UBS - Business Group Reporting


Huw Jenkins \| Chairman and CEO Investment Bank

In first quarter 2007, the Investment Bank's pre-tax profit was at an all-time quarterly record of CHF 1,801 million, up 3% from the performance a year earlier. The equities and investment banking areas experienced significant growth in revenues. The fixed income, rates and currencies business saw strong increases in most areas, which were more than offset by losses on the proprietary capital managed by Dillon Read Capital Management (DRCM). A rise in personnel expenses drove total operating expenses higher.

Spreadsheets

Business Group reporting

Business Group reporting
	Quarter ended			% change from
CHF million	31.3.07	31.12.06	31.3.06	4Q06	1Q06
Equities	3,128	2,545	2,844	23	10
Fixed income, rates and currencies	2,265	2,018	2,448	12	(7)
Investment banking	865	1,015	666	(15)	30
Income	6,258	5,578	5,958	12	5
Adjusted expected credit loss ¹	2	24	12	(92)	(83)
Total operating income	6,260	5,602	5,970	12	5
Cash components	3,027	2,452	2,809	23	8
Share-based components ²	362	366	385	(1)	(6)
Total personnel expenses	3,389	2,818	3,194	20	6
General and administrative expenses	769	996	799	(23)	(4)
Services (to) / from other business units	193	312	175	(38)	10
Depreciation of property and equipment	54	91	37	(41)	46
Amortization of intangible assets	54	29	15	86	260
Total operating expenses	4,459	4,246	4,220	5	6
Business Group performance before tax	1,801	1,356	1,750	33	3
1 In management accounts, adjusted expected credit loss rather than credit loss expense or recovery is reported for the business groups (see note 2 to the financial statements). The adjusted expected credit loss is the difference between expected credit loss and deferrals. The expected credit loss reflects expected average annual impairment costs. The deferral represents the difference between actual credit loss and expected credit loss, amortized over a three-year period. 2 Additionally includes social security contributions and expenses related to alternative investment awards.

Business Group reporting
	As of or for the quarter ended			% change from
CHF million, except where indicated	31.3.07	31.12.06	31.3.06	4Q06	1Q06

KPIs
Compensation ratio (%) ¹	54.2	50.5	53.6
Cost / income ratio (%) ²	71.3	76.1	70.8
Impaired lending portfolio as a % of total lending portfolio, gross	0.1	0.1	0.2
Average VaR (10-day, 99% confidence, 5 years of historical data)	517	391	429	32	21

Capital return and BIS data
Return on allocated regulatory capital (%) ³	30.9	29.4	36.1
BIS risk-weighted assets	182,295	174,599	148,912	4	22
Goodwill and excess intangible assets ⁴	5,471	5,465	4,406	0	24
Allocated regulatory capital ⁵	23,701	22,925	19,297	3	23

Additional information
Deferral (included in adjusted expected credit loss) ⁶	57	68	47	(16)	21
Expected credit loss (included in adjusted expected credit loss) ⁶	(55)	(44)	(35)	(25)	(57)
Personnel (full-time equivalents)	22,179	21,899	18,734	1	18
1 Personnel expenses / income. 2 Operating expenses / income. 3 Year to date Business Group performance before tax (annualized as applicable) / allocated regulatory capital year to date average. 4 Goodwill and intangible assets in excess of 4% of BIS Tier 1 Capital. 5 10% of BIS risk-weighted assets plus goodwill and excess intangible assets. 6 In management accounts, adjusted expected credit loss rather than credit loss expense or recovery is reported for the business groups (see note 2 to the financial statements). The adjusted expected credit loss is the difference between expected credit loss and deferrals. The expected credit loss reflects expected average annual impairment costs. The deferral represents the difference between actual credit loss and expected credit loss, amortized over a three-year period.

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Investment Bank

Business Group reporting