UBS Performance Indicators

Performance indicators

For the last six years, we consistently assessed our performance against a set of four measures that were designed to ensure the delivery of continuously improving returns to our shareholders. In that time, UBS has evolved, and its business and client base have grown. By late last year we had arrived at a point where we were steadily exceeding the original targets.

That is why, as announced in February, we have modified them starting this quarter. From now on, on average through periods of varying market conditions, we will:

– seek to increase the value of UBS by achieving a sustainable, after-tax return on equity of a minimum of 20% (we previously targeted a range of 15–20%).

– aim to achieve a clear growth trend in net new money for all our financial businesses, including Global Asset Management and Business Banking Switzerland (this measure was previously only applied to our wealth management units).

– use diluted earnings per share (EPS) instead of basic EPS as a reference for our EPS growth target that remains, as before, annual double-digit percentage growth.

– continue our unchanged objective to manage our cost / income ratio at levels that compare well with our competitors. Our cost / income ratio target is limited to our financial businesses, to avoid the distortion from industrial holdings, which operated at a 63.8% cost / income ratio in first quarter.

Performance against the new targets

Our performance from continuing operations against the new performance indicators in first quarter 2006 shows:

– Annualized return on equity at 30.6%, practically unchanged from 30.7% in the same quarter a year earlier and well above our 20% minimum. Higher attributable net profit was offset by an increase in average equity following strong retained earnings.

– Diluted earnings per share at CHF 3.08, up 32% or CHF 0.74 from CHF 2.34 in the same quarter a year earlier, reflecting the increase in net profit and a 2% reduction in the average number of shares outstanding as we continued to repurchase shares.

– A cost / income ratio in our financial businesses of 68.4%, slightly below the 69.5% shown in the same quarter last year. The strong increase in operating income reflected higher revenues in all businesses. It was only partially offset by the increase in personnel and general and administrative expenses.

– Net new money of CHF 48.0 billion, up from CHF 35.2 billion a year earlier. Inflows continued to be very strong worldwide. The Wealth Management units recorded inflows of CHF 33.6 billion this quarter, up from CHF 24.1 billion a year earlier, reflecting high inflows into our domestic European business and further strong contributions from Asian clients. The Swiss retail business recorded a net new money inflow of CHF 1.8 billion. Global Asset Management experienced a high inflow of CHF 12.6 billion. Institutional clients, mainly in Europe and the Americas, drove performance, as did inflows into the wholesale intermediary business worldwide.