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UBS results
Results
In 2006, attributable profit was CHF 12,257 million, down 13% from CHF 14,029 million a year earlier, which included a net gain of CHF 3,705 million from the sale of Private Banks & GAM.
Our financial businesses contributed CHF 11,253 million to attributable profit, of which CHF 11,249 million was from continuing operations. This was an improvement of 19% from CHF 9,442 million in 2005. Discontinued operations contributed CHF 4 million. Industrial Holdings added CHF 1,004 million to attributable profit, with CHF 242 million stemming from continuing operations.
Shareholder distributions
The Board of Directors will recommend a total payout of CHF 2.20 a share for the 2006 financial year at the Annual General Meeting (AGM) on 18 April 2007 in Zurich. Subject to shareholder approval, this is a 16% increase on the total payout last year, which included a par value repayment of CHF 0.30 a share. It is 38% higher than last year‘s regular dividend of CHF 1.60 a share.
New buyback program
In March 2007, UBS's seventh consecutive annual share buyback program will end. This will be succeeded, pending shareholder
approval, by a new three-year second-line repurchase program with a maximum limit of 10% of shares issued. At the current
share price, this would represent a maximum total of approximately CHF 16 billion. This underlines our long-term approach
to managing UBS capital. The three-year period is an extended commitment showing a continued disciplined approach to shareholder
returns. It also gives us the flexibility to deploy capital for our first priority – the growth of UBS's business. We will
both make further add-on acquisitions if appropriate opportunities arise and keep investing in the organic growth of our business.
Income statement
For the year ended | |||
CHF million, except per share data | 31.12.06 | 31.12.05 | % change from |
Continuing operations | |||
Interest income | 87,401 | 59,286 | 47 |
Interest expense | (80,880) | (49,758) | 63 |
Net interest income | 6,521 | 9,528 | (32) |
Credit loss (expense) / recovery | 156 | 375 | (58) |
Net interest income after credit loss expense | 6,677 | 9,903 | (33) |
Net fee and commission income | 25,881 | 21,436 | 21 |
Net trading income | 13,318 | 7,996 | 67 |
Other income | 1,596 | 1,122 | 42 |
Revenues from industrial holdings | 693 | 675 | 3 |
Total operating income | 48,165 | 41,132 | 17 |
Personnel expenses | 23,671 | 20,148 | 17 |
General and administrative expenses | 8,116 | 6,632 | 22 |
Depreciation of property and equipment | 1,263 | 1,261 | 0 |
Amortization of intangible assets | 153 | 131 | 17 |
Goods and materials purchased | 295 | 283 | 4 |
Total operating expenses | 33,498 | 28,455 | 18 |
Operating profit from continuing operations before tax | 14,667 | 12,677 | 16 |
Tax expense | 2,786 | 2,471 | 13 |
Net profit from continuing operations | 11,881 | 10,206 | 16 |
Discontinued operations | |||
Operating profit from discontinued operations before tax | 856 | 5,060 | (83) |
Tax expense / (benefit) | (13) | 576 | |
Net profit from discontinued operations | 869 | 4,484 | (81) |
Net profit | 12,750 | 14,690 | (13) |
Net profit attributable to minority interests | 493 | 661 | (25) |
from continuing operations | 390 | 430 | (9) |
from discontinued operations | 103 | 231 | (55) |
Net profit attributable to UBS shareholders | 12,257 | 14,029 | (13) |
from continuing operations | 11,491 | 9,776 | 18 |
from discontinued operations | 766 | 4,253 | (82) |
Earnings per share | |||
Basic earnings per share (CHF) | 6.20 | 6.97 | (11) |
from continuing operations | 5.81 | 4.85 | 20 |
from discontinued operations | 0.39 | 2.12 | (82) |
Diluted earnings per share (CHF) | 5.95 | 6.68 | (11) |
from continuing operations | 5.58 | 4.66 | 20 |
from discontinued operations | 0.37 | 2.02 | (82) |
Balance sheet
CHF million | 31.12.06 | 31.12.05 | % change from |
Assets | |||
Cash and balances with central banks | 3,495 | 5,359 | (35) |
Due from banks | 50,426 | 33,644 | 50 |
Cash collateral on securities borrowed | 351,590 | 288,435 | 22 |
Reverse repurchase agreements | 405,834 | 404,432 | 0 |
Trading portfolio assets | 627,036 | 499,297 | 26 |
Trading portfolio assets pledged as collateral | 251,478 | 154,759 | 62 |
Positive replacement values | 328,445 | 333,782 | (2) |
Financial assets designated at fair value | 5,930 | 1,153 | 414 |
Loans | 312,521 | 279,910 | 12 |
Financial investments available-for-sale | 8,937 | 6,551 | 36 |
Accrued income and prepaid expenses | 10,361 | 8,918 | 16 |
Investments in associates | 1,523 | 2,956 | (48) |
Property and equipment | 6,913 | 9,423 | (27) |
Goodwill and other intangible assets | 14,773 | 13,486 | 10 |
Other assets | 17,249 | 16,243 | 6 |
Total assets | 2,396,511 | 2,058,348 | 16 |
Liabilities | |||
Due to banks | 203,689 | 124,328 | 64 |
Cash collateral on securities lent | 63,088 | 59,938 | 5 |
Repurchase agreements | 545,480 | 478,508 | 14 |
Trading portfolio liabilities | 204,773 | 188,631 | 9 |
Negative replacement values | 332,533 | 337,663 | (2) |
Financial liabilities designated at fair value | 145,687 | 117,401 | 24 |
Due to customers | 570,565 | 466,907 | 22 |
Accrued expenses and deferred income | 21,527 | 18,791 | 15 |
Debt issued | 190,143 | 160,710 | 18 |
Other liabilities | 63,251 | 53,837 | 17 |
Total liabilities | 2,340,736 | 2,006,714 | 17 |
Equity | |||
Share capital | 211 | 871 | (76) |
Share premium | 9,870 | 9,992 | (1) |
Net income recognized directly in equity, net of tax | 815 | (182) | |
Revaluation reserve from step acquisitions, net of tax | 38 | 101 | (62) |
Retained earnings | 49,151 | 44,105 | 11 |
Equity classified as obligation to purchase own shares | (185) | (133) | (39) |
Treasury shares | (10,214) | (10,739) | 5 |
Equity attributable to UBS shareholders | 49,686 | 44,015 | 13 |
Equity attributable to minority interests | 6,089 | 7,619 | (20) |
Total equity | 55,775 | 51,634 | 8 |
Total liabilities and equity | 2,396,511 | 2,058,348 | 16 |
| Balance sheet |
UBS's total assets stood at CHF 2,396.5 billion on 31 December 2006, up from CHF 2,058.3 billion on 31 December 2005. The increase was driven by the growth in the trading portfolio (up CHF 225 billion), collateral trading (up CHF 65 billion) and the lending portfolio (up CHF 33 billion), while positive and negative replacement values were each down CHF 5 billion. Currency movements against the Swiss franc (mainly the 7% depreciation of the US dollar) partly offset these rises. Total liabilities rose due to higher borrowing (up CHF 241 billion), collateral trading liabilities (up CHF 70 billion) and trading liabilities (up CHF 16 billion). At CHF 49.7 billion on 31 December 2006, equity attributable to UBS shareholders increased by CHF 5.7 billion from 2005. The increase reflects attributable net profit of CHF 12.3 billion, partially offset by dividend payments and share repurchases. |
Letter from Group Auditors
As auditors of the group we have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of America) as well as Swiss Auditing Standards, the consolidated balance sheets of UBS AG as of 31 December 2006 and 2005, and the related consolidated statements of income, changes in equity and cash flows for each of the three years in the period ended 31 December 2006 and the notes thereto, from which the summarized consolidated financial statements were derived. In our report dated 10 March 2007 (see UBS Financial Report, pages 80 and 81), we expressed an unqualified opinion on those consolidated financial statements which are prepared in accordance with International Financial Reporting Standards. In our opinion, the summarized consolidated financial statements on pages 41 to 42 of the Annual Review are consistent, in all material respects, with the consolidated financial statements from which they were derived and on which we expressed an unqualified opinion.
For a more comprehensive understanding of the group's financial position and the results of its operations for the period and of the scope of our audit, the summarized consolidated financial statements should be read in conjunction with the consolidated financial statements from which they were derived and our audit report thereon.
Basel, 10 March 2007
Ernst & Young Ltd
Andrew McIntyre | Chartered Accountant (in charge of the audit)
Dr. Andreas Blumer | Swiss Certified Accountant
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