UBS - Note 2 Reporting by Business Group

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Internal charges and transfer pricing adjustments are reflected in the performance of each business. Revenue-sharing agreements are used to allocate external customer revenues to a Business Group on a reasonable basis. Transactions between Business Groups are conducted at internally agreed transfer prices or at arm’s length. The presentation of the business segments below reflects UBS’s organization structure and management responsibilities. UBS’s financial businesses are organized on a worldwide basis into three Business Groups and the Corporate Center. Global Wealth Management & Business Banking is segregated into three segments: Wealth Management International & Switzerland, Wealth Management US and Business Banking Switzerland. The Industrial Holdings segment holds all industrial operations controlled by the Group. In total, UBS reports seven business segments.

For the nine months ended 30 September 2007
		Financial Businesses					Industrial Holdings	UBS
	Global Wealth Management & Business Banking			Global Asset Management	Investment Bank	Corporate Center
CHF million	Wealth Management International & Switzerland	Wealth Management US	Business Banking Switzerland
Income	9,595	4,983	3,932	3,017	11,065	2,575	1,015	36,182
Credit loss (expense) / recovery	(1)	(1)	45	0	(43)	0	0	0
Total operating income	9,594	4,982	3,977	3,017	11,022	2,575	1,015	36,182
Personnel expenses	2,900	3,391	1,927	1,614	7,812	1,075	103	18,822
General and administrative expenses	758	730	818	384	2,521	954	55	6,220
Services (to) / from other business units	1,175	238	(498)	118	499	(1,651)	119	0
Depreciation of property and equipment	67	59	46	47	159	556	8	942
Amortization of intangible assets	14	50	0	15	131	0	4	214
Goods and materials purchased							178	178
Total operating expenses	4,914	4,468	2,293	2,178	11,122	934	467	26,376
Business Group performance from continuing operations before tax	4,680	514	1,684	839	(100)	1,641	548	9,806
Business Group performance from discontinued operations before tax						7	89	96
Business Group performance before tax	4,680	514	1,684	839	(100)	1,648	637	9,902
Tax expense on continuing operations								1,665
Tax expense on discontinued operations								(258)
Net profit								8,495

For internal management reporting purposes, credit loss is measured using an expected loss concept. This table shows Business Group performance consistent with the way in which the businesses are managed and the way Business Group performance is measured. Expected credit loss reflects the average annual costs that are expected to arise from positions in the current portfolio that become impaired. The adjusted expected credit loss reported for each Business Group is the expected credit loss on its portfolio plus the difference between credit loss expense and expected credit loss, amortized over a three-year period. The difference between these adjusted expected credit loss figures and the credit loss expense recorded at Group level for reporting purposes is reported in Corporate Center as adjusted expected credit loss.

Income	9,595	4,983	3,932	3,017	11,065	2,575	1,015	36,182
Adjusted expected credit loss	(21)	(2)	161	0	(7)	(131)	0	0
Total operating income	9,574	4,981	4,093	3,017	11,058	2,444	1,015	36,182
Personnel expenses	2,900	3,391	1,927	1,614	7,812	1,075	103	18,822
General and administrative expenses	758	730	818	384	2,521	954	55	6,220
Services (to) / from other business units	1,175	238	(498)	118	499	(1,651)	119	0
Depreciation of property and equipment	67	59	46	47	159	556	8	942
Amortization of intangible assets	14	50	0	15	131	0	4	214
Goods and materials purchased							178	178
Total operating expenses	4,914	4,468	2,293	2,178	11,122	934	467	26,376
Business Group performance from continuing operations before tax	4,660	513	1,800	839	(64)	1,510	548	9,806
Business Group performance from discontinued operations before tax						7	89	96
Business Group performance before tax	4,660	513	1,800	839	(64)	1,517	637	9,902
Tax expense on continuing operations								1,665
Tax expense on discontinued operations								(258)
Net profit								8,495

Internal charges and transfer pricing adjustments are reflected in the performance of each business. Revenue-sharing agreements are used to allocate external customer revenues to a Business Group on a reasonable basis. Transactions between Business Groups are conducted at internally agreed transfer prices or at arm’s length. The presentation of the business segments below reflects UBS’s organization structure and management responsibilities. UBS’s financial businesses are organized on a worldwide basis into three Business Groups and the Corporate Center. Global Wealth Management & Business Banking is segregated into three segments: Wealth Management International & Switzerland, Wealth Management US and Business Banking Switzerland. The Industrial Holdings segment holds all industrial operations controlled by the Group. In total, UBS reports seven business segments.

For the nine months ended 30 September 2006
				Financial Businesses			Industrial Holdings	UBS
	Global Wealth Management & Business Banking			Global Asset Management	Investment Bank	Corporate Center
CHF million	Wealth Management International & Switzerland	Wealth Management US	Business Banking Switzerland
Income	8,007	4,281	3,821	2,277	16,148	230	585	35,349
Credit loss (expense) / recovery	(1)	(1)	100	0	37	0	0	135
Total operating income	8,006	4,280	3,921	2,277	16,185	230	585	35,484
Personnel expenses	2,382	2,784	1,826	1,019	8,535	928	112	17,586
General and administrative expenses	645	791	817	266	2,264	911	74	5,768
Services (to) / from other business units	1,107	205	(489)	(18)	644	(1,457)	8	0
Depreciation of property and equipment	60	55	52	17	112	585	11	892
Amortization of intangible assets	6	38	0	1	43	8	4	100
Goods and materials purchased							207	207
Total operating expenses	4,200	3,873	2,206	1,285	11,598	975	416	24,553
Business Group performance from continuing operations before tax	3,806	407	1,715	992	4,587	(745)	169	10,931
Business Group performance from discontinued operations before tax						4	684	688
Business Group performance before tax	3,806	407	1,715	992	4,587	(741)	853	11,619
Tax expense on continuing operations								2,288
Tax expense on discontinued operations								84
Net profit								9,247

For internal management reporting purposes, credit loss is measured using an expected loss concept. This table shows Business Group performance consistent with the way in which the businesses are managed and the way Business Group performance is measured. Expected credit loss reflects the average annual costs that are expected to arise from positions in the current portfolio that become impaired. The adjusted expected credit loss reported for each Business Group is the expected credit loss on its portfolio plus the difference between credit loss expense and expected credit loss, amortized over a three-year period. The difference between these adjusted expected credit loss figures and the credit loss expense recorded at Group level for reporting purposes is reported in Corporate Center as adjusted expected credit loss.

Income	8,007	4,281	3,821	2,277	16,148	230	585	35,349
Adjusted expected credit loss	(22)	0	144	0	37	(24)	0	135
Total operating income	7,985	4,281	3,965	2,277	16,185	206	585	35,484
Personnel expenses	2,382	2,784	1,826	1,019	8,535	928	112	17,586
General and administrative expenses	645	791	817	266	2,264	911	74	5,768
Services (to) / from other business units	1,107	205	(489)	(18)	644	(1,457)	8	0
Depreciation of property and equipment	60	55	52	17	112	585	11	892
Amortization of intangible assets	6	38	0	1	43	8	4	100
Goods and materials purchased							207	207
Total operating expenses	4,200	3,873	2,206	1,285	11,598	975	416	24,553
Business Group performance from continuing operations before tax	3,785	408	1,759	992	4,587	(769)	169	10,931
Business Group performance from discontinued operations before tax						4	684	688
Business Group performance before tax	3,785	408	1,759	992	4,587	(765)	853	11,619
Tax expense on continuing operations								2,288
Tax expense on discontinued operations								84
Net profit								9,247

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Notes to the Financial Statements

Note 2 Reporting by Business Group