UBS results for third quarter 2008

Net profit attributable to UBS shareholders of CHF 296 million

Operating income

Income from trading businesses was negative CHF 1,896 million, compared with negative CHF 3,935 million in the prior quarter, as losses were recorded in positions related to the US residential real estate market and other credit positions. As a result of the widening of UBS’s credit spread in third quarter, the Investment Bank recorded a gain on own credit of CHF 2,207 million in net trading income.

Income from interest margin businesses was down 1% from second quarter 2008 to CHF 1,513 million, primarily resulting from lower income from mortgages.

Net fee and commission income, at CHF 5,709 million, was down 8% from the prior quarter, with decreases in most fee categories that were slightly offset by higher net brokerage fees.

Operating expense

Personnel expenses were down 13% from second quarter 2008, at CHF 3,997 million, primarily due to lower accruals for performance-related compensation.

General and administrative expenses decreased 40% from the previous quarter, to CHF 1,702 million. The second quarter saw a provision of CHF 919 million for the repurchase of auction rate securities and associated fines. The reduction in third quarter 2008, which was 11% excluding the effect of this provision, reflected cost cuts in most categories in connection with UBS’s ongoing cost reduction program.

Income taxes

A net income tax benefit of CHF 913 million was recognized for third quarter 2008. This includes a net impact of CHF 930 million from the recognition of an incremental deferred tax asset on available tax losses.

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