Credit risk

UBS recorded a credit loss expense of CHF 311 million in first quarter 2008, compared with CHF 238 million in fourth quarter 2007 and a recovery of CHF 1 million in first quarter 2007.

In first quarter 2008, the Investment Bank recorded a credit loss expense of CHF 308 million, of which CHF 306 million is in respect of securities financing positions that either have been liquidated or are in the process of being liquidated. In comparison, credit loss expenses of CHF 223 million were booked in fourth quarter 2007 and CHF 20 million in first quarter 2007.

Global Wealth Management & Business Banking reported a CHF 3 million credit loss expense in first quarter 2008, compared with CHF 15 million in fourth quarter 2007 and net recoveries of CHF 21 million in first quarter 2007.

UBS's gross lending portfolio was CHF 388 billion on 31 March 2008, down from CHF 398 billion on 31 December 2007. In Global Wealth Management & Business Banking, the gross lending portfolio was CHF 245 billion on 31 March 2008, compared with CHF 249 billion on the previous quarter-end, with the reduction being mainly due to lower secured lending activities in the international wealth management units. The gross lending portfolio in the Investment Bank was CHF 142 billion, down from CHF 148 billion on 31 December 2007. This reduction was mainly due to lower volumes in secured client financing businesses.

The ratio of the impaired lending portfolio to the total gross lending portfolio remained unchanged at 0.6% on 31 March 2008. The level of the gross impaired lending portfolio was CHF 2,192 million on 31 March 2008, down 8% from CHF 2,392 million on 31 December 2007. This reduction was mainly due to repayments of impaired loans in the Investment Bank.