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UBS reports first quarter net profit of $899 million*

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UBS reports net profit of CHF 1,214 million ($899 million) in first quarter 2003, down 11% from the same quarter a year earlier. Before goodwill and excluding the net gain from the sale of Hyposwiss in first quarter 2002**, net profit was 7% lower. Despite tough markets, UBS managed to increase shareholder returns by keeping a strong grip on costs and managing capital resources tightly. UBS's wealth management businesses (Private Banking and UBS PaineWebber) achieved strong net new money inflows of CHF 11.1 billion ($8.2 billion), with a record inflow into the European Wealth management initiative.

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UBS reports net profit of CHF 1,214 million ($899 million), a decline of 11% from the first quarter a year earlier. Before goodwill and excluding the gain from the sale of Hyposwiss in first quarter 2002*, net profit was 7% lower. This decrease is almost entirely attributable to currency moves - mainly the US dollar's 20% weakening against the Swiss franc between the two periods.

Compared to fourth quarter 2002 and before goodwill, net profit rose 35% after excluding the writedown related to the withdrawal of the PaineWebber brand*** and the gain from the sale of Klinik Hirslanden**** .

"UBS has again delivered robust results in a tough environment. We focused on protecting and enhancing returns for our shareholders. We pushed down our cost/income ratio to its lowest level since the middle of 2001, and delivered a higher return on equity than this time last year," said Peter Wuffli, President of the Group Executive Board.

About half of the change in both income and expense compared to the same quarter a year earlier was driven by currency movements. Operating income declined 19% compared to a year earlier. Adjusted for the gain from the sale of Hyposwiss1, income was 18% lower. Apart from the currency effects, the decrease was mainly due to poor equities trading conditions and low equity market levels, affecting asset-based revenues. Encouragingly, private equity writedowns at UBS Capital returned to more moderate levels, decreasing to CHF 123 million ($91 million) in first quarter 2003 from CHF 383 million ($284 million) in the same quarter a year earlier. Fixed income trading revenues were very strong, reflecting a buoyant trading environment that benefited from low interest rates and a steep yield curve.

Credit businesses again proved resilient, despite another quarter of generally weak economic conditions. Actual net credit loss expense during the quarter amounted to CHF 104 million ($77 million) compared to CHF 85 million ($63 million) in the same quarter in 2002.

Costs remained under tight control. Operating expenses fell 20% from the same quarter a year earlier, to their lowest level since the merger with PaineWebber. Besides currency effects, the decrease reflects sharp declines in personnel and in general and administrative expenses, down 21% and 18% respectively. Performance-related compensation also fell.

Headcount declined a further 666 to 68,395 in the three months since December 31, 2002 as processes and structures were streamlined. At the same time, capabilities were selectively expanded in areas with growth potential.

Net new money in UBS's wealth management businesses (Private Banking and UBS PaineWebber) for the quarter was CHF 11.1 billion ($8.2 billion)- a strong result that shows the continued confidence clients place in UBS's financial advice, its stability and strength. In the European wealth management business, net inflows reached a record of CHF 3.0 billion ($2.2 billion). Inflows were positive across all private banking markets. In the U.S., UBS PaineWebber reported net new money of CHF 3.7 billion ($2.7 billion) comparing favorably to industry experience.

* Note on US$ conversions:

UBS Group manages its businesses and reports its results in Swiss Francs (CHF). USD figures are provided for convenience only. All figures for all periods have been translated at $1 = CHF 1.35, the spot rate on March 31, 2003.

This rate is not the rate that would be used for a translation under US GAAP or IFRS if the USD were the reporting currency of UBS Group. All percentage changes are based on CHF amounts.

** Sale of Hyposwiss: In first quarter 2002 UBS recorded gains of CHF 155 million ($115 million) pre-tax and CHF 125 million ($93 million) after-tax from the sale of Hyposwiss. This gain was identified as a significant financial event, booked in Corporate Center as "Other income".

*** Sale of Klinik Hirslanden: In fourth quarter 2002 UBS recorded gains of CHF 72 million ($53 million) pre-tax and CHF 60 million ($44 million) after-tax from the sale of Klinik Hirslanden. This gain was identified as a significant financial event, booked in Corporate Center as "Other income".

Merger of Cantrade, Bank Ehinger and Armand von Ernst
On February 18, 2003, UBS announced the creation of a holding company for its five fully owned independent private banking subsidiaries and GAM, its specialist asset manager.

The three Swiss-German private banking subsidiaries (Berne-based Armand von Ernst, Basel's Bank Ehinger and Zurich's Cantrade) are now merging under the name Ehinger & Armand von Ernst. The legal merger is retroactively effective to January 1, 2003 and full operational integration of the three banks is expected to be complete by January 1, 2004. The new bank, headquartered in Zurich, with branches in Basel and Berne, will be one of the most important providers of private banking services in the Swiss-German speaking regions of Switzerland.

GAM, Ferrier Lullin in Geneva and Banco di Lugano are not affected by the merger and will continue to service their clients under their present brands.

Outlook 2003
Markets and trading conditions are tough and will likely remain so.

"While some further degree of volatility cannot be excluded, we do feel that the downward pressure on our industry from the business and market environment could be beginning to ease and that the worst earnings declines may be behind us," Peter Wuffli said. "Our businesses are proving highly competitive and we remain convinced that our strategy is the right one."

Although the timing of a return to sustained revenue growth is hard to predict, UBS is still in a position to protect and enhance shareholder returns by flexing costs and tightly managing capital. At the same time, because of its successful strategic initiatives, UBS continues to be well placed to profit from growth opportunities as they arise.

Financial ratios as reported
Annualized return on equity in first quarter 2003 was 13.2%, compared to 12.3% a year earlier. Basic earnings per share were CHF 1.05 ($0.78) in first quarter, against CHF 1.10 ($0.81) in the same quarter a year earlier. The cost/income ratio was 78.4% in first quarter 2003, down from 80.1% a year earlier.

Performance against Group financial targets
(pre-goodwill and adjusted for significant financial events****)

UBS management sets the Group's financial targets and evaluates performance in terms of adjusted results, excluding significant financial events and the amortization of goodwill and other intangibles. On that basis, UBS's performance against financial targets shows:

  • The Group's annualized return on equity for first quarter 2003 was 15.8%, up from 15.2% in the same quarter a year ago and back within our target range of 15-20%. The ongoing reduction of equity through share buyback programs more than offset the market-related decline in earnings.

  • Basic earnings per share in first quarter 2003 were CHF 1.26 ($0.93), just below CHF 1.27 ($0.94) in the same quarter last year. The 7% decline in profit was again offset by the reduced average number of shares outstanding, driven by ongoing share buyback programs.

  • The cost/income ratio this quarter was 75.3%, a decrease from 77.9% in first quarter last year and the lowest since second quarter 2001, as tight cost control complemented the fall in private equity writedowns.

*****Significant Financial Events:

In first quarter 2003 there were no significant financial events.

Items recorded in the financial statements and identified as significant financial events in 2002 are listed in footnote 1,2 and 3 on page 1 of this release.


For the full details of the effect of significant financial events in 2002 see the UBS First Quarter 2003 Report.

Further information

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Quarterly results

Further information on UBS's quarterly results is available in the Investors & Analysts section.

Further information:

  • 1Q2003 Report (pdf and interactive version)

  • 1Q2003 Results slide presentation

  • Letter to shareholders (English, German, French and Italian)



Webcast: The results presentation by Peter Wuffli, President of the Group Executive Board, UBS AG, will be webcast live via www.ubs.com at the following time on 13 May 2003:

  • 0900 CET

  • 0800 GMT

  • 0300 US EDT

  • Webcast playback will be available from 1400 CET on 13 May, with a bookmarked version at 1800 CET the same day.


Cautionary statement regarding forward-looking statements


This communication contains statements that constitute „forward-looking statements", including, but not limited to, statements relating to the implementation of strategic initiatives, such as the implementation of the new European wealth management strategy, expansion of our corporate finance presence in the U.S. and worldwide, and other statements relating to our future business development and economic performance.

While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations.

These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in local and international securities markets, currency exchange rates and interest rates, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties and developments in the markets in which they operate, (6) legislative developments, (7) management changes and changes to our business group structure in 2001, 2002 and 2003 and (8) other key factors that we have indicated could adversely affect our business and financial performance which are contained in other parts of this document and in our past and future filings and reports, including those filed with the SEC.

More detailed information about those factors is set forth elsewhere in this document and in documents furnished by UBS and filings made by UBS with the SEC, including UBS's Annual Report on Form 20-F for the year ended December 31, 2002. UBS is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.

New York, May 13, 2003
UBS AG