Results

In third quarter 2003, Corporate Center recorded a pre-tax loss of CHF 40 million, compared to a pre-tax loss of CHF 74 million in the same quarter a year earlier.

The credit loss expense or recovery booked in the Corporate Center represents the difference between the statistically calculated adjusted expected losses charged to the business units and the actual credit loss recognized in the UBS financial statements. UBS recorded an actual credit loss recovery of CHF 26 million this quarter, compared to a credit loss expense of CHF 95 million in third quarter 2002. Actual credit loss expense in both periods was lower than the adjusted credit loss expense charged to the business units, resulting in a credit loss recovery at Corporate Center of CHF 66 million this quarter and CHF 7 million in the same quarter a year ago.

Total operating income dropped 42% from CHF 524 million in third quarter 2002 to CHF 305 million in the same quarter this year. The drop mainly reflects the deconsolidaton of Klinik Hirslanden (sold in fourth quarter 2002), and lower gains from investments. This was partially offset by lower writedowns on financial investments and higher credit loss recoveries.

Total operating expenses dropped to CHF 345 million in third quarter 2003, down from CHF 598 million in third quarter 2002. Personnel expenses declined 31% to CHF 170 million, reflecting the deconsolidation of Klinik Hirslanden. In the same period, general and administrative expenses decreased to CHF 40 million in third quarter, down from CHF 204 million a year earlier. This was mainly due to lower legal provisions and the disposal of Klinik Hirslanden.

Headcount

Corporate Center headcount, excluding Private Banks & GAM, was 1,109 on 30 September 2003, down by 54 from 30 June 2003, mainly due to a lower number of assignees and the transfer of human resources staff to the Business Groups.

Private Banks & GAM

Invested assets were CHF 80 billion on 30 September 2003, up from CHF 76 billion on 30 June 2003, reflecting strong net new money inflows and positive financial markets.

Net new money was CHF 2.4 billion in third quarter 2003, up from CHF 1.2 billion in second quarter, driven by very strong inflows into GAM. Pre-tax net profit increased by CHF 20 million to CHF 63 million in third quarter 2003 from second quarter. Before goodwill, net profit also rose CHF 20 million to CHF 83 million in third quarter. Revenues continued to benefit from higher fee income, reflecting the higher asset base, while trading income picked up due to higher client activity. Second quarter 2003 expenses were influenced by CHF 10 million in restructuring costs related to the merger of Cantrade, Bank Ehinger and Armand von Ernst to form Ehinger & Armand von Ernst. Excluding the restructuring costs, expenses rose on the back of higher incentive-based compensation, which was up in line with performance.

Headcount Private Banks & GAM

Headcount in Private Banks & GAM decreased by 16 to 1,657 in third quarter from second quarter, mainly due to rationalization measures put in place in the individual private banks. Overall the merger of the three private banks in second quarter 2003 will lead to a headcount reduction of up to 80 people.