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UBS results for third quarter 2008
Key performance indicators
UBS focuses on four key performance indicators: return on equity (RoE), diluted earnings per share (EPS), cost / income ratio and net new money. These are designed to monitor the returns UBS delivers to shareholders and are calculated using results from continuing operations.
Year-to-date | |||||
30.9.08 | 30.9.07 | ||||
Return on equity (RoE) (%) 1 | (43.9) | 19.9 | |||
RoE from continuing operations (%) 1 | (44.4) | 19.0 | |||
Quarter ended | Year-to-date | ||||
30.9.08 | 30.6.08 | 30.9.07 | 30.9.08 | 30.9.07 | |
Diluted earnings per share (EPS) (CHF) 2 | 0.09 | (0.14) | (0.41) | (4.41) | 3.45 |
Diluted EPS from continuing operations (CHF) 2 | 0.09 | (0.17) | (0.45) | (4.46) | 3.28 |
Cost / income ratio (%) 3 | 102.1 | 200.7 | 113.9 | 348.5 | 74.0 |
Net new money (CHF billion) 4 | (83.6) | (43.8) | 38.3 | (140.2) | 125.1 |
Return on equity
UBS's annualized RoE from continuing operations was negative 44.4% in the first nine months of 2008 compared with positive 19.0% in the first nine months of 2007, primarily due to losses in the fixed income, currencies and commodities area of the Investment Bank.
Earnings per share
Diluted EPS from continuing operations were CHF 0.09 in third quarter 2008, compared with negative CHF 0.17 in second quarter 2008. This change was mainly driven by reduced losses in the Investment Bank. The EPS calculation assumes the issuance of the shares issuable upon conversion of the mandatory convertible notes issued on 5 March 2008.
Cost / income ratio
The cost / income ratio was 102.1% in third quarter compared with 200.7% in the prior quarter.
Income in third quarter was affected by the factors mentioned above. Total operating expenses were down 26% from the previous quarter, mainly due to lower accruals for performance-related compensation in third quarter, and the provision of CHF 919 million for the repurchase of auction rate securities and associated fines made in second quarter.
Net new money
Third quarter 2008 saw net new money outflows of CHF 83.6 billion, compared with outflows of CHF 43.8 billion the prior quarter. Net outflows reflect a number of factors, including: clients seeking to diversify their exposure to individual financial institutions, a general trend of clients to deleverage, the disappointing performance of certain funds managed by Global Asset Management in prior periods, the impact of of our ongoing exit from certain US cross-border operations for US private clients, and concerns on the part of some clients about the financial position of UBS.
Global Wealth Management & Business Banking saw total net new money outflows of CHF 49.3 billion. Wealth Management International & Switzerland recorded net outflows of CHF 36.0 billion, Wealth Management US recorded net outflows of CHF 9.8 billion and Business Banking Switzerland recorded net outflows of CHF 3.5 billion.
Global Asset Management saw total net new money outflows of CHF 34.4 billion. Institutional clients recorded net outflows of CHF 21.0 billion. Excluding money market flows, net outflows increased to CHF 16.1 billion from CHF 8.1 billion. Wholesale intermediary recorded net outflows of CHF 13.4 billion. Excluding money market flows, outflows of net new money decreased to CHF 13.1 billion from CHF 16.0 billion.
At the end of third quarter, total invested assets stood at CHF 2,640 billion, of which CHF 1,932 billion were attributable to Global Wealth Management & Business Banking and CHF 708 billion were attributable to Global Asset Management.
Net new money1 | |||||
Quarter ended | Year-to-date | ||||
CHF billion | 30.9.08 | 30.6.08 | 30.9.07 | 30.9.08 | 30.9.07 |
Wealth Management International & Switzerland | (36.0) | (9.3) | 35.1 | (42.7) | 101.7 |
Wealth Management US | (9.8) | (8.0) | 5.1 | (14.8) | 18.5 |
Business Banking Switzerland | (3.5) | (2.0) | 0.9 | (7.3) | 4.4 |
Global Wealth Management & Business Banking | (49.3) | (19.3) | 41.1 | (64.8) | 124.6 |
Institutional | (21.0) | (8.4) | (1.2) | (38.9) | (1.0) |
Wholesale intermediary | (13.4) | (16.1) | (1.6) | (36.5) | 1.5 |
Global Asset Management | (34.4) | (24.5) | (2.8) | (75.4) | 0.5 |
UBS | (83.6) | (43.8) | 38.3 | (140.2) | 125.1 |
Invested assets | |||||
As of | % change from | ||||
CHF billion | 30.9.08 | 30.6.08 | 30.9.07 | 30.6.08 | 30.9.07 |
Wealth Management International & Switzerland | 1,080 | 1,145 | 1,297 | (6) | (17) |
Wealth Management US | 709 | 712 | 870 | 0 | (19) |
Business Banking Switzerland | 142 | 149 | 165 | (5) | (14) |
Global Wealth Management & Business Banking | 1,932 | 2,006 | 2,332 | (4) | (17) |
Institutional | 419 | 448 | 557 | (6) | (25) |
Wholesale intermediary | 289 | 310 | 376 | (7) | (23) |
Global Asset Management | 708 | 757 | 933 | (6) | (24) |
UBS | 2,640 | 2,763 | 3,265 | (4) | (19) |
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