Corporate Center

Corporate Center recorded a pre-tax loss from continuing operations of CHF 31 million in third quarter 2007, compared with a gain of CHF 1,734 million in second quarter 2007. Without the gain of CHF 1,950 million related to the sale of the 20.7% stake in Julius Baer, Corporate Center would have posted a loss of CHF 216 million in second quarter.

Operating income

Total operating income was CHF 304 million in third quarter 2007, down from CHF 2,061 million in second quarter 2007. The decline reflects the previous quarter's gain from the sale of the Julius Baer stake of CHF 1,950 million, which was booked at the end of June. Excluding this gain, total operating income would have been CHF 111 million in second quarter. The effective CHF 193 million improvement between third and second quarter is mainly due to considerably higher income from treasury activities. Additionally, results in second quarter included realized foreign exchange losses from the deconsolidation of subsidiaries. Credit loss expense recorded in Corporate Center, however, rose in third quarter 2007 from second quarter.

The credit loss expense booked in Corporate Center represents the difference between the adjusted expected credit loss result booked in the business units and the actual credit loss expense recognized in the UBS financial statements. In third quarter 2007, UBS recorded an expense of CHF 15 million, compared with a recovery of CHF 14 million in second quarter 2007. In the same period, adjusted expected credit loss recoveries booked in the business units amounted to CHF 34 million. The difference of CHF 49 million was booked in Corporate Center as credit loss expense. By contrast, in second quarter 2007, Corporate Center booked an expense of CHF 31 million.

Operating expenses

Total operating expenses were CHF 335 million in third quarter 2007, up CHF 8 million from CHF 327 million in second quarter 2007. Personnel expenses were CHF 397 million, up 11% from CHF 358 million in second quarter 2007. This was mainly driven by accelerated amortization of share-based deferred compensation. General and administrative expenses decreased 7% to CHF 313 million in third quarter 2007 from second quarter 2007, mainly reflecting lower sponsoring and advertising costs. This was partially offset by higher data center costs in the IT infrastructure unit. Other businesses were charged CHF 560 million for services provided by Corporate Center in third quarter 2007, compared with CHF 552 million in second quarter 2007, reflecting the higher IT infrastructure expenses incurred in support of continued business growth.

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