Note 3 Net Interest & Trading Income

Interactive Report

Net interest income

Accounting standards require separate disclosure of net interest income and net trading income by type of income (see the second and the third tables). This required disclosure, however, does not take into account that net interest and trading income are generated by a range of different business activities. In many cases, a particular business activity can generate both net interest and trading income. Fixed income trading activity, for example, generates both trading profits and coupon income. UBS management therefore analyzes net interest and trading income according to the business activity generating it. The first table below (labeled Net interest and trading income) provides information that corresponds to this management view. For example, net income from trading activities is further broken down into the four sub-components of Equities, Fixed income, Foreign exchange and Other. These activities generate both types of income (interest and trading revenue) and therefore this analysis is not comparable to the breakdown provided in the third table on the next page (Net trading income only).

Net interest and trading income

	Quarter ended			% change from		Year to date

CHF million	30.9. 2003	30.6. 2003	30.9. 2002	2Q03	3Q02	30.9. 2003	30.9. 2002


Net interest income	3,357	3,026	2,726	11	23	9,292	7,849
Net trading income	642	1,333	1,027	(52)	(37)	3,236	4,906


Total net interest and trading income	3,999	4,359	3,753	(8)	7	12,528	12,755

Breakdown by business activity

	Quarter ended			% change from		Year to date

CHF million	30.9. 2003	30.6. 2003	30.9. 2002	2Q03	3Q02	30.9. 2003	30.9. 2002


Net income from interest margin products	1,267	1,292	1,238	(2)	2	3,844	3,979


Equities	743	700	807	6	(8)	1,758	2,272
Fixed income	1,568	1,794	1,389	(13)	13	5,362	4,991
Foreign exchange	351	419	287	(16)	22	1,140	1,172
Other	83	85	59	(2)	41	244	199


Net income from trading activities	2,745	2,998	2,542	(8)	8	8,504	8,634


Net income from treasury activities	334	354	328	(6)	2	1,072	1,232


Other¹	(347)	(285)	(355)	(22)	2	(892)	(1,090)


Total net interest and trading income	3,999	4,359	3,753	(8)	7	12,528	12,755

Net interest income¹

	Quarter ended			% change from		Year to date

CHF million	30.9. 2003	30.6. 2003	30.9. 2002	2Q03	3Q02	30.9. 2003	30.9. 2002


Interest income
Interest earned on loans and advances	2,794	2,822	2,808	(1)	0	8,188	8,937
Interest earned on securities borrowed and reverse repurchase agreements	2,538	2,861	3,290	(11)	(23)	8,243	9,173
Interest and dividend income from financial investments	13	22	77	(41)	(83)	60	139
Interest and dividend income from trading portfolio	4,799	4,939	4,234	(3)	13	13,929	13,017


Total	10,144	10,644	10,409	(5)	(3)	30,420	31,266


Interest expense
Interest on amounts due to banks and customers	1,017	1,160	1,531	(12)	(34)	3,369	4,955
Interest on securities lent and repurchase agreements	2,448	2,631	2,944	(7)	(17)	7,561	8,396
Interest and dividend expense from trading portfolio	2,571	2,979	2,124	(14)	21	7,795	6,396
Interest on debt issued	751	848	1,084	(11)	(31)	2,403	3,670


Total	6,787	7,618	7,683	(11)	(12)	21,128	23,417


Net interest income	3,357	3,026	2,726	11	23	9,292	7,849

Net trading income

	Quarter ended			% change from		Year to date

CHF million	30.9. 2003	30.6. 2003	30.9. 2002	2Q03	3Q02	30.9. 2003	30.9. 2002


Equities	331	632	702	(48)	(53)	1,145	2,187
Fixed income²	(54)	219	45			784	1,274
Foreign exchange and other	365	482	280	(24)	30	1,307	1,445


Net trading income	642	1,333	1,027	(52)	(37)	3,236	4,906

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