UBS - Investment Bank

In second quarter 2007, the Investment Bank achieved another record pre-tax profit of CHF 1,815 million, up 3% from a year earlier. Our equities and investment banking businesses saw significant growth in revenues, with the latter posting an all-time quarterly record. Revenues in our fixed income, rates and currencies business fell, driven by weak results in rates, municipal securities and precious metals. Portfolios managed by DRCM (including the former outside investor fund) showed negative revenues of approximately CHF 230 million. A rise in general and administrative expenses drove total operating expenses up.

Search only in Quarterly Reporting Q2 2007

Spreadsheets

Business Group reporting

Business Group reporting
	Quarter ended			% change from		Year to date
CHF million	30.6.07	31.3.07	30.6.06	1Q07	2Q06	30.6.07	30.6.06
Equities	3,094	3,128	2,280	(1)	36	6,222	5,124
Fixed income, rates and currencies	1,814	2,265	2,626	(20)	(31)	4,079	5,074
Investment banking	1,313	865	795	52	65	2,178	1,461
Income	6,221	6,258	5,701	(1)	9	12,479	11,659
Adjusted expected credit loss ¹	(4)	2	14			(2)	26
Total operating income	6,217	6,260	5,715	(1)	9	12,477	11,685
Cash components	2,833	3,027	2,533	(6)	12	5,860	5,342
Share-based components ²	400	362	455	10	(12)	762	840
Total personnel expenses	3,233	3,389	2,988	(5)	8	6,622	6,182
General and administrative expenses	951	769	713	24	33	1,720	1,512
Services (to)/from other business units	133	193	209	(31)	(36)	326	384
Depreciation of property and equipment	46	54	37	(15)	24	100	74
Amortization of intangible assets	39	54	14	(28)	179	93	29
Total operating expenses	4,402	4,459	3,961	(1)	11	8,861	8,181
Business Group performance before tax	1,815	1,801	1,754	1	3	3,616	3,504
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 sum of 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 (continued)
	As of or for the quarter ended			% change from		Year to date
CHF million, except where indicated	30.6.07	31.3.07	30.6.06	1Q07	2Q06	30.6.07	30.6.06

KPIs
Compensation ratio (%) ¹	52.0	54.2	52.4			53.1	53.0
Cost/income ratio (%) ²	70.8	71.3	69.5			71.0	70.2
Impaired lending portfolio as a % of total lending portfolio, gross	0.1	0.1	0.1
Average VaR (10-day, 99% confidence, 5 years of historical data)	520	517	408	1	27

Capital return and BIS data
Return on allocated regulatory capital (%) ³						30.3	36.1
BIS risk-weighted assets	195,280	182,295	153,847	7	27
Goodwill and excess intangible assets ⁴	5,473	5,471	4,132	0	32
Allocated regulatory capital ⁵	25,001	23,701	19,517	5	28

Additional information
Deferral (included in adjusted expected credit loss) ⁶	54	57	58	(5)	(7)	111	105
Expected credit loss (included in adjusted expected credit loss) ⁶	(58)	(55)	(44)	(5)	(32)	(113)	(79)
Personnel (full-time equivalents)	22,300	22,179	19,512	1	14
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 sum of 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.

Investment Bank

Business Group reporting