capital to shareholders.
› Refer to the “Targets, aspirations and capital guidance” section of this report for more information
Active capital management to enable growth and deliver attractive shareholder returns
Our first priority is ensuring that we can maintain a strong balance sheet. This includes our strong capitalization, in line
with our capital guidance of maintaining a CET1 capital ratio of around 13% and a CET1 leverage ratio of greater than
3.7%.
As a second priority, we consider opportunities for investment in growth.
Our third priority is returning capital to shareholders in the form of a progressive dividend and share buybacks. For 2022,
the Board of Directors is proposing a dividend to UBS Group AG shareholders of USD 0.55 per share. We also bought
back USD 5.6bn of our shares. Looking ahead, we intend to buy back more than USD 5bn of shares in 2023.
› Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information
Communications
Our Investor Relations (IR) function is the primary point of contact between UBS and our shareholders. Our senior
management and IR regularly interact with institutional investors, financial analysts and other market participants, such
as credit rating agencies. Clear, transparent and relevant disclosures, and regular direct interactions with existing and
prospective shareholders, form the basis for our communications. The IR team relays the views of and feedback on UBS
from institutional investors and other market participants to our senior management.
IR and our Corporate Responsibility function work together and interact with any investors interested in sustainability
topics relevant to UBS and wider society.
› Refer to the first part of the “Corporate governance” section of this report and “Information policy” in that same section for more
information
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information
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Employees
At UBS, all business is personal. We are dedicated to being a world-class employer for talented individuals across all our
markets, and a place where people can unlock their full potential. We want to have real impact. As such, we invest in
measures to strengthen our unique culture and to provide a framework for employee growth and well-being as part of
our overarching people-management approach.
Our workforce in a nutshell¹
Men
59%
43,971
74,022
employees
Women
41%
30,051
19%
59%
22%
age <30
age 30–50
age >50
28%
30%
22%
20%
Switzerland
Americas
Asia Pacifi c
EMEA
48
countries
150
nationalities
151
languages
spoken
8
years of service,
on average
1 Calculated as of 31 December 2022 on a headcount basis of 74,022 internal employees only (72,597 FTE).
Deliver on our purpose and culture
Everything we do as a firm starts with our purpose. It is why we do what we do, and, in this respect, our culture is decisive
in achieving our ambitions, and is grounded in our three keys to success: our Pillars, Principles and Behaviors. We therefore
engage with our employees and seek to build an even more diverse and inclusive organization. Likewise, embracing
flexibility and agile ways of working and our intentional focus on simplification and efficiency support a transformation
that will generate significant benefits for our clients and for our employees.
In our global employee experience survey conducted in spring 2022, 92% of respondents indicated that they were
familiar with our purpose. In 2022, we therefore sought to ensure that we are living up to our purpose by bringing it to
life and driving it deeply into our daily business and people-management processes. Our Leadership Summit has been
pivotal in that respect. Senior leaders engaged with and were aligned to our purpose and strategy, thereby making those
concepts more tangible within their teams and accelerating our transformation. They also participated in training to
discover their own purpose and to connect it to the firm’s performance opportunities. We will have an ongoing focus on
the topic.
› Refer to “A firm driven by purpose” at the beginning of this report for more information about our purpose and culture
Build a diverse, equitable and inclusive workplace
We live a culture of belonging, where everyone can thrive. In practical terms, we seek to hire individuals with diverse
skills, perspectives and experiences, to provide visibility and opportunities, and to create an inclusive culture where
employees feel recognized and valued.
As a member of The Valuable 500, a global business collective, we are committed to taking action on disability inclusion.
We have improved the physical accessibility of many of our locations in 2022, increased digital accessibility for clients and
employees, and provided support for our disability-focused employee networks to increase their visibility and impact.
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In 2020, we outlined our intention to increase our female and ethnic minority representation, especially in leadership
positions, and we are making progress toward these aspirations. For example, we aim to have 30% of Director and above
roles globally held by women by 2025. At the end of 2022, that figure was 27.8%, up from 26.7% in 2021. Similarly,
our 2025 aspiration is to have 26% of Director and above roles in the US and the UK held by ethnic minority employees.
This figure was 20.4% in the US and 23.0% in the UK as of the end of 2022.
› Refer to our Diversity, Equity and Inclusion Report 2022, which will be available in the second quarter of 2023 at
ubs.com/diversity, for more details
Pay our people fairly and equitably
Fair and consistent pay practices are designed to ensure employees are appropriately rewarded for their contribution. We
pay for performance, and we take pay equity seriously. We’ve embedded clear commitments in our global compensation
policies and practices, and we regularly conduct internal reviews and external audits as quality checks. Since 2020, we
have been certified under the EQUAL-SALARY Foundation standards for our human resources practices in Switzerland,
the US, the UK, the Hong Kong SAR and Singapore, covering more than two-thirds of our global employee population.
Our global human resources policies and standards, including reward, performance management and promotion, from
hiring through retirement, are reviewed annually to further improve our approach and processes. Our processes are
global, and we apply the same standards across all our locations.
Listen to and appreciate employees
Key to bringing our purpose to life is listening to employees and acting on the things that matter to them. As part of our
employee listening strategy, we conduct regular Group-wide, focused and employee life cycle surveys. Those surveys
measure indicators such as strategic alignment, employee experience and well-being, collaboration, innovation, career
development and line manager effectiveness. We implement improvement measures on firm-wide, divisional and regional
levels and use survey results to create future culture-building initiatives.
Employee recognition continued to be a priority in 2022, as appreciation brings teams together and increases employees’
motivation and engagement. In particular, our Group Franchise Awards program rewards employees for promoting
innovation and cross-divisional collaboration. A linked idea-sharing platform helps employees collaborate on solutions
for various operational, client service and sustainability challenges. Furthermore, our peer-to-peer appreciation program,
called Kudos, encourages employees to recognize colleagues’ exemplary behavior, with more than 424,000 recognitions
awarded in 2022 alone.
Attract employees with the right capabilities and support their development
Connecting people with ideas and opportunities starts with our employees. In 2022, we continued to focus on hiring
diverse individuals with strong potential, along with the right capabilities and agile mindset. These qualities enable us to
deliver innovative and personalized products to clients faster, and in a more connected way. We hired a total of 12,693
external candidates in 2022, including more than 1,900 graduates and trainees, apprentices and interns through our
junior talent programs worldwide. We actively support multi-year apprenticeship programs in Switzerland and the UK,
along with summer internship programs in numerous locations. In 2022, for the 14th consecutive year, UBS was
recognized among the top 50 of the World’s Most Attractive Employers by employer-branding expert Universum.
Personnel by region
Full-time equivalents
Americas
of which: USA
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
of which: UK
of which: rest of Europe (excluding Switzerland)
of which: Middle East and Africa
Switzerland
TToottaall
As of
% change from
3311..1122..2222
31.12.21
31.12.20
31.12.21
2211,,881199
2211,,003322
1166,,448899
1144,,334422
66,,223344
77,,882233
228855
1199,,994477
7722,,559977
21,317
20,537
15,618
14,091
6,051
7,826
215
20,359
71,385
21,394
20,528
15,353
13,899
6,069
7,652
178
20,904
71,551
2
2
6
2
3
0
33
(2)
2
Drive career growth
We want our employees to be able to build long and successful careers. It starts with our senior leaders and line managers,
all of whom are expected to invest in their employees’ development and to inspire excellence. We take a systematic
approach to talent management, conducting annual talent reviews that look at our succession planning needs along
with individual employees’ contributions, abilities and future potential. Supporting this is our innovative Career Navigator
platform. It offers a wide range of self-service tools and resources, including mentorship and networking opportunities,
career path and training guidance, access to short-term rotations and internal mobility resources. To date, more than
7,000 people have shared their skills, enabling colleagues or internal recruiters to approach them directly for their subject
matter expertise.
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Our in-house UBS University plays a central role in both skill- and culture-building. Our broad offering includes business,
leadership and line manager education along with training on digitalization, data literacy, agile working, diversity,
inclusion and personal well-being, among other topics. Launched in June 2022, our new learning experience platform
offers AI-powered training recommendations based on employees’ unique needs and interests. We invested USD 78m in
training in 2022, and our permanent employees completed more than 1,327,000 learning activities, including mandatory
training, for an average of two training days per employee.
Work smarter
Driven by our strategic imperatives and evolving client needs, we continued to embrace new ways of working together
in 2022. In particular, we accelerated our transition to agile ways of working, with approximately 18,500 employees
across the firm working in agile teams as of year-end. In this setup, pods of specialists with end-to-end responsibility are
empowered to achieve better results, and more quickly, than in traditional project structures. A number of tailored
measures supported the transition, including the development of one consistent agile model and specialized training
delivered through the Agile Academy within our UBS University.
Comprehensive workforce data dashboards help us analyze all aspects of the employee life cycle, including recruitment,
internal mobility and attrition. These tools enable us to identify trends and make workforce decisions based on relevant
HR data.
Focus on impact and outcome
Our performance management approach (MyImpact), which considers both contribution and behavior, supports a high-
performance culture while simplifying our performance management and feedback processes. It features aspirational
objectives with outcomes aligned to strategic priorities, continuous feedback and transparent year-end decisions that
support pay-for-performance principles. Line managers play a key role in the quality of our approach. In 2022, we
introduced an integrated feedback app called Feedback 365, which allows employees to easily give and receive
meaningful feedback throughout the year.
Foster a supportive workplace community
We are committed to meeting employees’ needs and supporting their overall well-being. Hybrid-working arrangements
enable many employees to work at home several days a week, with agreed in-office days to support collaboration.
Additionally, starting with Global Wealth Management in the US, a new virtual worker framework launched in March
2022 will enable eligible US employees to work entirely remotely. These measures, along with options such as flexible
hours, part-time working, job sharing and partial retirement, will help us attract and retain top talent while making us a
stronger, more dynamic company.
Having seen the positive impact, we further expanded our employee health and well-being offering in 2022. This included
a suite of programs, benefits and workplace resources, along with a bespoke eLearning curriculum, that aimed to help
our employees manage their health, foster well-being, strengthen their resilience and support the sustainability of the
organization. We also sponsored virtual fitness challenges and mental health initiatives in all regions.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about our
workforce, our people management approach and relevant data
Society
The world’s social and environmental problems are too big and complex to tackle alone. Lasting change can only be
achieved when philanthropists and public and private organizations work collectively to maximize positive impact for
people and the planet.
Our clients can maximize the positive effect of their giving through our diverse social impact offering: UBS Philanthropy
Services, the grant-making UBS Optimus Foundation network, UBS Global Visionaries and UBS Community Impact.
Reimagining client philanthropy
With more than 100 social impact and philanthropy staff around the globe, we help clients to maximize their impact
locally, nationally and globally. We have partnered for more than two decades with clients and their families by using an
investment-based approach and connecting them to an international network of expertise and support.
To best serve our clients, we base our approach on three pillars: Advice, Insights and Execution. Advice – consulting with
clients who are considering setting up their first charitable fund and guiding them on tax-efficient giving, thus maximizing
the value of charitable giving. Insights – connecting our clients to a global network of experts, both within and outside
UBS (e.g., through insight trips, publications and events with fellow philanthropists, thought leaders and social
entrepreneurs, such as UBS Global Visionaries). Execution – providing clients with flexible options for managing their
philanthropic giving, including structures such as donor-advised funds (DAFs), outcomes financing, emergency relief
funds and our UBS Collectives, and supporting curated programs via the UBS Optimus Foundation network.
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Donor-advised funds
A DAF offers clients an easy, flexible and efficient alternative to setting up their own foundation and can be managed in
line with their usual investment approach. Their charitable donations can be invested within the parameters they select,
such as capital, growth or income, so they can grow their fund to give grants at a later date. UBS offers these services in
Switzerland, Singapore and the UK, with USD 249m in donations in 2022.
UBS Optimus Foundation
UBS Optimus Foundation is a network of foundations globally that connects clients with inspiring programs designed to
make a measurable, long-term difference. It has a 20-year track record and is recognized globally as a philanthropic
thought leader and is focused on incubating impact ventures, scaling impact through partnerships and achieving impact
transparency. The network is a pioneer in the social finance space, through which we leverage solutions to mobilize
private capital in new and more efficient ways. It conducts extensive due diligence and only recommends programs
considered to have the capacity to achieve long-term, measurable impact. UBS also makes matching contributions to the
network, to help our clients’ donations go even further.
Collective impact
The UBS Collectives also utilize an evidence-based approach and bring together philanthropists to pool their funds, share
their expertise and achieve a longer-term impact. The Collectives are a three-year learning journey during which
philanthropists follow a curriculum, network with peers and engage in programs with the goals of preventing family
separation, mitigating climate change and funding programs linked to measurable results. In 2022, USD 4.8m in funding
was raised for this long-term, systems-level change approach.
Emergency relief
In response to urgent relief efforts, in 2022 UBS raised more than USD 25m for the Ukraine Relief Fund, with matched
funding from UBS and XTX Markets bringing the total to more than USD 50m. Over half the funds have been disbursed
to 14 partners providing relief, recovery and resilience services. In 2022, we also launched our Pakistan Relief Fund with
our partners Americares and The Citizens Foundation, which raised USD 1.2m, including UBS matching contributions, to
provide both response and recovery efforts.
UBS Global Visionaries
Through our UBS Global Visionaries program, we aim to create opportunities for clients and prospective clients to connect
with leading social entrepreneurs, and help entrepreneurs focusing on social and environmental issues increase their
impact by expanding their network, building capacity and raising awareness of their work. Since the program started in
2016, we have onboarded and helped 68 entrepreneurs to accelerate their impact.
A third-party evaluation1 conducted in 2022 found that 88% of those entrepreneurs said the program had had a positive
influence on expanding their networks, with 68% creating partnerships from it, 64% agreed that we had increased
awareness of critical global issues and their solutions, 51% agreed that the program had helped them build skills valuable
to delivering their mission, and 48% felt that the program had influenced their fundraising efforts. We have also started
to evaluate how we can maximize the role of the program in terms of the impact of Global Visionaries on the United
Nations Sustainable Development Goals. In 2022, 27% noted this benefit.1
UBS Community Impact
At UBS, we seek to have an impact in local communities. We have a strategic focus on education and the development
of skills, as we believe these topics are where our resources can make the most impact. We believe our long-term
investment in these subjects is central to furthering the economic and social inclusion of those we support through our
activities.
With our Community Impact program, we focus on helping young people and adults to learn and develop skills. We
deliver on our commitment through strategic financial support and employee volunteering that will address social issues
to help further their economic and social inclusion. Through our Community Impact program, in 2022, we:
– supported 370,916 young people and adults in learning and developing skills – our aim is to support 1.5 million young
people and adults by 2025;
– engaged 34% of our global workforce in volunteering.
Direct cash contributions from the firm, including support through our Community Impact program, UBS’s affiliated
foundations in Switzerland and the UBS Foundation of Economics in Society at the University of Zurich, and contributions
to the UBS Optimus Foundation network, amounted to a total of USD 76m in 2022.
UBS’s overall charitable contributions are measured using the industry-leading Business for Societal Impact (B4SI)
framework. This includes cash, employee time and in-kind support.
› Refer to the “Social” section of our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more
information
11 Evaluation led by Wasafiri Consulting in October 2022, based on survey results from 71% (44) of our 62 UBS Global Visionaries and alumni at the time.
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Our focus on sustainability and climate
Our commitment to sustainability starts with our purpose. We know finance has a powerful influence on the world and
we recognize that investments can help create a better world for everyone: a fairer society, a more prosperous economy
and a healthier environment. That is why we partner with our clients to help them mobilize their capital toward a more
sustainable world and why we have put sustainability at the heart of our purpose. We are guided by the goal of being
the financial provider of choice for clients that want to mobilize capital toward the achievement of the United Nations
Sustainable Development Goals (the SDGs) and the orderly transition to a low-carbon economy.
Our Code of Conduct and Ethics
In our Code of Conduct and Ethics (the Code), the Board of Directors (the BoD) and the Group Executive Board (the GEB)
set out the principles and practices that define our ethical standards and the way we do business, which apply to all
aspects of our business. All employees must affirm annually that they have read and will adhere to the Code and other
key policies, supporting a culture where ethical and responsible behavior is part of our everyday operations. In our Code,
we make a commitment to acting with the long term in mind and creating value for clients, employees and shareholders.
We aspire to do our part in creating a fairer, more prosperous society, championing a healthier environment and
addressing inequalities at their root. This ethos underpins our purpose and is in line with our external commitments, such
as our pledge to help making progress toward the SDGs. Following a substantial review in 2021, we made only limited
changes to the Code in 2022, mainly pertaining to clarifications, simplifications and alignment of language.
› Refer to the Code of Conduct and Ethics of UBS, available at ubs.com/code, for more information
Our sustainability and impact governance
Sustainability activities, including climate, are overseen at the highest level of UBS, by the BoD and the GEB, and are
grounded in our Code.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about our
sustainability and impact governance
Board of Directors and Group Executive Board
The BoD is responsible for setting UBS’s values and standards for the purpose of ensuring that the Group’s obligations
to stakeholders are met. Both the Chairman of the BoD and the Group CEO play key roles in safeguarding our reputation
and ensuring we communicate effectively with all of our stakeholders. The BoD’s Corporate Culture and Responsibility
Committee (the CCRC) is the UBS body primarily responsible for corporate culture, responsibility and sustainability. The
CCRC oversees our sustainability and impact strategy and key activities across environmental and social topics, including
climate, nature and human rights. Annually, it considers and approves our firm’s sustainability and impact objectives.
During its six meetings throughout the course of the year, the CCRC also reviews the GEB’s activities in executing our
climate strategy, including our net-zero targets, and, jointly with the BoD’s Risk Committee, evaluates the progress of
our climate risk program. All BoD committees have environmental, social and governance (ESG)-related responsibilities.
The Group CEO has delegated to the GEB Lead for Sustainability and Impact, Suni Harford, the responsibility to lead
reviews of the firm’s sustainability and impact strategy and related objectives, in agreement with fellow GEB members,
and to propose strategy and objectives to the CCRC. The GEB Lead for Sustainability and Impact also co-chairs the firm’s
cross-divisional and cross-functional Sustainability and Climate Task Force, which oversees the implementation of the
firm’s sustainability activities and its climate action plan, including its net-zero program. We manage these annual plans
and goals through our ISO 14001-certified environmental management system, with management accountabilities across
our firm. Senior representatives from across our firm, including from the business divisions, Risk, Compliance and Finance,
attend the task force’s regular meetings.
The GEB also resolves overarching matters relating to sustainability and climate risks, including risk management
framework, policies, and disclosure.
› Refer to “Board of Directors” in the “Corporate governance” section of this report for more information about the CCRC
Group Sustainability and Impact
The Group Sustainability and Impact (GSI) organization supports the GEB Lead for Sustainability and Impact with carrying
out her responsibilities. GSI consists of the Chief Sustainability and Social Impact offices, headed by the Chief
Sustainability Officer (the CSO) and the Head Social Impact, respectively. The CSO is responsible for driving the
implementation of the Group-wide sustainability and impact strategy, including reporting on our progress toward net
zero (and the execution thereof by the business divisions and Group Functions). The Head Social Impact is responsible for
driving and implementing our social impact strategy, including Community Impact, Philanthropy Services and UBS Global
Visionaries. Progress toward the firm’s sustainability and impact strategy and associated targets is reviewed at least once
a year by the GEB and the CCRC.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about our
sustainability and impact governance
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Our sustainability and impact strategy
To help us maximize our impact, we focus on three key areas to drive the sustainability transition: planet, people and
partnerships.
– Planet: Climate is a clear focus for us as we shift toward a lower-carbon future. We have committed to achieving net-
zero greenhouse gas (GHG) emissions from across our business by 2050.
– People: We believe in a diverse, equitable and inclusive society. We are taking action to get there, within our own
workplace and beyond.
– Partnerships: By working in partnership with other thought leaders and standard setters, our goal is to drive change
at a global scale.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about
how UBS is advancing sustainability in the financial sector and beyond
Our approach to climate and nature
Our climate strategy covers two main areas: managing climate-related financial risks and acting for a low-carbon future.
Underpinning these two areas are four strategic pillars.
Climate strategy
Governance
Strategy
Managing climate-related fi nancial risks
Acting for a low-carbon future
Protecting our
clients’ assets
Protecting our
own assets
– Managing climate-
related risks and
opportunities through
our innovative products
and services in
investment, financing
and research
– Limiting our risk appetite
for carbon-related assets
– Estimating our
vulnerability to climate
risks
Reducing our
climate impact
– Sourcing 100% of
our electricity from
renewable sources
– Responsible supply chain
management
Mobilizing
capital
– From private and
institutional clients
– Toward the orderly
transition to a
low-carbon economy
Risks and opportunities
Metrics and targets
We understand the deep interrelationships that exist between climate and nature. Our climate strategy, including our
ambition to achieve net zero, also forms part of our approach toward managing nature-related risks and opportunities.
› Refer to our Climate and Nature Report 2022, available at ubs.com/gri, for a full description of UBS’s approach to climate and
nature
Our approach to sustainable finance
As a global financial institution, we have a role in helping clients direct capital toward the SDGs. Our clients turn to us
for advice on how they can help finance the transition to a low-carbon economy, support sustainable finance, align their
investments with their personal values and better risk manage their portfolios and businesses. They want to take
advantage of these opportunities, while also managing the risks associated with this transformational challenge.
During a year of global geopolitical and economic upheaval, sustainability and sustainable finance remained strategically
important topics for UBS and many of our clients, with a focus on two key areas:
– the implementation of strategic sustainability commitments, for example reaching net-zero GHG emissions across all
our activities by 2050, and
– the ongoing evolution of regulatory guidance designed to prevent greenwashing.
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At UBS, we want to partner with all our clients by providing innovative and effective products and solutions that can
support them in their sustainability transition and deliver on their commitments, where that is their preference. In
particular, we want to support innovation and technological progress.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about our
sustainability and impact strategy and activities
Defining sustainable finance
It is important to set out how we define sustainable finance, as at present there is no global, uniformly accepted definition.
At UBS, sustainable finance means any financial product or service (including both investing and financing solutions) that
aims to explicitly align with and / or contribute to sustainability-related objectives, while targeting market-rate financial
returns.
Sustainability outcomes can occur across a range of topics including goals defined using a reference framework, such as
the SDGs in the United Nations 2030 Agenda for Sustainable Development. As an example, a sustainable investment (SI)
product could invest in companies whose transition plans are aligned with the goal of limiting global warming to 1.5°C
compared with the pre-industrial age or invest with the goal of encouraging companies to adopt such plans.
Our definition is also reflected in our Group’s SI framework, which specifically defines “sustainability focus” and “impact
investing” products. Both categories reflect a defined and explicit sustainability intention of the underlying investment
strategy. This intentionality differentiates them from more “traditional“ investment products, or those that consider ESG
aspects but do not actively and explicitly pursue any specific sustainability objective, such as ESG integration- or
exclusions-only approaches.
Investment approaches
UBS’s definition of sustainable investments
‘Traditional’ investing
Sustainability focus
Impact investing
– No explicit sustainability objectives
– Target market-rate investment
– Target market-rate investment
– Manage sustainability and all risks
related to investment performance
– May use ESG tools, but these do
not drive the strategy
returns
returns
– Have explicit sustainable intentions
or objectives that drive the strategy
– Underlying investments may
contribute to positive sustainability
outcomes through products,
services and / or proceeds
– Have explicit intentions to generate
measurable, verifi able, positive
sustainability outcomes
– Impact attributable to investor
action and / or contribution
Identifying opportunities
UBS has a global and diversified business model. Each client has specific and differentiated sustainable financing, investing
and / or advisory needs. Leveraging the deep expertise of our experienced teams, we work hard to service those needs
in the best way possible. While their needs are diverse, our interactions with our clients follow an established rationale
that starts by building an understanding of the relevance of sustainability for their business and / or investment portfolio.
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Sustainable fi nance opportunities
Analysis
Advice
Action
Assessment
We help clients understand
the relevance of ESG factors
for their business
or portfolio
We provide targeted advice
to our clients on managing
ESG-related risks and / or
capturing ESG-related
opportunities for their specifi c
circumstances
We develop innovative and
individualized sustainable
fi nance products for clients
We give transparent feedback
to clients on non-fi nancial
outcomes achieved with
regard to sustainable
fi nancing and investing
client promises
Research, thought leadership, data, analytics and tools
Sustainable investment
In 2022, we made progress on a number of important investment product initiatives relevant to a broad spectrum of
clients across our business areas. For example:
– we made it easier for private clients to access SI products and services, suited to their individual preferences, e.g.,
through expanded access to our Advice SI and separately managed account (SMA) solutions, and new targeted
sustainable and impact offerings. In line with EU regulations for clients in scope thereof, UBS systematically captures
clients’ preferences when it comes to SI;
– we expanded the range of sustainable and impact funds in public and private markets and exchange-traded funds
available to private, institutional and corporate clients; and
– we continued to provide customized, tailored, and structured investment solutions for private and institutional
investors.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about our
sustainable investing and financing offering, including financing solutions, advisory, and research and insights
Sustainable financing
We develop financing solutions to help our clients transition to a more sustainable future. These solutions can be on-
balance sheet (e.g., green or sustainable loans and mortgages) or off-balance sheet (such as access to debt and equity
capital markets), and also include transaction structuring. Highlights in 2022 included: our Investment Bank facilitating
USD 48bn of green, social, sustainability and sustainability-linked (GSSS) bonds financing through 77 bond deals for our
clients, with a market-leading share of the Swiss franc GSSS bond market; our Personal & Corporate Banking business
launching both UBS Mortgage Energy and UBS Loan Energy, the former to encourage private clients to replace their fossil
fuel heating, either with a more sustainable alternative or by installing a photovoltaic system, and the latter being specially
designed for energy-efficient investment properties. Clients benefit from attractive interest rates and comprehensive
advice for their low-energy properties. In December of 2022, UBS adopted guidelines providing an internal global
standard for all our products in the categories of sustainable lending, sustainable bonds and GHG emissions trading.
During the course of 2023, UBS expects to (re-)assess all its products against these guidelines.
Sustainable investments
USD bn, except where indicated
SSuussttaaiinnaabbllee iinnvveessttmmeennttss11
Sustainability focus2
Impact investing3
TToottaall ssuussttaaiinnaabbllee iinnvveessttmmeennttss44,,55
SSII pprrooppoorrttiioonn ooff ttoottaall iinnvveesstteedd aasssseettss ((%%))
For the year ended
31.12.21
3311..1122..2222
224466..99
2200..77
226677..66
66..88
222.7
28.5
251.2
5.5
31.12.20
127.7
13.1
140.8
3.4
% change from
31.12.21
10.9
(27.4)
6.5
(13.9)
UBS total invested assets
11 We focus our sustainable investment reporting on those investment strategies exhibiting an explicit sustainability intention. 22 Strategies that have explicit sustainable intentions or objectives that drive the strategy.
Underlying investments may contribute to positive sustainability outcomes through products / services / use of proceeds. Examples include Global Wealth Management’s discretionary Manage SI mandate solutions
and Asset Management’s strategies such as its Global Sustainable Equities product. 33 Strategies that have explicit intentions of generating measurable, verifiable and positive sustainability outcomes. Impact
generated is attributable to investor action and / or contributions. Examples include Global Wealth Management’s Oncology Impact funds and Asset Management’s UBS Engage for Impact or UBS Climate Action
funds. 44 In 2022, UBS converted funds to the sustainability focus and impact investing categories, in line with corresponding changes to the funds’ underlying investment policies. The main impact was on sustainability
focus and impact investing strategies in Asset Management of USD 33bn. Further, we aligned the Global Wealth Management and Personal & Corporate Banking reporting of UBS funds and mandates products to
the Asset Management categorization with an impact on sustainable investments of USD 20bn. 55 In 2022, methodology changes related to the application of the Group SI framework resulted in a decrease in
invested assets of USD 10bn across total sustainable investments.
4,187.2
4,596.2
33,,995577..22
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In line with global market developments, at UBS, we continue to grow SI assets under management (AuM) as a share of
total AuM, reaching 6.8% by the end of 2022, compared with 5.5% at the end of 2021. As of 31 December 2022,
UBS’s SI assets (sustainability focus and impact investing) were USD 268bn, compared with USD 251bn at year-end 2021.
Impact investing assets decreased to USD 21bn from USD 29bn, reflecting negative market performance and foreign
currency effects, as well as methodology changes.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for more information about our
sustainable investing and financing offering, including financing solutions, advisory and research and insights
Managing sustainability and climate risks
At UBS, sustainability and climate risk is defined as the risk that UBS negatively impacts, or is impacted by, climate change,
natural capital, human rights, and other environmental, social, governance matters. Sustainability and climate risk may
manifest as credit, market, liquidity and / or non-financial risks for UBS, resulting in potential adverse financial, liability
and / or reputational impacts. These risks extend to the value of investments and may also affect the value of collateral
(e.g., real estate). Climate risks can arise from either changing climate conditions (physical risks) or from efforts to mitigate
climate change (transition risks). Physical and transition risks from a changing climate contribute to a structural change
across economies and, consequently, can affect banks and the financial sector through financial and non-financial
impacts.
Our Sustainability and Climate Risk (SCR) unit (part of Group Risk Control) manages material exposure to sustainability
and climate risks. It also advances our firm-wide SCR initiative to build in-house capacity for the management of
sustainability and climate-related risks.
› Refer to “Sustainability and climate risk” in the “Risk management and control” section of this report
› Refer to Appendix 2 to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for a full
description of our sustainability and climate risk policy framework
Our sustainability goals and progress
We work with a long-term focus on providing appropriate returns to our stakeholders in a responsible manner. We are
committed to providing transparent targets and reporting on the progress made against them. Our aspirational goals, as
set out below, can therefore only partly be compared with what we set out in previous years.
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Our aspirational goals and progress
Our priorities
Our aspirational goals
Our progress in 2022
Planet, people,
partnerships
USD 400bn invested assets in sustainable investments by
2025.
Increased invested assets in sustainable investments to USD 268bn
(compared with USD 251bn in 2021).
Planet
Decarbonization targets for 2030 for financing of the real
estate, fossil fuels, power generation and cement sectors
(from 2020 levels):
Calculated progress against pathways for the real estate (commercial and
residential), fossil fuel and power generation sectors:1
– reduced emissions intensity of UBS’s residential real estate lending
– reduce emissions intensity of UBS’s residential real
portfolio by 8% (end of 2021 vs 2020 baseline);
estate lending portfolio by 42%;
– reduced emissions intensity of UBS’s commercial real estate lending
– reduce emissions intensity of UBS’s commercial real
portfolio by 7% (end of 2021 vs 2020 baseline);
estate lending portfolio by 44%;
– reduced absolute financed emissions associated with UBS loans to fossil
– reduce absolute financed emissions associated with
UBS loans to fossil fuel companies by 71%;
– reduce emissions intensity associated with UBS loans
to power generation companies by 49%; and
– reduce emissions intensity associated with UBS loans
to cement companies by 15%.
Align 20% of AuM to be managed in line with net zero
(Asset Management).2
Achieve net-zero emissions across discretionary client
portfolios by 2050 (Asset Management).3
Achieve net-zero energy emissions resulting from our
own operations (scopes 1 and 2) by 2025; cut energy
consumption by 15% by 2025 (compared with 2020).
Offset historical emissions back to the year 2000 by
sourcing carbon offsets (by year-end 2021) and by
offsetting credit delivery and full retirement in registry (by
year-end 2025).
Engage with key vendors on aiming for net zero by 2035.
fuel companies by 42% (end of 2021 vs 2020 baseline); and
– reduced emissions intensity associated with UBS loans to power
generation companies by 12% (end of 2021 vs 2020 baseline).
Introduction of an additional decarbonization target for the cement sector,
as well as an estimation of the overall financed emissions.
Initiated analysis of revisions to fund documentation and investment
management agreements to align with Asset Management’s net-zero-
aligned frameworks.
Reduced net GHG footprint for scope 1 and 2 emissions by 13% and energy
consumption by 8% (compared with 2021); continued implementation of
the replacement of fossil fuel heating systems and investing in credible
carbon removal projects; achieved 99% renewable electricity coverage
despite challenging market conditions.
Continued to follow up on credit delivery and retirement of sourced
portfolio.
Identified “GHG key vendors” (vendors that collectively account for >50%
of our estimated vendor GHG emissions) and invited the vendors that
accounted for 67% of our annual vendor spend (including all GHG key
vendors) to disclose their environmental performance through CDP’s Supply
Chain Program, with 66% of the invited vendors completing their
disclosures in the CDP platform.
People
30% global female representation at Director level and
above by 2025.
Increased to 27.8% (2021: 26.7%) female representation at Director level
and above.
26% of US roles at Director level and above held by
employees from ethnic minorities by 2025.
Increased to 20.4% (2021: 20.1%) ethnic minority representation at Director
level and above in the US.
26% of UK roles at Director level and above held by
employees from ethnic minorities by 2025.
Increased to 23.0% (2021: 21.3%) ethnic minority representation at Director
level and above in the UK.
Raise USD 1bn in donations to our client philanthropy
foundations and funds and reach 25 million beneficiaries
by 2025 (cumulative for 2021–2025).
Achieved a UBS Optimus Foundation network donation volume of
USD 274m in 2022, totaling USD 436m since 2021 (both figures include UBS
matching contributions).
Support 1.5 million young people and adults to learn and
develop skills through our community impact activities
(2022–2025).
Reached 5.9 million beneficiaries.
Reached 370,916 beneficiaries through strategic community impact
activities.4
Partnerships
Establish UBS as a leading facilitator of discussion,
debate and idea generation.
Co-organized, with the Institute of International Finance, the first Wolfsberg
Forum for Sustainable Finance.
Joined a consortium that is pioneering methods of assessing and maximizing
the GHG reduction potential of energy storage.
Co-founded Carbonplace, a technology platform for the voluntary carbon
market that has the goal of creating a streamlined and transparent market
for our clients.
Drive standards, research and development, and
product development.
Co-led the Taskforce on Nature-related Financial Disclosures’ financial-
sector-specific working group.
Collaboration with two Swiss companies that are pioneering innovative
carbon removal technologies.
Joined the Partnership for Carbon Accounting Financials (PCAF).
11 Refer to the “Environment” section of our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for further information. The inherent one-year time lag between the as-of date of our
lending exposure and the as-of date of emissions can be explained by two factors: corporates disclose their emissions in annual reporting only a few months after the end of a financial year; and specialized third-party
data providers take up to nine months to collect disclosed data and make it available to data users. Consequently, the baselines for our net-zero ambitions are based on year-end 2020 lending exposure and 2019
emissions data. Our 2021 emissions actuals are based on year-end 2021 lending exposure and 2020 emissions data. 22 The 20% alignment goal amounted to USD 235bn at the time of Asset Management’s
commitment in 2021. By 2030, the weighted average carbon intensity of funds is to be 50% below the carbon intensity of the respective 2019 benchmark. 33 The near- and medium-term plans for the achievement
of this goal include our Asset Management business division only. 44 Our Community Impact program has a strategic focus on education and the development of skills.
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Our climate-related metrics and targets
We have developed methodologies that we use to set our climate-related targets and identify climate-related risks and
which underly the metrics that are disclosed in this report. Standard-setting organizations and regulators continue to
provide new or revised guidance and standards, as well as new or enhanced regulatory requirements for climate
disclosures. Our disclosed metrics are based upon data available to us, including estimates and approximations where
actual or specific data is not available. We intend to update our disclosures to comply with new guidance and regulatory
requirements as they become applicable to UBS. Such updates may result in revisions to our disclosed metrics, our
methodologies and related disclosures, which may be substantial, as well as changes to the metrics we disclose.
Our climate targets and ambitions are high-level goals that have been set based on the methodologies, data and
assumptions that we currently use. Changes to these methodologies, data and assumptions may affect our progress
toward intermediate targets and ambitions and the achievability of net zero and other climate goals. Our 2050 net-zero
targets, and related ambitions for scope 3 emissions, have a critical dependency on overall progress across all sectors and
countries toward net-zero carbon emissions that requires substantial governmental action across many jurisdictions. In
the absence of such progress, our goals with respect to scope 3 emissions will not be achievable.
› Refer to our Climate and Nature Report 2022, available at ubs.com/gri, for a full description of our net-zero targets, including
baselines and pathways
Climate-related metrics 2022
Risk management
Carbon-related assets (USD bn)1,2
of which: UBS AG
of which: UBS Switzerland AG
Proportion of total customer lending exposure, gross (%)
Total exposure to climate-sensitive sectors, transition risk (USD bn)2,3,4
of which: UBS AG
of which: UBS Switzerland AG
Proportion of total customer lending exposure, gross (%)
Total exposure to climate-sensitive sectors, physical risk (USD bn)2,3,4
of which: UBS AG
of which: UBS Switzerland AG
Proportion of total customer lending exposure, gross (%)
Opportunities
Number of green, sustainability, and sustainability-linked bond deals5
Total deal value of green, sustainability, and sustainability-linked bond deals (USD bn)5
UBS-apportioned deal value of above (USD bn)
Stewardship – Voting
Number of climate-related resolutions voted upon6
Proportion of supported climate-related resolutions (%)
Own operations (reporting period: July to June)
Net GHG footprint (1,000 metric tons CO2e)7
Change from baseline 2004 (%)
Share of renewable electricity (%)
For the year ended
% change from
3311..1122..2222
31.12.21
31.12.20
31.12.21
3333..88
88..99
2244..66
77..55
2244..99
55..44
1199..33
55..55
3300..00
1111..66
1177..77
66..77
6699
4422..44
88..88
116600
7711..22
36.5
10.1
26.0
8.0
27.3
6.7
20.4
5.9
31.9
13.3
18.2
7.0
98
63.3
13.2
89
78.6
37.1
11.0
25.4
8.6
27.1
7.5
19.2
6.2
35.0
18.3
16.2
8.0
29
19.3
5.7
50
88.0
2255
((9933..00))
9999
30
(92.0)
100
75
(79.0)
85
(7.4)
(11.9)
(5.4)
(8.8)
(19.4)
(5.4)
(6.0)
(12.8)
(2.7)
(29.6)
79.8
(15.4)
11 As defined by the Task Force on Climate-related Financial Disclosures (the TCFD), in its expanded definition published in 2021, UBS defines carbon-related assets through industry-identifying attributes of the firm’s
banking book. UBS further includes the four non-financial sectors addressed by the TCFD, including, but not limited to, fossil fuel extraction, carbon-based power generation, transportation (air, sea, rail, and auto
manufacture), metals production and mining, manufacturing industries, real estate development, chemicals, petrochemicals, and pharmaceuticals, building and construction materials and activities, forestry, agriculture,
fishing, food and beverage production, as well as including trading companies that may trade any of the above (e.g., oil trading or agricultural commodity trading companies). This metric is agnostic of risk rating, and
therefore may include exposures of companies that may be already transitioning or adapting their business models to climate risks, unlike UBS climate-sensitive sectors methodology, which takes a risk-based approach
to defining material exposure to climate impacts. 22 Methodologies for assessing climate-related risks are emerging and may change over time. As the methodologies, tools and data availability improve, we will
further develop our risk identification and measurement approaches, including further and updated geospatial analysis of properties securing financing with UBS (real estate) and better understanding how private
lending (e.g., Lombard) activities may result in direct financial impacts for UBS. Lombard lending rating is assigned based on the average riskiness of loans. 33 Consists of total loans and advances to customers and
guarantees, as well as irrevocable loan commitments (within the scope of expected credit loss), and is based on consolidated and standalone IFRS numbers. Metrics are calculated and restated based on 2022
methodology, across three years of reporting, 2020–2022. 44 Climate-related risks are scored between 0 and 1, based upon sustainability and climate risk transmission channels, as outlined in Appendix 3 to our
Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors. Risk ratings represent a range of scores across five risk-rating categories: low, moderately low, moderate, moderately high, and
high. The climate-sensitive exposure metrics are determined based upon the top three out of five rated categories: high to moderate. 55 Such as, but not limited to, Investment Bank Global Banking bonds issued
under the voluntary ICMA Green Bond Principles, Sustainability Bond Principles, and Sustainability-Linked Bond Principles. The principles include a recommendation that the issuer appoints an external review provider
to undertake an independent external review (e.g., second-party opinion). This is consistent with market practice. 66 This excludes proposals related to Japanese companies that included changes to the companies’
articles of association. The 2022 and 2021 numbers include shareholder and management proposals, the 2020 number shareholder proposals only. This reflects the increasingly common market practice of climate-
related proposals being presented by management. 77 Net greenhouse gas (GHG) footprint equals gross GHG emissions minus GHG reductions from renewable electricity and CO2e offsets (gross GHG emissions
include: direct GHG emissions by UBS; indirect GHG emissions associated with the generation of imported / purchased electricity (grid average emission factor), heat or steam; and other indirect GHG emissions
associated with business travel, paper consumption and waste disposal). A breakdown of our GHG emissions (scopes 1, 2 and 3) is provided in Appendix 3 to our Sustainability Report 2022, available under “Annual
reporting” at ubs.com/investors.
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Reporting to our stakeholders on our sustainability strategy and activities
Further information about our sustainability efforts and commitments is provided in our Sustainability Report 2022,
available under “Annual reporting” at ubs.com/investors. The content of our Sustainability Report 2022 has been
prepared in accordance with Global Reporting Initiative (GRI) standards and with the German rules implementing the EU
Directive on disclosure of non-financial and diversity information (2014/95/EU). We also disclose data on climate-related
financial risks, pertaining to the Swiss Financial Market Supervisory Authority’s (FINMA’s) disclosure requirements as set
out in appendix 5 to FINMA Circular 2016/1 “Disclosure – banks.” Our reporting on sustainability has been reviewed on
a limited assurance basis by Ernst & Young Ltd against the GRI standards.
› Refer to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for an overview of non-
financial disclosures in accordance with the German rules implementing EU Directive 2014/95 and for information about UBS AG
and UBS Europe SE disclosures pursuant to Art. 8 of the EU Taxonomy Regulation
Regulation and supervision
As a financial services provider based in Switzerland, UBS is subject to consolidated supervision by the Swiss Financial Market
Supervisory Authority (FINMA). Our entities are also regulated and supervised by authorities in each country where they
conduct business. Through UBS AG and UBS Switzerland AG, both licensed as banks in Switzerland, UBS may engage in a
full range of financial services activities in Switzerland and abroad, including personal banking, commercial banking,
investment banking and asset management.
As a global systemically important bank (a G-SIB), as designated by the Financial Stability Board, and a systemically
relevant bank (an SRB) in Switzerland, we are subject to stricter regulatory requirements and supervision than most other
Swiss banks.
› Refer to the “Our evolution” section of this report for more information
› Refer to the “Regulatory and legal developments” and “Risk factors” sections of this report for more information
Regulation and supervision in Switzerland
Supervision
UBS Group AG and its subsidiaries are subject to consolidated supervision by FINMA under the Swiss Banking Act and
related ordinances, which impose standards for matters such as minimum capital, liquidity, risk concentration and internal
organization standards. 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 (SIB), we are subject to capital and total loss-absorbing
capacity (TLAC) requirements that are based on both risk-weighted assets and the leverage ratio denominator, and are
among the most stringent in the world. We are also subject to Swiss SIB liquidity requirements and to minimum long-
term funding requirements.
› Refer to the “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 coverage ratio” in the “Capital, liquidity and funding, and balance sheet” section of this report for more
information about liquidity coverage 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 both subject to the Bank Holding Company Act,
pursuant to which the Federal Reserve Board has supervisory authority over the US operations of both UBS Group AG and
UBS AG.
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 is registered as a
swap dealer with the Commodity Futures Trading Commission (the CFTC) and as a securities-based swap dealer with the
Securities and Exchange Commission (the SEC).
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UBS Americas Holding LLC, the intermediate holding company for our operations in the US outside of the UBS AG branch
network, as required under the Dodd–Frank Act, 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 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, 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 in London, which serves as a global booking center for our Investment Bank. Our
regulated subsidiaries in the UK that provide asset management services are authorized and regulated mainly by the FCA,
with one entity, UBS Asset Management Life Ltd, being also subject to the authority of the PRA.
Regulation and supervision in Germany / the EU
UBS Europe SE, headquartered in Germany, is subject to the direct supervision of the European Central Bank, as well as
to continued conduct, consumer protection and anti-money-laundering-related supervision by the German Federal
Financial Supervisory Authority (the 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, Italy, Luxembourg, the
Netherlands, Poland, Spain, Sweden and Switzerland, and is subject to conduct supervision by authorities in all those
countries.
Regulation and supervision in Asia Pacific
We operate in 13 locations in Asia Pacific and are subject to regulation and supervision by local financial regulators. Our
regional hubs are in Singapore and the Hong Kong SAR.
In Singapore, we conduct our operations primarily through UBS AG Singapore Branch and UBS Securities Pte. Ltd., which
are supervised by the Monetary Authority of Singapore and the Singapore Exchange.
UBS AG Hong Kong Branch is primarily supervised by the Hong Kong Monetary Authority. UBS Securities Hong Kong
Limited, UBS Securities Asia Limited and UBS Asset Management (Hong Kong) Limited are primarily supervised by the
Hong Kong Securities and Futures Commission. In addition, UBS Securities Hong Kong Limited is supervised by the Hong
Kong Stock Exchange and the Hong Kong Futures Exchange.
In mainland China, UBS has multiple licenses to operate its core business lines and the various UBS entities are subject to
regulation by a number of different government agencies. The People’s Bank of China oversees the macro capital markets
policies and ensures coordinated supervisory approaches by the China Banking and Insurance Commission, the China
Securities and Regulatory Commission, and the exchanges.
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
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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 be stabilized otherwise.
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.
FINMA evaluates the recovery and resolution plans of Swiss SRBs on a regular basis. In its most recent assessment
published in March 2022, FINMA re-confirmed that our Swiss emergency plan is effective and that our recovery plan was
approved. Furthermore, FINMA acknowledged the continued progress we made toward achieving global resolvability.
UBS’s crisis management framework
Our 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 such activation, based on
the GRP’s risk indicators.
– FINMA has the authority to determine whether the point of non-viability (PONV) as defined by Swiss law has been
reached and, as part of the resolution strategy, 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.
UBS crisis management framework
Incident management
Risk and crisis management
Recovery and resolution
Governance body
Execution body
Group Crisis Task Force
GEB and BoD
Incident management teams
Global task forces
Recovery task forces
Support / infrastructure
Business as usual
Business continuity management teams
s
s
e
r
t
s
f
o
l
e
v
e
L
Plans
Monitoring and early-
warning indicators
Crisis
management
protocols and
playbooks
Contingency
funding plans
Recovery
plans
Resolution
strategies
Point of non-viability
Operational risk
framework triggers
Recovery
triggers
Liquidity
triggers
Scale of response needed
Recovery
Resolution
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Global Recovery Plan
The GRP provides a tool to restore financial strength if UBS comes under severe capital and 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 into resolution. The SPE bail-in strategy would involve writing down
the Group’s remaining equity and additional tier 1 and tier 2 instruments, as well as bail-in of total TLAC-eligible senior
unsecured bonds at the UBS Group AG level. An internal recapitalization of undercapitalized subsidiaries would be made
simultaneously with losses transmitted to UBS AG and, ultimately, UBS Group AG. Post-resolution restructuring measures
could include disposal and winding 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 holding UBS Switzerland AG as a
separate legal entity and maintaining sufficient capital and liquidity to ensure its continued operation. FINMA considers
the plan to be effective.
The US resolution plan sets out the steps that could be taken to resolve the UBS Americas Holding LLC group if it suffered
material financial distress and the 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 down-streaming financial resources to subsidiaries to facilitate
orderly wind-down or disposal of businesses.
UBS Europe SE develops a local recovery plan annually based on European Central Bank (ECB) requirements, and
resolution planning information and capabilities based on Single Resolution Board requirements. On the basis of such
information the Internal Resolution Team (IRT), composed of members of the Single Resolution Board, produces a
resolution plan for UBS Europe SE.
Other local recovery and resolution plans exist for various Group entities and jurisdictions.
Regulatory and legal developments
Developments regarding prudential matters
In March 2022, the Swiss Financial Market Supervisory Authority (FINMA) presented its annual assessment of the recovery
and resolution plans of systemically important financial institutions in Switzerland as part of the too-big-to-fail framework.
In its report, FINMA acknowledged the further progress that UBS has made with regard to its global resolvability by
significantly reducing the remaining obstacles to the implementation of its resolution strategy and making further
improvements to its recovery plans. FINMA considered UBS’s global recovery plan and Swiss emergency plan to be
effective, while identifying certain areas for further improvement, which UBS is in the process of addressing.
In parallel, the Swiss Federal Council announced the key parameters for a public liquidity backstop in conjunction with
the revision of the Swiss Liquidity Ordinance. The liquidity backstop would enable the Swiss government and the Swiss
National Bank to support the liquidity of a Swiss systemically important bank (SIB) in the process of resolution. The
introduction of the backstop is intended to increase the confidence of market participants in the ability of SIBs to become
successfully recapitalized and remain solvent in a crisis situation. The Swiss Federal Department of Finance (the FDF) is
expected to issue a public consultation by mid-2023.
In July 2022, the revision of the Swiss Liquidity Ordinance became effective, which increases the regulatory minimum
liquidity requirements for SIBs from 1 January 2024. The specific increase for UBS remains uncertain pending supervisory
guidance from FINMA, which is expected to be communicated to the firm in the autumn of 2023. Related new and
revised regulatory reporting requirements became effective from the fourth quarter of 2022 onward.
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In November 2022, the Swiss Federal Council adopted the amendments to the Banking Act and the Banking Ordinance,
which entered into force as of 1 January 2023. The amendments enact insolvency provisions for banks into statutory law
and strengthen the deposit insurance framework. They also replace the current resolvability discount on the gone concern
capital requirements for SIBs, including UBS, with a reduced base gone concern capital requirement. In addition, FINMA
has the authority to impose a surcharge of up to 25% of the base gone concern capital requirement should obstacles to
a SIB’s resolvability be identified in future resolvability assessments. We currently expect that our total gone concern
requirements will remain substantially unchanged in the first quarter of 2023 because of these changes.
In December 2022, the Swiss State Secretariat for International Finance changed the expected date on which the final
Basel III guidelines are to enter into force, from 1 July 2024 to 1 January 2025. As a result, the Swiss implementation
timeline would be aligned to the currently expected implementation timeline in the EU. We currently estimate that the
revised Basel III framework would lead to a further net increase in risk-weighted assets (RWA) of around USD 12bn,
before taking into account mitigating actions and not reflecting the impact of the output floor, which is phased in over
time. Our estimate includes the finalization of the Basel III framework, as well as the Fundamental Review of the Trading
Book, based on our current understanding of the relevant standards. It may change as a result of new or updated
regulatory interpretations, appropriate conservatism in model calibration, the implementation of Basel III standards into
national law, changes in business growth, market conditions and other factors. The final degree of alignment between
the Swiss implementation and those in other jurisdictions, particularly those regarding the treatment of historical
operational losses, remains uncertain at this stage.
In the US, the Securities and Exchange Commission (the SEC) has proposed a number of significant new and revised
regulations, including, among others, proposals that would significantly change order execution rules in US public equity
markets and new disclosure requirements relating to climate, cybersecurity and share repurchases, as well as changes
relating to investment companies and investment advisors. On 15 February 2023, the SEC approved rule changes to
shorten the settlement cycle for US markets to trade date +1, with the compliance date set as 28 May 2024.
US banking regulators are expected to adopt rules that would substantially change how banks’ service to low-income
and underserved communities is evaluated under the Community Reinvestment Act, which, if adopted as currently
proposed, would change measurement of this obligation for UBS Bank USA. The regulators further propose regulations
to implement the remaining Basel III capital requirements, including the Fundamental Review of the Trading Book
requirements. These requirements, when final, will affect UBS Americas Holding LLC.
The above proposals from the SEC and the US banking regulators represent a significant regulatory agenda, which, if
completed in the near future, would likely require significant resources to implement.
Corporate taxation in Switzerland and the US
In December 2021, the Organisation for Economic Co-operation and Development (the OECD) issued Global Anti-Base
Erosion Rules under the Pillar 2 framework. To address this, the Swiss Federal Council launched the consultation of the
ordinance on the national implementation of a global minimum corporate tax rate in August 2022. The Federal Council
has proposed a minimum tax rate of 15% for Swiss firms with global earnings above EUR 750m from January 2024. The
OECD model rules will be transformed into Swiss national law following a constitutional amendment, which is subject to
a mandatory referendum, expected by June 2023. We do not expect the proposed implementation of global minimum
taxation in Switzerland to materially impact our effective tax rate.
As part of the Inflation Reduction Act (the IRA) passed by the US Congress in August 2022, a new corporate alternative
minimum tax (CAMT) was introduced, with an effective date of 1 January 2023. CAMT is calculated as 15% of an entity’s
consolidated financial statement profits, without taking into account pre-2019 tax loss carry-forwards. As a result, the
Group is expected to incur significant US current tax expenses, although these will be offset by the recognition of
equivalent benefits in respect of deferred tax assets. There is no change to the Group’s effective tax rate. CAMT will
temporarily defer the accretion of profits to the Group’s common equity tier 1 (CET1) capital, but the amount of such
deferral is expected to be recaptured in the future through the use of CAMT credits. The 2022 impact on the accretion
of CET1 capital would have been around USD 250m.
Sanctions related to the Russia–Ukraine war
During 2022, the Swiss Federal Council adopted the EU sanctions against Russia. Recently issued measures provide,
among other things, a legal basis for the introduction of price caps for Russian crude oil and petroleum, and include a
ban on the provision of certain services to the Russian government and Russian companies. UBS’s sanctions programs
are designed to comply with sanctions across multiple jurisdictions, including those imposed by the United Nations,
Switzerland, the EU, the UK and the US.
Developments regarding environmental, social and governance matters
In 2022, environmental, social and governance (ESG) matters continued to evolve rapidly across different jurisdictions.
In June 2022, two new self-regulation minimum requirements were issued by the Swiss Bankers Association. One
requirement sets standards for the consideration of sustainability criteria in the investment advisory process and the other
regulates the mortgage advisory process. In parallel, the Swiss Federal Council launched the Swiss Climate Scores, which
consist of six indicators that provide transparency regarding climate-related information, such as carbon emissions and
the implied temperature increase of a portfolio.
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In September 2022, the Swiss Parliament adopted a new federal law on climate protection, including provisions related
to emission-reduction pathways and interim targets. The law provides the legal basis for measures to support the
transition to net zero in different economic sectors, including the financial sector. Subject to a referendum that will take
place in June 2023, the new law is expected to enter into force in 2024.
The Swiss Federal Council adopted a revised ordinance on climate-related disclosures in November 2022, which will be
mandatory for large companies domiciled in Switzerland as of 1 January 2024. The ordinance makes reference to the
recommendations of the Task Force on Climate-related Financial Disclosures (the TCFD) and sets disclosure requirements
related to the plans for the transition to net zero and regarding climate-related impacts on a company’s business activities.
In parallel, FINMA has issued guidance on disclosures of climate-related financial risks and announced another review of
climate-related disclosures in the course of 2023.
In December 2022, the Swiss Federal Council published a report on sustainability in the financial sector, in which it
defined 15 measures planned to be implemented in the years 2023 to 2025. The measures aim to, among other things,
ensure that more and better sustainability data is available from all sectors of the economy, in order to increase overall
transparency. The Swiss government also adopted a position on greenwashing, stating that financial products or services
should only be advertised as being sustainable if they are aligned with or contribute to at least one of the goals of the
wider sustainability frameworks, such as the United Nations Sustainable Development Goals.
In January 2023, FINMA provided further guidance on the developments regarding the management of climate risks.
FINMA reiterated its expectation that supervised institutions, including UBS, will establish adequate frameworks for
managing climate-related financial risks that are adapted to the respective risk profile of the institution. In this context,
FINMA expects the supervised financial institutions to proactively engage with the recommendations and guidance
provided by international bodies, such as the BCBS and its Principles for the Effective Management and Supervision of
Climate-Related Financial Risks issued in June 2023, as well as relevant best practices in the market, and to further develop
their tools and processes where necessary.
In April 2022, the SEC proposed rules on climate-related disclosures. The proposed rules would require qualitative
disclosures on climate risk management processes inclusive of governance, risk identification and scenario analyses, and
quantitative disclosures on greenhouse gas emissions and financial statement impacts.
The European Commission (the EC) proposed draft legislation on corporate sustainability due diligence in February 2022,
requiring companies to identify and, where necessary, prevent, end or mitigate adverse impacts of their activities on
human rights and the environment. The EC also published a consultation aiming to gain a better understanding of the
functioning of ESG ratings provided by specialized rating agencies.
In November 2022, the EU finalized the Corporate Sustainability Reporting Directive, which amends the reporting
requirements of the 2014 Non-Financial Reporting Directive for all large companies and all companies listed on regulated
markets in the EU. It requires the first companies, including UBS, to provide detailed information about sustainability
matters in their annual financial reports from the 2024 fiscal year onward, including the impact of their business activities
on sustainability matters and the influence of sustainability factors (e.g., climate change or human rights issues) on their
business model, outlook and operations. The Swiss Federal Council decided to review the impact of the EU rules on
Switzerland with a consultation planned for July 2024 at the latest.
On a global level, the International Sustainability Standards Board (the ISSB) launched a consultation in March 2022 on
two of its proposed standards: one defining general sustainability-related disclosure requirements and the other
specifying climate-related disclosure requirements. Based on the results of this consultation, the ISSB decided to adopt
disclosure standards on greenhouse gas emissions, to introduce scenarios for reporting on climate resilience and to
identify climate-related risks and opportunities. The ISSB is expected to finalize its standards by June 2023.
We expect to implement the standards and requirements that are applicable to us by their respective due dates.
FINMA revision of Circular 2008/21 “Operational risks and resilience – banks”
In December 2022, FINMA issued a revised “Operational risks and resilience – banks” circular that incorporates the BCBS’s
new Principles on Operational Resilience into the FINMA framework, including information and communication
technology risk, cyber risk, critical data risk, business continuity management, cross-border business service risk, and the
continuation of critical services during resolution and recovery. A two-year transition period has been granted for the
implementation of the requirements on ensuring operational resilience, with the first elements on critical functions and
disruption tolerance required to be in place by 1 January 2024 and the remaining elements in phases until 1 January
2026.
Swiss Federal Council approval of the revised Anti-Money Laundering Act
In August 2022, the Swiss Federal Council revised the Swiss Anti-Money Laundering Act and amended the Anti-Money
Laundering Ordinance, which became effective on 1 January 2023. Among other things, the revised provisions will affect
reporting requirements, as well as requirements to periodically review all clients and client data.
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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.
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
may therefore reduce transaction-based income and may also impede our ability to manage risks.
Geopolitical events: For example, the Russia–Ukraine war has led to one of the largest humanitarian crises in decades,
with millions of people displaced, a mass exodus of businesses from Russia, and heightened volatility across global
markets. In addition, as a result of the war, several jurisdictions, including the US, the EU, the UK, Switzerland and others,
have imposed extensive sanctions on Russia and Belarus and certain Russian and Belarusian entities and nationals, as well
as the Russian Central Bank. Among others, the financial sanctions include barring certain Russian banks from using the
Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system, asset freezes for sanctioned
individuals and corporations, limits on financial transactions with sanctioned entities and individuals, and limitation of
deposits in the EU and Switzerland from Russian persons not entitled to residency in the European Economic Area (the
EEA) or Switzerland. The scale of the conflict and the speed and extent of sanctions may produce many of the effects
described in the paragraph above, including in ways that cannot now 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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COVID-19 pandemic: The COVID-19 pandemic, the governmental measures taken to manage it, and related effects, such
as labor market displacements, supply chain disruptions, and inflationary pressures, have adversely affected, and may still
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, as well as significant disruptions in certain
regional real estate markets, increased unemployment, increased credit and counterparty risk, and operational challenges.
While in most jurisdictions the pandemic-related governmental measures were reversed, resurgence of the pandemic,
ineffectiveness of vaccines and continuance or imposition of new pandemic control measures may result in additional
adverse effects on the global economy negatively affecting UBS’s results of operations and financial condition. Should
inflationary pressures or other adverse global market conditions persist, or should the pandemic lead to additional
economic or market disruptions, we may experience 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 UBS experienced in the second quarter of 2022.
These factors and other consequences of the COVID-19 pandemic may negatively affect our financial condition, including
possible constraints on capital and liquidity, as well as a higher cost of capital, and possible downgrades to our credit
ratings.
The extent to which the pandemic, the ongoing Russia–Ukraine war, and 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 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, 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 EEA, which represent Switzerland’s largest export market. We have exposures related to real estate in various
countries, including a substantial Swiss mortgage portfolio. Although we believe this portfolio is prudently managed, we
could nevertheless be exposed to losses if a substantial deterioration in the Swiss real estate market were to occur.
As we experienced in 2020, under the IFRS 9 expected credit loss (ECL) regime, credit loss expenses may increase rapidly
at the onset of an economic downturn as a result of higher levels of credit impairments (stage 3), as well as higher ECL
from stages 1 and 2. Substantial increases in ECL could exceed expected loss for regulatory capital purposes and adversely
affect our common equity tier 1 (CET1) capital and regulatory capital ratios.
Interest rate trends and changes could negatively affect our financial results
UBS’s businesses are sensitive to changes in interest rate trends. A prolonged period of low or negative interest rates,
particularly in Switzerland and the Eurozone, adversely affected the net interest income generated by UBS’s Personal &
Corporate Banking and Global Wealth Management businesses prior to 2022. Actions that UBS took to mitigate adverse
effects on income, such as the introduction of selective deposit fees or minimum lending rates, contributed to outflows
of customer deposits (a key source of funding for UBS), net new money outflows and a declining market share in its
Swiss lending business.
During 2022, interest rates increased sharply in the US and most other markets, including a shift from negative to positive
central bank policy rates in the Eurozone and Switzerland, as central banks responded to higher inflation. Higher interest
rates generally benefit UBS’s net interest income. However, as returns on alternatives to deposits increase with rising
interest rates, such as returns on money market funds, UBS has 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, particularly in the US, where rates have rapidly increased. Customer deposit outflows may require UBS to
obtain alternative funding, which would likely be more costly than customer deposits.
Our shareholders’ equity and capital are also affected by changes in interest rates.
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Currency fluctuation may have an adverse effect on our profits, balance sheet and regulatory capital
We are subject to currency fluctuation risks. Although our change from the Swiss franc to the US dollar as our Group
presentation currency in 2018 reduces our exposure to currency fluctuation risks with respect to the Swiss franc, a
substantial portion of our assets and liabilities are denominated in currencies other than the US dollar. Additionally, 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 the amount of capital and the capital
ratio. Accordingly, changes in foreign exchange rates may adversely affect our profits, balance sheet, and capital, leverage
and liquidity coverage ratios.
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. The extent of our financial exposure to these
and other matters is material and could substantially exceed the level of provisions that we have established. We are not
able to predict the financial and non-financial consequences these matters may have when resolved.
We may be subject to adverse preliminary determinations or court decisions that may negatively affect public perception
and our reputation, result in prudential actions from regulators, and cause us to record additional provisions for such
matters even when we believe we have substantial defenses and expect to ultimately achieve a more favorable outcome.
This risk is illustrated by the award of aggregate penalties and damages of EUR 4.5bn by the court of first instance in
France. This award was reduced to an aggregate of EUR 1.8bn by the Court of Appeal, and UBS has further appealed
this judgment.
Resolution of regulatory proceedings may require 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. Failure to obtain such
waivers, or any limitation, suspension or termination of licenses, authorizations or participations, could have material
adverse consequences for us.
Our settlements with governmental authorities in connection with foreign exchange, London Interbank Offered Rates
(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 the LIBOR-related, foreign exchange and precious metals regulatory resolutions. We have also
undertaken extensive efforts to implement new regulatory requirements and meet heightened expectations.
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.
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 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. In addition, 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. This could
put Swiss banks, such as UBS, at a disadvantage when competing with peer financial institutions subject to more lenient
regulation or 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.
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Resolvability and resolution and recovery planning: We have moved significant operations into subsidiaries to improve
resolvability and meet other regulatory requirements, and this has resulted in substantial implementation costs, increased
our capital and funding costs and reduced operational flexibility. For example, we have transferred all of our US
subsidiaries under a US intermediate holding company to meet US regulatory requirements, and have transferred
substantially all the operations of Personal & Corporate Banking and Global Wealth Management booked in Switzerland
to UBS Switzerland AG to improve resolvability.
These changes create operational, capital, liquidity, funding and tax inefficiencies. Our operations in subsidiaries are
subject to local capital, liquidity, stable funding, capital planning and stress testing requirements. These requirements
have resulted in increased capital and liquidity requirements in affected subsidiaries, which limit our operational flexibility
and negatively affect our ability to benefit from synergies between business units and to distribute earnings to the Group.
Under the Swiss too-big-to-fail (TBTF) framework, we are required to put in place viable emergency plans to preserve the
operation of systemically important functions in the event of a failure. Moreover, under this framework and similar
regulations in the US, the UK, the EU and other jurisdictions in which we operate, we are required to prepare credible
recovery and resolution plans detailing the measures that would be taken to recover in a significant adverse event or in
the event of winding down the Group or the operations in a host country through resolution or insolvency proceedings.
If a recovery or resolution plan that we produce is determined by the relevant authority to be inadequate or not credible,
relevant regulation may permit the authority to place limitations on the scope or size of our business in that jurisdiction,
or oblige us to hold higher amounts of capital or liquidity or to change our legal structure or business in order to remove
the relevant impediments to resolution.
Capital and prudential standards: As an internationally active Swiss systemically relevant bank (an SRB), 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.
We expect our risk-weighted assets (RWA) to further increase as the effective date for additional capital standards
promulgated by the Basel Committee on Banking Supervision (the BCBS) draws nearer.
Increases in capital and liquidity standards could significantly curtail our ability to pursue strategic opportunities or to
return capital to shareholders.
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 SEC Regulation Best Interest, which is intended to enhance and clarify the duties of
brokers and investment advisers to retail customers, 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 experienced cross-border outflows over a number of years as a result of heightened focus by fiscal authorities on
cross-border investment and fiscal amnesty programs, in anticipation of the implementation in Switzerland of the global
automatic exchange of tax information, and as a result of the measures UBS has implemented in response to these
changes. Further changes in local tax laws or regulations and their enforcement, additional cross-border tax information
exchange regimes, national tax amnesty or enforcement programs or similar actions may affect our clients’ ability or
willingness to do business with us and could result in additional cross-border outflows.
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If we experience financial difficulties, FINMA has the power to open restructuring or liquidation proceedings or impose
protective measures in relation to UBS Group AG, UBS AG or UBS Switzerland AG, and such proceedings or measures
may have a material adverse effect on our shareholders and creditors
Under the Swiss Banking Act, FINMA is able to exercise broad statutory powers with respect to Swiss banks and Swiss
parent companies of financial groups, such as UBS Group AG, UBS AG and UBS Switzerland AG, if there is justified
concern that the entity is over-indebted, has serious liquidity problems or, after the expiration of any relevant deadline,
no longer fulfills capital adequacy requirements. Such powers include ordering protective measures, instituting
restructuring proceedings (and exercising any Swiss resolution powers in connection therewith), and instituting
liquidation proceedings, all of which may have a material adverse effect on shareholders and creditors or may prevent
UBS Group AG, UBS AG or UBS Switzerland AG from paying dividends or making payments on debt obligations.
UBS would have limited ability to challenge any such protective measures, and creditors and shareholders would also
have limited ability under Swiss law or in Swiss courts to reject them, seek their suspension, or challenge their imposition,
including measures that require or result in the deferment of payments.
If restructuring proceedings are opened with respect to UBS Group AG, UBS AG or UBS Switzerland AG, the resolution
powers that FINMA may exercise include the power to: (i) transfer all or some of the assets, debt and other liabilities, and
contracts of the entity subject to proceedings to another entity; (ii) stay for a maximum of two business days (a) the
termination of, or the exercise of rights to terminate, netting rights, (b) rights to enforce or dispose of certain types of
collateral or (c) rights to transfer claims, liabilities or certain collateral, under contracts to which the entity subject to
proceedings is a party; and / or (iii) partially or fully write down the equity capital and regulatory capital instruments and,
if such regulatory capital is fully written down, write down or convert into equity the other debt instruments of the entity
subject to proceedings. Shareholders and creditors would have no right to reject, or to seek the suspension of, any
restructuring plan pursuant to which such resolution powers are exercised. They would have only limited rights to
challenge any decision to exercise resolution powers or to have that decision reviewed by a judicial or administrative
process or otherwise.
Upon full or partial write-down of the equity and regulatory capital instruments of the entity subject to restructuring
proceedings, the relevant shareholders and creditors would receive no payment in respect of the equity and debt that is
written down, the write-down would be permanent, and the investors would likely not, at such time or at any time
thereafter, receive any shares or other participation rights, or be entitled to any write-up or any other compensation in
the event of a potential subsequent recovery of the debtor. If FINMA orders the conversion of debt of the entity subject
to restructuring proceedings into equity, the securities received by the investors may be worth significantly less than the
original debt and may have a significantly different risk profile. In addition, creditors receiving equity would be effectively
subordinated to all creditors of the restructured entity in the event of a subsequent winding up, liquidation or dissolution
of the restructured entity, which would increase the risk that investors would lose all or some of their investment.
FINMA has significant discretion in the exercise of its powers in connection with restructuring proceedings. Furthermore,
certain categories of debt obligations, such as certain types of deposits, are subject to preferential treatment. As a result,
holders of obligations of an entity subject to a Swiss restructuring proceeding may have their obligations written down
or converted into equity even though obligations ranking on par with such obligations are not written down or converted.
Developments in sustainability, climate, environmental and social standards and regulations may affect our business
and impact our ability to fully realize our goals
We have set ambitious goals for environmental, social and governance (ESG) matters. These goals include our ambitions
for environmental sustainability in our operations, including carbon emissions, in the business we do with clients and in
products that we offer. They also include goals or ambitions for diversity in our workforce and supply chain, and support
for the United Nations Sustainable Development Goals. 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, and regulatory taxonomies and disclosure obligations addressing these
matters are relatively immature and are rapidly evolving. In many cases, goals and standards are defined at a high level
and can be subject to different interpretations. 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 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 aspirations. 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.
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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 UBS is considered as discriminating against companies based on ESG
considerations, or if further anti-ESG rules are developed or broadened.
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 International Financial Reporting Standards (IFRS).
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 the US relating to residential mortgage-backed securities 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 or interpretations thereof may cause future reported results and financial position to differ from current
expectations, or historical results to differ from those previously reported due to the adoption of accounting standards
on a retrospective basis. Such changes may also affect our regulatory capital and ratios. For example, the introduction of
the ECL regime under IFRS 9 in 2018 fundamentally changed how credit risk arising from loans, loan commitments,
guarantees and certain revocable facilities is accounted for. Under the ECL regime, credit loss expenses may increase
rapidly at the onset of an economic downturn as a result of higher levels of credit impairments (stage 3), as well as higher
ECL from stages 1 and 2, only gradually diminishing once the economic outlook improves. As we observed in 2020, this
effect may be more pronounced in a deteriorating economic environment. Substantial increases in ECL could exceed
expected loss for regulatory capital purposes and adversely affect our CET1 capital and regulatory capital ratios.
We may be unable to maintain our capital strength
Capital strength enables us to grow our businesses and absorb increases in regulatory and capital requirements. It
reassures our clients and stakeholders, allows us to maintain our capital return policy and contributes to our credit ratings.
Our capital and leverage ratios are driven primarily by RWA, the leverage ratio denominator and eligible capital, all of
which may fluctuate based on a number of factors, some of which are outside of our control. 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. The results of our businesses may be adversely affected by events arising from other risk factors described
herein. In some cases, such as litigation and regulatory risk and operational risk events, losses may be sudden and large.
These risks could reduce the amount of capital available for return to shareholders and hinder our ability to achieve our
capital returns target of a progressive cash dividend coupled with a share repurchase program.
Our eligible capital may be reduced by losses recognized within net profit or other comprehensive income. Eligible capital
may also be reduced for other reasons, including acquisitions that change the level of goodwill, changes in temporary
differences related to DTAs included in capital, adverse currency movements affecting the value of equity, prudential
adjustments that may be required due to the valuation uncertainty associated with certain types of positions, changes in
regulatory interpretations on the inclusion or exclusion of items contributing to our shareholders equity in regulatory
capital, and changes in the value of certain pension fund assets and liabilities or in the interest rate and other assumptions
used to calculate the changes in our net defined benefit obligation recognized in other comprehensive income.
RWA are driven by our business activities, by changes in the risk profile of our exposures, by changes in our foreign
currency exposures and foreign exchange rates, and by regulation. For instance, substantial market volatility, a widening
of credit spreads, adverse currency movements, increased counterparty risk, deterioration in the economic environment
or increased operational risk could result in an increase in RWA. Changes in the calculation of RWA, the imposition of
additional supplemental RWA charges or multipliers applied to certain exposures and other methodology changes, as
well as the finalization of the Basel III framework and Fundamental Review of the Trading Book promulgated by the
BCBS, which are expected to increase 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 leverage ratio denominator is driven by, among other things, the level of client
activity, including deposits and loans, foreign exchange rates, interest rates and other market factors. Many of these
factors are wholly or partly outside of our control.
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The effect of taxes on our financial results is significantly influenced by tax law changes and reassessments of our
deferred tax assets
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 in the US federal corporate tax rate.
Furthermore, based on prior years’ tax losses, we have recognized DTAs reflecting the probable recoverable level based
on future taxable profit as informed by our business plans. If our performance is expected to produce diminished taxable
profit in future years, particularly in the US, we may be required to write down all or a portion of the currently recognized
DTAs through the income statement in excess of anticipated amortization. This would have the effect of increasing our
effective tax rate in the year in which any write-downs are taken. Conversely, if we expect the performance of entities in
which we have unrecognized tax losses to improve, particularly in the US or the UK, we could potentially recognize
additional DTAs. The effect of doing so would be to reduce our effective tax rate in years in which additional DTAs are
recognized and to increase our effective tax rate in future years. Our effective tax rate is also sensitive to any future
reductions in statutory tax rates, particularly in the US, which would cause the expected future tax benefit from items
such as tax loss carry-forwards in the affected locations to diminish in value. This, in turn, would cause a write-down of
the associated DTAs. Conversely, an increase in US corporate tax rates would result in an increase in the Group’s DTAs.
We generally revalue our DTAs in the fourth quarter of the financial year based on a reassessment of future profitability
taking into account our updated business plans. We consider the performance of our businesses and the accuracy of
historical forecasts, tax rates and other factors in evaluating the recoverability of our DTAs, including the remaining tax
loss carry-forward period and our assessment of expected future taxable profits over the life of DTAs. Estimating future
profitability is inherently subjective and is particularly sensitive to future economic, market and other conditions, which
are difficult to predict.
Our results in past years have demonstrated that changes in the recognition of DTAs can have a very significant effect
on our reported results. Any future change in the manner in which UBS remeasures DTAs could affect UBS’s effective tax
rate, particularly in the year in which the change is made.
Our full-year effective tax rate could change if aggregate tax expenses in respect of profits from branches and subsidiaries
without loss coverage differ from what is expected, or if branches and subsidiaries generate tax losses that we cannot
benefit from through the income statement. In particular, 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, may 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.
Strategy, management and operational risks
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, such as the substantial loss we incurred from the
unauthorized trading incident announced in September 2011.
As a significant 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, such
measures have never been tested on the scale or duration that we are currently experiencing, and there is risk that these
measures will prove not to have been effective in the current unprecedented operating environment.
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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 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 artificial intelligence tools may adversely affect their
functioning and result in errors and other operational risks.
For financial institutions, cybersecurity risks have increased due to the widespread use of digital technologies, cloud
computing and mobile devices to conduct financial business and transactions. In addition, 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.
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. These 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. 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. 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.
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, US 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.
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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 may not be successful in the ongoing execution of our strategic plans
We have transformed UBS to focus on our Global Wealth Management business and our universal bank in Switzerland,
complemented by Asset Management and a significantly smaller and more capital-efficient Investment Bank; we have
substantially reduced the risk-weighted assets and leverage ratio denominator usage in Group Functions; and made
significant cost reductions. Our ongoing strategic initiatives focus on growing our business in the Americas and in Asia
Pacific, particularly China, and investing in technology to differentiate our service to clients, and implementing an agile
mode of work. These measures will require significant change in our organization and we may not succeed in executing
our strategy or achieving our performance targets, or may be delayed in doing so. Macroeconomic conditions, geopolitical
uncertainty, changes to regulatory requirements and the continuing costs of meeting these requirements have prompted
us to adapt our targets and ambitions in the past and we may need to do so again in the future.
To achieve our strategic plans, we expect to continue to make significant expenditures on technology and infrastructure
to improve client experience, improve and further enable digital offerings and increase efficiency. We also may seek to
implement our strategy through acquisitions or strategic partnerships to expand or improve our product offerings or
target additional client segments. Our investments in new technology and our acquisitions and strategic partnerships
may not be successfully completed, fully achieve our objectives or improve our ability to attract and retain clients. In
addition, we face competition in providing digitally enabled offerings from both existing competitors and new financial
service providers in various portions of the value chain. For example, technological advances and the growth of
e-commerce have made it possible for e-commerce firms and other companies to offer products and services that were
traditionally offered only by banks. These advances have also allowed financial institutions and other companies to
provide digitally based financial solutions, including electronic securities trading, payments processing and online
automated algorithmic-based investment advice at a low cost to their clients. We may have to lower our prices, or risk
losing clients as a result. Our ability to develop and implement competitive digitally enabled offerings and processes will
be an important factor in our ability to compete.
As part of our strategy, we seek to improve our operating efficiency, in part by controlling our costs. We may not be able
to identify feasible cost reduction opportunities that are consistent with our business goals and cost reductions may be
realized later or may be smaller than we anticipate. Higher temporary and permanent regulatory costs and higher business
demand than anticipated have partly offset cost reductions and delayed the achievement of our past cost reduction
targets, and we could continue to be challenged in the execution of our ongoing efforts to improve operating efficiency.
Changes in our workforce as a result of outsourcing, nearshoring, offshoring, insourcing or staff reductions, or changes
that arise from the introduction of work from home or other flexible ways of working or agile work methodologies may
introduce new operational risks that, if not effectively addressed, could affect our ability to achieve cost and other benefits
from such changes, or could result in operational losses.
As we implement effectiveness and efficiency programs, we may also experience unintended consequences, such as the
unintended loss or degradation of capabilities that we need in order to maintain our competitive position, achieve our
targeted returns or meet existing or new regulatory requirements and expectations.
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. We 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.
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We also hold legacy risk positions, primarily in Group Functions, that, in many cases, are illiquid and may again deteriorate
in value.
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 not be successful in implementing changes in our wealth management businesses to meet changing market,
regulatory and other conditions
We are exposed to possible outflows of client assets in our asset-gathering businesses and to changes affecting the
profitability of Global Wealth Management, in particular. Initiatives that we may implement to overcome the effects of
changes in the business environment on our profitability, balance sheet and capital positions may not succeed in
counteracting those effects and may cause net new money outflows and reductions in client deposits, as happened with
our balance sheet and capital optimization program in 2015. There is no assurance that we will be successful in our
efforts to offset the adverse effect of these or similar trends and developments.
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 Group Executive Board (GEB) members, as well as certain other employees.
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. Swiss law
requires that shareholders approve the compensation of the Board of Directors (the BoD) and the GEB each year. If our
shareholders fail to approve the compensation for the GEB or the BoD, this could have an adverse effect on our ability
to retain experienced directors and our senior management.
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 financial crisis, investigations into our cross-border private banking services, criminal
resolutions of 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. 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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As UBS Group AG is a holding company, its operating results, financial condition and ability to pay dividends and other
distributions and / or to pay its obligations in the future depend on funding, dividends and other distributions received
directly or indirectly from its subsidiaries, which may be subject to restrictions
UBS Group AG’s ability to pay dividends and other distributions and to pay its obligations in the future will depend on
the level of funding, dividends and other distributions, if any, received from UBS AG and other subsidiaries. The ability of
such subsidiaries to make loans or distributions, directly or indirectly, to UBS Group AG may be restricted as a result of
several factors, including restrictions in financing agreements and the requirements of applicable law and regulatory,
fiscal or other restrictions. In particular, UBS Group AG’s direct and indirect subsidiaries, including UBS AG, UBS
Switzerland AG, UBS Americas Holding LLC and UBS Europe SE, are subject to laws and regulations that restrict dividend
payments, authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to UBS Group AG, or
could affect their ability to repay any loans made to, or other investments in, such subsidiary by UBS Group AG or another
member of the Group. For example, in the early stages of the COVID-19 pandemic, the European Central Bank ordered
all banks under its supervision to cease dividend distributions and the Federal Reserve Board has limited capital
distributions by bank holding companies and intermediate holding companies. Restrictions and regulatory actions of this
kind could impede access to funds that UBS Group AG may need to meet its obligations or to pay dividends to
shareholders. In addition, UBS Group AG’s right to participate in a distribution of assets upon a subsidiary’s liquidation
or reorganization is subject to all prior claims of the subsidiary’s creditors.
Our capital instruments may contractually prevent UBS Group AG from proposing the distribution of dividends to
shareholders, other than in the form of shares, and from engaging in repurchases of shares, if we do not pay interest on
these instruments.
Furthermore, UBS Group AG may guarantee some of the payment obligations of certain of the Group’s subsidiaries from
time to time. These guarantees may require UBS Group AG to provide substantial funds or assets to subsidiaries or their
creditors or counterparties at a time when UBS Group AG is in need of liquidity to fund its own obligations.
The credit ratings of UBS Group AG or its subsidiaries used for funding purposes could be lower than the ratings of the
Group’s operating subsidiaries, which may adversely affect the market value of the securities and other obligations of
UBS Group AG or those subsidiaries on a standalone basis.
Liquidity and funding risk
Liquidity and funding management are critical to UBS’s ongoing performance
The viability of our business depends on the availability of funding sources, and our success depends on our ability to
obtain funding at times, in amounts, for tenors and at rates that enable us to efficiently support our asset base in all
market conditions. Our funding sources have generally been stable, but could change in the future because of, among
other things, general market disruptions or widening credit spreads, which could also influence the cost of funding. A
substantial part of our liquidity and funding requirements are met using short-term unsecured funding sources, including
retail and wholesale deposits and the regular issuance of money market securities. A change in the availability of short-
term funding could occur quickly.
The addition of loss-absorbing debt as a component of capital requirements, the regulatory requirements to maintain
minimum TLAC at UBS’s holding company and at 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 further increase of our cost of funding, and could potentially increase the total amount of funding required, in
the absence of other changes in our 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 Moody’s 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 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. In particular, UBS AG is subjected to increased liquidity coverage requirements under
the direction of FINMA. 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.
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Financial and operating
performance
Management report
Accounting and financial reporting
Critical accounting estimates and judgments
In preparing our financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by
the International Accounting Standards Board (the IASB), we apply judgment and make estimates and assumptions that
may involve significant uncertainty at the time they are made. We regularly reassess those estimates and assumptions,
which encompass historical experience, expectations of the future and other pertinent factors, to determine their
continuing relevance based on current conditions, and update them as necessary. Changes in estimates and assumptions
may have significant effects on the financial statements. Furthermore, actual results may differ significantly from our
estimates, which could result in significant losses to the Group, beyond what we expected or provided for.
Key areas involving a high degree of judgment and areas where estimates and assumptions are significant to the
consolidated financial statements include:
– expected credit loss measurement;
– fair value measurement;
– income taxes;
– provisions and contingent liabilities;
– post-employment benefit plans;
– goodwill; and
– consolidation of structured entities.
› Refer to “Note 1a Material accounting policies” in the “Consolidated financial statements” section of this report for more
information
› Refer to the “Risk factors” section of this report for more information
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Group performance
Income statement
USD m
Net interest income
Other net income from financial instruments measured at fair value through profit or loss
Net fee and commission income
Other income
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
OOppeerraattiinngg eexxppeennsseess
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Net profit / (loss) attributable to non-controlling interests
NNeett pprrooffiitt // ((lloossss)) aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Comprehensive income
Total comprehensive income
Total comprehensive income attributable to non-controlling interests
TToottaall ccoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
2022 compared with 2021
Results
For the year ended
% change from
3311..1122..2222
31.12.21
31.12.20
31.12.21
66,,662211
77,,551177
1188,,996666
11,,445599
3344,,556633
6,705
5,850
22,387
452
35,393
5,862
6,960
19,186
1,076
33,084
2299
(148)
694
1177,,668800
55,,118899
22,,006611
2244,,993300
99,,660044
11,,994422
77,,666611
3322
77,,663300
33,,116677
1188
33,,114499
18,387
5,553
2,118
26,058
9,484
1,998
7,486
29
7,457
5,119
13
5,106
17,224
4,885
2,126
24,235
8,155
1,583
6,572
15
6,557
8,312
36
8,276
(1)
28
(15)
223
(2)
(4)
(7)
(3)
(4)
1
(3)
2
11
2
(38)
39
(38)
In 2022, net profit attributable to shareholders increased by USD 173m, or 2%, to USD 7,630m, which included a net
tax expense of USD 1,942m.
Operating profit before tax increased by USD 120m, or 1%, to USD 9,604m, reflecting lower operating expenses,
partly offset by lower total revenues. Operating expenses decreased by USD 1,128m, or 4%, to USD 24,930m, which
included positive foreign currency effects. This decrease was mainly driven by USD 707m lower personnel expenses
and USD 364m lower general and administrative expenses. Net credit loss expenses were USD 29m, compared with
net credit loss releases of USD 148m in the prior year. Total revenues decreased by USD 830m, or 2%, to
USD 34,563m, which included negative foreign currency effects. Net fee and commission income decreased by
USD 3,421m, partly offset by a USD 1,582m increase in total combined net interest income and other net income
from financial instruments measured at fair value through profit or loss, as well as USD 1,007m higher other income.
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 1,582m to USD 14,137m.
Global Wealth Management increased by USD 1,014m to USD 6,355m, predominantly due to higher net interest income,
mainly driven by an increase in deposit revenues, as rising interest rates led to higher deposit margins. This increase was
partly offset by the effects of shifts to lower-margin products and higher interest rates paid to clients. In addition, loan
revenues decreased, driven by lower loan margins.
The Investment Bank increased by USD 702m to USD 5,769m, mainly reflecting USD 803m higher net income in
Financing, largely due to a loss of USD 861m incurred in the first half of 2021 on the default of a US-based client of our
prime brokerage business. In addition, Derivatives & Solutions increased by USD 320m, driven by Rates and Foreign
Exchange, which benefited from elevated volatility due to inflationary concerns and the actions of central banks, partly
offset by decreases in Equity Derivatives and Credit revenues due to lower levels of client activity. The increases in
Financing and Derivatives & Solutions were partly offset by a USD 409m decrease in Global Banking, mainly due to lower
revenues in Leveraged Capital Markets.
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Personal & Corporate Banking increased by USD 128m, predominantly driven by an increase in net interest income,
mainly reflecting higher deposit revenues, as a result of rising interest rates. This increase was partly offset by a lower
benefit from the Swiss National Bank deposit exemption and a decrease in deposit fees.
Group Functions recognized negative income of USD 649m, compared with negative income of USD 397m, mainly driven
by higher funding costs related to deferred tax assets (DTAs) and capitalized software in Group Services and negative net
effects of accounting asymmetries, including hedge accounting ineffectiveness, within Group Treasury. These changes were
partly offset by higher valuation gains on auction rate and other securities in Non-core and Legacy Portfolio.
› Refer to “Note 3 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
31.12.21
3311..1122..2222
31.12.20
% change from
31.12.21
USD m
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
TToottaall
Global Wealth Management
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary activity 1
Personal & Corporate Banking
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary activity 1
Asset Management
Investment Bank 2
Global Banking
Global Markets
55,,221188
11,,440033
77,,551177
1144,,113377
66,,335555
55,,227733
11,,008822
22,,668855
22,,119911
449944
((2233))
55,,776699
118877
55,,558822
((664499))
5,274
1,431
5,850
12,555
5,341
4,244
1,097
2,557
2,120
437
(13)
5,067
596
4,471
(397)
4,563
1,299
6,960
12,822
5,039
4,027
1,012
2,459
2,049
409
(16)
5,643
585
5,057
(302)
(1)
(2)
28
13
19
24
(1)
5
3
13
75
14
(69)
25
64
Group Functions
11 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. 22 Investment Bank
information is provided at the business line level rather than by financial statement reporting line in order to reflect the underlying business activities, which is consistent with the structure of the management discussion
and analysis in the “Investment Bank” section of this report.
Net fee and commission income
Net fee and commission income decreased by USD 3,421m to USD 18,966m.
Underwriting fees decreased by USD 884m to USD 579m, mainly driven by lower equity underwriting revenues from
public offerings in the Investment Bank, reflecting lower levels of client activity.
Net brokerage fees decreased by USD 841m to USD 3,282m, driven by Global Wealth Management, reflecting lower
levels of client activity, and by the Investment Bank, mainly in relation to Cash Equities, partly offset by higher net income
from foreign exchange products.
Investment fund fees decreased by USD 848m, driven by Asset Management and Global Wealth Management, mainly
reflecting negative market performance. In addition, performance-based fee income in Asset Management decreased,
mainly in Hedge Fund Businesses and Equities. Fees for portfolio management and related services decreased by
USD 703m, predominantly driven by Global Wealth Management, also reflecting negative market performance, partly
offset by incremental revenues from net new fee-generating assets.
M&A and corporate finance fees decreased by USD 298m to USD 804m, primarily reflecting lower revenues from merger
and acquisition transactions in our Global Banking business in the Investment Bank, due to a decrease in the number of
transactions that closed in 2022.
› Refer to “Note 4 Net fee and commission income” in the “Consolidated financial statements” section of this report for more
information
Other income
Other income increased by USD 1,007m to USD 1,459m, mainly driven by higher gains from disposals of associates and
subsidiaries, largely reflecting a gain of USD 848m in Asset Management on the sale of our shareholding in our Japanese
real estate joint venture, Mitsubishi Corp.-UBS Realty Inc. In addition, there were gains in Global Wealth Management of
USD 133m on the sale of our domestic wealth management business in Spain, USD 86m on the sale of UBS Swiss
Financial Advisers AG and USD 41m on the sale of our US alternative investments administration business. These gains
compared with a gain of USD 100m in 2021 in Global Wealth Management from the sale of our domestic wealth
management business in Austria. In addition, we recognized USD 98m of gains related to the repurchase of UBS’s own
debt instruments, compared with losses of USD 60m in the prior year. These gains were partly offset by USD 76m lower
net gains from properties held for sale.
› Refer to “Note 5 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 the gains from disposals of associates and subsidiaries
Annual Report 2022 | Financial and operating performance | Group performance
69
69
Credit loss expense / release
Total net credit loss expenses were USD 29m, compared with net credit loss releases of USD 148m in the prior year,
reflecting net expenses of USD 29m related to stage 1 and 2 positions.
› Refer to “Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and
“Note 19 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)
USD m
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2222
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2211
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2200
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
Operating expenses
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Group
Functions
((55))
55
00
(28)
(1)
((2299))
48
40
8888
2277
1122
3399
(62)
(24)
((8866))
129
128
225577
00
00
00
0
1
11
0
2
22
66
((1188))
((1122))
(34)
0
((3344))
88
217
330055
11
22
33
0
0
00
0
42
4422
Total
2299
00
2299
(123)
(25)
((114488))
266
429
669944
Personnel expenses
Personnel expenses decreased by USD 707m to USD 17,680m, mainly driven by USD 352m lower variable compensation
related to financial advisors, following a decrease in compensable revenues. Furthermore, salary costs decreased by
USD 294m, as an underlying increase from higher salaries and an increase in the number of employees were more than
offset by foreign currency translation effects. Other personnel expenses were USD 87m lower, primarily reflecting a
decrease in the number of contractors.
› Refer to the “Compensation” section of this report for more information
› Refer to “Note 6 Personnel expenses,” “Note 26 Post-employment benefit plans” and “Note 27 Employee benefits: variable
compensation” in the “Consolidated financial statements” section of this report for more information
General and administrative expenses
General and administrative expenses decreased by USD 364m to USD 5,189m, mainly reflecting USD 563m lower net
expenses for litigation, regulatory and similar matters, as 2021 included expenses of USD 740m related to litigation
provisions for the French cross-border matter. This was partly offset by higher expenses for travel and entertainment,
technology, and consulting fees.
We believe that the industry continues to operate in an environment in which expenses associated with litigation,
regulatory and similar matters will remain elevated for the foreseeable future, and we continue to be exposed to a
number of significant claims and regulatory matters. The outcome of many of these matters, the timing of a resolution,
and the potential effects of resolutions on our future business, financial results or financial condition are extremely
difficult to predict.
› Refer to “Note 7 General and administrative expenses” and “Note 17 Provisions and contingent liabilities” in the “Consolidated
financial statements” section of this report for more information
Annual Report 2022 | Financial and operating performance | Group performance
70
70
Operating expenses
of which: other personnel expenses 2
USD m
Personnel expenses
of which: salaries
of which: variable compensation
of which: performance awards
of which: financial advisors 1
of which: other
% change from
31.12.21
(4)
(4)
(4)
0
(7)
5
(3)
(7)
(62)
4
(3)
Depreciation, amortization and impairment of non-financial assets
TToottaall ooppeerraattiinngg eexxppeennsseess
(4)
11 Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation commitments with financial
advisors entered into at the time of recruitment that are subject to vesting requirements. 22 Consists of expenses related to contractors, social security, post-employment benefit plans, and other personnel expenses.
Refer to “Note 6 Personnel expenses” in the “Consolidated financial statements” section of this report for more information. 33 During 2020, UBS modified the conditions for continued vesting of certain outstanding
deferred compensation awards for qualifying employees, resulting in an expense of approximately USD 280m, of which USD 240m is disclosed within Variable compensation and USD 40m within Other personnel
expenses in this table.
For the year ended
31.12.21
18,387
7,339
8,280
3,190
4,860
229
2,768
5,553
911
4,642
2,118
26,058
of which: net expenses for litigation, regulatory and similar matters
of which: other general and administrative expenses
31.12.20
17,224
7,023
7,520 3
3,209
4,091
220
2,680 3
4,885
197
4,688
2,126
24,235
3311..1122..2222
1177,,668800
77,,004455
77,,995544
33,,220055
44,,550088
224411
22,,668811
55,,118899
334488
44,,884411
22,,006611
2244,,993300
General and administrative expenses
Tax
Income tax expenses of USD 1,942m were recognized for the Group in 2022, representing an effective tax rate of 20.2%,
compared with USD 1,998m for 2021, which represented an effective tax rate of 21.1%. The income tax expenses for
2022 included Swiss tax expenses of USD 715m and non-Swiss tax expenses of USD 1,227m.
The Swiss tax expenses included current tax expenses of USD 730m related to taxable profits of UBS Switzerland AG and
other Swiss entities. They also included a deferred tax benefit of USD 15m.
The non-Swiss tax expenses included current tax expenses of USD 718m related to taxable profits earned by non-Swiss
subsidiaries and branches and net deferred tax expenses of USD 509m. Expenses of USD 678m, which primarily related
to the amortization of DTAs previously recognized in relation to tax losses carried forward and deductible temporary
differences of UBS Americas Inc., were partly offset by a benefit of USD 169m in respect of net upward revaluations of
DTAs for certain entities, primarily in connection with our business planning process.
The effective tax rate for the year of 20.2% is lower than our projected rate for the year of 24%, primarily as a result of
the aforementioned deferred tax benefit of USD 169m in respect of net upward revaluations of DTAs and because no
tax expenses were recognized in respect of pre-tax gains from dispositions of UBS subsidiaries in 2022.
Excluding any potential effects from the remeasurement of DTAs in connection with the business planning process and
any material jurisdictional statutory tax rate changes that could be enacted, we expect a tax rate for 2023 of around
23%.
› Refer to “Note 8 Income taxes” in the “Consolidated financial statements” section of this report for more information
› Refer to the “Risk factors” section of this report for more information
Total comprehensive income attributable to shareholders
In 2022, total comprehensive income attributable to shareholders was USD 3,149m, reflecting net profit of USD 7,630m
and negative other comprehensive income (OCI), net of tax, of USD 4,481m.
OCI related to cash flow hedges was negative USD 4,793m, mainly reflecting net unrealized losses on US dollar hedging
derivatives resulting from significant increases in the relevant US dollar long-term interest rates.
Foreign currency translation OCI was negative USD 525m, mainly due to the weakening of the Swiss franc (1%) and the
euro (6%) against the US dollar.
Defined benefit plan OCI, net of tax, was negative USD 10m. Total net pre-tax OCI related to the Swiss pension plan was
negative USD 285m. This was predominantly driven by an extraordinary employer contribution of USD 209m that
increased the gross plan assets and resulted in an offsetting OCI loss as no net pension asset could be recognized on the
balance sheet as of 31 December 2022 due to the asset ceiling. As announced in 2018, UBS agreed to mitigate the
effects from changes to the Swiss pension plan implemented in 2019 and contributed CHF 646m (USD 698m) in three
installments in 2020, 2021 and 2022. The extraordinary contribution of USD 209m in the first quarter of 2022 reflected
the third and final installment paid.
Total pre-tax OCI related to our non-Swiss pension plans was positive USD 212m, mostly driven by the UK pension plan,
which recorded positive net pre-tax OCI of USD 162m. The positive OCI in the UK plan reflected gains of USD 1,474m
from the remeasurement of the defined benefit obligation (DBO), partly offset by a negative return on plan assets of
USD 1,312m. The DBO remeasurement effect was mainly driven by a gain of USD 1,451m due to an increase in the
applicable discount rate.
Annual Report 2022 | Financial and operating performance | Group performance
71
71
OCI related to own credit on financial liabilities designated at fair value was positive USD 796m, primarily due to a
widening of our own credit spreads.
› Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for more
information
› Refer to “Note 1b Changes in accounting policies, comparability and other adjustments” in the “Consolidated financial
statements” section of this report for more information about the reclassification of a portfolio of assets from Financial assets
measured at fair value through OCI to Other financial assets measured at amortized cost in 2022
› Refer to “Note 20 Fair value measurement” in the “Consolidated financial statements” section of this report for more information
about own credit on financial liabilities designated at fair value
› Refer to “Note 25 Hedge accounting” in the “Consolidated financial statements” section of this report for more information about
cash flow hedges of forecast transactions
› Refer to “Note 26 Post-employment benefit plans” in the “Consolidated financial statements” section of this report for more
information about OCI related to defined benefit plans
Sensitivity to interest rate movements
As of 31 December 2022, we estimate that a parallel shift in yield curves by +100 basis points could lead to a combined
increase in annual net interest income of approximately USD 1.5bn in Global Wealth Management and Personal &
Corporate Banking in the first year after such a shift. Of this increase, approximately USD 0.8bn, USD 0.4bn and
USD 0.2bn 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 decrease in annual net interest income of approximately
USD 1.5bn in Global Wealth Management and Personal & Corporate Banking in the first year after such a shift, showing
similar currency contributions as for the aforementioned increase in rates.
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 2022 applied to our banking book. These estimates further
assume no change to balance sheet size and structure, constant foreign exchange rates, and no specific management
action. The benefit of the negative rates exemption threshold provided by the Swiss National Bank is not in scope of this
net interest income sensitivity disclosure. As average implied forward rates were above 100 basis points across all tenors
as of 31 December 2022, the impact would have been negligible. These estimates do not represent a forecast of our net
interest income and actual changes in net interest income could differ significantly from the amounts referred to above.
Seasonal characteristics
Our revenues may show seasonal patterns, notably in the Investment Bank and transaction-based revenues for Global
Wealth Management, and typically reflect the highest client activity levels in the first quarter, with lower levels throughout
the rest of the year, especially during the summer months and the end-of-year holiday season.
Key figures
Below we provide an overview of selected key figures of the Group. For further information about key figures related to
capital management, refer to the “Capital, liquidity and funding, and balance sheet” section of this report.
Cost / income ratio
The cost / income ratio was 72.1%, compared with 73.6%, mainly reflecting a decrease in operating expenses, partly
offset by a decrease in total revenues.
Return on common equity tier 1 capital
The annualized return on our common equity tier 1 (CET1) capital was 17.0%, compared with 17.5%, reflecting a
USD 2.2bn increase in average CET1 capital, with a partly offsetting effect driven by a USD 173m increase in net profit
attributable to shareholders.
CET1 capital
CET1 capital increased by USD 0.2bn to USD 45.5bn as of 31 December 2022, mainly as a result of operating profit
before tax of USD 9.6bn with associated current tax expenses of USD 1.4bn, partly offset by share repurchases of
USD 5.6bn under our share repurchase programs, dividend accruals of USD 1.7bn, negative foreign currency effects of
USD 0.5bn and compensation- and own share-related capital components of USD 0.3bn.
Risk-weighted assets
Risk-weighted assets (RWA) increased by USD 17.4bn to USD 319.6bn, primarily driven by increases of USD 10.4bn in
credit and counterparty credit risk RWA, USD 4.7bn in operational risk RWA, and USD 2.4bn in market risk RWA.
CET1 capital ratio
Our CET1 capital ratio decreased to 14.2% from 15.0%, mainly reflecting a USD 17.4bn increase in RWA.
Annual Report 2022 | Financial and operating performance | Group performance
72
72
Leverage ratio denominator
The leverage ratio denominator (the LRD) decreased by USD 40.4bn to USD 1,028.5bn, driven by currency effects of
USD 24.5bn and a USD 15.9bn decrease due to asset size and other movements.
CET1 leverage ratio
Our CET1 leverage ratio increased to 4.42% from 4.24%, predominantly due to the aforementioned decrease in the
LRD.
Going concern leverage ratio
Our going concern leverage ratio was unchanged at 5.7%, as the aforementioned decrease in the LRD was offset by a
USD 2.2bn decrease in the going concern capital.
Personnel
The number of personnel employed as of 31 December 2022 increased by 1,212 to 72,597 (full-time equivalents)
compared with 31 December 2021.
Equity, CET1 capital and returns
USD m, except where indicated
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 (%)
As of or for the year ended
3311..1122..2222
31.12.21
31.12.20
77,,663300
7,457
6,557
5566,,887766
66,,226677
5500,,660099
55,,115522
4455,,445577
1133..33
1144..99
1177..00
60,662
6,378
54,283
9,003
45,281
12.6
14.1
17.5
59,445
6,480
52,965
13,075
39,890
11.3
12.8
17.4
Annual Report 2022 | Financial and operating performance | Group performance
73
73
Global Wealth Management
Global Wealth Management1
USD m, except where indicated
Results
Net interest income
Recurring net fee income2
Transaction-based income2
Other income
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
OOppeerraattiinngg eexxppeennsseess
BBuussiinneessss ddiivviissiioonn ooppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
As of or for the year ended
3311..1122..2222
31.12.21
% change from
31.12.21
55,,227733
1100,,228822
33,,113377
227755
1188,,996677
00
1133,,998899
44,,997777
4,244
11,170
3,836
168
19,419
(29)
14,665
4,783
24
(8)
(18)
63
(2)
(5)
4
Performance measures and other information
Pre-tax profit growth (year-on-year, %)2
Cost / income ratio (%)2
Average attributed equity (USD bn)3
Return on attributed equity (%)2,3
Financial advisor compensation4
Net new fee-generating assets (USD bn)2
Fee-generating assets (USD bn)2
Fee-generating asset margin (bps)2
Net new money (USD bn)2
Invested assets (USD bn)2
Loans, gross (USD bn)5
Customer deposits (USD bn)5
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)2,6
(1)
Advisors (full-time equivalents)
11 Comparatives may differ as a result of 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. 22 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. Since the second quarter of 2022, assets related to our Global Financial
Intermediaries business have been excluded from fee-generating assets, given that fee-generating investment management products, such as mandates, are not central to this business. Furthermore, client
commitments into closed-ended private-market investment funds are included as fee-generating assets once recurring fees are charged, rather than when commitments are funded. These changes have been applied
prospectively. 33 Refer to “Capital management” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information. 44 Relates to licensed professionals with the ability to provide
investment advice to clients in the Americas. Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It 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 1,751m as of 31 December
2022. 55 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. 66 Refer to the “Risk
management and control” section of this report for more information about (credit-)impaired exposures. Excludes loans to financial advisors.
19.0
75.5
18.8
25.4
4,860
106.9
1,482
82.6
111.1
3,303
234.1
369.8
0.2
9,329
44..11
7733..88
2200..00
2244..99
44,,550088
6600..11
11,,227711
7799..55
4400..55
22,,881155
222255..00
334488..22
00..33
99,,221155
(15)
(4)
(6)
(14)
(7)
6
2022 compared with 2021
Results
Profit before tax increased by USD 194m, or 4%, to USD 4,977m, mainly driven by lower operating expenses, as 2021
included expenses of USD 657m related to litigation provisions for the French cross-border matter, partly offset by lower
total revenues.
Total revenues
Total revenues decreased by USD 452m, or 2%, to USD 18,967m, due to decreases across recurring net fee and
transaction-based income, partly offset by increases in net interest and other income.
Net interest income increased by USD 1,029m, or 24%, to USD 5,273m, mainly due to an increase in deposit revenues,
as rising interest rates led to higher deposit margins. This increase was partly offset by the effects of shifts to lower-
margin products and higher interest rates paid to clients. Loan revenues decreased, driven by lower loan margins.
Recurring net fee income decreased by USD 888m, or 8%, to USD 10,282m, primarily driven by negative market
performance and foreign currency effects, partly offset by incremental revenues from net new fee-generating assets.
Transaction-based income decreased by USD 699m, or 18%, to USD 3,137m, mainly reflecting lower levels of client
activity in Asia Pacific, Americas and EMEA.
Annual Report 2022 | Financial and operating performance | Global Wealth Management
74
74
Other income increased by USD 107m to USD 275m, including a USD 133m gain from the sale of our domestic wealth
management business in Spain, an USD 86m gain from the sale of UBS Swiss Financial Advisers AG and a USD 41m gain
from the sale of our US alternative investments administration business in 2022. 2021 included a gain of USD 100m
related to the sale of our domestic wealth management business in Austria. Additionally, 2022 included lower gains on
our equity ownership of SIX Group and lower gains from sales of securities positions.
Credit loss expense / release
Net credit loss expenses were zero, as net expenses related to credit-impaired (stage 3) positions were entirely offset by
net releases from stage 1 and 2 positions, compared with net releases of USD 29m.
Operating expenses
Operating expenses decreased by USD 676m, or 5%, to USD 13,989m, primarily due to 2021 including the
aforementioned expenses of USD 657m related to litigation provisions for the French cross-border matter. Operating
expenses in 2022 included lower personnel expenses, primarily as a result of lower financial advisor variable compensation
following a decrease in compensable revenues, and benefited from positive foreign currency effects. These effects were
partly offset by higher technology expenses and higher expenses for professional fees, travel and entertainment,
outsourcing, and marketing in 2022.
Pre-tax profit growth
Pre-tax profit growth in 2022 was 4.1%, compared with 19.0% in 2021. Our target range is 10–15% over the cycle.
Cost / income ratio
The cost / income ratio decreased to 73.8% from 75.5%, reflecting positive operating leverage.
Fee-generating assets
Fee-generating assets decreased by USD 211bn, or 14%, to USD 1,271bn, mainly driven by net negative market
performance and foreign currency effects. Net new fee-generating asset inflows were USD 60.1bn, with inflows in all
regions, and resulted in an annualized net new fee-generating asset growth rate of 4.1%.
Loans
Loans decreased by USD 9.1bn, or 4%, to USD 225.0bn, primarily driven by negative foreign exchange effects and net
new loan outflows of USD 2.5bn.
› Refer to the “Risk management and control” section of this report for more information
Customer deposits
Customer deposits decreased by USD 21.6bn to USD 348.2bn, mainly driven by US dollar deposit shifts into other
products, as well as negative foreign currency effects.
Regional breakdown of performance measures
As of or for the year ended 31.12.22
USD bn, except where indicated
Total revenues (USD m)
Operating profit / (loss) before tax (USD m)
Cost / income ratio (%)4
Loans, gross
Net new loans
Fee-generating assets4
Net new fee-generating assets4
Net new fee-generating asset growth rate (%)4
Invested assets4
Net new money4
Advisors (full-time equivalents)
Americas1
1100,,663344
Switzerland
11,,885599
11,,774488
8833..77
110011..225
99..00
777799
1177..22
11..99
11,,558811
77..00
66,,224455
881177
5555..22
4455..11
22..55
111199
99..11
77..00
225533
1122..33
667766
EMEA2
33,,991133
11,,449900
6611..99
4433..44
((11..44))
225599
2200..33
66..11
554411
2211..99
11,,337722
Asia Pacific
22,,555566
Global Wealth
Management3
1188,,996677
994433
6633..22
3344..55
((1133..22))
111144
1133..77
1111..88
443377
((00..66))
884477
44,,997777
7733..88
222255..00
((22..55))
11,,227711
6600..11
44..11
22,,881155
4400..55
99,,221155
11 Including the following business units: United States and Canada; and Latin America. 22 Including the following business units: Europe; Central & Eastern Europe, Greece and Israel; and Middle East and Africa.
33 Including minor functions, which are not included in the four regions individually presented in this table, with USD 5m of total revenues, USD 21m of operating loss before tax, USD 0.7bn of loans, USD 0.6bn of net
new loan inflows, USD 0.8bn of fee-generating assets, USD 0.1bn of net new fee-generating asset outflows, USD 3bn of invested assets, USD 0.1bn of net new money outflows and 74 advisors in 2022. 44 Refer to
“Alternative performance measures” in the appendix to this report for the definition and calculation method. 55 Loans include customer brokerage receivables, which are presented in a separate reporting line on the
balance sheet.
Regional comments: 2022 compared with 2021
Americas
Profit before tax decreased by USD 253m to USD 1,748m, mainly driven by higher operating expenses, including an
increase in net expenses for litigation, regulatory and similar matters. Total revenues decreased by USD 22m to
USD 10,634m, mainly driven by lower recurring net fee and transaction-based income, partly offset by higher net interest
income. The cost / income ratio increased to 83.7% from 81.4%. Loans increased 10% to USD 101.2bn, reflecting
USD 9.0bn of net new loan inflows. Net new fee-generating assets were USD 17.2bn.
Annual Report 2022 | Financial and operating performance | Global Wealth Management
75
75
Switzerland
Profit before tax increased by USD 67m to USD 817m, mostly driven by lower operating expenses, as 2021 included
expenses of USD 85m related to litigation provisions for the French cross-border matter. Total revenues decreased by
USD 41m to USD 1,859m, mainly driven by lower recurring net fee income, partly offset by higher net interest and
transaction-based income. The cost / income ratio decreased to 55.2% from 60.8%. Loans increased 4% to USD 45.1bn,
driven by net new loan inflows of USD 2.5bn, partly offset by negative foreign currency effects. Net new fee-generating
assets were USD 9.1bn.
EMEA
Profit before tax increased by USD 678m to USD 1,490m, primarily driven by lower operating expenses, as 2021 included
expenses of USD 572m related to litigation provisions for the French cross-border matter. Total revenues decreased by
USD 35m to USD 3,913m, due to lower recurring net fee and transaction-based income, partly offset by an increase in
net interest income, as well as an increase in other income, which was driven by the aforementioned gains from sales.
The cost / income ratio decreased to 61.9% from 79.6%. Loans decreased 12% to USD 43.4bn, mainly reflecting
negative foreign currency effects and net new loan outflows of USD 1.4bn. Net new fee-generating assets were
USD 20.3bn.
Asia Pacific
Profit before tax decreased by USD 294m to USD 943m. Total revenues decreased by USD 343m to USD 2,556m, mostly
driven by lower transaction-based and recurring net fee income, partly offset by an increase in net interest income. The
cost / income ratio increased to 63.2% from 57.4%. Loans decreased 29% to USD 34.5bn, driven by net new loan
outflows of USD 13.2bn, as clients reduced their debts in light of market uncertainty, as well as negative foreign currency
effects. Net new fee-generating assets were USD 13.7bn.
Personal & Corporate Banking
Personal & Corporate Banking – in Swiss francs1
CHF m, except where indicated
Results
Net interest income
Recurring net fee income2
Transaction-based income2
Other income
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
OOppeerraattiinngg eexxppeennsseess
BBuussiinneessss ddiivviissiioonn ooppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Performance measures and other information
Pre-tax profit growth (year-on-year, %)2
Cost / income ratio (%)2
Average attributed equity (CHF bn)3
Return on attributed equity (%)2,3
Net interest margin (bps)2
Fee and trading income for Corporate & Institutional Clients2
Investment products for Personal Banking (CHF bn)2
Net new investment products for Personal Banking (CHF bn)2
Active Digital Banking clients in Personal Banking (%)2,4
Active Mobile Banking clients in Personal Banking (%)2
Active Digital Banking clients in Corporate & Institutional Clients (%)2
Loans, gross (CHF bn)
As of or for the year ended
3311..1122..2222
31.12.21
% change from
31.12.21
22,,008877
881122
11,,115544
4466
44,,009999
3366
22,,333377
11,,772266
88..88
5577..00
88..88
1199..55
114477
881100
2211..66
11..9999
7744..33
5566..55
8800..00
114422..99
1,941
774
1,079
110
3,904
(79)
2,397
1,587
35.1
61.4
8.4
19.0
140
791
23.5
2.66
70.3
46.7
79.3
139.3
8
5
7
(58)
5
(2)
9
6
2
(8)
3
Customer deposits (CHF bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)2,5
11 Comparatives may differ as a result of 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. 22 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 33 Refer to “Capital management” in the “Capital, liquidity and funding,
and balance sheet” section of this report for more information. 44 In 2022, 86.0% of clients of Personal Banking were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least
once in the course of their relationship with UBS). 55 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.
116677..22
162.1
0.9
00..88
3
Annual Report 2022 | Financial and operating performance | Global Wealth Management
76
76
2022 compared with 2021
Results
Profit before tax increased by CHF 139m, or 9%, to CHF 1,726m, reflecting higher total revenues and lower operating
expenses, partly offset by net credit loss expenses, compared with net credit loss releases in 2021.
Total revenues
Total revenues increased by CHF 195m, or 5%, to CHF 4,099m, reflecting increases across all income lines except other
income.
Net interest income increased by CHF 146m to CHF 2,087m, mainly driven by higher deposit revenues, as a result of
rising interest rates. This increase was partly offset by a lower benefit from the Swiss National Bank deposit exemption
and lower deposit fees.
Recurring net fee income increased by CHF 38m to CHF 812m, primarily driven by higher revenues from account fees.
Transaction-based income increased by CHF 75m to CHF 1,154m, largely driven by higher revenues from credit card and
foreign exchange transactions, reflecting a continued increase in spending on travel and leisure by clients following the
easing of COVID-19-related restrictions in certain countries compared with 2021.
Other income decreased by CHF 64m to CHF 46m, mostly due to lower gains on our equity ownership of SIX Group. The
prior year also included a gain of CHF 26m from the sale of several small properties in that year.
Credit loss expense / release
Net credit loss expenses were CHF 36m, compared with net releases of CHF 79m. Stage 1 and 2 net credit loss expenses
were CHF 25m. Prior-year stage 1 and 2 net credit loss releases were CHF 57m, largely resulting from a partial release of
a post-model adjustment during the year, as well as model updates. Stage 3 net credit loss expenses were CHF 11m,
compared with net releases of CHF 23m in 2021.
Operating expenses
Operating expenses decreased by CHF 60m, or 2%, to CHF 2,337m, mostly due to 2021 including expenses of CHF 76m
(USD 83m) related to litigation provisions for the French cross-border matter.
Cost / income ratio
The cost / income ratio was 57.0%, compared with 61.4% in 2021, reflecting both higher total revenues and lower
operating expenses.
Personal & Corporate Banking – in US dollars1
USD m, except where indicated
Results
Net interest income
Recurring net fee income2
Transaction-based income2
Other income
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
OOppeerraattiinngg eexxppeennsseess
BBuussiinneessss ddiivviissiioonn ooppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
As of or for the year ended
3311..1122..2222
31.12.21
% change from
31.12.21
22,,119911
885522
11,,221122
4488
44,,330022
3399
22,,445522
11,,881122
2,120
846
1,178
119
4,263
(86)
2,618
1,731
3
1
3
(60)
1
(6)
5
Performance measures and other information
Pre-tax profit growth (year-on-year, %)2
Cost / income ratio (%)2
Average attributed equity (USD bn)3
Return on attributed equity (%)2,3
Net interest margin (bps)2
Fee and trading income for Corporate & Institutional Clients2
Investment products for Personal Banking (USD bn)2
Net new investment products for Personal Banking (USD bn)2
Active Digital Banking clients in Personal Banking (%)2,4
Active Mobile Banking clients in Personal Banking (%)2
Active Digital Banking clients in Corporate & Institutional Clients (%)2
Loans, gross (USD bn)
Customer deposits (USD bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)2,5
11 Comparatives may differ as a result of 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. 22 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 33 Refer to “Capital management” in the “Capital, liquidity and funding,
and balance sheet” section of this report for more information. 44 In 2022, 86.0% of clients of Personal Banking were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least
once in the course of their relationship with UBS). 55 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.
44..77
5577..00
99..33
1199..55
114466
885511
2233..44
22..1111
7744..33
5566..55
8800..00
115544..66
118800..88
00..88
37.5
61.4
9.2
18.9
142
864
25.8
2.90
70.3
46.7
79.3
152.8
177.8
0.9
(1)
(9)
1
2
1
Annual Report 2022 | Financial and operating performance | Personal & Corporate Banking
77
77
Asset Management
Asset Management1
USD m, except where indicated
Results
Net management fees2
Performance fees
Net gain from disposal of a joint venture / an associate
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
OOppeerraattiinngg eexxppeennsseess
BBuussiinneessss ddiivviissiioonn ooppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Performance measures and other information
Pre-tax profit growth (year-on-year, %)3
Cost / income ratio (%)3
Average attributed equity (USD bn)4
Return on attributed equity (%)3,4
Gross margin on invested assets (bps)3
Information by business line / asset class
NNeett nneeww mmoonneeyy ((UUSSDD bbnn))33
Equities
Fixed Income
of which: money market
Multi-asset & Solutions
Hedge Fund Businesses
Real Estate & Private Markets
TToottaall nneett nneeww mmoonneeyy55
of which: net new money excluding money market
IInnvveesstteedd aasssseettss ((UUSSDD bbnn))33
Equities
Fixed Income
of which: money market
Multi-asset & Solutions
Hedge Fund Businesses
Real Estate & Private Markets
TToottaall iinnvveesstteedd aasssseettss
of which: passive strategies
Information by region
IInnvveesstteedd aasssseettss ((UUSSDD bbnn))33
Americas
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
TToottaall iinnvveesstteedd aasssseettss
As of or for the year ended
3311..1122..2222
31.12.21
% change from
31.12.21
22,,005500
6644
884488
22,,996611
00
11,,556644
11,,339977
3355..77
5522..88
11..77
8811..22
2288
((1122..88))
3366..55
2266..33
((11..33))
22..33
00..22
2244..88
((11..66))
445566
229966
111199
115555
5555
110022
11,,006644
444433
229988
115500
226633
335544
11,,006644
2,320
260
37
2,617
1
1,586
1,030
(29.2)
60.6
2.0
51.8
23
10.3
22.7
(3.1)
6.8
5.7
(0.6)
44.9
48.0
580
285
92
193
55
98
1,211
540
287
190
334
399
1,211
(12)
(75)
13
(1)
36
(13)
(21)
4
29
(19)
1
4
(12)
(18)
4
(21)
(21)
(11)
(12)
Information by channel
IInnvveesstteedd aasssseettss ((UUSSDD bbnn))33
(14)
Third-party institutional
Third-party wholesale
(20)
UBS’s wealth management businesses
(5)
TToottaall iinnvveesstteedd aasssseettss
(12)
11 Comparatives may differ as a result of 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. 22 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. 33 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 44 Refer to “Capital
management” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information. 55 A net new money inflow of USD 4.1bn was recognized in the fourth quarter of 2022 for the
provision of hedge fund services to Global Wealth Management Americas.
707
145
359
1,211
660066
111166
334422
11,,006644
Annual Report 2022 | Financial and operating performance | Asset Management
78
78
2022 compared with 2021
Results
Profit before tax increased by USD 367m, or 36%, to USD 1,397m. This increase reflected a gain of USD 848m from the
sale of our shareholding in the Mitsubishi Corp.-UBS Realty Inc. joint venture in the second quarter of 2022. Profit before
tax in 2021 included a post-tax gain of USD 37m related to the sale of our minority interest in Clearstream Fund
Centre AG. Excluding these gains, profit before tax decreased by USD 443m, or 45%, to USD 550m, reflecting lower net
management and performance fees.
› 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 the aforementioned sales
Total revenues
Total revenues increased by USD 344m, or 13%, to USD 2,961m. Excluding the aforementioned gains from sales, total
revenues decreased by USD 466m, or 18%.
Net management fees decreased by USD 270m, or 12%, to USD 2,050m, on a lower average invested asset base,
reflecting negative market performance and foreign currency effects.
Performance fees decreased by USD 196m to USD 64m, mainly in Hedge Fund Businesses and Equities.
Operating expenses
Operating expenses decreased by USD 22m, or 1%, to USD 1,564m, mainly reflecting positive foreign currency effects,
lower personnel expenses and lower net expenses for litigation, regulatory and similar matters, as well as lower consulting
expenses. These decreases were almost entirely offset by higher expenses for technology, market data services, travel,
regulatory, and risk management.
Cost / income ratio
The cost / income ratio was 52.8%, compared with 60.6% in 2021. Excluding the aforementioned gains from sales, the
cost / income ratio was 74.0%, compared with 61.5% in 2021.
Invested assets
Invested assets decreased to USD 1,064bn from USD 1,211bn, reflecting negative market performance of USD 137bn
and negative foreign currency effects of USD 32bn, partly offset by net new money inflows of USD 25bn. Excluding
money market flows, net new money was negative USD 2bn.
Investment performance
As of year-end 2022, Morningstar assigned a four- or five-star rating to 62% of our retail and institutional funds assets
under management (AuM) (both actively managed and passive), on an AuM-weighted basis. Furthermore, 47% of our
actively managed open-ended retail and institutional funds AuM are ranked, on an AuM-weighted basis over a three-
year investment period, above their respective peer median.
Investment performance as of 31 December 2022
In %
% of UBS Asset Management fund assets rated as 4- or 5-star1,2
Total traditional
investments
62
Equities
71
Fixed Income
55
Multi-asset
41
% of UBS Asset Management fund assets above peer median over a 3-year investment period1,3
44
11 Morningstar® Essentials Quantitative Star Rating & Rankings; © Morningstar 2023, extract date 12 January 2023. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and / or its
content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and (4) does not constitute advice of any kind, whether investment, tax, legal or otherwise. User is
solely responsible for ensuring that it complies with all laws, regulations and restrictions applicable to it. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use
of this information, except where such damages or losses cannot be limited or excluded by law in your jurisdiction. Past performance is no guarantee of future results. For more detailed information about the
Morningstar Rating, including its methodology, please go to: https://s21.q4cdn.com/198919461/files/doc_downloads/othe_disclosure_materials/MorningstarRatingforFunds.pdf. 22 Percentage of AuM to which
Morningstar has assigned a four- or five-star rating. AuM reflect the AuM of Asset Management’s retail and institutional funds (both actively managed and passive) across all domiciles for which Asset Management
owns the investment performance, i.e., Asset Management is either the sole portfolio manager or co-portfolio manager. Universe is approximately 31% of all active and passive traditional assets of Asset Management
(Equities, Fixed Income excluding money market, and Multi-asset) as of 31 December 2022. 33 Percentage of AuM above peer median over a three-year investment period. AuM reflect the AuM of Asset Management’s
actively managed open-ended retail and institutional funds across all domiciles for which Asset Management owns the investment performance, i.e., Asset Management is either the sole portfolio manager or co-
portfolio manager. Universe is approximately 29% of all active traditional assets of Asset Management (Equities, Fixed Income excluding money market, and Multi-asset) as of 31 December 2022.
52
47
46
Annual Report 2022 | Financial and operating performance | Asset Management
79
79
Investment Bank
Investment Bank1
USD m, except where indicated
Results
Advisory
Capital Markets
GGlloobbaall BBaannkkiinngg
Execution Services
Derivatives & Solutions
Financing
GGlloobbaall MMaarrkkeettss
of which: Equities
of which: Foreign Exchange, Rates and Credit
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
OOppeerraattiinngg eexxppeennsseess
BBuussiinneessss ddiivviissiioonn ooppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
As of or for the year ended
3311..1122..2222
31.12.21
% change from
31.12.21
773333
885544
11,,558877
11,,664433
33,,666655
11,,882222
77,,112299
44,,997700
22,,116600
88,,771177
((1122))
66,,883322
11,,889977
988
2,170
3,158
1,894
3,422
979
6,296
4,581
1,715
9,454
(34)
6,858
2,630
(26)
(61)
(50)
(13)
7
86
13
8
26
(8)
(65)
0
(28)
Performance measures and other information
Pre-tax profit growth (year-on-year, %)2
Cost / income ratio (%)2
Average attributed equity (USD bn)3
Return on attributed equity (%)2,3
(5)
Average VaR (1-day, 95% confidence, 5 years of historical data)
11 Comparative figures in this table may differ as a result of 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. 22 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 33 Refer to “Capital management” in the “Capital,
liquidity and funding, and balance sheet” section of this report for more information.
((2277..99))
7788..44
1133..00
1144..66
1100
5.9
72.5
13.0
20.3
11
0
2022 compared with 2021
Results
Profit before tax decreased by USD 733m, or 28%, to USD 1,897m, driven by lower total revenues and lower net credit
loss releases, partly offset by lower operating expenses.
Total revenues
Total revenues decreased by USD 737m, or 8%, to USD 8,717m, reflecting lower revenues in Global Banking, partly
offset by higher revenues in Global Markets.
Global Banking
Global Banking revenues decreased by USD 1,571m, or 50%, to USD 1,587m, driven by Capital Markets and Advisory
revenues, compared with a 43% decrease in the overall global fee pool.
Advisory revenues decreased by USD 255m, or 26%, to USD 733m, mostly due to lower merger and acquisition (M&A)
transaction revenues, which decreased by USD 217m, or 25%, compared with a 21% decrease in the global M&A fee
pool.
Capital Markets revenues decreased by USD 1,316m, or 61%, to USD 854m, primarily due to lower Equity Capital
Markets (ECM) revenues, which decreased by USD 738m, or 71%, compared with a 67% decrease in the global ECM
fee pool. Leveraged Capital Markets (LCM) fee revenues decreased by USD 297m, or 58%, compared with a 54%
decrease in the global LCM fee pool.
Global Markets
Global Markets revenues increased by USD 833m, or 13%, to USD 7,129m, driven by higher revenues in our Financing
and Derivatives & Solutions businesses, partly offset by lower revenues in Execution Services.
Execution Services revenues decreased by USD 251m, or 13%, to USD 1,643m, mainly driven by lower Cash Equities
revenues.
Derivatives & Solutions revenues increased by USD 243m, or 7%, to USD 3,665m, mostly driven by an increase in Foreign
Exchange and Rates, which benefited from elevated volatility due to inflationary concerns and the actions of central
banks, partly offset by a decrease in Equity Derivatives revenues due to lower levels of client activity.
Financing revenues increased by USD 843m, or 86%, to USD 1,822m, predominantly due to 2021 including an
USD 861m loss on the default of a US-based client of our prime brokerage business.
Annual Report 2022 | Financial and operating performance | Investment Bank
80
80
Global Markets Equities revenues increased by USD 389m, or 8%, to USD 4,970m, mainly driven by Equity Financing,
due to the aforementioned loss in our prime brokerage business in 2021, partly offset by lower revenues in Cash Equities
and Equity Derivatives.
Global Markets Foreign Exchange, Rates and Credit revenues increased by USD 445m, or 26%, to USD 2,160m, mostly
driven by an increase in Foreign Exchange and Rates products, which benefited from elevated volatility due to inflationary
concerns and the actions of central banks.
Credit loss expense / release
Net credit loss releases were USD 12m, primarily related to credit-impaired (stage 3) positions, compared with net releases
of USD 34m in 2021.
Operating expenses
Operating expenses decreased by USD 26m, to USD 6,832m, with positive foreign currency effects being almost entirely
offset by increases across a number of expense lines.
Cost / income ratio
The cost / income ratio increased to 78.4% from 72.5%, as total revenues decreased by 8% and operating expenses
were in line with 2021.
Group Functions
Group Functions1
USD m
Results
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
OOppeerraattiinngg eexxppeennsseess
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
of which: Group Treasury
of which: Non-core and Legacy Portfolio
As of or for the year ended
3311..1122..2222
31.12.21
% change from
31.12.21
((338855))
33
9922
((448800))
((440044))
113311
(359)
0
330
(689)
(446)
(79)
7
801
(72)
(30)
(9)
of which: Group Services
25
11 Comparatives may differ as a result of 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.
((220066))
(165)
2022 compared with 2021
Results
Group Functions recorded a loss before tax of USD 480m, compared with a loss of USD 689m.
Group Treasury
The Group Treasury result was negative USD 404m, compared with negative USD 446m.
The net effects of accounting asymmetries, including hedge accounting ineffectiveness, were negative USD 375m,
compared with negative USD 341m. Accounting asymmetries are generally expected to mean revert to zero over time,
though the length of time needed for full reversion can vary significantly, depending on market conditions.
Income related to centralized Group Treasury risk management was negative USD 2m, compared with negative
USD 63m.
Non-core and Legacy Portfolio
The Non-core and Legacy Portfolio result was positive USD 131m, compared with negative USD 79m. This was mainly
due to income of USD 114m related to a legacy litigation settlement and a legacy bankruptcy claim, and valuation gains
of USD 81m on our USD 1.3bn portfolio of auction rate securities (ARS). Our remaining exposures to ARS were all rated
investment grade as of 31 December 2022.
Group Services
The Group Services result was negative USD 206m, compared with negative USD 165m, mainly driven by higher funding
costs related to deferred tax assets, partly offset by lower expenses relating to our legal entity transformation program.
Annual Report 2022 | Financial and operating performance | Investment Bank
81
81
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 International Financial Reporting Standard 7 (IFRS
7), Financial Instruments: Disclosures, and International Accounting Standard 1 (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. The risk profile of UBS AG consolidated does not differ materially
from that of UBS Group AG consolidated. Audited information provided in the “Risk management and control” and
“Capital, liquidity and funding, and balance sheet” sections applies to both UBS Group AG consolidated and UBS AG
consolidated.
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 2022 | Risk, capital, liquidity and funding, and balance sheet
82
82
Risk management and control
Table of contents
89
85
92
86
87
84
Overview of risks arising from our business activities
Risk categories
Top and emerging risks
Risk governance
Risk appetite framework
Internal risk reporting
Model risk management
Risk measurement
Credit risk
96
111 Market risk
Country risk
Sustainability and climate risk
Non-financial risk
122
119
130
93
92
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
83
83
Risk management and control
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
Personal & Corporate Banking
Asset Management
Investment Bank
Group Functions
Credit risk from lending against securities collateral, including derivative trading activity, and lending
against residential and commercial real estate collateral, as well as corporate and other lending.
Market risk from municipal securities and taxable fixed-income securities. Interest rate risk in the
banking book related to Global Wealth Management is transferred to and managed by Group Treasury.
Credit risk from retail business, mortgages, secured and unsecured corporate lending, commodity trade
finance, 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.
Credit risk and market risk on client assets invested in Asset Management funds can impact
management and performance fees and cause heightened fund outflows, liquidity risk and losses on our
seed capital and co-investments.
Small amounts of credit and market risk for on-balance sheet items.
Credit risk from lending (take-and-hold, as well as temporary loan underwriting activities), derivatives
trading and securities financing.
Market risk from primary underwriting activities and secondary trading.
Credit and market risk arising from management of the Group’s balance sheet, capital, profit or loss
and liquidity portfolios.
Structural risk arising from asset and liability management and liquidity and funding risk (managed by
Group Treasury).
Non-financial risks, which include operational, financial crime, compliance, conduct, model and reputational risks, are an inevitable consequence of being
in business and can arise as a result of our past and current business activities across all business divisions and Group Functions.
› Refer to “Risk categories” in this section for more information about other financial and non-financial risks relevant to UBS
Key risk developments
Although 2022 was a challenging year for the global economy and most markets, our lending portfolio performed well,
with low credit loss expenses and a USD 0.2bn reduction in credit-impaired exposure to USD 2.5bn. Overall, we saw a
USD 6bn decrease in banking product exposure driven by lower balances at central banks and lower loans and advances
to Global Wealth Management customers. Traded product exposures saw a decrease of USD 3bn across our business
divisions.
Market risk remained stable and at low levels, as a result of our continued focus on managing tail risks.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
84
84
Risk categories
We categorize the risk exposures of our business divisions and Group Functions as outlined in the table below. Our risk
appetite framework is designed to capture all risk categories.
› Refer to “Risk appetite framework” in this section for more information
Financial risks
Audited | Credit risk: the risk of loss resulting from the failure of a client or counterparty to meet its
contractual obligations toward UBS. This includes settlement risk, loan underwriting risk and step-in risk.
Business divisions
Risk Control
Risk managed by
Independent
oversight by
Settlement risk: the risk of loss resulting from transactions that involve exchange of value (e.g.,
security versus cash) where we must deliver without first being able to determine with certainty that
we will receive the consideration.
Loan underwriting risk: the risk of loss arising during the holding period of financing transactions
that are intended for further distribution.
Step-in risk: the risk that UBS may decide to provide financial support to an unconsolidated entity
that is facing stress in the absence of, or in excess of, any contractual obligations to provide such
support.
Audited | Market risk (traded and non-traded): the risk of loss resulting from adverse movements in
market variables. Market variables include observable variables, such as interest rates, foreign exchange
rates, equity prices, credit spreads and commodity (including precious metal) prices, as well as variables
that may be unobservable or only indirectly observable, such as volatilities and correlations. Market risk
includes issuer risk and investment risk.
Issuer risk: the risk of loss from changes in fair value resulting from credit-related events affecting
an issuer to which we are exposed through tradable securities or derivatives referencing the issuer.
Investment risk: issuer risk associated with positions held as financial investments.
Business divisions and
Group Treasury
Risk Control
Country risk: the risk of loss resulting from country-specific events. Includes 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.
Business divisions
Risk Control
Sustainability and climate risk: the risk that UBS negatively impacts, or is impacted by, climate
change, natural capital, human rights, and other environmental, social, governance (ESG) matters.
Climate risks can arise from either changing climate conditions (physical risks) or from efforts to mitigate
climate change (transition risks). Sustainability and climate risk may manifest as credit, market, liquidity,
and / or non-financial risks for UBS, resulting in potential adverse financial, liability and / or reputation
impacts. These risks extend to the value of investments and may also affect the value of collateral (e.g.,
real estate).
Business divisions
Risk Control
Treasury risk: the risks associated with asset and liability management and our liquidity and funding
positions, as well as structural exposures including pension risks.
Group Treasury
Risk Control
Audited | Liquidity risk: the risk that the firm will not be able to efficiently meet both expected and
unexpected current and forecast cash flows and collateral needs without affecting either daily
operations or the financial condition of the firm.
Audited | Funding risk: the risk that the firm will be unable, on an ongoing basis, to borrow funds in
the market on an unsecured (or even secured) basis at an acceptable price to fund actual or
proposed commitments, i.e., the risk that UBS’s funding capacity is not sufficient to support the
firm’s current business and desired strategy.
Interest rate risk in the banking book: the risk to the bank’s capital and earnings arising from the
adverse effects of interest rate movements on the bank’s banking book positions. The risk is
transferred from the originating business units GWM and P&C to Group Treasury to risk manage this
centrally and benefit from Group-wide netting while leaving the business units with margin
management.
Structural foreign exchange risk: the risk of decreases in our capital due to changes in foreign
exchange rates with an adverse translation effect on capital held in currencies other than the
US dollar.
Pension risk: the risk of a negative impact on our capital as a result of deteriorating funded status
from decreases in the fair value of assets held in defined benefit pension funds and / or changes in
the value of defined benefit pension obligations due to changes in actuarial assumptions (e.g.,
discount rate, life expectancy, rate of pension increase) and / or changes to plan designs.
Group Treasury and
Human Resources
Risk Control
and Finance
Business risk: the potential negative impact on earnings from lower-than-expected business volumes
and / or margins, to the extent they are not offset by a decrease in expenses. For example, changes in
the competitive landscape, client behavior or market conditions can potentially have a negative impact.
Business divisions
Risk Control
and Finance
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Risk managed by
Independent
oversight by
Non-financial risks
Compliance risk: the risk of failure to comply with laws, rules and regulations, and internal policies and
procedures.
Business divisions
Employment risk: the risk of not adhering to the applicable employment law, regulatory
requirements and human resources practices, as well as our own internal standards.
Conduct risk: the risk that the conduct of the firm or its individuals unfairly impacts clients or
counterparties, undermines the integrity of the financial system or impairs effective competition to
the detriment of consumers.
Financial crime risk: the risk of failure to prevent financial crime (including money laundering, terrorist
financing, sanctions violations, fraud, bribery and corruption).
Business divisions and
Financial Crime
Prevention (FCP)
Group Compliance,
Regulatory &
Governance (GCRG)
Human Resources
GCRG
GCRG
Operational risk: the risk resulting from inadequate or failed internal processes, people or systems, or
from external causes (deliberate, accidental or natural).
Business divisions
GCRG
Cybersecurity and information security risk: the risk of a malicious internal or external act, or a
failure of IT hardware or software, or human error, leading to a material impact on confidentiality,
integrity or availability of UBS’s data or information systems.
Model risk: the risk of adverse consequences (e.g., financial loss, due to legal matters, operational
loss, biased business decisions, or reputational damage) resulting from decisions based on incorrect /
inadequate or misused model outputs and reports.
Legal risk: the financial or reputational implications resulting from the risk of: (i) being held liable for a
breach of applicable laws, rules or regulations; (ii) being held liable for a breach of contractual or other
legal obligations; (iii) an inability or failure to enforce or protect contractual rights or non-contractual
rights sufficiently to protect UBS’s interests, including the risk of being party to a claim in respect of any
of the above (and the risk of loss of attorney–client privilege in the context of any such claim); (iv) a
failure to adequately develop, supervise and resource legal teams or adequately supervise external legal
counsel advising on business legal risk and other matters; and (v) a failure to adequately manage any
potential, threatened and commenced litigation and legal proceedings, including civil, criminal,
arbitration and regulatory proceedings, and / or litigation risk or any dispute or investigation that may
lead to litigation or threat of any litigation.
Business divisions and
the Chief Digital and
Information Office (the
CDIO)
GCRG
Model owner
Risk Control
Business divisions
Legal
Reputational risk: the risk of loss of and damage to reputation, loss of clients and investor confidence
within the financial system.
All businesses and
functions
All control functions
Top and emerging risks
The top and emerging risks disclosed below reflect those that we currently think have the potential to materialize within
one year and which could significantly affect the Group. 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 we consider 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.
– We remain watchful of a range of geopolitical developments across the world, including the Russia–Ukraine war, US–
China and US–Iran tensions, and political changes in a number of countries. Geopolitical tensions will continue to
create uncertainty, while the Russia–Ukraine war complicates the energy price outlook.
– Inflation appears to be moderating in the US and Europe, but there continue to be concerns regarding a potential
resurgence and regarding the timing and extent of central bank policy responses (i.e., interest rate hikes and the
tapering of quantitative easing).
– We are exposed to a number of macroeconomic issues, as well as general market conditions. As noted in “Market,
credit and macroeconomic risks” in the “Risk factors” section of this report, these external pressures may have a
significant adverse effect on our business activities and related financial results, primarily through reduced margins
and revenues, asset impairments and other valuation adjustments. Accordingly, these macroeconomic factors are
considered in the development of stress-testing scenarios for our ongoing risk management activities.
– We are exposed to substantial changes in the regulation of our businesses that could have a material adverse effect
on our business, as discussed in the “Regulatory and legal developments” section of this report and in “Regulatory
and legal risks” in the “Risk factors” section of this report.
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– As a global financial services firm, we are subject to many different legal, tax and regulatory regimes and extensive
regulatory oversight. We are exposed to significant liability risk, and we are subject to various claims, disputes, legal
proceedings and government investigations, as noted in “Regulatory and legal risks” in the “Risk factors” section of
this report. Information about litigation, regulatory and similar matters we consider significant is disclosed in “Note 17
Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report.
– The geopolitical situation increases the likelihood of external state-driven cyber activity, and attacks are becoming
increasingly sophisticated, which may result in business disruption or the corruption or loss of data. Additionally, as a
result of the dynamic and material nature of recent geopolitical, environmental and health threats and the operational
complexity of all our businesses, we are continually exposed to operational resilience scenarios such as process error,
failed execution, system failures and fraud.
– Conduct risks are inherent in our businesses. Achieving fair outcomes for our clients, upholding market integrity and
cultivating the highest standards of employee conduct are of critical importance to us. Management of conduct risks
is an integral part of our risk management framework.
– Financial crime (including money laundering, terrorist financing, sanctions violations, fraud, bribery and corruption)
presents significant risk. Heightened regulatory expectations and attention require investment in people and systems,
while emerging technologies and changing geopolitical risks further increase the complexity of identifying and
preventing financial crime. 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.
– ESG / sustainability and climate risks are in the focus of regulators and other stakeholders, in particular climate risks,
nature-related risk and concerns about greenwashing, where UBS may be subject to reputational risk if not fully aligned
with sustainability-related criteria. New standards and rules are developing in several jurisdictions, with the risk of
divergent rules increasing and leading to an increased risk that UBS may not comply with all relevant regulations. Refer
to “Sustainability and climate risk” and “Non-financial risk” in this section.
– New risks continue to emerge. For example, client demand for distributed ledger technology, blockchain-based assets
and virtual currencies creates new risks, to which we currently have limited exposure and for which relevant control
frameworks are being implemented.
Risk governance
Our risk governance framework operates along three lines of defense.
Our first line of defense, business management, owns its risks and is accountable for maintaining effective processes and
systems to manage them in compliance with applicable laws, rules and regulations, as well as internal standards, including
identifying control weaknesses and inadequate processes.
Our second line of defense, control functions, is separate from the business and reports directly to the Group CEO.
Control functions provide independent oversight, challenge financial and non-financial risks arising from the firm’s
business activities, and establish independent frameworks for risk assessment, measurement, aggregation, control and
reporting, protecting against non-compliance with applicable laws, rules and regulations.
Our third line of defense, Group Internal Audit (GIA), reports to the Chairman and to the Audit Committee. This function
assesses the design and operating effectiveness and sustainability of processes to define risk appetite, governance, risk
management, internal controls, remediation activities and processes to comply with legal and regulatory requirements
and internal governance standards.
The key roles and responsibilities for risk management and control are shown in the chart below and described further
below.
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Group function
Heads
Group Functions
Group Treasury¹ /
Non-core and
Legacy Portfolio
Divisional
Presidents
Audited
Risk governance
Board of Directors
Risk
Committee
Audit
Committee
Corporate Culture and
Responsibility Committee
Governance and
Nominating Committee
Compensation
Committee
Group Internal Audit (third line of defense)
Group Executive Board (acting as risk council)
Group Chief Executive Officer
First line of
defense
(business and
Group Functions
management)
Group Risk
Control
Divisional,
regional and legal
entity Presidents
Group Chief
Risk Offi cer
(CRO)
Second line of defense (Group Functions – control functions)
Group
Compliance,
Regulatory &
Governance
(GCRG)
Group Chief
Compliance
and
Governance
Offi cer
Group
Finance
Group
General
Counsel
Group
Human
Resources
Group Chief
Financial
Offi cer (CFO)
Group
General
Counsel
Head
Human
Resources
Market and
Treasury CRO
Central Risk
functions
Central GCRG
functions
Central Finance
functions
Central Legal
functions
HR functions
Divisional CROs
Divisional Heads
Compliance &
Operational Risk
Control (C&ORC)
Regional / legal
entity Heads
C&ORC
Divisional CFOs
Divisional
General Counsels
Regional / legal
entity CFOs
Regional / legal
entity General
Counsels
HR Business
Partners
(by business
division)
HR regions
Regional / legal
entity Presidents
Regional / legal
entity CROs
1 Part of Group Finance.
Audited | The Board of Directors (the BoD) approves the risk management and control framework of the Group, including
the Group and business division overall risk appetite. The BoD is supported by its Risk Committee, which monitors and
oversees the Group’s risk profile and the implementation of the risk framework approved by the BoD, and approves the
Group’s risk appetite methodology. The Corporate Culture and Responsibility Committee (the CCRC) helps the BoD meet
its duty to safeguard and advance UBS’s reputation for responsible and sustainable conduct, reviewing stakeholder
concerns and expectations pertaining to UBS’s societal contribution and corporate culture. The Audit Committee assists
the BoD with its oversight duty relating to financial reporting and internal controls over financial reporting, and the
effectiveness of whistleblowing procedures and the external and internal audit functions.
The Group Executive Board (the GEB) has overall responsibility for establishing and implementing a risk management and
control framework in the Group, managing the risk profile of the Group as a whole.
The Group Chief Executive Officer has responsibility and accountability for the management and performance of the Group,
has risk authority over transactions, positions and exposures, and allocates business divisions and Group Functions risk limits
approved by the BoD.
The business division Presidents and Group functional heads are responsible for the operation and management of their
business divisions / Group Functions, including controlling the dedicated financial resources and risk appetite of the
business divisions.
The regional Presidents ensure cross-divisional collaboration in their regions and are mandated to inform the GEB about
any regional activities and issues that may give rise to actual or potentially material regulatory or reputational concerns.
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The Group Chief Risk Officer (the Group CRO) is responsible for developing the Group’s risk management and control
framework (including risk principles and risk appetite) for credit, market, country, treasury, model and sustainability and
climate risks. This includes risk measurement and aggregation, portfolio controls and risk reporting. The Group CRO sets
risk limits and approves credit and market risk transactions and exposures. Risk Control is also the central function for
model risk management and control for all models used in UBS. A framework of policies and authorities support the risk
control process.
The Group Chief Compliance and Governance Officer is responsible for developing the Group’s non-financial risk
framework, which sets the general requirements for identification, management, assessment and mitigation of non-
financial risk, and for ensuring that all non-financial risks are identified, owned and managed according to the non-
financial risk appetite objectives, supported by an effective control framework.
The Group Chief Financial Officer is responsible for transparency in assessing the financial performance of the Group and
the business divisions, and for managing the Group’s financial accounting, controlling, forecasting, planning and
reporting. Additional responsibilities include managing UBS’s tax affairs, as well as treasury and capital management,
including liquidity and funding risk and UBS’s regulatory ratios, Finance Artificial Intelligence & Data Analytics strategy
and Group M&A.
The Group General Counsel manages the Group’s legal affairs (including litigation involving UBS), ensuring effective and timely
assessment of legal matters impacting the Group or its businesses, and managing and reporting all litigation matters.
The Head Human Resources is responsible for independent oversight and challenge of employment-related risks.
Group Internal Audit (GIA) independently assesses the effectiveness of processes to define strategy and risk appetite and
overall adherence to the approved strategy. It also assesses the effectiveness of governance processes and risk
management, including compliance with legal and regulatory requirements and internal governance documents. The
Head GIA reports to the Chairman of the BoD. GIA also has a functional reporting line to the BoD Audit Committee.
Some of these roles and responsibilities are replicated for significant legal entities of the Group. Designated legal entity
risk officers oversee and control financial and non-financial risks for significant legal entities of UBS as part of the legal
entity control framework, which complements the Group’s risk management and control framework.
Risk appetite framework
We have a defined Group-level risk appetite, covering all financial and non-financial risk types, via a complementary set of
qualitative and quantitative risk appetite statements. This is reviewed and recalibrated annually and presented to the BoD
for approval.
Our risk appetite is defined at the aggregate Group level and reflects the types of 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. The “Risk appetite framework” chart below shows the
key elements of the framework, which is described in detail in this section.
Qualitative risk appetite statements aim to ensure we maintain the desired risk culture. Quantitative risk appetite
objectives are designed to enhance UBS’s resilience against the effects of potential severe adverse economic or
geopolitical events. These risk appetite objectives cover UBS’s minimum capital and leverage ratios, solvency, earnings,
liquidity and funding, and are subject to periodic review, including the yearly business planning process. These objectives
are complemented by non-financial risk appetite objectives, which are set for each of our non-financial risk categories. A
standardized quantitative firm-wide non-financial risk appetite has been established at the Group and business division
levels. Non-financial risk events exceeding predetermined risk tolerances, expressed as percentages of UBS’s total
revenue, must be escalated as per the firm-wide escalation framework to the respective business division President or
higher, as appropriate.
The quantitative risk appetite objectives are supported by a comprehensive suite of risk limits set at a portfolio level to
monitor specific portfolios and to control potential risk concentrations.
The status of risk appetite objectives is evaluated each month and reported to the BoD and the GEB. As our risk appetite
may change over time, portfolio limits and associated approval authorities are subject to periodic reviews and changes,
particularly in the context of our annual business planning process.
Our risk appetite framework is governed by a single overarching policy and conforms to the Financial Stability Board’s
Principles for an Effective Risk Appetite Framework.
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Risk appetite framework
Risk appetite framework
Risk appetite statements
Risk principles, governance, roles and responsibilities
Risk objectives, measures and controls
– Risk management and control principles
– Code of Conduct and Ethics
– Total Reward Principles
– Organization regulations / policies
– Roles and responsibilities
– Group-wide risk appetite objectives
– Non-fi nancial risk appetite objectives
– Risk measurement frameworks
– Authorities and limits
Risk reporting and disclosure, including internal, regulatory and external reporting
Risk principles and 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. Together these aim to align our decisions with the Group’s strategy, principles and risk appetite. They help
create a solid foundation for promoting risk awareness, leading to appropriate risk-taking and the establishing of robust
risk management and control processes. These principles are supported by a range of initiatives covering employees at
all levels, for example the UBS House View on Leadership, which is a set of explicit expectations that establishes consistent
leadership standards across UBS, and our Principles of Good Supervision, which establish clear expectations of managers
and employees regarding supervisory responsibilities, specifically: to take responsibility; to know and organize their
business; to know their employees and what they do; to create a good risk culture; and to respond to and resolve issues.
› Refer to “Employees” in the “How we create value for our stakeholders” section of this report for more information about our
Pillars, Principles and Behaviors
› Refer to the Code of Conduct and Ethics of UBS at ubs.com/code for more information
Risk management and control principles
Protection of financial strength
Protection of reputation
Business management accountability
Independent controls
Risk disclosure
Protecting UBS’s financial strength by controlling our risk exposure and avoiding potential risk
concentrations at individual exposure levels, at specific portfolio levels and at an aggregate firm-wide
level across all risk types.
Protecting our reputation through a sound risk culture characterized by a holistic and integrated view of
risk, performance and reward, and through full compliance with our standards and principles, particularly
our Code of Conduct and Ethics.
Maintaining management accountability, whereby business management owns all risks assumed
throughout the Group and is responsible for the continuous and active management of all risk exposures
to provide for balanced risk and return.
Independent control functions that monitor the effectiveness of the businesses’ risk management and
oversee risk-taking activities.
Disclosure of risks to senior management, the BoD, investors, regulators, credit rating agencies and other
stakeholders with an appropriate level of comprehensiveness and transparency.
Whistleblowing policies and procedures exist to encourage an environment where staff are comfortable raising concerns.
There are multiple channels via which individuals may, either openly or anonymously, escalate suspected breaches of
laws, regulations, rules and other legal requirements, our Code of Conduct and Ethics, policies or relevant professional
standards. We are committed to ensuring there is appropriate training and communication to staff and legal entity
representatives, including information about new regulatory requirements.
Mandatory training programs cover various compliance-related and risk-related topics, including operational risk and
anti-money laundering. Additional specialized training is provided depending on employees’ specific roles and
responsibilities; e.g., credit risk and market risk training for those working in trading areas. Our non-financial risk
framework aims to identify and manage financial, regulatory and reputational risks, as well as risks to clients and markets.
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Quantitative risk appetite objectives
Our quantitative risk appetite objectives aim to ensure that our aggregate risk exposure remains within desired risk
capacity, based on capital and business plans. The specific definition of risk capacity for each objective is aimed at ensuring
we have sufficient capital, earnings, funding and liquidity to protect our businesses and exceed minimum regulatory
requirements under a severe stress event. The risk appetite objectives are evaluated during the annual business planning
process and approved by the BoD. The comparison of risk exposure with risk capacity is a key consideration in decisions
on potential adjustments to the business strategy, risk profile, and the level of capital returns to shareholders.
In the annual business planning process, UBS’s business strategy is reviewed, the risk profile that our operations and
activities result in is assessed, and that risk profile stressed. We use both scenario-based stress tests and statistical risk
measurement techniques to assess the effects of severe stress events at a firm-wide level. These complementary
frameworks capture exposures to material risks across our business divisions and Group Functions.
› Refer to “Risk measurement” in this section for more information about our stress testing and statistical stress frameworks
2022 quantitative risk appetite objectives
Group-wide quantitative risk appetite objectives
Minimum capital objectives
CET1 capital is suffi cient to meet
minimum RWA-based capital
requirements even if a severe stress
event were to occur.
Minimum leverage ratio objectives
CET1 capital is suffi cient to meet
minimum leverage-ratio-based capital
requirements even if a severe stress
event were to occur.
Earnings objectives
Losses do not exceed average historic
earnings even if a severe stress event
were to occur.
Liquidity objectives
Ensure that the fi rm has suffi cient
liquidity to survive a severe three-
month idiosyncratic and market-
wide liquidity stress event without
government support, allowing for
discrete management actions.
Solvency objectives
CET1 capital plus contingent capital
is suffi cient to ensure that the
probability of loss for the fi rm’s debt
holders is consistent with the fi rm’s
target credit rating.
Funding objectives
Ensure that the fi rm has suffi cient
long-term funding to maintain
franchise assets at a constant level
under stressed market conditions for
up to one year without government
support, allowing for discrete
management actions.
Risk capacity
Projected earnings
adjusted to refl ect
business risk
Capital
adjusted to refl ect
stress impact on capital-
relevant elements
Risk exposure
Statistical measures
earnings-at-risk, capital-at-risk, risk-based capital
Stress measures
combined stress test
Credit risk
Country risk
Market risk¹
Non-fi nancial risk
Liquidity and
funding risk
Structural foreign-
exchange risk
Pension risk
Granular limit framework
1 Includes interest rate risk. Refer to “Risk categories” in this section for more information.
Our risk capacity is underpinned by performance targets and capital guidance as per our business plan. When determining
our risk capacity in case of a severe stress event, we estimate projected earnings under stress, factoring in lower expected
income and expenses. We also consider capital impacts under stress from deferred tax assets, pension plan assets and
liabilities, and accruals for capital returns to shareholders.
Risk appetite objectives define the aggregate risk exposure acceptable at the firm-wide level, given our risk capacity. The
maximum acceptable risk exposure is supported by a full set of risk limits, which are cascaded to businesses and portfolios.
These limits aim to ensure that our risks remain in line with risk appetite.
Risk appetite statements at the business division level are derived from the firm-wide risk appetite. They may also include
division-specific strategic goals related to that division’s activities and risks. Risk appetite statements are also set for certain
legal entities, which must be consistent with the firm-wide risk appetite framework and approved in accordance with
Group and legal entity regulations. Differences may exist that reflect the specific nature, size, complexity and regulations
applicable to the relevant legal entity.
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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.
The Group Risk Report provides a detailed qualitative and quantitative monthly overview of developments in financial
and non-financial risks at the firm-wide level, including the status of our risk appetite objectives and the results of firm-
wide stress testing. The Group Risk Report is distributed internally to the BoD and the GEB, and senior members of Risk
Control, GIA, Finance and Legal. Risk reports are also produced for significant Group entities (entities subject to enhanced
standards of corporate governance) and significant branches.
Granular divisional risk reports are provided to the respective business division CROs and business division Presidents. This
monthly reporting is supplemented with daily or weekly reports, at various levels of granularity, covering market and
credit risks for the business divisions to enable risk officers and senior management to monitor and control the Group’s
risk profile.
Our internal risk reporting covers financial and non-financial risks and is supported by risk data and measurement systems
that are also used for external disclosure and regulatory reporting. Dedicated units within Risk Control assume responsibility
for measurement, analysis and reporting of risk and for overseeing the quality and integrity of risk-related data. Our risk
data and measurement systems are subject to periodic review by GIA, following a risk-based audit approach.
Model risk management
Introduction
We rely on models to inform risk management and control decisions, to measure risks or exposures, value instruments
or positions, conduct stress testing, assess adequacy of capital, and manage clients’ assets and our own assets. Models
may also be used to measure and monitor compliance with rules and regulations, for surveillance activities, or to meet
financial or regulatory reporting requirements.
Model risk is defined as the risk of adverse consequences (e.g., financial losses or reputational damage) resulting from
incorrect or misused models.
Model governance framework
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 they can be granted approval for use from the model sponsor, all our models
are independently validated.
Once validated and approved for use, a model is subject to ongoing model monitoring and annual model confirmation,
ensuring that the model is only used if it continues to be found fit for purpose. All models are subject to periodic model
re-validation.
Our model risk governance framework follows our overarching risk governance framework, with the three lines of
defense (LoD) assigned as follows.
– First LoD: model sponsors, model owners, model developers, and model users
– Second LoD: Chief Model Risk Officer, Model Risk Management & Control
– Third LoD: Group Internal Audit
An important difference as compared with how LoD are usually defined in financial and non-financial risk is that some
models are owned by traditionally second LoD functions, such as Risk Control, Finance or Compliance.
Model risk appetite framework and statement
The model risk appetite framework sets out the model risk appetite statement, defines the relevant metrics and lays out
how appropriate adherence is assessed.
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Model oversight
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 CRO 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.
Risk measurement
Audited | We apply a variety of methodologies and measurements to quantify the risks of our portfolios and potential risk
concentrations. Risks that are not fully reflected within standard measures are subject to additional controls, which may
include preapproval of specific transactions and the application of specific restrictions. Models to quantify risk are
generally developed by dedicated units within control functions and are subject to independent validation.
› Refer to “Credit risk,” “Market risk” and “Non-financial risk” in this section for more information about model confirmation
procedures
Stress testing
We perform stress testing to estimate losses that could result from extreme yet plausible macroeconomic and geopolitical
stress events to identify, better understand and manage our potential vulnerabilities and risk concentrations. Stress testing
has a key role in our limits framework at the firm-wide, business division, legal entity and portfolio levels. Stress test
results are regularly reported to the BoD and the GEB. As described in “Risk appetite framework,” stress testing, along
with statistical loss measures, has a central role in our risk appetite and business planning processes.
Our stress testing framework has three pillars: (i) combined stress tests; (ii) an extensive set of portfolio- and risk-type-
specific stress tests; and (iii) reverse stress testing.
Our 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. We implement each scenario through the expected evolution of market indicators and
economic variables under that scenario and then estimate the overall loss and capital implications were the scenario to
occur. 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.
We provide detailed stress loss analyses to the Swiss Financial Market Supervisory Authority (FINMA) and regulators of
our legal entities in accordance with their requirements.
Our Enterprise-wide Stress Forum (the ESF) aims to ensure the consistency and adequacy of the assumptions and scenarios
used for firm-wide stress measures. As part of its responsibilities, the ESF, with input from the Think Tank, a panel of
senior representatives from the business divisions, Risk Control and Economic Research, seeks to ensure that the set of
stress scenarios adequately reflects current and potential developments in the macroeconomic and geopolitical
environment, current and planned business activities, and actual or potential risk concentrations and vulnerabilities in our
portfolios.
Each scenario captures a wide range of macroeconomic variables, including GDP, equity prices, interest rates, foreign
exchange rates, commodity prices, property prices and unemployment. We use assumed changes in these
macroeconomic and market variables in each scenario 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 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 variables are updated periodically to account for changes in the current and
possible future market environment.
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In 2022, the binding scenario for CST was the internal global crisis scenario. In this scenario, weaker fiscal conditions
resulting from the COVID-19 pandemic, combined with concerns around inflation, geopolitical tensions and accelerating
policy actions toward a carbon-neutral economy, lead to sovereign defaults in several emerging markets. This then spills
over into a Eurozone crisis, a hard landing in China and a global downturn. The macroeconomic impact is severe, as is
the immediate market impact. Volatility in the bond markets spreads to other asset classes. Greece, Portugal and Cyprus
lose market access and require substantial debt restructurings, while Greece leaves the Eurozone. Weak consumer and
business confidence and a fall in global markets lead to a global recession. The fiscal response in many countries is limited
due to the lack of fiscal headroom, while central banks resume expansionary monetary policy. China is hit severely by the
slowdown in global demand and volatility in financial markets, which further weakens emerging market economies. The
scenario was updated over the course of 2022 to incorporate evolving economic conditions, including rising interest rates
across the globe.
As part of the CST framework, we routinely monitored three additional stress scenarios throughout 2022:
– The global depression scenario explores a resurgence of COVID-19 occurring in the midst of a global market downturn.
A combination of political, solvency and liquidity concerns cause several large emerging markets to default, which
triggers a broader sovereign crisis. Several European economies default, and some leave the Eurozone. A negative
feedback loop between collapsing demand in developed and emerging markets, declining asset values and commodity
prices, and disruption in the banking system leads to a deep and prolonged recession across the globe.
– The severe Russia–Ukraine conflict scenario was created in early 2022 in response to developments in Ukraine and
explores a sharp and persistent rise in inflation due to an escalation of geopolitical tensions, leading to a significant
rise in long-term interest rates and a period of market turbulence. Economic activity slows across the globe as both
business and household sentiment collapse, while credit conditions deteriorate. Despite weakness in activity, inflation
remains stubbornly high, forcing central banks to begin raising their policy rates and thereby prolonging the weakness
in economic activity and asset prices.
– The US monetary crisis scenario explores a loss of confidence in the US, which leads to a sell-off of US dollar-
denominated assets, sparking an abrupt and substantial depreciation of the US dollar. The US economy is hit hard,
financial markets enter a period of high volatility and other industrialized countries replicate the cyclical pattern of the
US. Regional inflation trends diverge as the US experiences significant inflationary pressures while other developed
markets experience deflation.
We have updated the binding stress scenario in our CST framework for 2023. The new stagflationary geopolitical crisis
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. The global crisis scenario will continue to be maintained
and run for monitoring purposes.
Portfolio-specific stress tests are measures tailored to the risks of specific portfolios. Our portfolio stress loss measures are
derived from data on past events, but also include forward-looking elements (e.g., we derive the expected market
movements in our liquidity-adjusted stress metric using a combination of historical market behavior, based on an analysis
of historical events, and forward-looking analysis, including consideration of defined scenarios not modeled on any
historical events). Results of portfolio-specific stress tests may be subject to limits to explicitly control risk-taking or may
be monitored without limits to identify vulnerabilities.
Reverse stress testing starts from a defined stress outcome (e.g., a specified loss amount, reputational damage, a liquidity
shortfall or a breach of regulatory capital ratios) and works backward to identify economic or financial scenarios that
could result in such an outcome. As such, reverse stress testing is intended to complement scenario-based stress tests by
assuming “what if” outcomes that could extend beyond the range normally considered, and thereby potentially challenge
assumptions regarding severity and plausibility.
We also routinely analyze the effect of increases or decreases in interest rates and changes in the structure of yield curves.
Within Group Treasury, 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 19 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more
information about scenarios used for expected credit loss measurement
Statistical measures
We complement the scenario-based CST measures with our statistical stress measures to calculate and aggregate risks
using statistical techniques to derive stress events at chosen confidence levels.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
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This framework is used to derive a loss distribution, considering effects on both income and expenses, based on the
simulation of historically observed financial and economic risk factors in combination with the firm’s actual earnings and
relevant risk exposures. From that, we determine earnings-at-risk (EaR), measuring the potential shortfall in earnings (i.e.,
the deviation from forecast earnings) at a 95% confidence level and evaluated over a one-year horizon. EaR is used for
the assessment of the earnings objectives in our risk appetite framework.
We extend the EaR measure, incorporating the effects of gains and losses recognized through other comprehensive
income, to derive a distribution of potential effects of stress events on common equity tier 1 capital. From this distribution,
we derive our capital-at-risk (CaR) buffer measure at a 95% confidence level to assess our capital and leverage ratio risk
appetite objectives, and derive our CaR solvency measure at a 99.9% confidence level to assess our solvency risk appetite
objective.
We use the CaR solvency measure as a basis for deriving the contributions of the business divisions to risk-based capital
(RBC), which is a component of our equity attribution framework. RBC measures the potential capital impairment from
an extreme stress event at a 99.9% confidence level.
› Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information about the equity
attribution framework
Portfolio and position limits
UBS maintains a comprehensive set of risk limits across its major risk portfolios. These portfolio limits are set based on
our risk appetite and periodically reviewed and adjusted as part of the business planning process.
Firm-wide stress and statistical metrics are complemented by more granular portfolio and position limits, triggers and
targets. Combining these measures provides a comprehensive framework for control of the key risks of our business
divisions, as well as significant legal entities.
We apply limits to a variety of exposures at portfolio level, using statistical and stress-based measures, such as value-at-
risk, liquidity-adjusted stress, loan underwriting limits, economic value sensitivity and portfolio default simulations for
loan books. These are complemented with a set of controls for net interest income sensitivity, mark-to-market losses on
available-for-sale portfolios, and the effect of foreign exchange movements on capital and capital ratios.
Portfolio measures are supplemented with counterparty- and position-level controls. Risk measures for position controls
are based on market risk sensitivities and counterparty-level credit risk exposures. Market risk sensitivities include
sensitivities to changes in general market risk factors (e.g., equity indices, foreign exchange rates and interest rates) and
sensitivities to issuer-specific factors (e.g., changes in an issuer’s credit spread or default risk). We monitor numerous
market and treasury risk controls on a daily basis. Counterparty measures capture the current and potential future
exposure to an individual counterparty, considering collateral and legally enforceable netting agreements.
› Refer to “Credit risk” in this section for more information about counterparty limits
› Refer to “Risk appetite framework” in this section for more information about the risk appetite framework
Risk concentrations
Audited | Risk concentrations may exist where one or several positions within or across different risk categories could result
in significant losses relative to UBS’s financial strength. Identifying such risk concentrations and assessing their potential
impact is a critical component of our risk management and control process.
For financial risks, we consider a number of elements, such as shared characteristics of positions, the size of the portfolio
and the sensitivity of positions to changes in the underlying risk factors. Also important in our assessment is the liquidity
of the markets where the positions are traded, as well as the availability and effectiveness of hedges or other potential
risk-mitigating factors. This includes an assessment of, for example, the provider of the hedge and market liquidity where
the hedge might be traded. 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 is when
a position and its risk mitigation can be impacted by the same event.
For non-financial risks, risk concentrations may result from, for example, a single operational risk issue that is large on its
own (i.e., it has the potential to produce a single high-impact loss or a number of losses that together are high impact)
or related risk issues that may link together to create a high impact.
Risk concentrations are subject to increased oversight by Group Risk Control and Group Compliance, Regulatory &
Governance, and assessed to determine whether they should be reduced or mitigated, depending on the available means
to do so. It is possible that material losses could occur on financial or non-financial risks, particularly if the correlations
that emerge in a stressed environment differ markedly from those envisaged by risk models.
› Refer to “Credit risk” and “Market risk” in this section for more information about the composition of our portfolios
› Refer to the “Risk factors” section of this report for more information
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
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Credit risk
Audited | Main sources of credit risk
– Global Wealth Management credit risk arises from lending against securities collateral, including derivative trading
activity, and lending against residential and commercial real estate collateral, as well as corporate and other lending.
– A substantial portion of lending exposure arises from Personal & Corporate Banking, which offers mortgage loans,
secured mainly by owner-occupied properties and income-producing real estate, as well as corporate loans, and
therefore depends on the performance of the Swiss economy and real estate market.
– The Investment Bank’s credit exposure 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 give rise to temporary concentrated exposure.
– Credit risk within Non-core and Legacy portfolio relates to derivative transactions and securitized positions.
Credit loss expense / release
Total net credit loss expenses were USD 29m in 2022, compared with net credit loss releases of USD 148m in the prior
year, reflecting net expenses of USD 29m related to stage 1 and 2 positions.
Stage 1 and 2 expected credit loss expenses of USD 29m relate to lending to corporate clients not secured by mortgages
(USD 21m), mainly driven by scenario effects related to downward revision of GDP and higher interest rate assumptions,
and lending secured by mortgages (USD 16m), mainly driven by scenario effects related to higher interest rate
assumptions, especially in the newly introduced stagflationary geopolitical crisis scenario, and adverse house price
assumptions, partly offset by releases from other lending (USD 9m).
› Refer to “Note 1 Summary of material accounting policies,” “Note 9 Financial assets at amortized cost and other positions in scope
of expected credit loss measurement” and “Note 19 Expected credit loss measurement” in the “Consolidated financial statements”
section of this report for more information about IFRS 9 and expected credit losses
Credit loss expense / (release)
USD m
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2222
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2211
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2200
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Group
Functions
((55))
55
00
(28)
(1)
((2299))
48
40
8888
2277
1122
3399
(62)
(24)
((8866))
129
128
225577
00
00
00
0
1
11
0
2
22
66
((1188))
((1122))
(34)
0
((3344))
88
217
330055
11
22
33
0
0
00
0
42
4422
Total
2299
00
2299
(123)
(25)
((114488))
266
429
669944
Audited | Overview of measurement, monitoring and management techniques
– Credit risk from transactions with individual counterparties is based on our estimates of probability of default (PD),
exposure at default (EAD) and loss given default (LGD). Limits are established for individual counterparties and groups
of related counterparties covering banking and traded products, and for settlement amounts. Risk authorities are
approved by the Board of Directors and are delegated to the Group CEO, the Group CRO and divisional CROs, based
on risk exposure amounts, internal credit rating and potential for losses.
– Limits apply not only to the current outstanding amount but also to contingent commitments and the potential future
exposure of traded products.
– The Investment Bank monitoring, measurement and limit framework distinguishes between exposures intended to be
held to maturity (take-and-hold exposures) and those intended for distribution or risk transfer (temporary exposures).
– We use models to derive portfolio credit risk measures of expected loss, statistical loss and stress loss at Group-wide
and business division levels, and to establish portfolio limits.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
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96
– 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
/ operational controls that constrain risk concentrations at portfolio, sub-portfolio or counterparty levels for sector
exposure, country risk and specific product exposures.
Credit risk profile of the Group
The exposures detailed in this section are based on management’s view of credit risk, which differs in certain respects
from the expected credit loss (ECL) measurement requirements of International Financial Reporting Standards (IFRS).
Internally, we put 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 (ETDs) 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 Functions
USD m
BBaannkkiinngg pprroodduuccttss11,,22
Gross exposure
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and loan commitments (off-balance sheet)
TTrraaddeedd pprroodduuccttss22,,33
Gross exposure
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
OOtthheerr ccrreeddiitt lliinneess,, ggrroossss44
Total credit-impaired exposure, gross (stage 3)1
Total allowances and provisions for expected credit losses (stages 1 to 3)
of which: stage 1
of which: stage 2
of which: stage 3
USD m
BBaannkkiinngg pprroodduuccttss11,,22
Gross exposure
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and loan commitments (off-balance sheet)
TTrraaddeedd pprroodduuccttss22,,33
Gross exposure
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
OOtthheerr ccrreeddiitt lliinneess,, ggrroossss44
GGlloobbaall WWeeaalltthh
MMaannaaggeemmeenntt
333344,,662211
221199,,338855
1133,,114477
88,,332288
66,,441166
00
11,,991122
1122,,008844
775577
221155
6688
5577
9900
Global Wealth
Management
337,266
228,598
10,772
9,582
7,186
0
2,396
12,947
PPeerrssoonnaall &&
CCoorrppoorraattee
BBaannkkiinngg
223366,,550088
115544,,664433
2288,,661100
332200
330044
00
1155
2233,,009922
11,,338800
770011
113388
115566
440066
Personal &
Corporate
Banking
229,334
152,847
29,737
783
766
0
17
24,174
3311..1122..2222
AAsssseett
MMaannaaggeemmeenntt
IInnvveessttmmeenntt
BBaannkk
GGrroouupp
FFuunnccttiioonnss
11,,445544
((11))
00
7766,,558855
1122,,775544
1122,,992200
3377,,998866
11,,222211
77,,448866
00
00
00
00
00
00
00
00
00
00
3344,,337700
1111,,221188
1177,,005555
66,,009977
66,,110055
110099
331122
116688
4499
5544
6644
66
77
44
00
33
31.12.21
Asset
Management
Investment
Bank
Group
Functions
1,520
0
0
59,352
13,720
14,994
65,514
3,445
4,947
0
0
0
0
0
35,950
9,767
18,566
7,617
3,629
28
TToottaall
668877,,115522
338888,,000033
6622,,116633
4433,,001188
1177,,993388
1177,,005555
88,,002244
4411,,339900
22,,445555
11,,009911
225599
226677
556644
Total
692,985
398,611
60,450
46,314
17,719
18,566
10,030
40,778
of which: stage 1
of which: stage 2
of which: stage 3
Total credit-impaired exposure, gross (stage 3)1
Total allowances and provisions for expected credit losses (stages 1 to 3)
2,610
1,165
282
220
662
11 ECL gross exposure including other financial assets at amortized cost, but excluding cash, receivables from securities financing transactions, cash collateral receivables on derivative instruments, financial assets at
FVOCI, irrevocable committed prolongation of existing loans and unconditionally revocable committed credit lines and forward starting reverse repurchase and securities borrowing agreements. 22 Internal management
view of credit risk, which differs in certain respects from IFRS. 33 As counterparty risk for traded products is managed at counterparty level, no further split between exposures in the Investment Bank and Group
Functions is provided. 44 Unconditionally revocable committed credit lines.
1,617
709
126
146
438
729
264
89
41
135
264
188
64
34
90
0
4
4
0
0
0
0
0
0
0
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
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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 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and “Note
19 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information
about ECL measurement requirements under IFRS
› Refer to “Note 13a Other financial assets measured at amortized cost” in the “Consolidated financial statements” section of this
report for more details
Global Wealth Management
Gross banking products exposure within Global Wealth Management decreased slightly to USD 335bn from USD 337bn.
Our Global Wealth Management loan portfolio is mainly secured by securities (Lombard loans) and by residential real
estate. Most of our USD 154bn of Lombard loans, including traded products collateralized by securities, were of high
quality, with 89% rated as investment grade based on our internal ratings and an average loan-to-value (LTV) of 49%.
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. In 2022, the Lombard book, including traded products,
decreased by approximately 11%, while keeping a stable risk profile with regard to collateral concentrations with no
material losses. The decrease was primarily driven by clients in Asia Pacific deleveraging on the back of ongoing market
volatility. The share of non-standard Lombard loans, for example those with less liquid or concentrated collateral, slightly
increased to 5% of the total Lombard book from 4%.
The mortgage book increased by approximately 8%, driven by higher volumes of mortgage loans in the US residential
real estate portfolios (average LTV 48%) and by further expansion of the commercial real estate business to USD 5bn.
Other financings represent approximately 6% of the total banking products exposures and are consolidated in a corporate
and other portfolio that increased by approximately 68% in 2022, mainly driven by private equity subscription facilities
in the US, which are mostly investment grade rated.
Collateralization of Loans and advances to customers1
USD m, except where indicated
Secured by collateral
Residential real estate
Commercial / industrial real estate
Cash
Securities
Other collateral
Subject to guarantees
Uncollateralized and not subject to guarantees
TToottaall llooaannss aanndd aaddvvaanncceess ttoo ccuussttoommeerrss,, ggrroossss
UBS
3311..1122..2222
336677,,115599
31.12.21
377,857
117722,,770000
168,696
2255,,227711
3333,,555500
22,682
37,504
of which:
Global Wealth Management
31.12.21
225,591
3311..1122..2222
221166,,999933
6622,,220000
44,,995555
3300,,551144
58,655
3,338
34,175
111155,,994411
128,665
110077,,225533
115,901
1199,,669988
20,310
1122,,007711
13,523
of which: Personal &
Corporate Banking
3311..1122..2222
113388,,885511
31.12.21
138,344
111100,,550000
110,041
1199,,779955
18,878
33,,003366
22,,222288
33,,229933
22,,775588
3,114
2,214
4,098
3,338
22,,995577
1177,,888877
338888,,000033
3,954
16,801
398,611
114444
616
22,,224477
221199,,338855
2,391
228,598
1133,,003344
115544,,664433
11,166
152,847
of which:
Investment Bank
3311..1122..2222
1100,,772244
31.12.21
11,200
00
552200
00
55,,886699
44,,333344
5555
11,,997766
1122,,775544
0
466
215
7,829
2,690
0
2,519
13,720
AAlllloowwaanncceess
TToottaall llooaannss aanndd aaddvvaanncceess ttoo ccuussttoommeerrss,, nneett ooff aalllloowwaanncceess
Collateralized loans and advances to customers in % of
total loans and advances to customers, gross (%)
81.6
11 Collateral arrangements generally incorporate a range of collateral, including cash, securities, real estate and other collateral. UBS applies a risk-based approach that generally prioritizes collateral according to its
liquidity profile.
(574)
152,273
(168)
228,431
((113388))
221199,,224477
((555599))
115544,,008844
(850)
397,761
((778833))
338877,,222200
(108)
13,612
((8833))
1122,,667722
98.7
90.5
8844..11
9988..99
8899..88
9944..66
94.8
Personal & Corporate Banking
Gross banking products exposure within Personal & Corporate Banking increased to USD 237bn, compared with
USD 229bn in 2021. Net banking products exposure (excluding exposure reallocated from Group Treasury) was largely
unchanged at USD 186bn (CHF 172bn), of which approximately 66% was classified as investment grade, broadly
unchanged from 2021. Around 48% of the exposure is categorized in the lowest LGD bucket, i.e., 0–25%, compared
with 50% in 2021. Personal & Corporate Banking’s gross loan portfolio was USD 155bn (CHF 143bn) compared with
USD 153bn (CHF 139bn) in 2021. This portfolio is predominantly denominated in Swiss francs and the increase in
Swiss franc terms was largely offset by the effect of the US dollar appreciating. As of 31 December 2022, 90% of this
portfolio was secured by collateral, mainly residential and commercial property. Of the total unsecured amount, 86%
related to cash flow-based lending to corporate counterparties and 3% related to lending to public authorities. Based
on our internal ratings, 53% of the unsecured loan portfolio was rated as investment grade, compared with 50% in
2021.
Our Swiss corporate banking products take-and-hold portfolio, which was USD 36bn (CHF 33bn) and unchanged compared
with 2021, consists of loans, guarantees and loan commitments to multi-national and domestic counterparties. The small
and medium-sized entity (SME) 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.
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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 7bn (CHF 7bn) as of 31 December 2022, compared with
USD 8bn (CHF 7bn) in 2021, with a considerable part of the exposure correlating with commodity prices.
Our exposure to banks consists primarily of contingent claims and was USD 5bn (CHF 5bn), compared with USD 6bn
(CHF 5bn) in 2021.
Despite the Russia–Ukraine war, higher energy prices and supply chain bottlenecks, as well as the onset of monetary
policy tightening, credit losses were at a low level in 2022. The delinquency ratio was 0.2% for the corporate portfolio,
compared with 0.3% at the end of 2021.
› Refer to “Credit risk models” in this section for more information about loss given default, rating grades and rating agency
mappings
Swiss mortgage loan portfolio
Our Swiss mortgage loan portfolio secured by residential and commercial real estate in Switzerland continues to be our
largest loan portfolio. These mortgage loans, totaling USD 170bn (CHF 157bn), mainly originate from Personal & Corporate
Banking, but also from Global Wealth Management Region Switzerland. Of these mortgage loans, USD 154bn (CHF 142bn)
related to residential properties that the borrower was either occupying or renting out, with full recourse to the borrower.
Of this USD 154bn (CHF 142bn), USD 111bn (CHF 103bn) is related to properties occupied by the borrower, with an
average LTV ratio of 51%, compared with 52% as of 31 December 2021. The average LTV for newly originated loans for
this portfolio was 63%, compared with 64% in 2021. The remaining USD 43bn (CHF 39bn) of the Swiss residential
mortgage loan portfolio related to properties rented out by the borrower and the average LTV of that portfolio was 51%,
compared with 52% as of 31 December 2021. The average LTV for newly originated Swiss residential mortgage loans for
properties rented out by the borrower was 54%, compared with 55% in 2021.
As illustrated in the “Swiss mortgages: distribution of net exposure at default (EAD) across exposure segments and loan-
to-value (LTV) buckets” table below, 99.9% of the aggregate amount of Swiss residential mortgage loans would continue
to be covered by the real estate collateral even if the value assigned to that collateral were to decrease 20%, and more
than 99% would remain covered by the real estate collateral even if the value assigned to that collateral were to decrease
30%.
Personal & Corporate Banking: distribution of banking products exposure across internal UBS ratings and loss given
default (LGD) buckets1
USD m, except where indicated
31.12.21
3311..1122..2222
LLGGDD bbuucckkeettss
Internal UBS rating2
Investment grade
Sub-investment grade
of which: 6−9
of which: 10−13
Defaulted / Credit-impaired
EExxppoossuurree
112233,,335588
6622,,221199
5566,,777744
55,,444455
11,,338800
00––2255%%
6677,,225544
2222,,992244
2211,,005533
11,,887711
2244
2266––5500%% 5511––7755%%
99,,116622
4444,,223366
7766––110000%%
22,,770066
2255,,116688
1111,,779900
2222,,997766
1100,,559922
22,,119933
11,,115511
11,,119999
220055
22,,333366
22,,115533
118822
Total exposure before deduction of allowances and provisions
118866,,995577
9900,,220022
7700,,555555
2211,,115588
55,,004422
WWeeiigghhtteedd
aavveerraaggee
LLGGDD ((%%))
2288
3355
3355
3366
4422
3300
Weighted
average
LGD (%)
27
34
34
36
42
29
Exposure
121,520
63,141
57,955
5,185
1,617
186,278
Less: allowances and provisions
NNeett bbaannkkiinngg pprroodduuccttss eexxppoossuurree11
11 Excluding balances at central banks and Group Treasury reallocations. 22 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.
185,604
118866,,229933
((666644))
(674)
Personal & Corporate Banking: loans uncollateralized and not subject to guarantees by industry sector
Construction
Financial institutions
Hotels and restaurants
Manufacturing
Private households
Public authorities
Real estate and rentals
Retail and wholesale
Services
Other
EExxppoossuurree,, ggrroossss
3311..1122..2222
UUSSDD mm
117722
33,,887788
113355
11,,771155
11,,447733
441166
554477
22,,223300
22,,224422
222266
%%
11..33
2299..88
11..00
1133..22
1111..33
33..22
44..22
1177..11
1177..22
11..77
31.12.21
USD m
166
2,786
119
1,555
1,488
419
574
1,971
1,908
180
%
1.5
25.0
1.1
13.9
13.3
3.8
5.1
17.7
17.1
1.6
1133,,003344
110000..00
11,166
100.0
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
99
99
Swiss mortgages: distribution of net exposure at default (EAD) across exposure segments and loan-to-value (LTV)
buckets1
USD bn, except where indicated
3311..1122..2222
31.12.21
Exposure segment
Residential mortgages
Income-producing real estate
Corporates
Other segments
MMoorrttggaaggee--ccoovveerreedd eexxppoossuurree
Net EAD
as a % of row total
Net EAD
as a % of row total
Net EAD
as a % of row total
Net EAD
as a % of row total
Net EAD
as a % of total
Mortgage-covered exposure 31.12.21
Net EAD
≤≤3300%%
3311––5500%%
5511––6600%%
6611––7700%%
7711––8800%% 8811––110000%% >>110000%%
LLTTVV bbuucckkeettss
9911..55
6633
1155..66
6666
77..22
6644
00..66
6677
111144..88
6644
111.2
3388..44
2277
66..11
2266
22..77
2244
00..22
2222
4477..44
2266
47.0
99..66
77
11..33
66
00..77
66
00..00
55
1111..66
66
12.2
33..99
33
00..55
22
00..44
33
00..00
33
44..99
33
5.5
11..00
11
00..11
11
00..22
11
00..00
22
11..22
11
1.5
00..11
00
00..00
00
00..11
11
00..00
11
00..33
00
0.3
00..00
00
00..00
00
00..00
00
00..00
00
00..11
00
0.1
Total
143.9
22.2
10.9
0.9
177.9
TToottaall
114444..55
110000
2233..77
110000
1111..22
110000
00..99
110000
118800..33
110000
177.9
26
11 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-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.
as a % of total
63
1
7
0
0
3
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.
The gross banking products exposure increased to USD 77bn as of 31 December 2022, compared with USD 59bn as of
31 December 2021, mostly driven by balances at central banks allocated to the business division. Excluding balances at
central banks and Group Treasury reallocations, gross banking products exposure decreased to USD 32bn from USD 35bn
in 2021, mostly driven by a decrease in irrevocable loan commitments. Based on our internal ratings, 50% of this gross
banking products exposure was classified as investment grade. The vast majority of the gross banking products exposure
had an estimated LGD below 50%.
Total mandated temporary loan underwriting exposure ended 2022 at USD 2.6bn, compared with USD 6.6bn at the end
of the prior year. USD 2.3bn of commitments had not yet been distributed as originally planned as of 31 December 2022.
Loan underwriting exposures are classified as held for trading, with fair values reflecting market conditions at the end of
2022.
› Refer to “Credit risk models” in this section for more information about LGD, rating grades and rating agency mappings
Investment Bank: distribution of banking products exposure across internal UBS ratings and loss given default (LGD)
buckets1
USD m, except where indicated
31.12.21
3311..1122..2222
LLGGDD bbuucckkeettss
Internal UBS rating2
Investment grade
Sub-investment grade
of which: 6−9
of which: 10−13
Defaulted / Credit-impaired
EExxppoossuurree
1155,,887788
1155,,552222
99,,117744
66,,334488
331122
00––2255%%
44,,118822
2266––5500%%
77,,886677
5511––7755%%
22,,112277
7766––110000%%
11,,770022
44,,887722
22,,774466
22,,112277
227733
66,,332244
22,,338800
33,,994444
2277
44,,112288
33,,887799
224499
99
119988
116699
2299
33
WWeeiigghhtteedd
aavveerraaggee
LLGGDD ((%%))
3377
2233
1177
3322
2211
Weighted
average
LGD (%)
36
20
14
31
33
Exposure
18,302
16,250
10,467
5,783
264
BBaannkkiinngg pprroodduuccttss eexxppoossuurree11
28
99,,332277
11 Excluding balances at central banks and Group Treasury reallocations. 22 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.
34,815
3311,,771122
1144,,221188
11,,990044
66,,226644
3300
Investment Bank: banking products exposure by geographical region1
Asia Pacific
Latin America
Middle East and Africa
North America
Switzerland
Rest of Europe
EExxppoossuurree11
11 Excluding balances at central banks and Group Treasury reallocations.
3311..1122..2222
31.12.21
UUSSDD mm
44,,776666
11,,220099
118833
1155,,440099
446611
99,,668844
3311,,771122
%%
1155..00
33..88
00..66
4488..66
11..55
3300..55
110000..00
USD m
5,154
1,327
212
16,282
453
11,387
34,815
%
14.8
3.8
0.6
46.8
1.3
32.7
100.0
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
100
100
Investment Bank: banking products exposure by industry sector1
3311..1122..2222
31.12.21
Banks
Chemicals
Electricity, gas, water supply
Financial institutions, excluding banks
Manufacturing
Mining
Public authorities
Real estate and construction
Retail and wholesale
Technology and communications
Transport and storage
Other
UUSSDD mm
44,,440099
558833
336633
1144,,558877
11,,336611
887788
225599
11,,668855
11,,665544
22,,332244
449999
33,,111100
%%
1133..99
11..88
11..11
4466..00
44..33
22..88
00..88
55..33
55..22
77..33
11..66
99..88
USD m
4,908
645
359
13,353
1,692
1,024
619
1,581
2,793
3,736
414
3,691
EExxppoossuurree11
11 Excluding balances at central banks and Group Treasury reallocations.
3311,,771122
110000..00
34,815
%
14.1
1.9
1.0
38.4
4.9
2.9
1.8
4.5
8.0
10.7
1.2
10.6
100.0
Group Functions
Gross banking products exposure within Group Functions, which arises primarily in connection with treasury activities,
decreased by USD 28bn to USD 38bn from balances at central banks. The decrease was mainly due to shifts within the
high-quality liquid asset portfolio from cash into securities, a reduction in short-term debt, decreases in customer deposits,
and outflows related to the share repurchase programs.
› 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 Functions” 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 Portfolio, 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. In the Investment Bank, 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 classes or categories
of collateral on a portfolio level. 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 or similar master netting agreements, which generally
allow for close-out and netting of transactions in case of default, subject to applicable law. 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. This collateral typically
consists of well-rated government debt or other collateral permitted by applicable regulations. For certain counterparties,
an 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. Regulations on margining uncleared OTC derivatives
continue to evolve. These generally expand the scope of bilateral derivatives activity subject to margining. They will also
result in greater amounts of initial margin received from, and posted to, certain bilateral trading counterparties than had
been required in the past. These changes should result in lower close-out risk over time.
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 10 Derivative instruments” in the “Consolidated financial statements” section of this report for more information
about OTC derivatives settled through central counterparties
› Refer to “Note 21 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 Portfolio and Group Treasury: traded products exposure
USD m
OOTTCC ddeerriivvaattiivveess
EETTDDss
SSFFTTss
3311..1122..2222
Total exposure, before deduction of credit valuation adjustments and hedges
Less: credit valuation adjustments and allowances
Less: credit protection bought (credit default swaps, notional)
NNeett eexxppoossuurree aafftteerr ccrreeddiitt vvaalluuaattiioonn aaddjjuussttmmeennttss,, aalllloowwaanncceess aanndd hheeddggeess
1111,,221188
((3344))
((110099))
1111,,007755
1177,,005555
((11))
66,,009977
00
1177,,005555
66,,009977
TToottaall
3344,,337700
((3355))
((110099))
3344,,222266
TToottaall
31.12.21
35,950
(34)
(119)
35,797
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
101
101
Investment Bank, Non-core and Legacy Portfolio and Group Treasury: distribution of net OTC derivatives and SFT
exposure across internal UBS ratings and loss given default (LGD) buckets
USD m, except where indicated
31.12.21
Internal UBS rating1
NNeett OOTTCC ddeerriivvaattiivveess eexxppoossuurree
Investment grade
Sub-investment grade
of which: 6−9
of which: 10−12
of which: 13 and defaulted
TToottaall nneett OOTTCC ddeerriivvaattiivveess eexxppoossuurree,, aafftteerr ccrreeddiitt vvaalluuaattiioonn aaddjjuussttmmeennttss
aanndd hheeddggeess
NNeett SSFFTT eexxppoossuurree
Investment grade
3311..1122..2222
LLGGDD bbuucckkeettss
EExxppoossuurree
00––2255%% 2266––5500%% 5511––7755%% 7766––110000%%
WWeeiigghhtteedd
aavveerraaggee
LLGGDD ((%%))
Weighted
average
LGD (%)
Exposure
1100,,775577
331188
228855
2288
55
331100
1133
99
00
33
88,,779911
111144
8899
2255
00
444444
11,,221122
1144
1133
00
22
117777
117744
22
00
1111,,007755
332222
88,,990055
445588
11,,338899
4488
7722
7766
4411
2233
4499
9,297
317
249
46
22
9,615
47
59
62
64
14
48
1166,,668822
227799
1144,,441144
999999
999900
4400
17,937
40
Sub-investment grade
69
TToottaall nneett SSFFTT eexxppoossuurree
41
11 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.
337733
1177,,005555
629
18,566
115511
1144,,556655
4455
11,,004444
117777
11,,116666
00
227799
7711
4411
Investment Bank, Non-core and Legacy Portfolio and Group Treasury: net OTC derivatives and SFT exposure
by geographical region
Asia Pacific
Latin America
Middle East and Africa
North America
Switzerland
Rest of Europe
EExxppoossuurree
NNeett OOTTCC ddeerriivvaattiivveess eexxppoossuurree
NNeett SSFFTT eexxppoossuurree
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
UUSSDD mm
11,,224499
111177
661155
22,,220000
11,,005555
55,,883399
1111,,007755
%%
1111..33
11..11
55..66
1199..99
99..55
5522..77
110000..00
USD m
1,586
111
112
1,830
688
5,288
9,615
%
16.5
1.2
1.2
19.0
7.2
55.0
100.0
UUSSDD mm
44,,990066
3344
448833
33,,117777
446666
77,,998888
1177,,005555
%%
2288..88
00..22
22..88
1188..66
22..77
4466..88
110000..00
USD m
5,380
20
360
4,473
559
7,774
18,566
Investment Bank, Non-core and Legacy Portfolio and Group Treasury: net OTC derivatives and SFT exposure
by industry sector
NNeett OOTTCC ddeerriivvaattiivveess eexxppoossuurree
NNeett SSFFTT eexxppoossuurree
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
UUSSDD mm
11,,228888
7711
111188
88,,661144
9977
2200
665555
2299
111155
6699
1111,,007755
%%
1111..66
00..66
11..11
7777..88
00..99
00..22
55..99
00..33
11..00
00..66
110000..00
USD m
986
14
103
7,174
50
51
810
22
255
150
9,615
%
10.3
0.1
1.1
74.6
0.5
0.5
8.4
0.2
2.6
1.6
100.0
UUSSDD mm
886699
00
00
1144,,886655
00
00
11,,332200
00
00
00
1177,,005555
%%
55..11
00..00
00..00
8877..22
00..00
00..00
77..77
00..00
00..00
00..00
110000..00
USD m
1,654
0
0
15,866
0
0
926
0
0
120
18,566
Banks
Chemicals
Electricity, gas, water supply
Financial institutions, excluding banks
Manufacturing
Mining
Public authorities
Retail and wholesale
Transport, storage and communication
Other
EExxppoossuurree
Credit risk mitigation
%
29.0
0.1
1.9
24.1
3.0
41.9
100.0
%
8.9
0.0
0.0
85.5
0.0
0.0
5.0
0.0
0.0
0.6
100.0
Audited | We actively manage credit risk in our portfolios by taking collateral against exposures and by utilizing credit
hedging.
Lending secured by real estate
Audited | We use a scoring model as part of a standardized front-to-back process for credit decisions on originating or
modifying Swiss mortgage loans. The model’s two key factors are the LTV ratio and an affordability calculation.
The calculation of affordability takes into account interest payments, minimum amortization requirements and potential
property maintenance costs in relation to gross income or rental income for rental properties. Interest payments are
estimated using a predefined framework, which considers the potential for significant interest rate increases over the
lifetime of the loan. The interest rate is set at 5% per annum in the context of the current environment.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
102
102
For residential properties occupied by the borrower, the maximum LTV for the standard approval process is 80% and
60% for holiday homes and luxury real estate. For other properties, the maximum LTV allowed within the standard
approval process ranges from 30% to 80%, depending on the type and age of the property, and the amount of
renovation work needed.
Audited | The value we assign to each property is based on the lowest value determined from model-derived valuations, the
purchase price, an asset value for income-producing real estate (IPRE), and, in some cases, an additional external
valuation.
Two separate models provided by a market-leading external vendor are used to derive property valuations for owner-
occupied residential properties (ORPs) and IPRE. We estimate the current value of an ORP using a regression model (a
hedonic model) based on statistical comparison against current transaction data. We derive the value of a property from
the characteristics of the real estate itself, as well as those of its location. In addition to the initial valuation, values for
ORPs are updated quarterly over the lifetime of the loan using region-specific real estate price indices. The price indices
are sourced from an external vendor and subject to internal validation and benchmarking. We use these valuations
quarterly to compute indexed LTV for all ORPs. A portfolio-specific monitoring system considers these along with other
risk measures (e.g., rating and behavioral information) to identify higher-risk loans and triggers an assessment and
reappraisal by client advisors and credit officers as needed.
For IPRE, the capitalization rate model is used to determine the property valuation by discounting estimated sustainable
future income using a capitalization rate based on various attributes. These attributes consider regional and specific
property characteristics, such as market and location data (e.g., vacancy rates), benchmarks (e.g., for running costs), and
certain other standardized input parameters (e.g., property condition). Updated information regarding rental income
from IPRE is requested from the client at least once every three years. Our portfolio-specific monitoring system alerts us
to changes in rental income and other risk measures (e.g., LTV, rating, behavioral information), and triggers an assessment
and reappraisal by client advisors and credit officers as needed.
To take market developments into account for these models, the external vendor regularly updates the parameters and
/ or refines the architecture for each model. Model changes and parameter updates are subject to the same validation
procedures as our internally developed models.
Audited | We similarly apply underwriting guidelines for our Global Wealth Management Region Americas mortgage loan
portfolio, taking into account loan affordability and collateral sufficiency. LTV standards are defined for the various
mortgage types, such as residential mortgages or investment properties, based on associated risk factors, such as property
type, loan size, and purpose. The maximum LTV allowed within the standard approval process ranges from 45% to 80%.
In addition to LTV, other credit risk metrics, such as debt-to-income ratios, credit scores and required client reserves, are
also part of our underwriting guidelines.
A risk limit framework is applied to the Global Wealth Management Region Americas mortgage loan portfolio. Limits are
set to govern exposures within LTV categories, geographic concentrations, portfolio growth and high-risk mortgage
segments, such as interest-only loans. These limits are monitored by a specialized credit risk monitoring team and reported
to senior management. Supplementing this limit framework is a real estate lending policy and procedures framework,
set up to govern real estate lending activities. Quality assurance and quality control programs monitor compliance with
mortgage underwriting and documentation requirements.
For our mortgage loan portfolio in the Global Wealth Management regions of EMEA and Asia Pacific, we apply global
underwriting guidelines with regional variations to allow for regulatory and market differentials. As in other regions, the
underwriting guidelines take into account affordability and collateral sufficiency. Affordability is assessed at a stressed
interest rate using, for residential real estate, the borrowers’ sustainable income and declared liabilities, and for
commercial real estate the quality and sustainability of rental income. For interest-only loans, a declared and evidenced
repayment strategy must be in place. The applicable LTV for each mortgage is based on the quality and liquidity of the
property and assessed against valuations from bank-appointed third-party valuers. Maximum LTV varies from 30% to
70%, depending on the type and location of the property, as well as other factors. Collateral sufficiency is often further
supported by personal guarantees from related third parties. The overall portfolio is centrally assessed against a number
of stress scenarios to ensure that exposures remain within predefined stress limits.
› Refer to “Swiss mortgage loan portfolio” in this section for more information about LTV in our Swiss mortgage portfolio
Lombard lending
Audited | Lombard loans are secured by pledges of marketable securities, guarantees and other forms of collateral. Eligible
financial securities are primarily liquid and actively traded transferable securities (such as bonds and equities), and other
transferable securities, such as approved structured products for which regular prices are available and the issuer of the
security provides a market. To a lesser degree, less liquid collateral is also used.
We derive lending values by applying discounts (haircuts) to the pledged collateral’s market value. Haircuts for marketable
securities are calculated to cover a possible change in value over a given close-out period and confidence level. Less liquid
or more volatile collateral will typically have larger haircuts.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
103
103
We assess concentration and correlation risks across collateral posted at a counterparty level, and at a divisional level
across counterparties. We also perform targeted Group-wide reviews of concentration. Concentration of collateral in
single securities, issuers or issuer groups, industry sectors, countries, regions or currencies may result in higher risk and
reduced liquidity. In such cases, the lending value of the collateral, margin call and close-out levels are adjusted
accordingly.
Exposures and collateral values are monitored daily, with the aim of ensuring that the credit exposure is always 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.
We conduct stress testing of collateralized exposures to simulate market events that reduce collateral value, increase
exposure of traded products, or do both. For certain classes of counterparties, limits on such calculated stress exposures
are applied and controlled at a counterparty level. Also, portfolio limits are applied across certain businesses or collateral
types.
› Refer to “Stress loss” in this section for more information about our stress testing
Credit hedging
Audited | We use single-name credit default swaps (CDSs), credit-index CDSs, bespoke protection and other instruments to
actively manage credit risk in the Investment Bank and Non-core and Legacy Portfolio. 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 (CVAs).
We have strict guidelines with regard to taking credit hedges into account for credit risk mitigation purposes. For example,
when monitoring exposures against counterparty limits, we do not usually apply certain credit risk mitigants, such as
proxy hedges (credit protection on a correlated but different name) or credit-index CDSs, to reduce counterparty
exposures. Buying credit protection also creates credit exposure with regard to the protection provider. We monitor and
limit exposures to credit protection providers, and also monitor the effectiveness of credit hedges as part of our overall
credit exposures to the relevant counterparties. Trading with such counterparties is typically collateralized. For credit
protection purchased to hedge the lending portfolio, this includes monitoring mismatches between the maturity of credit
protection purchased and the maturity of the associated loan. Such mismatches result in basis risk and may reduce the
effectiveness of the credit protection. Mismatches are routinely reported to credit officers and mitigating actions are
taken when necessary.
› Refer to “Note 10 Derivative instruments” in the “Consolidated financial statements” section of this report for more information
Mitigation of settlement risk
To mitigate settlement risk, we reduce actual settlement volumes by using multi-lateral and bi-lateral agreements with
counterparties, including payment netting.
Foreign exchange transactions are our most significant source of settlement risk. We are a member of Continuous Linked
Settlement (CLS), an industry utility that provides a multi-lateral framework to settle transactions on a delivery-versus-
payment basis, thus reducing foreign-exchange-related settlement risk relative to the volume of business. However,
mitigation of settlement risk through CLS and other means does not fully eliminate credit risk in foreign exchange
transactions resulting from changes in exchange rates prior to settlement, which is managed as part of our overall credit
risk management of OTC derivatives.
Credit risk models
Basel III – A-IRB credit risk models
Audited | We have developed tools and models to estimate future credit losses that may be implicit in our current portfolio.
Exposures to individual counterparties are measured using three generally accepted parameters: PD, EAD and LGD. For a
given credit facility, the product of these three parameters results in the expected loss (the EL). These parameters are the
basis for the majority of our internal measures of credit risk, and key inputs for regulatory capital calculation under the
advanced internal ratings-based (A-IRB) approach of the Basel III framework. We also use models to derive the portfolio
credit risk measures of EL, statistical loss and stress loss.
› Refer to the 31 December 2022 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
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Key features of our main credit risk models
PPrroobbaabbiilliittyy ooff
ddeeffaauulltt
PPoorrttffoolliioo iinn ssccooppee
Sovereigns and central banks
Owner-occupied mortgages in
Switzerland and the US
Income-producing real estate
mortgages
AAsssseett ccllaassss
Central governments and
central banks
Retail: residential
mortgages
Retail: residential
mortgages,
Corporates: specialized
lending
MMooddeell
aapppprrooaacchh
Scorecard
Scorecard
Scorecard
Lombard lending
Retail: other retail,
Corporates: other lending Merton type
Small and medium-sized
enterprises
Credit cards in Switzerland
Corporates: other lending Scorecard
Retail: qualifying
revolving retail and other
retail,
Corporates: other lending Scorecard
Banks
Commodity traders
Banks and securities
dealers
Corporates: specialized
lending
Scorecard
Scorecard
Aircraft financing
Corporates: other lending Scorecard
LLoossss ggiivveenn ddeeffaauulltt
Large corporates
Corporates: other lending
Corporates: other
lending,
Public-sector entities and
multi-lateral development
banks
Retail: residential
mortgages
Retail: residential
mortgages, Corporates:
specialized lending
Retail: other retail,
Corporates: other lending
Corporates: other lending
Retail: qualifying
revolving retail and other
retail,
Corporates: other lending
Other portfolios
Owner-occupied mortgages in
Switzerland and the US
Income-producing real estate
mortgages
Lombard lending
Small and medium-sized
enterprises
Credit cards in Switzerland
Investment Bank – all
counterparties
Across the asset classes
EExxppoossuurree aatt ddeeffaauulltt Banking products
Across the asset classes
Scorecard /
market data
Scorecard /
pooled rating
approach /
rating
template
Statistical
model
Statistical
model
Statistical
model,
simulation
Statistical
model
Statistical
model
Statistical
model
Statistical
model
NNuummbbeerr ooff
mmaaiinn mmooddeellss MMaaiinn ddrriivveerrss
NNuummbbeerr ooff
yyeeaarrss ooff lloossss
ddaattaa11
1 Political, institutional and economic indicators
>10
Behavioral data, affordability relative to income,
property type, loan-to-value. Separate models for
mortgages in Switzerland and the US
Loan-to-value, debt service coverage, financial data
(for large corporates only), behavioral data. Weights
of risk drivers differ between corporate and private
clients
Separate models for structured margin lending and
standard Lombard. Key risk drivers for both models:
loan-to-value, historical asset returns, behavioral
data
Financial data including balance sheet ratios and
profit and loss, behavioral data. Weights of risk
drivers differ depending on the corporate client sub-
segment
Client type and characteristics (revolver, transactor,
new client, dormant client), and behavioral data
Financial data including balance sheet ratios and
profit and loss. Separate models for banks –
developed markets, banks – emerging markets,
broker-dealers and investment banks, and private
banks
Financial data including balance sheet ratios and
profit and loss, as well as non-financial criteria
Loan-to-value, AuM, strength of legal framework of
source of wealth, and behavioral factors
Financial data including balance sheet ratios and
profit and loss, and market data. Separate rating
tools for corporates with publicly traded and highly
liquid stocks (market intelligence tool), private
corporates, and leveraged corporates
Financial data and/or historical portfolio performance
for pooled ratings. Separate models for hedge funds,
managed funds, private equity funds, insurance
companies, commercial real estate loans, debt REITs,
mortgage originators, public-sector entities and
multi-lateral development banks / supranationals
Loan-to-value, time since last valuation. Separate
models for mortgages in Switzerland and the US
Loan-to-value, time since last valuation, property
type, location indicator
Separate models for structured margin lending and
standard Lombard. Key risk drivers for both models:
historical observed loss rates, liquidity
Separate models for mortgage and non-mortgage
LGDs. Mortgage models: loan-to-value, time since
last valuation, property type, location indicator. Non-
mortgage models: historical observed loss rates
2
1
2
1
1
4
1
1
3
10
2
1
2
2
28
28
13–16
28
17
15
24
16
15
15
11–14
11
13–14
11–17
1 Collateral, accrued interests, client characteristics.
17
Counterparty and facility specific, including industry
segment, collateral, seniority, legal environment and
bankruptcy procedures. Specific model for sovereign
LGDs based on econometric modeling of past default
events using GDP per capita, government debt, and
other quantitative and qualitative factors such as the
share of multi-lateral debt service, the size of the
banking sector and institutional quality
Separate models based on exposure type (committed
credit lines, revocable credit lines, contingent
products)
Product-specific market drivers, e.g., interest rates.
Separate models for OTC derivatives, ETDs and SFTs
that generate the simulation of risk factors used for
the credit exposure measure
>10
>10
n/a
2
3
2
11 For sovereign and Investment Bank PD models, the length of internal portfolio history is shown in “Number of years of loss data.”
Across the asset classes
Traded products
Statistical
model
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Audited |
Internal UBS rating scale and mapping of external ratings
IInntteerrnnaall UUBBSS rraattiinngg
00 aanndd 11
22
33
44
55
66
77
88
99
1100
1111
1122
1133
CCoouunntteerrppaarrttyy iiss iinn ddeeffaauulltt
1-year PD range in %
0.00–0.02
0.02–0.05
0.05–0.12
0.12–0.25
0.25–0.50
0.50–0.80
0.80–1.30
1.30–2.10
2.10–3.50
3.50–6.00
6.00–10.00
10.00–17.00
>17
Default
Description
Investment grade
Sub-investment grade
Defaulted
Moody’s Investors
Service mapping
Aaa
Aa1 to Aa3
A1 to A3
Baa1 to Baa2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa1 to Caa2
Caa3 to C
S&P mapping
AAA
AA+ to AA–
A+ to A–
BBB+ to BBB
BBB–
BB+
BB
BB–
B+
B
B–
CCC+ to CCC
CCC- to C
D
Fitch mapping
AAA
AA+ to AA–
A+ to A–
BBB+ to BBB
BBB–
BB+
BB
BB–
B+
B
B–
CCC+ to CCC
CCC- to C
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 “Key features of our main credit risk
models” table above gives an overview of the approaches used for our main asset classes and presents the main drivers
of the PD. The rating tools for these asset classes are also calibrated to our internal credit rating scale (masterscale),
designed to ensure a consistent assessment of default probabilities across counterparties.
The ratings of major credit rating agencies, and their mapping to our masterscale and internal PD bands, are shown in
the “Internal UBS rating scale and mapping of external ratings” table above. For Moody’s and S&P, the mapping is based
on the long-term average of one-year default rates available from these rating agencies, with Fitch ratings being mapped
to the equivalent S&P ratings. For each external rating category, the average default rate is compared with our internal
PD bands to derive a periodically reviewed mapping to our internal rating scale.
Exposure at default
EAD is the amount we expect to be owed by a counterparty at the time of possible default. We derive EAD from current
exposure to the counterparty and possible future exposure development.
The EAD of an on-balance sheet loan is its notional amount, while for off-balance sheet commitments that are not drawn,
credit conversion factors (CCFs) are used in order to obtain an expected on-balance sheet amount.
For traded products, we derive EAD by modeling the range of possible exposure outcomes at various points in time using
scenario and statistical techniques. We assess the net amount that may be owed to us or that we may owe to others, taking
into account the effect of market movements over the potential time it would take to close out positions.
We assess exposures where there is a material correlation between the factors driving the credit quality of the
counterparty and those driving the potential future value of our traded products exposure (wrong-way risk), and we have
established specific controls to mitigate such risks.
Loss given default
LGD is the magnitude of the likely loss if there is a default. Our LGD estimates, which consider downturn conditions,
include loss of principal, interest and other amounts less recovered amounts. We determine LGD based on the likely
recovery rate of claims against defaulted counterparties, which depends on the type of counterparty and any credit
mitigation due to collateral or guarantees. Our estimates are supported by internal loss data and external information,
where available. If we hold collateral, such as marketable securities or a mortgage on a property, LTV ratios are typically
a key parameter in determining LGD. For risk-weighted asset (RWA) calculation, floors are applied to LGD in line with
regulation.
Expected loss
We use the concept of expected loss to quantify future credit losses that may be implicit in our current portfolio. The
expected loss for a given credit facility is a product of the three components described above, i.e., PD, EAD and LGD. We
aggregate the expected loss for individual counterparties to derive expected portfolio credit losses.
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IFRS 9 – ECL credit risk models
Expected credit loss
Expected credit loss (ECL) is defined as the difference between contractual cash flows and those UBS expects to receive,
discounted at the effective interest rate (EIR). 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 include all information available without undue cost and effort, and address multiple scenarios where
there is perceived non-linearity between changes in economic conditions and their effect on credit losses. From a credit
risk modeling perspective, ECL parameters are generally derivations of the factors assessed for regulatory Basel III EL.
Comparison of Basel III EL and IFRS 9 ECL credit risk models
The IFRS 9 ECL concept has a number of key differences from our Basel III credit risk models, both in the loss estimation
process and the result thereof. Most notably, regulatory Basel III EL parameters are TTC / downturn estimates, which
might include a margin of conservatism, while IFRS 9 ECL parameters are typically PIT, reflecting current economic
conditions and future outlook. The table below summarizes the main differences. Stage 1 and 2 ECL expenses in 2022
were USD 29m and respective allowances and provisions as of 31 December 2022 were USD 526m. This included ECL
allowances and provisions of USD 485m related to positions under the Basel III advanced internal ratings-based (A-IRB)
approach. Basel III EL for non-defaulted positions increased by USD 37m to USD 956m.
› 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 (advanced internal ratings-based 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.
Exposure at default
(EAD)
Probability of
default
(PD)
EAD is the amount we expect a counterparty to owe us at
the time of a possible default. For banking products, EAD
equals book value as of the reporting date; for traded
products, the vast majority of EAD is modeled. 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 over the 12-month
period, irrespective of the actual maturity of a particular
transaction. The credit conversion factor includes downturn
adjustments.
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.
In the absence of a significant increase in credit risk (SICR), a
maximum 12-month ECL is recognized to reflect lifetime cash
shortfalls that will result if a default event occurs in the 12 months
after the reporting date (or a shorter period if the expected lifetime
is less). Once an SICR event has occurred, a lifetime ECL is
recognized considering expected default events over the life of the
transaction.
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, discounted to the reporting date using
the effective interest rate. For loan commitments, a credit
conversion factor is applied to model expected future drawdowns
over the life of the transaction without including downturn
assumptions. In both cases, the time period is capped at 12
months, unless an SICR has occurred.
PD estimates will be 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
n / a
Multiple forward-looking scenarios have to be taken into account
to determine a probability-weighted ECL.
Further key aspects of credit risk models
Stress loss
We complement our statistical modeling approach with scenario-based stress loss measures. Stress tests are run regularly
to monitor potential effects of extreme, but nevertheless plausible, events on our portfolios, under which key credit risk
parameters are assumed to deteriorate substantially. Where we consider it appropriate, we apply limits on this basis.
Stress scenarios and methodologies are tailored to portfolios’ natures, ranging from regionally focused to global systemic
events, and varying in time horizon.
› Refer to “Stress testing” in this section for more information about our stress testing framework
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Credit risk model confirmation
Our approach to model confirmation involves both quantitative methods, such as monitoring compositional changes in
portfolios and results of backtesting, and qualitative assessments, such as feedback from users on model output as a
practical indicator of a model’s performance and reliability.
Material changes in portfolio composition may invalidate the conceptual soundness of a model. We therefore perform
regular analyses of the evolution of portfolios to identify such changes in the structure and credit quality of portfolios.
This includes analyses of changes in key attributes, changes in portfolio concentration measures and changes in RWA.
› Refer to “Model risk management” 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, if the portfolio average PD lies below the derived lower boundary, the rating tool is
recalibrated.
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, models are recalibrated.
Main credit risk models backtesting by regulatory asset class
Length of time series
used for the calibration
(in years)
Actual rates in %
Average of last
5 years1
Min. of last
5 years2
Max. of last
5 years2
Estimated average rates
at the start of
2022 in %
PPrroobbaabbiilliittyy ooff ddeeffaauulltt33
Central governments and central banks
Banks and securities dealers
Public-sector entities, multi-lateral development banks
Corporates: specialized lending
Corporates: other lending5
Retail: residential mortgages
Retail: qualifying revolving retail exposure5
Retail: other retail5
LLoossss ggiivveenn ddeeffaauulltt
Central governments and central banks
Banks and securities dealers
Public-sector entities, multi-lateral development banks
Corporates: specialized lending
Corporates: other lending5
Retail: residential mortgages
Retail: qualifying revolving retail exposure5
Retail: other retail5
CCrreeddiitt ccoonnvveerrssiioonn ffaaccttoorrss
Corporates
>104
>10
>10
>10
>10
>20
>10
>10
>10
>10
>10
>10
>10
>20
>10
>10
>10
0.00
0.03
0.05
0.30
0.28
0.20
0.71
0.09
2.16
15.92
0.45
24.88
8.20
0.00
0.00
0.00
0.11
0.20
0.14
0.63
0.05
0.00
5.09
0.00
20.27
4.80
0.00
0.13
0.21
0.60
0.34
0.25
0.79
0.19
9.51
24.68
0.72
27.42
13.54
21.65
6.93
38.08
0.43
0.65
0.23
1.26
0.44
0.49
0.83
0.20
47.72
53.38
27.40
22.80
38.24
22.75
47.87
24.37
38.10
11 Average of all observations over the last five years. 22 Minimum / maximum annual average of observations in any single year from the last five years. Yearly averages are only calculated where five or more
observations occurred during that year. 33 Average PD estimation is based on all rated clients in the portfolio. 44 Sovereign PD model is calibrated to UBS masterscale, length of time series shows span of internal
history for this portfolio. 55 During 2021, a new PD and LGD model for credit cards went live. Obligors subject to this model contribute to Corporates: other lending, Retail: qualifying revolving retail exposure, and
Retail: other retail.
CCFs, used for the calculation of EAD for undrawn facilities with corporate counterparties, 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, the relevant CCFs are redefined.
The “Main credit risk models backtesting by regulatory asset class” table above compares the current model calibration
for PD, LGD and CCFs with historical observed values over the last five years.
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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 2022.
In Personal & Corporate Banking and Global Wealth Management, we updated the PD model for owner-occupied
residential properties in Switzerland and the LGD model for mortgages in Switzerland. In Global Wealth Management,
we also recalibrated the PD model for aircraft financing and implemented some model updates for the standard Lombard
model.
In the Investment Bank, a new PD model for private equity counterparties was introduced, and a redeveloped PD model
for hedge funds went live. Additionally, we have implemented a new model for structured margin lending.
For CCR models, we recalibrated the market parameters in the SFT model, enhancing and automating the process, which
is run on a daily basis. The transition from LIBOR required a number of model changes for CCR models, for traded
products to be able to consume the new alternative reference rate curves.
Where required, changes to models and model parameters were approved by FINMA before being made.
› 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
Future credit risk-related regulatory capital developments
In December 2017, the Basel Committee on Banking Supervision (the BCBS) announced the finalization of the Basel III
framework. In December 2022, the Swiss State Secretariat for International Finance changed the expected date on which
the final Basel III guidelines are to enter into force, from 1 July 2024 to 1 January 2025. The updated framework makes
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 large and medium-sized corporate clients, 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).
The published framework has a number of requirements that are subject to national discretion. Also, revisions to the
credit valuation adjustment (CVA) framework were published, including the removal of the advanced CVA approach.
UBS has a close dialogue with FINMA to discuss in detail the implementation objectives and prepare for a smooth
transition of the capital regime for credit risk.
› Refer to “Capital management objectives, planning and activities” in the “Capital, liquidity and funding, and balance sheet”
section of this report for more information about the development of RWA
› Refer to “Risk measurement” in this section for more information about our approach to model confirmation procedures
› Refer to the “Regulatory and legal developments” and “Risk factors” sections of this report for more information
Credit policies for distressed assets
Non-performing
Audited | In line with the regulatory definition, we report a claim as non-performing when: (i) it is more than 90 days past
due; (ii) it is subject to restructuring proceedings, where preferential conditions concerning interest rates, subordination,
tenor, etc. have been granted in order to avoid default of the counterparty (forbearance); (iii) the counterparty is subject
to bankruptcy / enforced liquidation proceedings in any form, even if there is sufficient collateral to cover the due
payment; or (iv) there is other evidence that payment obligations will not be fully met without recourse to collateral.
Default and credit-impaired
UBS uses a single definition of default for classifying assets and determining the PD of its obligors for risk modeling
purposes. The definition of default is based on quantitative and qualitative criteria. A counterparty is classified as
defaulted when material payments of interest, principal or fees are overdue for more than 90 days, or more than 180
days for certain exposures in relation to loans to private and commercial clients in Personal & Corporate Banking and to
private clients of Global Wealth Management Region Switzerland. UBS does not consider the general 90-day presumption
for default recognition appropriate for those portfolios, given the cure rates, which show that strict application of the
90-day criterion would not accurately reflect the inherent credit risk. Counterparties are also classified as defaulted when:
bankruptcy, insolvency proceedings or enforced liquidation have commenced; obligations have been restructured on
preferential terms (forbearance); or there is other evidence that payment obligations will not be fully met without recourse
to collateral. The latter may be the case even if, to date, all contractual payments have been made when due. If one claim
against a counterparty is defaulted on, generally all claims against the counterparty are treated as defaulted.
An instrument is classified as credit-impaired if the counterparty is classified as defaulted and / or the instrument is
identified as purchased or originated credit-impaired (POCI). An instrument is POCI 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 POCI), 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. As of 31 December 2022, we had no instruments classified as POCI on our books.
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Forbearance (credit restructuring)
Audited | If payment default is imminent or default has already occurred, we may grant concessions to borrowers in financial
difficulties that we would otherwise not consider in the normal course of business, such as offering preferential interest
rates, extending maturity, modifying the schedule of repayments, debt / equity swap, subordination, etc. When a
forbearance measure takes place, each case is considered individually and the exposure is generally classified as defaulted.
Forbearance classification remains until the loan is repaid or written off, non-preferential conditions are granted that
supersede the preferential conditions, or the counterparty has recovered and the preferential conditions no longer exceed
our risk tolerance.
Contractual adjustments when there is no evidence of imminent payment default, or where changes to terms and
conditions are within our usual risk tolerance, are not considered to be forborne.
Loss history statistics
An instrument is classified as credit-impaired if the counterparty has defaulted. This also includes credit-impaired
exposures for which no loss has occurred or for which no allowance has been recognized (e.g., we expect to fully recover
the exposures via collateral held).
Coverage ratios are calculated for the core loan portfolio by taking ECL allowances and provisions divided by the gross
carrying amount of the exposures. Core loan exposure is defined as the sum of Loans and advances to customers and
Loans to financial advisors.
The total combined on- and off-balance sheet coverage ratio was at 21 basis points as of 31 December 2022, 1 basis
point lower than on 31 December 2021. The combined stage 1 and 2 ratio of 10 basis points was unchanged compared
with 31 December 2021; the stage 3 ratio was 22%, 2 percentage points lower than as of 31 December 2021.
› The majority of the credit-impaired exposure relates to loans and advances in our Swiss domestic business. Refer to “Note 9
Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and “Note 19 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 13a Other financial assets measured at amortized cost” in the “Consolidated financial statements” section of this
report for more details
Exposure categorization
Performing
Non-performing1
Stage 1
Stage 2
(signifi cant increase in credit risk)
Stage 3
(credit-impaired¹)
Credit exposures with no signifi cant
increase in the risk of default since
initial recognition
Credit exposures with a signifi cant
increase in the risk of default since
initial recognition
Credit exposures that are classifi ed
as in default
0–30 days past due
31–90 days past due
91–180 days
past due
(certain exposures)
Purchased or originated credit-impaired (POCI)
Credit exposures classifi ed as POCI at initial recognition
for which the credit situation has subsequently improved
More than 90 days past due (more
than 180 days for certain exposures)
Forbearance / credit restructuring²
Credit exposures where concessions
exceeding our risk tolerance have
been granted under imminent
payment default or in default
Credit exposures where full collection
of initial contractual claims has been
doubtful since initial recognition
1 Excluding purchased or originated credit-impaired instruments. 2 May include purchased or originated credit-impaired instruments.
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Loss history statistics
USD m, except where indicated
Banking products, core exposure on- and off-balance sheet, gross1
of which: loans and advances to banks and customers (gross)
Credit-impaired exposure, gross (stage 3)
of which: credit-impaired loans and advances to banks and customers (stage 3)
Non-performing loans and advances to banks and customers
ECL allowances and provisions for credit losses2
of which: core loan exposure (all stages)
of which: loans and advances to banks and customers (all stages)
of which: loans and advances to banks and customers (stage 3)
Write-offs (stage 3)
of which: write-offs for loans and advances to banks and customers
31.12.20
31.12.21
3311..1122..2222
449911,,555566
479,176
499,839
440022,,880011 414,099 396,049
3,778
2,610
2,945
2,150
3,176
2,387
1,468
1,165
1,426
1,132
1,076
857
703
572
356
137
348
118
694
(148)
22,,445555
22,,001122
22,,333333
11,,009911
11,,004433
778899
447744
9955
7744
2299
31.12.19
408,331
340,003
3,113
2,309
2,466
1,029
987
770
559
142
122
78
31.12.18
410,117
338,000
3,154
2,300
2,419
1,054
1,003
780
549
210
192
118
Credit loss expense / (release)3
RRaattiiooss
Credit-impaired loans and advances to banks and customers as a percentage of loans and advances to banks
and customers (gross)
Non-performing loans and advances to banks and customers as a percentage of loans and advances to banks
and customers (gross)
ECL allowances for loans and advances to banks and customers as a percentage of loans and advances to
banks and customers (gross)
Write-offs as a percentage of average loans and advances to banks and customers (gross) outstanding during
the period
11 Core loan exposure is defined as the sum of Loans and advances to customers and Loans to financial advisors. 22 Includes provisions for ECL of guarantees and loan commitments and allowances for securities
financing transactions. 33 Includes credit loss expense / (release) for other financial assets at amortized cost, guarantees, loan commitments, and securities financing transactions.
00..22
00..00
00..66
00..55
0.1
0.1
0.0
0.2
0.0
0.2
0.7
0.7
0.2
0.7
0.7
0.5
0.6
0.8
0.7
0.3
Market risk
Audited | Main sources of market risk
Market risks arise from both trading and non-trading business activities.
– Trading market risks are mainly connected with primary debt and equity underwriting and securities and derivatives
trading for market-making and client facilitation in our Investment Bank, as well as the remaining positions in Non-
core and Legacy Portfolio in Group Functions and our municipal securities trading business in Global Wealth
Management.
– 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 business, our Swiss personal and corporate banking
business, 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, Group Treasury and Non-core and Legacy Portfolio 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 also covered in the risks
controlled by Market & Treasury Risk Control, as set out below.
– Our primary portfolio measures of market risk are liquidity-adjusted stress (LAS) loss and VaR. Both are common to all
business divisions and subject to limits that are approved by the Board of Directors (the BoD).
– 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, available operational capacity, valuation uncertainty, and, for our single-name exposures, issuer credit
quality.
– Trading market risks are managed on an integrated basis 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.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
111
111
– Issuer risk is controlled by limits applied at 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.
Our Market & Treasury Risk Control function applies a holistic risk framework, setting the appetite for treasury-related
risk-taking activities across the Group. Key elements of the framework include an overarching economic value sensitivity
limit, set by the BoD, and the sensitivity of net interest income to changes in interest rates targets, set by the Group CEO.
Limits are also set by the BoD to balance the effect of foreign exchange movements on our CET1 capital and CET1 capital
ratio. Non-trading interest rate and foreign exchange risks are included in Group-wide statistical and stress testing metrics,
which flow into our risk appetite framework.
Equity and debt investments are subject to a range of risk controls, including preapproval of new investments by business
management and Risk Control and regular monitoring and reporting. They are also included in Group-wide statistical
and stress testing metrics.
› Refer to “Currency management” in the “Capital, liquidity and funding, and balance sheet” section of this report for more
information about Group Treasury’s management of foreign exchange risks
› Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information about the sensitivity
of our CET1 capital and CET1 capital ratio to currency movements
Market risk stress loss
The measurement and management of market risks include an extensive set of stress tests and scenario analyses,
continuously evaluated to ensure that losses resulting from an extreme yet plausible event do not exceed our risk appetite.
Liquidity-adjusted stress
LAS is our primary stress loss measure for Group-wide market risk. The LAS framework captures the economic losses that
could arise under specified stress scenarios. This is partially done by replacing the standard 1-day and 10-day holding
period assumptions used for management and regulatory VaR with liquidity-adjusted holding periods, as explained
below. 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 LAS are calibrated to reflect the time needed to reduce or hedge the risk of positions in
each major risk factor in a stressed environment, assuming maximum utilization of the relevant position limits. 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.
LAS-based limits apply at several levels: Group, business division, Group Treasury, and Non-core and Legacy Portfolio;
business area; and sub-portfolio. LAS 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, representing the potential market risk losses over a set time horizon
(holding period) at an established level of confidence. VaR assumes no change in the Group’s trading positions over the
set time horizon.
We calculate VaR daily. The profit or loss distribution VaR is derived from our internally developed VaR model, which
simulates returns over the holding period for those risk factors our trading positions are sensitive to, and subsequently
quantifies the profit / loss effect of these risk factor returns on trading positions. Risk factor returns associated with
general interest rate, foreign exchange and commodities risk factor classes are based on a pure historical simulation
approach, using a five-year look-back window. Risk factor returns for selected issuer-based risk factors (e.g., equity prices
and credit spreads) are split into systematic and residual issuer-specific components using a factor model approach.
Systematic returns are based on historical simulation, and residual returns on a Monte Carlo simulation. VaR model profit
or loss distribution is derived from the sum of systematic and residual returns in such a way that we consistently capture
systematic and residual risk. Correlations among risk factors are implicitly captured via a historical simulation approach.
When modeling risk factor returns, we consider the stationarity properties of the historical time series of risk factor
changes. Depending on the stationarity properties of the risk factors within a given factor class, we model the factor
returns using absolute returns or logarithmic returns. Risk factor return distributions are updated fortnightly.
Our VaR model does not have full revaluation capability, but we source full revaluation grids and sensitivities from front-
office systems, enabling us to capture material non-linear profit-or-loss effects.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
112
112
We use a single VaR model for both internal management purposes and determining market risk risk-weighted assets
(RWA), although we consider different confidence levels and time horizons. For internal management purposes, we
establish risk limits and measure exposures using VaR at a 95% confidence level 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 requirement under Basel III requires a measure equivalent to a 99% confidence level
using a 10-day holding period. To calculate a 10-day holding period VaR, we use 10-day risk factor returns, with all
observations equally weighted.
Additionally, the portfolio populations for management and regulatory VaR are slightly different. The one for regulatory
VaR meets regulatory requirements for inclusion in regulatory VaR. Management VaR includes a broader range of
positions. For example, regulatory VaR excludes credit spread risks from the securitization portfolio, which are treated
instead under the securitization approach for regulatory purposes.
We also use stressed VaR (SVaR) for the calculation of market risk RWA. SVaR uses broadly the same methodology as
regulatory VaR and is calculated using the same population, holding period (10-day) and confidence level (99%). Unlike
regulatory VaR, the historical data set for SVaR is not limited to five years, instead covering the period from 1 January
2007 to the present. In deriving SVaR, we seek the largest 10-day holding period VaR for the current Group portfolio
across all one-year look-back windows from 1 January 2007 to the present. SVaR is computed weekly.
› Refer to the 31 December 2022 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
We continued to maintain management VaR at low levels, with average VaR at USD 11m, unchanged compared with
2021.
Audited |
Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of our business divisions and Group
Functions by general market risk type1
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2222
USD m
TToottaall mmaannaaggeemmeenntt VVaaRR,, GGrroouupp
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Group Functions
Diversification effect2,3
USD m
MMiinn..
66
11
00
00
66
33
Min.
MMaaxx..
AAvveerraaggee
1188
22
00
00
1177
55
3311..1122..2222
99
11
00
00
88
55
((55))
1111
11
00
00
1100
44
((55))
EEqquuiittyy
22
1177
66
66
00
00
00
66
11
((11))
IInntteerreesstt
rraatteess
88
1188
1100
1100
FFoorreeiiggnn
eexxcchhaannggee
22
1111
33
33
CCrreeddiitt
sspprreeaaddss
44
99
55
44
AAvveerraaggee ((ppeerr bbuussiinneessss ddiivviissiioonn aanndd rriisskk ttyyppee))
11
00
00
55
33
((44))
11
00
00
99
44
((33))
00
00
00
33
11
((11))
CCoommmmooddiittiieess
22
77
33
33
00
00
00
33
00
00
For the year ended 31.12.21
Max.
Average
TToottaall mmaannaaggeemmeenntt VVaaRR,, GGrroouupp
0
Global Wealth Management
0
Personal & Corporate Banking
0
Asset Management
3
Investment Bank
0
Group Functions
Diversification effect2,3
0
11 Statistics at individual levels may not be summed to deduce the corresponding aggregate figures. The minima and maxima for each level may well 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. 22 Difference between the sum of the standalone VaR for the business divisions and Group Functions and the VaR for the Group as
a whole. 33 As the minima and maxima for different business divisions and Group Functions occur on different days, it is not meaningful to calculate a portfolio diversification effect.
11
1
0
0
11
5
(6)
36
3
0
0
36
8
0
0
0
7
0
0
4
1
0
0
3
4
31.12.21
12
2
0
0
11
4
(5)
Commodities
2
5
3
3
Equity
1
35
7
8
Interest
rates
7
13
9
11
Foreign
exchange
1
9
3
6
Credit
spreads
5
11
7
7
Average (per business division and risk type)
2
0
0
7
4
(5)
0
0
0
3
1
(1)
1
0
0
9
4
(5)
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
113
113
150
125
100
75
50
0
150
-25
125
-50
100
75
50
0
-25
-50
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 (10-day 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. This may happen due to the number of risk factors included in the VaR model needing to be limited.
– 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.
– Using a five-year 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 data sets avoids the smoothing effect of
the five-year data set used for VaR and the absence of the five-year window gives a longer history of potential loss events.
Therefore, although the significant period of stress during the 2007–2009 financial crisis is no longer contained in the
historical five-year period 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 liquidity-adjusted stress and comprehensive stress testing frameworks.
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 regulatory capital, calculated as a multiple
of regulatory VaR and stressed VaR.
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 (P&L). We compute backtesting VaR using a 99% confidence level and 1-day holding period for the
regulatory VaR population. Since 99% VaR at UBS is defined as a risk measure that operates on the lower tail of the P&L
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 for a like-for-like
comparison. A backtesting exception occurs when backtesting revenues are lower than the previous day’s backtesting
VaR.
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(cid:44)(cid:67)(cid:80)
(cid:40)(cid:71)(cid:68)
(cid:47)(cid:67)(cid:84)
(cid:35)(cid:82)(cid:84)
(cid:47)(cid:67)(cid:91)
(cid:44)(cid:87)(cid:80)
(cid:44)(cid:87)(cid:78)
(cid:35)(cid:87)(cid:73)
(cid:53)(cid:71)(cid:82)
(cid:49)(cid:69)(cid:86)
(cid:48)(cid:81)(cid:88)
(cid:38)(cid:71)(cid:69)
(cid:55)(cid:53)(cid:38)(cid:2)(cid:79)
(cid:19)(cid:20)(cid:23)
(cid:19)(cid:18)(cid:18)
(cid:25)(cid:23)
(cid:23)(cid:18)
(cid:20)(cid:23)
(cid:18)
(cid:10)(cid:20)(cid:23)(cid:11)
(cid:10)(cid:23)(cid:18)(cid:11)
(cid:36)(cid:67)(cid:69)(cid:77)(cid:86)(cid:71)(cid:85)(cid:86)(cid:75)(cid:80)(cid:73)(cid:2)(cid:84)(cid:71)(cid:88)(cid:71)(cid:80)(cid:87)(cid:71)(cid:85)
(cid:27)(cid:27)(cid:7)(cid:2)(cid:82)(cid:81)(cid:85)(cid:75)(cid:86)(cid:75)(cid:88)(cid:71)(cid:2)(cid:86)(cid:67)(cid:75)(cid:78)(cid:2)(cid:81)(cid:72)(cid:2)(cid:86)(cid:74)(cid:71)(cid:2)(cid:68)(cid:67)(cid:69)(cid:77)(cid:86)(cid:71)(cid:85)(cid:86)(cid:75)(cid:80)(cid:73)(cid:2)(cid:56)(cid:67)(cid:52)(cid:2)(cid:70)(cid:75)(cid:85)(cid:86)(cid:84)(cid:75)(cid:68)(cid:87)(cid:86)(cid:75)(cid:81)(cid:80)
(cid:35)(cid:69)(cid:86)(cid:87)(cid:67)(cid:78)(cid:2)(cid:86)(cid:84)(cid:67)(cid:70)(cid:75)(cid:80)(cid:73)(cid:2)(cid:84)(cid:71)(cid:88)(cid:71)(cid:80)(cid:87)(cid:71)(cid:85)
(cid:36)(cid:67)(cid:69)(cid:77)(cid:86)(cid:71)(cid:85)(cid:86)(cid:75)(cid:80)(cid:73)(cid:2)(cid:56)(cid:67)(cid:52)(cid:2)(cid:10)(cid:19)(cid:15)(cid:70)(cid:67)(cid:91)(cid:14)(cid:2)(cid:27)(cid:27)(cid:7)(cid:2)(cid:69)(cid:81)(cid:80)(cid:386)(cid:70)(cid:71)(cid:80)(cid:69)(cid:71)(cid:2)(cid:31)(cid:2)(cid:19)(cid:7)(cid:2)(cid:80)(cid:71)(cid:73)(cid:67)(cid:86)(cid:75)(cid:88)(cid:71)(cid:2)(cid:86)(cid:67)(cid:75)(cid:78)(cid:11)
(cid:19) (cid:39)(cid:90)(cid:69)(cid:78)(cid:87)(cid:70)(cid:71)(cid:85)(cid:2) (cid:80)(cid:81)(cid:80)(cid:15)(cid:86)(cid:84)(cid:67)(cid:70)(cid:75)(cid:80)(cid:73)(cid:2) (cid:84)(cid:71)(cid:88)(cid:71)(cid:80)(cid:87)(cid:71)(cid:85)(cid:14)(cid:2) (cid:85)(cid:87)(cid:69)(cid:74)(cid:2) (cid:67)(cid:85)(cid:2) (cid:88)(cid:67)(cid:78)(cid:87)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:2) (cid:84)(cid:71)(cid:85)(cid:71)(cid:84)(cid:88)(cid:71)(cid:85)(cid:14)(cid:2) (cid:69)(cid:81)(cid:79)(cid:79)(cid:75)(cid:85)(cid:85)(cid:75)(cid:81)(cid:80)(cid:85)(cid:2) (cid:67)(cid:80)(cid:70)(cid:2) (cid:72)(cid:71)(cid:71)(cid:85)(cid:14)(cid:2) (cid:67)(cid:80)(cid:70)(cid:2) (cid:84)(cid:71)(cid:88)(cid:71)(cid:80)(cid:87)(cid:71)(cid:85)(cid:2) (cid:72)(cid:84)(cid:81)(cid:79)(cid:2) (cid:75)(cid:80)(cid:86)(cid:84)(cid:67)(cid:70)(cid:67)(cid:91)(cid:2) (cid:86)(cid:84)(cid:67)(cid:70)(cid:75)(cid:80)(cid:73)(cid:16)(cid:2) (cid:20) (cid:43)(cid:80)(cid:69)(cid:78)(cid:87)(cid:70)(cid:71)(cid:85)(cid:2) (cid:68)(cid:67)(cid:69)(cid:77)(cid:86)(cid:71)(cid:85)(cid:86)(cid:75)(cid:80)(cid:73)(cid:2) (cid:84)(cid:71)(cid:88)(cid:71)(cid:80)(cid:87)(cid:71)(cid:85)(cid:2) (cid:67)(cid:80)(cid:70)(cid:2)
(cid:84)(cid:71)(cid:88)(cid:71)(cid:80)(cid:87)(cid:71)(cid:85)(cid:2)(cid:72)(cid:84)(cid:81)(cid:79)(cid:2)(cid:75)(cid:80)(cid:86)(cid:84)(cid:67)(cid:70)(cid:67)(cid:91)(cid:2)(cid:86)(cid:84)(cid:67)(cid:70)(cid:75)(cid:80)(cid:73)(cid:16)(cid:2)(cid:21)(cid:2)(cid:36)(cid:67)(cid:85)(cid:71)(cid:70)(cid:2)(cid:81)(cid:80)(cid:2)(cid:36)(cid:67)(cid:85)(cid:71)(cid:78)(cid:2)(cid:43)(cid:43)(cid:43)(cid:2)(cid:84)(cid:71)(cid:73)(cid:87)(cid:78)(cid:67)(cid:86)(cid:81)(cid:84)(cid:91)(cid:2)(cid:56)(cid:67)(cid:52)(cid:14)(cid:2)(cid:71)(cid:90)(cid:69)(cid:78)(cid:87)(cid:70)(cid:71)(cid:85)(cid:2)(cid:37)(cid:56)(cid:35)(cid:2)(cid:82)(cid:81)(cid:85)(cid:75)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85)(cid:2)(cid:67)(cid:80)(cid:70)(cid:2)(cid:86)(cid:74)(cid:71)(cid:75)(cid:84)(cid:2)(cid:71)(cid:78)(cid:75)(cid:73)(cid:75)(cid:68)(cid:78)(cid:71)(cid:2)(cid:74)(cid:71)(cid:70)(cid:73)(cid:71)(cid:85)(cid:14)(cid:2)(cid:89)(cid:74)(cid:75)(cid:69)(cid:74)(cid:2)(cid:67)(cid:84)(cid:71)(cid:2)(cid:85)(cid:87)(cid:68)(cid:76)(cid:71)(cid:69)(cid:86)(cid:2)(cid:86)(cid:81)(cid:2)(cid:86)(cid:74)(cid:71)(cid:2)(cid:85)(cid:86)(cid:67)(cid:80)(cid:70)(cid:67)(cid:78)(cid:81)(cid:80)(cid:71)(cid:2)(cid:37)(cid:56)(cid:35)(cid:2)(cid:69)(cid:74)(cid:67)(cid:84)(cid:73)(cid:71)(cid:16)
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Risk management and control
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150
150150
125
125125
100
100100
75
7575
50
5050
0
00
-25
-25-25
-50
-50-50
25
25
25
2525
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
five-year 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, the Group CRO and the Group Chief Market & Treasury Risk Officer. Internal and external auditors and
relevant regulators are also informed about backtesting exceptions.
In the “Group: development of regulatory backtesting revenues and actual trading revenues against backtesting VaR”
chart above, the asymmetry between the negative and positive tails is due to the long gamma risk profile historically run
in the Investment Bank. The actual trading revenues include backtesting and intraday revenues.
The number of negative backtesting exceptions within a 250-business-day window decreased to one from four by the
end of 2022. The Swiss Financial Market Supervisory Authority (FINMA) VaR multiplier derived from backtesting
exceptions for market risk RWA was unchanged compared with the prior year, at 3.0.
VaR model confirmation
As well as for regulatory-purposes backtesting described above, we conduct extended backtesting for internal model
confirmation purposes. This includes observing model performance across the entire P&L distribution (not just the tails),
and at multiple levels within the business division hierarchies.
› Refer to “Risk measurement” in this section for more information about our approach to model confirmation procedures
VaR model developments in 2022
Audited | In the fourth quarter of 2022, we made an upgrade to our credit spread factor model, in which we significantly
increased the coverage of single-name-issuer bond spread curves. The resulting RWA decrease was offset by an RWA
increase arising from the introduction of a FINMA-agreed temporary measure.
Future market risk-related regulatory capital developments
In January 2019, the Basel Committee on Banking Supervision (the BCBS) published the final standards on the minimum
capital requirements for market risk (the Fundamental Review of the Trading Book). In December 2022, the Swiss State
Secretariat for International Finance changed the expected date on which the final Basel III guidelines are to enter into
force, from 1 July 2024 to 1 January 2025. As a result, the Swiss implementation timeline would be aligned to the
currently expected implementation timeline in the EU.
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 it being a credible fallback method for an internal model-based approach; and (iii) a revised boundary between
trading book and banking book. UBS maintains a close dialogue with FINMA to discuss the implementation objectives in
more detail and to provide a smooth transition of the capital regime for market risk.
In September 2021, FINMA mandated that UBS hold an RWA add-on for the omission of time decay in regulatory VaR
and SVaR. The add-on reflects the outcome of discussions with FINMA regarding our regulatory VaR model, which started
in late 2019. The integration of time decay into the regulatory VaR model, which would replace the add-on, is subject to
further discussions between FINMA and UBS. The integration of time decay into regulatory VaR is expected to become
effective in 2023. The FINMA-agreed temporary measure related to the credit spread factor model and the add-on related
to time decay are expected to be removed with the integration of time decay into regulatory VaR.
› 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 | Interest rate risk in the banking book (IRRBB) arises from balance sheet positions such as Loans and advances to
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 derivatives, including those subject to
hedge accounting. Fair value changes to these positions may affect other comprehensive income (OCI) or the income
statement, depending on their accounting treatment.
Our largest banking book interest rate exposures arise from customer deposits and lending products in Global Wealth
Management and Personal & Corporate Banking, as well as from debt issuance, liquidity buffers and interest rate hedges
in Group Treasury. The inherent interest rate risks stemming from Global Wealth Management and Personal & Corporate
Banking are generally transferred to Group Treasury, to manage them centrally together with our modeled interest rate
duration assigned to equity, goodwill and real estate. This makes the netting of interest rate risks across different sources
possible, while leaving the originating businesses with commercial margin and volume management. The residual interest
rate risk is mainly hedged with interest rate swaps, to the vast majority of which we apply hedge accounting. Short-term
exposures and most of our 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.
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Risk management and governance
IRRBB is measured using several metrics, the most relevant of which are the following.
– Economic value of equity (EVE) sensitivity to yield curve moves is calculated as changes in the present value of future
cash flows irrespective of accounting treatment. They are also the key risk factors for statistical and stress-based
measures, e.g., value-at-risk and stress scenarios, as well as the regulatory interest rate scenarios. These are measured
and reported daily. The regulatory IRRBB EVE exposure is the most adverse regulatory interest rate scenario that is
netted across currencies. It excludes the sensitivity from additional tier 1 (AT1) capital instruments (as per specific
FINMA requirements) and the modeled interest rate duration assigned to equity, goodwill and real estate. UBS also
applies granular internal interest rate shock scenarios to its banking book positions to monitor its specific risk profile.
– Net interest income (NII) sensitivities to yield curve moves are calculated as changes of baseline NII over a set time
horizon, which we internally compute by assuming interest rates in all currencies develop according to their market-
implied forward rates and assuming constant business volumes and no specific management actions. The sensitivities
are measured and reported monthly. Our Pillar 3 disclosure (as per specific FINMA requirements) excludes the
contribution from cash held at central banks.
We actively manage IRRBB, with the aim of reducing the volatility of NII subject to limits and triggers for EVE and NII
exposure at consolidated and significant legal entity levels.
The Group Asset and Liability Committee (ALCO) and, where relevant, ALCOs at a legal entity level perform independent
oversight over the management of IRRBB, which is also subject to Group Internal Audit and model governance.
› Refer to “Group Internal Audit” in the “Corporate governance” section of this report and to “Risk measurement” in this section for
more information
Key modeling assumptions
The cash flows from customer deposits and lending products used in calculation of EVE sensitivity exclude commercial
margins and other spread components, are aggregated by daily time buckets and are discounted using risk-free rates.
Our external issuances are discounted using UBS’s senior debt curve, and capital instruments are modeled to the first call
date. NII sensitivity, which includes commercial margins, is calculated over a one-year time horizon, assuming constant
balance sheet structure and volumes, and considers embedded interest rate options.
The average repricing maturity of non-maturing deposits and loans is determined via target replication portfolios designed
to protect product margins. Optimal replicating portfolios are determined at granular currency- and product-specific
levels by simulating and applying a real-world market rate model to historically calibrated client rate and volume models.
We use an econometric prepayment model to forecast prepayment rates on US mortgage loans in UBS Bank USA and
agency mortgage-backed securities (MBSs) held in various liquidity portfolios of UBS Americas Holding LLC consolidated.
These prepayment rates are used to forecast both mortgage loan and MBS balances under various macroeconomic
scenarios. The prepayment model is used for a variety of purposes, including risk management and regulatory stress
testing. Swiss mortgages and fixed-term deposits generally do not carry similar optionality, due to prepayment and early
redemption penalties.
Effect of interest rate changes on shareholders’ equity and CET1 capital
The “Accounting and capital effect of changes in interest rates” table below shows the effects on shareholders’ equity
and CET1 capital of gains and losses from changes in interest rates in the main banking book positions. We use derivatives
to hedge interest rate risks in the banking book and these reflect changes in interest rates as an immediate fair value
gain or loss, recognized either in the income statement or through OCI. Where hedged items are accrual accounted, we
aim to minimize accounting asymmetries by applying hedge accounting to reflect the economic hedge relationship.
In a rising rate scenario, we would have an initial decrease in shareholders’ equity as a result of fair value losses on our
derivatives recognized in OCI. This would be compensated over time by increased NII for higher interest rates. 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.
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Accounting and capital effect of changes in interest rates1
RReeccooggnniittiioonn
SShhaarreehhoollddeerrss’’ eeqquuiittyy
CCEETT11 ccaappiittaall
Loans and deposits at amortized cost2,3
Other financial assets and liabilities measured at amortized cost2
Debt issued measured at amortized cost2,3
Receivables and payables from securities financing transactions2
TTiimmiinngg
Gradual
Gradual
Gradual
Gradual
IInnccoommee ssttaatteemmeenntt // OOCCII
Income statement
Income statement
Income statement
Income statement
Financial assets at fair value not held for trading
Immediate
Income statement
Financial assets at fair value through other comprehensive income
Derivatives designated as cash flow hedges
Derivatives designated as fair value hedges5
Derivatives transacted as economic hedges
Immediate
Immediate
OCI
OCI4
Immediate
Income statement
Immediate
Income statement
Gains
Losses
Gains
Losses
11 Refer to the “Reconciliation of IFRS equity 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. 22 For fixed-rate financial instruments, changes in interest rates affect the income statement when these instruments roll over and reprice. 33 For hedge accounted
items, a fair value adjustment is applied in line with the treatment of the hedging derivatives. 44 Excluding hedge ineffectiveness that is recognized in the income statement in accordance with IFRS. 55 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 the banking book to a +1-basis-point parallel shift in yield curves was negative USD 25.0m
as of 31 December 2022, compared with negative USD 29.9m as of 31 December 2021, the change predominantly
driven by rising market rates. This excludes the sensitivity of USD 3.4m from additional tier 1 (AT1) capital instruments
(as per specific FINMA requirements) in contrast to general Basel Committee on Banking Supervision (BCBS) guidance.
The majority of our interest rate risk in the banking book is a reflection of the net asset duration that we run to offset
our modeled sensitivity of net USD 19.6m (31 December 2021: USD 22.1m) assigned to our equity, goodwill and real
estate, with the aim of generating a stable NII contribution. Of this, USD 14.0m and USD 4.8m are attributable to the US
dollar and the Swiss franc portfolios, respectively (31 December 2021: USD 15.6m and USD 5.5m, respectively).
In addition to the sensitivity mentioned above, we calculate the six interest rate shock scenarios prescribed by FINMA.
The “Parallel up” scenario, assuming all positions were fair valued, was the most severe and would have resulted in a
change in EVE of negative USD 4.6bn, or 7.9%, of our tier 1 capital (31 December 2021: negative USD 6.0bn, or 10.0%),
which is well below the 15% threshold as per the BCBS supervisory outlier test for high levels of interest rate risk in the
banking book.
The immediate effect on our tier 1 capital in the “Parallel up” scenario as of 31 December 2022 would have been only
a decrease of USD 0.4bn, or 0.6% (31 December 2021: USD 1.1bn, or 1.8%), reflecting the fact that the vast majority
of our banking book is accrual accounted or subject to hedge accounting. The “Parallel up” scenario would subsequently
have a positive effect on NII, assuming a constant balance sheet.
UBS also applies granular internal interest rate shock scenarios to its banking book positions to monitor the banking
book’s specific risk profile.
Net interest income sensitivity
The main NII sensitivity in the banking book resides in Global Wealth Management and Personal & Corporate Banking.
Our investment of equity portfolio has a long duration and Group Treasury actively manages the residual IRRBB. This
sensitivity is assessed using a number of scenarios assuming parallel and non-parallel shifts in yield curves, with various
degrees of severity, and we have set and monitor thresholds for the NII sensitivity to immediate parallel shocks of –200
and +200 basis points under the assumption of constant balance sheet volume and structure.
› Refer to the “Group performance” section of this report for more information about sensitivity to interest rate movements
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Audited |
Interest rate risk – banking book
USD m
Scenarios
+1 bp
Parallel up2
Parallel down2
Steepener3
Flattener4
Short-term up5
Short-term down6
USD m
Scenarios
+1 bp
Parallel up2
Parallel down2
Steepener3
Flattener4
Short-term up5
EEffffeecctt oonn EEVVEE11 –– FFIINNMMAA
3311..1122..2222
GGBBPP
00..11
3333..22
((4455..44))
((2288..22))
3322..66
4422..22
UUSSDD
((2200..44))
((33,,994444..33))
44,,007744..99
((11,,002277..44))
9944..44
OOtthheerr
((00..11))
TToottaall
((2255..00))
((2266..33))
((44,,662299..11))
2211..99
44,,884411..77
((33..33))
((22..55))
((11,,440088..77))
334444..00
((11,,551199..00))
((1133..88))
((11,,553399..22))
((4422..55))
11,,665588..55
1133..44
11,,668833..11
Effect on EVE1 – FINMA
31.12.21
GBP
0.1
33.3
(32.8)
(31.1)
35.3
45.4
USD
(23.5)
(5,068.3)
4,124.2
(821.4)
(362.3)
(2,165.9)
Other
(0.4)
Total
(29.9)
(85.8)
(6,041.4)
19.9
5,149.5
(3.7)
(1,179.6)
(34.5)
(59.6)
(207.0)
(2,362.9)
EEUURR
((00..77))
((111177..00))
114488..11
((9922..88))
7744..11
3344..33
((3333..11))
EUR
(1.1)
(196.6)
231.9
(69.0)
37.4
(24.1)
EEffffeecctt oonn EEVVEE11 –– BBCCBBSS
AAddddiittiioonnaall ttiieerr 11 ((AATT11)) ccaappiittaall
iinnssttrruummeennttss
33..44
TToottaall
((2211..66))
664499..77
((33,,997799..44))
((669999..88))
44,,114411..99
((4466..88))
((11,,445555..55))
118899..99
443388..66
553333..99
((11,,110000..66))
((445555..55))
11,,222277..66
Effect on EVE1 – BCBS
Additional tier 1 (AT1) capital
instruments
4.5
Total
(25.4)
853.4
(5,188.0)
(928.4)
4,221.1
(9.6)
(1,189.2)
197.1
531.5
(10.0)
(1,831.4)
CCHHFF
((44..00))
((557744..66))
664422..33
((225577..00))
114455..44
((8833..00))
8866..99
CHF
(5.1)
(724.1)
806.3
(254.3)
117.1
(158.7)
Short-term down6
11 Economic value of equity. 22 Rates across all tenors move by ±150 bps for Swiss franc, ±200 bps for euro and US dollar, and ±250 bps for pound sterling. 33 Short-term rates decrease and long-term rates increase.
44 Short-term rates increase and long-term rates decrease. 55 Short-term rates increase more than long-term rates. 66 Short-term rates decrease more than long-term rates.
2,315.6
2,465.6
1,912.3
(553.3)
(43.7)
162.5
27.4
3.8
Other market risk exposures
Own credit
We are exposed to changes in UBS’s own credit reflected in the valuation of financial liabilities designated at fair value
when UBS’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 20 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 10 Derivative instruments” in the “Consolidated financial statements” section of this report for more information
about our hedges of net investments in foreign operations
Equity investments and investment fund units
Audited | We make direct investments in a variety of entities and buy equity holdings in both listed and unlisted companies,
with the aim of supporting our business activities and delivering strategic value to UBS. This includes investments in
exchange and clearing house memberships, as well as minority investments in early-stage fintechs and technology
companies via UBS Next. We may also make investments in funds that we manage in order to fund or seed them at
inception or to demonstrate that our interests align with those of investors. We also buy, and are sometimes required by
agreement to buy, securities and units from funds that we have sold to clients.
The fair value of equity investments tends to be influenced by factors specific to the individual investments. Equity
investments are generally intended to be held for the medium or long term and may be subject to lock-up agreements.
For these reasons, we generally do not control these exposures by using market risk measures applied to trading activities.
However, such equity investments are subject to a different range of controls, including preapproval of new investments
by business management and Risk Control, portfolio and concentration limits, and regular monitoring and reporting to
senior management. They are also included in our Group-wide statistical and stress testing metrics, which flow into our
risk appetite framework.
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As of 31 December 2022, we held equity investments and investment fund units totaling USD 3.0bn, of which USD 1.9bn
was classified as Financial assets at fair value not held for trading and USD 1.1bn as Investments in associates.
› Refer to “Note 20 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 2022 were measured at fair value with changes in fair value recorded through Equity, and can broadly be
categorized as money market instruments and debt securities primarily held for statutory, regulatory or liquidity reasons.
The risk control framework applied to debt instruments classified as Financial assets measured at fair value through other
comprehensive income depends on the nature of the instruments and the purpose for which we hold them. Our
exposures may be included in market risk limits or be subject to specific monitoring and interest rate sensitivity analysis.
They are also included in our Group-wide statistical and stress testing metrics, which flow into our risk appetite
framework.
Debt instruments classified as Financial assets measured at fair value through other comprehensive income had a fair
value of USD 2.2bn as of 31 December 2022, compared with USD 8.8bn as of 31 December 2021. Effective from 1 April
2022, UBS has reclassified a portfolio of financial assets from Financial assets measured at fair value through other
comprehensive income with a fair value of USD 6.9bn to Other financial assets measured at amortized cost, in line with
the principles in IFRS 9, Financial Instruments, which require a reclassification when an entity changes its business model
for managing financial assets.
› Refer to “Note 20 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 that can have a material effect on our IFRS equity 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 Group-wide statistical and stress testing metrics, which flow into our risk appetite
framework. The potential effects are thus captured in the post-stress capital ratio calculations.
› Refer to “Note 1 Summary of material accounting policies” and “Note 26 Post-employment benefit plans” in the “Consolidated
financial statements” section of this report for more information about defined benefit plans
UBS own share exposure
Group Treasury holds UBS Group AG shares to hedge future share delivery obligations related to employee share-based
compensation awards, and also holds shares purchased under the share repurchase program. In addition, the Investment
Bank holds a limited number of UBS Group AG shares, primarily in its capacity as a market-maker with regard to UBS
Group AG shares and related derivatives, and to hedge certain issued structured debt instruments.
› Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information
Country risk
Country risk framework
Country risk includes all country-specific events occurring in a sovereign jurisdiction that may lead to impairment of UBS’s
exposures. It may take the form of: (i) sovereign risk, which is the ability and willingness of a government to honor its
financial commitments; (ii) transfer risk, which arises if a counterparty or issuer cannot acquire foreign currencies
following a moratorium by a central bank on foreign exchange transfers; or (iii) “other” country risk. “Other” country
risk may manifest itself through, on the one hand, increased and multiple counterparty and issuer default risk (systemic
risk) and, on the other hand, events that may affect a country’s standing, such as adverse shocks affecting political
stability or institutional and / or legal frameworks. We have a well-established risk control framework to assess the risk
profiles of all countries where we have exposure.
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We assign a country rating to each country, which reflects our view of the 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. We use this internal analysis to set the credit ratings of
governments and central banks, estimate the probability of a transfer event occurring, and establish rules on how aspects
of country risk should be incorporated in counterparty ratings of non-sovereign entities domiciled in the respective
country.
Country ratings are also used to define our risk appetite and risk exposure to foreign countries. A country risk limit (i.e.,
maximum aggregate exposure) applies to exposures to counterparties or issuers of securities and financial investments in
the given foreign country. We may limit the extension of credit, transactions in traded products or positions in securities
based on a country risk ceiling even if our exposure to a counterparty is otherwise acceptable.
For internal measurement and control of country risk, we also consider the financial effect of market disruptions arising
prior to, during and after a country crisis. These may take the form of a severe deterioration in a country’s debt, equity
or other asset markets, or a sharp depreciation of its currency. We use stress testing to assess potential financial effects
of severe country or sovereign crises. This involves the developing of plausible stress scenarios for combined stress testing
and the identification of countries that may potentially be subject to a crisis event, determining potential losses and
making assumptions about recovery rates depending on the types of credit transactions involved and their economic
importance to the affected countries.
Our exposures to market risks are subject to regular stress tests covering major global scenarios, which are also used for
combined stress testing, where we apply market shock factors to equity indices, interest rates and currency rates in all
relevant countries and consider the potential liquidity of the instruments.
Country risk exposure
Country risk exposure measure
The presentation of country risk follows our internal risk view, where the basis for measuring exposures depends on the
product category in which we classified the exposures. In addition to the classification of exposures into banking products
and traded products, covered in “Credit risk profile of the Group” in this section, in the trading inventory we classify
issuer risk on securities such as bonds and equities, as well as risk relating to underlying reference assets for derivative
positions.
As we manage the trading inventory on a net basis, we net the value of long positions against short positions with the
same underlying issuer. Net exposures are, however, floored at zero per issuer in the figures presented in the following
tables. As a result, we do not recognize potentially offsetting benefits of certain hedges and short positions across issuers.
We do not recognize any expected recovery values when reporting country exposures as exposure before hedges, except
for risk-reducing effects of master netting agreements and collateral held in either cash or portfolios of diversified
marketable securities, which we deduct from the positive exposure values. Within banking products and traded products,
risk-reducing effects of credit protection are 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.
We apply a specific approach for banking products exposures to branches of banks that are located in a country other
than the legal entity’s domicile. In such cases, exposures are recorded in full against the country of domicile of the
counterparty and additionally in full against the country where the branch is located.
In the case of derivatives, we show counterparty risk associated with positive replacement value (PRV) against the
counterparty’s country of domicile (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 domicile of
the issuer of the reference asset (presented within trading inventory). This approach allows us to capture both
counterparty and, where applicable, issuer elements of risk arising from derivatives and applies comprehensively for all
derivatives, including single-name credit default swaps (CDSs) and other credit derivatives.
CDSs are primarily bought and sold in relation to our trading businesses, and, to a much lesser degree, used to hedge
credit valuation adjustments (CVAs). Holding CDSs for credit default protection does not necessarily protect the buyer of
protection against losses, as contracts only pay out under certain scenarios. The effectiveness of our CDS protection as a
hedge of default risk is influenced by several factors, including the contractual terms under which a given CDS was
written. Generally, only the occurrence of credit events as defined by the CDS contract’s terms (which may include,
among other events, failure to pay, restructuring or bankruptcy) results in payments under the purchased credit protection
contracts. For CDS contracts on sovereign obligations, repudiation can also be deemed as a default event. The
determination as to whether a credit event has occurred is made by the relevant International Swaps and Derivatives
Association (ISDA) determination committees (composed of various ISDA member firms) based on the terms of the CDS
and the facts and circumstances surrounding the event.
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Top 20 country risk exposures
The table below shows our 20 largest country exposures by product type, excluding our home country, as of 31 December
2022 compared with 31 December 2021.
Compared with the prior year, our net exposure to the UK decreased by USD 14.5bn, driven by central bank exposures
due to treasury activities. Net exposure to Germany increased by USD 4.1bn, driven by central bank exposures due to
treasury activities. Net exposures to Singapore increased by USD 1.9bn, driven by trading inventory due to treasury
activities. Net exposure to China decreased by USD 1.7bn, predominantly driven by trading inventory across issuer risk
and margin loans, as well as traded and banking products. Net exposure to France increased by USD 1.7bn, driven by
trading inventory due to treasury activities. Net exposure to the US increased by USD 1.6bn, driven by mortgages, as well
as trading inventory due to treasury activities with partial offsets related to securities financing transactions.
Based on the sovereign rating categories, as of 31 December 2022, 86% of our emerging market country exposure was
rated investment grade, compared with 84% as of 31 December 2021.
Russia
Our direct country risk exposure to Russia contributed USD 98m to our total emerging market exposure of USD 18.6bn
as of 31 December 2022, compared with a contribution of USD 634m as of 31 December 2021. This includes trade
finance exposures in Personal & Corporate Banking, Nostro and cash accounts balances, and issuer risk on trading
inventory within the Investment Bank.
We had no material direct country risk exposures to Belarus or to Ukraine as of 31 December 2022 and no material
reliance on Russian, Belarusian or Ukrainian collateral.
Top 20 country risk net exposures by product type
TToottaall
Net of hedges1
Banking products
(loans, guarantees, loan
commitments)
Net of hedges1
Traded products
(counterparty risk from derivatives
and securities financing)
after master netting agreements
and net of collateral
Net of hedges
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
USD m
United States
United Kingdom
Japan
Germany
Singapore
France
Australia
Canada
China
South Korea
Luxembourg
Netherlands
Hong Kong SAR
Norway
United Arab Emirates
Thailand
Sweden
Austria
Monaco
3311..1122..2222
111177,,999944
2200,,336600
1155,,889944
1144,,665511
1100,,886633
77,,999966
44,,889933
44,,772222
33,,662255
33,,226655
33,,223300
22,,886666
22,,227788
11,,667766
11,,339933
11,,338833
11,,229933
11,,119922
11,,001177
31.12.21
116,388
34,837
14,764
10,564
8,993
6,301
6,397
3,933
5,344
2,479
3,453
3,020
3,388
1,215
769
1,469
1,617
1,220
1,022
8811,,887755
1100,,888877
1133,,225511
88,,225555
33,,003388
22,,005566
11,,336655
227744
11,,334477
338888
22,,771177
11,,007744
993388
8800
444466
334444
115588
228855
11,,000011
79,647
24,788
10,572
3,397
3,110
1,356
2,674
1,199
1,823
462
2,438
1,183
1,914
25
555
208
647
265
984
Trading inventory
(securities and potential
benefits / remaining
exposure from derivatives)
Net long per issuer
3311..1122..2222
2299,,449999
31.12.21
28,371
11,,449900
441100
44,,990011
55,,333322
44,,660055
11,,669966
33,,882277
11,,998833
22,,446666
442277
11,,112233
888855
11,,220000
224400
11,,001177
880033
779922
00
4400
2,585
684
5,934
3,326
3,235
1,937
1,689
2,691
1,599
958
1,007
1,107
983
97
1,235
776
858
10
41
66,,662200
77,,998822
22,,223322
11,,449955
22,,449933
11,,333355
11,,883333
662200
229955
441111
8877
666699
445555
339966
770077
2233
333322
111166
1166
8888
8,371
7,465
3,508
1,232
2,557
1,711
1,786
1,044
830
418
58
830
367
206
117
26
194
97
28
87
India
TToottaall ttoopp 220022
11 Before deduction of IFRS 9 ECL allowances and provisions. 22 Excluding Switzerland, supranationals and global funds.
228,291
222211,,556655
113300,,662266
138,238
1,119
997755
884477
991
2288,,220033
30,930
6622,,773366
59,124
Emerging markets¹ net exposure² by internal UBS country rating category
USD m
Investment grade
Sub-investment grade
TToottaall
3311..1122..2222
31.12.21
1166,,002299
22,,559944
1188,,662233
17,608
3,261
20,869
11 We classify countries as emerging markets based on per capita GDP, historical real GDP growth, alignment with international institutions (such as BIS, World Bank, IMF, MSCI) and other factors. 22 Net of credit
hedges (for banking products and for traded products); net long per issuer (for trading inventory). Before deduction of IFRS 9 ECL allowances and provisions.
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Sustainability and climate risk
At UBS, sustainability and climate risk is defined as the risk that UBS negatively impacts or is impacted by climate change,
natural capital, human rights or other environmental, social and governance (ESG) matters.
Sustainability and climate risk may manifest as credit, market, liquidity and / or non-financial risk for UBS, resulting in
potential adverse financial, liability and / or reputational impacts. These risks extend to the value of investments and may
also affect the value of collateral (e.g., real estate). The management of sustainability and climate risk is key, amid a
global drive to meet the United Nations Sustainable Development Goals (the SDGs) and the transition to net zero, as
defined by the Paris Agreement. In addition, regulators across jurisdictions increasingly seek to understand the potential
financial impacts of climate change.
Our sustainability and climate risk policy framework governs client and supplier relationships, applies Group-wide to all
activities, and is integrated in management practices and control principles. The sustainability and climate risk framework
is embedded in our standard risk, compliance and operations processes and applied as described below.
Sustainability and climate risk framework
1 Identifi cation and
measurement
Sustainability and climate (physical
and transition) risks are identifi ed and
their fi nancial materiality is measured
4 Reporting
Key sustainability and climate risk
considerations are included in
periodic risk reporting
2 Monitoring and risk
appetite setting
Exposure to high / moderate risk
sectors, emerging risks and regulations
is monitored and metrics are reported
internally to enable risk appetite setting
3 Management and control
Management and control processes for
products, counterparties and transactions
ensure material sustainability and climate
risks are identifi ed, measured, monitored
and escalated
The aforementioned processes include client onboarding, transaction due diligence, product development and
investment decision processes, own operations, supply chain management, and portfolio reviews. This framework is
geared toward identifying clients, transactions or suppliers potentially in breach of our standards or otherwise subject to
significant controversies related to sustainability, human rights or climate change.
› Refer to “Sustainability and climate risk policy framework” in Supplement 2 to our Sustainability Report 2022, available under
“Annual reporting” at ubs.com/investors, for more information
Managing climate risk
Climate risk can arise either from changing climate conditions (physical risks) or from efforts to mitigate climate change
(transition risks). The physical and transition risks from a changing climate contribute to a structural change across
economies and consequently can affect banks and the financial sector as a whole through financial and non-financial
impacts.
Our sustainability and climate risk (SCR) unit (part of Group Risk Control) manages material exposure to sustainability
and climate risks. It also advances our firm-wide SCR initiative to build in-house capacity for the management of
sustainability and climate-related risks.
Our SCR initiative follows a multi-year roadmap. It is designed to integrate sustainability and climate risk considerations
into our various traditional financial and non-financial risk management frameworks, and related policies and processes.
This is necessary to meet expectations regarding the management of sustainability and climate risks and to deliver on
climate stress-test exercises. Our roadmap is configured to address current and emerging regulations and builds capacity
through expertise and collaboration, for example, structured engagement with internal and external stakeholders (e.g.,
our Group Compliance, Regulatory & Governance (GCRG) function, for non-financial risks) and pertinent experts.
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In 2022, the SCR initiative monitored emerging sustainability and climate risk regulation, engaged with select regulators
for deep dives, and further advanced efforts toward the goal of full integration of sustainability and climate risk into our
traditional risk management frameworks and stress-testing capacity. Further developments included establishing
sustainable product guidelines, building new capacity to centrally structure, acquiring and deploying ESG data across the
firm, and further refining governance and methodologies driving ESG reporting and disclosure.
› Refer to “Our management of climate risks” in our Sustainability Report 2022, available under “Annual reporting” at
ubs.com/investors, for more information
UBS’s lending to climate-sensitive sectors
UBS approaches climate risk identification by integrating climate risk drivers, expert-based views on their transmission
channels, and climate risk methodologies (e.g., risk scores and heatmaps). This enables a materiality-driven approach to
climate risk management.
› Refer to “Climate related materiality assessment” in our Sustainability Report 2022, available under “Annual reporting” at
ubs.com/investors, for more information
The current inventory of UBS’s exposure to climate-sensitive activities (transition and physical risk) at the sector level is
summarized in the table below. Exposures may appear either under one or more of the risk types, as the methodologies
are distinct in their approach and application and should not be added up as one total exposure figure. Climate risk
analysis is a novel area of research, and, as the methodologies, tools, and data availability improve, we will further develop
our risk identification and measurement approaches.
Risk exposures by sector1,2
SSeeccttoorr
AAggrriiccuullttuurree
Agriculture, fishing and forestry
Food and beverage
FFiinnaanncciiaall sseerrvviicceess
Financial services
IInndduussttrriiaallss
Cement or concrete manufacture
Chemicals manufacture
Electronics manufacture
Goods and apparel manufacture
Machinery manufacturing
Pharmaceuticals manufacture
Plastics and petrochemicals manufacture
MMeettaallss aanndd mmiinniinngg
Conglomerates (incl. trading)
Mining and quarrying
Production
FFoossssiill ffuueellss
Downstream refining, distribution
Integrated
Midstream transport, storage
Trading
Upstream extraction
RReeaall eessttaattee
Real estate development and
management
Residential2
Commercial2
SSeerrvviicceess aanndd tteecchhnnoollooggyy
Services and technology
EExxppoossuurree
TTrraannssiittiioonn rriisskk
PPhhyyssiiccaall rriisskk
2020–2022
trend
2022
(USD bn)
2022
climate-
sensitive
exposure3
2022 risk-rating
category3
2020–2022
trend in risk
profile4
In scope of
net-zero
target (%)5
2022
climate-
sensitive
exposure3
2022 risk-rating
category3
2020–2022
trend in risk
profile4
0.3
3.2
0.0
1.4
Moderately low
Moderate
46.9
0.0
Low
0.5
1.0
1.8
2.1
2.9
1.9
0.9
2.4
0.4
0.4
0.3
0.4
0.0
5.2
0.1
5.6
158.9
47.1
0.5
1.0
0.0
1.0
2.6
1.9
0.9
2.4
0.0
0.4
0.3
0.4
0.0
5.2
0.1
1.8
0.0
1.4
Moderately high
Moderately high
Moderately low
Moderate
Moderate
Moderately high
Moderate
Moderate
Moderately low
Moderate
Moderate
Moderately high
Moderate
Moderate
Moderately high
Moderately low
Low
Moderately low
19.6
0.0
Low
98
100
95
99
97
0.3
2.3
Moderate
Moderate
7.1
Moderately low
0.5
1.0
0.1
0.9
0.1
0.2
0.8
0.4
0.4
0.1
0.3
0.4
0.0
5.2
0.1
0.8
0.0
1.7
Moderate
Moderate
Moderately low
Moderately low
Moderately low
Moderately low
Moderate
Moderately low
Moderately high
Moderate
Moderate
Moderate
Moderate
Moderately high
Moderate
Moderately low
Low
Low
3.0
Moderately low
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Risk exposures by sector1,2 (continued)
EExxppoossuurree
TTrraannssiittiioonn rriisskk
PPhhyyssiiccaall rriisskk
SSeeccttoorr
TTrraannssppoorrttaattiioonn
Air transport
Automotive
Parts and equipment supply
Rail freight
Road freight
Transit
Water transport
UUttiilliittiieess
Other
Secondary energy production
Secondary energy trading
PPrriivvaattee lleennddiinngg
Lombard2,6
Private lending, credit cards, other2
TToottaall
of which: sensitive exposure (%)
2020–2022
trend
2022
(USD bn)
2022
climate-
sensitive
exposure3
1.8
0.4
0.5
0.7
0.5
0.2
0.4
0.2
2.0
0.0
137.3
4.1
445500..00
1.8
0.1
0.5
0.0
0.5
0.0
0.0
0.1
0.5
0.0
0.0
0.0
2244..99
5.5
2022 risk-rating
category3
Moderate
Moderately low
Moderate
Low
Moderate
Moderately low
Moderately low
Moderately low
Moderately low
Moderately low
Low
Not Classified
MMooddeerraatteellyy llooww
2020–2022
trend in risk
profile4
In scope of
net-zero
target (%)5
2022
climate-
sensitive
exposure3
91
1.1
0.0
0.1
0.2
0.2
0.1
0.4
0.1
2.0
0.0
0.0
0.0
3300..00
6.7
2022 risk-rating
category3
Moderate
Moderately low
Moderately low
Moderately low
Moderately low
Moderately low
Moderate
Moderate
Moderate
Moderate
Moderately low
Not Classified
MMooddeerraatteellyy llooww
2020–2022
trend in risk
profile4
11 Consists of total loans and advances to customers and guarantees, as well as irrevocable loan commitments (within the scope of expected credit loss), and is based on consolidated and standalone IFRS numbers,
in USD bn. Metrics and trends are calculated and restated based on 2022 methodology, across three years of reporting, 2020–2022. 22 Methodologies for assessing climate-related risks are emerging and may
change over time. As the methodologies, tools and data availability improve, we will further develop our risk identification and measurement approaches, including further and updated geospatial analysis of properties
securing financing with UBS (real estate) and better understanding how private lending (e.g., Lombard) activities may result in direct financial impacts for UBS. For physical climate risks, UBS has identified select
properties in its real estate portfolio that are vulnerable to acute climate hazards. However, real estate rating is assigned based on the riskiness of loan counterparties or qualitative estimates leveraging internal
studies. 33 Climate-related risks are scored between 0 and 1, based upon sustainability and climate risk transmission channels, as outlined in Appendix 3 to our Sustainability Report 2022, available under “Annual
reporting” at ubs.com/investors. Risk ratings represent a range of scores across five risk-rating categories: low, moderately low, moderate, moderately high, and high. The climate-sensitive exposure metrics are
determined based upon the top three out of five rated categories: high to moderate. Legend on risk codes: not classified means the respective category of risk rating is not classified and its range of risk profiles scores
0%; low means the category of risk rating is low and its range of risk profiles scores ≤19%; moderately low means the category of risk rating is moderately low and its range of risk profiles scores >19% and ≤39%;
moderate means the category of risk rating is moderate and its range of risk profiles scores >39% and ≤59%; moderately high means the category of risk rating is moderately high and its range of risk profiles scores
>59% and ≤79%; high means the category of risk rating is high and its range of risk profiles scores >79% and ≤100%. 44 A material change in risk profile (discrete risk score, weighted average per sub-sector) is
considered a >5% shift up, or down. 55 Calculated as a % of total exposure to the sub-sector, overall net-zero targets cover 45.6% of UBS lending, as defined in footnote 1. 66 Lombard lending rating is assigned
based on the average riskiness of loans.
Transition risk heatmap
Transition risk covers the adjustment to an environmentally sustainable economy, including changes in public policies,
disruptive technological developments and shifts in consumer and investor preferences. Our transition risk heatmap
methodology is based on a risk-segmentation process, dividing and rating economic sectors and industry sub-segments
that share similar risk vulnerability characteristics.
These are then scored and rated according to their vulnerability to (i) climate policy, (ii) low-carbon technology risks and
(iii) revenue or demand shifts under an immediate and ambitious approach, to meeting the well-below-2°C Paris goal.
We are able to use these risk ratings to support identification of potential climate-sensitive concentrations. The ratings in
the heatmap are bands of scores (from 0 to 1), and reflect the levels of risk that would likely occur under an ambitious
transition (in a short-term time horizon).
Our current transition risk heatmap shows that our exposure to activities rated as having high, moderately high or
moderate vulnerability to climate transition risks is relatively low (as a percentage, in 2022 compared with 2021). Most
year-on-year fluctuations (2021 to 2022) were in the energy sector, specifically in the oil and gas midstream and
downstream segments, and were caused by increasing energy prices, as the Russia–Ukraine war tightened the global
energy supply. Despite these fluctuations, we have continued to reduce our exposure to climate-sensitive sectors.
› Refer to “Managing sustainability and climate risks” in our Sustainability Report 2022, available under “Annual reporting” at
ubs.com/investors, for more information
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Climate risk heatmap (transition risk)1,2
In USD bn
5.08
Moderately high
Industrials
Fossil fuels
Utilities
Real estate
Agriculture
0.02
High
Fossil fuels
0.02
0.00
Shale gas
Refi ning and marketing
19.77
Moderate
Fossil fuels
Industrials
Real estate
Transportation
Metals and
mining
Agriculture
Utilities
3.43
1.12
0.51
0.02
0.01
4.91
4.55
3.15
2.86
2.80
1.40
0.10
Industrials
Fossil fuels
Utilities
Real estate
Agriculture
1.90
1.02
0.51
Pharmaceuticals
Chemicals
Cement or concrete manufacture
12.82
Not classifi ed
80.19
Moderately low
0.54
Wholesale / trade: crude oil and natural gas
0.40
Integrated oil and gas
0.11
0.08
Conventional oil (on - / offshore)
Gas processing (incl. LNG)
0.51
Electricity from high-carbon fuels (regulated)
0.02
Commercial real estate
0.01
Livestock – beef extensive grazing
450.173,4
Total exposure
332.28
Low
Fossil fuels
Industrials
Real estate
Transportation
Metals and mining
Agriculture
Utilities
4.70
0.21
0.00
Wholesale / trade: refi ned petroleum products
Downstream oil and gas distribution
Transportation and storage (gas)
2.62
Machinery and related parts manufacturing
1.00
0.93
1.76
1.39
Consumer durables manufacturing
Plastics and petrochemicals manufacture
Construction of buildings and related activities
Commercial real estate
1.70
Airlines – cargo
0.49
Land-based shipping (trucks)
0.48
0.10
0.06
0.02
Transportation parts and equipment supply
Autos, high-carbon (few EVs, many SUVs)
Airlines – commercial
Sea-based shipping, high-carbon
2.44
Conglomerates (incl. trading)
0.26
0.09
Production of other mined metals and raw materials
Production of steel / iron
1.40
Food and beverage production
0.08
Wastewater treatment
0.02
Electricity from moderate-carbon fuels (regulated)
1
2
3
4
Consists of total loans and advances to customers and guarantees, as well as irrevocable loan commitments (within the scope of expected credit loss), and are based on consolidated and standalone IFRS numbers.
Climate-related risks are scored between 0 and 1, based upon sustainability and climate risk transmission channels, as outlined in the Appendix 3 to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors. Risk ratings represent a range of scores across, 5 risk rating categories:
low, moderately low, moderate, moderately high, and high. Climate-sensitive exposure metric is determined based upon the top 3 out of 5 rated categories: high to moderate. Sectors, such as fossil fuels, are further segmented to categories refl ecting a range of risk vulnerabilities from high to moderate, within
the sensitive sector.
Total exposure calculation is subject to rounding to two decimal places, hence potential deviation from actual.
Methodologies for assessing climate-related risks are emerging and may change over time. As the methodologies, tools, and data availability improve, we will further develop our risk identifi cation and measurement approaches, including updated geospatial analysis of properties securing fi nancing with UBS (real
estate) and better understanding how private lending (e.g., Lombard) activities may result in direct fi nancial impacts to UBS. Not classifi ed represents portion of UBS business activities where methodologies and data are not yet able to provide a rating. Lombard lending rating is assigned based on the average
riskiness of loans.
125–
126
Physical risk heatmap
Physical risk arises from the impact of weather events and long-term or widespread environmental changes. The physical
risk heatmap methodology groups corporate counterparties based on exposure to key physical risk factors, by rating
sectoral (sectoral average risk distribution), geographic (vulnerability and adaptive capacity) and value chain (sectoral
average risk distribution) vulnerabilities in a climate-change trajectory in which no additional policy action is taken, and
scored for the potential for financial loss in the short-term time horizon. Ratings from low to high are based on a
weighted-average score (from 0 to 1), given by double-weighting sector and geography and single-weighting value chain.
› Refer to “Managing sustainability and climate risks” in our Sustainability Report 2022, available under “Annual reporting” at
ubs.com/investors
We will continue to enhance our methodology in 2023, with relevant subject matter experts (e.g., country risk experts)
and enhanced vendor data sources (e.g., systematic integration of geospatial tools and data). Our current physical risk
heatmap shows that we have relatively low exposure to activities rated as having high, moderately high or moderate
vulnerability to physical climate risks. Key concentrations of exposure include high volumes of real estate lending in
Switzerland. Most of our lending is to the financial sector, which by its nature has a lower physical climate risk. Key
exceptions are lending to property insurance companies or lending in higher-risk regions, such as South Asia.
The chart below shows the location-specific risk distribution compared with the spread of physical risk across sectoral
risk ratings versus country (risk domicile, see above) risk ratings. The size of the circle indicates the relative lending
exposure.
Scenario analysis and stress test exercises
We use scenario-based approaches to assess our exposure to physical and transition risks stemming from climate change.
We have introduced a series of assessments performed through industry collaborations in order to harmonize approaches
for addressing methodological and data gaps. We have performed top-down balance sheet stress testing (across the
Group), as well as targeted, bottom-up analysis of specific sector exposures covering short-, medium-, and long-term
time horizons.
UBS first participated in regulatory scenario analysis and stress test exercises in 2021,namely the Bank of England (BoE)
2021 Climate Biennial Exploratory Scenario (CBES): Financial risks from climate change; and the Climate Risk Stress Test
(CST) of the European Central Bank (the ECB). In addition, in 2021 UBS participated in climate risk assessment conducted
in Switzerland jointly by FINMA and the Swiss National Bank. Throughout 2022, we engaged with a range of regulatory
surveys and other requests for information from supervisors around the globe.
› Refer to “Managing sustainability and climate risks” in our Sustainability Report 2022, available under “Annual reporting” at
ubs.com/investors
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Climate risk heatmap (physical risk)1,2
In USD bn
1.42
High
8.71
Not classifi ed
4.15
Moderately high
24.44
Moderate
226.59
Low
450.173,4
Total exposure
184.85
Moderately low
Physical risk by sector and geographic (country) scores
Marker size indicates relative exposure magnitude
High
1.0
e
r
o
c
s
y
r
t
n
u
o
C
0.6
0.5
0.4
0.3
0.2
0.1
Lombard4
Financial
services
Transportation
Real estate
(development,
commercial)5,6
Industrials
Services and
technology
Fossil fuels
Metals and
mining
Utilities
Agriculture
0
Low
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Sector score
1.0
High
Average country and sector score
Lower risk
Higher risk
1
2
3
4
5
6
Consists of total loans and advances to customers and guarantees, as well as irrevocable loan commitments (within the scope of expected credit loss), and are based on consolidated and standalone IFRS numbers.
Climate-related risks are scored between 0 and 1, based upon sustainability and climate risk transmission channels, as outlined in the Appendix 3 to our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors. Risk ratings represent a range of scores across, 5 risk rating categories:
low, moderately low, moderate, moderately high, and high. Climate sensitive exposure metric is determined based upon the top 3 out of 5 rated categories: high to moderate. Sectors, such as fossil fuels, are further segmented to categories refl ecting a range of risk vulnerabilities from high to moderate, within
the sensitive sector.
Total exposure calculation is subject to rounding to two decimal places, hence potential deviation from actual.
Methodologies for assessing climate-related risks are emerging and may change over time. As the methodologies, tools, and data availability improve, we will further develop our risk identifi cation and measurement approaches, including updated geospatial analysis of properties securing fi nancing with UBS (real
estate) and better understanding how private lending (e.g., Lombard) activities may result in direct fi nancial impacts to UBS. Not classifi ed represents portion of UBS business activities where methodologies and data are not yet able to provide a rating. Lombard lending rating is assigned based on the average
riskiness of loans.
Residential real estate is not given a sector score, therefore not included in this chart, however, is rated “low” based on periodic geospatial analysis.
UBS has identifi ed select properties in its portfolio that are vulnerable to acute climate hazards, however portfolio-level risks are inherently low, given the integration of such information into UBS’s loan underwriting processes.
128–
129
Non-financial risk
Non-financial risk is the risk of undue monetary loss and / or non-monetary adverse consequences resulting from
inadequate or failed internal processes, people and / or systems, failure to comply with laws and regulations and internal
policies and procedures, or external events (deliberate, accidental or natural) that have an impact, monetary or non-
monetary, on UBS, its clients or its markets.
Key developments
We have identified eight non-financial risk themes as being currently key to us. These are:
– digital transformation and change delivery;
– data life cycle;
– operational resilience and cyber threat;
– investor protection and market interaction;
– strategic growth initiatives and partnerships;
– the evolving nature of AML / KYC and sanctions;
– virtual assets; and
– environmental, social and governance (ESG) risks.
We are continuing our efforts regarding innovation and digitalization to create value for our clients. As part of the
resulting transformation, we focus on timely and properly controlled changes to frameworks, including consideration of
new or revised controls, working practices and oversight, with the aim of mitigating any new risks introduced.
The increasing interest in data-driven advisory processes, and use of artificial intelligence and machine learning, is opening
up new questions related to data ethics, data privacy and records management. In addition, given the interconnectivity
between systems and data flows, it is important that data is properly managed and is complete, timely and correct. We
are actively enhancing the required frameworks, which are designed to ensure proper controls are in place to meet
regulatory and customer expectations.
Given rising geopolitical tensions, coupled with ongoing environmental and health threats, we believe that it is essential
that UBS remains operationally resilient. We have developed a global operational resilience framework and are
implementing it across all business divisions and jurisdictions. The framework will mature over time and is designed to
drive enhancements in operational resilience. In addition, in regions with local COVID-19 restrictions, our response
continues to rely upon our business continuity management and operational risk processes, with no material impact on
our services.
The inherent risk of cyberattacks continues to be elevated, as the geopolitical situation increases the likelihood of external
state-driven cyber activity, and attacks are becoming increasingly sophisticated, which may result in business disruption
or the corruption or loss of data. It is therefore key that our cyber-defense capabilities continue to be strengthened and
evolve in line with developments in the threat landscape. Our IT security controls, staff training and communications, and
cyber-threat monitoring provided adequate cyber defenses to prevent our operations being materially impacted by
cybersecurity incidents in 2022. We continue to enhance our cyber capabilities to stay abreast of evolving threats.
Cyberattacks may also occur on the systems that are operated by external service providers. 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,
investigate and assess the attack, and successfully restore the relevant systems and data.
As we continue to move to a post-pandemic “new normal,” changes to the work environment (including permanent
hybrid working and the introduction of agile ways of working) have introduced new challenges for supervision and
monitoring. Hybrid working can lead to increased conduct risk, inherent risk of fraudulent activities, potential increases
in the number of suspicious transactions, and increased information security risks. We have implemented additional
monitoring and supervision to mitigate these risks.
Competition to find new investment opportunities across the financial services sector, both for firms and for customers,
is increasing. Thus, suitability risk, product selection, cross-divisional service offerings, quality of advice and price
transparency also remain areas of heightened focus for UBS and for the industry as a whole.
With regard to consumer protection, sustainable investing, market volatility and major legislative change programs, such
as the Swiss Financial Services Act (FIDLEG) in Switzerland, Regulation Best Interest (Reg BI) in the US and the Markets in
Financial Instruments Directive II (MiFID II) in the EU, all significantly affect the industry and require adjustments to control
processes on a geographically aligned basis.
Achieving fair outcomes for our clients, upholding market integrity and cultivating the highest standards of employee
conduct are of critical importance to us. 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.
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Cross-border risk remains an area of regulatory attention for global financial institutions, with a strong focus on fiscal
transparency, as well as market access, particularly third-country market access into the European Economic Area. There
is also an ongoing high level of attention regarding the risk that tax authorities may, on the basis of new interpretations
of existing law, seek to impose taxation based on the existence of a permanent establishment. We maintain a series of
controls designed to address these risks. Remote communication and the use of digital solutions also require that these
evolving client channels remain compliant.
In September 2022, the Securities and Exchange Commission (the SEC) and the Commodity Futures Trading Commission
(the CFTC) issued settlement orders with UBS AG relating to communications recordkeeping requirements in our US
broker-dealers and our registered swap dealer. In response, we have initiated a program to remediate the identified
shortcomings.
Financial crime, including money laundering, terrorist financing, sanctions violations, fraud, bribery and corruption,
continues to present 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 for UBS. Money laundering and financial fraud techniques are becoming increasingly sophisticated, and
geopolitical volatility makes the sanctions landscape more complex, as new or novel sanctions may be imposed that
require complex implementation in a short time frame, such as the extensive and continuously evolving sanctions arising
from the Russia–Ukraine war. As a regulated financial institution, UBS is subject to the requirements of, and to supervision
by, the Swiss Financial Market Supervisory Authority (FINMA), the US Federal Reserve Board, the US Office of the
Comptroller of the Currency (the OCC), the US Federal Deposit Insurance Corporation, the US SEC, the UK Prudential
Regulation Authority, the UK Financial Conduct Authority, the German Federal Financial Supervisory Authority (BaFIN)
and the European Central Bank (the ECB), as applicable. As such, we maintain policies and procedures that are reasonably
designed to comply with the sanctions, anti-bribery and anti-corruption regimes in the jurisdictions in which we operate,
including the Swiss, EU, US and UK regimes.
In the US, the OCC issued a Cease and Desist Order against UBS in May 2018 relating to our US branch anti-money-
laundering (AML) and know-your-client (KYC) programs. In response, we initiated an extensive program for the purpose
of ensuring sustainable remediation of US-relevant Bank Secrecy Act / AML issues across all our US legal entities. We
introduced significant improvements to the framework between 2019 and 2022. We are continuing to implement these
enhancements, as well as evolving them to respond to any new and emerging risks.
We continue to focus on strategic enhancements to our global AML / KYC and sanctions programs, including the
exploration of new technologies and sophisticated monitoring and analytical capabilities, as well as the application of
risk appetite statements for markets.
In line with our firm-wide purpose, ESG topics and the risks related to them are high on our agenda, particularly
considering the increasing regulatory focus on ESG disclosure, climate-related stress testing, net-zero commitments,
greenwashing risk and the strategic commercial pushing of sustainability topics, as well as the potential for new and
diverse regulations being deployed across jurisdictions. Strong regulatory development tracking and impact assessment
are key, as is integrating ESG factors into the financial and non-financial risk control frameworks as required.
› Refer to “Sustainability and climate risk” in this section for more information about risks related to sustainability and climate risk
New risks continue to emerge. For example, client demand for distributed ledger technology, blockchain-based assets
and virtual currencies creates new risks, to which we currently have limited exposure and for which relevant control
frameworks are being implemented.
Non-financial risk framework
Non-financial risk is an inherent part of our business. Losses can result from people and systems, inadequate or failed
internal processes, or external causes. We follow a Group-wide non-financial risk framework that establishes
requirements for identifying, managing, assessing and mitigating operational, compliance and conduct risks to achieve
an agreed balance between risk and return. It is built on the following pillars:
– classifying inherent risks through 18 non-financial risk taxonomies, which define the universe of material non-financial
risks that can arise as a consequence of our business activities and external factors;
– assessing the design and operating effectiveness of controls through our control assessment process;
– defining the non-financial risk appetite (including a financial risk appetite statement at the Group, UBS AG and
business division levels for non-financial risk events) through quantitative metrics and thresholds and qualitative
measures, 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.
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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.
Compliance & Operational Risk Control (C&ORC) is responsible for providing an independent and objective view of the
adequacy of non-financial risk management across the Group, and ensuring that compliance risk, financial crime risk and
operational risk are understood, owned and managed in accordance with our risk appetite. C&ORC business- or function-
aligned teams sit within the Group Compliance, Regulatory & Governance (GCRG) function, reporting to the Group Chief
Compliance and Governance Officer, who is a member of the Group Executive Board. 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.
In 2022, we continued to review and enhance the non-financial risk framework, including delivery of the Group Functions
Risk Control Self-Assessment for the first time and the rolling-out of the simplified risk taxonomy, which also facilitated
the development of the firm-wide non-financial risk appetite statement and assessments across all 18 taxonomies.
All functions within UBS are required to assess the design and operating effectiveness of their internal controls
periodically. The output of these reviews supports the assessment and testing scope of internal controls over financial
reporting as required by the Sarbanes–Oxley Act, Section 404 (SOX 404).
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.
Advanced measurement approach model
The non-financial risk framework outlined above 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.
We measure Group operational risk exposure and calculate operational risk regulatory capital using the advanced
measurement approach (AMA) in accordance with FINMA and international requirements.
An entity-specific AMA model has been applied for UBS Switzerland AG, while for other regulated entities the basic
indicators or standardized approaches are adopted for regulatory capital in agreement with local regulators. Also, the
methodology of the Group AMA is leveraged for entity-specific Internal Capital Adequacy Assessment Processes.
Currently, the model includes 16 AMA units of measure (UoM), which are aligned with our non-financial risk taxonomy
as closely as possible. Full transition to the non-financial risk taxonomy is not yet implemented, but is planned by the end
of December 2023 with expected FINMA approval for the Group’s AMA model. Frequency and severity distributions are
calibrated for each of the model’s UoM. The modeled distribution functions for both frequency and severity are used to
generate the annual loss distribution. The resulting 99.9% quantile of the overall annual operational risk loss distribution
across all UoM determines the required regulatory capital. Currently, we do not reflect mitigation through insurance or
any other risk transfer mechanism in our AMA model.
AMA model calibration and review
A key assumption when calibrating data-driven frequency and severity distributions is that historical losses form a
reasonable proxy for future events. In line with regulatory expectations, the AMA methodology utilizes both historical
internal losses and external losses suffered by the broader industry for model calibration purposes.
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.
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Our model is reviewed regularly to maintain risk sensitivity and recalibrated at least annually. Any changes to regulatory
capital as a result of a recalibration or methodology changes are presented to FINMA for approval prior to use for
disclosure purposes.
AMA model governance
The Group- and entity-specific AMA models are subject to an independent validation performed by Model Risk
Management & Control in line with the Group’s model risk management framework.
Expected transition of capital regime under Basel III capital regulations
The AMA is expected to be replaced by the standardized measurement approach for regulatory capital determination
purposes in line with the relevant Basel Committee for Banking Supervision Basel III capital regulations. UBS is interacting
closely with the relevant Swiss authorities to discuss the implementation details and related implementation timeline.
› Refer to “Capital planning and activities” in the “Capital, liquidity and funding, and balance sheet” section of this report for more
information about the development of risk-weighted assets
› Refer to “Risk measurement” in this section for more information about our approach to model confirmation procedures
› Refer to the “Risk factors” section of this report for more information
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Capital, liquidity and funding, and balance sheet
Table of contents
135
135
136
139
143
144
146
149
150
150
150
151
152
152
153
153
157
159
Capital management
Capital management objectives, planning and activities
Swiss SRB total loss-absorbing capacity framework
Total loss-absorbing capacity
Risk-weighted assets
Leverage ratio denominator
UBS AG consolidated total loss-absorbing capacity and
leverage ratio information
Equity attribution and return on attributed equity
Liquidity and funding management
Strategy, objectives and governance
Liquidity and funding stress testing
Funding management
Liquidity coverage ratio
Net stable funding ratio
Balance sheet and off-balance sheet
Balance sheet
Off-balance sheet
Cash flows
159
Currency management
160
UBS shares
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Capital management
Capital management objectives, planning and activities
Capital management objectives
Audited | An adequate level of common equity tier 1 (CET1) capital and total loss-absorbing capacity (TLAC) meeting both
internal assessment and regulatory requirements is a prerequisite for conducting our business activities.
We are therefore committed to maintaining a strong CET1 capital and TLAC position at all times, in order to meet
regulatory capital requirements and our target capital ratios, and to support the growth of our businesses.
As of 31 December 2022, our CET1 capital ratio was 14.2% and our CET1 leverage ratio 4.42%, each above our capital
guidance and also above the requirements for Swiss systemically relevant banks (SRBs) and the Basel Committee on
Banking Supervision (the 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.
The BCBS announced the finalization of the Basel III framework in December 2017, and published the final rules on the
minimum capital requirements for market risk from the Fundamental Review of the Trading Book (the FRTB) in January
2019. In response to COVID-19, the Group of Central Bank Governors and Heads of Supervision, which acts as the BCBS’s
oversight body, endorsed the deferral of the implementation date by one year, to 1 January 2023. The accompanying
transitional arrangements for the output floor were also extended by one year, to 1 January 2028. We expect the Swiss
regulations to come into force in 2025 and we continue to make progress on our infrastructure design and operational
governance ahead of the upcoming adoption of these rules. We currently estimate that the revised Basel III framework
would lead to a further net increase in risk-weighted assets (RWA) of around USD 12bn, before taking into account
mitigating actions and not reflecting the impact of the output floor, which is phased in over time. Our estimate includes
the finalization of the Basel III framework, as well as the FRTB, based on our current understanding of the relevant
standards. It may change as a result of new or updated regulatory interpretations, appropriate conservatism in model
calibration, the implementation of Basel III standards into national law, changes in business growth, market conditions
and other factors. The final degree of alignment between the Swiss implementation and those in other jurisdictions,
particularly those regarding the treatment of historical operational losses, remains uncertain at this stage.
› Refer to the “Our strategy” and “Targets, aspirations and capital guidance” sections of this report for more information about our
capital and resource guidelines
› Refer to “We may be unable to maintain our capital strength” in the “Risk factors” section of this report for more information
about capital ratio-related risks
Capital planning and activities
Audited | We manage our balance sheet, RWA, leverage ratio denominator (LRD) and TLAC ratio levels based on our
regulatory requirements, within our internal limits and targets, and our externally provided guidance. Our strategic focus
is on achieving an optimal attribution and use of financial resources between our business divisions and Group Functions,
as well as between our legal entities, while remaining within the limits defined for the Group and allocated to the business
divisions by the Board of Directors (the BoD). These resource allocations, in turn, affect business plans and earnings
projections, which are reflected in our capital plans.
The annual strategic planning process includes a capital-planning component that is key in defining our capital targets.
It is based on an attribution of Group RWA and LRD internal limits to the business divisions.
Limits and targets are established at the Group and business division levels, and are approved by the BoD at least annually.
In the target-setting process, we take into account the current and potential future TLAC requirements, our aggregate
risk exposure in terms of capital-at-risk, the assessment by rating agencies, comparisons with peers and the effect of
expected accounting policy changes.
Monitoring is based on these internal limits and targets and provides indications if any changes are required. Any breach
of limits in place triggers a series of required remediating actions.
Group Treasury plans for and monitors consolidated TLAC information on an ongoing basis, reflecting business and legal
entity requirements, as well as regulatory developments in capital regulations. In addition, capital planning and
monitoring are performed at the legal entity level for our significant subsidiaries and sub-groups that are subject to
prudential supervision and must meet capital and other supervisory requirements.
› Refer to “Capital and capital ratios of our significant regulated subsidiaries” in this section for more information
› Refer to “Statistical measures” in the “Risk management and control” section of this report for more information about capital-at-
risk
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Swiss SRB total loss-absorbing capacity framework
The disclosures in this section are provided for UBS Group AG on a consolidated basis and focus on key developments
during the reporting period and information in accordance with the Basel III framework, as applicable to Swiss SRBs.
Additional regulatory disclosures for UBS Group AG on a consolidated basis are provided in our 31 December 2022
Pillar 3 Report. The Pillar 3 Report further includes information relating to our significant regulated subsidiaries and sub-
groups (UBS AG standalone, UBS Switzerland AG standalone, UBS Europe SE consolidated and UBS Americas
Holding LLC consolidated) as of 31 December 2022 and is available under “Pillar 3 disclosures” at ubs.com/investors.
Capital and other regulatory information for UBS AG consolidated in accordance with the Basel III framework, as
applicable to Swiss SRBs, is provided in the combined UBS Group AG and UBS AG Annual Report 2022, available under
“Annual reporting” at ubs.com/investors.
Regulatory framework
The Basel III framework came into effect in Switzerland on 1 January 2013 and is embedded in the Swiss Capital
Adequacy Ordinance (the CAO). The CAO also includes the too-big-to-fail provisions applicable to Swiss SRBs, which
have been fully phased-in since 1 January 2020.
Under the Swiss SRB framework, going and gone concern requirements represent the Group’s TLAC requirement. TLAC
encompasses regulatory capital, such as CET1, 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 our total loss-absorbing capacity
In addition to CET1 capital, the following instruments contribute to our loss-absorbing capacity:
– loss-absorbing AT1 capital instruments (high- and low-trigger);
– loss-absorbing tier 2 capital instruments (high- and low-trigger);
– non-Basel III-compliant tier 2 capital instruments; and
– TLAC-eligible senior unsecured debt instruments.
Under the Swiss SRB rules, going concern capital includes CET1 and high-trigger loss-absorbing AT1 capital instruments.
Our existing outstanding low-trigger loss-absorbing AT1 capital instruments are available to meet the going concern
capital requirements until their first call date. As of their first call date, these instruments are eligible to meet the gone
concern requirements.
Outstanding high- and low-trigger loss-absorbing tier 2 capital instruments, non-Basel III-compliant tier 2 capital
instruments and TLAC-eligible senior unsecured debt instruments are eligible to meet gone concern requirements until
one year before maturity. A maximum of 25% of the gone concern requirements can be met with instruments that have
a remaining maturity of between one and two years (i.e., are in the last year of eligibility). However, once at least 75%
of the gone concern requirement has been met with instruments that have a remaining maturity of greater than two
years, all instruments that have a remaining maturity of between one and two years remain eligible to be included in the
total gone concern capital.
› Refer to “Bondholder information,” available at ubs.com/investors, for more information about the eligibility of capital and senior
unsecured debt instruments and key features and terms and conditions of capital instruments
Total loss-absorbing capacity and leverage ratio requirements
Going concern capital requirements
Under the Swiss SRB requirements, total going concern minimum requirements for all Swiss SRBs are a capital ratio
requirement of 12.86% of RWA and a leverage ratio requirement of 4.5%. In addition to these minimum requirements,
an add-on reflecting the degree of systemic importance is applied, based on market share and LRD. The applicable market
share add-on requirements for UBS were unchanged at 0.72% of RWA and 0.25% of LRD. The applicable LRD add-on
requirements remained unchanged at 0.72% of RWA and 0.25% of LRD, as our Group LRD remained within the same
add-on bucket.
On 30 September 2022, the Swiss countercyclical capital buffer was reactivated, at a maximum level of 2.5% on risk-
weighted positions that are directly or indirectly backed by residential properties in Switzerland. This increased our
minimum CET1 capital requirement by 27 basis points as of 31 December 2022. We also continued to apply
countercyclical buffer requirements introduced in other BCBS member jurisdictions, which resulted in an additional buffer
requirement of 7 basis points as of 31 December 2022. Overall, countercyclical capital buffers contributed 34 basis points
to our minimum CET1 capital requirement as of 31 December 2022.
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The total going concern capital requirements applicable are 14.64% of RWA (including countercyclical buffer
requirements) and 5.00% of LRD. Furthermore, of the total going concern capital requirement of 14.64% of RWA, at
least 10.34% must be met with CET1 capital, while a maximum of 4.3% can be met with high-trigger loss-absorbing
AT1 capital instruments (including our existing outstanding low-trigger AT1 capital instruments, which qualify until their
first call date as mentioned above).
Similarly, of the total going concern leverage ratio requirement of 5.00%, at least 3.5% must be met with CET1 capital,
while a maximum of 1.5% can be met with high-trigger loss-absorbing AT1 capital instruments (including our existing
outstanding low-trigger AT1 capital instruments, which qualify until their first call date as mentioned above).
Gone concern loss-absorbing capacity requirements
As an internationally active Swiss SRB, UBS is also subject to gone concern loss-absorbing capacity requirements. The
gone concern requirements also include add-ons for market share and LRD.
Under the Swiss SRB framework, banks are eligible for a rebate on the gone concern requirement if they take actions
that facilitate recovery and resolvability beyond the minimum requirements. The amount of the rebate for improved
resolvability is assessed annually by the Swiss Financial Market Supervisory Authority (FINMA). Based on actions we had
completed by December 2021 to improve resolvability, FINMA granted a rebate on the gone concern requirement of
65% of the aforementioned maximum rebate in the third quarter of 2022, with an effective maximum rebate of
3.56 percentage points for the RWA-based requirement and 1.25 percentage points for the LRD-based requirement as
of 31 December 2022.
Our gone concern requirements are further 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 2022, UBS used low-trigger tier 2 capital to fulfill gone concern requirements, resulting in a reduction of
0.38 percentage points for the RWA-based requirement.
From 1 January 2022 onward, the gone concern requirement after the application of the rebate for resolvability measures
and the 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 November 2022, the Swiss Federal Council adopted amendments to the Banking Act and the Banking Ordinance and
both entered into force as of 1 January 2023. The amendments replace the resolvability discount on the gone concern
capital requirements for systemically important banks (SIBs), including UBS, with a reduced base gone concern capital
requirement. In addition, FINMA has the authority to impose a surcharge of up to 25% of the base gone concern capital
requirement based on obstacles to a SIB’s resolvability identified in future resolvability assessments. We currently expect
that our total gone concern requirements will remain substantially unchanged in 2023 as a result of these changes.
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 2022.
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Swiss SRB going and gone concern requirements and information
AAss ooff 3311..1122..2222
USD m, except where indicated
RReeqquuiirreedd ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall
CCoommmmoonn eeqquuiittyy ttiieerr 11 ccaappiittaall
of which: minimum capital
of which: buffer capital
of which: countercyclical buffer
MMaaxxiimmuumm aaddddiittiioonnaall ttiieerr 11 ccaappiittaall
of which: additional tier 1 capital
of which: additional tier 1 buffer capital
EElliiggiibbllee ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall
Common equity tier 1 capital
TToottaall lloossss--aabbssoorrbbiinngg aaddddiittiioonnaall ttiieerr 11 ccaappiittaall33
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
RReeqquuiirreedd ggoonnee ccoonncceerrnn ccaappiittaall
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy44
of which: base requirement 5
of which: additional requirement for market share and LRD
of which: applicable reduction on requirements
of which: rebate granted 6
of which: reduction for usage of low-trigger tier 2 capital instruments
EElliiggiibbllee ggoonnee ccoonncceerrnn ccaappiittaall
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy
TToottaall ttiieerr 22 ccaappiittaall
of which: low-trigger loss-absorbing tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TTLLAACC--eelliiggiibbllee sseenniioorr uunnsseeccuurreedd ddeebbtt
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
RReeqquuiirreedd ttoottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
EElliiggiibbllee ttoottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
RRWWAA
iinn %%
LLRRDD
iinn %%
1144..664411
1100..3344
4.50
5.50
0.34
44..3300
3.50
0.80
1188..2255
14.22
44..0033
3.65
0.37
1100..3366
12.86
1.44
(3.94)
(3.56)
(0.38)
1144..7700
00..9933
0.76
0.17
1133..7788
4466,,880022
3333,,006600
14,381
17,577
1,102
1133,,774422
11,185
2,557
5588,,332211
45,457
1122,,886644
11,675
1,189
3333,,110055
41,099
4,602
(12,596)
(11,385)
(1,211)
4466,,999911
22,,995588
2,422
536
4444,,003333
55..000011
33..550022
1.50
2.00
11..5500
1.50
55..6677
4.42
11..2255
1.14
0.12
33..7755
4.50
0.50
(1.25)
(1.25)
0.00
44..5577
00..2299
0.24
0.05
44..2288
5511,,442233
3355,,999966
15,427
20,569
1155,,442277
15,427
5588,,332211
45,457
1122,,886644
11,675
1,189
3388,,556677
46,281
5,142
(12,856)
(12,856)
0
4466,,999911
22,,995588
2,422
536
4444,,003333
2255..0000
3322..9955
7799,,990077
110055,,331122
88..7755
1100..2244
8899,,999900
110055,,331122
RRiisskk--wweeiigghhtteedd aasssseettss // lleevveerraaggee rraattiioo ddeennoommiinnaattoorr
Risk-weighted assets
Leverage ratio denominator
11 Includes applicable add-ons of 1.44% for RWA and 0.50% for LRD. 22 Our minimum CET1 leverage ratio requirement of 3.5% consists of a 1.5% base requirement, a 1.5% base buffer capital requirement,
a 0.25% LRD add-on requirement and a 0.25% market share add-on requirement based on our Swiss credit business. 33 Includes outstanding low-trigger loss-absorbing additional tier 1 capital instruments, which
are available under the Swiss systemically relevant bank framework to meet the going concern requirements until their first call date. As of their first call date, these instruments are eligible to meet the gone concern
requirements. 44 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. 55 The gone concern requirement after the application of the rebate for resolvability measures and the reduction for the use of higher-quality capital instruments is floored at 10% and
3.75% for the RWA- and LRD-based requirements, respectively. This means that the combined reduction may not exceed 4.3 percentage points for the RWA-based requirement of 14.3% and 1.25 percentage points
for the LRD-based requirement of 5.0%. 66 Based on the actions we completed up to December 2021 to improve resolvability, FINMA granted an increase in the rebate on the gone concern requirement from 55.0%
to 65.0% of the maximum rebate, effective 1 July 2022, with an effective maximum rebate of 1.25 percentage points for the LRD-based requirements and – given the risk density of 35% underlying the regulatory
requirements – an effective maximum rebate of 3.56 percentage points for the RWA-based requirements.
11,,002288,,446611
331199,,558855
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
138
138
Total loss-absorbing capacity
Swiss SRB going and gone concern information
USD m, except where indicated
EElliiggiibbllee ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ttiieerr 11 ccaappiittaall
Common equity tier 1 capital
TToottaall lloossss--aabbssoorrbbiinngg aaddddiittiioonnaall ttiieerr 11 ccaappiittaall
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
EElliiggiibbllee ggoonnee ccoonncceerrnn ccaappiittaall
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy
TToottaall ttiieerr 22 ccaappiittaall
of which: low-trigger loss-absorbing tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TTLLAACC--eelliiggiibbllee sseenniioorr uunnsseeccuurreedd ddeebbtt
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
RRiisskk--wweeiigghhtteedd aasssseettss // lleevveerraaggee rraattiioo ddeennoommiinnaattoorr
Risk-weighted assets
Leverage ratio denominator
CCaappiittaall aanndd lloossss--aabbssoorrbbiinngg ccaappaacciittyy rraattiiooss ((%%))
Going concern capital ratio
of which: common equity tier 1 capital ratio
Gone concern loss-absorbing capacity ratio
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy rraattiioo
LLeevveerraaggee rraattiiooss ((%%))
Going concern leverage ratio
of which: common equity tier 1 leverage ratio
Gone concern leverage ratio
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy lleevveerraaggee rraattiioo
Audited |
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital
USD m
TToottaall IIFFRRSS eeqquuiittyy
Equity attributable to non-controlling interests
Defined benefit plans, net of tax
Deferred tax assets recognized for tax loss carry-forwards
Deferred tax assets on temporary differences, excess over threshold
Goodwill, net of tax1
Intangible assets, net of tax
Compensation-related components (not recognized in net profit)
Expected losses on advanced internal ratings-based portfolio less provisions
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
Unrealized gains related to financial assets at fair value through OCI, net of tax
Prudential valuation adjustments
Accruals for dividends to shareholders
Other
TToottaall ccoommmmoonn eeqquuiittyy ttiieerr 11 ccaappiittaall
3311..1122..2222
31.12.21
5588,,332211
5588,,332211
4455,,445577
1122,,886644
1111,,667755
11,,118899
4466,,999911
22,,995588
22,,442222
553366
4444,,003333
60,488
60,488
45,281
15,207
12,783
2,425
44,264
3,144
2,596
547
41,120
110055,,331122
104,752
331199,,558855
11,,002288,,446611
302,209
1,068,862
1188..22
1144..22
1144..77
3333..00
55..77
44..4422
44..66
1100..22
3311..1122..2222
5577,,221188
((334422))
((331111))
((44,,007777))
((6644))
((55,,775544))
((115500))
((22,,228877))
((447711))
44,,223344
((552233))
((110055))
00
((220011))
((11,,668833))
((2299))
4455,,445577
20.0
15.0
14.6
34.7
5.7
4.24
4.1
9.8
31.12.21
6611,,000022
(340)
(270)
(4,565)
(49)
(5,838)
(180)
(1,700)
(482)
(628)
315
(50)
(68)
(167)
(1,700)
1
4455,,228811
11 Includes goodwill related to significant investments in financial institutions of USD 20m as of 31 December 2022 (31 December 2021: USD 22m) presented on the balance sheet line Investments in associates.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
139
139
Total loss-absorbing capacity and movement
Our total loss-absorbing capacity increased by USD 0.6bn to USD 105.3bn as of 31 December 2022.
Going concern capital and movement
Audited | Our CET1 capital mainly consists of: share capital; share premium, which primarily consists of additional paid-in capital
related to shares issued; and retained earnings. A detailed reconciliation of International Financial Reporting Standards (IFRS)
equity to CET1 capital is provided in the “Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital” table.
Our CET1 capital increased by USD 0.2bn to USD 45.5bn as of 31 December 2022, mainly as a result of operating profit
before tax of USD 9.6bn with associated current tax expenses of USD 1.4bn, partly offset by share repurchases of
USD 5.6bn under our share repurchase programs, dividend accruals of USD 1.7bn, negative foreign currency effects of
USD 0.5bn and compensation- and own share-related capital components of USD 0.3bn.
› Refer to “UBS shares” in this section for more information about our share repurchase programs
Our loss-absorbing AT1 capital decreased by USD 2.3bn to USD 12.9bn, mainly driven by our announcement on
5 December 2022 that we intended to redeem an AT1 capital instrument on 31 January 2023, the first call date (ISIN
CH0400441280, with a nominal amount of USD 2.0bn, issued on 31 January 2018; this instrument ceased to be eligible
as AT1 capital when the call was announced in December 2022), a call of a USD 1.1bn equivalent AT1 capital instrument
denominated in euro, and interest rate risk hedge, foreign currency translation and other effects. This was partly offset
by two issuances of AT1 capital instruments denominated in US dollars and Swiss francs amounting to USD 1.8bn
equivalent.
Gone concern loss-absorbing capacity and movement
Audited | Our total gone concern loss-absorbing capacity increased by USD 2.7bn to USD 47.0bn as of 31 December 2022
and included USD 44.0bn of TLAC-eligible senior unsecured debt.
The increase was mainly due to 21 issuances of TLAC-eligible senior unsecured debt instruments denominated in
US dollars, euro, yen and Australian dollars amounting to USD 15.2bn, partly offset by four calls of TLAC-eligible senior
unsecured debt instruments denominated in US dollars amounting to USD 6.3bn, as well as interest rate risk hedge,
foreign currency translation and other effects.
Loss-absorbing capacity and leverage ratios
Our CET1 capital ratio decreased to 14.2% from 15.0%, mainly reflecting a USD 17.4bn increase in RWA.
Our CET1 leverage ratio increased to 4.42% from 4.24%, predominantly due to a USD 40.4bn decrease in the LRD.
Our gone concern loss-absorbing capacity ratio increased to 14.7% from 14.6%, due to an increase in gone concern
loss-absorbing capacity of USD 2.7bn, partly offset by the aforementioned increase in RWA.
Our gone concern leverage ratio increased to 4.6% from 4.1%, driven by the aforementioned increase in gone concern
loss-absorbing capacity and the aforementioned decrease in the LRD.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
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140
Swiss SRB total loss-absorbing capacity movement
USD m
Going concern capital
CCoommmmoonn eeqquuiittyy ttiieerr 11 ccaappiittaall aass ooff 3311..1122..2211
Operating profit before tax
Current tax (expense) / benefit
Share repurchase programs
Accruals for proposed dividends to shareholders
Foreign currency translation effects, before tax
Compensation- and own share-related capital components
Other
CCoommmmoonn eeqquuiittyy ttiieerr 11 ccaappiittaall aass ooff 3311..1122..2222
LLoossss--aabbssoorrbbiinngg aaddddiittiioonnaall ttiieerr 11 ccaappiittaall aass ooff 3311..1122..2211
Issuance of high-trigger loss-absorbing additional tier 1 capital
Call of high-trigger loss-absorbing additional tier 1 capital1
Call of low-trigger loss-absorbing additional tier 1 capital
Interest rate risk hedge, foreign currency translation and other effects
LLoossss--aabbssoorrbbiinngg aaddddiittiioonnaall ttiieerr 11 ccaappiittaall aass ooff 3311..1122..2222
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall aass ooff 3311..1122..2211
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall aass ooff 3311..1122..2222
Gone concern loss-absorbing capacity
TTiieerr 22 ccaappiittaall aass ooff 3311..1122..2211
Interest rate risk hedge, foreign currency translation and other effects
TTiieerr 22 ccaappiittaall aass ooff 3311..1122..2222
TTLLAACC--eelliiggiibbllee sseenniioorr uunnsseeccuurreedd ddeebbtt aass ooff 3311..1122..2211
Issuance of TLAC-eligible senior unsecured debt
Call of TLAC-eligible senior unsecured debt
Interest rate risk hedge, foreign currency translation and other effects
TTLLAACC--eelliiggiibbllee sseenniioorr uunnsseeccuurreedd ddeebbtt aass ooff 3311..1122..2222
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy aass ooff 3311..1122..2211
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy aass ooff 3311..1122..2222
SSwwiissss SSRRBB
4455,,228811
9,604
(1,448)
(5,602)
(1,683)
(529)
(258)
93
4455,,445577
1155,,220077
1,789
(2,000)
(1,121)
(1,011)
1122,,886644
6600,,448888
5588,,332211
33,,114444
(185)
22,,995588
4411,,112200
15,237
(6,250)
(6,075)
4444,,003333
4444,,226644
4466,,999911
Total loss-absorbing capacity
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy aass ooff 3311..1122..2211
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy aass ooff 3311..1122..2222
11 On 5 December 2022, we announced our intention to redeem an AT1 capital instrument on 31 January 2023, the first call date (ISIN CH0400441280). This instrument ceased to be eligible as AT1 capital when the
call was announced.
110044,,775522
110055,,331122
Additional information
Active management of sensitivity to foreign exchange movements
Group Treasury is mandated to minimize adverse effects from changes in foreign currency rates on our CET1 capital
and / or CET1 capital ratio. A significant portion of our CET1 capital and RWA is denominated in Swiss francs, euro,
pounds sterling and other currencies. In order to hedge the CET1 capital ratio, CET1 capital needs to have foreign currency
exposure, leading to foreign currency rates sensitivity of CET1 capital.
Consequently, it is not possible to simultaneously fully hedge CET1 capital and the CET1 capital ratio. As the proportion
of RWA denominated in currencies other than the US dollar outweighs CET1 capital in such currencies, a significant
appreciation of the US dollar against such currencies could benefit our capital ratios, while a significant depreciation of
the US dollar against these currencies could adversely affect our capital ratios.
The Group Asset and Liability Committee, a committee of the Group Executive Board, has mandated Group Treasury to
adjust the currency mix of CET1 capital, within limits set by the BoD, to balance the effect of foreign exchange movements
on CET1 capital and the CET1 capital ratio. Limits are in place for the sensitivity of both CET1 capital and the CET1 capital
ratio to an appreciation or depreciation of 10% in the value of the US dollar against other currencies.
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 13bn and our CET1 capital by USD 1.4bn as of 31 December 2022 (31 December 2021: USD 13bn and
USD 1.4bn, respectively) and decreased our CET1 capital ratio 13 basis points (31 December 2021: 15 basis points).
Conversely, we estimate that a 10% appreciation of the US dollar against other currencies would have decreased our
RWA by USD 12bn and our CET1 capital by USD 1.3bn as of 31 December 2022 (31 December 2021: USD 11bn and
USD 1.3bn, respectively) and increased our CET1 capital ratio 13 basis points (31 December 2021: 14 basis points).
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
141
141
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 63bn as of 31 December 2022 (31 December 2021: USD 63bn) and decreased our Swiss SRB going concern
leverage ratio 17 basis points (31 December 2021: 15 basis points). Conversely, we estimate that a 10% appreciation
of the US dollar against other currencies would have decreased our LRD by USD 57bn (31 December 2021: USD 57bn)
and increased our Swiss SRB going concern leverage ratio 17 basis points (31 December 2021: 16 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.
Estimated effect on capital from litigation, regulatory and similar matters subject to provisions and contingent liabilities
We have estimated the loss in capital that we could incur as a result of the risks associated with the matters described in
“Note 17 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report. We have
employed for this purpose the advanced measurement approach (AMA) methodology that we use when determining
the capital requirements associated with operational risks, based on a 99.9% confidence level over a 12-month horizon.
The methodology takes into consideration UBS and industry experience for the AMA operational risk categories to which
those matters correspond, as well as the external environment affecting risks of these types, in isolation from other areas.
On this basis, we estimate the maximum loss in capital that we could incur over a 12-month period as a result of our
risks associated with these operational risk categories at USD 4.4bn as of 31 December 2022, unchanged compared with
the prior year-end. This estimate is not related to and does not take into account any provisions recognized for any of
these matters and does not constitute a subjective assessment of our actual exposure in any of these matters.
› Refer to “Non-financial risk” in the “Risk management and control” section of this report for more information
› Refer to “Note 17 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more
information
Capital and capital ratios of our significant regulated subsidiaries
UBS Group AG is a holding company conducting substantially all operations through UBS AG and subsidiaries thereof.
UBS Group AG and UBS AG have contributed a significant portion of their respective capital to, and provided substantial
liquidity to, subsidiaries. Many of these subsidiaries are subject to regulations requiring compliance with minimum capital,
liquidity and similar requirements. Regulatory capital components and capital ratios of our significant regulated
subsidiaries determined under the regulatory framework of each subsidiary’s home jurisdiction are provided in the
“Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups” section of this report.
Supervisory authorities generally have discretion to impose higher requirements, or to otherwise limit the activities of
subsidiaries. Supervisory authorities also may require entities to measure capital and leverage ratios on a stressed basis,
and may limit the ability of the entity to engage in new activities or take capital actions based on the results of those
tests.
› Refer to the 31 December 2022 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 resolution 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 2022, the liability of UBS Switzerland AG amounted to CHF 4.0bn (USD 4.3bn), a decrease of
CHF 1.2bn (USD 1.4bn) compared with 31 December 2021. The respective liability of UBS AG has been substantially
extinguished.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
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142
Risk-weighted assets
RWA development in 2022
During 2022, RWA increased by USD 17.4bn to USD 319.6bn, primarily driven by increases of USD 10.4bn in credit and
counterparty credit risk RWA, USD 4.7bn in operational risk RWA, and USD 2.4bn in market risk RWA.
› Refer to the 31 December 2022 Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information
about RWA movements and definitions of RWA movement key drivers
Movement in risk-weighted assets by key driver
USD bn
Credit and counterparty credit risk2
Non-counterparty-related risk3
Market risk
Operational risk
TToottaall
11 Includes the Pillar 3 categories “Asset size,” “Credit quality of counterparties,” “Acquisitions and disposals” and “Other.” For more information, refer to the 31 December 2022 Pillar 3 report, available under “Pillar
3 disclosures” at ubs.com/investors. 22 Includes settlement risk, credit valuation adjustments, equity exposures in the banking book, investments in funds and securitization exposures in the banking book. 33 Non-
counterparty-related risk includes deferred tax assets recognized for temporary differences, property, equipment, software and other items.
(2.4)
4.6
99..00
((33..88))
22..66
11..22
2.3
1.2
Asset size
and other1
6.9
0.1
1.3
0.0
88..33
RRWWAA aass ooff
3311..1122..2222
220000..55
2244..22
1133..55
8811..44
331199..66
RRWWAA aass ooff
3311..1122..2211
119900..11
2244..33
1111..11
7766..77
330022..22
Currency
effects
(3.6)
(0.2)
Methodology
and policy
changes
0.1
Model
updates /
changes
6.7
Regulatory
add-ons
0.3
Credit and counterparty credit risk
Credit and counterparty credit risk RWA increased by USD 10.4bn to USD 200.5bn as of 31 December 2022. This increase
was mainly driven by model updates of USD 6.7bn and asset size increases of USD 6.4bn, partly offset by currency effects
of USD 3.6bn. Model updates resulted in an increase of USD 6.7bn, mainly relating to structured margin loans and similar
products in Global Wealth Management, prime brokerage clients, private equity and hedge fund financing trades and
structured margin loans in the Investment Bank, and mortgage loans in Personal & Corporate Banking.
Asset size increased by USD 6.4bn, mainly due to higher RWA from loans and loan commitments in Global Wealth
Management and, to a lesser extent, in Personal & Corporate Banking, partly offset by lower RWA from loans and loan
commitments in the Investment Bank.
Movement in credit and counterparty credit risk RWA by key driver1
USD bn
TToottaall ccrreeddiitt aanndd ccoouunntteerrppaarrttyy ccrreeddiitt rriisskk RRWWAA aass ooff 3311..1122..2211
Asset size
Asset quality
Model updates
Methodology and policy changes
Regulatory add-ons
Acquisitions and disposals
Foreign exchange movements
Other
TToottaall mmoovveemmeenntt
TToottaall ccrreeddiitt aanndd ccoouunntteerrppaarrttyy ccrreeddiitt rriisskk RRWWAA aass ooff 3311..1122..2222
Global Wealth
Management
5566..99
Personal &
Corporate
Banking
6633..00
8.2
0.3
2.1
0.1
0.0
1.2
(0.5)
0.0
1111..55
6688..44
2.9
(1.5)
1.3
0.0
0.0
0.0
(0.9)
0.0
11..99
6644..99
Asset
Management
33..22
Investment
Bank
6600..55
(0.1)
(4.9)
0.0
0.0
0.0
0.0
0.0
(0.1)
0.0
((00..22))
33..00
0.0
3.3
0.0
0.3
0.0
(1.5)
0.0
((22..88))
5577..77
Group
Functions
66..44
0.3
0.4
0.0
0.0
0.0
0.0
(0.6)
0.0
00..11
66..55
GGrroouupp
119900..11
66..44
((00..77))
66..77
00..11
00..33
11..22
((33..66))
00..00
1100..44
220000..55
11 Refer to the 31 December 2022 Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for the definitions of credit and counterparty credit risk RWA movement categories.
› Refer to the “Risk management and control” section of this report and the 31 December 2022 Pillar 3 Report, available under
“Pillar 3 disclosures” at ubs.com/investors, for more information about credit and counterparty credit risk developments
Market risk
Market risk RWA increased by USD 2.4bn to USD 13.5bn as of 31 December 2022, driven by an increase of USD 2.3bn
in regulatory add-ons, reflecting updates from the monthly risks-not-in-VaR assessment and an increase of USD 1.3bn in
asset size and other movements related to higher average regulatory and stressed value-at-risk levels in the Investment
Bank’s Global Markets business on the back of heightened market volatility in the first half of 2022. These increases were
partly offset by decreases of USD 2.4bn from changes to the value-at-risk (VaR) model, and such decreases were partly
offset by USD 1.2bn arising from the introduction of a FINMA-agreed temporary measure to offset a VaR-model-change-
related RWA decrease that went live in the fourth quarter of 2022. We are in discussions with FINMA regarding material
updates to the VaR model in 2023, which would replace the aforementioned temporary measure and the currently
applied add-on related to time decay.
› Refer to the “Risk management and control” section of this report and the 31 December 2022 Pillar 3 Report, available under
“Pillar 3 disclosures” at ubs.com/investors, for more information about market risk developments
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
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143
Operational risk
Operational risk RWA increased by USD 4.7bn to USD 81.4bn as of 31 December 2022. Following a review with FINMA
regarding the French cross-border matter, we reflected additional operational risk RWA of USD 4.1bn in the first half of
2022. In the fourth quarter of 2022, we reflected an increase of USD 0.5bn driven by the annual recalibration of the
advanced measurement approach (AMA) model used for the calculation of operational risk capital.
› Refer to “Advanced measurement approach model” in the “Risk management and control” section of this report for more
information about the AMA model
Outlook
We expect that regulatory-driven updates to models will result in an RWA increase of around USD 4bn in 2023. The
extent and timing of RWA changes may vary as model updates are completed and receive regulatory approval, along
with changes in the composition of the relevant portfolios. In addition, business growth and changes in market factors
are expected to increase RWA at the beginning of 2023, following a period of lower levels of client activity and market
volatility toward the end of the fourth quarter of 2022.
› Refer to the “Regulatory and legal developments” section of this report for more information
Risk-weighted assets by business division and Group Functions
IInnvveessttmmeenntt
BBaannkk
GGrroouupp
FFuunnccttiioonnss
TToottaall
RRWWAA
USD bn
Credit and counterparty credit risk1
Non-counterparty-related risk2
Market risk
Operational risk
TToottaall
Credit and counterparty credit risk1
Non-counterparty-related risk2
Market risk
Operational risk
TToottaall
Credit and counterparty credit risk1
Non-counterparty-related risk2
Market risk
Operational risk
TToottaall
GGlloobbaall WWeeaalltthh
MMaannaaggeemmeenntt
PPeerrssoonnaall &&
CCoorrppoorraattee
BBaannkkiinngg
6688..44
55..99
11..66
3377..66
111133..55
56.9
6.2
1.6
35.2
9999..88
11.5
(0.3)
0.0
2.5
1133..66
6644..99
11..99
00..00
99..11
7755..99
63.0
2.0
0.0
8.1
7733..22
1.9
(0.1)
0.0
1.1
22..88
AAsssseett
MMaannaaggee--
mmeenntt
3311..1122..2222
33..00
00..66
33..22
66..77
31.12.21
3.2
0.6
3.0
66..99
5577..77
33..77
1100..11
2211..33
9922..88
60.5
3.5
8.1
20.2
9922..22
31.12.22 vs 31.12.21
(0.2)
0.0
0.1
((00..11))
(2.8)
0.2
2.1
1.1
00..66
66..55
1122..11
11..88
1100..11
3300..66
6.4
12.0
1.5
10.3
3300..11
0.1
0.2
0.3
(0.2)
00..44
220000..55
2244..22
1133..55
8811..44
331199..66
190.1
24.3
11.1
76.7
330022..22
10.4
0.0
2.4
4.6
1177..44
11 Includes settlement risk, credit valuation adjustments, equity exposures in the banking book, investments in funds and securitization exposures in the banking book. 22 Non-counterparty-related risk includes deferred
tax assets recognized for temporary differences (31 December 2022: USD 11.4bn; 31 December 2021: USD 11.4bn), as well as property, equipment, software and other items (31 December 2022: USD 12.9bn; 31
December 2021: USD 12.9bn).
Leverage ratio denominator
The LRD decreased by USD 40.4bn to USD 1,028.5bn as of 31 December 2022, driven by currency effects of USD 24.5bn
and a USD 15.9bn decrease due to asset size and other movements.
Movement in leverage ratio denominator by key driver
USD bn
On-balance sheet exposures (excluding derivatives and securities financing transactions)1
Derivatives
Securities financing transactions
Off-balance sheet items
Deduction items
TToottaall
11 The exposures exclude derivative financial instruments, cash collateral receivables on derivative instruments, receivables from securities financing transactions, and margin loans, as well as prime brokerage receivables
and financial assets at fair value not held for trading, both related to securities financing transactions. These exposures are presented separately under Derivatives and Securities financing transactions in this table.
Currency
effects
(17.3)
(3.5)
(3.1)
(0.5)
0.1
((2244..55))
Asset size and
other
(14.1)
2.9
(7.4)
2.2
0.6
((1155..99))
LLRRDD aass ooff
3311..1122..2211
847.4
90.9
109.2
32.8
(11.5)
11,,006688..99
LLRRDD aass ooff
3311..1122..2222
881166..00
9900..33
9988..66
3344..44
((1100..88))
11,,002288..55
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144
The LRD movements described below exclude currency effects.
On-balance sheet exposures (excluding derivatives and securities financing transactions) decreased by USD 14.1bn, mainly
driven by lower trading portfolio assets in the Investment Bank, lower central bank balances, and a decrease in lending
assets, mainly in Global Wealth Management, partly offset by purchases of high-quality liquid asset securities.
Derivatives increased by USD 2.9bn, primarily reflecting market-driven movements, partly offset by lower client volumes,
in the Investment Bank.
Securities financing transactions decreased by USD 7.4bn, mainly due to lower client activity levels and lower brokerage
receivables in the Investment Bank, as well as trade roll-offs in Group Treasury.
Off-balance sheet items increased by USD 2.2bn, mainly driven by higher unutilized credit lines in Global Wealth
Management, and an increase in forward starting reverse repurchase agreements in Group Treasury.
› Refer to “Balance sheet and off-balance sheet” in this section for more information about balance sheet movements
Leverage ratio denominator by business division and Group Functions
USD bn
Total IFRS assets
Difference in scope of consolidation1
Less: derivatives and securities financing transactions2
OOnn--bbaallaannccee sshheeeett eexxppoossuurreess
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
TToottaall
Total IFRS assets
Difference in scope of consolidation1
Less: derivatives and securities financing transactions2
OOnn--bbaallaannccee sshheeeett eexxppoossuurreess
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
TToottaall
GGlloobbaall WWeeaalltthh
MMaannaaggeemmeenntt
PPeerrssoonnaall &&
CCoorrppoorraattee
BBaannkkiinngg
AAsssseett
MMaannaaggeemmeenntt
IInnvveessttmmeenntt
BBaannkk
GGrroouupp
FFuunnccttiioonnss
TToottaall
3311..1122..2222
338888..55
00..00
((2233..77))
336644..88
55..44
2200..55
88..88
((55..22))
339944..44
395.2
0.0
(25.9)
336699..33
5.8
22.6
7.2
(5.3)
339999..66
223355..22
00..00
((1111..99))
222233..44
11..55
1100..88
1166..66
((00..22))
225522..11
225.4
0.0
(11.8)
221133..66
1.4
10.9
17.5
(0.2)
224433..22
1177..33
((1133..22))
((00..11))
44..00
00..00
00..11
((11..22))
22..99
31.12.21
25.6
(21.5)
(0.1)
44..11
0.0
0.0
0.0
(1.2)
22..99
339911..33
((00..11))
((220011..77))
118899..55
8800..00
4400..44
66..99
((00..44))
331166..66
346.4
(0.1)
(159.2)
118877..11
79.0
45.7
7.6
(0.3)
331199..22
31.12.22 vs 31.12.21
7711..99
00..00
((3377..77))
3344..22
33..33
2266..88
22..11
((33..99))
6622..66
124.5
0.0
(51.2)
7733..33
4.7
29.9
0.5
(4.4)
110044..00
11,,110044..44
((1133..33))
((227755..00))
881166..00
9900..33
9988..66
3344..44
((1100..88))
11,,002288..55
1,117.2
(21.6)
(248.2)
884477..44
90.9
109.2
32.8
(11.5)
11,,006688..99
(12.8)
Total IFRS assets
Difference in scope of consolidation1
8.3
Less: derivatives and securities financing transactions2
(26.9)
((3311..44))
OOnn--bbaallaannccee sshheeeett eexxppoossuurreess
(0.7)
Derivatives
(10.6)
Securities financing transactions
1.6
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
0.6
TToottaall
((4400..44))
11 Represents the difference between the IFRS and the regulatory scope of consolidation, which is the applicable scope for the LRD calculation. 22 The exposures consist of derivative financial instruments, cash
collateral receivables on derivative instruments, receivables from securities financing transactions, and margin loans, as well as prime brokerage receivables and financial assets at fair value not held for trading, both
related to securities financing transactions, all of which are in accordance with the regulatory scope of consolidation. These exposures are presented separately under Derivatives and Securities financing transactions
in this table.
(52.6)
0.0
13.5
((3399..11))
(1.3)
(3.1)
1.5
0.6
((4411..44))
44.9
0.0
(42.5)
22..44
1.0
(5.3)
(0.7)
(0.1)
((22..66))
(6.7)
0.0
2.2
((44..55))
(0.4)
(2.1)
1.6
0.1
((55..22))
9.9
0.0
(0.1)
99..88
0.1
(0.1)
(0.9)
0.0
88..88
(8.3)
8.3
0.0
((00..11))
0.0
0.0
0.0
0.0
00..00
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145
UBS AG consolidated total loss-absorbing capacity and leverage ratio
information
Going and gone concern requirements and information
UBS is considered an SRB under Swiss banking law and, on a consolidated basis, both UBS Group AG and UBS AG are
required to comply with regulations based on the Basel III framework as applicable for Swiss SRBs.
The Swiss SRB framework and requirements applicable to UBS AG consolidated are consistent with those applicable to
UBS Group AG consolidated and are described in the “Capital, liquidity and funding, and balance sheet” section of this
report.
› Refer to “Regulatory framework” in this section for more information about total loss-absorbing capacity, leverage ratio
requirements and gone concern rebate
UBS AG is subject to going and gone concern requirements on a standalone basis. Capital and other regulatory
information for UBS AG standalone is provided under “Holding company and significant regulated subsidiaries and sub-
groups” at ubs.com/investors and in the 31 December 2022 Pillar 3 Report available under “Pillar 3 disclosures” at
ubs.com/investors.
The table below provides the RWA- and LRD-based requirements and information as of 31 December 2022 for UBS AG
consolidated.
Swiss SRB going and gone concern requirements and information
AAss ooff 3311..1122..2222
USD m, except where indicated
RReeqquuiirreedd ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall
CCoommmmoonn eeqquuiittyy ttiieerr 11 ccaappiittaall
of which: minimum capital
of which: buffer capital
of which: countercyclical buffer
MMaaxxiimmuumm aaddddiittiioonnaall ttiieerr 11 ccaappiittaall
of which: additional tier 1 capital
of which: additional tier 1 buffer capital
EElliiggiibbllee ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall
Common equity tier 1 capital
TToottaall lloossss--aabbssoorrbbiinngg aaddddiittiioonnaall ttiieerr 11 ccaappiittaall
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital 3
RReeqquuiirreedd ggoonnee ccoonncceerrnn ccaappiittaall
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy4
of which: base requirement 5
of which: additional requirement for market share and LRD
of which: applicable reduction on requirements
of which: rebate granted 6
of which: reduction for usage of low-trigger tier 2 capital instruments
EElliiggiibbllee ggoonnee ccoonncceerrnn ccaappiittaall
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy
TToottaall ttiieerr 22 ccaappiittaall
of which: low-trigger loss-absorbing tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TTLLAACC--eelliiggiibbllee sseenniioorr uunnsseeccuurreedd ddeebbtt
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
RReeqquuiirreedd ttoottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
EElliiggiibbllee ttoottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
RRWWAA
iinn %%
LLRRDD
iinn %%
1144..664411
1100..3344
4.50
5.50
0.34
44..3300
3.50
0.80
1177..2233
13.51
33..7733
3.35
0.37
1100..3366
12.86
1.44
(3.94)
(3.56)
(0.38)
1144..7799
00..9933
0.76
0.17
1133..8855
4466,,554455
3322,,887788
14,302
17,480
1,096
1133,,666666
11,124
2,543
5544,,777700
42,929
1111,,884411
10,654
1,187
3322,,992222
40,872
4,577
(12,527)
(11,322)
(1,204)
4466,,999911
22,,995588
2,422
536
4444,,003333
55..000011
33..550022
1.50
2.00
11..5500
1.50
55..3322
4.17
11..1155
1.03
0.12
33..7755
4.50
0.50
(1.25)
(1.25)
0.00
44..5566
00..2299
0.24
0.05
44..2288
5511,,447788
3366,,003355
15,443
20,591
1155,,444433
15,443
5544,,777700
42,929
1111,,884411
10,654
1,187
3388,,660099
46,330
5,148
(12,870)
(12,870)
0
4466,,999911
22,,995588
2,422
536
4444,,003333
2255..0000
3322..0022
7799,,446677
110011,,776611
88..7755
99..8888
9900,,008877
110011,,776611
RRiisskk--wweeiigghhtteedd aasssseettss // lleevveerraaggee rraattiioo ddeennoommiinnaattoorr
Risk-weighted assets
Leverage ratio denominator
11 Includes applicable add-ons of 1.44% for RWA and 0.50% for leverage ratio denominator LRD. 22 Our minimum CET1 leverage ratio requirement of 3.5% consists of a 1.5% base requirement, a 1.5% base buffer
capital requirement, a 0.25% LRD add-on requirement and a 0.25% market share add-on requirement based on our Swiss credit business. 33 Existing outstanding low-trigger AT1 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. 44 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.
55 The gone concern requirement after the application of the rebate for resolvability measures and the reduction for the use of higher-quality capital instruments is floored at 10% and 3.75% for the RWA- and LRD-
based requirements, respectively. This means that the combined reduction may not exceed 4.3 percentage points for the RWA-based requirement of 14.3% and 1.25 percentage points for the LRD-based requirement
of 5.0%. 66 Based on the actions we completed up to December 2021 to improve resolvability, FINMA granted an increase in the rebate on the gone concern requirement from 55.0% to 65.0% of the maximum
rebate, effective from 1 July 2022, with an effective maximum rebate of 1.25 percentage points for the LRD-based requirements and – given the risk density of 35% underlying the regulatory requirements – an
effective maximum rebate of 3.56 percentage points for the RWA-based requirements.
11,,002299,,556611
331177,,882233
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146
Swiss SRB going and gone concern information
USD m, except where indicated
EElliiggiibbllee ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ttiieerr 11 ccaappiittaall
Common equity tier 1 capital
TToottaall lloossss--aabbssoorrbbiinngg aaddddiittiioonnaall ttiieerr 11 ccaappiittaall
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
EElliiggiibbllee ggoonnee ccoonncceerrnn ccaappiittaall
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy
TToottaall ttiieerr 22 ccaappiittaall
of which: low-trigger loss-absorbing tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TTLLAACC--eelliiggiibbllee sseenniioorr uunnsseeccuurreedd ddeebbtt
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
RRiisskk--wweeiigghhtteedd aasssseettss // lleevveerraaggee rraattiioo ddeennoommiinnaattoorr
Risk-weighted assets
Leverage ratio denominator
CCaappiittaall aanndd lloossss--aabbssoorrbbiinngg ccaappaacciittyy rraattiiooss ((%%))
Going concern capital ratio
of which: common equity tier 1 capital ratio
Gone concern loss-absorbing capacity ratio
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy rraattiioo
LLeevveerraaggee rraattiiooss ((%%))
Going concern leverage ratio
of which: common equity tier 1 leverage ratio
Gone concern leverage ratio
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy lleevveerraaggee rraattiioo
3311..1122..2222
31.12.21
5544,,777700
5544,,777700
4422,,992299
1111,,884411
1100,,665544
11,,118877
4466,,999911
22,,995588
22,,442222
553366
4444,,003333
55,434
55,434
41,594
13,840
11,414
2,426
44,264
3,144
2,596
547
41,120
110011,,776611
99,698
331177,,882233
11,,002299,,556611
299,005
1,067,679
1177..22
1133..55
1144..88
3322..00
55..33
44..1177
44..66
99..99
18.5
13.9
14.8
33.3
5.2
3.90
4.1
9.3
UBS Group AG consolidated vs UBS AG consolidated loss-absorbing capacity and leverage ratio information
The going concern capital of UBS AG consolidated was USD 3.6bn lower than the going concern capital of UBS Group
AG consolidated as of 31 December 2022, reflecting lower CET1 capital of USD 2.5bn and lower going concern loss-
absorbing additional tier 1 (AT1) capital of USD 1.0bn.
The aforementioned difference in CET1 capital was primarily due to higher UBS AG consolidated accruals for dividends
and USD 0.3bn lower UBS AG consolidated International Financial Reporting Standards equity, as well as a higher capital
deduction at the UBS AG consolidated level related to deferred tax assets on temporary differences. The aforementioned
factors were partly offset by compensation-related regulatory capital accruals at the UBS Group AG consolidated level.
The going concern loss-absorbing AT1 capital of UBS AG consolidated was USD 1.0bn lower than that of UBS Group AG
consolidated as of 31 December 2022, mainly reflecting deferred contingent capital plan awards granted at Group level
to eligible employees for the performance years 2017 to 2021, partly offset by four loss-absorbing AT1 capital instruments
on lent by UBS Group AG to UBS AG.
Differences in capital between UBS Group AG consolidated and UBS AG consolidated related to employee compensation
plans will reverse to the extent underlying services are performed by employees of, and are consequently charged to,
UBS AG and its subsidiaries. Such reversal generally occurs over the service period of the employee compensation plans.
The leverage ratio framework for UBS AG consolidated is consistent with that of UBS Group AG consolidated. As of
31 December 2022, the going concern leverage ratio of UBS AG consolidated was 0.4 percentage points lower than that
of UBS Group AG consolidated, mainly because the going concern capital of UBS AG consolidated was USD 3.6bn lower.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
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147
Audited |
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital (UBS Group AG vs UBS AG consolidated)
AAss ooff 3311..1122..2222
USD m
TToottaall IIFFRRSS eeqquuiittyy
Equity attributable to non-controlling interests
Defined benefit plans, net of tax
Deferred tax assets recognized for tax loss carry-forwards
Deferred tax assets on temporary differences, excess over threshold
Goodwill, net of tax
Intangible assets, net of tax
Compensation-related components (not recognized in net profit)
Expected losses on advanced internal ratings-based portfolio less provisions
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
Unrealized gains related to financial assets at fair value through OCI, net of tax
Prudential valuation adjustments
Accruals for dividends to shareholders
Other
TToottaall ccoommmmoonn eeqquuiittyy ttiieerr 11 ccaappiittaall
UUBBSS GGrroouupp AAGG
((ccoonnssoolliiddaatteedd))
5577,,221188
((334422))
((331111))
((44,,007777))
((6644))
((55,,775544))
((115500))
((22,,228877))
((447711))
44,,223344
((552233))
((110055))
00
((220011))
((11,,668833))
((2299))
4455,,445577
UUBBSS AAGG
((ccoonnssoolliiddaatteedd))
5566,,994400
((334422))
((331111))
((44,,007777))
((226622))
((55,,775544))
((115500))
DDiiffffeerreennccee
227788
119988
((22,,228877))
((447711))
44,,223344
((552233))
((110055))
00
((220011))
((66,,000000))
((5511))
4422,,992299
44,,331177
2222
22,,552288
Swiss SRB going and gone concern information (UBS Group AG vs UBS AG consolidated)
AAss ooff 3311..1122..2222
USD m, except where indicated
EElliiggiibbllee ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ggooiinngg ccoonncceerrnn ccaappiittaall
TToottaall ttiieerr 11 ccaappiittaall
Common equity tier 1 capital
TToottaall lloossss--aabbssoorrbbiinngg aaddddiittiioonnaall ttiieerr 11 ccaappiittaall
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
EElliiggiibbllee ggoonnee ccoonncceerrnn ccaappiittaall
TToottaall ggoonnee ccoonncceerrnn lloossss--aabbssoorrbbiinngg ccaappaacciittyy
TToottaall ttiieerr 22 ccaappiittaall
of which: low-trigger loss-absorbing tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TTLLAACC--eelliiggiibbllee sseenniioorr uunnsseeccuurreedd ddeebbtt
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy
RRiisskk--wweeiigghhtteedd aasssseettss // lleevveerraaggee rraattiioo ddeennoommiinnaattoorr
Risk-weighted assets
Leverage ratio denominator
CCaappiittaall aanndd lloossss--aabbssoorrbbiinngg ccaappaacciittyy rraattiiooss ((%%))
Going concern capital ratio
of which: common equity tier 1 capital ratio
Gone concern loss-absorbing capacity ratio
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy rraattiioo
LLeevveerraaggee rraattiiooss ((%%))
Going concern leverage ratio
of which: common equity tier 1 leverage ratio
Gone concern leverage ratio
TToottaall lloossss--aabbssoorrbbiinngg ccaappaacciittyy lleevveerraaggee rraattiioo
UUBBSS GGrroouupp AAGG
((ccoonnssoolliiddaatteedd))
UUBBSS AAGG
((ccoonnssoolliiddaatteedd))
DDiiffffeerreennccee
5588,,332211
5588,,332211
4455,,445577
1122,,886644
1111,,667755
11,,118899
4466,,999911
22,,995588
22,,442222
553366
4444,,003333
5544,,777700
5544,,777700
4422,,992299
1111,,884411
1100,,665544
11,,118877
4466,,999911
22,,995588
22,,442222
553366
4444,,003333
33,,555511
33,,555511
22,,552288
11,,002233
11,,002211
22
00
00
00
00
00
110055,,331122
110011,,776611
33,,555511
331199,,558855
11,,002288,,446611
331177,,882233
11,,002299,,556611
11,,776622
((11,,110000))
1188..22
1144..22
1144..77
3333..00
55..77
44..4422
44..66
1100..22
1177..22
1133..55
1144..88
3322..00
55..33
44..1177
44..66
99..99
11..00
00..77
((00..11))
00..99
00..44
00..2255
00..00
00..44
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
148
148
Equity attribution and return on attributed equity
Under our equity attribution framework, tangible equity is attributed based on a weighting of 50% each for average
risk-weighted assets (RWA) and average leverage ratio denominator (LRD), which both include resource allocations from
Group Functions to the business divisions (the BDs). Average RWA and LRD are converted to common equity tier 1 (CET1)
capital equivalents using capital ratios of 12.5% and 3.75%, respectively. If the attributed tangible equity calculated
under the weighted-driver approach is less than the CET1 capital equivalent of risk-based capital (RBC) for any BD, the
CET1 capital equivalent of RBC is used as a floor for that BD.
In addition to tangible equity, we allocate equity to the BDs to support goodwill and intangible assets.
Furthermore, we allocate to the BDs attributed equity related to certain CET1 deduction items, such as compensation-
related components and expected losses on the advanced internal ratings-based portfolio less provisions.
We attribute all remaining Basel III capital deduction items to Group Functions. These items include deferred tax assets
(DTAs) recognized for tax loss carry-forwards, DTAs on temporary differences in excess of the threshold, accruals for
shareholder returns, and unrealized gains / losses from cash flow hedges.
› Refer to “Balance sheet and off-balance sheet” in this section for more information about movements in equity attributable to
shareholders
Average attributed equity
USD bn
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Group Functions
For the year ended
31.12.21
18.8
3311..1122..2222
2200..00
99..33
11..77
1133..00
1133..55
55..22
9.2
2.0
13.0
16.3
5.9
31.12.20
17.1
8.9
2.0
12.6
17.4
6.7
of which: deferred tax assets1
of which: related to retained RWA and LRD2
of which: accruals for shareholder returns and others3
3.4
7.2
57.8
AAvveerraaggee eeqquuiittyy aattttrriibbuutteedd ttoo bbuussiinneessss ddiivviissiioonnss aanndd GGrroouupp FFuunnccttiioonnss
11 Includes average attributed equity related to the Basel III capital deduction items for deferred tax assets (deferred tax assets recognized for tax loss carry-forwards and deferred tax assets on temporary differences,
excess over threshold), as well as retained risk-weighted assets (RWA) and leverage ratio denominator (LRD) related to deferred tax assets. 22 Excludes average attributed equity related to retained RWA and LRD
related to deferred tax assets. 33 Includes attributed equity related to dividend accruals, unrealized gains / losses from cash flow hedges, and a balancing item for capital held in excess of the 12.5%-capital and
3.75%-leverage-ratio calibration thresholds for equity attribution.
33..00
55..44
5577..66
3.2
7.2
59.3
Return on attributed equity1, 2
in %
Global Wealth Management
For the year ended
3311..1122..2222
2244..99
31.12.21
25.4
31.12.20
23.6
Personal & Corporate Banking
Asset Management
Investment Bank
11 Return on attributed equity for Group Functions is not shown, as it is not meaningful. 22 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method.
1199..55
8811..22
1144..66
18.9
51.8
20.3
14.2
74.2
19.7
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Capital management
149
149
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.
Strategy, objectives and governance
Audited | Our management of liquidity and funding has the overall objective of protecting our business franchises and
prudently managing our internal and regulatory liquidity and funding requirements. 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 requirements, primarily expressed through the liquidity coverage ratio (the LCR) and the net stable
funding ratio (the NSFR). Our liquidity and funding strategy is proposed by Group Treasury and approved by the Group
Asset and Liability Committee (the Group ALCO), which is a committee of the Group Executive Board (the GEB) that is
overseen by the Risk Committee of the Board of Directors (the BoD).
Liquidity and funding limits and other indicators (including early-warning indicators) are set at Group and, where
appropriate, at legal entity and business division levels, and are reviewed and reconfirmed at least once a year by
the BoD, the GEB, the Group ALCO, the Group Chief Financial Officer, the Group Chief Risk Officer and the Group
Treasurer, taking into consideration the Group’s business strategy and risk appetite. Treasury Risk Control provides
independent oversight over liquidity and funding risk.
› 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 close control of both our cash and collateral, including our high-
quality liquid assets (HQLA), and centralizes the Group’s access to wholesale cash 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 to define procedures throughout the crisis continuum. Group Treasury reports on
the Group’s liquidity and funding status and position, including concentration risk, at least monthly, to the Group ALCO
and the Risk Committee of the BoD.
In July 2022, the revision of the Swiss Liquidity Ordinance became effective. Further supervisory guidance from FINMA is
expected to be communicated in the autumn of 2023.
Liquidity and funding stress testing
Audited | Our liquidity and funding risk management aims to ensure that the firm has sufficient liquidity and funding to
survive a severe idiosyncratic and market-wide liquidity and funding stress event without government support, 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 and subsidiary liquidity and funding requirements.
Our liquidity and funding stress testing covers two main stress scenarios: a combined (market and idiosyncratic) scenario
and a structural market-wide scenario. We continuously refine stress-testing assumptions.
› 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.
The objective of this stress test is to ensure that UBS keeps 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.
Structural market-wide scenario
In this scenario, UBS is subject to a significant deterioration of macroeconomic and financial market conditions globally,
resulting in a requirement for long-term funding to survive the liquidity drain and support the franchise of the business.
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.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management
150
150
The objective of this stress test is to ensure that UBS maintains 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 stressed liquidity inflows and outflows under the scenario. In addition, the liquidity stress-
testing metric above 12 months aims to ensure that UBS has sufficient long-term (contractual and behavioral) funding
supply to support its long-term funding consumption.
Funding management
Audited | Group Treasury monitors our funding position, including concentration risk, aiming to ensure that we maintain a
well-balanced and diversified liability structure. Our funding management team looks to create the optimal liability
structure to finance our businesses in a reliable and cost-efficient manner. Our funding activities are planned by analyzing
the overall liquidity and funding requirements, taking into account the amount of stable funding that would be needed
to support ongoing business activities through periods of difficult market conditions.
The funding strategy of UBS Group 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 Group ALCO.
› Refer to “Balance sheet and off-balance sheet” in this section for more information about the development of our short- and
long-term debt during 2022
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, 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 all 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 is designed to ensure we have the right mix of assets and liabilities
in currencies and tenors.
Credit ratings
Credit ratings can affect the cost and availability of funding, especially from wholesale unsecured sources. Our 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 2022, in the event of a one-notch reduction in our long-term credit ratings, we would
have been required to provide USD 0.1bn in cash or other collateral. In the event of a two-notch reduction, it would have
been USD 0.3bn and for a three-notch downgrade USD 1.0bn. In the two- and three-notch scenarios the collateral
requirements predominantly relate to OTC derivative positions.
There were no rating actions with regard to UBS Group AG’s or UBS AG’s solicited credit ratings in 2022.
› Refer to “Liquidity and funding management are critical to UBS’s ongoing performance” in the “Risk factors” section of this report
for more information
Contingency Funding Plan
Audited | We maintain our Contingency Funding Plan as a preparation and action plan, aiming to ensure we hold sufficient
liquidity to meet our payment obligations and raise funding during periods of liquidity stress. 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 and unutilized liquidity facilities at several major central
banks, contingent reductions of trading portfolio assets, and other actions available to the management.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management
151
151
Liquidity coverage ratio
The LCR measures the short-term resilience of a bank’s liquidity profile by assessing whether sufficient HQLA are available
to meet expected net cash outflows from a significant liquidity stress scenario, as defined by the relevant regulator.
For UBS, HQLA are low-risk unencumbered assets under the control of Group Treasury that are easily and immediately
convertible into cash at little or no loss of value, in order to meet liquidity needs. Our HQLA predominantly consist of
assets that qualify as Level 1 in the LCR framework, including cash, central bank reserves and government bonds. Group
HQLA are held by UBS AG and its subsidiaries and may include amounts that are available to meet funding and collateral
needs in certain jurisdictions but are not readily available for use by the Group as a whole. These limitations are typically
the result of local regulatory requirements, including local LCR and large exposure requirements. Funds that are effectively
restricted are excluded from the calculation of Group HQLA to the extent they exceed the outflow assumptions for the
subsidiary that holds the relevant HQLA. On this basis, USD 34bn of assets were excluded from our daily average Group
HQLA for the fourth quarter of 2022. Amounts held in excess of local liquidity requirements that are not subject to other
restrictions are generally available for transfer within the Group.
Basel Committee on Banking Supervision (BCBS) standards require an LCR of at least 100%. In a period of financial stress,
the Swiss Financial Market Supervisory Authority (FINMA) may allow banks to use their HQLA and let their LCR temporarily
fall below the minimum threshold. We monitor the LCR in all significant currencies in order to manage any currency
mismatches between HQLA and the net expected cash outflows in times of stress.
Our daily average LCR for the fourth quarter of 2022 was 163.7%, compared with 155.5% in the fourth quarter of
2021, remaining above the prudential requirement communicated by FINMA.
Average HQLA increased by USD 10.7bn to USD 238.6bn, mainly driven by lower funding consumption from the business
divisions, partly offset by a reduction of short-term debt. Average net cash outflows decreased slightly, by USD 0.8bn, to
USD 146.0bn. Lower average outflows from customer deposits were almost entirely offset by lower average inflows from
loans and securities financing transactions, as well as higher average net cash outflows from derivatives.
› Refer to the 31 December 2022 Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information
about the LCR
› Refer to the “Significant regulated subsidiary and sub-group information” section of this report for more information about the
LCR of UBS AG and UBS Switzerland AG
Liquidity coverage ratio
USD bn, except where indicated
High-quality liquid assets (HQLA)
Total net cash outflows2
LLiiqquuiiddiittyy ccoovveerraaggee rraattiioo ((%%))33
11 Calculated based on an average of 63 data points in the fourth quarter of 2022 and 66 data points in the fourth quarter of 2021. 22 Represents the net cash outflows expected over a stress period of 30 calendar
days. 33 Calculated after the application of haircuts and inflow and outflow rates, as well as, where applicable, caps on Level 2 assets and cash inflows.
AAvveerraaggee 44QQ222211
223388..66
Average 4Q211
227.9
146.8
155.5
114466..00
116633..77
Net stable funding ratio
The NSFR framework is intended to limit overreliance on short-term wholesale funding, to encourage a better assessment
of funding risk across all on- and off-balance sheet items and to promote funding stability. The NSFR has two
components: available stable funding (ASF), as numerator, and required stable funding (RSF), as denominator. ASF is the
portion of capital and liabilities expected to be available over the period of one year. RSF is a measure of the stable
funding requirement of assets based on their maturity, encumbrance and other characteristics, as well as the potential
for contingent calls on funding liquidity from off-balance sheet exposures. The BCBS NSFR regulatory framework requires
a ratio of at least 100%.
As of 31 December 2022, the NSFR increased 1.3 percentage points to 119.8%, remaining above the prudential
requirement communicated by FINMA. RSF decreased by USD 19.6bn to USD 468.5bn, mainly due to lower trading assets
and receivables from securities financing transactions, partly offset by higher derivative balances. ASF decreased by
USD 17.0bn to USD 561.4bn, mainly driven by lower debt securities issued and customer deposits.
› Refer to the 31 December 2022 Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information
about the NSFR
› Refer to the “Significant regulated subsidiary and sub-group information” section of this report for more information about the
NSFR of UBS AG and UBS Switzerland AG
Net stable funding ratio
USD bn, except where indicated
Available stable funding (ASF)
Required stable funding (RSF)
NNeett ssttaabbllee ffuunnddiinngg rraattiioo ((%%))
3311..1122..2222
556611..44
446688..55
111199..88
31.12.21
578.4
488.1
118.5
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management
152
152
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 our financial position.
Balance sheet assets
As of 31 December 2022, balance sheet assets totaled USD 1,104.4bn, a decrease of USD 12.8bn compared with
31 December 2021, which included a decrease of approximately USD 22.7bn from currency effects.
Cash and balances at central banks decreased by USD 23.4bn, including currency effects of approximately USD 5.9bn.
The net cash outflow was mainly due to shifts within the high-quality liquid asset (HQLA) portfolio from cash into
securities, a reduction in short-term debt, decreases in customer deposits and outflows related to the share repurchase
programs. These outflows were partly offset by inflows from roll-offs of securities financing transactions, decreases in
trading assets, as well as lower lending.
Trading portfolio assets decreased by USD 22.9bn, mainly in our Financing and Derivatives & Solutions businesses in the
Investment Bank, reflecting lower inventory held to hedge client positions and market-driven movements. Lending assets
decreased by USD 11.2bn, mainly driven by currency effects of USD 6.4bn. The movement not related to currency effects
was mainly in Global Wealth Management, reflecting decreases in Lombard loans in Asia Pacific, partly offset by higher
mortgage loans in the Americas. Non-financial assets and financial assets for unit-linked investment contracts decreased
by USD 8.7bn, predominantly in Asset Management, mainly due to market-driven decreases on investments related to
unit-linked contracts, and in Global Wealth Management, due to the completion of the sale of our domestic wealth
management business in Spain and the sale of UBS Swiss Financial Advisers AG in 2022. Securities financing transactions
at amortized cost decreased by USD 7.2bn, mostly due to lower client activity levels in the Investment Bank as interest
rates rose, as well as trade roll-offs in Group Treasury. Brokerage receivables decreased by USD 4.2bn in our Financing
business, as increases in client lending were more than offset by netting effects against Brokerage payables.
These decreases were partly offset by a USD 36.4bn increase in Derivatives and cash collateral receivables on derivative
instruments. The increases were mainly in our Derivatives & Solutions and Financing businesses, predominantly reflecting
increases in foreign exchange contracts, where the contracts in place at the end of 2022 had higher fair values compared
with the contracts in place at the end of 2021, as well as increases in interest rate contracts, mainly due to higher trading
volumes and market-driven movements as interest rates increased during the year. These increases were partly offset by
market-driven decreases in Non-core and Legacy Portfolio on long-dated interest rate contracts due to the
aforementioned increases in interest rates.
Other financial assets measured at amortized cost and fair value increased by USD 28.4bn, largely reflecting shifts within
the HQLA portfolio from cash into securities within Group Treasury due to the widening of spreads. Included within Other
financial assets measured at amortized cost and fair value is a portfolio of financial assets reclassified effective from
1 April 2022 from Financial assets measured at fair value through other comprehensive income to Other financial assets
measured at amortized cost, in line with the principles in IFRS 9, Financial Instruments.
› Refer to “Note 1 Summary of material accounting policies” in the “Consolidated financial statements” section of this report for
more information about the reclassification of a portfolio of financial assets
Assets
% change from
31.12.21
USD bn
(12)
Cash and balances at central banks
Lending1
(3)
Securities financing transactions at amortized cost
(10)
Trading portfolio2
(18)
Derivatives and cash collateral receivables on derivative instruments
25
Brokerage receivables
(20)
Other financial assets measured at amortized cost and fair value3
38
Non-financial assets and financial assets for unit-linked investment contracts
(14)
TToottaall aasssseettss
(1)
11 Consists of loans and advances to customers and banks. 22 Consists of financial assets at fair value held for trading. 33 Consists of financial assets at fair value not held for trading, financial assets measured at
fair value through other comprehensive income and other financial assets measured at amortized cost, but excludes financial assets for unit-linked investment contracts.
31.12.21
192.8
413.2
75.0
130.8
148.7
21.8
73.8
61.0
1,117.2
3311..1122..2222
116699..44
440022..00
6677..88
110077..99
118855..11
1177..66
110022..22
5522..33
11,,110044..44
As of
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet
153
153
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.
› Refer to “Note 22 Restricted and transferred financial assets” in the “Consolidated financial statements” section of this report for
more information
Assets that cannot be pledged as collateral represents 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. Assets that are considered to be readily available to secure funding on
a Group and / or legal entity level are shown separately and consist of cash and securities readily realizable in the normal
course of business. These include our HQLA and unencumbered positions in our trading portfolio. Unencumbered assets
that are considered to be available to secure funding on a legal entity level may be subject to restrictions that limit the
total amount of assets available to the Group as a whole. Other unencumbered assets, which are not considered to be
readily available to secure funding on a Group and / or legal entity level, primarily consist of loans and advances to banks
and customers.
Asset encumbrance as of 31 December 2022
Encumbered
Assets
otherwise
restricted and
not available
to secure
funding
Assets
pledged
as collateral
Unencumbered
Cash and
securities
available to
secure funding
on a Group and /
or legal entity
level
Other
realizable
assets
Assets that
cannot be
pledged as
collateral
Total Group
USD bn
BBaallaannccee sshheeeett
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial assets at fair value held for trading
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
NNoonn--ffiinnaanncciiaall aasssseettss
TToottaall bbaallaannccee sshheeeett aasssseettss aass ooff 3311 DDeecceemmbbeerr 22002222
TToottaall bbaallaannccee sshheeeett aasssseettss aass ooff 3311 DDeecceemmbbeerr 22002211
OOffff--bbaallaannccee sshheeeett
FFaaiirr vvaalluuee ooff sseeccuurriittiieess aacccceepptteedd aass ccoollllaatteerraall aass ooff 3311 DDeecceemmbbeerr 22002222
FFaaiirr vvaalluuee ooff sseeccuurriittiieess aacccceepptteedd aass ccoollllaatteerraall aass ooff 3311 DDeecceemmbbeerr 22002211
0.0
3.7
5.2
1.1
0.8
1100..88
0.2
14.5
1144..66
11..88
00..00
2277..33
33.5
55..66
16.3
15.2
3.4
1188..66
57.41
0.0
1.51
5588..99
7777..55
85.1
333311..88
367.4
169.4
40.4
220099..88
48.5
30.1
7788..77
00..44
44..55
229933..44
307.5
9933..88
106.5
338877..11
238.6
414.0
232.8
11.1
370.2
1.3
338822..66
1.8
6.0
77..88
1133..44
440033..77
415.4
22..88
7.6
67.8
29.9
0.7
7.3
110055..77
150.1
17.6
7.7
117755..44
2211..44
330022..55
275.7
169.4
14.8
67.8
35.0
387.2
53.3
772277..66
107.9
150.1
17.6
59.8
333355..33
22..22
3399..22
11,,110044..44
1,117.2
443344..00
497.8
440066..55
330022..55
11,,553388..44
423.0
275.7
1,615.0
TToottaall bbaallaannccee sshheeeett aasssseettss aanndd ooffff--bbaallaannccee sshheeeett sseeccuurriittiieess aacccceepptteedd aass ccoollllaatteerraall aass ooff
3311 DDeecceemmbbeerr 22002222
440099..33
3333..00
of which: high-quality liquid assets
TToottaall bbaallaannccee sshheeeett aasssseettss aanndd ooffff--bbaallaannccee sshheeeett sseeccuurriittiieess aacccceepptteedd aass ccoollllaatteerraall aass ooff
3311 DDeecceemmbbeerr 22002211
452.5
49.8
of which: high-quality liquid assets
11 Includes assets pledged as collateral that may be sold or repledged by counterparties. The respective amounts are disclosed in “Note 22 Restricted financial assets” in the “Consolidated financial statements” section
of this report.
Assets available to secure funding on a Group and / or legal entity level by currency
USD bn
Swiss franc
US dollar
Euro
Other
TToottaall
3311..1122..2222
112200..00
115566..22
4400..33
7700..66
338877..11
31.12.21
111.4
174.7
46.6
81.2
414.0
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet
154
154
Balance sheet liabilities
Total liabilities as of 31 December 2022 were USD 1,047.1bn, a decrease of USD 9.1bn compared with 31 December
2021, which included a decrease of approximately USD 20.4bn from currency effects.
Customer deposits decreased by USD 16.9bn, including an USD 8.3bn decrease from currency effects. The decrease not
related to currency effects was USD 14.4bn in Global Wealth Management, mostly in the Americas, partly offset by a
USD 5.8bn increase in Personal & Corporate Banking. In addition, increases in interest rates during the year resulted in
significant shifts from demand deposits to time deposits. As of 31 December 2022, our ratio of customer deposits to
outstanding loans and advances to customers was unchanged at 136%. Short-term borrowings decreased by
USD 14.9bn, mainly due to maturities of commercial paper and certificates of deposit in Group Treasury.
Debt issued designated at fair value and long-term debt issued measured at amortized cost decreased by USD 11.3bn.
Long-term debt issued measured at amortized cost decreased by USD 11.1bn, driven by hedge accounting and foreign
currency effects, as well as net redemptions. Debt issued designated at fair value remained broadly unchanged, while
net new issuances mainly of fixed-rate and equity-linked contracts were offset by market-driven movements on equity-
linked contracts.
During 2022, the redemption of a covered bond of USD 1.4bn and net redemptions of subordinated debt instruments
of USD 1.3bn were partly offset by USD 0.8bn of net new issuances of senior unsecured debt, including TLAC-eligible
benchmark instruments. In December 2022, we announced our intention to call one loss-absorbing tier 1 capital
instrument of USD 2.0bn, which was redeemed in January 2023. As of 31 December 2022, UBS is already compliant
with its 2023 going and gone concern capital requirements and expects to act rationally and strategically with respect to
the refinancing of any callable capital instruments and any potential incremental issuances.
› Refer to “UBS Group AG consolidated capital instruments and TLAC-eligible senior unsecured debt,” available under “Bondholder
information” at ubs.com/investors, for more information
Non-financial liabilities and financial liabilities related to unit-linked investment contracts decreased by USD 10.6bn,
mainly reflecting market-driven decreases in unit-linked investment contracts in line with the asset side and in Global
Wealth Management due to the completion of the sale of our domestic wealth management business in Spain and the
sale of UBS Swiss Financial Advisers AG in 2022.
› 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 the sales of these businesses
These decreases were partly offset by a USD 38.2bn increase in Derivatives and cash collateral payables on derivative
instruments, in line with the movement on the asset side. Other financial liabilities measured at amortized cost and fair
value increased by USD 9.0bn, mainly in Group Treasury, due to lower netting effects on securities financing transactions
measured at fair value.
Equity
Equity attributable to shareholders decreased by USD 3,786m to USD 56,876m as of 31 December 2022.
This decrease was mainly driven by net treasury share activity that decreased equity by USD 5,999m. This was mainly due
to share repurchases with an acquisition cost of USD 3,966m under our 2022 share repurchase program, repurchases of
USD 1,637m under our 2021 program and purchases of USD 207m from the market to hedge our share delivery
obligations related to employee share-based compensation awards. In addition, distributions to shareholders reduced
equity by USD 1,668m, reflecting a dividend payment of USD 0.50 per share.
These decreases were partly offset by total comprehensive income attributable to shareholders of positive USD 3,149m,
reflecting net profit of USD 7,630m and negative other comprehensive income (OCI) of USD 4,481m. OCI mainly included
negative cash flow hedge OCI of USD 4,793m, negative OCI related to foreign currency translation of USD 525m and
positive OCI related to own credit on financial liabilities designated at fair value of USD 796m. In addition, deferred share-
based compensation awards of USD 716m were expensed in the income statement, increasing share premium.
In the second quarter of 2022, we canceled 177,787,273 shares purchased under our 2021 share repurchase program
from its inception in 2021 until 18 February 2022, as approved by shareholders at the 2022 Annual General Meeting.
The cancellation of shares resulted in reclassifications within equity but had no net effect on our total equity attributable
to shareholders.
› Refer to the “Group performance” and “Consolidated financial statements” sections of this report for more information about OCI
› Refer to the “Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital” table in this section for more information
about the effects of OCI on common equity tier 1 capital
› Refer to “UBS shares” in this section for more information about our share repurchase programs
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet
155
155
Liabilities and equity
As of
% change from
31.12.21
USD bn
Short-term borrowings1
(27)
Securities financing transactions at amortized cost
(24)
Customer deposits
(3)
Debt issued designated at fair value and long-term debt issued measured at amortized cost2
(7)
Trading portfolio3
(7)
Derivatives and cash collateral payables on derivative instruments
25
Brokerage payables
2
Other financial liabilities measured at amortized cost and fair value4
51
Non-financial liabilities and financial liabilities related to unit-linked investment contracts
(29)
(1)
TToottaall lliiaabbiilliittiieess
Share capital
(6)
Share premium
(15)
Treasury shares
47
14
Retained earnings
Other comprehensive income5
(102)
(6)
TToottaall eeqquuiittyy aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Equity attributable to non-controlling interests
1
(6)
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
(1)
11 Consists of short-term debt issued measured at amortized cost and amounts due to banks. 22 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. 33 Consists of financial
liabilities at fair value held for trading. 44 Consists of other financial liabilities measured at amortized cost and other financial liabilities designated at fair value, but excludes financial liabilities related to unit-linked
investment contracts. 55 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.
31.12.21
56.2
5.5
542.0
169.9
31.7
153.1
44.0
17.6
36.1
1,056.2
0.3
15.9
(4.7)
43.9
5.2
60.7
0.3
61.0
1,117.2
3311..1122..2222
4411..33
44..22
552255..11
115588..66
2299..55
119911..33
4455..11
2266..66
2255..55
11,,004477..11
00..33
1133..55
((66..99))
5500..00
((00..11))
5566..99
00..33
5577..22
11,,110044..44
Asset funding
USD bn, except where indicated
As of 31 December 2022
Cash, balances at central banks and
loans and advances to banks
Securities financing transactions at amortized cost
Trading portfolio
Brokerage receivables
Loans and advances to customers
Other
184
68
108
18
387
190
Assets
Liabilities
and equity
s
t
i
s
o
p
e
d
r
e
m
o
t
s
u
C
136% coverage
USD 138bn
surplus
41
4
30
45
525
74
85
93
57
Short-term borrowings
Securities financing transactions at amortized cost
Trading portfolio
Brokerage payables
181
Demand deposits
149
Retail savings / deposits
69
Sweep deposits
126
Time deposits
Debt issued designated at fair value
Long-term debt issued measured at
amortized cost¹
Other (including net derivative liability)
Total equity
1
The classification of debt issued measured at amortized cost into short- 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.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet
156
156
Liabilities by product and currency
USD bn
Short-term borrowings
of which: amounts due to banks
of which: short-term debt issued1
Securities financing transactions at amortized cost
Customer deposits
of which: demand deposits
of which: retail savings / deposits
of which: sweep deposits
of which: time deposits
Debt issued designated at fair value and long-term debt issued
measured at amortized cost2
Trading portfolio3
Derivatives and cash collateral payables on derivative instruments
Brokerage payables
Other financial liabilities measured at amortized cost and fair value4
Non-financial liabilities and financial liabilities related to unit-linked investment
contracts
TToottaall lliiaabbiilliittiieess
AAllll ccuurrrreenncciieess
ooff wwhhiicchh:: UUSSDD
3311..1122..2222
4411..33
1111..66
2299..77
44..22
552255..11
118800..88
114499..33
6699..22
112255..77
31.12.21
56.2
13.1
43.1
5.5
542.0
246.4
133.3
113.9
48.4
3311..1122..2222
2233..33
44..22
1199..00
33..66
222266..66
4477..11
2244..66
6699..22
8855..77
31.12.21
32.2
3.4
28.8
5.2
252.1
92.3
11.7
113.9
34.2
UUSSDD eeqquuiivvaalleenntt
ooff wwhhiicchh:: CCHHFF
3311..1122..2222
33..88
33..77
00..11
00..00
119988..55
7711..44
111199..00
00..00
88..11
31.12.21
4.3
4.2
0.2
0.0
189.7
70.9
116.0
0.0
2.8
ooff wwhhiicchh:: EEUURR
3311..1122..2222
44..44
11..11
33..33
00..22
5533..66
3377..33
55..66
00..00
1100..66
31.12.21
6.2
0.8
5.3
0.2
54.8
46.3
5.5
0.0
3.0
115588..66
2299..55
119911..33
4455..11
2266..66
169.9
31.7
153.1
44.0
17.6
2255..55
11,,004477..11
36.1
1,056.2
9988..44
1122..11
116600..44
3322..33
1166..33
44..77
557777..77
100.3
13.7
126.3
32.8
9.3
6.0
577.8
1166..99
00..88
33..88
00..44
11..77
18.4
0.9
2.1
0.4
1.5
2299..66
88..11
1155..88
33..22
44..88
35.1
6.3
15.2
2.8
3.7
11..55
222277..66
2.4
219.7
22..99
112222..66
3.4
127.8
11 Short-term debt issued consists of certificates of deposit, commercial paper, acceptances and promissory notes, and other money market paper. 22 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. 33 Consists of financial liabilities at fair value held for trading. 44 Consists of other financial liabilities measured at amortized cost and other financial liabilities designated at fair value, but
excludes financial liabilities related to unit-linked investment contracts.
Off-balance sheet
In the normal course of business, we enter into transactions where, pursuant to IFRS, the maximum contractual exposure
may not be recognized in whole or in part on our balance sheet. These transactions include derivative instruments,
guarantees, loan commitments and similar arrangements.
When we incur an obligation or become entitled to an asset through these arrangements, we recognize them on the
balance sheet. It should be noted that in certain instances the amount recognized on the balance sheet does not represent
the full gain or loss potential inherent in such arrangements.
The following paragraphs provide more information about certain off-balance sheet arrangements. Additional off-
balance sheet information is primarily provided in Notes 9, 10, 17, 19, 20h, 22 and 28 in the “Consolidated financial
statements” section of this report, and in the 31 December 2022 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors.
Guarantees, loan commitments and similar arrangements
In the normal course of business, we issue various forms of guarantees, commitments to extend credit, standby and other
letters of credit to support our clients, forward starting transactions, note issuance facilities, and revolving underwriting
facilities. With the exception of related premiums, generally these guarantees and similar obligations are kept as off-
balance sheet items, unless a provision to cover probable losses or expected credit losses is required.
Guarantees represent irrevocable assurances that, subject to the satisfying of certain conditions, we will make payments
if our clients fail to fulfill their obligations to third parties. As of 31 December 2022, the net exposure (i.e., gross values
less sub-participations) from guarantees and similar instruments was USD 20.6bn, compared with USD 18.9bn as of
31 December 2021. The increase of USD 1.7bn reflected higher guarantees issued to corporate clients in Group Treasury.
Fee income from issuing guarantees compared with total net fee and commission income is insignificant for both 2022
and 2021.
We also enter into commitments to extend credit in the form of credit lines available to secure the liquidity needs of
clients. The majority of loan commitments range in maturity from one month to two years. Committed unconditionally
revocable credit lines are generally open-ended. During 2022, loan commitments and committed unconditionally
revocable credit lines remained broadly stable. Forward starting reverse repurchase agreements increased by USD 2.4bn
and forward starting repurchase agreements increased by USD 0.9bn, both predominantly in Group Treasury.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet
157
157
Off-balance sheet
% change from
31.12.21
USD bn
Guarantees1
9
Loan commitments1,2
1
Committed unconditionally revocable credit lines
1
Forward starting reverse repurchase agreements2
163
Forward starting repurchase agreements2
80
11 Guarantees and Loan commitments are shown net of sub-participations. 22 The exposures related to loan commitments, forward starting repurchase and reverse repurchase agreements measured at fair value
through profit or loss are not included in this table but are reflected as notional amounts in “Note 10 Derivative instruments” in the “Consolidated financial statements” section of this report.
31.12.21
18.9
39.5
40.8
1.4
1.0
3311..1122..2222
2200..66
4400..00
4411..44
33..88
11..99
As of
If customers fail to meet their obligations, our maximum exposure to credit risk is generally the contractual amount of
these instruments. The risk is similar to the risk involved in extending loan facilities and is subject to the same risk
management and control framework. In 2022, we recognized net credit loss releases of USD 3m related to loan
commitments, guarantees and other credit facilities in the scope of expected credit loss measurement, compared with
net credit loss releases of USD 46m in 2021. Provisions recognized for guarantees, loan commitments and other credit
facilities in the scope of expected credit loss measurement were USD 201m as of 31 December 2022, compared with
USD 196m as of 31 December 2021.
› Refer to “Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and “Note 19
Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information about
provisions for expected credit losses
For certain obligations, we enter into partial sub-participations to mitigate various risks from guarantees and loan
commitments. A sub-participation is an agreement by another party to take a share of the loss in the event that the
obligation is not fulfilled by the obligor and, where applicable, to fund a part of the credit facility. We retain the
contractual relationship with the obligor, and the sub-participant has only an indirect relationship. Generally, we only
enter into sub-participation agreements with banks to which we ascribe a credit rating equal to or better than that of
the obligor.
We also provide representations, warranties and indemnifications to third parties in the normal course of business.
Support provided to non-consolidated investment funds
In 2022, the Group did not provide material support, financial or otherwise, to unconsolidated investment funds when
the Group was not contractually obligated to do so, nor does it have an intention to do so.
Clearing house and exchange memberships
We are a member of numerous securities and derivative exchanges and clearing houses. In connection with some of
these memberships, we may be required to pay a share of the financial obligations of another member who defaults, or
we may be otherwise exposed to additional financial obligations. While the membership rules vary, obligations generally
would arise only if the exchange or clearing house had exhausted its resources. We consider the probability of a material
loss due to such obligations to be remote.
Deposit insurance
Swiss banking law and the deposit insurance system require Swiss banks and securities dealers to jointly guarantee an
amount of up to CHF 6bn for privileged client deposits in the event that a Swiss bank or securities dealer becomes
insolvent. As of 31 December 2022, FINMA estimates our share in the deposit insurance system to be CHF 0.9bn. This
represents a contingent payment obligation and exposes us to additional risk. As of 31 December 2022, we considered
the probability of a material loss from our obligations to be remote.
UBS is also subject to, or is a member of, other deposit protection schemes in other countries. However, no contingent
payment obligation existed as of 31 December 2022 from any other material scheme.
Material cash requirements
The Group’s material cash requirements as of 31 December 2022 are represented by the residual contractual maturities
for non-derivative and non-trading financial liabilities included in the table presented in “Note 23b Maturity analysis of
financial liabilities on an undiscounted basis” in the “Consolidated financial statements” section of this report. Included
in the table are debt issued designated at fair value (USD 83.4bn) and long-term debt issued measured at amortized cost
(USD 103.7bn). The amounts represent estimated future interest and principal payments on an undiscounted basis.
In the normal course of business, we also issue or enter into various forms of guarantees, loan commitments and other
similar arrangements that may result in an outflow of cash in the future. The maturity profile of these obligations, which
are presented off-balance sheet, are included in “Note 23b Maturity analysis of financial liabilities on an undiscounted
basis” in the “Consolidated financial statements” section of this report.
› Refer to “Guarantees, loan commitments and similar arrangements” in this section for more information
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet
158
158
Cash flows
As 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 2022, cash and cash equivalents totaled USD 195.3bn, a decrease of USD 12.6bn compared with
31 December 2021, driven by net cash outflows from investing and financing activities, as well as negative foreign
exchange effects, largely reflecting appreciation of the US dollar against the yen, euro and Swiss franc in 2022. These
effects were partly offset by net cash inflows from operating activities.
Operating activities
Net cash inflows from operating activities were USD 14.6bn in 2022, compared with USD 31.4bn in 2021. The net
operating cash flow, before changes in operating assets and liabilities and income taxes paid, was an outflow of
USD 2.0bn. Changes in operating assets and liabilities resulted in net cash inflows of USD 16.6bn, mainly driven by net
inflows of USD 8.0bn from financial assets and liabilities at fair value held for trading and derivative financial instruments,
USD 6.0bn from brokerage receivables and payables, USD 5.7bn from financial assets and liabilities at fair value not held
for trading and other financial assets and liabilities, as well as USD 4.4bn from securities financing transactions at
amortized cost. These inflows were partly offset by a net outflow from loans and advances to customers and customer
deposits of USD 5.2bn and income tax paid of USD 1.6bn.
Investing activities
Investing activities resulted in a net cash outflow of USD 12.4bn in 2022, compared with USD 2.1bn in 2021, primarily
related to a cash outflow of USD 12.0bn from net purchases of debt securities measured at amortized cost.
Financing activities
Financing activities resulted in a net cash outflow of USD 9.1bn in 2022, compared with an inflow of USD 10.3bn in 2021,
mainly due to net repayment of short-term debt of USD 12.2bn, net cash used to repurchase treasury shares of USD 6.0bn
and a dividend distribution to shareholders of USD 1.7bn. This outflow was partly offset by net issuance proceeds of
USD 11.4bn from debt designated at fair value and long-term debt 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)
USD bn
Net cash flow from / (used in) operating activities
Net cash flow from / (used in) investing activities
Net cash flow from / (used in) financing activities
Effects of exchange rate differences on cash and cash equivalents
NNeett iinnccrreeaassee // ((ddeeccrreeaassee)) iinn ccaasshh aanndd ccaasshh eeqquuiivvaalleennttss
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr
Currency management
Strategy, objectives and governance
For the year ended
3311..1122..2222
31.12.21
1144..66
((1122..44))
((99..11))
((55..77))
((1122..66))
119955..33
31.4
(2.1)
10.3
(5.3)
34.3
207.9
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) sell-down of foreign currency International Financial Reporting 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. Group Treasury also manages structural currency composition at the
consolidated Group level.
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, we follow the principle of
matching the currencies of our assets and liabilities for funding purposes. This avoids profits and losses arising from the
translation of non-US-dollar assets and liabilities.
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet
159
159
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 1a Material accounting policies” and “Note 25 Hedge accounting” in the “Consolidated financial statements”
section of this report for more information
› Refer to “Capital management” in this section for more information about our active management of sensitivity to currency
movements and the effect thereof on our key ratios
Sell-down of non-US-dollar reported profits and losses
Income statement items of foreign subsidiaries and branches of UBS AG 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) arising
in UBS AG and its branches and sells or buys the profit or loss for US dollars on a monthly basis. Our foreign subsidiaries
follow a similar monthly sell-down process into their own functional currencies. Retained earnings in foreign subsidiaries
with a functional currency other than the US dollar are integrated and managed as part of our net investment hedge
accounting program.
Hedging of anticipated non-US-dollar profits and losses
The Group Asset and Liability Committee may at any time instruct Group Treasury to execute hedges to protect
anticipated future profits and losses in foreign currencies against possible adverse trends of foreign exchange rates.
Although intended to hedge future earnings, these transactions are accounted for as open currency positions and subject
to internal market risk limits for value-at-risk and stress loss limits.
Dividend distribution
UBS Group AG declares dividends in US dollars. Shareholders holding shares through the SIX Swiss Exchange
(ISIN: CH0244767585) will receive dividends in Swiss francs, based on a published exchange rate calculated up to five
decimal places, on the day prior to the ex-dividend date. Shareholders holding shares through DTC (ISIN: CH0244767585;
CUSIP: H42097107) will be paid dividends in US dollars.
› Refer to the “Standalone financial statements” section of this report for more information about the proposed dividend
distribution of UBS Group AG
UBS shares
UBS Group AG shares
Audited | As of 31 December 2022, IFRS equity attributable to shareholders amounted to USD 56,876m, represented by
3,524,635,722 shares issued. Shares issued decreased by 177,787,273 shares in 2022 as the shares acquired under the
2021 share repurchase program from its inception in 2021 until 18 February 2022 were canceled by means of a capital
reduction, as approved by shareholders at the 2022 Annual General Meeting (the AGM).
Each share has a nominal value of CHF 0.10, carries one vote if entered into the share register as having the right to vote,
and also entitles the holder to a proportionate share of distributed dividends. All shares are fully paid up. As the Articles of
Association of UBS Group AG indicate, there are no other classes of shares and no preferential rights for shareholders.
› Refer to “Share information and earnings per share” in the “Consolidated financial statements” section of this report for more
information about the planned conversion of our share capital nominal currency in 2023
› Refer to the “Corporate governance” section of this report for more information about UBS shares
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | Currency management
160
160
UBS Group share information
Shares issued
Treasury shares1
of which: related to share repurchase program 2021
of which: related to share repurchase program 2022
Shares outstanding
Basic earnings per share (USD)2
Basic earnings per share (CHF)3
Diluted earnings per share (USD)2
Diluted earnings per share (CHF)3
Equity attributable to shareholders (USD m)
Less: goodwill and intangible assets (USD m)
Tangible equity attributable to shareholders (USD m)
Ordinary cash dividends per share (USD)4,5
Total book value per share (USD)
Tangible book value per share (USD)
Share price (USD)6
Market capitalization (USD m)
As of or for the year ended
3311..1122..2222
31.12.21
33,,552244,,663355,,772222
3,702,422,995
441166,,990099,,001100
6622,,554488,,000000
223333,,990011,,995500
302,815,328
152,596,273
33,,110077,,772266,,771122
3,399,607,667
22..3344
22..2233
22..2255
22..1144
5566,,887766
66,,226677
5500,,660099
00..5555
1188..3300
1166..2288
1188..6611
5577,,884488
2.14
1.96
2.06
1.88
60,662
6,378
54,283
0.50
17.84
15.97
18.01
61,230
% change from
31.12.21
(5)
38
(59)
(9)
9
14
9
14
(6)
(2)
(7)
10
3
2
3
(6)
11 Based on a settlement date view. 22 Refer to “Share information and earnings per share” in the “Consolidated financial statements” section of this report for more information. 33 Basic and diluted earnings per
share in Swiss francs are calculated based on a translation of net profit / (loss) under our US dollar presentation currency. 44 Dividends and / or distributions out of the capital contribution reserve are normally
approved and paid in the year subsequent to the reporting period. 55 Refer to “Statement of proposed appropriation of total profit and dividend distribution out of total profit and capital contribution reserve” in the
“Standalone financial statements” section of this report for more information. 66 Represents the share price as listed on the SIX Swiss Exchange, translated to US dollars using the closing exchange rate as of the
respective date.
Holding of UBS Group AG shares
Group Treasury holds UBS Group AG shares to hedge future share delivery obligations related to employee share-based
compensation awards, and also holds shares purchased under share repurchase programs. As of 31 December 2022, we
held a total of 416,909,010 treasury shares (31 December 2021: 302,815,328).
Our 2021 share repurchase program was concluded on 29 March 2022 with the purchase of an additional 87.7m shares
in 2022 for an acquisition cost of USD 1,637m (CHF 1,516m). The 177.8m shares repurchased under this program from
its inception until 18 February 2022 for a total acquisition cost of USD 3,022m (CHF 2,775m) were canceled by means
of a capital reduction, as approved by shareholders at the 2022 AGM. We also intend to cancel the remaining shares
purchased under the 2021 program, subject to shareholder approval at the 2023 AGM.
On 31 March 2022, we commenced a new, 2022 share repurchase program of up to USD 6bn. Shares acquired under
this program totaled 233.9m as of 31 December 2022 for a total acquisition cost of USD 3,944m (CHF 3,808m) and are
intended to be canceled by means of a capital reduction, pending approval by shareholders at a future AGM.
Looking ahead, we intend to commence a new, 2023 repurchase program of up to USD 6bn over two years and expect
to execute more than USD 5bn of share repurchases under both the existing, 2022 repurchase program and the new
program in 2023.
Treasury shares held to hedge our share delivery obligations related to employee share-based compensation awards
totaled 119m shares as of 31 December 2022 (31 December 2021: 149m). Share delivery obligations related to employee
share-based compensation awards totaled 178m shares as of 31 December 2022 (31 December 2021: 175m) and are
calculated on the basis of undistributed notional share awards, taking applicable performance conditions into account.
Treasury shares held are delivered to employees at exercise or vesting. As of 31 December 2022, up to 122m UBS Group
AG shares (31 December 2021: 122m) could have been issued out of conditional capital to satisfy share delivery
obligations of any future employee share option programs or similar awards.
The Investment Bank also holds a limited number of UBS Group AG shares, primarily in its capacity as a market-maker
with regard to UBS Group AG shares and related derivatives, and to hedge certain issued structured debt instruments.
The table below outlines the market purchases of UBS Group AG shares by Group Treasury. It does not include the
activities of the Investment Bank.
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161
Treasury share purchases
Share repurchase programs1
Other treasury shares purchased2
Remaining volume of
2022 share repurchase
program in USD m
at month-end
Remaining volume of
2021 share repurchase
program in CHF m
at month-end
1,706
999
1905
Remaining volume of
2021 share repurchase
program in USD m
at month-end4
1,843
1,089
2055
Number of shares
Number of shares
Average price
in USD
Average price in
USD
Month of
purchase3
January 2022
February 2022
March 2022
April 2022
May 2022
June 2022
July 2022
August 2022
September 2022
October 2022
November 2022
December 2022
11 In February 2021, UBS initiated a share repurchase program of up to CHF 4bn and this program was concluded on 29 March 2022. UBS has an active share repurchase program to buy back up to USD 6bn of its
own shares over the two-year period started in March 2022. The share buybacks were transacted in Swiss francs on a separate trading line on the SIX Swiss Exchange. 22 This table excludes purchases for the purpose
of hedging derivatives linked to UBS Group AG shares and for market-making in UBS Group AG shares. The table also excludes UBS Group AG shares purchased by post-employment benefit funds for UBS employees,
which are managed by a board of UBS management and employee representatives in accordance with Swiss law. UBS’s post-employment benefit funds purchased 1,243,164 UBS Group AG shares during the year
and held 14,213,559 UBS Group AG shares as of 31 December 2022. 33 Based on the transaction date of the respective treasury share purchases. 44 The remaining volume of the 2021 share repurchase program
in US dollars was calculated based on the remaining volume in Swiss francs and the respective month-end closing exchange rate. 55 The 2021 share repurchase program was concluded on 29 March 2022.
38,231,000
51,928,000
29,420,000
31,670,000
32,124,500
32,152,000
18,284,450
14,114,500
30,526,500
23,769,000
20,571,000
20.05
17.68
18.14
17.65
16.78
15.83
16.41
15.23
15.15
17.70
18.40
5,952
5,418
4,859
4,320
3,811
3,511
3,296
2,833
2,413
2,034
12,510,000
16.52
Trading volumes
1,000 shares
SIX Swiss Exchange total
SIX Swiss Exchange daily average
New York Stock Exchange total
New York Stock Exchange daily average
Source: Reuters
Listing of UBS Group AG shares
For the year ended
31.12.21
2,514,259
9,899
137,366
545
3311..1122..2222
22,,443333,,005511
99,,557799
118866,,446688
774433
31.12.20
5,095,908
20,222
260,681
1,030
UBS Group AG shares are listed on the SIX Swiss Exchange (SIX). They are also listed on the New York Stock Exchange
(the NYSE) as global registered shares. As such, they can be traded and transferred across applicable borders, without
the need for conversion, with identical shares traded on different stock exchanges in different currencies.
During 2022, the average daily trading volume of UBS Group AG shares was 9.6m shares on SIX and 0.7m shares on the
NYSE. SIX is expected to remain the main venue for determining the movement in our share price, because of the high
volume traded on this exchange.
During the hours in which both SIX and the NYSE are simultaneously open for trading, price differences between these
exchanges are likely to be arbitraged away by professional market-makers. Accordingly, the share price will typically be
similar between the two exchanges when considering the prevailing US dollar / Swiss franc exchange rate. When SIX is
closed for trading, globally traded volumes will typically be lower. However, the specialist firm making a market in
UBS Group AG shares on the NYSE is required to facilitate sufficient liquidity and maintain an orderly market in
UBS Group AG shares throughout normal NYSE trading hours.
Ticker symbols UBS Group AG
TTrraaddiinngg eexxcchhaannggee
SSIIXX // NNYYSSEE
SIX Swiss Exchange
New York Stock Exchange
UBSG
UBS
BBlloooommbbeerrgg
UBSG SW
UBS UN
RReeuutteerrss
UBSG.S
UBS.N
Security identification codes
ISIN
CCHH00224444776677558855
Valoren
CUSIP
2244 447766 775588
CCIINNSS HH4422009977 1100 77
Annual Report 2022 | Risk, capital, liquidity and funding, and balance sheet | UBS shares
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162
Corporate governance and
compensation
Management report
Audited information according to the Swiss law and applicable regulatory
requirements and guidance
Disclosures provided are in line with the requirements of the Swiss Code of Obligations (tables containing such
information are marked as “Audited” throughout this section), as well as other applicable regulations and guidance.
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Corporate governance
Table of contents
165
166
167
171
173
189
196
196
198
Corporate governance
Group structure and shareholders
Share capital structure
Shareholders’ participation rights
Board of Directors
Group Executive Board
Change of control and defense measures
Auditors
Information policy
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Corporate governance
UBS Group AG is subject to, and complies with, all relevant Swiss legal and regulatory requirements regarding corporate
governance, including the SIX Swiss Exchange’s Directive on Information relating to Corporate Governance (the SIX Swiss
Exchange Corporate Governance Directive) and the standards established in the Swiss Code of Best Practice for Corporate
Governance.
The revised Swiss Code of Obligations entered into force on 1 January 2023. The correspondingly amended Articles of
Association of UBS Group AG (the AoA) will be submitted to the Annual General Meeting (the AGM) on 5 April 2023
for approval. The implementation of resulting amendments based on the revised Swiss Code of Obligations will be
reflected in the Annual Report 2023.
As a foreign company with shares listed on the New York Stock Exchange (the NYSE), UBS Group AG also complies with
all relevant corporate governance standards applicable to foreign private issuers.
The Organization Regulations of UBS Group AG, adopted by the Board of Directors (the BoD) based on Art. 716b of the
Swiss Code of Obligations and Art. 25 and 27 of the AoA, constitute our primary corporate governance guidelines.
To the extent practicable, the governance structures of UBS Group AG and UBS AG are aligned. UBS AG complies with
all relevant Swiss legal and regulatory corporate governance requirements. As a foreign private issuer with debt securities
listed on the NYSE, UBS AG also complies with the relevant NYSE corporate governance standards. The discussion in this
section refers to both UBS Group AG and UBS AG, unless specifically noted otherwise or unless the information discussed
is relevant only to listed companies and therefore only applicable to UBS Group AG. This approach is in line with US
Securities and Exchange Commission (SEC) regulations and NYSE standards.
› Refer to the Articles of Association of UBS Group AG and of UBS AG, and to the Organization Regulations of UBS Group AG,
available at ubs.com/governance and ubs.com/ubs-ag-governance, for more information
› The SIX Swiss Exchange Corporate Governance Directive is available at ser-ag.com/content/dam/
serag/downloads/regulation/listing/directives/dcg-en.pdf, the Swiss Code of Best Practice for Corporate Governance at
economiesuisse.ch/en/publications/swiss-code-best-practice-corporate-governance and the NYSE rules at
nyseguide.srorules.com/listed-company-manual
Differences from corporate governance standards relevant to US-listed companies
The NYSE standards on corporate governance require foreign private issuers to disclose any significant ways in which their
corporate governance practices differ from those that have to be followed by domestic companies. The key differences are
discussed below.
Responsibility of the Audit Committee regarding independent auditors
Our Audit Committee is responsible for the compensation, retention and oversight of independent auditors. It assesses
the performance and qualifications of external auditors and submits proposals for appointment, reappointment or
removal of independent auditors to the BoD. As required by the Swiss Code of Obligations, the BoD submits its proposals
for a shareholder vote at the AGM. Under NYSE standards audit committees are responsible for appointing independent
auditors.
Discussion of risk assessment and risk management policies by the Risk Committee
As per the Organization Regulations of UBS Group AG and 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, our Compensation Committee, together with the BoD, proposes for shareholder approval at the
AGM the maximum aggregate amount of compensation for the BoD, the maximum aggregate amount of fixed
compensation for the Group Executive Board (the GEB) and the aggregate amount of variable compensation for the GEB.
The members of the Compensation Committee are elected by the AGM. Under NYSE standards it is the responsibility of
compensation committees to evaluate senior management’s performance and to determine and approve, as a committee
or together with the other independent directors, the compensation thereof.
Proxy statement reports of the Audit Committee and the Compensation Committee
NYSE standards require the aforementioned committees to submit their reports directly to shareholders. However, under
Swiss law all reports to shareholders, including those from the aforementioned committees, are provided to and approved
by the BoD, which has ultimate responsibility to the shareholders.
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Shareholder votes on equity compensation plans
NYSE standards require shareholder approval for the establishing of and material revisions to all equity compensation
plans. However, as per Swiss law, the BoD approves compensation plans. Shareholder approval is only mandatory if
equity-based compensation plans require an increase in capital. No shareholder approval is required if shares for such
plans are purchased in the market.
› Refer to “Board of Directors” in this section for more information about the BoD’s committees
› Refer to “Share capital structure” in this section for more information about UBS Group AG’s capital
Group structure and shareholders
Operational Group structure
As of 31 December 2022, the operational structure of the Group is composed of the Global Wealth Management,
Personal & Corporate Banking, Asset Management and Investment Bank 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
› Refer to “Financial and operating performance” and to “Note 2a Segment reporting” in the “Consolidated financial statements”
section of this report for more information
› Refer to the “Our evolution” section of this report for more information
Listed and non-listed companies belonging to the Group
The Group includes a number of consolidated entities, of which only UBS Group AG shares are listed.
UBS Group AG’s registered office is at Bahnhofstrasse 45, CH-8001 Zurich, Switzerland. UBS Group AG shares are listed
on the SIX Swiss Exchange (ISIN: CH0244767585) and on the NYSE (CUSIP: H42097107).
› Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for information about UBS
Group AG’s market capitalization and shares held by Group entities
› Refer to “Note 28 Interests in subsidiaries and other entities” in the “Consolidated financial statements” section of this report for
more information about the significant subsidiaries of the Group
Significant shareholders
General rules
Under the Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading
of 19 June 2015 (the FMIA), anyone directly, indirectly or acting in concert with third parties holding shares in a company
listed in Switzerland or holding derivative rights related to shares in such a company directly, indirectly or in concert with
third parties must notify the company and the SIX Swiss Exchange (SIX) if the holding reaches, falls below or exceeds one
of the following percentage thresholds: 3, 5, 10, 15, 20, 25, 331⁄3, 50 or 662⁄3% of voting rights, regardless of whether or
not such rights may be exercised. Nominee companies that cannot autonomously decide how voting rights are exercised
are not required to notify the company and SIX if they reach, exceed or fall below the aforementioned thresholds.
Pursuant to the Swiss Code of Obligations, we disclose in “Note 24 Significant shareholders” to the UBS Group AG
standalone financial statements the identity of any shareholder with a holding of more than 5% of the total share capital
of UBS Group AG.
Shareholders subject to FMIA disclosure notifications
According to the mandatory FMIA disclosure notifications filed with UBS Group AG and SIX, as of 31 December
2022, the following entities held more than 3% of the total share capital of UBS Group AG: BlackRock Inc., New
York, which disclosed a holding of 5.23% on 29 June 2022; Dodge & Cox International Stock Fund, San
Francisco, which disclosed a holding of 3.02% on 28 January 2022; Massachusetts Financial Services Company,
Boston, which disclosed a holding of 3.01% on 25 June 2021; Artisan Partners Limited Partnership, Milwaukee,
which disclosed a holding of 3.15% on 18 November 2020; and Norges Bank, Oslo, which disclosed a holding of
3.01% on 25 July 2019.
As registration in the UBS share register is optional, the aforementioned shareholders that crossed the indicated
percentage thresholds and were required to notify their holding to UBS and SIX do not necessarily appear in the table
below, as such table only discloses registered shareholders.
In accordance with the FMIA, the aforementioned holdings are calculated in relation to the total share capital of
UBS Group AG reflected in the AoA at the time of the respective disclosure notification.
Information on disclosures under
participants/significant-shareholders.html.
the FMIA
is available at
ser-ag.com/en/resources/notifications-market-
Annual Report 2022 | Corporate governance and compensation | Corporate governance
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166
Shareholders registered in the UBS share register with 3% or more of the share capital of UBS Group AG
As a supplement to the mandatory disclosure requirements according to the SIX Swiss Exchange Corporate Governance
Directive, we disclose in the table below the shareholders (acting in their own name or in their capacity as nominees for
other investors or beneficial owners) that were registered in the UBS share register with 3% or more of the total share
capital of UBS Group AG as of 31 December 2022.
› Refer to “Shareholders’ participation rights” in this section for more information about voting rights, restrictions and
representation
Audited |
Shareholders registered in the UBS share register with 3% or more of the total share capital1
% of share capital
Chase Nominees Ltd., London2
DTC (Cede & Co.), New York2,3
3311..1122..2222
31.12.21
31.12.20
88..6600
77..1122
8.89
5.78
10.39
4.99
Nortrust Nominees Ltd., London2
11 As registration in the UBS share register is optional, shareholders crossing the threshold percentages requiring SIX notification under the FMIA do not necessarily appear in this table. 22 Nominee companies and
securities clearing organizations cannot autonomously decide how voting rights are exercised and are therefore not obligated to notify UBS and SIX if they reach, exceed or fall below the threshold percentages
requiring disclosure notification under the FMIA. Consequently, they do not appear in the “Shareholders subject to FMIA disclosure notifications” section above. 33 DTC (Cede & Co.), New York, “The Depository
Trust Company,” is a US securities clearing organization.
44..3333
4.80
5.15
Cross-shareholdings
UBS Group AG has no cross-shareholdings where reciprocal ownership would be in excess of 5% of capital or voting
rights with any other company.
Share capital structure
Ordinary share capital
At year-end 2022, UBS Group AG had 3,524,635,722 issued shares with a nominal value of CHF 0.10 each, equating to
a share capital of CHF 352,463,572.20.
Under Swiss company law, shareholders must approve, in a general meeting of shareholders, any increase or reduction
in the ordinary share capital or the creation of conditional or authorized share capital.
In 2022, our shareholders were asked to approve a reduction of share capital by way of canceling 177,787,273 registered
shares repurchased under the 2021 share buyback program.
In 2022, our shareholders were not asked to approve the creation of conditional or authorized share capital.
No shares were issued out of existing conditional capital, as there were no employee options and stock appreciation
rights outstanding.
Following revisions to Swiss Corporate Law that are effective from 1 January 2023, the BoD will propose at the 2023
AGM that the shareholders approve the conversion of the share capital currency of UBS Group AG from the Swiss franc
to the US dollar.
› Refer to “Share information and earnings per share” in the “Consolidated financial statements” section of this report for
information about the conversion of the share capital currency
Distribution of UBS shares
AAss ooff 3311 DDeecceemmbbeerr 22002222
Number of shares registered
1–100
101–1,000
1,001–10,000
10,001–100,000
100,001–1,000,000
1,000,001–5,000,000
5,000,001–35,246,357 (1%)
1–2%
2–3%
3–4%
4–5%
Over 5%
SShhaarreehhoollddeerrss rreeggiisstteerreedd
Number
21 641
95 818
62 369
6 086
512
83
24
3
0
0
1
21
%
11.6
51.4
33.4
3.3
0.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
SShhaarreess rreeggiisstteerreedd
Number
1 189 373
% of shares issued
0.0
45 447 811
182 418 473
144 786 290
149 728 515
178 206 417
253 068 282
134 680 829
0
0
152 567 310
553 962 520
1 796 055 8202
1.3
5.2
4.1
4.2
5.1
7.2
3.8
0.0
0.0
4.3
15.7
Total shares registered
Shares not registered3
49.0
110000..00
TToottaall
11 On 31 December 2022, Chase Nominees Ltd., London, entered as a nominee, was registered with 8.60% of all UBS shares issued. However, according to the provisions of UBS Group AG, voting rights of nominees
are limited to a maximum of 5% of all UBS shares issued. The US securities clearing organization DTC (Cede & Co.), New York, was registered with 7.12% of all UBS shares issued and is not subject to this 5% voting
limit as a securities clearing organization. 22 Of the total shares registered, 264,874,790 shares did not carry voting rights. 33 Shares not entered in the UBS share register as of 31 December 2022.
1 728 579 902
33 552244 663355 772222
186 539
118866 553399
100.0
110000..00
51.0
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Conditional share capital
At year-end 2022, the following conditional share capital was available to UBS Group AG’s BoD.
– A maximum of CHF 38,000,000 represented by up to 380,000,000 fully paid registered shares with a nominal value
of CHF 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 AGM of UBS AG on 14 April 2010. The BoD has not made
use of such allowance.
– A maximum of CHF 12,170,583 represented by 121,705,830 fully paid registered shares with a nominal value of
CHF 0.10 each, to be issued upon exercise of employee options and stock appreciation rights issued to employees and
members of the management and of the BoD of UBS Group AG and its subsidiaries. This conditional capital allowance
was approved by the shareholders at the same EGM in 2014.
› Refer to article 4a of the AoA for more information about the terms and conditions of the issue of shares out of existing
conditional capital. The AoA are available at ubs.com/governance
› Refer to the “Our evolution” section of this report for more information
Conditional capital of UBS Group AG
AAss ooff 3311 DDeecceemmbbeerr 22002222
Employee equity participation plans
Conversion rights / warrants granted in connection with bonds
TToottaall
Authorized share capital
MMaaxxiimmuumm nnuummbbeerr ooff sshhaarreess ttoo
bbee iissssuueedd
121,705,830
Year approved by Extraor-
dinary General Meeting
2014
380,000,000
550011,,770055,,883300
2014
%% ooff sshhaarreess iissssuueedd
3.45
10.78
1144..2233
UBS Group AG had no authorized capital available to issue on 31 December 2022.
Changes in capital
In accordance with International Financial Reporting Standards (IFRS), Group equity attributable to shareholders was
USD 56.9bn as of 31 December 2022 (2021: USD 60.7bn; 2020: USD 59.4bn). The equity of UBS Group AG shareholders
was represented by 3,524,635,722 issued shares as of 31 December 2022 (31 December 2021: 3,702,422,995 shares;
31 December 2020: 3,859,055,395 shares).
› Refer to “Statement of changes in equity” in the “Consolidated financial statements” section of this report for more information
about changes in shareholders’ equity over the last three years
Ownership
Ownership of UBS Group AG shares is widely spread. The tables in this section provide information about the distribution
of UBS Group AG shareholders by category and geographic location. This information relates only to shareholders
registered in the UBS share register and cannot be assumed to be representative of UBS Group AG’s entire investor base
or the actual beneficial ownership. Only shareholders registered in the share register as “shareholders with voting rights”
are entitled to exercise voting rights.
› Refer to “Shareholders’ participation rights” in this section for more information
As of 31 December 2022, 1,531,181,030 UBS Group AG shares were registered in the share register and carried voting
rights, 264,874,790 shares were registered in the share register without voting rights, and 1,728,579,902 shares were
not registered in the UBS share register. All shares were fully paid up and eligible for dividends. There are no preferential
rights for shareholders, and no other classes of shares have been issued by UBS Group AG.
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168
Shareholders, legal entities and nominees: type and geographical distribution
AAss ooff 3311 DDeecceemmbbeerr 22002222
Individual shareholders
Legal entities
Nominees, fiduciaries
Total shares registered
Shares not registered
TToottaall
AAmmeerriiccaass
of which: USA
AAssiiaa PPaacciiffiicc
EEuurrooppee,, MMiiddddllee EEaasstt aanndd AAffrriiccaa
of which: Germany
of which: UK
of which: rest of Europe
of which: Middle East and Africa
SSwwiittzzeerrllaanndd
Total shares registered
Shares not registered
TToottaall
SShhaarreehhoollddeerrss rreeggiisstteerreedd
Number
182 738
3 646
155
186 539
%
98.0
1.9
0.1
100.0
118866 553399
110000..00
IInnddiivviidduuaall sshhaarreehhoollddeerrss
LLeeggaall eennttiittiieess
NNoommiinneeeess
TToottaall
Number
11 771100
1 235
55 000088
1122 006688
3 821
4 563
3 415
269
116633 995522
%
00..99
0.7
22..77
66..55
2.0
2.4
1.8
0.1
8877..99
Number
9933
52
9933
224433
30
8
201
4
33 221177
%
00..11
0.0
00..00
00..11
0.0
0.0
0.0
0.0
11..77
Number
7788
75
99
4400
3
7
29
1
2288
%
00..00
0.0
00..00
00..00
0.0
0.0
0.0
0.0
00..00
Number
11 888811
1 362
55 111100
1122 335511
3 854
4 578
3 645
274
116677 119977
%
11..00
0.7
22..77
66..66
2.1
2.5
2.0
0.1
8899..66
118822 773388
9988..00
33 664466
11..99
115555
00..11
118866 553399
110000..00
At year-end 2022, UBS owned 416,909,010 UBS Group AG registered shares, which corresponded to 11.83% of the
total share capital of UBS Group AG. At the same time, UBS had acquisition positions relating to 440,347,367 voting
rights of UBS Group AG and disposal positions relating to 182,025,794 such rights, corresponding to 12.49% and 5.16%
of the total voting rights of UBS Group AG, respectively. Of the disposal positions, 177,610,490 related to voting rights
on shares deliverable in respect of employee awards. The calculation methodology for the acquisition and disposal
positions is based on the Ordinance of the Swiss Financial Market Supervisory Authority on Financial Market
Infrastructures and Market Conduct in Securities and Derivatives Trading, which states that all future potential share
delivery obligations, irrespective of the contingent nature of the delivery, must be considered.
Employee share ownership
Employee share ownership is encouraged and made possible in a variety of ways. Our Equity Plus Plan is a voluntary plan
that provides eligible employees with the opportunity to purchase UBS Group AG shares at market value and receive, at
no additional cost, one notional UBS Group AG share for every three shares purchased. Additional shares vest after a
maximum of three years, provided the employee remains employed by UBS and has retained the purchased shares
throughout the holding period. The Equity Ownership Plan (the EOP) is a mandatory deferral plan for all employees
(except GEB members) with regulatory-driven deferral requirements or total compensation greater than
USD / CHF 300,000. EOP recipients receive a portion of their deferred performance award in notional shares (or notional
funds for employees in Investment Areas within Asset Management). GEB members receive the equity-based Long-Term
Incentive Plan (the LTIP) instead of the EOP. Both the EOP and LTIP include employment conditions and malus conditions
that allow the firm to reduce or fully forfeit unvested deferred awards under certain circumstances, pursuant to
performance and harmful acts provisions. In addition, forfeiture is triggered in cases where employment has been
terminated for cause. Underlining our emphasis on sustainable performance and risk management, and our focus on
achieving growth ambitions, LTIP awards will only vest if predetermined performance conditions are met.
On 31 December 2022, UBS employees held at least 7.9% of UBS shares outstanding (including approximately 5.05%
in unvested deferred notional shares from our compensation programs). These figures are based on known shareholding
information from employee participation plans, personal holdings with UBS and selected individual retirement plans. At
the end of 2022, at least 25.5% of all employees held UBS shares through the firm’s employee share participation plans.
› Refer to the “Compensation” section of this report for more information
Trading restrictions in UBS shares
UBS employees with regular access to unpublished price-sensitive information about the firm are subject to specific
restrictions in respect to UBS financial instruments, including, but not limited to, pre-clearance requirements and regular
blackout periods. Such UBS employees are not permitted to trade UBS financial instruments in the period starting from
the close of business in New York on the seventh business day of the final month of the financial quarter of UBS Group
AG and ending on the day of the publication of the quarterly financial results.
Shares and participation certificates
UBS Group AG has a single class of shares, which are registered shares in the form of uncertificated securities (in the
sense of the Swiss Code of Obligations) and intermediary-held securities (in the sense of the Swiss Federal Act on
Intermediated Securities). Each registered share has a nominal value of CHF 0.10 and carries one vote, subject to the
restrictions set out under “Transferability, voting rights and nominee registration” below.
We have no participation certificates outstanding.
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Shareholders, legal entities and nominees: type and geographical distribution (continued)
AAss ooff 3311 DDeecceemmbbeerr 22002222
Individual shareholders
Legal entities
Nominees, fiduciaries
Total shares registered
Shares not registered
TToottaall
AAmmeerriiccaass
of which: USA
AAssiiaa PPaacciiffiicc
EEuurrooppee,, MMiiddddllee EEaasstt aanndd AAffrriiccaa
of which: Germany
of which: UK
of which: rest of Europe
of which: Middle East and Africa
SSwwiittzzeerrllaanndd
Total shares registered
Shares not registered
TToottaall
SShhaarreess rreeggiisstteerreedd
Number
384 263 314
490 864 772
920 927 734
1 796 055 820
1 728 579 902
33 552244 663355 772222
TToottaall
Number of shares
337744 003355 001133
364 929 358
3399 998822 333300
667711 993333 994455
24 805 357
536 689 325
70 416 464
40 022 799
771100 110044 553322
1 796 055 820
1 728 579 902
33 552244 663355 772222
%
10.9
13.9
26.1
51.0
49.0
110000..00
%
1100..66
10.4
11..11
1199..11
0.7
15.2
2.0
1.1
2200..11
51.0
49.0
110000..00
LLeeggaall eennttiittiieess
Number of shares
2299 116666 003355
21 746 373
1122 990088 554499
7722 445555 339977
1 841 712
280 984
31 497 076
38 835 625
337766 333344 779911
490 864 772
0
449900 886644 777722
%
00..88
0.6
00..44
22..11
0.1
0.0
0.9
1.1
1100..77
13.9
1133..99
NNoommiinneeeess
Number of shares
334422 444411 881155
342 247 810
77 224444 441199
555577 332244 226699
11 597 965
517 282 579
28 310 742
132 983
1133 991177 223311
920 927 734
0
992200 992277 773344
%
99..77
9.7
00..22
1155..88
0.4
14.7
0.8
0.0
00..44
26.1
2266..11
IInnddiivviidduuaall sshhaarreehhoollddeerrss
Number of shares
22 442277 116633
935 175
1199 882299 336622
4422 115544 227799
11 365 680
19 125 762
10 608 646
1 054 191
331199 885522 551100
384 263 314
0
338844 226633 331144
%
00..11
0.0
00..66
11..22
0.3
0.5
0.3
0.0
99..11
10.9
1100..99
Our shares are listed on the NYSE as global registered shares. As such, they can be traded and transferred across applicable
borders, without the need for conversion, with identical shares traded on different stock exchanges in different currencies.
› Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information
Distributions to shareholders
The decision to pay a dividend and the amount of any dividend depend on a variety of factors, including our profits, cash
flow generation and capital ratios.
At the 2023 AGM, the BoD is proposing to shareholders for approval a dividend of USD 0.55 per share for the 2022
financial year. Shareholders whose shares are held through SIX SIS AG will receive dividends in Swiss francs, based on a
public exchange rate on the day prior to the ex-dividend date. Shareholders holding shares through The Depository Trust
Company in New York and Computershare will be paid dividends in US dollars.
In compliance with Swiss tax law, 50% of the dividend will be paid out of retained earnings and the balance will be paid
out of the capital contribution reserve. Dividends paid out of capital contribution reserves are not subject to Swiss
withholding tax. The portion of the dividend paid out of retained earnings will be subject to a 35% Swiss withholding
tax. For US federal income tax purposes, we expect that the dividend will be paid out of current or accumulated earnings
and profits.
Provided that the proposed dividend distribution out of retained earnings and out of the capital contribution reserve will
be approved at the AGM on 5 April 2023, the payment of USD 0.55 per share will be made on 14 April 2023 to holders
of shares on the record date 13 April 2023. The shares will be traded ex-dividend as of 12 April 2023 and, accordingly,
the last day on which the shares may be traded with entitlement to receive the dividend will be 11 April 2023.
In February 2022, the BoD announced a new two-year share buyback program. At the 2022 AGM, the shareholders
authorized the BoD to buy back shares for cancellation purposes in an aggregate value of up to USD 6bn until the 2024
AGM. Any shares bought back under the program are intended to be canceled by way of capital reduction, which will
be subject to shareholder approval at one or several subsequent AGMs, and the acquisition and holding of such shares
are not subject to the 10% threshold for UBS Group AG’s own shares within the meaning of Art. 659 para. 1 of the
Swiss Code of Obligations. The 2021 share repurchase program was concluded on 29 March 2022 with a total of
240,335,273 shares repurchased, at an overall purchase price of CHF 3.81bn. A total of 177,787,273 shares purchased
up to 18 February 2022 were canceled in June 2022 upon approval at the 2022 AGM of UBS Group AG. The remaining
62,548,000 shares, repurchased between 21 February 2022 and 29 March 2022, are expected to be canceled by means
of a capital reduction, to be proposed for shareholder approval at the 2023 AGM.
Looking ahead, we intend to commence a new, 2023 share repurchase program of up to USD 6bn over two years and
expect to execute more than USD 5bn of share repurchases under both the existing, 2022 repurchase program and the
new program in 2023.
› Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information about
the share repurchase programs
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Transferability, voting rights and nominee registration
We do not apply any restrictions or limitations on the transferability of shares. Voting rights may be exercised without
any restrictions by shareholders entered into the share register if they expressly render a declaration of beneficial
ownership according to the provisions of the AoA.
We have special provisions for the registration of nominees. Nominees are entered in the share register with voting rights
up to a total of 5% of all issued UBS Group AG shares if they agree to disclose, upon our request, beneficial owners
holding 0.3% or more of all issued UBS Group AG shares. An exception to the 5% voting limit rule is in place for securities
clearing organizations, such as The Depository Trust Company in New York.
› Refer to “Shareholders’ participation rights” in this section for more information
Convertible bonds and options
As of 31 December 2022, there were no contingent capital securities or convertible bonds outstanding requiring the
issuance of new shares.
› Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information about our outstanding
capital instruments
As of 31 December 2022, there were no employee options and stock appreciation rights outstanding. Option-based
compensation plans are sourced by issuing new shares out of conditional capital. As of 31 December 2022, 121,705,830
unissued UBS Group AG shares in conditional share capital were available for the issuance of new shares for this purpose.
› Refer to “Conditional share capital” in this section for more information
› Refer to “Note 27 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for
more information about outstanding options and stock appreciation rights
Shareholders’ participation rights
We are committed to shareholder participation in decision-making processes. Our online voting platform offers registered
shareholders a convenient log-in and online voting process. Registered shareholders are sent personal invitations to the
general meetings. Together with the invitation materials, they receive a personal one-time password and a QR code to
easily log in to the online voting platform, where they can enter their voting instructions or order an admission card for
the general meeting.
Shareholders who choose not to receive the comprehensive invitation materials are informed of upcoming general
meetings by a short letter containing a personal one-time password, a QR code for online voting and a reference to
ubs.com/agm, where all information for the upcoming meeting is available.
General meetings offer shareholders the opportunity to raise questions for the BoD, GEB and internal and external
auditors. During the pandemic, when the general meetings 2020–2022 had to be held without the physical attendance
of shareholders, we also offered all shareholders the opportunity to contact us with questions, which were answered in
writing or during the general meeting.
Voting rights, restrictions and representation
We place no restrictions on share ownership and voting rights. However, pursuant to general principles formulated by
the BoD, nominee companies, which normally represent a large number of individual shareholders and may hold an
unlimited number of shares, have voting rights limited to a maximum of 5% of all issued UBS Group AG shares. This is
to avoid large shareholders being entered in UBS’s share register via nominee companies so as to exercise influence
without directly registering their shares with UBS. Securities clearing organizations, such as The Depository Trust
Company in New York, are not subject to this 5% voting limit.
Shareholders can exercise voting rights conferred by shares only if they are registered in our share register with voting
rights. To register, shareholders must confirm that they have acquired UBS Group AG shares in their own name and for
their own account. Nominee companies are required to sign an agreement confirming their willingness to disclose, upon
our request, individual beneficial owners holding more than 0.3% of all issued UBS Group AG shares.
All shareholders registered with voting rights are entitled to participate in general meetings. If they do not wish to attend
in person, they may issue instructions to support, reject or abstain for each individual item on the meeting agenda, either
by giving instructions to an independent proxy in accordance with article 14 of the AoA or by appointing another
registered shareholder of their choice to vote on their behalf. Alternatively, registered shareholders may issue their voting
instructions to the independent proxy electronically through our online voting platform. Nominee companies normally
submit the proxy material to the beneficial owners and forward the collected votes to the independent proxy.
› Refer to article 14 of the AoA, available at ubs.com/governance, for more information about the issuing of instructions to
independent voting right representatives
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Statutory quorums
Motions are decided at a general meeting by an absolute majority of the votes cast, 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, authorizing contingent capital or a capital band 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.
Votes and elections are generally conducted electronically to ascertain the exact number of votes cast. Voting by a show
of hands is possible if a clear majority is predictable. Shareholders representing at least 3% of the votes represented may
request that a vote or election be carried out electronically or by written ballot. To allow shareholders to clearly express
their views on all individual topics, each agenda item is separately put to a vote and BoD members are elected on a
person-by-person basis.
Convocation of general meetings of shareholders
The AGM must be held within six months of the close of the financial year (i.e., 31 December). In 2023, the AGM will
take place on 5 April.
Extraordinary general meetings (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.
A personal invitation, including a detailed agenda, is made available to every registered shareholder at least 20 days
ahead of each scheduled general meeting. The items on the agenda are also published in the Swiss Official Gazette of
Commerce, as well as at ubs.com/agm.
Placing of items on the agenda
Pursuant to our AoA, shareholders individually or jointly representing shares with an aggregate minimum nominal value
of CHF 62,500 may submit proposals for matters to be placed on the agenda for consideration at the next general
meeting of shareholders.
At the beginning of January, the invitation to submit such proposals is published in the Swiss Official Gazette of
Commerce and at ubs.com/agm. Requests for items to be placed on the agenda must include the actual motions to be
put forward, together with a short explanation. Such requests must be submitted to the BoD at least 50 days prior to the
general meeting of shareholders, including a statement from the depository bank confirming the number of shares held
by the requesting shareholder(s) and that these shares are blocked from sale until the end of the general meeting of
shareholders. The BoD formulates opinions on the proposals, which are published together with the motions.
Registrations in the share register
The share register of UBS Group AG, where around 185,000 shareholders are directly registered, is an internal, non-
public register subject to statutory confidentiality, secrecy, privacy and data protection regulations protecting registered
shareholders. In general, third parties and shareholders have no inspection rights with regard to data related to other
shareholders. Disclosure of such data is permitted only in specific and limited instances. In line with the Swiss Federal Act
on Data Protection, the disclosure of personal data as defined thereunder is only allowed with the consent of the
registered shareholder and in cases where there is an overriding private or public interest or if explicitly provided for by
Swiss law. The Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives
Trading contains specific reporting duties, such as in relation to significant shareholders (refer to “Significant
shareholders” in this section for more information). Disclosure may also be required or requested by a court of a
competent jurisdiction, by any regulatory body that regulates the conduct of UBS Group AG or by other statutory
provisions.
The general rules for entry into our Swiss share register with voting rights are described in article 5 of our AoA. The same
rules apply to our US transfer agent that operates the US share register for all UBS Group AG shares in a custodian
account in the US, where some 255,000 US shareholders are indirectly registered via nominee companies. In order to
determine the voting rights of each shareholder, our share register generally closes two business days prior to a general
meeting. Our independent proxy agent processes voting instructions from shareholders as long as technically possible,
generally also until two business days before a general meeting. Such technical closure of our share register facilitates
the determination of the actual voting rights of every shareholder that issued a voting instruction. Irrespective of this
technical closure, shares that are registered in our share register are never immobilized and are freely tradable at any
time, irrespective of any issued voting instructions.
› Refer to article 5 of our AoA, available at ubs.com/governance, for more information about the general rules for entry into our
Swiss share register
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Board of Directors
The BoD of UBS Group AG, led by the Chairman, consists of between 6 and 12 members, as per our AoA.
The BoD decides on the strategy of the Group, upon recommendation by the Group Chief Executive Officer (the Group
CEO), and is responsible for the overall direction, supervision and control of the Group and its management. It is also
responsible for supervising compliance with applicable laws, rules and regulations. The BoD exercises oversight over UBS
Group AG and its subsidiaries, and is responsible for establishing a clear Group governance framework to provide
effective steering and supervision of the Group, taking into account the material risks to which UBS Group AG and its
subsidiaries are exposed. The BoD has ultimate responsibility for the success of the Group and for delivering sustainable
shareholder value within a framework of prudent and effective controls. It approves all financial statements and appoints
and removes all GEB members.
The BoD of UBS AG, led by the Chairman, decides on the strategy of UBS AG upon recommendation by the President of
its Executive Board 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
At the AGM on 6 April 2022, Jeremy Anderson, Claudia Böckstiegel, William C. Dudley, Patrick Firmenich, Fred Hu, Mark
Hughes, Nathalie Rachou, Julie G. Richardson, Dieter Wemmer and Jeanette Wong were re-elected as members of the
BoD. The Chairman, Axel A. Weber, and Reto Francioni did not stand for re-election; the biographies of Mr. Weber and
Mr. Francioni can be found on pages 194 and 197 of the UBS Group AG Annual Report 2021, available under “Annual
reporting” at ubs.com/investors. Colm Kelleher and Lukas Gähwiler were elected for their first terms, as the new
Chairman and a new Board member, respectively. At that same AGM, Julie G. Richardson, Dieter Wemmer and Jeanette
Wong were re-elected as members of the Compensation Committee. ADB Altorfer Duss & Beilstein AG was re-elected
as independent proxy agent. Following their election, the BoD appointed Lukas Gähwiler as Vice Chairman and Jeremy
Anderson as Senior Independent Director of UBS Group AG.
Article 31 of our AoA limits the number of mandates that members of the BoD may hold outside UBS Group to four
mandates in listed companies and five additional mandates in non-listed companies. Mandates in companies that are
controlled by us or that control us are not subject to this limitation. In addition, members of the BoD may hold no more
than 10 mandates at UBS’s request and 10 mandates in associations, charitable organizations, foundations, trusts, and
employee welfare foundations. As of 31 December 2022, no member of the BoD reached the thresholds described in
article 31 of our AoA.
The following biographies provide information about the BoD members who were in office after the 2022 AGM and the
Group Company Secretary. In addition to information on mandates, the biographies include information on memberships
or other activities or functions, as required by the SIX Swiss Exchange Corporate Governance Directive.
No member of the BoD currently carries out or has carried out over the past three years operational management tasks
within the Group; therefore, all members of the Board are non-executive members.
All members of UBS Group AG’s BoD are also members of UBS AG’s BoD, and committee membership is the same for
both entities. The Senior Independent Director function relates only to UBS Group AG.
In 2022, UBS AG’s BoD had three permanent committees: the Audit Committee, the Compensation Committee and the
Risk Committee. In addition to these, UBS Group AG also had the Corporate Culture and Responsibility Committee and
the Governance and Nominating Committee as permanent committees.
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Colm Kelleher
Chairman of the Board of Directors and non-executive member of
the Board since 2022
– Chairperson of the Corporate Culture and Responsibility Committee
Education
– Master’s degree, modern history, University of Oxford
– Fellow of the Institute of Chartered Accountants in England and
since 2022
Wales
– Chairperson of the Governance and Nominating Committee since
2022
Listed company boards
– Member of the Board of Norfolk Southern Corporation (chair of the
Nationality: Irish | Year of birth: 1957
risk and finance committee)
Colm Kelleher was elected Chairman of UBS in April 2022. 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 geographic regions and major
business areas in which UBS operates.
Professional experience
2016 – 2019
2011 – 2016
2013 – 2015
2010 – 2012
2007 – 2009
2006 – 2007
2004 – 2006
1989 – 2004
President, Morgan Stanley, responsible for Institutional
Securities and Wealth Management
CEO of Morgan Stanley International, Morgan Stanley
President, Institutional Securities, Morgan Stanley
Co-President, Institutional Securities, Morgan Stanley
CFO and Co-Head Corporate Strategy, Morgan Stanley
Head Global Capital Markets, Morgan Stanley
Co-Head Fixed Income, Europe, Morgan Stanley
Various roles, Morgan Stanley
Other activities and functions
– Member of the Board of Directors of the Bretton Woods Committee
– Member of the Board of the Swiss Finance Council
– Member of the Board of Americans for Oxford
– Member of the Oxford Chancellor’s Court of Benefactors
– Member of the Advisory Council of the British Museum
– Member of the International Advisory Council of the China Securities
Regulatory Commission
– Member of the European Financial Services Round Table
– Member of the European Banking Group
– Member of the International Monetary Conference
Key competencies
– Banking (wealth management, asset management, personal and
corporate banking) and insurance
– Investment banking, capital markets
– Finance, audit, accounting
– Risk management, compliance and legal
Leadership experience
– CEO, Chairman
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Lukas Gähwiler
Jeremy Anderson
Vice Chairman and non-executive member of the Board since 2022
Nationality: Swiss | Year of birth: 1965
Lukas Gähwiler brings a wealth of industry experience and an in-depth
understanding of UBS to the Board. He served as Chairman of the Board
of UBS Switzerland AG for five years and was a member of the Group
Executive Board of UBS and President UBS Switzerland from 2010 to
2016, 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.
Professional experience
Senior Independent Director since 2020 and non-executive
member of the Board since 2018
– Member of the Governance and Nominating Committee since 2019
– Chairperson of the Audit Committee since 2018
Nationality: British | Year of birth: 1958
Jeremy Anderson is a financial services veteran, with more than 30 years’
experience working in the banking and insurance sector in an advisory
capacity, covering a broad range of topics, including strategy, audit and
risk management, technology-enabled transformation, mergers, and bank
restructuring. Before retiring from KPMG in 2017, he was its Chairman of
Global Financial Services. Mr. Anderson is also an IT expert, having started
out as a software developer in the early 1980s, before working in IT
consulting and developing a broad knowledge of systems integration and
IT outsourcing services, as well as software development. He cemented his
reputation as a tech specialist by becoming a founding sponsor of KPMG’s
Global Fintech Network in 2014.
Chairman of the Board of Directors of UBS Switzerland AG
2017 – 2022
2010 – 2016 Member of the Group Executive Board, UBS and President
Professional experience
2003 – 2010
2002 – 2003
1998 – 2001
1990 – 1998
1981 – 1986
UBS Switzerland
Chief Credit Officer, Global Private and Corporate
Banking, Credit Suisse
Head Credit Risk Management, Corporate Clients
Switzerland, Credit Suisse
Chief of Staff to CEO, Private and Corporate Clients,
Credit Suisse
Various senior front office roles in Corporate Clients in
Switzerland and North America, Credit Suisse
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 Swiss Bankers Association
– 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 economiesuisse
– Chairman of the Foundation Board of the UBS Pension Fund
– 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
2008 – 2011
2010 – 2017
Chairman of Global Financial Services, KPMG International
Head of Clients and Markets KPMG Europe, KPMG
International
Head of Financial Services KPMG Europe, KPMG
International
Head of Financial Services KPMG UK, KPMG International
2004 – 2006
2002 – 2004 Member of the Group Management Board and Head of
2006 – 2011
1985 – 2002
1980 – 1985
UK operations, Atos Origin SA
KPMG consulting UK, KPMG
Software developer, Triad Computing Systems
Education
– Bachelor’s degree, economics, University College London
Listed company boards
– Member of the Board of Prudential plc
Other activities and functions
– Trustee of the UK’s Productivity Leadership Group
– Trustee of The Kingham Hill Trust
– Trustee of St. Helen’s Bishopsgate
Key competencies
– Banking (wealth management, asset management, personal and
corporate banking) and insurance
– Finance, audit, accounting
– Risk management, compliance and legal
– Technology, cybersecurity
Leadership experience
– Executive board leadership
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Claudia Böckstiegel
William C. Dudley
Non-executive member of the Board since 2021
– Member of the Corporate Culture and Responsibility Committee
Non-executive member of the Board since 2019
– Member of the Corporate Culture and Responsibility Committee
since 2022
Nationality: Swiss and German | Year of birth: 1964
since 2019
– Member of the Risk Committee since 2019
Nationality: American (US) | Year of birth: 1953
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 management
positions in the legal sector in Switzerland. Ms. Böckstiegel brings a wealth
of know-how in a highly regulated sector. Her responsibilities at Roche
Holding AG include a broad range of additional topics, such as safety,
health and environment, patents, audit and risk advisory, compliance, and
sustainability.
Professional experience
2020 – date
2016 – 2020
2010 – 2016
2005 – 2010
2001 – 2005
1995 – 2001
1992 – 1995
General Counsel and member of the Enlarged Executive
Committee, Roche Holding AG
Head of Legal Diagnostics, F. Hoffmann-La Roche Ltd.,
Basel, Switzerland, Roche Group
Head Legal Business, Roche Diagnostics International Ltd,
Rotkreuz, Switzerland, Roche Group
Head Legal Business, Roche Diagnostics GmbH,
Mannheim, Germany, Roche Group
Legal Counsel, Roche Diagnostics GmbH,
Mannheim, Germany, Roche Group
Attorney (Partner), Philipp & Littig, Mannheim, Germany
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
Other activities and functions
– None
Key competencies
– Finance, audit, accounting
– Risk management, compliance and legal
– Regulatory authority, central bank
– ESG (environmental, social and governance)
Leadership experience
– Executive board leadership
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
2007 – 2009
2006
2002 – 2005
President and CEO, Federal Reserve Bank of New York
Executive Vice President and Head Markets Group,
Federal Reserve Bank of New York
Senior advisor (part-time), Goldman Sachs Group
Partner and Director US Economic Research Group,
Goldman Sachs Group
1996 – 2002 Managing Director and Director US Economic Research
1983 – 1996
Group, Goldman Sachs Group
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 Board of Treliant LLC
Other activities and functions
– 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
– Opinion writer and consultant to Bloomberg Economics, Bloomberg
Key competencies
– Investment banking, capital markets
– Risk management, compliance and legal
– Regulatory authority, central bank
– ESG (environmental, social and governance)
Leadership experience
– CEO, Chairman
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Patrick Firmenich
Fred Hu
Non-executive member of the Board since 2021
– Member of the Audit Committee since 2021
– Member of the Corporate Culture and Responsibility Committee
Non-executive member of the Board since 2018
– Member of the Governance and Nominating Committee since 2020
since 2021
Nationality: Chinese | Year of birth: 1963
Nationality: Swiss | Year of birth: 1962
Patrick Firmenich has been Chairman of the Board of Firmenich
International SA, the world’s largest privately owned fragrances and
flavorings company, since 2016, after leading the company as CEO during
a 12-year tenure. He 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
2014 – 2016
2002 – 2014
2001 – 2002
1997 – 2001
1993 – 1997
1990 – 1993
1988 – 1989
1988
1984 – 1986
Vice Chairman of the Board, Firmenich International SA
CEO, Firmenich SA, Geneva
Corporate Vice President, Special Operations,
Firmenich SA, Geneva
Vice President Fine Fragrance worldwide and Président
Directeur Général, Firmenich & Cie, Paris, and
Firmenich Inc, New York
Vice President Fine Fragrance North America,
Firmenich Inc, New York
Account Manager, Firmenich & Cie, Paris
Analyst, International Investment Banking, Credit Suisse
First Boston
Production administrator, Firmenich SA de CV, Mexico
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
Non-listed company boards
– Chairman of Firmenich International SA
– Member of the Board of Jacobs Holding AG
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. 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 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
2008 – 2010
2004 – 2008
Founder, Chairman and CEO,
Primavera Capital Group, China
Partner and Chairman of Greater China, Goldman Sachs
Partner and Co-Head, Investment Banking, China,
Goldman Sachs
2003 – 2004 Managing Director and Co-Head, Investment Banking,
China, Goldman Sachs
2000 – 2003 Managing Director and Chief Economist and Strategist,
1996 – date
1996 – date
Greater China, Goldman Sachs
Co-Director, the National Center for Economic Research
Adjunct Professor, Economics, Tsinghua University
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
Non-listed company boards
– Chairman of Primavera Capital Ltd
Other activities and functions
– Trustee of the China Medical Board
– Governor of the Chinese International School in Hong Kong SAR
– Co-Chairman of the Nature Conservancy Asia Pacific Council
– Member of the Board of Trustees, the Institute for Advanced Study
– Director and member of the Executive Committee of China Venture
Capital and Private Equity Association Ltd.
Other activities and functions
– Member of the Board of INSEAD and INSEAD World Foundation
– 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
– ESG (environmental, social and governance)
Key competencies
– Investment banking, capital markets
– Risk management, compliance and legal
– Technology, cybersecurity
– Regulatory authority, central bank
Leadership experience
– CEO, Chairman
Leadership experience
– CEO, Chairman
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Mark Hughes
Nathalie Rachou
Non-executive member of the Board since 2020
– Chairperson of the Risk Committee since 2020
– Member of the Corporate Culture and Responsibility Committee
Non-executive member of the Board since 2020
– Member of the Governance and Nominating Committee since 2022
– Member of the Risk Committee since 2020
since 2020
Nationality: Canadian, British and American (US) | Year of birth: 1958
Mark Hughes is a highly experienced professional in the financial services
sector, having spent more than 35 years working for RBC (the Royal Bank
of Canada) in Canada, the US and the UK. In his final role as Group Chief
Risk Officer of RBC, he was responsible for the strategic management of
risk on an enterprise-wide basis and oversaw all risk functions. During his
career, Mr. Hughes has also held senior management positions in the front
office and key operational roles. Currently, he is a visiting lecturer at Leeds
University 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
2013
2008 – 2013
2001 – 2008
1999 – 2001
1998 – 1999
1997 – 1998
1982 – 1996
Group Chief Risk Officer and member Group Executive
Committee, RBC
Deputy Chief Risk Officer, RBC
COO, RBC Capital Markets, RBC
Head of Global Credit, RBC
Head of Debt Products, RBC
Senior Vice President and General Manager USA, RBC
Senior Vice President Financial Services, RBC
Various positions, RBC
Education
– Bachelor of Laws (LL.B.), University of Leeds
– MBA, finance, University of Manchester
Other activities and functions
– Chair of the Board of Directors of the Global Risk Institute
– Visiting lecturer at the University of Leeds
– 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, cybersecurity
Leadership experience
– Executive board leadership
Nationality: French | Year of birth: 1957
Nathalie Rachou is a seasoned expert in financial services, having held a
number of banking positions, such as CEO of Prime Brokerage and head
of a business line in Capital Markets at Crédit Agricole Indosuez in the UK
and in France. In 1999, she founded a London-based asset management
company that merged with a French asset manager and continued as a
senior adviser until 2020. Alongside these roles, Ms. Rachou brings
extensive experience from serving as a board member of Société Générale
for 12 years and is currently on the boards of two other listed companies,
including the pan-European bourse, Euronext N.V.
Professional experience
2015 – 2020
1999 – 2014
1996 – 1999
1991 – 1996
1986 – 1991
1983 – 1986
1978 – 1982
Senior Advisor, Clartan Associés
(formerly Rouvier Associés), France
Founding partner and CEO,
Topiary Finance Ltd., UK
Head of Global Foreign Exchange and Currency Options,
Crédit Agricole Indosuez (formerly Banque Indosuez), UK
Corporate Secretary and Secretary to the
Board of Directors, Crédit Agricole Indosuez, France
COO, Carr Futures, France (owned by Banque Indosuez),
Crédit Agricole Indosuez, France
Head of Asset and Liability Management & Market Risks,
Crédit Agricole Indosuez, France
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 Veolia Environnement SA
(chair of the audit committee)
Non-listed company boards
– Member of the Board of the African Financial Institutions Investment
Platform
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
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Julie G. Richardson
Dieter Wemmer
Non-executive member of the Board since 2017
– Chairperson of the Compensation Committee since 2019
– Member of the Risk Committee since 2017
Non-executive member of the Board since 2016
– Member of the Audit Committee since 2019
– Member of the Compensation Committee since 2018
Nationality: American (US) | Year of birth: 1963
Nationality: Swiss and German | Year of birth: 1957
Julie G. Richardson spent more than 25 years on Wall Street as a senior
investment banker 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
of the New York office of Providence Equity Partners. Throughout her
career, Ms. Richardson has spent significant time with both incumbent
and new technology companies, including being a board member of a
digital knowledge management company and a leading cloud monitoring
firm.
Professional experience
2012 – 2014
2003 – 2012
1998 – 2003
1986 – 1998
Senior advisor, Providence Equity Partners, New York
Partner and Head of the New York office,
Providence Equity Partners, New York
Vice Chairman of the Investment Banking division of
JPMorgan Chase & Co. and Head of its Global
Telecommunications, Media and Technology group
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)
– 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.
Key competencies
– Investment banking, capital markets
– Risk management, compliance and legal
– Human resources management, including compensation
– Technology, cybersecurity
Dieter Wemmer began his highly successful career in the insurance sector with
the Zurich Group in 1986, retiring in 2017 as CFO of Allianz. As a long-serving
CFO of two large multi-national companies in the financial services sector, he
has deep experience across a broad range of highly relevant topics. Mr.
Wemmer brings to the BoD knowledge covering accounting, finance and
audit, including capital markets, investments and risk management, as well as
asset management. His know-how includes hands-on experience in mergers
and acquisitions, and management of large organizations with a focus on
strategy.
Professional experience
2013 – 2017
2012 – 2013
2007 – 2011
2010 – 2011
2004 – 2007
2003 – 2004
1999 – 2003
1997 – 1999
CFO, Allianz SE
Member of the Board of Management, responsible for the
insurance business in France, Benelux, Italy, Greece and
Turkey and for the “Global Property & Casualty” Center of
Competence, Allianz SE
CFO, Zurich Insurance Group
Regional Chairman of Europe, Zurich Insurance Group
CEO of the Europe General Insurance business and
member of Zurich’s Group Executive Committee, Zurich
Insurance Group
COO of Europe General Insurance, Zurich Insurance Group
Head of Mergers and Acquisitions, Zurich Insurance Group
Head of Financial Controlling, Zurich Insurance Group
Education
– Master’s degree and doctorate, mathematics, University of Cologne
Listed company boards
– Member of the Board of Ørsted A/S
(chair of the audit and risk committee)
Non-listed company boards
– Chairman of Marco Capital Holdings Limited, Malta and subsidiaries
Other activities and functions
– Member of the Berlin Center of Corporate Governance
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
– Executive board leadership
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Markus Baumann
Group Company Secretary since 2017
Nationality: Swiss | Year of birth: 1963
Markus Baumann joined UBS in 1979 as a banking apprentice
and has now been with the firm for more than 40 years. Earlier
in his career, he worked in Japan for four years, as Corporate
Planning Officer and assistant to the CEO. He then worked as
COO EMEA for UBS Asset Management and has since held a
broad range of leadership roles across the Group in Switzerland,
the US and Japan, including COO of Group Internal Audit from
2006 to 2015.
Professional experience
2017 – date
Group Company Secretary of UBS Group AG
and Company Secretary of UBS AG
Chief of Staff to the Chairman of the Board of
Directors, UBS
COO, Group Internal Audit, UBS
Head Global Reporting & Controlling,
Global Asset Management, UBS
Head Management Support CEO EMEA,
Global Asset Management, UBS
COO EMEA, Global Asset Management, UBS
Various positions, Union Bank of Switzerland
2015 – 2016
2006 – 2015
2005 – 2006
2002 – 2004
1998 – 2002
1979 – 1997
Education
– Swiss Federal Diploma as a Business Analyst
– MBA, INSEAD Fontainebleau
Jeanette Wong
Non-executive member of the Board since 2019
– Member of the Compensation Committee since 2020
– Member of the Audit Committee since 2019
Nationality: Singaporean | Year of birth: 1960
Jeanette Wong has spent more than 30 years working 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. Prior to that, she held
the position of CFO at DBS Bank. During a 16-year career with JPMorgan
Chase, Ms. Wong helped build up its Asia 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
2003 – 2008
2003
1997 – 2002
1986 – 1997
Group Executive institutional banking business,
DBS Bank, Singapore
CFO, DBS Bank, Singapore
Chief Administration Officer, DBS Bank, Singapore
Country Manager Singapore, JPMorgan Chase, Singapore
Various roles in Global Markets and Emerging Markets
Sales and Trading business, Asia, JPMorgan Chase,
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 Risk Committee of GIC Pte Ltd
– Member of the Board of Jurong Town Corporation
– Member of the Board of PSA International
Other activities and functions
– 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
– ESG (environmental, social and governance)
Leadership experience
– Executive board leadership
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Elections and terms of office
Shareholders annually elect each member of the BoD individually, as well as the Chairman and the members of the
Compensation Committee, based on proposals from the BoD.
As set out in the Organization Regulations, BoD members are normally expected to serve for at least three years. BoD
members are limited to serving for a maximum of 10 consecutive terms of office; in exceptional circumstances, the BoD
may extend that limit.
› Refer to “Skills, expertise and training of the Board of Directors” in this section for more information
Organizational principles and structure
Following each AGM, the BoD meets to appoint one or more Vice Chairmen, a Senior Independent Director, the BoD
committee members (other than the Compensation Committee members, who are elected by the shareholders) and the
respective committee Chairpersons. At the same meeting, the BoD appoints the Group Company Secretary, who,
pursuant to the Organization Regulations, acts as secretary to the BoD and its committees.
Pursuant to the AoA and the Organization Regulations, the BoD meets as often as business requires, but it must meet at
least six times a year. During the height of the COVID-19 pandemic, BoD meetings were mainly organized as video calls,
with few exceptions. Based on the experiences during the pandemic, the BoD decided to adopt a split approach for 2022
and going forward. In 2022, half of the meetings were held in person. During 2022, a total of 31 BoD meetings were
held, 15 of which were attended by GEB members. Average participation in the BoD meetings was 98%. In addition to
the BoD meetings attended by GEB members, the Group CEO regularly attended some of the meetings of the BoD
without the participation of other GEB members. The meetings had an average duration of 95 minutes and covered both
UBS Group AG and UBS AG. Additionally, six ad hoc calls were held. The BoD held a two-day strategy workshop, which
included deep dives on each business division and geographical region, and focused on the execution against the strategy
defined in 2021. A separate one-day strategy deep dive was held with a specific focus on the Asia Pacific region.
At the BoD meetings, each committee Chairperson provides the BoD with an update on current activities of his or her
committee and important committee issues.
In 2022, four UBS AG BoD meetings were held with members of the Executive Board in attendance. These standalone
meetings are held regularly to discuss and agree on finance, risk, compliance, operational risk, regulatory and other topics
related to UBS AG.
We also continued with the coordination and exchange of information between UBS Group AG and its significant group
entities. Joint meetings between the BoD of UBS Group AG and the boards of directors of the significant group entities,
as well as between the respective chairs of the risk and audit committees, have been held. As in prior years, an annual
workshop, attended by independent members of the boards of the Group and significant group entities, was held.
Performance assessment
Every third year, an external assessment of the effectiveness of the BoD is conducted. In 2022, this review concluded that
the UBS BoD and committees operate effectively, in line with best practice, and set a high standard in comparison with
leading international peers. The review also confirmed that the BoD agenda covers all important and relevant topics and
that these are addressed professionally and in great depth. It further found that the BoD members are independent,
highly committed and of the highest integrity, and that the Chairman provides effective leadership and direction. The
review emphasized that the cooperation between the BoD and the GEB is based on mutual trust, respect and constructive
dialogue. The mix of expertise in the BoD is broad-based and the quality of BoD members is high. The BoD and GEB have
responded well to the economic environment, including successfully managing the firm through the COVID-19 pandemic
and other significant challenges, while maintaining an appropriate focus on control and regulatory issues. The review
highlighted the successful CEO transition and onboarding, and the well-planned and professionally executed Chairman
succession process. No significant weaknesses were identified in the review; maintaining a balanced agenda that provides
sufficient room for each business performance, strategic review and growth initiatives was the main area recommended
for further focus. In spring 2023, the performance assessment will be conducted in-house with a lengthy questionnaire.
BoD committees
The committees listed below assist the BoD in fulfilling the performance of its responsibilities. These committees and their
charters are described in our Organization Regulations, available at ubs.com/governance. The committees meet as often
as their business requires, but no less than four times a year in the case of the Audit Committee, the Risk Committee and
the Compensation Committee, and no less than twice a year in the case of the Corporate Culture and Responsibility
Committee (the CCRC) and the Governance and Nominating Committee. Topics of common interest or affecting more
than one committee are discussed at joint committee meetings.
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During 2022, a total of eight joint committee meetings were held for UBS Group AG (five joint committee meetings were
held simultaneously for UBS AG). The Audit Committee met four times with the Risk Committee and twice with the
CCRC. The Risk Committee met once with the CCRC and once with the Compensation Committee.
Board of Directors
Members in 2022
Axel A. Weber, Chairman1
Colm Kelleher, Chairman2
Lukas Gähwiler2
Jeremy Anderson
Claudia Böckstiegel
William C. Dudley
Patrick Firmenich
Reto Francioni1
Fred Hu
Mark Hughes
Nathalie Rachou
Julie G. Richardson
Dieter Wemmer
Jeanette Wong
Meeting attendance
without GEB3
Meeting attendance
with GEB
Key responsibilities include:
The Board has ultimate responsibility for the success of the Group and
for delivering sustainable shareholder value within a framework of
prudent and effective controls. It decides on the Group’s strategy and
the necessary financial and human resources upon recommendation of
the Group CEO and sets the Group’s values and standards to ensure
that its obligations to shareholders and other stakeholders are met.
› Refer to the Organization Regulations of UBS Group AG,
available at ubs.com/governance, for more information
2/2
14/14
14/14
16/16
16/16
16/16
16/16
2/2
14/16
16/16
16/16
15/16
15/16
16/16
100%
100%
100%
100%
100%
100%
100%
100%
88%
100%
100%
94%
94%
100%
2/2
100%
13/13
13/13
15/15
15/15
15/15
15/15
100%
100%
100%
100%
100%
100%
2/2
100%
14/15
15/15
15/15
15/15
15/15
15/15
93%
100%
100%
100%
100%
100%
11 Axel A. Weber and Reto Francioni did not stand for re-election at the 2022 AGM; indicated are their attended and total meetings up to the 2022 AGM. 22 Colm Kelleher was elected as Chairman and Lukas Gähwiler
to the Board at the 2022 AGM; indicated are their attended and total meetings after their election. 33 Additionally, six calls took place in 2022.
Audit Committee
Throughout 2022, the Audit Committee consisted of four independent BoD members. 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 2022, all members of the Audit
Committee, in addition to satisfying our independence criteria, satisfied these requirements, in that they did not receive,
directly or indirectly, any consulting, advisory or compensatory fees from any member of the Group other than in their
capacity as a BoD member, did not hold, directly or indirectly, UBS Group AG shares in excess of 5% of the outstanding
capital, and did not serve on the audit committees of more than two other public companies.
During 2022, the Audit Committee held 12 committee meetings, with a participation rate of 100%. The meetings had
an average duration of approximately 135 minutes and covered both UBS Group AG and UBS AG. Additional attendees
included the Group CFO, the Group Controller and Chief Accounting Officer, the Head Group Internal Audit (GIA), and
the external auditors. The Chairman of the BoD, the Vice Chairman and the Group CEO attended most meetings. The
Chairperson and the committee continued to maintain regular contact with core supervisory authorities.
Audit Committee
Members in 2022
Meeting attendance Key responsibilities include:
Jeremy Anderson (Chairperson)
Patrick Firmenich
Dieter Wemmer
Jeanette Wong
12/12
12/12
12/12
12/12
100%
100%
100%
100%
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, and the effectiveness of whistleblowing procedures.
Management is responsible for the preparation, presentation and integrity of the financial
statements, while the external auditors are responsible for auditing financial statements. The Audit
Committee’s responsibility is one of oversight and review.
› Refer to the Organization Regulations of UBS Group AG,
available at ubs.com/governance, for more information
.
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Compensation Committee
In 2022, the Compensation Committee consisted of four independent members before the AGM and three independent
members after the AGM. In addition to the key responsibilities indicated in the same table, the Compensation Committee
reviews the compensation disclosures included in this report.
During 2022, the Compensation Committee held eight meetings, with a participation rate of 100%. The meetings had
an average duration of approximately 70 minutes and covered both UBS Group AG and UBS AG. All meetings were held
in the presence of the Chairman and the Group CEO and most were attended by external advisors. In 2022, the
Chairperson met regularly with core supervisory authorities.
› Refer to “Compensation for the Board of Directors” in the “Compensation” section of this report for more information about the
Compensation Committee’s decision-making procedures
Compensation Committee
Members in 2022
Meeting attendance2 Key responsibilities include:
Julie G. Richardson (Chairperson)
Reto Francioni1
Dieter Wemmer
Jeanette Wong
8/8
2/2
8/8
8/8
100%
100%
100%
100%
The Compensation Committee is responsible for:
(i)
supporting the Board in its duties to set guidelines on compensation and benefits;
(ii) approving the total compensation for the Chairman and the non-independent Board members;
(iii) proposing, upon proposal of the Chairman, financial and non-financial performance targets
and objectives for the Group CEO for approval by the Board and reviewing, upon the proposal
of the Group CEO, the performance framework for the other GEB members;
(iv) proposing, upon proposal of the Chairman, the Group CEO’s performance assessment for
approval by the Board, as well as informing the Board of the performance assessments of
all GEB members, including the Group CEO;
(v) proposing, upon proposal of the Chairman, the total compensation for the Group CEO for
approval by the Board; and
(vi) proposing, upon proposal of the Group CEO, the individual total compensation for the other
GEB members for approval by the Board.
› Refer to the Organization Regulations of UBS Group AG,
available at ubs.com/governance, for more information
11 Reto Francioni did not stand for re-election at the 2022 AGM; indicated are his attended and total meetings up to the 2022 AGM 22 Additionally, the Compensation Committee held one ad hoc call.
Corporate Culture and Responsibility Committee
In 2022, the CCRC consisted of the Chairperson and four independent BoD members. The Group CEO, the Group Chief
Risk Officer, the President Asset Management and GEB Lead for Sustainability and Impact, the Group General Counsel
and the Chief Sustainability Officer are permanent guests of the CCRC. During 2022, six meetings were held, with a
participation rate of 100%. The average duration of each of the meetings was approximately 85 minutes.
Corporate Culture and Responsibility Committee
Members in 2022
Meeting attendance Key responsibilities include:
Axel A. Weber (Chairperson)1
Colm Kelleher (Chairperson)2
Claudia Böckstiegel2
William C. Dudley
Patrick Firmenich
Mark Hughes
Jeanette Wong1
2/2
4/4
4/4
6/6
6/6
6/6
2/2
100%
100%
100%
100%
100%
100%
100%
The CCRC supports the Board in its duties to safeguard and advance the Group’s reputation for
responsible and sustainable conduct. Its function is forward-looking in that it monitors and reviews
societal trends and transformational developments and assesses their potential relevance for the
Group.
In undertaking this assessment, it reviews stakeholder concerns and expectations pertaining to the
societal performance of UBS and to the development of its corporate culture. The CCRC’s function
also encompasses the monitoring of the current state and implementation of the programs and
initiatives within the Group pertaining to corporate culture and corporate responsibility, including
sustainability.
› Refer to the Organization Regulations of UBS Group AG,
available at ubs.com/governance, for more information
11 Axel A. Weber did not stand for re-election and Jeannette Wong stepped down from this committee at the 2022 AGM; indicated are their attended and total meetings up to the 2022 AGM. 22 Colm Kelleher became
Chairman and Claudia Böckstiegel member of this committee; indicated are their attended and total meetings after election.
Governance and Nominating Committee
In 2022, the Governance and Nominating Committee consisted of, in addition to the Chairperson, five independent
members before the AGM and three independent members after the AGM. During 2022, six meetings were held, with
a participation rate of 100%. The average duration of each of the meetings was approximately 60 minutes. The Group
CEO attended meetings as appropriate.
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Governance and Nominating Committee
Members in 2022
Meeting attendance3 Key responsibilities include:
Axel A. Weber (Chairperson)1
Colm Kelleher (Chairperson)2
Jeremy Anderson
William C. Dudley1
Fred Hu
Nathalie Rachou2
Julie G. Richardson1
Dieter Wemmer1
2/2
4/4
6/6
2/2
6/6
4/4
2/2
2/2
100%
100%
100%
100%
100%
100%
100%
100%
The function of the Governance and Nominating Committee is to support the Board in fulfilling its
duty to establish best practices in corporate governance across the Group, including conducting a
Board assessment, establishing and maintaining a process for appointing new Board and GEB
members, as well as for the annual performance assessment of the Board.
› Refer to the Organization Regulations of UBS Group AG,
available at ubs.com/governance, for more information
11 Axel A. Weber did not stand for re-election; William Dudley, Julie G. Richardson and Dieter Wemmer stepped down from this committee at the 2022 AGM; indicated are their attended and total meetings up to the
2022 AGM. 22 Colm Kelleher became Chairman and Nathalie Rachou member of this committee; indicated are their attended and total meetings after election. 33 Additionally, the Governance and Nominating
Committee held one ad hoc call.
Risk Committee
In 2022, the Risk Committee consisted of six independent members before the AGM and four independent members
after the AGM. During 2022, the Risk Committee held 12 committee meetings, with a participation rate of 100%. The
average duration of each of the meetings was approximately 145 minutes, covering both UBS Group AG and UBS AG.
The Chairman of the BoD, the Vice Chairman, the Group CEO, the Group CFO, the Group Chief Risk Officer, the Group
Chief Digital and Information Officer, the Group Treasurer, the Group Chief Compliance and Governance Officer, the
Group General Counsel, the Head GIA, and the external auditors attended the meetings. In 2022, the Chairperson or
the full committee met with core supervisory authorities.
Risk Committee
Members in 2022
Meeting attendance
Key responsibilities include:
Mark Hughes (Chairperson)
William C. Dudley
Reto Francioni1
Fred Hu1
Nathalie Rachou
Julie G. Richardson
12/12
12/12
3/3
3/3
12/12
12/12
100%
100%
100%
100%
100%
100%
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;
(ii) balance sheet, treasury and capital management, including funding,
liquidity and equity attribution.
› Refer to the Organization Regulations of UBS Group AG,
available at ubs.com/governance, for more information
11 Reto Francioni did not stand for re-election and Fred Hu stepped down from this committee at the 2022 AGM; indicated are their attended and total meetings up to the 2022 AGM.
Ad hoc committees
The Special Committee and the Strategy Committee are two ad hoc committees, which have a standing composition and
hold meetings as and when required.
Leading up to the 2022 AGM, the Special Committee was chaired by Jeremy Anderson, with Claudia Böckstiegel, Nathalie
Rachou, Julie G. Richardson and Axel A. Weber as its members; after the AGM, Colm Kelleher and Lukas Gähwiler joined
the Special Committee and Axel A. Weber stepped down from the BoD. Its primary purpose is to oversee activities related
to key litigation and investigation matters, review management’s respective proposals and provide to the BoD
recommendations for decisions. In 2022, the main focus was the French cross-border matter. The Group CEO and the
Group General Counsel are permanent guests of the Special Committee. During 2022, two meetings of the Special
Committee were held, covering both UBS Group AG and UBS AG.
Leading up to the 2022 AGM, the Strategy Committee was chaired by Axel A. Weber, with William C. Dudley, Fred Hu
and Dieter Wemmer as its members; after the AGM, Colm Kelleher replaced Axel A. Weber (who stepped down from
the BoD) as the chair and Julie G. Richardson also joined the Strategy Committee. The primary purpose of this committee
is to support management and the BoD with regard to the assessment of strategic considerations and to prepare decisions
on behalf of the BoD. During 2022, four meetings of the Strategy Committee were held, covering both UBS Group AG
and UBS AG. The Group CEO and other members of the GEB and management participated in these meetings as
required.
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Roles and responsibilities of the Chairman of the Board of Directors
At the 2022 AGM, Axel A. Weber stepped down and Colm Kelleher was elected as the full-time Chairman of the BoD.
The Chairman coordinates tasks within the BoD, calls BoD meetings and sets their agendas. He presides over all general
meetings of shareholders, chairs the Governance and Nominating Committee, as well as the CCRC, and works with the
committee Chairpersons to coordinate the work of all BoD committees. Together with the Group CEO, the Chairman
undertakes responsibility for UBS’s reputation, and is responsible for effective communication with shareholders and
other stakeholders, including government officials, regulators and public organizations. This is in addition to establishing
and maintaining close working relationships with the Group CEO and other GEB members, and providing advice and
support when appropriate.
› Refer to “Employees” in the “How we create value for our stakeholders” section of this report for information about our Pillars,
Principles and Behaviors
In 2022, the respective Chairman in office met regularly with core supervisory authorities of all major locations where
UBS is active. Meetings with important supervisory authorities were scheduled on an ad hoc or needs-driven basis.
Roles and responsibilities of the Vice Chairmen and the Senior Independent Director
The BoD appoints one or more Vice Chairmen and a Senior Independent Director. If the BoD appoints more than one
Vice Chairman, at least one of them must be independent. Both the Vice Chairman and the Senior Independent Director
support the Chairman with regard to his responsibilities and authorities and provide him with advice. In conjunction with
the Chairman and the Governance and Nominating Committee, they facilitate good Group-wide corporate governance,
as well as balanced leadership and control within the Group, the Board and the committees.
Lukas Gähwiler was appointed as Vice Chairman following the 2022 AGM. Jeremy Anderson has been the Senior
Independent Director since 2020. The Vice Chairman is required to lead meetings of the BoD in the temporary absence
of the Chairman. Together with the Governance and Nominating Committee, either one of them is tasked with the
ongoing monitoring and the annual evaluation of the Chairman. The Vice Chairman also represents UBS on behalf of
the Chairman in meetings with internal or external stakeholders. In particular, he represents UBS across a broad range of
associations and industry bodies in Switzerland.
The Senior Independent Director enables and supports communication and the flow of information among the
independent BoD members. At least twice a year, he organizes and leads a meeting of the independent BoD members
without the participation of the Chairman. In 2022 and in early 2023, two independent BoD meetings were held, covering
both UBS Group AG and UBS AG, with an average participation rate of 85% and an average duration of approximately
105 minutes. The Senior Independent Director also relays to the Chairman any issues or concerns raised by the
independent BoD members and acts as a point of contact for shareholders and stakeholders seeking discussions with an
independent BoD member.
Important business connections of independent members of the Board of Directors
As a global financial services provider and a major Swiss bank, we enter into business relationships with many large
companies, including some in which our BoD members have management or independent board responsibilities. The
Governance and Nominating Committee determines in each instance whether the nature of the Group’s business
relationship with such a company might compromise our BoD members’ capacity to express independent judgment.
Our Organization Regulations require three-quarters of the UBS Group AG BoD members and one-third of those at
UBS AG to be independent. For this purpose, independence is determined in accordance with FINMA Circular 2017/1
“Corporate governance – banks” and the NYSE rules.
In 2022, our BoD met the standards of the Organization Regulations for the percentage of directors who are considered
independent under the criteria described above. Axel Weber, who served as Chairman of the Board until the Annual
General Meeting on 6 April 2022, had a full-time contract with UBS Group AG and was not considered independent.
Our Vice Chairman, Lukas Gähwiler, previously had a full-time contract with UBS Switzerland AG and, therefore, is
currently not considered independent according to the regulatory independence rules. No current BoD member has either
an employment contract or a significant business connection to UBS or any of its subsidiaries. Except for the Vice
Chairman, no BoD member currently carries out, or has carried out over the past three years, any operational
management tasks within the Group.
All relationships and transactions with UBS Group AG’s independent BoD members are conducted in the ordinary course
of business and are on the same terms as those prevailing at the time for comparable transactions with non-affiliated
persons. All relationships and transactions with BoD members’ associated companies are conducted at arm’s length.
› Refer to “Note 30 Related parties” in the “Consolidated financial statements” section on of this report for more information
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Checks and balances: Board of Directors and Group Executive Board
We operate under a strict dual board structure, as mandated by Swiss banking law. The separation of responsibilities
between the BoD and the GEB is clearly defined in the Organization Regulations. The BoD decides on the strategy of the
Group, upon recommendations by the Group CEO, and exercises ultimate supervision over management; whereas the
GEB, headed by the Group CEO, has executive management responsibility. The functions of Chairman and Group CEO
are assigned to two different 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 the Group, for which
responsibility is delegated to the GEB, under the leadership of the Group CEO. No member of one board may
simultaneously be a member of the other.
Supervision and control of the GEB remain with the BoD. The authorities and responsibilities of the two bodies are
governed by the AoA and the Organization Regulations.
Skills, expertise and training of the Board of Directors
At present, the BoD is well-diversified and composed of members with a broad spectrum of skills, educational
backgrounds, experience, and expertise from a range of sectors that reflect the nature and scope of the firm’s business.
The Governance and Nominating Committee maintains a competencies and experience matrix to identify gaps in the
competencies considered most relevant to the BoD, taking into consideration the firm’s business exposure, risk profile,
strategy and geographic reach.
In recent years, the composition of the BoD has been systematically rebuilt along the identified requirements. The
appointment of a new Chairman and Vice Chairman in 2022 completed this process. As a result, no nominations are
submitted for a vote at the AGM in 2023. Nevertheless, a list of potential candidates is prepared and updated regularly
by UBS Group AG.
We asked our BoD members to select their four key competencies from the following eight categories and to indicate
whether they have ever been a CEO or chairperson of a listed company or a member of the executive board of such a
company:
Key competencies
– banking (wealth management, asset management, personal and corporate banking) and insurance
– investment banking, capital markets
– finance, audit, accounting
– risk management, compliance and legal
– human resources management, including compensation
– technology, cybersecurity
– regulatory authority, central bank
– environmental, social and governance (ESG)
Leadership experience
– experience as a CEO or chairperson
– executive board leadership experience (e.g., as CFO, chief risk officer or COO of a listed company)
The Governance and Nominating Committee reviews these categories and ratings annually to confirm that the BoD
continues to possess the most relevant experience and competencies to perform its duties.
With regard to the composition of the BoD after the 2022 AGM, the members thereof identified all of the target
competencies as being their key competencies. Particularly strong levels of experience and expertise existed in these
areas:
– financial services
– risk management, compliance and legal
– finance, audit, accounting
Furthermore, 10 of the 12 BoD members have held or currently hold chairperson, CEO or other executive board-level
leadership positions.
Moreover, education remained an important priority for our BoD members. In addition to a comprehensive induction
program for new BoD members, continuous training and topical deep dives are part of the BoD agenda.
› Refer to “Risk governance” in the “Risk management and control” section of this report for information about our risk
governance framework
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Terms of office¹
Geographic diversity ²
Gender³
4
7
1
0
< 3 years
3 – 6 years
7 – 9 years
> 9 years
33%
Switzerland
25%
Europe and the UK
25% USA / Canada
17% Asia
67% male
33%
female
0
2
4
6
8
10
12
Competencies and experience 4
Key competencies
Banking 5 and insurance
Investment banking, capital markets
Finance, audit, accounting
Risk management, compliance and legal
HR management, including compensation
Technology, cybersecurity
Regulatory authority, central bank
ESG 6
Leadership experience
0
2
4
6
8
10
12
Chief executive officer or chairman
Executive board 7
1 Terms of office until the 2023 AGM. 2 In the case of dual-nationals, the domicile applies. 3 In accordance with the 30% gender quota of the revised Swiss Corporate Law.
4 The number of BoD members identifying a key competency as one of his / her key competencies; each member identified up to four key competencies (although not every
sub-area of the respective competency might be applicable), plus one leadership experience. 5 Wealth management, asset management, and personal and corporate
banking. 6 Environmental, social and governance. 7 For example, a CFO, chief risk officer or COO of a listed company.
Succession planning
Succession planning is one of the key responsibilities of both the BoD and the GEB. Across all divisions and regions, an
inclusive talent development and succession planning process is in place that aims to foster the personal development
and Group-wide mobility of our employees. Although the recruiting process for BoD and GEB members takes into account
a broad spectrum of factors, such as skills, backgrounds, experience and expertise, our approach with regard to diversity
considerations does not constitute a diversity policy within the meaning of the EU Directive on Non-Financial Reporting,
and Swiss law does not require UBS to maintain such a policy.
In 2022, the GEB launched several strategic initiatives with the close involvement of the BoD and with the aim of further
strengthening internal succession planning at UBS. This included the early identification of talents and their systematic
development, including international and cross-divisional rotations. The succession plans for the GEB and the
management layers below it are managed under the lead of the Group CEO and are reviewed and approved by the BoD.
For the BoD, the Chairman leads a systematic succession planning process as illustrated in the chart below.
Our strategy and the business environment constitute the main drivers in our succession planning process for new BoD
members, as they define the key competencies required on the BoD. Taking the diversity and the tenure of the existing
BoD into account, the Governance and Nominating Committee defines the recruiting profile for the search. Both external
and internal sources contribute to identifying suitable candidates. The Chairman and the members of the Governance
and Nominating Committee meet with potential candidates and, with the support of the full BoD, nominations are
submitted to the AGM for approval. New BoD members follow an in-depth onboarding process designed to enable them
to integrate efficiently and become effective in their new role. Due to this succession planning process, the composition
of the BoD is in line with the demanding requirements of a leading global financial services firm.
The smooth and effective succession of both the CEO and Chairman, as well as that of new GEB members, demonstrates
the strength and success of succession planning at UBS.
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Board of Directors’ succession planning process
Strategy / Environment
Onboarding
Existing board composition
Succession
planning process
AGM election
Search
Selection
Information and control instruments with regard to the Group Executive Board
The BoD is kept informed of the GEB’s activities in various ways, including regular meetings between the Chairman, the
Group CEO and GEB members. The Group CEO and other GEB members also participate in BoD meetings to update its
members on all significant issues. The BoD receives regular comprehensive reports covering financial, capital, funding,
liquidity, regulatory, compliance and legal developments, as well as performance against plan and forecasts for the
remainder of the year. For important developments, BoD members are also updated by the GEB in between meetings. In
addition, the Chairman receives the meeting material and minutes of the GEB meetings.
BoD members may request from other BoD or GEB members any information about matters concerning the Group that
they require in order to fulfill their duties. When these requests are raised outside BoD meetings, such requests must go
through the Group Company Secretary and be addressed to the Chairman.
The BoD is supported in discharging its governance responsibilities by GIA, which independently assesses whether risk
management, control and governance processes are designed and operating sustainably and effectively.
The Head GIA reports directly to the Chairman. In addition, GIA has a functional reporting line to the Audit Committee
in accordance with its responsibilities as set forth in our Organization Regulations. The Audit Committee assesses the
independence and performance of GIA and the effectiveness of both the Head GIA and GIA as an organization, approves
GIA’s annual audit plan and objectives and monitors GIA’s discharge of these objectives.
The committee is also in regular contact with the Head GIA. GIA issues quarterly reports that provide an overview of
significant audit results and key issues, as well as themes and trends, based on results of individual audits, continuous
risk assessment and issue assurance. The reports are provided to the Chairman, the members of the Audit and the Risk
Committees, the GEB and other stakeholders. The Head GIA regularly updates the Chairman and the Audit Committee
on GIA’s activities, processes, audit plan execution, resourcing requirements and other important developments. GIA
issues an annual Activity Report, which is provided to the Chairman and the Audit Committee to support their assessment
of GIA’s effectiveness.
› Refer to “Group Internal Audit” in this section for more information
› Refer to “Internal risk reporting” in the “Risk management and control” section of this report for information about reporting to
the BoD
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Group Executive Board
The BoD delegates the management of the business to the Group Executive Board (the GEB).
Responsibilities, authorities and organizational principles of the Group Executive Board
As of 31 December 2022, the GEB, under the leadership of the Group CEO, consisted of 12 members. It has executive
management responsibility for the steering of the Group and its business, develops the strategies of the Group, business
divisions and Group Functions, and implements the BoD-approved strategies. The GEB is also the risk council of the
Group, with overall responsibility for establishing and supervising the implementation of risk management and control
principles, as well as for managing the risk profile of the Group, as determined by the BoD and the Risk Committee.
In 2022, the GEB held a total of 74 meetings for UBS Group AG.
At UBS AG, management of the business is also delegated, and its Executive Board, under the leadership of its President,
has executive management responsibility for UBS AG and its business. All members of the GEB are members of UBS AG’s
Executive Board, with the exception of Sabine Keller-Busse, who serves as President UBS Switzerland AG. The Executive
Board held 74 combined meetings with the GEB and four standalone meetings for UBS AG in 2022.
› Refer to the Organization Regulations of UBS Group AG, available at ubs.com/governance, for more information about the
authorities of the Group Executive Board
Changes to the Group Executive Board
Effective 16 May 2022, Kirt Gardner stepped down and Sarah Youngwood succeeded him as Group CFO, having joined
the GEB on 1 March 2022. Formerly, she was CFO of JPMorgan Chase’s Consumer & Community Banking line of
business.
Effective 3 October 2022, Tom Naratil stepped down as Co-President Global Wealth Management and President UBS
Americas and Naureen Hassan joined UBS as a GEB member with functions of President UBS Americas and CEO of UBS
Americas Holding LLC. Ms. Hassan was most recently First Vice President and Chief Operating Officer of the Federal
Reserve Bank of New York, where she was responsible for technology, operations, finance, risk and HR, and led the New
York Fed’s agile transformation. Iqbal Khan became sole President Global Wealth Management on the same date.
On 8 November 2022, UBS announced that Christian Bluhm will step down from his role as Group Chief Risk Officer on
30 April 2023. Damian Vogel will join the GEB on 1 May 2023 and will take over as Group Chief Risk Officer. Mr. Vogel
is currently Chief Risk Officer for UBS’s Global Wealth Management business division.
The biographies on the following pages provide information about the GEB members in office as of 31 December 2022.
The biographies of Kirt Gardner and Tom Naratil can be found on pages 212 and 216 of the UBS Group AG Annual
Report 2021, available under “Annual reporting” at ubs.com/investors. In addition to information on mandates, the
biographies include memberships and other activities or functions, as required by the SIX Swiss Exchange Corporate
Governance Directive.
In line with Swiss law, article 36 of our AoA limits the number of mandates that GEB members may hold outside UBS
Group to one mandate in a listed company and five additional mandates in non-listed companies. Mandates in companies
that are controlled by UBS or that control UBS are not subject to this limitation. In addition, GEB members may not hold
more than 10 mandates at one time at the request of the company and more than eight mandates in associations,
charitable organizations, foundations, trusts and employee welfare foundations. On 31 December 2022, no member of
the GEB reached the aforementioned thresholds.
Responsibilities and authorities of the Asset and Liability Committees
The Asset and Liability Committees (the ALCOs) of UBS Group AG and UBS AG are sub-committees of the GEB and the
Executive Board that are responsible for managing assets and liabilities in line with the strategy, risk appetite, regulatory
commitments and the interests of shareholders and other stakeholders. The ALCO of UBS Group AG proposes the
framework for capital management, capital allocation, and liquidity and funding risk, and proposes limits and indicators
for the Group to the BoD for approval. It oversees the balance sheet management of the Group, its business divisions
and Group Functions. In 2022, the ALCOs of UBS Group AG and UBS AG held 10 meetings.
Management contracts
We have not entered into management contracts with any companies or natural persons that do not belong to the
Group.
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Ralph Hamers
Christian Bluhm
Group Chief Executive Officer, member of the GEB since 2020
Group Chief Risk Officer, member of the GEB since 2016
Nationality: Dutch | Year of birth: 1966
Nationality: German | Year of birth: 1969
Ralph Hamers has been Group CEO of UBS Group AG and President of
the Executive Board of UBS AG since November 2020, after joining UBS
as Group Executive Board member in September 2020. Mr. Hamers is
committed to ensuring that our firm is positioned to evolve with our clients
and the larger world. He has led work to transform our firm for the future,
with our Group-wide strategy and newly defined purpose launched in
April 2021. Prior to joining UBS, Mr. Hamers was CEO and Chairman of
the Executive Board of ING Group, where he spent over 30 years of his
career. During his time as CEO of ING, he steered the bank to profitability
after the financial crisis and supported the firm’s digital transformation.
Mr. Hamers has played a leading role in driving efforts in areas such as
digital disruption and sustainability.
Professional experience
2020 – date
2013 – 2020
2011 – 2013
2010 – 2011
2007 – 2010
2005 – 2007
2002 – 2005
Group CEO, UBS Group AG, and President of the
Executive Board, UBS AG
CEO and Chairman of the Executive Board, ING
Supervisory Board member of NN Group (2014 – 2015);
Chairman Management Board Banking (2013 – 2020) and
Chairman Management Board Insurance (2013 – 2014)
CEO of ING Belgium and Luxembourg, ING
Head of Network Management for Retail Banking Direct &
International, ING
Global Head of the Commercial Banking network, ING
CEO of ING Bank Netherlands, ING
General Manager of the ING Bank branch network, ING
Christian Bluhm has been Group Chief Risk Officer since 2016. He held
several positions in academia before starting his banking career in 1999
with Deutsche Bank in credit risk management, and subsequently working
for Hypovereinsbank and Credit Suisse in the same area. Before joining
UBS, he used his expertise and skills as Chief Risk & Financial Officer at
FMS Wertmanagement. Mr. Bluhm is responsible for the development of
the Group’s risk management and control framework for various risk
categories and implementation of its independent control frameworks.
Professional experience
2016 – date
2012 – 2015
Group Chief Risk Officer, UBS Group AG, and Chief Risk
Officer, UBS AG
Spokesman of the Executive Board,
FMS Wertmanagement
Chief Risk & Financial Officer, FMS Wertmanagement
2008 – 2009
2010 – 2015
2004 – 2009 Managing Director, Credit Risk Management (Switzerland
and Private Banking worldwide), Credit Suisse
Head Credit Risk Management Analytics & Instruments,
Credit Suisse
Head of Credit Portfolio Management, Credit Suisse
Head Structured Finance Analytics, Group Credit Portfolio
Management, Hypovereinsbank
2004 – 2008
2001 – 2004
Education
– Master’s degree, mathematics and informatics, and doctorate,
mathematics, University of Erlangen-Nuremberg, Germany
Education
– Master’s degree, business econometrics and operations research,
Non-listed company boards
– Chairman of the Board of Christian Bluhm Photography AG
Tilburg University, Netherlands
Other activities and functions
– Member of the Board of UBS Switzerland AG
– Member of the Foundation Board of the UBS Pension Fund
– Member of the Foundation Board International Financial Risk Institute
Other activities and functions
– Member of the Board of the Swiss-American Chamber of Commerce
– Member of the Institut International d’Etudes Bancaires
– Member of the IMD Foundation Board
– Member of the McKinsey Advisory Council
– Member of the World Economic Forum International Business Council
– Governor of the Financial Services / Banking Community of the World
Economic Forum
– Member of the International Advisory Panel, Monetary Authority
of Singapore
– Member of the Board of the Institute of International Finance
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Mike Dargan
Suni Harford
Group Chief Digital and Information Officer,
member of the GEB since 2021
Nationality: British | Year of birth: 1977
Mike Dargan was appointed Group Chief Digital and Information Officer
(CDIO) in May 2021 after leading our Group Technology function since
joining UBS in 2016. In addition to his CDIO remit, where he oversees
global functions such as technology and corporate services, he is also
Group Executive Board sponsor for our firm’s digital assets strategy and a
co-sponsor of both our AI, Data and Analytics center of expertise (along
with Robert Karofsky) and our agile transformation. Prior to joining UBS,
Mr. Dargan held various senior roles in technology, corporate strategy and
investment banking at Standard Chartered Bank, Merrill Lynch and Oliver
Wyman.
2014 – 2015
2015 – 2016
2016 – 2021
Oct. 2021 – date
Professional experience
May 2021 – date Group CDIO, UBS Group AG, and CDIO, UBS AG
President of the Executive Board,
UBS Business Solutions AG
Head Group Technology, UBS
CIO for Corporate and Institutional Banking,
Standard Chartered Bank
Global Group Technology and Operations Head for
Global Markets, Wealth Management, Private Banking
and Securities Services, Group Technology and
Operations Engineering, Standard Chartered Bank
CIO for Financial Markets, Standard Chartered Bank
Global Head of Strategy and Corporate M&A, Global
Markets, Standard Chartered Bank
Head Corporate Strategy & M&A, EMEA and Pacific
Rim, Merrill Lynch
2005 – 2009
2009 – 2013
2013 – 2014
President Asset Management, member of the GEB since 2019
Nationality: American (US) | Year of birth: 1962
Suni Harford was appointed President Asset Management in 2019 and is
the Chair of UBS Optimus Foundation. Ms. Harford has been the UBS GEB
Lead for Sustainability and Impact since May 2021. She started her Wall
Street career at Merrill Lynch & Co., in investment banking, before
embarking on a 24-year career at Citigroup Inc., the last nine years of
which she was the Regional Head of Markets for North America. Ms.
Harford joined UBS in 2017, bringing with her a broad experience from
across the industry, including in research, client coverage and risk
management, and successfully led UBS Asset Management’s integrated
investments capabilities, driving performance for its clients.
Professional experience
2019 – date
2017 – 2019
2008 – 2017
2004 – 2008
President Asset Management, UBS Group AG
and UBS AG
Head of Investments, Asset Management, UBS
Regional Head of Markets for North Americas,
Citigroup Inc.
Global Head of Fixed Income Research, Citigroup Inc.
Education
– Bachelor’s degree, physics and mathematics, Denison University, Ohio
– MBA, Tuck School of Business, Dartmouth College, New Hampshire
Other activities and functions
– Chairman of the Board of Directors of UBS Asset Management AG
– Chair of the Board of UBS Optimus Foundation
– Member of the Leadership Council of the Bob Woodruff Foundation
Education
– Master’s degree, politics, philosophy and economics,
St. John’s College, University of Oxford
Non-listed company boards
– Member of the Board of Directors of Done Next Holdings AG
Other activities and functions
– Member of the Board of UBS Business Solutions AG
– Member of the Board of UBS Optimus Foundation
– Member of the Board of Trustees of the Inter-Community
School Zurich
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Naureen Hassan
Robert Karofsky
President UBS Americas, member of the GEB since October 2022
President Investment Bank, member of the GEB since 2018
Nationality: American (US) | Year of birth: 1971
Nationality: American (US) | Year of birth: 1967
Naureen Hassan was appointed President UBS Americas and CEO of UBS
Americas Holding LLC in October 2022. She joined UBS from the Federal
Reserve Bank of New York, where she was COO and First Vice President.
After starting her career at McKinsey & Company, Ms. Hassan held various
business transformation, strategy, and client experience leadership roles
at Charles Schwab Corporation. As Chief Digital Officer at Morgan Stanley
Wealth Management, she led the digital strategy and executed digital
transformation of the wealth management business to improve client
experience and financial advisor effectiveness and efficiency.
Robert Karofsky was appointed Co-President of the Investment Bank in
2018. He became sole President in April 2021. Before joining UBS, he
acquired know-how in investment banking as an analyst and trader,
working for various financial institutions such as Morgan Stanley,
Deutsche Bank and AllianceBernstein. He then became Global Head of
Equities at UBS, responsible for driving UBS’s growth strategy for equities
globally. In October 2021, Mr. Karofsky was appointed to the additional
role of UBS GEB sponsor to co-lead the AI, Data and Analytics center of
expertise, along with Mike Dargan.
Professional experience
Professional experience
Oct. 2022 – date
President UBS Americas, UBS Group AG and UBS AG
CEO, UBS Americas Holding LLC
Apr. 2021 – date
2018 – Mar. 2021 Co-President Investment Bank, UBS
President Investment Bank, UBS Group AG and UBS AG
2021 – Sept. 2022 First Vice President and COO, Federal Reserve
2016 – 2020
2014 – 2016
2014
2012 – 2014
2010 – 2012
2003 – 2010
Bank of New York
Chief Digital Officer, Wealth Management,
Morgan Stanley
Executive Vice President, Investor Services Segments &
Platforms, Charles Schwab Corporation
Senior Vice President, Business Process Transformation,
Charles Schwab Corporation
Senior Vice President, Advisor Services Client Experience
& Strategic Integration, Charles Schwab Corporation
COO and Board Director, Charles Schwab Corporation
Various senior positions at Charles Schwab Corporation
Education
– Bachelor’s degree, economics, Princeton University
– Master’s degree, business administration, Stanford University
Graduate School of Business
Other activities and functions
– Member of the Board of UBS Americas Holding LLC
– Member of the Board of the Securities Industry and Financial Markets
Association
2015 – 2021
2014 – 2018
2011 – 2014
2008 – 2010
2005 – 2008
President UBS Securities LLC, UBS
Global Head Equities, UBS
Global Head of Equity Trading, AllianceBernstein
Co-Head of Global Equities, Deutsche Bank
Head of North American Equities, Deutsche Bank
Education
– Bachelor’s degree, economics, Hobart and William Smith Colleges,
New York
– MBA, finance and statistics, University of Chicago’s Booth School of
Business
Other activities and functions
– Member of the Board of UBS Americas Holding LLC
– Member of the Board of UBS Optimus Foundation
– Trustee of the UBS Americas Inc. Political Action Committee
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Sabine Keller-Busse
Iqbal Khan
President Personal & Corporate Banking and
President UBS Switzerland, member of the GEB since 2016
Nationality: Swiss and German | Year of birth: 1965
Sabine Keller-Busse was appointed President Personal & Corporate
Banking and President UBS Switzerland in 2021, heading the leading
universal bank in Switzerland. In her previous role as Group COO, she
oversaw global functions such as technology, operations, human
resources and corporate services. She has been pivotal in driving business
alignment, and digital and cultural transformation, while also facilitating
business growth as President UBS Europe, Middle East and Africa. Ms.
Keller-Busse also brings in-depth experience regarding financial market
infrastructure, having served on the Board of SIX Group for nine years.
President Global Wealth Management and
President UBS Europe, Middle East and Africa, member of the GEB
since 2019
Nationality: Swiss | Year of birth: 1976
Iqbal Khan has been President Global Wealth Management since October
2022 and President UBS Europe, Middle East and Africa since February
2021. From 2019 until September 2022, he was Co-President Global
Wealth Management. Mr. Khan joined Ernst & Young in 2001, holding
many leadership positions and becoming the youngest-ever partner of the
firm’s Swiss arm; when leaving Ernst & Young, he was lead auditor of UBS.
In 2013, he moved to Credit Suisse, holding senior leadership positions as
CFO Private Banking & Wealth Management and later CEO International
Wealth Management.
Professional experience
Feb. 2021 – date
Feb. 2021 – date
2019 – 2021
2018 – 2021
2016 – 2021
2014 – 2017
2010 – 2014
President Personal & Corporate Banking and
President UBS Switzerland, UBS Group AG
President of the Executive Board, UBS Switzerland AG
President UBS Europe, Middle East and Africa, UBS
Group COO of UBS and President of the Executive
Board, UBS Business Solutions AG
Member of the Executive Board of UBS AG
Group Head Human Resources, UBS
COO UBS Switzerland, UBS
Education
– Master’s degree, economic sciences, University of St. Gallen
– Ph.D., economic sciences (Dr. oec.), University of St. Gallen
Listed company boards
– Member of the Board of Zurich Insurance Group
Other activities and functions
– Member of the Foundation Council of the UBS International Center
of Economics in Society
– Member of the Board and Board Committee of Zurich Chamber
of Commerce
– Member of the Board of the University Hospital Zurich Foundation
– Member of the Board of Trustees of the Swiss Entrepreneurs
Foundation
Professional experience
Oct. 2022 – date
Feb. 2021 – date
President Global Wealth Management, UBS Group AG
and UBS AG
President UBS Europe, Middle East and Africa, UBS
Group AG and UBS AG
2019 – Sept. 2022 Co-President Global Wealth Management, UBS
2015 – 2019
2013 – 2015
2011 – 2013
2009 – 2011
2001 – 2009
CEO International Wealth Management, Credit Suisse
CFO Private Banking & Wealth Management,
Credit Suisse
Managing Partner Assurance and Advisory Services –
Financial Services, Ernst & Young
Industry Lead Partner Banking and Capital Markets,
Switzerland and EMEA Private Banking, Ernst & Young
Various positions in Ernst & Young
Education
– Swiss Certified Public Accountant
– Advanced Master of International Business Law degree (LL.M.),
University of Zurich
Other activities and functions
– Member of the Supervisory Board of UBS Europe SE
– Member of the Board of UBS Optimus Foundation
– Member of the Board of Room to Read Switzerland
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Edmund Koh
Barbara Levi
President UBS Asia Pacific, member of the GEB since 2019
Group General Counsel, member of the GEB since 2021
Nationality: Singaporean | Year of birth: 1960
Nationality: Italian | Year of birth: 1971
Edmund Koh has been President UBS Asia Pacific since 2019. He is a
financial sector veteran, with more than 30 years in senior roles in financial
services, including as Head Wealth Management Asia Pacific, Country
Head Singapore and Head Wealth Management South-East Asia and Asia
Pacific Hub for UBS. Before working for DBS Bank in Singapore, Mr. Koh
was CEO for Prudential Assurance and Alverdine Pte Ltd, both companies
based in Singapore. He joined UBS from Taiwan-based Ta Chong Bank,
where he served as President and Director.
Professional experience
2019 – date
2012 – 2018
2016 – 2018
President UBS Asia Pacific, UBS Group AG and UBS AG
Head Wealth Management Asia Pacific, UBS
Country Head Singapore, UBS
Head Wealth Management South-East Asia and
Asia Pacific Hub, UBS
President and Director, Ta Chong Bank, Taiwan
2008 – 2012
2001 – 2008 Managing Director and Regional Head, Consumer Banking
2012 – 2015
Group, DBS Bank, Singapore
Education
– Bachelor’s degree, psychology, University of Toronto
Non-listed company boards
– Member of the Board of Trustees of the Wealth Management
Institute, Singapore
– Member of the Board of Next50 Limited, Singapore
– Member of the Board of Medico Suites (S) Pte Ltd
– Member of the Board of Curbside Pte Ltd
Other activities and functions
– Member of a sub-committee of the Singapore Ministry
of Finance’s Committee on the Future Economy
– Member of the Financial Centre Advisory Panel of the Monetary
Authority of Singapore
– Council member of the Asian Bureau of Finance and Economic
Research
– Trustee of the Cultural Matching Fund, Singapore
– Member of University of Toronto’s International Leadership
Council for Asia
Barbara Levi has been Group General Counsel since November 2021. 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. In both roles, she was
a member of that company’s executive committee.
Professional experience
Nov. 2021 – date Group General Counsel, UBS Group AG, and General
2021
2020 – 2021
2019
2016 – 2019
2014 – 2016
2013 – 2014
2009 – 2013
Counsel, UBS AG
Chief Legal Officer & External Affairs, Rio Tinto Group
Group General Counsel, Rio Tinto Group
Group Legal Head, M&A and Strategic Transactions,
Novartis
Global General Counsel, Sandoz International GmbH,
Novartis
Global Legal Head, Product Strategy &
Commercialization, Novartis
Global Legal Head, TechOps, Primary Care and
Established Medicines, Novartis
Head of Legal & Compliance, Region Asia-Pacific,
Middle East, and African Countries, Region Group
Emerging Markets, Novartis
Education
– Law degree, 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 Employers’ Board of the Global Institute for Women’s
Leadership, King’s College London
– Member of the Board of Directors of the European General Counsel
Association
– Member of the Legal Committee of the Swiss-American Chamber of
Commerce
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Markus Ronner
Sarah Youngwood
Group Chief Compliance and Governance Officer,
member of the GEB since 2018
Group Chief Financial Officer, member of the GEB since March
2022
Nationality: Swiss | Year of birth: 1965
Nationality: American (US) and French | Year of birth: 1974
Markus Ronner has been Group Chief Compliance and Governance
Officer since 2018. He 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 at the Group level for the control of all non-financial risks,
governmental and regulatory affairs, as well as investigations and
governance matters. Since 2022, he also serves as Chairman of
UBS Switzerland AG, the leading Swiss universal bank.
Sarah Youngwood became Group CFO in May 2022. Before joining UBS,
Ms. Youngwood was CFO for JPMorgan Chase Consumer & Community
Banking, CFO for Firmwide Technology and CFO for Diversity & Inclusion.
She set up the data and reporting infrastructure for that company’s
USD 30bn racial equity commitments. Previously, Ms. Youngwood was
Head of Investor Relations and worked in the Financial Institutions Group
within JPMorgan’s investment bank in Paris, London and New York. She
brings in-depth finance expertise to the table and has a strong track record
of adding
leading agile and data-driven
transformations.
long-term value, and
Professional experience
2018 – date
Group Chief Compliance and Governance Officer, UBS
Group AG, and Chief Compliance and Governance Officer
UBS AG
Head Group Regulatory and Governance, UBS
2012 – 2018
2011 – 2013 Manager Group-wide too-big-to-fail program, UBS
2010 – 2011
2009 – 2010
2007 – 2009
2001 – 2007
COO Wealth Management & Swiss Bank, UBS
Head Products and Services of Wealth Management &
Swiss Bank, UBS
COO Asset Management, UBS
Head Group Internal Audit, UBS
Education
– Swiss Banking Diploma
Professional experience
May 2022 – date Group CFO, UBS Group AG, and CFO, UBS AG
2020 – 2022
2016 – 2020
2012 – 2016
1997 – 2012
CFO, Consumer & Community Banking and Diversity &
Inclusion, incl. Global Technology, JPMorgan Chase
CFO, Consumer & Community Banking,
JPMorgan Chase
Head of Investor Relations, JPMorgan Chase
Investment Bank, Financial Institutions Group, JPMorgan
Chase, Paris, London and New York, including
Managing Director – Head of Mortgage Coverage
activities
Education
– Master’s degree, Business and Finance, ESCP Business School, Paris
Other activities and functions
– Chairman of the Board of Directors of UBS Switzerland AG
Other activities and functions
– Member of the Board of UBS Business Solutions AG
– Advisory Board Member – Wall Street Women’s Alliance
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Change of control and defense measures
Our Articles of Association (the AoA) do not provide any measures for delaying, deferring or preventing a change of
control.
Duty to make an offer
Pursuant to the Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives
Trading of 19 June 2015, an investor who has acquired (whether directly, indirectly or in concert with third parties)
more than 331⁄3% of all voting rights of a company listed in Switzerland, whether such rights are exercisable or not,
is required to submit a takeover offer for all listed shares outstanding. We have not elected to change or opt out of
this rule.
Clauses on change of control
Neither the terms regulating the Board members’ mandate nor any employment contracts with GEB members or
employees holding key functions within the Group contain change of control clauses.
All employment contracts with GEB members stipulate a notice period of six months. During the notice period, GEB
members are entitled to their salaries and the continuation of existing employment benefits and may be eligible to be
considered for a discretionary performance award based on their contribution during their tenure.
In case of a change of control, we may, at our discretion, accelerate the vesting of and / or relax applicable forfeiture
provisions of employees’ awards.
› Refer to the “Compensation” section of this report for more information
Auditors
Audit is an integral part of corporate governance. While safeguarding their independence, the external auditors closely
coordinate their work with Group Internal Audit (GIA). The Audit Committee and, ultimately, the BoD supervise the
effectiveness of audit work.
› Refer to “Board of Directors” in this section for more information about the Audit Committee
External independent auditors
The 2022 AGM re-elected Ernst & Young Ltd (EY) as auditors for the Group for the 2022 financial year. EY assumes
virtually all auditing functions according to laws, regulatory requests and the AoA. Bob 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. 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 2022, the Audit Committee held 12 meetings with the external auditors.
Review of UBS Group AG and UBS AG audit engagement
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 Group audit engagement including soliciting proposals from potential
auditors. In early 2022, based on the results of this assessment, the BoD decided to retain EY as the Group’s external
auditors.
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.
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Fees paid to external independent auditors
UBS Group AG and its subsidiaries (including UBS AG) paid the following fees (including expenses) to their external independent
auditors.
USD m
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)
TToottaall aauuddiitt11
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
For the year ended
3311..1122..2222
31.12.21
4499
77
5566
1111
66
55
00
22
53
8
61
9
4
5
0
1
All other fees
TToottaall nnoonn--aauuddiitt11
11 Total audit and non-audit fees amounted to USD 70m for UBS Group AG consolidated as of 31 December 2022 (31 December 2021: USD 72m), of which USD 46m related to UBS AG consolidated (31 December
2021: USD 43m).
10
1144
0
11
Special auditors for potential capital increases
At the AGM on 8 April 2021, 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.
Services performed and 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 above. In addition, EY received USD 35.2m in 2022 (USD 34.1m in 2021) for services performed
on behalf of our investment funds, many of which have independent fund boards or trustees.
Audit work includes all services necessary to perform the audit for the Group in accordance with applicable laws and
generally accepted auditing standards, as well as other assurance services that conventionally only the auditor can
provide. These include statutory and regulatory audits, attestation services and the review of documents to be filed with
regulatory bodies. The additional services classified as audit in 2022 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.
Group Internal Audit
GIA performs the internal auditing role for the Group. It is an independent function that provides expertise and insights
to confirm controls are functioning correctly and highlight where UBS needs to better manage current and emerging
risks. In 2022, it operated with an average headcount of 585 full-time equivalent employees.
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GIA supports the BoD in discharging its governance responsibilities by taking a dynamic approach to audit, issue assurance
and risk assessment, drawing attention to key risks in order to drive action to prevent unexpected loss or damage to the
firm’s reputation. To support the achievement of UBS’s objectives, GIA independently, objectively and systematically
assesses the:
(i)
(ii)
soundness of the Group’s risk and control culture;
reliability and integrity of financial and operational information, including whether activities are properly,
accurately and completely recorded, and the quality of underlying data and models; and
(iii) design, operating effectiveness and sustainability of:
– processes to define strategy and risk appetite, as well as the overall adherence to the approved strategy;
– governance processes;
– risk management, including whether risks are appropriately identified and managed;
– internal controls, specifically whether they are commensurate with the risks taken;
– remediation activities; and
– processes to comply with legal and regulatory requirements, internal policies, and the Group’s constitutional
documents and contracts.
Audit reports that include significant issues are provided to the Group CEO, relevant GEB members and other responsible
management. The Chairman, the Audit Committee and the Risk Committee of the BoD are regularly informed of such
issues.
In addition, GIA provides independent assurance on the effective and sustainable remediation of control deficiencies
within its mandate, taking a prudent and conservative risk-based approach and assessing at the issue level whether the
root cause and the potential exposure for the firm have been holistically and sustainably addressed. GIA also cooperates
closely with risk control functions and internal and external legal advisors on investigations into major control issues.
To ensure GIA’s independence from management, the Head GIA reports to the Chairman of the BoD and to the Audit
Committee, which assesses annually whether GIA has sufficient resources to perform its function, as well as its
independence and performance. In the Audit Committee’s assessment, GIA is sufficiently resourced to fulfill its mandate
and complete its auditing objectives. GIA’s role, position, responsibilities and accountability are set out in our Organization
Regulations and the Charter for GIA, available at ubs.com/governance. The Charter also applies to UBS AG’s internal
audit function. GIA has unrestricted access to all accounts, books, records, systems, property and personnel, and must
be provided with all information and data that it needs to fulfill its auditing responsibilities. GIA also conducts special
audits at the request of the Audit Committee, or other BoD members, committees or the Group CEO in consultation
with the Audit Committee.
GIA enhances the efficiency of its work through coordination and close cooperation with the external auditors.
Information policy
We provide regular information to our shareholders and to the wider financial community.
Financial reports for UBS Group AG are expected to be published on the following dates:
First quarter 2023
Second quarter 2023
Third quarter 2023
25 April 2023
25 July 2023
24 October 2023
The annual general meetings of the shareholders of UBS Group AG will take place on the following dates:
2023
2024
5 April 2023
11 April 2024
› Refer to the corporate calendar available at ubs.com/investors for the dates of the publication of financial reports and other key
dates, including the dates of the publication of UBS AG’s financial reports
We meet with institutional investors worldwide throughout the year and regularly hold results presentations, attend and
present at investor conferences, and, from time to time, host investor days. When appropriate, investor meetings are
hosted by senior management and are attended by members of our Investor Relations team. We use various technologies,
such as webcasting, audio links and cross-location videoconferencing, to widen our audience and maintain contact with
shareholders globally.
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We make our publications available to all shareholders simultaneously to provide them with equal access to our financial
information.
Our annual and quarterly publications are available in a fully digital and .pdf format at ubs.com/investors, under “Financial
information.” Starting with our Annual Report 2022, we no longer provide printed copies of our Annual Report and our
Compensation Report in any language.
› Refer to ubs.com/investors for a complete set of published reporting documents and a selection of senior management industry
conference presentations
› Refer to the “Information sources” section of this report for more information
› Refer to “Corporate information” and “Contacts” of this report for more information
Financial disclosure principles
We fully support transparency, and consistent and informative disclosure. We aim to communicate our strategy and
results in a manner that enables stakeholders to gain a good understanding of how our Group operates, what our growth
prospects are, and the risks that our businesses and our strategy entail. We assess feedback from analysts and investors
on a regular basis and, where appropriate, reflect this in our disclosures. To continue achieving these goals, we apply the
following principles in our financial reporting and disclosure:
– transparency that enhances the understanding of economic drivers and builds trust and credibility;
– consistency within each reporting period and between reporting periods;
– simplicity that allows readers to gain a good understanding of the performance of our businesses;
– relevance, by focusing not only on what is required by regulation or statute but also on what is relevant to our
stakeholders; and
– best practice that leads to improved standards.
We regard the continuous improvement of our disclosures as an ongoing commitment.
Financial reporting policies
We report our Group’s results for each financial quarter, including a breakdown of results by business division and
disclosures or key developments relating to risk management and control, capital, liquidity and funding management.
Each quarter, we publish quarterly financial reports for UBS Group AG, on the same day as the earnings releases.
The consolidated financial statements of UBS Group AG and UBS AG are prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
› Refer to “Note 1 Summary of material accounting policies” in the “Consolidated financial statements” section of this report for
more information about the basis of accounting
We are committed to maintaining the transparency of our reported results and to allowing analysts and investors to make
meaningful comparisons with prior periods. If there is a major reorganization of our business divisions or if changes to
accounting standards or interpretations lead to a material change in the Group’s reported results, our results are restated
for previous periods as required by applicable accounting standards. These restatements show how our results would
have been reported on the new basis and provide clear explanations of all relevant changes.
US disclosure requirements
As a foreign private issuer, we must file reports and other information, including certain financial reports, with
the US Securities and Exchange Commission (the SEC) under the US federal securities laws.
An evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a–15e) under the US
Securities Exchange Act of 1934 has been carried out, under the supervision of management, including the Group CEO,
the Group CFO and the Group Controller and Chief Accounting Officer. Based on that evaluation, the Group CEO and
the Group CFO concluded that our disclosure controls and procedures were effective as of 31 December 2022. 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 “Consolidated financial statements” section of this report for more information
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Compensation
Table of contents
201
204
206
207
214
222
229
232
Compensation
2022 key compensation themes
Say-on-pay
Compensation philosophy and governance
Compensation for GEB members
Group compensation
Compensation for the Board of Directors
Supplemental information
Advisory vote | Corporate governance and compensation | Compensation
200
200
Compensation
Julie G. Richardson
Chairperson of the
Compensation Committee
of the Board of Directors
Dear Shareholders,
The Board of Directors (the BoD) and I wish to thank you for your support once again at last year’s Annual General
Meeting (the AGM) and for sharing your views on our compensation practices over the past year.
Throughout 2022, the BoD Compensation Committee continued to oversee the compensation process, aiming to ensure
that reward reflects performance, that risk-taking is appropriate and that employees’ interests are aligned with those of
our stakeholders. As the Chairperson of the Compensation Committee, I am pleased to present our Compensation Report
for 2022.
As part of our ongoing engagement with shareholders during 2022, we received positive feedback on our compensation
framework. We believe it is well suited to support our ambitions for the Group and provides strong alignment with
shareholders. Its robustness supports pay-for-performance through varying business cycles and incentivizes both annual
and longer-term performance. In addition to other measures taken in light of the increasing competition for talent, our
compensation framework further reinforces the attractiveness of UBS for key talent.
Supporting our clients and executing in a challenging environment
The macroeconomic and geopolitical environment has become increasingly complex. Our clients remain focused on key
issues, such as potential persistently high inflation, elevated energy prices, the war in Ukraine and residual effects of the
pandemic. The related impact has been far-reaching, affecting asset levels, market volatility, rates and investor sentiment
across the globe. Our highly accretive, capital-light business model and disciplined risk management position us well to
face the challenges of the current macroeconomic environment.
Sustainable finance is crucial when it comes to helping our clients achieve their diverse sustainability objectives. Leveraging
the deep expertise of our experienced teams, we work hard to service our clients’ diverse sustainable financing, investing
and/or advisory needs in the best way possible. In 2022, we expanded our sustainable investment offering with additional
alternative and tailored-investment solutions and progressed a number of important investment product initiatives
relevant to a broad spectrum of clients across our business areas.
› Refer to “Financial and operating performance” in our Annual Report 2022 for further details about our Group and business division
performance
How does UBS respond to the increasing competition for talent?
– We continue to see heightened competition for talent. These pressures come from our competitors but also
organizations in other industries, including technology, consulting and new entrants, such as fintech firms.
– We continue to be successful in hiring the talent we need to grow our businesses, who are increasingly interested
in operating digitally, and they value diverse experiences, which requires flexibility and agility. That’s one reason
why we support hybrid working arrangements where possible as these benefit current employees and improve
client service while attracting a wider range of candidates and making us a stronger, more dynamic company.
– Agility drives simplification; we are committed to making it even easier for our clients to do business with us and
for our employees to work at UBS. As of year-end 2022, approximately 18,500 employees across the firm were
working in agile teams.
– In 2022, we further expanded our employee health and well-being offering. This included a suite of programs,
benefits and workplace resources, along with a bespoke eLearning curriculum, that aimed to help our employees
manage their health, foster well-being, strengthen their resilience and support the sustainability of the
organization.
– Ultimately, we strongly reflect pay-for-performance in our compensation decision-making, and additionally
consider carefully inflation levels and our competitive market position.
› Refer to ubs.com/global/en/our-firm/our-employees for more information about our workforce
Advisory vote | Corporate governance and compensation | Compensation
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201
GEB hiring and succession planning
Succession planning is a pivotal activity for the BoD. We are convinced that a Group Executive Board (GEB) with diverse
backgrounds and experiences is critical to our continued success. We have a successful track record of filling GEB roles
with highly qualified, diverse candidates from within the Group and, in selected cases, from the outside. In order to
attract external top talent, market practice dictates that we consider replacing the forfeited compensation from their
prior employer. In selected situations and with careful consideration, we replace the lost compensation of senior hires.
Awards for new GEB members are subject to independent review to support the like-for-like nature of the replacement
and confirm that these awards do not represent sign-on payments (i.e., there are no “golden hellos”). In 2022, we made
two external GEB hires and in this report we disclose their replacement awards.
Financial performance
We delivered good results in 2022, with USD 9.6bn profit before tax and 17.0% RoCET1 in a challenging environment,
achieving our Group returns and efficiency targets on a reported and underlying basis. This result was supported by
strong momentum with our clients, who turned to us for advice, resulting in USD 60bn of net new fee-generating assets.
We also demonstrated continued cost discipline despite the backdrop of rising inflation, resulting in a cost-income ratio
of 72.1%. We are well positioned to continue executing our growth strategy and delivering strong capital returns, while
weathering the challenges of the current macroeconomic environment. We enter 2023 in a position of strength and with
a CET1 capital ratio of 14.2%, enabling us to fund growth and deliver attractive and sustainable returns to shareholders.
Commitment to return capital to shareholders
We remain committed to returning excess capital to our shareholders. We repurchased USD 5.6bn of shares in 2022.
Looking ahead, we intend to continue repurchasing shares and accruing for a progressive dividend. The BoD is proposing
a dividend of USD 0.55 per share for 2022 (which represents an increase of 10% compared with the previous year) for
approval at the AGM in 2023.
Group profi t before tax
Return on CET1 capital
Cost / income ratio
USD bn
in %
in %
+1%
9.5
9.6
(0.5ppts)
17.5
17.0
(1.5ppts)
73.6
72.1
2021
2022
2021
2022
2021
2022
Group performance award pool
GEB performance award pool
Per capita GEB performance award pool
USD bn
CHF m
USD m
CHF m
USD m
(10%)
+2%
(3%)
+4%
(1%)
3.7
3.3
79.8
81.1
87.1
84.1
6.3
6.6
6.9
6.9
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
Note: As the compensation-related AGM agenda items are in Swiss franc terms, we show the total and per capita GEB performance award pool in Swiss francs
and US dollars for comparability with our fi nancial results.
2022 performance award pool and salaries
The performance award pool continues to reflect our strict pay-for-performance philosophy, our disciplined approach in
managing compensation over business cycles and our alignment to shareholder interests. Reflecting our overall results
while also considering our underlying results, the 2022 performance award pool was USD 3.3bn, a decrease of 10%
compared with 2021.
In addition, the pool also reflects our achievements relative to non-financial objectives, such as our reconfirmed position
among the leading firms when it comes to their approach to sustainability. It also takes into account risk considerations,
as well as the competitive total shareholder return (TSR) of UBS shares versus our core peers. It also considers other
factors, such as the continuing competition to attract and retain a talented and diverse workforce that delivers on our
purpose and strategy.
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While the 2022 GEB pool percentage change appears more favorable than the overall Group pool, this year’s GEB
comparison is impacted by the significant reduction made in 2021 to reflect the loss resulting from the default of a US
client in our prime brokerage business. For 2022, we consider a GEB pool before the impact of the 2021 loss event to
support competitive pay for competitive performance and not to carry forward the 2021 impact over multiple years. In
addition, the 2022 GEB pool reflects changes in both foreign exchange rates and GEB composition. Adjusted for the
direct impact of the 2021 loss event on specific GEB members, the 2022 GEB pool is down approximately 5% in Swiss
franc terms or a decrease of 10% in US dollar terms, which is aligned with the Group pool development.
We take note of the increased impact of inflationary pressures on the broad-based employee population. At a Group
level, we have carefully monitored and adjusted compensation levels where appropriate to address increased competition
for talent in certain markets. For the GEB, we continue with the same salary level instituted in 2011 and propose no
increase to our GEB fixed compensation budget and salary levels for 2024. Furthermore, we also propose no increase to
the fee levels for the BoD and no change to the maximum aggregate amount for BoD from the 2023 AGM to the 2024
AGM.
Commitment to fair pay and diversity, equity and inclusion
Pay equity and equal opportunity are fundamental to achieving our purpose. We pay for performance, and we take pay
equity seriously. Since 2020, we have been certified under the EQUAL-SALARY Foundation standards for our human
resources practices in Switzerland, the US, the UK, the Hong Kong SAR and Singapore, covering more than two-thirds
of our global employee population. Our processes are global and we apply the same standards across all our locations.
In 2022, we extended our internal fair pay analysis by assessing employees’ salaries against local living wages, using
benchmarks defined by the Fair Wage Network. We are committed to fair pay and support all employees being paid at
least a living wage.
In 2020, we outlined our intention to increase diversity, especially among management, and we have made steady
progress toward achieving our aspirations. Women now account for more than 40% of our workforce, nearly 28%
of our Director-level and above population, and 42% of our GEB members.
The 2023 Annual General Meeting
At the 2023 AGM on 5 April, we will seek your support on the following compensation-related items:
– the maximum aggregate amount of compensation for the BoD for the period from the 2023 AGM to the 2024 AGM;
– the maximum aggregate amount of fixed compensation for the GEB for 2024;
– the aggregate amount of variable compensation for the GEB for 2022; and
– shareholder endorsement in an advisory vote for this Compensation Report.
On behalf of the Compensation Committee and the BoD, I thank you again for your feedback and we respectfully ask
for your continued support at the upcoming AGM.
Julie G. Richardson
Chairperson of the Compensation Committee of the
Board of Directors
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2022 key compensation themes
The feedback we seek from our shareholders about compensation-related topics is very important to us, as we are
committed to maintaining a strong link between the interests of our employees and those of our shareholders. We
continued engaging with shareholders during 2022 and
feedback about our
compensation framework.
received overall positive
The text below summarizes key compensation themes for 2022 and provides answers to the questions we most frequently
receive from shareholders.
Summary of 2022 key compensation themes / responses to frequently asked questions
What progress has been made on resolving the French cross-border matter and how is this reflected in GEB
compensation?
In December 2021, UBS filed an appeal with the French Supreme Court regarding the decision of the Court of Appeal
relating to the French cross-border matter. This matter remains ongoing and was considered in the decision-making
process for our 2021 performance award pool.
The use of the RoCET1 metric aims to ensure the cost of litigation matters, including the French cross-border matter, has
an ongoing and direct impact on the compensation awarded and realized by our most senior leaders, including the GEB.
Additionally, when determining the 2019 performance award pool, the impact of the French cross-border matter was
considered in our decision making, following the verdict of the Court of First Instance in early 2019.
Furthermore, up to CHF 7.9m, or 30%, of the 2019 LTIP awards at grant for GEB members active in March 2017, as well
as the former Chairman of the BoD’s unvested share award, remains undelivered and continues to be at risk and directly
linked to the final resolution of the French cross-border matter. In addition, a malus clause allows the Compensation
Committee to assess any new information that becomes available in the future and to retrospectively reduce any
undelivered 2019 LTIP award by up to the full amount if such new information would have impacted our compensation
decision in 2019. This matter continues to be ongoing and, once resolved, the final outcome will be reflected in the final
amounts delivered to relevant current and former employees.
Impact of litigation matters on the LTIP
LTIP design
(all years)
Performance metric
(RoCET1 directly impacted by litigation costs)
Added measure for
2019 LTIP award
(GEB members active
in March 2017)
Fact-based adjustment
(up to CHF 7.3m of the 2019
LTIP at grant is directly linked
to the final resolution of the
French cross-border matter)
+
Malus adjustment
(2019 LTIP award may be reduced
based on new information
that would have impacted the
compensation for 2019)
)
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Note: As disclosed in the Compensation Report 2019.
How does UBS support diversity and pay fairness?
Compensating employees fairly and consistently is key to ensuring equal opportunities. A strong commitment to pay for
performance and pay equity is embedded in our compensation policies.
› Refer to “Environmental, Social and Governance considerations” in the “Compensation philosophy and governance” section of
this report for more information about pay fairness
› Refer to the “People and culture make the difference“ section of our Sustainability Report 2022, available under “Annual
reporting” at ubs.com/investors, for more information about diversity, equity and inclusion (DE&I)
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How are environmental, social and governance considerations factored into the compensation process?
We maintain our well-established process that considers environmental, social and governance (ESG) objectives in the
compensation determination process in objective setting, performance award pool funding, performance evaluation and
compensation decisions.
› Refer to “Environmental, Social and Governance considerations” in the “Compensation philosophy and governance” section of
this report for more information
How does UBS promote and support the health and well-being of employees?
Supporting employee health and well-being remained a priority, and we further expanded our offering in 2022.
We are committed to helping employees thrive in their current roles and deliver sustainable performance over time.
Regular “pulse” surveys gauged employees’ views on remote work, stress, communication and other aspects.
Resources to support holistic well-being included a suite of programs, benefits and workplace resources, along with
a bespoke eLearning curriculum, that aimed to help our employees manage their health, foster well-being,
strengthen their resilience and support the sustainability of the organization.
› Refer to the “People and culture make the difference“ section of our Sustainability Report 2022, available under “Annual
reporting” at ubs.com/investors, for more information about DE&I
What is the achievement level of the Long-Term Incentive Plan granted in 2020 for 2019 performance?
The deferred portion of the performance award granted in 2020 (for 2019 performance) to members of the Group
Executive Board (the GEB) and selected senior management was in part delivered through the Long-Term Incentive
Plan (the LTIP) award. The three-year performance period concluded at the end of 2022, with the 2019 LTIP
achieving 98% of the maximum opportunity (of up to 100%). We believe alignment of our senior leadership with
our shareholders is important for long-term success. Our LTIP is designed to support alignment of compensation
with the execution of our strategy, financial performance and long-term growth.
Performance achievement for the 2019 LTIP awarded in 2020
Performance
metrics
RoCET1
(Weight: 50%)
rTSR
(Weight: 50%)
Performance metric outcome
2019 LTIP achievement level
Threshold
6%
Maximum
18%
Threshold
33%
Maximum
100%
Outcome:
17.3%
−25ppts
+25ppts
Outcome
below
threshold:
full forfeiture
Achievement: 96%
33%
100%
Achievement: 100%
Outcome
above
maximum:
achievement
capped at
100%
Outcome:
50.9ppts
Overall 2019 LTIP achievement level
Overall achievement: 98%
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Say-on-pay
Say-on-pay votes at the AGM
In line with the revised Swiss Code of Obligations (which to a large extent integrates the Swiss Ordinance against Excessive
Compensation in Listed Stock Corporations, which was enacted as an interim measure), we seek binding shareholder
approval for the aggregate compensation awarded to the Group Executive Board (the GEB) and the Board of Directors
(the BoD). Prospective approval of the fixed compensation of the BoD and GEB provides the firm and its governing bodies
with the certainty needed to operate effectively. Retrospective approval of the GEB’s variable compensation aligns their
compensation with performance and contribution.
The table below outlines our compensation proposals, including supporting rationales, that we plan to submit to the
2023 AGM for binding votes, in line with the revised Swiss Code of Obligations and our Articles of Association (the AoA).
These binding votes on compensation and the advisory vote on our compensation report reflect our commitment to
shareholders having their say on pay.
› Refer to “Provisions of the Articles of Association related to compensation” in the “Supplemental information” section of this
report for more information
Audited |
Approved fixed compensation
At the 2021 AGM, the shareholders approved a maximum aggregate fixed compensation amount of CHF 33.0m for GEB
members for the 2022 performance year. This budget reflects base salaries, role-based allowances in response to EU
Capital Requirements Directive V, and estimated standard contributions to retirement benefit plans, as well as
other benefits.
Our expenses related to fixed compensation for our continuing GEB members were within the budget; however, the
amount of fixed compensation, including replacement awards, related to the hiring of Sarah Youngwood as Group Chief
Financial Officer and Naureen Hassan as President UBS Americas, required the use of the supplemental amount as
authorized by article 46 para. 5 of our AoA. A total of CHF 0.1m (of which CHF 0.05m related to Sarah Youngwood and
CHF 0.05m related to Naureen Hassan) was used to fund the authorized excess to the approved aggregate amount of
fixed compensation.
› Refer to “2022 total compensation for the GEB members” in the “Compensation for GEB members” section of this report
Compensation-related proposals for binding and advisory votes at the 2023 AGM
Item
Approved at the 2022
AGM
BoD proposals for the
2023 AGM
Rationale
GEB variable
compensation
Shareholders approved
CHF 79,750,000 for the
2021 financial year1,2,3
(vote “for”: 86%)
GEB fixed
compensation
Shareholders approved
CHF 33,000,000 for the
2023 financial year1,2,3
(vote “for”: 93%)
The BoD proposes an
aggregate amount of
variable compensation of
CHF 81,100,000 for the
members of the GEB for
the 2022 financial year.
The BoD proposes a
maximum aggregate
amount of fixed
compensation of
CHF 33,000,000 for the
members of the GEB for
the 2024 financial year.
BoD
compensation
Shareholders approved
CHF 13,000,000 for the
period from the 2022
AGM to the 2023
AGM1,2,4
(vote “for”: 93%)
The BoD proposes a
maximum aggregate
amount of compensation
of CHF 13,000,000 for the
members of the BoD for
the period from the 2023
AGM to the 2024 AGM.
Advisory vote
on the
Compensation
Report
Shareholders approved the
UBS Group AG
Compensation Report
2021 in an advisory vote
(vote “for”: 86%)
The BoD proposes that the
UBS Group AG
Compensation Report
2022 be ratified in an
advisory vote.
The proposed pool reflects the solid performance of the GEB as demonstrated in
the strength of our share price and the good performance of the Group in a
challenging market environment. For 2022, we consider a GEB pool excluding the
impact of the 2021 loss event to support competitive pay for competitive
performance and not to carry forward the 2021 impact over multiple years.
Adjusted for the direct impact of the 2021 loss event on specific GEB members, the
2022 GEB pool is down approximately 5% in Swiss franc terms or a decrease of
10% in US dollar terms, which is aligned with the Group pool development.
The proposed amount is unchanged from the previous year, reflecting consistency
in planning over time and unchanged base salaries for the Group CEO and other
GEB members. Besides the base salaries, it also includes role-based allowances,
estimated standard contributions to retirement benefit plans, as well as other
benefits. The proposed amount provides flexibility in light of potential changes of
GEB composition or roles, competitive considerations where potential additional
role-based allowances may be required as well as other factors (e.g., changes in FX
rates or benefits).
The proposed amount is unchanged compared with the previous period and
includes the total compensation of the Chairman and the newly defined Vice
Chairman role. The compensation for the Chairman is approximately 8% lower
compared with the previous Chairman. The fee for the new full-time Vice Chairman
role was absorbed within the existing budget. All BoD fees remain unchanged for
the period 2023 AGM to 2024 AGM.
Our Total Reward Principles and compensation framework are fully aligned with our
purpose and support our strategic imperatives. This aims to ensure that the interests
of our employees are aligned with those of our clients and other stakeholders.
11 Local currencies are converted into Swiss francs at the 2022 performance award currency exchange rates. 22 Excludes the portion related to the legally required employer’s social security contributions. 33 As stated
in “Group Executive Board” in the “Corporate governance” section of our Annual Report 2022, twelve GEB members were in office on 31 December 2022 and on 31 December 2021. 44 Twelve BoD members were in
office on 31 December 2022 and on 31 December 2021.
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Compensation philosophy and governance
Our compensation philosophy
Total Reward Principles
Our Total Reward Principles provide a strong link to our strategic imperatives and encourage employees to live our strong
and inclusive culture that is grounded in our three keys to success: our Pillars, Principles and Behaviors. These guiding
principles underpin our approach to compensation and define our compensation framework. In 2022, we reviewed our
Total Reward Principles and compensation framework to confirm they are fully aligned with our purpose and support
our strategic imperatives. This aims to ensure that the interests of our employees are aligned with those of our clients
and other stakeholders.
Therefore, our compensation approach supports our capital strength and risk management, and provides for
simplification and efficiency. It encourages employees to focus on client centricity, connectivity and sustainable impact in
everything we do. Moreover, we reward behaviors that help build and protect the firm’s reputation, specifically
Accountability with integrity, Collaboration and Innovation. Compensation for each employee is based on individual,
team, business division and Group performance, within the context of the markets in which we operate.
Total Reward Principles
Our Total Reward Principles apply to all employees globally, but vary in certain locations according to local legal
requirements, regulations and practices. The table below provides a summary of our Total Reward Principles.
Support our purpose and strategy
Our compensation approach supports the firm’s purpose and strategy, fosters engagement among
employees and aligns their long-term interests with those of clients and stakeholders.
Attract, retain and connect a diverse,
talented workforce
We embrace a culture of diversity, equity and inclusiveness. Pay at UBS is fair, reflects equal treatment and
is competitive. In this way, our investment in a connected workforce supports the sustainability of the
organization.
Apply a pay-for-performance approach to
promote development and our ways of
working
The setting of clear objectives, as well as a thorough evaluation of what was achieved and how it was
achieved, combined with effective communication, promotes clarity, accountability and establishes a
strong link between pay and performance. This approach emphasizes our Behaviors, which are
Accountability with integrity, Collaboration and Innovation.
Reinforce sustainable growth and support
long-term value creation
Compensation is appropriately balanced between fixed and variable elements and delivered over an
adequate period to support our growth ambitions and sustainable performance.
Support risk awareness and appropriate
risk-taking
Our compensation structure encourages employees to have a focus on risk management and behave
consistently with the firm’s risk framework and appetite, thereby anticipating and managing risks
effectively to protect our capital and reputation.
Our Total Reward approach
At UBS, we apply a holistic Total Reward approach, generally consisting of fixed compensation (base salary and role-
based allowances, if applicable), performance awards, pension contributions and benefits. Our Total Reward approach is
structured to support sustainable results and growth ambitions.
For employees whose total compensation exceeds certain levels, performance awards are delivered in a combination of
cash, deferred contingent capital awards and deferred share-based awards.
A substantial portion of performance awards is deferred and vests over a five-year period (or longer for certain regulated
employees). This deferral approach supports alignment of employee and investor interests, our capital base and the
creation of sustainable shareholder value.
› Refer to “Compensation elements for all employees” in the “Group compensation” section of this report for more information
Total Reward
Total Compensation
Performance award
Deferred Contingent Capital Plan
Base salary / fi xed
compensation
Deferred share-based awards:
– Long-Term Incentive Plan (GEB members)
– Equity Ownership Plan (all other employees, as applicable)
Cash
Note: illustrative
Longer-term
Shorter-term
Pension
and
benefi ts
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Compensation governance
Board of Directors and Compensation Committee
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 AoA.
As determined in the AoA and the firm’s Organization Regulations, the Compensation Committee supports the BoD with
its duties to set guidelines on compensation and benefits, to oversee implementation thereof, to approve certain
compensation and to scrutinize executive performance. The Compensation Committee consists of independent BoD
members, who are elected annually by shareholders at the AGM, and is responsible for governance and oversight of our
compensation process and practices. This includes the alignment between pay and performance, and ensuring that the
compensation framework supports appropriate risk awareness and management, as well as appropriate risk-taking. In
2022, to additionally support the connection between the Compensation Committee and the Risk Committee, the
Compensation Committee Chairperson was also a member of the Risk Committee.
Annually, and on behalf of the BoD, the Compensation Committee:
– reviews our Total Reward Principles;
– approves key features of the compensation framework and plans for the non-independent Board members and GEB
members;
– reviews performance award funding throughout the year and proposes, upon proposal of the Group CEO, the final
annual Group performance award pool to the BoD for approval;
– upon proposal of the Group CEO, reviews the performance framework for the other GEB members;
– upon proposal of the Group CEO, proposes the performance assessments and the individual total compensation for
the other GEB members for approval by the BoD;
– upon proposal of the Chairman, for the Group CEO, proposes the financial and non-financial performance targets and
objectives, the performance assessment and the total compensation for approval by the Board;
– approves the total compensation for the Chairman and the non-independent Board members;
– upon proposal of the Chairman, proposes the remuneration / fee framework for independent Board members for
approval by the Board;
– upon proposal of the Chairman and Group CEO, approves the remuneration / fee frameworks for external supervisory
board members of Significant Group Entities and is informed of remuneration / fee frameworks for external supervisory
board members of Significant Regional Entities;
– proposes to the BoD for approval the annual compensation report and approves other material public disclosures on
UBS compensation matters; and
– proposes to the BoD, for approval by the AGM, the maximum aggregate amounts of BoD compensation and GEB
fixed compensation and the aggregate amount of variable compensation for the GEB.
The Compensation Committee is required to meet at least four times each year. All meetings in 2022 were held in the
presence of the Chairman and the Group CEO and most were attended by external advisors. Individuals, including the
Chairman and the Group CEO, are not permitted to attend a meeting or participate in a discussion on their own
performance and compensation.
After the meetings, the Chairperson of the Compensation Committee reports to the BoD on the Compensation
Committee’s activities and discussions and, if necessary, submits proposals for approval by the full BoD. Compensation
Committee meeting minutes are also sent to all members of the BoD.
On 31 December 2022, the members of the Compensation Committee were Julie G. Richardson (Chairperson), Dieter
Wemmer and Jeanette Wong.
› Refer to “Board of Directors” in the “Corporate governance” section of our Annual Report 2022 for more information
External advisors
The Compensation Committee may retain external advisors to support it in fulfilling its duties. In 2022, HCM International
Ltd. (HCM) provided independent advice on compensation matters. HCM holds no other mandates with UBS.
Additionally, Willis Towers Watson provided the Compensation Committee with data on market trends and pay levels.
Various subsidiaries of Willis Towers Watson provide similar information to UBS’s human resources department in relation
to compensation for employees. Willis Towers Watson holds no other compensation-related mandates with UBS.
The Risk Committee’s role in compensation
The Risk Committee, a committee of the BoD, works closely with the Compensation Committee with the goal of ensuring
that our compensation framework appropriately reflects risk awareness and management, and supports appropriate risk-
taking. It supervises and sets appropriate risk management and risk control principles and is regularly briefed on how risk
is factored into the compensation process. It also monitors the involvement of Group Risk Control and Compliance and
Operational Risk in compensation and reviews risk-related aspects of the compensation process.
› Refer to ubs.com/governance for more information
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Compensation Committee 2022 / 2023 key activities and timeline
SSttrraatteeggyy,, ppoolliiccyy aanndd ggoovveerrnnaannccee
Total Reward Principles
Sustainability / ESG in the compensation process
Compensation disclosure and stakeholder communication matters
AGM reward-related items
Compensation Committee governance
AAnnnnuuaall ccoommppeennssaattiioonn rreevviieeww
Accruals and full-year forecast of the performance award pool funding
Performance targets and performance assessment of the Group CEO and GEB members
Group CEO and GEB members’ salaries and individual performance awards
Update on market practice, trends and peer group matters
Pay for performance, including governance on certain higher-paid employees, and
non-standard compensation arrangements
Board of Directors remuneration
CCoommppeennssaattiioonn ffrraammeewwoorrkk
Compensation framework and deferred compensation matters
RRiisskk aanndd rreegguullaattoorryy
Risk management in the compensation approach and joint meeting with
BoD Risk Committee
Regulatory activities impacting employees and engagement with regulators
11 The Compensation Committee held two meetings in December 2022.
Compensation governance
April
July
Sept
Oct
Nov
Dec¹
Jan
Feb
The table below provides an overview of compensation governance by specific role.
Recipients
Compensation recommendations proposed by
Approved by
Chairman of the BoD and Vice
Chairman of the BoD
Compensation Committee
Compensation Committee1
Other BoD members
Compensation Committee and Chairman of the BoD
Group CEO
Compensation Committee and Chairman of the BoD
Other GEB members
Compensation Committee and Group CEO
BoD1
BoD1
BoD1
Key Risk Takers (KRTs) /
senior employees
Respective GEB member and functional management
team
Individual compensation for KRTs and senior employees:
Group CEO
11 Aggregate variable compensation and maximum aggregate amount of fixed compensation for the GEB, as well as maximum aggregate remuneration for the BoD, are subject to shareholder approval.
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Environmental, Social and Governance considerations
Environmental, social and governance in the compensation determination process
Environmental, social and governance (ESG) objectives are considered in the compensation determination process in
objective setting, performance award pool funding, performance evaluation and compensation decisions.
ESG-related objectives have been embedded in our Pillars and Principles since they were established in 2011. In 2021,
we introduced explicit sustainability objectives in the non-financial goal category of the Group CEO and GEB scorecards.
These sustainability objectives are linked to our priorities, and their progress is measured via robust quantitative metrics
and qualitative criteria. The table below provides an overview of our metrics and progress achieved in 2022, including
climate-related goals under the priority “Planet.” Sustainability objectives are individually assessed for each GEB member,
and consequently directly impact their performance assessments and compensation decisions.
In addition, in the performance award pool funding across the Group, ESG is also reflected through an assessment of
progress made against targets linked to our focus areas of Planet, People (including progress made against our diversity
ambitions) and Partnerships, alongside other key dimensions. Therefore, ESG is taken into consideration when the
Compensation Committee assesses not only what results were achieved but also how they were achieved.
For 2022, we established robust and concrete targets, and made good progress toward achieving them. We continue to
increase our focus on this topic.
› Refer to “GEB performance assessments” in the “Compensation for GEB members” section of this report for more information
about the GEB performance measurement process
› Refer to “Our focus on sustainability and climate,” “Employees” and “Society” in the “How we create value for our stakeholders”
section of our Annual Report 2022 for more information
› Refer to ubs.com/gri for more information about ESG-related topics
Paying our people fairly and equitably
Pay equity and equal opportunity are fundamental to achieving our purpose. To connect for a better world, providing
equal support to all our employees, with their diverse experiences, perspectives and backgrounds, is critical to our success.
Factors such as gender, race, ethnicity, part-time status or a recent leave of absence should not impact opportunities.
Fair and consistent pay practices are designed to ensure that employees are appropriately rewarded for their contribution.
We pay for performance, and we take pay equity seriously. We’ve embedded clear commitments in our global
compensation policies and practices, and we regularly conduct internal reviews and external audits as quality checks. If
we find any gaps not explained by business or by appropriate employee factors such as role, responsibility, experience,
performance or location, we look at the root causes and address them.
Since 2020, we have been certified under the EQUAL-SALARY Foundation standards for our human resources practices
in Switzerland, the US, the UK, the Hong Kong SAR and Singapore, covering more than two-thirds of our global employee
population. Our global human resources policies and standards, including reward, performance management and
promotion, from hiring through retirement, are reviewed annually to further improve our approach and processes. Our
processes are global and we apply the same standards across all our locations.
The firm also successfully completed an equal pay analysis in Switzerland in 2020, as required by the Swiss Federal Act
on Gender Equality. The results of the analysis confirmed that we are fully compliant with Swiss equal pay standards.
These holistic certifications are a testament to our well-established equal opportunity environment and the strength of
our human resources practices, including performance and reward.
In 2022, we extended our internal fair pay analysis by assessing employees’ salaries against local living wages, using
benchmarks defined by the Fair Wage Network. Excluding our US Financial Advisor population and their related support
population (as their compensation is primarily based on a formulaic approach), our analysis showed that employees’
salaries were at or above the respective benchmarks, and the few outliers have all been addressed. UBS is committed to
fair pay and supports all employees being paid at least a living wage.
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Our aspirational goals and progress
Our priorities
Our aspirational goals
Our progress in 2022
Planet, people,
partnerships
Planet
USD 400bn invested assets in sustainable investments
by 2025.
Decarbonization targets for 2030 for financing of the
real estate, fossil fuels, power generation and cement
sectors (from 2020 levels):
– reduce emissions intensity of UBS’s residential real
–
–
–
–
estate lending portfolio by 42%;
reduce emissions intensity of UBS’s commercial real
estate lending portfolio by 44%;
reduce absolute financed emissions associated with
UBS loans to fossil fuel companies by 71%;
reduce emissions intensity associated with UBS
loans to power generation companies by 49%; and
reduce emissions intensity associated with UBS loans
to cement companies by 15%.
Align 20% of AuM to be managed in line with net zero
(Asset Management).2
Achieve net-zero emissions across discretionary client
portfolios by 2050 (Asset Management).3
Achieve net-zero energy emissions resulting from our
own operations (scopes 1 and 2) by 2025; cut energy
consumption by 15% by 2025 (compared with 2020).
Offset historical emissions back to the year 2000 by
sourcing carbon offsets (by year-end 2021) and by
offsetting credit delivery and full retirement in registry
(by year-end 2025).
Engage with key vendors on aiming for net zero by
2035.
Increased invested assets in sustainable investments to
USD 268bn (compared with USD 251bn in 2021).
Calculated progress against pathways for the real estate (commercial and
residential), fossil fuel and power generation sectors:1
– reduced emissions intensity of UBS’s residential real estate lending
–
–
–
portfolio by 8% (end of 2021 vs 2020 baseline);
reduced emissions intensity of UBS’s commercial real estate lending
portfolio by 7% (end of 2021 vs 2020 baseline);
reduced absolute financed emissions associated with UBS loans to fossil
fuel companies by 42% (end of 2021 vs 2020 baseline); and
reduced emissions intensity associated with UBS loans to power
generation companies by 12% (end of 2021 vs 2020 baseline).
Introduction of an additional decarbonization target for the cement sector,
as well as an estimation of the overall financed emissions.
Initiated analysis of revisions to fund documentation and investment
management agreements to align with Asset Management’s net-zero-
aligned frameworks.
Reduced net greenhouse gas (GHG) footprint for scope 1 and 2 emissions
by 13% and energy consumption by 8% (compared with 2021); continued
implementation of the replacement of fossil fuel heating systems and
investing in credible carbon removal projects; achieved 99% renewable
electricity coverage despite challenging market conditions.
Continued to follow up on credit delivery and retirement of sourced
portfolio.
Identified “GHG key vendors” (vendors that collectively account for >50%
of our estimated vendor GHG emissions) and invited the vendors that
accounted for 67% of our annual vendor spend (including all GHG key
vendors) to disclose their environmental performance through CDP’s
Supply Chain Program, with 66% of the invited vendors completing their
disclosures in the CDP platform.
People
30% global female representation at Director level and
above by 2025.
Increased to 27.8% (2021: 26.7%) female representation at Director level
and above.
26% of US roles at Director level and above held by
employees from ethnic minorities by 2025.
Increased to 20.4% (2021: 20.1%) ethnic minority representation at
Director level and above in the US.
26% of UK roles at Director level and above held by
employees from ethnic minorities by 2025.
Increased to 23.0% (2021: 21.3%) ethnic minority representation at
Director level and above in the UK.
Raise USD 1bn in donations to our client philanthropy
foundations and funds and reach 25 million
beneficiaries by 2025 (cumulative for 2021–2025).
Achieved a UBS Optimus Foundation network donation volume of
USD 274m in 2022, totaling USD 436m since 2021 (both figures include
UBS matching contributions).
Support 1.5 million young people and adults to learn
and develop skills through our community impact
activities (2022–2025).
Reached 5.9 million beneficiaries.
Reached 370,916 beneficiaries through strategic community impact
activities.4
Partnerships
Establish UBS as a leading facilitator of discussion,
debate and idea generation.
Co-organized, with the Institute of International Finance, the first
Wolfsberg Forum for Sustainable Finance.
Drive standards, research and development, and
product development.
Joined a consortium that is pioneering methods of assessing and
maximizing the GHG reduction potential of energy storage.
Co-founded Carbonplace, a technology platform for the voluntary carbon
market that has the goal of creating a streamlined and transparent market
for our clients.
Co-led the Taskforce on Nature-related Financial Disclosures’ financial-
sector-specific working group.
Collaboration with two Swiss companies that are pioneering innovative
carbon removal technologies.
Joined the Partnership for Carbon Accounting Financials (PCAF).
11 Refer to the “Environment” section of our Sustainability Report 2022, available under “Annual reporting” at ubs.com/investors, for further information. The inherent one-year time lag between the as-of date of our
lending exposure and the as-of date of emissions can be explained by two factors: corporates disclose their emissions in annual reporting only a few months after the end of a financial year; and specialized third-party
data providers take up to nine months to collect disclosed data and make it available to data users. Consequently, the baselines for our net-zero ambitions are based on year-end 2020 lending exposure and 2019
emissions data. Our 2021 emissions actuals are based on year-end 2021 lending exposure and 2020 emissions data. 22 The 20% alignment goal amounted to USD 235bn at the time of Asset Management’s commitment
in 2021. By 2030, the weighted average carbon intensity of funds is to be 50% below the carbon intensity of the respective 2019 benchmark. 33 The near- and medium-term plans for the achievement of this goal
include our Asset Management business division only. 44 Our Community Impact program has a strategic focus on education and the development of skills.
CCaauuttiioonnaarryy nnoottee:: We have developed methodologies that we use to set our climate-related targets and identify climate-related risks and which underly the metrics that are disclosed in this report. Standard setting
organizations and regulators continue to provide new or revised guidance and standards, as well as new or enhanced regulatory requirements for climate disclosures. Our disclosed metrics are based upon data available
to us, including estimates and approximations where actual or specific data is not available. We intend to update our disclosures to comply with new guidance and regulatory requirements as they become applicable
to UBS. Such updates may result in revisions to our disclosed metrics, our methodologies and related disclosures, which may be substantial, as well as changes to the metrics we disclose.
› Refer to our Sustainability Report 2022, available under “Annual reporting“ at ubs.com/investors, for more information
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Build a diverse, equitable and inclusive workplace
Our diversity, equity and inclusion (DE&I) strategy and initiatives focus on a wide range of characteristics including gender,
gender identity, sexual orientation, ethnic diversity, disabilities, age, and veteran status, along the entire employee life
cycle. Our businesses aim to hire individuals with strong potential along with diverse skills, backgrounds and perspectives.
We invest in the development of all employees and give them the visibility and opportunities to realize their potential,
and implement Group-wide divisional and regional initiatives that support their career growth. These efforts collectively
support the progress towards achieving our DE&I aspirational goals. For example, our partnerships with the Investments
and Wealth Institute (the IWI) and Kaplan Financial Education in the US provide scholarships for diverse Wealth
Management professionals at UBS to pursue industry certifications in investment management, private wealth advisory,
retirement management and financial planning. Our leaders and employee networks are essential in our work to build a
sense of belonging and to advance our goals.
We have an ongoing focus on the importance of inclusive leadership skills, ensuring equity in our policies and practices,
and increasing the representation of women and ethnic minority employees. We take a multi-faceted approach that
considers recruitment, development and belonging perspectives. For example, we support flexible working arrangements
that benefit current employees and help us attract a more diverse pool of applicants. We also assess executive candidates
for inclusive leadership competencies.
In 2020, we outlined our intention to increase our female and ethnic minority representation, especially among
management, and we have made steady progress toward achieving those aspirations. Women now account for 41% of
our workforce and 27.8% of our Director-level and above population. At the same time, 42% of our GEB members are
female. Due to variations in legal requirements and historical progress, we continue to take a country-specific approach
to increasing our representation of ethnic minorities, and we have published aspirations for the US and the UK,
specifically. In 2022, we increased the ethnic minority representation at Director level and above to 20.4% (in the US)
and 23.0% (in the UK).
Progress against these aspirations is considered in the determination of the annual performance award pool and included
in the sustainability objectives under “Strategic & Growth” for the GEB, as outlined in the table above.
› Refer to the “People and culture make the difference“ section of our Sustainability Report 2022, available under “Annual
reporting” at ubs.com/investors, for more information about DE&I
Performance award pool funding
Our compensation philosophy focuses on balancing performance with appropriate risk-taking, retaining talented
employees and shareholder returns. Our overall performance award pool funding percentage decreases as financial
performance increases. In years of strong financial performance, this prevents excessive compensation and results in an
increased proportion of profit before performance awards being available for distribution to shareholders or growing the
Group’s capital. In years where performance declines, the performance award pool will generally decrease; however, the
funding percentage may increase.
Our performance award pool funding framework is based on Group and business division performance, including
achievements against defined performance measures. In assessing performance, we also consider industry peers, market
competitiveness of our results and pay position, as well as progress against our strategic objectives, including returns,
risk-weighted assets and cost efficiency. The Risk and Compliance functions support our holistic reflection and
consideration of the financial and non-financial impact (including reputation) of risk matters. We further consider the
firm’s risk profile and culture, the extent to which operational risks and audit issues have been identified and resolved,
and the success of risk reduction initiatives including significant events.
The funding for Group Functions is linked to overall Group performance and reflects headcount, workforce location and
demographics. For each functional area, quantitative and qualitative assessments evaluate service quality, risk
management and financial achievements.
Our decisions regarding the performance award pool also balance consideration of financial performance with a range
of factors, including DE&I and other ESG metrics, the impact of litigation, regulatory costs, the effect of changes in
financial accounting standards, capital returns and relative total shareholder return.
Before making its final proposal to the BoD, the Compensation Committee considers the CEO’s proposals and can apply
a positive or negative adjustment to the performance award pool.
› Refer to “2022 Group performance outcomes” in the “Group compensation” section of this report
› Refer to the “Group performance” section of our Annual Report 2022 for more information about our results
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Performance award pool funding process – illustrative overview
Financial
performance
Risk
adjustment
Quantitative and qualitative adjustments
1
Business
division
fi nancial
performance
2
Risk-adjusted
business
division
performance
award pool
Business
division
measures
3
Qualitative,
risk, regulatory
and
sustainability
assessment
Relative
performance
versus peers
Market
position
and trends
Consultation of
Group CEO with
GEB members
Compensation
Committee / BoD
governance and
decision
4
5
Recommended
business
division
performance
award pools
Final Group
performance
award pool
1
2
3
4
5
Business division
fi nancial performance
The starting point for the funding process is the business division fi nancial performance, which may be adjusted
for items that are not refl ective of the underlying business division performance.
Risk-adjusted business
division performance
award pool
Business division
measures
Qualitative, risk,
regulatory and
sustainability
assessment
Predetermined business division-specifi c funding rates are applied to risk-adjusted performance, which excludes
items that are not refl ective of the underlying business performance.
Each division is assessed based on specifi c measures (e.g., net new fee-generating assets, return on attributed
equity).
Decision making considers the fi rm’s risk profi le and the extent to which operational risks and audit issues have
been identifi ed and resolved. Diversity, equity & inclusion and other ESG metrics, the impact of litigation and
regulatory costs are also considered. The Risk and Compliance functions support our holistic refl ection
and consideration of the fi nancial and non-fi nancial impact (including reputation) of risk matters.
Relative performance
versus peers
Performance is assessed relative to our peers, including fi nancial performance, returns and relative total
shareholder return.
Market position
and trends
Market intelligence, based on external advisors, helps assess the competitiveness of our pay levels and
compensation structure. It also provides a prospective view of market trends in terms of absolute compensation
levels, compensation framework and industry practice.
Recommended business
division performance
award pools
The business division performance award pool determination process, based on quantitative and qualitative
assessments, results in a proposal from the Group CEO (after consultation with the GEB) to the Compensation
Committee for consideration.
Final Group
performance award
pool
The Compensation Committee considers the proposal in the context of the factors outlined above and verifi es it
is in line with our strategy and our Total Reward Principles to create sustainable shareholder value and support
our growth ambitions. The Committee may alter the proposal of the Group CEO (upward or downward
including proposing a zero award) before making its fi nal proposal to the BoD.
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Compensation for GEB members
GEB compensation framework
In 2022, we made no changes to our GEB compensation framework. The chart below illustrates the compensation
elements, pay mix and key features for GEB members. Of the annual performance award, 20% is paid in the form of
cash and 80% is deferred over a period of five years,1 with 50% of the annual performance awards granted under the
Long-Term Incentive Plan (the LTIP) and 30% under the Deferred Contingent Capital Plan (the DCCP).
› Refer to “Our deferred compensation plans” in the “Group compensation” section of this report for more information
2022 compensation framework for GEB members (illustrative example)
GEB1
DCCP
30%
Key features
30%
~17%
– Notional additional tier 1 (AT1) instruments
– Award vests in year 5 after grant year, subject to a write-down if a viability event
occurs or the CET1 capital ratio falls below 10% (i.e., a trigger event)
– Award is subject to 20% forfeiture for each fi nancial year that UBS does not
achieve a Group profi t before tax, adjusted for disclosed items generally not
representative of underlying business performance
– Award is subject to employment conditions and harmful acts provisions
– Notional shares
– Award vests in equal installments in years 3, 4 and 5 after grant year, depending
on the achievement of RoCET1 and rTSR measured over a three-year performance
period
– Award is subject to employment conditions and harmful acts provisions
LTIP
50%
three-year
performance
period
~17%
~17%
Cash
20%
20%
Base
salary
2022 2023
grant
year
year
1
year
2
year
3
year
4
year
5
1 Performance awards to GEB members who are SMF / MRT are subject to additional deferral and vesting requirements.
› Refer to the “Group Compensation” section of this report for more information
› Refer to “Regulated staff” in the “Supplemental information” section of this report for more information
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Pay-for-performance safeguards for GEB members
Performance
award caps
– Cap on the total GEB performance award pool (2.5% of profit before tax)1
– Caps on individual performance awards (for the Group CEO capped at five times the fixed compensation and at seven times for the other
GEB members)
– Cap of 20% of performance award in cash
Delivery and
deferral
– 80% of performance awards are at risk of forfeiture
– Long-term deferral over five years (or longer for certain regulated GEB members)
– Alignment with shareholders (through the LTIP) and bondholders (through the DCCP)
– Final payout of equity-based LTIP award (50% of performance award) subject to absolute and relative performance conditions (three-year
performance period)
Contract
terms
– No severance terms
– Notice period between six and twelve months
Other
safeguards
– Share ownership requirements
– No hedging allowed
11 The Compensation Committee may consider adjustments to profit for items that are not reflective of underlying performance.
GEB share ownership requirements
To align the interests of GEB members with those of our shareholders and to demonstrate personal commitment to the
firm, we require the Group CEO and the other GEB members to hold a substantial number of UBS shares. GEB members
must reach their minimum shareholding requirements within five years from their appointment and retain it throughout
their tenure. The total number of UBS shares held by a GEB member consists of any vested or unvested shares and any
privately held shares. At the end of 2022, all GEB members met their share ownership requirements, except for those
appointed within the last three years, who still have time to build up and meet the required share ownership.
As of 31 December 2022, our GEB members held shares with an aggregate value of approximately USD 154m,
demonstrating their commitment to our strategy and alignment with shareholders.
Share ownership requirements
Group CEO
min. 1,000,000 shares
Other GEB members
min. 500,000 shares
GEB base salary and role-based allowance
Must be built up within five years from their appointment and retained throughout
their tenure
Each GEB member receives a fixed base salary, which is reviewed annually by the Compensation Committee. The 2022
annual base salary for the Group CEO role was CHF 2.5m and has remained unchanged since 2011. The other GEB
members each received a base salary of CHF 1.5m (or local currency equivalent), also unchanged since 2011.
Over the course of 2022, one GEB member held a UK Senior Management Function (SMF) role for one of our UK entities.
In addition to base salary, a role-based allowance was part of the fixed compensation.
At the AGM, shareholders are asked to approve the maximum aggregate amount of fixed compensation for GEB
members for the following financial year.
› Refer to the “Supplemental information” section of this report for more information about Material Risk Takers (MRTs) and SMFs
› Refer to the “Say-on-pay” section of this report for more information about the AGM vote on fixed compensation for the GEB
Caps on the GEB performance award pool
The size of the GEB performance award pool may not exceed 2.5% of the Group’s profit before tax. This limits the overall
GEB compensation based on the firm’s profitability.
For 2022, the Group’s profit before tax was USD 9.6bn and the total GEB performance award pool was CHF 81.1m. The
GEB performance award pool was 0.9% of Group profit before tax, well below the 2.5% cap.
In line with the individual compensation caps on the proportion of fixed pay to variable pay for all GEB members
(introduced in 2013), the Group CEO’s granted performance award is capped at five times his fixed compensation.
Granted performance awards of other GEB members are capped at seven times their fixed compensation (or two times
for GEB members who are also MRTs). For 2022, performance awards granted to GEB members and the Group CEO
were, on average, 3.5 times their fixed compensation (in Swiss franc terms, excluding one-time replacement awards,
benefits and contributions to retirement plans).
› Refer to “Performance award pool funding” in the “Compensation philosophy and governance” section of this report for more
information
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GEB employment contracts
GEB members’ employment contracts do not include severance terms or supplementary pension plan contributions and
are subject to a notice period of between six and twelve months. A GEB member leaving UBS before the end of a
performance year may be considered for a performance award. Such awards are subject to approval by the BoD, and
ultimately by the shareholders at the AGM.
Benchmarking for GEB members
When recommending performance awards for the Group CEO and the other GEB members, the Compensation
Committee reviews the respective total compensation for each role against a financial industry peer group. The peer
group is selected based on comparability of their size, business mix, geographic presence and the extent to which they
compete with us for talent. The Compensation Committee considers our peers’ strategies, practices and pay levels, as
well as their regulatory environment; it also periodically reviews other firms’ pay levels or practices, including both
financial and non-financial sector peers, as applicable. The total compensation for a GEB member’s specific role considers
the compensation paid by our peers for a comparable role and performance within the context of our organizational
profile. The Compensation Committee periodically reviews and approves the peer group composition.
The table below presents the composition of our peer group as approved by the Compensation Committee for the 2022
performance year.
Bank of America
Barclays
BlackRock
BNP Paribas
Citigroup
Credit Suisse
Deutsche Bank
Goldman Sachs
HSBC
JPMorgan Chase
Julius Baer
Morgan Stanley
Standard Chartered
State Street
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GEB performance assessments
We assess each GEB member’s performance against a set of Group financial targets, non-financial objectives and
Behaviors. Under the non-financial objectives, we maintained the categories introduced in 2021: Core Job (which covers
job-specific, risk and people objectives) and Strategic & Growth (which covers strategy, digital, and environmental, social
and governance (ESG) objectives). This approach fosters an even greater focus on GEB priorities and the success of the
Group overall among all GEB members, and strengthens the understanding and importance of interdependence within
and across the GEB. At the same time, it creates stronger individual accountability, and further increases the focus on
core activities.
The Compensation Committee exercises its judgment with respect to the performance achieved relative to the prior year,
our strategic plan and our competitors, and considers the Group CEO’s proposals. The Compensation Committee’s
proposals are subject to approval by the BoD.
The Compensation Committee, and then the full BoD, follows a similar process for the Group CEO, except that the
proposal comes from the Chairman of the BoD.
Overview of the GEB compensation determination process
The compensation for the Group CEO and the other GEB members is governed by a rigorous process under Compensation
Committee and BoD oversight. The chart below shows how compensation for all GEB members is determined.
The Compensation Committee is involved at all stages of the performance and total compensation decision-making
process for the Group CEO and the other GEB members, for review and approval by the BoD.
Objective setting
Performance assessment
Compensation determination
Financial targets are based on Group
performance measures.
Non-fi nancial objectives are related
to core job, strategic and growth.
Behaviors objectives are related
to the three UBS Behaviors of
accountability with integrity,
collaboration and innovation.
Financial targets weight: 60%
Non-fi nancial objectives weight: 30%
Behavior objectives weight: 10%
When determining actual pay levels,
the Compensation Committee
factors in:
–
fi nancial performance;
–
–
performance assessment;
relative performance versus
peers; and compensation market
benchmarks and trends.
Final compensation decisions for GEB
members consider the Group CEO’s
proposal (the Group CEO makes no
proposal on his own awards).
Financial results are assessed
quantitatively based on full-year
fi nancial results versus predetermined
targets and plan fi gures.
Non-fi nancial objectives are
assessed predominantly based on
achievements relative to quantitative
key performance indicators.
Behaviors objectives are assessed
qualitatively.
The achievements of non-fi nancial
measures and Behaviors are
determined in three performance
categories, outlined on the next page.
The total of all weighted achievement
scores cannot exceed 100%.
Together with the BoD Chairman,
proposes performance targets and
objectives for the Group CEO for
approval by the BoD.
Together with the BoD Chairman,
proposes the Group CEO’s
performance assessment for approval
by the BoD.
Together with the Group CEO,
reviews the performance framework
for the other GEB members.
Together with the Group CEO,
proposes the performance
assessments of the other GEB
members for approval by the BoD.
Proposes to the BoD for approval:
–
–
together with the BoD Chairman,
the total compensation for the
Group CEO; and
together with the Group CEO, the
individual total compensation for
the other GEB members.
The fi nal decision on the aggregate
amount is subject to shareholder
approval.
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Overview of performance assessment measures
We apply a range of quantitative measures to assess GEB member performance against financial and non-financial
objectives while Behaviors are assessed qualitatively. The table below provides a summary of the main metrics and
measures used for 2022.
Financial measures
(60%)
Strategic &
Growth
Non-
financial
measures
(30%)
– Reported Group profit before tax
– Reported Group cost / income ratio
– Reported Return on CET1 capital
Strategy
– Progress on Group-wide transformation initiatives
– Delivery on division- / function-specific strategic programs and initiatives
Digital
– Progress on digital transformation initiatives
– Delivery of digital offering and user experience for clients
ESG
– Refer to the ”Our aspirational goals and progress” table in the ”Environmental, Social and Governance
considerations” section of this report
Core Job
Job-specific
– Business-specific criteria, such as net new investable asset targets and client engagement-level objectives
– Operating income growth targets for specific client segments and total cost goals
– Post-stress CET1 objectives and capital ratio guidance
– Execution progress regarding key client and internal initiatives; e.g., cross-divisional collaboration
initiatives, efficiency and cost-saving initiatives
Risk
– Operating within risk appetite constraints
– Progress to delivering on risk reduction initiatives
People
– Employee listening / sentiment results and feedback
– Progress toward meeting 2025 ambitions for female representation and for ethnic minority
representation in the US and the UK at Director and above levels (as per ESG disclosure)
– People development, mobility, turnover and succession plan metrics
Behaviors
Accountability with integrity
– Responsible for what they say and do
(10%)
Collaboration
– Takes ownership and makes things happen
– Steps up and acts when something is not right
– Trusts others and helps them to be successful
– Delivers One UBS, together with their colleagues
– Fosters a diverse, inclusive and equitable work environment
Qualitative assessment
against expected
Behaviors:
Innovation
– Challenges perspectives and looks at every opportunity to improve
– Actively seeks and provides feedback
– Learns from every success and failure
Performance assessment categories
The table below presents the three performance categories for the assessment of the performance against non-financial
objectives related to Core Job, Strategic & Growth and Behaviors. The achievement score represents the maximum
percentage, and the Compensation Committee may apply downward adjustments.
Needs focus
Good contribution
Excellent contribution
Achievement score: up to 33%
Achievement score: up to 66%
Achievement score: up to 100%
Non-financial measures
Needs focus
Expected behavior
Exemplary behavior
Achievement score: up to 33%
Achievement score: up to 66%
Achievement score: up to 100%
Behaviors
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2022 performance for the Group CEO
The performance award for the Group CEO is based on the achievement of financial performance targets and non-
financial objectives related to Core Job, Strategic & Growth and Behaviors, as described earlier in this section.
These objectives were set to reflect the strategic priorities determined by the Chairman and the BoD.
› Refer to “GEB compensation framework” in this section of this report for more information
Performance assessment for the Group CEO
The BoD recognized that Ralph Hamers successfully led UBS through a challenging year and delivered good financial
results despite significant headwinds due to geopolitical and macroeconomic developments. In this environment, he
focused the firm on maintaining client momentum and the disciplined execution of our strategy across regions to deliver
the benefits of our geographic diversification. Furthermore, the resulting growth enabled us to achieve a performance in
line with our 2022 targets. In addition, our strong capital position enabled us to return USD 7.3bn of capital to
shareholders for the 2022 financial year.
Furthermore, Mr. Hamers effectively led the Group through the challenging and volatile risk environment and continued
to promote an effective risk culture throughout the organization. He also kept the firm focused on risk reduction and
operating within our risk appetite.
Additionally, the BoD acknowledged that Mr. Hamers continued to be a strong ambassador for the drive to make our
organization more digital. He continued to increase the Group’s focus on technology as a differentiator for our clients
and employees, achieving important progress on our technology initiatives and agile transformation that benefit clients
and employees.
Mr. Hamers successfully continued to focus the Group on delivering on its diversity, equity and inclusion (DE&I) strategy
and initiatives. Important progress was made in our diversity and ethnicity ambitions and it remains a key area of focus.
He also successfullly managed Group Executive Board (GEB) transitions that rejuvenated the GEB and increased the female
ratio on the GEB to 42%.
Mr. Hamers continued to demonstrate strong leadership and focus on delivering the Group’s sustainability strategy,
including the commitment to net zero. He continued to focus the organization to deliver on the ambitions in the key ESG
focus areas including a reduction of 11% in scope 1 and 2 emissions year on year, partnering with two pioneering
companies on CO2 removal, supporting clients with USD 268bn invested assets in sustainability-focused and impact
investments. As a result, UBS retained its position amongst the leaders in the field, as evidenced by the ratings from the
most important independent sustainability rating agencies.
The table below illustrates the assessment criteria used to evaluate the achievements of Mr. Hamers in 2022.
Financial performance
Weight
Performance measures
2022
targets
2022
results
Achieve-
ment2
Weighted
assess-
ment
2022 commentary
20%
Reported Group PBT
USD 9.8bn
USD 9.6bn
97.6%
19.5%
– Profit before tax (PBT) increased to USD 9.6 bn,
slightly below target but up from 2021 and the
highest annual result since 2006, reflecting good
profitability in a challenging market.
20%
Reported Group C/I ratio
70 to 73%1
72.1%
100%3
20.0%
– The cost / income (C/I) ratio was 72.1%, in line with
the 2022 performance target range and an
improvement of 1.5 percentage points compared
with 2021. This demonstrates good cost discipline in
an inflationary environment.
20%
Reported RoCET1
15 to 18%1
17.0%
100%
20.0%
– Delivered strong capital returns with a return on CET1
capital (RoCET1) of 17.0%, in line with the 2022
performance target range.
11 The return on CET1 capital and cost / income ratio performance targets reflect externally communicated target ranges. The determination of the achievement is based on specific target levels defined
within the indicated target ranges. 22 Achievement score capped at 100%. 33 For the assessment of the cost / income ratio, each 1% difference between actual and target affects the score by 10%.
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Performance assessment for the Group CEO (continued)
Non-financial performance and Behaviors
Weight
Performance
measures
Achieve-
ment
2022 commentary
Weighted
assess-
ment
30%
Good
contribution
(66%)
20%
– The evaluation of each non-financial objective considers quantitative metrics that are
assessed against internal targets / plan.
Core Job
(Job specific,
Risk, People)
Strategic &
Growth
(Strategy, Digital,
ESG)
10%
Behaviors
(Accountability
with integrity,
Collaboration,
Innovation)
7%
Expected
behavior
(66%)
Total weighted assessment
(maximum 100%)
86.5%
Core Job
– Good client momentum in a challenging market environment and maintained strong focus
on managing our costs
– Active capital management to protect our business, enable growth and deliver attractive
returns including executing USD 5.6bn in share buybacks
– Operated within risk appetite constraints
– Improved employee listening / sentiment results across key categories
– Successfully managed effective leadership transitions in GEB
– Continued focus on people diversity, with the ratio of female leaders increased to 28%,
on track to meet the 2025 target; stayed on track toward the 2025 ambition for ratios of
UK (23%) and US (20%) employees from ethnic minorities
Strategic & Growth
– Embedded our purpose into the organization and executed on the strategic imperatives,
including executing across regions and delivering benefits of geographic diversification.
– Focused the Group to deliver simplification initiatives, making it easier for our businesses
to deliver for our clients.
– Progressed our technology initiatives and agile transformation with new launches of
key products such as Key4 in Switzerland, Circle One, and WE.UBS in China and
approximately 18,500 employees operating in an agile work environment
– See ESG metrics and progress in separate table in this report
The assessment of the Behavior objectives is qualitative and has resulted in the following
summary assessment:
– Mr. Hamers continued to be a role model in accountability and empowerment in the
organization. He remained the most important ambassador of collaboration to deliver the
whole firm to our clients.
– Mr. Hamers exemplifies innovation in UBS. He continued the successful digitalization
through new ways of working and continuously promoted innovative thinking and
simplification.
In addition to the overall 2022 Group performance and Mr. Hamers’s achievements outlined above, the BoD also
considered other factors, such as the Group’s good profitability, UBS’s performance in context of the underlying results
and the strong relative share price performance. For context, as outlined in our compensation report last year,
Mr. Hamers’s 2021 performance award was additionally impacted by the significant risk event related to a loss from a
US-based client of our prime brokerage business. The 2022 proposal considers a year-on-year change that reflects pay-
for-performance and does not carry forward the 2021 impact over multiple years.
The BoD approved the proposal by the Compensation Committee to grant Mr. Hamers a performance award of
CHF 9.7m, resulting in a total compensation for 2022 of CHF 12.2m (excluding benefits and contributions to his
retirement benefit plan).
Aligned with the GEB compensation framework, the Group CEO’s performance award will be delivered 20%
(CHF 1.94m) in cash and the remaining 80% (CHF 7.76m) subject to deferral and forfeiture provisions, as well as meeting
performance conditions over the next five years.
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2022 total compensation for the GEB members
The 2022 GEB performance award pool is CHF 81.1m, which is an increase of 2% in Swiss franc terms and a decrease
of 3% in US dollar terms. Adjusted for the direct impact of the 2021 loss event on specific GEB members, the 2022 GEB
pool is down approximately 5% in Swiss franc terms or a decrease of 10% in US dollar terms, which is aligned with the
Group pool development. This pool also considers the impact of changes in GEB composition and foreign exchange rates.
This outcome reflects the solid performance of the GEB as demonstrated by the strength of our share price and the good
performance of the Group in a challenging market environment, achieving our returns and efficiency targets on a
reported basis, while also considering our underlying reported results.
At the 2023 AGM, shareholders will vote on the aggregate 2022 total variable compensation for the GEB in Swiss francs.
The tables below provide the awarded compensation for the Group CEO and the GEB members in Swiss francs and, for
reference, the total amounts in US dollars for comparability with financial performance. The individual variable
performance awards for each GEB member will only be confirmed upon shareholder approval at the AGM.
› Refer to “Deferred compensation” in the “Supplemental information” section of this report for more information about the
vesting of outstanding awards for GEB members
› Refer to “Provisions of the Articles of Association related to compensation” in the “Supplemental Information” section of this
report for more information
Audited |
Total compensation for GEB members
CHF, except where indicated
USD (for reference)1
FFoorr tthhee
yyeeaarr
Base salary
Contribution
to retirement
benefit plans
Benefits2
TToottaall ffiixxeedd
ccoommppeennssaa--
ttiioonn
Performance
award
under LTIP4
Cash3
Performance
award
under
DCCP5
TToottaall
vvaarriiaabbllee
ccoommppeennssaa--
ttiioonn
TToottaall ffiixxeedd
aanndd vvaarrii--
aabbllee ccoomm--
ppeennssaattiioonn66
Total fixed
compensa-
tion
Total
variable
compensa-
tion
Total fixed
and vari-
able com-
pensation6
Group CEO Ralph Hamers (Highest Paid Executive excluding replacement awards)11
2,910,000
22002222
4,850,000
1,940,000
2,500,000
22,,994400,,661177
198,378
242,239
99,,770000,,000000
1122,,664400,,661177
3,050,684
10,063,071
13,113,755
22002211
2,500,000
246,415
251,856
22,,999988,,227711
1,700,000
4,250,000
2,550,000
88,,550000,,000000
1111,,449988,,227711
Aggregate of all GEB members (excluding replacement awards)7,8,9,10,11,12
693,473
22002222
2255,,880088,,775566 16,220,000 40,550,000 24,330,000
23,318,410
1,796,872
8811,,110000,,000000
110066,,990088,,775566
26,774,777
84,135,571 110,910,348
22002211
24,853,521
2,064,009
1,179,512
2288,,009977,,004411 15,950,000 39,875,000 23,925,000
7799,,775500,,000000
110077,,884477,,004411
11 Swiss franc amounts have been translated into US dollars for reference at the 2022 performance award currency exchange rate of CHF / USD 1.037430. 22 All benefits are valued at market price. 33 For GEB
members who are also MRTs or SMFs, the cash portion includes blocked shares. 44 LTIP awards for performance year 2022 were awarded at a value of 71.45% of maximum which reflects our best estimate of the
fair value of the award. The maximum number of shares is determined by dividing the awarded amount by the estimated fair value of the award at grant, divided by CHF 20.092 or USD 21.790, the average closing
price of UBS shares over the last ten trading days leading up to and including the award date in February. 55 The amounts reflect the amount of the notional additional tier 1 (AT1) capital instrument excluding future
notional interest. 66 Excludes the portion related to the legally required employer’s social security contributions for 2022 and 2021, which are estimated at grant at CHF 4,675,424 and CHF 4,997,243, respectively,
of which CHF 841,402 and CHF 763,059, respectively, are for the highest-paid GEB member (excluding replacement awards). The legally required employees’ social security contributions are included in the amounts
shown in the table above, as appropriate. 77 As stated in “Group Executive Board” in the “Corporate governance” section of our Annual Report 2022, twelve GEB members were in office on 31 December 2022 and
31 December 2021. 88 Includes compensation paid under employment contracts during notice periods for GEB members who stepped down during the respective years. 99 Includes compensation for newly appointed
GEB members for their time in office as GEB members during the respective years. 1100 Base salary may include role-based allowances in line with market practice in response to regulatory requirements. 1111 The 2022
total compensation of Sarah Youngwood, Group CFO, including both the one-time replacement awards of her compensation forfeited upon joining UBS as well as her compensation for the 2022 performance year,
amounts to a total of CHF 13,475,863 (which makes her the highest paid executive including replacement awards). 1122 For 2022, the one-time replacement awards of CHF 7,206,683 for Sarah Youngwood and CHF
65,229 for Naureen Hassan are not included in the above table; including these, the 2022 total aggregate compensation of all GEB members is CHF 114,180,668. For 2021, the one-time replacement award of CHF
7,081,474 for Barbara Levi is not included in the above table; including this, the 2021 total aggregate compensation of all GEB members is CHF 114,928,515.
Total realized compensation for the Group CEO
The realized compensation for the Group CEO reflects the total amount paid out in the year. It includes the base salary,
cash performance award payments, and all deferred performance awards vested in the year. As such, realized pay is the
natural culmination of awards granted and approved by shareholders in previous years.
To illustrate the effect of our long-term deferral approach, which has been in place since 2012, we disclose the annual
realized compensation of Mr. Hamers, including a comparison with his total awarded compensation.
Total realized compensation vs awarded compensation for Ralph A.J.G Hamers
CHF
AAwwaarrddeedd
Total awarded
fixed and variable
compensation3,4
Cash award2
FFoorr tthhee yyeeaarr
12,200,000
1,700,000
22002222
22002211
11,000,000
600,000
2200220011
3,833,333
0
11 Includes compensation for 4 months as Ralph A.J.G. Hamers joined UBS on 1 September 2020. 22 Excludes dividend / interest payments. 33 Excludes contributions to retirement benefit plans and benefits. Includes
social security contributions paid by Ralph A.J.G. Hamers but excludes the portion related to the legally required social security contributions paid by UBS. 44 Excludes the one-time replacement award granted in 2020.
RReeaalliizzeedd
TToottaall rreeaalliizzeedd
ffiixxeedd aanndd vvaarriiaabbllee
ccoommppeennssaattiioonn
44,,220000,,000000
3,100,000
833,333
Performance
award under
equity plans2
0
0
0
Performance
award under
DCCP2
0
0
0
Base salary
2,500,000
2,500,000
833,333
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Group compensation
Compensation elements for all employees
All elements of pay are considered when making our compensation decisions. We regularly review our principles and
compensation framework in order to remain competitive and aligned with stakeholders. In 2022, we made no material
changes to our overall framework. We will continue to review our approach to salaries and performance awards,
considering market developments, our performance and our commitment to deliver sustainable returns to shareholders.
Base salary and role-based allowance
Employees’ fixed compensation (e.g., base salary) reflects their level of skill, role and experience, as well as local market
practice. Base salaries are usually paid monthly or fortnightly, in line with local market practice. We offer competitive
base salaries that reflect location, function and role. Salary increases generally consider promotions, skill set, performance
and overall responsibility.
In addition to base salary, and as part of fixed compensation, some employees may receive a role-based allowance. This
allowance is a shift in the compensation mix between fixed and variable compensation, not an increase in total
compensation. It reflects the market value of a specific role and is fixed, non-forfeitable compensation. Unlike salary, a
role-based allowance is paid only if the employee is in a specific role. Similar to previous years, 2022 role-based allowances
consisted of a cash portion and, where applicable, a blocked UBS share award.
Pensions and benefits
We provide a range of benefit plans, such as retirement benefits and health insurance, aiming to provide financial
protection in case of significant life events, and support our employees’ well-being and diverse needs. Retirement and
other benefits are set in the context of local market practice and regularly reviewed for competitiveness.
Pension plan rules in any one location are generally the same for all employees, including GEB members and other
management. There are no enhanced or supplementary pension contributions for the GEB.
Performance award
Most of our employees are eligible for an annual performance award. The level of this award, where applicable, generally
depends on the firm’s overall performance, the employee’s business division, team and individual performance, and
behavior, reflecting their overall contribution to the firm’s results. These awards are in line with applicable local
employment conditions and at the discretion of the firm.
In addition to the firm’s Pillars and Principles, Behaviors related to Accountability with integrity, Collaboration and
Innovation are part of the performance management approach. Therefore, when assessing performance, we consider
not only what was achieved but also how it was achieved.
Our deferred compensation plans
Underlining our emphasis on sustainable performance and risk management, and our focus on achieving our growth
ambitions, we deliver part of our employees’ annual variable compensation through deferred compensation plans. We
believe that our approach, with a single incentive decision and a mandatory deferral, is transparent and well suited to
implementing our compensation philosophy and delivering sustainable performance. This aligns the interests of our
employees and shareholders and appropriately links compensation to longer-term sustainable performance.
Our mandatory deferral approach applies to all employees with regulatory-driven deferral requirements or total
compensation greater than USD / CHF 300,000. Certain regulated employees, such as Senior Management Functions
(SMFs) and Material Risk Takers (MRTs), are subject to additional requirements (e.g., more stringent deferral requirements
and additional blocking periods). In addition, SMFs and MRTs receive 50% of their cash portion in the form of immediately
vested shares, which are blocked for 12 months after grant.
The deferred amount increases at higher marginal rates in line with the value of the performance award. The effective
deferral rate therefore depends on the amount of the performance award and the amount of total compensation.
We believe our deferral regime has one of the longest vesting periods in the industry. The weighted average deferral
period for non-regulated employees is 4.4 years for GEB members and is 3.5 years for employees outside of the GEB.
Additionally, from time to time, we may utilize alternative deferred compensation arrangements to remain competitive
in specific business areas.
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To further promote sustainable performance, all of our deferred compensation plans include employment conditions and
malus conditions. These enable the firm to reduce or fully forfeit unvested deferred awards under certain circumstances,
pursuant to performance and harmful acts provisions. In addition, forfeiture is triggered in cases where employment has
been terminated for cause.
Our share delivery obligations related to notional share awards are satisfied by delivering treasury shares, which are
purchased in the market, to employees at vesting.
› Refer to “Note 27 Employee benefits: variable compensation” in the “Consolidated financial statements” section of our Annual
Report 2022 for more information
› Refer to the “Supplemental information” section of this report for more information about MRTs and SMFs
Variable compensation elements by employee category
Employee category
GEB members
Deferred compensation elements
Cash
LTIP
EOP
DCCP
Employees subject to mandatory deferral framework
1
1 Employees in investment areas within Asset Management typically receive notional funds (Fund Ownership Plan, previously named AM EOP) in lieu
of EOP to align their compensation more closely with fund performance, industry standards and regulatory requirements.
Long-Term Incentive Plan
The Long-Term Incentive Plan (the LTIP) granted for 2022 performance is a mandatory deferral plan for GEB members.
For the 2022 performance year, we awarded LTIP to 14 GEB members in office during 2022, at a fair value of 71.45%
of the maximum. The value was calculated by an independent third party using a well-established valuation methodology.
The performance metrics of the share-based LTIP awards are average return on CET1 capital (RoCET1) and relative total
shareholder return (rTSR) over a three-year performance period starting on 1 January in the year of grant. Performance
outcomes and actual payout levels will be disclosed at the end of the performance period.
The three-year average RoCET1 performance metric reflects our strategic return ambitions and considers our financial
targets, as well as our cost of capital as outlined below:
– the required RoCET1 performance for a maximum payout is set at 18%, which represents the upper end of our target
range, without encouraging excessive risk-taking;
– the required performance threshold for the minimum payout is 8%, the mid-point of the payout thresholds
appropriately reflects our cost of equity; and
– the linear payout design between threshold and maximum level supports our growth ambitions and our focus on
delivering sustainable performance without encouraging excessive risk-taking.
The rTSR performance metric over the three-year period further aligns the interests of employees with those of
shareholders:
– the metric compares the total shareholder return (the TSR) of UBS with the TSR of an index consisting of listed Global
Systemically Important Banks (G-SIBs) as determined by the Financial Stability Board (excluding UBS Group);
– the G-SIBs are independently defined and reflect companies with a comparable risk profile and impact on the global
economy;
– the index, which includes publicly traded G-SIBs, is equally weighted, calculated in Swiss francs and maintained by an
independent index provider, so as to ensure independence of the TSR calculation; and
– the payout interval of ±25 percentage points versus the index performance demonstrates our ambition of delivering
attractive relative returns to shareholders. The linear payout and the threshold level set below index performance
further support sustainability of results and appropriate risk-taking.
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Global Systemically Important Banks (G-SIBs) that are listed companies1
Agricultural Bank of China
Bank of America
Bank of China
Bank of New York Mellon
Barclays
BNP Paribas
China Construction Bank
Citigroup
Credit Suisse
Deutsche Bank
11 As of November 2022. Excludes UBS Group.
Goldman Sachs
Groupe Crédit Agricole
HSBC
ING
ICBC
JPMorgan Chase
Mitsubishi UFJ FG
Mizuho FG
Morgan Stanley
Royal Bank of Canada
Santander
Société Générale
Standard Chartered
State Street
Sumitomo Mitsui FG
Toronto-Dominion
UniCredit
Wells Fargo
Dividend equivalents (granted where applicable regulation permits) are subject to the same terms as the underlying LTIP
award.
LTIP awards reflect the long-term focus of our compensation framework. The final number of shares as determined at
the end of the three-year performance period will vest in three equal installments in each of the three years following
the performance period for GEB members (i.e., years 3, 4 and 5 after grant), although longer deferral periods may apply
for regulated employees).
LTIP payout illustration
– The final number of notional
shares vesting will vary based on
the achievement versus the
performance metrics.
– Linear payout between threshold
and maximum performance.
– Achievement levels are a
percentage of the maximum
opportunity of the LTIP and
cannot exceed 100%.
– Full forfeiture for performance
below the predefined threshold
levels.
– UK Senior Management Function
holders (SMFs) and UK Material
Risk Takers (UK MRTs) are subject
to an additional non-financial
metric based on a conduct
assessment with a potential
downward adjustment of up to
100% of the entire award.
Performance metric: average RoCET1 (50% of award)
Below threshold (<8%)
Threshold (8%) up to
maximum (<18%)
Maximum and above (>18%)
Full forfeiture
(payout 0%)
Partial vest
(payout between 33% and <100%)
Full vest
(payout 100%)
Performance metric: rTSR vs G-SIBs index (50% of award)
Below threshold (<–25 ppts)
Threshold (–25 ppts) up to
maximum (+25 ppts)
Maximum and above (>+25 ppts)
Full forfeiture
(payout 0%)
Partial vest
(payout between 33% and <100%)
Full vest
(payout 100%)
Performance achievement of the 2019 LTIP granted in 2020
The 2019 LTIP was granted in 2020 (for 2019 performance) at a fair value of 62.25% of a maximum of 100%. The final
performance achieved is 98% of a maximum of 100%. This achievement reflects the outcome of the two equally
weighted performance metrics, RoCET1 and rTSR, both measured over the three-year performance period from 1 January
2020 to 31 December 2022. The achievement level of this 2019 LTIP award (granted in 2020) applies to 8 current GEB
members and 102 other plan participants.
We achieved a three-year average RoCET1 performance of 17.3% against the performance range of 6% to 18%, and
an rTSR outperformance of +50.9 percentage points versus the index of listed Global Systemically Important Banks
(G-SIBs). No adjustments, pandemic-related or otherwise, were made in the assessment of the performance conditions.
For context, at the time when the LTIP was introduced, our communicated ambition for RoCET1 was 12–15%. This
ambition level has since been updated and was raised to 15–18%, as communicated in February 2022.
For GEB members, the first of the three equal installments of the 2019 LTIP vested on 1 March 2023 and the second and
third installments will vest in March 2024 and 2025; while for selected senior management, the 2019 LTIP cliff vested on
1 March 2023 (later dates may apply for regulated employees). For context, and as outlined in our 2019 Compensation
Report, up to CHF 7.3m, or 30%, of the 2019 LTIP awards at grant for GEB members active in March 2017 continues to
be at risk and directly linked to the final resolution of the French cross-border matter. In addition, a malus clause allows
the Compensation Committee to assess any new information that becomes available in the future in relation to the
matter and for the affected GEB members, and to retrospectively reduce any undelivered 2019 LTIP award by up to the
full amount if any new information would have impacted our compensation decision in 2019. This matter continues to
be ongoing and, once resolved, the final outcome will be reflected in the final amounts delivered to relevant current and
former employees.
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Performance achievement for the 2019 LTIP awarded in 2020
Performance
metrics
RoCET1
(Weight: 50%)
rTSR
(Weight: 50%)
Performance metric outcome
2019 LTIP achievement level
Threshold
6%
Maximum
18%
Threshold
33%
Maximum
100%
Outcome:
17.3%
−25ppts
+25ppts
Outcome
below
threshold:
full forfeiture
Achievement: 96%
33%
100%
Achievement: 100%
Outcome
above
maximum:
achievement
capped at
100%
Outcome:
50.9ppts
Overall 2019 LTIP achievement level
Overall achievement: 98%
Equity Ownership Plan / Fund Ownership Plan
The Equity Ownership Plan (the EOP) is the deferred compensation plan for employees outside of the GEB that are subject
to deferral requirements. For the 2022 performance year, we granted EOP awards to 4,458 employees.
Delivering sustainable results is a key objective for UBS. Our EOP creates a direct link with shareholder returns as a notional
equity award and has no upward leverage. This approach promotes growth and sustainable performance. EOP awards
generally vest over three years.
In place of EOP, employees in investment areas within Asset Management receive some or all of their EOP in the form of
notional funds (the Fund Ownership Plan (the FOP), previously named AM EOP) to align their compensation more closely
with industry standards. This plan is generally delivered in cash and vests over three years.
› Refer to “Vesting of outstanding awards granted in prior years subject to performance metrics and thresholds” in the
“Supplemental information” section of this report for more information
Deferred Contingent Capital Plan
The Deferred Contingent Capital Plan (the DCCP) is a key component of our compensation framework and supports
alignment of the interests of our senior employees with those of our stakeholders.
All employees subject to deferral requirements receive DCCP awards. For the 2022 performance year, we granted DCCP
awards to 4,326 employees.
The DCCP is consistent with many of the features of the loss-absorbing bonds that we issue to investors and may be paid
at vesting in cash or, at the discretion of the firm, as a perpetual, marketable additional tier 1 (AT1) capital instrument.
Employees can elect to have their DCCP awards denominated in Swiss francs or US dollars.
DCCP awards vest in full after five years (longer deferral periods may apply for regulated employees). DCCP awards bear
notional interest paid annually (except as limited by regulation for MRTs), subject to review and confirmation by the
Compensation Committee. The notional interest rate for grants in 2023 was 4.85% for awards denominated in Swiss
francs and 7.80% for awards denominated in US dollars. These interest rates are based on the current market rates for
similar AT1 capital instruments issued by UBS Group.
Awards are forfeited if a viability event occurs (i.e., if FINMA notifies the firm that the DCCP awards must be written
down to mitigate the risk of an insolvency, bankruptcy or failure of UBS) or if the firm receives a commitment of
extraordinary support from the public sector that is necessary to prevent such an event. DCCP awards are also written
down for GEB members if the Group’s CET1 capital ratio falls below 10% and for all other employees if it falls below
7%.
In addition, GEB members forfeit 20% of DCCP awards for each loss-making year during the vesting period. This means
100% of the award is subject to risk of forfeiture. The forfeiture features of DCCP create a strong alignment with our
debt holders and support the sustainability of the firm.
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Over the last five years, USD 2.0bn of DCCP awards have been issued, contributing to the Group’s total loss-absorbing
capacity (TLAC). Therefore, DCCP awards not only support competitive pay but also provide a loss absorption buffer that
protects the firm’s capital position. The following table illustrates the contribution of the DCCP to our AT1 capital and
the effect on our TLAC ratio.
› Refer to the “Supplemental information” section of this report for more information about performance award and personnel-
related expenses
› Refer to the “Supplemental information” section of this report for more information about longer vesting and clawback periods
for MRTs and SMFs
Contribution of the Deferred Contingent Capital Plan to our loss-absorbing capacity1
USD m, except where indicated
Deferred Contingent Capital Plan (DCCP), eligible as high-trigger loss-absorbing additional tier 1 capital
DCCP contribution to the total loss-absorbing capacity ratio (%)
11 Refer to “Bondholder information” at ubs.com/investors for more information about the capital instruments of UBS Group AG and UBS AG both on a consolidated and a standalone basis.
3311..1122..2222
31.12.21
11,,779944
00..66
1,730
0.6
Other variable compensation components
To support hiring and retention, particularly at senior levels, we may offer other compensation components, such as:
– retention payments to key employees to induce them to stay, particularly during critical periods for the firm, such as a
sale or wind-down of a business;
– on a limited basis, guarantees that may be required to attract individuals with certain skills and experience – these
awards are fixed incentives subject to our standard deferral rules and limited to the first full year of employment;
– awards granted to employees hired late in the year to replace performance awards that they would have earned at
their previous employer, but have foregone by joining UBS – these awards are generally structured with the same level
of deferral as for employees at a similar level at UBS; and
– in exceptional cases, sign-on awards may be offered to candidates to increase the chances of them accepting our
offer.
These other variable compensation components are subject to a comprehensive governance process, which may involve
the Compensation Committee, depending on the amount or type of such payments.
Employees outside of the GEB that are made redundant may receive severance payments. Our severance terms comply
with the applicable local laws (legally obligated severance). In certain locations, we may provide severance packages that
are negotiated with our local social partners and may go beyond the applicable minimum legal requirements (standard
severance). Such payments are governed by location-specific severance policies. In addition, we may make severance
payments that exceed legally obligated or standard severance payments where we believe these are aligned with market
practice and appropriate under the circumstances (supplemental severance). GEB members do not receive severance
payments.
Replacement awards and forfeitures
In line with industry practice, our compensation framework and plans include provisions generally requiring reduction /
forfeiture of a terminated employee’s unvested or deferred awards. In particular, these provisions apply if the terminated
employee joins another financial services organization and / or violates restrictive covenants, such as solicitation of clients
or employees.
Conversely, to attract external top talent, market practice dictates that we consider replacing their forfeited compensation
from their prior employer. In select situations and based on careful consideration, we replace the lost compensation of
senior hires. The replacement awards are subject to UBS’s harmful acts provisions. Their value is subject to independent
review as part of the “Report of the statutory auditor on the compensation report” to support the like-for-like nature of
the replacement and to confirm that these awards do not represent sign-on payments (i.e., there are no “golden hellos”).
Based on a thorough review of available documentation, we aim to mirror the type, conditions and timing of the forfeited
compensation, based on actual facts and circumstances. Replacement awards can include cash payments and / or
deferred awards, including EOP share awards and DCCP awards. Where payments are made in cash, there is typically a
clawback period if the employee leaves UBS voluntarily within 12 months of the start of employment. The replacement
awards do not exceed the commercial or fair value of the compensation actually forfeited by the individual and, in case
of GEB members, are disclosed transparently. The total 2022 forfeitures of USD 188m of previously awarded deferred
compensation offset the 2022 total sign-on payments, replacement payments and guarantees of USD 153m.
In March 2022, Sarah Youngwood joined the GEB and succeeded Kirt Gardner as Group CFO effective 16 May 2022.
Before joining UBS, Ms. Youngwood was CFO for JPMorgan Chase Consumer & Community Banking, CFO for Firmwide
Technology and CFO for Diversity & Inclusion. In October 2022, Naureen Hassan joined the GEB and succeeded Tom
Naratil in his role as President UBS Americas. She joined UBS from the Federal Reserve Bank of New York, where she was
COO and First Vice President.
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Consistent with the terms of the compensation forfeited at her previous employer, Sarah Youngwood received
replacement awards with a total value of CHF 7,206,683, consisting of an EOP share award representing 291,584 UBS
shares (denominated in Swiss francs), and replacement of cash items. The deferred portion of the award will vest in
various installments between 2023 and 2026. Similarly, Naureen Hassan received replacement awards with a total value
of CHF 65,229, consisting of a deferred cash award (vesting in 2023) and replacement of cash items. These replacement
awards reflect the different compensation structures of the industries and organizations we recruit from.
Sign-on payments, replacement payments, guarantees and severance payments
USD m, except where indicated
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of which: deferred
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awards
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00
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2266
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00
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1100
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0
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22
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15
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0
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119
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17
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160
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11
00
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11,,774455
2021
0
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463
13
40
1
1,477
10
11 GEB members are not eligible for sign-on or severance payments. Sign-on awards exclude one-time payments for junior associate hires into the Investment Bank. Including these, the 2022 and 2021 total sign-on
payments are USD 1m for each respective year. All one-time payments for junior associate hires are subject to a 12-month clawback condition. Prior period information has been adjusted to exclude awards granted
to employees hired late in the year. 22 Expenses for Key Risk Takers are full-year amounts for individuals in office on 31 December 2022. Key Risk Takers as defined by UBS, including all employees with a total
compensation exceeding USD / CHF 2.5m (Highly Paid Employees). 33 Includes replacement payments for two GEB members in 2022 and for one GEB member in 2021. Includes awards granted to employees hired
late in the year to replace performance awards that they would have earned at their previous employers, but have foregone by joining UBS. Prior period information has been adjusted to include awards granted to
employees hired late in the year. 44 No GEB member received a guarantee in 2022 or 2021. 55 Includes legally obligated and standard severance payments, as well as payments in lieu of notice.
88
11
11
3
0
Forfeitures1
USD m, except where indicated
TToottaall ffoorrffeeiittuurreess
of which: former GEB members
TToottaall 22002222
Total 2021
118888
33
258
23
of which: Key Risk Takers2
8
11 For notional share awards, forfeitures are calculated as units forfeited during the year, valued at the share price on 31 December 2022 (USD 18.67) for 2022. The 2021 data is valued using the share price on
31 December 2021 (USD 17.87). For LTIP the forfeited units reflect the fair value awarded at grant. For the notional funds awarded to Asset Management employees under the EOP, this represents the forfeiture
credits recognized in 2022 and 2021. For the DCCP, the fair value at grant of the forfeited awards during the year is reflected. Numbers presented may differ from the effect on the income statement in accordance
with IFRS. 22 Key Risk Takers as defined by UBS, including all employees with a total compensation exceeding USD / CHF 2.5m (Highly Paid Employees) and excluding former GEB members who forfeited awards in
2022 or 2021.
1122
Employee share ownership
According to available records on employee shareholdings, including unvested deferred compensation, as of
31 December 2022, employees held at least USD 4.6bn of UBS shares (of which approximately USD 2.9bn were
unvested), representing approximately 7% of our total shares issued.
The Equity Plus Plan is our employee share purchase program. It allows employees at Executive Director level and below
to voluntarily invest up to 30% of their base salary and / or regular commission payments to purchase UBS shares. In
addition (where offered), eligible employees can invest up to 35% of their performance award under the program.
Participation in the program is capped at USD / CHF 20,000 annually. Eligible employees may purchase UBS shares at
market price and receive one additional share for every three shares purchased through the program. Additional shares
vest after a maximum of three years, provided the employee remains employed by UBS and has retained the purchased
shares throughout the holding period.
› Refer to “Note 27 Employee benefits: variable compensation” in the “Consolidated financial statements” section of our Annual
Report 2022 for more information
Compensation for US financial advisors in Global Wealth Management
In line with market practice for US wealth management businesses, the compensation for US financial advisors in Global
Wealth Management consists of cash compensation and deferred compensation awards, determined using a formulaic
approach based on production.
The monthly cash compensation is determined using an overall percentage rate for each financial advisor. It reflects a
percentage of the compensable production that each financial advisor generates during that month. Compensable
production is generally based on transaction revenue and investment advisory fees and may reflect further adjustments.
The percentage rate generally varies based on the level of the production and firm tenure, supporting growth and
alignment with the investment strategy and goals of our clients.
Financial advisors may also be granted annual deferred compensation. These amounts generally vest over a six-year
period. The annual deferred compensation amount reflects their overall percentage rate and production, as previously
outlined.
Advisory vote | Corporate governance and compensation | Compensation
224
227
Cash compensation and deferred compensation 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.
2022 Group performance outcomes
Performance awards granted for the 2022 performance year
The “Variable compensation” table below shows the amount of variable compensation awarded to employees for the
2022 performance year, together with the number of beneficiaries for each type of award granted. In the case of deferred
awards, the final amount paid to an employee depends on performance conditions and consideration of relevant
forfeiture provisions. The deferred share award amount is based on the market value of these awards on the date of
grant.
Variable compensation
USD m, except where indicated
Non-deferred cash
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ppeerrffoorrmmaannccee aawwaarrdd ppooooll
VVaarriiaabbllee ccoommppeennssaattiioonn –– ffiinnaanncciiaall aaddvviissoorrss1
VVaarriiaabbllee ccoommppeennssaattiioonn –– ootthheerr2
TToottaall vvaarriiaabbllee ccoommppeennssaattiioonn
Expenses recognized
in the IFRS income
statement
22002222
2021
22,,227766
2,383
336644
220022
112299
1111
2211
405
183
140
54
29
22,,664400
33,,779999
116699
2,788
4,175
191
66,,660088
7,155
Expenses deferred to
future periods3
22002222
2021
Accounting
adjustments3,4
22002222
2021
00
660055
331100
224455
3300
2200
660055
11,,229900
223377
22,,113311
0
797
393
299
50
56
797
1,097
215
2,109
((1188))
5588
5555
00
33
00
0
65
46
0
18
0
11,,002266
1,267
556688
337755
4433
4411
623
438
122
84
4400
00
((114466))55
65
0
(121)5
33,,228855
55,,008899
226600
3,650
5,272
285
((110066))
(56)
88,,663344
9,207
Total
22002222
2021
Number of beneficiaries6
2021
22002222
22,,225599
2,383
5599,,557700
57,783
44,,334499
44,,004422
44,,220066
1144
229955
4,202
3,807
4,170
117
374
5599,,559900
66,,224455
57,793
6,218
11 Financial advisor compensation consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to
compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 22 Consists of replacement payments, forfeiture credits, severance payments,
retention plan payments and interest expense related to the Deferred Contingent Capital Plan. 33 Estimates as of 31 December 2022 and 2021. Actual amounts to be expensed in future periods may vary; e.g., due
to forfeiture of awards. 44 Represents estimated post-vesting transfer restriction and permanent forfeiture discounts, as well as currency translation adjustments. 55 Included in expenses deferred to future periods is
an amount of USD 146m (2021: USD 121m) in interest expense related to the Deferred Contingent Capital Plan. As the amount recognized as performance award represents the present value of the award at the
date it is granted to the employee, this amount is excluded. 66 Excludes awards that are part of other variable compensation.
2022 performance award pool and expenses
The performance award pool, which includes performance-based variable awards for 2022, was USD 3.3bn, reflecting a
decrease of 10% compared with 2021. Performance award expenses for 2022 remained at USD 3.2bn, reflecting
decreased performance award expenses accrued in the performance year, offset by increased performance award
expenses related to prior performance years. The “Performance award pool and expenses” table below compares the
performance award pool with performance award expenses.
Performance award pool and expenses
USD m, except where indicated
Performance award pool1
of which: expenses deferred to future periods and accounting adjustments 2,3
Performance award expenses accrued in the performance year
22002222
33,,228855
664455
22,,664400
2021
3,650
862
2,788
% change
(10)
(25)
(5)
Performance award expenses related to prior performance years
TToottaall ppeerrffoorrmmaannccee aawwaarrdd eexxppeennsseess rreeccooggnniizzeedd ffoorr tthhee yyeeaarr44
11 Excluding employer-paid taxes and social security. 22 Estimate as of the end of the performance year. Actual amounts expensed in future periods may vary, e.g., due to forfeiture of awards. 33 Accounting
adjustments represent estimated post-vesting transfer restriction and permanent forfeiture discounts, as well as currency translation adjustments. 44 Refer to “Note 27 Employee benefits: variable compensation” in
the “Consolidated financial statements” section of our Annual Report 2022 for more information.
3,190
33,,220055
556666
402
41
0
Advisory vote | Corporate governance and compensation | Compensation
225
228
Compensation for the Board of Directors
Chairman of the BoD
Colm Kelleher was elected Chairman of the BoD at the 2022 AGM on 6 April 2022. Under his leadership, the BoD
determines, among other things, the strategy for the Group, based on recommendations by the Group CEO, exercises
ultimate supervision over management and appoints all GEB members.
The Chairman leads all general meetings and BoD meetings and works with the committee Chairpersons to coordinate
the work of all BoD committees. Together with the Group CEO, the Chairman is responsible for effective communication
with shareholders and stakeholders, including clients, government officials, regulators and public organizations. The
Chairman works closely with the Group CEO and other GEB members, providing advice and support when appropriate,
and continues to strengthen and promote our culture through the three keys to success: our Pillars, Principles and
Behaviors.
As an independent director, the Chairman’s total compensation for the period from AGM to AGM consists of a fixed fee
without any variable component, which is delivered 50% in cash and 50% in shares (blocked for four years). For the
current period, from the 2022 AGM to the 2023 AGM, his fixed fee was CHF 4.7m and consisted of a cash payment of
CHF 2.35m and a share component of CHF 2.35m, consisting of 116,961 UBS shares at CHF 20.092 per share. The share
component aligns the Chairman’s pay with the Group’s long-term performance. The Chairman does not receive
performance awards, severance payments or pension contributions in addition to his fixed fee, but, given the full-time
nature of his role, he is eligible for employee conditions on UBS products and services.
› Refer to “Board of Directors” in the “Corporate governance” section of our Annual Report 2022 for more information about the
responsibilities of the Chairman
Vice Chairman of the BoD
Lukas Gähwiler was elected as a member of the BoD at the 2022 AGM on 6 April 2022 and thereafter appointed as Vice
Chairman. In this newly defined full-time role, he leads the BoD in the absence of the Chairman. Together with the Senior
Independent Director, he also supports the Chairman in all aspects of corporate governance and oversight across the
Group. In particular, he represents UBS across a broad range of associations and industry bodies in Switzerland.
The Vice Chairman’s total compensation for the period from AGM to AGM consists of a fixed fee without any variable
component, which is delivered 50% in cash and 50% in shares (blocked for four years). For the current period, from the
2022 AGM to the 2023 AGM, his fixed fee was CHF 1.5m, excluding benefits and pension fund contributions. The fixed
fee consisted of a cash payment of CHF 0.75m and a share component of CHF 0.75m, consisting of 37,328 UBS shares
at CHF 20.092 per share. The fee for the new full-time Vice Chairman was absorbed within the existing budget and does
not result in an increase of the proposed maximum aggregate amount for BoD compensation.
As a non-independent director, Mr. Gähwiler is entitled to pension fund contributions. Including these, his total reward
for his service as Vice Chairman for the current period was CHF 1,879,010.
The Vice Chairman is not eligible for performance awards, severance terms or supplementary contributions to pension
plans. The pension contributions and benefits for the Vice Chairman, in his capacity as non-independent director, are
consistent with all UBS employees and aligned with local market practice.
› Refer to “Board of Directors” in the “Corporate governance” section of our Annual Report 2022 for more information about the
responsibilities of the Vice Chairman
Advisory vote | Corporate governance and compensation | Compensation
226
229
Other BoD members
BoD members, except the Chairman and Vice Chairman, receive fixed fees for their services on the BoD and its
committees. BoD members do not receive performance awards, severance payments, benefits or pension contributions
(the benefit eligibility of the Chairman and that of the Vice Chairman are described above).
BoD members must use a minimum of 50% of their fees to purchase UBS shares, which are blocked for four years, and
they may elect to use up to 100% of their fees to purchase blocked UBS shares. As outlined above, the fixed fees of the
Chairman and Vice Chairman are delivered 50% in cash and 50% in shares, which are blocked for four years. 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.
At each AGM, shareholders are invited to approve the aggregate amount of BoD remuneration, including the
compensation for the Chairman and Vice Chairman, which applies until the next AGM. The chart and the tables below
provide details on the fee structure for the BoD members.
Remuneration framework for BoD members
CHF
Annual fi xed fees¹
Chairman
Vice Chairman
Fees for other BoD members²
Fixed base fee
Senior Independent Director
2022 AGM to 2023 AGM
Pay mix
Delivery
4,700,000
1,500,000
300,000
150,000
Blocked
shares
50%
Audit Committee
Compensation Committee
Governance and Nominating Committee
Corporate Culture and Responsibility
Committee
Risk Committee
Chair
300,000
200,000
350,000
Member
200,000
100,000
100,000
50,000
200,000
Cash
50%
AGM-
to-AGM
period
grant
year
year 1 year 2 year 3 year 4
1 The Chairman and the Vice Chairman do not receive committee or other fees in addition to their annual fi xed fee. Their fi xed fee is
delivered 50% in cash and 50% in shares (blocked for four years). See above for the benefi t eligibility of the Chairman and Vice Chairman.
2 At least 50% of the total amounts must be used to purchase UBS shares, which are blocked for four years, but other BoD members can elect to
use 100% of their remuneration to purchase blocked UBS shares.
Approval governance for BoD compensation
The Chairperson of the Compensation Committee proposes and the Compensation Committee approves the
compensation of the Chairman and that of the Vice Chairman annually for the upcoming AGM-to-AGM period, taking
into consideration fee or compensation levels for comparable roles based on our core financial industry peers and other
relevant leading Swiss companies included in the Swiss Market Index.
The fee structure for the other BoD members is reviewed annually based on the Chairman’s proposal to the
Compensation Committee, which in turn submits a proposal to the BoD for approval. In our regular review of the BoD
fee structure, we concluded that our overall approach for BoD member compensation remains appropriate and thus
unchanged.
› Refer to “Compensation Governance” in the “Compensation philosophy and governance” section of this report for more
information about the remuneration responsibilities of the BoD and Compensation Committee
Advisory vote | Corporate governance and compensation | Compensation
227
230
Audited |
Remuneration details and additional information for BoD members
PPeerriioodd 22002222 AAGGMM ttoo 22002233 AAGGMM
CHF, except where indicated
e
e
t
t
i
d
n
a
m
m
o
C
y
t
i
l
i
e
r
u
t
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t
s
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C
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G
N
C
i
M
M
M
M
M
M
M
e
e
t
t
i
m
m
o
C
t
i
d
u
A
C
M
M
M
n
o
i
t
a
s
n
e
p
m
o
C
e
e
t
t
i
m
m
o
C
C
M
M
Name, function1
Colm Kelleher, Chairman8
Lukas Gähwiler, Vice Chairman8
Jeremy Anderson, Senior
Independent Director
Claudia Böckstiegel, member
William C. Dudley, member
Patrick Firmenich, member
Fred Hu, member
Mark Hughes, member
Nathalie Rachou, member
Julie G. Richardson, member
Dieter Wemmer, member
Jeanette Wong, member
AAggggrreeggaattee ooff aallll BBooDD mmeemmbbeerrss 22002222//22002233
Aggregate of all BoD members 2022/2023 in USD (for reference)9
PPeerriioodd 22002211 AAGGMM ttoo 22002222 AAGGMM
CHF, except where indicated
d
n
a
e
e
t
t
i
m
m
o
C
t
i
d
u
A
n
o
i
t
a
s
n
e
p
m
o
C
e
e
t
t
i
m
m
o
C
e
e
t
t
i
m
m
o
C
y
t
i
l
i
e
r
u
t
l
u
C
b
e
i
t
s
a
n
r
o
o
p
p
r
s
o
e
C
R
C
e
e
t
t
i
d
n
a
m
m
o
C
e
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c
n
n
i
t
a
a
n
n
r
e
m
v
o
o
G
N
C
i
C
Name, function1
Axel A. Weber, Chairman11
Jeremy Anderson,
Vice Chairman and Senior
Independent Director
Claudia Böckstiegel, member
William C. Dudley, member
Patrick Firmenich, member
Reto Francioni, member
Fred Hu, member
Mark Hughes, member
Nathalie Rachou, member
Julie G. Richardson, member
Dieter Wemmer, member
Jeanette Wong, member
AAggggrreeggaattee ooff aallll BBooDD mmeemmbbeerrss 22002211//22002222
M
M
M
M
M
M
M
M
M
M
M
C
M
M
e
e
t
t
i
m
m
o
C
k
s
i
R
M
C
M
M
e
e
t
t
i
m
m
o
C
k
s
i
R
M
M
M
C
M
M
Committee
fee(s)
Additional
payments2
Base fee
4,700,000
1,500,000
Benefits3
86,494
379,010
300,000
400,000
150,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
50,000
250,000
250,000
100,000
400,000
300,000
400,000
300,000
300,000
Share
percentage5
50
50
Number of
shares6,7
116,961
37,328
50
50
50
100
100
50
50
50
50
100
21,152
8,709
13,687
26,130
14,722
17,419
14,931
17,419
14,931
22,127
TToottaall44
44,,778866,,449944
11,,887799,,001100
885500,,000000
335500,,000000
555500,,000000
555500,,000000
440000,,000000
770000,,000000
660000,,000000
770000,,000000
660000,,000000
660000,,000000
1122,,556655,,550044
13,035,831
Base fee
4,900,000
Committee
fee(s)
Additional
payments10
Benefits
324,913
TToottaall44
55,,222244,,991133
Share
percentage5
29
Number of
shares6,7
72,939
300,000
400,000
150,000
885500,,000000
50
22,142
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
0
350,000
250,000
300,000
300,000
400,000
200,000
500,000
400,000
350,000
330000,,000000
665500,,000000
555500,,000000
660000,,000000
660000,,000000
770000,,000000
550000,,000000
880000,,000000
770000,,000000
665500,,000000
1122,,112244,,991133
50
50
100
50
100
50
50
50
50
100
7,814
16,932
27,275
15,629
23,062
18,234
13,024
20,839
18,234
24,988
Legend: C = Chairperson of the respective Committee, M = Member of the respective Committee
11 Twelve BoD members were in office on 31 December 2022. At the 2022 AGM, Colm Kelleher and Lukas Gähwiler were newly elected and Reto Francioni and Axel A. Weber did not stand for re-election. Twelve
BoD members were in office on 31 December 2021. 22 These payments are associated with the Senior Independent Director role. 33 For the period from the 2022 AGM to the 2023 AGM, benefits amount is an
estimate. For the Vice Chairman, the benefits include the portion related to UBS’s contribution to the statutory pension scheme. 44 Excludes UBS’s portion related to the legally required social security contributions,
which for the period from the 2022 AGM to the 2023 AGM (including the Chairman and Vice Chairman) is estimated at grant at CHF 731,329 and which for the period from the 2021 AGM to the 2022 AGM was
estimated at grant at CHF 719,763. The legally required social security contributions paid by the independent BoD members are included in the amounts shown in this table, as appropriate. 55 Except for the former
Chairman (see footnote 11), fees are paid 50% in cash and 50% in blocked UBS shares. 66 For 2022, UBS shares were valued at CHF 20.092 (average closing price of UBS shares over the last 10 trading days
leading up to and including the grant date). For 2021, UBS shares were valued at CHF 19.194 (average closing price of UBS shares over the last 10 trading days leading up to and including the grant date). These
shares are blocked for four years. 77 Number of shares is reduced in case of the 100% election to deduct legally required contributions. All remuneration payments are, where applicable, subject to social security
contributions and / or withholding tax. 88 The Chairman and the Vice Chairman do not receive committee fees in addition to their annual fixed fee. 99 Swiss franc amounts have been translated into US dollars for
reference at the 2022 performance award currency exchange rate of CHF / USD 1.03743. 1100 This payment is associated with the Senior Independent Director function and the Vice Chairman role. 1111 In his function
as non-independent BoD member for the AGM period 2021/2022, the former Chairman received a base salary of CHF 3,500,000 and an annual share award of CHF 1,400,000. This remuneration is included above
in the Base fee column.
Advisory vote | Corporate governance and compensation | Compensation
228
231
Supplemental information
Fixed and variable compensation for GEB members
Fixed and variable compensation for GEB members1,2,3
CHF m, except where indicated
TToottaall ccoommppeennssaattiioonn
Amount5
Number of beneficiaries
FFiixxeedd ccoommppeennssaattiioonn55,,66
Cash-based
Equity-based
VVaarriiaabbllee ccoommppeennssaattiioonn
Cash7
TToottaall ffoorr 22002222
NNoott ddeeffeerrrreedd
AAmmoouunntt
%%
AAmmoouunntt
110044
110000
1155
2233
2211
22
8811
1166
2222
2200
22
7788
1155
3399
2233
2211
22
1166
1166
%%
3388
110000
2200
DDeeffeerrrreedd44
AAmmoouunntt
6655
00
00
00
00
6655
00
%%
6633
00
8800
Total for 2021
Amount
105
15
25
22
3
80
16
4411
2244
Long-Term Incentive Plan (LTIP)8
Deferred Contingent Capital Plan (DCCP)8
11 The figures include all GEB members in office during the respective years. 22 Includes compensation paid under the employment contract during the notice period for GEB members who stepped down during the
respective years. 33 Includes compensation for newly appointed GEB members for their time in office as a GEB member during the respective years. 44 Based on the specific plan vesting and reflecting the total
award value at grant, which may differ from the expense recognized in the income statement in accordance with IFRS. 55 Excludes benefits and employer’s contributions to retirement benefit plans. Includes social
security contributions paid by GEB members but excludes the portion related to the legally required social security contributions paid by UBS. For 2022, Sarah Youngwood received a one-time replacement award of
CHF 7m and Naureen Hassan received a one-time replacement award of CHF 0.07m. The replacement awards are not included in the above table; including these, the 2022 total aggregate compensation of all GEB
members is CHF 112m. For 2021, Barbara Levi received a one-time replacement award of CHF 7m. This replacement award is not included in the above table; including this, the 2021 total aggregate compensation
of all GEB members is CHF 112m. 66 Includes base salary and role-based allowances, rounded to the nearest million. 77 Includes allocation of vested but blocked shares, in line with the remuneration section of the
UK Prudential Regulation Authority Rulebook. 88 For the GEB members who are also MRTs or SMFs, the awards do not include dividend and interest payments. Accordingly, the amounts reflect for the LTIP the fair
value of the non-dividend-bearing awards and for the DCCP the fair value of the granted non-interest-bearing awards.
40
24
4411
2244
3399
2233
00
00
Regulated staff
Key Risk Takers
Key Risk Takers (KRTs) are defined as those employees that, by the nature of their roles, have been determined to
materially set, commit or control significant amounts of the firm’s resources and / or exert significant influence over its
risk profile. This includes employees working in front-office roles, logistics and control functions. Identifying KRTs globally
is part of our risk control framework and an important element in ensuring we incentivize only appropriate risk-taking.
For 2022, in addition to GEB members, 699 employees were classified as KRTs throughout UBS Group globally, including
all employees with a total compensation exceeding USD / CHF 2.5m (Highly Paid Employees), who may not have been
identified as KRTs during the performance year.
Advisory vote | Corporate governance and compensation | Compensation
229
232
In line with regulatory requirements, the performance of employees identified as KRTs during the performance year is
evaluated by the control functions. In addition, KRTs’ performance awards are subject to a mandatory deferral rate of at
least 50%, regardless of whether the deferral threshold has been met (excluding KRTs with de minimis performance
awards below a predetermined threshold where standard deferral rates apply). A KRT’s deferred compensation award
will only vest if the Group performance conditions are met. Consistent with all other employees, the deferred portion of
a KRT’s compensation is also subject to forfeiture or reduction if the KRT commits harmful acts.
Fixed and variable compensation for Key Risk Takers1
USD m, except where indicated
TToottaall ccoommppeennssaattiioonn
Amount
Number of beneficiaries
FFiixxeedd ccoommppeennssaattiioonn33,,44
Cash-based
Equity-based
VVaarriiaabbllee ccoommppeennssaattiioonn
TToottaall ffoorr 22002222
AAmmoouunntt
NNoott ddeeffeerrrreedd
%%
AAmmoouunntt
11,,229922
110000
669999
443388
443355
33
885555
3344
3344
00
6666
779900
443388
443355
33
335533
%%
6611
110000
DDeeffeerrrreedd22
AAmmoouunntt
550022
00
4411
550022
Total for 2021
Amount
1,561
699
477
474
3
1,084
%%
3399
00
5599
335533
Cash5
Long-Term Incentive Plan (LTIP) / Equity Ownership
Plan (EOP) / Fund Ownership Plan (FOP)6
Deferred Contingent Capital Plan (DCCP)6
11 Includes employees with a total compensation exceeding USD / CHF 2.5m (Highly Paid Employees), excludes payments made to individuals related to their time as GEB member. 22 Based on the specific plan vesting
and reflecting the total value at grant, which may differ from the expense recognized in the income statement in accordance with IFRS. 33 Excludes benefits and employer’s contributions to retirement benefits plan.
Includes social security contributions paid by KRTs but excludes the legally required social security contributions paid by UBS. 44 Includes base salary and role-based allowances. 55 Includes allocation of vested but
blocked shares, in line with regulatory requirements where applicable. 66 KRTs who are also MRTs do not receive dividend and interest payments. Accordingly, the amounts for the EOP / LTIP reflect the fair value of
the non-dividend-bearing awards and for the DCCP the fair value of the granted non-interest-bearing awards.
423
243
330066
119966
330066
119966
2244
1155
418
335533
2277
Deferred compensation of the GEB and KRTs
The table below shows the current economic value of unvested outstanding deferred variable compensation awards
subject to ex post adjustments. For share-based plans, the economic value is determined based on the closing share price
on 31 December 2022. For notional funds, it is determined using the latest available market price for the underlying
funds at year-end 2022, and for deferred cash plans, it is determined based on the outstanding amount of cash owed to
award recipients.
Deferred compensation of the GEB and KRTs1,2,3
USD m, except where indicated
GGEEBB
Deferred Contingent Capital Plan
Equity Ownership Plan (including notional funds)
Long-Term Incentive Plan
KKRRTTss
Deferred Contingent Capital Plan
Equity Ownership Plan (including notional funds)
Long-Term Incentive Plan
RReellaattiinngg ttoo aawwaarrddss
ffoorr 2200222244
Relating to
awards for prior
years5
2255
4422
119966
330066
86
45
118
907
905
184
Total
111
45
160
1,104
1,210
184
of which: exposed to
ex-post explicit and /
or implicit adjustments
Total deferred
compensation
year-end 2021
Total amount of
deferred compensation
paid out in 20226
100%
100%
100%
100%
100%
100%
98
78
119
1,183
1,414
235
21
27
159
355
TToottaall GGEEBB aanndd KKRRTTss
562
11 Based on the specific plan vesting and reflecting the economic value of the outstanding awards, which may differ from the expense recognized in the income statement in accordance with IFRS. Year-to-year
reconciliations would also need to consider the impacts of additional items including off-cycle awards, FX movements, population changes, and dividend equivalent reinvestments. 22 Refer to “Note 27 Employee
benefits: variable compensation” in the “Consolidated financial statements” section of the Annual Report 2022 for more information. 33 GEB members and KRTs who are also MRTs do not receive dividend and
interest payments. Accordingly, the amounts for the EOP / LTIP reflect the fair value of the non-dividend-bearing awards and for the DCCP the fair value of the granted non-interest-bearing awards. 44 Where
applicable, amounts are translated into US dollars at the performance award currency exchange rate. LTIP values reflect the fair value awarded at grant. 55 Takes into account the ex post implicit adjustments, given
the share price movements since grant. Where applicable, amounts are translated from award currency into US dollars using FX rates as of 31 December 2022. LTIP values reflect the fair value awarded at grant.
66 Valued at distribution price and FX rate for all awards distributed in 2022.
3,127
2,245
2,814
556699
Advisory vote | Corporate governance and compensation | Compensation
230
233
The table below shows the value of actual ex post explicit and implicit adjustments to outstanding deferred compensation
in the 2022 financial year for GEB members and KRTs.
Ex post adjustments occur after an award has been granted. Explicit adjustments occur when we adjust compensation
by forfeiting deferred awards. Implicit adjustments are unrelated to any action taken by the firm and occur as a result of
price movements that affect the value of an award.
The total value of ex post explicit adjustments made to UBS share awards in 2022, based on the approximately 5.8m
shares forfeited during 2022, is a reduction of USD 110m.
GEB and KRTs ex post explicit and implicit adjustments to deferred compensation
USD m
GGEEBB
Deferred Contingent Capital Plan
Equity Ownership Plan (including notional funds, if applicable)
Long-Term Incentive Plan
KKRRTTss
Deferred Contingent Capital Plan
Equity Ownership Plan (including notional funds)
Long-Term Incentive Plan
EExx ppoosstt eexxpplliicciitt aaddjjuussttmmeennttss
ttoo uunnvveesstteedd aawwaarrddss11
3311..1122..2222
31.12.21
EExx ppoosstt iimmpplliicciitt aaddjjuussttmmeennttss
ttoo uunnvveesstteedd aawwaarrddss22
3311..1122..2222
31.12.21
00
00
00
((88))
((44))
0
0
0
(14)
(16)
(1)
00
99
2255
00
112299
3388
0
17
21
0
250
47
TToottaall GGEEBB aanndd KKRRTTss
11 For notional share awards, ex post explicit adjustments are calculated as units forfeited during the year, valued at the share price on 31 December 2022 (USD 18.67) for 2022 (which may differ from the expense
recognized in the income statement in accordance with IFRS). The 2021 data is valued using the share price on 31 December 2021 (USD 17.87). For LTIP, the forfeited units reflect the fair value awarded at grant. For
the notional funds awarded to employees in investment areas within Asset Management under the FOP, this represents the forfeiture credits recognized in 2022 and 2021. For the DCCP, the fair value at grant of the
forfeited awards during the year is reflected. 22 Ex post implicit adjustments for UBS shares are calculated based on the difference between the weighted average grant date fair value and the share price at year-end.
The amount for notional funds is calculated using the mark-to-market change during 2022 and 2021. For the GEB member who was appointed to the GEB during 2022, awards have been fully reflected in the GEB
entries.
(31)
((1122))
335
220011
Material Risk Takers
For relevant EU- or UK-regulated entities, we identify individuals who are deemed to be Material Risk Takers (MRTs) based
on local regulatory requirements, including the respective EU Commission Delegated Regulation, the fifth iteration of the
EU Capital Requirements Directive (CRD V) and equivalent UK requirements, as applicable. This group consists of senior
management, risk takers, selected staff in control or support functions and certain highly compensated employees. For
2022, UBS identified 616 MRTs in relation to its relevant EU or UK entities.
Variable compensation awarded to MRTs is subject to additional deferral and other requirements. These include a
maximum variable to fixed compensation ratio of 200% based on approval through relevant shareholder votes, a
minimum deferral rate of 40% or 60% (depending on role / variable compensation level) on performance awards and
delivery of at least 50% of any upfront performance award in UBS shares that are vested but blocked for 12 months
after grant.
Deferred awards granted to MRTs under UBS’s deferred compensation plans for their performance in 2022 are subject
to 6- or 12-month blocking periods post vesting and do not pay out dividends or interest during the deferral period.
For up to seven years after grant, performance awards granted to MRTs are subject to clawback provisions, which allow
the firm to claim repayment of both the upfront and the vested deferred element of any performance award if an
individual is found to have contributed substantially to significant financial losses for the Group or corporate structure in
scope, a material downward restatement of disclosed results, or engaged in misconduct and / or failed to take expected
actions that contributed to significant reputational harm.
LTIP awards granted to UK MRTs and SMFs are subject to an additional non-financial conduct-related metric as required
by UK regulation.
UK Senior Managers and Certification Regime
The Senior Managers and Certification Regime (the SMCR) of the UK Prudential Regulation Authority and Financial
Conduct Authority requires that individuals with specified responsibilities, performing certain significant functions and /
or those in certain other identified categories be designated as SMFs.
Subject to de minimis and other compensation-related considerations, variable compensation awards made to SMFs must
comply with specific requirements, including longer deferral, blocking and clawback periods. The deferral period for SMFs
is seven years, with the deferred performance awards vesting no faster than pro rata from years 3 to 7, except those that
have total compensation below GBP 500,000 and variable incentive accounting for less than 33% of total compensation,
for whom a five-year deferral period (instead of a seven-year period) applies. Such awards are also subject to a 12-month
blocking period post vesting. The clawback policy for SMFs permits clawback for up to 10 years from the date of
performance award grants (applicable if an individual is subject to an investigation at the end of the initial seven-year
clawback period). All SMFs are also MRTs and, as such, subject to the same prohibitions on dividend and interest
payments.
Advisory vote | Corporate governance and compensation | Compensation
231
234
Control functions and Group Internal Audit
Our control functions must be independent in order to monitor risk effectively. Therefore, their compensation is
determined separately from the revenue areas that they oversee, supervise or monitor. Their performance award pool is
based not on the performance of these businesses, but on the performance of the Group as a whole. We also consider
other factors, such as how effectively the function has performed and our market position. Decisions on individual
compensation for the senior managers of the control functions are made by the function heads and approved by the
Group CEO. Decisions on individual compensation for the members of Group Internal Audit (GIA) are made by the Head
GIA and approved by the Chairman. Following a proposal by the Chairman, total compensation for the Head GIA is
approved by the Compensation Committee.
2022 Group personnel expenses
The number of personnel employed as of 31 December 2022 increased by 1,212 to 72,597 (full-time equivalents)
compared with 31 December 2021.
The table below shows our total personnel expenses for 2022, including salaries, pension expenses, social security
contributions, variable compensation and other personnel costs. Variable compensation includes cash performance
awards paid in 2023 for the 2022 performance year, amortization of unvested deferred awards granted in previous years
and the cost of deferred awards granted to employees that are eligible for retirement in the context of the compensation
framework at the date of grant.
The performance award pool reflects the value of performance awards granted relating to the 2022 performance year,
including awards that are paid out immediately and those that are deferred. To determine our variable compensation
expenses, the following adjustments are required in order to reconcile the performance award pool to the expenses
recognized in the Group’s financial statements prepared in accordance with IFRS:
– a reduction for expenses deferred to future periods (amortization of unvested awards granted in 2023 for the 2022
performance year) and accounting adjustments; and
– an addition for the 2022 amortization of unvested deferred awards granted in prior years.
As a large part of compensation consists of deferred awards, the amortization of unvested deferred awards granted in
prior years forms a significant part of the IFRS expenses in both 2022 and 2023.
› Refer to “Note 6 Personnel expenses” and “Note 27 Employee benefits: variable compensation” in the “Consolidated financial
statements” section of our Annual Report 2022 for more information
Personnel expenses
USD m
SSaallaarriieess11
Non-deferred cash
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ppeerrffoorrmmaannccee aawwaarrddss
VVaarriiaabbllee ccoommppeennssaattiioonn –– ffiinnaanncciiaall aaddvviissoorrss22
VVaarriiaabbllee ccoommppeennssaattiioonn –– ootthheerr33
TToottaall vvaarriiaabbllee ccoommppeennssaattiioonn44
CCoonnttrraaccttoorrss
SSoocciiaall sseeccuurriittyy
PPeennssiioonn aanndd ootthheerr ppoosstt--eemmppllooyymmeenntt bbeenneeffiitt ppllaannss55
OOtthheerr ppeerrssoonnnneell eexxppeennsseess
TToottaall ppeerrssoonnnneell eexxppeennsseess
RReellaatteedd ttoo tthhee
ppeerrffoorrmmaannccee yyeeaarr 22002222
77,,004455
22,,227766
336644
220022
112299
1111
2211
22,,664400
33,,779999
116699
66,,660088
332233
990033
779944
559988
Expenses recognized in the IFRS income statement
RReellaatteedd ttoo pprriioorr
ppeerrffoorrmmaannccee yyeeaarrss
00
((1166))
558811
223355
221199
3322
9955
556666
770099
7711
11,,334466
00
4400
00
2233
TToottaall eexxppeennsseess
rreeccooggnniizzeedd iinn
22002222
77,,004455
Total expenses
recognized in
2021
7,339
Total expenses
recognized in
2020
7,023
22,,226600
2,373
994455
443377
334499
4433
111166
33,,220055
44,,550088
224411
77,,995544
332233
994444
779944
662211
817
363
297
73
84
3,190
4,860
229
8,280
381
978
833
576
2,141
1,068
463
463
54
88
3,209
4,091
220
7,520
375
899
845
561
1166,,227711
11,,441100
1177,,668800
18,387
17,224
11 Includes role-based allowances. 22 Financial advisor compensation consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It also
includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 33 Consists of replacement payments, forfeiture credits,
severance payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan. 44 Refer to “Note 27 Employee benefits: variable compensation” in the “Consolidated financial
statements” section of our Annual Report 2022 for more information. 55 Refer to “Note 26 Post-employment benefit plans” in the “Consolidated financial statements” section of our Annual Report 2022 for more
information.
Advisory vote | Corporate governance and compensation | Compensation
232
235
Deferred compensation
Vesting of outstanding awards granted in prior years subject to performance metrics and thresholds
The tables below show the extent to which the performance metrics and thresholds for awards granted in prior years
have been met and the related vesting in 2023.
Long-Term Incentive Plan (LTIP) 2019 (performance period 2020–2022)
Performance metrics
Performance achievement1
Vesting
Return on common equity tier 1 capital
(RoCET1) and relative Total Shareholder
Return (rTSR)
The overall achievement level is 98% of the maximum
opportunity (of up to 100%), based on outcomes for
rTSR (weighted 50%) and RoCET1 (weighted 50%).
- For GEB, the first installment will vest in 2023 and the
remaining tranches will vest in 2024 and 2025
accordingly. For context, and as outlined in our 2019
Compensation Report, up to CHF 7.3m, or 30%, of
the 2019 LTIP awards at grant for GEB members active
in March 2017 continues to be at risk and directly
linked to the final resolution of the French cross-
border matter.
- For other select senior management, the full award
will vest in 2023.
11 As disclosed in our Compensation Report 2019, LTIP awards for the 2019 performance year were awarded at a value of 62.25% of maximum, which reflected our best estimate of the fair value of the award. The
maximum number of shares was determined by dividing the awarded amount by the fair value of the award at the date of grant, divided by CHF 12.919 or USD 13.141, the average closing price of UBS shares over the
last ten trading days leading up to and including the grant date.
› Refer to “Performance achievement of the 2019 LTIP granted in 2020” in the “Group compensation” section of this report for more
information
The below EOP and DCCP thresholds have been set to support the sustainability of the organization and represent
minimum performance levels to retain the awards.
Equity Ownership Plan (EOP) 2017 / 2018, EOP 2018 / 2019, EOP 2019 / 2020 and EOP 2020 / 2021
Thresholds
Threshold achievement1
Vesting
Return on common equity tier 1 capital
(RoCET1) and divisional return on
attributed equity
The Group and divisional thresholds have been
satisfied.
The following installments vest in full:
- for EOP 2017 / 2018, the third and final installment
for GEB members;
- for EOP 2018 / 2019, the second installment for the
GEB members;
- for EOP 2019 / 2020, the second installment for all
other employees covered under the plan; and
- for EOP 2020 / 2021, the first installment for all other
employees covered under the plan.
Deferred Contingent Capital Plan (DCCP) 2017 / 2018
Thresholds
Threshold achievement1
Vesting
Common equity tier 1 (CET1) capital
ratio, viability event and, additionally for
GEB, Group profit before tax
The thresholds have been satisfied.
- DCCP 2017 / 2018 vests in full.
11 Performance may be adjusted for disclosed items generally not representative of underlying business performance.
Advisory vote | Corporate governance and compensation | Compensation
233
236
Audited |
Share ownership / entitlements of GEB members1
Name, function
Ralph A.J.G. Hamers, Group Chief Executive Officer
Christian Bluhm, Group Chief Risk Officer
Mike Dargan, Group Chief Digital and Information Officer
Kirt Gardner, former Group Chief Financial Officer
Suni Harford, President Asset Management
Naureen Hassan, President UBS Americas
Robert Karofsky, President Investment Bank
Sabine Keller-Busse, President Personal & Corporate Banking and President UBS Switzerland
Iqbal Khan, President Global Wealth Management and President EMEA
Edmund Koh, President Asia Pacific
Barbara Levi, Group General Counsel
Tom Naratil, former Co-President Global Wealth Management and President UBS Americas
Markus Ronner, Group Chief Compliance and Governance Officer
Sarah Youngwood, Group Chief Financial Officer
TToottaall
Number of
unvested
shares / at
risk2
349,441
122,453
707,979
654,579
386,141
240,343
-
780,640
1,028,210
636,122
0
-
1,037,028
851,520
973,150
798,457
960,301
898,111
724,865
501,322
407,195
430,732
-
1,374,044
586,283
418,452
299,729
-
Number of
vested shares
5,238
TToottaall nnuummbbeerr
ooff sshhaarreess
335544,,667799
Potentially
conferred
voting
rights in %
0.023
2,673
0
226
17,955
82,743
-
236,421
44,202
22,199
0
-
364,914
357,064
566,106
421,491
0
113,715
579,937
493,977
45,818
0
-
950,682
0
57,856
0
-
112255,,112266
770077,,997799
665544,,880055
440044,,009966
332233,,008866
--
11,,001177,,006611
11,,007722,,441122
665588,,332211
00
--
11,,440011,,994422
11,,220088,,558844
11,,553399,,225566
11,,221199,,994488
996600,,330011
11,,001111,,882266
11,,330044,,880022
999955,,229999
445533,,001133
443300,,773322
--
22,,332244,,772266
558866,,228833
447766,,330088
229999,,772299
--
0.008
0.046
0.041
0.026
0.020
-
0.063
0.070
0.041
0.000
-
0.092
0.075
0.101
0.076
0.063
0.063
0.085
0.062
0.030
0.027
-
0.145
0.038
0.030
0.020
-
7,460,322
1,624,170
99,,008844,,449922
0.593
oonn
3311 DDeecceemmbbeerr
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
0.650
11 Includes all vested and unvested shares of GEB members, including those held by related parties. No options were held in 2022 and 2021 by any GEB member or any of its related parties. Refer to “Note 27 Employee
benefits: variable compensation” in the “Consolidated financial statements” section of our Annual Report 2022 for more information. 22 Includes shares granted under variable compensation plans with forfeiture
provisions. For the 2019/20 LTIP award, the values reflect the final value. For all other LTIP awards, the values reflect the fair value awarded at grant. The actual number of shares vesting in the future will be calculated
under the terms of the plans. Refer to the “Group compensation” section of this report for more information about the plans.
1100,,444455,,882233
7,706,776
2,739,047
22002211
Audited |
Total of all vested and unvested shares of GEB members1,2
SShhaarreess oonn 3311 DDeecceemmbbeerr 22002222
99,,008844,,449922
1,624,170
1,572,210
1,952,123
2,020,881
1,281,201
599,733
TToottaall of which: vested
of which: vesting
2023
2024
2025
2026
2027
SShhaarreess oonn 3311 DDeecceemmbbeerr 22002211
1100,,444455,,882233
2,739,047
1,463,440
1,688,568
2,112,516
1,488,544
877,856
2022
2023
2024
2025
2026
2028
34,174
2027
75,852
11 Includes shares held by related parties. 22 Includes shares granted under variable compensation plans with forfeiture provisions. The actual number of shares vesting in the future will be calculated under the terms
of the plans. Refer to the “Group compensation” section of this report for more information.
Advisory vote | Corporate governance and compensation | Compensation
234
237
Audited |
Number of shares of BoD members1
Name, function
Colm Kelleher, Chairman2
Lukas Gähwiler, Vice Chairman2, 3
Axel A. Weber, former Chairman2
Jeremy Anderson, Senior Independent Director
Claudia Böckstiegel, member
William C. Dudley, member
Patrick Firmenich, member
Reto Francioni, member2
Fred Hu, member
Mark Hughes, member
Nathalie Rachou, member
Julie G. Richardson, member
Dieter Wemmer, member
Jeanette Wong, member
oonn 3311 DDeecceemmbbeerr
22002222
NNuummbbeerr ooff sshhaarreess hheelldd
333399,,008844
Voting rights in %
0.022
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
--
228833,,990077
--
--
11,,114488,,336699
111199,,666600
9977,,551188
77,,881144
00
6666,,664466
4499,,771144
2277,,227755
00
--
113399,,660099
9977,,554433
7744,,448811
4488,,449977
3300,,226633
3311,,112266
1188,,110022
113388,,220044
111177,,336655
113322,,332200
111144,,008866
9933,,444400
6688,,445522
11,,338855,,551166
0.019
0.071
0.008
0.006
0.001
0.000
0.004
0.003
0.002
0.000
0.009
0.006
0.005
0.003
0.002
0.002
0.001
0.009
0.007
0.009
0.007
0.006
0.004
0.090
Total
0.116
11 Includes blocked and unblocked shares held by BoD members, including those held by related parties. No options were granted in 2022 and 2021. 22 At the 2022 AGM, Lukas Gähwiler and Colm Kelleher were
newly elected and Reto Francioni and Axel A. Weber did not stand for re-election. 33 Includes 203,246 unvested shares granted under variable compensation plans with forfeiture provisions as part of Lukas Gähwiler’s
compensation for his executive roles previously held at UBS.
11,,885577,,995599
22002211
Audited |
Total of all blocked and unblocked shares of BoD members1
SShhaarreess oonn 3311 DDeecceemmbbeerr 22002222
11,,338855,,55116622
472,981
207,155
250,165
262,671
192,544
TToottaall
of which:
unblocked
of which: blocked until
2023
2024
2025
2026
SShhaarreess oonn 3311 DDeecceemmbbeerr 22002211
11,,885577,,995599
701,594
178,603
305,947
329,875
341,940
11 Includes shares held by related parties. 22 Includes 203,246 unvested shares granted under variable compensation plans with forfeiture provisions as part of Lukas Gähwiler’s compensation for his executive roles
previously held at UBS.
2022
2023
2024
2025
Audited |
Loans granted to GEB members1
Pursuant to article 38 of the Articles of Association (the AoA) of UBS Group AG, GEB members may be granted loans.
Such loans are made in the ordinary course of business on substantially the same terms as those granted to other
employees, including interest rates and collateral, and neither involve more than the normal risk of collectability nor
contain any other unfavorable features for the firm. The total amount of such loans must not exceed CHF 20m per GEB
member.
CHF, except where indicated2
Name, function
Christian Bluhm, Group Chief Risk Officer (highest loan in 2022)
Christian Bluhm, Group Chief Risk Officer (highest loan in 2021)
Aggregate of all GEB members4
oonn 3311 DDeecceemmbbeerr
22002222
22002211
22002222
22002211
USD
(for reference)
Loans3
7,494,391
LLooaannss33
66,,992277,,000000
77,,005599,,000000
3300,,775522,,003355
33,270,934
2299,,663355,,559900
11 No loans have been granted to related parties of the GEB members at conditions not customary in the market. 22 Swiss franc and US dollar amounts disclosed represent local currency amounts translated at the
relevant year-end closing exchange rate. 33 All loans granted are secured loans. 44 No unused uncommitted credit facilities in 2022 and 2021.
Advisory vote | Corporate governance and compensation | Compensation
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238
Audited |
Loans granted to BoD members1
Pursuant to article 33 of the AoA of UBS Group AG, loans to independent BoD members are made in the ordinary course
of business at general market conditions. The Vice Chairman, given the full-time nature of his role, may be granted loans
in the ordinary course of business on substantially the same terms as those granted to employees, including interest rates
and collateral. Such loans neither involve more than the normal risk of collectability nor contain any other unfavorable
features for the firm. The total amount of such loans must not exceed CHF 20m per BoD member.
CHF, except where indicated2
Aggregate of all BoD members
oonn 3311 DDeecceemmbbeerr
22002222
22002211
LLooaannss33,,44
00
11,,550000,,000000
USD
(for reference)
Loans3,4
0
11 No loans have been granted to related parties of the BoD members at conditions not customary in the market. 22 Swiss franc and US dollar amounts disclosed represent local currency amounts translated at the
relevant year-end closing exchange rate. 33 All loans granted are secured loans. 44 No loans in 2022 and CHF 1,500,000 for Reto Francioni in 2021.
Audited |
Compensation paid to former BoD and GEB members1
CHF, except where indicated2
Former BoD members
Aggregate of all former GEB members3
Aggregate of all former BoD and GEB members
FFoorr tthhee yyeeaarr
Compensation
Benefits
22002222
22002211
22002222
22002211
22002222
22002211
0
0
0
0
0
0
0
0
89,657
187,876
89,657
187,876
TToottaall
00
00
8899,,665577
118877,,887766
8899,,665577
118877,,887766
USD
(for reference)
Total
0
97,001
97,001
11 Compensation or remuneration that is related to the former members’ activity on the BoD or GEB or that is not at market conditions. 22 Swiss franc and US dollar amounts disclosed represent local currency amounts
translated at the relevant year-end closing exchange rate. 33 Includes benefit payments in 2022 and 2021 to two former GEB members.
Advisory vote | Corporate governance and compensation | Compensation
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239
Provisions of the Articles of Association related to compensation
Swiss say-on-pay provisions give shareholders of companies listed in Switzerland significant influence over board and
management compensation. At UBS, this is achieved by means of an annual binding say-on-pay vote in accordance with
the following provisions of the AoA.
Say on pay
In line with article 43 of the AoA, the General Meeting approves proposals from the BoD in relation to:
a) the maximum aggregate amount of compensation of the BoD for the period until the next AGM;
b) the maximum aggregate amount of fixed compensation of the GEB for the following financial year; and
c) the aggregate amount of variable compensation of the GEB for the preceding financial year.
The BoD may submit for approval by the General Meeting deviating or additional proposals relating to the same or
different periods. If the General Meeting does not approve a proposal from the BoD, the BoD will determine, taking into
account all relevant factors, the respective (maximum) aggregate amount or (maximum) partial amounts and submit the
amount(s) so determined for approval by the General Meeting. UBS Group AG or companies controlled by it may pay or
grant compensation prior to approval by the General Meeting, subject to subsequent approval.
Principles of compensation
In line with articles 45 and 46 of the AoA, compensation of the members of the BoD includes base remuneration and
may include other compensation elements and benefits. Compensation of the members of the BoD is intended to
recognize the responsibility and governance nature of their role, to attract and retain qualified individuals, and to ensure
alignment with shareholders’ interests.
Compensation of the members of the GEB includes fixed and variable compensation elements. Fixed compensation
includes the base salary and may include other compensation elements and benefits. Variable compensation elements
are governed by financial and non-financial performance measures that take into account the performance of UBS Group
AG and / or parts thereof, targets in relation to the market, other companies or comparable benchmarks, short- and
long-term strategic objectives, and / or individual targets. The BoD or, where delegated to it, the Compensation
Committee, determines the respective performance measures, the overall and individual performance targets, and their
achievement. The BoD or, where delegated to it, the Compensation Committee, aims to ensure alignment with
sustainable performance and appropriate risk-taking through adequate deferrals, forfeiture conditions, caps on
compensation, harmful acts provisions and similar means with regard to parts of or all of the compensation. Parts of
variable compensation are subject to a multi-year vesting period.
Additional amount for GEB members appointed after the vote on the aggregate amount of compensation by the AGM
In line with article 46 of the AoA of UBS Group AG, if the maximum aggregate amount of compensation already approved
by the General Meeting is not sufficient to also cover the compensation of a person that becomes a member of or is
being promoted within the GEB after the General Meeting has approved the compensation, UBS Group AG, or companies
controlled by it, is authorized to pay or grant each such GEB member a supplementary amount during the compensation
period(s) already approved. The aggregate pool for such supplementary amounts per compensation period cannot exceed
40% of the average of total annual compensation paid or granted to the GEB during the previous three years.
› Refer to ubs.com/governance for more information
Advisory vote | Corporate governance and compensation | Compensation
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240
Ernst & Young Ltd
Aeschengraben 27
P.O. Box
CH-4002 Basel
Phone:
www.ey.com/ch
+41 58 286 86 86
Advisory vote | Corporate governance and compensation | Compensation
238
241
Financial statements
Consolidated financial statements
Table of contents
244 Management’s report on internal control over financial
245
246
251
reporting
Report of the independent registered public accounting
firm on internal control over financial reporting
Report of the independent registered public accounting
firm on the consolidated financial statements
Statutory auditor’s report on the audit of the consolidated
financial statements
257 UBS Group AG consolidated financial statements
257
257
258
259
260
262
264
Primary financial statements and share information
Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Share information and earnings per share
Statement of cash flows
266 Notes to the UBS Group AG consolidated financial
statements
1
Summary of material accounting policies
Segment reporting
Income statement notes
3
Net interest income and other net income from
financial instruments measured at fair value through
profit or loss
Net fee and commission income
Other income
Personnel expenses
General and administrative expenses
Income taxes
266
283
286
286
286
287
287
287
288
2
4
5
6
7
8
291
291
295
297
297
299
300
300
301
301
308
320
334
336
338
341
343
346
353
356
360
361
362
363
364
Balance sheet notes
9
Financial assets at amortized cost and other
positions in scope of expected credit loss
measurement
Derivative instruments
Property, equipment and software
Goodwill and intangible assets
Other assets
Customer deposits
Debt issued designated at fair value
Debt issued measured at amortized cost
Provisions and contingent liabilities
Other liabilities
10
11
12
13
14
15
16
17
18
309 Additional information
309
19
26
25
20
21
Expected credit loss measurement
Fair value measurement
Offsetting financial assets and financial liabilities
Restricted and transferred financial assets
22
23 Maturity analysis of assets and liabilities
Interest rate benchmark reform
24
Hedge accounting
Post-employment benefit plans
Employee benefits: variable compensation
Interests in subsidiaries and other entities
Changes in organization and acquisitions and
disposals of subsidiaries and businesses
Related parties
Invested assets and net new money
Currency translation rates
32
33 Main differences between IFRS and Swiss GAAP
29
31
30
27
28
Annual Report 2022 | Financial statements | Consolidated financial statements
242
242
367 UBS AG consolidated financial information
368 UBS AG consolidated key figures
369 Comparison between UBS Group AG consolidated and
UBS AG consolidated
370 Management’s report on internal control over financial
371
372
377
reporting
Report of the independent registered public accounting
firm on internal control over financial reporting
Report of the independent registered public accounting
firm on the consolidated financial statements
Statutory auditor’s report on the audit of the consolidated
financial statements
416
416
420
422
422
424
425
425
426
426
433
10
11
12
13
14
15
16
17
18
Balance sheet notes
9
Financial assets at amortized cost and other
positions in scope of expected credit loss
measurement
Derivative instruments
Property, equipment and software
Goodwill and intangible assets
Other assets
Customer deposits, and funding from UBS Group
AG
Debt issued designated at fair value
Debt issued measured at amortized cost
Provisions and contingent liabilities
Other liabilities
383 UBS AG consolidated financial statements
383
383
384
385
386
388
389
Primary financial statements and share information
Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Share information and earnings per share
Statement of cash flows
391 Notes to the UBS AG consolidated financial statements
391
Summary of material accounting policies
Segment reporting
408
2
1
411
411
411
412
412
412
413
4
5
6
7
8
Income statement notes
3
Net interest income and other net income from
financial instruments measured at fair value
through profit or loss
Net fee and commission income
Other income
Personnel expenses
General and administrative expenses
Income taxes
434 Additional information
434
19
445
459
461
463
466
468
471
479
483
487
488
490
491
491
494
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
Expected credit loss measurement
Fair value measurement
Offsetting financial assets and financial liabilities
Restricted and transferred financial assets
Maturity analysis of assets and liabilities
Interest rate benchmark reform
Hedge accounting
Post-employment benefit plans
Employee benefits: variable compensation
Interests in subsidiaries and other entities
Changes in organization and acquisitions and
disposals of subsidiaries and businesses
Related parties
Invested assets and net new money
Currency translation rates
Main differences between IFRS and Swiss GAAP
Supplemental guarantor information required
under SEC regulations
Annual Report 2022 | Financial statements | Consolidated financial statements
243
243
Management’s report on internal control over financial reporting
Management’s responsibility for internal control over financial reporting
The Board of Directors and management of UBS Group AG (UBS) are responsible for establishing and maintaining
adequate internal control over financial reporting. UBS’s internal control over financial reporting is designed to provide
reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance
with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
UBS’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 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 2022
UBS management has assessed the effectiveness of UBS’s internal control over financial reporting as of 31 December
2022 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, management believes that, as
of 31 December 2022, UBS’s internal control over financial reporting was effective.
The effectiveness of UBS’s internal control over financial reporting as of 31 December 2022 has been audited by Ernst &
Young Ltd, UBS’s independent registered public accounting firm, as stated in their Report of the independent
registered public accounting firm on internal control over financial reporting, which expresses an unqualified
opinion on the effectiveness of UBS’s internal control over financial reporting as of 31 December 2022.
Reports of the statutory auditor / independent registered public accounting firm
The accompanying reports of the independent registered public accounting firm on the consolidated financial statements
Report of the independent registered public accounting firm on the consolidated financial statements
and internal control over financial reporting Report of the independent registered public accounting firm on
internal control over financial reporting of UBS Group AG are included in our filing on 6 March 2023 with the
Securities and Exchange Commission on Form 20-F pursuant to US reporting obligations.
The accompanying statutory auditor’s report on the audit of the consolidated financial statements of UBS Group AG
Statutory auditor’s report on the audit of the consolidated financial statements, in addition to the
aforementioned reports, is included in our Annual Report 2022 available on our website and filed on 6 March 2023 with
all other relevant non-US exchanges.
Annual Report 2022 | Financial statements | Consolidated financial statements
244
244
Ernst & Young Ltd
Aeschengraben 27
P.O. Box
4002 Basel
Phone: +41 58 286 86 86
www.ey.com/ch
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of UBS Group AG
Opinion on Internal Control over Financial Reporting
We have audited UBS Group AG and subsidiaries’ internal control over financial reporting as of 31 December 2022,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, UBS Group AG
and subsidiaries (“the Group”) maintained, in all material respects, effective internal control over financial reporting
as of 31 December 2022, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Group as of 31 December 2022 and 2021, the related
consolidated income statements, statements of comprehensive income, statements of changes in equity and
statements of cash flows for each of the three years in the period ended 31 December 2022, and the related notes
and our report dated 3 March 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Group’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) 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.
Ernst & Young Ltd
Basel, 3 March 2023
Annual Report 2022 | Financial statements | Consolidated financial statements
245
245
Ernst & Young Ltd
Aeschengraben 27
P.O. Box
4002 Basel
Phone: +41 58 286 86 86
www.ey.com/ch
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of UBS Group AG
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UBS Group AG and subsidiaries (“the
Group”) as of 31 December 2022 and 2021, the related consolidated income statements, statements of
comprehensive income, statements of changes in equity and statements of cash flows for each of the three
years in the period ended 31 December 2022, and the related notes to the consolidated financial statements,
including the information identified as “audited” as described in Note 1 (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Group at 31 December 2022 and 2021, and the results of its
operations and its cash flows for each of the three years in the period ended 31 December 2022, in conformity
with the International Financial Reporting Standards as issued by the International Accounting Standards
Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Group’s internal control over financial reporting as of 31 December 2021, based
on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated 3 March 2022 expressed
an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Group’s Board of Directors. Our responsibility is to
express an opinion on the Group’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Group in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of critical audit matters does not alter in
any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.
Annual Report 2022 | Financial statements | Consolidated financial statements
246
246
2
Valuation of complex or illiquid instruments at fair value
Description of
the Matter
At 31 December 2022, as explained in Notes 1 and 20 to the consolidated financial statements,
the Group held financial assets and liabilities measured at fair value of USD 342,166 million
and USD 333,381 million, including financial instruments that did not trade in active markets.
These instruments are reported within the following accounts: financial assets and liabilities at
fair value held for trading, derivative financial instruments, financial assets at fair value not
held for trading, debt issued designated at fair value, and other financial liabilities designated
at fair value. In determining the fair value of these financial instruments, the Group used
valuation techniques, modelling assumptions, and estimates of unobservable market inputs
which required significant management judgment.
Auditing management’s judgments and assumptions used in the estimation of the fair value of
these instruments was complex due to the highly judgmental nature of valuation techniques,
key modelling assumptions and significant unobservable inputs. Auditing the valuation of
complex or illiquid instruments at fair value included consideration of any incremental risks
arising from the impact of current macroeconomic influences on valuation techniques and
inputs, such as geopolitics, inflation, and the ongoing COVID-19 pandemic. The valuation
techniques that required especially complex judgement were comprised of discounted cash
flow and earnings-based valuation techniques. Highly judgmental modelling assumptions
result from a range of different models or model calibrations used by market participants.
Valuation inputs which were particularly complex and subjective included those with a limited
degree of observability and the associated extrapolation, interpolation or calibration of curves
using limited and proxy data points. Examples of such inputs included unobservable credit
spreads and bond prices, volatility, and correlation.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness
of the controls over management’s financial instruments valuation processes, including
controls over market data inputs, model and methodology governance, and valuation
adjustments.
We tested the valuation techniques, models and methodologies, and the inputs used in those
models, as outlined above, by performing an independent revaluation of certain complex or
illiquid financial assets and liabilities with the support of specialists. We used independent
models and inputs, and compared inputs to available market data among other procedures.
We also independently challenged key judgments in relation to a sample of fair value
adjustments.
We also assessed management’s disclosures regarding fair value measurement (within Notes
1 and 20 to the consolidated financial statements).
Recognition of deferred tax assets
Description of
the Matter
At 31 December 2022, the Group’s deferred tax assets (“DTA”) were USD 9,389 million (see
Note 8 to the consolidated financial statements). DTAs are recognized to the extent it is
probable that taxable profits will be available, against which, the applicable deductible
temporary differences or the carryforward of unused tax losses within the loss carryforward
Annual Report 2022 | Financial statements | Consolidated financial statements
247
247
3
period can be utilized. There is significant judgment exercised when estimating future taxable
income that is not based on the reversal of taxable temporary differences. Management’s
estimate of future taxable profits is based on its strategic plan that is sensitive to the
assumptions made in estimating future taxable income.
Auditing management’s assessment of the recognition of the Group’s DTAs was complex due
to the highly judgmental nature of estimating future taxable profits over the life of underlying
tax loss carryforwards. Estimating future profitability is inherently subjective as it is sensitive
to future economic, market and other conditions, which are difficult to predict, such as the
impact of geopolitics, inflation, interest rates, and the ongoing COVID-19 pandemic.
Specifically, some of the more subjective key macroeconomic assumptions used included
gross domestic product growth rates, equity market performance, and interest rate
expectations.
We obtained an understanding, evaluated the design, and tested the operating effectiveness
of management’s controls over DTA valuation, which included the assumptions used in
developing the strategic plans and estimating future taxable income.
We assessed the completeness and accuracy of the data used for the estimations of future
taxable income. This included recalculating the outputs of models applied to the recognition
process for DTAs.
We involved specialists to assist in assessing the key economic assumptions embedded in
the strategic plans. We compared key assumptions used to forecast future taxable income to
externally available historical and prospective data and assumptions, and assessed the
sensitivity of the outcomes using reasonably possible changes in assumptions.
We also assessed management’s disclosure regarding recognized and unrecognized
deferred tax assets (within Note 8 to the consolidated financial statements).
How We
Addressed the
Matter in Our
Audit
Expected credit losses
Description of
the Matter
At 31 December 2022, the Group’s allowances and provisions for expected credit losses
(“ECL”) were USD 1,091 million. As explained in Notes 1, 9 and 19 to the consolidated financial
statements, ECL is recognized for financial assets measured at amortized cost, financial
assets measured at fair value through other comprehensive income, fee and lease
receivables, financial guarantees and irrevocable loan commitments. ECL is also recognized
on the undrawn portion of revolving revocable credit lines, which include the Group’s credit
card limits and master credit facilities. The allowances and provisions for ECL consists of
exposures that are in default which are individually evaluated for impairment (stage 3), as well
as losses inherent in the loan portfolio that are not specifically identified (stage 1 and stage 2).
Management’s ECL estimates represent the difference between contractual cash flows and
those the Group expects to receive, discounted at the effective interest rate. The method used
to calculate ECL is based on a combination of the following principal factors: probability of
default (“PD”), loss given default (“LGD”) and exposure at default (“EAD”).
Annual Report 2022 | Financial statements | Consolidated financial statements
248
248
4
Auditing management’s estimate of the allowances and provisions for ECL was complex due
to the highly judgmental nature of forward-looking economic scenarios that form the basis of
the ECL calculation, their probability weightings, and the credit risk models used to estimate
stage 1 and stage 2 ECL. The geopolitical tensions and macroeconomic developments during
2022, such as the Russian invasion into Ukraine, US/China developments, inflation, including
emerging stagflation risks and monetary policy challenges, and continued restrictions in
certain locations due to the ongoing COVID-19 pandemic contribute to further uncertainty, and
as a consequence additional complexity in estimating ECL. As a result, the ECL estimation
requires higher management judgement, specifically within the following two areas: (i)
scenario selection, including assumptions about the scenario severity,
the possible
geopolitical developments and macroeconomic and market developments, and the number of
scenarios necessary to sufficiently cover the bandwidth of potential outcomes, as well as
related scenario weights and post-model adjustments; and, (ii) credit risk models, since the
output from historic data based models may not be indicative of current or future conditions.
Additionally, auditing the measurement of individual ECL for stage 3 was complex due to the
high degree of judgment involved in management’s process for estimating ECL based on
assumptions. These assumptions take 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.
We obtained an understanding, evaluated the design and tested the operating effectiveness
of management’s controls over the ECL estimate, including management’s choice of forward-
looking economic scenarios used to measure ECL and the probability weighting assigned to
such scenarios. We evaluated management’s methodologies and governance controls for
developing and monitoring the economic scenarios used and the probability weightings
assigned to them, and related post-model adjustment. Supported by specialists, we assessed
the key macroeconomic variables used in the forward-looking scenarios, such as real gross
domestic product growth, unemployment rate, interest rates and house price indices, and
evaluated the modelled correlation and translation of those macroeconomic factors to the ECL
estimate. We further assessed the appropriateness of the post-model adjustments by
considering management’s governance process, assumptions used and sensitivity analysis.
We also obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over credit risk models used in the ECL estimate, including controls
over the completeness and accuracy of model input data, calculation logic, and output data
used in the overall ECL calculation. With the support of specialists, on a sample basis, we
performed an evaluation of management’s models and tested the model outcomes by
inspecting model documentation, reperforming model calculations, and comparing data used
as inputs to management’s forecast to external sources, among other procedures.
For the measurement of stage 3, we obtained an understanding, evaluated the design and
tested the operating effectiveness of controls over management’s process, including an
evaluation of the assumptions used by management regarding the future cash flows from
debtors’ continuing operations and/or the liquidation of collateral. Supported by specialists in
certain areas, we additionally tested collateral valuation, cash flow assumptions and exit
strategies by performing inquiries of management, inspecting underlying documents, such as
How We
Addressed the
Matter in Our
Audit
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249
5
loan contracts, financial statements, covenants, budgets and business plans, and by re-
performing discounted cash flow calculations among other procedures, on a sample basis.
We also assessed management’s disclosures regarding financial assets at amortized cost and
other positions in scope of expected credit loss measurement (within Notes 1, 9 and 19 to the
consolidated financial statements).
Ernst & Young Ltd
We have served as the Group’s auditor since 1998.
Basel, Switzerland
3 March 2023
Annual Report 2022 | Financial statements | Consolidated financial statements
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250
Ernst & Young Ltd
Aeschengraben 27
P.O. Box
CH-4002 Basel
Phone:
www.ey.com/ch
+41 58 286 86 86
To the General Meeting of
UBS Group AG, Zurich
Basel, 3 March 2023
Statutory auditor’s report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of UBS Group AG and its subsidiaries (“the Group”),
which comprise the consolidated balance sheets as of 31 December 2022 and 31 December 2021, and the
consolidated income statements, statements of comprehensive income, statements of changes in equity
and statements of cash flows for each of the three years in the period ended 31 December 2022, and the
related notes to the consolidated financial statements, including the information identified as “audited” as
described in Note 1 (collectively referred to as the “consolidated financial statements”).
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2022 and 31 December 2021, and the
consolidated financial performance and its consolidated cash flows for each of the three years in the period
ended 31 December 2022 in accordance with International Financial Reporting Standards (IFRS) and
comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss
Auditing Standards. Our responsibilities under those provisions and standards are further described in the
Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of
the Swiss audit profession, as well as the International Code of Ethics for Professional Accountants
(including International Independence Standards) of the International Ethics Standards Board for
Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. For each matter below, our description of how
our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the consolidated financial statements. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our audit opinion on
the accompanying consolidated financial statements.
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2
Valuation of complex or illiquid instruments at fair value
Area of focus At 31 December 2022, as explained in Notes 1 and 20 to the consolidated financial
statements, the Group held financial assets and liabilities measured at fair value of USD
342,166 million and USD 333,381 million, including financial instruments that did not trade
in active markets. These instruments are reported within the following accounts: financial
assets and liabilities at fair value held for trading, derivative financial instruments, financial
assets at fair value not held for trading, debt issued designated at fair value, and other
financial liabilities designated at fair value. In determining the fair value of these financial
instruments, the Group used valuation techniques, modelling assumptions, and estimates
of unobservable market inputs which required significant management judgment.
Auditing management’s judgments and assumptions used in the estimation of the fair value
of these instruments was complex due to the highly judgmental nature of valuation
techniques, key modelling assumptions and significant unobservable inputs. Auditing the
valuation of complex or illiquid instruments at fair value included consideration of any
incremental risks arising from the impact of current macroeconomic influences on valuation
techniques and inputs, such as geopolitics, inflation, and the ongoing COVID-19 pandemic.
The valuation techniques that required especially complex judgement were comprised of
discounted cash flow and earnings-based valuation techniques. Highly judgmental
modelling assumptions result from a range of different models or model calibrations used
by market participants. Valuation inputs which were particularly complex and subjective
included those with a limited degree of observability and the associated extrapolation,
interpolation or calibration of curves using limited and proxy data points. Examples of such
inputs included unobservable credit spreads and bond prices, volatility, and correlation.
Our audit
response
We obtained an understanding, evaluated the design and tested the operating
effectiveness of the controls over management’s financial instruments valuation processes,
including controls over market data inputs, model and methodology governance, and
valuation adjustments.
We tested the valuation techniques, models and methodologies, and the inputs used in
those models, as outlined above, by performing an independent revaluation of certain
complex or illiquid financial assets and liabilities with the support of specialists. We used
independent models and inputs, and compared inputs to available market data among
other procedures. We also independently challenged key judgments in relation to a sample
of fair value adjustments.
We also assessed management’s disclosures regarding fair value measurement (within
Notes 1 and 20 to the consolidated financial statements).
Recognition of deferred tax assets
Area of focus At 31 December 2022, the Group’s deferred tax assets (“DTA”) were USD 9,389 million
(see Note 8 to the consolidated financial statements). DTAs are recognized to the extent it
is probable that taxable profits will be available, against which, the applicable deductible
temporary differences or the carryforward of unused tax losses within the loss carryforward
period can be utilized. There is significant judgment exercised when estimating future
taxable income that is not based on the reversal of taxable temporary differences.
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3
Management’s estimate of future taxable profits is based on its strategic plan that is
sensitive to the assumptions made in estimating future taxable income.
Auditing management’s assessment of the recognition of the Group’s DTAs was complex
due to the highly judgmental nature of estimating future taxable profits over the life of
underlying tax loss carryforwards. Estimating future profitability is inherently subjective as
it is sensitive to future economic, market and other conditions, which are difficult to predict,
such as the impact of geopolitics, inflation, interest rates, and the ongoing COVID-19
pandemic. Specifically, some of the more subjective key macro-economic assumptions
used included gross domestic product growth rates, equity market performance, and
interest rate expectations.
Our audit
response
We obtained an understanding, evaluated the design, and tested the operating
effectiveness of management’s controls over DTA valuation, which included the
assumptions used in developing the strategic plans and estimating future taxable income.
We assessed the completeness and accuracy of the data used for the estimations of future
taxable income. This included recalculating the outputs of models applied to the recognition
process for DTAs.
We involved specialists to assist in assessing the key economic assumptions embedded
in the strategic plans. We compared key assumptions used to forecast future taxable
income to externally available historical and prospective data and assumptions, and
assessed the sensitivity of the outcomes using reasonably possible changes in
assumptions.
We also assessed management’s disclosure regarding recognized and unrecognized
deferred tax assets (within Note 8 to the consolidated financial statements).
Expected credit losses
Area of focus At 31 December 2022, the Group’s allowances and provisions for expected credit losses
(“ECL”) were USD 1,091 million. As explained in Notes 1, 9 and 19 to the consolidated
financial statements, ECL is recognized for financial assets measured at amortized cost,
financial assets measured at fair value through other comprehensive income, fee and lease
receivables, financial guarantees and irrevocable loan commitments. ECL is also
recognized on the undrawn portion of revolving revocable credit lines, which include the
Group’s credit card limits and master credit facilities. The allowances and provisions for
ECL consists of exposures that are in default which are individually evaluated for
impairment (stage 3), as well as losses inherent in the loan portfolio that are not specifically
identified (stage 1 and stage 2). Management’s ECL estimates represent the difference
between contractual cash flows and those the Group expects to receive, discounted at the
effective interest rate. The method used to calculate ECL is based on a combination of the
following principal factors: probability of default (“PD”), loss given default (“LGD”) and
exposure at default (“EAD”).
Auditing management’s estimate of the allowances and provisions for ECL was complex
due to the highly judgmental nature of forward-looking economic scenarios that form the
basis of the ECL calculation, their probability weightings, and the credit risk models used
to estimate stage 1 and stage 2 ECL. The geopolitical tensions and macroeconomic
Annual Report 2022 | Financial statements | Consolidated financial statements
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253
Our audit
response
4
developments during 2022, such as the Russian invasion into Ukraine, US/China
developments, inflation, including emerging stagflation risks and monetary policy
challenges, and continued restrictions in certain locations due to the ongoing COVID-19
pandemic contribute to further uncertainty, and as a consequence additional complexity in
estimating ECL.As a result, the ECL estimation requires higher management judgement,
specifically within the following two areas: (i) scenario selection, including assumptions
about the scenario severity, the possible geopolitical developments and macroeconomic
and market developments, and the number of scenarios necessary to sufficiently cover the
bandwidth of potential outcomes, as well as related scenario weights and post-model
adjustments; and, (ii) credit risk models, since the output from historic data based models
may not be indicative of current or future conditions.
Additionally, auditing the measurement of individual ECL for stage 3 was complex due to
the high degree of judgment involved in management’s process for estimating ECL based
on assumptions. These assumptions take 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.
We obtained an understanding, evaluated the design and tested the operating
effectiveness of management’s controls over the ECL estimate, including management’s
choice of forward-looking economic scenarios used to measure ECL and the probability
weighting assigned to such scenarios. We evaluated management’s methodologies and
governance controls for developing and monitoring the economic scenarios used and the
probability weightings assigned to them, and related post-model adjustment. Supported by
specialists, we assessed the key macroeconomic variables used in the forward-looking
scenarios, such as real gross domestic product growth, unemployment rate, interest rates
and house price indices, and evaluated the modelled correlation and translation of those
macroeconomic factors to the ECL estimate. We further assessed the appropriateness of
the post-model adjustments by considering management’s governance process,
assumptions used and sensitivity analysis.
We also obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over credit risk models used in the ECL estimate, including
controls over the completeness and accuracy of model input data, calculation logic, and
output data used in the overall ECL calculation. With the support of specialists, on a sample
basis, we performed an evaluation of management’s models and tested the model
outcomes by inspecting model documentation, reperforming model calculations, and
comparing data used as inputs to management’s forecast to external sources, among other
procedures.
For the measurement of stage 3, we obtained an understanding, evaluated the design and
tested the operating effectiveness of controls over management’s process, including an
evaluation of the assumptions used by management regarding the future cash flows from
debtors’ continuing operations and/or the liquidation of collateral. Supported by specialists
in certain areas, we additionally tested collateral valuation, cash flow assumptions and exit
strategies by performing inquiries of management, inspecting underlying documents, such
as loan contracts, financial statements, covenants, budgets and business plans, and by re-
performing discounted cash flow calculations among other procedures, on a sample basis.
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5
We also assessed management’s disclosures regarding financial assets at amortized cost
and other positions in scope of expected credit loss measurement (within Notes 1, 9 and
19 to the consolidated financial statements).
Other information in the annual report
The Board of Directors is responsible for the other information in the annual report. The other information
comprises all information included in the annual report, but does not include the consolidated financial
statements, the stand-alone financial statements of UBS Group AG, the compensation report1, and our
auditor’s reports thereon.
Our opinions on the consolidated financial statements, the standalone financial statements of UBS Group
AG and the compensation report1 do not cover the other information in the annual report and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information in the annual report and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
Responsibility of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give
a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control
as the Board of Directors determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Board of Directors either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located
at the website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-report-for-public-companies. This
description forms part of our auditor’s report.
1 Specifically, the following tables in the compensation report: “Share ownership/entitlements of GEB members," "Total of all vested
and unvested shares of GEB members," "Number of shares of BoD members," and "Total of all blocked and unblocked shares of
BoD Members.”
Annual Report 2022 | Financial statements | Consolidated financial statements
255
255
6
Report on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an
internal control system exists, which has been designed for the preparation of consolidated financial
statements according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
Ernst & Young Ltd
Maurice McCormick
Licensed audit expert
(Auditor in charge)
Robert E. Jacob, Jr.
Certified Public Accountant (U.S.)
Annual Report 2022 | Financial statements | Consolidated financial statements
256
256
UBS Group AG consolidated financial statements
Primary financial statements and share information
Audited |
Income statement
USD m
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
Net interest income from financial instruments measured at fair value through profit or loss and other
Net interest income
Other net income from financial instruments measured at fair value through profit or loss
Fee and commission income
Fee and commission expense
Net fee and commission income
Other income
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
OOppeerraattiinngg eexxppeennsseess
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Net profit / (loss) attributable to non-controlling interests
NNeett pprrooffiitt // ((lloossss)) aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Earnings per share (USD)
Basic
Diluted
Note
3311..1122..2222
31.12.21
31.12.20
For the year ended
3
3
3
3
3
4
4
4
5
19
6
7
11, 12
8
1111,,778822
((66,,556644))
11,,440033
66,,662211
77,,551177
2200,,778899
((11,,882233))
1188,,996666
11,,445599
3344,,556633
8,533
(3,259)
1,431
6,705
5,850
24,372
(1,985)
22,387
452
35,393
8,810
(4,247)
1,299
5,862
6,960
20,961
(1,775)
19,186
1,076
33,084
2299
(148)
694
1177,,668800
55,,118899
22,,006611
2244,,993300
99,,660044
11,,994422
77,,666611
3322
77,,663300
18,387
5,553
2,118
26,058
9,484
1,998
7,486
29
7,457
17,224
4,885
2,126
24,235
8,155
1,583
6,572
15
6,557
22..3344
22..2255
2.14
2.06
1.83
1.77
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
257
257
Statement of comprehensive income
USD m
Comprehensive income attributable to shareholders
NNeett pprrooffiitt // ((lloossss))
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt
FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn
Foreign currency translation movements related to net assets of foreign operations, before tax
Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax
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
Income tax relating to foreign currency translations, including the effect of net investment hedges
Subtotal foreign currency translation, net of tax
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Net unrealized gains / (losses), before tax
Net realized (gains) / losses reclassified to the income statement from equity
Reclassification of financial assets to Other financial assets measured at amortized cost1
Income tax relating to net unrealized gains / (losses)
Subtotal financial assets measured at fair value through other comprehensive income, net of tax
CCaasshh ffllooww hheeddggeess ooff iinntteerreesstt rraattee rriisskk
Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax
Net (gains) / losses reclassified to the income statement from equity
Income tax relating to cash flow hedges
Subtotal cash flow hedges, net of tax
CCoosstt ooff hheeddggiinngg
Cost of hedging, before tax
Income tax relating to cost of hedging
Subtotal cost of hedging, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt
DDeeffiinneedd bbeenneeffiitt ppllaannss
Gains / (losses) on defined benefit plans, before tax
Income tax relating to defined benefit plans
Subtotal defined benefit plans, net of tax
OOwwnn ccrreeddiitt oonn ffiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
Gains / (losses) from own credit on financial liabilities designated at fair value, before tax
Income tax relating to own credit on financial liabilities designated at fair value
Subtotal own credit on financial liabilities designated at fair value, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall ccoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Comprehensive income attributable to non-controlling interests
NNeett pprrooffiitt // ((lloossss))
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
TToottaall ccoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo nnoonn--ccoonnttrroolllliinngg iinntteerreessttss
Total comprehensive income
NNeett pprrooffiitt // ((lloossss))
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee
of which: other comprehensive income that may be reclassified to the income statement
of which: other comprehensive income that will not be reclassified to the income statement
For the year ended
Note
3311..1122..2222
31.12.21
31.12.20
77,,663300
7,457
6,557
((889944))
333377
3322
((44))
44
((552255))
((444400))
11
444499
((33))
66
((55,,775588))
((115599))
11,,112244
((44,,779933))22
4455
00
4455
((55,,226677))
((7733))
6633
((1100))
886677
((7711))
779966
778866
(1,076)
498
(2)
10
35
(535)
(203)
(9)
55
(157)
(992)
(1,073)
390
(1,675)
(32)
6
(26)
(2,393)
2
(7)
(5)
46
0
46
42
2,103
(936)
(7)
2
(67)
1,095
223
(40)
(48)
136
2,012
(770)
(231)
1,011
(13)
0
(13)
2,230
(327)
109
(218)
(293)
0
(293)
(511)
((44,,448811))
33,,114499
(2,351)
5,106
1,719
8,276
3322
((1144))
1188
29
(16)
13
15
21
36
25
25
26
20
77,,666611
((44,,449944))
((55,,226677))
777722
33,,116677
7,486
(2,367)
(2,393)
26
5,119
6,572
1,740
2,230
(490)
8,312
TToottaall ccoommpprreehheennssiivvee iinnccoommee
11 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 1b for more information. 22 Mainly reflects net unrealized losses on US dollar hedging derivatives resulting from significant increases in the relevant US dollar long-term interest rates.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
258
258
Balance sheet
USD m
Assets
Cash and balances at central banks
Loans and advances to 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
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial assets at fair value held for trading
of which: assets pledged as collateral that may be sold or repledged by counterparties
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Investments in associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
TToottaall aasssseettss
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
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
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
Provisions
Other non-financial liabilities
TToottaall lliiaabbiilliittiieess
Equity
Share capital
Share premium
Treasury shares
Retained earnings
Other comprehensive income recognized directly in equity, net of tax
EEqquuiittyy aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Equity attributable to non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
Note
3311..1122..2222
31.12.21
9
9, 21
9, 21
9
9, 13a
20
10, 20, 21
20
20
19, 20
28b
11
12
8
13b
21
21
14
16
18a
20
10, 20, 21
20
15, 20
18b, 20
17a
18c
116699,,444455
1144,,779922
6677,,881144
3355,,003322
338877,,222200
5533,,226644
772277,,556688
110077,,886666
3366,,774422
115500,,110088
1177,,557766
5599,,779966
333355,,334477
22,,223399
11,,110011
1122,,228888
66,,226677
99,,338899
1100,,116666
11,,110044,,336644
1111,,559966
44,,220022
3366,,443366
552255,,005511
111144,,662211
99,,557755
770011,,448811
2299,,551155
115544,,990066
4455,,008855
7733,,663388
3300,,223377
333333,,338811
33,,224433
99,,004400
11,,004477,,114466
330044
1133,,554466
((66,,887744))
5500,,000044
((110033))
5566,,887766
334422
5577,,221188
11,,110044,,336644
192,817
15,480
75,012
30,514
397,761
26,209
737,794
130,821
43,397
118,142
21,839
60,080
330,882
8,844
1,243
12,888
6,378
8,876
10,277
1,117,182
13,101
5,533
31,798
542,007
139,155
9,001
740,595
31,688
121,309
44,045
73,799
30,074
300,916
3,518
11,151
1,056,180
322
15,928
(4,675)
43,851
5,236
60,662
340
61,002
1,117,182
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259
Statement of changes in equity
USD m
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22001199
Acquisition of treasury shares
Delivery of treasury shares under share-based compensation plans
Other disposal of treasury shares
Share-based compensation expensed in the income statement
Tax (expense) / benefit
Dividends
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)4
Total comprehensive income for the year
of which: net profit / (loss)
of which: OCI, net of tax
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002200
Acquisition of treasury shares
Delivery of treasury shares under share-based compensation plans
Other disposal of treasury shares
Share-based compensation expensed in the income statement
Tax (expense) / benefit
Dividends
Equity classified as obligation to purchase own shares
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)5
Total comprehensive income for the year
of which: net profit / (loss)
of which: OCI, net of tax
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
Acquisition of treasury shares
Delivery of treasury shares under share-based compensation plans
Other disposal of treasury shares
Cancellation of treasury shares related to the 2018–2021 share repurchase program
(16)
Share
capital
333388
Share
premium
1188,,006644
(628)
(11)
691
18
(1,304)3
(76)
333388
1166,,775533
(675)
7
(236)
643
(88)
(651)3
(7)
182
Retained
earnings
3344,,112222
(1,304)3
(49)
(40)
6,046
6,557
(511)
3388,,777766
Treasury
shares
((33,,332266))
(1,584)2
719
1232
((44,,006688))
(3,521)2
789
812
2,044
(1,792)
(651)3
18
1
7,499
7,457
42
4433,,885511
332222
1155,,992288
((776633))
((11))
((44,,667755))
((66,,226622))22
887799
11664422
Cancellation of treasury shares related to the 2021 share repurchase program6
((1188))
((11,,550022))
33,,002222
((11,,550022))
Share-based compensation expensed in the income statement
Tax (expense) / benefit
Dividends
Equity classified as obligation to purchase own shares
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
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002222
771166
1133
((883344))33
((1155))
44
((883344))33
6699
00
33
88,,441155
77,,663300
778866
330044
1133,,554466
((66,,887744))
5500,,000044
11 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings. 22 Includes treasury shares acquired and disposed of by the Investment Bank
in its capacity as a market-maker with regard to UBS Group AG shares and related derivatives, and to hedge certain issued structured debt instruments. These acquisitions and disposals are reported based on the sum
of the net monthly movements. 33 Reflects the payment of an ordinary cash dividend of USD 0.50 (2021: USD 0.37, 2020: USD 0.73) per dividend-bearing share. From 2020 onward, Swiss tax law effective 1 January
2020 requires that Switzerland-domiciled companies with shares listed on a stock exchange pay no more than 50% of dividends from capital contribution reserves, with the remainder required to be paid from retained
earnings. 44 Mainly relates to the establishment of a banking partnership with Banco do Brasil. In 2020, UBS issued a 49.99% stake in UBS Brasil Serviços in exchange for exclusive access to Banco do Brasil’s
corporate clients. Upon completion of the transaction in 2020, equity attributable to non-controlling interests increased by USD 115m, with no material effect on equity attributable to shareholders. 55 Includes the
effects related to the launch of UBS’s operational partnership entity with Sumitomo Mitsui Trust Holdings, Inc. in 2021. 66 Reflects the cancellation of 177,787,273 shares purchased under UBS’s 2021 share
repurchase program from its inception in 2021 until 18 February 2022, as approved by shareholders at the 2022 Annual General Meeting. For shares repurchased from 2020 onward, Swiss tax law effective 1 January
2020 requires Switzerland-domiciled companies with shares listed on a Swiss stock exchange to reduce capital contribution reserves by at least 50% of the total capital reduction amount exceeding the nominal value
upon cancellation of the shares.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
260
260
Other comprehensive
income recognized
directly in equity,
net of tax1
55,,330033
of which:
foreign currency
translation
44,,002288
of which:
financial assets at
fair value through OCI
1144
of which:
cash flow
hedges
11,,226600
Total equity
attributable to
shareholders
5544,,550011
(1,584)
Non-controlling
interests
117744
49
65
2,230
2,230
77,,664477
65
1,095
1,095
55,,118888
0
49
136
136
115511
1,011
1,011
22,,332211
90
112
691
18
(2,607)
0
(40)
(12)
8,276
6,557
1,719
5599,,444455
(3,521)
114
88
0
643
(88)
(6)
115
36
15
21
331199
Total equity
5544,,667755
(1,584)
90
112
691
18
(2,613)
0
(40)
103
8,312
6,572
1,740
5599,,776655
(3,521)
114
88
0
643
(88)
(18)
0
(18)
(2,393)
(535)
(157)
(1,675)
(2,393)
55,,223366
(535)
44,,665533
(157)
((77))
(1,675)
662288
((6699))
((33))
((55,,226677))
((55,,226677))
((110033))
((552255))
((552255))
44,,112288
00
((33))
66
66
((44))
((6699))
((44,,779933))
((44,,779933))
((44,,223344))
(1,301)
(4)
(1,305)
(7)
0
1
182
5,106
7,457
(2,351)
6600,,666622
((66,,226622))
111155
116633
00
771166
1133
((11,,666688))
((1155))
00
00
44
33,,114499
77,,663300
((44,,448811))
5566,,887766
(7)
0
1
193
5,119
7,486
(2,367)
6611,,000022
((66,,226622))
111155
116633
00
771166
1133
((11,,667777))
((1155))
00
00
((33))
33,,116677
77,,666611
((44,,449944))
5577,,221188
12
13
29
(16)
334400
((99))
((77))
1188
3322
((1144))
334422
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
261
261
Share information and earnings per share
Ordinary share capital
As of 31 December 2022, UBS Group AG had 3,524,635,722 issued shares (31 December 2021: 3,702,422,995 shares)
with a nominal value of CHF 0.10 each, leading to a share capital of CHF 352,463,572.20. Shares issued decreased by
177,787,273 shares and share capital decreased by USD 18m in 2022, as the shares acquired under the 2021 share
repurchase program from its inception in 2021 until 18 February 2022 were canceled by means of a capital reduction,
as approved by shareholders at the 2022 Annual General Meeting (the AGM).
Following revisions to Swiss Corporate Law that are effective from 1 January 2023, the Board of Directors (the BoD) will
propose at the 2023 AGM that the shareholders approve the conversion of the share capital currency of UBS Group AG
from the Swiss franc to the US dollar. This would align the share capital currency with the financial statement presentation
currency of UBS Group AG. If the change is approved, the share capital of UBS Group AG will be slightly reduced to a
nominal value per share of USD 0.10 (from CHF 0.10 currently), with the amount of the reduction allocated to the capital
contribution reserve (presented as Share premium in the consolidated financial statements). Total equity reported for
UBS Group AG consolidated will not change.
Conditional share capital
As of 31 December 2022, the following conditional share capital was available to UBS Group AG’s BoD.
– A maximum of CHF 38,000,000 represented by up to 380,000,000 fully paid registered shares with a nominal value
of CHF 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 AGM of UBS AG on 14 April 2010. The BoD has not made
use of such allowance.
– A maximum of CHF 12,170,583 represented by 121,705,830 fully paid registered shares with a nominal value of
CHF 0.10 each, to be issued upon exercise of employee options and stock appreciation rights issued to employees and
members of the management and of the BoD of UBS Group AG and its subsidiaries. This conditional capital allowance
was approved by the shareholders at the same EGM in 2014.
Authorized share capital
UBS Group AG had no authorized capital available to issue on 31 December 2022.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
262
262
Share repurchase programs
In February 2021, UBS initiated a share repurchase program of up to CHF 4bn. Under this program, UBS repurchased
88m shares in 2022 for a total acquisition cost of USD 1,637m (CHF 1,516m).
The 2021 program was concluded on 29 March 2022 and the 177,787,273 shares repurchased under this program from
its inception in 2021 until 18 February 2022 for a total acquisition cost of USD 3,022m (CHF 2,775m) were canceled by
means of a capital reduction, as approved by shareholders at the 2022 AGM. UBS intends to cancel the remaining
62,548,000 shares purchased under the 2021 program, subject to shareholder approval at the 2023 AGM.
In March 2022, UBS commenced a new two-year share repurchase program of up to USD 6bn. Under this program, UBS
repurchased 234m shares in 2022 for a total acquisition cost of USD 3,944m (CHF 3,808m). UBS also intends to cancel
the shares purchased under the 2022 program by means of a capital reduction, pending approval by shareholders at a
future AGM.
Shares outstanding
SShhaarreess iissssuueedd
Balance at the beginning of the year
Shares canceled
Balance at the end of the year
TTrreeaassuurryy sshhaarreess
Balance at the beginning of the year
Acquisitions
Disposals
Cancellation of second trading line treasury shares
Balance at the end of the year
SShhaarreess oouuttssttaannddiinngg
Basic and diluted earnings (USD m)
Net profit / (loss) attributable to shareholders for basic EPS
Less: (profit) / loss on own equity derivative contracts
Net profit / (loss) attributable to shareholders for diluted EPS
As of or for the year ended
3311..1122..2222
31.12.21
31.12.20
33,,770022,,442222,,999955
((117777,,778877,,227733))11
33,,552244,,663355,,772222
3,859,055,395
(156,632,400)2
3,702,422,995
3,859,055,395
3,859,055,395
330022,,881155,,332288
335599,,337788,,009933
((6677,,449977,,113388))
((117777,,778877,,227733))11
441166,,990099,,001100
33,,110077,,772266,,771122
307,477,002
214,270,175
(62,299,449)
(156,632,400)2
302,815,328
3,399,607,667
243,021,296
128,372,257
(63,916,551)
307,477,002
3,551,578,393
77,,663300
00
77,,663300
7,457
0
7,457
6,557
(1)
6,556
Weighted average shares outstanding
Weighted average shares outstanding for basic EPS3
Effect of dilutive potential shares resulting from notional employee shares, in-the-money options and warrants
outstanding4
Weighted average shares outstanding for diluted EPS
33,,226600,,993388,,556611
3,482,963,682
3,583,176,189
113366,,553311,,665544
33,,339977,,447700,,221155
144,277,693
3,627,241,375
123,852,137
3,707,028,326
Earnings per share (USD)
Basic
Diluted
22..3344
22..2255
2.14
2.06
1.83
1.77
Potentially dilutive instruments5
Employee share-based compensation awards
Other equity derivative contracts
TToottaall
11 Reflects the cancellation of shares purchased under UBS’s 2021 share repurchase program as approved by shareholders at the 2022 Annual General Meeting (AGM). 22 Reflects the cancellation of shares purchased
under UBS’s 2018–2021 share repurchase program as approved by shareholders at the 2021 AGM. 33 The weighted average shares outstanding for basic EPS are calculated by taking the number of shares at the
beginning of the period, adjusted by the number of shares acquired or issued during the period, multiplied by a time-weighted factor for the period outstanding. As a result, balances are affected by the timing of
acquisitions and issuances during the period. 44 The weighted average number of shares for notional employee awards with performance conditions reflects all potentially dilutive shares that are expected to vest
under the terms of the awards. 55 Reflects potential shares that could dilute basic earnings per share in the future, but were not dilutive for the periods presented.
2,536,789
11,414,728
13,951,517
5,886,945
6,553,051
12,439,996
44,,118822,,779999
11,,669900,,224477
55,,887733,,004466
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
263
263
Statement of cash flows
USD m
Cash flow from / (used in) operating activities
Net profit / (loss)
NNoonn--ccaasshh iitteemmss iinncclluuddeedd iinn nneett pprrooffiitt aanndd ootthheerr aaddjjuussttmmeennttss::
Depreciation, amortization and impairment of non-financial assets
Credit loss expense / (release)
Share of net profits of associates and joint ventures and impairment related to associates
Deferred tax expense / (benefit)
Net loss / (gain) from investing activities
Net loss / (gain) from financing activities
Other net adjustments
NNeett cchhaannggee iinn ooppeerraattiinngg aasssseettss aanndd lliiaabbiilliittiieess::
Loans and advances to banks and amounts due to banks
Securities financing transactions measured at amortized cost
Cash collateral on derivative instruments
Loans and advances to customers and customer deposits
Financial assets and liabilities at fair value held for trading and derivative financial instruments
Brokerage receivables and payables
Financial assets at fair value not held for trading and other financial assets and liabilities
Provisions and other non-financial assets and liabilities
Income taxes paid, net of refunds
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ooppeerraattiinngg aaccttiivviittiieess
Cash flow from / (used in) investing activities
Purchase of subsidiaries, associates and intangible assets
Disposal of subsidiaries, associates and intangible assets
Purchase of property, equipment and software
Disposal of property, equipment and software
Purchase of financial assets measured at fair value through other comprehensive income
Disposal and redemption of financial assets measured at fair value through other comprehensive income
Net (purchase) / redemption of debt securities measured at amortized cost
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
Table continues below.
For the year ended
31.12.21
3311..1122..2222
31.12.20
77,,666611
7,486
6,572
22,,006611
2,118
2,126
2299
((3322))
449944
((11,,447700))
((1166,,558877))
55,,884444
((11,,008888))
44,,444433
7766
((55,,116633))
88,,000066
66,,001199
55,,667788
225577
((11,,558822))
1144,,664477
((33))
11,,77330011
((11,,664433))
116611
((44,,778833))
44,,008844
((1111,,999933))
((1122,,444477))
(148)
(105)
434
(230)
100
3,802
2,148
(2,316)
(3,312)
2,365
(10,516)
8,115
19,609
3,010
(1,134)
31,425
(1)
593
(1,841)
295
(5,802)
5,052
(415)
(2,119)
694
(84)
352
(698)
3,246
(8,076)
3,586
9,588
(3,487)
18,149
11,259
(5,199)
320
(387)
(1,002)
36,958
(46)
674
(1,854)
366
(6,290)
4,530
(4,166)
(6,785)
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
264
264
Statement of cash flows (continued)
Table continued from above.
USD m
Cash flow from / (used in) financing activities
Net short-term debt issued / (repaid)
Net movements in treasury shares and own equity derivative activity
Distributions paid on UBS shares
Issuance of debt designated at fair value and long-term debt measured at amortized cost
Repayment of debt designated at fair value and long-term debt measured at amortized cost
Net cash flows from other financing activities
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess
Total cash flow
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Net cash flow from / (used in) operating, investing and financing activities
Effects of exchange rate differences on cash and cash equivalents
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr22
of which: cash and balances at central banks 3
of which: loans and advances to banks
of which: money market paper 4
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
For the year ended
31.12.21
3311..1122..2222
31.12.20
((1122,,224499))
((66,,000066))
((11,,666688))
7799,,111155
((6677,,667700))
((661177))
((99,,009944))
220077,,887755
((66,,889955))
((55,,665599))
119955,,332211
116699,,336633
1133,,445500
1122,,550088
(3,093)
(3,341)
(1,301)
98,272
(79,909)
(282)
10,345
173,531
39,651
(5,307)
207,875
192,706
13,942
1,227
23,845
(1,387)
(2,607)
80,255
(87,098)
(575)
12,432
119,873
42,605
11,052
173,531
158,088
14,028
1,415
1155,,771188
11,163
11,915
Interest paid in cash
Dividends on equity investments, investment funds and associates received in cash5
11 Includes cash proceeds from the sales of: UBS’s shareholding in Mitsubishi Corp.-UBS Realty Inc.; UBS’s wholly owned subsidiary UBS Swiss Financial Advisers AG; UBS’s US alternative investments administration
business; and UBS’s domestic wealth management business in Spain. Refer to Note 29 for more information. Also includes dividends received from associates. 22 USD 4,253m, USD 3,408m and USD 3,828m of cash
and cash equivalents (mainly reflected in Loans and advances to banks) were restricted as of 31 December 2022, 31 December 2021 and 31 December 2020, respectively. Refer to Note 22 for more information.
33 Includes only balances with an original maturity of three months or less. 44 Money market paper is included in the balance sheet under Financial assets at fair value held for trading (31 December 2022: USD 2m;
31 December 2021: USD 20m; 31 December 2020: USD 117m), Financial assets measured at fair value through other comprehensive income (31 December 2022: USD 0m; 31 December 2021: USD 0m; 31 December
2020: USD 178m), Financial assets at fair value not held for trading (31 December 2022: USD 6,048m; 31 December 2021: USD 1,066m; 31 December 2020: USD 536m), and Other financial assets measured at
amortized cost (31 December 2022: USD 6,459m; 31 December 2021: USD 141m; 31 December 2020: USD 584m). 55 Includes dividends received from associates reported within Net cash flow from / (used in)
investing activities.
6,320
4,707
2,531
1,901
11,,990077
88,,119988
Changes in liabilities arising from financing activities
USD m
BBaallaannccee aass ooff 11 JJaannuuaarryy 22002211
Cash flows
Non-cash changes
of which: foreign currency translation
of which: fair value changes
of which: hedge accounting and other effects
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
Cash flows
Non-cash changes
of which: foreign currency translation
of which: fair value changes
of which: hedge accounting and other effects
Debt issued
measured at
amortized cost
139,232
5,070
(5,148)
(3,175)
of which:
short-term 1
46,666
(3,093)
(475)
(475)
of which:
long-term 2
92,566
8,163
(4,673)
(2,700)
Debt issued
designated at fair
value
61,243
10,076
2,480
(1,617)
4,097
Over-the-
counter debt
instruments3
2,060
124
(56)
(65)
9
(1,972)
139,155
(14,333)
(10,201)
(3,526)
(6,675)
43,098
(12,249)
(1,173)
(1,173)
(1,972)
96,057
(2,084)
(9,028)
(2,353)
73,799
13,782
(13,944)
(1,394)
(12,550)
2,128
(253)
(190)
(115)
(75)
(6,675)
8844,,994455
Total
202,535
15,270
(2,724)
(4,857)
4,106
(1,972)
215,082
(804)
(24,335)
(5,035)
(12,625)
(6,675)
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002222
11 Debt with an original contractual maturity of less than one year. 22 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. 33 Included in balance sheet line Other financial liabilities designated at fair value.
111144,,662211
118899,,994433
2299,,667766
7733,,663388
11,,668844
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
265
265
Notes to the UBS Group AG consolidated financial statements
Note 1 Summary of material accounting policies
The following table provides an overview of information included in this Note.
267
267
267
267
267
268
272
272
272
272
273
276
276
277
a) Material accounting policies
Basis of accounting
1) Consolidation
2) Financial instruments
a. Recognition
b. Classification, measurement and presentation
c. Loan commitments and financial guarantees
d.
e. Derecognition
Fair value of financial instruments
f.
g. Allowances and provisions for expected
Interest income and expense
credit losses
h. Restructured and modified financial assets
i. Offsetting
j. Hedge accounting
277
278
279
279
280
280
280
281
281
Income taxes
3) Fee and commission income and expenses
4) Share-based and other deferred compensation plans
5) Post-employment benefit plans
6)
7) Property, equipment and software
8) Goodwill
9) Provisions and contingent liabilities
10) Foreign currency translation
11) Equity, treasury shares and contracts
on UBS Group AG shares
282
b) Changes in accounting policies, comparability
and other adjustments
282
c)
International Financial Reporting Standards and
Interpretations to be adopted in 2023 and later
and other changes
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
266
266
Note 1 Summary of material accounting policies (continued)
a) Material accounting policies
This Note describes the material accounting policies applied in the preparation of the consolidated financial statements
(the Financial Statements) of UBS Group AG and its subsidiaries (UBS or the Group). On 23 February 2023, 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 International Financial Reporting Standards (IFRS), as
issued by the International Accounting Standards Board (the IASB), and are presented in US dollars (USD).
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 requires management to apply judgment and make estimates and assumptions that affect reported amounts
of assets, liabilities, income and expenses, and disclosure of contingent assets and liabilities, and may involve significant uncertainty at the time they are made.
Such estimates and assumptions are based on the best available information. UBS regularly reassesses such estimates and assumptions, which encompass historical
experience, expectations of the future and other pertinent factors, to determine their continuing relevance based on current conditions, updating them as
necessary. Changes in those estimates and assumptions may have a significant effect on the Financial Statements. Furthermore, actual results may differ significantly
from UBS’s estimates, which could result in significant losses to the Group, beyond what was anticipated or provided for.
The following areas contain estimation uncertainty or require critical judgment and have a significant effect on amounts recognized in the Financial
expected credit loss measurement (refer to item 2g in this Note and to Note 19);
fair value measurement (refer to item 2f in this Note and to Note 20);
income taxes (refer to item 6 in this Note and to Note 8);
Statements:
–
–
–
– provisions and contingent liabilities (refer to item 9 in this Note and to Note 17);
– post-employment benefit plans (refer to item 5 in this Note and to Note 26);
– goodwill (refer to item 8 in this Note and to Note 12); and
–
consolidation of structured entities (refer to item 1 in this Note and to Note 28).
1) Consolidation
The Financial Statements include the financial statements of the parent company (UBS Group AG) and its subsidiaries,
presented as a single economic entity; intercompany transactions and balances have been eliminated. UBS consolidates
all entities that it controls, including structured entities (SEs), which is the case when it has: (i) power over the relevant
activities of the entity; (ii) exposure to an entity‘s variable returns; and (iii) the ability to use its power to affect its own
returns.
Consideration is given to all facts and circumstances to determine whether the Group has power over another entity,
i.e., the current ability to direct the relevant activities of an entity when decisions about those activities need to be made.
Subsidiaries, including SEs, are consolidated from the date when control is gained and deconsolidated from the date
when control ceases. Control, or the lack thereof, is reassessed if facts and circumstances indicate that there is a change
to one or more elements required to establish that control is present.
Business combinations are accounted for using the acquisition method. The amount of any non-controlling interest is
measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
› Refer to Note 28 for more information
Critical accounting estimates and judgments
Each individual entity is assessed for consolidation in line with the aforementioned consolidation principles. The assessment of control can be complex and
requires the use of significant judgment, in particular in determining whether UBS has power over the entity. As the nature and extent of UBS’s involvement
is unique for each entity, there is no uniform consolidation outcome by entity. Certain entities within a class may be consolidated while others may not.
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
2) Financial instruments
a. Recognition
UBS recognizes financial instruments when it becomes a party to contractual provisions of an instrument. UBS applies
settlement date accounting to all standard purchases and sales of non-derivative financial instruments.
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Note 1 Summary of material accounting policies (continued)
In transactions where UBS acts as a transferee, to the extent the financial asset transfer does not qualify for derecognition
by the transferor, UBS does not recognize the transferred instrument as its asset.
UBS also acts in a fiduciary capacity, which results in it holding or placing assets on behalf of individuals, trusts, retirement
benefit plans and other institutions. Unless these items meet the definition of an asset and the recognition criteria are
satisfied, they are not recognized on UBS’s balance sheet and the related income is excluded from the Financial
Statements.
Client cash balances associated with derivatives clearing and execution services are not recognized on the balance sheet
if, through contractual agreement, regulation or practice, UBS neither obtains benefits from nor controls such cash
balances.
b. Classification, measurement and presentation
Financial assets
Where the contractual terms of a debt instrument result in cash flows that are solely payments of principal and interest
(SPPI) on the principal amount outstanding, the debt instrument is classified as measured at amortized cost if it is held
within a business model that has an objective of holding financial assets to collect contractual cash flows, or at fair value
through other comprehensive income (FVOCI) if it is held within a business model with the objective being achieved by
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 a hedge relationship, in which case hedge
accounting requirements apply (refer to item 2j in this Note for more information).
Business model assessment and contractual cash flow characteristics
UBS determines the nature of a business model by considering the way financial assets are managed to achieve a
particular business objective.
In assessing whether contractual cash flows are SPPI, the Group considers whether the contractual terms of the financial
asset contain a term that could change the timing or amount of contractual cash flows arising over the life of the
instrument. This assessment includes contractual cash flows that may vary due to environmental, social and governance
(ESG) triggers.
Financial liabilities
Financial liabilities measured at amortized cost
Debt issued measured at amortized cost includes contingent capital instruments containing contractual provisions under
which the principal amounts would be written down or converted into equity 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.
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.
A gain or loss is recognized in Other income when debt issued is subsequently repurchased for market-making or other
activities. A subsequent sale of own bonds in the market is treated as a reissuance of debt.
Financial liabilities measured at fair value through profit or loss
UBS designates certain issued debt instruments as financial liabilities at fair value through profit or loss, on the basis that
such financial instruments include non-closely-related embedded derivatives that 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
After initial recognition, UBS classifies, measures and presents its financial assets and liabilities in accordance with IFRS 9,
as described in the table below.
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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
amortized cost
This classification includes:
– cash and balances at central banks;
– loans and advances to 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;
– loans to financial advisors; and
– debt securities held as high-quality liquid assets
(HQLA).
Measured at
FVOCI
Debt
instruments
measured at
FVOCI
This classification primarily includes debt securities
and certain asset-backed securities held as 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 fair value, with unrealized gains and losses
reported in Other comprehensive income, net of applicable
income taxes, until such investments are derecognized.
Upon derecognition, any accumulated balances in Other
comprehensive income are reclassified to the income
statement and reported within Other income.
The following items, which are determined on the same
basis as for financial assets measured at amortized cost, are
recognized in the income statement:
– interest income, which is accounted for in accordance
with item 2d in this Note;
– ECL and reversals; and
– FX translation gains and losses.
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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.
Mandatorily
measured at
FVTPL – Other
This classification includes financial assets mandatorily
measured at FVTPL that are not held for trading, as
follows:
– certain structured loans, 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;
– certain investment fund holdings and assets held to
hedge delivery obligations related to cash-settled
employee compensation plans;
– 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;
– auction rate securities, for which contractual cash flows
do not meet the SPPI criterion because interest may be
reset at rates that contain leverage;
– equity instruments; and
– assets held under unit-linked investment contracts.
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).
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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; and
– cash collateral payables on derivative instruments.
Measured at
FVTPL
Held for trading
Financial liabilities held for trading include:
– all derivatives with a negative replacement value
(including certain loan commitments), except those
that are designated and effective hedging
instruments; and
– obligations to deliver financial instruments, such as
debt and equity instruments, that UBS has sold to
third parties but does not own (short positions).
Designated at
FVTPL
UBS designates at FVTPL the following financial
liabilities:
– issued hybrid debt instruments that primarily include
equity-linked, credit-linked and rates-linked bonds or
notes;
– issued debt instruments managed on a fair value
basis;
– certain payables from securities financing
transactions;
– amounts due under unit-linked investment contracts,
the cash flows of which are linked to financial assets
measured at FVTPL and eliminate an accounting
mismatch; and
– brokerage payables, which arise in conjunction with
brokerage receivables and are measured at FVTPL to
achieve measurement consistency.
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.
Measurement and presentation of financial liabilities
classified at FVTPL follow the same principles as for
financial assets classified at FVTPL, except that the amount
of change in the fair value of a financial liability
designated at FVTPL that is attributable to changes in
UBS’s own credit risk is presented in Other comprehensive
income directly within Retained earnings and is never
reclassified to the income statement.
Derivative liabilities (including derivatives that are
designated and effective hedging instruments) are
generally presented as Derivative financial instruments,
except those exchange-traded and OTC-cleared
derivatives that are legally settled on a daily basis or
economically net settled on a daily basis, which are
presented within Cash collateral payables on derivative
instruments.
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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.
Financial guarantee contracts are contracts that require UBS to make specified payments to reimburse the holder for an
incurred loss because a specified debtor fails to make payments when due in accordance with the terms of a specified
debt instrument.
d. Interest income and expense
Interest income and expense are recognized in the income statement based on the effective interest method. When
calculating the effective interest rate (the EIR) for financial instruments (other than credit-impaired financial instruments),
UBS estimates future cash flows considering all contractual terms of the instrument, but not expected credit losses, with
the EIR applied to the gross carrying amount of the financial asset or the amortized cost of a financial liability. However,
when a financial asset becomes credit-impaired after initial recognition, interest income is determined by applying the
EIR to the amortized cost of the instrument, which represents the gross carrying amount adjusted for any credit loss
allowance.
Upfront fees, including fees on loan commitments not measured at fair value where a loan is expected to be issued, and
direct costs are included within the initial measurement of a financial instrument measured at amortized cost or FVOCI
and recognized over the expected life of the instrument as part of its EIR.
Fees related to loan commitments where no loan is expected to be issued, as well as loan syndication fees where UBS
does not retain a portion of the syndicated loan or where UBS does retain a portion of the syndicated loan at the same
effective yield for comparable risk as other participants, are included in Net fee and commission income and either
recognized over the life of the commitment or when syndication occurs.
› Refer to item 3 in this Note for more information
Interest income on financial assets, excluding derivatives, is included in interest income when positive and in interest
expense when negative. Similarly, interest expense on financial liabilities, excluding derivatives, is included in interest
expense, except when interest rates are negative, in which case it is included in interest income.
› Refer to item 2b in this Note and Note 3 for more information
e. Derecognition
Financial assets
UBS derecognizes a transferred financial asset, or a portion of a financial asset, if the purchaser has received substantially
all the risks and rewards of the asset or a significant part of the risks and rewards combined with a practical ability to sell
or pledge the asset.
Where financial assets have been pledged as collateral or in similar arrangements, they are considered to have been
transferred if the counterparty has received the contractual rights to the cash flows of the pledged assets, as may be
evidenced by, for example, the counterparty’s right to sell or repledge the assets. In transfers where control over the
financial asset is retained, UBS continues to recognize the asset to the extent of its continuing involvement, determined
by the extent to which it is exposed to changes in the value of the transferred asset following the transfer.
› Refer to Note 22 for more information
Financial liabilities
UBS derecognizes a financial liability when it is extinguished, i.e., when the obligation specified in the contract is
discharged, canceled or expires. When an existing financial liability is exchanged for a new one from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, the original liability is
derecognized and a new liability recognized with any difference in the respective carrying amounts recorded in the
income statement.
Certain OTC derivative contracts and most 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 variation margin
on a daily basis represents legal or economic settlement, which results in derecognition of the associated derivatives.
› Refer to Note 21 for more information
f. Fair value of financial instruments
UBS accounts for a significant portion of its assets and liabilities at fair value. Fair value is the price on the measurement
date that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market
participants in the principal market, or in the most advantageous market in the absence of a principal market.
› Refer to Note 20 for more information
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Note 1 Summary of material accounting policies (continued)
Critical accounting estimates and judgments
The use of valuation techniques, modeling assumptions and estimates of unobservable market inputs in the fair valuation of financial instruments requires
significant judgment and could affect the amount of gain or loss recorded for a particular position. Valuation techniques that rely more heavily on
unobservable inputs and sophisticated models inherently require a higher level of judgment and may require adjustment to reflect factors that market
participants would consider in estimating fair value, such as close-out costs, which are presented in Note 20d.
UBS‘s governance framework over fair value measurement is described in Note 20b, and UBS provides a sensitivity analysis of the estimated effects arising
from changing significant unobservable inputs in Level 3 financial instruments to reasonably possible alternative assumptions in Note 20f.
› Refer to Note 20 for more information
g. Allowances and provisions for expected credit losses
ECL are recognized for financial assets measured at amortized cost, financial assets measured at FVOCI, fee and lease
receivables, financial guarantees, and loan commitments not measured at fair value. ECL are also recognized on the
undrawn portion of committed unconditionally revocable credit lines, which include UBS’s credit card limits and master
credit facilities, as UBS is exposed to credit risk because the borrower has the ability to draw down funds before UBS can
take credit risk mitigation actions.
Recognition of expected credit losses
ECL are recognized on the following basis.
– Stage 1 instruments: Maximum 12-month ECL are recognized from initial recognition, reflecting the portion of lifetime
cash shortfalls 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 instruments: Lifetime ECL are recognized if a significant increase in credit risk (an SICR) is observed subsequent
to the instrument’s initial recognition, 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 instruments: Lifetime ECL are always recognized for credit-impaired financial instruments, as determined by
the occurrence of one or more loss events, 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 or originated credit-
impaired (POCI). POCI 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 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 “Credit policies for distressed assets” in 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.
For the purpose of determining the ECL-relevant parameters, UBS leverages its Basel III advanced internal ratings-based
(A-IRB) models that are also used in determining expected loss (EL) and risk-weighted assets under the Basel III framework
and Pillar 2 stress loss models. Adjustments have been made to these models and IFRS 9-related models have been
developed that consider the complexity, structure and risk profile of relevant portfolios and take account of the fact that
PDs and LGDs used in the ECL calculation are PIT-based, as opposed to the corresponding Basel III through-the-cycle
(TTC) parameters. All models that are relevant for measuring expected credit losses are subject to UBS’s model validation
and oversight processes.
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Note 1 Summary of material accounting policies (continued)
Probability of default: PD represents the probability of a default over a specified time period. A 12-month PD represents
the probability of default determined for the next 12 months and a lifetime PD represents the probability of default over
the remaining lifetime of the instrument. PIT PDs are derived from TTC PDs and scenario forecasts. The modeling is region,
industry and client segment specific and considers both macroeconomic scenario dependencies and client-idiosyncratic
information.
Exposure at default: EAD represents an estimate of the exposure to credit risk at the time of a potential default occurring,
considering expected repayments, interest payments and accruals, discounted at the EIR. Future drawdowns on facilities
are considered through a credit conversion factor (a CCF) that is reflective of historical drawdown and default patterns
and the characteristics of the respective portfolios.
Loss given default: LGD represents an estimate of the loss at the time of a potential default occurring, taking into account
expected future cash flows from collateral and other credit enhancements, or expected payouts from bankruptcy
proceedings for unsecured claims and, where applicable, time to realization of collateral and the seniority of claims. LGD is
commonly expressed as a percentage of EAD.
Estimation of expected credit losses
Number of scenarios and estimation of scenario weights
Determination of probability-weighted ECL requires evaluating a range of diverse and relevant future economic conditions,
especially with a view to modeling the non-linear effect of assumptions about macroeconomic factors on the estimate.
To accommodate this requirement, UBS uses different economic scenarios in the ECL calculation. Each scenario is
represented by a specific scenario narrative, which is relevant considering the exposure of key portfolios to economic
risks, and for which a set of consistent macroeconomic variables is determined. The estimation of the appropriate weights
for these scenarios is predominantly judgment-based. The assessment is based on a holistic review of the prevailing
economic or political conditions, which may exhibit different levels of uncertainty. It takes into account the impact of
changes in the nature and severity of the underlying scenario narratives and the projected economic variables.
The determined weights constitute the probabilities that the respective set of macroeconomic conditions will occur and
not that the chosen particular narratives with the related macroeconomic variables will materialize.
Macroeconomic and other factors
The range of macroeconomic, market and other factors that is modeled as part of the scenario determination is wide,
and historical information is used to support the identification of the key factors. As the forecast horizon increases, the
availability of information decreases, requiring an increase in judgment. For cycle-sensitive PD and LGD determination
purposes, UBS projects the relevant economic factors for a period of three years before reverting, over a specified period,
to cycle-neutral PD and LGD for longer-term projections.
Factors relevant for ECL calculation vary by type of exposure. Regional and client-segment characteristics are generally
taken into account, with specific focus on Switzerland and the US, considering UBS’s key ECL-relevant portfolios.
For UBS, the following forward-looking macroeconomic variables represent the most relevant factors for ECL calculation:
– 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 our corporate rating tools.
Scenario generation, review process and governance
A team of economists, which is part of Group Risk Control, develop the forward-looking macroeconomic assumptions
with involvement from a broad range of experts.
The scenarios, their weight 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
allowance.
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.
› Refer to Note 19 for more information
ECL measurement period
The period for which lifetime ECL are determined is based on the maximum contractual period that UBS is exposed to
credit risk, taking into account contractual extension, termination and prepayment options. For irrevocable loan
commitments and financial guarantee contracts, the measurement period represents the maximum contractual period
for which UBS has an obligation to extend credit.
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Note 1 Summary of material accounting policies (continued)
Additionally, some financial instruments include both an on-demand loan and a revocable undrawn commitment, where
the contractual cancellation right does not limit UBS’s exposure to credit risk to the contractual notice period, as the
client has the ability to draw down funds before UBS can take risk-mitigating actions. In such cases UBS is required to
estimate the period over which it is exposed to credit risk. This applies to UBS’s credit card limits, which do not have a
defined contractual maturity date, are callable on demand and where the drawn and undrawn components are managed
as one exposure. The exposure arising from UBS’s credit card limits is not significant and is managed at a portfolio level,
with credit actions triggered when balances are past due. An ECL measurement period of seven years is applied for credit
card limits, capped at 12 months for stage 1 balances, as a proxy for the period that UBS is exposed to credit risk.
Customary master credit agreements in the Swiss corporate market also include on-demand loans and revocable undrawn
commitments. For smaller commercial facilities, a risk-based monitoring (RbM) approach is in place that highlights
negative trends as risk events, at an individual facility level, based on a combination of continuously updated risk
indicators. The risk events trigger additional credit reviews by a risk officer, enabling informed credit decisions to be
taken. Larger corporate facilities are not subject to RbM, but are reviewed at least annually through a formal credit review.
UBS has assessed these credit risk management practices and considers both the RbM approach and formal credit reviews
as substantive credit reviews resulting in a re-origination of the given facility. Following this, a 12-month measurement
period from the reporting date is used for both types of facilities as an appropriate proxy of the period over which UBS
is exposed to credit risk, with 12 months also used as a look-back period for assessing SICR, always from the respective
reporting date.
Significant increase in credit risk
Financial instruments subject to ECL are monitored on an ongoing basis. To determine whether the recognition of a
maximum 12-month ECL continues to be appropriate, an assessment is made as to whether an SICR has occurred
since initial recognition of the financial instrument, applying both quantitative and qualitative factors.
Primarily, UBS assesses changes in an instrument’s risk of default on a quantitative basis by comparing the annualized
forward-looking and scenario-weighted lifetime PD of an instrument determined at two different dates:
– at the reporting date; and
– at inception of the instrument.
If, based on UBS’s quantitative modeling, an increase exceeds a set threshold, an SICR is deemed to have occurred and
the instrument is transferred to stage 2 with lifetime ECL recognized.
The threshold applied varies depending on the original credit quality of the borrower, with a higher SICR threshold set
for those instruments with a low PD at inception. The SICR assessment based on PD changes is made at an individual
financial asset level. A high-level overview of the SICR trigger, which is a multiple of the annualized remaining lifetime
PIT PD expressed in rating downgrades, is provided in the “SICR thresholds” table below. The actual SICR thresholds
applied are defined on a more granular level by interpolating between the values shown in the table.
SICR thresholds
–
Internal rating at origination
of the instrument
–
Rating downgrades /
SICR trigger
0–3
4–8
9–13
3
2
1
› Refer to the “Risk management and control” section of this report for more details about UBS’s internal grading system
Irrespective of the SICR assessment based on default probabilities, credit risk is generally deemed to have significantly
increased for an instrument if the 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. 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.
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Note 1 Summary of material accounting policies (continued)
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 amount of ECL recognized.
Determination of a significant increase in credit risk
IFRS 9 does not include a definition of what constitutes an SICR, with UBS’s assessment considering qualitative and quantitative criteria. An IFRS 9 ECL
Management Forum has been established to review and challenge the SICR results.
Scenarios, scenario weights and macroeconomic variables
ECL reflect an unbiased and probability-weighted amount, which UBS determines by evaluating a range of possible outcomes. Management selects forward-
looking scenarios that include relevant macroeconomic variables and management’s assumptions around future economic conditions. IFRS 9 Scenario
Sounding Sessions, in addition to the IFRS 9 ECL Management Forum, are in place to derive, review and challenge the scenario selection and weights, and
to determine whether any additional post-model adjustments are required that may significantly affect ECL.
ECL measurement period
Lifetime ECL are generally determined based upon the contractual maturity of the transaction, which significantly affects ECL. For credit card limits and Swiss
callable master credit facilities, judgment is required, as UBS must determine the period over which it is exposed to credit risk. A seven-year period is applied
for credit card limits, capped at 12 months for stage 1 positions, and a 12-month period applied for master credit facilities.
Modeling and post-model adjustments
A number of complex models have been developed or modified to calculate ECL, with additional post-model adjustments required which may significantly
affect ECL. The models are governed by UBS’s model validation controls and approved by the GMGC. The post-model adjustments are approved by the ECL
Management Forum and endorsed by the GMGC.
A sensitivity analysis covering key macroeconomic variables, scenario weights and SICR trigger points on ECL measurement is provided in Note 19f.
› Refer to Note 19 for more information
h. Restructured and modified financial assets
When payment default is expected, or where default has already occurred, UBS may grant concessions to borrowers in
financial difficulties that it would not consider in the normal course of its business, such as preferential interest rates,
extension of maturity, modifying the schedule of repayments, debt / equity swap, subordination, etc.
› Refer to the “Risk management and control” section of this report for more information
Modifications result in an alteration of future contractual cash flows and can occur within UBS’s normal risk tolerance or
as part of a credit restructuring where a counterparty is in financial difficulties. The restructuring or modification of a
financial asset could lead to a substantial change in the terms and conditions, resulting in the original financial asset
being derecognized and a new financial asset being recognized. Where the modification does not result in a
derecognition, any difference between the modified contractual cash flows discounted at the original EIR and the existing
gross carrying amount of the given financial asset is recognized in the income statement as a modification gain or loss.
i. Offsetting
UBS presents financial assets and liabilities on its balance sheet net if (i) it has a legally enforceable right to set off the
recognized amounts and (ii) it intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously. Netted positions include, for example, certain derivatives and repurchase and reverse repurchase
transactions with various counterparties, exchanges and clearing houses.
In assessing whether UBS intends to either settle on a net basis, or to realize the asset and settle the liability
simultaneously, emphasis is placed on the effectiveness of operational settlement mechanics in eliminating substantially
all credit and liquidity exposure between the counterparties. This condition precludes offsetting on the balance sheet for
substantial amounts of UBS’s financial assets and liabilities, even though they may be subject to enforceable netting
arrangements. Repurchase 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 21 for more information
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Note 1 Summary of material accounting policies (continued)
j. Hedge accounting
The Group applies hedge accounting requirements of IFRS 9 where the criteria for documentation and hedge
effectiveness are met. If a hedge relationship no longer meets the criteria for hedge accounting, hedge accounting is
discontinued. Voluntary discontinuation of hedge accounting is not permitted under IFRS 9.
Fair value hedges of interest rate risk related to debt instruments and loan assets
The fair value change of the hedged item attributable to a hedged risk is reflected as an adjustment to the carrying
amount of the hedged item and recognized in the income statement along with the change in the fair value of the
hedging instrument.
Fair value hedges of FX risk related to debt instruments
The fair value change of the hedged item attributable to the hedged risk is reflected in the measurement of the hedged
item and recognized in the income statement along with the change in the fair value of the hedging instrument. The
foreign currency basis spread of cross-currency swaps designated as hedging derivatives is excluded from the designation
and accounted for as a cost of hedging with amounts deferred in Other comprehensive income within Equity. These
amounts are released to the income statement over the term of the hedged item.
Discontinuation of fair value hedges
Discontinuations for reasons other than derecognition of the hedged item result in an adjustment to the carrying amount,
which is amortized to the income statement over the remaining life of the hedged item using the effective interest
method. If the hedged item is derecognized, the unamortized fair value adjustment or deferred cost of hedging amount
is recognized immediately in the income statement as part of any derecognition gain or loss.
Cash flow hedges of forecast transactions
Fair value gains or losses associated with the effective portion of derivatives designated as cash flow hedges for cash flow
repricing risk are recognized initially in Other comprehensive income within Equity and reclassified to Interest income
from financial instruments measured at amortized cost and fair value through other comprehensive income or Interest
expense from financial instruments measured at amortized cost in the periods when the hedged forecast cash flows
affect profit or loss, including discontinued hedges for which forecast cash flows are expected to occur. If the forecast
transactions are no longer expected to occur, the deferred gains or losses are immediately reclassified to the income
statement.
Hedges of net investments in foreign operations
Gains or losses on the hedging instrument relating to the effective portion of a hedge are recognized directly in Other
comprehensive income within Equity, while any gains or losses relating to the ineffective and / or undesignated portion
(for example, the interest element of a forward contract) are recognized in the income statement. Upon disposal or partial
disposal of the foreign operation, the cumulative value of any such gains or losses recognized in Equity associated with
the entity is reclassified to Other income.
Interest Rate Benchmark Reform
UBS continues hedge accounting during the period of uncertainty before existing interest rate benchmarks are replaced
with alternative risk-free interest rates. During this period, UBS assumes that the current benchmark rates will continue
to exist, such that forecast transactions are considered highly probable and hedge relationships remain, with little or no
consequential impact on the financial statements. Upon replacement of existing interest rate benchmarks by alternative
risk-free interest rates, UBS applies the requirements of Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (Interest
Rate Benchmark Reform – Phase 2), where applicable.
› Refer to Note 25 for more information
3) Fee and commission income and expenses
UBS earns fee income from the diverse range of services it provides to its clients. Fee income can be divided into two
broad categories: fees earned from services that are provided over a certain period of time, such as management of
clients’ assets, custody services and certain advisory services; and fees earned from point-in-time services, such as
underwriting fees, deal-contingent merger and acquisitions fees, and brokerage fees (e.g., securities and derivatives
execution and clearing). UBS recognizes fees earned from PIT services when it has fully provided the service to the client.
Where the contract requires services to be provided over time, income is recognized on a systematic basis over the life of
the agreement.
Consideration received is allocated to the separately identifiable performance obligations in a contract. Owing to the
nature of UBS’s business, contracts that include multiple performance obligations are typically those that are considered
to include a series of similar performance obligations fulfilled over time with the same pattern of transfer to the client,
e.g., management of client assets and custodial services. As a consequence, UBS is not required to apply significant
judgment in allocating the consideration received across the various performance obligations.
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Note 1 Summary of material accounting policies (continued)
PIT services are generally for a fixed price or dependent on deal size, e.g., a fixed number of basis points of trade size,
where the amount of revenue is known when the performance obligation is met. Fixed-over-time fees are recognized on
a straight-line basis over the performance period. Custodial and asset management fees can be variable through reference
to the size of the customer portfolio. However, they are generally billed on a monthly or quarterly basis once the
customer’s portfolio size is known or known with near certainty and therefore also recognized ratably over the
performance period. UBS does not recognize performance fees related to management of clients’ assets or fees related
to contingencies beyond UBS’s control until such uncertainties are resolved.
UBS’s fees are generally earned from short-term contracts. As a result, UBS’s contracts do not include a financing
component or result in the recognition of significant receivables or prepayment assets. Furthermore, due to the short-
term nature of such contracts, UBS has not capitalized any material costs to obtain or fulfill a contract or generated any
significant contract assets or liabilities.
UBS presents expenses primarily in line with their nature in the income statement, differentiating between expenses that
are directly attributable to the satisfaction of specific performance obligations associated with the generation of revenues,
which are generally presented within Total revenues as Fee and commission expense, and those that are related to
personnel, general and administrative expenses, which are presented within Operating expenses. For derivatives
execution and clearing services (where UBS acts as an agent), UBS only records its specific fees in the income statement,
with fees payable to other parties not recognized as an expense but instead directly offset against the associated income
collected from the given client.
› Refer to Note 4 for more information, including the disaggregation of revenues
4) Share-based and other deferred compensation plans
UBS recognizes expenses for deferred compensation awards over the period that the employee is required to provide
service to become entitled to the award. Where the service period is shortened, for example in the case of employees
affected by restructuring programs or mutually agreed termination provisions, recognition of such expense is accelerated
to the termination date. Where no future service is required, such as for employees who are eligible for retirement or
who have met certain age and length-of-service criteria, the services are presumed to have been received and
compensation expense is recognized over the performance year or, in the case of off-cycle awards, immediately on the
grant date.
Share-based compensation plans
Share-based compensation expense is measured by reference to the fair value of the equity instruments on the date of
grant, taking into account the terms and conditions inherent in the award, including, where relevant, dividend rights,
transfer restrictions in effect beyond the vesting date, market conditions, and non-vesting conditions.
For equity-settled awards, fair value is not remeasured unless the terms of the award are modified such that there is an
incremental increase in value. Expenses are recognized, on a per-tranche basis, over the service period based on an
estimate of the number of instruments expected to vest and are adjusted to reflect the actual outcomes of service or
performance conditions.
For equity-settled awards, forfeiture events resulting from a breach of a non-vesting condition (i.e., one that does not
relate to a service or performance condition) do not result in any adjustment to the share-based compensation expense.
For cash-settled share-based awards, fair value is remeasured at each reporting date, so that the cumulative expense
recognized equals the cash distributed.
Other deferred compensation plans
Compensation expense for other deferred compensation plans is recognized on a per-tranche or straight-line basis,
depending on the nature of the plan. The amount recognized is measured based on the present value of the amount
expected to be paid under the plan and is remeasured at each reporting date, so that the cumulative expense recognized
equals the cash or the fair value of respective financial instruments distributed.
› Refer to Note 27 for more information
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Note 1 Summary of material accounting policies (continued)
5) Post-employment benefit plans
Defined benefit plans
Defined benefit plans specify an amount of benefit that an employee will receive, which usually depends on one or more
factors, such as age, years of service and compensation. The defined benefit liability recognized in the balance sheet is
the present value of the defined benefit obligation, measured using the projected unit credit method, less the fair value
of the plan’s assets at the balance sheet date, with changes resulting from remeasurements recorded immediately in
Other comprehensive income. If the fair value of the plan’s assets is higher than the present value of the defined benefit
obligation, the recognition of the resulting net asset is limited to the present value of economic benefits available in the
form of refunds from the plan or reductions in future contributions to the plan. Calculation of the net defined benefit
obligation or asset takes into account the specific features of each plan, including risk sharing between employee and
employer, and is calculated periodically by independent qualified actuaries.
Critical accounting estimates and judgments
The net defined benefit liability or asset at the balance sheet date and the related personnel expense depend on the expected future benefits to be provided,
determined using a number of economic and demographic assumptions. A range of assumptions could be applied, and different assumptions could
significantly alter the defined benefit liability or asset and pension expense recognized. The most significant assumptions include life expectancy, discount
rate, expected salary increases, pension increases and interest credits on retirement savings account balances. Sensitivity analysis for reasonable possible
movements in each significant assumption for UBS‘s post-employment obligations is provided in Note 26.
› Refer to Note 26 for more information
Defined contribution plans
A defined contribution plan pays fixed contributions into a separate entity from which post-employment and other
benefits are paid. UBS has no legal or constructive obligation to pay further amounts if the plan does not hold sufficient
assets to pay employees the benefits relating to employee service in the current and prior periods. Compensation expense
is recognized when the employees have rendered services in exchange for contributions. This is generally in the year of
contribution. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future
payments is available.
6) Income taxes
UBS is subject to the income tax laws of Switzerland and those of the non-Swiss jurisdictions in which UBS has business
operations.
The Group’s provision for income taxes is composed of current and deferred taxes. Current income taxes represent taxes
to be paid or refunded for the current period or previous periods.
Deferred tax assets (DTAs) and deferred tax liabilities (DTLs) are recognized for temporary differences between the
carrying amounts and tax bases of assets and liabilities that will result in deductible or taxable amounts, respectively in
future periods. DTAs may also arise from other sources, including unused tax losses and unused tax credits. DTAs and
DTLs are measured using the applicable tax rates and laws that have been enacted or substantively enacted by the end
of the reporting period and that will be in effect when such differences are expected to reverse.
DTAs are recognized only to the extent it is probable that sufficient taxable profits will be available against which these
differences can be used. When an entity or tax group has a history of recent losses, DTAs are only recognized to the
extent 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) gains and losses on the sale of treasury shares (for which the tax
effects are recognized directly in Equity); (iii) unrealized gains or losses on financial instruments that are classified at
FVOCI; (iv) changes in fair value of derivative instruments designated as cash flow hedges; (v) remeasurements of defined
benefit plans; or (vi) certain foreign currency translations of foreign operations. Amounts relating to points (iii) through
(vi) above are recognized in Other comprehensive income within Equity.
UBS reflects the potential effect of uncertain tax positions for which acceptance by the relevant tax authority is not
considered probable by adjusting current or deferred taxes, as applicable, using either the most likely amount or expected
value methods, depending on which method is deemed a better predictor of the basis on which, and extent to which,
the uncertainty will be resolved.
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Note 1 Summary of material accounting policies (continued)
Critical accounting estimates and judgments
Tax laws are complex, and judgment and interpretations about the application of such laws are required when accounting for income taxes. UBS considers
the performance of its businesses and the accuracy of historical forecasts and other factors when evaluating the recoverability of its DTAs, including the
remaining tax loss carry-forward period, and its assessment of expected future taxable profits in the forecast period used for recognizing DTAs. Estimating
future profitability and business plan forecasts is inherently subjective and is particularly sensitive to future economic, market and other conditions.
Forecasts are reviewed annually, but adjustments may be made at other times, if required. If recent losses have been incurred, convincing evidence is
required to prove there is sufficient future profitability given that the value of UBS’s DTAs may be affected, with effects primarily recognized through the
income statement.
In addition, judgment is required to assess the expected value of uncertain tax positions and the related probabilities, including interpretation of tax laws,
the resolution of any income tax-related appeals and litigation.
› Refer to Note 8 for more information
7) Property, equipment and software
Property, equipment and software is measured at cost less accumulated depreciation and impairment losses. Software
development costs are capitalized only when the costs can be measured reliably and it is probable that future economic
benefits will arise. Depreciation of property, equipment and software begins when they are available for use and is
calculated on a straight line basis over an asset’s estimated useful life.
Property, equipment and software are generally tested for impairment at the appropriate cash-generating unit level,
alongside goodwill and intangible assets as described in item 8 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 11 for more information
8) Goodwill
Goodwill represents the excess of the consideration over the fair value of identifiable assets, liabilities and contingent
liabilities acquired that arises in a business combination. Goodwill is not amortized, but is assessed for impairment at the
end of each reporting period, or when indicators of impairment exist. UBS tests goodwill for impairment annually,
irrespective of whether there is any indication of impairment.
An impairment charge is recognized in the income statement if the carrying amount exceeds the recoverable amount of a
cash-generating unit.
Critical accounting estimates and judgments
UBS‘s methodology for goodwill impairment testing is based on a model that is most sensitive to the following key assumptions: (i) forecasts of earnings
available to shareholders in years one to three; (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 2 and 12 for more information
9) Provisions and contingent liabilities
Provisions are liabilities of uncertain timing or amount, and are generally recognized in accordance with IAS 37, Provisions,
Contingent Liabilities and Contingent Assets, when: (i) UBS has a present obligation as a result of a past event; (ii) it is
probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount
of the obligation can be made.
The majority of UBS’s provisions relate to litigation, regulatory and similar matters, restructuring, and employee benefits.
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. Provisions
for employee benefits relate mainly to service anniversaries and sabbatical leave, and are recognized in accordance with
measurement principles set out in item 4 in this Note. In addition, UBS presents expected credit loss allowances within
Provisions if they relate to a loan commitment, financial guarantee contract or a revolving revocable credit line.
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.
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Note 1 Summary of material accounting policies (continued)
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, timing and 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 amount of any potential outflows.
› Refer to Note 17 for more information
10) Foreign currency translation
Transactions denominated in a foreign currency are translated into the functional currency of the reporting entity at the
spot exchange rate on the date of the transaction. At the balance sheet date, all monetary assets, including those at
FVOCI, and monetary liabilities denominated in foreign currency are translated into the functional currency using the
closing exchange rate. Translation differences are reported in Other net income from financial instruments measured at
fair value through profit or loss.
Non-monetary items measured at historical cost are translated at the exchange rate on the date of the transaction.
Upon consolidation, assets and liabilities of foreign operations are translated into US dollars, UBS’s presentation currency,
at the closing exchange rate on the balance sheet date, and income and expense items and other comprehensive income
are translated at the average rate for the period. The resulting foreign currency translation differences are recognized in
Equity and reclassified to the income statement when UBS disposes of, partially or in its entirety, the foreign operation and
UBS no longer controls the foreign operation.
Share capital issued, share premium and treasury shares held are translated at the historic average rate, with the difference
between the historic average rate and the spot rate realized upon repayment of share capital or disposal of treasury shares
reported as Share premium. Cumulative amounts recognized in Other comprehensive income in respect of cash flow hedges
and financial assets measured at FVOCI are translated at the closing exchange rate as of the balance sheet dates, with any
translation effects adjusted through Retained earnings.
› Refer to Note 32 for more information
11) Equity, treasury shares and contracts on UBS Group AG shares
Proceeds from the issuance of shares are recognized in Share capital for the nominal value, with the balance presented
in Share premium.
UBS Group AG shares held (treasury shares)
UBS Group AG shares held by the Group, including those purchased as part of market-making activities, are presented
in Equity as Treasury shares at their acquisition cost and are deducted from Equity until they are canceled or reissued.
The difference between the proceeds from sales of treasury shares and their weighted average cost (net of tax, if any) is
reported as Share premium.
Contracts on UBS Group AG shares
Contracts involving UBS Group AG shares that require net cash settlement, or provide the counterparty or UBS with a
settlement option that includes a choice of settling net in cash, are classified as derivatives held for trading.
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Note 1 Summary of material accounting policies (continued)
b) Changes in accounting policies, comparability and other adjustments
Changes to the presentation of the financial statements
During 2022, UBS made several changes to simplify the presentation of the income statement alongside other primary
financial statements and disclosure notes, and to align them with management information. In particular, Total operating
income has been renamed Total revenues and excludes Credit loss expense / (release), which is now separately presented
below Total revenues.
Reclassification of a portfolio from Financial assets measured at fair value through other comprehensive income to
Other financial assets measured at amortized cost
Effective from 1 April 2022, UBS has reclassified a portfolio of financial assets from Financial assets measured at fair value
through other comprehensive income with a fair value of USD 6.9bn (the Portfolio) to Other financial assets measured at
amortized cost, in line with the principles in IFRS 9, Financial Instruments, which require a reclassification when an entity
changes its business model for managing financial assets.
The Portfolio’s cumulative fair value losses of USD 449m pre-tax and USD 333m post-tax, previously recognized in Other
comprehensive income, have been removed from equity and adjusted against the value of the assets on the
reclassification date, so that the Portfolio is measured as if the assets had always been classified at amortized cost, with
a value of USD 7.4bn as on 1 April 2022. The reclassification had no effect on the income statement.
The reclassified Portfolio is made up of high-quality liquid assets, primarily US government treasuries and US government
agency mortgage-backed securities, held and separately managed by UBS Bank USA (BUSA).
The accounting reclassification has arisen as a direct result of the transformation of UBS’s Global Wealth Management
Americas business, which has significantly impacted BUSA. This includes initiatives approved by the Group Executive
Board to significantly grow and extend the business, as disclosed on 1 February 2022 during UBS’s fourth quarter 2021
earnings presentation. Over the two years preceding the reclassification date, BUSA’s deposit base grew by more than
100% generating substantial cash balances, with a number of new products being launched, including new deposit
types that are longer in duration, additional lending and a broader range of customer segments targeted.
Following the commencement of these activities and the announcement made in the first quarter of 2022, 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.
The fair value of the Portfolio as on 31 December 2022 was USD 5.8bn. A pre-tax fair value loss of USD 981m would
have been recognized in Other comprehensive income during 2022 if the Portfolio had not been reclassified.
› Refer to the Statement of changes in equity and Note 20 for more information about the effects from the reclassification of the
Portfolio
Accounting for obligations to safeguard crypto-assets an entity holds for platform users (SAB 121)
In March 2022, the US Security and Exchange Commission (the SEC) issued Staff Accounting Bulletin (SAB) 121,
“Accounting for obligations to safeguard crypto-assets an entity holds for platform users.” SAB 121 adds interpretive
guidance requiring SEC registrants, including foreign private issuers that apply IFRS, to recognize a liability on their
balance sheets to reflect the obligation to safeguard any digital asset that is issued or transferred using distributed ledger
or blockchain technology and held for their platform users, along with a corresponding asset. The guidance is effective
for UBS for annual reporting from 2022 onwards. Amounts that would be recognized as liabilities, with corresponding
assets, under this guidance are not material to UBS.
c) International Financial Reporting Standards and Interpretations to be adopted in 2023 and later and other
changes
IFRS 17, Insurance Contracts
In May 2017, the IASB issued IFRS 17, Insurance Contracts, which sets out the accounting requirements for contractual
rights and obligations that arise from insurance contracts issued and reinsurance contracts held. IFRS 17 is effective from
1 January 2023. Adoption on 1 January 2023 will have no effect on the Group’s financial statements. UBS does not
provide insurance services in any market.
Other amendments to IFRS
The IASB has issued a number of minor amendments to IFRS, effective from 1 January 2023 and in later years. These
amendments are not expected to have a significant effect on the Group when they are adopted.
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Note 2a Segment reporting
UBS’s businesses are organized globally into four business divisions: Global Wealth Management, Personal & Corporate
Banking, Asset Management and the Investment Bank. All four business divisions are supported by Group Functions and
qualify as reportable segments for the purpose of segment reporting. Together with Group Functions, the four business
divisions reflect the management structure of the Group.
– Global Wealth Management provides financial services, advice and solutions to private wealth clients. Its offering
ranges from investment management to estate planning and corporate finance advice, in addition to specific wealth
management and banking products and services.
– Personal & Corporate Banking serves its private, corporate, and institutional clients’ needs, from banking to
retirement, financing, investments and strategic transactions, in Switzerland, through its branch network and digital
channels.
– Asset Management is a global, large-scale and diversified asset manager. It offers investment capabilities and styles
across all major traditional and alternative asset classes, as well as advisory support to institutions, wholesale
intermediaries and wealth management clients.
– The Investment Bank provides a range of services to institutional, corporate and wealth management clients globally,
to help them raise capital, grow their businesses, invest and manage risks. Its offering includes research, advisory
services, facilitating clients raising debt and equity from the public and private markets and capital markets, cash and
derivatives trading across equities and fixed income, and financing.
– Group Functions is made up of the following major areas: Group Services (which consists of Chief Digital and
Information Office, Communications & Branding, Compliance, Finance, Group Sustainability and Impact, Human
Resources, Group Legal, Regulatory & Governance, and Risk Control), Group Treasury and Non-core and Legacy
Portfolio.
Financial information about the four business divisions and Group Functions is presented separately in internal
management reports to the Group Executive Board (the GEB), which is considered the “chief operating decision maker”
pursuant to IFRS 8, Operating Segments.
UBS’s internal accounting policies, which include management accounting policies and service level agreements,
determine the revenues and expenses directly attributable to each reportable segment. Transactions between the
reportable segments are carried out at internally agreed rates and are reflected in the operating results of the reportable
segments. Revenue-sharing agreements are used to allocate external client revenues to reportable segments where
several reportable segments are involved in the value creation chain. Total intersegment revenues for the Group are
immaterial, as the majority of the revenues are allocated across the segments by means of revenue-sharing agreements.
Interest income earned from managing UBS’s consolidated equity is allocated to the reportable segments based on
average attributed equity and currency composition. Assets and liabilities of the reportable segments are funded through
and invested with Group Functions, and the net interest margin is reflected in the results of each reportable segment.
Segment assets are based on a third-party view and do not include intercompany balances. This view is in line with
internal reporting to the GEB. If one operating segment is involved in an external transaction together with another
operating segment or Group Functions, 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.
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Note 2a Segment reporting (continued)
USD m
For the year ended 31 December 2022
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Non-interest income
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Operating expenses
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Total assets
Additions to non-current assets
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For the year ended 31 December 2021
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Non-interest income
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OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Additional information
Total assets2
Additions to non-current assets
USD m
For the year ended 31 December 2020
Net interest income
Non-interest income3
Total revenues
Credit loss expense / (release)
Operating expenses
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Group
Functions
UBS
5,273
13,694
18,967
0
13,989
44,,997777
2,191
2,111
4,302
39
2,452
11,,881122
(19)
2,9801
2,961
0
1,564
11,,339977
(242)
8,958
8,717
(12)
6,832
11,,889977
(584)
199
(385)
3
92
((448800))
6,621
27,942
34,563
29
24,930
99,,660044
1,942
77,,666611
388,530
42
Global Wealth
Management
235,226
13
Personal &
Corporate
Banking
17,348
1
391,320
34
71,940
1,970
1,104,364
2,060
Asset
Management
Investment
Bank
Group
Functions
4,244
15,175
19,419
(29)
14,665
44,,778833
2,120
2,143
4,263
(86)
2,618
11,,773311
(15)
2,632
2,617
1
1,586
11,,003300
481
8,972
9,454
(34)
6,858
22,,663300
(127)
(233)
(359)
0
330
((668899))
UBS
6,705
28,689
35,393
(148)
26,058
99,,448844
1,998
77,,448866
395,235
56
Global Wealth
Management
225,370
16
Personal &
Corporate
Banking
25,639
1
346,431
30
124,507
1,989
1,117,182
2,091
Asset
Management
Investment
Bank
Group
Functions
UBS
4,027
13,107
17,134
88
13,026
44,,001199
2,049
1,858
3,908
257
2,392
11,,225599
(17)
2,993
2,975
2
1,519
11,,445555
284
9,235
9,519
305
6,732
22,,448822
(481)
30
(452)
42
567
((11,,006600))
5,862
27,222
33,084
694
24,235
88,,115555
1,583
66,,557722
Additional information
Total assets
Additions to non-current assets
11 Includes an USD 848m gain in Asset Management related to the sale of UBS’s shareholding in Mitsubishi Corp.-UBS Realty Inc. 22 During 2022, UBS refined the methodology applied to allocate balance sheet
resources from Group Functions to the business divisions, with prospective effect. If the new methodology had been applied as of 31 December 2021, balance sheet assets allocated to business divisions would have
been USD 26bn higher, of which USD 14bn related to the Investment Bank. 33 Includes a USD 631m net gain on the sale of a majority stake in Fondcenter AG (now Clearstream Fund Centre AG), of which USD 571m
was recognized in Asset Management and USD 60m was recognized in Global Wealth Management.
1,125,765
2,847
231,657
12
369,683
150
128,122
2,294
367,714
5
28,589
385
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
280
284
Note 2b Segment reporting by geographic location
The operating regions shown in the table below correspond to the regional management structure of the Group. The
allocation of total revenues to these regions reflects, and is consistent with, the basis on which the business is managed
and its performance is evaluated. These allocations involve assumptions and judgments that management considers to
be reasonable, and may be refined to reflect changes in estimates or management structure. The main principles of the
allocation methodology are that client revenues are attributed to the domicile of the given client and trading and portfolio
management revenues are attributed to the country where the risk is managed. This revenue attribution is consistent
with the mandate of the regional Presidents. Certain revenues, such as those related to Non-core and Legacy Portfolio in
Group Functions, are managed at a Group level. These revenues are included in the Global line.
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 2022
Americas2
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
TToottaall
For the year ended 31 December 2021
Americas2
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
TToottaall
For the year ended 31 December 2020
Americas2
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
TToottaall
TToottaall rreevveennuueess11
TToottaall nnoonn--ccuurrrreenntt aasssseettss
UUSSDD bbnn
1133..88
55..66
77..00
77..77
00..55
3344..66
SShhaarree %%
UUSSDD bbnn
SShhaarree %%
4400
1166
2200
2222
11
110000
88..99
11..55
22..99
66..33
00..00
1199..77
4466
88
1155
3322
00
110000
Total revenues1
Total non-current assets
USD bn
14.5
6.5
7.0
7.8
(0.3)
3355..44
Share %
USD bn
Share %
41
18
20
22
(1)
110000
9.0
1.5
2.9
7.1
0.0
2200..55
44
7
14
35
0
110000
Total revenues1
Total non-current assets
USD bn
13.2
6.1
6.5
7.1
0.1
3333..11
Share %
USD bn
Share %
40
18
20
22
0
110000
9.0
1.5
3.0
7.6
0.0
2211..11
42
7
14
36
0
110000
11 During 2022, UBS changed the presentation of its Income statement. Total operating income was renamed Total revenues and excludes Credit loss expense / (release). Note 2b, including prior-period information,
has been updated to reflect the new presentation structure, with the disclosure of Total revenues instead of Total operating income. Refer to Note 1b for more information. 22 Predominantly related to the USA.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
281
285
Income statement notes
Note 3 Net interest income and other net income from financial instruments measured at fair value through
profit or loss
USD m
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
of which: net gains / (losses) from financial liabilities designated at fair value 1
TToottaall nneett iinnccoommee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss aanndd ootthheerr
For the year ended
3311..1122..2222
11,,440033
77,,551177
1177,,003377
88,,992200
31.12.21
1,431
5,850
(6,582)
7,281
31.12.20
1,299
6,960
1,509
8,259
Net interest income
Interest income from loans and deposits2
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 income from derivative instruments designated as cash flow hedges
TToottaall iinntteerreesstt iinnccoommee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt aanndd ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Interest expense on loans and deposits4
Interest expense on securities financing transactions measured at amortized cost 5
Interest expense on debt issued
Interest expense on lease liabilities
TToottaall iinntteerreesstt eexxppeennssee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
TToottaall nneett iinntteerreesstt iinnccoommee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt aanndd ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall nneett iinntteerreesstt iinnccoommee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss aanndd ootthheerr
TToottaall nneett iinntteerreesstt iinnccoommee
11 Excludes fair value changes of 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. 2022 included net gains of USD 4,112m (net losses of USD 2,068m and USD 72m
in 2021 and 2020, respectively), driven by financial liabilities related to unit-linked investment contracts, which are designated at fair value through profit or loss. This was offset by net losses of USD 4,112m (net
gains of USD 2,068m and USD 72m in 2021 and 2020, respectively), related to financial assets for unit-linked investment contracts that are mandatorily measured at fair value through profit or loss not held for
trading. 22 Consists of interest income from cash and balances at central banks, loans and advances to 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. 33 Includes negative interest, including fees, on payables from securities financing transactions measured at amortized
cost. 44 Consists of interest expense on amounts due to banks, cash collateral payables on derivative instruments, and customer deposits, as well as negative interest on cash and balances at central banks, loans
and advances to banks, and cash collateral receivables on derivative instruments. 55 Includes negative interest, including fees, on receivables from securities financing transactions measured at amortized cost.
99,,661122
11,,337788
554455
7744
117733
1111,,778822
22,,557799
11,,008899
22,,880033
9922
66,,556644
55,,221188
11,,440033
66,,662211
6,690
862
335
101
822
8,810
1,031
870
2,237
110
4,247
4,563
1,299
5,862
6,488
513
284
115
1,133
8,533
523
1,102
1,533
102
3,259
5,274
1,431
6,705
Note 4 Net fee and commission income
USD m
Underwriting fees
M&A and corporate finance fees
Brokerage fees
Investment fund fees
Portfolio management and related services
Other
TToottaall ffeeee aanndd ccoommmmiissssiioonn iinnccoommee11
of which: recurring
of which: transaction-based
of which: performance-based
FFeeee aanndd ccoommmmiissssiioonn eexxppeennssee
NNeett ffeeee aanndd ccoommmmiissssiioonn iinnccoommee
For the year ended
3311..1122..2222
31.12.21
31.12.20
557799
880044
33,,448844
44,,994422
99,,005599
11,,992200
2200,,778899
1144,,222299
66,,449922
6688
11,,882233
1188,,996666
1,463
1,102
4,382
5,790
9,762
1,874
24,372
15,410
8,692
269
1,985
22,387
1,085
736
4,132
5,289
8,009
1,710
20,961
13,009
7,491
461
1,775
19,186
11 For the year ended 31 December 2022, reflects third-party fee and commission income of USD 12,990m for Global Wealth Management, USD 1,654m for Personal & Corporate Banking, USD 2,840m for Asset
Management, USD 3,296m for the Investment Bank and USD 10m for Group Functions (for the year ended 31 December 2021: USD 14,545m for Global Wealth Management, USD 1,644m for Personal & Corporate
Banking, USD 3,337m for Asset Management, USD 4,814m for the Investment Bank and USD 33m for Group Functions; for the year ended 31 December 2020: USD 12,475m for Global Wealth Management,
USD 1,426m for Personal & Corporate Banking, USD 3,129m for Asset Management, USD 3,882m for the Investment Bank and USD 49m for Group Functions).
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
282
286
Note 5 Other income
USD m
AAssssoocciiaatteess,, jjooiinntt vveennttuurreess aanndd ssuubbssiiddiiaarriieess
Net gains / (losses) from acquisitions and disposals of subsidiaries1
Net gains / (losses) from disposals of investments in associates and joint ventures
Share of net profits of associates and joint ventures
TToottaall
Net gains / (losses) from disposals of financial assets measured at fair value through other comprehensive income
Income from properties4
Net gains / (losses) from properties held for sale
Other
TToottaall ootthheerr iinnccoommee
For the year ended
3311..1122..2222
31.12.21
31.12.20
114488
88444433
3322
11,,002244
((11))
2200
2244
33991177
11,,445599
(11)
41
105
135
9
23
1005
1858
452
6352
0
84
719
40
26
766
2169
1,076
11 Includes foreign exchange gains / (losses) reclassified from other comprehensive income related to the disposal or closure of foreign operations. Refer to Note 29 for more information about UBS’s acquisitions and
disposals of subsidiaries and businesses. 22 Includes a USD 631m net gain on the sale of a majority stake in Fondcenter AG (now Clearstream Fund Centre AG). 33 Includes an USD 848m gain related to the sale of
UBS’s shareholding in Mitsubishi Corp.-UBS Realty Inc. Refer to Note 28b for more information. 44 Includes rent received from third parties. 55 Mainly relates to the sale of a property in Basel. 66 Includes net gains
of USD 140m arising from sale-and-leaseback transactions, primarily related to a property in Geneva, partly offset by remeasurement losses relating to properties that were reclassified as held for sale. 77 Mainly
relates to a portion of the total USD 133m gain on the sale of UBS’s domestic wealth management business in Spain of USD 111m (with the remaining amount disclosed within Net gains / (losses) from acquisitions
and disposals of subsidiaries), income of USD 111m related to a legacy litigation settlement and a legacy bankruptcy claim, as well as gains of USD 98m related to the repurchase of UBS’s own debt instruments
(compared with losses of USD 60m in 2021). 88 Includes a gain of USD 100m from the sale of UBS’s domestic wealth management business in Austria. 99 Includes a USD 215m gain on the sale of intellectual
property rights associated with the Bloomberg Commodity Index family.
Note 6 Personnel expenses
USD m
Salaries1
Variable compensation2
of which: performance awards
of which: financial advisors 4
of which: other
Contractors
Social security
Post-employment benefit plans5
of which: defined benefit plans
of which: defined contribution plans
Other personnel expenses
TToottaall ppeerrssoonnnneell eexxppeennsseess
For the year ended
3311..1122..2222
31.12.21
31.12.20
77,,004455
77,,995544
33,,220055
44,,550088
224411
332233
994444
779944
443377
335577
662211
7,339
8,280
3,190
4,860
229
381
978
833
470
363
576
7,023
7,520
3,209 3
4,091
220
375
8993
845
502
343
5613
1177,,668800
18,387
17,224
11 Includes role-based allowances. 22 Refer to Note 27 for more information. 33 During 2020, UBS modified the conditions for continued vesting of certain outstanding deferred compensation awards for qualifying
employees, resulting in an expense of approximately USD 280m, of which USD 240m is disclosed within Variable compensation – performance awards, USD 20m within Social security and USD 20m within Other
personnel expenses. 44 Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation
commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 55 Refer to Note 26 for more information. Includes curtailment gains of USD 20m for the year
ended 31 December 2022 (for the year ended 31 December 2021: USD 80m; for the year ended 31 December 2020: USD 0m), which represent a reduction in the defined benefit obligation related to the Swiss pension
plan resulting from a decrease in headcount following restructuring activities.
Note 7 General and administrative expenses
USD m
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 matters1
Other
TToottaall ggeenneerraall aanndd aaddmmiinniissttrraattiivvee eexxppeennsseess
11 Reflects the net increase in provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 17 for more information.
For the year ended
3311..1122..2222
31.12.21
31.12.20
889966
11,,114466
559922
660055
441199
226655
117722
334488
774466
893
1,055
540
634
417
242
72
911
788
951
949
646
671
413
217
84
197
757
55,,118899
5,553
4,885
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
283
287
Note 8 Income taxes
USD m
Tax expense / (benefit)
SSwwiissss
Current
Deferred
TToottaall SSwwiissss
NNoonn--SSwwiissss
Current
Deferred
TToottaall nnoonn--SSwwiissss
TToottaall iinnccoommee ttaaxx eexxppeennssee // ((bbeenneeffiitt)) rreeccooggnniizzeedd iinn tthhee iinnccoommee ssttaatteemmeenntt
Income tax recognized in the income statement
For the year ended
31.12.21
3311..1122..2222
31.12.20
773300
((1155))
771155
771188
550099
11,,222277
11,,994422
680
34
771144
884
400
11,,228844
11,,999988
482
116
559988
749
236
998855
11,,558833
The Swiss current tax expenses related to taxable profits of UBS Switzerland AG and other Swiss entities.
The non-Swiss current tax expenses related to taxable profits of non-Swiss subsidiaries and branches. The non-Swiss
deferred tax expenses include expenses of USD 678m that primarily related to the amortization of deferred tax assets
(DTAs) previously recognized in relation to tax losses carried forward and deductible temporary differences of UBS
Americas Inc., which were partly offset by a benefit of USD 169m in respect of net upward revaluations of DTAs for
certain entities, primarily in connection with our business planning process.
The effective tax rate for the year of 20.2% is lower than our projected rate for the year of 24%, primarily as a result of
the aforementioned deferred tax benefit of USD 169m in respect of net upward revaluations of DTAs and because no
tax expenses were recognized in respect of pre-tax gains from dispositions of UBS subsidiaries in 2022.
› Refer to Note 29 for more information about disposals of subsidiaries
USD m
Operating profit / (loss) before tax
of which: Swiss
of which: non-Swiss
Income taxes at Swiss tax rate of 18% for 2022, 18.5% for 2021 and 19.5% for 2020
Increase / (decrease) resulting from:
Non-Swiss tax rates differing from Swiss tax rate
Tax effects of losses not recognized
Previously unrecognized tax losses now utilized
Non-taxable and lower-taxed income
Non-deductible expenses and additional taxable income
Adjustments related to prior years, current tax
Adjustments related to prior years, deferred tax
Change in deferred tax recognition
Adjustments to deferred tax balances arising from changes in tax rates
Other items
IInnccoommee ttaaxx eexxppeennssee // ((bbeenneeffiitt))
For the year ended
31.12.21
9,484
3,334
6,150
1,755
3311..1122..2222
99,,660044
44,,442255
55,,117788
11,,772299
228844
7744
((221177))
((333355))
442299
((4411))
1133
((221177))
00
222222
11,,994422
234
124
(179)
(278)
510
(40)
(10)
(342)
(5)
231
1,998
31.12.20
8,155
3,403
4,752
1,590
110
144
(212)
(394)
385
(67)
12
(381)
234
161
1,583
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
284
288
Note 8 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 Group profits or losses arise outside Switzerland, the applicable local tax rate may differ from the Swiss
tax rate. This item reflects, for such profits, an adjustment from the tax expense that would arise at the Swiss tax rate to
the tax expense that would arise at the applicable local tax rate. Similarly, it reflects, for such losses, an adjustment from
the tax benefit that would arise at the Swiss tax rate to the tax benefit that would arise at the applicable local tax rate.
Tax effects of losses
not recognized
This item relates to tax losses of entities arising in the year that are not recognized as DTAs and where no tax benefit arises
in relation to those losses. Therefore, the tax benefit calculated by applying the local tax rate to those losses as described
above is reversed.
Previously
unrecognized tax losses
now utilized
This item relates to taxable profits of the year that are offset by tax losses of previous years for which no DTAs were
previously recorded. Consequently, no current tax or deferred tax expense arises in relation to those taxable profits and
the tax expense calculated by applying the local tax rate on those profits is reversed.
Non-taxable and lower-
taxed income
This item relates to tax deductions for the year in respect of permanent differences. These include deductions in respect of
profits that are either not taxable or are taxable at a lower rate of tax than the local tax rate. They also include deductions
made for tax purposes, which are not reflected in the accounts.
Non-deductible
expenses and
additional taxable
income
This item relates to additional taxable income for the year in respect of permanent differences. These include income that
is recognized for tax purposes by an entity but is not included in its profit that is reported in the financial statements, as
well as expenses for the year that are non-deductible (e.g., client entertainment costs are not deductible in certain
locations).
Adjustments related to
prior years, current tax
This item relates to adjustments to current tax expense for prior years (e.g., if the tax payable for a year is agreed with the
tax authorities in an amount that differs from the amount previously reflected in the financial statements).
Adjustments related to
prior years, deferred
tax
This item relates to adjustments to deferred tax positions recognized in prior years (e.g., if a tax loss for a year is fully
recognized and the amount of the tax loss agreed with the tax authorities is expected to differ from the amount previously
recognized as DTAs in the accounts).
Change in deferred tax
recognition
This item relates to changes in DTAs, including changes in DTAs previously recognized resulting from reassessments of
expected future taxable profits. It also includes changes in temporary differences in the year, for which deferred tax is not
recognized.
Adjustments to
deferred tax balances
arising from changes in
tax rates
This item relates to remeasurements of DTAs and liabilities recognized due to changes in tax rates. These have the effect
of changing the future tax saving that is expected from tax losses or deductible tax differences and therefore the amount
of DTAs recognized or, alternatively, changing the tax cost of additional taxable income from taxable temporary
differences and therefore the deferred tax liability.
Other items
Other items include other differences between profits or losses at the local tax rate and the actual local tax expense or
benefit, including movements in provisions for uncertain positions in relation to the current year and other items.
Income tax recognized directly in equity
A net tax benefit of USD 1,116m was recognized in Other comprehensive income (2021: net benefit of USD 479m) and
a net tax benefit of USD 13m was recognized in Share premium (2021: net expense of USD 88m).
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
285
289
Note 8 Income taxes (continued)
Deferred tax assets and liabilities
The Group has gross DTAs, valuation allowances and recognized DTAs related to tax loss carry-forwards and deductible
temporary differences, as well as deferred tax liabilities in respect of taxable temporary differences, as shown in the table
below. The valuation allowances reflect DTAs that were not recognized because, as of the last remeasurement period,
management did not consider it probable that there would be sufficient future taxable profits available to utilize the
related tax loss carry-forwards and deductible temporary differences.
The recognition of DTAs is supported by forecasts of taxable profits for the entities concerned. In addition, tax planning
opportunities are available that would result in additional future taxable income and these would be utilized, if necessary.
Deferred tax liabilities are recognized in respect of investments in subsidiaries, branches and associates, and interests in
joint arrangements, except to the extent that the Group can control the timing of the reversal of the associated taxable
temporary difference and it is probable that such will not reverse in the foreseeable future. However, as of 31 December
2022, this exception was not considered to apply to any taxable temporary differences.
USD m
Deferred tax assets1
Tax loss carry-forwards
Temporary differences
of which: related to real estate costs capitalized for US tax
purposes
of which: related to compensation and benefits
of which: related to cash flow hedges
of which: other
TToottaall ddeeffeerrrreedd ttaaxx aasssseettss
of which: related to the US
of which: related to other locations
3311..1122..2222
31.12.21
GGrroossss
1122,,770088
55,,881144
22,,448855
11,,119944
994477
11,,118888
1188,,552222
VVaalluuaattiioonn
aalllloowwaannccee
((88,,772200))
((441144))
00
((117755))
00
((223388))
((99,,113344))
RReeccooggnniizzeedd
33,,998888
55,,440000
22,,448855
11,,001188
994477
995500
99,,33889922
88,,229944
11,,009955
Gross
13,636
5,133
2,272
1,222
3
1,636
18,769
Valuation
allowance
(9,193)
(700)
0
(209)
0
(491)
(9,893)
Recognized
4,443
4,433
2,272
1,013
3
1,145
8,8762
8,521
355
Deferred tax liabilities
Cash flow hedges
Other
TToottaall ddeeffeerrrreedd ttaaxx lliiaabbiilliittiieess
11 After offset of DTLs, as applicable. 22 As of 31 December 2022, the Group recognized DTAs of USD 471m (31 December 2021: USD 77m) in respect of entities that incurred losses in either the current or preceding
year.
00
223366
223366
118
183
300
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
Within 1 year
From 2 to 5 years
From 6 to 10 years
From 11 to 20 years
No expiry
TToottaall
of which: related to the US 1
of which: related to the UK
of which: related to other locations
11 Related to UBS AG’s US branch.
3311..1122..2222
223311
22,,118844
1111,,110066
11,,661100
1166,,996600
3322,,009911
1133,,335500
1144,,333322
44,,440099
31.12.21
141
1,026
13,283
2,093
18,147
34,690
14,870
14,909
4,911
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
286
290
Balance sheet notes
Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement
The tables below provide information about financial instruments and certain credit lines that are subject to expected
credit loss (ECL) requirements. UBS’s ECL disclosure segments, or “ECL segments” are aggregated portfolios based on
shared risk characteristics and on the same or similar rating methods applied. The key segments are presented in the
table below.
› Refer to Note 19 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 the 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 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
SME clients
Lending to small and medium-sized
corporate clients
Lombard
Loans secured by pledges of marketable
securities, guarantees and other forms
of collateral (including concentration in
hedge funds, private equity and unlisted
equities), as well as unsecured recourse
lending
Credit cards
Credit card solutions in Switzerland and
the US
Commodity trade
finance
Working capital financing of commodity
traders, generally extended on a self-
liquidating transactional basis
Financial intermediaries
and hedge funds
Lending to financial institutions and
pension funds, including exposures to
broker-dealers and clearing houses
› Refer to Note 19f for more details regarding sensitivity
Sensitive to GDP developments,
unemployment levels, seasonality,
business cycles and collateral values
(diverse collateral, including real estate
and other collateral types)
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
– Investment Bank
– Personal & Corporate Banking
Sensitive to equity and debt markets (e.g.,
changes in collateral values)
– Global Wealth Management
Sensitive to unemployment levels
– Personal & Corporate Banking
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
Sensitive to GDP development, the
interest rate environment, price and
volatility risks in financial markets, and
regulatory and political risk
– Global Wealth Management
– Personal & Corporate Banking
– Personal & Corporate Banking
– Investment Bank
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
287
291
Note 9 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
3311..1122..2222
FFiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Other financial assets measured at amortized cost
of which: Loans to financial advisors
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall oonn--bbaallaannccee sshheeeett ffiinnaanncciiaall aasssseettss wwiitthhiinn tthhee ssccooppee ooff EECCLL rreeqquuiirreemmeennttss
OOffff--bbaallaannccee sshheeeett ((wwiitthhiinn tthhee ssccooppee ooff EECCLL))
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing agreements
Committed unconditionally revocable credit lines
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
CCaarrrryyiinngg aammoouunntt11
SSttaaggee 11
TToottaall
169,402
169,445
14,792
14,792
67,814
67,814
35,032
35,032
370,095
387,220
156,930 147,651
46,470 43,112
12,226 10,733
13,903 12,211
132,287 132,196
1,420
3,261
52,704
2,357
770099,,883399
22,,223399
771122,,007788
SSttaaggee 22
44
1
0
0
15,587
8,579
3,349
1,189
1,342
0
382
0
413
128
1166,,004444
00
1166,,004444
1,834
3,272
53,264
2,611
772277,,556688
22,,223399
772299,,880077
TToottaall eexxppoossuurree
SSttaaggee 11
TToottaall
19,805
22,167
2,883
3,663
1,337
1,124
11,833 10,513
2,376
2,376
2,121
2,121
39,996
37,531
23,611 21,488
3,801
39,521
8,528
4,304
4,442
7,854
8,900
327
4,600
110055,,225588
3,801
41,390
8,711
4,578
4,723
7,855
9,390
327
4,696
111122,,005500
SSttaaggee 22
2,254
721
164
1,320
0
0
2,341
2,024
0
1,833
183
268
256
0
487
0
94
66,,552222
SSttaaggee 33
0
0
0
0
1,538
699
9
303
351
91
31
11
147
126
11,,668855
00
11,,668855
SSttaaggee 33
108
58
49
0
1
0
124
99
0
36
0
5
26
1
3
0
2
227700
TToottaall
(12)
(6)
(2)
0
(783)
(161)
(41)
(130)
(251)
(26)
(36)
(96)
(86)
(59)
((888899))
00
((888899))
TToottaall
(48)
(26)
(5)
(12)
(1)
(1)
(111)
(93)
0
(40)
(6)
(4)
(19)
0
(7)
0
(2)
((220011))
((11,,009911))
EECCLL aalllloowwaanncceess
SSttaaggee 11
0
(5)
(2)
0
(129)
(27)
(17)
(24)
(26)
(9)
(7)
(6)
(17)
(7)
((115544))
00
((115544))
SSttaaggee 22
(12)
(1)
0
0
(180)
(107)
(23)
(14)
(22)
0
(10)
0
(6)
(2)
((119999))
00
((119999))
EECCLL pprroovviissiioonnss
SSttaaggee 11
(13)
(2)
(1)
(8)
0
(1)
(59)
(49)
0
(32)
(6)
(1)
(16)
0
(5)
0
(2)
((110066))
((225599))
SSttaaggee 22
(9)
(3)
(1)
(4)
0
0
(52)
(45)
0
(8)
0
(2)
(3)
0
(2)
0
0
((6699))
((226677))
SSttaaggee 33
0
0
0
0
(474)
(28)
0
(92)
(203)
(17)
(19)
(90)
(63)
(51)
((553377))
00
((553377))
SSttaaggee 33
(26)
(21)
(3)
0
(1)
0
0
0
0
0
0
0
0
0
0
0
0
((2266))
((556644))
Irrevocable committed prolongation of existing loans
TToottaall ooffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss aanndd ccrreeddiitt lliinneess
TToottaall aalllloowwaanncceess aanndd pprroovviissiioonnss
11 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
288
292
Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement
(continued)
USD m
31.12.21
FFiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Other financial assets measured at amortized cost
of which: Loans to financial advisors
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall oonn--bbaallaannccee sshheeeett ffiinnaanncciiaall aasssseettss wwiitthhiinn tthhee ssccooppee ooff EECCLL rreeqquuiirreemmeennttss
OOffff--bbaallaannccee sshheeeett ((wwiitthhiinn tthhee ssccooppee ooff EECCLL))
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing agreements
Committed unconditionally revocable credit lines
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Carrying amount1
Stage 1
Total
192,817
192,817
15,453
15,480
75,012
75,012
30,514
30,514
397,761
380,564
152,479 143,505
43,945 40,463
13,990 12,643
14,004 12,076
149,283 149,255
1,345
3,799
25,718
2,184
772200,,007799
88,,884444
772288,,992233
Stage 2
0
26
0
0
15,620
8,262
3,472
1,037
1,492
0
342
7
302
106
1155,,994488
00
1155,,994488
1,716
3,813
26,209
2,453
773377,,779944
88,,884444
774466,,663388
Total exposure
Stage 1
Total
19,695
20,972
2,567
3,464
1,143
1,353
9,491
9,575
2,454
2,454
3,137
3,137
37,097
39,478
23,922 21,811
1,444
38,207
7,046
4,599
4,736
8,670
9,000
117
5,527
110011,,997711
1,444
40,778
7,328
5,358
5,160
8,670
9,466
117
5,611
110088,,228844
Stage 2
1,127
793
164
84
0
0
2,335
2,102
0
2,508
281
736
389
0
462
0
36
66,,000066
Stage 3
0
1
0
0
1,577
711
9
310
436
27
29
7
189
163
11,,776677
00
11,,776677
Stage 3
150
104
46
0
0
0
46
9
0
63
0
23
35
0
4
0
48
330077
Total
0
(8)
(2)
0
(850)
(132)
(60)
(170)
(259)
(33)
(36)
(114)
(109)
(86)
((996699))
00
((996699))
Total
(41)
(6)
(8)
(17)
(1)
(1)
(114)
(100)
0
(38)
(5)
(7)
(15)
0
(6)
0
(3)
((119966))
((11,,116655))
ECL allowances
Stage 1
0
(7)
(2)
0
(126)
(28)
(19)
(22)
(19)
(6)
(10)
(6)
(27)
(19)
((116611))
00
((116611))
Stage 2
0
(1)
0
0
(152)
(71)
(40)
(16)
(15)
0
(9)
0
(7)
(3)
((116600))
00
((116600))
ECL provisions
Stage 1
(18)
(3)
(1)
(13)
0
(1)
(72)
(66)
0
(28)
(4)
(4)
(11)
0
(5)
0
(3)
((112211))
((228822))
Stage 2
(8)
(3)
(1)
(4)
0
0
(42)
(34)
0
(10)
(1)
(3)
(3)
0
(2)
0
0
((6600))
((222200))
Stage 3
0
0
0
0
(572)
(33)
0
(133)
(225)
(28)
(17)
(108)
(76)
(63)
((664477))
00
((664477))
Stage 3
(15)
0
(7)
0
(1)
0
0
0
0
0
0
0
0
0
0
0
0
((1155))
((666622))
Irrevocable committed prolongation of existing loans
TToottaall ooffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss aanndd ccrreeddiitt lliinneess
TToottaall aalllloowwaanncceess aanndd pprroovviissiioonnss
11 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
289
293
Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement
(continued)
Coverage ratios are calculated for the core loan portfolio by taking ECL allowances and provisions divided by the gross
carrying amount of the exposures. Core loan exposure is defined as the sum of Loans and advances to customers and
Loans to financial advisors.
These ratios are influenced by the following key factors:
– Lombard loans are generally secured with marketable securities in portfolios that are, as a rule, highly diversified, with
strict lending policies that are intended to ensure that credit risk is minimal under most circumstances;
– mortgage loans to private clients and real estate financing are controlled by conservative eligibility criteria, including
low loan-to-value ratios and strong debt service capabilities;
– the amount of unsecured retail lending (including credit cards) is insignificant;
– lending in Switzerland includes government-backed COVID-19 loans;
– 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, reduces the coverage ratios.
The total combined on- and off-balance sheet coverage ratio was at 21 basis points as of 31 December 2022, 1 basis
point lower than on 31 December 2021. The combined stage 1 and 2 ratio of 10 basis points was unchanged compared
with 31 December 2021; the stage 3 ratio was 22%, 2 percentage points lower than as of 31 December 2021.
OOnn--bbaallaannccee sshheeeett
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
TToottaall11
GGrroossss ccaarrrryyiinngg aammoouunntt ((UUSSDD mm))
3311..1122..2222
TToottaall
157,091
46,511
203,602
12,356
14,154
26,510
132,313
1,869
3,367
20,342
2,670
160,561
339900,,667722
SSttaaggee 11
147,678
43,129
190,807
10,757
12,237
22,994
132,205
1,427
3,266
19,525
2,364
158,787
337722,,558888
SSttaaggee 22
8,686
3,372
12,059
1,204
1,364
2,567
0
393
0
748
130
1,270
1155,,889966
SSttaaggee 33
727
9
736
395
553
949
108
50
101
68
176
503
22,,118888
GGrroossss eexxppoossuurree ((UUSSDD mm))
TToottaall
10
9
10
105
177
144
2
190
285
21
221
16
2222
EECCLL ccoovveerraaggee ((bbppss))
SSttaaggee 22
123
70
108
120
161
142
0
256
0
38
124
114
111144
SSttaaggee 11
2
4
2
22
22
22
1
46
18
7
28
3
44
SSttaaggee 11&&22
9
9
9
32
36
34
1
91
18
8
33
4
88
SSttaaggee 33
381
232
379
2,325
3,664
3,106
1,580
3,779
8,901
3,769
2,870
4,016
22,,339988
OOffff--bbaallaannccee sshheeeett
Total corporate lending
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
SSttaaggee 33
1,183
0
1,288
1,263
304
903
0
0
0
0
0
0
TToottaall22
998800
TToottaall oonn-- aanndd ooffff--bbaallaannccee sshheeeett33
22,,224422
11 Includes Loans and advances to customers and Loans to financial advisors which are presented on the balance sheet line Other assets measured at amortized cost. 22 Excludes Forward starting reverse repurchase
and securities borrowing agreements. 33 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related ECL coverage ratio.
Lombard
Credit cards
Commodity trade finance
Financial intermediaries and hedge funds
Other off-balance sheet commitments
SSttaaggee 11&&22
4
6
6
32
43
34
1
7
3
9
9
6
1166
1100
SSttaaggee 11
6,296
9,779
16,075
28,950
6,525
35,475
12,918
8,900
2,459
14,177
11,454
49,907
110011,,445577
447744,,004455
TToottaall
6,535
10,054
16,589
32,126
7,122
39,247
12,919
9,390
2,459
15,841
11,803
52,412
110088,,224499
449988,,992211
SSttaaggee 22
236
275
511
3,013
499
3,513
0
487
0
1,664
346
2,498
66,,552222
2222,,441188
SSttaaggee 11
4
7
6
18
30
20
1
5
3
7
8
5
1100
55
SSttaaggee 33
3
0
3
163
98
260
1
3
0
0
3
7
227700
22,,445588
EECCLL ccoovveerraaggee ((bbppss))
SSttaaggee 22
18
0
2
165
214
172
0
36
0
25
68
33
110066
111122
TToottaall
5
6
6
38
47
40
2
7
3
9
11
7
1199
2211
Total other lending
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
290
294
Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement
(continued)
OOnn--bbaallaannccee sshheeeett
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
TToottaall11
GGrroossss ccaarrrryyiinngg aammoouunntt ((UUSSDD mm))
3311..1122..2211
TToottaall
152,610
44,004
196,615
14,161
14,263
28,424
149,316
1,752
3,927
18,578
2,539
176,111
440011,,115500
SSttaaggee 11
143,533
40,483
184,016
12,665
12,095
24,760
149,261
1,355
3,805
17,493
2,203
174,117
338822,,889933
SSttaaggee 22
8,333
3,512
11,845
1,053
1,507
2,560
0
351
7
1,010
109
1,477
1155,,888822
GGrroossss eexxppoossuurree ((UUSSDD mm))
SSttaaggee 33
744
10
754
443
661
1,104
55
46
115
75
226
517
22,,337744
TToottaall
9
14
10
120
182
151
2
204
290
25
338
18
2233
EECCLL ccoovveerraaggee ((bbppss))
SSttaaggee 22
85
114
94
148
103
121
0
255
3
15
303
93
9988
SSttaaggee 11
2
5
3
18
16
17
0
72
15
9
88
3
44
SSttaaggee 11&&22
6
14
8
28
25
26
0
109
15
10
99
4
88
SSttaaggee 33
446
231
443
2,997
3,402
3,240
5,026
3,735
9,388
3,730
2,791
4,718
22,,667733
OOffff--bbaallaannccee sshheeeett
Total corporate lending
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
SSttaaggee 33
15
0
15
1
585
266
0
0
0
0
0
0
TToottaall22
448866
TToottaall oonn-- aanndd ooffff--bbaallaannccee sshheeeett33
22,,442233
11 Includes Loans and advances to customers and Loans to financial advisors which are presented on the balance sheet line Other assets measured at amortized cost. 22 Excludes Forward starting reverse repurchase and
securities borrowing agreements. 33 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related ECL coverage ratio.
Lombard
Credit cards
Commodity trade finance
Financial intermediaries and hedge funds
Other off-balance sheet commitments
SSttaaggee 11&&22
3
9
6
35
30
34
0
7
4
15
7
7
1177
1100
TToottaall
9,123
8,766
17,889
32,748
8,077
40,826
14,438
9,466
3,262
12,153
8,806
48,126
110066,,884400
550077,,999900
SSttaaggee 11
8,798
8,481
17,278
28,981
7,276
36,258
14,438
9,000
3,262
11,784
8,507
46,991
110000,,552277
448833,,442200
SSttaaggee 22
276
285
562
3,630
688
4,318
0
462
0
369
296
1,127
66,,000066
2211,,888888
SSttaaggee 11
3
7
5
25
19
24
0
5
4
12
6
5
1122
66
SSttaaggee 33
49
0
49
136
114
250
0
4
0
0
4
8
330077
22,,668811
EECCLL ccoovveerraaggee ((bbppss))
SSttaaggee 22
9
88
49
110
151
117
0
34
0
120
30
61
110000
9999
TToottaall
3
9
6
34
38
35
1
7
4
15
15
9
1188
2222
Total other lending
Note 10 Derivative instruments
Overview
Over-the-counter (OTC) derivative contracts are usually traded under a standardized International Swaps and Derivatives
Association (ISDA) master agreement or other recognized local industry-standard master agreements between UBS and
its counterparties. Terms are negotiated directly with counterparties and the contracts have industry-standard settlement
mechanisms prescribed by ISDA or similar industry-standard solutions. Other OTC derivatives are cleared through clearing
houses, in particular interest rate swaps with LCH, where a settled-to-market method has been generally adopted, under
which cash collateral exchanged on a daily basis is considered to legally settle the market value of the derivatives.
Regulators in various jurisdictions have introduced rules requiring the payment and collection of initial and variation
margins on certain OTC derivative contracts, which may have a bearing on price and other relevant terms.
Exchange-traded derivatives (ETD) are standardized in terms of their amounts and settlement dates, and are bought and
sold on regulated exchanges. Exchanges offer the benefits of pricing transparency, standardized daily settlement of
changes in value and, consequently, reduced credit risk.
Most of the Group’s derivative transactions relate to sales and market-making activity. Sales activities include the
structuring and marketing of derivative products to customers to enable them to take, transfer, modify or reduce current
or expected risks. Market-making aims to directly support the facilitation and execution of client activity, and involves
quoting bid and offer prices to other market participants with the aim of generating revenues based on spread and
volume. The Group also uses various derivative instruments for hedging purposes.
› Refer to Notes 15 and 20 for more information about derivative instruments
› Refer to Note 25 for more information about derivatives designated in hedge accounting relationships
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
291
295
Note 10 Derivative instruments (continued)
Risks of derivative instruments
The derivative financial assets shown on the balance sheet can be an important component of the Group’s credit
exposure; however, the positive replacement values related to a respective counterparty are rarely an adequate reflection
of the Group’s credit exposure in its derivatives business with that counterparty. This is generally the case because, on
the one hand, replacement values can increase over time (potential future exposure), while, on the other hand, exposure
may be mitigated by entering into master netting agreements and bilateral collateral arrangements. Both the exposure
measures used internally by the Group to control credit risk and the capital requirements imposed by regulators reflect
these additional factors.
› Refer to Note 21 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
USD bn
IInntteerreesstt rraattee ccoonnttrraaccttss
of which: forwards (OTC)1
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: options (ETD)
CCrreeddiitt ddeerriivvaattiivvee ccoonnttrraaccttss
of which: credit default swaps (OTC)
of which: total return swaps (OTC)
FFoorreeiiggnn eexxcchhaannggee ccoonnttrraaccttss
of which: forwards (OTC)
of which: swaps (OTC)
of which: options (OTC)
EEqquuiittyy ccoonnttrraaccttss
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: options (ETD)
of which: client-cleared transactions (ETD)
CCoommmmooddiittyy ccoonnttrraaccttss
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: forwards (ETD)
of which: client-cleared transactions (ETD)
NNoottiioonnaall
aammoouunnttss
rreellaatteedd ttoo
ddeerriivvaattiivvee
ffiinnaanncciiaall
aasssseettss22,,33
11,,005577..44
3377..77
332266..11
668877..55
66..11
3366..88
3344..22
00..99
33,,008877..11
DDeerriivvaattiivvee
ffiinnaanncciiaall
aasssseettss
3399..88
00..22
2255..22
1144..22
00..00
11..00
00..99
00..11
8855..55
3311..1122..2222
DDeerriivvaattiivvee
ffiinnaanncciiaall
lliiaabbiilliittiieess
3377..55
NNoottiioonnaall
aammoouunnttss
rreellaatteedd ttoo
ddeerriivvaattiivvee
ffiinnaanncciiaall
lliiaabbiilliittiieess22,,33
11,,002222..99
OOtthheerr
nnoottiioonnaall
aammoouunnttss22,,44
1111,,225555..44
Derivative
financial
assets
33.2
3344..66
779922..77
228811..00 99,,772288..66
770055..00
00..00
1199..88
1177..55
00..00
11..22
11..00
00..22
8888..55
22..22
3377..11
3366..88
00..33
22,,999922..77
0.1
26.4
6.6
0.0
1.4
1.3
0.1
53.3
Notional
amounts
related to
derivative
financial
assets2,3
991.2
29.4
394.3
545.2
22.4
44.7
39.4
1.3
3,030.8
660066..33
112277..77
4400..11
3388..44
6633..44
5522..22
1111..22
1177..66
1166..44
23.8 1,008.9
24.3 1,606.3
412.6
5.2
456.9
28.2
4.7
4.6
10.2
8.6
1.6
0.5
0.4
0.0
0.6
105.7
61.4
289.6
57.8
19.9
14.0
18.1
2266..55
885533..44
4499..66 11,,667799..33
555511..66
99..33
338844..55
2222..22
2288..66
991100..22
5500..44 11,,555533..77
552211..66
99..22
550011..33
2266..11
9955..55
5511..66
223377..00
6688..11
1199..33
1155..88
2244..55
55..33
22..88
99..00
55..11
11..44
00..55
00..44
00..00
00..22
112222..00
8899..00
228899..77
6644..22
1199..33
1133..33
2233..22
66..66
44..44
88..11
77..00
11..44
00..77
00..33
00..00
00..33
31.12.21
Derivative
financial
liabilities
28.7
0.2
19.2
9.2
0.0
1.8
1.6
0.2
54.1
23.8
24.9
5.3
34.9
9.3
6.5
9.8
9.4
1.6
0.8
0.2
0.0
0.4
Notional
amounts
related to
derivative
financial
liabilities2,3
943.1
28.6
344.1
553.6
16.8
46.3
44.1
1.7
2,938.8
1,043.2
1,480.3
408.6
603.9
154.8
102.3
346.3
56.4
25.4
10.4
15.2
Other
notional
amounts2,4
8,675.1
443.6
7,549.4
525.0
157.1
1.2
80.1
71.2
8.8
14.7
13.9
33..77
00..00
00..11
00..99
00..00
1122..11
LLooaann ccoommmmiittmmeennttss
mmeeaassuurreedd aatt FFVVTTPPLL ((OOTTCC))
UUnnsseettttlleedd ppuurrcchhaasseess ooff nnoonn--ddeerriivvaattiivvee
ffiinnaanncciiaall iinnssttrruummeennttss55
UUnnsseettttlleedd ssaalleess ooff nnoonn--ddeerriivvaattiivvee ffiinnaanncciiaall
iinnssttrruummeennttss55
TToottaall ddeerriivvaattiivvee iinnssttrruummeennttss,,
bbaasseedd oonn IIFFRRSS nneettttiinngg66
8,771.1
11 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. 22 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. 33 Notional
amounts of client-cleared ETD and OTC transactions through central clearing counterparties are not disclosed, as they have significantly different risk profile. 44 Other notional amounts relate to derivatives that are
cleared through either a central counterparty or an exchange. 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. 55 Changes in the fair value of purchased and sold non-derivative financial instruments
between trade date and settlement date are recognized as derivative financial instruments. 66 Derivative financial assets and liabilities are presented net on the balance sheet if UBS has the unconditional and legally
enforceable right to offset the recognized amounts, both in the normal course of business and in the event of default, bankruptcy or insolvency of the entity and all of the counterparties, and intends either to settle on
a net basis or to realize the asset and settle the liability simultaneously. Refer to Note 21 for more information on netting arrangements.
1111,,337766..55
4,613.8
4,616.6
44,,664411..99
44,,665599..99
118.1
121.3
115500..11
115544..99
13.3
18.2
10.6
1133..00
1100..77
00..11
00..00
00..11
99..44
0.8
0.0
8.2
0.0
0.2
0.2
9.4
0.1
0.1
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
292
296
Note 10 Derivative instruments (continued)
On a notional amount basis, approximately 46% of OTC interest rate contracts held as of 31 December 2022
(31 December 2021: 40%) mature within one year, 32% (31 December 2021: 36%) within one to five years and 22%
31 December 2021: 25%) after five years.
Notional amounts of interest rate contracts cleared through either a central counterparty or an exchange that are legally
settled or economically net settled on a daily basis are presented under Other notional amounts in the table above and
are categorized into maturity buckets on the basis of contractual maturities of the cleared underlying derivative contracts.
Other notional amounts related to interest rate contracts increased by USD 2.6trn compared with 31 December 2021,
mainly reflecting higher business volumes driven by elevated interest rate volatility and inflation, partly offset by
compression activity.
Note 11 Property, equipment and software
At historical cost less accumulated depreciation
USD m
HHiissttoorriiccaall ccoosstt
Balance at the beginning of the year
Additions
Disposals / write-offs4
Reclassifications
Foreign currency translation
Balance at the end of the year
AAccccuummuullaatteedd ddeepprreecciiaattiioonn
Balance at the beginning of the year
Depreciation
Impairment5
Disposals / write-offs4
Reclassifications
Foreign currency translation
Balance at the end of the year
Owned
properties and
equipment1
Leased
properties and
equipment2
Software
Projects in
progress
2200222233
20213
13,048
162
(333)
(1,073)
(217)
11,587
8,072
577
3
(332)
(761)
(135)
7,425
4,174
412
(62)
0
(65)
4,459
1,346
451
0
(59)
(1)
(24)
1,714
8,642
300
(106)
1,151
(42)
9,944
4,807
1,005
0
(106)
0
(6)
5,699
1,250
1,182
0
(1,301)
5
1,136
2277,,111133
22,,005577
((550011))
((11,,222233))
((331199))
2277,,112277
1144,,222255
22,,003333
33
((449977))
((776611))
((116644))
1144,,883399
26,238
2,090
(751)
(18)
(445)
27,113
13,129
2,078
10
(737)
(12)
(243)
14,225
NNeett bbooookk vvaalluuee
Net book value at the beginning of the year
NNeett bbooookk vvaalluuee aatt tthhee eenndd ooff tthhee yyeeaarr
11 Includes leasehold improvements and IT hardware. 22 Represents right-of-use assets recognized by UBS as lessee. UBS predominantly enters into lease contracts, or contracts that include lease components, in
relation to real estate, including offices, retail branches and sales offices. The total cash outflow for leases during 2022 was USD 614m (2021: USD 657m). Interest expense on lease liabilities is included within Interest
expense from financial instruments measured at amortized cost and Lease liabilities are included within Other financial liabilities measured at amortized cost. Refer to Notes 3 and 18a, respectively. There were no
material gains or losses arising from sale-and-leaseback transactions in 2022 and in 2021. 33 The total reclassification amount for the respective periods represents net reclassifications to Properties and other non-
current assets held for sale. 44 Includes write-offs of fully depreciated assets. 55 Impairment charges recorded in 2022 generally relate to assets that are no longer used, for which the recoverable amount based on
a value in use approach was determined to be zero. 66 Consists of USD 939m related to software and USD 197m related to Owned properties and equipment.
1,250
11,,11336666
13,109
12,888
1122,,888888
1122,,228888
3,835
44,,224455
2,828
22,,774466
4,976
44,,116622
Note 12 Goodwill and intangible assets
Introduction
UBS performs an impairment test on its goodwill assets on an annual basis or when indicators of impairment exist.
UBS considers Asset Management, as it is reported in Note 2a, 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 PaineWebber acquisition in 2000,
which mainly affected the Americas portion of the business, this goodwill remains separately monitored by the Americas,
despite the formation of Global Wealth Management in 2018. Therefore, goodwill for Global Wealth Management is
separately considered for impairment at the level of two CGUs: Americas; and Switzerland and International (consisting
of EMEA, Asia Pacific and Global).
The impairment test is performed for each CGU to which goodwill is allocated by comparing the recoverable amount
with the carrying amount of the respective CGU. UBS determines the recoverable amount of the respective CGUs based
on their value in use. An impairment charge is recognized if the carrying amount exceeds the recoverable amount.
As of 31 December 2022, total goodwill recognized on the balance sheet was USD 6.0bn, of which USD 3.7bn was
carried by the Global Wealth Management Americas CGU, USD 1.2bn was carried by the Global Wealth Management
Switzerland and International CGU, and USD 1.2bn was carried by Asset Management. Based on the impairment testing
methodology described below, UBS concluded that the goodwill balances as of 31 December 2022 allocated to these
CGUs were not impaired.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
293
297
Note 12 Goodwill and intangible assets (continued)
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.
The carrying amount for each CGU is determined by reference to the Group’s equity attribution framework. Within this
framework, which is described in the “Capital, liquidity and funding, and balance sheet” section of this report, 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), their goodwill and their intangible assets,
as well as attributed equity related to certain common equity tier 1 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.
› Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information about the equity
attribution framework
Assumptions
Valuation parameters used within the Group’s impairment test model are linked to external market information, where
applicable. The model used to determine the recoverable amount is most sensitive to changes in the forecast earnings
available to shareholders in years one to three, to changes in the discount rates and to changes in the long-term growth
rate. The applied long-term growth rate is based on long-term economic growth rates for different regions worldwide.
Earnings available to shareholders are estimated on the basis of forecast results, which are part of the business plan
approved by the Board of Directors.
The discount rates are determined by applying a capital asset pricing model-based approach, as well as considering
quantitative and qualitative inputs from both internal and external analysts and the view of management. They also take
into account regional differences in risk-free rates at the level of the individual CGUs. In line with discount rates, long-
term growth rates are determined at the regional level based on nominal GDP growth rate forecasts.
Key assumptions used to determine the recoverable amounts of each CGU are tested for sensitivity by applying a
reasonably possible change to those assumptions. Forecast earnings available to shareholders were changed by 20%,
the discount rates were changed by 1.5 percentage points, and the long-term growth rates were changed by
0.75 percentage points. Under all scenarios, reasonably possible changes in key assumptions did not result in an
impairment of goodwill or intangible assets reported by Global Wealth Management Americas, Global Wealth
Management Switzerland and International, and Asset Management.
If the estimated earnings and other assumptions in future periods deviate from the current outlook, the value of goodwill
attributable to Global Wealth Management Americas, Global Wealth Management Switzerland and International, and
Asset Management may become impaired in the future, giving rise to losses in the income statement. Recognition of any
impairment of goodwill would reduce International Financial Reporting Standards equity and net profit. It would not
affect cash flows and, as goodwill is required to be deducted from capital under the Basel III capital framework, no effect
would be expected on the Group’s capital ratios.
Discount and growth rates
In %
Global Wealth Management Americas
Global Wealth Management Switzerland and International
Asset Management
Discount rates
Growth rates
3311..1122..2222
1100..55
99..44
99..55
31.12.21
9.5
8.5
8.5
3311..1122..2222
33..88
33..66
33..44
31.12.21
4.0
3.1
2.9
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
294
298
Note 12 Goodwill and intangible assets (continued)
USD m
HHiissttoorriiccaall ccoosstt
Balance at the beginning of the year
Additions
Disposals2
Write-offs
Foreign currency translation
Balance at the end of the year
AAccccuummuullaatteedd aammoorrttiizzaattiioonn aanndd iimmppaaiirrmmeenntt
Balance at the beginning of the year
Amortization
Impairment / (reversal of impairment)
Write-offs
Foreign currency translation
Balance at the end of the year
NNeett bbooookk vvaalluuee aatt tthhee eenndd ooff tthhee yyeeaarr
of which: Global Wealth Management Americas
of which: Global Wealth Management Switzerland and International
of which: Asset Management
of which: Investment Bank
Goodwill
6,126
0
(22)
0
(61)
6,043
6,043
3,709
1,166
1,167
0
Intangible
assets1
22002222
2021
1,612
0
0
0
(14)
1,598
1,360
26
(1)
0
(11)
1,374
224
31
59
0
135
77,,773399
00
((2222))
00
((7766))
77,,664411
11,,336600
2266
((11))
00
((1111))
11,,337744
66,,226677
33,,774400
11,,222255
11,,116677
113355
7,865
1
(3)
(41)
(83)
7,739
1,385
31
(1)
(41)
(13)
1,360
6,378
3,760
1,276
1,202
139
11 Intangible assets mainly include customer relationships, contractual rights and the fully amortized branch network intangible asset recognized in connection with the acquisition of PaineWebber Group, Inc.
22 Reflects the derecognition of goodwill allocated to businesses that have been disposed of, in accordance with IAS 36 requirements.
The table below presents estimated aggregated amortization expenses for intangible assets.
USD m
EEssttiimmaatteedd aaggggrreeggaatteedd aammoorrttiizzaattiioonn eexxppeennsseess ffoorr::
2023
2024
2025
2026
2027
Thereafter
Not amortized due to indefinite useful life
TToottaall
Note 13 Other assets
a) Other financial assets measured at amortized cost
USD m
Debt securities
Loans to financial advisors
Fee- and commission-related receivables
Finance lease receivables
Settlement and clearing accounts
Accrued interest income
Other
Intangible assets
26
24
23
23
22
104
2
224
3311..1122..2222
4444,,559944
31.12.21
18,858
22,,661111
11,,881122
11,,331155
11,,117755
11,,225599
449999
2,453
1,972
1,356
455
520
594
TToottaall ootthheerr ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
5533,,226644
26,209
Debt securities increased by USD 25.7bn compared with 31 December 2021, largely reflecting shifts from cash into
securities within UBS’s high-quality liquid asset portfolio as spreads widened. In addition, 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 in 2022.
› Refer to Note 1b for more information
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
295
299
Note 13 Other assets (continued)
b) Other non-financial assets
USD m
Precious metals and other physical commodities
Deposits and collateral provided in connection with litigation, regulatory and similar matters1
Prepaid expenses
VAT, withholding tax and other tax receivables
Properties and other non-current assets held for sale
Assets of disposal group held for sale2
Other
TToottaall ootthheerr nnoonn--ffiinnaanncciiaall aasssseettss
11 Refer to Note 17 for more information. 22 Refer to Note 29 for more information.
Note 14 Customer deposits
USD m
Demand deposits
Retail savings / deposits
Sweep deposits
Time deposits1
TToottaall ccuussttoommeerr ddeeppoossiittss
3311..1122..2222
31.12.21
44,,447711
22,,220055
11,,007766
11,,446688
336699
557788
1100,,116666
5,258
1,526
1,108
638
32
1,093
621
10,277
3311..1122..2222
118800,,882222
114499,,331100
6699,,222233
112255,,669966
552255,,005511
31.12.21
246,417
133,354
113,870
48,365
542,007
11 Includes customer deposits in UBS AG Jersey Branch placed by UBS Switzerland AG on behalf of its clients.
Increases in interest rates during the year resulted in significant shifts from demand deposits to time deposits.
Note 15 Debt issued designated at fair value
USD m
IIssssuueedd ddeebbtt iinnssttrruummeennttss
Equity-linked1
Rates-linked
Credit-linked
Fixed-rate
Commodity-linked
Other
of which: debt that contributes to total loss-absorbing capacity
TToottaall ddeebbtt iissssuueedd ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
3311..1122..2222
31.12.21
4411,,990011
1166,,227766
22,,117700
66,,553388
44,,229944
22,,445599
11,,995599
7733,,663388
47,059
16,369
1,723
2,868
2,911
2,868
2,136
73,799
of which: issued by UBS AG with original maturity greater than one year2
57,967
11 Includes investment fund unit-linked instruments issued. 22 Based on original contractual maturity without considering any early redemption features. As of 31 December 2022, 100% of the balance was unsecured
(31 December 2021: 100%).
5577,,775500
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Note 16 Debt issued measured at amortized cost
USD m
SShhoorrtt--tteerrmm ddeebbtt11
Senior unsecured debt that contributes to total loss-absorbing capacity (TLAC)
Senior unsecured debt other than TLAC
of which: issued by UBS AG with original maturity greater than one year
Covered bonds
Subordinated debt
of which: eligible as high-trigger loss-absorbing additional tier 1 capital instruments
of which: eligible as low-trigger loss-absorbing additional tier 1 capital instruments
of which: eligible as low-trigger loss-absorbing tier 2 capital instruments
of which: eligible as non-Basel III-compliant tier 2 capital instruments
Debt issued through the Swiss central mortgage institutions
LLoonngg--tteerrmm ddeebbtt22
3311..1122..2222
31.12.21
2299,,667766
4422,,007733
1177,,889922
1177,,889922
00
1166,,001177
99,,888822
11,,118899
22,,442222
553366
88,,996622
8844,,994455
43,098
38,984
27,590
23,307
1,389
18,640
11,052
2,425
2,596
547
9,454
96,057
TToottaall ddeebbtt iissssuueedd mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt33
11 Debt with an original contractual maturity of less than one year, includes mainly certificates of deposit and commercial paper. 22 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. 33 Net of bifurcated embedded derivatives, the fair value of which was not material for the periods
presented.
139,155
111144,,662211
The Group uses interest rate and foreign exchange derivatives to manage the risks inherent in certain debt instruments
held at amortized cost. In some cases, the Group applies hedge accounting for interest rate risk as discussed in item 2j
in Note 1a and Note 25. As a result of applying hedge accounting, the life-to-date adjustment to the carrying amount of
debt issued was a decrease of USD 6.1bn as of 31 December 2022 and an increase of USD 0.5bn as of 31 December
2021, 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 2022 pay a fixed rate of interest.
› Refer to Note 23 for maturity information
Note 17 Provisions and contingent liabilities
a) Provisions
The table below presents an overview of total provisions.
USD m
Provisions other than provisions for expected credit losses
Provisions for expected credit losses1
TToottaall pprroovviissiioonnss
11 Refer to Note 9 for more information about ECL provisions recognized for off-balance sheet financial instruments and credit lines.
3311..1122..2222
33,,004422
220011
33,,224433
31.12.21
3,322
196
3,518
The following table presents additional information for provisions other than provisions for expected credit losses.
USD m
BBaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
Provisions used in conformity with designated purpose
Capitalized reinstatement costs
Foreign currency translation / unwind of discount
BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr
11 Consists of provisions for losses resulting from legal, liability and compliance risks. 22 Consists of personnel-related restructuring provisions of USD 102m as of 31 December 2022 (31 December 2021: USD 125m)
and provisions for onerous contracts of USD 28m as of 31 December 2022 (31 December 2021: USD 47m). 33 Mainly includes provisions related to real estate, employee benefits and operational risks.
Restructuring
172
231
(25)
(243)
0
(5)
11330022
TToottaall 22002222
33,,332222
669900
((111188))
((774455))
11
((110088))
33,,004422
Other3
352
53
(36)
(32)
1
(12)
332266
Litigation,
regulatory and
similar matters1
2,798
406
(58)
(470)
0
(91)
22,,558866
Restructuring provisions relate to personnel-related provisions and onerous contracts. 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. Onerous contracts for property are recognized when UBS is committed to pay for non-lease components,
such as utilities, service charges, taxes and maintenance, when a property is vacated or not fully recovered from sub-
tenants.
Information about provisions and contingent liabilities in respect of litigation, regulatory and similar matters, as a class,
is included in Note 17b. There are no material contingent liabilities associated with the other classes of provisions.
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Note 17 Provisions and contingent liabilities (continued)
b) Litigation, regulatory and similar matters
The Group operates in a legal and regulatory environment that exposes it to significant litigation and similar risks arising
from disputes and regulatory proceedings. As a result, UBS (which for purposes of this Note may refer to UBS Group AG
and/or one or more of its subsidiaries, as applicable) is involved in various disputes and legal proceedings, including
litigation, arbitration, and regulatory and criminal investigations.
Such matters are subject to many uncertainties, and the outcome and the timing of resolution are often difficult to
predict, particularly in the earlier stages of a case. There are also situations where the Group may enter into a settlement
agreement. This may occur in order to avoid the expense, management distraction or reputational implications of
continuing to contest liability, even for those matters for which the Group believes it should be exonerated. The
uncertainties inherent in all such matters affect the amount and timing of any potential outflows for both matters with
respect to which provisions have been established and other contingent liabilities. The Group makes provisions for such
matters brought against it when, in the opinion of management after seeking legal advice, it is more likely than not that
the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required, and the amount can be reliably estimated. Where these factors are otherwise satisfied, a
provision may be established for claims that have not yet been asserted against the Group, but are nevertheless expected
to be, based on the Group’s experience with similar asserted claims. If any of those conditions is not met, such matters
result in contingent liabilities. If the amount of an obligation cannot be reliably estimated, a liability exists that is not
recognized even if an outflow of resources is probable. Accordingly, no provision is established even if the potential
outflow of resources with respect to such matters could be significant. Developments relating to a matter that occur after
the relevant reporting period, but prior to the issuance of financial statements, which affect management’s assessment
of the provision for such matter (because, for example, the developments provide evidence of conditions that existed at
the end of the reporting period), are adjusting events after the reporting period under IAS 10 and must be recognized in
the financial statements for the reporting period.
Specific litigation, regulatory and other matters are described below, including all such matters that management
considers to be material and others that management believes to be of significance 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, in which case the matter is treated as a contingent liability
under the applicable accounting standard; 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 17a above. It is not practicable to provide an aggregate estimate of liability for our litigation, regulatory
and similar matters as a class of contingent liabilities. Doing so would require UBS to provide 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. Although
UBS therefore cannot provide a numerical estimate of the future losses that could arise from litigation, regulatory and
similar matters, UBS believes that the aggregate amount of possible future losses from this class that are more than
remote substantially exceeds the level of current provisions.
Litigation, regulatory and similar matters may also result in non-monetary penalties and consequences. A guilty plea to,
or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may require
UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory authorities to
limit, suspend or terminate licenses and regulatory authorizations, and may permit financial market utilities to limit,
suspend or terminate UBS’s participation in such utilities. Failure to obtain such waivers, or any limitation, suspension or
termination of licenses, authorizations or participations, could have material consequences for UBS.
The risk of loss associated with litigation, regulatory and similar matters is a component of operational risk for purposes
of determining capital requirements. Information concerning our capital requirements and the calculation of operational
risk for this purpose is included in the “Capital, liquidity and funding, and balance sheet” section of this report.
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Note 17 Provisions and contingent liabilities (continued)
Provisions for litigation, regulatory and similar matters by business division and in Group Functions1
USD m
BBaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
Provisions used in conformity with designated purpose
Reclassifications
Foreign currency translation / unwind of discount
BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr
Global Wealth
Manage-
ment
1,338
Personal &
Corporate
Banking
181
Asset
Manage-
ment
8
Investment
Bank
310
Group
Functions
962
TToottaall 22002222
22,,779988
268
(23)
(331)
0
(70)
11,,118822
2
(15)
0
0
(9)
115599
1
0
0
0
0
88
129
(8)
(115)
4
(11)
330088
6
(12)
(23)
(4)
0
440066
((5588))
((447700))
00
((9911))
992288
22,,558866
11 Provisions, if any, for the matters described in items 3 and 4 of this Note are recorded in Global Wealth Management, and provisions, if any, for the matters described in item 2 are recorded in Group Functions.
Provisions, if any, for the matters described in items 1 and 6 of this Note are allocated between Global Wealth Management and Personal & Corporate Banking, provisions, if any, for the matters described in item 5
are allocated between the Investment Bank and Group Functions, and provisions, if any, for the matters described in item 7 are allocated between Global Wealth Management and the Investment Bank.
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.
Since 2013, UBS (France) S.A., UBS AG and certain former employees have been under investigation in France in relation
to UBS’s cross-border business with French clients. In connection with this investigation, the investigating judges ordered
UBS AG to provide bail (“caution”) of EUR 1.1bn.
On 20 February 2019, the court of first instance returned a verdict finding UBS AG guilty of unlawful solicitation of clients
on French territory and aggravated laundering of the proceeds of tax fraud, and UBS (France) S.A. guilty of aiding and
abetting unlawful solicitation and of laundering the proceeds of tax fraud. The court imposed fines aggregating
EUR 3.7bn on UBS AG and UBS (France) S.A. and awarded EUR 800m of civil damages to the French state. A trial in the
French Court of Appeal took place in March 2021. On 13 December 2021, the Court of Appeal found UBS AG guilty of
unlawful solicitation and aggravated laundering of the proceeds of tax fraud. The court ordered a fine of EUR 3.75m,
the confiscation of EUR 1bn, and awarded civil damages to the French state of EUR 800m. UBS AG has filed an appeal
with the French Supreme Court to preserve its rights. The notice of appeal enables UBS AG to thoroughly assess the
verdict of the Court of Appeal and to determine next steps in the best interest of its stakeholders. The fine and
confiscation imposed by the Court of Appeal are suspended during the appeal. The civil damages award has been paid
to the French state (EUR 99m of which was deducted from the bail), subject to the result of UBS’s appeal.
Our balance sheet at 31 December 2022 reflected provisions with respect to this matter in an amount of EUR 1.1bn
(USD 1.2bn). The wide range of possible outcomes in this case contributes to a high degree of estimation uncertainty
and the provision reflects our best estimate of possible financial implications, although actual penalties and civil damages
could exceed (or may be less than) the provision amount.
Our balance sheet at 31 December 2022 reflected provisions with respect to matters described in this item 1 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. Claims related to sales of residential mortgage-backed securities and mortgages
From 2002 through 2007, prior to the crisis in the US residential loan market, UBS was a substantial issuer and underwriter
of US residential mortgage-backed securities (RMBS) and was a purchaser and seller of US residential mortgages.
In November 2018, the DOJ filed a civil complaint in the District Court for the Eastern District of New York. The complaint
seeks unspecified civil monetary penalties under the Financial Institutions Reform, Recovery and Enforcement Act of 1989
related to UBS’s issuance, underwriting and sale of 40 RMBS transactions in 2006 and 2007. UBS moved to dismiss the
civil complaint in February 2019. In December 2019, the district court denied UBS’s motion to dismiss.
Our balance sheet at 31 December 2022 reflected a provision with respect to matters described in this item 2 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 this matter 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.
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Note 17 Provisions and contingent liabilities (continued)
3. Madoff
In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg) S.A.
(now UBS Europe SE, Luxembourg branch) and certain other UBS subsidiaries have been subject to inquiries by a number
of regulators, including the Swiss Financial Market Supervisory Authority (FINMA) and the Luxembourg Commission de
Surveillance du Secteur Financier. Those inquiries concerned two third-party funds established under Luxembourg law,
substantially all assets of which were with BMIS, as well as certain funds established in offshore jurisdictions with either
direct or indirect exposure to BMIS. These funds faced severe losses, and the Luxembourg funds are in liquidation. The
documentation establishing both funds identifies UBS entities in various roles, including custodian, administrator,
manager, distributor and promoter, and indicates that UBS employees serve as board members.
In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims against UBS entities, non-UBS entities and
certain individuals, including current and former UBS employees, seeking amounts totaling approximately EUR 2.1bn,
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 2bn.
In 2014, the US Supreme Court rejected the BMIS Trustee’s motion for leave to appeal decisions dismissing all claims
except those for the recovery of approximately USD 125m of payments alleged to be fraudulent conveyances and
preference payments. In 2016, the bankruptcy court dismissed these claims against the UBS entities. In February 2019,
the Court of Appeals reversed the dismissal of the BMIS Trustee’s remaining claims, and the US Supreme Court
subsequently denied a petition seeking review of the Court of Appeals’ decision. The case has been remanded to the
Bankruptcy Court for further proceedings.
4. Puerto Rico
Declines since 2013 in the market prices of Puerto Rico municipal bonds and of closed-end funds (funds) that are sole-
managed and co-managed by UBS Trust Company of Puerto Rico and distributed by UBS Financial Services Incorporated
of Puerto Rico (UBS PR) led to multiple regulatory inquiries, which in 2014 and 2015, led to settlements with the Office
of the Commissioner of Financial Institutions for the Commonwealth of Puerto Rico, the US Securities and Exchange
Commission (SEC) and the Financial Industry Regulatory Authority.
Since then, UBS clients in Puerto Rico who own the funds or Puerto Rico municipal bonds and/or who used their UBS
account assets as collateral for UBS non-purpose loans filed customer complaints and arbitration demands seeking
aggregate damages of USD 3.42bn, of which USD 3.37bn have been resolved through settlements, arbitration or
withdrawal of claims. Allegations include fraud, misrepresentation and unsuitability of the funds and of the loans.
A shareholder derivative action was filed in 2014 against various UBS entities and current and certain former directors of
the funds, alleging hundreds of millions of US dollars in losses in the funds. In 2021, the parties reached an agreement
to settle this matter for USD 15m, subject to court approval.
In 2011, a purported derivative action was filed on behalf of the Employee Retirement System of the Commonwealth of
Puerto Rico (System) against over 40 defendants, including UBS PR, which was named in connection with its underwriting
and consulting services. Plaintiffs alleged that defendants violated their purported fiduciary duties and contractual
obligations in connection with the issuance and underwriting of USD 3bn of bonds by the System in 2008 and sought
damages of over USD 800m. In 2016, the court granted the System’s request to join the action as a plaintiff. In 2022, a
federal district court enjoined the plaintiffs from proceeding with the action on the grounds it impermissibly conflicted
with Puerto Rico’s approved Plan of Adjustment.
Beginning in 2015, certain agencies and public corporations of the Commonwealth of Puerto Rico (Commonwealth)
defaulted on certain interest payments on Puerto Rico bonds. In 2016, US federal legislation created an oversight board
with power to oversee Puerto Rico’s finances and to restructure its debt. The oversight board has imposed a stay on the
exercise of certain creditors’ rights. In 2017, the oversight board placed certain of the bonds into a bankruptcy-like
proceeding under the supervision of a Federal District Judge.
In May 2019, the oversight board filed complaints in Puerto Rico federal district court bringing claims against financial,
legal and accounting firms that had participated in Puerto Rico municipal bond offerings, including UBS, seeking a return
of underwriting and swap fees paid in connection with those offerings. UBS estimates that it received approximately
USD 125m in fees in the relevant offerings.
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Note 17 Provisions and contingent liabilities (continued)
In August 2019, and February and November 2020, four US insurance companies that insured issues of Puerto Rico
municipal bonds sued UBS and several other underwriters of Puerto Rico municipal bonds in three separate cases. The
actions collectively seek recovery of an aggregate of USD 955m in damages from the defendants. The plaintiffs in these
cases claim that defendants failed to reasonably investigate financial statements in the offering materials for the insured
Puerto Rico bonds issued between 2002 and 2007, which plaintiffs argue they relied upon in agreeing to insure the
bonds notwithstanding that they had no contractual relationship with the underwriters. Defendants’ motions to dismiss
have been granted in all three cases; those decisions are being appealed by the plaintiffs.
Our balance sheet at 31 December 2022 reflected provisions with respect to matters described in this item 4 in amounts
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 provisions that we have recognized.
5. Foreign exchange, LIBOR and benchmark rates, and other trading practices
Foreign exchange-related regulatory matters: Beginning in 2013, numerous authorities commenced investigations
concerning possible manipulation of foreign exchange markets and precious metals prices. As a result of these
investigations, UBS entered into resolutions with Swiss, US and United Kingdom 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.
Foreign exchange-related civil litigation: Putative class actions have been filed since 2013 in US federal courts and in other
jurisdictions against UBS and other banks on behalf of putative classes of persons who engaged in foreign currency
transactions with any of the defendant banks. UBS has 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 under a settlement agreement that provides for UBS to pay an aggregate of USD 141m and provide
cooperation to the settlement classes. Certain class members have excluded themselves from that settlement and have
filed individual actions in US and English courts against UBS and other banks, alleging violations of US and European
competition laws and unjust enrichment. UBS and the other banks have reached an agreement in principle to resolve
those individual matters.
In 2015, 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 March 2017, the court granted UBS’s (and the other banks’) motions to dismiss the complaint. The
plaintiffs filed an amended complaint in August 2017. In March 2018, the court denied the defendants’ motions to
dismiss the amended complaint. In March 2022, the court denied plaintiffs’ motion for class certification.
LIBOR and other benchmark-related regulatory matters: Numerous government agencies conducted investigations
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at certain
times. UBS reached settlements or otherwise concluded investigations relating to benchmark interest rates with the
investigating authorities. UBS was granted conditional leniency or conditional immunity from authorities in certain
jurisdictions, including the Antitrust Division of the DOJ and the Swiss Competition Commission (WEKO), in connection
with potential antitrust or competition law violations related to certain rates. However, UBS has not reached a final
settlement with WEKO, as the Secretariat of WEKO has asserted that UBS does not qualify for full immunity.
LIBOR and other benchmark-related civil litigation: A number of putative class actions and other actions are pending in
the federal courts in New York against UBS and numerous other banks on behalf of parties who transacted in certain
interest rate benchmark-based derivatives. Also pending in the US and in other jurisdictions are a number of other actions
asserting losses related to various products whose interest rates were linked to LIBOR and other benchmarks, including
adjustable rate mortgages, preferred and debt securities, bonds pledged as collateral, loans, depository accounts,
investments and other interest-bearing instruments. The complaints allege manipulation, through various means, of
certain benchmark interest rates, including USD LIBOR, Euroyen TIBOR, Yen LIBOR, EURIBOR, CHF LIBOR, GBP LIBOR,
SGD SIBOR and SOR and Australian BBSW, and seek unspecified compensatory and other damages under varying legal
theories.
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Note 17 Provisions and contingent liabilities (continued)
USD LIBOR class and individual actions in the US: In 2013 and 2015, the district court in the USD LIBOR actions dismissed,
in whole or in part, certain plaintiffs’ antitrust claims, federal racketeering claims, CEA claims, and state common law
claims, and again dismissed the antitrust claims in 2016 following an appeal. In December 2021, the Second Circuit
affirmed the district court’s dismissal in part and reversed in part and remanded to the district court for further
proceedings. The Second Circuit, among other things, held that there was personal jurisdiction over UBS and other
foreign defendants based on allegations that at least one alleged co-conspirator undertook an overt act in the United
States. Separately, in 2018, the Second Circuit reversed in part the district court’s 2015 decision dismissing certain
individual plaintiffs’ claims and certain of these actions are now proceeding. In 2018, the district court denied plaintiffs’
motions for class certification in the USD class actions for claims pending against UBS, and plaintiffs sought permission
to appeal that ruling to the Second Circuit. In July 2018, the Second Circuit denied the petition to appeal of the class of
USD lenders and in November 2018 denied the petition of the USD exchange class. In January 2019, a putative class
action was filed in the District Court for the Southern District of New York against UBS and numerous other banks on
behalf of US residents who, since 1 February 2014, directly transacted with a defendant bank in USD LIBOR instruments.
The complaint asserts antitrust claims. The defendants moved to dismiss the complaint in August 2019. In March 2020
the court granted defendants’ motion to dismiss the complaint in its entirety. Plaintiffs have appealed the dismissal. In
March 2022, the Second Circuit dismissed the appeal because appellants, who had been substituted in to replace the
original plaintiffs who had withdrawn, lacked standing to pursue the appeal. In August 2020, an individual action was
filed in the Northern District of California against UBS 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 LIBOR rate and monopolized
the market for LIBOR-based consumer loans and credit cards. Defendants moved to dismiss the complaint in September
2021. In September 2022, the court granted defendants’ motion to dismiss the complaint in its entirety, while allowing
plaintiffs the opportunity to file an amended complaint. Plaintiffs filed an amended complaint in October 2022, and
defendants have moved to dismiss the amended complaint in November 2022.
Other benchmark class actions in the US:
Yen LIBOR / Euroyen TIBOR – In 2014, 2015 and 2017, the court in one of the Yen LIBOR / Euroyen TIBOR lawsuits
dismissed certain of the plaintiffs’ claims, including the plaintiffs’ federal antitrust and racketeering claims. In August
2020, the court granted defendants’ motion for judgment on the pleadings and dismissed the lone remaining claim in
the action as impermissibly extraterritorial. In October 2022, the appeals court affirmed the dismissal on multiple grounds.
In 2017, the court dismissed the other Yen LIBOR / Euroyen TIBOR action in its entirety on standing grounds. In April
2020, the appeals court reversed the dismissal and in August 2020 plaintiffs in that action filed an amended complaint
focused on Yen LIBOR. The court granted in part and denied in part defendants’ motion to dismiss the amended
complaint in September 2021. In August 2022, the court granted UBS’s motion for reconsideration and dismissed the
case against UBS.
CHF LIBOR – In 2017, the court dismissed the CHF LIBOR action on standing grounds and failure to state a claim. Plaintiffs
filed an amended complaint, and the court granted a renewed motion to dismiss in September 2019. Plaintiffs appealed.
In September 2021, the Second Circuit granted the parties’ joint motion to vacate the dismissal and remand the case for
further proceedings. Plaintiffs filed a third amended complaint in November 2022 and defendants have moved to dismiss
the amended complaint in January 2023.
EURIBOR – In 2017, the court in the EURIBOR lawsuit dismissed the case as to UBS and certain other foreign defendants
for lack of personal jurisdiction. Plaintiffs have appealed.
SIBOR / SOR – In October 2018, the court in the SIBOR / SOR action dismissed all but one of plaintiffs’ claims against UBS.
Plaintiffs filed an amended complaint, and the court granted a renewed motion to dismiss in July 2019. Plaintiffs
appealed. In March 2021, the Second Circuit reversed the dismissal. Plaintiffs filed an amended complaint in October
2021, which defendants moved to dismiss in November 2021. In March 2022, plaintiffs reached a settlement in principle
with the remaining defendants, including UBS. The court granted final approval of the settlement in November 2022.
BBSW – In November 2018, the court dismissed the BBSW lawsuit as to UBS and certain other foreign defendants for
lack of personal jurisdiction. Plaintiffs filed an amended complaint in April 2019, which UBS and other defendants moved
to dismiss in May 2019. In February 2020, the court granted in part and denied in part defendants’ motions to dismiss
the amended complaint. In August 2020, UBS and other BBSW defendants joined a motion for judgment on the
pleadings, which the court denied in May 2021. In February 2022, plaintiffs reached a settlement in principle with the
remaining defendants, including UBS. The court granted final approval of the settlement in November 2022.
GBP LIBOR – The court dismissed the GBP LIBOR action in August 2019. Plaintiffs have appealed.
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Note 17 Provisions and contingent liabilities (continued)
Government bonds: Putative class actions have been filed since 2015 in US federal courts against UBS and other banks
on behalf of persons who participated in markets for US Treasury securities since 2007. A consolidated complaint was
filed in 2017 in the US District Court for the Southern District of New York alleging that the banks colluded with respect
to, and manipulated prices of, US Treasury securities sold at auction and in the secondary market and asserting claims
under the antitrust laws and for unjust enrichment. Defendants’ motions to dismiss the consolidated complaint were
granted in March 2021. Plaintiffs filed an amended complaint, which defendants moved to dismiss in June 2021. In
March 2022, the court granted defendants’ motion to dismiss that complaint. Plaintiffs have appealed the dismissal.
Similar class actions have been filed concerning European government bonds and other government bonds.
In May 2021, the European Commission issued a decision finding that UBS and six other banks breached European Union
antitrust rules in 2007–2011 relating to European government bonds. The European Commission fined UBS EUR 172m.
UBS is appealing the amount of the fine.
With respect to additional matters and jurisdictions not encompassed by the settlements and orders referred to above,
our balance sheet at 31 December 2022 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.
6. 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 for UBS 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.
Our balance sheet at 31 December 2022 reflected a provision with respect to matters described in this item 6 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.
7. Communications recordkeeping
The SEC and CFTC conducted investigations of UBS and other financial institutions regarding compliance with records
preservation requirements relating to business communications sent over unapproved electronic messaging channels.
UBS cooperated with the investigations, and, in September 2022, UBS agreed to pay civil monetary penalties of
USD 125m to the SEC and USD 75m to the CFTC to resolve these matters.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
303
307
Note 18 Other liabilities
a) Other financial liabilities measured at amortized cost
USD m
Other accrued expenses
Accrued interest expenses
Settlement and clearing accounts
Lease liabilities
Other
TToottaall ootthheerr ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
b) Other financial liabilities designated at fair value
USD m
Financial liabilities related to unit-linked investment contracts
Securities financing transactions
Over-the-counter debt instruments and other
TToottaall ootthheerr ffiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
c) Other non-financial liabilities
USD m
Compensation related liabilities
of which: Deferred Contingent Capital Plan
of which: financial advisor compensation plans
of which: other compensation plans
of which: net defined benefit liability
of which: other compensation-related liabilities1
Current tax liabilities
Deferred tax liabilities
VAT, withholding tax and other tax payables
Deferred income
Liabilities of disposal group held for sale2
Other
TToottaall ootthheerr nnoonn--ffiinnaanncciiaall lliiaabbiilliittiieess
11 Includes liabilities for payroll taxes and untaken vacation. 22 Refer to Note 29 for more information.
3311..1122..2222
31.12.21
11,,776600
11,,994499
11,,007755
33,,333344
11,,445577
99,,557755
3311..1122..2222
1133,,222211
1155,,333333
11,,668844
3300,,223377
1,876
1,094
1,304
3,558
1,167
9,001
31.12.21
21,466
6,377
2,231
30,074
3311..1122..2222
31.12.21
66,,882222
11,,661144
11,,446633
22,,668800
446699
559966
11,,007711
223366
559922
223355
8844
99,,004400
7,257
1,628
1,512
2,846
633
638
1,398
300
590
240
1,298
68
11,151
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
304
308
Additional information
Note 19 Expected credit loss measurement
a) Expected credit losses in the period
Total net credit loss expenses were USD 29m in 2022, reflecting net credit loss expenses of USD 29m related to stage 1
and 2 positions and USD 0m net credit loss expenses related to credit-impaired (stage 3) positions.
Stage 1 and 2 expected credit loss (ECL) expenses of USD 29m include USD 123m expenses related to scenario and
parameter updates and USD 13m related to other book quality and size changes, partly offset by USD 77m post-model
adjustment (PMA) releases and USD 30m releases related to model changes. Lending to corporate clients not secured by
mortgages contributed USD 21m, mainly driven by scenario effects related to the downward revision of GDP and higher
interest rate assumptions in the newly introduced stagflationary geopolitical crisis scenario (SGC). Lending secured by
mortgages contributed USD 16m in expenses, mainly driven by scenario effects related to higher interest rate
assumptions, especially from the SGC, and adverse house price assumptions from both applied downside scenarios. This
was partly offset by releases from other lending of USD 9m.
› Refer to Note 19b for more information regarding changes to ECL models, scenarios, scenario weights and the post-model
adjustment and to Note 19c for more information regarding the development of ECL allowances and provisions
Stage 3 net expenses of USD 0m were recognized across a number of defaulted positions, with net expenses of USD 12m
in Personal and Corporate Banking and USD 5m in Global Wealth Management, offset by releases of USD 18m in the
Investment Bank, including a USD 28m release for a single airline-related counterparty, mainly due to improved cashflow
assumptions, and USD 10m net expenses across a number of defaulted positions.
Credit loss expense / (release)
USD m
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2222
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2211
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2200
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Group
Functions
((55))
55
00
(28)
(1)
((2299))
48
40
8888
2277
1122
3399
(62)
(24)
((8866))
129
128
225577
00
00
00
0
1
11
0
2
22
66
((1188))
((1122))
(34)
0
((3344))
88
217
330055
11
22
33
0
0
00
0
42
4422
Total
2299
00
2299
(123)
(25)
((114488))
266
429
669944
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
305
309
Note 19 Expected credit loss measurement (continued)
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 applied.
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 2022, 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 30m decrease in ECL allowances. This includes
a decrease of USD 19m in Global Wealth Management affecting loans to financial advisors and specialized US lending
portfolios and an USD 11m decrease in Personal & Corporate Banking related to lending to large corporate clients and
financial intermediaries & hedge funds.
Scenario and key input updates
During 2022, the scenarios and related macroeconomic factors were updated from those applied at the end of 2021 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 Russia–Ukraine war, with the subsequent effect on energy markets, the
inflation outlook and economic growth in Europe, and rising global interest rates due to central banks’ adoption of more
restrictive monetary policies.
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 data, such as that from Bloomberg Consensus, Oxford
Economics and the International Monetary Fund World Economic Outlook. The expectation for 2023 is that global growth
stalls under the weight of monetary policy tightening, and continued pressure on real purchasing power due to high inflation
– further fueled in Europe by the energy crisis and a lack of labor supply – even though unemployment rates are forecast to
be higher than in 2022 and an energy crisis in Europe seems likely to be averted. Interest rates are expected to remain high,
given the persistence of inflationary trends, leading to a less optimistic outlook for global house prices, which is cushioned
in Switzerland by continued strong demand.
Global crisis scenario: The first hypothetical downside scenario, the global crisis scenario, is aligned with the Group’s 2022
binding stress scenario and was updated in 2022 to reflect expected risks, resulting in minimal changes. It assumes that,
while the global economy has returned to pre-pandemic levels and the immediate risks from COVID-19 have decreased, the
associated disruptions and the consequences of the unprecedented monetary and fiscal stimulus measures will remain
critical. Concerns regarding the sustainability of public debt, following the marked deterioration of fiscal positions, lead to
a loss of confidence and market turbulence, while protectionism results in a decrease in global trade. Governments and
central banks have limited scope to support the economies, and interest rate levels remain moderate. As a consequence,
China suffers a hard landing which, combined with political, solvency and liquidity concerns, affects emerging markets
significantly. A spillover effect leads to a contraction of the Eurozone, Swiss and US economies, as global demand is
significantly affected. Given the severity of the macroeconomic impact, unemployment rates rise to historical highs and real
estate sectors contract sharply.
Stagflationary geopolitical crisis scenario: The second downside scenario was changed during 2022. In light of the
developments caused by Russia’s invasion of Ukraine, the mild global interest rate steepening scenario was replaced by a
severe global interest rate steepening scenario in the first quarter of 2022, as the beginning of the Russia–Ukraine war
increased fears of higher inflation and a corresponding reaction by monetary authorities. In the second quarter of the year,
the progression of the war and the enforcement of sanctions regimes led to a redesign of the scenario. The resulting severe
Russia–Ukraine conflict scenario has similar dynamics as the severe global interest rate steepening scenario, but addressed
specifically the prospect of rising energy costs, especially in Europe, with the consequences of lower growth and higher
inflation rates. In the fourth quarter of 2022, UBS developed a new stagflationary geopolitical crisis scenario (SGC) and
included this new scenario in the ECL calculation for year-end 2022 in lieu of the severe Russia–Ukraine conflict scenario.
While the SGC scenario addresses similar risks as the severe Russia–Ukraine conflict scenario, it also covers additional and
broader risks and therefore assumes more severe shocks. 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. The severe interest rate and adverse house price
assumptions in the SGC scenario had a substantive impact on model-based ECL allowances for loans secured by mortgages
in Switzerland and the US. These effects were partly offset by PMA releases related to loans secured by mortgages. Refer to
the section below on “Scenario weights and post-model adjustments” for more details.
Asset price inflation 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 energy and commodity
prices, effective monetary policies and easing supply chain disruptions helps reduce inflation. Improved consumer and
business sentiment lead to an economic rebound with central banks able to normalize interest rates; asset prices increase
significantly.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
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310
Note 19 Expected credit loss measurement (continued)
The table below details the key assumptions for the four scenarios applied as of 31 December 2022.
Scenario weights and post-model adjustments
Due to the less positive outlook compared with the assessment on 31 December 2021, the scenario weights changed
during 2022. The upside scenario was allocated a 0% probability, and the previous 5% weight was added to the baseline
scenario, now set at 60%. Following the introduction of the SGC, which was deemed to have a higher probability of
occurring than the global crisis scenario, the weights were rebalanced. The SGC has a weight of 25% (compared with
10% for the mild global interest rate steepening scenario used as of 31 December 2021) and the weight of the global
crisis scenario was reduced to 15% (from 30% as of 31 December 2021). The weights are also shown in the table below.
The scenarios and weight allocation were established in line with the general market sentiment that the short-term
outlook is subdued and a recession in major markets is a strong probability. The downside risks in relation to inflation
and monetary policy, as well as the availability and price of energy, mainly in Europe, are better reflected in our models
compared with the uncertain developments caused by COVID-19 in recent years.
However, unquantifiable risks continue to be relevant, as the pandemic has not been overcome and the world may face
new disruptions. Furthermore, the geopolitical situation worsened during 2022, and the impact on the world economy
from escalations with unforeseeable consequences could be severe. In the near term, this uncertainty relates primarily to
the development of the Russia–Ukraine war. 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 gauging these risks and applying model
parameters that lack supportable information and cannot be robustly validated, management continued to also apply
PMAs.
These PMA took into account that more of the downside risks were modeled in 2022, particularly for lending secured by
mortgages. The PMA amounted to USD 131m as of 31 December 2022 (31 December 2021: USD 224m). These
remaining PMA for uncertainties on potentially unmodeled risk almost entirely relate to corporate lending portfolios in
Personal & Corporate Banking and the Investment Bank.
Economic scenarios and weights applied
EECCLL sscceennaarriioo
Asset price inflation
Baseline
Mild global interest rate steepening
Stagflationary geopolitical crisis
Global crisis
Scenario assumptions
3311..1122..2222
RReeaall GGDDPP ggrroowwtthh ((%% cchhaannggee))
United States
Eurozone
Switzerland
CCoonnssuummeerr pprriiccee iinnddeexx ((%% cchhaannggee))
United States
Eurozone
Switzerland
UUnneemmppllooyymmeenntt rraattee ((eenndd--ooff--ppeerriioodd lleevveell,, %%))
United States
Eurozone
Switzerland
FFiixxeedd iinnccoommee:: 1100--yyeeaarr ggoovveerrnnmmeenntt bboonnddss ((cchhaannggee iinn yyiieellddss,, bbaassiiss ppooiinnttss))
USD
EUR
CHF
EEqquuiittyy iinnddiicceess ((%% cchhaannggee))
S&P 500
EuroStoxx 50
SPI
SSwwiissss rreeaall eessttaattee ((%% cchhaannggee))
Single-Family Homes
OOtthheerr rreeaall eessttaattee ((%% cchhaannggee))
United States (S&P / Case–Shiller)
Eurozone (House Price Index)
AAssssiiggnneedd wweeiigghhttss iinn %%
3311..1122..2222
0.0
60.0
0.0
25.0
15.0
OOnnee yyeeaarr
TThhrreeee yyeeaarrss ccuummuullaattiivvee
AAsssseett pprriiccee
iinnffllaattiioonn
BBaasseelliinnee
SSttaaggffllaattiioonnaarryy
ggeeooppoolliittiiccaall
ccrriissiiss
GGlloobbaall
ccrriissiiss
AAsssseett pprriiccee
iinnffllaattiioonn
BBaasseelliinnee
SSttaaggffllaattiioonnaarryy
ggeeooppoolliittiiccaall
ccrriissiiss
4.0
3.0
3.0
2.5
2.3
2.1
3.0
6.0
1.7
25.0
20.0
25.0
20.0
17.0
14.0
6.6
7.8
7.0
(0.3)
0.6
0.7
2.6
5.0
1.6
3.9
7.0
2.3
(5.6)
47.8
45.7
7.4
17.2
5.6
1.1
(4.5)
(2.7)
(4.8)
(5.6)
(4.8)
10.0
9.6
5.8
9.2
10.9
4.3
235.0
250.0
220.0
(51.5)
(51.6)
(51.6)
(6.4)
(8.5)
(6.7)
(0.5)
(0.7)
(1.8)
10.0
11.9
4.4
(326.0)
(270.6)
(209.7)
(50.0)
(50.0)
(46.0)
9.1
6.2
6.6
8.1
7.4
6.2
3.0
6.0
1.5
70.0
57.5
62.5
51.7
42.9
37.9
3.2
2.5
3.5
6.5
9.6
3.9
5.3
7.1
2.6
(13.2)
44.7
57.0
22.8
29.2
19.3
(4.4)
(5.7)
(4.9)
15.8
14.8
10.7
11.8
12.2
5.1
205.0
220.0
205.0
(45.6)
(47.2)
(47.2)
(16.7)
(19.9)
14.0
2.3
(32.9)
(23.9)
(12.8)
(8.4)
(19.3)
(8.9)
19.1
15.4
(0.6)
2.0
(35.8)
(14.7)
(32.7)
(17.5)
3311..1122..2211
5.0
55.0
10.0
0.0
30.0
GGlloobbaall
ccrriissiiss
(1.8)
(8.3)
(3.7)
1.2
(0.7)
(1.6)
9.4
13.0
4.9
(291.1)
(246.5)
(159.6)
(27.9)
(39.3)
(32.9)
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
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311
Note 19 Expected credit loss measurement (continued)
Scenario assumptions
OOnnee yyeeaarr
3311..1122..2211
RReeaall GGDDPP ggrroowwtthh ((%% cchhaannggee))
United States
Eurozone
Switzerland
CCoonnssuummeerr pprriiccee iinnddeexx ((%% cchhaannggee))
United States
Eurozone
Switzerland
UUnneemmppllooyymmeenntt rraattee ((eenndd--ooff--ppeerriioodd lleevveell,, %%))
United States
Eurozone
Switzerland
FFiixxeedd iinnccoommee:: 1100--yyeeaarr ggoovveerrnnmmeenntt bboonnddss ((cchhaannggee iinn yyiieellddss,, bbaassiiss ppooiinnttss))
USD
EUR
CHF
EEqquuiittyy iinnddiicceess ((%% cchhaannggee))
S&P 500
EuroStoxx 50
SPI
SSwwiissss rreeaall eessttaattee ((%% cchhaannggee))
Single-Family Homes
OOtthheerr rreeaall eessttaattee ((%% cchhaannggee))
United States (S&P / Case–Shiller)
Eurozone (House Price Index)
AAsssseett pprriiccee
iinnffllaattiioonn
BBaasseelliinnee
MMiilldd gglloobbaall
iinntteerreesstt rraattee
sstteeeeppeenniinngg GGlloobbaall ccrriissiiss
AAsssseett pprriiccee
iinnffllaattiioonn
9.1
9.4
5.5
3.1
2.3
1.8
3.0
6.2
2.3
50.0
40.0
50.0
12.0
16.0
14.0
5.1
10.0
8.4
4.4
3.9
2.4
2.2
1.4
0.3
3.9
7.4
2.5
16.5
11.1
12.1
14.1
12.3
12.1
4.4
3.5
5.1
(0.1)
(0.1)
(0.9)
5.7
4.2
3.5
6.1
8.7
3.4
259.2
283.8
245.5
(27.0)
(23.4)
(22.9)
(5.9)
(8.7)
(6.6)
(1.2)
(1.3)
(1.8)
10.9
12.9
5.2
(50.0)
(35.0)
(70.0)
(50.2)
(57.6)
(53.6)
17.8
17.3
13.1
9.5
8.0
6.1
3.0
6.0
1.6
170.0
140.0
150.0
35.5
41.6
37.9
(4.3)
(17.0)
15.5
(2.3)
(4.0)
(9.5)
(5.4)
21.7
17.8
TThhrreeee yyeeaarrss ccuummuullaattiivvee
MMiilldd gglloobbaall
iinntteerreesstt rraattee
sstteeeeppeenniinngg GGlloobbaall ccrriissiiss
BBaasseelliinnee
10.1
7.5
5.8
6.3
4.8
1.7
3.5
7.2
2.3
41.2
34.9
34.4
24.7
20.7
19.1
7.4
7.1
9.6
1.8
0.9
(0.1)
13.0
10.4
9.0
7.2
9.1
4.2
329.2
349.3
307.3
(21.8)
(19.9)
(19.6)
(3.8)
(10.3)
(5.7)
0.4
(1.7)
(1.6)
10.8
15.1
5.9
(15.0)
(25.0)
(35.0)
(40.1)
(50.4)
(44.2)
(8.8)
(30.0)
(8.7)
(7.6)
(26.3)
(10.8)
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.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
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312
Note 19 Expected credit loss measurement (continued)
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
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
RReemmeeaassuurreemmeennttss wwiitthh ssttaaggee ttrraannssffeerrss22
NNeett mmoovveemmeenntt ffrroomm nneeww aanndd ddeerreeccooggnniizzeedd ttrraannssaaccttiioonnss11
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
RReemmeeaassuurreemmeennttss wwiitthhoouutt ssttaaggee ttrraannssffeerrss33
SSttaaggee 33
((666622))
((22))
0
0
(2)
0
0
0
0
((4466))
0
0
(21)
(22)
(3)
0
0
4488
1
0
41
14
(8)
0
(6)
00
MMoovveemmeennttss wwiitthh pprrooffiitt oorr lloossss iimmppaacctt55
00
MMoovveemmeennttss wwiitthhoouutt pprrooffiitt oorr lloossss iimmppaacctt ((wwrriittee--ooffff,, FFXX aanndd ootthheerr))66
9999
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002222
((556644))
11 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. 22 Represents the remeasurement between 12-month and lifetime ECL due to stage transfers. 33 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.
44 Represents the change in the allowances and provisions related to changes in models and methodologies. 55 Includes ECL movements from new and derecognized transactions, remeasurement changes, model and
methodology changes. 66 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.
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Sovereigns
of which: Loans to financial advisors
TToottaall
((11,,116655))
((77))
(6)
(3)
8
(1)
(6)
0
0
((6655))
(10)
7
(33)
(23)
(6)
0
1
1133
(12)
13
32
(6)
(15)
(8)
(3)
3300
((2299))
110044
((11,,009911))
SSttaaggee 22
((222200))
1166
0
2
11
0
3
2
0
((3399))
(12)
8
(28)
(2)
(4)
0
(1)
((2277))
(18)
10
2
(9)
(12)
(8)
(1)
11
((4499))
11
((226677))
SSttaaggee 11
((228822))
((2211))
(6)
(5)
(1)
(1)
(8)
(2)
0
2200
3
(1)
16
2
1
0
2
((88))
5
3
(11)
(10)
5
0
3
2299
2200
33
((225599))
MMooddeell cchhaannggeess44
Movements with profit or loss impact: Stages 1 and 2 ECL allowances and provisions increased on a net basis by USD 29m:
– Net movement from new and derecognized transactions includes USD 21m stage 1 expenses and USD 16m stage 2
releases: Stage 1 expenses are primarily driven by new loans secured by real estate. The residual effect is spread across
lending segments. Stage 2 releases are largely driven by redemption of corporate loans in the Investment Bank.
– Remeasurements with stage transfers include USD 20m releases in stage 1 and USD 39m expenses in stage 2. This
mainly includes the transfer of a few large corporate lending transactions in the Investment Bank from stage 1 to 2
(i.e., releases in stage 1 and related but generally higher expenses in stage 2), driven by rating downgrades and scenario
effects.
– Remeasurements without stage transfers include stage 1 expenses of USD 8m and stage 2 expenses of USD 27m.
These expenses of USD 35m relate to large and SME corporate lending (USD 28m), substantially due to scenario
effects, and to a single sovereign counterparty (USD 8m).
– Model changes: refer to Note 19b for more information.
Movements without profit or loss impact: Stage 3 allowances decreased by USD 99m almost entirely due to write-offs of
USD 95m.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
309
313
Note 19 Expected credit loss measurement (continued)
Development of ECL allowances and provisions
USD m
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002200
RReemmeeaassuurreemmeennttss wwiitthh ssttaaggee ttrraannssffeerrss22
NNeett mmoovveemmeenntt ffrroomm nneeww aanndd ddeerreeccooggnniizzeedd ttrraannssaaccttiioonnss11
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
RReemmeeaassuurreemmeennttss wwiitthhoouutt ssttaaggee ttrraannssffeerrss33
Stage 3
((882299))
00
0
0
0
0
0
0
0
((4499))
0
0
(8)
(36)
(4)
0
0
7744
(1)
3
17
53
2
0
(3)
00
MMoovveemmeennttss wwiitthh pprrooffiitt oorr lloossss iimmppaacctt55
2255
MMoovveemmeennttss wwiitthhoouutt pprrooffiitt oorr lloossss iimmppaacctt ((wwrriittee--ooffff,, FFXX aanndd ootthheerr))66
114411
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
((666622))
11 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. 22 Represents the remeasurement between 12-month and lifetime ECL due to stage transfers. 33 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.
44 Represents the change in the allowances and provisions related to changes in models and methodologies. 55 Includes ECL movements from new and derecognized transactions, remeasurement changes, model and
methodology changes. 66 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.
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
Total
((11,,446688))
((5599))
(7)
(7)
(13)
(8)
(24)
(21)
0
((4400))
(9)
(3)
2
(27)
(3)
2
0
220033
33
30
44
53
44
27
6
4455
114488
115544
((11,,116655))
Stage 1
((330066))
((7722))
(10)
(11)
(21)
(8)
(23)
(18)
(1)
88
4
1
(2)
5
0
(1)
1
5555
8
13
5
(1)
29
15
8
2299
1199
55
((228822))
Stage 2
((333333))
1133
3
4
7
0
(2)
(4)
1
00
(13)
(4)
12
4
2
3
(1)
7744
26
13
21
1
14
12
1
1166
110044
99
((222200))
MMooddeell cchhaannggeess44
As explained in Note 1a, the assessment of a significant increase in credit risk (SICR) considers a number of qualitative
and quantitative factors to determine whether a stage transfer between stage 1 and stage 2 is required, although the
primary assessment considers changes in PD based on rating analyses and economic outlook. Additionally, UBS takes into
consideration counterparties that have moved to a credit watch list and those with payments that are at least 30 days
past due.
ECL stage 2 (“significant deterioration in credit risk”) allowances / provisions as of 31 December 2022 – classification by trigger
USD m
On- and off-balance sheet
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
of which: Credit cards
of which: Other
SSttaaggee 22
(267)
(107)
(23)
(65)
(37)
(17)
(2)
(12)
(5)
of which:
PD layer
(196)
(83)
(18)
(51)
(22)
(17)
0
0
(5)
of which:
watch list
(21)
0
0
(13)
(7)
0
0
0
0
of which:
≥30 days
past due
(50)
(25)
(5)
0
(7)
0
(2)
(12)
0
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
310
314
Note 19 Expected credit loss measurement (continued)
d) Maximum exposure to credit risk
The tables below provide the Group’s maximum exposure to credit risk for financial instruments subject to ECL
requirements and the respective collateral and other credit enhancements mitigating credit risk for these classes of
financial instruments.
The maximum exposure to credit risk includes the carrying amounts of financial instruments recognized on the balance
sheet subject to credit risk and the notional amounts for off-balance sheet arrangements. Where information is available,
collateral is presented at fair value. For other collateral, such as real estate, a reasonable alternative value is used. Credit
enhancements, such as credit derivative contracts and guarantees, are included at their notional amounts. Both are
capped at the maximum exposure to credit risk for which they serve as security. The “Risk management and control”
section of this report describes management’s view of credit risk and the related exposures, which can differ in certain
respects from the requirements of International Financial Reporting Standards (IFRS).
Maximum exposure to credit risk
USD bn
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt
aammoorrttiizzeedd ccoosstt oonn tthhee bbaallaannccee sshheeeett
Cash and balances at central banks
Loans and advances to banks4
Receivables from securities financing transactions
measured at amortized cost
Cash collateral receivables on derivative instruments5,6
Loans and advances to customers
Other financial assets measured at amortized cost
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee –– ddeebbtt
TToottaall mmaaxxiimmuumm eexxppoossuurree ttoo ccrreeddiitt rriisskk
rreefflleecctteedd oonn tthhee bbaallaannccee sshheeeett wwiitthhiinn tthhee ssccooppee ooff EECCLL
Guarantees7
Loan commitments7
Forward starting transactions, reverse repurchase
and securities borrowing agreements
Committed unconditionally revocable credit lines
TToottaall mmaaxxiimmuumm eexxppoossuurree ttoo ccrreeddiitt rriisskk nnoott
rreefflleecctteedd oonn tthhee bbaallaannccee sshheeeett wwiitthhiinn tthhee ssccooppee ooff EECCLL
CCoollllaatteerraall11,,22
CCrreeddiitt eennhhaanncceemmeennttss11
3311..1122..2222
MMaaxxiimmuumm
eexxppoossuurree ttoo
ccrreeddiitt rriisskk
CCaasshh
ccoollllaatteerraall
rreecceeiivveedd
CCoollllaatteerraalliizzeedd
bbyy eeqquuiittyy
aanndd ddeebbtt
iinnssttrruummeennttss
SSeeccuurreedd bbyy
rreeaall eessttaattee
OOtthheerr
ccoollllaatteerraall33
NNeettttiinngg
CCrreeddiitt
ddeerriivvaattiivvee
ccoonnttrraaccttss GGuuaarraanntteeeess
EExxppoossuurree ttoo
ccrreeddiitt rriisskk
aafftteerr ccoollllaatteerraall
aanndd ccrreeddiitt
eennhhaanncceemmeennttss
116699..44
1144..88
6677..88
3355..00
338877..22
5533..33
772277..66
22..22
772299..88
2222..11
3399..99
33..88
4411..44
110077..22
00..00
6644..55
111155..99
00..55
118811..00
118811..00
99..33
33..11
33..88
88..22
2244..44
119977..88
00..00
119977..99
119977..99
00..11
11..33
66..00
77..55
00..00
3333..66
00..11
3333..77
3333..77
11..22
00..22
00..22
11..66
2222..99
2222..99
00..00
2222..99
00..00
00..11
22..44
1199..66
11..33
2233..44
2233..44
22..00
66..55
66..22
1144..77
00..00
00..11
31.12.21
Collateral1,2
Credit enhancements1
00..11
33..00
33..00
33..00
11..88
11..00
00..55
33..33
116699..44
1144..77
00..99
1122..11
1177..33
5511..33
226655..88
22..22
226688..00
77..77
2277..88
00..00
2200..22
5555..77
Maximum
exposure to
credit risk
Cash
collateral
received
Collateralized
by equity
and debt
instruments
Secured by
real estate
Other
collateral3
Credit
derivative
contracts Guarantees
Exposure to
credit risk
after collateral
and credit
enhancements
6.9
0.0
0.1
0.1
68.0
75.0
Netting
192.8
15.3
192.8
15.5
37.5
0.2
3377..77
30.5
397.8
26.2
773377..88
USD bn
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt
aammoorrttiizzeedd ccoosstt oonn tthhee bbaallaannccee sshheeeett
Cash and balances at central banks
Loans and advances to banks4
Receivables from securities financing transactions
measured at amortized cost
Cash collateral receivables on derivative instruments5,6
Loans and advances to customers
Other financial assets measured at amortized cost
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee –– ddeebbtt
TToottaall mmaaxxiimmuumm eexxppoossuurree ttoo ccrreeddiitt rriisskk
rreefflleecctteedd oonn tthhee bbaallaannccee sshheeeett wwiitthhiinn tthhee ssccooppee ooff EECCLL
Guarantees7
Loan commitments7
Forward starting transactions, reverse repurchase
and securities borrowing agreements
Committed unconditionally revocable credit lines
TToottaall mmaaxxiimmuumm eexxppoossuurree ttoo ccrreeddiitt rriisskk nnoott
5522..11
rreefflleecctteedd oonn tthhee bbaallaannccee sshheeeett wwiitthhiinn tthhee ssccooppee ooff EECCLL
11 Of which: USD 1,372m for 31 December 2022 (31 December 2021: USD 1,443m) relates to total credit-impaired financial assets measured at amortized cost and USD 113m for 31 December 2022 (31 December 2021:
USD 130m) to total off-balance sheet financial instruments and credit lines for credit-impaired positions. 22 Collateral arrangements generally incorporate a range of collateral, including cash, equity and debt instruments,
real estate and other collateral. UBS applies a risk-based approach that generally prioritizes collateral according to its liquidity profile. 33 Includes but is not limited to life insurance contracts, inventory, mortgage loans,
gold and other commodities. 44 Loans and advances to 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. 55 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. 66 The amount shown in the “Netting” column represents the netting potential not recognized on the balance sheet. Refer to Note 21 for more information. 77 The amount shown in the
“Guarantees” column includes sub-participations.
12.1
16.2
24.6
226611..00
191.3
0.0
119911..33
128.7
0.1
119966..99
226699..88
8.1
23.1
119911..33
0.2
2.4
119966..99
6.5
4.0
774466..66
20.9
39.4
20.2
1.3
2288..44
2288..44
2.5
7.3
3377..77
1.3
0.5
44..00
2.3
1.7
1.4
40.7
0.0
20.9
1.4
9.0
110022..55
18.4
1188..44
1188..44
1133..77
2200..99
00..00
22..22
88..88
00..00
00..00
00..33
0.3
4.0
6.2
3.9
0.3
0.5
0.0
88..88
88..77
44..00
44..55
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
311
315
Note 19 Expected credit loss measurement (continued)
e) Financial assets subject to credit risk by rating category
The table below shows the credit quality and the maximum exposure to credit risk based on the Group’s internal credit
rating system and year-end stage classification. Under IFRS 9, the credit risk rating reflects the Group’s assessment of the
probability of default of individual counterparties, prior to substitutions. The amounts presented are gross of impairment
allowances.
› Refer to the “Risk management and control” section of this report for more details regarding the Group’s internal grading system
Financial assets subject to credit risk by rating category
USD m
3311..1122..2222
CCrreeddiitt--
iimmppaaiirreedd
((ddeeffaauulltteedd))
TToottaall ggrroossss
ccaarrrryyiinngg
aammoouunntt
EECCLL
aalllloowwaanncceess
Rating category1
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
CCaasshh aanndd bbaallaanncceess aatt cceennttrraall bbaannkkss
of which: stage 1
of which: stage 2
LLooaannss aanndd aaddvvaanncceess ttoo bbaannkkss
of which: stage 1
of which: stage 2
of which: stage 3
RReecceeiivvaabblleess ffrroomm sseeccuurriittiieess ffiinnaanncciinngg ttrraannssaaccttiioonnss mmeeaassuurreedd aatt
aammoorrttiizzeedd ccoosstt
of which: stage 1
CCaasshh ccoollllaatteerraall rreecceeiivvaabblleess oonn ddeerriivvaattiivvee iinnssttrruummeennttss
of which: stage 1
LLooaannss aanndd aaddvvaanncceess ttoo ccuussttoommeerrss
of which: stage 1
of which: stage 2
of which: stage 3
OOtthheerr ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
of which: stage 1
of which: stage 2
of which: stage 3
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
OOnn--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt FFVVOOCCII –– ddeebbtt iinnssttrruummeennttss
TToottaall oonn--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
00––11
22––33
44––55
66––88
99––1133
887777
116688,,552255
877
168,525
0
0
886622
1122,,225577
862 12,257
0
0
0
0
00
0
0
886600
860
0
0
00
0
0
444400
440
0
0
5566
0
56
337799
378
1
0
88,,887700
77,,113388
1155,,886600
1122,,997777
221144,,447733
2277,,115588
1155,,220077
27,158 15,860 8,870 15,207
1100,,661133
44,,115577
10,613 12,977 7,138 4,157
7744,,773322
772211
721
114477
147
2211,,993399
6688,,335566
66,,449911
6,491 212,980 66,114 68,034 16,605
0 1,493 2,242 6,698 5,334
0
0
0
0
0
445500
444477
2299,,001111
66,,660000
1166,,663322
336
427 6,317
29,011 16,630
114
283
20
2
0
0
0
0
2233,,669933
110011,,113366
8855,,667711
227733,,007766
0
0
224422,,666600
00
116699,,445577
0 169,402
56
0
00
1144,,779988
0 14,797
1
0
0
0
22,,001122
00
6677,,881166
0 67,816
00
3355,,003333
0 35,033
338888,,000033
0 370,224
0 15,767
2,012
5533,,335500
0 52,721
419
0
210
210
772288,,445577
22,,222222
2,012
221100
11,,330077
224433,,996666
884400
227733,,991166
00
8855,,667711
9922
110011,,222288
00
2233,,669933
00
22,,222222
22,,223399
773300,,669966
Off-balance sheet positions subject to expected credit loss by rating category
USD m
3311..1122..2222
NNeett ccaarrrryyiinngg
aammoouunntt
((mmaaxxiimmuumm
eexxppoossuurree ttoo
ccrreeddiitt rriisskk))
116699,,444455
169,402
44
1144,,779922
14,792
1
0
6677,,881144
67,814
3355,,003322
35,032
338877,,222200
370,095
15,587
1,538
5533,,226644
52,704
413
147
772277,,556688
22,,223399
772299,,880077
((1122))
0
(12)
((66))
(5)
(1)
0
((22))
(2)
00
0
((778833))
(129)
(180)
(474)
((8866))
(17)
(6)
(63)
((888899))
00
((888899))
Rating category1
OOffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
GGuuaarraanntteeeess
of which: stage 1
of which: stage 2
of which: stage 3
IIrrrreevvooccaabbllee llooaann ccoommmmiittmmeennttss
of which: stage 1
of which: stage 2
of which: stage 3
FFoorrwwaarrdd ssttaarrttiinngg rreevveerrssee rreeppuurrcchhaassee aanndd sseeccuurriittiieess bboorrrroowwiinngg aaggrreeeemmeennttss
TToottaall ooffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
CCrreeddiitt lliinneess
CCoommmmiitttteedd uunnccoonnddiittiioonnaallllyy rreevvooccaabbllee ccrreeddiitt lliinneess
of which: stage 1
of which: stage 2
of which: stage 3
IIrrrreevvooccaabbllee ccoommmmiitttteedd pprroolloonnggaattiioonn ooff eexxiissttiinngg llooaannss
of which: stage 1
of which: stage 2
of which: stage 3
00––11
22––33
44––55
66––88
99––1133
TToottaall ooffff--
bbaallaannccee sshheeeett
eexxppoossuurree
((mmaaxxiimmuumm
eexxppoossuurree ttoo
ccrreeddiitt rriisskk)) EECCLL pprroovviissiioonnss
CCrreeddiitt--
iimmppaaiirreedd
((ddeeffaauulltteedd))
44,,777722
55,,996611
44
0
1144,,991122
33,,004499
77,,225522
7,252 5,917 3,812 2,229
821
0
1100,,009977
11,,002255
596
429
960
0
0
0
0
11,,777700
66,,110077
66,,998866
1,770 14,789 6,818 9,625 4,529
472 1,578
168
0
0
1111
00
77,,113322
1111,,776699
123
0
22
2200,,887744
0
11,,000077
1144,,115533
0
0
22,,778811
1111,,880033
110088
0
0
108
112244
0
0
124
00
223333
1100,,116622
1155,,991188
705
0
11,,993399
22,,228888
33,,773399
99,,224477
2,288 15,213 8,960 9,631 3,429
310
287
0
0
0
0
339922
77
11,,448899
380
7 1,938 1,411
11
78
1
0
0
0
0
0
44,,113311
1100,,773366
1177,,885577
22,,229955
531
0
886688
864
4
0
1111,,003300
3366
0
0
36
22
0
0
2
3377
2222,,116677
19,805
2,254
108
3399,,999966
37,531
2,341
124
33,,880011
6655,,996644
4411,,339900
39,521
1,833
36
44,,669966
4,600
94
2
4466,,008866
((4488))
(13)
(9)
(26)
((111111))
(59)
(52)
0
00
((115599))
((4400))
(32)
(8)
0
((22))
(2)
0
0
((4422))
TToottaall ccrreeddiitt lliinneess
11 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and control” section of this report for more information on rating categories.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
312
316
Note 19 Expected credit loss measurement (continued)
Financial assets subject to credit risk by rating category
USD m
31.12.21
Rating category1
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
CCaasshh aanndd bbaallaanncceess aatt cceennttrraall bbaannkkss
of which: stage 1
LLooaannss aanndd aaddvvaanncceess ttoo bbaannkkss
of which: stage 1
of which: stage 2
of which: stage 3
RReecceeiivvaabblleess ffrroomm sseeccuurriittiieess ffiinnaanncciinngg ttrraannssaaccttiioonnss
mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
of which: stage 1
CCaasshh ccoollllaatteerraall rreecceeiivvaabblleess oonn ddeerriivvaattiivvee iinnssttrruummeennttss
of which: stage 1
LLooaannss aanndd aaddvvaanncceess ttoo ccuussttoommeerrss
of which: stage 1
of which: stage 2
of which: stage 3
OOtthheerr ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
of which: stage 1
of which: stage 2
of which: stage 3
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
OOnn--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt FFVVOOCCII –– ddeebbtt iinnssttrruummeennttss
TToottaall oonn--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
0–1
2–3
4–5
6–8
9–13
Credit-
impaired
(defaulted)
Total gross
carrying
amount
ECL
allowances
11,,880022
119911,,001155
1,802
191,015
440077
1122,,662233
407 12,623
0
0
0
0
00
0
11,,117711
1,146
24
0
00
0
779955
795
0
0
00
0
449900
488
2
0
119922,,881177
00
0 192,817
11
1155,,448888
0 15,460
27
0
1
1
1100,,448833
1111,,226677
3344,,338866
1177,,444400
34,386 11,267 10,483 17,440
33,,664477
3,647
6699,,889922
11,,443399
1,439
77,,446666
1133,,447766
55,,887788
4477
7,466 13,476
5,878
47
2211,,442233
6677,,662200
223322,,223333
55,,229955
5,295 231,153 65,084 62,796 16,362
5,061
2,536
0
0
339944
332211
317
307
77
13
0
0
2233,,779933
8855,,447722
1,080
0
66,,770022
6,693
10
0
227788,,110033
7,096
0
66,,007722
5,863
209
0
9977,,884466
0
0
1122,,556644
12,564
0
0
225511,,113333
22,,114488
00
7755,,001144
0 75,014
00
3300,,551144
0 30,514
339988,,661111
0 380,690
0 15,773
2,148
2266,,331188
0 25,745
309
0
264
264
773388,,776622
22,,441144
2,148
226644
33,,999966
225555,,113300
44,,777711
228822,,887744
00
8855,,447722
7777
9977,,992233
00
2233,,779933
00
22,,441144
88,,884444
774477,,660066
00
0
((88))
(7)
(1)
0
((22))
(2)
00
0
((885500))
(126)
(152)
(572)
((110099))
(27)
(7)
(76)
((996699))
00
((996699))
Off-balance sheet positions subject to expected credit loss by rating category
USD m
31.12.21
Net carrying
amount
(maximum
exposure to
credit risk)
119922,,881177
192,817
1155,,448800
15,453
26
1
7755,,001122
75,012
3300,,551144
30,514
339977,,776611
380,564
15,620
1,577
2266,,220099
25,718
302
189
773377,,779944
88,,884444
774466,,663388
Rating category1
OOffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
GGuuaarraanntteeeess
of which: stage 1
of which: stage 2
of which: stage 3
IIrrrreevvooccaabbllee llooaann ccoommmmiittmmeennttss
of which: stage 1
of which: stage 2
of which: stage 3
FFoorrwwaarrdd ssttaarrttiinngg rreevveerrssee rreeppuurrcchhaassee aanndd sseeccuurriittiieess bboorrrroowwiinngg aaggrreeeemmeennttss
TToottaall ooffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
CCrreeddiitt lliinneess
CCoommmmiitttteedd uunnccoonnddiittiioonnaallllyy rreevvooccaabbllee ccrreeddiitt lliinneess
of which: stage 1
of which: stage 2
of which: stage 3
IIrrrreevvooccaabbllee ccoommmmiitttteedd pprroolloonnggaattiioonn ooff eexxiissttiinngg llooaannss
of which: stage 1
of which: stage 2
of which: stage 3
0–1
2–3
4–5
6–8
9–13
Total off-
balance sheet
exposure
(maximum
exposure to
credit risk) ECL provisions
Credit-
impaired
(defaulted)
77,,006644
44,,553355
27
0
1144,,118833
44,,445577
33,,775577
4,457 7,037 4,375 3,075
682
0
88,,229988
11,,000099
752
258
160
0
0
0
0
22,,779977
66,,550022
77,,665511
2,797 13,917 7,416 7,127 5,840
663
0
00
77,,551122
235 1,171
0
11,,338899
1133,,444444
266
0
00
2211,,224477
0
0
00
77,,225544
0
5555
1122,,224411
115500
0
0
150
4466
0
0
46
00
119966
99,,775522
1155,,559944
344
0
22,,443388
22,,663366
44,,110077
88,,662277
2,636 15,250 8,304 8,346 3,671
436
0
660022
568
34
0
44,,770099
323 1,406
0
0
0
11,,008844
1177
17 2,438 1,422 1,082
1
0
0
0
1100,,883366
22,,665533
0
0
1100,,004499
0
0
1188,,003322
0
11,,442222
6633
0
0
63
4488
0
0
48
111111
2200,,997722
19,695
1,127
150
3399,,447788
37,097
2,335
46
11,,444444
6611,,889944
4400,,777788
38,207
2,508
63
55,,661111
5,527
36
48
4466,,339900
((4411))
(18)
(8)
(15)
((111144))
(72)
(42)
0
00
((115555))
((3388))
(28)
(10)
0
((33))
(3)
0
0
((4411))
TToottaall ccrreeddiitt lliinneess
11 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and control” section of this report for more information on rating categories.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
313
317
Note 19 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 9.
Sustainability and climate risk
Sustainability and climate risk (SCR) may negatively affect clients or portfolios due to direct or indirect transition costs, or
exposure to 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 indicators that are more influenced by climate change (e.g., energy prices) are factored into the current PD
models where they have demonstrated statistical relevance, UBS currently does not use a specific SCR scenario in addition
to the 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 assessment given
the paucity of data.
Instead, UBS focuses on the process of vetting clients and business transactions and takes individual actions, where
transition risk is deemed to be a significant driver of a counterparty’s credit worthiness. This review process may lead to
a downward revision of the counterparty’s credit rating, or the adoption of risk mitigating actions, and hence affect the
individual contribution to ECLs.
At the portfolio level, UBS has started to use stress loss assumptions to assess the extent to which SCR may affect the
quality of the loans extended to small and medium-sized entities and large corporate clients. Initial tests were based on
a set of assumptions presented by external parties (such as the Bank of England). Such analysis undertaken during 2022
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. Based on current information on regulatory developments,
this would also apply to the portfolio of private clients’ mortgages and real estate financing, given the long lead times
for investments in upgrading the housing stock.
As a result of the aforementioned factors, it was assessed that the magnitude of any impact of SCR on the weighted-
average ECL would not be material as of 31 December 2022. Therefore, no specific post-model adjustment was made in
this regard.
› Refer to “Sustainability and climate risk” in the “Risk management and control” section of this report
› Refer to “Our focus on sustainability and climate” in the “Our strategy, business model and environment” section of this report
› Refer to “UBS AG consolidated supplemental disclosures required under SEC regulations” for the maturity profile of UBS 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 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
314
318
Note 19 Expected credit loss measurement (continued)
Potential effect on stage 1 and stage 2 positions from changing key parameters as of 31 December 2022
USD m
CChhaannggee iinn kkeeyy ppaarraammeetteerrss
FFiixxeedd iinnccoommee:: GGoovveerrnnmmeenntt bboonnddss ((aabbssoolluuttee cchhaannggee))
–0.50%
+0.50%
+1.00%
UUnneemmppllooyymmeenntt rraattee ((aabbssoolluuttee cchhaannggee))
–1.00%
–0.50%
+0.50%
+1.00%
RReeaall GGDDPP ggrroowwtthh ((rreellaattiivvee cchhaannggee))
–2.00%
–1.00%
+1.00%
+2.00%
HHoouussee PPrriiccee IInnddeexx ((rreellaattiivvee cchhaannggee))
–5.00%
–2.50%
+2.50%
+5.00%
EEqquuiittyy ((SS&&PP550000,, EEuurrooSSttooxxxx,, SSMMII)) ((rreellaattiivvee cchhaannggee))
–10.00%
–5.00%
+5.00%
+10.00%
110000%%
SSttaaggffllaattiioonnaarryy
110000%% BBaasseelliinnee
ggeeooppoolliittiiccaall ccrriissiiss 110000%% GGlloobbaall ccrriissiiss WWeeiigghhtteedd aavveerraaggee
(3)
4
8
(4)
(2)
3
5
7
3
(3)
(5)
15
7
(4)
(7)
4
2
(2)
(4)
(106)
124
264
(138)
(78)
84
179
13
7
(7)
(13)
196
92
(83)
(157)
7
3
(4)
(8)
(2)
2
10
(24)
(13)
16
32
18
9
(9)
(18)
88
40
(35)
(65)
6
3
(3)
(7)
(14)
17
37
(23)
(12)
15
31
11
5
(5)
(10)
56
25
(19)
(36)
5
2
(2)
(5)
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 2022
Actual ECL
allowances and
provisions,
including staging
(as per Note 9)
Pro forma ECL allowances and provisions, including staging
and assuming application of 100% scenario weighting
Pro forma ECL
allowances and
provisions,
assuming all
positions being
subject to lifetime
ECL
WWeeiigghhtteedd aavveerraaggee
110000%% BBaasseelliinnee
110000%% AAsssseett pprriiccee
iinnffllaattiioonn
110000%%
SSttaaggffllaattiioonnaarryy
ggeeooppoolliittiiccaall ccrriissiiss 110000%% GGlloobbaall ccrriissiiss WWeeiigghhtteedd aavveerraaggee
((113366))
((4433))
((113366))
((8866))
((112255))
((552266))
((2255))
((2266))
((9977))
((6677))
((111144))
((332299))
(13)
(22)
(84)
(66)
(111)
((229955))
(523)
(176)
(199)
(162)
(145)
((11,,220044))
(184)
(30)
(174)
(97)
(153)
((663388))
((447733))
((112266))
((223355))
((115533))
((228811))
((11,,226677))
Scenarios
USD m, except where indicated
SSeeggmmeennttaattiioonn
Private clients with mortgages
Real estate financing
Large corporate clients
SME clients
Other segments
TToottaall
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 329m (31 December
2021: USD 387m) instead of USD 526m (31 December 2021: USD 503m) if ECLs had been determined solely on the
baseline scenario. The weighted-average ECL therefore amounted to 160% (31 December 2021: 130%) of the baseline
value. The effects of weighting each of the four scenarios 100% are shown in the table above.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
315
319
Note 19 Expected credit loss measurement (continued)
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 1,267m, 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 526m as of 31 December 2022.
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: a) 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; b) 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.
Note 20 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 International Financial Reporting Standards (IFRS). The fair value hierarchy
is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. In certain
cases, the inputs used to measure fair value may fall within different levels of the fair value hierarchy. For disclosure
purposes, the level in the hierarchy within which an instrument is classified in its entirety is based on the lowest level
input that is significant to the position’s fair value measurement:
– Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities;
– Level 2 – valuation techniques for which all significant inputs are, or are based on, observable market data; or
– Level 3 – valuation techniques for which significant inputs are not based on observable market data.
Fair values are determined using quoted prices in active markets for identical assets or liabilities, where available. Where
the market for a financial instrument or non-financial asset or liability is not active, fair value is established using a
valuation technique, including pricing models. Valuation adjustments may be made to allow for additional factors,
including model, liquidity, credit and funding risks, which are not explicitly captured within the valuation technique, but
which would nevertheless be considered by market participants when establishing a price. The limitations inherent in a
particular valuation technique are considered in the determination of the classification of an asset or liability within the
fair value hierarchy. Generally, the unit of account for a financial instrument is the individual instrument, and UBS applies
valuation adjustments at an individual instrument level, consistent with that unit of account. However, if certain
conditions are met, UBS may estimate the fair value of a portfolio of financial assets and liabilities with substantially
similar and offsetting risk exposures on the basis of the net open risks.
› Refer to Note 20d for more information
b) Valuation governance
UBS’s fair value measurement and model governance framework includes numerous controls and other procedural
safeguards that are intended to maximize the quality of fair value measurements reported in the financial statements.
New products and valuation techniques must be reviewed and approved by key stakeholders from the risk and finance
control functions. Responsibility for the ongoing measurement of financial and non-financial instruments at fair value is
with the business divisions.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
316
320
Note 20 Fair value measurement (continued)
Fair value estimates are validated by the risk and finance control functions, which are independent of the business
divisions. Independent price verification is performed by Finance through benchmarking the business divisions’ fair value
estimates with observable market prices and other independent sources. A governance framework and associated
controls are in place in order to monitor the quality of third-party pricing sources where used. For instruments where
valuation models are used to determine fair value, independent valuation and model control groups within Finance and
Risk Control evaluate UBS’s models on a regular basis, including valuation and model input parameters, as well as pricing.
As a result of the valuation controls employed, valuation adjustments may be made to the business divisions’ estimates
of fair value to align with independent market data and the relevant accounting standard.
› Refer to Note 20d for more information
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 2022, assets and liabilities that were transferred from Level 2 to Level 1, or from Level 1 to Level 2, and were held
for the entire reporting period were not material.
Determination of fair values from quoted market prices or valuation techniques1
USD m
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee oonn aa rreeccuurrrriinngg bbaassiiss
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: Auction rate securities
of which: Investment fund units
of which: Equity instruments
3311..1122..2222
31.12.21
LLeevveell 11
LLeevveell 22
LLeevveell 33
TToottaall
Level 1
Level 2
Level 3
Total
9966,,224411
8833,,007744
55,,449966
66,,667733
997766
00
2222
1100,,113388
778899
995500
559966
66,,336633
11,,117799
226611
11,,448888
110077,,886666
113,697
14,825
112266 8833,,998888 97,958 1,090
7,135 1,351
1188
7,843 1,364
6611
554411
708 7,604
662288
111144
2,299 130,821
149 99,197
10 8,496
21 9,229
556 8,868
0 3,099 1,443 4,542
489
53
66,,446644
77,,333300
77,,888800
11,,880077
339977
317
120
114477,,887755
776699
557755 8844,,888811
00 3399,,334455
11 2211,,554422
00
771199
00
11,,333344
11,,446644
115500,,110088
22 8855,,445588
446600 3399,,880055
665533 2222,,119955
11,,003388
331188
11,,336655
3300
522 116,479
255 53,043
0 32,747
0 27,861
0 1,179
0 1,590
1,140 118,142
7 53,305
494 33,241
384 28,245
236 1,414
16 1,606
00
1177,,557766
00
1177,,557766
0
21,839
0
21,839
2266,,557722
1133,,007711
2299,,449988
11
3355 1144,,110011
33,,663388
33,,660022
77,,559900
00
556666
00
1133,,110033
00
00
00
330077
5577
33,,772255
5599,,779966
27,278
00 1133,,007722 21,110
223300 1144,,336666
00 1166,,774411
44,,333377
77,,770044
11,,332266
11,,006633
884499
773366
111144
11,,332266
119900
779922
4,180
28,622
187
123 13,937
5,624 3,236
0 4,982
0 5,704
0
338
83
60,080
6 21,303
306 14,366
0 8,860
892 5,874
100 5,804
0 1,585 1,585
117 1,028
765
681
574
2
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee oonn aa rreeccuurrrriinngg bbaassiiss
Financial assets measured at fair value through other comprehensive income
of which: Asset-backed securities2
of which: Government bills / bonds2
of which: Corporate and municipal bonds
5577
00
00
5577
22,,118822
00
2266
22,,115566
00
00
00
00
22,,223399
00
2266
22,,221133
2,704
6,140
0 4,849
27
45 1,265
2,658
NNoonn--ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee oonn aa rreeccuurrrriinngg bbaassiiss
Precious metals and other physical commodities
NNoonn--ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee oonn aa nnoonn--rreeccuurrrriinngg bbaassiiss
Other non-financial assets3
44,,447711
00
00
00
00
44,,447711
5,258
111100
111100
0
0
0
8,844
0
0 4,849
0 2,686
0 1,310
0
5,258
26
26
TToottaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
112288,,111100
220077,,226699
66,,778888
334422,,116666
149,459 187,905
7,645 345,010
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
317
321
Note 20 Fair value measurement (continued)
Determination of fair values from quoted market prices or valuation techniques (continued)1
USD m
FFiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee oonn aa rreeccuurrrriinngg bbaassiiss
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
FFiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee oonn aa rreeccuurrrriinngg bbaassiiss
Brokerage payables designated at fair value
Debt issued designated at fair value
3311..1122..2222
31.12.21
LLeevveell 11
LLeevveell 22
LLeevveell 33
TToottaall
Level 1
Level 2
Level 3
Total
2233,,557788
1166,,552211
3366
55,,888800
11,,114411
55,,882233
335522
44,,664433
770066
8844
111144
2299,,551155
7788 1166,,995511
44,,770077
2277
66,,558877
11
11,,222299
33
25,413
18,328
6,170
513
30 4,219
826
555
5,883
1,172
105
31,688
83 18,924
17 4,266
0 6,709
6 1,733
115522,,558822
664400
558877 8877,,889977
00 3377,,442299
00 2244,,996633
00
992200
00
11,,330099
11,,668844
115544,,990066
2244 8888,,550088
111166 3377,,554455
11,,118844 2266,,114488
11,,119999
11,,336611
227799
5522
2,242 121,309
509 118,558
21 54,078
258 53,800
0 28,398
278 28,675
0 33,438 1,511 34,949
341 1,753
0 1,412
63 1,566
0 1,503
00
00
4455,,008855
00
4455,,008855
6633,,111111
1100,,552277
7733,,663388
0
0
44,045
0
44,045
59,606
14,194
73,799
Other financial liabilities designated at fair value
of which: Financial liabilities related to unit-linked investment contracts
of which: Securities financing transactions
of which: Over-the-counter debt instruments and other
00
2299,,554477
00 1133,,222211
00 1155,,333333
00
999933
669911
3300,,223377
00 1133,,222211
00 1155,,333333
11,,668844
669911
0
29,258
0 21,466
0 6,375
0 1,417
816
30,074
0 21,466
2 6,377
814 2,231
TToottaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee
2244,,221199
11 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.
22 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 1 for more information. 33 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.
25,922 257,637
17,357 300,916
229966,,114488
333333,,338811
1133,,001155
Valuation techniques
UBS uses widely recognized valuation techniques for determining the fair value of financial and non-financial instruments
that are not actively traded and quoted. The most frequently applied valuation techniques include discounted value of
expected cash flows, relative value and option pricing methodologies.
Discounted value of expected cash flows is a valuation technique that measures fair value using estimated expected
future cash flows from assets or liabilities and then discounts these cash flows using a discount rate or discount margin
that reflects the credit and / or funding spreads required by the market for instruments with similar risk and liquidity
profiles to produce a present value. When using such valuation techniques, expected future cash flows are estimated
using an observed or implied market price for the future cash flows or by using industry-standard cash flow projection
models. The discount factors within the calculation are generated using industry-standard yield curve modeling
techniques and models.
Relative value models measure fair value based on the market prices of equivalent or comparable assets or liabilities, making
adjustments for differences between the characteristics of the observed instrument and the instrument being valued.
Option pricing models incorporate assumptions regarding the behavior of future price movements of an underlying
referenced asset or assets to generate a probability-weighted future expected payoff for the option. The resulting
probability-weighted expected payoff is then discounted using discount factors generated from industry-standard yield
curve modeling techniques and models. The option pricing model may be implemented using a closed-form analytical
formula or other mathematical techniques (e.g., binomial tree or Monte Carlo simulation).
Where available, valuation techniques use market-observable assumptions and inputs. If such data is not available, inputs
may be derived by reference to similar assets in active markets, from recent prices for comparable transactions or from
other observable market data. In such cases, the inputs selected are based on historical experience and practice for similar
or analogous instruments, derivation of input levels based on similar products with observable price levels, and knowledge
of current market conditions and valuation approaches.
For more complex instruments, fair values may be estimated using a combination of observed transaction prices,
consensus pricing services and relevant quotes. Consideration is given to the nature of the quotes (e.g., indicative or firm)
and the relationship of recently evidenced market activity to the prices provided by consensus pricing services. UBS also
uses internally developed models, which are typically based on valuation methods and techniques recognized as standard
within the industry. Assumptions and inputs used in valuation techniques include benchmark interest rate curves, credit
and funding spreads used in estimating discount rates, bond and equity prices, equity index prices, foreign exchange
rates, levels of market volatility and correlation. Refer to Note 20e for more information. The discount curves used by the
Group incorporate the funding and credit characteristics of the instruments to which they are applied.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
318
322
Note 20 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 and Level 3.
Valuation
– Generally valued using prices obtained directly from the market for the security, or similar securities,
Corporate and
municipal bonds
Traded loans and
loans measured at
fair value
Investment fund
units
Asset-backed
securities (ABS)
Auction rate
securities (ARS)
Fair value
hierarchy
Valuation
Fair value
hierarchy
Valuation
Fair value
hierarchy
Valuation
Fair value
hierarchy
Valuation
Fair value
hierarchy
Equity instruments
Valuation
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.
– 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.
– 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. Recently originated commercial real estate loans are measured using a securitization
approach based on rating agency guidelines.
– 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.
– 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).
– 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 are classified as Level 3.
– 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.
– Residential mortgage-backed securities, commercial mortgage-backed securities and other ABS are
generally classified as Level 2. However, if significant inputs are unobservable, or if market or fundamental
data is not available, they are classified as Level 3.
– 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.
– Granular and liquid pricing information is generally not available for ARS. As a result, these securities are
classified as Level 3.
– 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.
Financial assets for
unit-linked
investment
contracts
Securities
financing
transactions
Brokerage
receivables and
payables
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.
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.
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.
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 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
319
323
Note 20 Fair value measurement (continued)
Product
Valuation and classification in the fair value hierarchy
Financial liabilities
related to unit-
linked investment
contracts
Precious metals and
other physical
commodities
Debt issued
designated at fair
value
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.
Valuation
– Physical assets are valued using the spot rate observed in the relevant market.
Fair value
hierarchy
Valuation
Fair value
hierarchy
– Generally traded in active markets with prices that can be obtained directly from these markets, resulting
in classification as Level 1.
– 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.
– The observability is closely aligned with the equivalent derivatives business and the underlying risk.
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 20d, 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 (FVAs), as applicable, to reflect an estimation of the effect of counterparty
credit risk, UBS’s own credit risk, and funding costs and benefits.
› Refer to Note 10 for more information about derivative instruments
Derivative product
Valuation and classification in the fair value hierarchy
Interest rate
contracts
Valuation
Fair value
hierarchy
Credit derivative
contracts
Valuation
Fair value
hierarchy
– 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.
– 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 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.
– 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 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
320
324
Note 20 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
Fair value
hierarchy
Equity / index
contracts
Valuation
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 than
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.
– 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.
– OTC FX option contracts classified as Level 3 include multi-dimensional FX options and long-dated FX exotic
option contracts where there is no active market from which to derive volatility or correlation inputs.
– 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.
Commodity
contracts
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.
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.
d) Valuation adjustments and other items
The output of a valuation technique is always an estimate of a fair value that cannot be measured with complete certainty.
As a result, valuations are adjusted where appropriate and when such factors would be considered by market participants
in estimating fair value, to reflect close-out costs, credit exposure, model-driven valuation uncertainty, funding costs and
benefits, trading restrictions and other factors.
Deferred day-1 profit or loss reserves
For new transactions where the valuation technique used to measure fair value requires significant inputs that are not
based on observable market data, the financial instrument is initially recognized at the transaction price. The transaction
price may differ from the fair value obtained using a valuation technique, where any such difference is deferred and not
initially recognized in the income statement.
Deferred day-1 profit or loss is generally released into Other net income from financial instruments measured at fair value
through profit or loss when pricing of equivalent products or the underlying parameters becomes observable or when
the transaction is closed out.
The table below summarizes the changes in deferred day-1 profit or loss reserves during the respective period.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
321
325
Note 20 Fair value measurement (continued)
Deferred day-1 profit or loss reserves
USD m
RReesseerrvvee bbaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Profit / (loss) deferred on new transactions
(Profit) / loss recognized in the income statement
Foreign currency translation
RReesseerrvvee bbaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr
22002222
441188
229999
((229955))
00
442222
2021
269
459
(308)
(2)
418
2020
146
362
(238)
0
269
Own credit
Own credit risk is reflected in the valuation of UBS’s fair value option liabilities where this component is considered
relevant for valuation purposes by UBS’s counterparties and other market participants.
Changes in the fair value of financial liabilities designated at fair value through profit or loss related to own credit are
recognized in Other comprehensive income directly within Retained earnings, with no reclassification to the income
statement in future periods. This presentation does not create or increase an accounting mismatch in the income
statement, as the Group does not hedge changes in own credit.
Own credit is estimated using own credit adjustment (OCA) curves, which incorporate observable market data, including
market-observed secondary prices for UBS’s debt and debt curves of peers. In the table below, the change in unrealized
own credit consists of changes in fair value that are attributable to the change in UBS’s credit spreads, as well as the
effect of changes in fair values attributable to factors other than credit spreads, such as redemptions, effects from time
decay and changes in interest and other market rates. Realized own credit is recognized when an instrument with an
associated unrealized OCA is repurchased prior to the contractual maturity date. Life-to-date amounts reflect the
cumulative unrealized change since initial recognition.
› Refer to Note 15 for more information about debt issued designated at fair value
Own credit adjustments on financial liabilities designated at fair value
USD m
RReeccooggnniizzeedd dduurriinngg tthhee ppeerriioodd::
Realized gain / (loss)
Unrealized gain / (loss)
TToottaall ggaaiinn // ((lloossss)),, bbeeffoorree ttaaxx
USD m
RReeccooggnniizzeedd oonn tthhee bbaallaannccee sshheeeett aass ooff tthhee eenndd ooff tthhee ppeerriioodd::
Unrealized life-to-date gain / (loss)
of which: debt issued designated at fair value
of which: other financial liabilities designated at fair value
Included in Other comprehensive income
For the year ended
31.12.21
3311..1122..2222
31.12.20
11
886666
886677
(14)
60
46
2
(295)
(293)
3311..1122..2222
31.12.21
31.12.20
555566
445533
110033
(315)
(347)
32
(381)
(418)
36
Credit valuation adjustments
In order to measure the fair value of OTC derivative instruments, including funded derivative instruments that are
classified as Financial assets at fair value not held for trading, CVAs are needed to reflect the credit risk of the counterparty
inherent in these instruments. This amount represents the estimated fair value of protection required to hedge the
counterparty credit risk of such instruments. A CVA is determined for each counterparty, considering all exposures with
that counterparty, and is dependent on the expected future value of exposures, default probabilities and recovery rates,
applicable collateral or netting arrangements, break clauses, funding spreads, and other contractual factors.
Funding valuation adjustments
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.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
322
326
Note 20 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’s credit default spreads.
Other valuation adjustments
Instruments that are measured as part of a portfolio of combined long and short positions are valued at mid-market levels
to ensure consistent valuation of the long- and short-component risks. A liquidity valuation adjustment is then made to
the overall net long or short exposure to move the fair value to bid or offer as appropriate, reflecting current levels of
market liquidity. The bid–offer spreads used in the calculation of this valuation adjustment are obtained from market
transactions and other relevant sources and are updated periodically.
Uncertainties associated with the use of model-based valuations are incorporated into the measurement of fair value
through the use of model reserves. These reserves reflect the amounts that the Group estimates should be deducted
from valuations produced directly by models to incorporate uncertainties in the relevant modeling assumptions, in the
model and market inputs used, or in the calibration of the model output to adjust for known model deficiencies. In
arriving at these estimates, the Group considers a range of market practices, including how it believes market participants
would assess these uncertainties. Model reserves are reassessed periodically in light of data from market transactions,
consensus pricing services and other relevant sources.
Balance sheet valuation adjustments on financial instruments
USD m
CCrreeddiitt vvaalluuaattiioonn aaddjjuussttmmeennttss11
FFuunnddiinngg vvaalluuaattiioonn aaddjjuussttmmeennttss
DDeebbiitt vvaalluuaattiioonn aaddjjuussttmmeennttss
OOtthheerr vvaalluuaattiioonn aaddjjuussttmmeennttss
of which: liquidity
of which: model uncertainty
11 Amounts do not include reserves against defaulted counterparties.
Other items
As of
3311..1122..2222
((3333))
((5500))
44
((883399))
((331111))
((552299))
31.12.21
(44)
(49)
2
(913)
(341)
(571)
In the first half of 2021, UBS incurred a loss of USD 861m as a result of closing out a significant portfolio of swaps with
a US-based client of its prime brokerage business and the unwinding of related hedges, following the client’s default.
This loss is presented within Other net income from financial instruments measured at fair value through profit or loss.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
323
327
Note 20 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 2022 and
unobservable, and a range of values for those unobservable inputs.
The range of values represents the highest- and lowest-level inputs used in the valuation techniques. Therefore, the range
does not reflect the level of uncertainty regarding a particular input or an assessment of the reasonableness of the
Group’s estimates and assumptions, but rather the different underlying characteristics of the relevant assets and liabilities
held by the Group. The ranges will therefore vary from period to period and parameter to parameter based on
characteristics of the instruments held at each balance sheet date. Furthermore, the ranges of unobservable inputs may
differ across other financial institutions, reflecting the diversity of the products in each firm’s inventory.
Valuation techniques and inputs used in the fair value measurement of Level 3 assets and liabilities
FFaaiirr vvaalluuee
AAsssseettss
LLiiaabbiilliittiieess
VVaalluuaattiioonn
tteecchhnniiqquuee((ss))
SSiiggnniiffiiccaanntt
uunnoobbsseerrvvaabbllee
iinnppuutt((ss))11
RRaannggee ooff iinnppuuttss
3311..1122..2222
31.12.21
llooww
hhiigghh
wweeiigghhtteedd
aavveerraaggee22
low high
weighted
average2
unit1
3311..1122..2222 31.12.21
USD bn
FFiinnaanncciiaall aasssseettss aanndd lliiaabbiilliittiieess aatt ffaaiirr vvaalluuee hheelldd ffoorr ttrraaddiinngg aanndd FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee nnoott hheelldd ffoorr ttrraaddiinngg
Corporate and municipal
bonds
3311..1122..2222 31.12.21
00..88
00..00
0.0
0.9
Relative value to
market comparable
Discounted expected
cash flows
Relative value to
market comparable
Discounted expected
cash flows
Market comparable
and securitization
model
Discounted expected
cash flows
Relative value to
market comparable
Relative value to
market comparable
Bond price equivalent
1144
111122
8855
16
143
98
Discount margin
441122
441122
434
434
Loan price equivalent
3300
110000
9977
0
101
99
Credit spread
220000
220000
220000
175
800
436
Credit spread
114455
11,,335500
332222
28
1,54
4
241
Credit spread
111155
119966
114444
115
197
153
Net asset value
Price
Traded loans, loans
measured at fair value,
loan commitments and
guarantees
11..77
2.8
00..00
0.0
Auction rate securities
11..33
1.6
Investment fund units 3
00..33
0.1
00..00
0.0
00..99
0.8
00..11
0.1
Equity instruments 3
DDeebbtt iissssuueedd ddeessiiggnnaatteedd aatt
ffaaiirr vvaalluuee44
OOtthheerr ffiinnaanncciiaall lliiaabbiilliittiieess
ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss
1100..55
14.2
00..77
0.8
Discounted expected
cash flows
Funding spread
2233
117755
24
175
Interest rate
00..55
0.5
00..11
0.3 Option model
Credit
00..33
0.2
00..33
0.3
Discounted expected
cash flows
Equity / index
00..77
0.4
11..22
1.5 Option model
Volatility of interest
rates
Credit spreads
Bond price equivalent
Equity dividend yields
Volatility of equity
stocks, equity and
other indices
Equity-to-FX
correlation
Equity-to-equity
correlation
7755
114433
65
81
99
33
00
556655
227777
2200
44
112200
((2299))
8844
((2255))
110000
1
2
0
583
136
11
4
98
(29)
76
(25)
100
11 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). 22 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. 33 The range of inputs is not disclosed, as there is a dispersion of values given the diverse nature of the
investments. 44 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, rates-linked and credit-
linked notes, all of which have embedded derivative parameters that are considered to be unobservable. The equivalent derivative instrument parameters are presented in the respective derivative financial instruments
lines in this table.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
324
328
points
basis
points
points
basis
points
basis
points
basis
points
basis
points
basis
points
basis
points
points
%
%
%
%
Note 20 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
Bond price
equivalent
Loan price
equivalent
Credit spread
Discount margin
Funding spread
Volatility
Description
– 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.
– Where market prices are not available for a traded loan, 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.
– Valuation models for many credit derivatives 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.
– 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.
– Structured financing transactions are valued using synthetic funding curves that best represent the assets that are pledged as
collateral for the transactions. They are not representative of where UBS can fund itself on an unsecured basis, but provide
an estimate of where UBS can source and deploy secured funding with counterparties for a given type of collateral. The
funding spreads are expressed in terms of basis points, and if funding spreads widen, this increases the effect of discounting.
– A small proportion of structured debt instruments and non-structured fixed-rate bonds within financial liabilities designated
at fair value had an exposure to funding spreads that was longer in duration than the actively traded market.
– Volatility 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.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
325
329
Note 20 Fair value measurement (continued)
Input
Correlation
Equity dividend
yields
Description
– Correlation measures the interrelationship between the movements of two variables. It is expressed as a percentage between
–100% and +100%, where +100% represents perfectly correlated variables (meaning a movement of one variable is
associated with a movement of the other variable in the same direction) and –100% implies that the variables are inversely
correlated (meaning a movement of one variable is associated with a movement of the other variable in the opposite
direction). The effect of correlation on the measurement of fair value depends on the specific terms of the instruments being
valued, reflecting the range of different payoff features within such instruments.
– Equity-to-FX correlation is important for equity options based on a currency other than the currency of the underlying stock.
Equity-to-equity correlation is particularly important for complex options that incorporate, in some manner, different equities
in the projected payoff.
– The derivation of a forward price for an individual stock or index is important for measuring fair value for forward or swap
contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the
forward price is based on a combination of expected future dividend levels and payment timings, and, to a lesser extent, the
relevant funding rates applicable to the stock in question. Dividend yields are generally expressed as an annualized percentage
of the share price, with the lowest limit of 0% representing a stock that is not expected to pay any dividend. The dividend
yield and timing represent the most significant parameter in determining fair value for instruments that are sensitive to an
equity forward price.
f) Level 3 instruments: sensitivity to changes in unobservable input assumptions
The table below summarizes those financial assets and liabilities classified as Level 3 for which a change in one or more
of the unobservable inputs to reflect reasonably possible favorable and unfavorable alternative assumptions would
change fair value significantly, and the estimated effect thereof. The table below does not represent the estimated effect
of stress scenarios. Interdependencies between Level 1, 2 and 3 parameters have not been incorporated in the table.
Furthermore, direct interrelationships between the Level 3 parameters discussed below are not a significant element of
the valuation uncertainty.
Sensitivity data is estimated using a number of techniques, including the estimation of price dispersion among different
market participants, variation in modeling approaches and reasonably possible changes to assumptions used within the
fair value measurement process. The sensitivity ranges are not always symmetrical around the fair values, as the inputs
used in valuations are not always precisely in the middle of the favorable and unfavorable range.
Sensitivity data is determined at a product or parameter level and then aggregated assuming no diversification benefit.
Diversification would incorporate estimated correlations across different sensitivity results and, as such, would result in
an overall sensitivity that would be less than the sum of the individual component sensitivities. However, the Group
believes that the diversification benefit is not significant to this analysis.
Sensitivity of fair value measurements to changes in unobservable input assumptions1
USD m
Traded loans, loans measured at fair value, loan commitments and guarantees
Securities financing transactions
Auction rate securities
Asset-backed securities
Equity instruments
Interest rate derivatives, net
Credit derivatives, net
Foreign exchange derivatives, net
Equity / index derivatives, net
Other
TToottaall
3311..1122..2222
31.12.21
FFaavvoorraabbllee
cchhaannggeess
1199
UUnnffaavvoorraabbllee
cchhaannggeess
((1122))
Favorable
changes
19
Unfavorable
changes
(13)
3333
446622
2277
118833
118822
33
1100
336611
339922
773388
((3377))
((4466))22
((2277))
((116611))
((1122))22
((44))
((55))
((333300))
((6622))22
((669966))
41
66
20
173
29
5
19
368
50
790
(53)
(66)
(20)
(146)
(19)
(8)
(11)
(335)
(73)
(744)
11 Sensitivity of issued and over-the-counter debt instruments is reported with the equivalent derivative or securities financing instrument. 22 Includes refinements applied in estimating valuation uncertainty across
various parameters.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
326
330
Note 20 Fair value measurement (continued)
g) Level 3 instruments: movements during the period
The table below presents additional information about material movements in Level 3 assets and liabilities measured at
fair value on a recurring basis, excluding any related hedging activity.
Assets and liabilities transferred into or out of Level 3 are presented as if those assets or liabilities had been transferred
at the beginning of the year.
Movements of Level 3 instruments
Net gains /
losses
included in
compre-
hensive
income1
BBaallaannccee aatt
tthhee bbeeggiinnnniinngg
ooff tthhee ppeerriioodd
USD bn
FFoorr tthhee ttwweellvvee mmoonntthhss eennddeedd 3311 DDeecceemmbbeerr 2200222222
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
BBaallaannccee aatt
tthhee eenndd
ooff tthhee ppeerriioodd
FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee hheelldd ffoorr
ttrraaddiinngg
of which: Investment fund units
of which: Corporate and municipal
bonds
of which: Loans
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss ––
aasssseettss
of which: Interest rate
of which: Equity / index
of which: Credit
FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee nnoott hheelldd
ffoorr ttrraaddiinngg
of which: Loans
of which: Auction rate securities
of which: Equity instruments
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss ––
lliiaabbiilliittiieess
of which: Interest rate
of which: Equity / index
of which: Credit
22..33
0.0
0.6
1.4
11..11
0.5
0.4
0.2
44..22
0.9
1.6
0.7
22..22
0.3
1.5
0.3
DDeebbtt iissssuueedd ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee33
1144..22
((00..33))
(0.0)
(0.0)
(0.1)
00..66
0.3
0.2
0.1
00..11
(0.0)
0.1
0.0
((00..88))
(0.3)
(0.4)
(0.1)
((22..22))
((00..33))
(0.0)
(0.0)
(0.1)
00..33
0.3
0.1
(0.1)
00..11
(0.0)
0.0
0.0
((00..44))
(0.0)
(0.3)
(0.0)
((11..88))
00..33
0.0
0.3
0.0
00..00
0.0
0.0
0.0
00..77
0.4
0.0
0.1
00..00
0.0
0.0
0.0
00..00
((11..88))
(0.0)
(0.6)
(1.1)
00..00
0.0
0.0
0.0
((11..22))
(0.4)
(0.3)
(0.1)
00..00
0.0
0.0
0.0
00..00
00..55
0.0
0.0
0.5
00..44
0.0
0.4
0.0
00..11
0.1
0.0
0.0
11..11
0.1
0.8
0.1
44..77
00..00
0.0
0.0
0.0
((00..77))
(0.2)
(0.3)
(0.2)
((00..00))
0.0
0.0
0.0
((00..99))
(0.0)
(0.7)
(0.1)
((33..11))
00..77
0.1
0.4
0.0
00..11
0.0
0.1
0.0
00..22
0.1
0.0
0.1
00..33
0.0
0.1
0.1
00..77
((00..33))
(0.0)
(0.0)
(0.2)
((00..00))
(0.1)
(0.0)
0.1
((00..33))
(0.3)
0.0
0.0
((00..22))
(0.0)
(0.2)
(0.0)
((33..44))
((00..00))
(0.0)
(0.0)
0.0
((00..00))
(0.0)
(0.0)
0.0
((00..00))
(0.0)
0.0
(0.0)
((00..11))
(0.0)
(0.0)
(0.0)
((00..33))
11..55
0.1
0.5
0.6
11..55
0.5
0.7
0.3
33..77
0.7
1.3
0.8
11..77
0.1
1.2
0.3
1100..55
OOtthheerr ffiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt
ffaaiirr vvaalluuee
FFoorr tthhee ttwweellvvee mmoonntthhss eennddeedd 3311 DDeecceemmbbeerr 22002211
00..88
((00..11))
((00..11))
00..00
00..00
00..00
((00..11))
00..00
((00..00))
((00..00))
00..77
FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee hheelldd ffoorr
ttrraaddiinngg
of which: Investment fund units
of which: Corporate and municipal
bonds
of which: Loans
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss ––
aasssseettss
of which: Interest rate
of which: Equity / index
of which: Credit
FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee nnoott hheelldd
ffoorr ttrraaddiinngg
of which: Loans
of which: Auction rate securities
of which: Equity instruments
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss ––
lliiaabbiilliittiieess
of which: Interest rate
of which: Equity / index
of which: Credit
22..33
0.0
0.8
1.1
11..88
0.5
0.9
0.3
33..99
0.9
1.5
0.5
33..55
0.5
2.3
0.5
DDeebbtt iissssuueedd ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
1111..00
((00..00))
(0.0)
0.0
0.0
((00..22))
0.1
(0.1)
(0.1)
00..11
(0.0)
0.1
0.1
00..22
(0.1)
0.3
(0.1)
00..77
((00..11))
(0.0)
(0.0)
(0.0)
((00..11))
0.1
(0.1)
(0.1)
00..11
0.0
0.1
0.1
((00..00))
(0.1)
0.1
(0.1)
00..66
00..33
0.0
0.2
0.0
00..00
0.0
0.0
0.0
11..00
0.6
0.0
0.1
00..00
0.0
0.0
0.0
00..00
((11..66))
(0.0)
(0.4)
(0.8)
00..00
0.0
0.0
0.0
((00..66))
(0.3)
0.0
(0.1)
00..00
0.0
0.0
0.0
00..00
11..22
0.0
0.0
1.2
00..55
0.1
0.3
0.0
00..00
0.0
0.0
0.0
00..99
0.0
0.8
0.0
88..00
00..00
0.0
0.0
0.0
((00..77))
(0.2)
(0.4)
(0.1)
00..00
0.0
0.0
0.0
((11..88))
(0.1)
(1.5)
(0.0)
((44..22))
00..33
0.0
0.0
0.0
00..11
0.0
0.0
0.0
00..11
0.0
0.0
0.0
00..00
0.0
0.0
0.0
00..22
((00..33))
(0.0)
(0.1)
(0.2)
((00..33))
(0.1)
(0.2)
(0.0)
((00..33))
(0.3)
0.0
(0.0)
((00..55))
(0.0)
(0.4)
(0.1)
((11..22))
((00..00))
(0.0)
(0.0)
0.0
((00..00))
(0.0)
(0.0)
0.0
((00..00))
(0.0)
0.0
(0.0)
((00..00))
(0.0)
(0.0)
(0.0)
((00..22))
22..33
0.0
0.6
1.4
11..11
0.5
0.4
0.2
44..22
0.9
1.6
0.7
22..22
0.3
1.5
0.3
1144..22
OOtthheerr ffiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt
00..00
ffaaiirr vvaalluuee
11 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. 22 Total Level 3 assets as of 31 December 2022 were USD 6.8bn
(31 December 2021: USD 7.6bn). Total Level 3 liabilities as of 31 December 2022 were USD 13.0bn (31 December 2021: USD 17.4bn). 33 Of the USD 2.2bn in net gains / losses that is included in comprehensive
income, USD 1.7bn is recognized in the Income statement and USD 0.5bn is recognized in the Statement of comprehensive income in Gains / (losses) from own credit on financial liabilities designated at fair value,
before tax.
((00..00))
((00..00))
((00..22))
00..00
00..00
00..77
00..88
00..44
00..00
00..00
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
327
331
Note 20 Fair value measurement (continued)
h) Maximum exposure to credit risk for financial instruments measured at fair value
The tables below provide the Group’s maximum exposure to credit risk for financial instruments measured at fair value
and the respective collateral and other credit enhancements mitigating credit risk for these classes of financial
instruments.
The maximum exposure to credit risk includes the carrying amounts of financial instruments recognized on the balance
sheet subject to credit risk and the notional amounts for off-balance sheet arrangements. Where information is available,
collateral is presented at fair value. For other collateral, such as real estate, a reasonable alternative value is used. Credit
enhancements, such as credit derivative contracts and guarantees, are included at their notional amounts. Both are
capped at the maximum exposure to credit risk for which they serve as security. The “Risk management and control”
section of this report describes management’s view of credit risk and the related exposures, which can differ in certain
respects from the requirements of IFRS.
Maximum exposure to credit risk
USD bn
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt
ffaaiirr vvaalluuee oonn tthhee bbaallaannccee sshheeeett11
Financial assets at fair value
held for trading – debt instruments2,3
Derivative financial instruments4
Brokerage receivables
Financial assets at fair value not
held for trading – debt instruments5
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
Guarantees6
3311..1122..2222
CCoollllaatteerraall
CCrreeddiitt eennhhaanncceemmeennttss
MMaaxxiimmuumm
eexxppoossuurree ttoo
ccrreeddiitt rriisskk
CCaasshh
ccoollllaatteerraall
rreecceeiivveedd
CCoollllaatteerraalliizzeedd
bbyy eeqquuiittyy aanndd
ddeebbtt
iinnssttrruummeennttss
SSeeccuurreedd bbyy
rreeaall eessttaattee
OOtthheerr
ccoollllaatteerraall
NNeettttiinngg
CCrreeddiitt
ddeerriivvaattiivvee
ccoonnttrraaccttss GGuuaarraanntteeeess
EExxppoossuurree ttoo
ccrreeddiitt rriisskk
aafftteerr ccoollllaatteerraall
aanndd ccrreeddiitt
eennhhaanncceemmeennttss
1166..55
115500..11
1177..66
4444..88
222299..00
00..22
55..99
1177..33
1111..44
3344..66
00..00
113333..55
00..00
00..00
113333..55
00..00
00..00
00..22
1166..55
1100..77
00..33
3333..44
6611..00
00..00
31.12.21
Collateral
Credit enhancements
Maximum
exposure to
credit risk
Cash
collateral
received
Collateralized
by equity and
debt
instruments
Secured by
real estate
Other
collateral
Credit
derivative
contracts Guarantees
Exposure to
credit risk
after collateral
and credit
enhancements
Netting
USD bn
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt
ffaaiirr vvaalluuee oonn tthhee bbaallaannccee sshheeeett11
Financial assets at fair value
held for trading – debt instruments2,3
Derivative financial instruments4
Brokerage receivables
Financial assets at fair value not
held for trading – debt instruments5
25.7
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
5599..11
Guarantees6
0.0
11 The maximum exposure to loss is generally equal to the carrying amount and subject to change over time with market movements. 22 These positions are generally managed under the market risk framework. For
the purpose of this disclosure, collateral and credit enhancements were not considered. 33 Does not include investment fund units. 44 The amount shown in the “Netting” column represents the netting potential
not recognized on the balance sheet. Refer to Note 21 for more information. 55 Financial assets at fair value not held for trading collateralized by securities consisted of structured loans and reverse repurchase and
securities borrowing agreements. 66 The amount shown in the “Guarantees” column largely relates to sub-participations.
22.4
118.1
21.8
37.0
119999..44
0.2
22.4
10.7
0.2
4.2
21.6
11.2
3377..11
00..00
0.2
103.2
110033..22
00..00
00..00
00..00
00..00
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
328
332
Note 20 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
CCaarrrryyiinngg
aammoouunntt
3311..1122..2222
FFaaiirr vvaalluuee
Carrying
amount
31.12.21
Fair value
USD bn
AAsssseettss
Cash and balances at central banks
Loans and advances to 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
cost2
LLiiaabbiilliittiieess
Amounts due to banks
Payables from securities financing
transactions measured at amortized cost
Cash collateral payables on derivative
instruments
Customer deposits
TToottaall
116699..44
1144..88
6677..88
3355..00
338877..22
5533..33
1111..66
44..22
3366..44
552255..11
CCaarrrryyiinngg
aammoouunntt
aapppprrooxxiimmaatteess
ffaaiirr vvaalluuee11
LLeevveell 11
LLeevveell 22
LLeevveell 33
TToottaall
Total
Carrying
amount
approximates
fair value1
Level 1
Level 2
Level 3
Total
116699..44
1144..00
6644..33
3355..00
113344..33
00..11
00..00
00..00
00..00
00..00
00..00
00..77
00..00
00..00
116699..44
1144..88
192.8
15.5
11..88
11..77
6677..88
75.0
00..00
4455..99
00..00
119944..77
3355..00
337744..99
30.5
397.8
192.7
14.8
71.6
30.5
163.1
0.1
0.0
0.0
0.0
0.0
0.0
0.7
0.0
0.0
192.8
15.5
1.3
2.1
75.0
0.0
43.8
0.0
190.1
30.5
396.9
1122..99
1100..33
2255..11
22..55
5500..88
26.2
4.1
9.3
10.7
2.4
26.5
88..99
00..00
22..77
00..00
1111..66
13.1
9.1
0.0
4.0
0.0
13.1
33..55
3366..44
449911..33
00..00
00..00
00..00
00..77
00..00
3333..66
00..00
00..00
00..00
44..22
5.5
3366..44
552244..88
31.8
542.0
4.1
31.8
535.4
0.0
0.0
0.0
1.5
0.0
6.6
0.0
0.0
0.0
5.5
31.8
542.0
Debt issued measured at amortized cost
Other financial liabilities measured at
amortized cost3
5.4
00..00
11 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). 22 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 1 for information. 33 Excludes lease liabilities.
111144..66
141.1
125.3
139.2
111133..55
15.8
9988..11
1155..44
66..22
66..22
00..00
00..00
00..00
00..00
0.0
0.0
0.0
5.4
0.0
0.0
5.4
66..22
The fair values included in the table above have been calculated for disclosure purposes only. The valuation techniques
and assumptions described below relate only to the fair value of UBS’s financial instruments not measured at fair value.
Other institutions may use different methods and assumptions for their fair value estimations, and therefore such fair
value disclosures cannot necessarily be compared from one financial institution to another. The following principles were
applied when determining fair value estimates for financial instruments not measured at fair value:
– For financial instruments with remaining maturities greater than three months, the fair value was determined from
quoted market prices, if available.
– Where quoted market prices were not available, the fair values were estimated by discounting contractual cash flows
using current market interest rates or appropriate yield curves for instruments with similar credit risk and maturity.
These estimates generally include adjustments for counterparty credit risk or UBS’s own credit.
– For short-term financial instruments with remaining maturities of three months or less, the carrying amount, which is
net of credit loss allowances, is generally considered a reasonable estimate of fair value.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
329
333
Note 21 Offsetting financial assets and financial liabilities
UBS enters into netting agreements with counterparties to manage the credit risks associated primarily with repurchase
and reverse repurchase transactions, securities borrowing and lending, over-the-counter derivatives, and exchange-
traded derivatives. These netting agreements and similar arrangements generally enable the counterparties to set off
liabilities against available assets received in the ordinary course of business and / or in the event that the counterparties
to the transaction are unable to fulfill their contractual obligations.
The tables below provide a summary of financial assets and financial liabilities subject to offsetting, enforceable master
netting arrangements and similar agreements, as well as financial collateral received or pledged to mitigate credit
exposures for these financial instruments.
The Group engages in a variety of counterparty credit risk mitigation strategies in addition to netting and collateral
arrangements. Therefore, the net amounts presented in the tables below do not purport to represent their actual credit
risk exposure.
Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements
AAsssseettss ssuubbjjeecctt ttoo nneettttiinngg aarrrraannggeemmeennttss
Netting recognized on the balance sheet
Netting potential not recognized on
the balance sheet3
Gross assets
before netting
Netting with
gross liabilities2
NNeett aasssseettss
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
AAsssseettss aafftteerr
ccoonnssiiddeerraattiioonn
ooff
nneettttiinngg
ppootteennttiiaall
Financial
liabilities
Collateral
received
AAsssseettss nnoott
ssuubbjjeecctt ttoo nneettttiinngg
aarrrraannggeemmeennttss44
AAsssseettss
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
TToottaall aasssseettss
TToottaall aasssseettss
aafftteerr
ccoonnssiiddeerraattiioonn
ooff nneettttiinngg
ppootteennttiiaall
TToottaall aasssseettss
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
60.8
147.4
33.5
85.6
84.4
332277..22
67.7
116.0
29.4
93.1
93.1
330066..22
(11.1)
(2.5)
4499..66
114444..99
(3.0)
(110.9)
(46.4)
(28.5)
00..33
55..55
0.0
3333..55
(20.9)
(1.9)
1100..66
(76.8)
88..77
(1.5)
(7.3)
00..00
(76.8)
((9900..44))
77..66
223366..88
(1.5)
((113366..33))
(6.1)
((8844..11))
00..00
1166..44
(13.8)
(3.6)
5533..99
111122..44
(2.9)
(88.9)
(51.0)
(18.5)
00..00
55..00
0.0
2299..44
(15.2)
(3.3)
1111..00
(87.6)
55..55
(1.1)
(4.4)
00..00
(87.6)
((110055..00))
55..55
220011..22
(1.1)
((110088..11))
(4.4)
((7777..22))
00..00
1155..99
1188..22
55..22
11..55
5511..00
00..11
7766..00
2211..11
55..77
11..11
5544..66
00..33
8822..66
1188..55
1100..77
1122..11
5511..00
00..11
9922..33
2211..11
1100..77
1122..11
5544..66
00..33
9988..55
6677..88
115500..11
3355..00
5599..88
77..77
331122..88
7755..00
111188..11
3300..55
6600..11
55..88
228833..77
As of 31.12.22, USD bn
Receivables from securities financing
transactions measured at amortized cost
Derivative financial instruments
Cash collateral receivables on
derivative instruments1
Financial assets at fair value
not held for trading
of which: reverse
repurchase agreements
TToottaall aasssseettss
As of 31.12.21, USD bn
Receivables from securities financing
transactions measured at amortized cost
Derivative financial instruments
Cash collateral receivables on
derivative instruments1
Financial assets at fair value
not held for trading
of which: reverse
repurchase agreements
TToottaall aasssseettss
11 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. 22 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. 33 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. 44 Includes assets not subject to enforceable netting arrangements and other out-of-scope items.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
330
334
Note 21 Offsetting financial assets and financial liabilities (continued)
Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements
LLiiaabbiilliittiieess ssuubbjjeecctt ttoo nneettttiinngg aarrrraannggeemmeennttss
Netting recognized on the balance sheet
Netting potential not recognized
on the balance sheet3
NNeett
lliiaabbiilliittiieess
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
Netting with
gross assets2
LLiiaabbiilliittiieess
aafftteerr
ccoonnssiiddeerraattiioonn
ooff nneettttiinngg
ppootteennttiiaall
Financial
assets
Collateral
pledged
Gross
liabilities
before
netting
14.1
150.3
(11.1)
(2.5)
33..00
114477..88
(1.3)
(110.9)
(1.8)
(26.2)
34.9
0.0
3344..99
(20.0)
(1.9)
92.5
92.1
229911..77
(76.9)
(76.9)
((9900..44))
1155..66
1155..33
220011..33
(3.2)
(3.2)
((113355..33))
(12.4)
(12.1)
((4422..33))
16.9
118.4
(12.8)
(3.6)
44..11
111144..99
(1.8)
(88.9)
(2.3)
(18.1)
30.4
0.0
3300..44
(13.1)
(3.3)
94.8
94.6
226600..66
(88.6)
(88.6)
((110055..00))
66..22
66..00
115555..66
(2.2)
(2.2)
((110066..00))
(3.8)
(3.8)
((2277..55))
00..00
1100..77
1133..00
00..00
00..00
2233..77
00..00
77..99
1144..00
00..22
00..00
2222..11
LLiiaabbiilliittiieess nnoott
ssuubbjjeecctt
ttoo nneettttiinngg
aarrrraannggeemmeennttss44
LLiiaabbiilliittiieess
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
TToottaall lliiaabbiilliittiieess
TToottaall
lliiaabbiilliittiieess
aafftteerr
ccoonnssiiddeerraattiioonn
ooff nneettttiinngg
ppootteennttiiaall
TToottaall
lliiaabbiilliittiieess
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
11..22
77..11
11..66
1144..66
00..11
2244..55
11..44
66..44
11..44
2233..99
00..44
3333..11
11..22
1177..88
1144..55
1144..66
00..11
4488..11
11..44
1144..33
1155..44
2244..11
00..44
5555..22
44..22
115544..99
3366..44
3300..22
1155..33
222255..88
55..55
112211..33
3311..88
3300..11
66..44
118888..77
As of 31.12.22, USD bn
Payables from securities financing
transactions measured at amortized cost
Derivative financial instruments
Cash collateral payables on
derivative instruments1
Other financial liabilities
designated at fair value
of which: repurchase agreements
TToottaall lliiaabbiilliittiieess
As of 31.12.21, USD bn
Payables from securities financing
transactions measured at amortized cost
Derivative financial instruments
Cash collateral payables on
derivative instruments1
Other financial liabilities
designated at fair value
of which: repurchase agreements
TToottaall lliiaabbiilliittiieess
11 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. 22 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. 33 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. 44 Includes liabilities not subject to enforceable netting arrangements and other out-of-scope items.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
331
335
Note 22 Restricted and transferred financial assets
This Note provides information about restricted financial assets (Note 22a), transfers of financial assets (Note 22b and
22c) and financial assets that are received as collateral with the right to resell or repledge these assets (Note 22d).
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, against
loans from Swiss mortgage institutions and in connection with the issuance of covered bonds. The Group generally enters
into repurchase and securities lending arrangements 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. Pledged mortgage loans serve as collateral for existing liabilities against Swiss central
mortgage institutions and for existing covered bond issuances of USD 8,962m as of 31 December 2022 (31 December
2021: USD 10,843m).
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
FFiinnaanncciiaall aasssseettss pplleeddggeedd aass ccoollllaatteerraall
Financial assets at fair value held for trading
Loans and advances to customers1
Financial assets at fair value not held for trading
Debt securities classified as Other financial assets measured at amortized cost
TToottaall ffiinnaanncciiaall aasssseettss pplleeddggeedd aass ccoollllaatteerraall
3311..1122..2222
31.12.21
ooff wwhhiicchh:: aasssseettss
pplleeddggeedd aass
ccoollllaatteerraall tthhaatt
mmaayy bbee ssoolldd oorr
rreepplleeddggeedd bbyy
ccoouunntteerrppaarrttiieess
3366,,774422
11,,222200
22,,668855
of which: assets
pledged as
collateral that
may be sold or
repledged by
counterparties
43,397
961
1,870
Restricted
financial assets
63,725
18,160
961
2,234
85,079
RReessttrriicctteedd
ffiinnaanncciiaall aasssseettss
5577,,337777
1155,,119955
11,,550099
33,,443322
7777,,551133
OOtthheerr rreessttrriicctteedd ffiinnaanncciiaall aasssseettss
Loans and advances to banks
Financial assets at fair value held for trading
Cash collateral receivables on derivative 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
TToottaall ootthheerr rreessttrriicctteedd ffiinnaanncciiaall aasssseettss
TToottaall ffiinnaanncciiaall aasssseettss pplleeddggeedd aanndd ootthheerr rreessttrriicctteedd ffiinnaanncciiaall aasssseettss22
11 Mainly related to mortgage loans that serve as collateral for existing liabilities toward Swiss central mortgage institutions and for existing covered bond issuances. Of these pledged mortgage loans, approximately
USD 3.1bn as of 31 December 2022 (31 December 2021: approximately USD 2.7bn) could be withdrawn or used for future liabilities or covered bond issuances without breaching existing collateral requirements.
22 Does not include assets placed with central banks related to undrawn credit lines and for payment, clearing and settlement purposes (31 December 2022: USD 5.9bn; 31 December 2021: USD 4.4bn).
3,408
392
4,747
1,237
22,765
894
97
33,540
118,619
33,,668899
116622
55,,115555
11,,112277
1144,,447788
11,,884422
885599
2277,,331122
110044,,882255
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
332
336
Note 22 Restricted and transferred financial assets (continued)
In addition to restrictions on financial assets, UBS Group AG and its subsidiaries are, in certain cases, subject to regulatory
requirements that affect the transfer of dividends and capital within the Group, as well as intercompany lending.
Supervisory authorities also may require entities to measure capital and leverage ratios on a stressed basis, such as the
Federal Reserve Board’s Comprehensive Capital Analysis and Review (CCAR) process, which may limit the relevant
subsidiaries’ ability to make distributions of capital based on the results of those tests.
Supervisory authorities generally have discretion to impose higher requirements or to otherwise limit the activities of
subsidiaries.
Non-regulated subsidiaries are generally not subject to such requirements and transfer restrictions. However, restrictions
can also be the result of different legal, regulatory, contractual, entity- or country-specific arrangements and / or
requirements.
› Refer to the “Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups” section of this report
for financial information about significant regulated subsidiaries of the Group
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
3311..1122..2222
31.12.21
Financial assets at fair value held for trading that may be sold or repledged by counterparties
relating to securities lending and repurchase agreements in exchange for cash received
relating to securities lending agreements in exchange for securities received
relating to other financial asset transfers
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
TToottaall ffiinnaanncciiaall aasssseettss ttrraannssffeerrrreedd
CCaarrrryyiinngg aammoouunntt
ooff ttrraannssffeerrrreedd
aasssseettss
3366,,774422
1166,,775566
1188,,990088
11,,007788
11,,222200
22,,668855
4400,,664477
CCaarrrryyiinngg aammoouunntt ooff
aassssoocciiaatteedd lliiaabbiilliittiieess
rreeccooggnniizzeedd
oonn bbaallaannccee sshheeeett
1166,,447700
1166,,447700
Carrying amount
of transferred
assets
43,397
17,970
24,146
1,281
Carrying amount of
associated liabilities
recognized
on balance sheet
17,687
17,687
11,,005500
22,,330022
1199,,882222
961
1,870
46,227
898
1,725
20,311
Transactions in which financial assets are transferred, but continue to be recognized in their entirety on UBS’s balance
sheet include securities lending and repurchase agreements, as well as other financial asset transfers. Repurchase and
securities lending arrangements are, for the most part, conducted under standard market agreements and are undertaken
with counterparties subject to UBS’s normal credit risk control processes.
› Refer to Note 1a item 2e for more information about repurchase and securities lending agreements
As of 31 December 2022, approximately 45% of the transferred financial assets were assets held for trading transferred
in exchange for cash, in which case the associated recognized liability represents the amount to be repaid to
counterparties. For securities lending and repurchase agreements, a haircut of between 0% and 15% is generally applied
to the transferred assets, which results in associated liabilities having a carrying amount below the carrying amount of
the transferred assets. The counterparties to the associated liabilities presented in the table above have full recourse to
UBS.
In securities lending arrangements entered into in exchange for the receipt of other securities as collateral, neither the
securities received nor the obligation to return them are recognized on UBS’s balance sheet, as the risks and rewards of
ownership are not transferred to UBS. In cases where such financial assets received are subsequently sold or repledged
in another transaction, this is not considered to be a transfer of financial assets.
Other financial asset transfers primarily include securities transferred to collateralize derivative transactions, for which the
carrying amount of associated liabilities is not provided in the table above, because those replacement values are
managed on a portfolio basis across counterparties and product types, and therefore there is no direct relationship
between the specific collateral pledged and the associated liability.
Transferred financial assets that are not subject to derecognition in full but remain on the balance sheet to the extent of
the Group’s continuing involvement were not material as of 31 December 2022 and as of 31 December 2021.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
333
337
Note 22 Restricted and transferred financial assets (continued)
c) Transferred financial assets that are derecognized in their entirety with continuing involvement
Continuing involvement in a transferred and fully derecognized financial asset may result from contractual provisions in
the particular transfer agreement or from a separate agreement, with the counterparty or a third party, entered into in
connection with the transfer.
The fair value and carrying amount of UBS’s continuing involvement from transferred positions as of 31 December 2022
and 31 December 2021 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
Fair value of assets received that can be sold or repledged
received as collateral under reverse repurchase, securities borrowing
and lending arrangements, derivative and other transactions 1
received in unsecured borrowings
Thereof sold or repledged 2
in connection with financing activities
to satisfy commitments under short sale transactions
in connection with derivative and other transactions 1
3311..1122..2222
443344,,002233
441188,,884477
1155,,117755
333311,,880055
228888,,775522
2299,,551155
1133,,553388
31.12.21
497,828
483,426
14,402
367,440
319,176
31,688
16,575
11 Includes securities received as initial margin from its clients that UBS is required to remit to central counterparties, brokers and deposit banks through its exchange-traded derivative clearing and execution services.
22 Does not include off-balance sheet securities (31 December 2022: USD 9.9bn; 31 December 2021: USD 12.7bn) 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 23 Maturity analysis of assets and liabilities
a) Maturity analysis of carrying amounts of assets and liabilities
The table below provides an analysis of carrying amounts of balance sheet assets and liabilities, as well as off-balance
sheet exposures by residual contractual maturity as of the reporting date. The residual contractual maturity of assets
includes the effect of callable features. The residual contractual maturity of liabilities and off-balance sheet exposures is
based on the earliest date on which a third party could require UBS to pay.
Derivative financial instruments and financial assets and liabilities at fair value held for trading are presented in the Due
within 1 month column; however, the respective contractual maturities may extend over significantly longer periods.
Assets held to hedge unit-linked investment contracts (presented within Financial assets at fair value not held for trading)
are presented in the Due within 1 month column, consistent with the maturity assigned to the related amounts due
under unit-linked investment contracts (presented within Other financial liabilities designated at fair value).
Other financial assets and liabilities with no contractual maturity, such as equity securities, are presented in the Perpetual
/ Not applicable column. Undated or perpetual instruments are classified based on the contractual notice period that the
counterparty of the instrument is entitled to give. Where there is no contractual notice period, undated or perpetual
contracts are presented in the Perpetual / Not applicable column.
Non-financial assets and liabilities with no contractual maturity are generally included in the Perpetual / Not applicable
column.
Loan commitments are classified based on the earliest date they can be drawn down.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
334
338
Note 23 Maturity analysis of assets and liabilities (continued)
USD bn
AAsssseettss
Total financial assets measured at amortized cost1
Loans and advances to customers
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 income1
Total non-financial assets
TToottaall aasssseettss
LLiiaabbiilliittiieess
Total financial liabilities measured at amortized cost
Customer deposits
Debt issued measured at amortized cost
of which: non-subordinated fixed rate debt
of which: non-subordinated floating rate debt
of which: subordinated fixed-rate debt
Total financial liabilities measured at fair value through
profit or loss2
Debt issued designated at fair value
of which: non-subordinated fixed rate debt
of which: non-subordinated floating rate debt
Total non-financial liabilities
TToottaall lliiaabbiilliittiieess
GGuuaarraanntteeeess,, llooaann ccoommmmiittmmeennttss aanndd ffoorrwwaarrdd ssttaarrttiinngg ttrraannssaaccttiioonnss33
Loan commitments
Guarantees
Forward starting transactions, reverse repurchase and
securities borrowing agreements
TToottaall
DDuuee wwiitthhiinn
11 mmoonntthh
DDuuee bbeettwweeeenn
11 aanndd 33
mmoonntthhss
DDuuee bbeettwweeeenn
33 aanndd 1122
mmoonntthhss
DDuuee bbeettwweeeenn
11 aanndd 22 yyeeaarrss
DDuuee bbeettwweeeenn
22 aanndd 55 yyeeaarrss
DDuuee oovveerr
55 yyeeaarrss
PPeerrppeettuuaall //
NNoott
aapppplliiccaabbllee
3311..1122..2222
422.6
139.4
300.2
24.6
0.3
7.6
773300..77
521.9
463.0
6.6
3.1
1.5
2.0
265.9
9.3
0.5
8.8
7.2
779955..11
39.3
22.4
3.8
6655..44
28.7
16.3
10.0
10.0
0.9
3399..66
40.0
28.3
8.8
4.0
4.8
13.8
12.3
2.3
10.0
3.0
5566..77
34.4
28.3
7.8
7.8
0.9
0.2
4433..44
49.6
23.8
23.3
13.2
10.1
16.3
15.9
5.6
10.3
6655..99
78.7
74.9
3.6
3.6
0.1
8822..44
20.5
7.5
11.9
7.6
1.9
2.4
19.6
19.3
3.6
15.7
4400..11
0.3
0.4
0.0
00..33
00..44
00..00
70.4
55.5
9.9
9.9
0.0
2.0
8822..33
35.1
2.2
31.1
28.4
2.2
0.5
7.3
6.9
2.0
4.9
92.7
72.9
2.0
2.0
0.0
0.4
9955..11
23.4
0.3
21.9
21.9
0.0
10.5
10.0
3.4
6.6
4422..44
3333..99
1.9
1.9
29.0
3311..00
11.1
11.1
11.1
2.1
1133..22
USD bn
AAsssseettss
Total financial assets measured at amortized cost
Loans and advances to customers
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
TToottaall aasssseettss
LLiiaabbiilliittiieess
Total financial liabilities measured at amortized cost
Customer deposits
Debt issued measured at amortized cost
of which: non-subordinated fixed rate debt
of which: non-subordinated floating rate debt
of which: subordinated fixed-rate debt
Total financial liabilities measured at fair value through
profit or loss2
Debt issued designated at fair value
of which: non-subordinated fixed rate debt
of which: non-subordinated floating rate debt
Total non-financial liabilities
TToottaall lliiaabbiilliittiieess
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
31.12.21
453.7
157.2
300.5
29.7
0.1
7.7
776611..99
581.6
530.1
3.7
3.7
237.7
12.5
0.8
11.7
9.3
882288..66
45.9
28.7
5.8
5.8
0.4
0.5
5522..66
20.1
5.2
12.1
10.8
1.3
12.0
11.6
1.2
10.3
3.0
3355..11
43.1
37.2
8.1
8.1
0.7
0.1
5522..00
48.4
3.2
39.8
28.8
9.0
2.0
14.7
14.1
2.9
11.2
6633..00
53.7
49.6
5.2
5.2
0.1
0.2
5599..22
17.0
1.6
14.9
10.6
4.3
18.8
18.6
1.2
17.4
3355..88
64.1
54.9
7.1
7.1
0.4
1.4
7733..00
35.6
1.5
32.5
26.0
3.3
3.1
5.6
5.4
1.3
4.2
77.3
70.1
2.5
2.5
7.1
0.3
8877..22
24.4
0.3
22.7
22.7
12.2
11.5
4.8
6.8
4411..22
3366..66
1.8
1.8
29.4
3311..22
13.5
13.5
13.5
2.4
1155..99
TToottaall
727.6
387.2
335.3
59.8
2.2
39.2
11,,110044..44
701.5
525.1
114.6
78.1
20.5
16.0
333.4
73.6
17.4
56.2
12.3
11,,004477..11
40.0
22.4
3.8
6666..22
Total
737.8
397.8
330.9
60.1
8.8
39.7
11,,111177..22
740.6
542.0
139.2
102.6
17.9
18.6
300.9
73.8
12.2
61.6
14.7
11,,005566..22
GGuuaarraanntteeeess,, llooaann ccoommmmiittmmeennttss aanndd ffoorrwwaarrdd ssttaarrttiinngg ttrraannssaaccttiioonnss33
Loan commitments
Guarantees
Forward starting transactions, reverse repurchase and
1.4
securities borrowing agreements
TToottaall
6622..11
00..55
11 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 1b for more information. 22 As of 31 December 2022 and 31 December 2021, the contractual redemption amount at maturity of debt issued designated at fair value through profit or loss and other
financial liabilities measured at fair value through profit or loss was not materially different from the carrying amount. 33 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 10 for more information.
38.3
21.2
39.5
21.2
1.4
6600..99
0.5
0.7
0.0
00..00
00..00
00..77
00..00
00..00
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
335
339
Note 23 Maturity analysis of assets and liabilities (continued)
b) Maturity analysis of financial liabilities on an undiscounted basis
The table below provides an analysis of financial liabilities on an undiscounted basis, including all cash flows relating to
principal and future interest payments. The residual contractual maturities for non-derivative and non-trading financial
liabilities are based on the earliest date on which UBS could be contractually required to pay. Derivative positions and
trading liabilities, predominantly made up of short sale transactions, are presented in the Due within 1 month column,
as this provides a conservative reflection of the nature of these trading activities. The residual contractual maturities may
extend over significantly longer periods.
USD bn
FFiinnaanncciiaall lliiaabbiilliittiieess rreeccooggnniizzeedd oonn bbaallaannccee sshheeeett11
Amounts due to banks
Payables from securities financing transactions
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost2
Other financial liabilities measured at amortized cost
of which: lease liabilities
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial liabilities at fair value held for trading3, 4
Derivative financial instruments3, 5
Brokerage payables designated at fair value
Debt issued designated at fair value6
Other financial liabilities designated at fair value
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh
pprrooffiitt oorr lloossss
TToottaall
GGuuaarraanntteeeess,, ccoommmmiittmmeennttss aanndd ffoorrwwaarrdd ssttaarrttiinngg ttrraannssaaccttiioonnss
Loan commitments7
Guarantees
Forward starting transactions, reverse repurchase and
securities borrowing agreements7
TToottaall
USD bn
FFiinnaanncciiaall lliiaabbiilliittiieess rreeccooggnniizzeedd oonn bbaallaannccee sshheeeett11
Amounts due to banks
Payables from securities financing transactions
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost2
Other financial liabilities measured at amortized cost
of which: lease liabilities
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial liabilities at fair value held for trading3,4
Derivative financial instruments3,5
Brokerage payables designated at fair value
Debt issued designated at fair value6
Other financial liabilities designated at fair value
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh
pprrooffiitt oorr lloossss
TToottaall
DDuuee wwiitthhiinn
11 mmoonntthh
DDuuee bbeettwweeeenn
11 aanndd 33
mmoonntthhss
DDuuee bbeettwweeeenn
33 aanndd 1122
mmoonntthhss
DDuuee bbeettwweeeenn
11 aanndd 22 yyeeaarrss
DDuuee bbeettwweeeenn
22 aanndd 55 yyeeaarrss
DDuuee oovveerr
55 yyeeaarrss
PPeerrppeettuuaall //
NNoott
aapppplliiccaabbllee
3311..1122..2222
6.3
3.3
36.4
463.1
6.8
4.7
0.1
520.7
29.5
154.9
45.1
9.4
27.1
266.0
778866..88
39.3
22.4
3.8
6655..44
2.6
0.3
28.5
9.4
0.1
0.1
40.9
12.4
1.4
13.8
5544..77
0.3
1.9
0.4
24.5
24.8
0.5
0.5
52.1
16.1
0.4
16.4
6688..66
0.4
0.3
0.3
8.0
14.4
0.5
0.5
23.6
19.7
0.4
20.0
4433..66
0.0
00..33
00..44
00..00
0.6
0.0
2.4
37.9
1.3
1.3
42.3
7.1
0.5
7.6
4499..88
0.3
28.0
1.4
1.4
29.7
18.8
0.8
19.6
4499..33
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
31.12.21
6.7
3.8
31.8
530.1
4.0
4.5
0.1
580.9
31.7
121.3
44.0
13.8
28.1
239.0
881199..88
2.4
0.3
5.2
12.7
0.1
0.1
20.8
11.5
0.4
11.9
3322..77
3.5
1.6
3.3
41.1
0.5
0.5
49.9
13.5
0.5
14.0
6633..99
0.0
0.0
1.7
16.7
0.6
0.6
19.0
18.8
0.2
19.0
3388..00
0.5
1.5
36.9
1.3
1.3
40.3
5.7
0.2
5.9
4466..11
0.4
24.3
1.6
1.6
26.2
18.5
1.1
19.6
4455..99
343.5
11,,006644..77
1111..99
11.9
11.9
13.3
13.3
TToottaall
11.7
4.4
36.4
526.9
133.4
8.5
3.8
721.2
29.5
154.9
45.1
83.4
30.6
40.0
22.4
3.8
6666..22
Total
13.1
5.7
31.8
542.3
148.9
8.4
4.0
750.2
31.7
121.3
44.0
81.9
30.5
309.4
1133..33
11,,005599..66
0.5
38.3
21.2
GGuuaarraanntteeeess,, ccoommmmiittmmeennttss aanndd ffoorrwwaarrdd ssttaarrttiinngg ttrraannssaaccttiioonnss
Loan commitments7
Guarantees
Forward starting transactions, reverse repurchase
and securities borrowing agreements7
1.4
TToottaall
6622..11
00..55
11 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. 22 The time-bucket Perpetual / Not applicable includes perpetual loss-absorbing additional tier 1 capital instruments. 33 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. 44 Contractual maturities of financial liabilities at fair value held for trading are: USD 27.8bn due within 1 month (31 December
2021: USD 30.8bn), USD 1.7bn due between 1 month and 1 year (31 December 2021: USD 0.9bn) and USD 0bn due between 1 and 5 years (31 December 2021: USD 0bn). 55 Includes USD 46m (31 December 2021:
USD 34m) 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 34.4bn (31 December 2021: USD 36.0bn) is presented in Note 10 under notional amounts. 66 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. 77 Excludes derivative loan commitments and
forward starting reverse repurchase agreements measured at fair value (see footnote 5).
39.5
21.2
1.4
6600..99
00..00
00..77
0.0
0.7
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
336
340
Note 24 Interest rate benchmark reform
Background
A market-wide reform of major interest rate benchmarks is being undertaken globally. The publication of London
Interbank Offered Rates (LIBORs) ceased immediately after 31 December 2021 for all non-US dollar LIBORs, as well as for
one-week and two-month USD LIBOR. Publication of the remaining USD LIBOR tenors will cease immediately after
30 June 2023.
In December 2022, the FCA consulted on the continued publication of one-, three- and six-month USD LIBOR under a
synthetic format until the end of September 2024 to ensure an orderly winding down of remaining contracts that are
not governed by US law. In addition, in December 2022, the US Federal Reserve Board adopted the final rules that
implement the Adjustable Interest Rate (LIBOR) Act, which is substantially based on, and supersedes, the New York State
LIBOR legislation. The Adjustable Interest Rate (LIBOR) Act provides a legislative solution for USD LIBOR legacy products
governed by any US state law should such products fail to transition prior to the USD LIBOR cessation date of 30 June
2023.
A framework has been established within UBS to address the transition of contracts that do not contain adequate fallback
provisions and to cease entering into new LIBOR contracts, with the exception of specific circumstances that are allowed
by regulatory provisions for USD LIBOR.
Governance over the transition to alternative benchmark rates
Throughout the transition process UBS has been maintaining a global cross-divisional, cross-functional governance
structure and change program to address the scale and complexity of the transition. This global program is sponsored by
the Group CFO and led by senior representatives from the business divisions and UBS’s control and support functions.
The program includes governance and execution structures within each business division, together with cross-divisional
teams from each control and support function. During 2022, progress was overseen centrally via a monthly Group LIBOR
Transition Forum with an increased US regional focus.
Risks
A core part of UBS’s change program is the identification, management and monitoring of the risks associated with IBOR
reform and transition. These risks include, but are not limited to, the following:
– economic risks to UBS and its clients, through the repricing of existing contracts, reduced transparency and / or liquidity
of pricing information, market uncertainty or disruption;
– accounting risks, where the transition affects the accounting treatment, including hedge accounting and consequential
income statement volatility;
– valuation risks arising from the variation between benchmarks that will cease and ARRs, affecting the risk profile of
financial instruments;
– operational risks arising from changes to UBS’s front-to-back processes and systems to accommodate the transition
(e.g., data sourcing and processing and bulk migration of contracts); and
– legal and conduct risks relating to UBS’s engagement with clients and market counterparties around new benchmark
products and amendments required for existing contracts referencing benchmarks that will cease.
Overall, the effort required to transition is affected by multiple factors, including whether negotiations need to take place
with multiple stakeholders (as is the case for syndicated loans or certain listed securities), market readiness and a client’s
technical readiness to handle ARR market conventions. UBS remains confident that it has the transparency, oversight and
operational preparedness to progress with the IBOR transition consistent with market timelines, given the significant
progress made as of 31 December 2022. UBS did not have and does not expect changes to its risk management approach
and strategy as a result of interest rate benchmark reform.
Transition progress
UBS’s significant non-derivative exposures subject to IBOR reform primarily related to brokerage receivable and payable
balances, corporate and private loans, and mortgages, linked to CHF and USD LIBORs. During 2020, UBS transitioned
most of its CHF LIBOR-linked deposits to the Swiss Average Overnight Rate (SARON). In that same year, UBS launched
SARON-based mortgages and corporate loans based on all major ARRs in the Swiss market, as well as Secure Overnight
Financing Rate (SOFR)-based mortgages in the US market.
Throughout 2021, UBS transitioned substantially all of its private and corporate loans linked to non-USD IBORs, with the
remaining CHF LIBOR-linked contracts transitioning on their first roll date in 2022. In addition, as of 31 December 2021
UBS had completed the transition of IBOR-linked non-derivative financial assets and liabilities related to brokerage
accounts, except for balances originated in the US, which transitioned to SOFR in January 2022.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
337
341
Note 24 Interest rate benchmark reform (continued)
In 2022, UBS focused its efforts on the transition of USD LIBOR and the remaining non-USD LIBOR contracts, by leveraging
industry solutions (e.g., the use of fallback provisions), through third-party actions (those by clearing houses, agents, etc.)
and bi-lateral contract negotiations. As of 31 December 2022, the transition of non-USD IBORs is substantially complete.
In addition, in 2022, substantially all US securities-based lending has been transitioned to SOFR and UBS continues to
make good progress on the transition of the remaining USD LIBOR non-derivative assets and liabilities, with the US
mortgage portfolio of USD 9bn (31 December 2021: USD 11bn) the largest remaining exposure left to transition.
In August 2022, to facilitate the transition of derivatives linked to the USD LIBOR Swap Rate, UBS adhered to the June
2022 Benchmark Module of the ISDA 2021 Fallbacks Protocol on the USD LIBOR Swap Rate. UBS will begin gradually
transitioning USD LIBOR derivatives not transacted with clearing houses or exchanges from the first quarter of 2023. The
transition of USD LIBOR-cleared derivatives is planned to commence in the second quarter of 2023.
As of 31 December 2022, UBS had approximately USD 3bn equivalent of yen- and US dollar-denominated publicly issued
benchmark bonds that, per current contractual terms, if not called on their respective call dates, would reset based
directly on JPY LIBOR and USD LIBOR. In addition, certain US dollar-denominated benchmark bonds publicly issued by
UBS reference rates indirectly derived from IBORs, if they are not called on their respective call dates. These bonds have
robust IBOR fallback language and the confirmation of interest rate calculation mechanics will be communicated as
market standards formalize and in advance of any rate resets. These debt instruments have not been included in the table
below, given their current fixed-rate coupon.
Financial instruments yet to transition to alternative benchmarks
The amounts included in the table below relate to financial instrument contracts across UBS’s business divisions where
UBS has material exposures subject to IBOR reform that have not yet transitioned to ARRs, and that:
– contractually reference an interest rate benchmark that will transition to an alternative benchmark; and
– have a contractual maturity date (including open-ended contracts) after the agreed cessation dates.
Contracts where penalty terms reference IBORs, or where exposure to an IBOR is not the primary purpose of the contract,
have not been included, as these contracts do not have a material impact on the transition process.
In line with information provided to management and external parties monitoring UBS’s transition progress, the table
below includes the following financial metrics for instruments external to the Group that are subject to interest rate
benchmark reform:
– gross carrying value / exposure for non-derivative financial instruments; and
– total trade count for derivative financial instruments.
The exposures included in the table below reflect the maximum IBOR exposure, without regard for early termination
rights, with the actual exposure being dependent upon client preferences and investment decisions.
As of 31 December 2022, UBS had made significant progress in transitioning LIBOR exposures to ARRs. The remaining
USD LIBOR-linked exposures included in the table below primarily relate to derivatives and US mortgages, with the
transition planned to be completed by 30 June 2023.
CCaarrrryyiinngg vvaalluuee ooff nnoonn--ddeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss
Total non-derivative financial assets
Total non-derivative financial liabilities
TTrraaddee ccoouunntt ooff ddeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss
Total derivative financial instruments
3311..1122..222211
LLIIBBOORR bbeenncchhmmaarrkk rraatteess
31.12.21
MMeeaassuurree
USD m
USD m
UUSSDD
USD
CHF
1144,,22669933
11,,11338855
65,2343
1,9855
21,6164
275
GBP
455
35
EUR2
1
56
JPY
0
0
Trade count
3322,,00006677
40,5007,8
8299
1839
3,7449
1849
USD m
OOffff--bbaallaannccee sshheeeett eexxppoossuurreess
Total irrevocable loan commitments
0
11 As of 31 December 2022, non-USD balances and trade counts are minimal. 22 Relates primarily to EUR LIBOR positions. 33 Includes USD 1bn (31 December 2021: USD 1bn) of loans related to revolving multi-
currency credit lines, where IBOR transition efforts are complete, except for USD LIBOR. Balances as of 31 December 2021 also include USD 37bn USD LIBOR securities-based lending and USD 5bn brokerage accounts,
which for the most part transitioned to SOFR in January 2022. The remaining balances as of 31 December 2022 and 31 December 2021 primarily relate to US mortgages and corporate lending. 44 Relates primarily
to CHF LIBOR mortgages, which have automatically transitioned to SARON on their first roll date in 2022. 55 Relates to floating-rate notes that per their contractual terms can reset to rates linked to LIBOR, with
transition dependent upon the actions of respective issuers. 66 Relates to contracts that transitioned in January 2022. 77 Includes approximately 2,000 (31 December 2021: 1,000) contracts having a contractual
maturity after 30 June 2023, with the last USD LIBOR fixing occurring before 30 June 2023. No further contractual fixing is required for these contracts. 88 Includes approximately 5,000 cross-currency derivatives, of
which approximately 500 have both a non-USD LIBOR leg and a USD LIBOR leg, where the non-USD leg transitioned in January 2022 before the next fixing date. The remainder represents cross-currency swaps with
an ARR leg and a USD IBOR leg. 99 Includes predominantly bilateral derivatives, which transitioned in January 2022, and an insignificant amount of cleared derivatives, where the respective clearing houses’ organized
transition happened in January 2022. 1100 Includes approximately USD 3bn of loan commitments that can be drawn in different currencies, however only USD LIBOR transition efforts remain open, with completion
scheduled for 2023. 1111 Includes loan commitments that can be drawn in different currencies at the client‘s discretion, of which approximately USD 3bn have only USD LIBOR exposure remaining and approximately
USD 2bn retain a non-USD LIBOR interest rate, with transition dependent upon the actions of other parties. The remainder represents loan commitments that can be drawn in US dollars only and will transition on or
before 30 June 2023.
11,86311
44,,6600661100
0
0
0
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
338
342
Note 25 Hedge accounting
Derivatives designated in hedge accounting relationships
The Group applies hedge accounting to interest rate risk and foreign exchange risk, including structural foreign exchange
risk related to net investments in foreign operations.
› Refer to “Market risk” in the “Risk management and control” section of this report for more information about how risks arise
and how they are managed by the Group
Hedging instruments and hedged risk
Interest rate swaps are designated in fair value hedges or cash flow hedges of interest rate risk arising solely from changes
in benchmark interest rates. Fair value changes arising from such risk are usually the largest component of the overall
change in the fair value of the hedged position in 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 re-designated in cash flow hedges, 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 the debt issued, debt securities held and long-term fixed-rate mortgage loans in Swiss francs to floating
cash flows by entering into interest rate swaps that either receive fixed and pay floating cash flows or that pay fixed and
receive floating cash flows.
Designations have been made in US dollars, euro, Swiss francs, Australian dollars, yen, pounds sterling and Singapore
dollars. For new hedging instruments and hedged risk designations entered into starting from 2021 in these currencies
(with the exception of euro), the benchmark rate was the relevant alternative reference rate (ARR). Following the
interbank offered rate (IBOR) transition for swaps with LCH (formerly the London Clearing House) in December 2021,
the benchmark hedge rate for Swiss franc, yen and pound sterling designations was changed from an IBOR rate to the
relevant ARR with the hedge relationship continuing in accordance with Interest Rate Benchmark Reform – Phase 2
(Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
Cash flow hedges of forecast transactions
The Group hedges forecast cash flows on non-trading financial assets and liabilities that bear interest at variable rates or
are expected to be refinanced or reinvested in the future, due to movements in future market rates. The amounts and
timing of future cash flows, representing both principal and interest flows, are projected on the basis of contractual terms
and other relevant factors, including estimates of prepayments and defaults. The aggregate principal balances and
interest cash flows across all portfolios over time form the basis for identifying the non-trading interest rate risk of the
Group, which is hedged with interest rate swaps, the maximum maturity of which is 15 years. Cash flow forecasts and
risk exposures are monitored and adjusted on an ongoing basis, and consequently additional hedging instruments are
traded and designated, or are terminated resulting in a hedge discontinuance. Hedge designations have been made in
the following currencies: US dollars, euro, Swiss francs, pounds sterling and Hong Kong dollars. The cash flow hedges in
Swiss francs, pounds sterling and certain cash flow hedges in US dollars were discontinued and replaced with new ARR
designations in December 2021. In addition, the transition of floating rate hedged items in USD to ARR rates in January
2022 resulted in the update of the hedged risk to ARR in the affected hedge relationships without discontinuation of
hedge accounting in accordance with Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16).
Fair value hedges of foreign exchange risk related to issued 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 denominated in currencies other than the US dollar to US dollars.
Hedges of net investments in foreign operations
The Group applies hedge accounting for certain net investments in foreign operations, which include subsidiaries,
branches and associates. Upon maturity of hedging instruments, typically two months, the hedge relationship is
terminated and new designations are made to reflect any changes in the net investments in foreign operations.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
339
343
Note 25 Hedge accounting (continued)
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 origination 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 issued, hedge ineffectiveness can arise due to the discounting of the
hedging instruments and undesignated risk components and lack of such discounting and risk components in the hedged
items.
In hedges of net investments in foreign operations, ineffectiveness is unlikely unless the hedged net assets fall below the
designated hedged amount. The exceptions are hedges where the hedging currency is not the same as the currency of
the foreign operation, where the currency basis may cause ineffectiveness.
Hedge ineffectiveness from financial instruments measured at fair value through profit or loss is recognized in Other net
income.
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 contracts acting as economic hedges, which are reported in Net interest income.
All hedges: designated hedging instruments and hedge ineffectiveness
USD m
IInntteerreesstt rraattee rriisskk
Fair value hedges
Cash flow hedges
FFoorreeiiggnn eexxcchhaannggee rriisskk
Fair value hedges2
Hedges of net investments in foreign operations
USD m
IInntteerreesstt rraattee rriisskk
Fair value hedges
Cash flow hedges
FFoorreeiiggnn eexxcchhaannggee rriisskk
Fair value hedges2
Hedges of net investments in foreign operations
As of or for the year ended
3311..1122..2222
CCaarrrryyiinngg aammoouunntt
NNoottiioonnaall
aammoouunntt
DDeerriivvaattiivvee
ffiinnaanncciiaall
aasssseettss
DDeerriivvaattiivvee
ffiinnaanncciiaall
lliiaabbiilliittiieess
CChhaannggeess iinn
ffaaiirr vvaalluuee ooff
hheeddggiinngg
iinnssttrruummeennttss11
CChhaannggeess iinn
ffaaiirr vvaalluuee ooff
hheeddggeedd
iitteemmss11
HHeeddggee
iinneeffffeeccttiivveenneessss
rreeccooggnniizzeedd iinn tthhee
iinnccoommee ssttaatteemmeenntt
9922,,441155
7755,,330044
2200,,556666
1144,,000099
00
22
884455
77
00
55
33
552299
((55,,119955))
((55,,881133))
((11,,008888))
333366
55,,116699
55,,776600
11,,110055
((333377))
((2277))
((5533))
1188
((11))
As of or for the year ended
31.12.21
Carrying amount
Notional
amount
Derivative
financial
assets
Derivative
financial
liabilities
Changes in
fair value of
hedging
instruments1
Changes in
fair value of
hedged
items1
Hedge
ineffectiveness
recognized in the
income statement
89,525
79,573
27,875
13,939
0
12
87
23
7
1
261
105
(1,604)
(1,185)
(2,139)
497
1,602
990
2,181
(497)
(2)
(196)
42
0
11 Amounts used as the basis for recognizing hedge ineffectiveness for the period. 22 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 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
340
344
Note 25 Hedge accounting (continued)
Fair value hedges: designated hedged items
USD m
DDeebbtt iissssuueedd mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Carrying amount of designated debt issued
of which: accumulated amount of fair value hedge adjustment
OOtthheerr ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt –– ddeebbtt sseeccuurriittiieess
Carrying amount of designated debt securities
of which: accumulated amount of fair value hedge adjustment
LLooaannss aanndd aaddvvaanncceess ttoo ccuussttoommeerrss
Carrying amount of designated loans
of which: accumulated amount of fair value hedge adjustment
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
Fair value hedges: profile of the timing of the nominal amount of the hedging instrument
3311..1122..2222
31.12.21
IInntteerreesstt rraattee
rriisskk
FFXX rriisskk
Interest rate
risk
FX risk
6688,,552299
2200,,556666
74,700
27,875
((66,,005577))
44,,557777
((118800))
1144,,227700
((11,,224499))
((5511))
478
2,677
(7)
13,835
(109)
3
USD bn
Interest rate swaps
Cross-currency swaps
USD bn
Interest rate swaps
Cross-currency swaps
3311..1122..2222
DDuuee bbeettwweeeenn
11 aanndd 33 mmoonntthhss
44
DDuuee bbeettwweeeenn
33 aanndd 1122 mmoonntthhss
1100
DDuuee bbeettwweeeenn
11 aanndd 55 yyeeaarrss
5533
11
22
1122
31.12.21
Due between
1 and 3 months
8
Due between
3 and 12 months
10
Due between
1 and 5 years
49
1
6
13
DDuuee wwiitthhiinn
11 mmoonntthh
00
00
Due within
1 month
0
1
DDuuee aafftteerr
55 yyeeaarrss
2266
55
Due after
5 years
22
6
TToottaall
9922
2211
Total
90
28
Cash flow hedge reserve on a pre-tax basis
USD m
Amounts related to hedge relationships for which hedge accounting continues to be applied
Amounts related to hedge relationships for which hedge accounting is no longer applied
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee rreeccooggnniizzeedd ddiirreeccttllyy iinn eeqquuiittyy rreellaatteedd ttoo ccaasshh ffllooww hheeddggeess,, oonn aa pprree--ttaaxx bbaassiiss
Foreign currency translation reserve on a pre-tax basis
USD m
Amounts related to hedge relationships for which hedge accounting continues to be applied
Amounts related to hedge relationships for which hedge accounting is no longer applied
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee rreeccooggnniizzeedd ddiirreeccttllyy iinn eeqquuiittyy rreellaatteedd ttoo hheeddggiinngg iinnssttrruummeennttss ddeessiiggnnaatteedd aass nneett iinnvveessttmmeenntt hheeddggeess,, oonn aa pprree--ttaaxx
bbaassiiss
3311..1122..2222
((44,,669922))
((554400))
((55,,223322))
31.12.21
26
743
769
3311..1122..2222
31.12.21
228844
226666
555500
(45)
262
217
Interest rate benchmark reform
The Group continues to apply the relief provided by Interest Rate Benchmark Reform (amendments to IFRS 9, IAS 39 and
IFRS 7), published by the IASB in September 2019, mainly to its hedges in USD. The cessation date for USD LIBOR is
30 June 2023.
The following table provides details on the notional amount and carrying amount of the hedging instruments in the
hedge relationships where the designated risk is LIBOR and maturing after the cessation date of the applicable interest
rate benchmarks.
Hedges of net investments in foreign operations are not affected by the amendments.
› Refer to Note 1a item 2j for more information about the relief provided by the amendments to IFRS 9 and IFRS 7 related to
interest rate benchmark reform
› Refer to Note 24 for more information about the transition progress
› Refer to earlier parts of this Note for the information about the transition progress of fair value and cash flow hedges
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
341
345
Note 25 Hedge accounting (continued)
Hedging instruments referencing LIBOR
USD m
IInntteerreesstt rraattee rriisskk
Fair value hedges
Cash flow hedges
Note 26 Post-employment benefit plans
a) Defined benefit plans
3311..1122..2222
31.12.21
CCaarrrryyiinngg aammoouunntt
DDeerriivvaattiivvee
ffiinnaanncciiaall
aasssseettss
DDeerriivvaattiivvee
ffiinnaanncciiaall
lliiaabbiilliittiieess
00
00
00
00
NNoottiioonnaall
aammoouunntt
2200,,338833
22,,117799
Carrying amount
Derivative
financial
assets
Derivative
financial
liabilities
0
0
0
0
Notional
amount
23,367
10,803
UBS has established defined benefit plans for its employees in various jurisdictions in accordance with local regulations
and practices. The major plans are located in Switzerland, the UK, the US and Germany. The level of benefits depends
on the specific plan rules.
Swiss pension plan
The Swiss pension plan covers employees of UBS Group AG in Switzerland and employees of companies in Switzerland
having close economic or financial ties with UBS Group AG, and exceeds the minimum benefit requirements under Swiss
pension law. The Swiss plan offers retirement, disability and survivor benefits and is governed by a Pension Foundation
Board. The responsibilities of this board are defined by Swiss pension law and the plan rules.
Savings contributions to the Swiss plan are paid by both employer and employee. Depending on the age of the employee,
UBS pays a savings contribution that ranges between 6.5% and 27.5% of contributory base salary and between 2.8%
and 9% of contributory variable compensation. UBS also pays risk contributions that are used to fund disability and
survivor benefits. Employees can choose the level of savings contributions paid by them, which vary between 2.5% and
13.5% of contributory base salary and between 0% and 9% of contributory variable compensation, depending on age
and choice of savings contribution category.
The plan offers to members at the normal retirement age of 65 a choice between a lifetime pension and a partial or full
lump sum payment. Participants can choose to draw early retirement benefits starting from the age of 58, but can also
continue employment and remain active members of the plan until the age of 70. Employees have the opportunity to
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, and the employee and employer contributions that have
been made to the participant’s retirement savings account, as well as the interest accrued. The annual interest rate
credited to participants is determined by the Pension Foundation Board at the end of each year.
Although the Swiss plan is based on a defined contribution promise under Swiss pension law, it is accounted for as a
defined benefit plan under International Financial Reporting Standards (IFRS), primarily because of the obligation to
accrue interest on the participants’ retirement savings accounts and the payment of lifetime pension benefits.
An actuarial valuation in accordance with Swiss pension law is performed regularly. Should an underfunded situation on
this basis occur, the Pension Foundation Board is required to take the necessary measures to ensure that full funding can
be expected to be restored within a maximum period of 10 years. If a Swiss plan were to become significantly
underfunded on a Swiss pension law basis, additional employer and employee contributions could be required. In this
situation, the risk is shared between employer and employees, and the employer is not legally obliged to cover more than
50% of the additional contributions required. As of 31 December 2022, the Swiss plan had a technical funding ratio in
accordance with Swiss pension law of 119.0% (31 December 2021: 134.8%).
The investment strategy of the Swiss plan complies with Swiss pension law, including the rules and regulations relating
to diversification of plan assets, and is derived from the risk budget defined by the Pension Foundation Board on the
basis of regularly performed asset and liability management analyses. The Pension Foundation Board strives for a medium-
and long-term balance between assets and liabilities.
As of 31 December 2022, the Swiss plan was in a surplus situation on an IFRS measurement basis, as the fair value of
the plan’s assets exceeded the defined benefit obligation (DBO) by USD 7,848m (31 December 2021: USD 6,577m).
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 2022 and 31 December 2021,
the estimated future economic benefit was zero and hence no net defined benefit asset was recognized on the balance
sheet.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
342
346
Note 26 Post-employment benefit plans (continued)
Changes to the Swiss pension plan in 2019
The Pension Foundation Board and UBS agreed to implement measures that took effect from the start of 2019 to support
the long-term financial stability of the Swiss pension fund. The measures, among other things, lowered the conversion rate
and increased the normal retirement age from 64 to 65. Pensions already in payment on 1 January 2019 were not affected.
To mitigate the effects for active participants, UBS committed to pay an extraordinary contribution and contributed
CHF 646m (USD 698m) in three installments in 2020, 2021 and 2022. The installments of USD 235m, USD 254m and
USD 209m paid in 2020, 2021 and 2022 reduced other comprehensive income with no effect on the income statement.
The regular employer contributions to be made to the Swiss plan in 2023 are estimated at USD 480m.
UK pension plan
The UK plan is a career-average revalued earnings scheme, and benefits increase automatically based on UK price
inflation, subject to defined caps. The normal retirement age for participants in the UK plan is 60. The plan provides
guaranteed lifetime pension benefits to participants upon retirement. The UK plan has been closed to new entrants for
more than 20 years and, since 2013, participants are no longer accruing benefits for current or future service. Instead,
employees participate in the UK defined contribution plan.
The governance responsibility for the UK plan lies jointly with the Pension Trustee Board and UBS. The employer
contributions to the pension fund reflect agreed-upon deficit funding contributions, which are determined on the basis
of the most recent actuarial valuation using assumptions agreed by the Pension Trustee Board and UBS. In the event of
underfunding, UBS and the Pension Trustee Board must agree on a deficit recovery plan within statutory deadlines. In
2022, UBS made deficit funding contributions of USD 5m to the UK plan. In 2021, UBS made no deficit funding
contributions.
The plan assets are invested in a diversified portfolio of financial assets, which include longevity swaps with an external
insurance company. These swaps enable the UK pension plan to hedge the risk between expected and actual longevity,
which should mitigate volatility in the net defined benefit asset / liability. As of 31 December 2022, the longevity swaps
had a negative value of USD 1m (31 December 2021: negative USD 3m).
In 2019, UBS and the Pension Trustee Board entered into an arrangement whereby a collateral pool was established to
provide security for the pension fund. The value of the collateral pool as of 31 December 2022 was USD 292m
(31 December 2021: USD 337m) and includes corporate bonds, government-related debt instruments and other financial
assets. The arrangement provides the Pension Trustee Board dedicated access to a pool of assets in the event of UBS’s
insolvency or not paying a required deficit funding contribution.
The employer contributions to be made to the UK defined benefit plan in 2023 are estimated at USD 18m, subject to
regular funding reviews during the year.
US pension plans
There are two distinct major defined benefit plans in the US, with a normal retirement age of 65. Both plans were closed to
new entrants more than 20 years ago. Since they closed, new employees have participated in a defined contribution plan.
One of the defined benefit plans is a contribution-based plan in which each participant accrues a percentage of salary in
a retirement savings account. The retirement savings account is credited annually with interest based on a rate that is
linked to the average yield on one-year US government bonds. For the other defined benefit plan, retirement benefits
accrue based on the career-average earnings of each individual plan participant. Former employees with vested benefits
have the option of taking a lump sum payment or a lifetime annuity.
As required under applicable pension laws, both plans have fiduciaries who, together with UBS, are responsible for the
governance of the plans.
The plan assets of both plans are invested in diversified portfolios of financial assets. Each plan’s fiduciaries are responsible
for the investment decisions with respect to the plan assets.
The employer contributions to be made to the US defined benefit plans in 2023 are estimated at USD 11m.
German pension plans
There are two unfunded defined benefit plans in Germany. The normal retirement age is 65 and benefits are paid directly
by UBS. In the larger of the two plans each participant accrues a percentage of salary in a retirement savings account.
The accumulated account balance of the participant is credited on an annual basis with guaranteed interest at a rate of
5%. The plan has been closed to new entrants, and all participants younger than the age of 55 as of June 2021 no longer
accrue benefits. In the other plan, amounts are accrued annually based on employee elections related to variable
compensation. For this plan, the accumulated account balance is credited on an annual basis with a guaranteed interest
rate of 6% for amounts accrued before 2010, of 4% for amounts accrued from 2010 to 2017 and of 0.9% for amounts
accrued after 2017. Both plans are subject to German pension law, whereby the responsibility to pay pension benefits
when they are due resides entirely with UBS. A portion of the pension payments is directly increased in line with price
inflation.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
343
347
Note 26 Post-employment benefit plans (continued)
In June 2021, UBS implemented a new funded pension plan with interest credited to participants equal to actual
investment returns with a guaranteed minimum of 0%. The plan was implemented retrospectively for new hires since
June 2018 and for all eligible active participants younger than 55 from July 2021. Each participant accrues a percentage
of salary in a retirement savings account.
The employer contributions to be made to the German defined benefit plans in 2023 are estimated at USD 12m.
Financial information by plan
The tables below provide an analysis of the movement in the net asset / liability recognized on the balance sheet for
defined benefit plans, as well as an analysis of amounts recognized in net profit and in Other comprehensive income.
Defined benefit plans
USD m
Defined benefit obligation at the beginning of the year
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 1
Past service cost related to plan amendments
Curtailments
Benefit payments
Other movements
Foreign currency translation
DDeeffiinneedd bbeenneeffiitt oobblliiggaattiioonn aatt tthhee eenndd ooff tthhee yyeeaarr
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
Return on plan assets excluding interest income
Interest income
Employer contributions
Plan participant contributions
Benefit payments
Administration expenses, taxes and premiums paid
Other movements
Foreign currency translation
FFaaiirr vvaalluuee ooff ppllaann aasssseettss aatt tthhee eenndd ooff tthhee yyeeaarr
SSuurrpplluuss // ((ddeeffiicciitt))
Asset ceiling effect at the beginning of the year
Interest expense on asset ceiling effect
Asset ceiling effect excluding interest expense and foreign currency translation on
asset ceiling effect
Foreign currency translation
AAsssseett cceeiilliinngg eeffffeecctt aatt tthhee eenndd ooff tthhee yyeeaarr
NNeett ddeeffiinneedd bbeenneeffiitt aasssseett // ((lliiaabbiilliittyy)) ooff mmaajjoorr ppllaannss
NNeett ddeeffiinneedd bbeenneeffiitt aasssseett // ((lliiaabbiilliittyy)) ooff rreemmaaiinniinngg ppllaannss
TToottaall nneett ddeeffiinneedd bbeenneeffiitt aasssseett // ((lliiaabbiilliittyy))
Swiss pension plan
2021
27,728
494
58
266
837
22002222
2277,,339988
441166
334444
225577
((44,,115511))
00
33
((44,,666666))
51
(678)
551122 1,464
0
00
(80)
((2200))
(1,097)
((11,,445544))
0
((55))
(809)
((551133))
2222,,227722
27,398
1111,,992277 14,333
0
1100,,334455 13,065
2222,,227722 27,398
0
32,590
2,322
74
763
266
(1,097)
(13)
0
(930)
33,975
6,577
4,862
15
00
3333,,997755
((33,,224488))
448855
668855
225577
((11,,445544))
((1122))
((22))
((556677))
3300,,111199
77,,884488
66,,557777
113355
UK pension plan
22002222
44,,110055
00
6677
00
((11,,447744))
2021
4,162
0
58
0
71
14
((66))
(3)
((11,,557755))
59
110077
0
00
0
00
(148)
((112233))
0
00
(38)
((440088))
4,105
22,,116666
6655
150
665566 1,593
11,,444455 2,362
22,,116666 4,105
0
4,149
277
58
0
0
(148)
0
0
(39)
4,297
192
0
0
00
44,,229977
((11,,331122))
7700
55
00
((112233))
00
00
((445500))
22,,448888
332211
00
00
US and German
pension plans
22002222
11,,774400
55
3355
00
((226677))
2021
1,905
6
30
0
(62)
Total
22002222
3333,,224422
442200
444466
225577
((55,,889911))
2021
33,795
500
147
266
846
11
((227799))
1111
00
00
((111111))
00
((2288))
11,,337755
116699
552288
667788
4
(78)
12
4
0
(112)
1
(33)
1,740
222
669
849
11,,001111 1,222
518
1,360
40
26
16
0
(112)
(4)
1
0
1,329
(411)
0
0
336633
11,,332299
((222233))
3311
1166
00
((111111))
((33))
00
00
11,,003399
((333355))
00
00
((22))
((66,,552200))
69
(759)
663311 1,535
4
00
(80)
((2200))
(1,357)
((11,,668877))
1
((55))
(880)
((994499))
2255,,881133
33,242
1122,,116600 14,705
11,,118844 2,262
1122,,446699 16,276
2255,,444499 32,724
518
38,100
2,639
159
779
266
(1,357)
(17)
1
(969)
39,601
6,358
4,862
15
336633
3399,,660011
((44,,778822))
558866
770066
225577
((11,,668877))
((1166))
((22))
((11,,001177))
3333,,664466
77,,883344
66,,557777
113355
11,,118899
((5544))
77,,884488
00
1,821
(121)
6,577
0
00
00
00
332211
0
0
0
192
00
00
00
((333355))
0
0
0
(411)
11,,118899
((5544))
77,,884488
((1144))
((110000))
((111144))
1,821
(121)
6,577
(219)
(112)
(331)
of which: Net defined benefit asset
of which: Net defined benefit liability 2
302
(633)
11 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. 22 Refer to Note 18c.
335555
((446699))
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
344
348
Note 26 Post-employment benefit plans (continued)
IInnccoommee ssttaatteemmeenntt –– eexxppeennsseess rreellaatteedd ttoo ddeeffiinneedd bbeenneeffiitt ppllaannss11
USD m
For the year ended
Current service cost
Interest expense related to defined benefit obligation
Interest income related to plan assets
Interest expense on asset ceiling effect
Administration expenses, taxes and premiums paid
Past service cost related to plan amendments
Curtailments
NNeett ppeerriiooddiicc eexxppeennsseess rreeccooggnniizzeedd iinn nneett pprrooffiitt ffoorr mmaajjoorr ppllaannss
NNeett ppeerriiooddiicc eexxppeennsseess rreeccooggnniizzeedd iinn nneett pprrooffiitt ffoorr rreemmaaiinniinngg ppllaannss22
TToottaall nneett ppeerriiooddiicc eexxppeennsseess rreeccooggnniizzeedd iinn nneett pprrooffiitt
11 Refer to Note 6. 22 Includes differences between actual and estimated performance award accruals.
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee –– ggaaiinnss // ((lloosssseess)) oonn ddeeffiinneedd bbeenneeffiitt ppllaannss
Swiss pension plan
3311..1122..2222 31.12.21
494
441166
UK pension plan
3311..1122..2222 31.12.21
0
00
US and German
pension plans
3311..1122..2222 31.12.21
6
55
Total
3311..1122..2222 31.12.21
500
442200
334444
((448855))
113355
1122
00
((2200))
440022
58
(74)
15
13
0
(80)
426
6677
((7700))
00
00
00
00
((33))
58
(58)
0
0
0
0
0
3355
((3311))
00
33
00
00
1122
30
(26)
0
4
4
0
18
444466
((558866))
113355
1166
00
((2200))
441111
2255
443377
147
(159)
15
17
4
(80)
444
25
470
USD m
For the year ended
Remeasurement of defined benefit obligation
of which: change in discount rate assumption
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
of which: experience gains / (losses) 1
Return on plan assets excluding interest income
Asset ceiling effect excluding interest expense and foreign currency translation
TToottaall ggaaiinnss // ((lloosssseess)) rreeccooggnniizzeedd iinn ootthheerr ccoommpprreehheennssiivvee iinnccoommee ffoorr mmaajjoorr ppllaannss
Swiss pension plan
3311..1122..2222 31.12.21
(837)
44,,115511
UK pension plan
3311..1122..2222 31.12.21
(71)
11,,447744
55,,441144
00
870
0
11,,445511
112233
((771188))
(193)
00
0
((3333))
(50)
00
55
11
((551122)) (1,464)
((110077))
((33,,224488))
2,322
((11,,331122))
((11,,118899))
(1,821)
((228855))
(336)
00
116622
319
(316)
0
9
(23)
(59)
277
0
207
US and German
pension plans
3311..1122..2222 31.12.21
62
226677
Total
3311..1122..2222 31.12.21
(846)
55,,889911
331177
77
77,,118833 1,267
((55))
((8822))
((11))
4488
((1111))
((222233))
00
4433
(1)
(1)
(3)
2
111188
((880000))
44
1166
(318)
(194)
5
(71)
(12)
((663311)) (1,535)
40
0
102
((44,,778822))
2,639
((11,,118899))
(1,821)
((8800))
(28)
TToottaall ggaaiinnss // ((lloosssseess)) rreeccooggnniizzeedd iinn ootthheerr ccoommpprreehheennssiivvee iinnccoommee ffoorr rreemmaaiinniinngg ppllaannss
TToottaall ggaaiinnss // ((lloosssseess)) rreeccooggnniizzeedd iinn ootthheerr ccoommpprreehheennssiivvee iinnccoommee22
11 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. 22 Refer to the “Statement of comprehensive income.”
((7733))
30
77
2
The table below provides information about the duration of the DBO and the timing for expected benefit payments.
DDuurraattiioonn ooff tthhee ddeeffiinneedd bbeenneeffiitt oobblliiggaattiioonn ((iinn yyeeaarrss))
MMaattuurriittyy aannaallyyssiiss ooff bbeenneeffiittss eexxppeecctteedd ttoo bbee ppaaiidd
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
11 The duration of the defined benefit obligation represents a weighted average across US and German plans.
Swiss pension plan
3311..1122..2222
31.12.21
UK pension plan
US and German pension
plans1
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
1133..11
15.1
1133..77
18.8
77..99
9.5
11,,229944
22,,665577
33,,997777
66,,774433
66,,222233
1,312
2,636
3,824
6,220
5,572
110077
223344
338844
666677
666677
110
248
418
743
751
2222,,444466
18,092
22,,557700
3,028
112233
223322
333355
550022
338888
551166
123
237
338
495
392
519
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
345
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Note 26 Post-employment benefit plans (continued)
Actuarial assumptions
The actuarial assumptions used for the defined benefit plans are based on the economic conditions prevailing in the
jurisdiction in which they are offered. Changes in the defined benefit obligation are most sensitive to changes in the
discount rate. The discount rate is based on the yield of high-quality corporate bonds quoted in an active market in the
currency of the respective plan. A decrease in the discount curve increases the DBO. UBS regularly reviews the actuarial
assumptions used in calculating the DBO to determine their continuing relevance.
› Refer to Note 1a item 5 for a description of the accounting policy for defined benefit plans
The tables below show the significant actuarial assumptions used in calculating the DBO at the end of the year.
Significant actuarial assumptions
In %
Discount rate
Rate of pension increase
Rate of interest credit on retirement savings
Swiss pension plan
3311..1122..2222
31.12.21
22..3344
00..0000
33..3399
0.34
0.00
1.04
UK pension plan
US pension plans
3311..1122..2222
31.12.21
55..0022
33..0088
00..0000
1.82
3.32
0.00
3311..1122..2222
44..992211
31.12.21
2.471
00..0000
55..773322
0.00
1.182
German pension plans
31.12.21
3311..1122..2222
33..8811
22..2200
00..0000
0.99
1.80
0.00
11 Represents weighted average across US pension plans. 22 Only applicable to one of the US pension plans
Mortality tables and life expectancies for major plans
CCoouunnttrryy
Switzerland
UK
USA
Germany
CCoouunnttrryy
Switzerland
UK
USA
Germany
MMoorrttaalliittyy ttaabbllee
BVG 2020 G with CMI 2021 projections1
S3PA with CMI 2021 projections2
Pri-2012 with MP-2021 projection scale
Dr. K. Heubeck 2018 G
MMoorrttaalliittyy ttaabbllee
BVG 2020 G with CMI 2021 projections1
S3PA with CMI 2021 projections2
Pri-2012 with MP-2021 projection scale
Dr. K. Heubeck 2018 G
Life expectancy at age 65 for a male member currently
aged 65
aged 45
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
2211..77
2233..55
2222..00
2200..66
21.7
23.4
21.9
20.5
2233..44
2244..66
2233..33
2233..44
23.3
24.5
23.3
23.2
Life expectancy at age 65 for a female member currently
aged 65
aged 45
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
2233..55
2255..00
2233..44
2244..00
23.4
24.9
23.3
23.9
2255..11
2266..44
2244..88
2266..33
25.0
26.3
24.7
26.1
11 In 2021, BVG 2020 G with CMI 2019 projections was used. 22 In 2021, S3PA with CMI 2020 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 assumptions1
Increase / (decrease) in defined benefit obligation
USD m
DDiissccoouunntt rraattee
Increase by 50 basis points
Decrease by 50 basis points
RRaattee ooff ppeennssiioonn iinnccrreeaassee
Increase by 50 basis points
Decrease by 50 basis points
RRaattee ooff iinntteerreesstt ccrreeddiitt oonn rreettiirreemmeenntt ssaavviinnggss
Increase by 50 basis points
Decrease by 50 basis points
LLiiffee eexxppeeccttaannccyy
Increase in longevity by one additional year
Swiss pension plan
3311..1122..2222
31.12.21
UK pension plan
US and German pension plans
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
((11,,112288))
11,,226699
887777
––22
117788
((117788))
559933
(1,695)
1,933
1,333
–2
224
(224)
915
((114411))
115577
112277
((111188))
––33
––33
(361)
411
334
(306)
–3
–3
6655
184
((5511))
5555
44
((33))
99
((88))
3399
(78)
84
6
(6)
8
(7)
56
11 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. 22 As the assumed rate of pension
increase was 0% as of 31 December 2022 and as of 31 December 2021, a downward change in assumption is not applicable. 33 As the UK plan does not provide interest credits on retirement savings, a change in
assumption is not applicable.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
346
350
Note 26 Post-employment benefit plans (continued)
Fair value of plan assets
The tables below provide information about the composition and fair value of plan assets of the major pension plans.
Composition and fair value of plan assets
Swiss pension plan
USD m
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss
RReeaall eessttaattee // pprrooppeerrttyy
Domestic
Foreign
IInnvveessttmmeenntt ffuunnddss
Equity
Domestic
Foreign
Bonds1
Domestic, AAA to BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
Other
OOtthheerr iinnvveessttmmeennttss
TToottaall ffaaiirr vvaalluuee ooff ppllaann aasssseettss
TToottaall ffaaiirr vvaalluuee ooff ppllaann aasssseettss
of which:2
Bank accounts at UBS
UBS debt instruments
UBS shares
Securities lent to UBS3
Property occupied by UBS
Derivative financial instruments, counterparty UBS3
3311..1122..2222
31.12.21
FFaaiirr vvaalluuee
PPllaann aasssseett
aallllooccaattiioonn %%
Fair value
Plan asset
allocation %
QQuuootteedd
iinn aann aaccttiivvee
mmaarrkkeett
332266
OOtthheerr
00
TToottaall
332266
00
00
33,,778833
991199
33,,778833
991199
774433
44,,996644
00
22,,117711
774433
77,,113344
33,,776600
66,,003311
11,,006622
11,,554400
662244
1199,,004499
00
00
00
33,,554477
665511
1111,,007711
33,,776600
66,,003311
11,,006622
55,,008866
11,,227755
3300,,111199
3311..1122..2222
3300,,111199
333377
5500
2277
887711
9900
7766
11
1133
33
22
2244
1122
2200
44
1177
44
110000
Quoted
in an active
market
187
Other
0
Total
187
0
0
3,530
580
3,530
580
843
6,213
0
2,652
843
8,865
4,446
5,093
1,314
4,211
668
22,973
0
0
0
3,558
682
11,002
4,446
5,093
1,314
7,769
1,349
33,975
31.12.21
33,975
194
28
25
1,079
93
128
1
10
2
2
26
13
15
4
23
4
100
11 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. 22 Bank accounts at UBS encompass accounts in the name of the Swiss pension fund. The other
positions disclosed in the table encompass both direct investments in UBS instruments and indirect investments, i.e., those made through funds that the pension fund invests in. 33 Securities lent to UBS and derivative
financial instruments are presented gross of any collateral. Securities lent to UBS were fully covered by collateral as of 31 December 2022 and 31 December 2021. Net of collateral, derivative financial instruments
amounted to negative USD 8m as of 31 December 2022 (31 December 2021: positive USD 43m).
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
347
351
Note 26 Post-employment benefit plans (continued)
Composition and fair value of plan assets (continued)
UK pension plan
USD m
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss
BBoonnddss11
Domestic, AAA to BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
IInnvveessttmmeenntt ffuunnddss
Equity
Domestic
Foreign
Bonds1
Domestic, AAA to BBB–
Domestic, below BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
3311..1122..2222
31.12.21
FFaaiirr vvaalluuee
PPllaann aasssseett
aallllooccaattiioonn %%
Fair value
Plan asset
allocation %
QQuuootteedd
iinn aann aaccttiivvee
mmaarrkkeett
110044
11,,772299
229977
77
1199
336666
336677
11
9900
111144
OOtthheerr
00
TToottaall
110044
00
00
00
33
00
9900
00
00
00
11,,772299
229977
77
2222
336666
445577
11
9900
111144
Quoted
in an active
market
147
2,605
372
4
44
921
532
12
179
115
Other
0
Total
147
0
0
0
4
0
147
0
0
0
2,605
372
4
47
921
679
12
179
115
44
6699
1122
00
11
1155
1188
00
44
55
3
61
9
0
1
21
16
0
4
3
Real estate
Domestic
Foreign
Other
6644
3366
((228800))
RReeppuurrcchhaassee aaggrreeeemmeennttss
((661122))
OOtthheerr iinnvveessttmmeennttss
9944
TToottaall ffaaiirr vvaalluuee ooff ppllaann aasssseettss
22,,448888
11 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.
110
6
(313)
(725)
65
4,074
122
40
(313)
(725)
91
4,297
6644
66
((228800))
((661122))
6666
22,,333366
3
1
(7)
(17)
2
100
33
11
((1111))
((2255))
44
110000
12
34
0
0
26
223
00
3311
00
00
2277
115511
US and German pension plans
USD m
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss
EEqquuiittyy
Domestic
Foreign
BBoonnddss11
Domestic, AAA to BBB–
Domestic, below BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
IInnvveessttmmeenntt ffuunnddss
Equity
Domestic
Foreign
Bonds1
Domestic, AAA to BBB–
Domestic, below BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
3311..1122..2222
31.12.21
FFaaiirr vvaalluuee
PPllaann aasssseett
aallllooccaattiioonn %%
Fair value
Plan asset
allocation %
QQuuootteedd
iinn aann aaccttiivvee
mmaarrkkeett
77
OOtthheerr
00
TToottaall
77
5555
2244
335599
44
7744
33
2277
3333
226666
110099
22
55
00
00
00
00
00
00
00
00
00
00
00
00
5555
2244
335599
44
7744
33
2277
3333
226666
110099
22
55
Quoted
in an active
market
11
Other
0
Total
11
79
31
486
17
97
6
3
56
269
147
11
2
0
0
0
0
0
0
0
0
0
0
0
0
79
31
486
17
97
6
3
56
269
147
11
2
11
55
22
3355
00
77
00
33
33
2266
1100
00
00
1
6
2
37
1
7
0
0
4
20
11
1
0
Real estate
Domestic
Other
1111
5544
OOtthheerr iinnvveessttmmeennttss
66
TToottaall ffaaiirr vvaalluuee ooff ppllaann aasssseettss
11,,003399
11 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.
0
99
5
1,319
9
99
6
1,329
00
5544
55
11,,002277
1
7
0
100
11
55
11
110000
9
0
1
10
1111
00
11
1122
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
348
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Note 26 Post-employment benefit plans (continued)
b) Defined contribution plans
UBS sponsors a number of defined contribution plans, with the most significant plans in the US and the UK. UBS’s
obligation is limited to its contributions made in accordance with each plan, which may include direct contributions and
matching contributions. Employer contributions to defined contribution plans are recognized as an expense and were
USD 357m in 2022, USD 363m in 2021 and USD 343m in 2020.
› Refer to Note 6 for more information
c) Related-party disclosure
UBS is the principal provider of banking services for the pension fund of UBS in Switzerland. In this capacity, UBS is
engaged to execute most of the pension fund’s banking activities. These activities can include, but are not limited to,
trading, securities lending and borrowing and derivative transactions. The non-Swiss UBS pension funds do not have a
similar banking relationship with UBS. During 2022, UBS received USD 36m in fees for banking services from the major
post-employment benefit plans (2021: USD 39m). As of 31 December 2022, the major post-employment benefit plans
held USD 265m in UBS shares (31 December 2021: USD 252m).
› Refer to the “Composition and fair value of plan assets” table in Note 26a for more information about fair value of investments in
UBS instruments held by the Swiss pension fund
Note 27 Employee benefits: variable compensation
a) Plans offered
The Group has several share-based and other deferred compensation plans that align the interests of Group Executive
Board (GEB) members and other employees with the interests of investors.
Share-based awards are granted in the form of notional shares and, where permitted, carry a dividend equivalent that may be
paid in notional shares or cash. Awards are settled by delivering UBS shares at vesting, except in jurisdictions where this is not
permitted for legal or tax reasons.
Deferred compensation awards are generally forfeitable upon, among other circumstances, voluntary termination of
employment with UBS. These compensation plans are also designed to meet regulatory requirements and include special
provisions for regulated employees.
The most significant deferred compensation plans are described below.
› Refer to Note 1a item 4 for a description of the accounting policy related to share-based and other deferred compensation plans
Mandatory deferred compensation plans
Long-Term Incentive Plan
The Long-Term Incentive Plan (LTIP) is a mandatory deferred share-based compensation plan for GEB members for the
performance year 2022. For prior performance years, LTIP was granted to senior leaders of the Group (i.e., GEB members
and selected senior management).
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, which
compares the total shareholder return (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 (EOP) is the deferred share-based compensation plan for employees outside of the GEB that
are subject to deferral requirements. 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 (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 FINMA notifies the firm that the DCCP awards must be written down to mitigate
the risk of insolvency, bankruptcy or failure of UBS) or if the firm receives a commitment of extraordinary support from
the public sector that is necessary to prevent such an event. DCCP awards are also written down if the Group’s CET1
capital ratio falls below a defined threshold. In addition, GEB members forfeit 20% of DCCP awards for each loss-making
year during the vesting period.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
349
353
Note 27 Employee benefits: variable compensation (continued)
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 and deferred compensation awards, determined using a formulaic
approach based on production.
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 annual deferred compensation. These amounts generally vest over a six-year
period. The annual deferred compensation amount reflects the overall percentage rate and production.
Cash compensation and deferred compensation awards may be reduced for, among other things, errors, negligence or
carelessness, or failure to comply with the firm’s rules, standards, practices and / or policies, and / or applicable laws and
regulations.
Financial advisors may also participate in additional programs to support promoting and developing their business or
supporting the transition of client relationships where appropriate. Financial advisor compensation also includes expenses
related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to
vesting requirements.
Share delivery obligations
Share delivery obligations related to employee share-based compensation awards were 178m shares as of 31 December
2022 (31 December 2021: 175m shares). Share delivery obligations are calculated on the basis of undistributed notional
share awards, taking applicable performance conditions into account.
As of 31 December 2022, UBS held 119m treasury shares (31 December 2021: 149m) that were available to satisfy share
delivery obligations.
b) Effect on the income statement
Effect on the income statement for the financial year and future periods
The table below provides information about compensation expenses related to total variable compensation that were
recognized in the financial year ended 31 December 2022, as well as expenses that were deferred and will be recognized
in the income statement for 2023 and later. The majority of expenses deferred to 2023 and later that are related to the
2022 performance year pertain to awards granted in February 2023. The total unamortized compensation expense for
unvested share-based awards granted up to 31 December 2022 will be recognized in future periods over a weighted
average period of 2.5 years.
Variable compensation
USD m
Non-deferred cash
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ppeerrffoorrmmaannccee aawwaarrddss
VVaarriiaabbllee ccoommppeennssaattiioonn –– ffiinnaanncciiaall aaddvviissoorrss22
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ootthheerr33
TToottaall vvaarriiaabbllee ccoommppeennssaattiioonn
EExxppeennsseess rreeccooggnniizzeedd iinn 22002222
EExxppeennsseess ddeeffeerrrreedd ttoo 22002233 aanndd llaatteerr11
RReellaatteedd ttoo tthhee
22002222
ppeerrffoorrmmaannccee
yyeeaarr
2,276
RReellaatteedd ttoo pprriioorr
ppeerrffoorrmmaannccee
yyeeaarrss
(16)
364
202
129
11
21
22,,664400
33,,779999
3,481
104
185
29
116699
581
235
219
32
95
556666
770099
0
62
215
432
7711
TToottaall
2,260
945
437
349
43
116
33,,220055
44,,550088
3,481
166
400
461
224411
RReellaatteedd ttoo tthhee
22002222
ppeerrffoorrmmaannccee
yyeeaarr
0
RReellaatteedd ttoo pprriioorr
ppeerrffoorrmmaannccee
yyeeaarrss
0
605
310
245
30
20
660055
11,,229900
0
122
588
580
223377
754
250
408
42
54
775544
22,,665522
0
180
636
1,836
119933
33,,559999
66,,660088
11,,334466
77,,99554444
22,,113311
TToottaall
0
1,359
560
654
71
74
11,,335599
33,,994422
0
302
1,224
2,416
443300
55,,773311
11 Estimate as of 31 December 2022. Actual amounts to be expensed in future periods may vary; e.g., due to forfeiture of awards. 22 Financial advisor compensation consists of cash and deferred compensation
awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment
that are subject to vesting requirements. 33 Consists of replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan.
44 Includes USD 703m in expenses related to share-based compensation (performance awards: USD 480m; other variable compensation: USD 56m; financial advisor compensation: USD 166m). A further USD 88m in
expenses related to share-based compensation was recognized within other expense categories included in Note 6 (salaries: USD 4m, related to role-based allowances; social security: USD 61m; other personnel
expenses: USD 23m related to the Equity Plus Plan). Total personnel expense related to share-based equity-settled compensation excluding social security was USD 716m.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
350
354
Note 27 Employee benefits: variable compensation (continued)
Variable compensation (continued)
Expenses recognized in 2021
Expenses deferred to 2022 and later1
Related to the
2021
performance
year
0
Related to prior
performance
years
0
797
393
299
50
56
779977
11,,009977
0
123
311
662
221155
756
306
280
50
120
775566
882222
0
79
271
473
118811
Total
0
1,421
577
628
83
133
11,,442211
33,,441199
0
269
806
2,344
339977
55,,223388
Total
0
1,044
376
476
61
132
11,,004444
33,,110066
0
214
738
2,155
337744
44,,552244
624
184
329
33
78
662244
22,,332233
0
146
495
1,682
118822
33,,112299
288
69
196
10
12
228888
22,,228844
0
135
467
1,682
119922
22,,776644
USD m
Non-deferred cash
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ppeerrffoorrmmaannccee aawwaarrddss
VVaarriiaabbllee ccoommppeennssaattiioonn –– ffiinnaanncciiaall aaddvviissoorrss22
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ootthheerr33
TToottaall vvaarriiaabbllee ccoommppeennssaattiioonn
Related to the
2021
performance
year
2,383
Related to prior
performance
years
(10)
405
183
140
54
29
22,,778888
44,,117755
3,858
106
170
41
119911
412
180
158
19
56
440022
668855
(6)
51
202
438
3388
Total
2,373
817
363
297
73
84
33,,119900
44,,886600
3,853
157
372
479
222299
11 Estimate as of 31 December 2021. Actual amounts expensed may vary; e.g., due to forfeiture of awards. 22 Financial advisor compensation consists of cash and deferred compensation awards and is based on
compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to
vesting requirements. 33 Consists of replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan. 44 Includes
USD 651m in expenses related to share-based compensation (performance awards: USD 435m; other variable compensation: USD 59m; financial advisor compensation: USD 157m). A further USD 85m in expenses
related to share-based compensation was recognized within other expense categories included in Note 6 (salaries: USD 5m related to role-based allowances; social security: USD 64m; other personnel expenses:
USD 16m related to the Equity Plus Plan). Total personnel expense related to share-based equity-settled compensation excluding social security was USD 641m.
77,,115555
11,,112255
88,,22880044
22,,110099
Expenses recognized in 2020
Expenses deferred to 2021 and later1
Related to the
2020
performance
year
0
Related to prior
performance
years
0
Variable compensation (continued)
USD m
Non-deferred cash
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ppeerrffoorrmmaannccee aawwaarrddss
VVaarriiaabbllee ccoommppeennssaattiioonn –– ffiinnaanncciiaall aaddvviissoorrss22
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ootthheerr33
TToottaall vvaarriiaabbllee ccoommppeennssaattiioonn
Related to the
2020
performance
year
2,167
Related to prior
performance
years
(26)
341
137
112
42
49
22,,550088
33,,337788
3,154
69
133
22
112266
727
327
351
11
39
770011
771133
0
50
183
480
9944
Total
2,141
1,068
463
463
54
88
33,,220099
44,,009911
3,154
119
316
502
222200
66,,001122
11,,550088
77,,55220044
11,,776600
11 Estimate as of 31 December 2020. Actual amounts expensed may vary; e.g., due to forfeiture of awards. 22 Financial advisor compensation consists of cash and deferred compensation awards and is based on
compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to
vesting requirements. 33 Consists of replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan. 44 Includes
USD 686m in expenses related to share-based compensation (performance awards: USD 517m; other variable compensation: USD 50m; financial advisor compensation: USD 119m). A further USD 100m in expenses
related to share-based compensation was recognized within other expense categories included in Note 6 (salaries: USD 4m related to role-based allowances; social security: USD 54m; other personnel expenses:
USD 42m related to the Equity Plus Plan). Total personnel expense related to share-based equity-settled compensation excluding social security was USD 691m.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
351
355
Note 27 Employee benefits: variable compensation (continued)
c) Outstanding share-based compensation awards
Share and performance share awards
Movements in outstanding share-based awards to employees during 2022 and 2021 are provided in the table below.
Movements in outstanding share-based compensation awards
Outstanding, at the beginning of the year
Awarded during the year
Distributed during the year
Forfeited during the year
Outstanding, at the end of the year
of which: shares vested for accounting purposes
NNuummbbeerr ooff sshhaarreess
22002222
118800,,557788,,556611
6622,,220033,,777700
((5544,,663399,,888822))
((66,,223355,,224499))
118811,,990077,,220000
110022,,336644,,997733
WWeeiigghhtteedd aavveerraaggee
ggrraanntt ddaattee ffaaiirr vvaalluuee
((UUSSDD))
1133
Number of shares
2021
174,900,395
Weighted average
grant date fair value
(USD)
12
1188
1122
1155
1155
68,721,549
(52,137,287)
(10,906,096)
180,578,561
107,828,979
15
13
13
13
The total carrying amount of the liability related to cash-settled share-based awards as of 31 December 2022 and
31 December 2021 was USD 43m and USD 37m, 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.
Note 28 Interests in subsidiaries and other entities
a) Interests in subsidiaries
UBS defines its significant subsidiaries as those entities that, either individually or in aggregate, contribute significantly to
the Group’s financial position or results of operations, based on a number of criteria, including the subsidiaries’ equity
and contribution to the Group’s total assets and profit or loss before tax, in accordance with the requirements set by
IFRS 12, Swiss regulations and the rules of the US Securities and Exchange Commission (the SEC).
Individually significant subsidiaries
The two tables below list the Group’s individually significant subsidiaries as of 31 December 2022. Unless otherwise
stated, the subsidiaries listed below have share capital consisting solely of ordinary shares held entirely by the Group and
the proportion of ownership interest held is equal to the voting rights held by the Group.
The country where the respective registered office is located is also the principal place of business. UBS AG operates
through a global branch network and a significant proportion of its business activity is conducted outside Switzerland,
including in the UK, the US, Singapore, the Hong Kong SAR and other countries. UBS Europe SE has branches and offices
in a number of EU Member States, including Germany, Italy, Luxembourg and Spain. Share capital is provided in the
currency of the legally registered office.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
352
356
Note 28 Interests in subsidiaries and other entities (continued)
Individually significant subsidiaries of UBS Group AG as of 31 December 2022
Company
UBS AG
Registered office
Zurich and Basel, Switzerland
UBS Business Solutions AG1
11 UBS Business Solutions AG holds subsidiaries in China, India, Israel and Poland.
Zurich, Switzerland
Share capital in million
Equity interest accumulated in %
CHF
CHF
385.8
1.0
100.0
100.0
Individually significant subsidiaries of UBS AG as of 31 December 20221
Company
Registered office
UBS Americas Holding LLC
Wilmington, Delaware, USA
UBS Americas Inc.
Wilmington, Delaware, USA
Primary business
Group Functions
Group Functions
UBS Asset Management AG
Zurich, Switzerland
Asset Management
UBS Bank USA
UBS Europe SE
Salt Lake City, Utah, USA
Global Wealth Management
Frankfurt, Germany
Global Wealth Management
UBS Financial Services Inc.
Wilmington, Delaware, USA
Global Wealth Management
UBS Securities LLC
UBS Switzerland AG
Wilmington, Delaware, USA
Investment Bank
Zurich, Switzerland
Personal & Corporate Banking
Share capital in million
5,150.02
USD
USD
CHF
USD
EUR
USD
USD
CHF
0.0
43.2
0.0
446.0
0.0
1,283.13
10.0
Equity interest accumulated in %
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
11 Includes direct and indirect subsidiaries of UBS AG. 22 Consists of common share capital of USD 1,000 and non-voting preferred share capital of USD 5,150,000,000. 33 Consists of common share capital of
USD 100,000 and non-voting preferred share capital of USD 1,283,000,000.
Other subsidiaries
The table below lists other direct and indirect subsidiaries of UBS AG that are not individually significant but contribute
to the Group’s total assets and aggregated profit before tax thresholds and are thus disclosed in accordance with
requirements set by the SEC.
Other subsidiaries of UBS AG as of 31 December 2022
Company
UBS Asset Management (Americas) Inc.
Registered office
Wilmington, Delaware, USA
UBS Asset Management (Hong Kong) Limited
Hong Kong SAR, China
UBS Asset Management Life Ltd
London, United Kingdom
UBS Asset Management Switzerland AG
Zurich, Switzerland
Primary business
Asset Management
Asset Management
Asset Management
Asset Management
UBS Business Solutions US LLC
Wilmington, Delaware, USA
Group Functions
UBS Credit Corp.
UBS (France) S.A.
Wilmington, Delaware, USA
Global Wealth Management
Paris, France
Global Wealth Management
UBS Fund Management (Luxembourg) S.A.
Luxembourg, Luxembourg
UBS Fund Management (Switzerland) AG
Basel, Switzerland
Asset Management
Asset Management
UBS (Monaco) S.A.
UBS O‘Connor LLC
UBS Realty Investors LLC
UBS Securities Australia Ltd
UBS Securities Hong Kong Limited
UBS Securities Japan Co., Ltd.
UBS SuMi TRUST Wealth Management Co., Ltd.
Monte Carlo, Monaco
Global Wealth Management
Wilmington, Delaware, USA
Asset Management
Boston, Massachusetts, USA
Asset Management
Sydney, Australia
Hong Kong SAR, China
Tokyo, Japan
Tokyo, Japan
Investment Bank
Investment Bank
Investment Bank
Global Wealth Management
11 Includes a nominal amount relating to redeemable preference shares.
Share capital in million
0.0
USD
Equity interest
accumulated in %
100.0
HKD
GBP
CHF
USD
USD
EUR
EUR
CHF
EUR
USD
USD
AUD
HKD
JPY
JPY
153.8
15.0
0.5
0.0
0.0
197.0
13.0
1.0
49.2
1.0
9.0
0.31
3,354.2
34,708.7
5,165.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
Consolidated structured entities
Consolidated structured entities (SEs) include certain investment funds, securitization vehicles and client investment
vehicles. UBS has no individually significant subsidiaries that are SEs.
In 2022 and 2021, the Group did not enter into any contractual obligation that could require the Group to provide
financial support to consolidated SEs. In addition, the Group did not provide support, financial or otherwise, to a
consolidated SE when the Group was not contractually obligated to do so, nor does the Group have any intention to do
so in the future. Furthermore, the Group did not provide support, financial or otherwise, to a previously unconsolidated
SE that resulted in the Group controlling the SE during the reporting period.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
353
357
Note 28 Interests in subsidiaries and other entities (continued)
b) Interests in associates and joint ventures
As of 31 December 2022 and 2021, no associate or joint venture was individually material to the Group. Also, there were
no significant restrictions on the ability of associates or joint ventures to transfer funds to UBS Group AG or its subsidiaries
as cash dividends or to repay loans or advances made. There were no quoted market prices for any associates or joint
ventures of the Group.
In 2022, UBS reclassified its minority investment (49%) in its Japanese real estate joint venture, Mitsubishi Corp.-UBS
Realty Inc., of USD 44m to Properties and other non-current assets held for sale and sold the shareholding. The sale
resulted in a pre-tax gain of USD 848m in 2022, which was recognized in Other income. UBS’s asset management,
wealth management and investment banking businesses operating in Japan were not affected by the sale.
Investments in associates and joint ventures
USD m
Carrying amount at the beginning of the year
Additions
Reclassifications1
Share of comprehensive income
of which: share of net profit 2
of which: share of other comprehensive income 3
Share of changes in retained earnings
Dividends received
Foreign currency translation
CCaarrrryyiinngg aammoouunntt aatt tthhee eenndd ooff tthhee yyeeaarr
of which: associates
of which: SIX Group AG, Zurich 4
of which: other associates
of which: joint ventures
of which: Mitsubishi Corp.-UBS Realty Inc., Tokyo 1
of which: other joint ventures
22002222
11,,224433
33
((4444))
((4411))
3322
((7733))
00
((3311))
((3300))
11,,110011
11,,009988
995544
114444
33
33
2021
1,557
1
(386)
150
105
45
1
(39)
(39)
1,243
1,200
1,043
157
43
40
3
11 In 2022, UBS reclassified its minority investment (49%) in Mitsubishi Corp.-UBS Realty Inc. of USD 44m to Properties and other non-current assets held for sale and sold the investment in the same year. In 2021,
UBS reclassified its minority investment (48.8%) in Clearstream Fund Centre AG of USD 386m to Properties and other non-current assets held for sale and sold the investment in the same year. 22 For 2022, consists
of USD 27m from associates and USD 5m from joint ventures (for 2021, consists of USD 79m from associates and USD 26m from joint ventures). 33 For 2022, consists of negative USD 73m from associates (for 2021,
consists of USD 44m from associates and USD 1m from joint ventures). 44 In 2022, UBS AG’s equity interest amounted to 17.31%. UBS AG is represented on the Board of Directors.
c) Unconsolidated structured entities
UBS is considered to sponsor another entity if, in addition to ongoing involvement with that entity, it had a key role in
establishing that entity or in bringing together relevant counterparties for a transaction facilitated by that entity. During
2022, the Group sponsored the creation of various SEs and interacted with a number of non-sponsored SEs, including
securitization vehicles, client vehicles and certain investment funds, that UBS did not consolidate as of 31 December 2022
because it did not control them.
Interests in unconsolidated structured entities
The table below presents the Group’s interests in and maximum exposure to loss from unconsolidated SEs, as well as the
total assets held by the SEs in which UBS had an interest as of year-end, except for investment funds sponsored by third
parties, for which the carrying amount of UBS’s interest as of year-end has been disclosed.
Sponsored unconsolidated structured entities in which UBS did not have an interest at year-end
During 2022 and 2021, the Group did not earn material income from sponsored unconsolidated SEs in which UBS did
not have an interest at year-end.
During 2022 and 2021, UBS and third parties did not transfer any assets into sponsored securitization vehicles created in
the year. UBS and third parties transferred assets, alongside deposits and debt issuances (which are assets from the
perspective of the vehicle), of USD 1bn and USD 3bn, respectively, into sponsored client vehicles created in 2022 (2021:
USD 1bn and USD 2bn, respectively). For sponsored investment funds, transfers arose during the period as investors
invested and redeemed positions, thereby changing the overall size of the funds, which, when combined with market
movements, resulted in a total closing net asset value of USD 38bn (31 December 2021: USD 46bn).
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
354
358
Note 28 Interests in subsidiaries and other entities (continued)
Interests in unconsolidated structured entities
USD m, except where indicated
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 income2
Other financial assets measured at amortized cost2
TToottaall aasssseettss
Derivative financial instruments
TToottaall lliiaabbiilliittiieess
AAsssseettss hheelldd bbyy tthhee uunnccoonnssoolliiddaatteedd ssttrruuccttuurreedd eennttiittiieess iinn wwhhiicchh UUBBSS hhaadd aann iinntteerreesstt
((UUSSDD bbnn))
USD m, except where indicated
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
TToottaall aasssseettss
Derivative financial instruments
SSeeccuurriittiizzaattiioonn
vveehhiicclleess
227788
33
883377
11,,11118844
11
11
CClliieenntt
vveehhiicclleess
8811
116600
44,,99777733
55,,221199
3355
3355
3311..1122..2222
IInnvveessttmmeenntt
ffuunnddss
55,,888844
111155
111199
222255
22
66,,334455
776633
776633
550055
11007766
11339977
Securitization
vehicles
246
5
35
324
6104
2
Client
vehicles
162
45
4,525
03
4,732
11
31.12.21
Investment
funds
6,743
155
125
222
0
7,247
281
MMaaxxiimmuumm
eexxppoossuurree ttoo lloossss11
66,,224433
227788
111199
222255
66,,006666
22
Maximum
exposure to loss1
7,151
205
125
257
4,849
250
TToottaall
66,,224433
227788
111199
222255
55,,881177
1122,,668811
779988
779988
Total
7,151
205
125
257
4,849
1
12,588
294
TToottaall lliiaabbiilliittiieess
AAsssseettss hheelldd bbyy tthhee uunnccoonnssoolliiddaatteedd ssttrruuccttuurreedd eennttiittiieess iinn wwhhiicchh UUBBSS hhaadd aann iinntteerreesstt
((UUSSDD bbnn))
11 For the purpose of this disclosure, maximum exposure to loss amounts do not consider the risk-reducing effects of collateral or other credit enhancements. 22 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 1b for more information. 33 Includes the
carrying amount of loan commitments. The maximum exposure to loss for these instruments is equal to the notional amount. 44 As of 31 December 2022, USD 0.1bn of the USD 1.1bn (31 December 2021: USD 0.1bn
of the USD 0.6bn) was held in Group Functions – Non-core and Legacy Portfolio. 55 Represents the principal amount outstanding. 66 Represents the market value of total assets. 77 Represents the net asset value
of the investment funds sponsored by UBS and the carrying amount of UBS’s interests in the investment funds not sponsored by UBS.
1587
305
816
294
281
11
2
The Group retains or purchases interests in unconsolidated SEs in the form of direct investments, financing, guarantees,
letters of credit and derivatives, as well as through management contracts. The Group’s maximum exposure to loss is
generally equal to the carrying amount of the Group’s interest in the given SE, with this subject to change over time with
market movements. Guarantees, letters of credit and credit derivatives are an exception, with the given contract’s
notional amount, adjusted for losses already incurred, representing the maximum loss that the Group is exposed to.
The maximum exposure to loss disclosed in the table above does not reflect the Group’s risk management activities,
including effects from financial instruments that may be used to economically hedge risks inherent in the given
unconsolidated SE or risk-reducing effects of collateral or other credit enhancements.
In 2022 and 2021, the Group did not provide support, financial or otherwise, to any unconsolidated SE when not
contractually obligated to do so, nor does the Group have any intention to do so in the future.
In 2022 and 2021, income and expenses from interests in unconsolidated SEs primarily resulted from mark-to-market
movements recognized in Other net income from financial instruments measured at fair value through profit or loss,
which were generally hedged with other financial instruments, as well as fee and commission income received from UBS-
sponsored funds.
Interests in securitization vehicles
As of 31 December 2022 and 31 December 2021, the Group held interests, both retained and acquired, in various
securitization vehicles that relate to financing, underwriting, secondary market and derivative trading activities.
The numbers outlined in the table above may differ from the securitization positions presented in the 31 December 2022
Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for the following reasons: (i) exclusion of
synthetic securitizations transacted with entities that are not SEs and transactions in which the Group did not have an
interest because it did not absorb any risk; (ii) a different measurement basis in certain cases (e.g., IFRS carrying amount
within the previous table compared with net exposure amount at default for Pillar 3 disclosures); and (iii) different
classification of vehicles viewed as sponsored by the Group versus sponsored by third parties.
› Refer to the 31 December 2022 Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
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359
Note 28 Interests in subsidiaries and other entities (continued)
Interests in client vehicles
Client vehicles are established predominantly for clients to gain exposure to specific assets or risk exposures. Such vehicles
may enter into derivative agreements, with UBS or a third party, to align the cash flows of the entity with the investor’s
intended investment objective, or to introduce other desired risk exposures.
As of 31 December 2022 and 31 December 2021, the Group retained interests in client vehicles sponsored by UBS and
third parties that relate to financing, secondary market and derivative trading activities, and to hedge structured product
offerings.
Interests in investment funds
Investment funds have a collective investment objective, and are either passively managed, so that any decision-making
does not have a substantive effect on variability, or are actively managed and investors or their governing bodies do not
have substantive voting or similar rights.
The Group holds interests in a number of investment funds, primarily resulting from seed investments or in order to
hedge structured product offerings. In addition to the interests disclosed in the table above, the Group manages the
assets of various pooled investment funds and receives fees based, in whole or in part, on the net asset value of the fund
and / or the performance of the fund. The specific fee structure is determined based on various market factors and
considers the fund’s nature and the jurisdiction of incorporation, as well as fee schedules negotiated with clients. These
fee contracts represent an interest in the fund, as they align the Group’s exposure with investors, providing a variable
return based on the performance of the entity. Depending on the structure of the fund, these fees may be collected
directly from the fund’s assets and / or from the investors. Any amounts due are collected on a regular basis and are
generally backed by the fund’s assets. Therefore, interest in such funds is not represented by the on-balance sheet fee
receivable but rather by the future exposure to variable fees. The total assets of such funds were USD 292bn and
USD 370bn as of 31 December 2022 and 31 December 2021, respectively, and have been excluded from the table above.
The Group did not have any material exposure to loss from these interests as of 31 December 2022 or as of 31 December
2021.
Note 29 Changes in organization and acquisitions and disposals of subsidiaries and businesses
Disposals of subsidiaries and businesses
Sale of UBS Swiss Financial Advisers AG
In the third quarter of 2022, UBS completed the sale of its wholly owned subsidiary UBS Swiss Financial Advisers AG
(SFA) to Vontobel. UBS continues to refer US clients that want to have discretionary portfolio management or investment
advisory services booked in Switzerland to Vontobel SFA. Upon completion of the sale, UBS recorded a pre-tax gain of
USD 86m in 2022, which was recognized in Other income.
Prior to completion of the sale, the assets and liabilities that were subject to the transaction were presented as a disposal
group held for sale within Other non-financial assets and Other non-financial liabilities (31 December 2021: USD 446m
and USD 475m, respectively).
Sale of wealth management business in Spain
UBS completed the sale of its domestic wealth management business in Spain to Singular Bank in the third quarter of
2022. The sale included the transition of employees, client relationships, products and services of the wealth management
business of UBS in Spain and resulted in a pre-tax gain of USD 133m in 2022, which was recognized in Other income.
Prior to completion of the sale, the assets and liabilities that were subject to the transaction were presented as a disposal
group held for sale within Other non-financial assets and Other non-financial liabilities (31 December 2021: USD 647m
and USD 823m, respectively).
Sale of US alternative investments administration business
In the fourth quarter of 2022, UBS sold its US alternative investments administration business and recorded a pre-tax
gain of USD 41m gain in Other income.
Sale of investments in associates and joint ventures
UBS sold its minority investment (49%) in its Japanese real estate joint venture, Mitsubishi Corp.-UBS Realty Inc., in 2022.
› Refer to Note 28b for more information
Acquisitions of subsidiaries and businesses
Wealthfront
In August 2022, UBS and Wealthfront mutually agreed to terminate their merger agreement, under which Wealthfront
was to be acquired by UBS Americas Inc. In the third quarter of 2022, UBS purchased a USD 69.7m note convertible into
Wealthfront shares.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
356
360
Note 30 Related parties
UBS defines related parties as associates (entities that are significantly influenced by UBS), joint ventures (entities in which
UBS shares control with another party), post-employment benefit plans for UBS employees, key management personnel,
close family members of key management personnel and entities that are, directly or indirectly, controlled or jointly
controlled by key management personnel or their close family members. Key management personnel is defined as
members of the Board of Directors (the BoD) and Group Executive Board (the GEB).
a) Remuneration of key management personnel
The Vice Chairman of the BoD has a specific management employment contract and receives pension benefits upon
retirement. Total remuneration of the Chairman and the Vice Chairman of the BoD and all GEB members is included in
the table below.
Remuneration of key management personnel
USD m, except where indicated
Base salaries and other cash payments1
Incentive awards – cash2
Annual incentive award under DCCP
Employer’s contributions to retirement benefit plans
Benefits in kind, fringe benefits (at market value)
Share-based compensation3
TToottaall
3311..1122..2222
31.12.21
31.12.20
2277
1177
2255
22
11
4455
111188
31
17
26
3
1
45
124
33
18
27
3
1
47
129
TToottaall ((CCHHFF mm))44
11 May include role-based allowances in line with market practice and regulatory requirements. 22 The cash portion may also include blocked shares in line with regulatory requirements. 33 Compensation expense is
based on the share price on grant date taking into account performance conditions. Refer to Note 27 for more information. For GEB members, share-based compensation for 2022, 2021 and 2020 was entirely
composed of LTIP awards. For the Chairman of the BoD the share-based compensation for 2022, 2021 and 2020 was entirely composed of UBS shares. 44 Swiss franc amounts disclosed represent the respective US
dollar amounts translated at the applicable performance award currency exchange rates (2022: USD / CHF 0.96; 2021: USD / CHF 0.92; 2020: USD / CHF 0.94).
121
113
111144
The independent members of the BoD, including the Chairman, do not have employment or service contracts with UBS,
and thus are not entitled to benefits upon termination of their service on the BoD. Payments to these individuals for their
services as independent members of the BoD amounted to USD 11.1m (CHF 10.7m) in 2022, USD 7.5m (CHF 6.9m) in
2021 and USD 7.0m (CHF 6.6m) in 2020.
b) Equity holdings of key management personnel
Equity holdings of key management personnel1
3311..1122..2222
31.12.21
Number of UBS Group AG shares held by members of the BoD, GEB and parties closely linked to them2
11 No options were held in 2022 and 2021 by non-independent members of the BoD and any GEB member or any of its related parties. 22 Excludes shares granted under variable compensation plans with forfeiture
provisions.
4,597,006
33,,000099,,668866
Of the share totals above, no shares were held by close family members of key management personnel on 31 December
2022 and 31 December 2021. 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 2022 and 31 December 2021. As of
31 December 2022, no member of the BoD or GEB was the beneficial owner of more than 1% of the shares in UBS
Group AG.
c) Loans, advances and mortgages to key management personnel
The non-independent members of the BoD and GEB members are granted loans, fixed advances and mortgages in the
ordinary course of business on substantially the same terms and conditions that are available to other employees,
including interest rates and collateral, and neither involve more than the normal risk of collectability nor contain any other
unfavorable features for the firm. Independent BoD members are granted loans and mortgages in the ordinary course of
business at general market conditions.
Movements in the loan, advances and mortgage balances are as follows.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
357
361
Note 30 Related parties (continued)
Loans, advances and mortgages to key management personnel1
USD m, except where indicated
Balance at the beginning of the year
Additions
Reductions
BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr2
22002222
3344
88
((99))
3333
2021
38
11
(15)
34
BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr ((CCHHFF mm))2, 3
11 All loans are secured loans. 22 There were no unused uncommitted credit facilities as of 31 December 2022 and 31 December 2021. 33 Swiss franc amounts disclosed represent the respective US dollar amounts
translated at the relevant year-end closing exchange rate.
31
3311
d) Other related-party transactions with entities controlled by key management personnel
In 2022 and 2021, UBS did not enter into transactions with entities that are directly or indirectly controlled or jointly
controlled by UBS’s key management personnel or their close family members and as of 31 December 2022,
31 December 2021 and 31 December 2020, there were no outstanding balances related to such transactions.
Furthermore, in 2022 and 2021, entities controlled by key management personnel did not sell any goods or provide any
services to UBS, and therefore did not receive any fees from UBS. UBS also did not provide services to such entities in
2022 and 2021, and therefore also received no fees.
e) Transactions with associates and joint ventures
Loans to and outstanding receivables from associates and joint ventures
USD m
Carrying amount at the beginning of the year
Additions
Reductions
Foreign currency translation
Carrying amount at the end of the year
of which: unsecured loans and receivables
Other transactions with associates and joint ventures
USD m
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
Commitments and contingent liabilities to associates and joint ventures
› Refer to Note 28 for an overview of investments in associates and joint ventures
22002222
225511
440022
((443388))
11
221177
220099
2021
630
133
(497)
(14)
251
243
As of or for the year ended
3311..1122..2222
31.12.21
113388
44
9900
77
157
104
127
7
Note 31 Invested assets and net new money
The following disclosures provide a breakdown of UBS’s invested assets and a presentation of their development,
including net new money, as required by the Swiss Financial Market Supervisory Authority (FINMA).
Invested assets
Invested assets consist of all client assets managed by or deposited with UBS for investment purposes. Invested assets
include managed fund assets, managed institutional assets, discretionary and advisory wealth management portfolios,
fiduciary deposits, time deposits, savings accounts, and wealth management securities or brokerage accounts. All assets
held for purely transactional purposes and custody-only assets, including corporate client assets held for cash
management and transactional purposes, are excluded from invested assets, as the Group only administers the assets
and does not offer advice on how they should be invested. Also excluded are non-bankable assets (e.g., art collections)
and deposits from third-party banks for funding or trading purposes.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
358
362
Note 31 Invested assets and net new money (continued)
Discretionary assets are defined as client assets that UBS decides how to invest. Other invested assets are those where
the client ultimately decides how the assets are invested. When a single product is created in one business division and
sold in another, it is counted in both the business division managing the investment and the one distributing it. This
results in double counting within UBS’s total invested assets and net new money, as both business divisions are
independently providing a service to their respective clients, and both add value and generate revenue.
Net new money
Net new money in a reporting period is the amount of invested assets entrusted to UBS by new and existing clients, less
those withdrawn by existing clients and clients who terminated relationships with UBS.
Net new money is calculated using the direct method, under which inflows and outflows to / from invested assets are
determined at the client level, based on transactions. Interest and dividend income from invested assets are not counted as
net new money inflows. Market and currency movements, as well as fees, commissions and interest on loans charged, are
excluded from net new money, as are effects resulting from any acquisition or divestment of a UBS subsidiary or business.
Reclassifications between invested assets and custody-only assets as a result of a change in service level delivered are
generally treated as net new money flows. However, where the change in service level directly results from an externally
imposed regulation or a strategic decision by UBS to exit a market or specific service offering, the one-time net effect is
reported as Other effects.
The Investment Bank does not track invested assets and net new money. However, when a client is transferred from the
Investment Bank to another business division, this may produce net new money even though the client’s assets were
already with UBS.
Invested assets and net new money
USD bn
Fund assets managed by UBS
Discretionary assets
Other invested assets
TToottaall iinnvveesstteedd aasssseettss11
of which: double counts
NNeett nneeww mmoonneeyy11
11 Includes double counts.
Development of invested assets
USD bn
Total invested assets at the beginning of the year1
Net new money
Market movements2
Foreign currency translation
Other effects
of which: acquisitions / (divestments)
TToottaall iinnvveesstteedd aasssseettss aatt tthhee eenndd ooff tthhee yyeeaarr11
11 Includes double counts. 22 Includes interest and dividend income.
Note 32 Currency translation rates
As of or for the year ended
3311..1122..2222
31.12.21
339900
11,,444400
22,,112277
33,,995577
334400
6688
22002222
44,,559966
6688
((559955))
((7722))
((4400))
((1199))
419
1,705
2,472
4,596
356
159
2021
4,187
159
339
(65)
(24)
(5)
33,,995577
4,596
The following table shows the rates of the main currencies used to translate the financial information of UBS’s operations
with a functional currency other than the US dollar into US dollars.
1 CHF
1 EUR
1 GBP
100 JPY
CClloossiinngg eexxcchhaannggee rraattee
As of
AAvveerraaggee rraattee11
For the year ended
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
31.12.20
11..0088
11..0077
11..2211
00..7766
1.10
1.14
1.35
0.87
11..0055
11..0055
11..2233
00..7766
1.09
1.18
1.37
0.91
1.07
1.15
1.29
0.94
11 Monthly income statement items of operations with a functional currency other than the US dollar are translated into US dollars using month-end rates. Disclosed average rates for a year represent an average of
twelve month-end rates, weighted according to the income and expense volumes of all operations of the Group with the same functional currency for each month. Weighted average rates for individual business
divisions may deviate from the weighted average rates for the Group.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
359
363
Note 33 Main differences between IFRS and Swiss GAAP
The consolidated financial statements of UBS Group AG are prepared in accordance with International Financial Reporting
Standards (IFRS). The Swiss Financial Market Supervisory Authority (FINMA) requires financial groups presenting financial
statements under IFRS to provide a narrative explanation of the main differences between IFRS 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 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, 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, 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. However, non-
trading debt instruments are generally measured at amortized cost, even when the assets are managed on a fair value
basis. In addition, the measurement of financial assets in the form of securities depends on the nature of the asset: debt
instruments not held to maturity, i.e., instruments available for sale, and equity instruments with no permanent holding
intent, are classified as Financial investments and measured at the lower of (amortized) cost or market value. Market
value adjustments up to the original cost amount and realized gains or losses upon disposal of the investment are
recorded in the income statement as Other income from ordinary activities. Equity instruments with a permanent holding
intent are classified as participations in Non-consolidated investments in subsidiaries and other participations and are
measured at cost less impairment. Impairment losses are recorded in the income statement as Impairment of investments
in non-consolidated subsidiaries and other participations. Reversals of impairments up to the original cost amount and
realized gains or losses upon disposal of the investment are recorded as Extraordinary income / Extraordinary expenses.
3. Fair value option applied to financial liabilities
Under IFRS, UBS applies the fair value option to certain financial liabilities not held for trading. Instruments for which the
fair value option is applied are accounted for at FVTPL. The amount of change in the fair value attributable to changes in
UBS’s own credit is presented in Other comprehensive income directly within Retained earnings. The fair value option is
applied primarily to issued structured debt instruments, certain non-structured debt instruments, certain payables under
repurchase agreements and cash collateral on securities lending agreements, amounts due under unit-linked investment
contracts, and brokerage payables.
Under Swiss GAAP, the fair value option can only be applied to structured debt instruments consisting of a debt host
contract and one or more embedded derivatives that do not relate to own equity. Furthermore, unrealized changes in
fair value attributable to changes in UBS’s own credit are not recognized, whereas realized own credit is recognized in
Net trading income.
4. Allowances and provisions for credit losses
Swiss GAAP permit use of IFRS 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 and Swiss GAAP.
For the small residual exposures within the scope of Swiss GAAP ECL requirements, which are not subject to ECL under
IFRS 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.
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364
Note 33 Main differences between IFRS and Swiss GAAP (continued)
5. Hedge accounting
Under IFRS, when cash flow hedge accounting is applied, the fair value gain or loss on the effective portion of a derivative
designated as a cash flow hedge is recognized initially in equity and reclassified to the income statement when certain
conditions are met. When fair value hedge accounting is applied, the fair value change of the hedged item attributable
to the hedged risk is reflected in the measurement of the hedged item and is recognized in the income statement along
with the change in the fair value of the hedging derivative. Under Swiss GAAP, the effective portion of the fair value
change of a derivative instrument designated as a cash flow or as a fair value hedge is deferred on the balance sheet as
Other assets or Other liabilities. The carrying amount of the hedged item designated in fair value hedges is not adjusted
for fair value changes attributable to the hedged risk.
6. Goodwill and intangible assets
Under IFRS, 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 five years, unless a
longer useful life, which may not exceed 10 years, can be justified. In addition, these assets are tested annually for
impairment.
7. Post-employment benefit plans
Swiss GAAP permit the use of IFRS or Swiss accounting standards for post-employment benefit plans, with the election
made on a plan-by-plan basis.
UBS has elected to apply IFRS (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. Key differences between Swiss GAAP and IFRS 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 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 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 is 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).
8. Leasing
Under IFRS, 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, operating leases are not recognized on the
balance sheet, with payments recognized as General and administrative expenses on a straight-line basis over the lease
term, which commences with control of the physical use of the asset. Lease incentives are treated as a reduction of rental
expense and recognized on a consistent basis over the lease term.
Annual Report 2022 | Consolidated financial statements | UBS Group AG consolidated financial statements
361
365
Note 33 Main differences between IFRS and Swiss GAAP (continued)
9. Netting of derivative assets and liabilities
Under IFRS, derivative assets, derivative liabilities and related cash collateral not settled to market are reported on a gross
basis unless the restrictive IFRS netting requirements 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, 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.
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366
UBS AG consolidated financial information
This section contains a comparison of selected financial and capital information between UBS Group AG consolidated
and UBS AG consolidated. Information for UBS AG consolidated does not differ materially from UBS Group AG on a
consolidated basis.
Comparison between UBS Group AG consolidated and UBS AG consolidated
The accounting policies applied under International Financial Reporting Standards (IFRS) to both the UBS Group AG and
the UBS AG consolidated financial statements are identical. However, there are certain scope and presentation differences
as noted below:
– 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 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.
– Differences in net profit between UBS Group AG consolidated and UBS AG consolidated mainly arise as UBS Business
Solutions AG and other shared services subsidiaries of UBS Group AG charge other legal entities within the UBS AG
consolidation scope for services provided, including a markup on costs incurred. In addition, and to a lesser extent,
differences arise as a result of certain compensation-related matters, including pensions.
– The equity of UBS Group AG consolidated was USD 0.3bn higher than the equity of UBS AG consolidated as of
31 December 2022. This difference was mainly driven by higher dividends paid by UBS AG to UBS Group AG compared
with the dividend distributions of UBS Group AG, as well as higher retained earnings in the UBS Group AG
consolidated financial statements, largely related to the aforementioned markup charged by shared services
subsidiaries of UBS Group AG to other legal entities in the UBS AG scope of consolidation. In addition, UBS Group AG
is the grantor of the majority of the compensation plans of the Group and recognizes share premium for equity-settled
awards granted. These effects were largely offset by treasury shares acquired as part of our share repurchase programs
and those held to hedge share delivery obligations associated with Group compensation plans, as well as additional
share premium recognized at the UBS AG consolidated level related to the establishment of UBS Group AG and
UBS Business Solutions AG, a wholly owned subsidiary of UBS Group AG.
– The going concern capital of UBS Group AG consolidated was USD 3.6bn higher than the going concern capital of
UBS AG consolidated as of 31 December 2022, reflecting higher common equity tier 1 (CET1) capital of USD 2.5bn
and going concern loss-absorbing additional tier 1 (AT1) capital of USD 1.0bn.
– The CET1 capital of UBS Group AG consolidated was USD 2.5bn higher than that of UBS AG consolidated as of
31 December 2022, primarily due to lower UBS Group AG accruals for dividends to shareholders and USD 0.3bn higher
UBS Group AG consolidated IFRS equity. The aforementioned factors were partly offset by compensation-related
regulatory capital accruals at the UBS Group AG level.
– The going concern loss-absorbing AT1 capital of UBS Group AG consolidated was USD 1.0bn higher than that of UBS
AG consolidated as of 31 December 2022, mainly reflecting Deferred Contingent Capital Plan awards granted at the
Group level to eligible employees for the performance years 2017 to 2021, partly offset by four loss-absorbing AT1
capital instruments on-lent by UBS Group AG to UBS AG.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial information
367
367
UBS AG consolidated key figures
As of or for the year ended
3311..1122..2222
31.12.21
31.12.20
33,474
695
25,081
7,699
6,196
3344,,991155
2299
2255,,992277
88,,996600
77,,008844
35,828
(148)
27,012
8,964
7,032
USD m, except where indicated
RReessuullttss
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Net profit / (loss) attributable to shareholders
PPrrooffiittaabbiilliittyy aanndd ggrroowwtthh11
Return on equity (%)
Return on tangible equity (%)
Return on common equity tier 1 capital (%)
Return on leverage ratio denominator, gross (%)2
Cost / income ratio (%)
Net profit growth (%)
RReessoouurrcceess11
Total assets
Equity attributable to shareholders
Common equity tier 1 capital3
Risk-weighted assets3
Common equity tier 1 capital ratio (%)3
Going concern capital ratio (%)3
Total loss-absorbing capacity ratio (%)3
Leverage ratio denominator2,3
Common equity tier 1 leverage ratio (%)2,3
OOtthheerr
Invested assets (USD bn)4
Personnel (full-time equivalents)
11 Refer to the “Targets, aspirations and capital guidance” section of this report for more information about our performance measurement. 22 Leverage ratio denominators and leverage ratios for year 2020 do not
reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments”
section of our Annual Report 2020 for more information. 33 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. 44 Consists of invested assets for Global Wealth Management, Asset Management 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.
11,,110055,,443366
5566,,559988
4422,,992299
331177,,882233
1133..55
1177..22
3322..00
11,,002299,,556611
44..1177
1,116,145
58,102
41,594
299,005
13.9
18.5
33.3
1,067,679
3.90
1,125,327
57,754
38,181
286,743
13.3
18.3
34.2
1,036,771
3.68
1122..66
1144..22
1166..88
33..44
7744..33
00..77
12.3
13.9
17.6
3.4
75.4
13.5
10.9
12.4
16.6
3.4
74.9
56.3
33,,995577
4477,,662288
4,596
47,067
4,187
47,546
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial information
368
368
Comparison between UBS Group AG consolidated and UBS AG consolidated
USD m, except where indicated
Income statement
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
of which: Global Wealth Management
of which: Personal & Corporate Banking
of which: Asset Management
of which: Investment Bank
of which: Group Functions
Net profit / (loss)
of which: net profit / (loss) attributable to shareholders
of which: net profit / (loss) attributable to non-controlling interests
Statement of comprehensive income
Other comprehensive income
of which: attributable to shareholders
of which: attributable to non-controlling interests
Total comprehensive income
of which: attributable to shareholders
of which: attributable to non-controlling interests
Balance sheet
Total assets
Total liabilities
Total equity
of which: equity attributable to shareholders
of which: equity attributable to non-controlling interests
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 (%)
AAss ooff oorr ffoorr tthhee yyeeaarr eennddeedd 3311..1122..2222
As of or for the year ended 31.12.21
UUBBSS GGrroouupp AAGG
ccoonnssoolliiddaatteedd
UUBBSS AAGG
ccoonnssoolliiddaatteedd
Difference
(absolute)
UBS Group AG
consolidated
UBS AG
consolidated
Difference
(absolute)
3344,,556633
2299
2244,,993300
99,,660044
44,,997777
11,,881122
11,,339977
11,,889977
((448800))
77,,666611
77,,663300
3322
((44,,449944))
((44,,448811))
((1144))
33,,116677
33,,114499
1188
11,,110044,,336644
11,,004477,,114466
5577,,221188
5566,,887766
334422
4455,,445577
5588,,332211
331199,,558855
1144..22
1188..22
3333..00
11,,002288,,446611
44..4422
3344,,991155
2299
2255,,992277
88,,996600
44,,889944
11,,779900
11,,339966
11,,883399
((996600))
77,,111166
77,,008844
3322
((44,,339966))
((44,,338833))
((1144))
22,,771199
22,,770011
1188
11,,110055,,443366
11,,004488,,449966
5566,,994400
5566,,559988
334422
4422,,992299
5544,,777700
331177,,882233
1133..55
1177..22
3322..00
11,,002299,,556611
44..1177
(353)
0
(997)
644
83
21
1
58
480
546
546
0
(98)
(98)
0
448
448
0
(1,072)
(1,349)
278
278
0
2,528
3,551
1,762
0.7
1.0
0.9
(1,100)
0.25
35,393
(148)
26,058
9,484
4,783
1,731
1,030
2,630
(689)
7,486
7,457
29
(2,367)
(2,351)
(16)
5,119
5,106
13
35,828
(148)
27,012
8,964
4,706
1,726
1,023
2,592
(1,083)
7,061
7,032
29
(2,235)
(2,220)
(16)
4,826
4,813
13
(434)
0
(955)
520
77
4
7
38
394
425
425
0
(131)
(131)
0
293
293
0
1,117,182
1,056,180
61,002
60,662
340
1,116,145
1,057,702
58,442
58,102
340
1,037
(1,522)
2,559
2,559
0
45,281
60,488
302,209
15.0
20.0
34.7
1,068,862
4.24
41,594
55,434
299,005
13.9
18.5
33.3
1,067,679
3.90
3,687
5,054
3,204
1.1
1.5
1.3
1,183
0.34
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial information
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369
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
International Financial Reporting Standards (IFRS) 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 2022
UBS AG management has assessed the effectiveness of UBS AG’s internal control over financial reporting as of
31 December 2022 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,
management believes that, as of 31 December 2022, UBS AG’s internal control over financial reporting was effective.
The effectiveness of UBS AG’s internal control over financial reporting as of 31 December 2022 has been audited by Ernst
& Young Ltd, UBS AG’s independent registered public accounting firm, as stated in their Report of the independent
registered public accounting firm on internal control over financial reporting, which expresses an unqualified
opinion on the effectiveness of UBS AG’s internal control over financial reporting as of 31 December 2022.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial information
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370
Ernst & Young Ltd
Aeschengraben 27
P.O. Box
4002 Basel
Phone: +41 58 286 86 86
www.ey.com/ch
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of UBS AG
Opinion on Internal Control over Financial Reporting
We have audited UBS AG and subsidiaries’ internal control over financial reporting as of 31 December 2022, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, UBS AG and
subsidiaries (“the Group”) maintained, in all material respects, effective internal control over financial reporting as of
31 December 2022, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Group as of 31 December 2022 and 2021, the related
consolidated income statements, statements of comprehensive income, statements of changes in equity and
statements of cash flows for each of the three years in the period ended 31 December 2022, and the related notes
and our report dated 3 March 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Group’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) 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.
Ernst & Young Ltd
Basel, 3 March 2023
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371
Ernst & Young Ltd
Aeschengraben 27
P.O. Box
4002 Basel
Phone: +41 58 286 86 86
www.ey.com/ch
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of UBS AG
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UBS AG and subsidiaries (“the Group”)
as of 31 December 2022 and 2021, the related consolidated income statements, statements of
comprehensive income, statements of changes in equity and statements of cash flows for each of the three
years in the period ended 31 December 2022, and the related notes to the consolidated financial statements,
including the information identified as “audited” as described in Note 1 (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Group at 31 December 2022 and 2021, and the results of its
operations and its cash flows for each of the three years in the period ended 31 December 2022, in conformity
with the International Financial Reporting Standards as issued by the International Accounting Standards
Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Group’s internal control over financial reporting as of 31 December 2022, based
on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated 3 March 2023 expressed
an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Group’s Board of Directors. Our responsibility is to
express an opinion on the Group’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Group in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of critical audit matters does not alter in
any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.
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372
Valuation of complex or illiquid instruments at fair value
2
Description of
the Matter
At 31 December 2022, as explained in Notes 1 and 20 to the consolidated financial statements,
the Group held financial assets and liabilities measured at fair value of USD 341,858 million
and USD 333,382 million, including financial instruments that did not trade in active markets.
These instruments are reported within the following accounts: financial assets and liabilities at
fair value held for trading, derivative financial instruments, financial assets at fair value not held
for trading, debt issued designated at fair value, and other financial liabilities designated at fair
value. In determining the fair value of these financial instruments, the Group used valuation
techniques, modelling assumptions, and estimates of unobservable market inputs which
required significant management judgment.
Auditing management’s judgments and assumptions used in the estimation of the fair value of
these instruments was complex due to the highly judgmental nature of valuation techniques,
key modelling assumptions and significant unobservable inputs. Auditing the valuation of
complex or illiquid instruments at fair value included consideration of any incremental risks
arising from the impact of current macroeconomic influences on valuation techniques and
inputs, such as geopolitics, inflation, and the ongoing COVID-19 pandemic. The valuation
techniques that required especially complex judgement were comprised of discounted cash
flow and earnings-based valuation techniques. Highly judgmental modelling assumptions
result from a range of different models or model calibrations used by market participants.
Valuation inputs which were particularly complex and subjective included those with a limited
degree of observability and the associated extrapolation, interpolation or calibration of curves
using limited and proxy data points. Examples of such inputs included unobservable credit
spreads and bond prices, volatility, and correlation.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness
of the controls over management’s financial instruments valuation processes, including
controls over market data inputs, model and methodology governance, and valuation
adjustments.
We tested the valuation techniques, models and methodologies, and the inputs used in those
models, as outlined above, by performing an independent revaluation of certain complex or
illiquid financial assets and liabilities with the support of specialists. We used independent
models and inputs, and compared inputs to available market data among other procedures.
We also independently challenged key judgments in relation to a sample of fair value
adjustments.
We also assessed management’s disclosures regarding fair value measurement (within Notes
1 and 20 to the consolidated financial statements).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial information
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3
Recognition of deferred tax assets
Description of
the Matter
At 31 December 2022, the Group’s deferred tax assets (“DTA”) were USD 9,354 million (see
Note 8 to the consolidated financial statements). DTAs are recognized to the extent it is
probable that taxable profits will be available, against which, the applicable deductible
temporary differences or the carryforward of unused tax losses within the loss carryforward
period can be utilized. There is significant judgment exercised when estimating future taxable
income that is not based on the reversal of taxable temporary differences. Management’s
estimate of future taxable profits is based on its strategic plan that is sensitive to the
assumptions made in estimating future taxable income.
How We
Addressed the
Matter in Our
Audit
Auditing management’s assessment of the recognition of the Group’s DTAs was complex due
to the highly judgmental nature of estimating future taxable profits over the life of underlying
tax loss carryforwards. Estimating future profitability is inherently subjective as it is sensitive
to future economic, market and other conditions, which are difficult to predict, such as the
impact of geopolitics, inflation, interest rates, and the ongoing COVID-19 pandemic.
Specifically, some of the more subjective key macro-economic assumptions used included
gross domestic product growth rates, equity market performance, and interest rate
expectations.
We obtained an understanding, evaluated the design, and tested the operating effectiveness
of management’s controls over DTA valuation, which included the assumptions used in
developing the strategic plans and estimating future taxable income.
We assessed the completeness and accuracy of the data used for the estimations of future
taxable income. This included recalculating the outputs of models applied to the recognition
process for DTAs.
We involved specialists to assist in assessing the key economic assumptions embedded in
the strategic plans. We compared key assumptions used to forecast future taxable income to
externally available historical and prospective data and assumptions, and assessed the
sensitivity of the outcomes using reasonably possible changes in assumptions.
We also assessed management’s disclosure regarding recognized and unrecognized
deferred tax assets (within Note 8 to the consolidated financial statements).
Expected credit losses
Description of
the Matter
At 31 December 2022, the Group’s allowances and provisions for expected credit losses
(“ECL”) were USD 1,091 million. As explained in Notes 1, 9 and 19 to the consolidated financial
statements, ECL is recognized for financial assets measured at amortized cost, financial
assets measured at fair value through other comprehensive income, fee and lease
receivables, financial guarantees and irrevocable loan commitments. ECL is also recognized
on the undrawn portion of revolving revocable credit lines, which include the Group’s credit
card limits and master credit facilities. The allowances and provisions for ECL consists of
exposures that are in default which are individually evaluated for impairment (stage 3), as well
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial information
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4
as losses inherent in the loan portfolio that are not specifically identified (stage 1 and stage 2).
Management’s ECL estimates represent the difference between contractual cash flows and
those the Group expects to receive, discounted at the effective interest rate. The method used
to calculate ECL is based on a combination of the following principal factors: probability of
default (“PD”), loss given default (“LGD”) and exposure at default (“EAD”).
Auditing management’s estimate of the allowances and provisions for ECL was complex due
to the highly judgmental nature of forward-looking economic scenarios that form the basis of
the ECL calculation, their probability weightings, and the credit risk models used to estimate
stage 1 and stage 2 ECL. The geopolitical tensions and macroeconomic developments during
2022, such as the Russian invasion into Ukraine, US/China developments, inflation, including
emerging stagflation risks and monetary policy challenges, and continued restrictions in
certain locations due to the ongoing COVID-19 pandemic contribute to further uncertainty, and
as a consequence additional complexity in estimating ECL. As a result, the ECL estimation
requires higher management judgement, specifically within the following two areas: (i)
the possible
scenario selection, including assumptions about the scenario severity,
geopolitical developments and macroeconomic and market developments and the number of
scenarios necessary to sufficiently cover the bandwidth of potential outcomes, as well as
related scenario weights and post-model adjustments; and, (ii) credit risk models, since the
output from historic data based models may not be indicative of current or future conditions.
Additionally, auditing the measurement of individual ECL for stage 3 was complex due to the
high degree of judgment involved in management’s process for estimating ECL based on
assumptions. These assumptions take 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.
We obtained an understanding, evaluated the design and tested the operating effectiveness
of management’s controls over the ECL estimate, including management’s choice of forward-
looking economic scenarios used to measure ECL and the probability weighting assigned to
such scenarios. We evaluated management’s methodologies and governance controls for
developing and monitoring the economic scenarios used and the probability weightings
assigned to them, and related post-model adjustment. Supported by specialists, we assessed
the key macroeconomic variables used in the forward-looking scenarios, such as real gross
domestic product growth, unemployment rate, interest rates and house price indices, and
evaluated the modelled correlation and translation of those macroeconomic factors to the ECL
estimate. We further assessed the appropriateness of the post-model adjustments by
considering management’s governance process, assumptions used and sensitivity analysis.
We also obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over credit risk models used in the ECL estimate, including controls
over the completeness and accuracy of model input data, calculation logic, and output data
used in the overall ECL calculation. With the support of specialists, on a sample basis, we
performed an evaluation of management’s models and tested the model outcomes by
inspecting model documentation, reperforming model calculations, and comparing data used
as inputs to management’s forecast to external sources, among other procedures.
How We
Addressed the
Matter in Our
Audit
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5
For the measurement of stage 3, we obtained an understanding, evaluated the design and
tested the operating effectiveness of controls over management’s process, including an
evaluation of the assumptions used by management regarding the future cash flows from
debtors’ continuing operations and/or the liquidation of collateral. Supported by specialists in
certain areas, we additionally tested collateral valuation, cash flow assumptions and exit
strategies by performing inquiries of management, inspecting underlying documents, such as
loan contracts, financial statements, covenants, budgets and business plans, and by re-
performing discounted cash flow calculations among other procedures, on a sample basis.
We also assessed management’s disclosures regarding financial assets at amortized cost and
other positions in scope of expected credit loss measurement (within Notes 1, 9 and 19 to the
consolidated financial statements).
Ernst & Young Ltd
We have served as the Group’s auditor since 1998.
Basel, Switzerland
3 March 2023
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Ernst & Young Ltd
Aeschengraben 27
P.O. Box
CH-4002 Basel
Phone:
www.ey.com/ch
+41 58 286 86 86
To the General Meeting of
UBS AG, Zurich & Basel
Basel, 3 March 2023
Statutory auditor’s report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of UBS AG and its subsidiaries (“the Group”), which
comprise the consolidated balance sheets as of 31 December 2022 and 31 December 2021, and the
consolidated income statements, statements of comprehensive income, statements of changes in equity
and statements of cash flows for each of the three years in the period ended 31 December 2022, and the
related notes to the consolidated financial statements, including the information identified as “audited” as
described in Note 1 (collectively referred to as the “consolidated financial statements”).
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2022 and 31 December 2021, and the
consolidated financial performance and its consolidated cash flows for each of the three years in the period
ended 31 December 2022 in accordance with International Financial Reporting Standards (IFRS) and
comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss
Auditing Standards. Our responsibilities under those provisions and standards are further described in the
Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of
the Swiss audit profession, as well as the International Code of Ethics for Professional Accountants
(including International Independence Standards) of the International Ethics Standards Board for
Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. For each matter below, our description of how
our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the consolidated financial statements. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our audit opinion on
the accompanying consolidated financial statements.
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Valuation of complex or illiquid instruments at fair value
2
Area of focus
At 31 December 2022, as explained in Notes 1 and 20 to the consolidated financial
statements, the Group held financial assets and liabilities measured at fair value of USD
341,858 million and USD 333,382 million, including financial instruments that did not
trade in active markets. These instruments are reported within the following accounts:
financial assets and liabilities at fair value held for trading, derivative financial
instruments, financial assets at fair value not held for trading, debt issued designated at
fair value, and other financial liabilities designated at fair value. In determining the fair
value of these financial instruments, the Group used valuation techniques, modelling
assumptions, and estimates of unobservable market inputs which required significant
management judgment.
Auditing management’s judgments and assumptions used in the estimation of the fair
value of these instruments was complex due to the highly judgmental nature of valuation
techniques, key modelling assumptions and significant unobservable inputs. Auditing
the valuation of complex or illiquid instruments at fair value included consideration of any
incremental risks arising from the impact of current macroeconomic influences on
valuation techniques and inputs, such as geopolitics, inflation, and the ongoing COVID-
19 pandemic. The valuation techniques that required especially complex judgement
were comprised of discounted cash flow and earnings-based valuation techniques.
Highly judgmental modelling assumptions result from a range of different models or
model calibrations used by market participants. Valuation inputs which were particularly
complex and subjective included those with a limited degree of observability and the
associated extrapolation, interpolation or calibration of curves using limited and proxy
data points. Examples of such inputs included unobservable credit spreads and bond
prices, volatility, and correlation.
Our audit
response
We obtained an understanding, evaluated the design and tested the operating effective-
ness of the controls over management’s financial instruments valuation processes,
including controls over market data inputs, model and methodology governance, and
valuation adjustments.
We tested the valuation techniques, models and methodologies, and the inputs used in
those models, as outlined above, by performing an independent revaluation of certain
complex or illiquid financial assets and liabilities with the support of specialists. We used
independent models and inputs, and compared inputs to available market data among
other procedures. We also independently challenged key judgments in relation to a
sample of fair value adjustments.
We also assessed management’s disclosures regarding fair value measurement (within
Notes 1 and 20 to the consolidated financial statements).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial information
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3
Recognition of deferred tax assets
Area of focus
At 31 December 2022, the Group’s deferred tax assets (“DTA”) were USD 9,354 million
(see Note 8 to the consolidated financial statements). DTAs are recognized to the extent
it is probable that taxable profits will be available, against which, the applicable
deductible temporary differences or the carryforward of unused tax losses within the loss
carryforward period can be utilized. There is significant judgment exercised when
estimating future taxable income that is not based on the reversal of taxable temporary
differences. Management’s estimate of future taxable profits is based on its strategic
plan that is sensitive to the assumptions made in estimating future taxable income.
Auditing management’s assessment of the recognition of the Group’s DTAs was
complex due to the highly judgmental nature of estimating future taxable profits over the
life of underlying tax loss carryforwards. Estimating future profitability is inherently
subjective as it is sensitive to future economic, market and other conditions, which are
difficult to predict, such as the impact of geopolitics, inflation, interest rates, and the
ongoing COVID-19 pandemic. Specifically, some of the more subjective key macro-
economic assumptions used included gross domestic product growth rates, equity
market performance, and interest rate expectations.
Our audit
response
We obtained an understanding, evaluated the design, and tested the operating
effectiveness of management’s controls over DTA valuation, which included the
assumptions used in developing the strategic plans and estimating future taxable
income.
We assessed the completeness and accuracy of the data used for the estimations of
future taxable income. This included recalculating the outputs of models applied to the
recognition process for DTAs.
We involved specialists to assist in assessing the key economic assumptions embedded
in the strategic plans. We compared key assumptions used to forecast future taxable
income to externally available historical and prospective data and assumptions, and
assessed the sensitivity of the outcomes using reasonably possible changes in
assumptions.
We also assessed management’s disclosure regarding recognized and unrecognized
deferred tax assets (within Note 8 to the consolidated financial statements).
Expected credit losses
Area of focus
At 31 December 2022, the Group’s allowances and provisions for expected credit losses
(“ECL”) were USD 1,091 million. As explained in Notes 1, 9 and 19 to the consolidated
financial statements, ECL is recognized for financial assets measured at amortized cost,
financial assets measured at fair value through other comprehensive income, fee and
lease receivables, financial guarantees and irrevocable loan commitments. ECL is also
recognized on the undrawn portion of revolving revocable credit lines, which include the
Group’s credit card limits and master credit facilities. The allowances and provisions for
ECL consists of exposures that are in default which are individually evaluated for
impairment (stage 3), as well as losses inherent in the loan portfolio that are not
specifically identified (stage 1 and stage 2). Management’s ECL estimates represent the
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4
difference between contractual cash flows and those the Group expects to receive,
discounted at the effective interest rate. The method used to calculate ECL is based on
a combination of the following principal factors: probability of default (“PD”), loss given
default (“LGD”) and exposure at default (“EAD”).
Auditing management’s estimate of the allowances and provisions for ECL was complex
due to the highly judgmental nature of forward-looking economic scenarios that form the
basis of the ECL calculation, their probability weightings, and the credit risk models used
to estimate stage 1 and stage 2 ECL. The geopolitical tensions and macroeconomic
developments during 2022, such as the Russian invasion into Ukraine, US/China
developments, inflation, including emerging stagflation risks and monetary policy
challenges, and continued restrictions in certain locations due to the ongoing COVID-19
pandemic contribute to further uncertainty, and as a consequence additional complexity
in estimating ECL. As a result, the ECL estimation requires higher management
judgement, specifically within the following two areas: (i) scenario selection, including
the possible geopolitical developments and
assumptions about the scenario severity,
macroeconomic and market developments, and the number of scenarios necessary to
sufficiently cover the bandwidth of potential outcomes, as well as related scenario
weights and post-model adjustments; and, (ii) credit risk models, since the output from
historic data based models may not be indicative of current or future conditions.
Additionally, auditing the measurement of individual ECL for stage 3 was complex due
to the high degree of judgment involved in management’s process for estimating ECL
based on assumptions. These assumptions take 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.
We obtained an understanding, evaluated the design and tested the operating
effectiveness of management’s controls over the ECL estimate, including management’s
choice of forward-looking economic scenarios used to measure ECL and the probability
weighting assigned to such scenarios. We evaluated management’s methodologies and
governance controls for developing and monitoring the economic scenarios used and
the probability weightings assigned to them, and related post-model adjustments.
Supported by specialists, we assessed the key macroeconomic variables used in the
forward-looking scenarios, such as real gross domestic product growth, unemployment
rate, interest rates and house price indices, and evaluated the modelled correlation and
translation of those macroeconomic factors to the ECL estimate. We further assessed
the appropriateness of the post-model adjustments by considering management’s
governance process, assumptions used and sensitivity analysis.
We also obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over credit risk models used in the ECL estimate, including
controls over the completeness and accuracy of model input data, calculation logic, and
output data used in the overall ECL calculation. With the support of specialists, on a
sample basis, we performed an evaluation of management’s models and tested the
model outcomes by inspecting model documentation, reperforming model calculations,
and comparing data used as inputs to management’s forecast to external sources,
among other procedures.
Our audit
response
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5
For the measurement of stage 3, we obtained an understanding, evaluated the design
and tested the operating effectiveness of controls over management’s process, including
an evaluation of the assumptions used by management regarding the future cash flows
from debtors’ continuing operations and/or the liquidation of collateral. Supported by
specialists in certain areas, we additionally tested collateral valuation, cash flow
assumptions and exit strategies by performing inquiries of management, inspecting
underlying documents, such as loan contracts, financial statements, covenants, budgets
and business plans, and by re-performing discounted cash flow calculations among other
procedures, on a sample basis.
We also assessed management’s disclosures regarding financial assets at amortized
cost and other positions in scope of expected credit loss measurement (within Notes 1,
9 and 19 to the consolidated financial statements).
Other information in the annual report
The Board of Directors is responsible for the other information in the annual report. The other information
comprises all information included in the annual report, but does not include the consolidated financial
statements, the stand-alone financial statements of UBS AG, the compensation report1, and our auditor’s
reports thereon.
Our opinions on the consolidated financial statements, the standalone financial statements of UBS AG and
the compensation report1 do not cover the other information in the annual report and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information in the annual report and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
Responsibility of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give
a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control
as the Board of Directors determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Board of Directors either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
1 Specifically, the following tables in the compensation report: “Share ownership/entitlements of GEB members," "Total of all vested
and unvested shares of GEB members," "Number of shares of BoD members," and "Total of all blocked and unblocked shares of
BoD Members.”
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6
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located
at the website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-report-for-public-companies. This
description forms part of our auditor’s report.
Report on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an
internal control system exists, which has been designed for the preparation of consolidated financial
statements according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
Ernst & Young Ltd
Maurice McCormick
Licensed audit expert
(Auditor in charge)
Robert E. Jacob, Jr.
Certified Public Accountant (U.S.)
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial information
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382
UBS AG consolidated financial statements
Primary financial statements and share information
Audited |
Income statement
USD m
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
Net interest income from financial instruments measured at fair value through profit or loss and other
Net interest income
Other net income from financial instruments measured at fair value through profit or loss
Fee and commission income
Fee and commission expense
Net fee and commission income
Other income
TToottaall rreevveennuueess
CCrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
OOppeerraattiinngg eexxppeennsseess
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Net profit / (loss) attributable to non-controlling interests
NNeett pprrooffiitt // ((lloossss)) aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Note
3311..1122..2222
31.12.21
31.12.20
For the year ended
3
3
3
3
3
4
4
4
5
19
6
7
11,12
8
1111,,880033
((66,,669966))
11,,441100
66,,551177
77,,449933
2200,,884466
((11,,882233))
1199,,002233
11,,888822
3344,,991155
8,534
(3,366)
1,437
6,605
5,844
24,422
(1,985)
22,438
941
35,828
8,816
(4,333)
1,305
5,788
6,930
20,982
(1,775)
19,207
1,549
33,474
2299
(148)
695
1155,,008800
99,,000011
11,,884455
2255,,992277
88,,996600
11,,884444
77,,111166
3322
77,,008844
15,661
9,476
1,875
27,012
8,964
1,903
7,061
29
7,032
14,686
8,486
1,909
25,081
7,699
1,488
6,211
15
6,196
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
383
383
Statement of comprehensive income
USD m
Comprehensive income attributable to shareholders
NNeett pprrooffiitt // ((lloossss))
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt
FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn
Foreign currency translation movements related to net assets of foreign operations, before tax
Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax
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
Income tax relating to foreign currency translations, including the effect of net investment hedges
Subtotal foreign currency translation, net of tax
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Net unrealized gains / (losses), before tax
Net realized (gains) / losses reclassified to the income statement from equity
Reclassification of financial assets to Other financial assets measured at amortized cost1
Income tax relating to net unrealized gains / (losses)
Subtotal financial assets measured at fair value through other comprehensive income, net of tax
CCaasshh ffllooww hheeddggeess ooff iinntteerreesstt rraattee rriisskk
Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax
Net (gains) / losses reclassified to the income statement from equity
Income tax relating to cash flow hedges
Subtotal cash flow hedges, net of tax
CCoosstt ooff hheeddggiinngg
Cost of hedging, before tax
Income tax relating to cost of hedging
Subtotal cost of hedging, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt
DDeeffiinneedd bbeenneeffiitt ppllaannss
Gains / (losses) on defined benefit plans, before tax
Income tax relating to defined benefit plans
Subtotal defined benefit plans, net of tax
OOwwnn ccrreeddiitt oonn ffiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
Gains / (losses) from own credit on financial liabilities designated at fair value, before tax
Income tax relating to own credit on financial liabilities designated at fair value
Subtotal own credit on financial liabilities designated at fair value, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall ccoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Comprehensive income attributable to non-controlling interests
NNeett pprrooffiitt // ((lloossss))
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
TToottaall ccoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo nnoonn--ccoonnttrroolllliinngg iinntteerreessttss
Total comprehensive income
NNeett pprrooffiitt // ((lloossss))
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee
of which: other comprehensive income that may be reclassified to the income statement
of which: other comprehensive income that will not be reclassified to the income statement
For the year ended
Note
3311..1122..2222
31.12.21
31.12.20
77,,008844
7,032
6,196
25
25
26
20
((886699))
331199
3322
((44))
44
((551199))
((444400))
11
444499
((33))
66
((55,,775588))
((115599))
11,,112244
((44,,779933))22
4455
00
4455
((55,,226600))
4400
4411
8811
886677
((7711))
779966
887777
(1,046)
492
(1)
10
35
(510)
(203)
(9)
55
(157)
(992)
(1,073)
390
(1,675)
(32)
6
(26)
(2,368)
133
(31)
102
46
0
46
148
2,040
(938)
(7)
2
(67)
1,030
223
(40)
(48)
136
2,012
(770)
(231)
1,011
(13)
0
(13)
2,165
(222)
88
(134)
(293)
0
(293)
(427)
((44,,338833))
22,,770011
(2,220)
4,813
1,738
7,934
3322
((1144))
1188
29
(16)
13
15
21
36
77,,111166
((44,,339966))
((55,,226600))
886644
22,,771199
7,061
(2,235)
(2,368)
132
4,826
6,211
1,759
2,165
(406)
7,970
TToottaall ccoommpprreehheennssiivvee iinnccoommee
11 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 1b for more information. 22 Mainly reflects net unrealized losses on US dollar hedging derivatives resulting from significant increases in the relevant US dollar long-term interest rates.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
384
384
Balance sheet
USD m
Assets
Cash and balances at central banks
Loans and advances to 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
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial assets at fair value held for trading
of which: assets pledged as collateral that may be sold or repledged by counterparties
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Investments in associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
TToottaall aasssseettss
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
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
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
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
Provisions
Other non-financial liabilities
TToottaall lliiaabbiilliittiieess
Equity
Share capital
Share premium
Retained earnings
Other comprehensive income recognized directly in equity, net of tax
EEqquuiittyy aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Equity attributable to non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
Note
31.12.22
31.12.21
9
9, 21
9, 21
9
9, 13a
20
10, 20, 21
20
20
19, 20
28b
11
12
8
13b
21
21
14
14b
16
18a
20
10, 20, 21
20
15, 20
18b, 20
17a
18c
116699,,444455
1144,,667711
6677,,881144
3355,,003333
339900,,002277
5533,,338899
773300,,337799
110088,,003344
3366,,774422
115500,,110099
1177,,557766
5599,,440088
333355,,112277
22,,223399
11,,110011
1111,,331166
66,,226677
99,,335544
99,,665522
11,,110055,,443366
1111,,559966
44,,220022
3366,,443366
552277,,117711
5566,,114477
5599,,449999
1100,,339911
770055,,444422
2299,,551155
115544,,990066
4455,,008855
7711,,884422
3322,,003333
333333,,338822
33,,118833
66,,448899
11,,004488,,449966
333388
2244,,664488
3311,,774466
((113333))
5566,,559988
334422
5566,,994400
11,,110055,,443366
192,817
15,360
75,012
30,514
398,693
26,236
738,632
131,033
43,397
118,145
21,839
59,642
330,659
8,844
1,243
11,712
6,378
8,839
9,836
1,116,145
13,101
5,533
31,801
544,834
57,295
82,432
9,765
744,762
31,688
121,309
44,045
71,460
32,414
300,916
3,452
8,572
1,057,702
338
24,653
27,912
5,200
58,102
340
58,442
1,116,145
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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Statement of changes in equity
USD m
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22001199
Premium on shares issued and warrants exercised
Tax (expense) / benefit
Dividends
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)3
Total comprehensive income for the year
of which: net profit / (loss)
of which: OCI, net of tax
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002200
Premium on shares issued and warrants exercised
Tax (expense) / benefit
Dividends
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)4
Total comprehensive income for the year
of which: net profit / (loss)
of which: OCI, net of tax
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
Premium on shares issued and warrants exercised
Tax (expense) / benefit
Dividends
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
Share
capital
333388
Share
premium
2244,,665599
(4)2
1
(76)
333388
2244,,558800
(7)2
(102)
182
333388
2244,,665533
((1144))22
55
44
Retained
earnings
2233,,441199
(3,848)
(49)
(40)
5,769
6,196
(427)
2255,,225511
(4,539)
18
1
7,180
7,032
148
2277,,991122
((44,,220000))
6699
00
33
77,,996611
77,,008844
887777
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002222
11 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings. 22 Includes decreases related to recharges by UBS Group AG for share-based
compensation awards granted to employees of UBS AG or its subsidiaries. 33 Mainly relates to the establishment of a banking partnership with Banco do Brasil. In 2020, UBS AG issued a 49.99% stake in UBS Brasil
Serviços in exchange for exclusive access to Banco do Brasil’s corporate clients. Upon completion of the transaction in 2020, equity attributable to non-controlling interests increased by USD 115m, with no material
effect on equity attributable to shareholders. 44 Includes the effects related to the launch of UBS AG’s new operational partnership entity with Sumitomo Mitsui Trust Holdings, Inc in 2021.
2244,,664488
3311,,774466
333388
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
386
386
Other comprehensive
income recognized
directly in equity,
net of tax1
55,,330066
of which:
foreign currency
translation
44,,003322
of which:
financial assets at
fair value through OCI
1144
of which:
cash flow
hedges
11,,226600
Total equity
attributable to
shareholders
5533,,772222
Non-controlling
interests
117744
Total equity
5533,,889966
49
65
2,165
2,165
77,,558855
(18)
(2,368)
(2,368)
55,,220000
((6699))
((33))
((55,,226600))
((55,,226600))
((113333))
65
1,030
1,030
55,,112266
(510)
(510)
44,,661177
((551199))
((551199))
44,,009988
0
49
136
136
115511
1,011
1,011
22,,332211
0
(18)
(157)
(157)
((77))
00
((33))
66
66
((44))
(1,675)
(1,675)
662288
((6699))
((44,,779933))
((44,,779933))
((44,,223344))
(4)
1
(3,848)
0
(40)
(12)
7,934
6,196
1,738
5577,,775544
(7)
(102)
(4,539)
0
1
182
4,813
7,032
(2,220)
5588,,110022
((1144))
55
((44,,220000))
00
00
44
22,,770011
77,,008844
((44,,338833))
5566,,559988
(4)
1
(3,854)
0
(40)
103
7,970
6,211
1,759
5588,,007733
(7)
(102)
(4,542)
0
1
193
4,826
7,061
(2,235)
5588,,444422
((1144))
55
((44,,220099))
00
00
((33))
22,,771199
77,,111166
((44,,339966))
5566,,994400
(6)
115
36
15
21
331199
(4)
12
13
29
(16)
334400
((99))
((77))
1188
3322
((1144))
334422
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
387
387
Share information and earnings per share
Ordinary share capital
As of 31 December 2022, UBS AG had 3,858,408,466 issued shares (31 December 2021: 3,858,408,466 shares) with a
nominal value of CHF 0.10 each, leading to a share capital of CHF 385,840,846.60. The shares were entirely held by
UBS Group AG.
Following revisions to Swiss Corporate Law that are effective from 1 January 2023, the Board of Directors (the BoD) will
propose at the 2023 Annual General Meeting (the AGM) that the shareholders approve the conversion of the share
capital currency of UBS AG from the Swiss franc to the US dollar. This would align the share capital currency with the
financial statement presentation currency of UBS AG. If the change is approved, the share capital of UBS AG will be
slightly reduced to a nominal value per share of USD 0.10 (from CHF 0.10 currently), with the amount of the reduction
allocated to the capital contribution reserve (presented as Share premium in the consolidated financial statements). Total
equity reported for UBS AG consolidated will not change.
Conditional share capital
As of 31 December 2022, the following conditional share capital was available to UBS AG’s BoD:
– A maximum of CHF 38,000,000 represented by up to 380,000,000 fully paid registered shares with a nominal value
of CHF 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 AGM of UBS AG on 14 April 2010. The BoD has
not made use of such allowance.
Authorized share capital
UBS AG had no authorized capital available to issue on 31 December 2022.
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
2022, 100% 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 2022 | Consolidated financial statements | UBS AG consolidated financial statements
388
388
Statement of cash flows
USD m
Cash flow from / (used in) operating activities
Net profit / (loss)
NNoonn--ccaasshh iitteemmss iinncclluuddeedd iinn nneett pprrooffiitt aanndd ootthheerr aaddjjuussttmmeennttss::
Depreciation, amortization and impairment of non-financial assets
Credit loss expense / (release)
Share of net profits of associates and joint ventures and impairment related to associates
Deferred tax expense / (benefit)
Net loss / (gain) from investing activities
Net loss / (gain) from financing activities
Other net adjustments
NNeett cchhaannggee iinn ooppeerraattiinngg aasssseettss aanndd lliiaabbiilliittiieess::
Loans and advances to banks and amounts due to banks
Securities financing transactions measured at amortized cost
Cash collateral on derivative instruments
Loans and advances to customers and customer deposits
Financial assets and liabilities at fair value held for trading and derivative financial instruments
Brokerage receivables and payables
Financial assets at fair value not held for trading and other financial assets and liabilities
Provisions and other non-financial assets and liabilities
Income taxes paid, net of refunds
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ooppeerraattiinngg aaccttiivviittiieess
Cash flow from / (used in) investing activities
Purchase of subsidiaries, associates and intangible assets
Disposal of subsidiaries, associates and intangible assets
Purchase of property, equipment and software
Disposal of property, equipment and software
Purchase of financial assets measured at fair value through other comprehensive income
Disposal and redemption of financial assets measured at fair value through other comprehensive income
Net (purchase) / redemption of debt securities measured at amortized cost
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
Table continues below.
For the year ended
3311..1122..2222
31.12.21
31.12.20
77,,111166
7,061
6,211
11,,884455
1,875
1,909
2299
((3322))
449911
((11,,551155))
((1166,,558877))
55,,779922
((11,,008888))
44,,444444
7733
((77,,775566))
88,,117733
66,,001199
55,,555577
((443377))
((11,,449955))
1100,,663300
((33))
11,,77229911
((11,,447788))
116611
((44,,778833))
44,,008844
((1111,,999933))
((1122,,228833))
(148)
(105)
432
(230)
100
3,790
2,148
(2,316)
(3,311)
2,406
(10,635)
8,115
19,793
2,617
(1,026)
30,563
(1)
593
(1,581)
295
(5,802)
5,052
(415)
(1,860)
695
(84)
355
(698)
3,246
(8,061)
3,586
9,588
(3,486)
18,934
11,326
(5,199)
392
(1,213)
(919)
36,581
(46)
674
(1,573)
364
(6,290)
4,530
(4,166)
(6,506)
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
389
389
Statement of cash flows (continued)
Table continued from above.
USD m
Cash flow from / (used in) financing activities
Net short-term debt issued / (repaid)
Distributions paid on UBS AG shares
Issuance of debt designated at fair value and long-term debt measured at amortized cost2
Repayment of debt designated at fair value and long-term debt measured at amortized cost2
Net cash flows from other financing activities
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess
Total cash flow
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Net cash flow from / (used in) operating, investing and financing activities
Effects of exchange rate differences on cash and cash equivalents
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr33
of which: cash and balances at central banks 4
of which: loans and advances to banks
of which: money market paper 5
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 cash6
For the year ended
3311..1122..2222
31.12.21
31.12.20
((1122,,224499))
((44,,220000))
7799,,445577
((6677,,667700))
((559955))
((55,,225577))
220077,,775555
((66,,991111))
((55,,664455))
119955,,220000
116699,,336633
1133,,332299
1122,,550088
(3,093)
(4,539)
98,619
(79,799)
(261)
10,927
173,430
39,630
(5,306)
207,755
192,706
13,822
1,227
23,845
(3,848)
80,153
(87,099)
(553)
12,498
119,804
42,573
11,053
173,430
158,088
13,928
1,415
1155,,773300
88,,331155
11,,990077
11,170
4,802
2,531
11,929
6,414
1,901
11 Includes cash proceeds from the sales of: UBS AG’s shareholding in Mitsubishi Corp.-UBS Realty Inc.; UBS AG’s wholly owned subsidiary UBS Swiss Financial Advisers AG; UBS AG’s US alternative investments
administration business; and UBS AG’s domestic wealth management business in Spain. Refer to Note 29 for more information. Also includes dividends received from associates. 22 Includes funding from UBS Group
AG measured at amortized cost (recognized in Funding from UBS Group AG measured at amortized cost in the balance sheet) and measured at fair value (recognized in Other financial liabilities designated at fair
value in the balance sheet). 33 USD 4,253m, USD 3,408m and USD 3,828m of cash and cash equivalents (mainly reflected in Loans and advances to banks) were restricted as of 31 December 2022, 31 December
2021 and 31 December 2020, respectively. Refer to Note 22 for more information. 44 Includes only balances with an original maturity of three months or less. 55 Money market paper is included in the balance sheet
under Financial assets at fair value held for trading (31 December 2022: USD 2m; 31 December 2021: USD 20m; 31 December 2020: USD 117m), Financial assets measured at fair value through other comprehensive
income (31 December 2022: USD 0m; 31 December 2021: USD 0m; 31 December 2020: USD 178m), Financial assets at fair value not held for trading (31 December 2022: USD 6,048m; 31 December 2021: USD
1,066m; 31 December 2020: USD 536m), and Other financial assets measured at amortized cost (31 December 2022: USD 6,459m; 31 December 2021: USD 141m; 31 December 2020: USD 584m). 66 Includes
dividends received from associates reported within Net cash flow from / (used in) investing activities.
Changes in liabilities arising from financing activities
Debt issued
measured at
amortized cost
85,351
of which:
short-term 1
46,666
of which:
long-term 2
38,685
Debt issued
designated at fair
value
59,868
Over-the-
counter debt
instruments3
2,060
Funding from
UBS Group
AG4
55,354
Total
202,633
USD m
BBaallaannccee aass ooff 11 JJaannuuaarryy 22002211
Cash flows
Non-cash changes
of which: foreign currency translation
of which: fair value changes
(550)
(3,093)
(2,369)
(1,841)
(475)
(475)
2,543
(1,894)
(1,366)
(528)
of which: hedge accounting and other effects
(528)
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
82,432
43,098
39,334
Cash flows
Non-cash changes
of which: foreign currency translation
of which: fair value changes
(19,390)
(12,249)
(3,543)
(1,173)
(2,233)
(1,173)
of which: hedge accounting and other effects
(1,310)
(7,141)
(2,370)
(1,061)
(1,310)
9,075
2,516
(1,611)
4,127
71,460
13,277
(12,895)
(1,405)
(11,490)
126
(58)
(65)
7
7,076
15,727
(2,795)
(2,705)
(1,340) (4,857)
(30) 4,104
(1,425) (1,953)
2,128
59,635
215,655
(251)
(193)
(113)
(80)
5,903
(461)
(7,595)
(24,225)
(1,285) (5,036)
(1,060) (12,629)
(5,250) (6,560)
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002222
5599,,449999
2299,,667766
2299,,882233
7711,,884422
11,,668844
5577,,994433
119900,,996688
11 Debt with an original contractual maturity of less than one year. 22 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. 33 Included in balance sheet line Other financial liabilities designated at fair value. 44 Includes funding from UBS Group AG measured at amortized cost (refer to Note 14b) and
measured at fair value (refer to Note 18b).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
390
390
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.
392
392
392
392
392
393
397
397
397
397
398
401
401
402
402
a) Material accounting policies
Basis of accounting
1) Consolidation
2) Financial instruments
a. Recognition
b. Classification, measurement and presentation
c. Loan commitments and financial guarantees
d.
e. Derecognition
f.
g. Allowances and provisions for expected credit
Fair value of financial instruments
Interest income and expense
losses
h. Restructured and modified financial assets
i. Offsetting
j. Hedge accounting
3) Fee and commission income and expenses
403
404
404
405
405
405
406
406
Income taxes
4) Share-based and other deferred compensation plans
5) Post-employment benefit plans
6)
7) Property, equipment and software
8) Goodwill
9) Provisions and contingent liabilities
10) Foreign currency translation
11) Contracts on UBS Group AG shares
407
b) Changes in accounting policies, comparability
and other adjustments
407
c)
International Financial Reporting Standards and
Interpretations to be adopted in 2023 and later
and other changes
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
391
391
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 23 February 2023, 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 International Financial Reporting Standards (IFRS), as
issued by the International Accounting Standards Board (the IASB), and are presented in US dollars (USD).
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 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
expected credit loss measurement (refer to item 2g in this Note and to Note 19);
fair value measurement (refer to item 2f in this Note and to Note 20);
income taxes (refer to item 6 in this Note and to Note 8);
Statements:
–
–
–
– provisions and contingent liabilities (refer to item 9 in this Note and to Note 17);
– post-employment benefit plans (refer to item 5 in this Note and to Note 26);
– goodwill (refer to item 8 in this Note and to Note 12); and
–
consolidation of structured entities (refer to item 1 in this Note and to Note 28).
1) Consolidation
The Financial Statements include the financial statements of the 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 an 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.
Business combinations are accounted for using the acquisition method. The amount of any non-controlling interest is
measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
› 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. Certain entities within a class may be consolidated while others
may not. 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
2) Financial instruments
a. Recognition
UBS AG recognizes financial instruments when it becomes a party to contractual provisions of an instrument. UBS AG
applies settlement date accounting to all standard purchases and sales of non-derivative financial instruments.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
392
392
Note 1 Summary of material accounting policies (continued)
In transactions where UBS AG acts as a transferee, to the extent the financial asset transfer does not qualify for
derecognition by the transferor, UBS AG does not recognize the transferred instrument as its asset.
UBS AG also acts 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 with the objective being achieved by
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 a hedge relationship, in which case hedge
accounting requirements apply (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 financial assets are managed to achieve a
particular business objective.
In assessing whether contractual cash flows are SPPI, the 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 and Funding from UBS
Group AG measured at amortized cost. The latter includes contingent capital instruments issued to UBS Group AG
containing contractual provisions under which the principal amounts would be written down or converted into equity
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.
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.
A gain or loss is recognized in Other income when debt issued is subsequently repurchased for market-making or other
activities. A subsequent sale of own bonds in the market is treated as a reissuance of debt.
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 non-closely-related embedded derivatives that 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
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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
393
393
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
amortized cost
This classification includes:
– cash and balances at central banks;
– loans and advances to 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;
– loans to financial advisors; and
– debt securities held as high-quality liquid assets
(HQLA).
Measured at
FVOCI
Debt
instruments
measured at
FVOCI
This classification primarily includes debt securities
and certain asset-backed securities held as 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 fair value, with unrealized gains and losses
reported in Other comprehensive income, net of applicable
income taxes, until such investments are derecognized.
Upon derecognition, any accumulated balances in Other
comprehensive income are reclassified to the income
statement and reported within Other income.
The following items, which are determined on the same
basis as for financial assets measured at amortized cost, are
recognized in the income statement:
– interest income, which is accounted for in accordance
with item 2d in this Note;
– ECL and reversals; and
– FX translation gains and losses.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
394
394
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.
Mandatorily
measured at
FVTPL – Other
This classification includes financial assets mandatorily
measured at FVTPL that are not held for trading, as
follows:
– certain structured loans, 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;
– certain investment fund holdings and assets held to
hedge delivery obligations related to cash-settled
employee compensation plans;
– 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;
– auction rate securities, for which contractual cash flows
do not meet the SPPI criterion because interest may be
reset at rates that contain leverage;
– equity instruments; and
– assets held under unit-linked investment contracts.
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).
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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
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).
Designated at
FVTPL
UBS AG designates at FVTPL the following financial
liabilities:
– issued hybrid debt instruments that primarily include
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.
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.
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 directly within Retained earnings and is never
reclassified to the income statement.
Derivative liabilities (including derivatives that are
designated and effective hedging instruments) are
generally presented as Derivative financial instruments,
except those exchange-traded and OTC-cleared
derivatives that are legally settled on a daily basis or
economically net settled on a daily basis, which are
presented within Cash collateral payables on derivative
instruments.
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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.
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.
d. Interest income and expense
Interest income and expense 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 and either
recognized over the life of the commitment or when syndication occurs.
› Refer to item 3 in this Note for more information
Interest income on financial assets, excluding derivatives, is included in interest income when positive and in interest
expense when negative. Similarly, interest expense on financial liabilities, excluding derivatives, is included in interest
expense, except when interest rates are negative, in which case it is included in interest income.
› Refer to item 2b in this Note and Note 3 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 received
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 22 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.
Certain OTC derivative contracts and most 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 variation margin
on a daily basis represents legal or economic settlement, which results in derecognition of the associated derivatives.
› Refer to Note 21 for more information
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 20 for more information
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Note 1 Summary of material accounting policies (continued)
Critical accounting estimates and judgments
The use of valuation techniques, modeling assumptions and estimates of unobservable market inputs in the fair valuation of financial instruments requires
significant judgment and could affect the amount of gain or loss recorded for a particular position. Valuation techniques that rely more heavily on
unobservable inputs and sophisticated models inherently require a higher level of judgment and may require adjustment to reflect factors that market
participants would consider in estimating fair value, such as close-out costs, which are presented in Note 20d.
UBS AG’s governance framework over fair value measurement is described in Note 20b, 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 20f.
› Refer to Note 20 for more information
g. Allowances and provisions for expected credit losses
ECL are recognized for financial assets measured at amortized cost, financial assets measured at FVOCI, fee and lease
receivables, financial guarantees, and loan commitments not measured at fair value. ECL are also recognized on the
undrawn portion of 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 instruments: Maximum 12-month ECL are recognized from initial recognition, reflecting the portion of lifetime
cash shortfalls 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 instruments: Lifetime ECL are recognized if a significant increase in credit risk (an SICR) is observed subsequent
to the instrument’s initial recognition, 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 instruments: Lifetime ECL are always recognized for credit-impaired financial instruments, as determined by
the occurrence of one or more loss events, 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 or originated credit-
impaired (POCI). POCI 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 “Credit policies for distressed assets” in 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.
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.
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Note 1 Summary of material accounting policies (continued)
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:
– 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 our corporate rating tools.
Scenario generation, review process and governance
A team of economists, which is part of Group Risk Control, develop the forward-looking macroeconomic assumptions
with involvement from a broad range of experts.
The scenarios, their weight 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
allowance.
The Group Model Governance Committee (the GMGC), as the highest authority under UBS AG’s model governance
framework, ratifies the decisions taken by the ECL Management Forum.
› Refer to Note 19 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 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
4–8
9–13
3
2
1
› Refer to the “Risk management and control” section of this report for more details about UBS AG’s internal grading system
Irrespective of the SICR assessment based on default probabilities, credit risk is generally deemed to have significantly
increased for an instrument if the 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. 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.
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Note 1 Summary of material accounting policies (continued)
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 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 which 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 19f.
› Refer to Note 19 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 a modification gain or loss.
i. Offsetting
UBS AG presents financial assets and liabilities on its balance sheet net 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.
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Note 1 Summary of material accounting policies (continued)
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 21 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 within Equity. These
amounts are released to the income statement over the term of the hedged item.
Discontinuation of fair value hedges
Discontinuations for reasons other than derecognition of the hedged item result in an adjustment to the carrying amount,
which is amortized to the income statement over the remaining life of the hedged item using the effective interest
method. If the hedged item is derecognized, the unamortized fair value adjustment or deferred cost of hedging amount
is recognized immediately in the income statement as part of any derecognition gain or loss.
Cash flow hedges of forecast transactions
Fair value gains or losses associated with the effective portion of derivatives designated as cash flow hedges for cash flow
repricing risk are recognized initially in Other comprehensive income within Equity and reclassified to Interest income
from financial instruments measured at amortized cost and fair value through other comprehensive income or Interest
expense from financial instruments measured at amortized cost in the periods when the hedged forecast cash flows
affect profit or loss, including discontinued hedges for which forecast cash flows are expected to occur. If the forecast
transactions are no longer expected to occur, the deferred gains or losses are immediately reclassified to the income
statement.
Hedges of net investments in foreign operations
Gains or losses on the hedging instrument relating to the effective portion of a hedge are recognized directly in Other
comprehensive income within Equity, while any gains or losses relating to the ineffective and / or undesignated portion
(for example, the interest element of a forward contract) are recognized in the income statement. Upon disposal or partial
disposal of the foreign operation, the cumulative value of any such gains or losses recognized in Equity associated with
the entity is reclassified to Other income.
Interest Rate Benchmark Reform
UBS AG continues hedge accounting during the period of uncertainty before existing interest rate benchmarks are
replaced with alternative risk-free interest rates. During this period, UBS AG assumes that the current benchmark rates
will continue to exist, such that forecast transactions are considered highly probable and hedge relationships remain,
with little or no consequential impact on the financial statements. Upon replacement of existing interest rate benchmarks
by alternative risk-free interest rates, UBS AG applies the requirements of Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
and IFRS 16 (Interest Rate Benchmark Reform – Phase 2), where applicable.
› Refer to Note 25 for more information
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 point-in-time 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.
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Note 1 Summary of material accounting policies (continued)
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 as Fee and commission expense, and those that are related
to personnel, general and administrative expenses, 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 4 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.
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
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Note 1 Summary of material accounting policies (continued)
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 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) gains and losses on the sale of treasury shares (for which the tax
effects are recognized directly in Equity); (iii) unrealized gains or losses on financial instruments that are classified at
FVOCI; (iv) changes in fair value of derivative instruments designated as cash flow hedges; (v) remeasurements of defined
benefit plans; or (vi) certain foreign currency translations of foreign operations. Amounts relating to points (iii) through
(vi) above are recognized in Other comprehensive income within Equity.
UBS 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.
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Note 1 Summary of material accounting policies (continued)
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 8 for more information
7) Property, equipment and software
Property, equipment and software is measured at cost less accumulated depreciation and impairment losses. Software
development costs are capitalized only when the costs can be measured reliably and it is probable that future economic
benefits will arise. Depreciation of property, equipment and software begins when they are available for use and is
calculated on a straight line basis over an asset’s estimated useful life.
Property, equipment and software are generally tested for impairment at the appropriate cash-generating unit level,
alongside goodwill and intangible assets as described in item 8 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 11 for more information
8) Goodwill
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.
An impairment charge is recognized in the income statement if the carrying amount exceeds the recoverable amount of a
cash-generating unit.
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 in years one to three; (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 2 and 12 for more information
9) 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.
The majority of UBS AG’s provisions relate to litigation, regulatory and similar matters, restructuring, and employee
benefits. 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.
Provisions for employee benefits relate mainly to service anniversaries and sabbatical leave, and are recognized in
accordance with measurement principles set out in item 4 in this Note. In addition, UBS AG presents expected credit loss
allowances within Provisions if they relate to a loan commitment, financial guarantee contract or a revolving revocable
credit line.
IAS 37 provisions are measured considering the best estimate of the consideration required to settle the present
obligation at the balance sheet date.
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Note 1 Summary of material accounting policies (continued)
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, timing and 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 amount of any potential outflows.
› Refer to Note 17 for more information
10) 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 reclassified to the income statement when UBS AG disposes of, partially or in its entirety, the foreign operation
and UBS AG no longer controls the foreign operation.
Share capital issued, share premium and treasury shares held are translated at the historic average rate, with the difference
between the historic average rate and the spot rate realized upon repayment of share capital or disposal of treasury shares
reported as Share premium. Cumulative amounts recognized in Other comprehensive income in respect of cash flow hedges
and financial assets measured at FVOCI are translated at the closing exchange rate as of the balance sheet dates, with any
translation effects adjusted through Retained earnings.
› Refer to Note 32 for more information
11) Contracts on UBS Group AG shares
Contracts involving UBS Group AG shares that require net cash settlement, or provide the counterparty or UBS AG with
a settlement option that includes a choice of settling net in cash, are classified as derivatives held for trading.
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Note 1 Summary of material accounting policies (continued)
b) Changes in accounting policies, comparability and other adjustments
Changes to the presentation of the financial statements
During 2022, UBS AG made several changes to simplify the presentation of the income statement alongside other primary
financial statements and disclosure notes, and to align them with management information. In particular, Total operating
income has been renamed Total revenues and excludes Credit loss expense / (release), which is now separately presented
below Total revenues.
Reclassification of a portfolio from Financial assets measured at fair value through other comprehensive income to
Other financial assets measured at amortized cost
Effective from 1 April 2022, UBS AG has reclassified a portfolio of financial assets from Financial assets measured at fair
value through other comprehensive income with a fair value of USD 6.9bn (the Portfolio) to Other financial assets
measured at amortized cost, in line with the principles in IFRS 9, Financial Instruments, which require a reclassification
when an entity changes its business model for managing financial assets.
The Portfolio’s cumulative fair value losses of USD 449m pre-tax and USD 333m post-tax, previously recognized in Other
comprehensive income, have been removed from equity and adjusted against the value of the assets on the
reclassification date, so that the Portfolio is measured as if the assets had always been classified at amortized cost, with
a value of USD 7.4bn as on 1 April 2022. The reclassification had no effect on the income statement.
The reclassified Portfolio is made up of high-quality liquid assets, primarily US government treasuries and US government
agency mortgage-backed securities, held and separately managed by UBS Bank USA (BUSA).
The accounting reclassification has arisen as a direct result of the transformation of UBS AG’s Global Wealth Management
Americas business, which has significantly impacted BUSA. This includes initiatives approved by the Group Executive
Board to significantly grow and extend the business, as disclosed on 1 February 2022 during UBS’s fourth quarter 2021
earnings presentation. Over the two years preceding the reclassification date, BUSA’s deposit base grew by more than
100% generating substantial cash balances, with a number of new products being launched, including new deposit
types that are longer in duration, additional lending and a broader range of customer segments targeted.
Following the commencement of these activities and the announcement made in the first quarter of 2022, 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.
The fair value of the Portfolio as on 31 December 2022 was USD 5.8bn. A pre-tax fair value loss of USD 981m would
have been recognized in Other comprehensive income during 2022 if the Portfolio had not been reclassified.
› Refer to the Statement of changes in equity and Note 20 for more information about the effects from the reclassification of the
Portfolio
Accounting for obligations to safeguard crypto-assets an entity holds for platform users (SAB 121)
In March 2022, the US Security and Exchange Commission (the SEC) issued Staff Accounting Bulletin (SAB) 121,
“Accounting for obligations to safeguard crypto-assets an entity holds for platform users.” SAB 121 adds interpretive
guidance requiring SEC registrants, including foreign private issuers that apply IFRS, to recognize a liability on their
balance sheets to reflect the obligation to safeguard any digital asset that is issued or transferred using distributed ledger
or blockchain technology and held for their platform users, along with a corresponding asset. The guidance is effective
for UBS AG for annual reporting from 2022 onwards. Amounts that would be recognized as liabilities, with corresponding
assets, under this guidance are not material to UBS AG.
c) International Financial Reporting Standards and Interpretations to be adopted in 2023 and later and other
changes
IFRS 17, Insurance Contracts
In May 2017, the IASB issued IFRS 17, Insurance Contracts, which sets out the accounting requirements for contractual
rights and obligations that arise from insurance contracts issued and reinsurance contracts held. IFRS 17 is effective from
1 January 2023. Adoption on 1 January 2023 will have no effect on UBS AG’s financial statements. UBS AG does not
provide insurance services in any market.
Other amendments to IFRS
The IASB has issued a number of minor amendments to IFRS, effective from 1 January 2023 and in later years. These
amendments are not expected to have a significant effect on UBS AG when they are adopted.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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Note 2a Segment reporting
UBS AG’s businesses are organized globally into four business divisions: Global Wealth Management, Personal &
Corporate Banking, Asset Management and the Investment Bank. All four business divisions are supported by Group
Functions and qualify as reportable segments for the purpose of segment reporting. Together with Group Functions, the
four business divisions reflect the management structure of UBS AG.
– Global Wealth Management provides financial services, advice and solutions to private wealth clients. Its offering
ranges from investment management to estate planning and corporate finance advice, in addition to specific wealth
management and banking products and services.
– Personal & Corporate Banking serves its private, corporate, and institutional clients’ needs, from banking to
retirement, financing, investments and strategic transactions, in Switzerland, through its branch network and digital
channels.
– Asset Management is a global, large-scale and diversified asset manager. It offers investment capabilities and styles
across all major traditional and alternative asset classes, as well as advisory support to institutions, wholesale
intermediaries and wealth management clients.
– The Investment Bank provides a range of services to institutional, corporate and wealth management clients globally,
to help them raise capital, grow their businesses, invest and manage risks. Its offering includes research, advisory
services, facilitating clients raising debt and equity from the public and private markets and capital markets, cash and
derivatives trading across equities and fixed income, and financing.
– Group Functions is made up of the following major areas: Group Services (which consists of Chief Digital and
Information Office, Communications & Branding, Compliance, Finance, Group Sustainability and Impact, Human
Resources, Group Legal, Regulatory & Governance, and Risk Control), Group Treasury and Non-core and Legacy
Portfolio.
Financial information about the four business divisions and Group Functions 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 Functions, 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.
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Note 2a Segment reporting (continued)
USD m
For the year ended 31 December 2022
Net interest income
Non-interest income
Total revenues
Credit loss expense / (release)
Operating expenses
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Additional information
Total assets
Additions to non-current assets
USD m
For the year ended 31 December 2021
Net interest income
Non-interest income
Total revenues
Credit loss expense / (release)
Operating expenses
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Additional information
Total assets2
Additions to non-current assets
USD m
For the year ended 31 December 2020
Net interest income
Non-interest income3
Total revenues
Credit loss expense / (release)
Operating expenses
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Group
Functions
UBS AG
5,274
13,689
18,963
0
14,069
44,,889944
2,192
2,113
4,304
39
2,475
11,,779900
(19)
2,9801
2,961
0
1,565
11,,339966
(241)
8,958
8,717
(12)
6,890
11,,883399
(688)
659
(30)
3
928
((996600))
6,517
28,398
34,915
29
25,927
88,,996600
1,844
77,,111166
388,624
42
Global Wealth
Management
235,330
13
Personal &
Corporate
Banking
16,971
1
391,495
33
73,016
1,773
1,105,436
1,862
Asset
Management
Investment
Bank
Group
Functions
UBS AG
4,244
15,175
19,419
(29)
14,743
44,,770066
2,120
2,144
4,264
(86)
2,623
11,,772266
(15)
2,632
2,617
1
1,593
11,,002233
481
8,978
9,459
(34)
6,902
22,,559922
(226)
294
68
0
1,151
((11,,008833))
6,605
29,222
35,828
(148)
27,012
88,,996644
1,903
77,,006611
395,235
56
Global Wealth
Management
225,425
16
Personal &
Corporate
Banking
25,202
1
346,641
30
123,641
1,689
1,116,145
1,791
Asset
Management
Investment
Bank
Group
Functions
UBS AG
4,027
13,107
17,134
88
13,080
33,,996655
2,049
1,859
3,908
257
2,390
11,,226611
(17)
2,993
2,975
2
1,520
11,,445544
284
9,224
9,508
305
6,762
22,,444411
(555)
504
(52)
42
1,329
((11,,442233))
5,788
27,686
33,474
695
25,081
77,,669999
1,488
66,,221111
Additional information
Total assets
Additions to non-current assets
11 Includes an USD 848m gain in Asset Management related to the sale of UBS AG’s shareholding in Mitsubishi Corp.-UBS Realty Inc. 22 During 2022, UBS AG refined the methodology applied to allocate balance
sheet resources from Group Functions to the business divisions, with prospective effect. If the new methodology had been applied as of 31 December 2021, balance sheet assets allocated to business divisions would
have been USD 26bn higher, of which USD 14bn related to the Investment Bank. 33 Includes a USD 631m net gain on the sale of a majority stake in Fondcenter AG (now Clearstream Fund Centre AG), of which
USD 571m was recognized in Asset Management and USD 60m was recognized in Global Wealth Management.
1,125,327
2,524
127,858
1,971
369,778
150
367,714
5
231,710
12
28,266
385
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Note 2b 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 Portfolio in
Group Functions, are managed at a Group level. These revenues are included in the Global line.
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 2022
Americas2
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
TToottaall
For the year ended 31 December 2021
Americas2
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
TToottaall
For the year ended 31 December 2020
Americas2
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
TToottaall
TToottaall rreevveennuueess11
TToottaall nnoonn--ccuurrrreenntt aasssseettss
UUSSDD bbnn
1133..88
55..66
77..00
77..77
00..88
3344..99
SShhaarree %%
UUSSDD bbnn
SShhaarree %%
4400
1166
2200
2222
22
110000
99..00
11..55
22..66
55..66
00..00
1188..77
4488
88
1144
3300
00
110000
Total revenues1
Total non-current assets
USD bn
14.5
6.5
7.0
7.8
0.1
3355..88
Share %
USD bn
Share %
40
18
20
22
0
110000
9.0
1.4
2.6
6.3
0.0
1199..33
47
7
13
33
0
110000
Total revenues1
Total non-current assets
USD bn
13.2
6.1
6.5
7.1
0.5
3333..55
Share %
USD bn
Share %
39
18
20
21
2
110000
9.0
1.4
2.7
6.9
0.0
2200..00
45
7
14
34
0
110000
11 During 2022, UBS AG changed the presentation of its Income statement. Total operating income was renamed Total revenues and excludes Credit loss expense / (release). Note 2b, including prior-period information,
has been updated to reflect the new presentation structure, with the disclosure of Total revenues instead of Total operating income. Refer to Note 1b for more information. 22 Predominantly related to the USA.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
410
410
Income statement notes
Note 3 Net interest income and other net income from financial instruments measured at fair value through
profit or loss
USD m
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
of which: net gains / (losses) from financial liabilities designated at fair value 1
TToottaall nneett iinnccoommee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss aanndd ootthheerr
For the year ended
3311..1122..2222
31.12.21
31.12.20
11,,441100
77,,449933
1177,,003366
1,437
5,844
(6,457)
88,,990033
7,281
1,305
6,930
1,625
8,235
Net interest income
Interest income from loans and deposits2
Interest income from securities financing transactions measured at amortized cost3
Interest income from other financial instruments measured at amortized cost
Interest income from debt instruments measured at fair value through other comprehensive income
Interest income from derivative instruments designated as cash flow hedges
TToottaall iinntteerreesstt iinnccoommee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt aanndd ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Interest expense on loans and deposits4
Interest expense on securities financing transactions measured at amortized cost5
Interest expense on debt issued
Interest expense on lease liabilities
TToottaall iinntteerreesstt eexxppeennssee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
TToottaall nneett iinntteerreesstt iinnccoommee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt aanndd ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall nneett iinntteerreesstt iinnccoommee ffrroomm ffiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss aanndd ootthheerr
TToottaall nneett iinntteerreesstt iinnccoommee
11 Excludes fair value changes of 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. 2022 included net gains of USD 4,112m (net losses of USD 2,068m and
USD 72m in 2021 and 2020, respectively), driven by financial liabilities related to unit-linked investment contracts, which are designated at fair value through profit or loss. This was offset by net losses of USD 4,112m
(net gains of USD 2,068m and USD 72m in 2021 and 2020, respectively), related to financial assets for unit-linked investment contracts that are mandatorily measured at fair value through profit or loss not held
for trading. 22 Consists of interest income from cash and balances at central banks, loans and advances to 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. 33 Includes negative interest, including fees, on payables from securities financing transactions measured at
amortized cost. 44 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, loans and advances to banks, and cash collateral receivables on derivative instruments. 55 Includes negative interest, including fees, on receivables
from securities financing transactions measured at amortized cost.
99,,663344
11,,337788
554455
7744
117733
1111,,880033
44,,448888
11,,008899
11,,003311
8888
66,,669966
55,,110088
11,,441100
66,,551177
6,489
513
284
115
1,133
8,534
1,655
1,102
512
98
3,366
5,168
1,437
6,605
6,696
862
335
101
822
8,816
2,440
870
918
105
4,333
4,483
1,305
5,788
Note 4 Net fee and commission income
USD m
Underwriting fees
M&A and corporate finance fees
Brokerage fees
Investment fund fees
Portfolio management and related services
Other
TToottaall ffeeee aanndd ccoommmmiissssiioonn iinnccoommee11
of which: recurring
of which: transaction-based
of which: performance-based
FFeeee aanndd ccoommmmiissssiioonn eexxppeennssee
NNeett ffeeee aanndd ccoommmmiissssiioonn iinnccoommee
For the year ended
3311..1122..2222
31.12.21
31.12.20
663333
880044
33,,448877
44,,994422
99,,005599
11,,992211
2200,,884466
1144,,222299
66,,555500
6688
11,,882233
1199,,002233
1,512
1,102
4,383
5,790
9,762
1,874
24,422
15,410
8,743
269
1,985
22,438
1,104
736
4,132
5,289
8,009
1,712
20,982
13,010
7,512
461
1,775
19,207
11 For the year ended 31 December 2022, reflects third-party fee and commission income of USD 12,990m for Global Wealth Management, USD 1,657m for Personal & Corporate Banking, USD 2,840m for Asset
Management, USD 3,350m for the Investment Bank and USD 10m for Group Functions (for the year ended 31 December 2021: USD 14,545m for Global Wealth Management, USD 1,645m for Personal & Corporate
Banking, USD 3,337m for Asset Management, USD 4,863m for the Investment Bank and USD 33m for Group Functions; for the year ended 31 December 2020: USD 12,475m for Global Wealth Management,
USD 1,427m for Personal & Corporate Banking, USD 3,129m for Asset Management, USD 3,901m for the Investment Bank and USD 50m for Group Functions).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
411
411
Note 5 Other income
USD m
AAssssoocciiaatteess,, jjooiinntt vveennttuurreess aanndd ssuubbssiiddiiaarriieess
Net gains / (losses) from acquisitions and disposals of subsidiaries1
Net gains / (losses) from disposals of investments in associates and joint ventures
Share of net profits of associates and joint ventures
TToottaall
Net gains / (losses) from disposals of financial assets measured at fair value through other comprehensive income
Income from properties4
Net gains / (losses) from properties held for sale
Income from shared services provided to UBS Group AG or its subsidiaries
Other
TToottaall ootthheerr iinnccoommee
For the year ended
3311..1122..2222
31.12.21
31.12.20
114488
88444433
3322
11,,002244
((11))
2200
7711
446600
33008877
11,,888822
(11)
41
105
134
9
22
1005
451
2248
941
6352
0
84
719
40
25
766
422
2679
1,549
11 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. 22 Includes a USD 631m net gain on the sale of a majority stake in Fondcenter AG (now Clearstream Fund Centre AG). 33 Includes an USD 848m gain related to the
sale of UBS AG’s shareholding in Mitsubishi Corp.-UBS Realty Inc. Refer to Note 28b for more information. 44 Includes rent received from third parties. 55 Mainly relates to the sale of a property in Basel. 66 Includes
net gains of USD 140m arising from sale-and-leaseback transactions, primarily related to a property in Geneva, partly offset by remeasurement losses relating to properties that were reclassified as held for sale.
77 Mainly relates to a portion of the total USD 133m gain on the sale of UBS AG’s domestic wealth management business in Spain of USD 111m (with the remaining amount disclosed within Net gains / (losses) from
acquisitions and disposals of subsidiaries), income of USD 111m related to a legacy litigation settlement and a legacy bankruptcy claim, as well as gains of USD 23m related to the repurchase of UBS’s own debt
instruments (compared with losses of USD 17m in 2021). 88 Includes a gain of USD 100m from the sale of UBS AG’s domestic wealth management business in Austria. 99 Includes a USD 215m gain on the sale of
intellectual property rights associated with the Bloomberg Commodity Index family.
Note 6 Personnel expenses
USD m
Salaries1
Variable compensation2
of which: performance awards
of which: financial advisors 4
of which: other
Contractors
Social security
Post-employment benefit plans5
of which: defined benefit plans
of which: defined contribution plans
Other personnel expenses
TToottaall ppeerrssoonnnneell eexxppeennsseess
For the year ended
3311..1122..2222
31.12.21
31.12.20
55,,552288
77,,663366
22,,991100
44,,550088
221177
111199
773300
555555
225566
229999
551133
5,723
7,973
2,916
4,860
196
142
762
582
280
303
479
5,535
7,246
2,953 3
4,091
201
138
7043
597
306
291
4663
1155,,008800
15,661
14,686
11 Includes role-based allowances. 22 Refer to Note 27 for more information. 33 During 2020, UBS AG modified the conditions for continued vesting of certain outstanding deferred compensation awards for qualifying
employees, resulting in an expense of approximately USD 270m, of which USD 240m is disclosed within Variable compensation – performance awards, USD 20m within Social security and USD 10m within Other
personnel expenses. 44 Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation
commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 55 Refer to Note 26 for more information. Includes curtailment gains of USD 13m for the year
ended 31 December 2022 (for the year ended 31 December 2021: USD 49m; for the year ended 31 December 2020: USD 0m), which represent a reduction in the defined benefit obligation related to the Swiss pension
plan resulting from a decrease in headcount following restructuring activities.
Note 7 General and administrative expenses
USD m
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 matters1
Other
of which: shared services costs charged by UBS Group AG or its subsidiaries
TToottaall ggeenneerraall aanndd aaddmmiinniissttrraattiivvee eexxppeennsseess
11 Reflects the net increase in provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 17 for more information.
For the year ended
3311..1122..2222
31.12.21
31.12.20
445511
550022
449944
550077
336677
119955
115566
334488
55,,998811
55,,226644
99,,000011
426
490
465
530
367
171
66
910
6,051
5,321
9,476
466
449
566
563
361
162
77
197
5,646
4,939
8,486
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
412
412
Note 8 Income taxes
USD m
Tax expense / (benefit)
SSwwiissss
Current
Deferred
TToottaall SSwwiissss
NNoonn--SSwwiissss
Current
Deferred
TToottaall nnoonn--SSwwiissss
TToottaall iinnccoommee ttaaxx eexxppeennssee // ((bbeenneeffiitt)) rreeccooggnniizzeedd iinn tthhee iinnccoommee ssttaatteemmeenntt
Income tax recognized in the income statement
For the year ended
3311..1122..2222
31.12.21
31.12.20
666644
((2222))
664422
668899
551133
11,,220022
11,,884444
614
26
664400
857
406
11,,226633
11,,990033
417
107
552244
715
248
996633
11,,448888
The Swiss current tax expenses related to taxable profits of UBS Switzerland AG and other Swiss entities.
The non-Swiss current tax expenses related to taxable profits of non-Swiss subsidiaries and branches. The non-Swiss
deferred tax expenses include expenses of USD 678m that primarily related to the amortization of deferred tax assets
(DTAs) previously recognized in relation to tax losses carried forward and deductible temporary differences of UBS
Americas Inc., which were partly offset by a benefit of USD 169m in respect of net upward revaluations of DTAs for
certain entities, primarily in connection with our business planning process.
The effective tax rate for the year of 20.6% is lower than our projected rate for the year of 24%, primarily as a result of
the aforementioned deferred tax benefit of USD 169m in respect of net upward revaluations of DTAs and because no
tax expenses were recognized in respect of pre-tax gains from dispositions of UBS subsidiaries in 2022.
› Refer to Note 29 for more information about disposals of subsidiaries
USD m
Operating profit / (loss) before tax
of which: Swiss
of which: non-Swiss
Income taxes at Swiss tax rate of 18% for 2022, 18.5% for 2021 and 19.5% for 2020
Increase / (decrease) resulting from:
Non-Swiss tax rates differing from Swiss tax rate
Tax effects of losses not recognized
Previously unrecognized tax losses now utilized
Non-taxable and lower-taxed income
Non-deductible expenses and additional taxable income
Adjustments related to prior years, current tax
Adjustments related to prior years, deferred tax
Change in deferred tax recognition
Adjustments to deferred tax balances arising from changes in tax rates
Other items
IInnccoommee ttaaxx eexxppeennssee // ((bbeenneeffiitt))
For the year ended
3311..1122..2222
31.12.21
31.12.20
88,,996600
44,,005522
44,,990077
11,,661133
226677
7744
((221177))
((331166))
441144
((3333))
1199
((221177))
00
224400
11,,884444
8,964
2,983
5,981
1,658
217
124
(179)
(252)
487
(38)
(3)
(341)
(1)
230
1,903
7,699
3,042
4,657
1,501
96
144
(212)
(381)
373
(66)
18
(383)
235
163
1,488
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
413
413
Note 8 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 benefit of USD 1,095m was recognized in Other comprehensive income (2021: net benefit of USD 455m) and
a net tax benefit of USD 5m was recognized in Share premium (2021: net expense of USD 102m).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
414
414
Note 8 Income taxes (continued)
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
2022, this exception was not considered to apply to any taxable temporary differences.
USD m
Deferred tax assets1
Tax loss carry-forwards
Temporary differences
of which: related to real estate costs capitalized for US tax
purposes
of which: related to compensation and benefits
of which: related to cash flow hedges
of which: other
TToottaall ddeeffeerrrreedd ttaaxx aasssseettss
of which: related to the US
of which: related to other locations
3311..1122..2222
31.12.21
GGrroossss
1122,,770088
55,,777744
22,,448855
11,,116699
994477
11,,117733
1188,,448822
VVaalluuaattiioonn
aalllloowwaannccee
((88,,772200))
((440088))
00
((117755))
00
((223333))
((99,,112288))
RReeccooggnniizzeedd
33,,998888
55,,336655
22,,448855
999933
994477
994400
99,,33554422
88,,229944
11,,006600
Gross
13,636
5,092
2,272
1,200
3
1,620
18,728
Valuation
allowance
(9,193)
(696)
0
(209)
0
(487)
(9,889)
Recognized
4,443
4,396
2,272
991
3
1,133
8,8392
8,521
318
Deferred tax liabilities
Cash flow hedges
Other
TToottaall ddeeffeerrrreedd ttaaxx lliiaabbiilliittiieess
11 After offset of DTLs, as applicable. 22 As of 31 December 2022, UBS AG recognized DTAs of USD 471m (31 December 2021: USD 77m) in respect of entities that incurred losses in either the current or preceding
year.
00
223333
223333
118
179
297
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
Within 1 year
From 2 to 5 years
From 6 to 10 years
From 11 to 20 years
No expiry
TToottaall
of which: related to the US 1
of which: related to the UK
of which: related to other locations
11 Related to UBS AG’s US branch.
3311..1122..2222
31.12.21
223311
22,,118844
1111,,110066
11,,661100
1166,,996600
3322,,009911
1133,,335500
1144,,333322
44,,440099
141
1,026
13,283
2,093
18,147
34,690
14,870
14,909
4,911
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
415
415
Balance sheet notes
Note 9 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 19 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 the 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 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
SME clients
Lending to small and medium-sized
corporate clients
Lombard
Loans secured by pledges of marketable
securities, guarantees and other forms
of collateral (including concentration in
hedge funds, private equity and unlisted
equities), as well as unsecured recourse
lending
Credit cards
Credit card solutions in Switzerland and
the US
Commodity trade
finance
Working capital financing of commodity
traders, generally extended on a self-
liquidating transactional basis
Financial intermediaries
and hedge funds
Lending to financial institutions and
pension funds, including exposures to
broker-dealers and clearing houses
› Refer to Note 19f for more details regarding sensitivity
Sensitive to GDP developments,
unemployment levels, seasonality,
business cycles and collateral values
(diverse collateral, including real estate
and other collateral types)
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
– Investment Bank
– Personal & Corporate Banking
Sensitive to equity and debt markets (e.g.,
changes in collateral values)
– Global Wealth Management
Sensitive to unemployment levels
– Personal & Corporate Banking
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
Sensitive to GDP development, the
interest rate environment, price and
volatility risks in financial markets, and
regulatory and political risk
– Global Wealth Management
– Personal & Corporate Banking
– Personal & Corporate Banking
– Investment Bank
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
416
416
Note 9 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
3311..1122..2222
Financial instruments measured at amortized cost
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Other financial assets measured at amortized cost
of which: Loans to financial advisors
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall oonn--bbaallaannccee sshheeeett ffiinnaanncciiaall aasssseettss wwiitthhiinn tthhee ssccooppee ooff EECCLL rreeqquuiirreemmeennttss
Off-balance sheet (within the scope of ECL)
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing agreements
Committed unconditionally revocable credit lines
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
CCaarrrryyiinngg aammoouunntt11
SSttaaggee 11
TToottaall
169,402
169,445
14,670
14,671
67,814
67,814
35,033
35,033
372,903
390,027
156,930 147,651
46,470 43,112
12,226 10,733
13,903 12,211
132,287 132,196
1,420
3,261
52,829
2,357
771122,,665511
22,,223399
771144,,888899
SSttaaggee 22
44
1
0
0
15,587
8,579
3,349
1,189
1,342
0
382
0
413
128
1166,,004444
00
1166,,004444
1,834
3,272
53,389
2,611
773300,,337799
22,,223399
773322,,661188
TToottaall eexxppoossuurree
TToottaall
SSttaaggee 11
19,805
22,167
2,883
3,663
1,337
1,124
11,833 10,513
2,376
2,376
2,121
2,121
39,996
37,531
23,611 21,488
3,801
41,809
8,528
4,304
4,442
7,854
8,900
327
4,600
110077,,554455
3,801
43,677
8,711
4,578
4,723
7,855
9,390
327
4,696
111144,,333377
SSttaaggee 22
2,254
721
164
1,320
0
0
2,341
2,024
0
1,833
183
268
256
0
487
0
94
66,,552222
SSttaaggee 33
0
0
0
0
1,538
699
9
303
351
91
31
11
147
126
11,,668855
00
11,,668855
SSttaaggee 33
108
58
49
0
1
0
124
99
0
36
0
5
26
1
3
0
2
227700
TToottaall
(12)
(6)
(2)
0
(783)
(161)
(41)
(130)
(251)
(26)
(36)
(96)
(86)
(59)
((889900))
00
((889900))
TToottaall
(48)
(26)
(5)
(12)
(1)
(1)
(111)
(93)
0
(40)
(6)
(4)
(19)
0
(7)
0
(2)
((220011))
((11,,009911))
EECCLL aalllloowwaanncceess
SSttaaggee 11
0
(5)
(2)
0
(129)
(27)
(17)
(24)
(26)
(9)
(7)
(6)
(17)
(7)
((115544))
00
((115544))
SSttaaggee 22
(12)
(1)
0
0
(180)
(107)
(23)
(14)
(22)
0
(10)
0
(6)
(2)
((119999))
00
((119999))
EECCLL pprroovviissiioonnss
SSttaaggee 11
(13)
(2)
(1)
(8)
0
(1)
(59)
(49)
0
(32)
(6)
(1)
(16)
0
(5)
0
(2)
((110066))
((226600))
SSttaaggee 22
(9)
(3)
(1)
(4)
0
0
(52)
(45)
0
(8)
0
(2)
(3)
0
(2)
0
0
((6699))
((226677))
SSttaaggee 33
0
0
0
0
(474)
(28)
0
(92)
(203)
(17)
(19)
(90)
(63)
(51)
((553377))
00
((553377))
SSttaaggee 33
(26)
(21)
(3)
0
(1)
0
0
0
0
0
0
0
0
0
0
0
0
((2266))
((556644))
Irrevocable committed prolongation of existing loans
TToottaall ooffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss aanndd ccrreeddiitt lliinneess
TToottaall aalllloowwaanncceess aanndd pprroovviissiioonnss
11 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
417
417
Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement
(continued)
USD m
31.12.21
Financial instruments measured at amortized cost
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Other financial assets measured at amortized cost
of which: Loans to financial advisors
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall oonn--bbaallaannccee sshheeeett ffiinnaanncciiaall aasssseettss wwiitthhiinn tthhee ssccooppee ooff EECCLL rreeqquuiirreemmeennttss
Off-balance sheet (within the scope of ECL)
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing agreements
Committed unconditionally revocable credit lines
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Carrying amount1
Stage 1
Total
192,817
192,817
15,333
15,360
75,012
75,012
30,514
30,514
398,693
381,496
152,479 143,505
43,945 40,463
13,990 12,643
14,004 12,076
149,283 149,255
1,345
3,799
25,746
2,184
772200,,991177
88,,884444
772299,,776622
Stage 2
0
26
0
0
15,620
8,262
3,472
1,037
1,492
0
342
7
302
106
1155,,994488
00
1155,,994488
1,716
3,813
26,236
2,453
773388,,663322
88,,884444
774477,,447777
Total exposure
Stage 1
Total
19,695
20,972
2,567
3,464
1,143
1,353
9,491
9,575
2,454
2,454
3,137
3,137
37,097
39,478
23,922 21,811
1,444
39,802
7,046
4,599
4,736
8,670
9,000
117
5,527
110033,,556655
1,444
42,373
7,328
5,358
5,160
8,670
9,466
117
5,611
110099,,887788
Stage 2
1,127
793
164
84
0
0
2,335
2,102
0
2,508
281
736
389
0
462
0
36
66,,000066
Stage 3
0
1
0
0
1,577
711
9
310
436
27
29
7
189
163
11,,776677
00
11,,776677
Stage 3
150
104
46
0
0
0
46
9
0
63
0
23
35
0
4
0
48
330077
Total
0
(8)
(2)
0
(850)
(132)
(60)
(170)
(259)
(33)
(36)
(114)
(109)
(86)
((996699))
00
((996699))
Total
(41)
(6)
(8)
(17)
(1)
(1)
(114)
(100)
0
(38)
(5)
(7)
(15)
0
(6)
0
(3)
((119966))
((11,,116655))
ECL allowances
Stage 1
0
(7)
(2)
0
(126)
(28)
(19)
(22)
(19)
(6)
(10)
(6)
(27)
(19)
((116611))
00
((116611))
Stage 2
0
(1)
0
0
(152)
(71)
(40)
(16)
(15)
0
(9)
0
(7)
(3)
((116600))
00
((116600))
ECL provisions
Stage 1
(18)
(3)
(1)
(13)
0
(1)
(72)
(66)
0
(28)
(4)
(4)
(11)
0
(5)
0
(3)
((112211))
((228822))
Stage 2
(8)
(3)
(1)
(4)
0
0
(42)
(34)
0
(10)
(1)
(3)
(3)
0
(2)
0
0
((6600))
((222200))
Stage 3
0
0
0
0
(572)
(33)
0
(133)
(225)
(28)
(17)
(108)
(76)
(63)
((664477))
00
((664477))
Stage 3
(15)
0
(7)
0
(1)
0
0
0
0
0
0
0
0
0
0
0
0
((1155))
((666622))
Irrevocable committed prolongation of existing loans
TToottaall ooffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss aanndd ccrreeddiitt lliinneess
TToottaall aalllloowwaanncceess aanndd pprroovviissiioonnss
11 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
418
418
Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement
(continued)
Coverage ratios are calculated for the core loan portfolio by taking ECL allowances and provisions divided by the gross
carrying amount of the exposures. Core loan exposure is defined as the sum of Loans and advances to customers and
Loans to financial advisors.
These ratios are influenced by the following key factors:
– Lombard loans are generally secured with marketable securities in portfolios that are, as a rule, highly diversified, with
strict lending policies that are intended to ensure that credit risk is minimal under most circumstances;
– mortgage loans to private clients and real estate financing are controlled by conservative eligibility criteria, including
low loan-to-value ratios and strong debt service capabilities;
– the amount of unsecured retail lending (including credit cards) is insignificant;
– lending in Switzerland includes government-backed COVID-19 loans;
– 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, reduces the coverage ratios.
The total combined on- and off-balance sheet coverage ratio was at 21 basis points as of 31 December 2022, 1 basis
point lower than on 31 December 2021. The combined stage 1 and 2 ratio of 10 basis points was unchanged compared
with 31 December 2021; the stage 3 ratio was 22%, 2 percentage points lower than as of 31 December 2021.
OOnn--bbaallaannccee sshheeeett
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
TToottaall11
GGrroossss ccaarrrryyiinngg aammoouunntt ((UUSSDD mm))
3311..1122..2222
TToottaall
157,091
46,511
203,602
12,356
14,154
26,510
132,313
1,869
3,367
23,149
2,670
163,368
339933,,448800
SSttaaggee 11
147,678
43,129
190,807
10,757
12,237
22,994
132,205
1,427
3,266
22,333
2,364
161,595
337755,,339966
SSttaaggee 22
8,686
3,372
12,059
1,204
1,364
2,567
0
393
0
748
130
1,270
1155,,889966
GGrroossss eexxppoossuurree ((UUSSDD mm))
SSttaaggee 33
727
9
736
395
553
949
108
50
101
68
176
503
22,,118888
TToottaall
10
9
10
105
177
144
2
190
285
18
221
16
2211
EECCLL ccoovveerraaggee ((bbppss))
SSttaaggee 22
123
70
108
120
161
142
0
256
0
38
124
114
111144
SSttaaggee 11
2
4
2
22
22
22
1
46
18
6
28
3
44
SSttaaggee 11&&22
9
9
9
32
36
34
1
91
18
7
33
3
88
SSttaaggee 33
381
232
379
2,325
3,664
3,106
1,580
3,779
8,901
3,769
2,870
4,016
22,,339988
OOffff--bbaallaannccee sshheeeett
Total corporate lending
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
SSttaaggee 33
1,183
0
1,288
1,263
304
903
0
0
0
0
0
0
TToottaall22
998800
TToottaall oonn-- aanndd ooffff--bbaallaannccee sshheeeett33
22,,224422
11 Includes Loans and advances to customers and Loans to financial advisors which are presented on the balance sheet line Other assets measured at amortized cost. 22 Excludes Forward starting reverse repurchase and
securities borrowing agreements. 33 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related ECL coverage ratio.
Lombard
Credit cards
Commodity trade finance
Financial intermediaries and hedge funds
Other off-balance sheet commitments
SSttaaggee 11&&22
4
6
6
32
43
34
1
7
3
7
9
6
1166
1100
TToottaall
6,535
10,054
16,589
32,126
7,122
39,247
12,919
9,390
2,459
18,128
11,803
54,700
111100,,553377
550044,,001166
SSttaaggee 11
6,296
9,779
16,075
28,950
6,525
35,475
12,918
8,900
2,459
16,464
11,454
52,195
110033,,774455
447799,,114400
SSttaaggee 22
236
275
511
3,013
499
3,513
0
487
0
1,664
346
2,498
66,,552222
2222,,441188
SSttaaggee 11
4
7
6
18
30
20
1
5
3
6
8
5
1100
55
SSttaaggee 33
3
0
3
163
98
260
1
3
0
0
3
7
227700
22,,445588
EECCLL ccoovveerraaggee ((bbppss))
SSttaaggee 22
18
0
2
165
214
172
0
36
0
25
68
33
110066
111122
TToottaall
5
6
6
38
47
40
2
7
3
7
11
6
1188
2211
Total other lending
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
419
419
Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement
(continued)
OOnn--bbaallaannccee sshheeeett
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
TToottaall11
GGrroossss ccaarrrryyiinngg aammoouunntt ((UUSSDD mm))
3311..1122..2211
TToottaall
152,610
44,004
196,615
14,161
14,263
28,424
149,316
1,752
3,927
19,510
2,539
177,043
440022,,008811
SSttaaggee 11
143,533
40,483
184,016
12,665
12,095
24,760
149,261
1,355
3,805
18,425
2,203
175,049
338833,,882255
SSttaaggee 22
8,333
3,512
11,845
1,053
1,507
2,560
0
351
7
1,010
109
1,477
1155,,888822
GGrroossss eexxppoossuurree ((UUSSDD mm))
SSttaaggee 33
744
10
754
443
661
1,104
55
46
115
75
226
517
22,,337744
TToottaall
9
14
10
120
182
151
2
204
290
23
338
18
2233
EECCLL ccoovveerraaggee ((bbppss))
SSttaaggee 22
85
114
94
148
103
121
0
255
3
15
303
93
9988
SSttaaggee 11
2
5
3
18
16
17
0
72
15
9
88
3
44
SSttaaggee 11&&22
6
14
8
28
25
26
0
109
15
9
99
4
88
SSttaaggee 33
446
231
443
2,997
3,402
3,240
5,026
3,735
9,388
3,730
2,791
4,718
22,,667733
OOffff--bbaallaannccee sshheeeett
Total corporate lending
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
SSttaaggee 33
15
0
15
1
585
266
0
0
0
0
0
0
TToottaall22
448866
TToottaall oonn-- aanndd ooffff--bbaallaannccee sshheeeett33
22,,442233
11 Includes Loans and advances to customers and Loans to financial advisors which are presented on the balance sheet line Other assets measured at amortized cost. 22 Excludes Forward starting reverse repurchase and
securities borrowing agreements. 33 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related ECL coverage ratio.
Lombard
Credit cards
Commodity trade finance
Financial intermediaries and hedge funds
Other off-balance sheet commitments
SSttaaggee 11&&22
3
9
6
35
30
34
0
7
4
13
7
7
1177
99
TToottaall
9,123
8,766
17,889
32,748
8,077
40,826
14,438
9,466
3,262
13,747
8,806
49,720
110088,,443344
551100,,551166
SSttaaggee 11
8,798
8,481
17,278
28,981
7,276
36,258
14,438
9,000
3,262
13,379
8,507
48,585
110022,,112211
448855,,994466
SSttaaggee 22
276
285
562
3,630
688
4,318
0
462
0
369
296
1,127
66,,000066
2211,,888888
SSttaaggee 11
3
7
5
25
19
24
0
5
4
10
6
5
1122
55
SSttaaggee 33
49
0
49
136
114
250
0
4
0
0
4
8
330077
22,,668811
EECCLL ccoovveerraaggee ((bbppss))
SSttaaggee 22
9
88
49
110
151
117
0
34
0
120
30
61
110000
9999
TToottaall
3
9
6
34
38
35
1
7
4
13
15
8
1188
2222
Total other lending
Note 10 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 15 and 20 for more information about derivative instruments
› Refer to Note 25 for more information about derivatives designated in hedge accounting relationships
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
420
420
Note 10 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 21 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
USD bn
IInntteerreesstt rraattee ccoonnttrraaccttss
of which: forwards (OTC)1
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: options (ETD)
CCrreeddiitt ddeerriivvaattiivvee ccoonnttrraaccttss
of which: credit default swaps (OTC)
of which: total return swaps (OTC)
FFoorreeiiggnn eexxcchhaannggee ccoonnttrraaccttss
of which: forwards (OTC)
of which: swaps (OTC)
of which: options (OTC)
EEqquuiittyy ccoonnttrraaccttss
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: options (ETD)
of which: client-cleared transactions (ETD)
CCoommmmooddiittyy ccoonnttrraaccttss
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: forwards (ETD)
of which: client-cleared transactions (ETD)
NNoottiioonnaall
aammoouunnttss
rreellaatteedd ttoo
ddeerriivvaattiivvee
ffiinnaanncciiaall
aasssseettss22,,33
11,,005577..44
3377..77
332266..11
668877..55
66..11
3366..88
3344..22
00..99
33,,008877..33
885533..66
11,,667799..33
555511..66
338844..55
9955..55
5511..66
223377..00
6688..11
1199..33
1155..88
2244..55
3311..1122..2222
DDeerriivvaattiivvee
ffiinnaanncciiaall
lliiaabbiilliittiieess
3377..55
00..00
1199..88
1177..55
00..00
11..22
11..00
00..22
8888..55
2288..66
5500..44
99..22
2266..11
66..66
44..44
88..11
77..00
11..44
00..77
00..33
00..00
00..33
NNoottiioonnaall
aammoouunnttss
rreellaatteedd ttoo
ddeerriivvaattiivvee
ffiinnaanncciiaall
lliiaabbiilliittiieess22,,33
11,,002222..99
3344..66
228811..00
770055..00
22..22
3377..11
3366..88
00..33
22,,999922..77
991100..22
11,,555533..77
552211..66
550011..33
112222..00
8899..00
228899..77
6644..22
1199..33
1133..33
2233..22
OOtthheerr
nnoottiioonnaall
aammoouunnttss22,,44
1111,,225555..44
779922..77
99,,772288..66
660066..33
112277..77
4400..11
3388..44
6633..44
5522..22
1111..22
1177..66
1166..44
Notional
amounts
related to
derivative
financial
assets2,3
991.2
29.4
394.3
545.2
22.4
44.7
39.4
1.3
3,031.0
Derivative
financial
assets
33.2
0.1
26.4
6.6
0.0
1.4
1.3
0.1
53.3
23.8 1,009.1
24.3 1,606.4
412.6
5.2
456.9
28.2
4.7
4.6
105.7
61.4
289.6
57.8
19.9
14.0
18.1
10.2
8.6
1.6
0.5
0.4
0.0
0.6
DDeerriivvaattiivvee
ffiinnaanncciiaall
aasssseettss
3399..88
00..22
2255..22
1144..22
00..00
11..00
00..99
00..11
8855..55
2266..55
4499..66
99..33
2222..22
55..33
22..88
99..00
55..11
11..44
00..55
00..44
00..00
00..22
31.12.21
Derivative
financial
liabilities
28.7
Notional
amounts
related to
derivative
financial
liabilities2,3
943.1
Other
notional
amounts2,4
8,675.1
443.6
28.6
344.1 7,549.4
553.6
0.2
19.2
9.2
0.0
1.8
1.6
0.2
54.1
16.8
46.3
44.1
1.7
2,938.8
23.8 1,043.2
24.9 1,480.3
408.6
5.3
603.9
34.9
154.8
102.3
346.3
56.4
25.4
10.4
15.2
9.3
6.5
9.8
9.4
1.6
0.8
0.2
0.0
0.4
525.0
157.1
1.2
80.1
71.2
8.8
14.7
13.9
00..11
00..00
00..99
33..77
00..00
1122..11
LLooaann ccoommmmiittmmeennttss
mmeeaassuurreedd aatt FFVVTTPPLL ((OOTTCC))
UUnnsseettttlleedd ppuurrcchhaasseess ooff nnoonn--ddeerriivvaattiivvee
ffiinnaanncciiaall iinnssttrruummeennttss55
UUnnsseettttlleedd ssaalleess ooff nnoonn--ddeerriivvaattiivvee ffiinnaanncciiaall
iinnssttrruummeennttss55
TToottaall ddeerriivvaattiivvee iinnssttrruummeennttss,,
bbaasseedd oonn IIFFRRSS nneettttiinngg66
8,771.1
11 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. 22 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. 33 Notional
amounts of client-cleared ETD and OTC transactions through central clearing counterparties are not disclosed, as they have significantly different risk profile. 44 Other notional amounts relate to derivatives that are
cleared through either a central counterparty or an exchange. 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. 55 Changes in the fair value of purchased and sold non-derivative financial instruments
between trade date and settlement date are recognized as derivative financial instruments. 66 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 21 for more information on netting arrangements.
1111,,337766..55
4,614.0
4,616.6
44,,666600..11
44,,664422..00
118.1
121.3
115544..99
115500..11
13.3
18.2
10.6
1133..00
1100..77
00..11
99..44
00..00
00..11
0.0
0.8
0.0
0.1
0.2
0.2
0.1
8.2
9.4
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
421
421
Note 10 Derivative instruments (continued)
On a notional amount basis, approximately 46% of OTC interest rate contracts held as of 31 December 2022
(31 December 2021: 40%) mature within one year, 32% (31 December 2021: 36%) within one to five years and 22%
31 December 2021: 25%) after five years.
Notional amounts of interest rate contracts cleared through either a central counterparty or an exchange that are legally
settled or economically net settled on a daily basis are presented under Other notional amounts in the table above and
are categorized into maturity buckets on the basis of contractual maturities of the cleared underlying derivative contracts.
Other notional amounts related to interest rate contracts increased by USD 2.6trn compared with 31 December 2021,
mainly reflecting higher business volumes driven by elevated interest rate volatility and inflation, partly offset by
compression activity.
Note 11 Property, equipment and software
At historical cost less accumulated depreciation
USD m
HHiissttoorriiccaall ccoosstt
Balance at the beginning of the year
Additions
Disposals / write-offs4
Reclassifications
Foreign currency translation
Balance at the end of the year
AAccccuummuullaatteedd ddeepprreecciiaattiioonn
Balance at the beginning of the year
Depreciation
Impairment5
Disposals / write-offs4
Reclassifications
Foreign currency translation
Balance at the end of the year
NNeett bbooookk vvaalluuee
Net book value at the beginning of the year
NNeett bbooookk vvaalluuee aatt tthhee eenndd ooff tthhee yyeeaarr
Owned
properties and
equipment1
Leased
properties and
equipment2
Software
Projects in
progress
2200222233
20213
11,494
901
(284)
(796)
(152)
3,994
380
(48)
0
(50)
10,352
4,275
7,178
463
2
(283)
(565)
(98)
1,272
430
0
(45)
(1)
(18)
7,924
330
(81)
1,052
(5)
9,220
4,380
926
0
(81)
0
17
1,130
1,059
0
(1,150)
7
1,046
2244,,554422
11,,885599
((441144))
((889944))
((220000))
23,785
1,789
(632)
(18)
(381)
2244,,889933
24,542
1122,,883300
11,,881199
22
((441100))
((556666))
((9999))
11,827
1,835
9
(619)
(12)
(210)
6,697
1,638
5,242
1133,,557777
12,830
4,316
33,,665555
2,722
22,,663377
3,544
33,,997788
1,130
11,,00446666
1111,,771122
1111,,331166
11,958
1111,,771122
11 Includes leasehold improvements and IT hardware. 22 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 2022 was USD 589m (2021: USD 632m). Interest expense on lease liabilities is included within
Interest expense from financial instruments measured at amortized cost and Lease liabilities are included within Other financial liabilities measured at amortized cost. Refer to Notes 3 and 18a, respectively. There
were no material gains or losses arising from sale-and-leaseback transactions in 2022 and in 2021. 33 The total reclassification amount for the respective periods represents net reclassifications to Properties and
other non-current assets held for sale. 44 Includes write-offs of fully depreciated assets. 55 Impairment charges recorded in 2022 generally relate to assets that are no longer used, for which the recoverable amount
based on a value in use approach was determined to be zero. 66 Consists of USD 858m related to software and USD 188m related to Owned properties and equipment.
Note 12 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 it is reported in Note 2a, 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 PaineWebber acquisition 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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
422
422
Note 12 Goodwill and intangible assets (continued)
As of 31 December 2022, total goodwill recognized on the balance sheet was USD 6.0bn, of which USD 3.7bn was
carried by the Global Wealth Management Americas CGU, USD 1.2bn was carried by the Global Wealth Management
Switzerland and International CGU, and USD 1.2bn was carried by Asset Management. Based on the impairment testing
methodology described below, UBS AG concluded that the goodwill balances as of 31 December 2022 allocated to these
CGUs were not impaired.
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.
The carrying amount for each CGU is determined by reference to UBS’s equity attribution framework. Within this
framework, which is described in the “Capital, liquidity and funding, and balance sheet” section of this report, 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), their goodwill and their intangible assets,
as well as attributed equity related to certain common equity tier 1 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.
› Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information about the equity
attribution framework
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 20%,
the discount rates were changed by 1.5 percentage points, and the long-term growth rates were changed by
0.75 percentage points. Under all scenarios, reasonably possible changes in key assumptions did not result in an
impairment of goodwill or intangible assets reported by Global Wealth Management Americas, Global Wealth
Management Switzerland and International, and Asset Management.
If the estimated earnings and other assumptions in future periods deviate from the current outlook, the value of goodwill
attributable to Global Wealth Management Americas, Global Wealth Management Switzerland and International, and
Asset Management may become impaired in the future, giving rise to losses in the income statement. Recognition of any
impairment of goodwill would reduce International Financial Reporting 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
In %
Global Wealth Management Americas
Global Wealth Management Switzerland and International
Asset Management
Discount rates
Growth rates
3311..1122..2222
1100..55
99..44
99..55
31.12.21
9.5
8.5
8.5
3311..1122..2222
33..88
33..66
33..44
31.12.21
4.0
3.1
2.9
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
423
423
Goodwill
Intangible assets1
22002222
6,126
0
(22)
0
(61)
6,043
1,612
0
0
0
(14)
1,598
77,,773399
00
((2222))
00
((7766))
77,,664411
2021
7,865
1
(3)
(41)
(83)
7,739
Note 12 Goodwill and intangible assets (continued)
USD m
HHiissttoorriiccaall ccoosstt
Balance at the beginning of the year
Additions
Disposals2
Write-offs
Foreign currency translation
Balance at the end of the year
AAccccuummuullaatteedd aammoorrttiizzaattiioonn aanndd iimmppaaiirrmmeenntt
Balance at the beginning of the year
Amortization
Impairment / (reversal of impairment)
Write-offs
Foreign currency translation
Balance at the end of the year
NNeett bbooookk vvaalluuee aatt tthhee eenndd ooff tthhee yyeeaarr
1,385
31
(1)
(41)
(13)
1,360
6,378
3,760
1,276
1,202
139
11 Intangible assets mainly include customer relationships, contractual rights and the fully amortized branch network intangible asset recognized in connection with the acquisition of PaineWebber Group, Inc. 22 Reflects
the derecognition of goodwill allocated to businesses that have been disposed of, in accordance with IAS 36 requirements.
of which: Global Wealth Management Americas
of which: Global Wealth Management Switzerland and International
of which: Asset Management
of which: Investment Bank
11,,336600
2266
((11))
00
((1111))
11,,337744
66,,226677
33,,774400
11,,222255
11,,116677
113355
1,360
26
(1)
0
(11)
1,374
224
31
59
0
135
6,043
3,709
1,166
1,167
0
The table below presents estimated aggregated amortization expenses for intangible assets.
USD m
EEssttiimmaatteedd aaggggrreeggaatteedd aammoorrttiizzaattiioonn eexxppeennsseess ffoorr::
2023
2024
2025
2026
2027
Thereafter
Not amortized due to indefinite useful life
TToottaall
Note 13 Other assets
a) Other financial assets measured at amortized cost
USD m
Debt securities
Loans to financial advisors
Fee- and commission-related receivables
Finance lease receivables
Settlement and clearing accounts
Accrued interest income
Other
Intangible assets
26
24
23
23
22
104
2
224
3311..1122..2222
4444,,559944
31.12.21
18,858
22,,661111
11,,880033
11,,331144
11,,117744
11,,227766
661188
2,453
1,966
1,356
455
521
627
TToottaall ootthheerr ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
5533,,338899
26,236
Debt securities increased by USD 25.7bn compared with 31 December 2021, largely reflecting shifts from cash into
securities within UBS’s high-quality liquid asset portfolio as spreads widened. In addition, 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 in 2022.
› Refer to Note 1b for more information
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
424
424
Note 13 Other assets (continued)
b) Other non-financial assets
USD m
Precious metals and other physical commodities
Deposits and collateral provided in connection with litigation, regulatory and similar matters1
Prepaid expenses
VAT, withholding tax and other tax receivables
Properties and other non-current assets held for sale
Assets of disposal group held for sale2
Other
TToottaall ootthheerr nnoonn--ffiinnaanncciiaall aasssseettss
11 Refer to Note 17 for more information. 22 Refer to Note 29 for more information.
Note 14 Customer deposits, and funding from UBS Group AG
a) Customer deposits
USD m
Demand deposits
Retail savings / deposits
Sweep deposits
Time deposits1
TToottaall ccuussttoommeerr ddeeppoossiittss
3311..1122..2222
31.12.21
44,,447711
22,,220055
770099
11,,440055
227799
558833
99,,665522
5,258
1,526
717
591
32
1,093
618
9,836
3311..1122..2222
118822,,330077
114499,,331100
6699,,222233
112266,,333311
552277,,117711
31.12.21
247,299
133,354
113,870
50,312
544,834
11 Includes customer deposits in UBS AG Jersey Branch placed by UBS Switzerland AG on behalf of its clients.
Increases in interest rates during the year resulted in significant shifts from demand deposits to time deposits.
b) Funding from UBS Group AG measured at amortized cost
USD m
Senior unsecured debt that contributes to total loss-absorbing capacity (TLAC)
Senior unsecured debt other than TLAC
Subordinated debt
of which: eligible as high-trigger loss-absorbing additional tier 1 capital instruments
of which: eligible as low-trigger loss-absorbing additional tier 1 capital instruments
TToottaall ffuunnddiinngg ffrroomm UUBBSS GGrroouupp AAGG mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt11
11 UBS AG has also recognized funding from UBS Group AG that is designated at fair value. Refer to Note 18b for more information.
3311..1122..2222
4422,,007733
223366
1133,,883388
1100,,665544
11,,118877
5566,,114477
31.12.21
38,984
4,471
13,840
11,414
2,426
57,295
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 was a decrease of USD 5.1bn as of 31 December 2022 and an increase
of USD 0.2bn as of 31 December 2021, 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 2022 pay a fixed rate of interest.
› Refer to Note 23 for maturity information
Note 15 Debt issued designated at fair value
USD m
IIssssuueedd ddeebbtt iinnssttrruummeennttss
Equity-linked1
Rates-linked
Credit-linked
Fixed-rate
Commodity-linked
Other
TToottaall ddeebbtt iissssuueedd ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
3311..1122..2222
31.12.21
4411,,990011
1166,,227766
22,,117700
66,,553388
44,,229944
666633
7711,,884422
47,059
16,369
1,723
2,868
2,911
529
71,460
of which: issued by UBS AG with original maturity greater than one year2
57,967
11 Includes investment fund unit-linked instruments issued. 22 Based on original contractual maturity without considering any early redemption features. As of 31 December 2022, 100% of the balance was unsecured
(31 December 2021: 100%).
5577,,775500
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
425
425
Note 16 Debt issued measured at amortized cost
USD m
SShhoorrtt--tteerrmm ddeebbtt11
Senior unsecured debt
of which: issued by UBS AG with original maturity greater than one year
Covered bonds
Subordinated debt
of which: eligible as low-trigger loss-absorbing tier 2 capital instruments
of which: eligible as non-Basel III-compliant tier 2 capital instruments
Debt issued through the Swiss central mortgage institutions
LLoonngg--tteerrmm ddeebbtt22
3311..1122..2222
2299,,667766
1177,,889922
1177,,889922
00
22,,996688
22,,442222
553366
88,,996622
2299,,882233
31.12.21
43,098
23,328
23,307
1,389
5,163
2,596
547
9,454
39,334
TToottaall ddeebbtt iissssuueedd mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt33
11 Debt with an original contractual maturity of less than one year, includes mainly certificates of deposit and commercial paper. 22 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. 33 Net of bifurcated embedded derivatives, the fair value of which was not material for the periods
presented.
82,432
5599,,449999
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 was a decrease of USD 1.0bn as of 31 December 2022 and an increase of USD 0.3bn as of 31 December 2021,
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 2022 pay a fixed rate of interest.
› Refer to Note 23 for maturity information
Note 17 Provisions and contingent liabilities
a) Provisions
The table below presents an overview of total provisions.
USD m
Provisions other than provisions for expected credit losses
Provisions for expected credit losses1
TToottaall pprroovviissiioonnss
11 Refer to Note 9 for more information about ECL provisions recognized for off-balance sheet financial instruments and credit lines.
3311..1122..2222
22,,998822
220011
33,,118833
31.12.21
3,256
196
3,452
The following table presents additional information for provisions other than provisions for expected credit losses.
USD m
BBaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
Provisions used in conformity with designated purpose
Capitalized reinstatement costs
Foreign currency translation / unwind of discount
BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr
11 Consists of provisions for losses resulting from legal, liability and compliance risks. 22 Consists of personnel-related restructuring provisions of USD 70m as of 31 December 2022 (31 December 2021: USD 90m)
and provisions for onerous contracts of USD 28m as of 31 December 2022 (31 December 2021: USD 47m). 33 Mainly includes provisions related to real estate, employee benefits and operational risks.
Restructuring
137
174
(19)
(189)
0
(5)
998822
TToottaall 22002222
33,,225566
662299
((110099))
((668899))
11
((110066))
22,,998822
Other3
321
49
(32)
(31)
1
(11)
229977
Litigation,
regulatory and
similar matters1
2,798
406
(57)
(470)
0
(90)
22,,558866
Restructuring provisions relate to personnel-related provisions and onerous contracts. 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. Onerous contracts for property are recognized when UBS is committed to pay for non-lease components,
such as utilities, service charges, taxes and maintenance, when a property is vacated or not fully recovered from sub-
tenants.
Information about provisions and contingent liabilities in respect of litigation, regulatory and similar matters, as a class,
is included in Note 17b. There are no material contingent liabilities associated with the other classes of provisions.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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426
Note 17 Provisions and contingent liabilities (continued)
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 (which for purposes of this Note may refer to UBS AG and/or one
or more of its subsidiaries, as applicable) is involved in various disputes and legal proceedings, including litigation,
arbitration, and regulatory and criminal investigations.
Such matters are subject to many uncertainties, and the outcome and the timing of resolution are often difficult to
predict, particularly in the earlier stages of a case. There are also situations where 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.
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 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, in which case the matter is treated as a contingent liability
under the applicable accounting standard; 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 17a above. It is not practicable to provide an aggregate estimate of liability for our litigation, regulatory
and similar matters as a class of contingent liabilities. Doing so would require UBS to provide 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. Although
UBS therefore cannot provide a numerical estimate of the future losses that could arise from litigation, regulatory and
similar matters, UBS believes that the aggregate amount of possible future losses from this class that are more than
remote substantially exceeds the level of current provisions.
Litigation, regulatory and similar matters may also result in non-monetary penalties and consequences. A guilty plea to,
or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may require
UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory authorities to
limit, suspend or terminate licenses and regulatory authorizations, and may permit financial market utilities to limit,
suspend or terminate UBS’s participation in such utilities. Failure to obtain such waivers, or any limitation, suspension or
termination of licenses, authorizations or participations, could have material consequences for UBS.
The risk of loss associated with litigation, regulatory and similar matters is a component of operational risk for purposes
of determining capital requirements. Information concerning our capital requirements and the calculation of operational
risk for this purpose is included in the “Capital, liquidity and funding, and balance sheet” section of this report.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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Note 17 Provisions and contingent liabilities (continued)
Provisions for litigation, regulatory and similar matters by business division and in Group Functions1
USD m
BBaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
Provisions used in conformity with designated purpose
Reclassifications
Foreign currency translation / unwind of discount
BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr
Global Wealth
Manage-
ment
1,338
Personal &
Corporate
Banking
181
Asset
Manage-
ment
8
Investment
Bank
310
Group
Functions
962
TToottaall 22002222
22,,779988
268
(23)
(331)
0
(70)
11,,118822
2
(15)
0
0
(9)
115599
1
0
0
0
0
88
129
(8)
(115)
4
(11)
330088
6
(12)
(23)
(4)
0
440066
((5577))
((447700))
00
((9900))
992288
22,,558866
11 Provisions, if any, for the matters described in items 3 and 4 of this Note are recorded in Global Wealth Management, and provisions, if any, for the matters described in item 2 are recorded in Group Functions.
Provisions, if any, for the matters described in items 1 and 6 of this Note are allocated between Global Wealth Management and Personal & Corporate Banking, provisions, if any, for the matters described in item 5
are allocated between the Investment Bank and Group Functions, and provisions, if any, for the matters described in item 7 are allocated between Global Wealth Management and the Investment Bank.
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.
Since 2013, UBS (France) S.A., UBS AG and certain former employees have been under investigation in France in relation
to UBS’s cross-border business with French clients. In connection with this investigation, the investigating judges ordered
UBS AG to provide bail (“caution”) of EUR 1.1bn.
On 20 February 2019, the court of first instance returned a verdict finding UBS AG guilty of unlawful solicitation of clients
on French territory and aggravated laundering of the proceeds of tax fraud, and UBS (France) S.A. guilty of aiding and
abetting unlawful solicitation and of laundering the proceeds of tax fraud. The court imposed fines aggregating
EUR 3.7bn on UBS AG and UBS (France) S.A. and awarded EUR 800m of civil damages to the French state. A trial in the
French Court of Appeal took place in March 2021. On 13 December 2021, the Court of Appeal found UBS AG guilty of
unlawful solicitation and aggravated laundering of the proceeds of tax fraud. The court ordered a fine of EUR 3.75m,
the confiscation of EUR 1bn, and awarded civil damages to the French state of EUR 800m. UBS AG has filed an appeal
with the French Supreme Court to preserve its rights. The notice of appeal enables UBS AG to thoroughly assess the
verdict of the Court of Appeal and to determine next steps in the best interest of its stakeholders. The fine and
confiscation imposed by the Court of Appeal are suspended during the appeal. The civil damages award has been paid
to the French state (EUR 99m of which was deducted from the bail), subject to the result of UBS’s appeal.
Our balance sheet at 31 December 2022 reflected provisions with respect to this matter in an amount of EUR 1.1bn
(USD 1.2bn). The wide range of possible outcomes in this case contributes to a high degree of estimation uncertainty
and the provision reflects our best estimate of possible financial implications, although actual penalties and civil damages
could exceed (or may be less than) the provision amount.
Our balance sheet at 31 December 2022 reflected provisions with respect to matters described in this item 1 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. Claims related to sales of residential mortgage-backed securities and mortgages
From 2002 through 2007, prior to the crisis in the US residential loan market, UBS was a substantial issuer and underwriter
of US residential mortgage-backed securities (RMBS) and was a purchaser and seller of US residential mortgages.
In November 2018, the DOJ filed a civil complaint in the District Court for the Eastern District of New York. The complaint
seeks unspecified civil monetary penalties under the Financial Institutions Reform, Recovery and Enforcement Act of 1989
related to UBS’s issuance, underwriting and sale of 40 RMBS transactions in 2006 and 2007. UBS moved to dismiss the
civil complaint in February 2019. In December 2019, the district court denied UBS’s motion to dismiss.
Our balance sheet at 31 December 2022 reflected a provision with respect to matters described in this item 2 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 this matter 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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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Note 17 Provisions and contingent liabilities (continued)
3. Madoff
In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg) S.A.
(now UBS Europe SE, Luxembourg branch) and certain other UBS subsidiaries have been subject to inquiries by a number
of regulators, including the Swiss Financial Market Supervisory Authority (FINMA) and the Luxembourg Commission de
Surveillance du Secteur Financier. Those inquiries concerned two third-party funds established under Luxembourg law,
substantially all assets of which were with BMIS, as well as certain funds established in offshore jurisdictions with either
direct or indirect exposure to BMIS. These funds faced severe losses, and the Luxembourg funds are in liquidation. The
documentation establishing both funds identifies UBS entities in various roles, including custodian, administrator,
manager, distributor and promoter, and indicates that UBS employees serve as board members.
In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims against UBS entities, non-UBS entities and
certain individuals, including current and former UBS employees, seeking amounts totaling approximately EUR 2.1bn,
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 2bn.
In 2014, the US Supreme Court rejected the BMIS Trustee’s motion for leave to appeal decisions dismissing all claims
except those for the recovery of approximately USD 125m of payments alleged to be fraudulent conveyances and
preference payments. In 2016, the bankruptcy court dismissed these claims against the UBS entities. In February 2019,
the Court of Appeals reversed the dismissal of the BMIS Trustee’s remaining claims, and the US Supreme Court
subsequently denied a petition seeking review of the Court of Appeals’ decision. The case has been remanded to the
Bankruptcy Court for further proceedings.
4. Puerto Rico
Declines since 2013 in the market prices of Puerto Rico municipal bonds and of closed-end funds (funds) that are sole-
managed and co-managed by UBS Trust Company of Puerto Rico and distributed by UBS Financial Services Incorporated
of Puerto Rico (UBS PR) led to multiple regulatory inquiries, which in 2014 and 2015, led to settlements with the Office
of the Commissioner of Financial Institutions for the Commonwealth of Puerto Rico, the US Securities and Exchange
Commission (SEC) and the Financial Industry Regulatory Authority.
Since then, UBS clients in Puerto Rico who own the funds or Puerto Rico municipal bonds and/or who used their UBS
account assets as collateral for UBS non-purpose loans filed customer complaints and arbitration demands seeking
aggregate damages of USD 3.42bn, of which USD 3.37bn have been resolved through settlements, arbitration or
withdrawal of claims. Allegations include fraud, misrepresentation and unsuitability of the funds and of the loans.
A shareholder derivative action was filed in 2014 against various UBS entities and current and certain former directors of
the funds, alleging hundreds of millions of US dollars in losses in the funds. In 2021, the parties reached an agreement
to settle this matter for USD 15m, subject to court approval.
In 2011, a purported derivative action was filed on behalf of the Employee Retirement System of the Commonwealth of
Puerto Rico (System) against over 40 defendants, including UBS PR, which was named in connection with its underwriting
and consulting services. Plaintiffs alleged that defendants violated their purported fiduciary duties and contractual
obligations in connection with the issuance and underwriting of USD 3bn of bonds by the System in 2008 and sought
damages of over USD 800m. In 2016, the court granted the System’s request to join the action as a plaintiff. In 2022, a
federal district court enjoined the plaintiffs from proceeding with the action on the grounds it impermissibly conflicted
with Puerto Rico’s approved Plan of Adjustment.
Beginning in 2015, certain agencies and public corporations of the Commonwealth of Puerto Rico (Commonwealth)
defaulted on certain interest payments on Puerto Rico bonds. In 2016, US federal legislation created an oversight board
with power to oversee Puerto Rico’s finances and to restructure its debt. The oversight board has imposed a stay on the
exercise of certain creditors’ rights. In 2017, the oversight board placed certain of the bonds into a bankruptcy-like
proceeding under the supervision of a Federal District Judge.
In May 2019, the oversight board filed complaints in Puerto Rico federal district court bringing claims against financial,
legal and accounting firms that had participated in Puerto Rico municipal bond offerings, including UBS, seeking a return
of underwriting and swap fees paid in connection with those offerings. UBS estimates that it received approximately
USD 125m in fees in the relevant offerings.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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429
Note 17 Provisions and contingent liabilities (continued)
In August 2019, and February and November 2020, four US insurance companies that insured issues of Puerto Rico
municipal bonds sued UBS and several other underwriters of Puerto Rico municipal bonds in three separate cases. The
actions collectively seek recovery of an aggregate of USD 955m in damages from the defendants. The plaintiffs in these
cases claim that defendants failed to reasonably investigate financial statements in the offering materials for the insured
Puerto Rico bonds issued between 2002 and 2007, which plaintiffs argue they relied upon in agreeing to insure the
bonds notwithstanding that they had no contractual relationship with the underwriters. Defendants’ motions to dismiss
have been granted in all three cases; those decisions are being appealed by the plaintiffs.
Our balance sheet at 31 December 2022 reflected provisions with respect to matters described in this item 4 in amounts
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 provisions that we have recognized.
5. Foreign exchange, LIBOR and benchmark rates, and other trading practices
Foreign exchange-related regulatory matters: Beginning in 2013, numerous authorities commenced investigations
concerning possible manipulation of foreign exchange markets and precious metals prices. As a result of these
investigations, UBS entered into resolutions with Swiss, US and United Kingdom 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.
Foreign exchange-related civil litigation: Putative class actions have been filed since 2013 in US federal courts and in other
jurisdictions against UBS and other banks on behalf of putative classes of persons who engaged in foreign currency
transactions with any of the defendant banks. UBS has 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 under a settlement agreement that provides for UBS to pay an aggregate of USD 141m and provide
cooperation to the settlement classes. Certain class members have excluded themselves from that settlement and have
filed individual actions in US and English courts against UBS and other banks, alleging violations of US and European
competition laws and unjust enrichment. UBS and the other banks have reached an agreement in principle to resolve
those individual matters.
In 2015, 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 March 2017, the court granted UBS’s (and the other banks’) motions to dismiss the complaint. The
plaintiffs filed an amended complaint in August 2017. In March 2018, the court denied the defendants’ motions to
dismiss the amended complaint. In March 2022, the court denied plaintiffs’ motion for class certification.
LIBOR and other benchmark-related regulatory matters: Numerous government agencies conducted investigations
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at certain
times. UBS reached settlements or otherwise concluded investigations relating to benchmark interest rates with the
investigating authorities. UBS was granted conditional leniency or conditional immunity from authorities in certain
jurisdictions, including the Antitrust Division of the DOJ and the Swiss Competition Commission (WEKO), in connection
with potential antitrust or competition law violations related to certain rates. However, UBS has not reached a final
settlement with WEKO, as the Secretariat of WEKO has asserted that UBS does not qualify for full immunity.
LIBOR and other benchmark-related civil litigation: A number of putative class actions and other actions are pending in
the federal courts in New York against UBS and numerous other banks on behalf of parties who transacted in certain
interest rate benchmark-based derivatives. Also pending in the US and in other jurisdictions are a number of other actions
asserting losses related to various products whose interest rates were linked to LIBOR and other benchmarks, including
adjustable rate mortgages, preferred and debt securities, bonds pledged as collateral, loans, depository accounts,
investments and other interest-bearing instruments. The complaints allege manipulation, through various means, of
certain benchmark interest rates, including USD LIBOR, Euroyen TIBOR, Yen LIBOR, EURIBOR, CHF LIBOR, GBP LIBOR,
SGD SIBOR and SOR and Australian BBSW, and seek unspecified compensatory and other damages under varying legal
theories.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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430
Note 17 Provisions and contingent liabilities (continued)
USD LIBOR class and individual actions in the US: In 2013 and 2015, the district court in the USD LIBOR actions dismissed,
in whole or in part, certain plaintiffs’ antitrust claims, federal racketeering claims, CEA claims, and state common law
claims, and again dismissed the antitrust claims in 2016 following an appeal. In December 2021, the Second Circuit
affirmed the district court’s dismissal in part and reversed in part and remanded to the district court for further
proceedings. The Second Circuit, among other things, held that there was personal jurisdiction over UBS and other
foreign defendants based on allegations that at least one alleged co-conspirator undertook an overt act in the United
States. Separately, in 2018, the Second Circuit reversed in part the district court’s 2015 decision dismissing certain
individual plaintiffs’ claims and certain of these actions are now proceeding. In 2018, the district court denied plaintiffs’
motions for class certification in the USD class actions for claims pending against UBS, and plaintiffs sought permission
to appeal that ruling to the Second Circuit. In July 2018, the Second Circuit denied the petition to appeal of the class of
USD lenders and in November 2018 denied the petition of the USD exchange class. In January 2019, a putative class
action was filed in the District Court for the Southern District of New York against UBS and numerous other banks on
behalf of US residents who, since 1 February 2014, directly transacted with a defendant bank in USD LIBOR instruments.
The complaint asserts antitrust claims. The defendants moved to dismiss the complaint in August 2019. In March 2020
the court granted defendants’ motion to dismiss the complaint in its entirety. Plaintiffs have appealed the dismissal. In
March 2022, the Second Circuit dismissed the appeal because appellants, who had been substituted in to replace the
original plaintiffs who had withdrawn, lacked standing to pursue the appeal. In August 2020, an individual action was
filed in the Northern District of California against UBS 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 LIBOR rate and monopolized
the market for LIBOR-based consumer loans and credit cards. Defendants moved to dismiss the complaint in September
2021. In September 2022, the court granted defendants’ motion to dismiss the complaint in its entirety, while allowing
plaintiffs the opportunity to file an amended complaint. Plaintiffs filed an amended complaint in October 2022, and
defendants have moved to dismiss the amended complaint in November 2022.
Other benchmark class actions in the US:
Yen LIBOR / Euroyen TIBOR – In 2014, 2015 and 2017, the court in one of the Yen LIBOR / Euroyen TIBOR lawsuits
dismissed certain of the plaintiffs’ claims, including the plaintiffs’ federal antitrust and racketeering claims. In August
2020, the court granted defendants’ motion for judgment on the pleadings and dismissed the lone remaining claim in
the action as impermissibly extraterritorial. In October 2022, the appeals court affirmed the dismissal on multiple grounds.
In 2017, the court dismissed the other Yen LIBOR / Euroyen TIBOR action in its entirety on standing grounds. In April
2020, the appeals court reversed the dismissal and in August 2020 plaintiffs in that action filed an amended complaint
focused on Yen LIBOR. The court granted in part and denied in part defendants’ motion to dismiss the amended
complaint in September 2021. In August 2022, the court granted UBS’s motion for reconsideration and dismissed the
case against UBS.
CHF LIBOR – In 2017, the court dismissed the CHF LIBOR action on standing grounds and failure to state a claim. Plaintiffs
filed an amended complaint, and the court granted a renewed motion to dismiss in September 2019. Plaintiffs appealed.
In September 2021, the Second Circuit granted the parties’ joint motion to vacate the dismissal and remand the case for
further proceedings. Plaintiffs filed a third amended complaint in November 2022 and defendants have moved to dismiss
the amended complaint in January 2023.
EURIBOR – In 2017, the court in the EURIBOR lawsuit dismissed the case as to UBS and certain other foreign defendants
for lack of personal jurisdiction. Plaintiffs have appealed.
SIBOR / SOR – In October 2018, the court in the SIBOR / SOR action dismissed all but one of plaintiffs’ claims against UBS.
Plaintiffs filed an amended complaint, and the court granted a renewed motion to dismiss in July 2019. Plaintiffs
appealed. In March 2021, the Second Circuit reversed the dismissal. Plaintiffs filed an amended complaint in October
2021, which defendants moved to dismiss in November 2021. In March 2022, plaintiffs reached a settlement in principle
with the remaining defendants, including UBS. The court granted final approval of the settlement in November 2022.
BBSW – In November 2018, the court dismissed the BBSW lawsuit as to UBS and certain other foreign defendants for
lack of personal jurisdiction. Plaintiffs filed an amended complaint in April 2019, which UBS and other defendants moved
to dismiss in May 2019. In February 2020, the court granted in part and denied in part defendants’ motions to dismiss
the amended complaint. In August 2020, UBS and other BBSW defendants joined a motion for judgment on the
pleadings, which the court denied in May 2021. In February 2022, plaintiffs reached a settlement in principle with the
remaining defendants, including UBS. The court granted final approval of the settlement in November 2022.
GBP LIBOR – The court dismissed the GBP LIBOR action in August 2019. Plaintiffs have appealed.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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431
Note 17 Provisions and contingent liabilities (continued)
Government bonds: Putative class actions have been filed since 2015 in US federal courts against UBS and other banks
on behalf of persons who participated in markets for US Treasury securities since 2007. A consolidated complaint was
filed in 2017 in the US District Court for the Southern District of New York alleging that the banks colluded with respect
to, and manipulated prices of, US Treasury securities sold at auction and in the secondary market and asserting claims
under the antitrust laws and for unjust enrichment. Defendants’ motions to dismiss the consolidated complaint were
granted in March 2021. Plaintiffs filed an amended complaint, which defendants moved to dismiss in June 2021. In
March 2022, the court granted defendants’ motion to dismiss that complaint. Plaintiffs have appealed the dismissal.
Similar class actions have been filed concerning European government bonds and other government bonds.
In May 2021, the European Commission issued a decision finding that UBS and six other banks breached European Union
antitrust rules in 2007–2011 relating to European government bonds. The European Commission fined UBS EUR 172m.
UBS is appealing the amount of the fine.
With respect to additional matters and jurisdictions not encompassed by the settlements and orders referred to above,
our balance sheet at 31 December 2022 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.
6. 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 for UBS 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.
Our balance sheet at 31 December 2022 reflected a provision with respect to matters described in this item 6 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.
7. Communications recordkeeping
The SEC and CFTC conducted investigations of UBS and other financial institutions regarding compliance with records
preservation requirements relating to business communications sent over unapproved electronic messaging channels.
UBS cooperated with the investigations, and, in September 2022, UBS agreed to pay civil monetary penalties of
USD 125m to the SEC and USD 75m to the CFTC to resolve these matters.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
432
432
Note 18 Other liabilities
a) Other financial liabilities measured at amortized cost
USD m
Other accrued expenses
Accrued interest expenses
Settlement and clearing accounts
Lease liabilities
Other
TToottaall ootthheerr ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
b) Other financial liabilities designated at fair value
USD m
Financial liabilities related to unit-linked investment contracts
Securities financing transactions
Over-the-counter debt instruments and other
Funding from UBS Group AG
TToottaall ootthheerr ffiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
c) Other non-financial liabilities
USD m
Compensation-related liabilities
of which: financial advisor compensation plans
of which: other compensation plans
of which: net defined benefit liability
of which: other compensation-related liabilities1
Current tax liabilities
Deferred tax liabilities
VAT, withholding tax and other tax payables
Deferred income
Liabilities of disposal group held for sale2
Other
TToottaall ootthheerr nnoonn--ffiinnaanncciiaall lliiaabbiilliittiieess
11 Includes liabilities for payroll taxes and untaken vacation. 22 Refer to Note 29 for more information.
3311..1122..2222
31.12.21
11,,556644
22,,000088
11,,006600
33,,221111
22,,554499
1100,,339911
3311..1122..2222
1133,,222211
1155,,333333
11,,668844
11,,779966
3322,,003333
1,642
1,134
1,282
3,438
2,269
9,765
31.12.21
21,466
6,377
2,231
2,340
32,414
3311..1122..2222
31.12.21
44,,442244
11,,446633
22,,002233
444499
449900
11,,004444
223333
447722
223333
8844
66,,448899
4,795
1,512
2,140
617
526
1,365
297
524
225
1,298
68
8,572
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
433
433
Additional information
Note 19 Expected credit loss measurement
a) Expected credit losses in the period
Total net credit loss expenses were USD 29m in 2022, reflecting net credit loss expenses of USD 29m related to stage 1
and 2 positions and USD 0m net credit loss expenses related to credit-impaired (stage 3) positions.
Stage 1 and 2 expected credit loss (ECL) expenses of USD 29m include USD 123m expenses related to scenario and
parameter updates and USD 13m related to other book quality and size changes, partly offset by USD 77m post-model
adjustment (PMA) releases and USD 30m releases related to model changes. Lending to corporate clients not secured by
mortgages contributed USD 21m, mainly driven by scenario effects related to the downward revision of GDP and higher
interest rate assumptions in the newly introduced stagflationary geopolitical crisis scenario (SGC). Lending secured by
mortgages contributed USD 16m in expenses, mainly driven by scenario effects related to higher interest rate
assumptions, especially from the SGC, and adverse house price assumptions from both applied downside scenarios. This
was partly offset by releases from other lending of USD 9m.
› Refer to Note 19b for more information regarding changes to ECL models, scenarios, scenario weights and the post-model
adjustment and to Note 19c for more information regarding the development of ECL allowances and provisions
Stage 3 net expenses of USD 0m were recognized across a number of defaulted positions, with net expenses of USD 12m
in Personal and Corporate Banking and USD 5m in Global Wealth Management, offset by releases of USD 18m in the
Investment Bank, including a USD 28m release for a single airline-related counterparty, mainly due to improved cashflow
assumptions, and USD 10m net expenses across a number of defaulted positions.
Credit loss expense / (release)
USD m
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2222
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2211
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2200
Stages 1 and 2
Stage 3
TToottaall ccrreeddiitt lloossss eexxppeennssee // ((rreelleeaassee))
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Group
Functions
((55))
55
00
(28)
(1)
((2299))
48
40
8888
2277
1122
3399
(62)
(24)
((8866))
129
128
225577
00
00
00
0
1
11
0
2
22
66
((1188))
((1122))
(34)
0
((3344))
88
217
330055
11
22
33
0
0
00
0
42
4422
Total
2299
00
2299
(123)
(25)
((114488))
266
429
669955
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
434
434
Note 19 Expected credit loss measurement (continued)
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 applied.
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 2022, 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 30m decrease in ECL allowances. This includes
a decrease of USD 19m in Global Wealth Management affecting loans to financial advisors and specialized US lending
portfolios and an USD 11m decrease in Personal & Corporate Banking related to lending to large corporate clients and
financial intermediaries & hedge funds.
Scenario and key input updates
During 2022, the scenarios and related macroeconomic factors were updated from those applied at the end of 2021 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 Russia–Ukraine war, with the subsequent effect on energy markets, the
inflation outlook and economic growth in Europe, and rising global interest rates due to central banks’ adoption of more
restrictive monetary policies.
Baseline scenario: the projections of the baseline scenario, which are aligned to the economic and market assumptions used
for UBS AG’s business planning purposes, are broadly in line with external data, such as that from Bloomberg Consensus,
Oxford Economics and the International Monetary Fund World Economic Outlook. The expectation for 2023 is that global
growth stalls under the weight of monetary policy tightening, and continued pressure on real purchasing power due to high
inflation – further fueled in Europe by the energy crisis and a lack of labor supply – even though unemployment rates are
forecast to be higher than in 2022 and an energy crisis in Europe seems likely to be averted. Interest rates are expected to
remain high, given the persistence of inflationary trends, leading to a less optimistic outlook for global house prices, which
is cushioned in Switzerland by continued strong demand.
Global crisis scenario: The first hypothetical downside scenario, the global crisis scenario, is aligned with the UBS AG’s 2022
binding stress scenario and was updated in 2022 to reflect expected risks, resulting in minimal changes. It assumes that,
while the global economy has returned to pre-pandemic levels and the immediate risks from COVID-19 have decreased, the
associated disruptions and the consequences of the unprecedented monetary and fiscal stimulus measures will remain
critical. Concerns regarding the sustainability of public debt, following the marked deterioration of fiscal positions, lead to
a loss of confidence and market turbulence, while protectionism results in a decrease in global trade. Governments and
central banks have limited scope to support the economies, and interest rate levels remain moderate. As a consequence,
China suffers a hard landing which, combined with political, solvency and liquidity concerns, affects emerging markets
significantly. A spillover effect leads to a contraction of the Eurozone, Swiss and US economies, as global demand is
significantly affected. Given the severity of the macroeconomic impact, unemployment rates rise to historical highs and real
estate sectors contract sharply.
Stagflationary geopolitical crisis scenario: The second downside scenario was changed during 2022. In light of the
developments caused by Russia’s invasion of Ukraine, the mild global interest rate steepening scenario was replaced by a
severe global interest rate steepening scenario in the first quarter of 2022, as the beginning of the Russia–Ukraine war
increased fears of higher inflation and a corresponding reaction by monetary authorities. In the second quarter of the year,
the progression of the war and the enforcement of sanctions regimes led to a redesign of the scenario. The resulting severe
Russia–Ukraine conflict scenario has similar dynamics as the severe global interest rate steepening scenario, but addressed
specifically the prospect of rising energy costs, especially in Europe, with the consequences of lower growth and higher
inflation rates. In the fourth quarter of 2022, UBS developed a new stagflationary geopolitical crisis scenario (SGC) and
included this new scenario in the ECL calculation for year-end 2022 in lieu of the severe Russia–Ukraine conflict scenario.
While the SGC scenario addresses similar risks as the severe Russia–Ukraine conflict scenario, it also covers additional and
broader risks and therefore assumes more severe shocks. 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. The severe interest rate and adverse house price
assumptions in the SGC scenario had a substantive impact on model-based ECL allowances for loans secured by mortgages
in Switzerland and the US. These effects were partly offset by PMA releases related to loans secured by mortgages. Refer to
the section below on “Scenario weights and post-model adjustments” for more details.
Asset price inflation 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 energy and commodity
prices, effective monetary policies and easing supply chain disruptions helps reduce inflation. Improved consumer and
business sentiment lead to an economic rebound with central banks able to normalize interest rates; asset prices increase
significantly.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
435
435
Note 19 Expected credit loss measurement (continued)
The table below details the key assumptions for the four scenarios applied as of 31 December 2022.
Scenario weights and post-model adjustments
Due to the less positive outlook compared with the assessment on 31 December 2021, the scenario weights changed
during 2022. The upside scenario was allocated a 0% probability, and the previous 5% weight was added to the baseline
scenario, now set at 60%. Following the introduction of the SGC, which was deemed to have a higher probability of
occurring than the global crisis scenario, the weights were rebalanced. The SGC has a weight of 25% (compared with
10% for the mild global interest rate steepening scenario used as of 31 December 2021) and the weight of the global
crisis scenario was reduced to 15% (from 30% as of 31 December 2021). The weights are also shown in the table below.
The scenarios and weight allocation were established in line with the general market sentiment that the short-term
outlook is subdued and a recession in major markets is a strong probability. The downside risks in relation to inflation
and monetary policy, as well as the availability and price of energy, mainly in Europe, are better reflected in our models
compared with the uncertain developments caused by COVID-19 in recent years.
However, unquantifiable risks continue to be relevant, as the pandemic has not been overcome and the world may face
new disruptions. Furthermore, the geopolitical situation worsened during 2022, and the impact on the world economy
from escalations with unforeseeable consequences could be severe. In the near term, this uncertainty relates primarily to
the development of the Russia–Ukraine war. 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 gauging these risks and applying model
parameters that lack supportable information and cannot be robustly validated, management continued to also apply
PMAs.
These PMA took into account that more of the downside risks were modeled in 2022, particularly for lending secured by
mortgages. The PMA amounted to USD 131m as of 31 December 2022 (31 December 2021: USD 224m). These
remaining PMA for uncertainties on potentially unmodeled risk almost entirely relate to corporate lending portfolios in
Personal & Corporate Banking and the Investment Bank.
Economic scenarios and weights applied
EECCLL sscceennaarriioo
Asset price inflation
Baseline
Mild global interest rate steepening
Stagflationary geopolitical crisis
Global crisis
Scenario assumptions
3311..1122..2222
RReeaall GGDDPP ggrroowwtthh ((%% cchhaannggee))
United States
Eurozone
Switzerland
CCoonnssuummeerr pprriiccee iinnddeexx ((%% cchhaannggee))
United States
Eurozone
Switzerland
UUnneemmppllooyymmeenntt rraattee ((eenndd--ooff--ppeerriioodd lleevveell,, %%))
United States
Eurozone
Switzerland
FFiixxeedd iinnccoommee:: 1100--yyeeaarr ggoovveerrnnmmeenntt bboonnddss ((cchhaannggee iinn yyiieellddss,, bbaassiiss ppooiinnttss))
USD
EUR
CHF
EEqquuiittyy iinnddiicceess ((%% cchhaannggee))
S&P 500
EuroStoxx 50
SPI
SSwwiissss rreeaall eessttaattee ((%% cchhaannggee))
Single-Family Homes
OOtthheerr rreeaall eessttaattee ((%% cchhaannggee))
United States (S&P / Case–Shiller)
Eurozone (House Price Index)
AAssssiiggnneedd wweeiigghhttss iinn %%
3311..1122..2222
0.0
60.0
0.0
25.0
15.0
OOnnee yyeeaarr
TThhrreeee yyeeaarrss ccuummuullaattiivvee
AAsssseett pprriiccee
iinnffllaattiioonn
BBaasseelliinnee
SSttaaggffllaattiioonnaarryy
ggeeooppoolliittiiccaall
ccrriissiiss
GGlloobbaall
ccrriissiiss
AAsssseett pprriiccee
iinnffllaattiioonn
BBaasseelliinnee
SSttaaggffllaattiioonnaarryy
ggeeooppoolliittiiccaall
ccrriissiiss
4.0
3.0
3.0
2.5
2.3
2.1
3.0
6.0
1.7
25.0
20.0
25.0
20.0
17.0
14.0
6.6
7.8
7.0
(0.3)
0.6
0.7
2.6
5.0
1.6
3.9
7.0
2.3
(5.6)
47.8
45.7
7.4
17.2
5.6
1.1
(4.5)
(2.7)
(4.8)
(5.6)
(4.8)
10.0
9.6
5.8
9.2
10.9
4.3
235.0
250.0
220.0
(51.5)
(51.6)
(51.6)
(6.4)
(8.5)
(6.7)
(0.5)
(0.7)
(1.8)
10.0
11.9
4.4
(326.0)
(270.6)
(209.7)
(50.0)
(50.0)
(46.0)
9.1
6.2
6.6
8.1
7.4
6.2
3.0
6.0
1.5
70.0
57.5
62.5
51.7
42.9
37.9
3.2
2.5
3.5
6.5
9.6
3.9
5.3
7.1
2.6
(13.2)
44.7
57.0
22.8
29.2
19.3
(4.4)
(5.7)
(4.9)
15.8
14.8
10.7
11.8
12.2
5.1
205.0
220.0
205.0
(45.6)
(47.2)
(47.2)
(16.7)
(19.9)
14.0
2.3
(32.9)
(23.9)
(12.8)
(8.4)
(19.3)
(8.9)
19.1
15.4
(0.6)
2.0
(35.8)
(14.7)
(32.7)
(17.5)
3311..1122..2211
5.0
55.0
10.0
0.0
30.0
GGlloobbaall
ccrriissiiss
(1.8)
(8.3)
(3.7)
1.2
(0.7)
(1.6)
9.4
13.0
4.9
(291.1)
(246.5)
(159.6)
(27.9)
(39.3)
(32.9)
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
436
436
Note 19 Expected credit loss measurement (continued)
Scenario assumptions
OOnnee yyeeaarr
3311..1122..2211
RReeaall GGDDPP ggrroowwtthh ((%% cchhaannggee))
United States
Eurozone
Switzerland
CCoonnssuummeerr pprriiccee iinnddeexx ((%% cchhaannggee))
United States
Eurozone
Switzerland
UUnneemmppllooyymmeenntt rraattee ((eenndd--ooff--ppeerriioodd lleevveell,, %%))
United States
Eurozone
Switzerland
FFiixxeedd iinnccoommee:: 1100--yyeeaarr ggoovveerrnnmmeenntt bboonnddss ((cchhaannggee iinn yyiieellddss,, bbaassiiss ppooiinnttss))
USD
EUR
CHF
EEqquuiittyy iinnddiicceess ((%% cchhaannggee))
S&P 500
EuroStoxx 50
SPI
SSwwiissss rreeaall eessttaattee ((%% cchhaannggee))
Single-Family Homes
OOtthheerr rreeaall eessttaattee ((%% cchhaannggee))
United States (S&P / Case–Shiller)
Eurozone (House Price Index)
AAsssseett pprriiccee
iinnffllaattiioonn
BBaasseelliinnee
MMiilldd gglloobbaall
iinntteerreesstt rraattee
sstteeeeppeenniinngg GGlloobbaall ccrriissiiss
AAsssseett pprriiccee
iinnffllaattiioonn
9.1
9.4
5.5
3.1
2.3
1.8
3.0
6.2
2.3
50.0
40.0
50.0
12.0
16.0
14.0
5.1
10.0
8.4
4.4
3.9
2.4
2.2
1.4
0.3
3.9
7.4
2.5
16.5
11.1
12.1
14.1
12.3
12.1
4.4
3.5
5.1
(0.1)
(0.1)
(0.9)
5.7
4.2
3.5
6.1
8.7
3.4
259.2
283.8
245.5
(27.0)
(23.4)
(22.9)
(5.9)
(8.7)
(6.6)
(1.2)
(1.3)
(1.8)
10.9
12.9
5.2
(50.0)
(35.0)
(70.0)
(50.2)
(57.6)
(53.6)
17.8
17.3
13.1
9.5
8.0
6.1
3.0
6.0
1.6
170.0
140.0
150.0
35.5
41.6
37.9
(4.3)
(17.0)
15.5
(2.3)
(4.0)
(9.5)
(5.4)
21.7
17.8
TThhrreeee yyeeaarrss ccuummuullaattiivvee
MMiilldd gglloobbaall
iinntteerreesstt rraattee
sstteeeeppeenniinngg GGlloobbaall ccrriissiiss
BBaasseelliinnee
10.1
7.5
5.8
6.3
4.8
1.7
3.5
7.2
2.3
41.2
34.9
34.4
24.7
20.7
19.1
7.4
7.1
9.6
1.8
0.9
(0.1)
13.0
10.4
9.0
7.2
9.1
4.2
329.2
349.3
307.3
(21.8)
(19.9)
(19.6)
(3.8)
(10.3)
(5.7)
0.4
(1.7)
(1.6)
10.8
15.1
5.9
(15.0)
(25.0)
(35.0)
(40.1)
(50.4)
(44.2)
(8.8)
(30.0)
(8.7)
(7.6)
(26.3)
(10.8)
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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
437
437
Note 19 Expected credit loss measurement (continued)
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
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
RReemmeeaassuurreemmeennttss wwiitthh ssttaaggee ttrraannssffeerrss22
NNeett mmoovveemmeenntt ffrroomm nneeww aanndd ddeerreeccooggnniizzeedd ttrraannssaaccttiioonnss11
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
RReemmeeaassuurreemmeennttss wwiitthhoouutt ssttaaggee ttrraannssffeerrss33
SSttaaggee 33
((666622))
((22))
0
0
(2)
0
0
0
0
((4466))
0
0
(21)
(22)
(3)
0
0
4488
1
0
41
14
(8)
0
(6)
00
MMoovveemmeennttss wwiitthh pprrooffiitt oorr lloossss iimmppaacctt55
00
MMoovveemmeennttss wwiitthhoouutt pprrooffiitt oorr lloossss iimmppaacctt ((wwrriittee--ooffff,, FFXX aanndd ootthheerr))66
9999
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002222
((556644))
11 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. 22 Represents the remeasurement between 12-month and lifetime ECL due to stage transfers. 33 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.
44 Represents the change in the allowances and provisions related to changes in models and methodologies. 55 Includes ECL movements from new and derecognized transactions, remeasurement changes, model and
methodology changes. 66 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.
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Sovereigns
of which: Loans to financial advisors
TToottaall
((11,,116655))
((77))
(6)
(3)
8
(1)
(6)
0
0
((6655))
(10)
7
(33)
(23)
(6)
0
1
1133
(12)
13
32
(6)
(15)
(8)
(3)
3300
((2299))
110044
((11,,009911))
SSttaaggee 22
((222200))
1166
0
2
11
0
3
2
0
((3399))
(12)
8
(28)
(2)
(4)
0
(1)
((2277))
(18)
10
2
(9)
(12)
(8)
(1)
11
((4499))
11
((226677))
SSttaaggee 11
((228822))
((2211))
(6)
(5)
(1)
(1)
(8)
(2)
0
2200
3
(1)
16
2
1
0
2
((88))
5
3
(11)
(10)
5
0
3
2299
2200
33
((226600))
MMooddeell cchhaannggeess44
Movements with profit or loss impact: Stages 1 and 2 ECL allowances and provisions increased on a net basis by USD 29m:
– Net movement from new and derecognized transactions includes USD 21m stage 1 expenses and USD 16m stage 2
releases: Stage 1 expenses are primarily driven by new loans secured by real estate. The residual effect is spread across
lending segments. Stage 2 releases are largely driven by redemption of corporate loans in the Investment Bank.
– Remeasurements with stage transfers include USD 20m releases in stage 1 and USD 39m expenses in stage 2. This
mainly includes the transfer of a few large corporate lending transactions in the Investment Bank from stage 1 to 2
(i.e., releases in stage 1 and related but generally higher expenses in stage 2), driven by rating downgrades and scenario
effects.
– Remeasurements without stage transfers include stage 1 expenses of USD 8m and stage 2 expenses of USD 27m.
These expenses of USD 35m relate to large and SME corporate lending (USD 28m), substantially due to scenario
effects, and to a single sovereign counterparty (USD 8m).
– Model changes: refer to Note 19b for more information.
Movements without profit or loss impact: Stage 3 allowances decreased by USD 99m almost entirely due to write-offs of
USD 95m.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
438
438
Note 19 Expected credit loss measurement (continued)
Development of ECL allowances and provisions
USD m
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002200
RReemmeeaassuurreemmeennttss wwiitthh ssttaaggee ttrraannssffeerrss22
NNeett mmoovveemmeenntt ffrroomm nneeww aanndd ddeerreeccooggnniizzeedd ttrraannssaaccttiioonnss11
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
RReemmeeaassuurreemmeennttss wwiitthhoouutt ssttaaggee ttrraannssffeerrss33
Stage 3
((882299))
00
0
0
0
0
0
0
0
((4499))
0
0
(8)
(36)
(4)
0
0
7744
(1)
3
17
53
2
0
(3)
00
MMoovveemmeennttss wwiitthh pprrooffiitt oorr lloossss iimmppaacctt55
2255
MMoovveemmeennttss wwiitthhoouutt pprrooffiitt oorr lloossss iimmppaacctt ((wwrriittee--ooffff,, FFXX aanndd ootthheerr))66
114411
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
((666622))
11 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. 22 Represents the remeasurement between 12-month and lifetime ECL due to stage transfers. 33 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.
44 Represents the change in the allowances and provisions related to changes in models and methodologies. 55 Includes ECL movements from new and derecognized transactions, remeasurement changes, model and
methodology changes. 66 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.
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Other
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
Total
((11,,446688))
((5599))
(7)
(7)
(13)
(8)
(24)
(21)
0
((4400))
(9)
(3)
2
(27)
(3)
2
0
220033
33
30
44
53
44
27
6
4455
114488
115544
((11,,116655))
Stage 1
((330066))
((7722))
(10)
(11)
(21)
(8)
(23)
(18)
(1)
88
4
1
(2)
5
0
(1)
1
5555
8
13
5
(1)
29
15
8
2299
1199
55
((228822))
Stage 2
((333333))
1133
3
4
7
0
(2)
(4)
1
00
(13)
(4)
12
4
2
3
(1)
7744
26
13
21
1
14
12
1
1166
110044
99
((222200))
MMooddeell cchhaannggeess44
As explained in Note 1a, the assessment of a significant increase in credit risk (SICR) considers a number of qualitative
and quantitative factors to determine whether a stage transfer between stage 1 and stage 2 is required, although the
primary assessment considers changes in PD based on rating analyses and economic outlook. Additionally, UBS AG takes
into consideration counterparties that have moved to a credit watch list and those with payments that are at least 30
days past due.
ECL stage 2 (“significant deterioration in credit risk”) allowances / provisions as of 31 December 2022 – classification by trigger
USD m
On- and off-balance sheet
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Loans to financial advisors
of which: Credit cards
of which: Other
SSttaaggee 22
(267)
(107)
(23)
(65)
(37)
(17)
(2)
(12)
(5)
of which:
PD layer
(196)
(83)
(18)
(51)
(22)
(17)
0
0
(5)
of which:
watch list
(21)
0
0
(13)
(7)
0
0
0
0
of which:
≥30 days
past due
(50)
(25)
(5)
0
(7)
0
(2)
(12)
0
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
439
439
Note 19 Expected credit loss measurement (continued)
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.
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 International Financial Reporting Standards (IFRS).
Maximum exposure to credit risk
USD bn
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt
aammoorrttiizzeedd ccoosstt oonn tthhee bbaallaannccee sshheeeett
Cash and balances at central banks
Loans and advances to banks4
Receivables from securities financing transactions
measured at amortized cost
Cash collateral receivables on derivative instruments5,6
Loans and advances to customers
Other financial assets measured at amortized cost
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee –– ddeebbtt
TToottaall mmaaxxiimmuumm eexxppoossuurree ttoo ccrreeddiitt rriisskk
rreefflleecctteedd oonn tthhee bbaallaannccee sshheeeett wwiitthhiinn tthhee ssccooppee ooff EECCLL
Guarantees7
Loan commitments7
Forward starting transactions, reverse repurchase
and securities borrowing agreements
Committed unconditionally revocable credit lines
TToottaall mmaaxxiimmuumm eexxppoossuurree ttoo ccrreeddiitt rriisskk nnoott
rreefflleecctteedd oonn tthhee bbaallaannccee sshheeeett wwiitthhiinn tthhee ssccooppee ooff EECCLL
CCoollllaatteerraall11,,22
CCrreeddiitt eennhhaanncceemmeennttss11
3311..1122..2222
MMaaxxiimmuumm
eexxppoossuurree ttoo
ccrreeddiitt rriisskk
CCaasshh
ccoollllaatteerraall
rreecceeiivveedd
CCoollllaatteerraalliizzeedd
bbyy eeqquuiittyy aanndd
ddeebbtt
iinnssttrruummeennttss
SSeeccuurreedd bbyy
rreeaall eessttaattee
OOtthheerr
ccoollllaatteerraall33
NNeettttiinngg
CCrreeddiitt
ddeerriivvaattiivvee
ccoonnttrraaccttss GGuuaarraanntteeeess
EExxppoossuurree ttoo
ccrreeddiitt rriisskk
aafftteerr ccoollllaatteerraall
aanndd ccrreeddiitt
eennhhaanncceemmeennttss
116699..44
1144..77
6677..88
3355..00
339900..00
5533..44
773300..44
22..22
773322..66
2222..11
3399..99
33..88
4433..66
110099..44
00..00
6644..55
111155..99
00..55
118811..00
118811..00
99..33
33..11
33..88
88..22
2244..44
119977..88
00..00
119977..99
119977..99
00..11
11..33
66..00
77..55
00..00
3366..11
00..11
3366..22
3366..22
11..22
00..22
00..22
11..66
2222..99
2222..99
00..00
2222..99
00..00
00..11
22..44
1199..66
11..33
2233..44
2233..44
22..00
66..55
66..22
1144..77
00..00
00..11
31.12.21
Collateral1,2
Credit enhancements1
00..11
33..00
33..00
33..00
11..88
11..00
00..55
33..33
116699..44
1144..66
00..99
1122..11
1177..66
5511..44
226666..11
22..22
226688..33
77..77
2277..88
00..00
2222..55
5588..00
Maximum
exposure to
credit risk
Cash
collateral
received
Collateralized
by equity and
debt
instruments
Secured by
real estate
Other
collateral3
Credit
derivative
contracts Guarantees
Exposure to
credit risk
after collateral
and credit
enhancements
0.1
0.1
0.0
6.9
75.0
68.0
Netting
192.8
15.1
192.8
15.4
38.2
0.2
3388..44
30.5
398.7
26.2
773388..66
USD bn
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt
aammoorrttiizzeedd ccoosstt oonn tthhee bbaallaannccee sshheeeett
Cash and balances at central banks
Loans and advances to banks4
Receivables from securities financing transactions
measured at amortized cost
Cash collateral receivables on derivative instruments5,6
Loans and advances to customers
Other financial assets measured at amortized cost
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee –– ddeebbtt
TToottaall mmaaxxiimmuumm eexxppoossuurree ttoo ccrreeddiitt rriisskk
rreefflleecctteedd oonn tthhee bbaallaannccee sshheeeett wwiitthhiinn tthhee ssccooppee ooff EECCLL
Guarantees7
Loan commitments7
Forward starting transactions, reverse repurchase
and securities borrowing agreements
Committed unconditionally revocable credit lines
TToottaall mmaaxxiimmuumm eexxppoossuurree ttoo ccrreeddiitt rriisskk nnoott
rreefflleecctteedd oonn tthhee bbaallaannccee sshheeeett wwiitthhiinn tthhee ssccooppee ooff EECCLL
5533..77
11 Of which: USD 1,372m for 31 December 2022 (31 December 2021: USD 1,443m) relates to total credit-impaired financial assets measured at amortized cost and USD 113m for 31 December 2022 (31 December 2021:
USD 130m) to total off-balance sheet financial instruments and credit lines for credit-impaired positions. 22 Collateral arrangements generally incorporate a range of collateral, including cash, equity and debt instruments,
real estate and other collateral. UBS AG applies a risk-based approach that generally prioritizes collateral according to its liquidity profile. 33 Includes but is not limited to life insurance contracts, inventory, mortgage
loans, gold and other commodities. 44 Loans and advances to 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.
55 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. 66 The amount shown in the “Netting” column represents the netting potential not recognized on the balance sheet. Refer to Note 21 for more information. 77 The amount shown in
the “Guarantees” column includes sub-participations.
12.1
16.4
24.7
226611..11
227700..00
8.1
23.1
119911..33
0.2
2.4
119966..99
6.5
4.0
774477..55
20.9
39.4
191.3
0.0
119911..33
128.7
0.1
119966..99
2288..44
2.5
7.3
3388..44
1.3
0.5
20.2
1.3
2288..44
44..00
2.3
1.7
1.4
42.3
0.0
22.5
1.4
9.0
110044..11
18.4
1133..77
1188..44
1188..44
2200..99
44..00
88..77
44..55
88..88
00..00
88..88
00..00
00..00
00..33
0.5
0.3
6.2
0.3
3.9
0.0
4.0
22..22
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
440
440
Note 19 Expected credit loss measurement (continued)
e) Financial assets subject to credit risk by rating category
The table below shows the credit quality and the maximum exposure to credit risk based on the UBS AG’s internal credit
rating system and year-end stage classification. Under IFRS 9, the credit risk rating reflects the 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 the UBS AG’s internal grading
system
Financial assets subject to credit risk by rating category
USD m
3311..1122..2222
CCrreeddiitt--
iimmppaaiirreedd
((ddeeffaauulltteedd))
TToottaall ggrroossss
ccaarrrryyiinngg
aammoouunntt
EECCLL
aalllloowwaanncceess
Rating category1
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
CCaasshh aanndd bbaallaanncceess aatt cceennttrraall bbaannkkss
of which: stage 1
of which: stage 2
LLooaannss aanndd aaddvvaanncceess ttoo bbaannkkss
of which: stage 1
of which: stage 2
of which: stage 3
RReecceeiivvaabblleess ffrroomm sseeccuurriittiieess ffiinnaanncciinngg ttrraannssaaccttiioonnss mmeeaassuurreedd aatt
aammoorrttiizzeedd ccoosstt
of which: stage 1
CCaasshh ccoollllaatteerraall rreecceeiivvaabblleess oonn ddeerriivvaattiivvee iinnssttrruummeennttss
of which: stage 1
LLooaannss aanndd aaddvvaanncceess ttoo ccuussttoommeerrss
of which: stage 1
of which: stage 2
of which: stage 3
OOtthheerr ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
of which: stage 1
of which: stage 2
of which: stage 3
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
OOnn--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt FFVVOOCCII –– ddeebbtt iinnssttrruummeennttss
TToottaall oonn--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
00––11
22––33
44––55
66––88
99––1133
887777
116688,,552255
877
168,525
0
0
886622
1111,,115500
862 11,150
0
0
0
0
00
0
0
883322
832
0
0
00
0
0
999966
996
0
0
5566
0
56
883377
836
1
0
77,,113388
88,,887700
1122,,997788
1155,,886600
221166,,882244
2277,,115588
1155,,220077
27,158 15,860 8,870 15,207
1100,,661133
44,,115577
10,613 12,978 7,138 4,157
7766,,114477
772211
721
114477
147
66,,449911
2200,,889911
6688,,444444
6,491 215,332 66,202 69,450 15,557
0 1,493 2,242 6,698 5,334
0
0
0
0
0
445500
66,,770088
444477
1166,,664499
2299,,001111
336
427 6,426
29,011 16,646
114
283
20
2
0
0
0
0
2233,,110022
110033,,221166
8855,,773311
227744,,333377
0
0
224422,,666600
116699,,445577
00
0 169,402
0
56
00
1144,,667766
0 14,675
1
0
0
0
22,,001122
00
6677,,881166
0 67,816
00
3355,,003344
0 35,034
339900,,881100
0 373,032
0 15,767
2,012
5533,,447755
0 52,846
419
0
210
210
773311,,226699
22,,222222
2,012
221100
11,,330077
224433,,996666
884400
227755,,117788
00
8855,,773311
9922
110033,,330088
00
2233,,110022
00
22,,222222
22,,223399
773333,,550088
((1122))
0
(12)
((66))
(5)
(1)
0
((22))
(2)
00
0
((778833))
(129)
(180)
(474)
((8866))
(17)
(6)
(63)
((889900))
00
((889900))
Off-balance sheet positions subject to expected credit loss by rating category
USD m
3311..1122..2222
NNeett ccaarrrryyiinngg
aammoouunntt
((mmaaxxiimmuumm
eexxppoossuurree ttoo
ccrreeddiitt rriisskk))
116699,,444455
169,402
44
1144,,667711
14,670
1
0
6677,,881144
67,814
3355,,003333
35,033
339900,,002277
372,903
15,587
1,538
5533,,338899
52,829
413
147
773300,,337799
22,,223399
773322,,661188
Rating category1
OOffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
GGuuaarraanntteeeess
of which: stage 1
of which: stage 2
of which: stage 3
IIrrrreevvooccaabbllee llooaann ccoommmmiittmmeennttss
of which: stage 1
of which: stage 2
of which: stage 3
FFoorrwwaarrdd ssttaarrttiinngg rreevveerrssee rreeppuurrcchhaassee aanndd sseeccuurriittiieess bboorrrroowwiinngg aaggrreeeemmeennttss
TToottaall ooffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
CCrreeddiitt lliinneess
CCoommmmiitttteedd uunnccoonnddiittiioonnaallllyy rreevvooccaabbllee ccrreeddiitt lliinneess
of which: stage 1
of which: stage 2
of which: stage 3
IIrrrreevvooccaabbllee ccoommmmiitttteedd pprroolloonnggaattiioonn ooff eexxiissttiinngg llooaannss
of which: stage 1
of which: stage 2
of which: stage 3
00––11
22––33
44––55
66––88
99––1133
TToottaall ooffff--
bbaallaannccee sshheeeett
eexxppoossuurree
((mmaaxxiimmuumm
eexxppoossuurree ttoo
ccrreeddiitt rriisskk)) EECCLL pprroovviissiioonnss
CCrreeddiitt--
iimmppaaiirreedd
((ddeeffaauulltteedd))
55,,996611
44,,777722
44
0
1144,,991122
77,,225522
33,,004499
7,252 5,917 3,812 2,229
821
0
1100,,009977
11,,002255
596
429
960
0
0
0
0
11,,777700
66,,110077
66,,998866
1,770 14,789 6,818 9,625 4,529
472 1,578
168
0
0
00
1111
77,,113322
1111,,776699
123
0
22
2200,,887744
0
11,,000077
1144,,115533
0
0
22,,778811
1111,,880033
110088
0
0
108
112244
0
0
124
00
223333
1111,,888855
1166,,448833
705
0
11,,993399
22,,228888
33,,773399
99,,224477
2,288 15,777 8,960 11,355 3,429
310
287
0
0
0
0
339922
77
11,,448899
380
7 1,938 1,411
11
78
1
0
0
0
0
0
44,,113311
1100,,773366
1188,,442211
22,,229955
531
0
886688
864
4
0
1122,,775533
3366
0
0
36
22
0
0
2
3377
2222,,116677
19,805
2,254
108
3399,,999966
37,531
2,341
124
33,,880011
6655,,996644
4433,,667777
41,809
1,833
36
44,,669966
4,600
94
2
4488,,337733
((4488))
(13)
(9)
(26)
((111111))
(59)
(52)
0
00
((115599))
((4400))
(32)
(8)
0
((22))
(2)
0
0
((4422))
TToottaall ccrreeddiitt lliinneess
11 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and control” section of this report for more information on rating categories.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
441
441
Note 19 Expected credit loss measurement (continued)
Financial assets subject to credit risk by rating category
USD m
31.12.21
Rating category1
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
CCaasshh aanndd bbaallaanncceess aatt cceennttrraall bbaannkkss
of which: stage 1
LLooaannss aanndd aaddvvaanncceess ttoo bbaannkkss
of which: stage 1
of which: stage 2
of which: stage 3
RReecceeiivvaabblleess ffrroomm sseeccuurriittiieess ffiinnaanncciinngg ttrraannssaaccttiioonnss
mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
of which: stage 1
CCaasshh ccoollllaatteerraall rreecceeiivvaabblleess oonn ddeerriivvaattiivvee iinnssttrruummeennttss
of which: stage 1
LLooaannss aanndd aaddvvaanncceess ttoo ccuussttoommeerrss
of which: stage 1
of which: stage 2
of which: stage 3
OOtthheerr ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
of which: stage 1
of which: stage 2
of which: stage 3
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
OOnn--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt FFVVOOCCII –– ddeebbtt iinnssttrruummeennttss
TToottaall oonn--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
0–1
2–3
4–5
6–8
9–13
Credit-
impaired
(defaulted)
Total gross
carrying
amount
ECL
allowances
11,,880022
119911,,001155
1,802
191,015
440077
1122,,555522
407 12,552
0
0
0
0
00
0
11,,112233
1,098
24
0
00
0
779955
795
0
0
00
0
449900
488
2
0
00
119922,,881177
0 192,817
11
1155,,336688
0 15,340
27
0
1
1
1111,,226677
1100,,448833
3344,,338866
1177,,444400
34,386 11,267 10,483 17,440
33,,664477
3,647
7700,,339944
11,,443399
1,439
4477
55,,887788
77,,446666
1133,,447766
47
5,878
7,466 13,476
55,,229955
2211,,442233
6677,,662200
223322,,666633
5,295 231,583 65,083 63,298 16,362
5,061
2,536
0
0
339944
332211
317
307
77
13
0
0
2233,,779933
8855,,442244
1,080
0
66,,770055
6,696
10
0
227788,,446655
7,096
0
66,,009977
5,887
209
0
9988,,337722
0
0
1122,,556644
12,564
0
0
225511,,113333
22,,114488
00
7755,,001144
0 75,014
00
3300,,551144
0 30,514
339999,,554433
0 381,622
0 15,773
2,148
2266,,334466
0 25,772
309
0
264
264
773399,,660011
22,,441144
2,148
226644
33,,999966
225555,,113300
44,,777711
228833,,223366
00
8855,,442244
7777
9988,,444499
00
2233,,779933
00
22,,441144
88,,884444
774488,,444455
00
0
((88))
(7)
(1)
0
((22))
(2)
00
0
((885500))
(126)
(152)
(572)
((110099))
(27)
(7)
(76)
((996699))
00
((996699))
Off-balance sheet positions subject to expected credit loss by rating category
USD m
31.12.21
Net carrying
amount
(maximum
exposure to
credit risk)
119922,,881177
192,817
1155,,336600
15,333
26
1
7755,,001122
75,012
3300,,551144
30,514
339988,,669933
381,496
15,620
1,577
2266,,223366
25,746
302
189
773388,,663322
88,,884444
774477,,447777
Rating category1
OOffff--bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
GGuuaarraanntteeeess
of which: stage 1
of which: stage 2
of which: stage 3
IIrrrreevvooccaabbllee llooaann ccoommmmiittmmeennttss
of which: stage 1
of which: stage 2
of which: stage 3
FFoorrwwaarrdd ssttaarrttiinngg rreevveerrssee rreeppuurrcchhaassee aanndd sseeccuurriittiieess bboorrrroowwiinngg aaggrreeeemmeennttss
TToottaall ooffff bbaallaannccee sshheeeett ffiinnaanncciiaall iinnssttrruummeennttss
CCrreeddiitt lliinneess
CCoommmmiitttteedd uunnccoonnddiittiioonnaallllyy rreevvooccaabbllee ccrreeddiitt lliinneess
of which: stage 1
of which: stage 2
of which: stage 3
IIrrrreevvooccaabbllee ccoommmmiitttteedd pprroolloonnggaattiioonn ooff eexxiissttiinngg llooaannss
of which: stage 1
of which: stage 2
of which: stage 3
0–1
2–3
4–5
6–8
9–13
Total off-
balance sheet
exposure
(maximum
exposure to
credit risk) ECL provisions
Credit-
impaired
(defaulted)
77,,006644
44,,553355
27
0
1144,,118833
44,,445577
33,,775577
4,457 7,037 4,375 3,075
682
0
88,,229988
11,,000099
752
258
160
0
0
0
0
22,,779977
66,,550022
77,,665511
2,797 13,917 7,416 7,127 5,840
663
0
00
77,,551122
235 1,171
0
11,,338899
1133,,444444
266
0
00
2211,,224477
0
0
00
77,,225544
0
5555
1122,,224411
115500
0
0
150
4466
0
0
46
00
119966
1100,,113300
1166,,881111
344
0
22,,443388
22,,663366
44,,110077
88,,662277
2,636 16,467 8,304 8,724 3,671
436
0
660022
568
34
0
44,,770099
323 1,406
0
0
0
1177
11,,008844
17 2,438 1,422 1,082
1
0
0
0
1111,,221144
22,,665533
0
0
1199,,224499
0
0
1100,,004499
0
11,,442222
6633
0
0
63
4488
0
0
48
111111
2200,,997722
19,695
1,127
150
3399,,447788
37,097
2,335
46
11,,444444
6611,,889944
4422,,337733
39,802
2,508
63
55,,661111
5,527
36
48
4477,,998844
((4411))
(18)
(8)
(15)
((111144))
(72)
(42)
0
00
((115555))
((3388))
(28)
(10)
0
((33))
(3)
0
0
((4411))
TToottaall ccrreeddiitt lliinneess
11 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and control” section of this report for more information on rating categories.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
442
442
Note 19 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 9.
Sustainability and climate risk
Sustainability and climate risk (SCR) may negatively affect clients or portfolios due to direct or indirect transition costs, or
exposure to 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 indicators that are more influenced by climate change (e.g., energy prices) are factored into the current PD
models where they have demonstrated statistical relevance, UBS AG currently does not use a specific SCR scenario in
addition to the 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
assessment given the paucity of data.
Instead, UBS AG focuses on the process of vetting clients and business transactions and takes individual actions, where
transition risk is deemed to be a significant driver of a counterparty’s credit worthiness. This review process may lead to
a downward revision of the counterparty’s credit rating, or the adoption of risk mitigating actions, and hence affect the
individual contribution to ECLs.
At the portfolio level, UBS AG has started to use stress loss assumptions to assess the extent to which SCR may affect
the quality of the loans extended to small and medium-sized entities and large corporate clients. Initial tests were based
on a set of assumptions presented by external parties (such as the Bank of England). Such analysis undertaken during
2022 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. Based on current information on regulatory
developments, this would also apply to the portfolio of private clients’ mortgages and real estate financing, given the
long lead times for investments in upgrading the housing stock.
As a result of the aforementioned factors, it was assessed that the magnitude of any impact of SCR on the weighted-
average ECL would not be material as of 31 December 2022. Therefore, no specific post-model adjustment was made in
this regard.
› Refer to “Sustainability and climate risk” in the “Risk management and control” section of this report
› Refer to “Our focus on sustainability and climate” in the “Our strategy, business model and environment” section of this report
› Refer to “UBS AG consolidated supplemental disclosures required under SEC regulations” for the maturity profile of UBS 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 2022 | Consolidated financial statements | UBS AG consolidated financial statements
443
443
Note 19 Expected credit loss measurement (continued)
Potential effect on stage 1 and stage 2 positions from changing key parameters as of 31 December 2022
USD m
CChhaannggee iinn kkeeyy ppaarraammeetteerrss
FFiixxeedd iinnccoommee:: GGoovveerrnnmmeenntt bboonnddss ((aabbssoolluuttee cchhaannggee))
–0.50%
+0.50%
+1.00%
UUnneemmppllooyymmeenntt rraattee ((aabbssoolluuttee cchhaannggee))
–1.00%
–0.50%
+0.50%
+1.00%
RReeaall GGDDPP ggrroowwtthh ((rreellaattiivvee cchhaannggee))
–2.00%
–1.00%
+1.00%
+2.00%
HHoouussee PPrriiccee IInnddeexx ((rreellaattiivvee cchhaannggee))
–5.00%
–2.50%
+2.50%
+5.00%
EEqquuiittyy ((SS&&PP550000,, EEuurrooSSttooxxxx,, SSMMII)) ((rreellaattiivvee cchhaannggee))
–10.00%
–5.00%
+5.00%
+10.00%
110000%%
SSttaaggffllaattiioonnaarryy
110000%% BBaasseelliinnee
ggeeooppoolliittiiccaall ccrriissiiss 110000%% GGlloobbaall ccrriissiiss WWeeiigghhtteedd aavveerraaggee
(3)
4
8
(4)
(2)
3
5
7
3
(3)
(5)
15
7
(4)
(7)
4
2
(2)
(4)
(106)
124
264
(138)
(78)
84
179
13
7
(7)
(13)
196
92
(83)
(157)
7
3
(4)
(8)
(2)
2
10
(24)
(13)
16
32
18
9
(9)
(18)
88
40
(35)
(65)
6
3
(3)
(7)
(14)
17
37
(23)
(12)
15
31
11
5
(5)
(10)
56
25
(19)
(36)
5
2
(2)
(5)
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 2022
Actual ECL
allowances and
provisions,
including staging
(as per Note 9)
Pro forma ECL allowances and provisions, including staging
and assuming application of 100% scenario weighting
Pro forma ECL
allowances and
provisions,
assuming all
positions being
subject to lifetime
ECL
WWeeiigghhtteedd aavveerraaggee
110000%% BBaasseelliinnee
100% Asset price
inflation
100%
Stagflationary
geopolitical crisis 100% Global crisis WWeeiigghhtteedd aavveerraaggee
((113366))
((4433))
((113366))
((8866))
((112255))
((552266))
((2255))
((2266))
((9977))
((6677))
((111144))
((332299))
(13)
(22)
(84)
(66)
(111)
((229955))
(523)
(176)
(199)
(162)
(145)
((11,,220044))
(184)
(30)
(174)
(97)
(153)
((663388))
((447733))
((112266))
((223355))
((115533))
((228811))
((11,,226677))
Scenarios
USD m, except where indicated
SSeeggmmeennttaattiioonn
Private clients with mortgages
Real estate financing
Large corporate clients
SME clients
Other segments
TToottaall
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 329m (31 December
2021: USD 387m) instead of USD 526m (31 December 2021: USD 503m) if ECLs had been determined solely on the
baseline scenario. The weighted-average ECL therefore amounted to 160% (31 December 2021: 130%) of the baseline
value. The effects of weighting each of the four scenarios 100% are shown in the table above.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
444
444
Note 19 Expected credit loss measurement (continued)
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 1,267m, 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 526m as of 31 December 2022.
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: a) 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; b) 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.
Note 20 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 International Financial Reporting Standards (IFRS). The fair value hierarchy
is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. In certain
cases, the inputs used to measure fair value may fall within different levels of the fair value hierarchy. For disclosure
purposes, the level in the hierarchy within which an instrument is classified in its entirety is based on the lowest level
input that is significant to the position’s fair value measurement:
– Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities;
– Level 2 – valuation techniques for which all significant inputs are, or are based on, observable market data; or
– Level 3 – valuation techniques for which significant inputs are not based on observable market data.
Fair values are determined using quoted prices in active markets for identical assets or liabilities, where available. Where
the market for a financial instrument or non-financial asset or liability is not active, fair value is established using a
valuation technique, including pricing models. Valuation adjustments may be made to allow for additional factors,
including model, liquidity, credit and funding risks, which are not explicitly captured within the valuation technique, but
which would nevertheless be considered by market participants when establishing a price. The limitations inherent in a
particular valuation technique are considered in the determination of the classification of an asset or liability within the
fair value hierarchy. Generally, the unit of account for a financial instrument is the individual instrument, and UBS applies
valuation adjustments at an individual instrument level, consistent with that unit of account. However, if certain
conditions are met, UBS may estimate the fair value of a portfolio of financial assets and liabilities with substantially
similar and offsetting risk exposures on the basis of the net open risks.
› Refer to Note 20d for more information
b) Valuation governance
UBS’s fair value measurement and model governance framework includes numerous controls and other procedural
safeguards that are intended to maximize the quality of fair value measurements reported in the financial statements.
New products and valuation techniques must be reviewed and approved by key stakeholders from the risk and finance
control functions. Responsibility for the ongoing measurement of financial and non-financial instruments at fair value is
with the business divisions.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
445
445
Note 20 Fair value measurement (continued)
Fair value estimates are validated by the risk and finance control functions, which are independent of the business
divisions. Independent price verification is performed by Finance through benchmarking the business divisions’ fair value
estimates with observable market prices and other independent sources. A governance framework and associated
controls are in place in order to monitor the quality of third-party pricing sources where used. For instruments where
valuation models are used to determine fair value, independent valuation and model control groups within Finance and
Risk Control evaluate UBS’s models on a regular basis, including valuation and model input parameters, as well as pricing.
As a result of the valuation controls employed, valuation adjustments may be made to the business divisions’ estimates
of fair value to align with independent market data and the relevant accounting standard.
› Refer to Note 20d for more information
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 2022, assets and liabilities that were transferred from Level 2 to Level 1, or from Level 1 to Level 2, and were held
for the entire reporting period were not material.
Determination of fair values from quoted market prices or valuation techniques1
USD m
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee oonn aa rreeccuurrrriinngg bbaassiiss
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: Auction rate securities
of which: Investment fund units
of which: Equity instruments
3311..1122..2222
31.12.21
LLeevveell 11
LLeevveell 22
LLeevveell 33
TToottaall
Level 1
Level 2
Level 3
Total
9966,,226633
8833,,009955
55,,449966
66,,667733
997766
00
2222
1100,,228844
778899
995500
559966
66,,550099
11,,117799
226611
11,,448888
110088,,003344
113,722
15,012
112266 8844,,001100 97,983 1,090
7,135 1,351
1188
7,843 1,364
6611
554411
708 7,791
662288
111144
2,299 131,033
149 99,222
10 8,496
21 9,229
556 9,055
0 3,099 1,443 4,542
489
53
66,,446644
77,,333300
88,,002266
11,,880077
339977
317
120
776699
114477,,887766
557755 8844,,888822
00 3399,,334455
11 2211,,554422
00
771199
00
11,,333344
11,,446644
115500,,110099
22 8855,,445599
446600 3399,,880055
665533 2222,,119955
11,,003388
331188
11,,336655
3300
522 116,482
255 53,046
0 32,747
0 27,861
0 1,179
0 1,590
1,140 118,145
7 53,307
494 33,241
384 28,245
236 1,414
16 1,606
00
1177,,557766
00
1177,,557766
0
21,839
0
21,839
2266,,557722
1133,,007711
2299,,111100
11
3355 1144,,110011
33,,663388
33,,660022
77,,559900
00
117788
00
1133,,110033
00
00
00
330077
5577
33,,772255
5599,,440088
27,278
00 1133,,007722 21,110
223300 1144,,336666
00 1166,,774411
44,,333377
77,,770044
11,,332266
667755
884499
773366
111144
11,,332266
119900
779922
4,180
28,185
187
123 13,937
5,624 3,236
0 4,982
0 5,704
0
338
83
59,642
6 21,303
306 14,366
0 8,860
892 5,874
100 5,804
0 1,585 1,585
591
117
765
681
137
2
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee oonn aa rreeccuurrrriinngg bbaassiiss
Financial assets measured at fair value through other comprehensive income
of which: Asset-backed securities2
of which: Government bills / bonds2
of which: Corporate and municipal bonds
5577
00
00
5577
22,,118822
00
2266
22,,115566
00
00
00
00
22,,223399
00
2266
22,,221133
2,704
6,140
0 4,849
27
45 1,265
2,658
NNoonn--ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee oonn aa rreeccuurrrriinngg bbaassiiss
Precious metals and other physical commodities
NNoonn--ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee oonn aa nnoonn--rreeccuurrrriinngg bbaassiiss
Other non-financial assets3
44,,447711
00
00
00
00
44,,447711
5,258
2211
2211
0
0
0
0
8,844
0 4,849
0 2,686
0 1,310
0
5,258
26
26
TToottaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
112288,,113322
220077,,002288
66,,669988
334411,,885588
149,484 187,658
7,645 344,787
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
446
446
Note 20 Fair value measurement (continued)
Determination of fair values from quoted market prices or valuation techniques (continued)1
USD m
FFiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee oonn aa rreeccuurrrriinngg bbaassiiss
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
FFiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee oonn aa rreeccuurrrriinngg bbaassiiss
Brokerage payables designated at fair value
Debt issued designated at fair value
3311..1122..2222
31.12.21
LLeevveell 11
LLeevveell 22
LLeevveell 33
TToottaall
Level 1
Level 2
Level 3
Total
2233,,557788
1166,,552211
3366
55,,888800
11,,114411
55,,882233
335522
44,,664433
770066
8844
115522,,558822
664400
558877 8877,,889977
00 3377,,442299
00 2244,,996633
00
992200
00
11,,330099
2299,,551155
111144
25,413
7788 1166,,995511 18,328
2277
11
33
44,,770077
66,,558877
11,,222299
6,170
513
30 4,219
826
555
5,883
1,172
105
31,688
83 18,924
17 4,266
0 6,709
6 1,733
11,,668844
115544,,990066
2244 8888,,550088
111166 3377,,554455
11,,118844 2266,,114488
11,,119999
11,,336611
227799
5522
2,242 121,309
509 118,558
21 54,078
258 53,800
0 28,398
278 28,675
0 33,438 1,511 34,949
341 1,753
0 1,412
63 1,566
0 1,503
00
00
4455,,008855
00
4455,,008855
6622,,660033
99,,224400
7711,,884422
0
0
44,045
0
44,045
59,606
11,854
71,460
Other financial liabilities designated at fair value
of which: Financial liabilities related to unit-linked investment contracts
of which: Securities financing transactions
of which: Over-the-counter debt instruments and other
00
3300,,005555
00 1133,,222211
00 1155,,333333
00
999933
11,,997788
3322,,003333
00 1133,,222211
00 1155,,333333
11,,668844
669911
0
29,258
0 21,466
0 6,375
0 1,417
3,156
32,414
0 21,466
2 6,377
814 2,231
TToottaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee
2244,,221199
11 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.
22 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 1 for more information. 33 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.
17,357 300,916
25,922 257,637
229966,,114488
333333,,338822
1133,,001155
Valuation techniques
UBS uses widely recognized valuation techniques for determining the fair value of financial and non-financial instruments
that are not actively traded and quoted. The most frequently applied valuation techniques include discounted value of
expected cash flows, relative value and option pricing methodologies.
Discounted value of expected cash flows is a valuation technique that measures fair value using estimated expected
future cash flows from assets or liabilities and then discounts these cash flows using a discount rate or discount margin
that reflects the credit and / or funding spreads required by the market for instruments with similar risk and liquidity
profiles to produce a present value. When using such valuation techniques, expected future cash flows are estimated
using an observed or implied market price for the future cash flows or by using industry-standard cash flow projection
models. The discount factors within the calculation are generated using industry-standard yield curve modeling
techniques and models.
Relative value models measure fair value based on the market prices of equivalent or comparable assets or liabilities, making
adjustments for differences between the characteristics of the observed instrument and the instrument being valued.
Option pricing models incorporate assumptions regarding the behavior of future price movements of an underlying
referenced asset or assets to generate a probability-weighted future expected payoff for the option. The resulting
probability-weighted expected payoff is then discounted using discount factors generated from industry-standard yield
curve modeling techniques and models. The option pricing model may be implemented using a closed-form analytical
formula or other mathematical techniques (e.g., binomial tree or Monte Carlo simulation).
Where available, valuation techniques use market-observable assumptions and inputs. If such data is not available, inputs
may be derived by reference to similar assets in active markets, from recent prices for comparable transactions or from
other observable market data. In such cases, the inputs selected are based on historical experience and practice for similar
or analogous instruments, derivation of input levels based on similar products with observable price levels, and knowledge
of current market conditions and valuation approaches.
For more complex instruments, fair values may be estimated using a combination of observed transaction prices,
consensus pricing services and relevant quotes. Consideration is given to the nature of the quotes (e.g., indicative or firm)
and the relationship of recently evidenced market activity to the prices provided by consensus pricing services. UBS also
uses internally developed models, which are typically based on valuation methods and techniques recognized as standard
within the industry. Assumptions and inputs used in valuation techniques include benchmark interest rate curves, credit
and funding spreads used in estimating discount rates, bond and equity prices, equity index prices, foreign exchange
rates, levels of market volatility and correlation. Refer to Note 20e for more information. The discount curves used by
UBS incorporate the funding and credit characteristics of the instruments to which they are applied.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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Note 20 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 and Level 3.
Valuation
– Generally valued using prices obtained directly from the market for the security, or similar securities,
Corporate and
municipal bonds
Traded loans and
loans measured at
fair value
Investment fund
units
Asset-backed
securities (ABS)
Auction rate
securities (ARS)
Fair value
hierarchy
Valuation
Fair value
hierarchy
Valuation
Fair value
hierarchy
Valuation
Fair value
hierarchy
Valuation
Fair value
hierarchy
Equity instruments
Valuation
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.
– 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.
– 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. Recently originated commercial real estate loans are measured using a securitization
approach based on rating agency guidelines.
– 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.
– 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).
– 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 are classified as Level 3.
– 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.
– Residential mortgage-backed securities, commercial mortgage-backed securities and other ABS are
generally classified as Level 2. However, if significant inputs are unobservable, or if market or fundamental
data is not available, they are classified as Level 3.
– 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.
– Granular and liquid pricing information is generally not available for ARS. As a result, these securities are
classified as Level 3.
– 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.
Financial assets for
unit-linked
investment
contracts
Securities
financing
transactions
Brokerage
receivables and
payables
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.
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.
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.
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 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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Note 20 Fair value measurement (continued)
Product
Valuation and classification in the fair value hierarchy
Financial liabilities
related to unit-
linked investment
contracts
Precious metals and
other physical
commodities
Debt issued
designated at fair
value
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.
Valuation
– Physical assets are valued using the spot rate observed in the relevant market.
Fair value
hierarchy
Valuation
Fair value
hierarchy
– Generally traded in active markets with prices that can be obtained directly from these markets, resulting
in classification as Level 1.
– 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.
– The observability is closely aligned with the equivalent derivatives business and the underlying risk.
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 20d, 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 (FVAs), as applicable, to reflect an estimation of the effect of counterparty
credit risk, UBS’s own credit risk, and funding costs and benefits.
› Refer to Note 10 for more information about derivative instruments
Derivative product
Valuation and classification in the fair value hierarchy
Interest rate
contracts
Valuation
Fair value
hierarchy
Credit derivative
contracts
Valuation
Fair value
hierarchy
– 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.
– 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 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.
– 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 2022 | Consolidated financial statements | UBS AG consolidated financial statements
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Note 20 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
Fair value
hierarchy
Equity / index
contracts
Valuation
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 than
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.
– 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.
– OTC FX option contracts classified as Level 3 include multi-dimensional FX options and long-dated FX exotic
option contracts where there is no active market from which to derive volatility or correlation inputs.
– 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.
Commodity
contracts
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.
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.
d) Valuation adjustments and other items
The output of a valuation technique is always an estimate of a fair value that cannot be measured with complete certainty.
As a result, valuations are adjusted where appropriate and when such factors would be considered by market participants
in estimating fair value, to reflect close-out costs, credit exposure, model-driven valuation uncertainty, funding costs and
benefits, trading restrictions and other factors.
Deferred day-1 profit or loss reserves
For new transactions where the valuation technique used to measure fair value requires significant inputs that are not
based on observable market data, the financial instrument is initially recognized at the transaction price. The transaction
price may differ from the fair value obtained using a valuation technique, where any such difference is deferred and not
initially recognized in the income statement.
Deferred day-1 profit or loss is generally released into Other net income from financial instruments measured at fair value
through profit or loss when pricing of equivalent products or the underlying parameters becomes observable or when
the transaction is closed out.
The table below summarizes the changes in deferred day-1 profit or loss reserves during the respective period.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
450
450
Note 20 Fair value measurement (continued)
Deferred day-1 profit or loss reserves
USD m
RReesseerrvvee bbaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Profit / (loss) deferred on new transactions
(Profit) / loss recognized in the income statement
Foreign currency translation
RReesseerrvvee bbaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr
22002222
441188
229999
((229955))
00
442222
2021
269
459
(308)
(2)
418
2020
146
362
(238)
0
269
Own credit
Own credit risk is reflected in the valuation of UBS’s fair value option liabilities where this component is considered
relevant for valuation purposes by UBS’s counterparties and other market participants.
Changes in the fair value of financial liabilities designated at fair value through profit or loss related to own credit are
recognized in Other comprehensive income directly within Retained earnings, with no reclassification to the income
statement in future periods. This presentation does not create or increase an accounting mismatch in the income
statement, as UBS does not hedge changes in own credit.
Own credit is estimated using own credit adjustment (OCA) curves, which incorporate observable market data, including
market-observed secondary prices for UBS’s debt and debt curves of peers. In the table below, the change in unrealized
own credit consists of changes in fair value that are attributable to the change in UBS’s credit spreads, as well as the
effect of changes in fair values attributable to factors other than credit spreads, such as redemptions, effects from time
decay and changes in interest and other market rates. Realized own credit is recognized when an instrument with an
associated unrealized OCA is repurchased prior to the contractual maturity date. Life-to-date amounts reflect the
cumulative unrealized change since initial recognition.
› Refer to Note 15 for more information about debt issued designated at fair value
Own credit adjustments on financial liabilities designated at fair value
USD m
RReeccooggnniizzeedd dduurriinngg tthhee ppeerriioodd::
Realized gain / (loss)
Unrealized gain / (loss)
TToottaall ggaaiinn // ((lloossss)),, bbeeffoorree ttaaxx
USD m
RReeccooggnniizzeedd oonn tthhee bbaallaannccee sshheeeett aass ooff tthhee eenndd ooff tthhee ppeerriioodd::
Unrealized life-to-date gain / (loss)
of which: debt issued designated at fair value
of which: other financial liabilities designated at fair value
Included in Other comprehensive income
For the year ended
31.12.21
3311..1122..2222
31.12.20
11
886666
886677
(14)
60
46
2
(295)
(293)
3311..1122..2222
31.12.21
31.12.20
555566
228899
226666
(315)
(144)
(172)
(381)
(233)
(148)
Credit valuation adjustments
In order to measure the fair value of OTC derivative instruments, including funded derivative instruments that are
classified as Financial assets at fair value not held for trading, CVAs are needed to reflect the credit risk of the counterparty
inherent in these instruments. This amount represents the estimated fair value of protection required to hedge the
counterparty credit risk of such instruments. A CVA is determined for each counterparty, considering all exposures with
that counterparty, and is dependent on the expected future value of exposures, default probabilities and recovery rates,
applicable collateral or netting arrangements, break clauses, funding spreads, and other contractual factors.
Funding valuation adjustments
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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
451
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Note 20 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’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 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 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.
Balance sheet valuation adjustments on financial instruments
USD m
CCrreeddiitt vvaalluuaattiioonn aaddjjuussttmmeennttss11
FFuunnddiinngg vvaalluuaattiioonn aaddjjuussttmmeennttss
DDeebbiitt vvaalluuaattiioonn aaddjjuussttmmeennttss
OOtthheerr vvaalluuaattiioonn aaddjjuussttmmeennttss
of which: liquidity
of which: model uncertainty
11 Amounts do not include reserves against defaulted counterparties.
Other items
As of
3311..1122..2222
((3333))
((5500))
44
((883399))
((331111))
((552299))
31.12.21
(44)
(49)
2
(913)
(341)
(571)
In the first half of 2021, UBS AG incurred a loss of USD 861m as a result of closing out a significant portfolio of swaps
with a US-based client of its prime brokerage business and the unwinding of related hedges, following the client’s default.
This loss is presented within Other net income from financial instruments measured at fair value through profit or loss.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
452
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Note 20 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 2022 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’s
estimates and assumptions, but rather the different underlying characteristics of the relevant assets and liabilities held by
UBS. 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
FFaaiirr vvaalluuee
AAsssseettss
LLiiaabbiilliittiieess
VVaalluuaattiioonn
tteecchhnniiqquuee((ss))
SSiiggnniiffiiccaanntt
uunnoobbsseerrvvaabbllee
iinnppuutt((ss))11
RRaannggee ooff iinnppuuttss
3311..1122..2222
31.12.21
llooww
hhiigghh
wweeiigghhtteedd
aavveerraaggee22
low high
weighted
average2
unit1
3311..1122..2222 31.12.21
USD bn
FFiinnaanncciiaall aasssseettss aanndd lliiaabbiilliittiieess aatt ffaaiirr vvaalluuee hheelldd ffoorr ttrraaddiinngg aanndd FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee nnoott hheelldd ffoorr ttrraaddiinngg
Corporate and municipal
bonds
3311..1122..2222 31.12.21
00..88
00..00
0.0
0.9
Relative value to
market comparable
Discounted expected
cash flows
Relative value to
market comparable
Discounted expected
cash flows
Market comparable
and securitization
model
Discounted expected
cash flows
Relative value to
market comparable
Relative value to
market comparable
Traded loans, loans
measured at fair value,
loan commitments and
guarantees
11..77
2.8
00..00
0.0
Auction rate securities
11..33
1.6
Investment fund units3
00..33
0.1
00..00
0.0
00..99
0.8
00..11
0.1
Equity instruments3
DDeebbtt iissssuueedd ddeessiiggnnaatteedd aatt
ffaaiirr vvaalluuee44
OOtthheerr ffiinnaanncciiaall lliiaabbiilliittiieess
ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss
99..22
11.9
22..00
3.2
Discounted expected
cash flows
Interest rate
00..55
0.5
00..11
0.3 Option model
Credit
00..33
0.2
00..33
0.3
Discounted expected
cash flows
Equity / index
00..77
0.4
11..22
1.5 Option model
Bond price equivalent
1144
111122
8855
16
143
98
Discount margin
441122
441122
434
434
Loan price equivalent
3300
110000
9977
0
101
99
Credit spread
220000
220000
220000
175
800
436
Credit spread
114455 11,,335500
332222
28
1,544
241
Credit spread
111155
119966
114444
115
197
153
Net asset value
Price
Funding spread
2233
117755
24
175
Volatility of interest
rates
7755
114433
65
81
Credit spreads
Bond price equivalent
Equity dividend yields
Volatility of equity
stocks, equity and
other indices
Equity-to-FX
correlation
Equity-to-equity
correlation
99
33
00
556655
227777
2200
1
2
0
583
136
11
44
112200
4
98
((2299))
8844
(29)
76
points
basis
points
points
basis
points
basis
points
basis
points
basis
points
basis
points
basis
points
points
%
%
%
%
11 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). 22 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. 33 The range of inputs is not disclosed, as there is a dispersion of values given the diverse nature of the
investments. 44 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, rates-linked and credit-
linked notes, all of which have embedded derivative parameters that are considered to be unobservable. The equivalent derivative instrument parameters are presented in the respective derivative financial instruments
lines in this table.
(25)
((2255))
100
110000
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
453
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Note 20 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
Bond price
equivalent
Loan price
equivalent
Credit spread
Discount margin
Funding spread
Volatility
Description
– 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.
– Where market prices are not available for a traded loan, 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.
– Valuation models for many credit derivatives 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.
– 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.
– Structured financing transactions are valued using synthetic funding curves that best represent the assets that are pledged as
collateral for the transactions. They are not representative of where UBS can fund itself on an unsecured basis, but provide
an estimate of where UBS can source and deploy secured funding with counterparties for a given type of collateral. The
funding spreads are expressed in terms of basis points, and if funding spreads widen, this increases the effect of discounting.
– A small proportion of structured debt instruments and non-structured fixed-rate bonds within financial liabilities designated
at fair value had an exposure to funding spreads that was longer in duration than the actively traded market.
– Volatility 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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
454
454
Note 20 Fair value measurement (continued)
Input
Correlation
Equity dividend
yields
Description
– Correlation measures the interrelationship between the movements of two variables. It is expressed as a percentage between
–100% and +100%, where +100% represents perfectly correlated variables (meaning a movement of one variable is
associated with a movement of the other variable in the same direction) and –100% implies that the variables are inversely
correlated (meaning a movement of one variable is associated with a movement of the other variable in the opposite
direction). The effect of correlation on the measurement of fair value depends on the specific terms of the instruments being
valued, reflecting the range of different payoff features within such instruments.
– Equity-to-FX correlation is important for equity options based on a currency other than the currency of the underlying stock.
Equity-to-equity correlation is particularly important for complex options that incorporate, in some manner, different equities
in the projected payoff.
– 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 believes
that the diversification benefit is not significant to this analysis.
Sensitivity of fair value measurements to changes in unobservable input assumptions1
USD m
Traded loans, loans measured at fair value, loan commitments and guarantees
Securities financing transactions
Auction rate securities
Asset-backed securities
Equity instruments
Interest rate derivatives, net
Credit derivatives, net
Foreign exchange derivatives, net
Equity / index derivatives, net
Other
TToottaall
3311..1122..2222
31.12.21
FFaavvoorraabbllee
cchhaannggeess
1199
UUnnffaavvoorraabbllee
cchhaannggeess
((1122))
Favorable
changes
19
Unfavorable
changes
(13)
3333
446622
2277
118833
118822
33
1100
336611
339922
773388
((3377))
((4466))22
((2277))
((116611))
((1122))22
((44))
((55))
((333300))
((6622))22
((669966))
41
66
20
173
29
5
19
368
50
790
(53)
(66)
(20)
(146)
(19)
(8)
(11)
(335)
(73)
(744)
11 Sensitivity of issued and over-the-counter debt instruments is reported with the equivalent derivative or securities financing instrument. 22 Includes refinements applied in estimating valuation uncertainty across
various parameters.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
455
455
Note 20 Fair value measurement (continued)
g) Level 3 instruments: movements during the period
The table below presents additional information about material movements in Level 3 assets and liabilities measured at
fair value on a recurring basis, excluding any related hedging activity.
Assets and liabilities transferred into or out of Level 3 are presented as if those assets or liabilities had been transferred
at the beginning of the year.
Movements of Level 3 instruments
Net gains /
losses
included in
compre-
hensive
income1
BBaallaannccee aatt
tthhee bbeeggiinnnniinngg
ooff tthhee ppeerriioodd
USD bn
FFoorr tthhee ttwweellvvee mmoonntthhss eennddeedd 3311 DDeecceemmbbeerr 2200222222
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
BBaallaannccee aatt
tthhee eenndd
ooff tthhee ppeerriioodd
FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee hheelldd ffoorr
ttrraaddiinngg
of which: Investment fund units
of which: Corporate and municipal
bonds
of which: Loans
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss ––
aasssseettss
of which: Interest rate
of which: Equity / index
of which: Credit
FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee nnoott hheelldd
ffoorr ttrraaddiinngg
of which: Loans
of which: Auction rate securities
of which: Equity instruments
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss ––
lliiaabbiilliittiieess
of which: Interest rate
of which: Equity / index
of which: Credit
22..33
0.0
0.6
1.4
11..11
0.5
0.4
0.2
44..22
0.9
1.6
0.7
22..22
0.3
1.5
0.3
DDeebbtt iissssuueedd ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
1111..99
((00..33))
(0.0)
(0.0)
(0.1)
00..66
0.3
0.2
0.1
00..11
(0.0)
0.1
0.0
((00..88))
(0.3)
(0.4)
(0.1)
((11..33))
((00..33))
(0.0)
(0.0)
(0.1)
00..33
0.3
0.1
(0.1)
00..11
(0.0)
0.0
0.0
((00..44))
(0.0)
(0.3)
(0.0)
((00..99))
00..33
0.0
0.3
0.0
00..00
0.0
0.0
0.0
00..77
0.4
0.0
0.1
00..00
0.0
0.0
0.0
00..00
((11..88))
(0.0)
(0.6)
(1.1)
00..00
0.0
0.0
0.0
((11..22))
(0.4)
(0.3)
(0.1)
00..00
0.0
0.0
0.0
00..00
00..55
0.0
0.0
0.5
00..44
0.0
0.4
0.0
00..11
0.1
0.0
0.0
11..11
0.1
0.8
0.1
44..77
00..00
0.0
0.0
0.0
((00..77))
(0.2)
(0.3)
(0.2)
((00..00))
0.0
0.0
0.0
((00..99))
(0.0)
(0.7)
(0.1)
((33..11))
00..77
0.1
0.4
0.0
00..11
0.0
0.1
0.0
00..22
0.1
0.0
0.1
00..33
0.0
0.1
0.1
00..77
((00..33))
(0.0)
(0.0)
(0.2)
((00..00))
(0.1)
(0.0)
0.1
((00..33))
(0.3)
0.0
0.0
((00..22))
(0.0)
(0.2)
(0.0)
((33..33))
((00..00))
(0.0)
(0.0)
0.0
((00..00))
(0.0)
(0.0)
0.0
((00..00))
(0.0)
0.0
(0.0)
((00..11))
(0.0)
(0.0)
(0.0)
((00..33))
33..22
((11..00))
((11..00))
00..00
00..00
00..00
((00..11))
00..11
((00..22))
((00..00))
OOtthheerr ffiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt
ffaaiirr vvaalluuee33
FFoorr tthhee ttwweellvvee mmoonntthhss eennddeedd 3311 DDeecceemmbbeerr 22002211
FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee hheelldd ffoorr
ttrraaddiinngg
of which: Investment fund units
of which: Corporate and municipal
bonds
of which: Loans
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss ––
aasssseettss
of which: Interest rate
of which: Equity / index
of which: Credit
FFiinnaanncciiaall aasssseettss aatt ffaaiirr vvaalluuee nnoott hheelldd
ffoorr ttrraaddiinngg
of which: Loans
of which: Auction rate securities
of which: Equity instruments
DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss ––
lliiaabbiilliittiieess
of which: Interest rate
of which: Equity / index
of which: Credit
DDeebbtt iissssuueedd ddeessiiggnnaatteedd aatt ffaaiirr vvaalluuee
22..33
0.0
0.8
1.1
11..88
0.5
0.9
0.3
33..99
0.9
1.5
0.5
33..55
0.5
2.3
0.5
99..66
((00..00))
(0.0)
0.0
0.0
((00..22))
0.1
(0.1)
(0.1)
00..11
(0.0)
0.1
0.1
00..22
(0.1)
0.3
(0.1)
((00..11))
(0.0)
(0.0)
(0.0)
((00..11))
0.1
(0.1)
(0.1)
00..11
0.0
0.1
0.1
((00..00))
(0.1)
0.1
(0.1)
00..77
00..66
00..33
0.0
0.2
0.0
00..00
0.0
0.0
0.0
11..00
0.6
0.0
0.1
00..00
0.0
0.0
0.0
00..00
((11..66))
(0.0)
(0.4)
(0.8)
00..00
0.0
0.0
0.0
((00..66))
(0.3)
0.0
(0.1)
00..00
0.0
0.0
0.0
00..00
11..22
0.0
0.0
1.2
00..55
0.1
0.3
0.0
00..00
0.0
0.0
0.0
00..99
0.0
0.8
0.0
77..11
00..00
0.0
0.0
0.0
((00..77))
(0.2)
(0.4)
(0.1)
00..00
0.0
0.0
0.0
((11..88))
(0.1)
(1.5)
(0.0)
00..33
0.0
0.0
0.0
00..11
0.0
0.0
0.0
00..11
0.0
0.0
0.0
00..00
0.0
0.0
0.0
((00..33))
(0.0)
(0.1)
(0.2)
((00..33))
(0.1)
(0.2)
(0.0)
((00..33))
(0.3)
0.0
(0.0)
((00..55))
(0.0)
(0.4)
(0.1)
((00..00))
(0.0)
(0.0)
0.0
((00..00))
(0.0)
(0.0)
0.0
((00..00))
(0.0)
0.0
(0.0)
((00..00))
(0.0)
(0.0)
(0.0)
11..55
0.1
0.5
0.6
11..55
0.5
0.7
0.3
33..77
0.7
1.3
0.8
11..77
0.1
1.2
0.3
99..22
22..00
22..33
0.0
0.6
1.4
11..11
0.5
0.4
0.2
44..22
0.9
1.6
0.7
22..22
0.3
1.5
0.3
OOtthheerr ffiinnaanncciiaall lliiaabbiilliittiieess ddeessiiggnnaatteedd aatt
33..22
00..00
ffaaiirr vvaalluuee
11 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. 22 Total Level 3 assets as of 31 December 2022 were USD 6.7bn
(31 December 2021: USD 7.6bn). Total Level 3 liabilities as of 31 December 2022 were USD 13.0bn (31 December 2021: USD 17.4bn). 33 Of the USD 1.0bn in net gains / losses that is included in comprehensive
income, USD 0.6bn is recognized in the Income statement and USD 0.4bn is recognized in the Statement of comprehensive income in Gains / (losses) from own credit on financial liabilities designated at fair value,
before tax.
((00..22))
((00..00))
((00..00))
00..00
00..00
22..11
00..00
11..33
00..00
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
456
456
((44..22))
00..11
((11..22))
((00..22))
1111..99
Note 20 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.
Maximum exposure to credit risk
USD bn
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt
ffaaiirr vvaalluuee oonn tthhee bbaallaannccee sshheeeett11
Financial assets at fair value
held for trading – debt instruments2,3
Derivative financial instruments4
Brokerage receivables
Financial assets at fair value not
held for trading – debt instruments5
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
Guarantees6
3311..1122..2222
CCoollllaatteerraall
CCrreeddiitt eennhhaanncceemmeennttss
MMaaxxiimmuumm
eexxppoossuurree ttoo
ccrreeddiitt rriisskk
CCaasshh
ccoollllaatteerraall
rreecceeiivveedd
CCoollllaatteerraalliizzeedd
bbyy eeqquuiittyy aanndd
ddeebbtt
iinnssttrruummeennttss
SSeeccuurreedd bbyy
rreeaall eessttaattee
OOtthheerr
ccoollllaatteerraall
NNeettttiinngg
CCrreeddiitt
ddeerriivvaattiivvee
ccoonnttrraaccttss GGuuaarraanntteeeess
EExxppoossuurree ttoo
ccrreeddiitt rriisskk
aafftteerr ccoollllaatteerraall
aanndd ccrreeddiitt
eennhhaanncceemmeennttss
1166..77
115500..11
1177..66
4444..88
222299..22
00..22
55..99
1177..33
1111..44
3344..66
00..00
113333..55
00..00
00..00
113333..55
00..00
00..00
00..22
1166..77
1100..77
00..33
3333..44
6611..22
00..00
31.12.21
Collateral
Credit enhancements
Maximum
exposure to
credit risk
Cash
collateral
received
Collateralized
by equity and
debt
instruments
Secured by
real estate
Other
collateral
Credit
derivative
contracts Guarantees
Exposure to
credit risk
after collateral
and credit
enhancements
Netting
USD bn
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt
ffaaiirr vvaalluuee oonn tthhee bbaallaannccee sshheeeett11
Financial assets at fair value
held for trading – debt instruments2,3
Derivative financial instruments4
Brokerage receivables
Financial assets at fair value not
held for trading – debt instruments5
25.7
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
5599..22
Guarantees6
0.0
11 The maximum exposure to loss is generally equal to the carrying amount and subject to change over time with market movements. 22 These positions are generally managed under the market risk framework. For
the purpose of this disclosure, collateral and credit enhancements were not considered. 33 Does not include investment fund units. 44 The amount shown in the “Netting” column represents the netting potential
not recognized on the balance sheet. Refer to Note 21 for more information. 55 Financial assets at fair value not held for trading collateralized by securities consisted of structured loans and reverse repurchase and
securities borrowing agreements. 66 The amount shown in the “Guarantees” column largely relates to sub-participations.
22.6
118.1
21.8
37.0
119999..55
0.2
22.6
10.7
0.2
4.2
21.6
11.2
3377..11
00..00
0.2
00..00
0.0
0.0
00..00
103.2
110033..22
00..00
00..00
0.0
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
457
457
Note 20 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
CCaarrrryyiinngg
aammoouunntt
TToottaall
116699..44
1144..77
6677..88
3355..00
339900..00
3311..1122..2222
FFaaiirr vvaalluuee
Carrying
amount
31.12.21
Fair value
CCaarrrryyiinngg
aammoouunntt
aapppprrooxxiimmaatteess
ffaaiirr vvaalluuee11
LLeevveell 11
LLeevveell 22
LLeevveell 33
TToottaall
Total
Carrying
amount
approximates
fair value1
Level 1
Level 2
Level 3
Total
116699..44
1133..99
6644..33
3355..00
113366..99
00..11
00..00
00..00
00..00
00..00
00..00
00..77
00..00
00..00
116699..44
1144..66
192.8
15.4
11..88
11..77
6677..88
75.0
00..00
4455..99
00..00
119955..00
3355..00
337777..77
30.5
398.7
192.7
14.6
71.6
30.5
163.7
0.1
0.0
0.0
0.0
0.0
0.0
0.7
0.0
0.0
192.8
15.3
1.3
2.1
75.0
0.0
43.8
0.0
190.4
30.5
397.9
5533..44
1133..00
1100..33
2255..11
22..55
5511..00
26.2
4.1
9.3
10.7
2.4
26.5
USD bn
AAsssseettss
Cash and balances at central banks
Loans and advances to 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
cost2
LLiiaabbiilliittiieess
00..77
00..00
00..00
22..77
88..99
33..55
00..00
44..22
1111..66
1111..66
13.1
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 cost3
00..00
11 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). 22 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 1 for information. 33 Excludes lease liabilities.
3366..44
552277..22
3366..44
449933..00
31.8
544.8
31.8
537.6
31.8
544.8
3366..44
552266..99
5566..11
5599..55
56.0
69.8
57.3
82.4
2.8
13.0
58.8
82.8
5555..77
5588..99
22..00
1133..44
5533..77
4455..55
00..00
3333..99
00..00
00..00
00..00
00..00
0.0
0.0
0.0
0.0
0.0
0.0
0.0
7.3
0.0
0.0
00..00
00..00
00..00
00..00
13.1
44..22
00..00
77..22
00..00
77..22
00..00
9.1
0.0
4.0
0.0
0.0
4.1
0.0
5.5
1.5
5.5
0.0
6.3
6.3
0.0
0.0
6.3
77..22
The fair values included in the table above have been calculated for disclosure purposes only. The valuation techniques
and assumptions described below relate only to the fair value of UBS’s financial instruments not measured at fair value.
Other institutions may use different methods and assumptions for their fair value estimations, and therefore such fair
value disclosures cannot necessarily be compared from one financial institution to another. The following principles were
applied when determining fair value estimates for financial instruments not measured at fair value:
– For financial instruments with remaining maturities greater than three months, the fair value was determined from
quoted market prices, if available.
– Where quoted market prices were not available, the fair values were estimated by discounting contractual cash flows
using current market interest rates or appropriate yield curves for instruments with similar credit risk and maturity.
These estimates generally include adjustments for counterparty credit risk or UBS’s own credit.
– For short-term financial instruments with remaining maturities of three months or less, the carrying amount, which is
net of credit loss allowances, is generally considered a reasonable estimate of fair value.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
458
458
Note 21 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
AAsssseettss ssuubbjjeecctt ttoo nneettttiinngg aarrrraannggeemmeennttss
Netting recognized on the balance sheet
Netting potential not recognized on
the balance sheet3
Gross assets
before netting
Netting with
gross liabilities2
NNeett aasssseettss
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
AAsssseettss aafftteerr
ccoonnssiiddeerraattiioonn
ooff
nneettttiinngg
ppootteennttiiaall
Financial
liabilities
Collateral
received
AAsssseettss nnoott
ssuubbjjeecctt ttoo nneettttiinngg
aarrrraannggeemmeennttss44
AAsssseettss
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
TToottaall aasssseettss
TToottaall aasssseettss
aafftteerr
ccoonnssiiddeerraattiioonn
ooff nneettttiinngg
ppootteennttiiaall
TToottaall aasssseettss
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
60.8
147.4
33.5
85.6
84.4
332277..22
67.7
116.0
29.4
93.1
93.1
330066..22
(11.1)
(2.5)
4499..66
114444..99
(3.0)
(110.9)
(46.4)
(28.5)
00..33
55..55
0.0
3333..55
(20.9)
(1.9)
1100..66
(76.8)
88..77
(1.5)
(7.3)
00..00
(76.8)
((9900..44))
77..66
223366..88
(1.5)
((113366..33))
(6.1)
((8844..11))
00..00
1166..44
(13.8)
(3.6)
5533..99
111122..44
(2.9)
(88.9)
(51.0)
(18.5)
00..00
55..00
0.0
2299..44
(15.2)
(3.3)
1111..00
(87.6)
55..55
(1.1)
(4.4)
(87.6)
((110055..00))
55..55
220011..22
(1.1)
((110088..11))
(4.4)
((7777..22))
00..00
00..00
1155..99
1188..22
55..22
11..55
5500..77
00..11
7755..66
2211..11
55..88
11..11
5544..11
00..33
8822..11
1188..55
1100..77
1122..11
5500..77
00..11
9922..00
2211..11
1100..77
1122..11
5544..11
00..33
9988..11
6677..88
115500..11
3355..00
5599..44
77..77
331122..44
7755..00
111188..11
3300..55
5599..66
55..88
228833..33
As of 31.12.22, USD bn
Receivables from securities financing
transactions measured at amortized cost
Derivative financial instruments
Cash collateral receivables on
derivative instruments1
Financial assets at fair value
not held for trading
of which: reverse
repurchase agreements
TToottaall aasssseettss
As of 31.12.21, USD bn
Receivables from securities financing
transactions measured at amortized cost
Derivative financial instruments
Cash collateral receivables on
derivative instruments1
Financial assets at fair value
not held for trading
of which: reverse
repurchase agreements
TToottaall aasssseettss
11 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. 22 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. 33 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. 44 Includes assets not subject to enforceable netting arrangements and other out-of-scope items.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
459
459
Note 21 Offsetting financial assets and financial liabilities (continued)
Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements
LLiiaabbiilliittiieess ssuubbjjeecctt ttoo nneettttiinngg aarrrraannggeemmeennttss
Netting recognized on the balance sheet
Netting potential not recognized
on the balance sheet3
NNeett
lliiaabbiilliittiieess
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
Netting with
gross assets2
LLiiaabbiilliittiieess
aafftteerr
ccoonnssiiddeerraattiioonn
ooff nneettttiinngg
ppootteennttiiaall
Financial
assets
Collateral
pledged
Gross
liabilities
before
netting
14.1
150.3
(11.1)
(2.5)
33..00
114477..88
(1.3)
(110.9)
(1.8)
(26.2)
34.9
0.0
3344..99
(20.0)
(1.9)
92.5
92.1
229911..77
(76.9)
(76.9)
((9900..44))
1155..66
1155..33
220011..33
(3.2)
(3.2)
((113355..33))
(12.4)
(12.1)
((4422..33))
16.9
118.4
(12.8)
(3.6)
44..11
111144..99
(1.8)
(88.9)
(2.3)
(18.1)
30.4
0.0
3300..44
(13.1)
(3.3)
94.8
94.6
226600..66
(88.6)
(88.6)
((110055..00))
66..22
66..00
115555..66
(2.2)
(2.2)
((110066..00))
(3.8)
(3.8)
((2277..55))
00..00
1100..77
1133..00
00..00
00..00
2233..77
00..00
77..99
1144..00
00..22
00..00
2222..11
LLiiaabbiilliittiieess nnoott
ssuubbjjeecctt
ttoo nneettttiinngg
aarrrraannggeemmeennttss44
LLiiaabbiilliittiieess
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
TToottaall lliiaabbiilliittiieess
TToottaall
lliiaabbiilliittiieess
aafftteerr
ccoonnssiiddeerraattiioonn
ooff nneettttiinngg
ppootteennttiiaall
TToottaall
lliiaabbiilliittiieess
rreeccooggnniizzeedd
oonn tthhee
bbaallaannccee
sshheeeett
11..22
77..11
11..66
1166..44
00..11
2266..33
11..44
66..44
11..44
2266..33
00..44
3355..55
11..22
1177..88
1144..55
1166..44
00..11
4499..99
11..44
1144..33
1155..44
2266..55
00..44
5577..66
44..22
115544..99
3366..44
3322..00
1155..33
222277..66
55..55
112211..33
3311..88
3322..44
66..44
119911..11
As of 31.12.22, USD bn
Payables from securities financing
transactions measured at amortized cost
Derivative financial instruments
Cash collateral payables on
derivative instruments1
Other financial liabilities
designated at fair value
of which: repurchase agreements
TToottaall lliiaabbiilliittiieess
As of 31.12.21, USD bn
Payables from securities financing
transactions measured at amortized cost
Derivative financial instruments
Cash collateral payables on
derivative instruments1
Other financial liabilities
designated at fair value
of which: repurchase agreements
TToottaall lliiaabbiilliittiieess
11 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. 22 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. 33 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. 44 Includes liabilities not subject to enforceable netting arrangements and other out-of-scope items.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
460
460
Note 22 Restricted and transferred financial assets
This Note provides information about restricted financial assets (Note 22a), transfers of financial assets (Note 22b and
22c) and financial assets that are received as collateral with the right to resell or repledge these assets (Note 22d).
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, against
loans from Swiss mortgage institutions and in connection with the issuance of covered bonds. UBS AG generally enters
into repurchase and securities lending arrangements 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. Pledged mortgage loans serve as collateral for existing liabilities against Swiss central
mortgage institutions and for existing covered bond issuances of USD 8,962m as of 31 December 2022 (31 December
2021: USD 10,843m).
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
FFiinnaanncciiaall aasssseettss pplleeddggeedd aass ccoollllaatteerraall
Financial assets at fair value held for trading
Loans and advances to customers1
Financial assets at fair value not held for trading
Debt securities classified as Other financial assets measured at amortized cost
TToottaall ffiinnaanncciiaall aasssseettss pplleeddggeedd aass ccoollllaatteerraall
3311..1122..2222
31.12.21
ooff wwhhiicchh:: aasssseettss
pplleeddggeedd aass
ccoollllaatteerraall tthhaatt
mmaayy bbee ssoolldd oorr
rreepplleeddggeedd bbyy
ccoouunntteerrppaarrttiieess
3366,,774422
11,,222200
22,,668855
of which: assets
pledged as
collateral that
may be sold or
repledged by
counterparties
43,397
961
1,870
Restricted
financial assets
63,834
18,160
961
2,234
85,188
RReessttrriicctteedd
ffiinnaanncciiaall aasssseettss
5577,,443355
1155,,119955
11,,550099
33,,443322
7777,,557711
OOtthheerr rreessttrriicctteedd ffiinnaanncciiaall aasssseettss
Loans and advances to banks
Financial assets at fair value held for trading
Cash collateral receivables on derivative 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
TToottaall ootthheerr rreessttrriicctteedd ffiinnaanncciiaall aasssseettss
TToottaall ffiinnaanncciiaall aasssseettss pplleeddggeedd aanndd ootthheerr rreessttrriicctteedd ffiinnaanncciiaall aasssseettss22
11 Mainly related to mortgage loans that serve as collateral for existing liabilities toward Swiss central mortgage institutions and for existing covered bond issuances. Of these pledged mortgage loans, approximately
USD 3.1bn as of 31 December 2022 (31 December 2021: approximately USD 2.7bn) could be withdrawn or used for future liabilities or covered bond issuances without breaching existing collateral requirements.
22 Does not include assets placed with central banks related to undrawn credit lines and for payment, clearing and settlement purposes (31 December 2022: USD 5.9bn; 31 December 2021: USD 4.4bn).
33,,668899
116622
55,,115555
11,,112277
1144,,009900
11,,884422
885599
2266,,992244
110044,,449955
3,408
392
4,747
1,237
22,328
894
97
33,104
118,292
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
461
461
Note 22 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.
› Refer to the “Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups” section of this report
for financial information about significant regulated subsidiaries of UBS AG
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
3311..1122..2222
31.12.21
Financial assets at fair value held for trading that may be sold or repledged by counterparties
relating to securities lending and repurchase agreements in exchange for cash received
relating to securities lending agreements in exchange for securities received
relating to other financial asset transfers
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
TToottaall ffiinnaanncciiaall aasssseettss ttrraannssffeerrrreedd
CCaarrrryyiinngg aammoouunntt
ooff ttrraannssffeerrrreedd
aasssseettss
3366,,774422
1166,,775566
1188,,990088
11,,007788
11,,222200
22,,668855
4400,,664477
CCaarrrryyiinngg aammoouunntt ooff
aassssoocciiaatteedd lliiaabbiilliittiieess
rreeccooggnniizzeedd
oonn bbaallaannccee sshheeeett
1166,,447700
1166,,447700
Carrying amount
of transferred
assets
43,397
17,970
24,146
1,281
Carrying amount of
associated liabilities
recognized
on balance sheet
17,687
17,687
11,,005500
22,,330022
1199,,882222
961
1,870
46,227
898
1,725
20,311
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
As of 31 December 2022, approximately 45% of the transferred financial assets were assets held for trading transferred
in exchange for cash, in which case the associated recognized liability represents the amount to be repaid to
counterparties. For securities lending and repurchase agreements, a haircut of between 0% and 15% is generally applied
to the transferred assets, which results in associated liabilities having a carrying amount below the carrying amount of
the transferred assets. The counterparties to the associated liabilities presented 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 provided 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 2022 and as of 31 December 2021.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
462
462
Note 22 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
2022 and 31 December 2021 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
Fair value of assets received that can be sold or repledged
received as collateral under reverse repurchase, securities borrowing
and lending arrangements, derivative and other transactions 1
received in unsecured borrowings
Thereof sold or repledged 2
in connection with financing activities
to satisfy commitments under short sale transactions
in connection with derivative and other transactions 1
3311..1122..2222
443344,,002233
441188,,884477
1155,,117755
333311,,880055
31.12.21
497,828
483,426
14,402
367,440
228888,,775522
319,176
2299,,551155
1133,,553388
31,688
16,575
11 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. 22 Does not include off-balance sheet securities (31 December 2022: USD 9.9bn; 31 December 2021: USD 12.7bn) 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 23 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 column; however, the respective contractual maturities may extend over significantly longer periods.
Assets held to hedge unit-linked investment contracts (presented within Financial assets at fair value not held for trading)
are presented in the Due within 1 month column, consistent with the maturity assigned to the related amounts due
under unit-linked investment contracts (presented within Other financial liabilities designated at fair value).
Other financial assets and liabilities with no contractual maturity, such as equity securities, are presented in the Perpetual
/ Not applicable column. Undated or perpetual instruments are classified based on the contractual notice period that the
counterparty of the instrument is entitled to give. Where there is no contractual notice period, undated or perpetual
contracts are presented in the Perpetual / Not applicable column.
Non-financial assets and liabilities with no contractual maturity are generally included in the Perpetual / Not applicable
column.
Loan commitments are classified based on the earliest date they can be drawn down.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
463
463
Note 23 Maturity analysis of assets and liabilities (continued)
USD bn
AAsssseettss
Total financial assets measured at amortized cost1
Loans and advances to customers
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 income1
Total non-financial assets
TToottaall aasssseettss
LLiiaabbiilliittiieess
Total financial liabilities measured at amortized cost
Customer deposits
Funding from UBS Group AG
Debt issued measured at amortized cost
of which: non-subordinated fixed rate debt
of which: non-subordinated floating rate debt
of which: subordinated fixed-rate debt
Total financial liabilities measured at fair value through
profit or loss2
Debt issued designated at fair value
of which: non-subordinated fixed rate debt
of which: non-subordinated floating rate debt
Total non-financial liabilities
TToottaall lliiaabbiilliittiieess
GGuuaarraanntteeeess,, llooaann ccoommmmiittmmeennttss aanndd ffoorrwwaarrdd ssttaarrttiinngg ttrraannssaaccttiioonnss33
Loan commitments
Guarantees
Forward starting transactions, reverse repurchase and
securities borrowing agreements
TToottaall
USD bn
AAsssseettss
Total financial assets measured at amortized cost
Loans and advances to customers
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
TToottaall aasssseettss
LLiiaabbiilliittiieess
Total financial liabilities measured at amortized cost
Customer deposits
Funding from UBS Group AG
Debt issued measured at amortized cost
of which: non-subordinated fixed rate debt
of which: non-subordinated floating rate debt
of which: subordinated fixed-rate debt
Total financial liabilities measured at fair value through
profit or loss2
Debt issued designated at fair value
of which: non-subordinated fixed rate debt
of which: non-subordinated floating rate debt
DDuuee wwiitthhiinn
11 mmoonntthh
DDuuee bbeettwweeeenn
11 aanndd 33
mmoonntthhss
DDuuee bbeettwweeeenn
33 aanndd 1122
mmoonntthhss
DDuuee bbeettwweeeenn
11 aanndd 22 yyeeaarrss
DDuuee bbeettwweeeenn
22 aanndd 55 yyeeaarrss
DDuuee oovveerr
55 yyeeaarrss
PPeerrppeettuuaall //
NNoott
aapppplliiccaabbllee
3311..1122..2222
425.2
141.9
300.4
24.6
0.3
7.1
773322..99
524.3
464.5
2.0
4.6
3.1
1.5
265.9
9.3
0.5
8.8
6.7
779966..99
39.3
22.4
3.8
6655..44
28.7
16.3
10.0
10.0
0.9
3399..55
40.2
28.5
8.8
4.0
4.8
13.8
12.3
2.3
10.0
2.6
5566..55
34.5
28.3
7.8
7.8
0.9
0.2
4433..44
49.6
23.8
23.3
13.2
10.1
16.3
15.9
5.6
10.3
6655..99
78.8
74.9
3.6
3.6
0.1
8822..44
20.7
7.7
4.8
7.2
2.8
1.9
2.4
19.6
19.3
3.6
15.7
4400..44
0.3
0.4
0.0
00..33
00..44
00..00
1.5
1.5
28.0
2299..66
11.8
11.8
70.5
55.6
9.9
9.9
0.0
2.0
8822..44
35.2
2.3
21.2
10.0
7.8
1.6
0.5
7.3
6.9
2.0
4.9
92.8
73.0
2.0
2.0
0.0
0.4
9955..11
23.5
0.3
16.3
5.7
5.7
10.5
8.2
1.6
6.6
4422..55
3344..00
0.5
1122..33
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
31.12.21
454.3
157.8
300.7
29.7
0.1
7.3
776622..33
583.3
531.0
0.0
3.7
3.7
0.0
45.6
28.5
5.8
5.8
0.4
0.5
5522..33
21.5
6.5
2.8
9.3
8.4
0.8
238.1
12.0
12.5
0.8
11.7
8.7
883300..00
11.6
1.2
10.3
2.6
3366..00
1.4
1.4
28.2
2299..55
13.7
13.7
43.2
37.3
8.1
8.1
0.7
0.1
5522..11
48.4
3.2
1.4
38.4
27.4
9.0
2.0
14.7
14.1
2.9
11.2
53.7
49.7
5.2
5.2
0.1
0.2
5599..33
17.3
1.9
6.3
8.7
6.6
2.1
18.8
18.6
1.2
17.4
64.2
55.1
7.1
7.1
0.4
1.4
7733..22
36.0
1.8
17.0
15.5
9.0
3.3
3.1
5.6
5.4
1.3
4.2
77.6
70.3
2.5
2.5
7.1
0.3
8877..55
24.7
0.3
16.1
6.9
6.9
11.8
9.2
2.4
6.8
TToottaall
730.4
390.0
335.1
59.4
2.2
37.7
11,,110055..44
705.4
527.2
56.1
59.5
36.6
19.9
3.0
333.4
71.8
15.6
56.2
9.7
11,,004488..55
40.0
22.4
3.8
6666..22
Total
738.6
398.7
330.7
59.6
8.8
38.0
11,,111166..11
744.8
544.8
57.3
82.4
62.0
15.2
5.2
300.9
71.5
9.8
61.6
12.0
11,,005577..77
Total non-financial liabilities
TToottaall lliiaabbiilliittiieess
GGuuaarraanntteeeess,, llooaann ccoommmmiittmmeennttss aanndd ffoorrwwaarrdd ssttaarrttiinngg ttrraannssaaccttiioonnss33
Loan commitments
Guarantees
Forward starting transactions, reverse repurchase and
1.4
securities borrowing agreements
TToottaall
6622..11
00..55
11 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 1b for more information. 22 As of 31 December 2022 and 31 December 2021, the contractual redemption amount at maturity of debt issued designated at fair value through profit or loss and other
financial liabilities measured at fair value through profit or loss was not materially different from the carrying amount. 33 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 10 for more information.
38.3
21.2
39.5
21.2
1.4
6600..99
0.7
1144..44
3366..22
6633..00
4411..66
3366..55
0.5
0.7
0.0
00..77
00..00
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
464
464
Note 23 Maturity analysis of assets and liabilities (continued)
b) Maturity analysis of financial liabilities on an undiscounted basis
The table below provides an analysis of financial liabilities on an undiscounted basis, including all cash flows relating to
principal and future interest payments. The residual contractual maturities for non-derivative and non-trading financial
liabilities are based on the earliest date on which UBS could be contractually required to pay. Derivative positions and
trading liabilities, predominantly made up of short sale transactions, are presented in the Due within 1 month column,
as this provides a conservative reflection of the nature of these trading activities. The residual contractual maturities may
extend over significantly longer periods.
USD bn
FFiinnaanncciiaall lliiaabbiilliittiieess rreeccooggnniizzeedd oonn bbaallaannccee sshheeeett11
Amounts due to banks
Payables from securities financing transactions
Cash collateral payables on derivative instruments
Customer deposits
Funding from UBS Group AG2
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
of which: lease liabilities
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt33,, 55
Financial liabilities at fair value held for trading3, 4
Derivative financial instruments3, 5
Brokerage payables designated at fair value
Debt issued designated at fair value6
Other financial liabilities designated at fair value
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh
pprrooffiitt oorr lloossss
TToottaall
GGuuaarraanntteeeess,, ccoommmmiittmmeennttss aanndd ffoorrwwaarrdd ssttaarrttiinngg ttrraannssaaccttiioonnss
Loan commitments7
Guarantees
Forward starting transactions, reverse repurchase and
securities borrowing agreements7
TToottaall
USD bn
FFiinnaanncciiaall lliiaabbiilliittiieess rreeccooggnniizzeedd oonn bbaallaannccee sshheeeett11
Amounts due to banks
Payables from securities financing transactions
Cash collateral payables on derivative instruments
Customer deposits
Funding from UBS Group AG2
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
of which: lease liabilities
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial liabilities at fair value held for trading3,4
Derivative financial instruments3,5
Brokerage payables designated at fair value
Debt issued designated at fair value6
Other financial liabilities designated at fair value
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh
pprrooffiitt oorr lloossss
TToottaall
DDuuee wwiitthhiinn
11 mmoonntthh
DDuuee bbeettwweeeenn
11 aanndd 33
mmoonntthhss
DDuuee bbeettwweeeenn
33 aanndd 1122
mmoonntthhss
DDuuee bbeettwweeeenn
11 aanndd 22 yyeeaarrss
DDuuee bbeettwweeeenn
22 aanndd 55 yyeeaarrss
DDuuee oovveerr
55 yyeeaarrss
PPeerrppeettuuaall //
NNoott
aapppplliiccaabbllee
3311..1122..2222
0.6
2.6
27.6
10.8
1.2
1.2
42.8
7.1
0.5
77..55
5500..33
0.0
0.0
0.3
21.2
6.9
1.3
1.3
29.8
12.3
5.0
1177..33
4477..11
6.3
3.3
36.4
464.6
2.2
4.6
5.6
0.1
523.1
29.5
154.9
45.1
9.4
27.1
226666..00
778899..22
39.3
22.4
3.8
6655..44
2.6
0.3
28.8
0.6
8.9
0.1
0.1
41.2
12.4
1.4
1133..88
5555..00
0.3
1.9
0.4
24.5
1.2
23.7
0.4
0.4
52.2
16.0
0.4
1166..44
6688..66
0.4
0.3
0.3
8.2
6.8
7.8
0.5
0.5
24.0
19.7
0.4
2200..00
4444..00
0.0
00..33
00..44
00..00
31.12.21
6.7
3.8
31.8
531.0
0.2
3.8
5.3
0.1
582.6
31.7
121.3
44.0
13.8
28.1
239.0
882211..66
2.4
0.3
6.6
3.3
9.4
0.1
0.1
22.1
11.5
0.4
11.9
3344..00
3.5
1.6
3.3
2.3
38.8
0.4
0.4
49.9
13.5
0.5
14.0
6633..99
0.0
0.0
2.0
7.8
9.0
0.6
0.6
19.4
18.8
0.2
19.0
3388..44
0.5
1.9
21.1
16.1
1.2
1.2
40.8
5.6
0.2
5.8
4466..66
0.4
16.9
7.6
1.5
1.5
26.4
12.5
7.1
19.6
4455..99
12.7
12.7
13.7
13.7
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
TToottaall
11.7
4.4
36.4
529.0
72.3
62.8
9.2
3.7
725.8
29.5
154.9
45.1
76.8
34.8
40.0
22.4
3.8
6666..22
Total
13.1
5.7
31.8
545.1
65.3
84.7
9.1
3.9
754.8
31.7
121.3
44.0
75.9
36.5
309.4
334411..11
11,,006666..99
1122..77
1133..77
11,,006644..22
0.5
38.3
21.2
GGuuaarraanntteeeess,, ccoommmmiittmmeennttss aanndd ffoorrwwaarrdd ssttaarrttiinngg ttrraannssaaccttiioonnss
Loan commitments7
Guarantees
Forward starting transactions, reverse repurchase
and securities borrowing agreements7
1.4
TToottaall
6622..11
00..55
11 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. 22 The time-bucket Perpetual / Not applicable includes perpetual loss-absorbing additional tier 1 capital instruments. 33 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. 44 Contractual maturities of financial liabilities at fair value held for trading are: USD 27.8bn due within 1 month (31 December
2021: USD 30.8bn), USD 1.7bn due between 1 month and 1 year (31 December 2021: USD 0.9bn) and USD 0bn due between 1 and 5 years (31 December 2021: USD 0bn). 55 Includes USD 46m (31 December
2021: USD 34m) 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 34.4bn (31 December 2021: USD 36.0bn) is presented in Note 10 under notional amounts. 66 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. 77 Excludes derivative loan
commitments and forward starting reverse repurchase agreements measured at fair value (see footnote 5).
39.5
21.2
1.4
6600..99
00..77
00..00
0.0
0.7
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
465
465
Note 24 Interest rate benchmark reform
Background
A market-wide reform of major interest rate benchmarks is being undertaken globally. The publication of London
Interbank Offered Rates (LIBORs) ceased immediately after 31 December 2021 for all non-US dollar LIBORs, as well as for
one-week and two-month USD LIBOR. Publication of the remaining USD LIBOR tenors will cease immediately after
30 June 2023.
In December 2022, the FCA consulted on the continued publication of one-, three- and six-month USD LIBOR under a
synthetic format until the end of September 2024 to ensure an orderly winding down of remaining contracts that are
not governed by US law. In addition, in December 2022, the US Federal Reserve Board adopted the final rules that
implement the Adjustable Interest Rate (LIBOR) Act, which is substantially based on, and supersedes, the New York State
LIBOR legislation. The Adjustable Interest Rate (LIBOR) Act provides a legislative solution for USD LIBOR legacy products
governed by any US state law should such products fail to transition prior to the USD LIBOR cessation date of 30 June
2023.
A framework has been established within UBS AG to address the transition of contracts that do not contain adequate
fallback provisions and to cease entering into new LIBOR contracts, with the exception of specific circumstances that are
allowed by regulatory provisions for USD LIBOR.
Governance over the transition to alternative benchmark rates
Throughout the transition process UBS AG has been maintaining a global cross-divisional, cross-functional governance
structure and change program to address the scale and complexity of the transition. This global program is sponsored by
the Group CFO and led by senior representatives from the business divisions and UBS AG’s control and support functions.
The program includes governance and execution structures within each business division, together with cross-divisional
teams from each control and support function. During 2022, progress was overseen centrally via a monthly Group LIBOR
Transition Forum with an increased US regional focus.
Risks
A core part of UBS AG’s change program is the identification, management and monitoring of the risks associated with
IBOR reform and transition. These risks include, but are not limited to, the following:
– economic risks to UBS AG and its clients, through the repricing of existing contracts, reduced transparency and / or
liquidity of pricing information, market uncertainty or disruption;
– accounting risks, where the transition affects the accounting treatment, including hedge accounting and consequential
income statement volatility;
– valuation risks arising from the variation between benchmarks that will cease and ARRs, affecting the risk profile of
financial instruments;
– operational risks arising from changes to UBS AG’s front-to-back processes and systems to accommodate the transition
(e.g., data sourcing and processing and bulk migration of contracts); and
– legal and conduct risks relating to UBS AG’s engagement with clients and market counterparties around new
benchmark products and amendments required for existing contracts referencing benchmarks that will cease.
Overall, the effort required to transition is affected by multiple factors, including whether negotiations need to take place
with multiple stakeholders (as is the case for syndicated loans or certain listed securities), market readiness and a client’s
technical readiness to handle ARR market conventions. UBS AG remains confident that it has the transparency, oversight
and operational preparedness to progress with the IBOR transition consistent with market timelines, given the significant
progress made as of 31 December 2022. UBS AG did not have and does not expect changes to its risk management
approach and strategy as a result of interest rate benchmark reform.
Transition progress
UBS AG’s significant non-derivative exposures subject to IBOR reform primarily related to brokerage receivable and
payable balances, corporate and private loans, and mortgages, linked to CHF and USD LIBORs. During 2020, UBS AG
transitioned most of its CHF LIBOR-linked deposits to the Swiss Average Overnight Rate (SARON). In that same year, UBS
AG launched SARON-based mortgages and corporate loans based on all major ARRs in the Swiss market, as well as
Secure Overnight Financing Rate (SOFR)-based mortgages in the US market.
Throughout 2021, UBS AG transitioned substantially all of its private and corporate loans linked to non-USD IBORs, with
the remaining CHF LIBOR-linked contracts transitioning on their first roll date in 2022. In addition, as of 31 December
2021 UBS AG had completed the transition of IBOR-linked non-derivative financial assets and liabilities related to
brokerage accounts, except for balances originated in the US, which transitioned to SOFR in January 2022.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
466
466
Note 24 Interest rate benchmark reform (continued)
In 2022, UBS AG focused its efforts on the transition of USD LIBOR and the remaining non-USD LIBOR contracts, by
leveraging industry solutions (e.g., the use of fallback provisions), through third-party actions (those by clearing houses,
agents, etc.) and bi-lateral contract negotiations. As of 31 December 2022, the transition of non-USD IBORs is
substantially complete.
In addition, in 2022, substantially all US securities-based lending has been transitioned to SOFR and UBS AG continues
to make good progress on the transition of the remaining USD LIBOR non-derivative assets and liabilities, with the US
mortgage portfolio of USD 9bn (31 December 2021: USD 11bn) the largest remaining exposure left to transition.
In August 2022, to facilitate the transition of derivatives linked to the USD LIBOR Swap Rate, UBS AG adhered to the
June 2022 Benchmark Module of the ISDA 2021 Fallbacks Protocol on the USD LIBOR Swap Rate. UBS AG will begin
gradually transitioning USD LIBOR derivatives not transacted with clearing houses or exchanges from the first quarter of
2023. The transition of USD LIBOR-cleared derivatives is planned to commence in the second quarter of 2023.
As of 31 December 2022, UBS AG had approximately USD 3bn equivalent of yen- and US dollar-denominated funding
from UBS Group AG that, per current contractual terms, if not called on their respective call dates, would reset based
directly on JPY LIBOR and USD LIBOR. In addition, certain US dollar-denominated contracts providing funding from UBS
Group AG reference rates indirectly derived from IBORs, if they are not called on their respective call dates. These contracts
have robust IBOR fallback language and the confirmation of interest rate calculation mechanics will be communicated as
market standards formalize and in advance of any rate resets. These debt instruments have not been included in the table
below, given their current fixed-rate coupon.
Financial instruments yet to transition to alternative benchmarks
The amounts included in the table below relate to financial instrument contracts across UBS AG’s business divisions where
UBS AG has material exposures subject to IBOR reform that have not yet transitioned to ARRs, and that:
– contractually reference an interest rate benchmark that will transition to an alternative benchmark; and
– have a contractual maturity date (including open-ended contracts) after the agreed cessation dates.
Contracts where penalty terms reference IBORs, or where exposure to an IBOR is not the primary purpose of the contract,
have not been included, as these contracts do not have a material impact on the transition process.
In line with information provided to management and external parties monitoring UBS AG’s transition progress, the table
below includes the following financial metrics for instruments external to UBS AG that are subject to interest rate
benchmark reform:
– gross carrying value / exposure for non-derivative financial instruments; and
– total trade count for derivative financial instruments.
The exposures included in the table below reflect the maximum IBOR exposure, without regard for early termination
rights, with the actual exposure being dependent upon client preferences and investment decisions.
As of 31 December 2022, UBS AG had made significant progress in transitioning LIBOR exposures to ARRs. The remaining
USD LIBOR-linked exposures included in the table below primarily relate to derivatives and US mortgages, with the
transition planned to be completed by 30 June 2023.
CCaarrrryyiinngg vvaalluuee ooff nnoonn--ddeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss
Total non-derivative financial assets
Total non-derivative financial liabilities
TTrraaddee ccoouunntt ooff ddeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss
Total derivative financial instruments
3311..1122..222211
LLIIBBOORR bbeenncchhmmaarrkk rraatteess
31.12.21
MMeeaassuurree
USD m
USD m
UUSSDD
USD
CHF
1144,,22669933
11,,11338855
65,2343
1,9855
21,6164
275
GBP
455
35
EUR2
1
56
JPY
0
0
Trade count
3322,,00006677
40,5007,8
8299
1839
3,7449
1849
USD m
OOffff--bbaallaannccee sshheeeett eexxppoossuurreess
Total irrevocable loan commitments
0
11 As of 31 December 2022, non-USD balances and trade counts are minimal. 22 Relates primarily to EUR LIBOR positions. 33 Includes USD 1bn (31 December 2021: USD 1bn) of loans related to revolving multi-
currency credit lines, where IBOR transition efforts are complete, except for USD LIBOR. Balances as of 31 December 2021 also include USD 37bn USD LIBOR securities-based lending and USD 5bn brokerage accounts,
which for the most part transitioned to SOFR in January 2022. The remaining balances as of 31 December 2022 and 31 December 2021 primarily relate to US mortgages and corporate lending. 44 Relates primarily
to CHF LIBOR mortgages, which have automatically transitioned to SARON on their first roll date in 2022. 55 Relates to floating-rate notes that per their contractual terms can reset to rates linked to LIBOR, with
transition dependent upon the actions of respective issuers. 66 Relates to contracts that transitioned in January 2022. 77 Includes approximately 2,000 (31 December 2021: 1,000) contracts having a contractual
maturity after 30 June 2023, with the last USD LIBOR fixing occurring before 30 June 2023. No further contractual fixing is required for these contracts. 88 Includes approximately 5,000 cross-currency derivatives, of
which approximately 500 have both a non-USD LIBOR leg and a USD LIBOR leg, where the non-USD leg transitioned in January 2022 before the next fixing date. The remainder represents cross-currency swaps with
an ARR leg and a USD IBOR leg. 99 Includes predominantly bilateral derivatives, which transitioned in January 2022, and an insignificant amount of cleared derivatives, where the respective clearing houses’ organized
transition happened in January 2022. 1100 Includes approximately USD 3bn of loan commitments that can be drawn in different currencies, however only USD LIBOR transition efforts remain open, with completion
scheduled for 2023. 1111 Includes loan commitments that can be drawn in different currencies at the client‘s discretion, of which approximately USD 3bn have only USD LIBOR exposure remaining and approximately
USD 2bn retain a non-USD LIBOR interest rate, with transition dependent upon the actions of other parties. The remainder represents loan commitments that can be drawn in US dollars only and will transition on or
before 30 June 2023.
11,86311
44,,6600661100
0
0
0
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
467
467
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 re-designated in cash flow hedges, 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 the debt issued, funding from UBS Group AG, debt securities held and long-term fixed-rate mortgage
loans in Swiss francs to floating cash flows by entering into interest rate swaps that either receive fixed and pay floating
cash flows or that pay fixed and receive floating cash flows.
Designations have been made in US dollars, euro, Swiss francs, Australian dollars, yen, pounds sterling and Singapore
dollars. For new hedging instruments and hedged risk designations entered into starting from 2021 in these currencies
(with the exception of euro), the benchmark rate was the relevant alternative reference rate (ARR). Following the
interbank offered rate (IBOR) transition for swaps with LCH (formerly the London Clearing House) in December 2021,
the benchmark hedge rate for Swiss franc, yen and pound sterling designations was changed from an IBOR rate to the
relevant ARR with the hedge relationship continuing in accordance with Interest Rate Benchmark Reform – Phase 2
(Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
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. Hedge designations have been made in the
following currencies: US dollars, euro, Swiss francs, pounds sterling and Hong Kong dollars. The cash flow hedges in
Swiss francs, pounds sterling and certain cash flow hedges in US dollars were discontinued and replaced with new ARR
designations in December 2021. In addition, the transition of floating rate hedged items in USD to ARR rates in January
2022 resulted in the update of the hedged risk to ARR in the affected hedge relationships without discontinuation of
hedge accounting in accordance with Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16).
Fair value hedges of foreign exchange risk related to issued 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 denominated in currencies other than the US dollar to US dollars.
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 two months, the hedge relationship is terminated and
new designations are made to reflect any changes in the net investments in foreign operations.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
468
468
Note 25 Hedge accounting (continued)
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 origination 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 issued, hedge ineffectiveness can arise due to the discounting of the
hedging instruments and undesignated risk components and lack of such discounting and risk components in the hedged
items.
In hedges of net investments in foreign operations, ineffectiveness is unlikely unless the hedged net assets fall below the
designated hedged amount. The exceptions are hedges where the hedging currency is not the same as the currency of
the foreign operation, where the currency basis may cause ineffectiveness.
Hedge ineffectiveness from financial instruments measured at fair value through profit or loss is recognized in Other net
income.
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 contracts acting as economic hedges, which are reported in Net interest income.
All hedges: designated hedging instruments and hedge ineffectiveness
USD m
IInntteerreesstt rraattee rriisskk
Fair value hedges
Cash flow hedges
FFoorreeiiggnn eexxcchhaannggee rriisskk
Fair value hedges2
Hedges of net investments in foreign operations
USD m
IInntteerreesstt rraattee rriisskk
Fair value hedges
Cash flow hedges
FFoorreeiiggnn eexxcchhaannggee rriisskk
Fair value hedges2
Hedges of net investments in foreign operations
As of or for the year ended
3311..1122..2222
CCaarrrryyiinngg aammoouunntt
NNoottiioonnaall
aammoouunntt
DDeerriivvaattiivvee
ffiinnaanncciiaall
aasssseettss
DDeerriivvaattiivvee
ffiinnaanncciiaall
lliiaabbiilliittiieess
CChhaannggeess iinn
ffaaiirr vvaalluuee ooff
hheeddggiinngg
iinnssttrruummeennttss11
CChhaannggeess iinn
ffaaiirr vvaalluuee ooff
hheeddggeedd
iitteemmss11
HHeeddggee
iinneeffffeeccttiivveenneessss
rreeccooggnniizzeedd iinn tthhee
iinnccoommee ssttaatteemmeenntt
9922,,441155
7755,,330044
2200,,556666
1133,,884444
00
22
884455
77
00
55
33
552288
((55,,119955))
((55,,881133))
((11,,008888))
331188
55,,116699
55,,776600
11,,110055
((331199))
((2277))
((5533))
1188
((11))
As of or for the year ended
31.12.21
Carrying amount
Derivative
financial
assets
Derivative
financial
liabilities
Changes in
fair value of
hedging
instruments1
Changes in
fair value of
hedged
items1
Hedge
ineffectiveness
recognized in the
income statement
0
12
87
23
7
1
261
103
(1,604)
(1,185)
(2,139)
492
1,602
990
2,181
(491)
(2)
(196)
42
0
Notional
amount
89,525
79,573
27,875
13,761
11 Amounts used as the basis for recognizing hedge ineffectiveness for the period. 22 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 2022 | Consolidated financial statements | UBS AG consolidated financial statements
469
469
Note 25 Hedge accounting (continued)
Fair value hedges: designated hedged items
USD m
DDeebbtt iissssuueedd mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Carrying amount of designated debt issued
of which: accumulated amount of fair value hedge adjustment
FFuunnddiinngg ffrroomm UUBBSS GGrroouupp AAGG
Carrying amount of designated debt instruments
of which: accumulated amount of fair value hedge adjustment
OOtthheerr ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt –– ddeebbtt sseeccuurriittiieess
Carrying amount of designated debt securities
of which: accumulated amount of fair value hedge adjustment
LLooaannss aanndd aaddvvaanncceess ttoo ccuussttoommeerrss
Carrying amount of designated loans
of which: accumulated amount of fair value hedge adjustment
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
Fair value hedges: profile of the timing of the nominal amount of the hedging instrument
FFXX rriisskk
55,,773377
1144,,882288
3311..1122..2222
IInntteerreesstt rraattee
rriisskk
1111,,227799
((11,,000022))
5577,,225500
((55,,005555))
44,,557777
((118800))
1144,,227700
((11,,224499))
((5511))
3311..1122..2222
USD bn
Interest rate swaps
Cross-currency swaps
USD bn
Interest rate swaps
Cross-currency swaps
DDuuee wwiitthhiinn
11 mmoonntthh
00
00
Due within
1 month
0
1
DDuuee bbeettwweeeenn
11 aanndd 33 mmoonntthhss
44
DDuuee bbeettwweeeenn
33 aanndd 1122 mmoonntthhss
1100
DDuuee bbeettwweeeenn
11 aanndd 55 yyeeaarrss
5533
11
22
1122
31.12.21
Due between
1 and 3 months
8
Due between
3 and 12 months
10
Due between
1 and 5 years
49
1
6
13
Cash flow hedge reserve on a pre-tax basis
USD m
Amounts related to hedge relationships for which hedge accounting continues to be applied
Amounts related to hedge relationships for which hedge accounting is no longer applied
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee rreeccooggnniizzeedd ddiirreeccttllyy iinn eeqquuiittyy rreellaatteedd ttoo ccaasshh ffllooww hheeddggeess,, oonn aa pprree--ttaaxx bbaassiiss
Foreign currency translation reserve on a pre-tax basis
USD m
Amounts related to hedge relationships for which hedge accounting continues to be applied
Amounts related to hedge relationships for which hedge accounting is no longer applied
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee rreeccooggnniizzeedd ddiirreeccttllyy iinn eeqquuiittyy rreellaatteedd ttoo hheeddggiinngg iinnssttrruummeennttss ddeessiiggnnaatteedd aass nneett iinnvveessttmmeenntt hheeddggeess,, oonn aa pprree--ttaaxx
bbaassiiss
31.12.21
Interest rate
risk
21,653
261
53,047
218
2,677
(7)
13,835
(109)
3
DDuuee aafftteerr
55 yyeeaarrss
2266
55
Due after
5 years
22
6
FX risk
11,392
16,483
TToottaall
9922
2211
Total
90
28
3311..1122..2222
((44,,669922))
((554400))
((55,,223322))
31.12.21
26
743
769
3311..1122..2222
31.12.21
225500
226666
551155
(61)
262
201
Interest rate benchmark reform
UBS AG continues to apply the relief provided by Interest Rate Benchmark Reform (amendments to IFRS 9, IAS 39 and
IFRS 7), published by the IASB in September 2019, mainly to its hedges in USD. The cessation date for USD LIBOR is
30 June 2023.
The following table provides details on the notional amount and carrying amount of the hedging instruments in the
hedge relationships where the designated risk is LIBOR and maturing after the cessation date of the applicable interest
rate benchmarks.
Hedges of net investments in foreign operations are not affected by the amendments.
› Refer to Note 1a item 2j for more information about the relief provided by the amendments to IFRS 9 and IFRS 7 related to
interest rate benchmark reform
› Refer to Note 24 for more information about the transition progress
› Refer to earlier parts of this Note for the information about the transition progress of fair value and cash flow hedges
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
470
470
Note 25 Hedge accounting (continued)
Hedging instruments referencing LIBOR
USD m
IInntteerreesstt rraattee rriisskk
Fair value hedges
Cash flow hedges
Note 26 Post-employment benefit plans
a) Defined benefit plans
3311..1122..2222
31.12.21
CCaarrrryyiinngg aammoouunntt
DDeerriivvaattiivvee
ffiinnaanncciiaall
aasssseettss
DDeerriivvaattiivvee
ffiinnaanncciiaall
lliiaabbiilliittiieess
00
00
00
00
NNoottiioonnaall
aammoouunntt
2200,,338833
22,,117799
Carrying amount
Derivative
financial
assets
Derivative
financial
liabilities
0
0
0
0
Notional
amount
23,367
10,803
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, the UK, the US and Germany. The level of benefits depends
on the specific plan rules.
Swiss pension plan
The Swiss pension plan covers employees of UBS Group AG in Switzerland and employees of companies in Switzerland
having close economic or financial ties with UBS Group AG, and exceeds the minimum benefit requirements under Swiss
pension law. In 2017, a significant number of employees were transferred from UBS AG to UBS Business Solutions AG,
which is a directly held subsidiary of UBS Group AG. There continues to be one pooled pension plan in Switzerland
covering the employees of UBS AG and those transferred to UBS Business Solutions AG. UBS AG and UBS Business
Solutions AG both are legal sponsors of UBS’s Swiss pension plan. Since the date of the employee transfer, UBS AG and
UBS Business Solutions AG apply proportionate defined benefit accounting, i.e., the net pension cost and the net pension
asset / liability of the Swiss pension plan are allocated proportionally between UBS AG and UBS Business Solutions AG
based on the aggregated net pension cost and defined benefit obligations related to their employees. The Swiss plan
offers retirement, disability and survivor benefits and is governed by a Pension Foundation Board. The responsibilities of
this board are defined by Swiss pension law and the plan rules.
Savings contributions to the Swiss plan are paid by both employer and employee. Depending on the age of the employee,
UBS AG pays a savings contribution that ranges between 6.5% and 27.5% of contributory base salary and between
2.8% and 9% of contributory variable compensation. UBS AG also pays risk contributions that are used to fund disability
and survivor benefits. Employees can choose the level of savings contributions paid by them, which vary between 2.5%
and 13.5% of contributory base salary and between 0% and 9% of contributory variable compensation, depending on
age and choice of savings contribution category.
The plan offers to members at the normal retirement age of 65 a choice between a lifetime pension and a partial or full
lump sum payment. Participants can choose to draw early retirement benefits starting from the age of 58, but can also
continue employment and remain active members of the plan until the age of 70. Employees have the opportunity to
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, and the employee and employer contributions that have
been made to the participant’s retirement savings account, as well as the interest accrued. The annual interest rate
credited to participants is determined by the Pension Foundation Board at the end of each year.
Although the Swiss plan is based on a defined contribution promise under Swiss pension law, it is accounted for as a
defined benefit plan under International Financial Reporting Standards (IFRS), primarily because of the obligation to
accrue interest on the participants’ retirement savings accounts and the payment of lifetime pension benefits.
An actuarial valuation in accordance with Swiss pension law is performed regularly. Should an underfunded situation on
this basis occur, the Pension Foundation Board is required to take the necessary measures to ensure that full funding can
be expected to be restored within a maximum period of 10 years. If a Swiss plan were to become significantly
underfunded on a Swiss pension law basis, additional employer and employee contributions could be required. In this
situation, the risk is shared between employer and employees, and the employer is not legally obliged to cover more than
50% of the additional contributions required. As of 31 December 2022, the Swiss plan had a technical funding ratio in
accordance with Swiss pension law of 119.0% (31 December 2021: 134.8%).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
471
471
Note 26 Post-employment benefit plans (continued)
The investment strategy of the Swiss plan complies with Swiss pension law, including the rules and regulations relating
to diversification of plan assets, and is derived from the risk budget defined by the Pension Foundation Board on the
basis of regularly performed asset and liability management analyses. The Pension Foundation Board strives for a medium-
and long-term balance between assets and liabilities.
As of 31 December 2022, the Swiss plan was in a surplus situation on an IFRS measurement basis, as the fair value of
the plan’s assets exceeded the defined benefit obligation (DBO) by USD 4,418m (31 December 2021: USD 3,716m).
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 2022 and 31 December 2021,
the estimated future economic benefit was zero and hence no net defined benefit asset was recognized on the balance
sheet.
Changes to the Swiss pension plan in 2019
The Pension Foundation Board and UBS AG agreed to implement measures that took effect from the start of 2019 to
support the long-term financial stability of the Swiss pension fund. The measures, among other things, lowered the
conversion rate and increased the normal retirement age from 64 to 65. Pensions already in payment on 1 January 2019
were not affected.
To mitigate the effects for active participants, UBS AG committed to pay an extraordinary contribution and contributed
CHF 390m (USD 421m) in three installments in 2020, 2021 and 2022. The installments of USD 143m, USD 152m and
USD 126m paid in 2020, 2021 and 2022 reduced other comprehensive income with no effect on the income statement.
The regular employer contributions to be made to the Swiss plan in 2023 are estimated at USD 275m.
UK pension plan
The UK plan is a career-average revalued earnings scheme, and benefits increase automatically based on UK price
inflation, subject to defined caps. The normal retirement age for participants in the UK plan is 60. The plan provides
guaranteed lifetime pension benefits to participants upon retirement. The UK plan has been closed to new entrants for
more than 20 years and, since 2013, participants are no longer accruing benefits for current or future service. Instead,
employees participate in the UK defined contribution plan.
The governance responsibility for the UK plan lies jointly with the Pension Trustee Board and UBS AG. The employer
contributions to the pension fund reflect agreed-upon deficit funding contributions, which are determined on the basis
of the most recent actuarial valuation using assumptions agreed by the Pension Trustee Board and UBS AG. In the event
of underfunding, UBS AG and the Pension Trustee Board must agree on a deficit recovery plan within statutory deadlines.
In 2022, UBS AG made deficit funding contributions of USD 5m to the UK plan. In 2021, UBS AG made no deficit funding
contributions.
The plan assets are invested in a diversified portfolio of financial assets, which include longevity swaps with an external
insurance company. These swaps enable the UK pension plan to hedge the risk between expected and actual longevity,
which should mitigate volatility in the net defined benefit asset / liability. As of 31 December 2022, the longevity swaps
had a negative value of USD 1m (31 December 2021: negative USD 3m).
In 2019, UBS AG and the Pension Trustee Board entered into an arrangement whereby a collateral pool was established
to provide security for the pension fund. The value of the collateral pool as of 31 December 2022 was USD 292m
(31 December 2021: USD 337m) and includes corporate bonds, government-related debt instruments and other financial
assets. The arrangement provides the Pension Trustee Board dedicated access to a pool of assets in the event of UBS
AG’s insolvency or not paying a required deficit funding contribution.
The employer contributions to be made to the UK defined benefit plan in 2023 are estimated at USD 18m, subject to
regular funding reviews during the year.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
472
472
Note 26 Post-employment benefit plans (continued)
US pension plans
There are two distinct major defined benefit plans in the US, with a normal retirement age of 65. Both plans were closed to
new entrants more than 20 years ago. Since they closed, new employees have participated in a defined contribution plan.
One of the defined benefit plans is a contribution-based plan in which each participant accrues a percentage of salary in
a retirement savings account. The retirement savings account is credited annually with interest based on a rate that is
linked to the average yield on one-year US government bonds. For the other defined benefit plan, retirement benefits
accrue based on the career-average earnings of each individual plan participant. Former employees with vested benefits
have the option of taking a lump sum payment or a lifetime annuity.
As required under applicable pension laws, both plans have fiduciaries who, together with UBS AG, are responsible for
the governance of the plans.
The plan assets of both plans are invested in diversified portfolios of financial assets. Each plan’s fiduciaries are responsible
for the investment decisions with respect to the plan assets.
The employer contributions to be made to the US defined benefit plans in 2023 are estimated at USD 11m.
German pension plans
There are two unfunded defined benefit plans in Germany. The normal retirement age is 65 and benefits are paid directly
by UBS AG. In the larger of the two plans each participant accrues a percentage of salary in a retirement savings account.
The accumulated account balance of the participant is credited on an annual basis with guaranteed interest at a rate of
5%. The plan has been closed to new entrants, and all participants younger than the age of 55 as of June 2021 no longer
accrue benefits. In the other plan, amounts are accrued annually based on employee elections related to variable
compensation. For this plan, the accumulated account balance is credited on an annual basis with a guaranteed interest
rate of 6% for amounts accrued before 2010, of 4% for amounts accrued from 2010 to 2017 and of 0.9% for amounts
accrued after 2017. Both plans are subject to German pension law, whereby the responsibility to pay pension benefits
when they are due resides entirely with UBS AG. A portion of the pension payments is directly increased in line with price
inflation.
In June 2021, UBS AG implemented a new funded pension plan with interest credited to participants equal to actual
investment returns with a guaranteed minimum of 0%. The plan was implemented retrospectively for new hires since
June 2018 and for all eligible active participants younger than 55 from July 2021. Each participant accrues a percentage
of salary in a retirement savings account.
The employer contributions to be made to the German defined benefit plans in 2023 are estimated at USD 12m.
Financial information by plan
The tables below provide an analysis of the movement in the net asset / liability recognized on the balance sheet for
defined benefit plans, as well as an analysis of amounts recognized in net profit and in Other comprehensive income.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
473
473
Note 26 Post-employment benefit plans (continued)
Defined benefit plans
USD m
Defined benefit obligation at the beginning of the year
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 1
Past service cost related to plan amendments
Curtailments
Benefit payments
Other movements
Foreign currency translation
DDeeffiinneedd bbeenneeffiitt oobblliiggaattiioonn aatt tthhee eenndd ooff tthhee yyeeaarr
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
Return on plan assets excluding interest income
Interest income
Employer contributions
Plan participant contributions
Benefit payments
Administration expenses, taxes and premiums paid
Other movements
Foreign currency translation
FFaaiirr vvaalluuee ooff ppllaann aasssseettss aatt tthhee eenndd ooff tthhee yyeeaarr
SSuurrpplluuss // ((ddeeffiicciitt))
Asset ceiling effect at the beginning of the year
Interest expense on asset ceiling effect
Asset ceiling effect excluding interest expense and foreign currency translation on
asset ceiling effect
Foreign currency translation
AAsssseett cceeiilliinngg eeffffeecctt aatt tthhee eenndd ooff tthhee yyeeaarr
NNeett ddeeffiinneedd bbeenneeffiitt aasssseett // ((lliiaabbiilliittyy)) ooff mmaajjoorr ppllaannss
NNeett ddeeffiinneedd bbeenneeffiitt aasssseett // ((lliiaabbiilliittyy)) ooff rreemmaaiinniinngg ppllaannss
TToottaall nneett ddeeffiinneedd bbeenneeffiitt aasssseett // ((lliiaabbiilliittyy))
of which: Net defined benefit asset
of which: Net defined benefit liability 2
Swiss pension plan
22002222
2021
15,619
1155,,448800
224400
285
119955
33
115544
161
((22,,442244))
490
26
22
(385)
((22,,665533))
848
222266
0
00
((1133))
(49)
((779966))
(602)
((55))
0
((229911))
(456)
1122,,553399
15,480
77,,110033 8,604
0
55,,443366 6,876
1122,,553399 15,480
0
18,358
1,319
42
450
161
(602)
(8)
0
(524)
19,196
3,716
2,739
8
00
1199,,119966
((11,,994422))
227744
440011
115544
((779966))
((77))
((11))
((332222))
1166,,995577
44,,441188
33,,771166
7777
00
UK pension plan
2021
22002222
4,162
44,,110055
0
00
58
6677
0
00
71
((11,,447744))
14
((66))
(3)
((11,,557755))
59
110077
0
00
0
00
(148)
((112233))
0
00
(38)
((440088))
4,105
22,,116666
6655
150
665566 1,593
11,,444455 2,362
22,,116666 4,105
0
4,149
277
58
0
0
(148)
0
0
(39)
4,297
192
0
0
00
44,,229977
((11,,331122))
7700
55
00
((112233))
00
00
((445500))
22,,448888
332211
00
00
US and German
pension plans
22002222
11,,774400
55
3355
00
((226677))
11
((227799))
1111
00
00
((111111))
00
((2288))
11,,337755
116699
552288
667788
2021
1,905
6
30
0
(62)
4
(78)
12
4
0
(112)
1
(33)
1,740
222
669
849
11,,001111 1,222
518
1,360
40
26
16
0
(112)
(4)
1
0
1,329
(411)
0
0
336633
11,,332299
((222233))
3311
1166
00
((111111))
((33))
00
00
11,,003399
((333355))
00
00
Total
2021
22002222
21,686
2211,,332244
291
224444
122
229977
161
115544
498
((44,,116655))
45
((33))
(466)
((44,,550066))
919
334444
4
00
(49)
((1133))
(862)
((11,,003300))
1
((55))
(527)
((772277))
1166,,008800
21,324
77,,333366 8,976
11,,118844 2,262
77,,556600 10,086
1155,,771177 20,806
518
23,867
1,637
127
466
161
(862)
(11)
1
(563)
24,821
3,497
2,739
8
336633
2244,,882211
((33,,447766))
337766
442222
115544
((11,,003300))
((1111))
((11))
((777722))
2200,,448844
44,,440044
33,,771166
7777
1,037
(68)
3,716
(219)
(96)
(315)
302
(617)
11 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. 22 Refer to Note 18c.
665566
((3311))
44,,441188
((1144))
((8800))
((9944))
335555
((444499))
1,037
(68)
3,716
0
665566
((3311))
44,,441188
00
0
0
0
(411)
00
00
00
((333355))
0
0
0
192
00
00
00
332211
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
474
474
Note 26 Post-employment benefit plans (continued)
IInnccoommee ssttaatteemmeenntt –– eexxppeennsseess rreellaatteedd ttoo ddeeffiinneedd bbeenneeffiitt ppllaannss11
USD m
For the year ended
Current service cost
Interest expense related to defined benefit obligation
Interest income related to plan assets
Interest expense on asset ceiling effect
Administration expenses, taxes and premiums paid
Past service cost related to plan amendments
Curtailments
NNeett ppeerriiooddiicc eexxppeennsseess rreeccooggnniizzeedd iinn nneett pprrooffiitt ffoorr mmaajjoorr ppllaannss
NNeett ppeerriiooddiicc eexxppeennsseess rreeccooggnniizzeedd iinn nneett pprrooffiitt ffoorr rreemmaaiinniinngg ppllaannss22
TToottaall nneett ppeerriiooddiicc eexxppeennsseess rreeccooggnniizzeedd iinn nneett pprrooffiitt
11 Refer to Note 6. 22 Includes differences between actual and estimated performance award accruals.
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee –– ggaaiinnss // ((lloosssseess)) oonn ddeeffiinneedd bbeenneeffiitt ppllaannss
Swiss pension plan
3311..1122..2222 31.12.21
285
224400
UK pension plan
3311..1122..2222 31.12.21
0
00
US and German
pension plans
3311..1122..2222 31.12.21
6
55
Total
3311..1122..2222 31.12.21
291
224444
119955
((227744))
7777
77
00
((1133))
223300
33
(42)
8
8
0
(49)
243
6677
((7700))
00
00
00
00
((33))
58
(58)
0
0
0
0
0
3355
((3311))
00
33
00
00
1122
30
(26)
0
4
4
0
18
229977
((337766))
7777
1111
00
((1133))
223399
1177
225566
122
(127)
8
11
4
(49)
261
19
280
USD m
For the year ended
Remeasurement of defined benefit obligation
of which: change in discount rate assumption
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
of which: experience gains / (losses) 1
Return on plan assets excluding interest income
Asset ceiling effect excluding interest expense and foreign currency translation
TToottaall ggaaiinnss // ((lloosssseess)) rreeccooggnniizzeedd iinn ootthheerr ccoommpprreehheennssiivvee iinnccoommee ffoorr mmaajjoorr ppllaannss
Swiss pension plan
3311..1122..2222 31.12.21
(490)
22,,442244
UK pension plan
3311..1122..2222 31.12.21
(71)
11,,447744
33,,007788
00
494
0
11,,445511
112233
((440088))
(110)
00
0
((1199))
(26)
00
55
11
((222266))
(848)
((110077))
((11,,994422))
((665566))
((117733))
1,319
(1,037)
(207)
((11,,331122))
00
116622
319
(316)
0
9
(23)
(59)
277
0
207
US and German
pension plans
3311..1122..2222 31.12.21
62
226677
Total
3311..1122..2222 31.12.21
(498)
44,,116655
331177
77
44,,884466
(1)
(1)
(3)
2
111188
((449900))
44
3300
890
(318)
(110)
5
(47)
(12)
((334444))
(919)
40
0
102
((33,,447766))
((665566))
3322
1,637
(1,037)
102
((55))
((8822))
((11))
4488
((1111))
((222233))
00
4433
TToottaall ggaaiinnss // ((lloosssseess)) rreeccooggnniizzeedd iinn ootthheerr ccoommpprreehheennssiivvee iinnccoommee ffoorr rreemmaaiinniinngg ppllaannss
TToottaall ggaaiinnss // ((lloosssseess)) rreeccooggnniizzeedd iinn ootthheerr ccoommpprreehheennssiivvee iinnccoommee22
11 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. 22 Refer to the “Statement of comprehensive income.”
133
31
4400
88
The table below provides information about the duration of the DBO and the timing for expected benefit payments.
DDuurraattiioonn ooff tthhee ddeeffiinneedd bbeenneeffiitt oobblliiggaattiioonn ((iinn yyeeaarrss))
MMaattuurriittyy aannaallyyssiiss ooff bbeenneeffiittss eexxppeecctteedd ttoo bbee ppaaiidd
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
11 The duration of the defined benefit obligation represents a weighted average across US and German plans.
Swiss pension plan
3311..1122..2222
31.12.21
UK pension plan
US and German pension
plans1
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
1133..44
15.5
1133..77
18.8
77..99
9.5
770022
11,,444455
22,,118833
33,,775511
33,,551199
719
1,440
2,097
3,467
3,156
110077
223344
338844
666677
666677
110
248
418
743
751
1133,,224433
10,733
22,,557700
3,028
112233
223322
333355
550022
338888
551166
123
237
338
495
392
519
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
475
475
Note 26 Post-employment benefit plans (continued)
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
The tables below show the significant actuarial assumptions used in calculating the DBO at the end of the year.
Significant actuarial assumptions
In %
Discount rate
Rate of pension increase
Rate of interest credit on retirement savings
Swiss pension plan
3311..1122..2222
31.12.21
22..3344
00..0000
33..3399
0.34
0.00
1.04
UK pension plan
US pension plans
3311..1122..2222
31.12.21
55..0022
33..0088
00..0000
1.82
3.32
0.00
3311..1122..2222
44..992211
31.12.21
2.471
00..0000
55..773322
0.00
1.182
German pension plans
31.12.21
3311..1122..2222
33..8811
22..2200
00..0000
0.99
1.80
0.00
11 Represents weighted average across US pension plans. 22 Only applicable to one of the US pension plans
Mortality tables and life expectancies for major plans
CCoouunnttrryy
Switzerland
UK
USA
Germany
CCoouunnttrryy
Switzerland
UK
USA
Germany
MMoorrttaalliittyy ttaabbllee
BVG 2020 G with CMI 2021 projections1
S3PA with CMI 2021 projections2
Pri-2012 with MP-2021 projection scale
Dr. K. Heubeck 2018 G
MMoorrttaalliittyy ttaabbllee
BVG 2020 G with CMI 2021 projections1
S3PA with CMI 2021 projections2
Pri-2012 with MP-2021 projection scale
Dr. K. Heubeck 2018 G
Life expectancy at age 65 for a male member currently
aged 65
aged 45
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
2211..77
2233..55
2222..00
2200..66
21.7
23.4
21.9
20.5
2233..44
2244..66
2233..33
2233..44
23.3
24.5
23.3
23.2
Life expectancy at age 65 for a female member currently
aged 65
aged 45
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
2233..55
2255..00
2233..44
2244..00
23.4
24.9
23.3
23.9
2255..11
2266..44
2244..88
2266..33
25.0
26.3
24.7
26.1
11 In 2021, BVG 2020 G with CMI 2019 projections was used. 22 In 2021, S3PA with CMI 2020 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 assumptions1
Increase / (decrease) in defined benefit obligation
USD m
DDiissccoouunntt rraattee
Increase by 50 basis points
Decrease by 50 basis points
RRaattee ooff ppeennssiioonn iinnccrreeaassee
Increase by 50 basis points
Decrease by 50 basis points
RRaattee ooff iinntteerreesstt ccrreeddiitt oonn rreettiirreemmeenntt ssaavviinnggss
Increase by 50 basis points
Decrease by 50 basis points
LLiiffee eexxppeeccttaannccyy
Swiss pension plan
3311..1122..2222
31.12.21
UK pension plan
US and German pension plans
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
((664411))
772233
448877
––22
110066
((110066))
(975)
1,116
749
–2
134
(134)
((114411))
115577
112277
((111188))
––33
––33
(361)
411
334
(306)
–3
–3
((5511))
5555
44
((33))
99
((88))
(78)
84
6
(6)
8
(7)
Increase in longevity by one additional year
56
11 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. 22 As the assumed rate of pension
increase was 0% as of 31 December 2022 and as of 31 December 2021, a downward change in assumption is not applicable. 33 As the UK plan does not provide interest credits on retirement savings, a change in
assumption is not applicable.
330044
475
184
6655
3399
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
476
476
Note 26 Post-employment benefit plans (continued)
Fair value of plan assets
The tables below provide information about the composition and fair value of plan assets of the major pension plans.
Composition and fair value of plan assets
Swiss pension plan
3311..1122..2222
31.12.21
USD m
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss
RReeaall eessttaattee // pprrooppeerrttyy
Domestic
Foreign
IInnvveessttmmeenntt ffuunnddss
Equity
Domestic
Foreign
Bonds1
Domestic, AAA to BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
Other
OOtthheerr iinnvveessttmmeennttss
FFaaiirr vvaalluuee
QQuuootteedd
iinn aann aaccttiivvee
mmaarrkkeett
118833
OOtthheerr
00
TToottaall
118833
00
00
22,,113300
22,,113300
551177
551177
441188
00
441188
22,,779944
11,,222222
44,,001177
22,,111177
33,,339955
559988
886677
335511
00
00
00
22,,111177
33,,339955
559988
11,,999977
22,,886644
336677
771188
PPllaann aasssseett
aallllooccaattiioonn %%
Fair value
Plan asset
allocation %
Quoted
in an active
market
106
Other
0
Total
106
0
0
1,994
1,994
328
328
476
0
476
3,510
1,498
5,009
2,512
2,877
742
0
0
0
2,512
2,877
742
2,379
2,010
4,389
377
385
762
11
1133
33
22
2244
1122
2200
44
1177
44
1
10
2
2
26
13
15
4
23
4
TToottaall ffaaiirr vvaalluuee ooff ppllaann aasssseettss
1100,,772244
66,,223333
1166,,995577
110000
12,980
6,216
19,196
100
TToottaall ffaaiirr vvaalluuee ooff ppllaann aasssseettss
of which: 2
Bank accounts at UBS AG
UBS AG debt instruments
UBS Group AG shares
Securities lent to UBS AG 3
Property occupied by UBS
Derivative financial instruments, counterparty UBS AG 3
3311..1122..2222
1166,,995577
118899
2288
1155
448899
5511
4433
31.12.21
19,196
109
16
14
608
52
72
11 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. 22 Bank accounts at UBS AG encompass accounts in the name of the Swiss pension fund. 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.
33 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 2022 and 31 December 2021. Net
of collateral, derivative financial instruments amounted to negative USD 5m as of 31 December 2022 (31 December 2021: positive USD 24m).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
477
477
Note 26 Post-employment benefit plans (continued)
Composition and fair value of plan assets (continued)
UK pension plan
USD m
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss
BBoonnddss11
Domestic, AAA to BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
IInnvveessttmmeenntt ffuunnddss
Equity
Domestic
Foreign
Bonds1
Domestic, AAA to BBB–
Domestic, below BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
Real estate
Domestic
Foreign
Other
RReeppuurrcchhaassee aaggrreeeemmeennttss
OOtthheerr iinnvveessttmmeennttss
FFaaiirr vvaalluuee
QQuuootteedd
iinn aann aaccttiivvee
mmaarrkkeett
110044
OOtthheerr
00
11,,772299
229977
77
1199
336666
336677
11
9900
111144
6644
66
((228800))
((661122))
6666
00
00
00
33
00
9900
00
00
00
00
3311
00
00
2277
3311..1122..2222
31.12.21
PPllaann aasssseett
aallllooccaattiioonn %%
Fair value
Plan asset
allocation %
TToottaall
110044
11,,772299
229977
77
2222
336666
445577
11
9900
111144
6644
3366
((228800))
((661122))
9944
Quoted
in an active
market
147
2,605
372
4
44
921
532
12
179
115
110
6
(313)
(725)
65
44
6699
1122
00
11
1155
1188
00
44
55
33
11
((1111))
((2255))
44
Other
0
0
0
0
4
0
147
0
0
0
12
34
0
0
26
Total
147
2,605
372
4
47
921
679
12
179
115
122
40
(313)
(725)
91
3
61
9
0
1
21
16
0
4
3
3
1
(7)
(17)
2
TToottaall ffaaiirr vvaalluuee ooff ppllaann aasssseettss
100
11 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.
4,297
4,074
22,,448888
22,,333366
223
110000
115511
US and German pension plans
3311..1122..2222
31.12.21
USD m
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss
EEqquuiittyy
Domestic
Foreign
BBoonnddss11
Domestic, AAA to BBB–
Domestic, below BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
IInnvveessttmmeenntt ffuunnddss
Equity
Domestic
Foreign
Bonds1
Domestic, AAA to BBB–
Domestic, below BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
Real estate
Domestic
Other
OOtthheerr iinnvveessttmmeennttss
FFaaiirr vvaalluuee
QQuuootteedd
iinn aann aaccttiivvee
mmaarrkkeett
77
OOtthheerr
00
5555
2244
335599
44
7744
33
2277
3333
226666
110099
22
55
00
5544
55
00
00
00
00
00
00
00
00
00
00
00
00
1111
00
11
TToottaall
77
5555
2244
335599
44
7744
33
2277
3333
226666
110099
22
55
1111
5544
66
PPllaann aasssseett
aallllooccaattiioonn %%
11
55
22
3355
00
77
00
33
33
2266
1100
00
00
11
55
11
Fair value
Quoted
in an active
market
11
Other
0
79
31
486
17
97
6
3
56
269
147
11
2
0
99
5
0
0
0
0
0
0
0
0
0
0
0
0
9
0
1
Total
11
79
31
486
17
97
6
3
56
269
147
11
2
9
99
6
Plan asset
allocation %
1
6
2
37
1
7
0
0
4
20
11
1
0
1
7
0
TToottaall ffaaiirr vvaalluuee ooff ppllaann aasssseettss
100
11 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.
1,319
1,329
11,,003399
11,,002277
110000
10
1122
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
478
478
Note 26 Post-employment benefit plans (continued)
b) Defined contribution plans
UBS AG sponsors a number of 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 299m in 2022, USD 303m in 2021 and USD 291m in 2020.
› Refer to Note 6 for more information
c) Related-party disclosure
UBS AG is the principal provider of banking services for the pension fund of UBS AG in Switzerland. In this capacity, UBS
AG is engaged to execute most of the pension fund’s banking activities. These activities can include, but are not limited
to, 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 2022, UBS AG received USD 20m in fees for banking services
from the major post-employment benefit plans (2021: USD 22m). As of 31 December 2022, the major post-employment
benefit plans held USD 253m in UBS Group AG shares (31 December 2021: USD 241m).
› Refer to the “Composition and fair value of 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 Swiss pension fund
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, references 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 (LTIP) is a mandatory deferred share-based compensation plan for GEB members for the
performance year 2022. For prior performance years, LTIP was granted to senior leaders of the Group (i.e., GEB members
and selected senior management).
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, which
compares the total shareholder return (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 (EOP) is the deferred share-based compensation plan for employees outside of the GEB that
are subject to deferral requirements. 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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
479
479
Note 27 Employee benefits: variable compensation (continued)
Deferred Contingent Capital Plan
The Deferred Contingent Capital Plan (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 FINMA notifies the firm that the DCCP awards must be written down to mitigate
the risk of insolvency, bankruptcy or failure of UBS) or if the firm receives a commitment of extraordinary support from
the public sector that is necessary to prevent such an event. DCCP awards are also written down if the Group’s CET1
capital ratio falls below a defined threshold. In addition, GEB members forfeit 20% of DCCP awards for each loss-making
year during the vesting period.
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 and deferred compensation awards, determined using a formulaic
approach based on production.
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 annual deferred compensation. These amounts generally vest over a six-year
period. The annual deferred compensation amount reflects the overall percentage rate and production.
Cash compensation and deferred compensation 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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
480
480
Note 27 Employee benefits: variable compensation (continued)
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 2022, as well as expenses that were deferred and will be recognized
in the income statement for 2023 and later. The majority of expenses deferred to 2023 and later that are related to the
2022 performance year pertain to awards granted in February 2023. The total unamortized compensation expense for
unvested share-based awards granted up to 31 December 2022 will be recognized in future periods over a weighted
average period of 2.5 years.
Variable compensation
USD m
Non-deferred cash
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ppeerrffoorrmmaannccee aawwaarrddss
VVaarriiaabbllee ccoommppeennssaattiioonn –– ffiinnaanncciiaall aaddvviissoorrss22
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ootthheerr33
TToottaall vvaarriiaabbllee ccoommppeennssaattiioonn
EExxppeennsseess rreeccooggnniizzeedd iinn 22002222
EExxppeennsseess ddeeffeerrrreedd ttoo 22002233 aanndd llaatteerr11
RReellaatteedd ttoo tthhee
22002222
ppeerrffoorrmmaannccee
yyeeaarr
2,012
RReellaatteedd ttoo pprriioorr
ppeerrffoorrmmaannccee
yyeeaarrss
(9)
346
191
123
11
21
22,,335588
33,,779999
3,481
104
185
29
114466
561
225
211
30
95
555522
770099
0
62
215
432
7722
TToottaall
2,003
907
416
334
41
116
22,,991100
44,,550088
3,481
166
400
461
221177
RReellaatteedd ttoo tthhee
22002222
ppeerrffoorrmmaannccee
yyeeaarr
0
RReellaatteedd ttoo pprriioorr
ppeerrffoorrmmaannccee
yyeeaarrss
0
582
294
238
30
20
558822
11,,229900
0
122
588
580
223300
730
240
395
40
54
773300
22,,665522
0
180
636
1,836
118899
33,,557711
66,,330044
11,,333322
77,,66336644
22,,110011
TToottaall
0
1,312
534
634
70
74
11,,331122
33,,994422
0
302
1,224
2,416
441199
55,,667722
11 Estimate as of 31 December 2022. Actual amounts to be expensed in future periods may vary; e.g., due to forfeiture of awards. 22 Financial advisor compensation consists of cash and deferred compensation
awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment
that are subject to vesting requirements. 33 Consists of replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan.
44 Includes USD 680m in expenses related to share-based compensation (performance awards: USD 457m; other variable compensation: USD 56m; financial advisor compensation: USD 166m). A further USD 80m in
expenses related to share-based compensation was recognized within other expense categories included in Note 6 (salaries: USD 4m, related to role-based allowances; social security: USD 57m; other personnel
expenses: USD 19m related to the Equity Plus Plan).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
481
481
Note 27 Employee benefits: variable compensation (continued)
Variable compensation (continued)
Expenses recognized in 2021
Expenses deferred to 2022 and later1
Related to the
2021
performance
year
0
Related to prior
performance
years
0
767
374
290
48
56
776677
11,,009977
0
123
311
662
221100
734
298
271
46
120
773344
882222
0
79
271
473
117766
Total
0
1,373
553
608
79
133
11,,337733
33,,441199
0
269
806
2,344
338888
55,,118811
Total
0
1,011
365
459
55
132
11,,001111
33,,110066
0
214
738
2,155
336644
44,,448811
606
180
318
32
77
660066
22,,332233
0
146
495
1,682
117788
33,,110077
277
67
189
9
12
227777
22,,228844
0
135
467
1,682
118899
22,,774499
USD m
Non-deferred cash
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ppeerrffoorrmmaannccee aawwaarrddss
VVaarriiaabbllee ccoommppeennssaattiioonn –– ffiinnaanncciiaall aaddvviissoorrss22
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ootthheerr33
TToottaall vvaarriiaabbllee ccoommppeennssaattiioonn
Related to the
2021
performance
year
2,136
Related to prior
performance
years
(8)
389
175
134
51
29
22,,552255
44,,117755
3,858
106
170
41
116633
399
174
151
17
55
339911
668855
(6)
51
202
438
3333
Total
2,128
788
350
285
69
84
22,,991166
44,,886600
3,853
157
372
479
119966
11 Estimate as of 31 December 2021. Actual amounts expensed may vary; e.g., due to forfeiture of awards. 22 Financial advisor compensation consists of cash and deferred compensation awards and is based on
compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to
vesting requirements. 33 Consists of replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan. 44 Includes
USD 631m in expenses related to share-based compensation (performance awards: USD 419m; other variable compensation: USD 56m; financial advisor compensation: USD 157m). A further USD 77m in expenses
related to share-based compensation was recognized within other expense categories included in Note 6 (salaries: USD 5m related to role-based allowances; social security: USD 59m; other personnel expenses:
USD 13m related to the Equity Plus Plan).
66,,886633
11,,110099
77,,99773344
22,,007744
Expenses recognized in 2020
Expenses deferred to 2021 and later1
Related to the
2020
performance
year
0
Related to prior
performance
years
0
Variable compensation (continued)
USD m
Non-deferred cash
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ppeerrffoorrmmaannccee aawwaarrddss
VVaarriiaabbllee ccoommppeennssaattiioonn –– ffiinnaanncciiaall aaddvviissoorrss22
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
VVaarriiaabbllee ccoommppeennssaattiioonn –– ootthheerr33
Related to the
2020
performance
year
1,948
Related to prior
performance
years
(29)
329
131
108
41
49
22,,227788
33,,337788
3,154
69
133
22
110099
704
315
339
11
39
667755
771133
0
50
183
480
9922
Total
1,920
1,034
446
448
52
88
22,,995533
44,,009911
3,154
119
316
502
220011
TToottaall vvaarriiaabbllee ccoommppeennssaattiioonn
55,,776655
11,,448811
77,,22446644
11,,773322
11 Estimate as of 31 December 2020. Actual amounts expensed may vary; e.g., due to forfeiture of awards. 22 Financial advisor compensation consists of cash and deferred compensation awards and is based on
compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to
vesting requirements. 33 Consists of replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan. 44 Includes
USD 666m in expenses related to share-based compensation (performance awards: USD 498m; other variable compensation: USD 49m; financial advisor compensation: USD 119m). A further USD 88m in expenses
related to share-based compensation was recognized within other expense categories included in Note 6 (salaries: USD 4m related to role-based allowances; social security: USD 51m; other personnel expenses:
USD 34m related to the Equity Plus Plan).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
482
482
Note 27 Employee benefits: variable compensation (continued)
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 2022 and
2021 are provided in the table below.
Movements in outstanding share-based compensation awards
Outstanding, at the beginning of the year
Awarded during the year
Distributed during the year
Forfeited during the year
Outstanding, at the end of the year
of which: shares vested for accounting purposes
NNuummbbeerr ooff sshhaarreess
22002222
229955,,992211
335588,,442244
((3377,,999944))
((11,,992233))
661144,,442288
117744,,332299
WWeeiigghhtteedd
aavveerraaggee ggrraanntt
ddaattee ffaaiirr
vvaalluuee ((UUSSDD))
1155
Number of shares
2021
54,557
Weighted
average grant
date fair
value (USD)
13
1199
1144
1155
1177
278,756
(24,176)
(13,215)
295,921
116,775
15
13
15
15
The total carrying amount of the liability related to cash-settled share-based awards as of 31 December 2022 and
31 December 2021 was USD 7m and USD 3m, 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.
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 2022. 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, Italy, Luxembourg and Spain. Share capital is provided in the
currency of the legally registered office.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
483
483
Note 28 Interests in subsidiaries and other entities (continued)
Individually significant subsidiaries of UBS AG as of 31 December 20221
Company
Registered office
UBS Americas Holding LLC
Wilmington, Delaware, USA
UBS Americas Inc.
Wilmington, Delaware, USA
Primary business
Group Functions
Group Functions
UBS Asset Management AG
Zurich, Switzerland
Asset Management
UBS Bank USA
UBS Europe SE
Salt Lake City, Utah, USA
Global Wealth Management
Frankfurt, Germany
Global Wealth Management
UBS Financial Services Inc.
Wilmington, Delaware, USA
Global Wealth Management
UBS Securities LLC
UBS Switzerland AG
Wilmington, Delaware, USA
Investment Bank
Zurich, Switzerland
Personal & Corporate Banking
Share capital in million
5,150.02
USD
USD
CHF
USD
EUR
USD
USD
CHF
0.0
43.2
0.0
446.0
0.0
1,283.13
10.0
Equity interest accumulated in %
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
11 Includes direct and indirect subsidiaries of UBS AG. 22 Consists of common share capital of USD 1,000 and non-voting preferred share capital of USD 5,150,000,000. 33 Consists of common share capital of
USD 100,000 and non-voting preferred share capital of USD 1,283,000,000.
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 2022
Company
UBS Asset Management (Americas) Inc.
Registered office
Wilmington, Delaware, USA
UBS Asset Management (Hong Kong) Limited
Hong Kong SAR, China
UBS Asset Management Life Ltd
London, United Kingdom
UBS Asset Management Switzerland AG
Zurich, Switzerland
Primary business
Asset Management
Asset Management
Asset Management
Asset Management
UBS Business Solutions US LLC
Wilmington, Delaware, USA
Group Functions
UBS Credit Corp.
UBS (France) S.A.
Wilmington, Delaware, USA
Global Wealth Management
Paris, France
Global Wealth Management
UBS Fund Management (Luxembourg) S.A.
Luxembourg, Luxembourg
UBS Fund Management (Switzerland) AG
Basel, Switzerland
Asset Management
Asset Management
UBS (Monaco) S.A.
UBS O‘Connor LLC
UBS Realty Investors LLC
UBS Securities Australia Ltd
UBS Securities Hong Kong Limited
UBS Securities Japan Co., Ltd.
UBS SuMi TRUST Wealth Management Co., Ltd.
Monte Carlo, Monaco
Global Wealth Management
Wilmington, Delaware, USA
Asset Management
Boston, Massachusetts, USA
Asset Management
Sydney, Australia
Hong Kong SAR, China
Tokyo, Japan
Tokyo, Japan
Investment Bank
Investment Bank
Investment Bank
Global Wealth Management
11 Includes a nominal amount relating to redeemable preference shares.
Share capital in million
0.0
USD
Equity interest
accumulated in %
100.0
HKD
GBP
CHF
USD
USD
EUR
EUR
CHF
EUR
USD
USD
AUD
HKD
JPY
JPY
153.8
15.0
0.5
0.0
0.0
197.0
13.0
1.0
49.2
1.0
9.0
0.31
3,354.2
34,708.7
5,165.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
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 2022 and 2021, 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 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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
484
484
Note 28 Interests in subsidiaries and other entities (continued)
b) Interests in associates and joint ventures
As of 31 December 2022 and 2021, 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.
In 2022, UBS AG reclassified its minority investment (49%) in its Japanese real estate joint venture, Mitsubishi Corp.-UBS
Realty Inc., of USD 44m to Properties and other non-current assets held for sale and sold the shareholding. The sale
resulted in a pre-tax gain of USD 848m in 2022, which was recognized in Other income. UBS AG’s asset management,
wealth management and investment banking businesses operating in Japan were not affected by the sale.
Investments in associates and joint ventures
USD m
Carrying amount at the beginning of the year
Additions
Reclassifications1
Share of comprehensive income
of which: share of net profit 2
of which: share of other comprehensive income 3
Share of changes in retained earnings
Dividends received
Foreign currency translation
CCaarrrryyiinngg aammoouunntt aatt tthhee eenndd ooff tthhee yyeeaarr
of which: associates
of which: SIX Group AG, Zurich 4
of which: other associates
of which: joint ventures
of which: Mitsubishi Corp.-UBS Realty Inc., Tokyo 1
of which: other joint ventures
22002222
11,,224433
33
((4444))
((4411))
3322
((7733))
00
((3311))
((3300))
11,,110011
11,,009988
995544
114444
33
33
2021
1,557
1
(386)
150
105
45
1
(39)
(39)
1,243
1,200
1,043
157
43
40
3
11 In 2022, UBS AG reclassified its minority investment (49%) in Mitsubishi Corp.-UBS Realty Inc. of USD 44m to Properties and other non-current assets held for sale and sold the investment in the same year. In 2021,
UBS AG reclassified its minority investment (48.8%) in Clearstream Fund Centre AG of USD 386m to Properties and other non-current assets held for sale and sold the investment in the same year. 22 For 2022,
consists of USD 27m from associates and USD 5m from joint ventures (for 2021, consists of USD 79m from associates and USD 26m from joint ventures). 33 For 2022, consists of negative USD 73m from associates
(for 2021, consists of USD 44m from associates and USD 1m from joint ventures). 44 In 2022, UBS AG’s equity interest amounted to 17.31%. UBS AG is represented on the Board of Directors.
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
2022, 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
2022 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 had an interest as of year-end, except for investment funds sponsored by third
parties, for which the carrying amount of UBS’s interest as of year-end has been disclosed.
Sponsored unconsolidated structured entities in which UBS did not have an interest at year-end
During 2022 and 2021, UBS AG did not earn material income from sponsored unconsolidated SEs in which UBS did not
have an interest at year-end.
During 2022 and 2021, 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 1bn and USD 3bn, respectively, into sponsored client vehicles created in 2022
(2021: USD 1bn and USD 2bn, respectively). For sponsored investment funds, transfers arose during the period as
investors invested and redeemed positions, thereby changing the overall size of the funds, which, when combined with
market movements, resulted in a total closing net asset value of USD 38bn (31 December 2021: USD 46bn).
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
485
485
Note 28 Interests in subsidiaries and other entities (continued)
Interests in unconsolidated structured entities
USD m, except where indicated
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 income2
Other financial assets measured at amortized cost2
TToottaall aasssseettss
Derivative financial instruments
TToottaall lliiaabbiilliittiieess
AAsssseettss hheelldd bbyy tthhee uunnccoonnssoolliiddaatteedd ssttrruuccttuurreedd eennttiittiieess iinn wwhhiicchh UUBBSS AAGG hhaadd aann
iinntteerreesstt ((UUSSDD bbnn))
USD m, except where indicated
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
TToottaall aasssseettss
Derivative financial instruments
SSeeccuurriittiizzaattiioonn
vveehhiicclleess
227788
33
883377
11,,11118844
11
11
CClliieenntt
vveehhiicclleess
8811
116600
44,,99777733
55,,221199
3355
3355
3311..1122..2222
IInnvveessttmmeenntt
ffuunnddss
55,,888844
111155
111199
110088
22
66,,222288
776633
776633
550055
11007766
995577
Securitization
vehicles
246
5
35
324
6104
2
Client
vehicles
162
45
4,525
03
4,732
11
31.12.21
Investment
funds
6,743
155
125
100
0
7,124
281
MMaaxxiimmuumm
eexxppoossuurree ttoo lloossss11
66,,224433
227788
111199
110088
66,,006666
22
Maximum
exposure to loss1
7,151
205
125
135
4,849
250
TToottaall
66,,224433
227788
111199
110088
55,,881177
1122,,556655
779988
779988
Total
7,151
205
125
135
4,849
1
12,466
294
TToottaall lliiaabbiilliittiieess
AAsssseettss hheelldd bbyy tthhee uunnccoonnssoolliiddaatteedd ssttrruuccttuurreedd eennttiittiieess iinn wwhhiicchh UUBBSS AAGG hhaadd aann
iinntteerreesstt ((UUSSDD bbnn))
11 For the purpose of this disclosure, maximum exposure to loss amounts do not consider the risk-reducing effects of collateral or other credit enhancements. 22 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 1b for more information. 33 Includes the
carrying amount of loan commitments. The maximum exposure to loss for these instruments is equal to the notional amount. 44 As of 31 December 2022, USD 0.1bn of the USD 1.1bn (31 December 2021: USD 0.1bn
of the USD 0.6bn) was held in Group Functions – Non-core and Legacy Portfolio. 55 Represents the principal amount outstanding. 66 Represents the market value of total assets. 77 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.
1037
305
816
281
294
11
2
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 2022 and 2021, UBS AG did not provide support, financial or otherwise, to any unconsolidated SE when not
contractually obligated to do so, nor does UBS AG have any intention to do so in the future.
In 2022 and 2021, income and expenses from interests in unconsolidated SEs primarily resulted from mark-to-market
movements recognized in Other net income from financial instruments measured at fair value through profit or loss,
which were generally hedged with other financial instruments, as well as fee and commission income received from UBS-
sponsored funds.
Interests in securitization vehicles
As of 31 December 2022 and 31 December 2021, UBS AG held interests, both retained and acquired, in various
securitization vehicles that relate to financing, underwriting, secondary market and derivative trading activities.
The numbers outlined in the table above may differ from the securitization positions presented in the 31 December 2022
Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for the following reasons: (i) exclusion of
synthetic securitizations transacted with entities that are not SEs and transactions in which 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 carrying amount
within the previous table 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 2022 Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
486
486
Note 28 Interests in subsidiaries and other entities (continued)
Interests in client vehicles
Client vehicles are established predominantly for clients to gain exposure to specific assets or risk exposures. Such vehicles
may enter into derivative agreements, with UBS or a third party, to align the cash flows of the entity with the investor’s
intended investment objective, or to introduce other desired risk exposures.
As of 31 December 2022 and 31 December 2021, UBS AG retained interests in client vehicles sponsored by UBS and
third parties 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 total assets of such funds were USD 336bn and USD 425bn as of
31 December 2022 and 31 December 2021, respectively, and have been excluded from the table above. UBS AG did not
have any material exposure to loss from these interests as of 31 December 2022 or as of 31 December 2021.
Note 29 Changes in organization and acquisitions and disposals of subsidiaries and businesses
Disposals of subsidiaries and businesses
Sale of UBS Swiss Financial Advisers AG
In the third quarter of 2022, UBS AG completed the sale of its wholly owned subsidiary UBS Swiss Financial Advisers AG
(SFA) to Vontobel. UBS AG continues to refer US clients that want to have discretionary portfolio management or
investment advisory services booked in Switzerland to Vontobel SFA. Upon completion of the sale, UBS AG recorded a
pre-tax gain of USD 86m in 2022, which was recognized in Other income.
Prior to completion of the sale, the assets and liabilities that were subject to the transaction were presented as a disposal
group held for sale within Other non-financial assets and Other non-financial liabilities (31 December 2021: USD 446m
and USD 475m, respectively).
Sale of wealth management business in Spain
UBS AG completed the sale of its domestic wealth management business in Spain to Singular Bank in the third quarter
of 2022. The sale included the transition of employees, client relationships, products and services of the wealth
management business of UBS AG in Spain and resulted in a pre-tax gain of USD 133m in 2022, which was recognized
in Other income.
Prior to completion of the sale, the assets and liabilities that were subject to the transaction were presented as a disposal
group held for sale within Other non-financial assets and Other non-financial liabilities (31 December 2021: USD 647m
and USD 823m, respectively).
Sale of US alternative investments administration business
In the fourth quarter of 2022, UBS AG sold its US alternative investments administration business and recorded a pre-tax
gain of USD 41m gain in Other income.
Sale of investments in associates and joint ventures
UBS AG sold its minority investment (49%) in its Japanese real estate joint venture, Mitsubishi Corp.-UBS Realty Inc., in
2022.
› Refer to Note 28b for more information
Acquisitions of subsidiaries and businesses
Wealthfront
In August 2022, UBS AG and Wealthfront mutually agreed to terminate their merger agreement, under which
Wealthfront was to be acquired by UBS Americas Inc. In the third quarter of 2022, UBS AG purchased a USD 69.7m note
convertible into Wealthfront shares.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
487
487
Note 30 Related parties
UBS AG defines related parties as associates (entities that are significantly influenced by UBS), joint ventures (entities in
which UBS shares control with another party), post-employment benefit plans for UBS AG employees, key management
personnel, close family members of key management personnel and entities that are, directly or indirectly, controlled or
jointly controlled by key management personnel or their close family members. Key management personnel is defined as
members of the Board of Directors (the BoD) and Executive Board (the EB).
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 members is included in the
table below.
Remuneration of key management personnel
USD m, except where indicated
Base salaries and other cash payments1
Incentive awards – cash2
Annual incentive award under DCCP
Employer’s contributions to retirement benefit plans
Benefits in kind, fringe benefits (at market value)
Share-based compensation3
TToottaall
3311..1122..2222
31.12.21
31.12.20
2266
1166
2233
22
11
4422
111100
30
17
26
2
1
45
122
31
17
26
2
1
45
122
TToottaall ((CCHHFF mm))44
11 May include role-based allowances in line with market practice and regulatory requirements. 22 The cash portion may also include blocked shares in line with regulatory requirements. 33 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 members, share-based compensation for 2022, 2021 and 2020 was entirely
composed of LTIP awards. For the Chairman of the BoD, the share-based compensation for 2022, 2021 and 2020 was entirely composed of UBS shares. 44 Swiss franc amounts disclosed represent the respective
US dollar amounts translated at the applicable performance award currency exchange rates (2022: USD / CHF 0.96; 2021: USD / CHF 0.92; 2020: USD / CHF 0.94).
115
112
110066
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 11.1m (CHF 10.7m) in 2022, USD 7.5m (CHF 6.9m)
in 2021 and USD 7.0m (CHF 6.6m) in 2020.
b) Equity holdings of key management personnel
Equity holdings of key management personnel1
3311..1122..2222
31.12.21
Number of UBS Group AG shares held by members of the BoD, EB and parties closely linked to them2
11 No options were held in 2022 and 2021 by non-independent members of the BoD and any EB member or any of its related parties. 22 Excludes shares granted under variable compensation plans with forfeiture
provisions.
4,175,515
22,,444433,,558800
Of the share totals above, no shares were held by close family members of key management personnel on 31 December
2022 and 31 December 2021. 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 2022 and 31 December 2021. As of
31 December 2022, 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 and mortgages to 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.
Movements in the loan, advances and mortgage balances are as follows.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
488
488
Note 30 Related parties (continued)
Loans, advances and mortgages to key management personnel1
USD m, except where indicated
Balance at the beginning of the year
Additions
Reductions
Balance at the end of the year2
22002222
2288
88
((77))
2288
2021
31
11
(15)
28
Balance at the end of the year (CHF m)2, 3
11 All loans are secured loans. 22 There were no unused uncommitted credit facilities as of 31 December 2022 and 31 December 2021. 33 Swiss franc amounts disclosed represent the respective US dollar amounts
translated at the relevant year-end closing exchange rate.
25
2266
d) Other related-party transactions with entities controlled by key management personnel
In 2022 and 2021, UBS AG did not enter into transactions with entities that are directly or indirectly controlled or jointly
controlled by UBS AG’s key management personnel or their close family members and as of 31 December 2022,
31 December 2021 and 31 December 2020, there were no outstanding balances related to such transactions.
Furthermore, in 2022 and 2021, entities controlled by key management personnel 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 2022 and 2021, and therefore also received no fees.
e) Transactions with associates and joint ventures
Loans to and outstanding receivables from associates and joint ventures
USD m
Carrying amount at the beginning of the year
Additions
Reductions
Foreign currency translation
Carrying amount at the end of the year
of which: unsecured loans and receivables
Other transactions with associates and joint ventures
USD m
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
Commitments and contingent liabilities to associates and joint ventures
22002222
225511
440022
((443388))
11
221177
220099
2021
630
133
(497)
(14)
251
243
As of or for the year ended
3311..1122..2222
31.12.21
113388
44
9900
77
157
104
127
7
› 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
RReecceeiivvaabblleess
Loans and advances to customers
Financial assets at fair value held for trading
Other financial assets measured at amortized cost
PPaayyaabblleess
Customer deposits
Funding from UBS Group AG
Other financial liabilities measured at amortized cost
Other financial liabilities designated at fair value1
11 Represents funding recognized from UBS Group AG that is designated at fair value. Refer to Note 18b for more information.
3311..1122..2222
31.12.21
22,,880077
114466
114477
22,,111199
5566,,114477
11,,998855
11,,779966
1,049
187
45
2,828
57,295
1,887
2,340
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
489
489
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
USD bn
Fund assets managed by UBS
Discretionary assets
Other invested assets
TToottaall iinnvveesstteedd aasssseettss11
of which: double counts
NNeett nneeww mmoonneeyy11
11 Includes double counts.
Development of invested assets
USD bn
Total invested assets at the beginning of the year1
Net new money
Market movements2
Foreign currency translation
Other effects
of which: acquisitions / (divestments)
TToottaall iinnvveesstteedd aasssseettss aatt tthhee eenndd ooff tthhee yyeeaarr11
11 Includes double counts. 22 Includes interest and dividend income.
As of or for the year ended
3311..1122..2222
31.12.21
339900
11,,444400
22,,112277
33,,995577
334400
6688
22002222
44,,559966
6688
((559955))
((7722))
((4400))
((1199))
419
1,705
2,472
4,596
356
159
2021
4,187
159
339
(65)
(24)
(5)
33,,995577
4,596
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
490
490
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.
1 CHF
1 EUR
1 GBP
100 JPY
CClloossiinngg eexxcchhaannggee rraattee
As of
AAvveerraaggee rraattee11
For the year ended
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
31.12.20
11..0088
11..0077
11..2211
00..7766
1.10
1.14
1.35
0.87
11..0055
11..0055
11..2233
00..7766
1.09
1.18
1.37
0.91
1.07
1.15
1.29
0.94
11 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 and Swiss GAAP
The consolidated financial statements of UBS AG are prepared in accordance with International Financial Reporting
Standards (IFRS). The Swiss Financial Market Supervisory Authority (FINMA) requires financial groups presenting financial
statements under IFRS to provide a narrative explanation of the main differences between IFRS 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 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, 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, 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. However, non-
trading debt instruments are generally measured at amortized cost, even when the assets are managed on a fair value
basis. In addition, the measurement of financial assets in the form of securities depends on the nature of the asset: debt
instruments not held to maturity, i.e., instruments available for sale, and equity instruments with no permanent holding
intent, are classified as Financial investments and measured at the lower of (amortized) cost or market value. Market
value adjustments up to the original cost amount and realized gains or losses upon disposal of the investment are
recorded in the income statement as Other income from ordinary activities. Equity instruments with a permanent holding
intent are classified as participations in Non-consolidated investments in subsidiaries and other participations and are
measured at cost less impairment. Impairment losses are recorded in the income statement as Impairment of investments
in non-consolidated subsidiaries and other participations. Reversals of impairments up to the original cost amount and
realized gains or losses upon disposal of the investment are recorded as Extraordinary income / Extraordinary expenses.
3. Fair value option applied to financial liabilities
Under IFRS, UBS applies the fair value option to certain financial liabilities not held for trading. Instruments for which the
fair value option is applied are accounted for at FVTPL. The amount of change in the fair value attributable to changes in
UBS’s own credit is presented in Other comprehensive income directly within Retained earnings. The fair value option is
applied primarily to issued structured debt instruments, certain non-structured debt instruments, certain payables under
repurchase agreements and cash collateral on securities lending agreements, amounts due under unit-linked investment
contracts, and brokerage payables.
Under Swiss GAAP, the fair value option can only be applied to structured debt instruments consisting of a debt host
contract and one or more embedded derivatives that do not relate to own equity. Furthermore, unrealized changes in
fair value attributable to changes in UBS’s own credit are not recognized, whereas realized own credit is recognized in
Net trading income.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
491
491
Note 33 Main differences between IFRS and Swiss GAAP (continued)
4. Allowances and provisions for credit losses
Swiss GAAP permit use of IFRS 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 and Swiss GAAP.
For the small residual exposures within the scope of Swiss GAAP ECL requirements, which are not subject to ECL under
IFRS 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, when cash flow hedge accounting is applied, the fair value gain or loss on the effective portion of a derivative
designated as a cash flow hedge is recognized initially in equity and reclassified to the income statement when certain
conditions are met. When fair value hedge accounting is applied, the fair value change of the hedged item attributable
to the hedged risk is reflected in the measurement of the hedged item and is recognized in the income statement along
with the change in the fair value of the hedging derivative. Under Swiss GAAP, the effective portion of the fair value
change of a derivative instrument designated as a cash flow or as a fair value hedge is deferred on the balance sheet as
Other assets or Other liabilities. The carrying amount of the hedged item designated in fair value hedges is not adjusted
for fair value changes attributable to the hedged risk.
6. Goodwill and intangible assets
Under IFRS, 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 five years, unless a
longer useful life, which may not exceed 10 years, can be justified. In addition, these assets are tested annually for
impairment.
7. Post-employment benefit plans
Swiss GAAP permit the use of IFRS or Swiss accounting standards for post-employment benefit plans, with the election
made on a plan-by-plan basis.
UBS has elected to apply IFRS (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. Key differences between Swiss GAAP and IFRS 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 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 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 is 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 2022 | Consolidated financial statements | UBS AG consolidated financial statements
492
492
Note 33 Main differences between IFRS and Swiss GAAP (continued)
8. Leasing
Under IFRS, 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, operating leases are not recognized on the
balance sheet, with payments recognized as General and administrative expenses on a straight-line basis over the lease
term, which commences with control of the physical use of the asset. Lease incentives are treated as a reduction of rental
expense and recognized on a consistent basis over the lease term.
9. Netting of derivative assets and liabilities
Under IFRS, derivative assets, derivative liabilities and related cash collateral not settled to market are reported on a gross
basis unless the restrictive IFRS netting requirements 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, 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.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
493
493
Note 34 Supplemental guarantor information required under SEC regulations
Joint liability of UBS Switzerland AG
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 registered debt securities
issued by UBS AG. To reflect this joint liability, UBS Switzerland AG is presented in a separate column as a subsidiary co-
guarantor.
The joint liability of UBS Switzerland AG for contractual obligations of UBS AG decreased in 2022 by USD 1.4bn to
USD 4.3bn as of 31 December 2022. The decrease substantially relates to a combination of contractual maturities, early
extinguishments, fair value movements and foreign currency effects.
Supplemental guarantor consolidated income statement
USD m
For the year ended 31 December 2022
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
Net interest income from financial instruments measured at fair value through
profit or loss and other
Net interest income
Other net income from financial instruments measured at fair value through
profit or loss
Fee and commission income
Fee and commission expense
Net fee and commission income
Other income
TToottaall rreevveennuueess
Credit loss expense / (release)
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
OOppeerraattiinngg eexxppeennsseess
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
NNeett pprrooffiitt // ((lloossss)) aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
UUBBSS AAGG
((ssttaannddaalloonnee))11
UUBBSS
SSwwiittzzeerrllaanndd AAGG
((ssttaannddaalloonnee))11
OOtthheerr
ssuubbssiiddiiaarriieess22
EElliimmiinnaattiioonn
eennttrriieess
UUBBSS AAGG
((ccoonnssoolliiddaatteedd))
44,,882244
((55,,444499))
888811
225577
55,,554411
22,,887755
((668844))
22,,119911
66,,773322
1144,,772211
((1177))
33,,225511
33,,337744
887711
77,,449966
77,,224422
((2288))
77,,227700
00
77,,227700
33,,889944
((773366))
554466
33,,770044
990000
44,,886655
((446644))
44,,440011
220033
99,,220088
5500
11,,999955
33,,225588
334400
55,,559922
33,,556666
663388
22,,992288
00
22,,992288
44,,666611
((22,,660044))
443311
22,,448888
994400
1133,,776666
((11,,332277))
1122,,443399
33,,332299
1199,,119977
((33))
99,,883355
55,,002299
774444
1155,,660077
33,,559922
11,,008833
22,,550099
3322
22,,447777
((11,,557755))
22,,009933
((444499))
6688
111122
((666600))
665522
((88))
((88,,338822))
((88,,221100))
((11))
00
((22,,666600))
((110099))
((22,,776699))
((55,,444400))
115511
((55,,559922))
00
((55,,559922))
1111,,880033
((66,,669966))
11,,441100
66,,551177
77,,449933
2200,,884466
((11,,882233))
1199,,002233
11,,888822
3344,,991155
2299
1155,,008800
99,,000011
11,,884455
2255,,992277
88,,996600
11,,884444
77,,111166
3322
77,,008844
11 Amounts presented for UBS AG standalone and UBS Switzerland AG standalone represent IFRS standalone information. Refer to the UBS AG standalone and UBS Switzerland AG standalone financial statements
under “Complementary financial information” at ubs.com/investors for information prepared in accordance with Swiss GAAP. 22 The ”Other subsidiaries“ column includes consolidated information for the
UBS Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, as well as standalone information for other subsidiaries.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
494
494
Note 34 Supplemental guarantor information required under SEC regulations (continued)
Supplemental guarantor consolidated statement of comprehensive income
USD m
For the year ended 31 December 2022
CCoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Net profit / (loss)
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee
ssttaatteemmeenntt
Foreign currency translation, net of tax
Financial assets measured at fair value through other comprehensive
income, net of tax3
Cash flow hedges, net of tax
Cost of hedging, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt
Defined benefit plans, net of tax
Own credit on financial liabilities designated at fair value, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall ccoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
UUBBSS AAGG
((ssttaannddaalloonnee))11
UUBBSS
SSwwiittzzeerrllaanndd AAGG
((ssttaannddaalloonnee))11
OOtthheerr
ssuubbssiiddiiaarriieess22
EElliimmiinnaattiioonn
eennttrriieess
UUBBSS AAGG
((ccoonnssoolliiddaatteedd))
77,,227700
22,,992288
22,,447777
((55,,559922))
77,,008844
((111144))
((33))
((22,,779911))
4455
((22,,886633))
117700
779966
996666
((11,,889977))
55,,337733
((119977))
00
((11,,335599))
((550066))
99
((663311))
229988
00
((1122))
((11,,555555))
((11,,112288))
228866
((111122))
((111122))
((11,,666677))
11,,226611
2233
2233
((11,,110044))
11,,337733
00
00
228866
((55,,330066))
((551199))
66
((44,,779933))
4455
((55,,226600))
8811
779966
887777
((44,,338833))
22,,770011
Total comprehensive income attributable to non-controlling interests
TToottaall ccoommpprreehheennssiivvee iinnccoommee
11 Amounts presented for UBS AG standalone and UBS Switzerland AG standalone represent IFRS standalone information. Refer to the UBS AG standalone and UBS Switzerland AG standalone financial statements
under “Complementary financial information” at ubs.com/investors for information prepared in accordance with Swiss GAAP. 22 The ”Other subsidiaries“ column includes consolidated information for the UBS
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, as well as standalone information for other subsidiaries. 33 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 1b for more information.
1188
11,,339911
1188
22,,771199
((55,,330066))
11,,226611
55,,337733
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
495
495
Note 34 Supplemental guarantor information required under SEC regulations (continued)
Supplemental guarantor consolidated balance sheet
USD m
As of 31 December 2022
AAsssseettss
Cash and balances at central banks
Loans and advances to 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
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial assets at fair value held for trading
of which: assets pledged as collateral that may be
sold or repledged by counterparties
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Investments in subsidiaries and associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
TToottaall aasssseettss
LLiiaabbiilliittiieess
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
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
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
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
Provisions
Other non-financial liabilities
TToottaall lliiaabbiilliittiieess
EEqquuiittyy aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Equity attributable to non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
UUBBSS AAGG
((ssttaannddaalloonnee))11
UUBBSS
SSwwiittzzeerrllaanndd AAGG
((ssttaannddaalloonnee))11
OOtthheerr
ssuubbssiiddiiaarriieess22
EElliimmiinnaattiioonn
eennttrriieess
UUBBSS AAGG
((ccoonnssoolliiddaatteedd))
4488,,668899
3399,,669911
5511,,449933
3355,,559944
9900,,116688
2244,,000055
228899,,664411
9955,,881100
4411,,005566
114499,,444477
99,,776633
4455,,330022
330000,,332211
11,,995533
5544,,332233
55,,885522
221133
11,,662244
66,,993300
666600,,885566
4411,,339955
99,,442255
3355,,552288
9988,,662288
5566,,114477
5500,,770066
44,,990033
229966,,773333
2255,,005599
115533,,777788
3322,,334466
7711,,444444
1177,,888888
330000,,551144
11,,990044
11,,663300
660000,,778822
6600,,007755
6600,,007755
666600,,885566
8844,,446655
66,,335577
990033
11,,222211
222299,,886611
99,,553322
333322,,333399
117733
00
55,,992255
00
44,,335544
1100,,445533
00
3333
11,,665544
00
227766
11,,776688
334466,,552222
3377,,112233
224477
11,,551188
227733,,331166
00
88,,996655
22,,222211
332233,,339911
118833
66,,117777
00
00
00
66,,336600
223399
11,,001199
333311,,000099
1155,,551133
1155,,551133
334466,,552222
3366,,229911
1199,,006633
3344,,111100
1100,,007744
110011,,223311
2211,,888800
222222,,664499
1133,,889999
55,,557788
3355,,110066
77,,881144
2266,,884433
8833,,666611
228866
00
44,,007777
66,,005500
77,,447700
995511
00
((5500,,444411))
((1188,,669911))
((1111,,885566))
((3311,,223333))
((22,,002299))
((111144,,225500))
((11,,884488))
((99,,889922))
((4400,,336688))
00
((1177,,009911))
((5599,,330088))
00
((5533,,225555))
((226677))
55
((1166))
44
116699,,444455
1144,,667711
6677,,881144
3355,,003333
339900,,002277
5533,,338899
773300,,337799
110088,,003344
3366,,774422
115500,,110099
1177,,557766
5599,,440088
333355,,112277
22,,223399
11,,110011
1111,,331166
66,,226677
99,,335544
99,,665522
332255,,114444
((222277,,008877))
11,,110055,,443366
5511,,555555
1133,,330033
1111,,119911
113322,,661199
11
55,,555544
221144,,222222
55,,884433
3355,,331144
1122,,774466
550088
1177,,007744
7711,,448844
11,,004411
33,,774422
229900,,449900
3344,,331133
334422
3344,,665555
332255,,114444
((111188,,447777))
((1188,,777744))
((1111,,880000))
2222,,660088
00
((117733))
((22,,228877))
((112288,,990033))
((11,,557700))
((4400,,336633))
((77))
((111100))
((22,,992288))
((4444,,997777))
((22))
9988
1111,,559966
44,,220022
3366,,443366
552277,,117711
5566,,114477
5599,,449999
1100,,339911
770055,,444422
2299,,551155
115544,,990066
4455,,008855
7711,,884422
3322,,003333
333333,,338822
33,,118833
66,,448899
((117733,,778855))
11,,004488,,449966
((5533,,330033))
00
((5533,,330033))
((222277,,008877))
5566,,559988
334422
5566,,994400
11,,110055,,443366
11 Amounts presented for UBS AG standalone and UBS Switzerland AG standalone represent IFRS standalone information. Refer to the UBS AG standalone and UBS Switzerland AG standalone financial statements,
available under “Complementary financial information” at ubs.com/investors, for information prepared in accordance with Swiss GAAP. 22 The ”Other subsidiaries“ column includes consolidated information for the
UBS Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, as well as standalone information for other subsidiaries.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
496
496
Note 34 Supplemental guarantor information required under SEC regulations (continued)
Supplemental guarantor consolidated statement of cash flows
USD m
For the year ended 31 December 2022
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ooppeerraattiinngg aaccttiivviittiieess
CCaasshh ffllooww ffrroomm // ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
Purchase of subsidiaries, associates and intangible assets
Disposal of subsidiaries, associates and intangible assets2
Purchase of property, equipment and software
Disposal of property, equipment and software
Purchase of financial assets measured at fair value through other comprehensive income
Disposal and redemption of financial assets measured at fair value through other comprehensive
income
Net (purchase) / redemption of debt securities measured at amortized cost
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
CCaasshh ffllooww ffrroomm // ((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess
Net short-term debt issued / (repaid)
Distributions paid on UBS AG shares
Issuance of debt designated at fair value and long-term debt measured at amortized cost3
Repayment of debt designated at fair value and long-term debt measured at amortized cost3
Net cash flows from other financing activities
Net activity related to group internal capital transactions and dividends
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess
Total cash flow
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Net cash flow from / (used in) operating, investing and financing activities
Effects of exchange rate differences on cash and cash equivalents
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr44
of which: cash and balances at central banks
of which: loans and advances to banks
of which: money market paper 5
UUBBSS AAGG11
1177,,228866
UUBBSS
SSwwiittzzeerrllaanndd AAGG11
((11,,116655))
OOtthheerr
ssuubbssiiddiiaarriieess11
((55,,449911))
UUBBSS AAGG
((ccoonnssoolliiddaatteedd))
1100,,663300
00
115577
((556622))
116611
((44,,113311))
33,,118888
((88,,115599))
((99,,334466))
((1122,,221155))
((44,,220000))
7788,,886666
((6666,,552266))
((225588))
55,,221177
888844
5577,,889955
88,,882244
((33,,111111))
6633,,660088
4488,,660077
22,,995577
1122,,004444
((33))
445533
((229922))
00
00
00
((11,,882200))
((11,,666633))
((33))
00
555500
((886600))
00
((22,,008888))
((22,,440011))
9922,,779999
((55,,222299))
((11,,333388))
8866,,223322
8844,,446655
11,,555500
221166
00
11,,112200
((662244))
00
((665522))
889966
((22,,001133))
((11,,227744))
((3311))
00
4411
((228844))
((333377))
((33,,112288))
((33,,774400))
5577,,006611
((1100,,550055))
((11,,119966))
4455,,335599
3366,,229911
88,,882211
224488
((33))
11,,772299
((11,,447788))
116611
((44,,778833))
44,,008844
((1111,,999933))
((1122,,228833))
((1122,,224499))
((44,,220000))
7799,,445577
((6677,,667700))
((559955))
00
((55,,225577))
220077,,775555
((66,,991111))
((55,,664455))
119955,,220000
116699,,336633
1133,,332299
1122,,550088
11 Cash flows generally represent a third-party view from a UBS AG consolidated perspective, except for Net activity related to group internal capital transactions and dividends. 22 Includes cash proceeds from the
sales of: UBS AG’s shareholding in Mitsubishi Corp.-UBS Realty Inc.; UBS AG’s wholly owned subsidiary UBS Swiss Financial Advisers AG (including a loan portfolio in UBS Switzerland AG); UBS AG’s US alternative
investments administration business; and UBS AG’s domestic wealth management business in Spain. Also includes dividends received from associates. 33 Includes funding from UBS Group AG to UBS AG.
44 Balances with an original maturity of three months or less. USD 4,253m of cash and cash equivalents were restricted. 55 Money market paper is included in the balance sheet under Financial assets at fair value
held for trading, Financial assets measured at fair value through other comprehensive income, Financial assets at fair value not held for trading and Other financial assets measured at amortized cost.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
497
497
Note 34 Supplemental guarantor information required under SEC regulations (continued)
Supplemental guarantor consolidated income statement
USD m
For the year ended 31 December 2021
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
Net interest income from financial instruments measured at fair value through
profit or loss and other
Net interest income
Other net income from financial instruments measured at fair value through
profit or loss
Fee and commission income
Fee and commission expense
Net fee and commission income
Other income
TToottaall rreevveennuueess
Credit loss expense / (release)
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
OOppeerraattiinngg eexxppeennsseess
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
NNeett pprrooffiitt // ((lloossss)) aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
UBS AG
(standalone)1
UBS
Switzerland AG
(standalone)1
Other
subsidiaries2
Elimination
entries
UBS AG
(consolidated)
3,130
(2,847)
1,229
1,512
3,751
3,837
(810)
3,027
7,555
15,845
(65)
3,401
4,255
949
8,605
7,305
203
7,102
0
7,102
3,652
(520)
254
3,386
807
5,204
(481)
4,723
221
9,137
(98)
2,098
3,442
285
5,825
3,409
622
2,788
0
2,788
2,456
(1,024)
228
1,660
1,369
16,151
(1,450)
14,702
1,560
19,291
(10)
10,161
4,474
755
15,390
3,910
1,090
2,820
29
2,792
(703)
1,025
(274)
48
(83)
(770)
755
(14)
(8,396)
(8,445)
24
1
(2,696)
(114)
(2,809)
(5,660)
(11)
(5,649)
0
(5,649)
8,534
(3,366)
1,437
6,605
5,844
24,422
(1,985)
22,438
941
35,828
(148)
15,661
9,476
1,875
27,012
8,964
1,903
7,061
29
7,032
11 Amounts presented for UBS AG standalone and UBS Switzerland AG standalone represent IFRS standalone information. Refer to the UBS AG standalone and UBS Switzerland AG standalone financial statements
under “Complementary financial information” at ubs.com/investors for information prepared in accordance with Swiss GAAP. 22 The ”Other subsidiaries“ column includes consolidated information for the UBS
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, as well as standalone information for other subsidiaries.
Supplemental guarantor consolidated statement of comprehensive income
UBS AG
(standalone)1
UBS
Switzerland AG
(standalone)1
Other
subsidiaries2
Elimination
entries
UBS AG
(consolidated)
7,102
2,788
2,792
(5,649)
7,032
USD m
For the year ended 31 December 2021
CCoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Net profit / (loss)
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee
ssttaatteemmeenntt
Foreign currency translation, net of tax
Financial assets measured at fair value through other comprehensive
income, net of tax
Cash flow hedges, net of tax
Cost of hedging, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt
Defined benefit plans, net of tax
Own credit on financial liabilities designated at fair value, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall ccoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
(1)
0
(1,129)
(26)
(1,155)
170
46
217
(939)
6,163
(419)
(279)
(607)
(157)
(250)
517
0
(17)
(699)
(1,014)
500
(135)
(135)
(834)
1,954
67
67
(947)
1,845
13
1,858
0
0
500
(5,149)
(5,149)
(510)
(157)
(1,675)
(26)
(2,368)
102
46
148
(2,220)
4,813
13
4,826
Total comprehensive income attributable to non-controlling interests
TToottaall ccoommpprreehheennssiivvee iinnccoommee
6,163
1,954
11 Amounts presented for UBS AG standalone and UBS Switzerland AG standalone represent IFRS standalone information. Refer to the UBS AG standalone and UBS Switzerland AG standalone financial statements
under “Complementary financial information” at ubs.com/investors for information prepared in accordance with Swiss GAAP. 22 The ”Other subsidiaries“ column includes consolidated information for the UBS
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, as well as standalone information for other subsidiaries.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
498
498
Note 34 Supplemental guarantor information required under SEC regulations (continued)
Supplemental guarantor consolidated balance sheet
USD m
As of 31 December 2021
AAsssseettss
Cash and balances at central banks
Loans and advances to 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
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial assets at fair value held for trading
of which: assets pledged as collateral that
may be sold or repledged by counterparties
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Investments in subsidiaries and associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
TToottaall aasssseettss
LLiiaabbiilliittiieess
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
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
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
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
Provisions
Other non-financial liabilities
TToottaall lliiaabbiilliittiieess
UBS AG
(standalone)1
UBS
Switzerland AG
(standalone)1
Other
subsidiaries2
Elimination
entries
UBS AG
(consolidated)
53,839
39,681
50,566
29,939
101,458
8,902
284,385
116,370
47,891
113,426
14,563
37,532
281,891
1,007
54,204
6,501
213
936
5,757
634,894
34,691
16,711
30,260
101,093
57,295
73,045
4,477
317,572
25,711
116,588
30,497
70,660
11,127
254,584
2,023
1,799
575,978
91,031
7,066
5,438
779
230,170
6,828
341,312
79
0
4,199
5,413
9,691
37
1,456
2,424
354,921
33,453
526
153
286,488
9,460
2,477
332,556
372
4,053
4,425
297
1,278
338,556
47,946
19,858
40,585
10,314
93,252
12,377
224,332
16,740
6,073
35,567
7,283
33,940
93,531
7,837
40
4,048
6,138
7,903
1,656
345,484
50,405
9,910
11,845
142,967
5,057
220,184
7,652
35,731
13,548
785
24,454
82,171
1,153
5,528
309,036
(51,245)
(21,577)
(10,518)
(26,188)
(1,870)
(111,397)
(2,156)
(10,568)
(35,047)
(7)
(17,243)
(54,454)
(53,038)
(293)
28
(1)
(219,154)
(105,448)
(21,615)
(10,458)
14,287
(73)
(2,245)
(125,551)
(2,046)
(35,063)
(1)
14
(3,167)
(40,263)
(21)
(33)
(165,868)
192,817
15,360
75,012
30,514
398,693
26,236
738,632
131,033
43,397
118,145
21,839
59,642
330,659
8,844
1,243
11,712
6,378
8,839
9,836
1,116,145
13,101
5,533
31,801
544,834
57,295
82,432
9,765
744,762
31,688
121,309
44,045
71,460
32,414
300,916
3,452
8,572
1,057,702
EEqquuiittyy aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Equity attributable to non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
11 Amounts presented for UBS AG standalone and UBS Switzerland AG standalone represent IFRS standalone information. Refer to the UBS AG standalone and UBS Switzerland AG standalone financial statements,
available under “Complementary financial information” at ubs.com/investors, for information prepared in accordance with Swiss GAAP. 22 The ”Other subsidiaries“ column includes consolidated information for the
UBS Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, as well as standalone information for other subsidiaries.
58,102
340
58,442
1,116,145
36,108
340
36,448
345,484
(53,287)
(219,154)
58,916
634,894
16,365
354,921
(53,287)
58,916
16,365
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
499
499
Note 34 Supplemental guarantor information required under SEC regulations (continued)
Supplemental guarantor consolidated statement of cash flows
USD m
For the year ended 31 December 2021
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ooppeerraattiinngg aaccttiivviittiieess
CCaasshh ffllooww ffrroomm // ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
Purchase of subsidiaries, associates and intangible assets
Disposal of subsidiaries, associates and intangible assets2
Purchase of property, equipment and software
Disposal of property, equipment and software
Purchase of financial assets measured at fair value through other comprehensive income
Disposal and redemption of financial assets measured at fair value through other comprehensive
income
Net (purchase) / redemption of debt securities measured at amortized cost
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
CCaasshh ffllooww ffrroomm // ((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess
Net short-term debt issued / (repaid)
Distributions paid on UBS AG shares
Issuance of debt designated at fair value and long-term debt measured at amortized cost3
Repayment of debt designated at fair value and long-term debt measured at amortized cost3
Net cash flows from other financing activities
Net activity related to group internal capital transactions and dividends
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess
Total cash flow
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Net cash flow from / (used in) operating, investing and financing activities
Effects of exchange rate differences on cash and cash equivalents
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr44
of which: cash and balances at central banks
of which: loans and advances to banks
of which: money market paper 5
UBS AG1
5,714
0
16
(656)
294
(1,006)
189
(807)
(1,970)
(3,073)
(4,539)
97,250
(78,385)
(280)
5,240
16,212
39,400
19,957
(1,462)
57,895
53,729
3,258
908
UBS
Switzerland AG1
2,131
Other
subsidiaries1
22,718
UBS AG
(consolidated)
30,563
(1)
0
(276)
0
0
0
772
495
(21)
0
1,177
(1,093)
0
(537)
(475)
93,342
2,151
(2,693)
92,799
91,031
1,588
179
0
577
(650)
1
(4,795)
4,863
(380)
(385)
0
0
193
(320)
20
(4,702)
(4,811)
40,689
17,523
(1,151)
57,061
47,946
8,975
139
(1)
593
(1,581)
295
(5,802)
5,052
(415)
(1,860)
(3,093)
(4,539)
98,619
(79,799)
(261)
0
10,927
173,430
39,630
(5,306)
207,755
192,706
13,822
1,227
11 Cash flows generally represent a third-party view from a UBS AG consolidated perspective, except for Net activity related to group internal capital transactions and dividends. 22 Includes cash proceeds from the
sale of the minority stake in Clearstream Fund Centre AG and dividends received from associates. 33 Includes funding from UBS Group AG to UBS AG. 44 Balances with an original maturity of three months or less.
USD 3,408m of cash and cash equivalents were restricted. 55 Money market paper is included in the balance sheet under Financial assets at fair value held for trading, Financial assets measured at fair value through
other comprehensive income, Financial assets at fair value not held for trading and Other financial assets measured at amortized cost.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
500
500
Note 34 Supplemental guarantor information required under SEC regulations (continued)
Supplemental guarantor consolidated income statement
USD m
For the year ended 31 December 2020
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
Net interest income from financial instruments measured at fair value through
profit or loss and other
Net interest income
Other net income from financial instruments measured at fair value through
profit or loss
Fee and commission income
Fee and commission expense
Net fee and commission income
Other income
TToottaall rreevveennuueess
Credit loss expense / (release)
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
OOppeerraattiinngg eexxppeennsseess
OOppeerraattiinngg pprrooffiitt // ((lloossss)) bbeeffoorree ttaaxx
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
NNeett pprrooffiitt // ((lloossss)) aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
UBS AG
(standalone)1
UBS
Switzerland AG
(standalone)1
Other
subsidiaries2
Elimination
entries
UBS AG
(consolidated)
3,386
(3,694)
1,103
794
4,857
3,731
(644)
3,087
4,671
13,410
352
3,458
3,507
1,013
7,978
5,079
238
4,840
0
4,840
3,636
(513)
164
3,288
911
4,585
(829)
3,756
233
8,188
286
2,017
3,313
261
5,591
2,311
444
1,868
0
1,868
2,612
(1,261)
311
1,662
1,044
13,651
(1,263)
12,388
2,585
17,679
56
9,211
4,147
750
14,108
3,515
912
2,603
15
2,588
(818)
1,134
(273)
43
118
(984)
961
(23)
(5,941)
(5,803)
0
0
(2,481)
(115)
(2,596)
(3,207)
(107)
(3,100)
0
(3,100)
8,816
(4,333)
1,305
5,788
6,930
20,982
(1,775)
19,207
1,549
33,474
695
14,686
8,486
1,909
25,081
7,699
1,488
6,211
15
6,196
11 Amounts presented for UBS AG standalone and UBS Switzerland AG standalone represent IFRS standalone information. Refer to the UBS AG standalone and UBS Switzerland AG standalone financial statements
under “Complementary financial information” at ubs.com/investors for information prepared in accordance with Swiss GAAP. 22 The ”Other subsidiaries“ column includes consolidated information for the UBS
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, as well as standalone information for other subsidiaries.
Supplemental guarantor consolidated statement of comprehensive income
UBS AG
(standalone)1
UBS
Switzerland AG
(standalone)1
Other
subsidiaries2
Elimination
entries
UBS AG
(consolidated)
4,840
1,868
2,588
(3,100)
6,196
USD m
For the year ended 31 December 2020
CCoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
Net profit / (loss)
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee iinnccoommee
ssttaatteemmeenntt
Foreign currency translation, net of tax
Financial assets measured at fair value through other
comprehensive income, net of tax
Cash flow hedges, net of tax
Cost of hedging, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt
Defined benefit plans, net of tax
Own credit on financial liabilities designated at fair value, net of tax
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee tthhaatt wwiillll nnoott bbee rreeccllaassssiiffiieedd ttoo tthhee
iinnccoommee ssttaatteemmeenntt,, nneett ooff ttaaxx
TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee
TToottaall ccoommpprreehheennssiivvee iinnccoommee aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
81
0
902
(13)
971
(67)
(293)
(360)
611
5,451
1,228
0
26
1,254
(107)
(107)
1,147
3,015
690
137
101
928
40
40
968
3,556
36
3,592
(969)
0
(18)
(988)
0
0
(988)
(4,088)
(4,088)
1,030
136
1,011
(13)
2,165
(134)
(293)
(427)
1,738
7,934
36
7,970
Total comprehensive income attributable to non-controlling interests
TToottaall ccoommpprreehheennssiivvee iinnccoommee
5,451
3,015
11 Amounts presented for UBS AG standalone and UBS Switzerland AG standalone represent IFRS standalone information. Refer to the UBS AG standalone and UBS Switzerland AG standalone financial statements
under “Complementary financial information” at ubs.com/investors for information prepared in accordance with Swiss GAAP. 22 The ”Other subsidiaries“ column includes consolidated information for the UBS
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, as well as standalone information for other subsidiaries.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
501
501
Note 34 Supplemental guarantor information required under SEC regulations (continued)
Supplemental guarantor consolidated statement of cash flows
USD m
For the year ended 31 December 2020
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ooppeerraattiinngg aaccttiivviittiieess
CCaasshh ffllooww ffrroomm // ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
Purchase of subsidiaries, associates and intangible assets
Disposal of subsidiaries, associates and intangible assets2
Purchase of property, equipment and software
Disposal of property, equipment and software
Purchase of financial assets measured at fair value through other comprehensive income
Disposal and redemption of financial assets measured at fair value through other comprehensive
income
Net (purchase) / redemption of debt securities measured at amortized cost
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
CCaasshh ffllooww ffrroomm // ((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess
Net short-term debt issued / (repaid)
Distributions paid on UBS AG shares
Issuance of debt designated at fair value and long-term debt measured at amortized cost3
Repayment of debt designated at fair value and long-term debt measured at amortized cost3
Net cash flows from other financing activities
Net activity related to group internal capital transactions and dividends
NNeett ccaasshh ffllooww ffrroomm // ((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess
Total cash flow
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Net cash flow from / (used in) operating, investing and financing activities
Effects of exchange rate differences on cash and cash equivalents
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr44
of which: cash and balances at central banks
of which: loans and advances to banks
of which: money market paper 5
UBS AG1
(14,883)
UBS
Switzerland AG1
24,661
Other
subsidiaries1
26,804
UBS AG
(consolidated)
36,581
0
14
(714)
361
(77)
79
(3,021)
(3,357)
23,828
(3,848)
78,867
(86,204)
(290)
2,984
15,336
39,598
(2,905)
2,706
39,400
34,283
4,085
1,032
(3)
0
(162)
0
0
0
132
(33)
17
0
1,057
(776)
0
(1,307)
(1,009)
62,551
23,619
7,171
93,342
91,638
1,695
9
(43)
660
(697)
3
(6,213)
4,451
(1,277)
(3,117)
0
0
229
(118)
(263)
(1,677)
(1,829)
17,655
21,859
1,175
40,689
32,167
8,148
374
(46)
674
(1,573)
364
(6,290)
4,530
(4,166)
(6,506)
23,845
(3,848)
80,153
(87,099)
(553)
0
12,498
119,804
42,573
11,053
173,430
158,088
13,928
1,415
11 Cash flows generally represent a third-party view from a UBS AG consolidated perspective, except for Net activity related to group internal capital transactions and dividends. 22 Includes cash proceeds from the
sale of the majority stake in Fondcenter AG and dividends received from associates. 33 Includes funding from UBS Group AG to UBS AG. 44 Balances with an original maturity of three months or less. USD 3,828m
of cash and cash equivalents were restricted. 55 Money market paper is included in the balance sheet under Financial assets at fair value held for trading, Financial assets measured at fair value through other
comprehensive income, Financial assets at fair value not held for trading and Other financial assets measured at amortized cost.
Annual Report 2022 | Consolidated financial statements | UBS AG consolidated financial statements
502
502
Standalone financial statements
Table of contents
504 UBS Group AG standalone financial statements
504
504
505
Income statement
Balance sheet
Statement of proposed appropriation of total profit and
dividend distribution out of total profit and capital
contribution reserve
506 Notes to the UBS Group AG standalone financial
statements
1
Corporate information
Accounting policies
Income statement notes
3
506
507
509
509
509
509
509
509
509
2
4
5
6
7
8
Dividend income from investments in subsidiaries
Other operating income
Financial income
Personnel expenses
Other operating expenses
Financial expenses
510
510
510
510
510
510
511
511
511
511
512
514
514
515
Liquid assets
Balance sheet notes
9
10 Marketable securities
11 Other short-term receivables
12
Accrued income and prepaid expenses
Investments in subsidiaries
Financial assets
14
15 Other non-current assets
16
Current interest-bearing liabilities
Accrued expenses and deferred income
Long-term interest-bearing liabilities
Compensation-related long-term liabilities
Share capital
Treasury shares
13
17
18
19
20
21
515 Additional information
515
22
515
516
517
23
24
25
518
26
Assets pledged to secure own liabilities
Contingent liabilities
Significant shareholders
Share ownership of the members of the Board of
Directors, the Group Executive Board and other
employees
Related parties
519
Report of the statutory auditor on the financial statements
Annual Report 2022 | Financial statements | Standalone financial statements
503
503
UBS Group AG standalone financial statements
Audited |
Income statement
Dividend income from investments in subsidiaries
Other operating income
Financial income
OOppeerraattiinngg iinnccoommee
Personnel expenses
Other operating expenses
Amortization of intangible assets
Financial expenses
OOppeerraattiinngg eexxppeennsseess
Profit / (loss) before income taxes
Tax expense / (benefit)
NNeett pprrooffiitt // ((lloossss))
Balance sheet
Assets
Liquid assets
Marketable securities
Other short-term receivables
Accrued income and prepaid expenses
TToottaall ccuurrrreenntt aasssseettss
Investments in subsidiaries
of which: investment in UBS AG
Financial assets
Other non-current assets
TToottaall nnoonn--ccuurrrreenntt aasssseettss
TToottaall aasssseettss
of which: amounts due from subsidiaries
Liabilities
Current interest-bearing liabilities
Accrued expenses and deferred income
TToottaall sshhoorrtt--tteerrmm lliiaabbiilliittiieess
Long-term interest-bearing liabilities
Compensation-related long-term liabilities
TToottaall lloonngg--tteerrmm lliiaabbiilliittiieess
TToottaall lliiaabbiilliittiieess
of which: amounts due to subsidiaries
Equity
Share capital
General reserves
of which: statutory capital reserve
of which: capital contribution reserve
Voluntary earnings reserve
Treasury shares
of which: against capital contribution reserve
Net profit / (loss)
EEqquuiittyy aattttrriibbuuttaabbllee ttoo sshhaarreehhoollddeerrss
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
USD m
CHF m
For the year ended
For the year ended
Note
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
3
4
5
6
7
8
44,,337733
4488
22,,000022
66,,442233
2200
1155
00
11,,998877
22,,002222
44,,440011
1122
44,,338899
4,672
12
1,806
6,490
21
44
4
1,751
1,819
4,671
7
4,664
44,,225555
4466
11,,991111
66,,221122
1199
1144
00
11,,889977
11,,993300
44,,228822
1111
44,,227711
4,270
12
1,653
5,935
19
40
4
1,603
1,665
4,270
6
4,264
USD m
CHF m
Note
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
9
10
11
12
13
14
15
16
17
18
19
20
21
11,,331122
110066
22,,663388
883399
44,,889955
4411,,119999
4400,,888899
6622,,997755
333366
110044,,550099
110099,,440044
1,901
102
4,942
703
7,648
41,199
40,889
56,350
250
97,800
105,448
11,,221133
9988
22,,443388
777755
44,,552244
3388,,008800
3377,,779933
5588,,220077
331100
9966,,559977
110011,,112211
1,733
93
4,505
641
6,973
37,560
37,277
51,373
228
89,161
96,133
6677,,551144
63,587
6622,,440033
57,970
44,,334444
22,,008844
66,,442299
6611,,668822
33,,220011
6644,,888833
7711,,331111
4,732
1,846
6,578
55,034
3,116
58,149
64,727
44,,001155
11,,992277
55,,994422
5577,,001122
22,,995599
5599,,997711
6655,,991133
4,314
1,683
5,997
50,172
2,841
53,013
59,010
22,,661144
741
22,,441166
675
335599
2233,,882266
2233,,882266
2233,,882266
1166,,336644
((66,,884444))
((22,,552255))
44,,338899
3388,,009933
377
26,161
26,161
26,161
14,146
(4,629)
(1,242)
4,664
40,720
110099,,440044
105,448
335522
2233,,552222
2233,,552222
2233,,552222
1133,,662200
((66,,555577))
((22,,440077))
44,,227711
3355,,220099
110011,,112211
370
25,682
25,682
25,682
11,153
(4,345)
(1,145)
4,264
37,124
96,133
504
504
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
Statement of proposed appropriation of total profit and dividend distribution out of total profit and capital
contribution reserve
The Board of Directors (the BoD) proposes that the Annual General Meeting of Shareholders (the AGM) on 5 April 2023
approve the appropriation of total profit and an ordinary dividend distribution of USD 0.55 (gross) in cash per share of
CHF 0.10 nominal value under the terms set out below:
Appropriation of and distribution out of total profit
Net profit for the period
Profit / (loss) carried forward
TToottaall pprrooffiitt aavvaaiillaabbllee ffoorr aapppprroopprriiaattiioonn
Appropriation to voluntary earnings reserve
Dividend distribution: USD 0.55 (gross) per dividend-bearing share, USD 0.275 of which out of total profit1
PPrrooffiitt // ((lloossss)) ccaarrrriieedd ffoorrwwaarrdd
USD m
CHF m
For the year ended
For the year ended
3311..1122..2222
44,,338899
00
44,,338899
((33,,441199))
((996699))
00
3311..1122..2222
44,,227711
00
44,,227711
((33,,337733))
((889977))22
00
11 Dividend-bearing shares are all shares issued except for treasury shares held by UBS Group AG as of the record date. The amount of USD 969m presented is based on the total number of shares issued as of
31 December 2022. If the final total amount of the dividend is higher / lower, the difference will be balanced through the appropriation to the voluntary earnings reserve. 22 For illustrative purposes, converted at the
closing exchange rate as of 31 December 2022 (CHF / USD 1.08).
Distribution out of capital contribution reserve
Total statutory capital reserve: capital contribution reserve before proposed distribution1
Dividend distribution: USD 0.55 (gross) per dividend-bearing share, USD 0.275 of which out of capital contribution reserve2
TToottaall ssttaattuuttoorryy ccaappiittaall rreesseerrvvee:: ccaappiittaall ccoonnttrriibbuuttiioonn rreesseerrvvee aafftteerr pprrooppoosseedd ddiissttrriibbuuttiioonn
USD m
CHF m
For the year ended
For the year ended
3311..1122..2222
2233,,882266
((996699))
2222,,885566
3311..1122..2222
2233,,552222
((889977))33
2222,,662255
11 The Swiss Federal Tax Administration’s current position is that, of the CHF 23.5bn capital contribution reserve available as of 31 December 2022, an amount limited to CHF 8.9bn is available from which dividends
may be paid without a Swiss withholding tax deduction. This amount includes a reduction of capital contribution reserves of CHF 1,379m in 2022 (based on the purchase price). 22 Dividend-bearing shares are all
shares issued except for treasury shares held by UBS Group AG as of the record date. The amount of USD 969m presented is based on the total number of shares issued as of 31 December 2022. 33 For illustrative
purposes, converted at the closing exchange rate as of 31 December 2022 (CHF / USD 1.08).
As set out above, half of the ordinary dividend distribution of USD 0.55 (gross) in cash per share is payable out of total
profit and the other half is payable out of the capital contribution reserve. The portion of the dividend paid out of total
profit will be subject to a 35% Swiss withholding tax.
The ordinary dividend distribution is declared in US dollars. Shareholders whose shares are held through SIX SIS AG will
receive dividends in Swiss francs, based on a published exchange rate calculated up to five decimal places on the day
prior to the ex-dividend date. Shareholders holding shares through DTC or directly registered in the US share register
with Computershare will be paid dividends in US dollars. The total amount of the dividend distribution will be capped at
CHF 3,366m (the Cap). To the extent that the Swiss franc equivalent of the total dividend distribution would exceed the
Cap on the day of the AGM, based on the exchange rate determined by the Board of Directors in its reasonable opinion,
the US dollar per share amount of the dividend will be reduced on a pro rata basis so that the total Swiss franc amount
does not exceed the Cap.
Provided that the proposed dividend distribution out of the total profit and the capital contribution reserve is approved,
the payment of the dividend will be made on 14 April 2023 to holders of shares on the record date of 13 April 2023.
The shares will be traded ex-dividend as of 12 April 2023 and, accordingly, the last day on which the shares may be
traded with entitlement to receive the dividend will be 11 April 2023.
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
505
505
Notes to the UBS Group AG standalone financial statements
Note 1 Corporate information
UBS Group AG is incorporated and domiciled in Switzerland and its registered office is at Bahnhofstrasse 45, CH-8001
Zurich, Switzerland. UBS Group AG operates under Art. 620 et seq. of the Swiss Code of Obligations as an
Aktiengesellschaft (a corporation limited by shares).
The UBS Group AG standalone financial statements are prepared in accordance with the principles of the Swiss law on
accounting and financial reporting (32nd title of the Swiss Code of Obligations).
The significant accounting and valuation principles applied are described in Note 2 Accounting policies.
UBS Group AG is the ultimate holding company of the UBS Group, the grantor of the majority of UBS’s deferred
compensation plans and the issuer of loss-absorbing capital notes which qualify as Basel III additional tier 1 (AT1) capital
on a consolidated UBS Group basis and senior unsecured debt which contributes to the total loss-absorbing capacity
(TLAC) of the Group.
The proceeds from the issuances of loss-absorbing AT1 capital notes and TLAC-eligible senior unsecured debt instruments
are on lent to UBS AG.
› Refer to Notes 16 and 18 for more information about the main terms and conditions of the loss-absorbing AT1 capital notes and
TLAC-eligible senior unsecured debt instruments issued
Furthermore, UBS Group AG grants Deferred Contingent Capital Plan (DCCP) awards to UBS Group employees. These
DCCP awards also qualify as Basel III AT1 capital on a consolidated UBS Group basis.
As of 31 December 2022, UBS Group AG’s distributable items for the purpose of AT1 capital instruments were
USD 37.7bn (CHF 34.8bn) (31 December 2021: USD 40.3bn (CHF 36.7bn)). For this purpose, distributable items are
defined in the terms and conditions of the relevant instruments as the aggregate of (i) net profits carried forward and
(ii) freely distributable reserves, in each case less any amounts that must be contributed to legal reserves under applicable
law.
In 2022, as approved by shareholders at the Annual General Meeting (the AGM) held on 6 April 2022, the cancellation
of 177,787,273 shares, each with a nominal value of CHF 0.10, acquired under the 2021 share repurchase program from
its inception in 2021 until 18 February 2022, was executed. The cancellation of these shares resulted in reclassifications
within equity but had no net effect on the total equity attributable to shareholders. Share capital has been reduced by
the nominal value of the repurchased shares upon cancellation, i.e., USD 18m (CHF 18m). Following the requirements of
Swiss tax law for Switzerland-domiciled companies with shares listed on a Swiss stock exchange, effective 1 January
2020, the capital contribution reserve and the voluntary earnings reserve were each reduced by 50% of the total capital
reduction amount exceeding the nominal value upon cancellation of the shares, i.e., each by USD 1,502m (CHF 1,383m).
Following revisions to Swiss Corporate Law that are effective from 1 January 2023, the Board of Directors (the BoD) will
propose at the 2023 AGM that the shareholders approve the conversion of the share capital currency of UBS Group AG
from the Swiss franc to the US dollar. This would align the share capital currency with the functional currency of
UBS Group AG. If the change is approved, the share capital of UBS Group AG will be slightly reduced to a nominal value
per share of USD 0.10 (from CHF 0.10 currently), with the amount of the reduction allocated to the capital contribution
reserve. If approved, the conversion will be implemented with retroactive effect as of 1 January 2023 for accounting
purposes based on the closing exchange rate from 30 December 2022. Total equity reported for UBS Group AG will not
change.
Presentation currencies
The primary presentation currency of the standalone financial statements of UBS Group AG is the US dollar, in line with
its functional currency. Amounts in Swiss francs are additionally presented for each component of the financial
statements. UBS Group AG applies the modified closing rate method for converting US dollar amounts into Swiss francs:
assets and liabilities are translated at the closing rate, equity positions at historic rates, and income and expense items at
the weighted average rate for the period. All resulting currency translation effects are recognized separately in Voluntary
earnings reserve, amounting to a negative currency translation effect of CHF 2,343m as of 31 December 2022
(31 December 2021: negative CHF 2,808m).
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
506
506
Note 2 Accounting policies
Foreign currency translation
Transactions denominated in foreign currency are translated into US dollars at the spot exchange rate on the date of the
transaction. At the balance sheet date, all current assets and short-term liabilities, as well as Financial assets measured at
fair value that are denominated in a foreign currency, are translated into US dollars using the closing exchange rate. For
Other non-current assets and long-term liabilities, where the asset mirrors the terms of a corresponding liability or the
asset and liability otherwise form an economic hedge relationship, the asset and liability are treated as one unit of account
for foreign currency translation purposes, with offsetting unrealized foreign currency translation gains and losses based
on the closing exchange rate presented net in the income statement. Investments in subsidiaries measured at historic
cost are translated at the spot exchange rate on the date of the transaction. Currency translation effects from dividends
paid in Swiss francs are recognized in equity. All other currency translation effects are recognized in the income
statement.
The main currency translation rates used by UBS Group AG are provided in Note 32 of the consolidated financial
statements.
Marketable securities
Marketable securities include investments in alternative investment vehicles (AIVs) with a short-term holding period. The
holding period is deemed short term if the vesting of the awards hedged by the AIV is within 12 months after the balance
sheet date. These are equity instruments and are measured at fair value based on quoted market prices or other
observable market prices as of the balance sheet date. Gains and losses resulting from fair value changes are recognized
in Financial income and Financial expenses, respectively.
Financial assets
Financial assets include investments in AIVs with a long-term holding period. The holding period is deemed long term if
the vesting of the awards hedged by the AIV is more than 12 months after the balance sheet date. These are equity
instruments and are measured at fair value based on their quoted market prices or other observable market prices as of
the balance sheet date. Gains and losses resulting from fair value changes are recognized in Financial income and Financial
expenses, respectively.
Investments in AIVs that have no quoted market price or no other observable market price are recognized as Financial
assets and are measured at their acquisition cost adjusted for impairment losses.
Financial assets further include loans granted to UBS AG that substantially mirror the terms of the perpetual AT1 capital
notes and the TLAC-eligible senior unsecured debt instruments issued, as well as fixed-term deposits with UBS AG with
maturities more than 12 months after the balance sheet date. The loans and deposits are measured at cost value.
› Refer to Note 14 for more information
Derivative instruments
UBS Group AG uses derivative instruments to manage exposures to foreign currency risks from investments in foreign
subsidiaries. The derivative instruments are entered into with UBS AG, mirroring the conditions of the closing transactions
UBS AG enters into with third parties.
Derivative instruments are measured at fair value based on quoted market prices or other observable market prices as of
the balance sheet date. Unrealized gains and losses are recognized on the balance sheet as Accrued income and prepaid
expenses and Accrued expenses and deferred income, respectively. Corresponding gains and losses resulting from fair
value changes are recognized in Financial income and Financial expenses, respectively.
Investments in subsidiaries
Investments in subsidiaries are equity interests that are held to carry on the business of the UBS Group or for other
strategic purposes. They include all subsidiaries directly held by UBS Group AG through which UBS conducts its business
on a global basis. The investments are measured individually and carried at cost less impairment.
› Refer to Note 13 for more information
› Refer to Note 2 in the “Consolidated financial statements” section of this report for a description of businesses of the UBS Group
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
507
507
Note 2 Accounting policies (continued)
Long-term interest-bearing liabilities
Long-term interest-bearing liabilities include perpetual loss-absorbing capital notes that qualify as Basel III AT1 capital and
TLAC-eligible senior unsecured debt instruments at Group level. They are measured at nominal value. Any difference to
nominal value, e.g., premium, discount or external costs that are directly related to the issue, is deferred as Other non-
current assets or Accrued expenses and deferred income and amortized to Financial expenses or Financial income over
the maturity of the instrument or until the first call date or optional redemption date, where applicable.
› Refer to Note 18 for more information
Treasury shares
Treasury shares acquired by UBS Group AG are recognized at acquisition cost and are presented as a deduction from
shareholders’ equity.
Upon disposal of treasury shares or settlement of related share-based awards, any realized gain or loss is recognized in
Voluntary earnings reserve. Realized gains and losses from settlement of share-based awards represent the difference
between the acquisition cost of the UBS Group AG shares and the grant date fair value of the share-based awards. For
the year ended 31 December 2022, a net loss of USD 111m (CHF 102m) from settlement of share-based awards was
recognized in Voluntary earnings reserve (2021 comparative period: a net gain of USD 9m (CHF 8m)).
For UBS Group AG shares acquired by a direct or indirect subsidiary, a Reserve for own shares held by subsidiaries is
generally created in UBS Group AG’s equity. However, where UBS AG or UBS Switzerland AG acquire UBS Group AG
shares and hold such in their trading portfolios, no Reserve for own shares held by subsidiaries is created.
› Refer to Note 21 for more information
Share-based and other deferred compensation plans
Share-based compensation plans
The grant date fair value of equity-settled share-based compensation awards granted to employees is generally
recognized over the vesting period of the awards. Awards granted in the form of UBS Group AG shares and notional
shares are settled by delivering UBS Group AG shares at vesting, except in jurisdictions where this is not permitted for
legal or tax reasons. They are recognized as Compensation-related long-term liabilities if vesting is more than 12 months
after the balance sheet date, or as Accrued expenses and deferred income if vesting is within 12 months of the balance
sheet date. The amount recognized is adjusted for forfeiture assumptions, such that the amount ultimately recognized is
based on the number of awards that meet the related service conditions at the vesting date. The grant date fair value is
based on the UBS Group AG share price on the date of grant, taking into consideration post-vesting sale and hedge
restrictions, dividend rights, non-vesting conditions, and market conditions, where applicable.
Upon settlement of the share-based awards, any realized gain or loss on the treasury shares is recognized in Voluntary
earnings reserve. Realized gains and losses from settlement of share-based awards represent the difference between the
acquisition cost of the UBS Group AG shares and the grant date fair value of the share-based awards.
Other deferred compensation plans
Deferred compensation plans that are not share-based, including DCCP awards and awards in the form of AIVs, are
accounted for as cash-settled awards. The present value or fair value of the amount payable to employees that is settled
in cash is recognized as a liability generally over the vesting period, as Compensation-related long-term liabilities if vesting
is more than 12 months after the balance sheet date, and as Accrued expenses and deferred income if vesting is within
12 months from the balance sheet date. The liabilities are remeasured at each balance sheet date at the present value of
the corresponding DCCP award and the fair value of investments in AIVs. Gains and losses resulting from remeasurement
of the liabilities are recognized in Other operating income and Other operating expenses, respectively.
Recharge of compensation expenses
Expenses related to deferred compensation plans are recharged by UBS Group AG to its subsidiaries employing the
personnel. Upon recharge, UBS Group AG recognizes a receivable from its subsidiaries corresponding to a liability
representing its obligation toward the employees.
Dispensations in the standalone financial statements
As UBS Group AG prepares consolidated financial statements in accordance with IFRS, UBS Group AG is exempt from
various disclosures in the standalone financial statements. The dispensations include the management report and the
statement of cash flows, as well as certain note disclosures.
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
508
508
Income statement notes
Note 3 Dividend income from investments in subsidiaries
(the AGM) of UBS AG on 5 April 2022, and USD 173m
Dividend income from investments in subsidiaries in 2022 consisted of USD 4,200m (CHF 4,087m) received from UBS AG
related to the financial year ended 31 December 2021, which was approved by the annual general meeting of the
shareholders
from
UBS Business Solutions AG related to the financial year ended 31 December 2021, which was approved by the AGM of
UBS Business Solutions AG on 5 April 2022. In 2021, dividend income from investments in subsidiaries consisted of
USD 4,539m (CHF 4,149m) received from UBS AG related to the financial year ended 31 December 2020, which was
approved by the AGM of UBS AG on 7 April 2021, USD 133m (CHF 122m) received from UBS Business Solutions AG
related to the financial year ended 31 December 2020, which was approved by the AGM of UBS Business Solutions AG
on
from
UBS Group Funding (Switzerland) AG in Liquidation following liquidation of the entity in the course of 2020, which was
approved by the extraordinary general meeting of the shareholders of UBS Group Funding (Switzerland) AG in
Liquidation held on 8 October 2020.
a USD 0.2m
(CHF 168m)
liquidation
7 April
dividend
received
received
2021,
0.2m)
(CHF
and
net
Note 4 Other operating income
Fair value gains on AIV awards
Gains related to equity-settled awards
TToottaall ootthheerr ooppeerraattiinngg iinnccoommee
Note 5 Financial income
Interest income on onward lending to UBS AG1
Interest income on other interest-bearing assets
Fair value gains on investments in AIVs
Other
USD m
For the year ended
3311..1122..2222
4455
31.12.21
0
33
4488
12
12
CHF m
For the year ended
3311..1122..2222
4444
31.12.21
0
22
4466
12
12
USD m
For the year ended
3311..1122..2222
11,,992299
31.12.21
1,756
CHF m
For the year ended
3311..1122..2222
11,,884411
31.12.21
1,608
5555
00
1188
21
23
6
5533
00
1177
19
21
6
TToottaall ffiinnaanncciiaall iinnccoommee
1,653
11 Interest income on onward lending to UBS AG of the proceeds from the issuances of TLAC-eligible senior unsecured debt and loss-absorbing additional tier 1 perpetual capital notes. Refer to Note 1 for more
information.
1,806
11,,991111
22,,000022
Note 6 Personnel expenses
Personnel expenses include recharges from UBS AG and UBS Business Solutions AG for personnel-related costs for
activities performed by the personnel of those companies for the benefit of UBS Group AG.
UBS Group AG had no employees throughout 2022 and 2021. All employees of the UBS Group, including the members
of the Group Executive Board (the GEB) of UBS Group AG, were employed by subsidiaries of UBS Group AG. As of
31 December 2022, the UBS Group employed 72,597 personnel (31 December 2021: 71,385) on a full-time equivalent
basis.
Note 7 Other operating expenses
Fair value losses on AIV awards
Capital tax
Other
TToottaall ootthheerr ooppeerraattiinngg eexxppeennsseess
Note 8 Financial expenses
Interest expense on interest-bearing liabilities
Fair value losses on investments in AIVs
Other
TToottaall ffiinnaanncciiaall eexxppeennsseess
USD m
For the year ended
3311..1122..2222
00
31.12.21
23
CHF m
For the year ended
3311..1122..2222
00
31.12.21
21
55
1100
1155
9
11
44
55
1100
1144
8
10
40
USD m
For the year ended
3311..1122..2222
11,,993311
31.12.21
1,740
4444
1133
0
11
CHF m
For the year ended
3311..1122..2222
11,,884422
31.12.21
1,593
4422
1133
0
10
11,,998877
1,751
11,,889977
1,603
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
509
509
Balance sheet notes
Note 9 Liquid assets
As of 31 December 2022, liquid assets consisted of USD 1,039m (CHF 960m) held in current accounts at
UBS Switzerland AG and UBS AG and USD 274m (CHF 253m) of time deposits placed with UBS AG. As of 31 December
2021, liquid assets consisted of USD 590m (CHF 538m) held in current accounts at UBS Switzerland AG and UBS AG and
USD 1,311m (CHF 1,195m) of time deposits placed with UBS AG.
Note 10 Marketable securities
Marketable securities include investments in alternative investment vehicles (AIVs) related to compensation awards vesting
within 12 months after the balance sheet date.
Note 11 Other short-term receivables
Onward lending to UBS AG1
Receivables from employing entities related to compensation awards
Other
TToottaall ootthheerr sshhoorrtt--tteerrmm rreecceeiivvaabblleess
USD m
CHF m
3311..1122..2222
22,,000000
559900
4488
22,,663388
31.12.21
4,252
639
51
4,942
3311..1122..2222
11,,884499
554455
4444
22,,443388
31.12.21
3,876
583
46
4,505
11 Short-term receivables from the onward lending to UBS AG of the proceeds from the issuances of TLAC-eligible senior unsecured debt and loss-absorbing additional tier 1 perpetual capital notes. Refer to Note 1 for
more information.
Note 12 Accrued income and prepaid expenses
Accrued interest income
Other accrued income and prepaid expenses
TToottaall aaccccrruueedd iinnccoommee aanndd pprreeppaaiidd eexxppeennsseess
Note 13 Investments in subsidiaries
USD m
CHF m
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
883399
00
883399
703
0
703
777755
00
777755
641
0
641
Unless otherwise stated, the subsidiaries listed below have share capital consisting solely of ordinary shares, which are
held by UBS Group AG or UBS AG. The proportion of ownership interest held is equal to the voting rights held by
UBS Group AG or UBS AG. The country where the respective registered office is located is also the principal place of
business. UBS AG operates through a global network of branches and a significant proportion of its business activity is
conducted outside Switzerland, 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, Italy, Luxembourg and Spain. Share
capital is provided in the currency of the legally registered office.
Individually significant subsidiaries of UBS Group AG as of 31 December 2022
Company
UBS AG
Registered office
Zurich and Basel, Switzerland
UBS Business Solutions AG1
11 UBS Business Solutions AG holds subsidiaries in China, India, Israel and Poland.
Zurich, Switzerland
Share capital in million
Equity interest accumulated in %
CHF
CHF
385.8
1.0
100.0
100.0
Individually significant subsidiaries of UBS AG as of 31 December 20221
Company
Registered office
UBS Americas Holding LLC
Wilmington, Delaware, USA
UBS Americas Inc.
Wilmington, Delaware, USA
Primary business
Group Functions
Group Functions
UBS Asset Management AG
Zurich, Switzerland
Asset Management
UBS Bank USA
UBS Europe SE
Salt Lake City, Utah, USA
Global Wealth Management
Frankfurt, Germany
Global Wealth Management
UBS Financial Services Inc.
Wilmington, Delaware, USA
Global Wealth Management
UBS Securities LLC
UBS Switzerland AG
Wilmington, Delaware, USA
Investment Bank
Zurich, Switzerland
Personal & Corporate Banking
Share capital in million
5,150.02
USD
USD
CHF
USD
EUR
USD
USD
CHF
0.0
43.2
0.0
446.0
0.0
1,283.13
10.0
Equity interest accumulated in %
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
11 Includes direct and indirect subsidiaries of UBS AG. 22 Consists of common share capital of USD 1,000 and non-voting preferred share capital of USD 5,150,000,000. 33 Consists of common share capital of
USD 100,000 and non-voting preferred share capital of USD 1,283,000,000.
Individually significant subsidiaries of UBS AG are those entities that contribute significantly to the Group’s financial
position or results of operations, based on a number of criteria, including the subsidiaries’ equity and their contribution
to the Group’s total assets and profit or loss before tax, in accordance with Swiss regulations.
› Refer to Note 28 in the “Consolidated financial statements” section of this report for more information
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
510
510
Note 14 Financial assets
Long-term receivables from UBS AG
of which: onward lending1
Investments in alternative investment vehicles at fair value related to awards vesting after 12 months
Investments in alternative investment vehicles at cost less impairment
Other
TToottaall ffiinnaanncciiaall aasssseettss
USD m
CHF m
3311..1122..2222
6622,,445555
31.12.21
55,763
3311..1122..2222
5577,,772277
31.12.21
50,837
6611,,337711
54,781
5566,,772244
49,942
228811
11
223388
332
2
253
226600
11
222200
303
2
230
6622,,997755
56,350
5588,,220077
51,373
11 Onward lending to UBS AG of the proceeds from the issuances of TLAC-eligible senior unsecured debt and loss-absorbing additional tier 1 perpetual capital notes. Refer to Note 1 for more information.
Note 15 Other non-current assets
Unamortized issuance fees and discounts
Receivables from employing entities related to compensation awards
TToottaall ootthheerr nnoonn--ccuurrrreenntt aasssseettss
Note 16 Current interest-bearing liabilities
USD m
CHF m
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
330033
3333
333366
224
26
250
228800
3300
331100
204
24
228
As of 31 December 2022, current interest-bearing liabilities totaled USD 4,344m (CHF 4,015m), consisting of loss-
absorbing additional tier 1 (AT1) perpetual capital notes of USD 2,000m (CHF 1,849m) and loans from UBS AG and
UBS Switzerland AG of USD 2,344m (CHF 2,167m). As of 31 December 2021, current interest-bearing liabilities totaled
USD 4,732m (CHF 4,314m), consisting of total loss absorbing capacity (TLAC)-eligible senior unsecured debt instruments
of USD 4,252m (CHF 3,876m) and loans from UBS AG and UBS Switzerland AG of USD 480m (CHF 437m).
Notes issued, overview by amount, maturity and coupon
3311..1122..2222
CCaarrrryyiinngg aammoouunntt
31.12.21
Carrying amount
CCoonnttrraaccttuuaall
mmaattuurriittyy
FFiirrsstt ooppttiioonnaall
ccaallll ddaattee
iinn ttrraannssaaccttiioonn
ccuurrrreennccyy
in transaction
currency
CCoouuppoonn11
nn//aa
11..22..2222
11..22..2222
iinn UUSSDD
33MM UUSSDD LLIIBBOORR ++ 115533 bbppss
In m, except where indicated
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Swiss franc-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes
0
TToottaall nnootteess iissssuueedd
33,,887766
11 For TLAC-eligible senior unsecured notes, the disclosed coupon rate refers to the contractual coupon rate applied from the issue date up to the contractual maturity date or, if applicable, to the first optional call
date. For the loss-absorbing additional tier 1 perpetual capital notes, the disclosed coupon rate refers to the contractual fixed coupon rate from the issue date up to the first optional call date. 22 On 5 December
2022 we announced that we intended to redeem the instrument on 31 January 2023, the first call date.
0
44,,225522
11,,884499
11,,884499
22,,000000
22,,000000
3311..11..223322
PPeerrppeettuuaall
1166..1111..2222
2222..22..2222
22..6655%%
00..7755%%
11..7755%%
in USD
in CHF
iinn CCHHFF
1,297
1,250
2,000
1,823
1,423
2,000
22,,000000
300
300
500
456
500
329
55%%
nn//aa
nn//aa
nn//aa
00
00
00
00
00
00
00
00
00
00
00
00
0
Note 17 Accrued expenses and deferred income
Short-term portion of compensation-related liabilities
of which: Deferred Contingent Capital Plan
of which: other deferred compensation plans
Accrued interest expense
Other
TToottaall aaccccrruueedd eexxppeennsseess aanndd ddeeffeerrrreedd iinnccoommee
USD m
CHF m
3311..1122..2222
11,,119911
31.12.21
1,157
3311..1122..2222
11,,110011
31.12.21
1,054
339911
880011
779966
9977
384
773
664
25
336611
774400
773366
9900
350
705
606
23
22,,008844
1,846
11,,992277
1,683
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
511
511
Note 18 Long-term interest-bearing liabilities
As of 31 December 2022, long-term interest-bearing liabilities totaled USD 61,682m (CHF 57,012m), consisting of loss-
absorbing AT1 perpetual capital notes and TLAC-eligible senior unsecured debt instruments of USD 61,444m
(CHF 56,792m) and fixed-term loans from UBS AG of USD 238m (CHF 220m). As of 31 December 2021, long-term
interest-bearing liabilities totaled USD 55,034m (CHF 50,172m), consisting of loss-absorbing AT1 perpetual capital notes
and TLAC-eligible senior unsecured debt instruments of USD 54,781m (CHF 49,942m) and fixed-term loans from UBS AG
of USD 253m (CHF 230m).
Notes issued, overview by amount, maturity and coupon
In m, except where indicated
US dollar-denominated TLAC-eligible senior
unsecured notes2
US dollar-denominated TLAC-eligible senior
unsecured notes2
US dollar-denominated TLAC-eligible senior
unsecured notes3
US dollar-denominated TLAC-eligible senior
unsecured notes3
Euro-denominated low-trigger loss-absorbing
additional tier 1 perpetual capital notes4
US dollar-denominated high-trigger loss-absorbing
additional tier 1 perpetual capital notes5
Euro-denominated TLAC-eligible senior unsecured
notes
Swiss franc-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Yen-denominated TLAC-eligible senior unsecured
notes
Euro-denominated TLAC-eligible senior unsecured
notes
Swiss franc-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
Swiss franc-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
CCoonnttrraaccttuuaall
mmaattuurriittyy
FFiirrsstt ooppttiioonnaall
ccaallll ddaattee
2233..55..2233
2233..55..2222
CCoouuppoonn11
33..449911%%
2233..55..2233
2233..55..2222
33MM UUSSDD LLIIBBOORR ++ 112222 bbppss
1155..88..2233
1155..88..2222
33MM UUSSDD LLIIBBOORR ++ 9955 bbppss
1155..88..2233
1155..88..2222
PPeerrppeettuuaall
1199..22..2222
PPeerrppeettuuaall
3311..11..2233
44..33..2244
nn//aa
1188..55..2244
1188..55..2233
22..885599%%
55..7755%%
55%%
22..112255%%
00..662255%%
3311..1122..2222
CCaarrrryyiinngg aammoouunntt
31.12.21
Carrying amount
iinn ttrraannssaaccttiioonn
ccuurrrreennccyy
iinn UUSSDD
iinn CCHHFF
in transaction
currency
in USD
in CHF
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
2,000
2,000
1,823
1,000
1,000
912
1,250
1,250
1,140
2,000
2,000
1,823
1,000
1,138
1,038
2,000
2,000
1,823
775500
880022
774422
750
854
778
440000
443333
440000
400
439
400
3300..77..2244
3300..77..2233
11..000088%%
11,,330000
11,,330000
11,,220022
1,300
1,300
1,185
88..1111..2244
88..1111..2233
00..771199%%
113300,,000000
999911
991166
130,000
1,130
1,030
3300..1111..2244
3300..1111..2233
11..55%%
11,,225500
11,,333377
11,,223366
1,250
1,423
1,297
3300..11..2255
3300..11..2244
00..887755%%
440000
443333
440000
400
439
400
2211..33..2255
2211..33..2244
11%%
11,,550000
11,,660055
11,,448833
0
0
0
1177..44..2255
1177..44..2244
55..88..2255
55..88..2244
11..2255%%
44..4499%%
11,,775500
11,,887722
11,,773311
1,750
1,992
1,816
11,,775500
11,,775500
11,,661188
0
0
0
2244..99..2255
nn//aa
44..112255%%
22,,550000
22,,550000
22,,331111
2,500
2,500
2,279
2299..11..2266
2299..11..2255
2233..22..2266
1155..44..2266
nn//aa
nn//aa
00..2255%%
11..2255%%
11,,550000
11,,660055
11,,448833
1,500
1,708
1,557
115500
116622
115500
150
165
150
44..112255%%
22,,000000
22,,000000
11,,884499
2,000
2,000
1,823
1122..55..2266
1122..55..2255
44..448888%%
11,,220000
11,,220000
11,,110099
1122..55..2266
1122..55..2255
SSOOFFRR ++ 115588bbppss
660000
660000
555555
0
0
0
0
0
0
11..99..2266
11..66..2266
33..1111..2266
33..1111..2255
11..2255%%
00..2255%%
11,,225500
11,,333377
11,,223366
1,250
1,423
1,297
11,,225500
11,,333377
11,,223366
1,250
1,423
1,297
3300..11..2277
3300..11..2266
11..336644%%
11,,330000
11,,330000
11,,220022
1,300
1,300
1,185
1155..66..2277
1155..66..2266
22..7755%%
11,,000000
11,,007700
998899
55..88..2277
55..88..2266
44..770033%%
11,,775500
11,,775500
11,,661188
0
0
0
0
0
0
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
512
512
Note 18 Long-term interest-bearing liabilities (continued)
Notes issued, overview by amount, maturity and coupon (continued)
3311..1122..2222
CCaarrrryyiinngg aammoouunntt
31.12.21
Carrying amount
In m, except where indicated
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
Yen-denominated TLAC-eligible senior unsecured
notes
Swiss franc-denominated TLAC-eligible senior
unsecured notes
Swiss franc-denominated TLAC-eligible senior
unsecured notes
Pound sterling-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Australian dollar-denominated TLAC-eligible
senior unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Australian dollar-denominated TLAC-eligible
senior unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Australian dollar-denominated TLAC-eligible
senior unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
Australian dollar-denominated TLAC-eligible
senior unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
Euro-denominated TLAC-eligible senior unsecured
notes
Euro-denominated TLAC-eligible senior unsecured
notes
Yen-denominated TLAC-eligible senior unsecured
notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
CCoonnttrraaccttuuaall
mmaattuurriittyy
FFiirrsstt ooppttiioonnaall
ccaallll ddaattee
CCoouuppoonn1
iinn ttrraannssaaccttiioonn
ccuurrrreennccyy
iinn UUSSDD
iinn CCHHFF
in transaction
currency
in USD
in CHF
1100..88..2277
1100..88..2266
11..449944%%
22,,000000
22,,000000
11,,884499
2,000
2,000
1,823
2244..22..2288
nn//aa
00..2255%%
11,,000000
11,,007700
998899
1,000
1,138
1,038
2233..33..2288
2233..33..2277
44..225533%%
22,,000000
22,,000000
11,,884499
2,000
2,000
1,823
1122..55..2288
1122..55..2277
44..775511%%
11,,220000
11,,220000
11,,110099
0
0
0
55..1111..2288
55..1111..2277
00..2255%%
11,,550000
11,,660055
11,,448833
1,500
1,708
1,557
99..1111..2288
99..1111..2277
00..997733%%
2200,,000000
115522
114411
20,000
174
158
99..1111..2288
99..1111..2277
2244..88..2299
2244..88..2288
33..1111..2299
33..1111..2288
00..443355%%
00..337755%%
11..887755%%
444400
447766
444400
440
483
440
336600
338899
336600
360
395
360
440000
448833
444466
400
541
494
1155..66..3300
1155..66..2299
33..112255%%
11,,000000
11,,007700
998899
0
0
0
1133..88..3300
1133..88..2299
33..112266%%
11,,550000
11,,550000
11,,338866
1,500
1,500
1,368
33..1111..3311
nn//aa
00..887755%%
11,,225500
11,,333377
11,,223366
1,250
1,423
1,297
1111..22..3322
1111..22..3311
2255..33..3322
2255..33..2255
22..009955%%
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 44..55%%))
2211..99..3322
2211..99..2277
44..0033%%
3366
3300
2255
3322
2233
3300
1111..22..3333
1111..22..3322
22..774466%%
11,,550000
11,,550000
11,,338866
22,,000000
22,,000000
11,,884499
2,000
2,000
1,823
2244..22..3333
nn//aa
00..662255%%
11,,225500
11,,333377
11,,223366
1,250
1,423
1,297
0
0
0
0
0
0
0
0
0
0
37
40
45
25
40
0
0
0
0
0
0
0
0
0
27
40
33
25
40
0
0
0
0
0
0
0
0
0
25
36
30
23
36
0
0
0
0
0
0
0
0
55..88..3333
55..88..3322
1188..88..3355
1188..88..3300
44..998888%%
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 22..55%%))
2244..1111..3355
2244..1111..2233
33..1122..3355
33..1122..2233
2255..22..3366
2255..22..2244
44..33..3366
44..33..2244
1177..55..3377
1166..55..2277
1188..55..3377
1188..55..2255
1155..99..3377
1155..99..3344
2222..66..4422
2222..66..2299
88..99..4422
88..99..3322
22..2211%%
22..33%%
22..3377%%
22..4499%%
33..7733%%
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((ssiimmppllee iinntteerreesstt ooff 88..9922%%))
44..11%%
33..6633%%
44..0099%%
1111..22..4433
1111..22..4422
2299..33..4477
2299..33..2277
44..1111..4499
44..1111..2244
44..33..5500
44..33..2255
33..117799%%
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 44..0022%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 33..88%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 33..66%%))
11,,550000
11,,550000
11,,338866
3388
4400
4455
2255
4400
4455
5577
2266
4400
3311
2255
4400
4488
3399
2244
3377
2288
2233
3377
4455
3366
112200
112288
111199
2255
3377
2277
4400
7766
2255
3377
7700
11,,550000
11,,550000
11,,338866
8822
8822
7766
2288..99..4422
nn//aa
11..7799%%
1100,,000000
115577
115577
114466
152
152
138
113333
113333
112233
128
128
117
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
513
513
Note 18 Long-term interest-bearing liabilities (continued)
Notes issued, overview by amount, maturity and coupon (continued)
3311..1122..2222
CCaarrrryyiinngg aammoouunntt
31.12.21
Carrying amount
CCoonnttrraaccttuuaall
mmaattuurriittyy
FFiirrsstt ooppttiioonnaall
ccaallll ddaattee
iinn ttrraannssaaccttiioonn
ccuurrrreennccyy
in transaction
currency
9955
6600
6655
9977
5599
5544
5599
92
94
52
57
57
96
116666
332222
550055
110011
220066
118800
334488
110055
554477
222222
110099
159
174
309
174
338
103
338
103
214
528
482
528
214
106
106
195
228800
118800
334488
110055
554477
110099
222222
iinn CCHHFF
in CHF
iinn UUSSDD
in USD
1166..88..3322
2266..55..2266
2266..22..2266
2266..22..2266
1122..11..2266
2299..11..2266
2222..99..2233
2277..55..2255
2222..55..2255
1144..44..2255
1122..11..5511
2266..55..5511
1166..88..5522
2299..11..5511
2266..22..5511
2222..99..5500
2222..55..5500
2266..22..5511
2277..55..5500
1144..44..5500
CCoouuppoonn1
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 44%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 33..55%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 33..55%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 22..88%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 22..77%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 22..88%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 33%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 33..0011%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 33..55%%))
ZZeerroo ccoouuppoonn aaccccrreettiinngg
((aannnnuuaall yyiieelldd ooff 44..0044%%))
In m, except where indicated
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Australian dollar-denominated TLAC-eligible
senior unsecured notes
US dollar-denominated TLAC-eligible senior
unsecured notes
Euro-denominated TLAC-eligible senior unsecured
notes
Singapore dollar-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes
US dollar-denominated high-trigger loss-absorbing
additional tier 1 perpetual capital notes
Australian dollar-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes
Singapore dollar-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes
US dollar-denominated low-trigger loss-absorbing
additional tier 1 perpetual capital notes
US dollar-denominated high-trigger loss-absorbing
additional tier 1 perpetual capital notes
Swiss franc-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes
US dollar-denominated high-trigger loss-absorbing
additional tier 1 perpetual capital notes
US dollar-denominated high-trigger loss-absorbing
additional tier 1 perpetual capital notes
US dollar-denominated high-trigger loss-absorbing
additional tier 1 perpetual capital notes
Swiss franc-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes
US dollar-denominated high-trigger loss-absorbing
additional tier 1 perpetual capital notes
TToottaall nnootteess iissssuueedd
11 For TLAC-eligible senior unsecured notes, the disclosed coupon rate refers to the contractual coupon rate applied from the issue date up to the contractual maturity date or, if applicable, to the first optional call
date. For the loss-absorbing additional tier 1 perpetual capital notes, the disclosed coupon rate refers to the contractual fixed coupon rate from the issue date up to the first optional call date. 22 Instrument was
redeemed on 23 May 2022. 33 Instrument was redeemed on 15 August 2022. 44 Instrument was redeemed on 19 February 2022. 55 On 5 December 2022 we announced that we intended to redeem the instrument
on 31 January 2023, the first call date.
11,,338866
5566,,779922
1,368
4499,,994422
11,,550000
6611,,444444
1,500
5544,,778811
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
PPeerrppeettuuaall
2288..1111..2233
1133..1111..2255
55..887755%%
44..337755%%
66..887755%%
33..887755%%
44..887755%%
55..112255%%
33..337755%%
44..337755%%
3311..11..2244
2277..88..2244
1199..22..2255
2299..77..2266
1122..22..2277
1100..22..3311
1166..22..2277
44..8855%%
2,500
2,500
2,279
1,250
1,250
1,140
1,575
1,575
1,436
1,500
22,,550000
11,,225500
11,,557755
11,,550000
22,,550000
22,,331111
44..99..2244
11,,225500
11,,115555
77..88..2255
11,,557755
11,,445566
22..66..2266
11,,550000
11,,338866
11,,550000
770000
770000
775500
227755
775500
775500
226655
271
271
247
700
519
473
700
509
464
750
556
507
275
302
275
750
750
684
750
750
684
228800
110055
552233
447777
556600
229988
775500
775500
228877
225599
448833
444400
551188
227755
669933
669933
226655
77%%
77%%
33%%
67
61
9988
9977
0
0
0
0
0
0
0
0
0
Note 19 Compensation-related long-term liabilities
Long-term portion of compensation-related liabilities
of which: Deferred Contingent Capital Plan
of which: other deferred compensation plans
TToottaall ccoommppeennssaattiioonn--rreellaatteedd lloonngg--tteerrmm lliiaabbiilliittiieess
Note 20 Share capital
USD m
CHF m
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
33,,220011
11,,220099
11,,999922
33,,220011
3,116
1,231
1,885
3,116
22,,995599
11,,111188
11,,884411
22,,995599
2,841
1,122
1,719
2,841
As of 31 December 2022, the issued share capital consisted of 3,524,635,722 (31 December 2021: 3,702,422,995)
registered shares with a nominal value of CHF 0.10 each. In 2022, as approved by the AGM held on 6 April 2022, the
cancellation of 177,787,273 shares, each with a nominal value of CHF 0.10, acquired under the 2021 share repurchase
program from its inception in 2021 until 18 February 2022, was executed. Share capital was reduced by the nominal
value of the repurchased shares upon cancellation, i.e., USD 18m (CHF 18m).
› Refer to Note 1 for information on the planned conversion of the share capital currency of UBS Group AG from the Swiss franc to
the US dollar
› Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information about
UBS Group AG shares
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
514
514
Note 21 Treasury shares
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002200
of which: treasury shares held by UBS Group AG
of which: treasury shares held by UBS AG and other subsidiaries
Acquisitions
Disposals
Cancellation1
Delivery of shares to settle equity-settled awards
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002211
of which: treasury shares held by UBS Group AG 2
of which: treasury shares held by UBS AG
Acquisitions
Disposals
Cancellation1
Delivery of shares to settle equity-settled awards
BBaallaannccee aass ooff 3311 DDeecceemmbbeerr 22002222
of which: treasury shares held by UBS Group AG 2
of which: treasury shares held by UBS AG
Number of registered shares
Average price in USD
Average price in CHF
330077,,447777,,000022
306,114,513
1,362,490
214,650,175
(4,015,711)
(156,632,400)
(58,283,738)
330033,,119955,,332288
301,812,111
1,383,217
336600,,114488,,009933
((77,,111122,,118844))
((117777,,778877,,227733))
((6600,,339922,,007766))
441188,,005511,,888888
441166,,888811,,991111
11,,116699,,997777
1133..1144
13.13
14.13
16.34
14.95
13.05
13.55
1155..3355
15.34
17.87
1177..3322
1177..5555
1177..0000
1144..5566
1166..4422
1166..4422
1188..6677
1122..8800
12.80
12.62
15.06
13.63
12.78
12.75
1144..4411
14.40
16.03
1166..4466
1166..5599
1155..6666
1133..5533
1155..7733
1155..7733
1177..4400
11 In 2022, as approved by the shareholders at the Annual General Meeting held on 6 April 2022, the cancellation of 177,787,273 shares, each with a nominal value of CHF 0.10, acquired under the 2021 share
repurchase program from its inception in 2021 until 18 February 2022, was executed (In 2021, as approved by the shareholders at the Annual General Meeting held on 8 April 2021, the cancellation of 156,632,400
shares, each with a nominal value of CHF 0.10, repurchased under the 2018–2021 share repurchase program, was executed). Refer to Note 1 for more information. 22 Treasury shares held by UBS Group AG had a
carrying value of USD 6,844m (CHF 6,557m) as of 31 December 2022 (31 December 2021: USD 4,629m (CHF 4,345m)). Shares acquired under the 2021 and 2022 share repurchase programs are expected to be
canceled by means of a capital reduction, whereby the capital contribution reserve within the statutory capital reserve is expected to be reduced by USD 2,525m (CHF 2,417m, based on purchase price), subject to
shareholder approval. Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information.
Additional information
Note 22 Assets pledged to secure own liabilities
As of 31 December 2022, total pledged assets of UBS Group AG amounted to USD 3,401m (CHF 3,143m). These assets
consisted of certain liquid assets, marketable securities and financial assets and were pledged to UBS AG. As of
31 December 2021, total pledged assets of UBS Group AG amounted to USD 3,476m (CHF 3,169m). The associated
liabilities secured by these pledged assets were USD 2,543m (CHF 2,351m) and USD 676m (CHF 617m) as of
31 December 2022 and 31 December 2021, respectively.
Note 23 Contingent liabilities
UBS Group AG is jointly and severally liable for the combined value added tax (VAT) liability of UBS entities that belong
to the VAT group of UBS in Switzerland.
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
515
515
Note 24 Significant shareholders
Shareholders registered in the UBS Group AG share register with 3% or more of the total share capital1
% of share capital
Chase Nominees Ltd., London2
DTC (Cede & Co.), New York2,3
3311..1122..2222
31.12.21
88..6600
77..1122
8.89
5.78
Nortrust Nominees Ltd., London2
11 As registration in the UBS share register is optional, shareholders crossing the threshold percentages requiring SIX notification under the FMIA do not necessarily appear in this table. 22 Nominee companies and
securities clearing organizations cannot autonomously decide how voting rights are exercised and are therefore not obligated to notify UBS and SIX if they reach, exceed or fall below the threshold percentages
requiring disclosure notification under the FMIA. Consequently, they do not appear in the “Shareholders subject to FMIA disclosure notifications” section below. 33 DTC (Cede & Co.), New York, “The Depository
Trust Company,” is a US securities clearing organization.
4.80
44..3333
General rules
Under the Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading
of 19 June 2015 (the FMIA), anyone directly, indirectly or acting in concert with third parties holding shares in a company
listed in Switzerland or holding derivative rights related to shares in such a company directly, indirectly or in concert with
third parties must notify the company and the SIX Swiss Exchange (SIX) if the holding reaches, falls below or exceeds one
of the following percentage thresholds: 3, 5, 10, 15, 20, 25, 331⁄3, 50 or 662⁄3% of voting rights, regardless of whether
or not such rights may be exercised. Nominee companies that cannot autonomously decide how voting rights are
exercised are not required to notify the company and SIX if they reach, exceed or fall below the aforementioned
thresholds.
Pursuant to the Swiss Code of Obligations, UBS Group AG discloses in its financial statements the identity of any
shareholder with a holding of more than 5% of the total share capital of UBS Group AG.
Shareholders subject to FMIA disclosure notifications
According to the mandatory FMIA disclosure notifications filed with UBS Group AG and SIX, as of 31 December 2022,
the following entities held more than 3% of the total share capital of UBS Group AG: BlackRock Inc., New York, which
disclosed a holding of 5.23% on 29 June 2022; Dodge & Cox International Stock Fund, San Francisco, which disclosed a
holding of 3.02% on 28 January 2022; Massachusetts Financial Services Company, Boston, which disclosed a holding of
3.01% on 25 June 2021; Artisan Partners Limited Partnership, Milwaukee, which disclosed a holding of 3.15% on
18 November 2020; and Norges Bank, Oslo, which disclosed a holding of 3.01% on 25 July 2019.
As registration in the UBS share register is optional, the aforementioned shareholders that crossed the indicated
percentage thresholds and were required to notify their holding to UBS and SIX do not necessarily appear in the table
above, as such table only discloses registered shareholders.
In accordance with the FMIA, the aforementioned holdings are calculated in relation to the total share capital of
UBS Group AG reflected in the Articles of Association at the time of the respective disclosure notification.
› Refer to ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.html for information about
disclosures under the FMIA
Shareholders registered in the UBS Group AG share register with 3% or more of the share capital of UBS Group AG
As a supplement to the mandatory disclosure requirements according to the SIX Swiss Exchange Corporate Governance
Directive, the shareholders (acting in their own name or in their capacity as nominees for other investors or beneficial
owners) that were registered in the UBS share register with 3% or more of the total share capital of UBS Group AG as
of 31 December 2022 or as of 31 December 2021 are listed in the table above.
Cross-shareholdings
UBS Group AG has no cross-shareholdings where reciprocal ownership would be in excess of 5% of capital or voting
rights with any other company.
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
516
516
Note 25 Share ownership of the members of the Board of Directors, the Group Executive Board and other
employees
Shares awarded
Awarded to members of the BoD
Awarded to members of the GEB
Awarded to other UBS Group employees
TToottaall
FFoorr tthhee yyeeaarr eennddeedd 3311..1122..2222
For the year ended 31.12.21
NNuummbbeerr ooff sshhaarreess
228811,,111122
33,,660022,,665599
5588,,660011,,111111
6622,,448844,,888822
VVaalluuee ooff sshhaarreess iinn
UUSSDD mm11
66
VVaalluuee ooff sshhaarreess iinn
CCHHFF mm11
55
6655
11,,005522
11,,112233
6600
997733
11,,003388
Number of shares
361,853
5,194,307
63,527,242
69,083,402
Value of shares in
USD m1
5
Value of shares in
CHF m1
5
76
928
1,010
69
846
921
11 Shares awarded to members of the BoD during 2022 for the period from the 2021 AGM to the 2022 AGM were valued at CHF 19.194 and shares awarded during 2021 for the period from the 2020 AGM to the
2021 AGM were valued at CHF 13.81 (average closing price of UBS shares over the last 10 trading days leading up to and including the grant date). Shares (including notional shares) awarded to members of the
GEB in office during disclosed periods and other UBS Group employees were valued at weighted average grant date fair value (USD 17.96 for the year ended 31 December 2022 and USD 14.61 for the year ended
31 December 2021). For illustrative purposes, the value of the shares was converted at the closing exchange rates as of 31 December 2022 (CHF / USD 1.08) and 31 December 2021 (CHF / USD 1.10), accordingly.
› Refer to the “Compensation” section of this report for more information about the terms and conditions of the shares awarded to
the members of the Board of Directors and the Group Executive Board
Number of shares of BoD members1
Name, function
Colm Kelleher, Chairman2
Lukas Gähwiler, Vice Chairman2, 3
Axel A. Weber, former Chairman2
Jeremy Anderson, Senior Independent Director
Claudia Böckstiegel, member
William C. Dudley, member
Patrick Firmenich, member
Reto Francioni, member2
Fred Hu, member
Mark Hughes, member
Nathalie Rachou, member
Julie G. Richardson, member
Dieter Wemmer, member
Jeanette Wong, member
oonn 3311 DDeecceemmbbeerr
22002222
NNuummbbeerr ooff sshhaarreess hheelldd
333399,,008844
Voting rights in %
0.022
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
--
228833,,990077
--
--
11,,114488,,336699
111199,,666600
9977,,551188
77,,881144
00
6666,,664466
4499,,771144
2277,,227755
00
--
113399,,660099
9977,,554433
7744,,448811
4488,,449977
3300,,226633
3311,,112266
1188,,110022
113388,,220044
111177,,336655
113322,,332200
111144,,008866
9933,,444400
6688,,445522
11,,338855,,551166
0.019
0.071
0.008
0.006
0.001
0.000
0.004
0.003
0.002
0.000
0.009
0.006
0.005
0.003
0.002
0.002
0.001
0.009
0.007
0.009
0.007
0.006
0.004
0.090
Total
0.116
11 Includes blocked and unblocked shares held by BoD members, including those held by related parties. No options were granted in 2022 and 2021. 22 At the 2022 AGM, Lukas Gähwiler and Colm Kelleher were
newly elected and Reto Francioni and Axel A. Weber did not stand for re-election. 33 Includes 203,246 unvested shares granted under variable compensation plans with forfeiture provisions as part of Lukas Gähwiler’s
compensation for his executive roles previously held at UBS.
11,,885577,,995599
22002211
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
517
517
Note 25 Share ownership of the members of the Board of Directors, the Group Executive Board and other
employees (continued)
Share ownership / entitlements of GEB members1
Name, function
Ralph A.J.G. Hamers, Group Chief Executive Officer
Christian Bluhm, Group Chief Risk Officer
Mike Dargan, Group Chief Digital and Information Officer
Kirt Gardner, former Group Chief Financial Officer
Suni Harford, President Asset Management
Naureen Hassan, President UBS Americas
Robert Karofsky, President Investment Bank
Sabine Keller-Busse, President Personal & Corporate Banking and President UBS Switzerland
Iqbal Khan, President Global Wealth Management and President EMEA
Edmund Koh, President Asia Pacific
Barbara Levi, Group General Counsel
Tom Naratil, former Co-President Global Wealth Management and President UBS Americas
Markus Ronner, Group Chief Compliance and Governance Officer
Sarah Youngwood, Group Chief Financial Officer
TToottaall
Number of
unvested
shares / at
risk2
349,441
122,453
707,979
654,579
386,141
240,343
-
780,640
1,028,210
636,122
0
-
1,037,028
851,520
973,150
798,457
960,301
898,111
724,865
501,322
407,195
430,732
-
1,374,044
586,283
418,452
299,729
-
Number of
vested shares
5,238
TToottaall nnuummbbeerr
ooff sshhaarreess
335544,,667799
Potentially
conferred
voting
rights in %
0.023
2,673
0
226
17,955
82,743
-
236,421
44,202
22,199
0
-
364,914
357,064
566,106
421,491
0
113,715
579,937
493,977
45,818
0
-
950,682
0
57,856
0
-
112255,,112266
770077,,997799
665544,,880055
440044,,009966
332233,,008866
--
11,,001177,,006611
11,,007722,,441122
665588,,332211
00
--
11,,440011,,994422
11,,220088,,558844
11,,553399,,225566
11,,221199,,994488
996600,,330011
11,,001111,,882266
11,,330044,,880022
999955,,229999
445533,,001133
443300,,773322
--
22,,332244,,772266
558866,,228833
447766,,330088
229999,,772299
--
0.008
0.046
0.041
0.026
0.020
-
0.063
0.070
0.041
0.000
-
0.092
0.075
0.101
0.076
0.063
0.063
0.085
0.062
0.030
0.027
-
0.145
0.038
0.030
0.020
-
7,460,322
1,624,170
99,,008844,,449922
0.593
oonn
3311 DDeecceemmbbeerr
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
22002211
22002222
0.650
11 Includes all vested and unvested shares of GEB members, including those held by related parties. No options were held in 2022 and 2021 by any GEB member or any of its related parties. Refer to “Note 27 Employee
benefits: variable compensation” in the “Consolidated financial statements” section of our Annual Report 2022 for more information. 22 Includes shares granted under variable compensation plans with forfeiture
provisions. For the 2019/20 LTIP award, the values reflect the final value. For all other LTIP awards, the values reflect the fair value awarded at grant. The actual number of shares vesting in the future will be calculated
under the terms of the plans. Refer to the “Group compensation” section of this report for more information about the plans.
1100,,444455,,882233
7,706,776
2,739,047
22002211
Note 26 Related parties
Related parties are defined under the Swiss Code of Obligations as direct and indirect participants with voting rights of
20% or more, management bodies (BoD and GEB), external auditors, and direct and indirect investments in subsidiaries.
Payables due to members of the GEB and the external auditors are provided in the table below. Amounts due from and
due to subsidiaries are provided on the face of the balance sheet.
Payables due to the members of the GEB
of which: Deferred Contingent Capital Plan
of which: other deferred compensation plans
Payables due to external auditors
USD m
CHF m
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
111100
4444
6666
00
129
57
72
0
110022
4400
6611
00
118
52
66
0
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
518
518
Ernst & Young Ltd
Aeschengraben 27
P.O. Box
CH-4002 Basel
Phone:
www.ey.com/ch
+41 58 286 86 86
To the General Meeting of
UBS Group AG, Zurich
Basel, 3 March 2023
Report of the statutory auditor
Report on the audit of the financial statements
Opinion
We have audited the financial statements of UBS Group AG (the Company), which comprise the
Balance Sheet as at 31 December 2022, the Income Statement for the year then ended, and the
notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the financial statements comply with Swiss law and the Company’s articles of
incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing
(SA-CH). Our responsibilities under those provisions and standards are further described in
the “Auditor's responsibilities for the audit of the financial statements” section of our report.
We are independent of the Company in accordance with the provisions of Swiss law and the
requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period. These matters were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. We have determined that there are
no key audit matters to communicate in our report.
Other information
The Board of Directors is responsible for the other information. The other information comprises
the information included in the annual report, but does not include the consolidated financial
statements, stand-alone financial statements and our auditor’s reports thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements, or our knowledge obtained in the audit or otherwise appears to
be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
519
519
2
Board of Directors’ responsibilities for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in
accordance with the provisions of Swiss law and the Company's articles of incorporation,
and for such internal control as the Board of Directors determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern, and using the going concern basis of accounting unless the Board of Directors
either intends to liquidate the Company or to cease operations, or has no realistic alternative but
to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but
is not a guarantee that an audit conducted in accordance with Swiss law and SA-CH will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on
EXPERTsuisse’s website at: https://www.expertsuisse.ch/en/audit-report. This description forms
an integral part of our report.
Report on other legal and regulatory requirements
In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal
control system exists, which has been designed for the preparation of the financial statements
according to the instructions of the Board of Directors.
Furthermore, we confirm that the proposed appropriation of available earnings complies with
Swiss law and the Company’s articles of incorporation. We recommend that the financial
statements submitted to you be approved.
Ernst & Young Ltd
Maurice McCormick
Licensed audit expert
(Auditor in charge)
Eveline Hunziker
Licensed audit expert
Annual Report 2022 | Standalone financial statements | UBS Group AG standalone financial statements
520
520
Significant regulated subsidiary
and sub-group information
Financial and regulatory key figures for our significant regulated
subsidiaries and sub-groups
All values in million, except where indicated
Financial and regulatory requirements
As of or for the year ended
Financial information1
Income statement
Total operating income2
Total operating expenses
Operating profit / (loss) before tax
Net profit / (loss)
Balance sheet
Total assets
Total liabilities
Total equity
Capital3
Common equity tier 1 capital
Additional tier 1 capital
Total going concern capital / Tier 1 capital
Tier 2 capital
Total capital
Total gone concern loss-absorbing capacity
Total loss-absorbing capacity
Risk-weighted assets and leverage ratio denominator3
Risk-weighted assets
Leverage ratio denominator
Supplementary leverage ratio denominator
Capital and leverage ratios (%)3
Common equity tier 1 capital ratio
Going concern capital ratio / Tier 1 capital ratio
Total capital ratio
Total loss-absorbing capacity ratio
Tier 1 leverage ratio
Supplementary tier 1 leverage ratio
Going concern leverage ratio
Total loss-absorbing capacity leverage ratio
Gone concern capital coverage ratio
Liquidity coverage ratio3
High-quality liquid assets (bn)
Net cash outflows (bn)
Liquidity coverage ratio (%)
Net stable funding ratio3,9
Total available stable funding (bn)
Total required stable funding (bn)
Net stable funding ratio (%)
UBS AG
(standalone)
USD
Swiss GAAP
Swiss SRB rules
UBS Switzerland AG
(standalone)
CHF
Swiss GAAP
Swiss SRB rules
3311..1122..2222
31.12.21
3311..1122..2222
31.12.21
UBS Europe SE
(consolidated)
EUR
IFRS
EU regulatory rules
3311..1122..2222
31.12.21
UBS Americas Holding
LLC
(consolidated)
USD
US GAAP
US Basel III rules
3311..1122..2222
31.12.21
1155,,775599
88,,550055
77,,225533
77,,115577
16,293
9,712
6,581
6,548
88,,776600
55,,445588
33,,330022
22,,770077
8,490
5,472
3,018
2,452
550044,,776677
444477,,440066
5577,,336611
509,851
455,446
54,405
331155,,665577
330000,,116644
1155,,449933
320,656
305,919
14,736
5533,,999955
1111,,884411
6655,,883366
22,,994499
52,818
13,840
66,658
3,129
1122,,558866
55,,339933
1177,,997788
12,609
5,387
17,996
4466,,998822
111122,,881188
44,250
110,908
1111,,226677
2299,,224455
10,853
28,849
11,,115588
779944
336644
226622
4477,,997788
4444,,336600
33,,661177
22,,444411
660000
33,,004411
33,,004411
22,,11330044
55,,117711
1,123
800
323
227
46,411
42,664
3,747
2,764
290
3,054
3,054
2,4144
5,468
333322,,886644
557755,,446611
317,913
593,868
110077,,220088
333322,,228800
106,399
339,788
1100,,772266
4411,,881188
12,328
46,660
1133,,557755
1122,,335511
11,,222244
551111
14,490
11,925
2,565
1,812
220011,,777777
117766,,330099
2255,,446688
209,718
182,633
27,085
1111,,336677
55,,008822
1166,,444499
113311
1166,,558800
77,,44000055
2233,,884499
13,002
4,049
17,051
125
17,176
7,0005
24,051
7700,,773399
119944,,000033
221144,,770099
72,979
188,1306
212,167
1166..11
2233..33
2233..44
3333..77
88..55
77..77
17.8
23.4
23.5
33.0
9.1
8.0
1166..22
1199..88
16.6
21.0
1111..77
1166..88
11.9
16.9
2277..33
27.1
55..44
88..88
5.3
8.5
1111..44
11.2
111177..11
112.0
2222..88
2288..33
2288..33
4488..22
77..33
22.4
24.8
24.8
44.4
6.5
1122..44
11.7
1122..33
12.8
110011..66
5533..66
119911..2277
225544..44
228800..22
9900..881100
89.5
52.2
173.2
258.0
289.2
89.2
8888..99
6622..44
114422..4488
222211..77
116622..33
113366..661100
91.3
64.1
142.6
225.2
158.1
142.5
2200..66
1133..11
115588..77
1133..99
77..99
117744..66
17.1
10.1
170.3
15.4
9.0
171.3
2266..33
1188..33
114433..55
32.4
22.0
147.2
Other
Joint and several liability between UBS AG and UBS Switzerland AG (bn)11
11 The financial information disclosed does not represent financial statements under the respective GAAP / IFRS. 22 The total operating income includes credit loss expense / (release). 33 Refer to the 31 December
2022 Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information. 44 Consists of positions that meet the conditions laid down in Art. 72a–b of the Capital Requirements
Regulation (CRR) II with regard to contractual, structural or legal subordination. 55 Consists of eligible long-term debt that meets the conditions specified in 12 CFR 252.162 of the final TLAC rules. Total loss-
absorbing capacity is the sum of tier 1 capital (excluding minority interest) and eligible long-term debt. 66 The leverage ratio denominator as of 31 December 2021 has been aligned with UBS Americas Holding
LLC’s reported figure in the FR-Y9C report, which was filed with the Board of Governors of the Federal Reserve. 77 In the fourth quarter of 2022, the liquidity coverage ratio (the LCR) of UBS AG was 191.2%,
remaining above the prudential requirements communicated by FINMA. 88 In the fourth quarter of 2022, the LCR of UBS Switzerland AG, which is a Swiss SRB, was 142.4%, remaining above the prudential
requirement communicated by FINMA in connection with the Swiss Emergency Plan. 99 For UBS Americas Holding LLC consolidated, the NSFR requirement became effective as of 1 July 2021 and related
disclosures will come into effect in the second quarter of 2023. 1100 In accordance with Art. 17h para. 3 and 4 of the Liquidity Ordinance, UBS AG standalone is required to maintain a minimum NSFR of at
least 80% without taking into account excess funding of UBS Switzerland AG and 100% after taking into account such excess funding. 1111 Refer to the “Capital, liquidity and funding, and balance sheet”
section of this report for more information about the joint and several liability. Under certain circumstances, the Swiss Banking Act and FINMA’s Banking Insolvency Ordinance authorize FINMA to modify,
extinguish or convert to common equity liabilities of a bank in connection with a resolution or insolvency of such bank.
44
5
Annual Report 2022 | Significant regulated subsidiary and sub-group information
381
521
UBS Group AG is a holding company and conducts substantially all of its operations through UBS AG and subsidiaries
thereof. UBS Group AG and UBS AG have contributed a significant portion of their respective capital to, and provide
substantial liquidity to, such subsidiaries. Many of these subsidiaries are subject to regulations requiring compliance with
minimum capital, liquidity and similar requirements. The table in this section summarizes the regulatory capital
components and capital ratios of our significant regulated subsidiaries and sub-groups determined under the regulatory
framework of each subsidiary’s or sub-group’s home jurisdiction.
› Refer to “Capital and capital ratios of our significant regulated subsidiaries” in the “Capital, liquidity and funding, and balance
sheet” section of this report for more information
› Refer to “Note 22 Restricted and transferred financial assets” in the “Consolidated financial statements” section of this report for
more information
Supervisory authorities generally have discretion to impose higher requirements or to otherwise limit the activities of
subsidiaries. Supervisory authorities also may require entities to measure capital and leverage ratios on a stressed basis
and may limit the ability of an entity to engage in new activities or take capital actions based on the results of those tests.
Following the completion of the annual Dodd–Frank Act Stress Test (DFAST) and the Comprehensive Capital Analysis and
Review (CCAR), UBS Americas Holding LLC was assigned a stress capital buffer (an SCB) of 4.8% (previously 7.1%) under
the SCB rule as of 1 October 2022, resulting in a total common equity tier 1 capital requirement of 9.3%.
Standalone regulatory information for UBS AG and UBS Switzerland AG, as well as consolidated regulatory information
for UBS Europe SE and UBS Americas Holding LLC, is provided in the 31 December 2022 Pillar 3 Report, available under
“Pillar 3 disclosures” at ubs.com/investors.
Standalone financial statements for UBS Group AG, as well as standalone financial statements and regulatory information
for UBS AG and UBS Switzerland AG, are available under “Holding company and significant regulated subsidiaries and
sub-groups” at ubs.com/investors.
Annual Report 2022 | Significant regulated subsidiary and sub-group information
382
522
Additional regulatory
information
Table of contents
524 UBS Group AG consolidated supplemental
disclosures required under SEC regulations
532 UBS AG consolidated supplemental disclosures
required under SEC regulations
524 A – Introduction
532 A – Introduction
524
B – Selected financial data
Selected Information
524
524 Cash dividends received from investments in subsidiaries
525
Balance sheet data
525 C – Information about the company
Property, plant and equipment
525
526 D – Information required by Subpart 1400 of Regulation
S-K
Selected statistical information
526
526 Average balances and interest rates
528 Analysis of changes in interest income and expense
530 Deposits
530 Uninsured deposits
531
Investments in debt instruments
Loan portfolio
531
531 Allowance for credit loss
532 B – Selected financial data
Selected Information
532
532 Dividends received from investments in subsidiaries and
associates
533 Balance sheet data
533 C – Information about the company
Property, plant and equipment
533
534 D – Information required by Subpart 1400 of Regulation
S-K
Selected statistical information
534
534 Average balances and interest rates
536 Analysis of changes in interest income and expense
538 Deposits
538 Uninsured deposits
539
Investments in debt instruments
Loan portfolio
539
539 Allowance for credit loss
Annual Report 2022 | Additional regulatory information
523
523
UBS Group AG consolidated supplemental disclosures
required under SEC regulations
A – Introduction
The following pages contain supplemental UBS Group AG disclosures that are required under SEC regulations. UBS Group
AG’s consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (the IASB) and are denominated in US dollars
(USD), which is also the functional currency of: UBS Group AG; UBS AG’s Head Office; UBS AG London Branch; and
UBS’s US-based operations.
B – Selected financial data
Selected information
Personnel (full-time equivalents)
Americas
of which: USA
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
of which: UK
of which: rest of Europe (excluding Switzerland)
of which: Middle East and Africa
Switzerland
Registered ordinary shares (number)1
Treasury shares (number)1
Ordinary cash dividends declared per share (CHF)2,3
As of or for the year ended
3311..1122..2222
31.12.21
31.12.20
7722,,559977
2211,,881199
2211,,003322
1166,,448899
1144,,334422
66,,223344
77,,882233
228855
71,385
21,317
20,537
15,618
14,091
6,051
7,826
215
71,551
21,394
20,528
15,353
13,899
6,069
7,652
178
1199,,994477
20,359
20,904
33,,552244,,663355,,772222
3,702,422,995
3,859,055,395
441166,,990099,,001100
302,815,328
307,477,002
0.47
0.34
Ordinary cash dividends declared per share (USD)2,3
11 Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information. 22 Dividends and / or distributions out of the capital contribution reserve are normally
approved and paid in the year subsequent to the reporting period. Beginning in 2020, dividends have been declared in US dollars. The Swiss franc equivalent amount for the 2022 dividend will be determined after
the Annual General Meeting using the exchange rate applicable on that date and is therefore not provided in this table. 33 Refer to “Statement of proposed appropriation of total profit and dividend distribution out
of total profit and capital contribution reserve” in the “Standalone financial statements” section of this report for more information.
0.50
0.37
00..5555
Dividends received from investments in subsidiaries
In 2022, UBS Group AG received dividends of USD 4,373m (2021: USD 4,672m; 2020: USD 3,853m) from its subsidiaries.
Dividends disclosed have been translated to US dollars from the functional currency of the entity paying the dividend,
using the closing exchange rate of the month the dividend was received.
Annual Report 2022 | Additional regulatory information | UBS Group AG consolidated supplemental disclosures required under SEC regulations
524
524
Balance sheet data
USD m
Assets
Cash and balances at central banks
Loans and advances to 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
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial assets at fair value held for trading
of which: assets pledged as collateral that may be sold or repledged by counterparties
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Investments in associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
TToottaall aasssseettss
Liabilities
Amounts due to banks
Payables from securities financing transactions at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
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
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
Provisions
Other non-financial liabilities
TToottaall lliiaabbiilliittiieess
Equity attributable to shareholders
Equity attributable to non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
3311..1122..2222
31.12.21
31.12.20
116699,,444455
192,817
158,231
1144,,779922
6677,,881144
3355,,003322
338877,,222200
5533,,226644
772277,,556688
110077,,886666
3366,,774422
115500,,110088
1177,,557766
5599,,779966
333355,,334477
22,,223399
11,,110011
1122,,228888
66,,226677
99,,338899
1100,,116666
15,480
75,012
30,514
397,761
26,209
737,794
130,821
43,397
118,142
21,839
60,080
330,882
8,844
1,243
12,888
6,378
8,876
10,277
15,444
74,210
32,737
379,528
27,194
687,345
125,397
47,098
159,617
24,659
80,364
390,037
8,258
1,557
13,109
6,480
9,212
9,768
11,,110044,,336644
1,117,182
1,125,765
1111,,559966
44,,220022
3366,,443366
552255,,005511
111144,,662211
99,,557755
770011,,448811
2299,,551155
115544,,990066
4455,,008855
7733,,663388
3300,,223377
333333,,338811
33,,224433
99,,004400
13,101
5,533
31,798
542,007
139,155
9,001
740,595
31,688
121,309
44,045
73,799
30,074
300,916
3,518
11,151
11,050
6,321
37,312
524,605
139,232
9,729
728,250
33,595
161,102
38,742
61,243
30,387
325,069
2,828
9,854
11,,004477,,114466
1,056,180
1,066,000
5566,,887766
334422
5577,,221188
60,662
340
61,002
59,445
319
59,765
11,,110044,,336644
1,117,182
1,125,765
C – Information about the company
Property, plant and equipment
As of 31 December 2022, UBS operated in about 677 business and banking locations worldwide, of which approximately
33% were in Switzerland, 48% in the Americas, 9% in the rest of Europe, the Middle East and Africa, and 10% in Asia
Pacific. Of the business and banking locations in Switzerland, 23% were owned directly by UBS, with the remainder,
along with most of UBS’s offices outside Switzerland, being held under commercial leases. These premises are subject to
continuous maintenance and upgrading and are considered suitable and adequate for current and anticipated operations.
Annual Report 2022 | Additional regulatory information | UBS Group AG consolidated supplemental disclosures required under SEC regulations
525
525
D – Information required by Subpart 1400 of Regulation S-K
Selected statistical information
The tables below set forth selected statistical information regarding the Group’s banking operations extracted from its
financial statements. Unless otherwise indicated, average balances for the years ended 31 December 2022, 31 December
2021 and 31 December 2020 are calculated from monthly data. 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 2022, 2021 and 2020. Refer to “Note 3 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
USD m, except where indicated
AAsssseettss
Balances at central banks
Domestic
Foreign
Loans and advances to banks
Domestic
Foreign
Receivables from securities financing transactions measured
at amortized cost1
Domestic
Foreign
Loans and advances to customers
Domestic
Foreign
Financial assets at fair value1,2
Domestic
Foreign
Other interest-earning assets
Domestic
Foreign
TToottaall iinntteerreesstt--eeaarrnniinngg aasssseettss33
Net interest income on swaps
Interest income on off-balance sheet securities and other
IInntteerreesstt iinnccoommee aanndd aavveerraaggee iinntteerreesstt--eeaarrnniinngg aasssseettss
Non-interest-earning assets5
TToottaall aavveerraaggee aasssseettss
3311..1122..2222
31.12.21
31.12.20
AAvveerraaggee
bbaallaannccee
IInntteerreesstt
iinnccoommee
AAvveerraaggee
yyiieelldd ((%%))
Average
balance
Interest
income
Average
yield (%)
Average
balance
Interest
income
Average
yield (%)
9922
559955
5500
88
3300
11,,110055
33,,118877
44,,882299
5500
22,,111133
112255
885588
1133,,004433
11,,880044
667777
1155,,5522554
9999,,777777
8888,,226677
22,,996666
1122,,334455
66,,443311
7700,,994422
222233,,997700
116600,,550099
55,,889922
115511,,550044
88,,222266
6633,,110077
889933,,993366
889933,,993366
229999,,448888
11,,119933,,442244
00..11
00..77
11..77
00..11
00..55
11..66
11..44
33..00
00..88
11..44
11..55
11..44
11..55
11..77
98,804
71,529
3,158
13,074
(105)
(31)
40
12
(0.1)
0.0
1.3
0.1
90,234
51,611
2,930
12,089
9,435
79,297
(28)
234
(0.3)
0.3
4,746
92,098
3,211
2,700
11
1,203
121
298
7,666
1,552
472
9,6894
228,070
160,902
10,006
169,267
7,477
47,040
898,059
898,059
298,224
1,196,284
1.4
1.7
0.1
0.7
1.6
0.6
0.9
1.1
210,971
138,515
12,455
192,251
8,064
45,442
861,406
861,406
310,129
1,171,535
(112)
7
43
31
8
551
3,014
3,139
40
1,826
136
386
9,068
1,134
386
10,5884
(0.1)
0.0
1.5
0.3
0.2
0.6
1.4
2.3
0.3
0.9
1.7
0.8
1.1
1.2
11 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. 22 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. 33 Non-taxable positions and amounts were not material
for the years presented. 44 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 3 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. 55 Mainly includes derivative financial instruments, equity instruments at fair value held for trading and financial assets for unit-linked investment contracts.
Annual Report 2022 | Additional regulatory information | UBS Group AG consolidated supplemental disclosures required under SEC regulations
526
526
Average balances and interest rates (continued)
For the year ended
USD m, except where indicated
LLiiaabbiilliittiieess aanndd eeqquuiittyy
Amount due to banks
Domestic
Foreign
Payables from securities financing transactions measured at
amortized cost1
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
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
TToottaall iinntteerreesstt--bbeeaarriinngg lliiaabbiilliittiieess
Swap interest on hedged debt issued and other swaps
Interest expense on off-balance sheet securities and other
IInntteerreesstt eexxppeennssee aanndd aavveerraaggee iinntteerreesstt--bbeeaarriinngg lliiaabbiilliittiieess
Non-interest-bearing liabilities4
Total liabilities
Total equity
TToottaall aavveerraaggee lliiaabbiilliittiieess aanndd eeqquuiittyy
3311..1122..2222
31.12.21
31.12.20
AAvveerraaggee
bbaallaannccee
IInntteerreesstt
eexxppeennssee
AAvveerraaggee
iinntteerreesstt
rraattee ((%%))
Average
balance
Interest
expense
Average
interest
rate (%)
Average
balance
Interest
expense
Average
interest
rate (%)
10,369
2,897
(32)
18
(0.3)
0.6
8,097
3,169
(9)
26
(0.1)
0.8
00..00
11..33
11..22
22..22
00..00
((00..11))
00..00
11..11
00..77
00..22
00..55
11..77
00..00
11..33
11..22
11..00
22..99
11..99
33..77
11..00
11..44
22..00
00..55
11..11
00..99
11..00
33
4433
4400
228899
((8822))
((114499))
66
6600
11,,881199
112200
557788
11,,112211
00
225566
44
112244
11,,994466
443399
1111
11,,339922
112277
11,,228833
1144
443322
88,,114422
4400
772233
88,,99004433
1100,,773333
33,,225555
33,,335577
1133,,335511
227722,,992266
114477,,990033
111199,,668855
55,,333377
224466,,007722
6666,,998877
111111,,113300
6677,,995555
11
2200,,445522
336666
1111,,992277
6677,,446622
2222,,992299
229911
113399,,665577
99,,227788
6633,,447700
22,,888833
3388,,993388
992277,,334477
992277,,334477
220088,,004499
11,,113355,,339966
5588,,002288
11,,119933,,442244
4,786
14,161
1
209
289,096
160,019
126,290
2,786
232,165
82,226
99,847
50,092
292
24,461
13
18,473
(290)
(273)
4
(20)
107
(31)
81
58
0
33
0
37
67,916
27,820
1,789
491
3
13
48
429
(7)
105
2,954
(765)
795
2,9853
421
137,268
9,905
60,388
2,884
34,943
938,259
938,259
198,130
1,136,389
59,895
1,196,284
0.2
0.9
(0.1)
(0.1)
0.0
(0.2)
0.3
0.0
0.3
0.5
(0.3)
0.7
0.0
0.9
3.1
2.1
0.3
0.2
0.8
1.4
(0.2)
0.5
0.5
0.5
3,888
18,793
6
174
263,619
137,599
121,793
4,227
214,785
64,957
71,341
78,488
130
17,098
10
16,989
(173)
(166)
3
(9)
552
(6)
194
363
0
120
0
147
64,899
27,100
1,988
581
0.0
1.5
(0.1)
(0.2)
0.0
(0.7)
0.0
0.0
0.1
0.1
0.0
0.1
(0.1)
0.2
2.6
1.8
0.8
0.0
0.5
0.7
2
324
35
801
(6)
191
4,759
(608)
576
4,7263
700
145,398
4,376
56,442
(0.2)
0.3
0.3
3,333
38,606
887,433
0.3
887,433
226,388
1,113,820
57,715
1,171,535
NNeett iinntteerreesstt iinnccoommee
NNeett yyiieelldd oonn iinntteerreesstt--eeaarrnniinngg aasssseettss
11 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. 22 Includes financial liabilities at fair value held for
trading, other financial liabilities designated at fair value and brokerage payables designated at fair value. 33 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 3 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. 44 Mainly includes derivative financial instruments, equity instruments at fair value
held for trading and financial liabilities related to unit-linked investment contracts.
6,705
5,862
66,,662211
00..77
0.7
0.7
The percentage of total average interest-earning assets attributable to foreign activities was 61% for 2022 (2021: 60%;
2020: 62%). The percentage of total average interest-bearing liabilities attributable to foreign activities was 60% for
2022 (2021: 59%; 2020: 61%). 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 2022 | Additional regulatory information | UBS Group AG consolidated supplemental disclosures required under SEC regulations
527
527
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
2022 compared with the year ended 31 December 2021, and for the year ended 31 December 2021 compared with the
year ended 31 December 2020. The change in average volume represents the change in the current average balance
compared to the average balance from the prior year with respect to the average rate of the prior year. The change in
average rate represents the difference between the net change in interest income and expense and the change in average
volume.
USD m
IInntteerreesstt iinnccoommee ffrroomm iinntteerreesstt--eeaarrnniinngg aasssseettss
Balances at central banks
Domestic
Foreign
Loans and advances to 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
TToottaall iinntteerreesstt iinnccoommee ffrroomm iinntteerreesstt--eeaarrnniinngg aasssseettss
Net interest income on swaps
Interest income on off-balance sheet securities and other
TToottaall iinntteerreesstt iinnccoommee
22002222 ccoommppaarreedd wwiitthh 22002211
2021 compared with 2020
IInnccrreeaassee // ((ddeeccrreeaassee))
dduuee ttoo cchhaannggeess iinn
AAvveerraaggee
vvoolluummee
AAvveerraaggee
iinntteerreesstt rraattee
NNeett
cchhaannggee
Increase / (decrease)
due to changes in
Average
volume
Average
interest rate
((11))
00
((22))
((11))
99
((2255))
((5577))
((77))
((44))
((112244))
1122
110022
((4433))
((5555))
((9988))
119988
662266
1122
((33))
4499
889966
3344
22,,113355
4433
11,,003344
((88))
445588
332288
55,,114477
55,,447755
119977
662266
1100
((44))
5588
887711
((2233))
22,,112288
3399
991100
44
556600
228855
55,,009922
55,,337777
225533
220055
55,,883366
(9)
0
3
3
9
(77)
239
515
(7)
(207)
(10)
13
225
247
472
16
(38)
(6)
(23)
(44)
(240)
(42)
(954)
(22)
(416)
(5)
(101)
(103)
(1,771)
(1,874)
Net
change
7
(38)
(3)
(20)
(35)
(317)
197
(439)
(29)
(623)
(15)
(88)
122
(1,524)
(1,402)
418
86
(899)
Annual Report 2022 | Additional regulatory information | UBS Group AG consolidated supplemental disclosures required under SEC regulations
528
528
Analysis of changes in interest income and expense (continued)
USD m
IInntteerreesstt eexxppeennssee oonn iinntteerreesstt--bbeeaarriinngg lliiaabbiilliittiieess
Amount 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
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
TToottaall iinntteerreesstt eexxppeennssee oonn iinntteerreesstt--bbeeaarriinngg lliiaabbiilliittiieess
Swap interest on hedged debt issued and other swaps
Interest expense on off-balance sheet securities and other
TToottaall iinntteerreesstt eexxppeennssee
22002222 ccoommppaarreedd wwiitthh 22002211
2021 compared with 2020
IInnccrreeaassee // ((ddeeccrreeaassee))
dduuee ttoo cchhaannggeess iinn
AAvveerraaggee
vvoolluummee
AAvveerraaggee
iinntteerreesstt rraattee
NNeett
cchhaannggee
Increase / (decrease)
due to changes in
Average
volume
Average
interest rate
((11))
22
00
((1122))
22
2211
00
((1199))
66
66
99
((99))
00
((55))
00
((1133))
((1122))
((8866))
((11))
00
((33))
2222
00
1122
((1155))
((7744))
((8899))
3366
2233
3399
9922
220066
110044
22
9999
11,,770077
114455
448888
11,,007733
00
222288
55
110000
117700
3344
3355
2255
3399
8800
220088
112255
22
8800
11,,771133
115511
449977
11,,006644
00
222233
55
8877
115588
((5522))
88
11,,337799
77
11,,337799
8822
883322
2211
331166
556677
44,,771100
55,,227777
7799
885544
2211
332288
555522
44,,663366
55,,118888
880055
((7733))
55,,992200
(2)
(2)
2
(42)
(19)
(22)
0
3
52
(2)
78
(24)
0
52
0
13
94
15
(1)
(16)
44
55
1
(18)
119
109
228
(21)
(6)
(7)
76
(98)
(86)
1
(14)
(497)
(24)
(192)
(281)
0
(138)
0
(123)
(293)
(105)
2
(295)
(31)
(427)
(2)
(68)
(450)
(1,583)
(2,033)
Net
change
(23)
(8)
(5)
34
(117)
(108)
1
(11)
(445)
(26)
(114)
(305)
0
(86)
0
(110)
(199)
(90)
1
(311)
13
(372)
(1)
(86)
(331)
(1,474)
(1,805)
(157)
220
(1,742)
Annual Report 2022 | Additional regulatory information | UBS Group AG consolidated supplemental disclosures required under SEC regulations
529
529
Deposits
The table below analyzes average deposits and average rates on each deposit category for the years ended 31 December
2022, 2021 and 2020. 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 59,744m as of 31 December
2022 (31 December 2021: USD 77,011m; 31 December 2020: USD 76,167m).
USD m, except where indicated
DDuuee ttoo bbaannkkss
DDoommeessttiicc
Demand deposits
Time deposits
Total domestic
FFoorreeiiggnn11
Interest-bearing deposits
TToottaall dduuee ttoo bbaannkkss
CCuussttoommeerr ddeeppoossiittss
DDoommeessttiicc
Demand deposits
Savings and sweep deposits
Time deposits
Total domestic
FFoorreeiiggnn11
Demand deposits
Savings and sweep deposits
Time deposits
Total foreign
TToottaall ccuussttoommeerr ddeeppoossiittss
3311..1122..2222
31.12.21
31.12.20
AAvveerraaggee
ddeeppoossiittss
AAvveerraaggee
rraattee ((%%))
Average
deposits
Average
rate (%)
Average
deposits
Average
rate (%)
990088
22,,779933
33,,770000
1100,,228888
1133,,998888
9955,,886666
110099,,003399
88,,882255
221133,,773300
111199,,002244
112211,,777766
6644,,446688
330055,,226677
551188,,999977
((00..33))
00..55
00..33
00..33
00..33
927
3,026
3,953
9,313
13,266
((00..11))
101,338
00..00
00..22
00..00
00..11
00..55
11..88
00..66
00..33
114,792
8,371
224,502
140,906
111,345
44,507
296,758
521,260
(0.5)
0.0
(0.1)
(0.1)
(0.1)
(0.2)
0.0
(0.4)
(0.1)
1,037
1,775
2,812
8,454
11,266
90,070
110,328
17,610
218,008
(0.1)
112,486
0.1
0.1
0.0
0.0
82,806
65,104
260,397
478,404
(0.4)
0.4
0.1
0.1
0.1
(0.1)
0.0
(0.1)
(0.1)
0.0
0.2
0.5
0.2
0.1
11 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 2022, total estimated uninsured
deposits were USD 362bn (31 December 2021: USD 392bn; 31 December 2020: USD 380bn). Uninsured deposits are
deposits that are in excess of local deposit insurance or protection scheme limits in the key locations in which UBS
operates, calculated based on the respective local regulations, as well as deposits in uninsured accounts. The main deposit
insurance schemes applicable to UBS deposits are the Swiss depositor protection scheme in Switzerland (which protects
applicable deposits up to a maximum of CHF 100,000 per client and per bank or securities firm), the Compensation
Scheme of German Banks, in combination with the Deposit Protection Fund of the Association of German Banks in
Germany (which protects applicable deposits up to a maximum of EUR 456m per client) 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 2022. 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
Within 3 months
3 to 6 months
6 to 12 months
Over 12 months
UUnniinnssuurreedd ttiimmee ddeeppoossiittss11
9933,,003300
1100,,996622
77,,556633
779900
TToottaall uunniinnssuurreedd ttiimmee ddeeppoossiittss aass ooff 3311 DDeecceemmbbeerr 22002222
11 Amounts are estimated based on the methodologies defined in each local jurisdiction. As of 31 December 2022, there were no US time deposits subject to the FDIC scheme that were in excess of the FDIC insurance
limit.
111122,,334455
Annual Report 2022 | Additional regulatory information | UBS Group AG consolidated supplemental disclosures required under SEC regulations
530
530
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, and debt instruments without fixed maturities
are not included.
WWiitthhiinn 11 yyeeaarr
11 ttoo 55 yyeeaarrss
55 ttoo 1100 yyeeaarrss
OOvveerr 1100 yyeeaarrss
CCaarrrryyiinngg
aammoouunntt
YYiieelldd ((%%))
CCaarrrryyiinngg
aammoouunntt
YYiieelldd ((%%))
CCaarrrryyiinngg
aammoouunntt
YYiieelldd ((%%))
CCaarrrryyiinngg
aammoouunntt
YYiieelldd ((%%))
TToottaall ccaarrrryyiinngg
aammoouunntt
00..7733
22..6644
11..2277
00..5533
2266
22,,009933
22,,112200
88,,558844
22,,000055
1100,,558899
1122,,770088
22..4488
11..9977
11..9977
11..2244
111199
111199
111177
66,,223366
99,,666622
1166,,001155
1166,,113355
11,,558888
44,,440033
33,,441100
99,,440022
99,,440022
22..3333
11..6677
11..3333
66,,773355
11,,883377
1166
88,,558888
88,,558888
22..3377
22..4466
11..9955
2266
22,,221133
22,,223399
88,,444400
2211,,006600
1155,,009944
4444,,559944
4466,,883333
USD m, except where indicated
DDeebbtt iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh
ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Government bills / bonds
Corporate and other
SSuubbttoottaall aass ooff 3311 DDeecceemmbbeerr 22002222
DDeebbtt sseeccuurriittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Asset-backed securities
Government bills / bonds
Corporate and other
SSuubbttoottaall aass ooff 3311 DDeecceemmbbeerr 22002222
TToottaall aass ooff 3311 DDeecceemmbbeerr 22002222
Loan portfolio
The table below provides the maturity profile of UBS’s core loan portfolio as of 31 December 2022. 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
WWiitthhiinn 11 yyeeaarr
11 ttoo 55 yyeeaarrss
55 ttoo 1155 yyeeaarrss
3311..1122..2222
OOvveerr 1155 yyeeaarrss
TToottaall
ooff wwhhiicchh:: oovveerr 11 yyeeaarr
Private clients with mortgages
Real estate financing
Large corporate clients
SME clients
Lombard
Credit cards
Commodity trade finance
Other loans and advances to customers
Loans to financial advisors
TToottaall
1155,,005566
1199,,113300
44,,442233
66,,664477
112244,,669955
11,,883344
33,,115588
99,,000000
113344
118844,,007788
8833,,222233
1199,,114466
66,,887766
44,,664444
77,,117788
00
111100
99,,119933
997755
113311,,334455
3311,,885544
88,,115533
992266
22,,661122
441144
00
44
22,,008888
11,,227788
4477,,332288
2266,,779977
4400
11
00
00
00
00
1199
222233
2277,,008800
115566,,993300
4466,,447700
1122,,222266
1133,,990033
113322,,228877
11,,883344
33,,227722
2200,,330000
22,,661111
338899,,883311
FFiixxeedd rraattee
7766,,770077
1177,,443355
22,,779911
33,,339933
66,,997755
00
44
11,,553333
22,,447766
111111,,331155
AAddjjuussttaabbllee oorr
ffllooaattiinngg rraattee
6655,,116666
99,,990044
55,,001122
33,,886633
661177
00
111100
99,,776666
00
9944,,443388
Allowance for credit losses
For the years ended 31 December 2022, 2021 and 2020, the ratio of net charge-offs (i.e., write-offs of expected credit
loss allowances to gross carrying amount of the average loans outstanding) during the period was not material for UBS’s
core loan portfolio, both on an overall basis and on an individual loan category basis. Total write-offs for 31 December
2022 were USD 95m (31 December 2021: USD 137m; 31 December 2020: USD 356m). Refer to the coverage ratio tables
in “Note 9 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 2022 | Additional regulatory information | UBS Group AG consolidated supplemental disclosures required under SEC regulations
531
531
UBS AG consolidated supplemental disclosures
required under SEC regulations
A – Introduction
The following pages contain supplemental UBS AG disclosures that are required under SEC regulations. UBS AG’s
consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (the IASB) and are denominated in US dollars (USD),
which is also the functional currency of: UBS AG’s Head Office; UBS AG London Branch; and UBS AG’s US-based
operations.
B – Selected financial data
Selected information
Personnel (full-time equivalents)
Americas
of which: USA
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
of which: UK
of which: rest of Europe (excluding Switzerland)
of which: Middle East and Africa
Switzerland
Registered ordinary shares (number)
Treasury shares (number)
As of or for the year ended
3311..1122..2222
4477,,662288
2211,,881199
2211,,003322
88,,331199
55,,779922
22,,771144
22,,883311
224466
31.12.21
47,067
21,317
20,537
7,993
5,748
2,611
2,949
189
31.12.20
47,546
21,394
20,528
8,049
5,797
2,596
3,024
177
1111,,669988
12,009
12,307
33,,885588,,440088,,446666
3,858,408,466
3,858,408,466
00
0
0
Dividends received from investments in subsidiaries and associates
In 2022, UBS AG received dividends of USD 6,465m (2021: USD 6,401m; 2020: USD 3,214m) from its subsidiaries and
associates. 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 2022 | Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations
532
532
Balance sheet data
USD m
Assets
Cash and balances at central banks
Loans and advances to 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
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Financial assets at fair value held for trading
of which: assets pledged as collateral that may be sold or repledged by counterparties
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
TToottaall ffiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
FFiinnaanncciiaall aasssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Investments in associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
TToottaall aasssseettss
Liabilities
Amounts due to banks
Payables from securities financing transactions 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
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
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
TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss
Provisions
Other non-financial liabilities
TToottaall lliiaabbiilliittiieess
Equity attributable to shareholders
Equity attributable to non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
3311..1122..2222
31.12.21
31.12.20
116699,,444455
192,817
158,231
1144,,667711
6677,,881144
3355,,003333
339900,,002277
5533,,338899
773300,,337799
110088,,003344
3366,,774422
115500,,110099
1177,,557766
5599,,440088
333355,,112277
22,,223399
11,,110011
1111,,331166
66,,226677
99,,335544
99,,665522
15,360
75,012
30,514
398,693
26,236
738,632
131,033
43,397
118,145
21,839
59,642
330,659
8,844
1,243
11,712
6,378
8,839
9,836
15,344
74,210
32,737
380,977
27,219
688,717
125,492
47,098
159,618
24,659
80,038
389,808
8,258
1,557
11,958
6,480
9,174
9,374
11,,110055,,443366
1,116,145
1,125,327
1111,,559966
44,,220022
3366,,443366
552277,,117711
5566,,114477
5599,,449999
1100,,339911
770055,,444422
2299,,551155
115544,,990066
4455,,008855
7711,,884422
3322,,003333
13,101
5,533
31,801
544,834
57,295
82,432
9,765
744,762
31,688
121,309
44,045
71,460
32,414
11,050
6,321
37,313
527,929
53,979
85,351
10,421
732,364
33,595
161,102
38,742
59,868
31,773
333333,,338822
300,916
325,080
33,,118833
66,,448899
3,452
8,572
2,791
7,018
11,,004488,,449966
1,057,702
1,067,254
5566,,559988
334422
5566,,994400
58,102
340
58,442
57,754
319
58,073
11,,110055,,443366
1,116,145
1,125,327
C – Information about the company
Property, plant and equipment
As of 31 December 2022, UBS AG operated in about 663 business and banking locations worldwide, of which
approximately 33% were in Switzerland, 49% in the Americas, 9% in the rest of Europe, the Middle East and Africa,
and 9% in Asia Pacific. Of the business and banking locations in Switzerland, 22% 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 2022 | Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations
533
533
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 2022, 31 December
2021 and 31 December 2020 are calculated from monthly data. 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 2022, 2021 and 2020. Refer to “Note 3 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
USD m, except where indicated
AAsssseettss
Balances at central banks
Domestic
Foreign
Loans and advances to banks
Domestic
Foreign
Receivables from securities financing transactions measured
at amortized cost1
Domestic
Foreign
Loans and advances to customers
Domestic
Foreign
Financial assets at fair value1,2
Domestic
Foreign
Other interest-earning assets
Domestic
Foreign
TToottaall iinntteerreesstt--eeaarrnniinngg aasssseettss33
Net interest income on swaps
Interest income on off-balance sheet securities and other
3311..1122..2222
AAvveerraaggee
bbaallaannccee
IInntteerreesstt
iinnccoommee
AAvveerraaggee
yyiieelldd ((%%))
Average
balance
31.12.21
Interest
income
Average
yield (%)
Average
balance
31.12.20
Interest
income
Average
yield (%)
9999,,777777
8888,,226677
22,,996666
1122,,220055
66,,443311
7700,,994422
222255,,554400
116600,,449966
55,,992222
115511,,667722
88,,222266
6633,,110088
889955,,555533
9922
559955
5500
88
3300
11,,110055
33,,221122
44,,882244
5500
22,,111133
112255
885588
1133,,006644
11,,881122
667777
1155,,55553344
00..11
00..77
11..77
00..11
00..55
11..66
11..44
33..00
00..88
11..44
11..55
11..44
11..55
98,804
71,529
3,158
12,961
(105)
(31)
40
12
(0.1)
0.0
1.3
0.1
90,234
51,611
2,930
12,001
(112)
7
43
31
9,435
79,297
(28)
234
(0.3)
0.3
4,746
92,098
1.4
1.7
0.1
0.7
1.6
0.6
0.9
212,383
138,485
12,459
192,381
8,064
45,443
862,835
229,794
160,869
10,023
169,368
7,477
47,042
899,757
3,214
2,698
11
1,203
121
298
7,666
1,558
472
9,6954
8
551
3,020
3,136
40
1,826
136
386
9,071
1,140
386
10,5974
(0.1)
0.0
1.5
0.3
0.2
0.6
1.4
2.3
0.3
0.9
1.7
0.8
1.1
IInntteerreesstt iinnccoommee aanndd aavveerraaggee iinntteerreesstt--eeaarrnniinngg aasssseettss
Non-interest-earning assets5
TToottaall aavveerraaggee aasssseettss
11 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. 22 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. 33 Non-taxable positions and amounts were not
material for the years presented. 44 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 3 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. 55 Mainly includes derivative financial instruments, equity instruments at fair value held for trading and financial assets for unit-linked investment contracts.
899,757
296,300
1,196,057
862,835
308,528
1,171,363
889955,,555533
229977,,669911
11,,119933,,224444
1.2
11..77
1.1
Annual Report 2022 | Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations
534
534
Average balances and interest rates (continued)
For the year ended
USD m, except where indicated
LLiiaabbiilliittiieess aanndd eeqquuiittyy
Amount due to banks
Domestic
Foreign
Payables from securities financing transactions measured at
amortized cost1
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
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
TToottaall iinntteerreesstt--bbeeaarriinngg lliiaabbiilliittiieess
Swap interest on hedged debt instruments and other
swaps
Interest expense on off-balance sheet securities and other
3311..1122..2222
31.12.21
31.12.20
AAvveerraaggee
bbaallaannccee
IInntteerreesstt
eexxppeennssee
AAvveerraaggee
iinntteerreesstt
rraattee ((%%))
Average
balance
Interest
expense
Average
interest
rate (%)
Average
balance
Interest
expense
Average
interest
rate (%)
1100,,773333
33,,225555
33,,335577
1133,,335511
227755,,227700
114499,,335577
111199,,668855
66,,222277
224466,,007722
6666,,998877
111111,,113300
6677,,995566
33
4444
4400
228899
((6611))
((114411))
66
7744
11,,882200
112200
557788
11,,112211
5566,,888844
11,,887755
11
2200,,445522
336666
1111,,992277
1111,,553388
2222,,992299
228899
114411,,552266
77,,440000
6633,,447700
22,,887722
3388,,883388
993300,,553311
00
225566
44
112244
118844
443399
1111
11,,447766
4433
11,,228833
1144
442299
88,,227733
4400
00..00
11..33
11..22
22..22
00..00
((00..11))
00..00
11..22
00..77
00..22
00..55
11..77
33..33
00..00
11..33
11..22
11..00
11..66
11..99
33..77
11..00
00..66
22..00
00..55
11..11
00..99
10,369
2,897
(32)
18
(0.3)
0.6
8,097
3,169
(9)
26
(0.1)
0.8
4,786
14,161
1
209
293,028
162,016
126,290
4,721
232,165
82,226
99,847
50,092
(281)
(273)
4
(12)
107
(31)
81
58
56,008
1,699
292
24,461
13
18,473
12,352
27,820
421
139,374
7,806
60,388
2,884
34,833
942,531
0
33
0
37
192
491
3
81
(20)
429
(7)
101
3,060
(765)
0.0
1.5
(0.1)
(0.2)
0.0
(0.3)
0.0
0.0
0.1
0.1
3.0
0.0
0.1
(0.1)
0.2
1.6
1.8
0.8
0.1
(0.3)
0.7
(0.2)
0.3
0.3
3,888
18,793
6
174
266,614
138,949
121,793
5,873
214,783
64,955
71,341
78,488
(160)
(164)
3
1
551
(6)
194
363
51,005
1,740
130
17,098
10
16,989
14,054
27,100
701
146,306
3,469
56,442
3,333
38,516
890,498
0
120
0
147
323
581
2
354
6
801
(6)
187
4,841
(608)
0.2
0.9
(0.1)
(0.1)
0.0
0.0
0.3
0.0
0.3
0.5
3.4
0.0
0.7
0.0
0.9
2.3
2.1
0.3
0.2
0.2
1.4
(0.2)
0.5
0.5
772233
99,,00335533
797
3,0913
576
4,8093
11..00
IInntteerreesstt eexxppeennssee aanndd aavveerraaggee iinntteerreesstt--bbeeaarriinngg lliiaabbiilliittiieess
Non-interest-bearing liabilities4
Total liabilities
Total equity
Total average liabilities and equity
NNeett iinntteerreesstt iinnccoommee
NNeett yyiieelldd oonn iinntteerreesstt--eeaarrnniinngg aasssseettss
11 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. 22 Includes financial liabilities at fair value held for
trading, other financial liabilities designated at fair value and brokerage payables designated at fair value. 33 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 3 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. 44 Mainly includes derivative financial instruments, equity instruments at fair value
held for trading and financial liabilities related to unit-linked investment contracts.
993300,,553311
220066,,333377
11,,113366,,886688
5566,,337766
11,,119933,,224444
942,531
196,273
1,138,804
57,254
1,196,057
890,498
224,468
1,114,966
56,397
1,171,363
6,604
5,788
66,,551177
00..77
0.7
0.7
0.3
0.5
The percentage of total average interest-earning assets attributable to foreign activities was 61% for 2022 (2021: 60%;
2020: 62%). The percentage of total average interest-bearing liabilities attributable to foreign activities was 60% for
2022 (2021: 59%; 2020: 61%). 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 2022 | Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations
535
535
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
2022 compared with the year ended 31 December 2021, and for the year ended 31 December 2021 compared with the
year ended 31 December 2020. The change in average volume represents the change in the current average balance
compared to the average balance from the prior year with respect to the average rate of the prior year. The change in
average rate represents the difference between the net change in interest income and expense and the change in average
volume.
USD m
IInntteerreesstt iinnccoommee ffrroomm iinntteerreesstt--eeaarrnniinngg aasssseettss
Balances at central banks
Domestic
Foreign
Loans and advances to 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
TToottaall iinntteerreesstt iinnccoommee
22002222 ccoommppaarreedd wwiitthh 22002211
2021 compared with 2020
IInnccrreeaassee // ((ddeeccrreeaassee))
dduuee ttoo cchhaannggeess iinn
AAvveerraaggee
vvoolluummee
AAvveerraaggee
iinntteerreesstt rraattee
NNeett
cchhaannggee
Increase / (decrease)
due to changes in
Average
volume
Average
interest rate
((11))
((77))
((22))
((11))
99
((2255))
((5599))
((66))
((55))
((112266))
1122
110022
((4466))
((6633))
((110099))
119988
663333
1122
((33))
4499
889966
5588
22,,113333
4444
11,,003366
((88))
445588
335544
55,,115544
55,,550077
119977
662266
1100
((44))
5588
887711
((11))
22,,112277
3399
991100
44
556600
330088
55,,009911
55,,339988
225544
220055
55,,885588
(9)
0
3
3
9
(77)
244
515
(7)
(207)
(10)
13
230
247
477
16
(38)
(6)
(23)
(44)
(240)
(50)
(954)
(22)
(416)
(5)
(101)
(111)
(1,772)
(1,883)
Net
change
7
(38)
(3)
(20)
(35)
(317)
194
(439)
(29)
(623)
(15)
(88)
119
(1,525)
(1,406)
418
86
(902)
Annual Report 2022 | Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations
536
536
Analysis of changes in interest income and expense (continued)
USD m
IInntteerreesstt eexxppeennssee oonn iinntteerreesstt--bbeeaarriinngg lliiaabbiilliittiieess
Amount 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
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
TToottaall iinntteerreesstt eexxppeennssee
22002222 ccoommppaarreedd wwiitthh 22002211
2021 compared with 2020
IInnccrreeaassee // ((ddeeccrreeaassee))
dduuee ttoo cchhaannggeess iinn
AAvveerraaggee
vvoolluummee
AAvveerraaggee
iinntteerreesstt rraattee
NNeett
cchhaannggee
Increase / (decrease)
due to changes in
Average
volume
Average
interest rate
((11))
22
00
((1122))
1177
2211
00
((44))
66
66
99
2211
2277
00
((55))
00
((1133))
((1133))
((8866))
((11))
11
11
2222
00
1122
3300
((7733))
((4433))
3366
2233
3399
9922
220033
111111
22
9900
11,,770077
114455
448888
11,,004433
114499
00
222288
55
110000
55
3344
3355
2255
3399
8800
222200
113322
22
8866
11,,771133
115511
449977
11,,006644
117766
00
222233
55
8877
((88))
((5522))
88
11,,339955
77
11,,339966
6611
883322
2211
331166
552299
44,,772277
55,,225566
6622
885544
2211
332288
555599
44,,665544
55,,221133
880055
((7744))
55,,994444
(2)
(2)
2
(42)
(23)
(23)
0
0
52
0
86
(142)
(21)
(5)
(7)
76
(98)
(86)
1
(13)
(497)
(26)
(200)
(163)
170
(211)
0
52
0
13
(39)
15
(1)
(14)
9
55
1
(18)
0
(138)
0
(123)
(92)
(105)
2
(259)
(34)
(426)
(2)
(68)
117
111
228
(463)
(1,546)
(2,010)
Net
change
(23)
(7)
(5)
34
(121)
(109)
1
(13)
(445)
(26)
(114)
(305)
(41)
0
(86)
0
(110)
(131)
(90)
1
(273)
(25)
(371)
(1)
(86)
(346)
(1,435)
(1,782)
(157)
221
(1,718)
Annual Report 2022 | Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations
537
537
Deposits
The table below analyzes average deposits and average rates on each deposit category for the years ended 31 December
2022, 2021 and 2020. 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 59,897m as of 31 December
2022 (31 December 2021: USD 77,070m; 31 December 2020: USD 76,200m).
USD m, except where indicated
DDuuee ttoo bbaannkkss
DDoommeessttiicc
Demand deposits
Time deposits
Total domestic
FFoorreeiiggnn11
Interest-bearing deposits
TToottaall dduuee ttoo bbaannkkss
CCuussttoommeerr ddeeppoossiittss
DDoommeessttiicc
Demand deposits
Savings and sweep deposits
Time deposits
Total domestic
FFoorreeiiggnn11
Demand deposits
Savings and sweep deposits
Time deposits
Total foreign
TToottaall ccuussttoommeerr ddeeppoossiittss
3311..1122..2222
31.12.21
31.12.20
AAvveerraaggee
ddeeppoossiittss
AAvveerraaggee
rraattee ((%%))
Average
deposits
Average
rate (%)
Average
deposits
Average
rate (%)
990088
22,,779933
33,,770000
1100,,228888
1133,,998888
9977,,221177
110099,,003399
99,,771155
221155,,997711
111199,,112277
112211,,777766
6644,,446688
330055,,337700
552211,,334422
((00..33))
00..55
00..33
00..33
00..33
927
3,026
3,953
9,313
13,266
((00..11))
103,267
00..00
00..44
00..00
00..11
00..55
11..88
00..66
00..33
114,792
10,306
228,366
140,975
111,345
44,507
296,826
525,192
(0.5)
0.0
(0.1)
(0.1)
(0.1)
(0.2)
0.0
(0.2)
(0.1)
1,037
1,775
2,812
8,454
11,266
91,404
110,328
19,256
220,988
(0.1)
112,499
0.1
0.1
0.0
0.0
82,806
65,104
260,410
481,398
(0.4)
0.4
0.1
0.1
0.1
(0.1)
0.0
0.0
0.0
0.0
0.2
0.5
0.2
0.1
11 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 2022, total estimated uninsured
deposits were USD 365bn (31 December 2021: USD 395bn; 31 December 2020: USD 383bn). 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 456m per client) 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 2022. 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
Within 3 months
3 to 6 months
6 to 12 months
Over 12 months
UUnniinnssuurreedd ttiimmee ddeeppoossiittss11
9933,,330088
1100,,996633
77,,556644
11,,114488
TToottaall uunniinnssuurreedd ttiimmee ddeeppoossiittss aass ooff 3311 DDeecceemmbbeerr 22002222
11 Amounts are estimated based on the methodologies defined in each local jurisdiction. As of 31 December 2022, there were no US time deposits subject to the FDIC scheme that were in excess of the FDIC insurance
limit.
111122,,998833
Annual Report 2022 | Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations
538
538
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 and debt instruments without fixed maturities
are not included.
WWiitthhiinn 11 yyeeaarr
11 ttoo 55 yyeeaarrss
55 ttoo 1100 yyeeaarrss
OOvveerr 1100 yyeeaarrss
CCaarrrryyiinngg
aammoouunntt
YYiieelldd ((%%))
CCaarrrryyiinngg
aammoouunntt
YYiieelldd ((%%))
CCaarrrryyiinngg
aammoouunntt
YYiieelldd ((%%))
CCaarrrryyiinngg
aammoouunntt
YYiieelldd ((%%))
2266
22,,009933
22,,112200
88,,558844
22,,000055
1100,,558899
1122,,770088
00..7733
22..6644
11..2277
00..5533
111199
111199
111177
66,,223366
99,,666622
1166,,001155
1166,,113355
22..4488
11..9977
11..9977
11..2244
11,,558888
44,,440033
33,,441100
99,,440022
99,,440022
22..3333
11..6677
11..3333
66,,773355
11,,883377
1166
88,,558888
88,,558888
22..3377
22..4466
11..9955
TToottaall
ccaarrrryyiinngg
aammoouunntt
2266
22,,221133
22,,223399
88,,444400
2211,,006600
1155,,009944
4444,,559944
4466,,883333
USD m, except where indicated
DDeebbtt iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee
tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Government bills / bonds
Corporate and other
SSuubbttoottaall aass ooff 3311 DDeecceemmbbeerr 22002222
DDeebbtt sseeccuurriittiieess mmeeaassuurreedd aatt aammoorrttiizzeedd ccoosstt
Asset-backed securities
Government bills / bonds
Corporate and other
SSuubbttoottaall aass ooff 3311 DDeecceemmbbeerr 22002222
TToottaall aass ooff 3311 DDeecceemmbbeerr 22002222
Loan portfolio
The table below provides the maturity profile of UBS AG’s core loan portfolio as of 31 December 2022. 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
3311..1122..2222
WWiitthhiinn 11 yyeeaarr
11 ttoo 55 yyeeaarrss
55 ttoo 1155 yyeeaarrss
OOvveerr 1155 yyeeaarrss
TToottaall
ooff wwhhiicchh:: oovveerr 11 yyeeaarr
Private clients with mortgages
Real estate financing
Large corporate clients
SME clients
Lombard
Credit cards
Commodity trade finance
Other loans and advances to customers
Loans to financial advisors
TToottaall
1155,,005566
1199,,113300
44,,442233
66,,664477
112244,,669955
11,,883344
33,,115588
1111,,557700
113344
118866,,664488
8833,,222233
1199,,114466
66,,887766
44,,664444
77,,117788
00
111100
99,,338822
997755
113311,,553355
3311,,885544
88,,115533
992266
22,,661122
441144
00
44
22,,113355
11,,227788
4477,,337766
2266,,779977
4400
11
00
00
00
00
1199
222233
2277,,008800
115566,,993300
4466,,447700
1122,,222266
1133,,990033
113322,,228877
11,,883344
33,,227722
2233,,110077
22,,661111
339922,,663388
FFiixxeedd rraattee
7766,,770077
1177,,443355
22,,779911
33,,339933
66,,997755
00
44
11,,660099
22,,447766
111111,,339911
AAddjjuussttaabbllee oorr
ffllooaattiinngg rraattee
6655,,116666
99,,990044
55,,001122
33,,886633
661177
00
111100
99,,992277
00
9944,,660000
Allowance for credit losses
For the years ended 31 December 2022, 2021 and 2020, 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 2022 were USD 95m (31 December 2021: USD 137m, 31 December 2020: USD 356m). Refer to the
coverage ratio tables in “Note 9 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 2022 | Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations
539
539
Appendix
Alternative performance measures
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or future financial performance, financial
position or cash flows other than a financial measure defined or specified in the applicable recognized accounting
standards or in other applicable regulations. We report a number of APMs in the discussion of the financial and operating
performance of the Group, our business divisions and our Group Functions. We use APMs to provide a more complete
picture of our operating performance and to reflect management’s view of the fundamental drivers of our business
results. A definition of each APM, the method used to calculate it and the information content are presented in
alphabetical order in the table below. Our APMs may qualify as non-GAAP measures as defined by US Securities and
Exchange Commission (SEC) regulations.
AAPPMM llaabbeell
CCaallccuullaattiioonn
IInnffoorrmmaattiioonn ccoonntteenntt
Active Digital Banking clients in
Corporate & Institutional Clients (%)
– Personal & Corporate Banking
Active Digital Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Active Mobile Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) which are serviced by Corporate &
Institutional Clients.
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) who are serviced by Personal Banking.
This measure provides information about the
proportion of active Mobile Banking clients in the
total number of UBS clients (within the
aforementioned meaning) who are serviced by
Personal Banking.
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to the
number of unique business relationships or legal
entities operated by Corporate & Institutional Clients,
excluding clients that do not have an account, mono-
product clients and clients that have defaulted on loans
or credit facilities. At the end of each month, any client
that has logged on at least once in that month is
determined to be “active” (a log-in time stamp is
allocated to all business relationship numbers or per
legal entity in a digital banking contract).
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to the
number of unique business relationships operated by
Personal Banking, excluding persons under the age of
15, clients who do not have a private account, clients
domiciled outside Switzerland and clients who have
defaulted on loans or credit facilities. At the end of
each month, any client that has logged on at least once
in that month is determined to be “active” (a log-in
time stamp is allocated to all business relationship
numbers in a digital banking contract).
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to the
number of unique business relationships operated by
Personal Banking, excluding persons under the age of
15, clients who do not have a private account, clients
domiciled outside Switzerland and clients who have
defaulted on loans or credit facilities. At the end of
each month, any client that has logged on via the
mobile app at least once in that month is determined
to be “active” (a log-in time stamp is allocated to all
business relationship numbers in a digital banking
contract).
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 gross income.
Fee and trading income for Corporate
& Institutional Clients (USD and CHF)
– Personal & Corporate Banking
Calculated as the total of recurring net fee and
transaction-based income for Corporate & Institutional
Clients.
This measure provides information about the amount
of fee and trading income for Corporate &
Institutional Clients.
Annual Report 2022 | Appendix
540
540
AAPPMM llaabbeell
CCaallccuullaattiioonn
IInnffoorrmmaattiioonn ccoonntteenntt
Fee-generating assets (USD)
– Global Wealth Management
Fee-generating asset margin (bps)
– Global Wealth Management
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.
This measure provides information about the revenues
from fee-generating assets in relation to their average
volume during the relevant mandate fee billing
period.
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.
Calculated as revenues from fee-generating assets (a
portion of which is included in recurring fee income
and a portion of which is included in transaction-
based income, annualized as applicable) divided by
average fee-generating assets for the relevant
mandate fee billing period. For the US, fees have
been billed on daily balances since the fourth quarter
of 2020 and average fee-generating assets are
calculated as the average of the monthly average
balances. Prior to the fourth quarter of 2020, billing
was based on prior quarter-end balances, and the
average fee-generating assets were thus the prior
quarter-end balance. For balances outside of the US,
billing is based on prior month-end balances and
average fee-generating assets are thus the average of
the prior month-end balances.
Gross margin on invested assets (bps)
– Asset Management
Calculated as total revenues (annualized as applicable)
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
Invested assets (USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management
Investment products for Personal
Banking (USD and CHF)
– 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.
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.
Calculated as the sum of investment funds (including
UBS Vitainvest third-pillar pension funds), mandates
and third-party life insurance operated in Personal
Banking.
This measure provides information about the volume
of investment funds (including UBS Vitainvest third-
pillar pension funds), mandates and third-party life
insurance operated in Personal Banking.
Net interest margin (bps)
– Personal & Corporate Banking
Calculated as net interest income (annualized as
applicable) 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 fee-generating assets (USD)
– Global Wealth Management
Calculated as the sum of 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 fee-generating asset
growth rate (%)
– Global Wealth Management
Calculated as the sum of the net amount of fee-
generating asset inflows and outflows recorded
during a specific period (annualized as applicable)
divided by total fee-generating assets at the
beginning of the period.
This measure provides information about the growth
of fee-generating assets during a specific period as a
result of net new fee-generating asset flows.
Net new investment products for
Personal Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the sum of the net amount of inflows
and outflows of investment products during a specific
period.
This measure provides information about the
development of investment products during a specific
period as a result of net new investment product
flows.
Annual Report 2022 | Appendix
541
541
AAPPMM llaabbeell
CCaallccuullaattiioonn
IInnffoorrmmaattiioonn ccoonntteenntt
Net new money (USD)
– Global Wealth Management,
Asset Management
Net profit growth (%)
Pre-tax profit growth (%)
Recurring net fee income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Return on attributed equity (%)
Calculated as the sum of 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 the effects on invested assets
of strategic decisions by UBS to exit markets or
services. Net new money for Global Wealth
Management is disclosed on an annual basis. Net new
money is not measured for Personal & Corporate
Banking.
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.
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.
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.
Calculated as annualized business division operating
profit before tax divided by average attributed equity.
This measure provides information about the
development of invested assets during a specific
period as a result of net new money flows and
excludes 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.
This measure provides information about profit
growth since the comparison period.
This measure provides information about pre-tax
profit growth since the comparison period.
This measure provides information about the amount
of recurring net fee income.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity.
Return on common equity tier 1
capital (%)
Calculated as annualized net profit attributable to
shareholders 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 (%)
Calculated as annualized net profit attributable to
shareholders 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 annualized total revenues divided by
average leverage ratio denominator.
Return on tangible equity (%)
Tangible book value per share
(USD)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable to
shareholders less average goodwill and intangible
assets.
Calculated as equity attributable to shareholders less
goodwill and intangible assets divided by the number
of shares outstanding.
This measure provides information about the revenues
of the business in relation to the leverage ratio
denominator.
This measure provides information about the
profitability of the business in relation to tangible
equity.
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.
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.
Annual Report 2022 | Appendix
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542
Abbreviations frequently used in our financial reports
A
ABS
AG
AGM
A-IRB
AIV
ALCO
AMA
AML
AoA
APM
ARR
ARS
ASF
AT1
AuM
B
BCBS
BIS
BoD
C
CAO
CCAR
CCF
CCP
CCR
CCRC
CDS
CEA
CEO
CET1
CFO
CGU
CHF
CIO
C&ORC
asset-backed securities
Aktiengesellschaft
Annual General Meeting of
shareholders
advanced internal ratings-
based
alternative investment
vehicle
Asset and Liability
Committee
advanced measurement
approach
anti-money laundering
Articles of Association
alternative performance
measure
alternative reference rate
auction rate securities
available stable funding
additional tier 1
assets under management
Basel Committee on
Banking Supervision
Bank for International
Settlements
Board of Directors
Capital Adequacy
Ordinance
Comprehensive Capital
Analysis and Review
credit conversion factor
central counterparty
counterparty credit risk
Corporate Culture and
Responsibility Committee
credit default swap
Commodity Exchange Act
Chief Executive Officer
common equity tier 1
Chief Financial Officer
cash-generating unit
Swiss franc
Chief Investment Office
Compliance & Operational
Risk Control
CRM
CST
CUSIP
CVA
D
DBO
DCCP
DE&I
DFAST
DM
DOJ
DTA
DVA
E
EAD
EB
EC
ECB
ECL
EGM
EIR
EL
EMEA
EOP
EPS
ESG
ESR
ETD
ETF
EU
EUR
EURIBOR
EVE
EY
F
FA
FCA
FDIC
FINMA
FMIA
FSB
FTA
FVA
FVOCI
FVTPL
FX
G
GAAP
GBP
GCRG
GDP
GEB
GHG
GIA
GRI
G-SIB
H
HQLA
I
IAS
IASB
IBOR
IFRIC
IFRS
IRB
IRRBB
ISDA
ISIN
credit risk mitigation (credit
risk) or comprehensive risk
measure (market risk)
combined stress test
Committee on Uniform
Security Identification
Procedures
credit valuation adjustment
defined benefit obligation
Deferred Contingent
Capital Plan
diversity, equity and
inclusion
Dodd–Frank act stress test
discount margin
US Department of Justice
deferred tax asset
debit valuation adjustment
exposure at default
Executive Board
European Commission
European Central Bank
expected credit loss
Extraordinary General
Meeting of shareholders
effective interest rate
expected loss
Europe, Middle East and
Africa
Equity Ownership Plan
earnings per share
environmental, social and
governance
environmental and social
risk
exchange-traded derivatives
exchange-traded fund
European Union
euro
Euro Interbank Offered Rate
economic value of equity
Ernst & Young Ltd
financial advisor
UK Financial Conduct
Authority
Federal Deposit Insurance
Corporation
Swiss Financial Market
Supervisory Authority
Swiss Financial Market
Infrastructure Act
Financial Stability Board
Swiss Federal Tax
Administration
funding valuation
adjustment
fair value through other
comprehensive income
fair value through profit or
loss
foreign exchange
generally accepted
accounting principles
pound sterling
Group Compliance,
Regulatory & Governance
gross domestic product
Group Executive Board
greenhouse gas
Group Internal Audit
Global Reporting Initiative
global systemically
important bank
high-quality liquid assets
International Accounting
Standards
International Accounting
Standards Board
interbank offered rate
International Financial
Reporting Interpretations
Committee
International Financial
Reporting Standards
internal ratings-based
interest rate risk in the
banking book
International Swaps and
Derivatives Association
International Securities
Identification Number
Annual Report 2022 | Appendix
543
543
Abbreviations frequently used in our financial reports (continued)
T
TBTF
TCFD
TIBOR
TLAC
TTC
U
USD
V
VaR
VAT
too big to fail
Task Force on Climate-
related Financial Disclosures
Tokyo Interbank Offered
Rate
total loss-absorbing capacity
through the cycle
US dollar
value-at-risk
value added tax
K
KRT
L
LAS
LCR
LGD
LIBOR
LLC
LoD
LRD
LTIP
LTV
M
M&A
MRT
N
NII
NSFR
NYSE
O
OCA
OCI
OECD
OTC
P
PD
PIT
P&L
POCI
Q
QCCP
Key Risk Taker
liquidity-adjusted stress
liquidity coverage ratio
loss given default
London Interbank Offered
Rate
limited liability company
lines of defense
leverage ratio denominator
Long-Term Incentive Plan
loan-to-value
R
RBC
RbM
REIT
RMBS
RniV
RoCET1
RoU
rTSR
RWA
S
SA
mergers and acquisitions
Material Risk Taker
SA-CCR
net interest income
net stable funding ratio
New York Stock Exchange
own credit adjustment
other comprehensive
income
Organisation for Economic
Co-operation and
Development
over-the-counter
probability of default
point in time
profit or loss
purchased or originated
credit-impaired
Qualifying central
counterparty
SAR
SDG
SEC
SFT
SI
SIBOR
SICR
SIX
SME
SMF
SNB
SOR
SPPI
SRB
SRM
SVaR
risk-based capital
risk-based monitoring
real estate investment trust
residential mortgage-
backed securities
risks not in VaR
return on CET1 capital
right-of-use
relative total shareholder
return
risk-weighted assets
standardized approach or
société anonyme
standardized approach for
counterparty credit risk
Special Administrative
Region of the People’s
Republic of China
Sustainable Development
Goal
US Securities and Exchange
Commission
securities financing
transaction
sustainable investing or
sustainable investment
Singapore Interbank
Offered Rate
significant increase in credit
risk
SIX Swiss Exchange
small and medium-sized
entities
Senior Management
Function
Swiss National Bank
Singapore Swap Offer Rate
solely payments of principal
and interest
systemically relevant bank
specific risk measure
stressed value-at-risk
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 2022 | Appendix
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544
Information sources
Reporting publications
Annual publications
Annual Report: Published in English, this single-volume report provides descriptions of: our Group strategy and
performance; the strategy and performance of the business divisions and Group Functions; risk, treasury and capital
management; corporate governance, corporate responsibility and our compensation framework, including information
about compensation for the Board of Directors and the Group Executive Board members; and financial information,
including the financial statements.
“Auszug aus dem Geschäftsbericht”: This publication provides a German translation of selected sections of our Annual
Report.
Compensation Report: This report discusses our 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 Annual Report.
Sustainability Report: Published in English, our Sustainability Report provides disclosures on environmental, social and
governance topics related to UBS Group.
Diversity, Equity and Inclusion Report: This report details our DE&I priority areas of focus, our strategic goals and our
approach to achieving them at UBS.
Quarterly publications
Quarterly financial report: This report provides an update on our performance and strategy (where applicable) for the
respective quarter. It is available in English.
The annual and quarterly publications are available in a fully digital and .pdf format at ubs.com/investors, under “Financial
information.” Starting with our Annual Report 2022, we no longer provide printed copies, in any language, of the
aforementioned annual publications.
Other information
Website
The “Investor Relations” website at ubs.com/investors provides the following information about UBS: results-related news
releases; financial information, including results-related filings with the US Securities and Exchange Commission (the
SEC); information for shareholders, including UBS share price charts, as well as data and dividend information, and for
bondholders; our 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
Our 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
We file periodic reports and submit other information about UBS 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 combined UBS Group AG and
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 we file with the SEC is available on the SEC’s website: sec.gov. Refer to ubs.com/investors for more
information.
Annual Report 2022 | Appendix
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545
Cautionary Statement Regarding Forward-Looking Statements | This report contains statements that constitute “forward-looking statements,” including
but not limited to management’s outlook for UBS’s financial performance, statements relating to the anticipated effect of transactions and strategic initiatives
on UBS’s business and future development and goals or intentions to achieve climate, sustainability and other social objectives. While these forward-looking
statements represent UBS’s judgments, expectations and objectives concerning the matters described, a number of risks, uncertainties and other important
factors could cause actual developments and results to differ materially from UBS’s expectations. The Russia–Ukraine war has led to heightened volatility across
global markets, exacerbated global inflation, and slowed global growth. In addition, the war has caused significant population displacement, and if the conflict
continues or escalates, the scale of disruption will increase and continue to cause shortages of vital commodities, including energy shortages and food insecurity,
and may lead to recessions in OECD economies. The coordinated sanctions on Russia and Belarus, and Russian and Belarusian entities and nationals, and the
uncertainty as to whether the war will widen and intensify, may have significant adverse effects on the market and macroeconomic conditions, including in ways
that cannot be anticipated. This creates significantly greater uncertainty about forward-looking statements. Other factors that may affect our performance and
ability to achieve our plans, outlook and other objectives also include, but are not limited to: (i) the degree to which UBS is successful in the ongoing execution
of its strategic plans, including its cost reduction and efficiency initiatives and its ability to manage its levels of risk-weighted assets (RWA) and leverage ratio
denominator (LRD), liquidity coverage ratio and other financial resources, including changes in RWA assets and liabilities arising from higher market volatility;
(ii) the degree to which UBS is successful in implementing changes to its businesses to meet changing market, regulatory and other conditions; (iii) increased
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, the effects of economic conditions, including increasing inflationary
pressures, market developments, increasing geopolitical tensions, 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, including the COVID-19 pandemic and the measures taken to manage it, which
have had and may also continue to have a significant adverse effect on global and regional economic activity, including disruptions to global supply chains and
labor market displacements; (v) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings, as well as availability
and cost of funding to meet requirements for debt eligible for total loss-absorbing capacity (TLAC); (vi) changes in central bank policies or the implementation of
financial legislation and regulation in Switzerland, the US, the UK, the European Union 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 Group in response to legal and regulatory requirements, or other external 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 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 our 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 our RWA, as well as the amount of capital available for return to
shareholders; (xiii) the effects on UBS’s business, in particular cross-border banking, of sanctions, tax or regulatory developments and of possible changes in UBS’s
policies and practices; (xiv) 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; (xv) 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; (xvi) UBS’s ability to implement new technologies
and business methods, including digital services and technologies, and ability to successfully compete with both existing and new financial service providers,
some of which may not be regulated to the same extent; (xvii) limitations on the effectiveness of UBS’s internal processes for risk management, risk control,
measurement and modeling, and of financial models generally; (xviii) 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 cyberattack threats from nation states; (xix) restrictions on the
ability of UBS Group AG to make payments or distributions, including due to restrictions on the ability of its subsidiaries to make loans or distributions, directly
or indirectly, or, in the case of financial difficulties, due to the exercise by FINMA or the regulators of UBS’s operations in other countries of their broad statutory
powers in relation to protective measures, restructuring and liquidation proceedings; (xx) 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; (xxi) 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; and (xxii) the effect that these
or other factors or unanticipated events may have on our reputation and the additional consequences that this may have on our business and performance. The
sequence in which the factors above are presented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. Our
business and financial performance could be affected by other factors identified in our past and future filings and reports, including those filed with the 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 UBS’s Annual Report on Form 20-F for the year ended 31 December 2022. UBS is not under any obligation to (and expressly disclaims
any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
Rounding | Numbers presented throughout this report may not add up precisely to the totals provided in the tables and text. Percentages and percent changes
disclosed in text and tables are calculated on the basis of unrounded figures. Absolute changes between reporting periods disclosed in the text, which can be
derived from numbers presented in related tables, are calculated on a rounded basis.
Tables | Within tables, blank fields generally indicate non-applicability or that presentation of any content would not be meaningful, or that information is not
available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis. Values
that are zero on a rounded basis can be either negative or positive on an actual basis.
Annual Report 2022 | Appendix
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UBS Group AG
P.O. Box, CH-8098 Zurich
UBS AG
P.O. Box, CH-8098 Zurich
P.O. Box, CH-4002 Basel
ubs.com