At the highest level ever recorded, Wealth Management pre-tax profit in first quarter 2005 was CHF 915 million, up 12% from CHF 818 million in fourth quarter 2004. The result was helped by the fact that goodwill amortization ceased in first quarter 2005. Excluding goodwill, the increase was 10%. The strong result reflected increased asset-based fees from the record invested asset base as well as higher client activity levels. Rising interest income, a reflection of the expansion of margin lending activities, also reinforced revenues. The higher client activity levels helped the gross margin on invested assets to rise to 104 basis points, up 5 basis points from fourth quarter 2004, when the margin was depressed by a number of timing effects.

Net new money in first quarter 2005 was CHF 15.4 billion, up from CHF 6.5 billion in fourth quarter 2004. This intake was the second-best ever, just behind first quarter 2004. The International Clients area recorded CHF 14.5 billion in net new money, driven by a record high inflow of CHF 5.6 billion into the domestic European business and further strong contributions from Asian clients. The Swiss Clients area showed an inflow of CHF 0.9 billion, a clear improvement from the outflow of CHF 0.7 billion in fourth quarter 2004, which was influenced by seasonal withdrawals.

The Business Banking Switzerland unit reported pre-tax profit of CHF 531 million in first quarter 2005, CHF 28 million or 6% higher than in fourth quarter 2004. The result shows the continued tight management of the cost base, with improved credit results reflecting the structural improvement of the loan portfolio in recent years. Total operating income was practically unchanged from fourth quarter 2004.
The loan portfolio, at CHF 139.4 billion on 31 March 2005, was CHF 2.3 billion above the level on 31 December 2004. A strong increase in private client mortgages and slightly increased demand from corporate clients offset the ongoing workout of the recovery portfolio.

The Global Asset Management unit reported pre-tax profit for first quarter 2005 of CHF 224 million, up from CHF 162 million in fourth quarter 2004. The result was helped by the fact that goodwill amortization ceased in first quarter 2005. Pre-goodwill, profit increased by CHF 31 million or 16% compared to last quarter. This increase was due to higher performance-based revenues and improved asset-based fees, reflecting strong net new money inflows and improved market valuations as well as the continuous shift to higher-margin products. Total operating expenses fell on lower general and administrative expenses, the latter partly offset by higher personnel expenses reflecting an increase in incentive-based compensation, which rose in line with revenues.

Net new money in the Institutional business in first quarter 2005 was CHF 5.1 billion, up from CHF 3.0 billion in fourth quarter 2004. Strong inflows were reported in equity mandates, primarily in Europe and the UK, as well as in money market mandates, mainly in the Americas. Net new money in the Wholesale Intermediary business was CHF 4.7 billion in first quarter 2005, up from CHF 0.5 billion in fourth quarter 2004. This was the best result since fourth quarter 2001. The main drivers were strong inflows into asset allocation, equity and fixed income funds in Europe and the Americas, partially offset by outflows of CHF 2.5 billion in money market funds, particularly in Europe.

Invested assets at the end of first quarter 2005 stood at CHF 635 billion, up from CHF 601 billion from 31 December 2004, reflecting strong net new money inflows, positive market performance and currency impacts.

Most funds show a strong relative performance over one-year, three-year, five-year and ten-year periods.

The Investment Bank's pre-tax profit in first quarter 2005 was CHF 1,303 million, down 19% from the record result in the same quarter a year earlier. Before goodwill amortization, pre-tax profit was down 22%.

Total operating income in first quarter 2005 was CHF 4,341 million, down 9% from the same quarter a year earlier. Revenues in the equities and fixed income, rates and currencies businesses remained resilient and both stood at their second-highest level on record, but were not able to match the record levels achieved in the same period a year earlier.

Equities revenues were down 4% from the same period in 2004, reflecting the weakening of the US dollar against the Swiss franc. The derivatives business, especially in Asia, as well as the prime brokerage and equity capital markets businesses, saw strong performances. Results from secondary cash and proprietary trading declined, with inflationary pressures and worries over tighter monetary policies negatively impacting revenues in the convertibles area.

Fixed income, rates and currencies revenues were down 14% from the record achieved a year earlier in 2004, reflecting the weakening of the US dollar against the Swiss franc and a mixed impact of the current market conditions. The increasingly challenging credit market over the quarter negatively impacted the credit fixed income business. Foreign exchange and cash and collateral trading were down in a relatively neutral market environment. This was offset by a solid performance in the principal finance and rates businesses. Credit default swaps hedging loan exposures recorded positive revenues of CHF 91 million, an improvement from positive CHF 53 million a year earlier.

Investment banking revenues were up 1% from first quarter 2004. Excluding the impact of currency and of credit hedging costs for the investment banking loan book, revenues increased 5%, driven by a strong performance in Europe and Asia Pacific and the continued momentum of the global syndicated finance and equity capital market franchises.

Total operating expenses were down 4% from the same period last year. Personnel expenses fell on lower accruals for cash bonuses, in line with the drop in revenues, with general and administrative expenses driven lower by the weakening of the US dollar against the Swiss franc.

Market risk for the Investment Bank, as measured by the average 10-day 99% Value at Risk (VaR was CHF 371 million in first quarter 2005, up slightly from CHF 358 million in the previous quarter. While the Investment Bank took advantage of the positive, active markets at the beginning of the quarter, it reduced risk towards the end of February, in anticipation of more negative sentiment.

Wealth Management USA pre-tax profit stood at a record CHF 144 million in first quarter 2005 compared to a pre-tax profit of CHF 52 million in fourth quarter 2004. The result was helped by the fact that goodwill amortization ceased in first quarter 2005. Before acquisition costs (net goodwill funding, amortization of goodwill and intangibles), pre-tax profit increased 24% to CHF 201 million in first quarter 2005 from CHF 162 million in fourth quarter 2004. The result reflected strong recurring income partially offset by a weaker performance in municipal finance, which felt the negative effect of rising interest rates.

Because Wealth Management USA's business is almost entirely conducted in US dollars, comparisons of results to prior periods are affected by the movements of the US dollar against the Swiss franc. In first quarter 2005, the US dollar appreciated against the Swiss franc slightly. In US dollar terms, performance excluding acquisition costs was 22% higher in first quarter 2005 compared to fourth quarter 2004.

The inflow of net new money in first quarter 2005 was CHF 5.8 billion compared to CHF 6.8 billion in fourth quarter 2004, with the decline primarily related to outflows in liquid investments.

Financial advisor headcount was 7,403 on 31 March 2005, down 116 from 7,519 on 31 December 2004, reflecting attrition among the less productive advisors and a decline in the number of trainees. UBS continues to invest in recruiting and training, with its primary aim remaining the hiring of talented and highly productive financial advisors.

Zurich/Basel, 3 May 2005
UBS