Balance sheet

UBS's total assets were CHF 2,231 billion on 31 March 2008, a decrease of CHF 42 billion from CHF 2,273 billion on 31 December 2007. The balance sheet was reduced by the weakening of major currencies against the Swiss franc, in particular the US dollar and the British pound, though this effect was mostly offset by an increase in positive replacement values on a currency-adjusted basis. Furthermore, UBS achieved significant and deliberate balance sheet reductions in first quarter 2008, mainly in the trading portfolio of the Investment Bank. Balance sheet positions of Global Wealth Management & Business Banking and Global Asset Management were basically unchanged compared with year-end 2007.

Lending and borrowing

Lending
Cash was CHF 19 billion on 31 March 2008, up by CHF 1 billion from year-end 2007. Due from banks increased by CHF 3 billion, largely related to higher lending activities by the Investment Bank's foreign exchange and money market desk, which is the central funding entity of the bank. Loans to customers stood at CHF 323 billion on 31 March 2008, down by CHF 12 billion from 31 December 2007, largely due to the US dollar's decline against the Swiss franc.

Borrowing
Due to banks remained stable at around CHF 145 billion in first quarter 2008. Total debt issued (including financial liabilities designated at fair value) decreased to CHF 394 billion on 31 March 2008, down CHF 20 billion from year-end 2007. In detail, money market paper issuance declined slightly by CHF 2 billion to CHF 150 billion, but the underlying volume in original currencies increased by over CHF 16 billion. The amount of long-term debt issued (including financial liabilities designated at fair value) was CHF 244 billion at the end of first quarter, a drop of CHF 18 billion from year-end 2007 mostly related to currency movements, partly offset by the CHF  13 billion mandatory convertible notes issuance. Due to customers was CHF 567 billion in first quarter 2007, down by CHF 75 billion from year-end 2007, with almost two-thirds of this decrease related to currency movements.

Repurchase / reverse repurchase agreements and securities borrowing / lending

In first quarter 2008, cash collateral on securities borrowed and reverse repurchase agreements decreased by CHF 14 billion, or 2%, to CHF 570 billion, and the sum of securities lent and repurchase agreements declined by CHF 40 billion, or 12%, to CHF 297 billion. This decline occurred almost entirely in the Investment Bank, where the matched book was reduced as part of the Investment Bank's overall balance sheet reduction (the matched book is a repurchase agreement portfolio comprised of assets and liabilities with equal maturities and equal value so that the market risks substantially cancel each other out).

Trading portfolio

The trading portfolio declined sharply during first quarter 2008, with trading assets dropping by CHF 157 billion to CHF 617 billion at quarter-end. While CHF 59 billion of this decline was due to currency movements, the majority was related to the mandated balance sheet reductions in the Investment Bank. In the Investment Bank, equity instruments decreased by CHF 61 billion driven to a large extent by disposals and reduced market valuations, while traded loans and precious metals inventory decreased by CHF 11 billion and CHF 5 billion respectively. In addition, the trading assets inventory in debt instruments declined by CHF 79 billion, mainly in asset-backed securities and corporate bonds as a result of either sales or markdowns, though this was offset by a slight increase in government bonds.

Replacement values

The positive replacement value of derivative instruments increased to CHF 573 billion in first quarter 2008, a rise of CHF 145 billion from the prior quarter-end. During the same period, the negative replacement values of derivative instruments also increased - rising by CHF 130 billion to CHF 573 billion. Both changes were due to movements in interest rates and currencies, as well as increased spread volatility in  credit default swaps on securities related to the US real estate market.