Balance Sheet

UBS’s total assets stood at CHF 2,173 billion on 31 March 2006, up from CHF 2,060 billion at year-end 2005. Asset growth was driven by increases in collateral trading (up CHF 112 billion) and the trading portfolio (up CHF 38 billion). This was partially offset by a drop in positive replacement values (down CHF 36 billion), currency fluctuations (CHF 4 billion) and a slight reduction in loans to customers (down CHF 2 billion).

Lending and borrowing

Loans to customers totaled CHF 268 billion on 31 March 2006, down marginally from CHF 270 billion on 31 December 2005. Net loans in the Investment Bank dropped in first quarter, mainly reflecting decreased customer lending in global syndicated finance and reduced lending to US mortgage originators. This was mostly offset by higher lending activity in Global Wealth Management and Business Banking, driven by growth in our Swiss mortgage business and collateralized lending in the international wealth management business. UBS’s borrowing position rose CHF 55 billion, mainly driven by an increase in client and interbank deposits and, to a lesser extent, by additional commercial paper issued in the US.

Repo and securities borrowing / lending

Cash collateral on securities borrowed and reverse repurchase agreements stood at CHF 817 billion on 31 March 2006, up CHF 112 billion from 31 December 2005. This rise stems largely from the fixed income matched book (a portfolio comprised of assets and liabilities with equal maturities and equal value, so that market risks cancel out), primarily in high- quality collateral, driven by higher client demands for such collateral and additional equity finance activities (securities borrowing and lending).

Trading portfolio/derivative instruments

Between 31 December 2005 and 31 March 2006, trading assets increased CHF 38 billion to CHF 692 billion, while the replacement value of derivative instruments decreased by CHF 36 billion to CHF 298 billion, reflecting movements in interest rates and currencies. Trading assets inventory in equities rose by CHF 30 billion due to rising stock markets and delta hedges on fair value notes issued. The value of debt instruments rose by CHF 5 billion, mainly due to higher positions in commercial paper and asset-backed securities. In precious metals, trading assets grew as well, by CHF 4 billion. Traded loans fell CHF 1 billion.