UBS reports net profit after tax in first quarter 2002 of CHF 1,363 million ($811 million), 14% less than the same quarter a year earlier but 23% higher than fourth quarter 2001. Pre-goodwill, and adjusted for gains from the sale of Hyposwiss, profit was CHF 1,574 million ($937 million), 17% less than the same quarter a year earlier but 10% higher than the fourth quarter 2001. Although the market environment remained difficult, revenues continued to recover, showing the benefit of a diverse business mix. NEW YORK, May 14 /PRNewswire-FirstCall/ -- UBS achieved first quarter 2002net profit after tax of CHF 1,363 million ($811 million), 14% less than thesame quarter a year earlier but 23% higher than fourth quarter 2001.Pre-goodwill, and adjusted for gains from the sale of Hyposwiss, profit wasCHF 1,574 million ($937 million), 17% less than the same quarter a yearearlier but 10% higher than the fourth quarter 2001. Overall profitabilitygrew for the second consecutive quarter, with every business unit (except UBSCapital) recording quarter-on-quarter growth. The highly successful Swissdomestic banking business again posted record pre-tax profits. "The market environment remains difficult, but the progress of all ourbusinesses is very encouraging. We continue to see the benefits of ourdisciplined cost and risk management, our strategic focus and our diversebusiness mix," said President Peter Wuffli. Wealth management results proved resilient despite the uncertainsentiment, and UBS Warburg's core Corporate & Institutional Clients unitperformed very well -- driven by record fixed income results. A largeproportion of the Group's drop in profits compared to first quarter 2001 wasrecorded by UBS Capital, which continues to post disappointing results aswider economic difficulties depress private equity valuations. Operating income in first quarter 2002 was CHF 9,589 million($5,708 million), down 5% compared to first quarter 2001, but up 13% comparedto fourth quarter 2001. Wealth management businesses provided stable growth,with revenue increasing quarter-on-quarter, thanks in particular to growth inasset-based fees. These recurring fees rose both in Private Banking and in UBSPaineWebber, to record levels in the latter. Investment fund fees also hit anall-time high. General and administrative expenses dropped 9% compared to first quarter2001 to CHF 1,700 million ($1,012 million), their lowest level since themerger with PaineWebber, reflecting deep cuts in marketing, travel andentertainment and technology spending. Personnel expenses rose 1% to CHF 5,317million ($3,165 million) on higher performance-related compensation. Thesecosts are managed on a full-year cycle with the fixing of annual performance-related compensation made in the fourth quarter. Headcount disciplinecontinues to make capacity cuts unnecessary and leave scope for strategicinvestments. Credit loss expense was CHF 85 million ($51 million) in first quarter 2002or 3 basis points of the loan book for the quarter, compared to CHF 115million ($68 million) in fourth quarter 2001 and CHF 136 million ($81 million)in the same period a year earlier. The Group benefited from the improvedquality of the Swiss domestic portfolio while UBS Warburg continues to managerisk cautiously and to make effective use of credit protection. Clients invested CHF 11.8 billion ($7.0 billion) in net new money in firstquarter 2002, a satisfactory result given the current market environment andthe short term impact of the Italian tax amnesty, which reduced net flows inPrivate Banking in this quarter by CHF 4.5 billion ($2.7 billion). Thestrategic build-up of domestic private banking activities in Italy helped UBSretain nearly half of the CHF 8.4 billion ($5.0 billion) in repatriatedassets. UBS PaineWebber, the Group's US private client business, continued togain market share from its US private client peers and generate strong net newmoney, capturing CHF 7.4 billion ($4.4 billion) in net new money this quarter.UBS's investment funds continued to attract net inflows. Performance against Group financial targets: Pre-goodwill and adjusted for the one-off gain from the sale of Hyposwiss in first quarter 2002: * Annualized return on equity was 15.2%, within the target range of 15-20%, but below the 17.6% achieved in the first quarter a year earlier. * Basic earnings per share were CHF 1.27 ($0.76), 15% lower than the first quarter 2001, but ahead of last year's quarterly average. * The cost/income ratio was 77.9%, up from 73.9% in first quarter last year although expenses were down 2%, evidence of the continued cost control across all our businesses. Outlook 2002 As in 2001, UBS performed relatively strongly in the first quarter. Thediversity of the Group's revenue streams continues to mitigate the effects ofadverse market conditions and low levels of client activity. The prospects for a global economic recovery in the latter part of theyear remain intact, although it is far from certain how strong any growth maybe. Because of this, results in 2002 are unlikely to improve on theperformance in 2001. UBS Americas Highlights UBS PaineWebber * Despite the difficult market environment, UBS PaineWebber attracted CHF 7.4 billion ($4.4 billion) of net new money in the first quarter of 2002, excluding dividends and interest of CHF 4.7 billion ($2.8 billion). * Generated net revenues of CHF 1,600 million ($952 million), an increase of 6 percent from the fourth quarter. * Earned an operating profit of CHF 164 million ($98 million), compared to CHF 133 million ($79 million) in the fourth quarter of 2001 and CHF 233 million ($139 million) in the first quarter of 2001. * Recurring fee income increased by 11 percent in the first quarter and comprises 37 percent of net revenues, compared to 35 percent in the fourth quarter of 2001. * The Municipal Securities group increased its market share to more than 16 percent versus 9 percent one year ago, and ranked second in negotiated senior managed underwriting. * Equity syndicate volume for 1Q2002 derived from transactions on which UBS Warburg had a lead or co-position was CHF 1,370 million ($815 million), an increase of more than double the comparable year ago period. * The Corporate Employees Financial Services business that provides option processing services to corporate clients had CHF 20 billion ($12 billion) in invested assets, an increase of 14 percent from year- end 2001. Relationships with employees of corporate clients grew 42 percent from first quarter 2001. * The Alternative Investment group increased invested assets to CHF 5.3 billion ($3.2 billion), a 30 percent increase from first quarter 2001. UBS Warburg * UBS Warburg today announced that it has completed the construction of a 36,000 square foot expansion of its Stamford, CT (US) trading floor. The expanded facility is now the largest securities trading floor in the world, able to accommodate 1,400 traders and staff, up from 800. The addition brings the total size of the floor to 103,000 square feet, approximately the size of two football fields. * Investment banking increased its US market share to 3.6 percent from 3.4 percent in 2001, despite challenging market conditions. * Completed the quarter ranked fourth in NYSE listed equities trading volume and sixth in OTC. * Among first time US corporate issuers, UBS Warburg was the leading underwriter of equity and high yield transactions. * Increased US High Yield market share by 1.3 percent to 5.8 percent, from year-end 2001. * Maintained the top rank in underwriting U.S. residential mortgage- backed securities. * The firm continued to attract talented investment bankers in sector leadership positions. In the quarter, UBS Warburg hired Michael Martin, Oliver Sarkozy and John Adams (Financial Institutions); Jackson Hsieh (Real Estate, Lodging and Leisure); Kevin Cox (Industrials): Matthew Gourlay (Leverage Finance within the Industrial Group); Karl Knapp (Paper and Packaging); Evan Newmark (Technology); David Bradley (Chemicals) and Glenn Tongue (Financial Sponsors). UBS Global Asset Management * UBS Global Asset Management's managed account offering, Private Wealth Solutions (PWS), has attracted more than 250 accounts with approximately CHF 218 million ($130 million) of assets under management since its product launch within UBS PaineWebber in February. * In the first quarter, 15 of the 20 UBS Global Asset Management's composite strategies outperformed their benchmarks. * For the year ended March 31, 2002, 7 of 11 of the firm's North American and global Focus mutual funds ranked in the top quartile of their Morningstar categories. * On April 9, the organization adopted a unified brand name, UBS Global Asset Management and retired regional brand names, including Brinson Partners, Brinson Advisors and Brinson Canada. The firm's investment funds are now marketed under the UBS name. Regrouping and management accounting changes On 29 April, UBS published restated figures for 1999, 2000 and 2001 thatreflect its new Business Group structure, which has been effective from 1January 2002. UBS also instituted a number of management accounting changes, theforemost being the allocation to the Business Groups and business units ofgoodwill arising from the merger in 2000 of UBS and PaineWebber. None of the changes have an impact on the Group Financial Statements for1999, 2000 and 2001. They only affect the results of the Business Groups andbusiness units. All figures in this quarter reflect the new structure.For more specific information about the changes in detail, refer tohttp://www.ubs.com/media. (1) Note on US$ 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 USD = 1.68 CHF, the spot rate on 31 March 2002. This rate is not the rate that would be used, for a translation under US GAAP or IAS if the USD were the reporting currency of UBS Group. All percentage changes are based on CHF amounts UBS Group Financial Highlights (unaudited) CHF million, except where Quarter ended % change from indicated 31.3.02 31.12.01 31.3.01 4Q01 1Q01 Income statement key figures Operating income 9,589 8,462 10,067 13 (5) Operating expenses 7,750 7,082 7,872 9 (2) Operating profit before tax 1,839 1,380 2,195 33 (16) Net profit 1,363 1,106 1,579 23 (14) Cost / income ratio(%)1 80.1 82.6 77.2 Cost / income ratio before goodwill(%)1,2 76.6 78.7 73.9 Per share data (CHF) Basic earnings per share 3 1.10 0.88 1.24 25 (11) Basic earnings per share before goodwill 2,3 1.37 1.14 1.50 20 (9) Diluted earnings per share 3 1.06 0.87 1.10 22 (4) Diluted earnings per share before goodwill 2,3 1.33 1.13 1.35 18 (1) Return on shareholders' equity (%) Return on shareholders' equity 4 12.3 11.7 14.5 Return on shareholders' equity before goodwill 2,4 15.5 14.8 17.6 CHF million, except where indicated % change from As at 31.3.02 31.12.01 31.3.01 4Q01 1Q01 Balance sheet key figures Total assets 1,229,625 1,253,297 1,216,852 (2) 1 Shareholders' equity 44,769 43,530 43,380 3 3 Market capital- ization 103,216 105,475 106,078 (2) (3) BIS capital ratios Tier 1 (%)5 11.8 11.6 10.2 2 16 Total BIS (%) 14.7 14.8 14.0 (1) 5 Risk-weighted assets 255,157 253,735 286,885 1 (11) Invested assets (CHF billion) 2,468 2,448 2,430 1 2 Headcount (full time equivalents) 670,221 69,985 71,080 0 (1) Long-term ratings Fitch, London AAA AAA AAA Moody's, New York Aa2 Aa2 Aa1 Standard & Poor's, New York AA+ AA+ AA+ Earnings adjusted for significant financial events and pre-goodwill 2,7 CHF million, except where Quarter ended % change from indicated 31.3.02 31.12.01 31.3.01 4Q01 1Q01 Operating income 9,434 8,462 10,067 11 (6) Operating expenses 7,414 6,752 7,544 10 (2) Operating profit before tax 2,020 1,710 2,523 18 (20) Net profit 1,574 1,436 1,907 10 (17) Cost / income ratio (%)1 77.9 78.7 73.9 Basic earnings per share (CHF) 31.27 1.14 1.50 11 (15) Diluted earnings per share (CHF) 31.23 1.13 1.35 9 (9) Return on shareholders' equity (%)4 15.2 14.8 17.6 1 Operating expenses / operating income before credit loss expense. 2 Excludes the amortization of goodwill and other intangible assets. 3 For EPS calculation, see Note 8 to the Financial Statements. 4 Year-to-date annualized net profit / average shareholders' equity excluding dividends. 5 Includes hybrid tier 1 capital, please refer to the BIS capital and ratios table in the Group Review. 6 The Group headcount does not include the Klinik Hirslanden AG headcount of 2,687, 2,450 and 2,062 for 31 March 2002, 31 December 2001 and 31 March 2001, respectively. 7 Details of significant financial events can be found in the First Quarter 2002 Report. 2001 segment results have been restated to reflect the new Business Group structure and associated management accounting changes effective 1 January 2002 and announced 29 April 2002. All share and earnings per share figures have been adjusted for the 3 for 1 share split which took place on 16 July 2001. UBS Group Financial Highlights (unaudited) US$ figures - convenience translation Quarter ended USD million, except where indicated 30.02.01 Income statement key figures Operating income 5,708 Operating expenses 4,613 Operating profit before tax 1,095 Net profit 811 Cost / income ratio (%)1 80.1 Cost / income ratio before goodwill (%)1,2 76.6 Per share data (USD) Basic earnings per share 3 0.65 Basic earnings per share before goodwill 2,3 0.82 Diluted earnings per share 3 0.63 Diluted earnings per share before goodwill 2,3 0.79 Return on shareholders' equity (%) Return on shareholders' equity 4 12.3 Return on shareholders' equity before goodwill 2,4 15.5 USD million, except where indicated As at 31.03.02 Balance Sheet Key Figures Total assets 731,920 Shareholders' equity 26,648 Market capitalization 61,438 BIS capital ratios Tier 1 (%) 5 11.8 Total BIS (%) 14.7 Risk-weighted assets 151,879 Invested assets (USD billion) 1,469 Headcount (full time equivalents) 6 70,221 Long-term ratings Fitch, London AAA Moody's, New York Aa2 Standard & Poor's, New York AA+ Earnings adjusted for significant financial events and before goodwill 2,7 Year ended USD million, except where indicated 31.03.02 Operating income 5,615 Operating expenses 4,413 Operating profit before tax 1,202 Net profit 937 Cost / income ratio (%)1 77.9 Basic earnings per share (USD)3 0.76 Diluted earnings per share (USD)3 0.73 Return on shareholders' equity (%)4 15.2 1 Operating expenses / operating income before credit loss expense. 2 Excludes the amortization of goodwill and other intangible assets. 3 For EPS calculation, see Note 8 to the Financial Statements. 4 Year-to-date annualized net profit / average shareholders' equity excluding dividends. 5 Includes hybrid tier 1 capital, please refer to the BIS capital and ratios table in the Group Review. 6 The Group headcount does not include the Klinik Hirslanden AG headcount of 2,687, 2,450 and 2,062 for 31 March 2002, 31 December 2001 and 31 March 2001, respectively. 7 Details of significant financial events can be found in the First Quarter 2002 Report. All share and earnings per share figures have been adjusted for the 3 for 1 share split which took place on 16 July 2001. Results of the business groups (adjusted for significant financial events(2)) UBS Switzerland The Private and Corporate Clients business unit achieved another recordresult in the first quarter, with profit before tax rising 24% from fourthquarter 2001 to CHF 705 million ($420 million), representing an annualizedreturn of 47% on its allocated regulatory equity. Operating income rose 5% toCHF 1,665 million ($991 million), as fee and commission income recoveredslightly from the previous quarter's levels and benefited from certain one-offitems. Interest income, on the other hand, suffered some margin pressure. The cost/income ratio improved significantly, falling to a record 55% fromthe previous low of 59% in fourth quarter 2001, thanks to continued stringentcost management and a 22% reduction in headcount in the three and a halfyears since the merger of Union Bank of Switzerland and Swiss BankCorporation. Net new money totalled CHF 1.3 billion ($0.77 billion), mainlyinvested by corporate clients. Private Banking's profit before tax was CHF 601 million ($358 million), up3% from fourth quarter 2001. Total operating income increased 3% to CHF 1,593million ($948 million), driven by the slight improvement in market conditionsin the first quarter and higher contributions from the European wealthmanagement initiative. The entire increase was driven by improved asset-basedincome, which now comprises 71% of total income, while transaction-basedincome remained at the fourth quarter level. Net new money in the quarter totalled CHF 2.6 billion ($1.5 billion), astrong result in view of the outflows related to the Italian tax amnesty. Ofthe outflow of CHF 8.4 billion ($5.0 billion), UBS managed to retain almosthalf (CHF 3.9 billion) ($2.3 billion) within its Italian domestic business.Excluding the effect of the Italian tax amnesty, net inflows clearly surpassedboth the CHF 4.2 billion ($2.5 billion) inflow recorded in fourth quarter 2001and the CHF 4.5 billion ($2.7 billion) in the first quarter a year ago. UBS Global Asset Management UBS Global Asset Management reported profit before tax of CHF 75 million($45 million), up from CHF 72 million ($43 million) in fourth quarter 2001, asgeneral and administrative expenses fell. Operating income eased 1% to CHF 556million ($331 million) in the period, while operating expenses fell CHF 9million ($5 million) to CHF 481 million ($286 million). Total invested assets rose to CHF 677 billion ($403 billion) on 31 March2002 from CHF 672 billion ($400 billion) on 31 December 2001. Net new moneywas CHF 0.4 billion ($0.2 billion), with inflows in Asian fixed incomemandates and GAM equity and asset allocation products, offset by outflows inUK asset allocation mandates and low margin US fixed income mandates. UBS Warburg UBS Warburg's Corporate and Institutional Clients business unit recorded astrong relative performance, with profit before tax of CHF 954 million ($568million) for the first quarter, a 20% reduction from the same quarter a yearearlier, but up 18% on the fourth quarter. Operating income, at CHF 4,133 million ($2,460 million) in first quarter2002, declined 7% from the same quarter last year, but was up 29% from thefourth quarter 2001: Fixed income and foreign exchange, where revenues rose41% from first quarter 2001 to CHF 2,117 million ($1,260 million) and 89% fromthe fourth quarter, achieving a record performance, although not completelyoffsetting the result in equities. Investment banking revenues were largely inline with first quarter 2001 with good progress in US underwriting mandates. UBS Warburg continued to expand its resources dedicated to the largest andmost important industry sectors of the corporate finance market globally. Inparticular, market share in the Americas in first quarter 2002 increased to3.6% from 3.4% for the full year 2001. Personnel expenses this quarter increased to CHF 2,425 million($1,443 million), up 3% from first quarter 2001, due to higher levels ofincentive-based compensation. The ongoing cost management program helped topush general and administrative expenses down by 17% from first quarter 2001and 9% from the fourth quarter. UBS Capital's operating loss widened to CHF 462 million ($275 million)from CHF 287 million ($171 million) in fourth quarter 2001, reflectingdifficult conditions in private equity markets, leading to increasedwritedowns, and few opportunities for secondary market exits. Total operatingexpenses, at CHF 30 million ($18 million) in the first quarter, were at theirlowest level in over a year. There were no material divestments in thequarter. Looking ahead, conditions will remain difficult for private equityvaluations and exit opportunities will remain limited. Until markets recoverand more favorable exit opportunities arise, UBS Capital will likely continueto report losses over the next several quarters. UBS continues to focus onmaximizing the value of the existing portfolio, making no significantadditional investments. UBS PaineWebber UBS PaineWebber recorded a pre-tax loss of CHF 171 million ($102 million)compared to a loss of CHF 217 million ($129 million) for the fourth quarter of2001 and a loss of CHF 114 million ($68 million) in first quarter 2001. Whencommenting on UBS PaineWebber results, UBS focuses on the operating profitexcluding acquisition costs (goodwill amortization, net goodwill funding costsand retention payments) to isolate underlying performance. On this basis, pre-tax profit rose 23% to CHF 164 million ($98 million) from CHF 133 million ($79million) in fourth quarter 2001 and was down 30% from CHF 233 million ($139million) compared to first quarter 2001. UBS PaineWebber's results underscore the resiliency of its private clientfranchise despite the prevailing market conditions. The business performedwell in comparison to its US private client peers. Client transaction activityduring the first quarter was slightly higher than fourth quarter 2001, but wasdown 13% from first quarter 2001. Operating income was CHF 1,600 million ($952 million) in the firstquarter, an increase of 6% from fourth quarter 2001 thanks to strong resultsin municipal securities, increased recurring fees and currency effects.Compared to the first quarter a year earlier, operating income fell 7% on thereduced level of client activity. Total personnel expenses were CHF 1,223 million ($728 million), a 2%increase from fourth quarter 2001. Excluding currency effects, personnelexpenses were 1% lower than the fourth quarter, principally reflecting lowervariable compensation. Compared to the first quarter a year earlier, personnelexpenses were down 6%, reflecting lower revenue-driven compensation andreduced levels of support staff. Net new money was CHF 7.4 billion ($4.4 billion) in the first quarter,compared to CHF 8.5 billion ($5.1 billion) in the fourth quarter and CHF 6.2billion ($3.7 billion) in first quarter 2001. That pushed invested assets toCHF 779 billion ($464 billion) at 31 March 2002 from CHF 769 billion ($458billion) at 31 December 2001. The cost/income ratio before acquisition costswas 90% for the first quarter, an improvement of two percentage points fromfourth quarter 2001, reflecting continuing cost control initiatives. Amongprivate client peers, UBS PaineWebber is the only firm reporting animprovement in the cost/income ratio quarter-on-quarter. (2) Significant Financial Events: In first quarter 2002, UBS realized a pre-tax gain of CHF 155 million ($92 million) from the sale of Hyposwiss. This was recorded as a significant financial event. In first and fourth quarter 2001, there were no significant financial events. (See UBS First Quarter 2002Report for the full details of the effect of significant financial events in 2002 and 2001.) UBS Media release available at http://www.ubs.com/media Further information on UBS's quarterly results is available at http://www.ubs.com/media: -- 1Q2002 Report (pdf and interactive version) -- 1Q2002 Results slide presentation -- Letter to shareholders (English, German, French and Italian) Webcast: The results presentation by Peter Wuffli, President of the Group Executive Board, UBS AG, will be webcast live via http://www.ubs.com at the following time on 14 May 2002: -- 0900 CET -- 0800 GMT -- 0300 US EST -- Webcast playback will be available from 1400 CET on 14 May, with a bookmarked version at 1800 CET the same day. Invested Assets Net new money 1 CHF billion 31.3.02 31.12.01 % change 1Q02 UBS Group 2,468 2,448 1 11.8 UBS Switzerland Private and Corporate Clients 314 311 1 1.3 Private Banking 697 695 0 2.6 UBS Global Asset Management Institutional 330 328 1 (1.6) Mutual funds 347 344 1 2.0 UBS Warburg UBS Capital 1 1 0 0.1 UBS PaineWebber 779 769 1 7.4 1 Excludes interest and dividend income. Invested Assets US$ figures - convenience translations Net new money 1 USD billion 31.03.02 1Q02 UBS Group 1,469 7.0 UBS Switzerland Private and Corporate Clients 187 0.8 Private Banking 415 1.5 UBS Asset Management Institutional 196 (1.0) Mutual funds 206 1.2 UBS Warburg UBS Capital 1 0.1 UBS PaineWebber 464 4.4 1 Excludes interest and dividend income. Cautionary statement regarding forward-looking statements This communication contains statements that constitute "forward-lookingstatements", including, but not limited to, statements relating to theimplementation of strategic initiatives, such as the implementation of the newEuropean wealth management strategy, expansion of our corporate financepresence in the US and worldwide, the development of UBS Warburg's new energytrading operations, and other statements relating to our future businessdevelopment and economic performance. While these forward-looking statements represent our judgments and futureexpectations concerning the development of our business, a number of risks,uncertainties and other important factors could cause actual developments andresults 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 andinternational securities markets, currency exchange rates and interest rates,(3) competitive pressures, (4) technological developments, (5) changes in thefinancial position or credit-worthiness of our customers, obligors andcounterparties and developments in the markets in which they operate, (6)legislative developments, (7) the impact of the terrorist attacks on the WorldTrade Center and other sites in the United States on 11 September 2001 andsubsequent related developments, (8) the impact of the management changes andchanges to our business group structure that took place in December 2001 and(9) other key factors that we have indicated could adversely affect ourbusiness and financial performance which are contained in other parts of thisdocument and in our past and future filings and reports, including those filedwith the SEC. More detailed information about those factors is set forth elsewhere inthis document and in documents furnished by UBS and filings made by UBS withthe SEC, including UBS's Annual Report on Form 20-F for the year ended 31December 2001. UBS is not under any obligation to (and expressly disclaims anysuch obligations to) update or alter its forward-looking statements whether asa result of new information, future events, or otherwise.
 | Click here |
