Financial Statements

Income Statement
		For the year ended			% change from
CHF million, except per share data	Note	31.12.06	31.12.05	31.12.04	31.12.05

Continuing operations
Interest income	3	87,401	59,286	39,228	47
Interest expense	3	(80,880)	(49,758)	(27,484)	63
Net interest income	3	6,521	9,528	11,744	(32)
Credit loss (expense) / recovery		156	375	241	(58)
Net interest income after credit loss expense		6,677	9,903	11,985	(33)
Net fee and commission income	4	25,881	21,436	18,506	21
Net trading income	3	13,318	7,996	4,902	67
Other income	5	1,596	1,122	853	42
Revenues from industrial holdings		693	675	640	3
Total operating income		48,165	41,132	36,886	17
Personnel expenses	6	23,671	20,148	17,891	17
General and administrative expenses	7	8,116	6,632	6,563	22
Depreciation of property and equipment	15	1,263	1,261	1,284	0
Amortization of goodwill	16	0	0	673
Amortization of other intangible assets	16	153	131	170	17
Goods and materials purchased		295	283	263	4
Total operating expenses		33,498	28,455	26,844	18
Operating profit from continuing operations before tax		14,667	12,677	10,042	16
Tax expense	22	2,786	2,471	2,155	13
Net profit from continuing operations		11,881	10,206	7,887	16

Discontinued operations
Operating profit from discontinued operations before tax	38	856	5,060	781	(83)
Tax expense / (benefit)	22	(13)	576	198
Net profit from discontinued operations		869	4,484	583	(81)

Net profit		12,750	14,690	8,470	(13)
Net profit attributable to minority interests		493	661	454	(25)
from continuing operations		390	430	340	(9)
from discontinued operations		103	231	114	(55)
Net profit attributable to UBS shareholders		12,257	14,029	8,016	(13)
from continuing operations		11,491	9,776	7,547	18
from discontinued operations		766	4,253	469	(82)

Earnings per share
Basic earnings per share (CHF)	8	6.20	6.97	3.89	(11)
from continuing operations		5.81	4.85	3.66	20
from discontinued operations		0.39	2.12	0.23	(82)
Diluted earnings per share (CHF)	8	5.95	6.68	3.70	(11)
from continuing operations		5.58	4.66	3.49	20
from discontinued operations		0.37	2.02	0.21	(82)

Balance Sheet
				% change from
CHF million	Note	31.12.06	31.12.05	31.12.05

Assets
Cash and balances with central banks		3,495	5,359	(35)
Due from banks	10	50,426	33,644	50
Cash collateral on securities borrowed	11	351,590	288,435	22
Reverse repurchase agreements	11	405,834	404,432	0
Trading portfolio assets	12	627,036	499,297	26
Trading portfolio assets pledged as collateral	12	251,478	154,759	62
Positive replacement values	23	328,445	333,782	(2)
Financial assets designated at fair value	9	5,930	1,153	414
Loans	10	312,521	279,910	12
Financial investments available-for-sale	13	8,937	6,551	36
Accrued income and prepaid expenses		10,361	8,918	16
Investments in associates	14	1,523	2,956	(48)
Property and equipment	15	6,913	9,423	(27)
Goodwill and other intangible assets	16	14,773	13,486	10
Other assets	17, 22	17,249	16,243	6
Total assets		2,396,511	2,058,348	16

Liabilities
Due to banks	18	203,689	124,328	64
Cash collateral on securities lent	11	63,088	59,938	5
Repurchase agreements	11	545,480	478,508	14
Trading portfolio liabilities	12	204,773	188,631	9
Negative replacement values	23	332,533	337,663	(2)
Financial liabilities designated at fair value	19	145,687	117,401	24
Due to customers	18	570,565	466,907	22
Accrued expenses and deferred income		21,527	18,791	15
Debt issued	19	190,143	160,710	18
Other liabilities	20, 21, 22	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

Statement of Changes in Equity
	For the year ended
CHF million	31.12.06	31.12.05	31.12.04
Share capital
Balance at the beginning of the year	871	901	946
Issue of share capital	1	2	2
Capital repayment by par value reduction	(631)
Cancellation of second trading line treasury shares	(30)	(32)	(47)
Balance at the end of the year	211	871	901
Share premium
Balance at the beginning of the year	9,992	9,231	7,595
Premium on shares issued and warrants exercised	46	36	70
Net premium / (discount) on treasury share and own equity derivative activity	(271)	(309)	(20)
Employee share and share options plans	(508)	768	1,244
Tax benefits from exercise of employee share options	611	266	342
Balance at the end of the year	9,870	9,992	9,231
Net income recognized directly in equity, net of tax
Foreign currency translation
Balance at the beginning of the year	(432)	(2,520)	(1,694)
Movements during the year	(1,186)	2,088	(826)
Subtotal – balance at the end of the year¹	(1,618)	(432)	(2,520)
Net unrealized gains / (losses) on financial investments available-for-sale, net of tax
Balance at the beginning of the year	931	761	399
Net unrealized gains / (losses) on financial investments available-for-sale	2,574	463	501
Impairment charges reclassified to the income statement	19	96	192
Realized gains reclassified to the income statement	(649)	(396)	(353)
Realized losses reclassified to the income statement	1	7	22
Subtotal – balance at the end of the year	2,876	931	761
Changes in fair value of derivative instruments designated as cash flow hedges, net of tax
Balance at the beginning of the year	(681)	(322)	(144)
Net unrealized gains / (losses) on the revaluation of cash flow hedges	1	(474)	(223)
Net unrealized (gains) / losses reclassified to the income statement	237	115	45
Subtotal – balance at the end of the year	(443)	(681)	(322)
Balance at the end of the year	815	(182)	(2,081)
Revaluation reserve from step acquisitions, net of tax
Balance at the beginning of the year	101	90
Movements during the year	(63)	11	90
Balance at the end of the year	38	101	90
Retained earnings
Balance at the beginning of the year	44,105	36,692	35,951
Net profit attributable to UBS shareholders for the year	12,257	14,029	8,016
Dividends paid ²	(3,214)	(3,105)	(2,806)
Cancellation of second trading line treasury shares	(3,997)	(3,511)	(4,469)
Balance at the end of the year	49,151	44,105	36,692
Equity classified as obligation to purchase own shares
Balance at the beginning of the year	(133)	(96)	(49)
Movements during the year	(52)	(37)	(47)
Balance at the end of the year	(185)	(133)	(96)
Treasury shares
Balance at the beginning of the year	(10,739)	(11,105)	(9,654)
Acquisitions	(8,314)	(8,375)	(9,368)
Disposals	4,812	5,198	3,401
Cancellation of second trading line treasury shares	4,027	3,543	4,516
Balance at the end of the year	(10,214)	(10,739)	(11,105)
Equity attributable to UBS shareholders	49,686	44,015	33,632
1 Net of CHF 83 million, CHF (292) million and CHF 236 million of related taxes for the years ended 2006, 2005 and 2004 respectively. 2 Dividends of CHF 1.60 per share, CHF 1.50 per share and CHF 1.30 per share were paid on 24 April 2006, 26 April 2005 and 20 April 2004, respectively.

Statement of Changes in Equity (continued)
	For the year ended
CHF million	31.12.06	31.12.05	31.12.04
Equity attributable to minority interests
Balance at the beginning of the year	7,619	5,426	3,879
Issuance of preferred securities	1,219	1,539
Other increases	131	44	1,922
Decreases and dividend payments	(3,191)	(595)	(523)
Foreign currency translation	(182)	544	(306)
Minority interest in net profit	493	661	454
Balance at the end of the year	6,089	7,619	5,426
Total equity	55,775	51,634	39,058

Shares issued
	For the year ended			% change from
Number of shares	31.12.06	31.12.05	31.12.04	31.12.05
Balance at the beginning of the year	2,177,265,044	2,253,716,354	2,366,093,528	(3)
Issue of share capital	2,208,242	3,418,878	6,586,826	(35)
Cancellation of second trading line treasury shares	(74,200,000)	(79,870,188)	(118,964,000)	7
Balance at the end of the year	2,105,273,286	2,177,265,044	2,253,716,354	(3)

Treasury shares
	For the year ended			% change from
Number of shares	31.12.06	31.12.05	31.12.04	31.12.05
Balance at the beginning of the year	208,519,748	249,326,620	273,482,454	(16)
Acquisitions	117,160,339	156,436,070	192,278,008	(25)
Disposals	(87,004,388)	(117,372,754)	(97,469,842)	26
Cancellation of second trading line treasury shares	(74,200,000)	(79,870,188)	(118,964,000)	7
Balance at the end of the year	164,475,699	208,519,748	249,326,620	(21)

In July 2006, UBS made a distribution of CHF 0.60 per share to shareholders which reduced the par value of UBS shares from CHF 0.80 to CHF 0.20 per share. At the same time, UBS split its share 2-for-1, resulting in a new par value of CHF 0.10 per share.

During the year a total of 74,200,000 shares acquired under the second trading line buyback program 2005 were cancelled. Out of the total number of 164,475,699 treasury shares, 22,600,000 shares (CHF 1,615 million) have been repurchased for cancellation. The Board of Directors will propose to the Annual General Meeting on 18 April 2007 to reduce the outstanding number of shares and the share capital by the number of shares purchased for cancellation.

On 31 December 2006, a maximum of 1,437,410 shares can be issued against the future exercise of options from former PaineWebber employee option plans. These shares are shown as conditional share capital in the UBS AG (Parent Bank) disclosure. In addition, during 2006, shareholders approved the creation of conditional capital of up to a maximum of 150 million shares to fund UBS's employee share option programs. As of 31 December 2006, no shares have been issued under this program.

All issued shares are fully paid

Statement of Recognized Income and Expense
For the year ended		31.12.06			31.12.05			31.12.04
	Attributable to		Total	Attributable to		Total	Attributable to		Total
CHF million	UBS share- holders	minority interests	UBS shareholders	minority interests	UBS shareholders	minority interests	Net unrealized gains / (losses) on financial investments available-for-sale, before tax	2,610	9
2,619	152	(58)	94	444	79	523	Change in fair value of derivative instruments designated as cash flow hedges, before tax	332	0
332	(479)	0	(479)	(238)	0	(238)	Foreign currency translation	(1,186)	(21)
(1,207)	2,088	62	2,150	(826)	(184)	(1,010)	Tax on items transferred to / (from) equity	(759)	0
(759)	138	0	138	(50)	0	(50)	Net income recognized directly in equity	997	(12)
985	1,899	4	1,903	(670)	(105)	(775)	Net income recognized in the income statement	12,257	493
12,750	14,029	661	14,690	8,016	454	8,470	Total recognized income and expense	13,254	481
13,735	15,928	665	16,593	7,346	349	7,695

Statement of Cash Flows
	For the year ended
CHF million	31.12.06	31.12.05	31.12.04

Cash flow from / (used in) operating activities
Net profit	12,750	14,690	8,470
Adjustments to reconcile net profit to cash flow from / (used in) operating activities
Non-cash items included in net profit and other adjustments:
Depreciation of property and equipment	1,325	1,556	1,576
Amortization of goodwill and other intangible assets	196	340	1,066
Credit loss expense / (recovery)	(156)	(374)	(241)
Equity in income of associates	(117)	(152)	(67)
Deferred tax expense / (benefit)	(517)	(382)	171
Net loss / (gain) from investing activities	(2,092)	(5,062)	(1,008)
Net loss / (gain) from financing activities	3,870	4,025	1,203
Net (increase) / decrease in operating assets:
Net due from / to banks	80,269	(1,690)	(7,471)
Reverse repurchase agreements and cash collateral on securities borrowed	(61,382)	(125,097)	(40,752)
Trading portfolio, net replacement values and financial assets designated at fair value	(177,087)	(74,799)	(19,733)
Loans / due to customers	64,029	47,265	13,108
Accrued income, prepaid expenses and other assets	(4,536)	(1,227)	(10,809)
Net increase / (decrease) in operating liabilities:
Repurchase agreements, cash collateral on securities lent	66,370	64,558	9,753
Accrued expenses and other liabilities	14,975	15,536	22,019
Income taxes paid	(2,607)	(2,394)	(1,345)
Net cash flow from / (used in) operating activities	(4,710)	(63,207)	(24,060)

Cash flow from / (used in) investing activities
Investments in subsidiaries and associates	2,856	(1,540)	(2,511)
Disposal of subsidiaries and associates	1,154	3,240	1,277
Purchase of property and equipment	(1,793)	(1,892)	(1,149)
Disposal of property and equipment	499	270	704
Net (investment in) / divestment of financial investments available-for-sale	1,723	(2,487)	703
Net cash flow from / (used in) investing activities	4,439	(2,409)	(976)

Cash flow from / (used in) financing activities
Net money market paper issued / (repaid)	16,921	23,221	21,379
Net movements in treasury shares and own equity derivative activity	(3,624)	(2,416)	(4,999)
Capital issuance	1	2	2
Capital repayment by par value reduction	(631)	0	0
Dividends paid	(3,214)	(3,105)	(2,806)
Issuance of long-term debt, including financial liabilities designated at fair value	97,675	76,307	51,211
Repayment of long-term debt, including financial liabilities designated at fair value	(59,951)	(30,457)	(24,717)
Increase in minority interests ¹	1,331	1,572	85
Dividend payments to / purchase from minority interests	(1,072)	(575)	(332)
Net cash flow from / (used in) financing activities	47,436	64,549	39,823
Effects of exchange rate differences	(2,117)	5,018	(1,052)
Net increase / (decrease) in cash and cash equivalents	45,048	3,951	13,735
Cash and cash equivalents, beginning of the year	91,042	87,091	73,356
Cash and cash equivalents, at the end of the year	136,090	91,042	87,091
Cash and cash equivalents comprise:
Cash and balances with central banks	3,495	5,359	6,036
Money market paper ²	87,144	57,826	45,523
Due from banks with original maturity of less than three months	45,451	27,857	35,532
Total	136,090	91,042	87,091
1 Includes issuance of preferred securities of CHF 1,219 million and CHF 1,539 million for the years ended 31 December 2006 and 31 December 2005, respectively. 2 Money market paper is included in the balance sheet under Trading portfolio assets and Financial investments available-for-sale. CHF 7,183 million, CHF 4,744 million and CHF 5,289 million were pledged at 31 December 2006, 31 December 2005 and 31 December 2004, respectively.

Statement of Cash Flows (continued)
	For the year ended
CHF million	31.12.06	31.12.05	31.12.04

Additional information
Cash received as interest	79,805	53,117	36,063
Cash paid as interest	76,109	44,392	24,192
Cash received as dividends on equities (incl. Associates, see Note 14)	4,839	3,869	2,934

Significant non-cash investing and financing activities
Motor-Columbus, Baden, from valuation at equity to full consolidation
Financial investments available-for-sale			644
Investments in associates			261
Property and equipment			2,083
Goodwill and other intangible assets			1,194
Debt issued			727
Minority interests			1,742
Investment funds transferred to other liabilities according to IAS 32
Minority interests			336
Private Banks and GAM, deconsolidation
Financial investments available-for-sale		60
Property and equipment		180
Goodwill and other intangible assets		362
Debt issued		5
Private equity investments, deconsolidation
Property and equipment	264	248
Goodwill and other intangible assets		3
Minority interests	62	27
Acquisitions of businesses
Financial investments available-for-sale		35
Property and equipment		112
Goodwill and other intangible assets		377
Minority interests		6
Motor-Columbus, deconsolidation
Financial investments available-for-sale	178
Property and equipment	2,229
Goodwill and other intangible assets	951
Debt issued	718
Minority interests	2,057
Acquisition of ABN AMRO's Global Futures and Options Business
Property and equipment	13
Goodwill and other intangible assets	428
Acquisition of Banco Pactual
Financial investments available-for-sale	36
Property and equipment	9
Goodwill and other intangible assets	2,218
Debt issued	1,496
Acquisition of Piper Jaffray
Goodwill and other intangible assets	605