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Business Group Results

| Media Releases Americas


Wealth Management & Business Banking
Wealth Management
's pre-tax profit in first quarter 2004 was CHF 868 million, up 23% from fourth quarter 2003. This represents the highest level in three years. Recurring income increased on rising asset-based fees, benefiting from gains in market levels. Non-recurring income rose due to higher brokerage fees, which reflected a strong increase in client activity levels in the more positive market environment. This increase in revenue, supported by the continued effort to enhance the client offering with value-added products and services, drove gross margin on invested assets up to 107 basis points from 100 basis points in the previous quarter.

The first quarter 2004 net new money inflow of CHF 16.2 billion, was up 153% from fourth quarter on record inflows from both international and Swiss clients. Net new money inflows from existing clients were particularly high. The European wealth management business achieved net new money inflows of CHF 4.2 billion.

Business Banking Switzerland reported a pre-tax profit of CHF 510 million -- a 5% decrease from fourth quarter 2003. Operating income was lower, mainly driven by decreased interest income from its reduced recovery portfolio and by a drop in fee income compared to particularly high levels in fourth quarter.

Business Banking Switzerland's loan portfolio, at CHF 138.6 billion, was up CHF 1.4 billion from the level on 31 December 2003. An increase in mortgages for private clients was partly offset by the ongoing workout of the recovery portfolio.


Global Asset Management
Global Asset Management reported a pre-tax profit of CHF 144 million in first quarter 2004, up 29% from fourth quarter 2003. It was the highest quarterly result since 2000. The increase was mainly attributable to higher management fees reflecting the gains in invested assets from excellent net new money inflows and continued strong market valuations. Operating expenses rose less than income as lower general and administrative expenses partially offset the revenue-driven increase in incentive-based compensation.

In the Institutional business, net new money totaled CHF 10.1 billion, a significant gain from CHF 1.4 billion in fourth quarter 2003. It was the best result ever reported and reflects the strength of long-term investment performance. In the Wholesale Intermediary business, net new money outflows were CHF 1.4 billion in first quarter 2004, compared with CHF 8.3 billion in fourth quarter 2003, mainly due to money market outflows related to the launch of UBS Bank USA. Before the bank's launch in third quarter 2003, private client cash balances in the US were swept into money market funds. Now they are redirected automatically into FDIC-insured deposit accounts.

Invested assets for Global Asset Management totaled CHF 602 billion on 31 March 2004, up from CHF 574 billion on 31 December 2003. Most of Global Asset Management's funds showed a strong relative investment performance over one-year, three-year, five-year and 10-year periods.


Investment Bank
The Investment Bank recorded a pre-tax profit of CHF 1,674 million in first quarter 2004, up 115% from the same period a year earlier. This reflected a significant rise in revenues across all areas, particularly in the Equities business and in the Fixed Income, Rates and Currencies (FIRC) area, which posted another record result.

Operating income was a record CHF 4,937 million in first quarter 2004, representing a 54% increase from a year earlier (up 39% from fourth quarter 2003). The main contributors were the FIRC and Equities businesses, which capitalized on favorable trading conditions and higher client volumes. Fixed Income, Rates and Currencies revenues rose 19% from a year earlier (up 82% from fourth quarter 2003). Excellent results in rates, foreign exchange and cash and collateral trading drove performance year-on-year. Equities revenues gained 109% from a year earlier (up 23% from fourth quarter). The results reflected improved market conditions, strong demand for derivative and cash products from key client segments, higher proprietary revenues and the ability of the business to efficiently process high trading volumes. Investment Banking revenues rose 59% from a year earlier (down 27% from seasonally strong fourth quarter), reflecting increased activity in mergers and acquisitions, continued favorable debt capital markets and improving market conditions for equity issuance. Performance in the Private Equity business continued to improve, with revenues of CHF 165 million in first quarter compared to negative CHF 75 million a year earlier, with improved market conditions allowing a number of successful divestments and a reduced level of writedowns.

Total operating expenses rose 35% from a year earlier, reflecting the rise in personnel expenses in line with improving revenues. Annual performance-related payments are driven by the revenue mix across business areas and are managed in line with market levels.


Wealth Management USA
In first quarter 2004, pre-tax profit of Wealth Management USA stood at CHF 43 million compared to a pre-tax loss of CHF 10 million in fourth quarter 2003. The improvement was driven by strong operating performance and lower retention costs. Before acquisition costs (goodwill and intangible asset amortization, net goodwill funding costs and retention payments), pre-tax profit increased 20% to CHF 218 million from CHF 181 million in fourth quarter 2003.

Because Wealth Management USA's business is almost entirely conducted in US dollars, comparisons of first quarter results to prior periods are affected by movements of the US dollar against the Swiss franc. Excluding this currency effect and before acquisition costs, pre-tax profit reached a record high, increasing 23% from fourth quarter 2003. Revenues were driven by record levels of recurring fees, higher levels of activity among private clients and higher net interest income, reflecting the impact of UBS Bank USA. These positive effects were partially offset by a decline in municipal finance income due to lower origination volumes across the industry and changes in the interest rate environment affecting the value of municipal securities. At the same time, costs continued to be tightly managed.

The inflow of net new money was CHF 2.8 billion in first quarter 2004, and although it declined from the CHF 7.8 billion in fourth quarter 2003, the first quarter result compares satisfactorily to performance reported by US peers.

Financial advisors continued to be among the most productive in the industry, with productivity per financial advisor (private client revenues per financial advisor) rising to CHF 172,000 in first quarter 2004 from CHF 155,000 in fourth quarter 2003.

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