UBS - Investment Bank

In third quarter 2007, the Investment Bank recorded a loss of CHF 3,680 million compared with a pre-tax profit of CHF 1,083 million in the same period a year earlier. This was driven by net revenues of negative CHF 4,226 million in the fixed income, currencies and commodities area, mainly related to the inventory of securities linked to the US sub-prime residential mortgage market. Performance-related compensation fell sharply.

Search only in Quarterly Reporting Q3 2007

Spreadsheets

Business Group reporting

Business Group reporting
	Quarter ended			% change from		Year to date
CHF million	30.9.07	30.6.07	30.9.06	2Q07	3Q06	30.9.07	30.9.06
Equities	1,709	3,094	1,728	(45)	(1)	7,931	6,852
Fixed income, currencies and commodities	(4,226)	1,814	1,964			(147)	7,038
Investment banking	1,103	1,313	797	(16)	38	3,281	2,258
Income	(1,414)	6,221	4,489			11,065	16,148
Adjusted expected credit loss ¹	(5)	(4)	11	25		(7)	37
Total operating income	(1,419)	6,217	4,500			11,058	16,185
Cash components	834	2,833	2,007	(71)	(58)	6,694	7,349
Share-based components ²	356	400	346	(11)	3	1,118	1,186
Total personnel expenses	1,190	3,233	2,353	(63)	(49)	7,812	8,535
General and administrative expenses	801	951	752	(16)	7	2,521	2,264
Services (to) / from other business units	173	133	260	30	(33)	499	644
Depreciation of property and equipment	59	46	38	28	55	159	112
Amortization of intangible assets	38	39	14	(3)	171	131	43
Total operating expenses	2,261	4,402	3,417	(49)	(34)	11,122	11,598
Business Group performance before tax	(3,680)	1,815	1,083			(64)	4,587

KPIs
Compensation ratio (%) ³	N/A ⁴	52.0	52.4			70.6	52.9
Cost / income ratio (%) ⁵	N/A⁴	70.8	76.1			100.5	71.8
Impaired lending portfolio as a % of total lending portfolio, gross	0.4	0.1	0.1
Average VaR (10-day, 99% confidence, 5 years of historical data)	447	520	453	(14)	(1)

Capital return and BIS data
Return on allocated regulatory capital (%) ⁶						(0.3)	31.1
BIS risk-weighted assets	209,245	195,280	163,804	7	28
Goodwill and excess intangible assets ⁷	5,366	5,473	4,442	(2)	21
Allocated regulatory capital ⁸	26,291	25,001	20,822	5	26

Additional information
Deferral (included in adjusted expected credit loss) ¹	57	54	59	6	(3)	168	164
Expected credit loss (included in adjusted expected credit loss) ¹	(62)	(58)	(48)	(7)	(29)	(175)	(127)
Personnel (full-time equivalents)	22,833	22,300	20,652	2	11
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. 3 Personnel expenses / income. 4 Both the cost/income and the compensation ratios are not meaningful this quarter due to the losses recorded in the Investment Bank. 5 Operating expenses / income. 6 Year to date Business Group performance before tax (annualized as applicable) / allocated regulatory capital year to date average. 7 Goodwill and intangible assets in excess of 4% of BIS Tier 1 Capital. 8 10% of BIS risk-weighted assets plus goodwill and excess intangible assets.

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Investment Bank

Business Group reporting