UBS Switzerland AG: 2023 Standalone Financial Summary
Business Context and Reporting Period
This Form 6-K filing presents the audited standalone financial statements for UBS Switzerland AG, a wholly-owned subsidiary of UBS AG, for the year ended December 31, 2023. The entity operates under Swiss banking law and Swiss GAAP. A significant post-reporting period event is the approved merger between UBS Switzerland AG and Credit Suisse (Schweiz) AG, expected to complete in the third quarter of 2024.
Key Financial Metrics
| Metric (CHF m) | 2023 | 2022 |
|---|---|---|
| Total Operating Income | 9,655 | 8,760 |
| Net Interest Income | 4,404 | 3,491 |
| Net Fee and Commission Income | 4,139 | 4,189 |
| Net Trading Income | 900 | 930 |
| Total Operating Expenses | 5,816 | 5,458 |
| Operating Profit | 3,839 | 3,302 |
| Net Profit | 3,133 | 2,707 |
| Total Assets | 314,231 | 315,657 |
| Total Equity | 15,926 | 15,493 |
Regulatory Capital & Liquidity (Q4 2023):
- CET1 Ratio: 11.69% (Requirement: 10.88%)
- Total Capital Ratio: 16.35%
- Leverage Ratio: 5.30%
- Liquidity Coverage Ratio (LCR): 142.46% (Requirement: 100%)
- Net Stable Funding Ratio (NSFR): 134.08% (Requirement: 100%)
Material Changes vs. Prior Period
- Profitability Growth: Net profit increased by 15.7% (CHF 426m) to CHF 3.133bn, driven primarily by a 26% increase in Net Interest Income (CHF 913m increase) due to higher interest rates.
- Expense Management: Total operating expenses rose by 6.6% (CHF 358m), largely due to a CHF 298m increase in General and Administrative expenses, specifically shared services costs charged by the Group.
- Asset Composition: Mortgage loans increased by CHF 4.5bn to CHF 168.7bn. Conversely, cash and balances at central banks decreased by CHF 4.8bn.
- Dividend Proposal: The Board proposes a total dividend distribution of CHF 3.184bn, utilizing the full net profit plus CHF 51m from the voluntary earnings reserve.
Outlook, Risks, and Contingencies
- Merger Integration: The definitive merger agreement with Credit Suisse (Schweiz) AG is subject to regulatory approvals. Completion is targeted for Q3 2024.
- Joint and Several Liability: UBS Switzerland AG holds a joint and several liability of CHF 3bn for contractual obligations of UBS AG (down from CHF 4bn in 2022). Management assesses the probability of outflow as remote.
- Deposit Insurance: The entity's share of the Swiss deposit insurance payment obligation increased to CHF 1.193bn (from CHF 883m) following regulatory revisions effective January 1, 2023.
- Credit Risk: Total allowances and provisions for credit losses increased slightly to CHF 744m. Impaired financial instruments totaled CHF 1.859bn gross.
Investor Verification Checklist
- Verify the timeline and regulatory status of the merger with Credit Suisse (Schweiz) AG.
- Confirm the final dividend approval at the Annual General Meeting scheduled for April 23, 2024.
- Review the impact of the increased Swiss deposit insurance obligation on future liquidity requirements.
- Assess the stability of the Net Interest Income margin in the context of future interest rate movements.
- Monitor the evolution of the joint and several liability exposure to UBS AG.