UBS Performance Indicators

Performance indicators

We focus on four key performance indicators, designed to ensure the delivery of continuously improving returns to our shareholders. All are calculated based on results from continuing operations. The first two, return on equity and diluted earnings per share, are based on the results of the entire firm. The cost / income ratio and net new money indicators are limited to our financial businesses. On this basis, performance indicators in third quarter 2006 show:

– annualized return on equity was 25.8% in the first nine months of 2006, down from 27.4% in the same period a year earlier, but well above our target of 20% minimum over the cycle. The decrease was driven by the growth in the average equity base, only partially offset by higher annualized profit.

– diluted earnings per share of CHF 1.07, down 13% or CHF 0.16 from CHF 1.23 in the same quarter a year earlier, reflecting the decrease in net profit, partly offset by a 2% reduction in the average number of shares outstanding following continued share buybacks.

– a cost / income ratio in our financial businesses of 73.8%, up from 68.9% in the same quarter last year. Revenues remained practically flat, while costs rose, mainly on higher general and administrative expenses related to the expansion of our business and investment in support of further growth. Costs were also up on higher salary expenses. We have added over 5,000 employees in the last year in areas where we see long-term strategic opportunities.

– net new money of CHF 41.9 billion, down from a record high of CHF 51.2 billion a year earlier. Inflows remained strong worldwide. The wealth management units recorded inflows of CHF 26.8 billion this quarter, down from CHF 31.1 billion in third quarter 2005. Inflows in the international and Swiss wealth management business rose to CHF 23.4 billion, driven by inflows from Asia and the Americas. Within this, net new money in European Wealth Management was CHF 2.7 billion in third quarter 2006, down from CHF 5.6 billion in third quarter 2005, as asset gathering slowed in July and August. Strong inflows in Italy and the UK were partly offset by small outflows in other European markets. Inflows into our domestic wealth management business in the US were CHF 3.4 billion in third quarter, down sharply from the record of CHF 9.9 billion a year earlier, but up from CHF 0.7 billion in second quarter. Global Asset Management inflows fell to CHF 15.5 billion, down from the strong CHF 19.9 billion result a year earlier. Of the total, CHF 8.8 billion was into money market funds, which tend to experience larger quarterly swings than other asset classes. The Swiss retail banking business recorded net new money outflows of CHF 0.4 billion. Overall, UBS net new money in the first nine months of 2006 was at a record CHF 126.2 billion.