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UBS first quarter 2005 result of CHF 2,625 million

| Quarterly Results

- Net profit attributable to UBS shareholders of CHF 2,625 million - Financial businesses contributed CHF 2,427 million -- second-best quarterly performance, down CHF 1 million from the record first quarter 2004 - EPS of CHF 2.60 and ROE 32.4% -- both at all-time highs - Revenues resilient, with strong fee and commission income - Net new money was CHF 32.3 billion in first quarter, with a record CHF 21.2 billion inflow from wealth management businesses worldwide.

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UBS (including Industrial Holdings)

Financial businesses

Quarter ended

% change from

column 2

CHF million, except where indicated

31.3.05

31.12.04

31.3.04

4Q04

1Q04

Operating income

13,101

12,053

11,338

9

16

Operating expenses

9,526

9,396

8,230

1

16

Net profit

2,833

2,210

2,369

28

20

Net profit attributable to minority interests

208

132

92

58

126

Net profit attributable to UBS shareholders

2,625

2,078

2,277

26

15

Operating income

10,104

9,084

10,135

11

0

Operating expenses

6,877

6,600

7,120

4

(3)

Net profit attributable to UBS shareholders

2,427

1,889

2,248

28

8

UBS reports net profit attributable to its shareholders ("attributable profit") of CHF 2,625 million in first quarter 2005, up from CHF 2,277 million in the same period a year earlier. Before goodwill, attributable profit rose 7%.

UBS's industrial holdings, including its private equity portfolio, contributed CHF 198 million, or 7.5%, to UBS's attributable profit. Its Financial Businesses contributed CHF 2,427 million, the second-best quarterly performance on record, only CHF 1 million below the record pre-goodwill result achieved in first quarter 2004.

"We saw revenues holding up extremely well because of the diversity of our business mix. We again benefited from our growing core of recurring revenues from our wealth and asset management businesses, helping us balance the dip in our securities trading performance, which is always a reflection of prevailing market conditions," said Clive Standish, Chief Financial Officer.

Total operating income for UBS's Financial Businesses was CHF 10,104 million in first quarter 2005, roughly unchanged from the same quarter a year earlier.

Wealth and asset management businesses profited from stronger market valuations, generating higher asset-based fees. Net fee and commission income was particularly strong, making up more than 50% of overall total operating income. Brokerage fees could not match the particularly high levels reached in first quarter 2004, but that decrease was fully offset by record investment fund fees and strong portfolio management fees. The growing US bank, UBS Bank USA, along with higher volumes in the Swiss mortgage business and the wealth management margin lending business, was also an important contributor to first quarter operating income. UBS experienced another excellent credit result, posting a net credit recovery of CHF 137 million, up from CHF 2 million in the year-earlier quarter. These positive effects were offset by a decrease in trading revenues from the peak level achieved a year ago, with fixed income trading down 19%, foreign exchange down 10%, and equities virtually flat.

Total operating expenses for the Financial Businesses were CHF 6,877 million in first quarter 2005, down 3% from a year earlier, mainly reflecting the discontinuation of goodwill amortization. Personnel expenses fell slightly. Higher salary expenses due to the continuous expansion of the business as well as increased expenses for contractors reflecting the integration of previously outsourced IT staff were more than offset by lower accruals for performance-related payments. General and administrative expenses decreased, reflecting continued tight management of the firm's non-personnel cost base.
Headcount in the Financial Businesses was 68,197 on 31 March 2005, up 790 from 67,407 on 31 December 2004, with higher headcount levels across all businesses and regions. In the Americas, headcount rose by 39, in Asia Pacific 309, in Europe 237 and in Switzerland 205.

Net new money inflows in first quarter 2005 totaled CHF 32.3 billion. The wealth management businesses contributed a record CHF 21.2 billion, compared to CHF 13.3 billion a quarter earlier driven by strong inflows into the domestic European business and from Asian and domestic US clients.

Risk-weighted assets, BIS Tier 1 ratio

Risk-weighted assets were CHF 286.0 billion on 31 March 2005, up 8% from CHF 264.8 billion on 31 December 2004. The increase reflects an expansion of business activities across the firm, leading to higher capital requirements in the loan portfolios of our businesses. Much of the increased lending is collateralized, such as the margin-lending activities in wealth management or prime brokerage. The strengthening of the US dollar against the Swiss franc contributed approximately CHF 5 billion to the increase in risk-weighted assets.

BIS Tier 1 capital rose to CHF 32.8 billion on 31 March 2005 from CHF 31.6 billion on 31 December 2004. The BIS Tier 1 ratio dropped to 11.5% at the end of March from 11.9% at the end of December.

Rising awareness of UBS brand

The sustained effort and investment UBS is making to build its brand is continuing to pay off. The latest research results from its global "You & Us" advertising campaign show that awareness of and familiarity with UBS are growing in all regions worldwide.

Outlook

As always, it is hard to predict at this early stage how the year will turn out. History shows that there is a natural seasonality boosting first quarter performance, and market activity has ebbed as the year has progressed.

"We have designed our diversified business mix to deliver sustainably strong results across a whole variety of market conditions," said Clive Standish.

Performance against UBS financial targets

UBS's performance against financial targets shows:

  • Annualized return on equity for first quarter 2005 was 32.4%, up from 31.1%1 in the same quarter a year ago, again well above UBS's target range of 15 to 20%, and at the highest level ever reported. The increase was driven by higher attributable profit, partially offset by an increase in average equity as strong retained earnings were accompanied by the issuance of treasury shares to employees.

  • Basic earnings per share, also at a record level, stood at CHF 2.60, up 11% from CHF 2.341 in the same quarter a year earlier, driven by the increase in attributable profit as well as the impact of share repurchases.

  • The cost/income ratio for UBS's financial businesses was 69.0% slightly above the 68.5%1 shown in the same quarter last year. The modest drop in income reflected lower trading revenues, and was only partially offset by lower general and administrative expenses.

Performance against targets

Year-to-date

31.3.05

31.12.04

31.3.04

RoE (%) 1

as reported

32.4

25.5

28.8

before goodwill

32.4

27.8 2

31.1 2

Quarter ended

31.3.05

31.12.04

31.3.04

Basic EPS (CHF) 3

as reported

2.60

2.07

2.16

before goodwill

2.60

2.23 4

2.34 4

Cost / income ratio of the financial businesses (%) 5,6

as reported

69.0

73.0

70.3

before goodwill

69.0

71.1 7

68.5 7

Net new money, wealth management businesses (CHF billion) 8

Wealth Management

15.4

6.5

16.2

Wealth Management USA

5.8

6.8

2.8

Total

21.2

13.3

19.0

1 Net profit attributable to UBS shareholders (annualized as applicable) / average equity attributable to UBS shareholders less
dividends.

2 Net profit attributable to UBS shareholders less the amortization of goodwill (annualized as applicable) / average

equity attributable to UBS shareholders less dividends.
3 Details of the EPS calculation can be found in note 8 to the financial
statements.

4 Net profit attributable to UBS shareholders less the amortization of goodwill / weighted average shares
outstanding.

5 Excludes Industrial Holdings.

6 Operating expenses / operating income less credit loss expense or recovery.

7 Operating expenses less the amortization of goodwill / operating income less credit loss expense or recovery.

8 Excludes interest and dividend income.

1 Before goodwill amortization: Until the end of 2004, targets were evaluated on a pre-goodwill basis.

With the introduction of new and revised International Financial Reporting Standards (IFRS), goodwill
amortization stopped at the beginning of 2005.

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Further Information

Zurich/Basel, 3 May 2005
UBS

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 European wealth management business, 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 creditworthiness 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 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 31 December 2003. 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.