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Risk Management and Control
Credit risk
| Tables and Spreadsheets |
UBS realized a net recovery of CHF 1 million in first quarter 2007, compared with net recoveries of CHF 21 million in fourth quarter 2006 and CHF 83 million in first quarter 2006. As indicated in previous quarters, we continue to see a progressive downward trend in net credit loss recoveries, which is mainly due to the continued reduction in the level of impaired loans. Global Wealth Management & Business Banking reported a net recovery of CHF 21 million in first quarter 2007, after net recoveries of CHF 11 million in fourth quarter 2006 and CHF 53 million in first quarter 2006. The Investment Bank posted a net credit loss expense of CHF 20 million in first quarter 2007, mainly related to its exposure to US sub-prime mortgage lenders. The Investment Bank recorded a net recovery of CHF 10 million in fourth quarter 2006 and a recovery of CHF 30 million in first quarter 2006.
Our gross lending portfolio was CHF 389 billion on 31 March 2007, up significantly from CHF 364 billion on 31 December 2006. In Global Wealth Management & Business Banking, gross lending was CHF 233 billion, up from CHF 229 billion on 31 December 2006, mainly due to higher secured loans extended by our wealth management units. The gross lending portfolio at the Investment Bank rose by CHF 21 billion to CHF 155 billion, as a result of continued expansion of our prime brokerage area, which, among other activities, provides financing on a collateralized basis to hedge funds.
The ratio of impaired loans to total loans continued to improve. It was 0.6% in first quarter 2007, down from 0.7% in fourth quarter 2006. The level of impaired loans was CHF 2,478 million in first quarter, down 5.7% from last quarter's CHF 2,628 million.
Credit loss (expense) / recovery | |||||
Quarter ended | % change from | ||||
CHF million | 31.3.07 | 31.12.06 | 31.3.06 | 4Q06 | 1Q06 |
Global Wealth Management & Business Banking | 21 | 11 | 53 | 91 | (60) |
Investment Bank | (20) | 10 | 30 | ||
UBS | 1 | 21 | 83 | (95) | (99) |
Our gross lending portfolio was CHF 389 billion on 31 March 2007, up significantly from CHF 364 billion on 31 December 2006. In Global Wealth Management & Business Banking, gross lending was CHF 233 billion, up from CHF 229 billion on 31 December 2006, mainly due to higher secured loans extended by our wealth management units. The gross lending portfolio at the Investment Bank rose by CHF 21 billion to CHF 155 billion, as a result of continued expansion of our prime brokerage area, which, among other activities, provides financing on a collateralized basis to hedge funds.
The ratio of impaired loans to total loans continued to improve. It was 0.6% in first quarter 2007, down from 0.7% in fourth quarter 2006. The level of impaired loans was CHF 2,478 million in first quarter, down 5.7% from last quarter's CHF 2,628 million.
Allowances and provisions for credit losses | ||||||||||||||
CHF million | Wealth Management International & Switzerland | Wealth Management US | Business Banking Switzerland | Global Wealth Management & Business Banking | Investment Bank | Others1 | UBS | |||||||
As of | 31.3.07 | 31.12.06 | 31.3.07 | 31.12.06 | 31.3.07 | 31.12.06 | 31.3.07 | 31.12.06 | 31.3.07 | 31.12.06 | 31.3.07 | 31.12.06 | 31.3.07 | 31.12.06 |
Due from banks | 167 | 160 | 834 | 1,096 | 5,026 | 4,989 | 6,027 | 6,245 | 50,161 | 43,612 | 469 | 506 | 56,657 | 50,363 |
Loans | 72,620 | 67,822 | 16,657 | 16,549 | 138,106 | 138,405 | 227,383 | 222,776 | 105,313 | 90,867 | 113 | 104 | 332,809 | 313,747 |
Total lending portfolio, gross2 | 72,787 | 67,982 | 17,491 | 17,645 | 143,132 | 143,394 | 233,410 | 229,021 | 155,474 | 134,479 | 582 | 610 | 389,4663 | 364,110 3 |
Allowances for credit losses | (11) | (10) | (10) | (10) | (1,100) | (1,139) | (1,121) | (1,159) | (115) | (97) | 0 | 0 | (1,236) | (1,256) |
Total lending portfolio, net | 72,776 | 67,972 | 17,481 | 17,635 | 142,032 | 142,255 | 232,289 | 227,862 | 155,359 | 134,382 | 582 | 610 | 388,2303 | 362,854 3 |
Impaired lending portfolio, gross | 4 | 4 | 10 | 10 | 2,324 | 2,493 | 2,338 | 2,507 | 140 | 121 | 0 | 0 | 2,478 | 2,628 |
Estimated liquidation proceeds of collateral for impaired loans | 0 | 0 | 0 | 0 | (943) | (1,034) | (943) | (1,034) | (19) | (25) | 0 | 0 | (962) | (1,059) |
Impaired lending portfolio, net of collateral | 4 | 4 | 10 | 10 | 1,381 | 1,459 | 1,395 | 1,473 | 121 | 96 | 0 | 0 | 1,516 | 1,569 |
Allocated allowances for impaired lending portfolio | 4 | 4 | 10 | 10 | 1,073 | 1,107 | 1,087 | 1,121 | 115 | 97 | 0 | 0 | 1,202 | 1,218 |
Other allowances and provisions | 7 | 6 | 0 | 0 | 97 | 104 | 104 | 110 | 4 | 4 | 0 | 0 | 108 | 114 |
Total allowances and provisions for credit losses | 11 | 10 | 10 | 10 | 1,170 | 1,211 | 1,191 | 1,231 | 119 | 101 | 0 | 0 | 1,310 | 1,332 |
Ratios | ||||||||||||||
Allowances and provisions as a % of total lending portfolio, gross | 0.0 | 0.0 | 0.1 | 0.1 | 0.8 | 0.8 | 0.5 | 0.5 | 0.1 | 0.1 | 0.0 | 0.0 | 0.3 | 0.4 |
Impaired lending portfolio as a % of total lending portfolio, gross | 0.0 | 0.0 | 0.1 | 0.1 | 1.6 | 1.7 | 1.0 | 1.1 | 0.1 | 0.1 | 0.0 | 0.0 | 0.6 | 0.7 |
Allocated allowances as a % of impaired lending portfolio, gross | 100.0 | 100.0 | 100.0 | 100.0 | 46.2 | 44.4 | 46.5 | 44.7 | 82.1 | 80.2 | 0.0 | 0.0 | 48.5 | 46.3 |
Allocated allowances as a % of impaired lending portfolio, net of collateral | 100.0 | 100.0 | 100.0 | 100.0 | 77.7 | 75.9 | 77.9 | 76.1 | 95.0 | 101.0 | 0.0 | 0.0 | 79.3 | 77.6 |
| 1 Includes Global Asset Management and Corporate Center. 2 Excludes loans designated at fair value. 3 Excludes CHF 101 million and CHF 93 million gross loans from industrial holdings for the quarters ended 31 March 2007 and 31 December 2006. | ||||||||||||||
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