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 of our four indicators, return on equity and diluted earnings per share, are calculated on a full UBS basis. The cost / income ratio and net new money indicators are limited to our financial businesses. On this basis, performance indicators in third quarter 2007 show:

- annualized return on equity for the first nine months of 2007 of 20.7%, down from 26.0% for the same period a year earlier. Substantial losses in our Investment Bank were only partially offset by post-tax gains of CHF 1,926 million from the sale of our stake in Julius Baer in second quarter 2007. Excluding this gain, and the costs related to the closure of DRCM (post-tax CHF 229 million) in second quarter 2007, annualized return on equity for the first nine months of 2007 would have been 17.2%.

- negative diluted earnings per share of CHF 0.49, compared with positive CHF 1.07 in third quarter 2006.

- a cost / income ratio in our financial businesses of 115.2%, significantly up from 73.8% in the same quarter last year.

- net new money of CHF 38.3 billion in third quarter 2007, down from CHF 41.9 billion in the same period a year earlier. The wealth management units recorded inflows of CHF 40.2 billion this quarter, up from CHF 26.8 billion in third quarter 2006. Inflows in the international and Swiss wealth management business rose by CHF 11.7 billion to CHF 35.1 billion, with strong contributions from all regions. Net new money in European wealth management was a record CHF 7.3 billion in third quarter 2007, up from CHF 2.7 billion in third quarter a year earlier, reflecting stronger contributions from all markets except Italy. Inflows into our domestic wealth management business in the US were CHF 5.1 billion in third quarter, up from CHF 3.4 billion a year earlier as we saw inflows from new clients, driven by an increased number of financial advisors. The asset management business saw a CHF 2.8 billion net outflow in total for the institutional and the wholesale intermediary business, sharply down from the strong inflow of CHF 15.5 billion a year earlier. The institutional clients business suffered from outflows in certain underperforming equity mandates, which were partly offset by inflows into alternative and quantitative investments as well as multi-assets. We experienced outflows from fixed income funds in our wholesale intermediary business, which were only partly offset by inflows into other asset classes. The Swiss retail banking business recorded net new money inflows of CHF 0.9 billion in third quarter compared with an outflow of CHF 0.4 billion in the same period a year earlier, mainly due to higher inflows from existing clients.