UBS posted a net recovery of CHF 131 million for the quarter, following net recoveries of CHF 3 million and CHF 1 million in first quarter 2004 and second quarter 2003 respectively. All Business Groups contributed to this favorable result, reflecting a stable economic environment across all our markets.
The Wealth Management & Business Banking business reported a net recovery of CHF 91 million, compared to net credit loss expense of CHF 54 million in first quarter 2004 and a net recovery of CHF 68 million in second quarter 2003. The strong quality of our loan book resulted in few new impairments which were more than compensated by recoveries of previously established counterparty provisions.
The Investment Bank realized net recoveries of CHF 37 million in second quarter 2004 as it continued to benefit from the release of previously established counterparty and country provisions. The lack of new provisions reflected stronger credit fundamentals as companies continue to rebuild their balance sheets. In first quarter 2004, the Investment Bank realized net recoveries of CHF 58 million and in second quarter 2003 experienced a net credit loss expense of CHF 64 million. Wealth Management USA recovered CHF 3 million following the successful workout of an impaired position.
UBS’s gross loan portfolio was CHF 269 billion on 30 June 2004, up from CHF 256 billion on 31 March 2004 as the Investment Bank reported increased exposure in the short-term money market inter-bank business, and both the Wealth Management and Wealth Management USA businesses continued their focused expansion of secured lending.
Following the trend observed in past quarters, the ratio of impaired loans to total loans improved further, falling to 2.2% from 2.6% on 31 March 2004, reflecting a generally benign mood in the credit markets. Impaired loans declined 10% to CHF 6,024 million this quarter from CHF 6,707 million last quarter.
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