Balance Sheet

UBS's total assets stood at CHF 2,572.9 billion on 31 March 2007, up from CHF 2,396.5 billion on 31 December 2006. The increase was driven by the growth in collateral trading (up CHF 85 billion), the trading portfolio (up CHF 59 billion), and the lending portfolios (up CHF 30 billion), while positive replacement values grew moderately by CHF 2 billion. Currency movements against the Swiss franc were immaterial in first quarter 2007. Total liabilities rose due to higher borrowing (up CHF 90 billion), collateral trading liabilities (up CHF 44 billion), trading liabilities (up CHF 36 billion) and to a ­lesser extent due to negative replacement values (up CHF 9 billion).

Lending and borrowing

Lending

Cash was CHF 3.8 billion on 31 March 2007, up slightly by CHF 0.3 billion from year-end 2006, mainly from higher sight deposit balances held with central banks. Due from banks increased by CHF 6 billion, largely related to higher lending activities by the cash and collateral trading business, which is the central funding instance of the bank. Our loans to customers stood at CHF 332 billion on 31 March 2007, up by CHF 19 billion from 31 December 2006, reflecting higher secured lending volumes for wealth management clients (in particular in Asia) and to a lesser extent continued growth in mortgages in Switzerland. This was further accentuated by a substantial increase in the Investment Bank's secured lending to prime brokerage clients, which was partially offset by lower secured lending balances to US mortgage originators as a result of the US mortgage securities market slowdown.

Borrowing

Due to banks rose by CHF 16 billion to CHF 220 billion, mainly due to increased time deposits in the Investment Bank's cash and collateral trading activities to accommodate the firm's general growth. Total debt issued (including financial liabilities designated at fair value) increased to CHF 380 billion on 31 March 2007, up CHF 44 billion from year-end. Money market paper issuance increased by CHF 20 billion, mainly in the US and Europe. The amount of long-term debt issued (including financial liabilities designated at fair value) grew by CHF 24 billion to CHF 240 billion. Due to customers was up CHF 30 billion, mainly reflecting larger time deposits from private clients in our wealth management franchise around the globe and to a lesser extent in Switzerland from our retail banking business. Further growth was recorded in our Investment Bank's prime brokerage and exchange traded derivative business.

Repo and securities borrowing / lending

In first quarter 2007, cash collateral on securities borrowed and reverse repurchase agreements increased by CHF 85 billion or 11% to CHF 842 billion, while the sum of securities lent and repos grew by CHF 44 billion or 7% to CHF 653 billion. The collateral trading asset increase stems primarily from the Investment Bank's matched book (a repo portfolio comprised of assets and liabilities with equal maturities and equal value, so that the risks substantially cancel each other out) from a larger fixed income book to cover an increase in short trading inventories and to a lesser extent from ­equity securities borrowing activities. Repos and securities lending rose, largely to finance the growth in trading in­ventory.

Trading portfolio / derivative instruments

Between 31 December 2006 and 31 March 2007, trading assets increased by CHF 59 billion, reaching CHF 938 billion. Equity instruments were up by CHF 22 billion, largely driven by higher volumes and accentuated by a slight rise in equity markets, while our money market paper inventory (in particular European Commercial Paper) rose by CHF 20 billion, mainly in our fixed income, rates and currencies business. Further, our traded loan portfolio grew by CHF 11 billion, related to securitization business, while precious metals and debt instruments grew moderately (each up by CHF 3 billion). Over the same period, short trading positions increased by CHF 36 billion to stand at CHF 241 billion. The positive replacement value of derivative instruments increased CHF 2 billion to CHF 330 billion.