UBS Group AG current report, Q3 FY2015

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Business Context and Reporting Period

This Form 6-K filing by UBS Group AG and UBS AG, dated July 31, 2015, provides supplemental guarantor information required under SEC regulations. The financial data presented covers the six-month period ended June 30, 2015, and compares it to the same period in 2014. The report details the financial positions of UBS AG (standalone), UBS Switzerland AG (standalone), UBS Americas Inc., and other subsidiaries, alongside consolidated figures. A significant structural change occurred in June 2015, where Retail & Corporate and Wealth Management businesses in Switzerland were transferred from UBS AG to UBS Switzerland AG, resulting in joint liability for certain obligations.

Key Financial Metrics (Six Months Ended June 30, 2015)

Financial figures are presented in CHF millions unless otherwise noted.

  • Revenue: Total consolidated operating income was CHF 16,644 million. This comprised net interest income of CHF 3,129 million, net fee and commission income of CHF 8,832 million, and net trading income of CHF 3,741 million.
  • Profit: Consolidated net profit attributable to shareholders was CHF 3,201 million. Operating profit before tax was CHF 4,391 million.
  • Cash Flow: Net cash flow used in operating activities was CHF (10,408) million. Net cash flow used in investing activities was CHF (15,673) million. Net cash flow from financing activities was CHF 11,799 million. The net decrease in cash and cash equivalents was CHF (19,876) million.
  • Balance Sheet: Total consolidated assets were CHF 951,528 million. Total consolidated liabilities were CHF 897,966 million. Total equity attributable to shareholders was CHF 51,685 million.
  • Debt and Guarantees: As of June 30, 2015, outstanding senior notes of UBS Americas Inc. (guaranteed by UBS AG) were approximately CHF 145 million. Outstanding preferred securities of non-consolidated US trusts (guaranteed by UBS AG) were USD 1.3 billion. Total debt issued on the consolidated balance sheet was CHF 97,255 million.

Material Changes Versus Prior Period

Comparing the six months ended June 30, 2015, to the same period in 2014:

  • Operating Income: Consolidated total operating income increased from CHF 14,405 million in 2014 to CHF 16,644 million in 2015.
  • Net Profit: Consolidated net profit attributable to shareholders increased significantly from CHF 1,846 million in 2014 to CHF 3,201 million in 2015.
  • Trading Income: Net trading income rose from CHF 2,704 million in 2014 to CHF 3,741 million in 2015.
  • Fee Income: Net fee and commission income increased from CHF 8,408 million in 2014 to CHF 8,832 million in 2015.
  • Operating Expenses: Total operating expenses increased from CHF 11,794 million in 2014 to CHF 12,254 million in 2015, driven largely by personnel expenses which rose from CHF 7,809 million to CHF 8,297 million.
  • Cash Flow: Operating cash flow shifted from a positive CHF 5,799 million in 2014 to a negative CHF (10,408) million in 2015. Investing cash flow also shifted from positive CHF 5,308 million in 2014 to negative CHF (15,673) million in 2015, largely due to net investments in financial assets available-for-sale.

Guidance, Outlook, and Risks

The filing does not contain forward-looking guidance, management commentary on future outlook, or specific risk factors beyond the disclosure of contingent liabilities and guarantees.

  • Guarantees: UBS AG provides full and unconditional guarantees for senior notes issued by UBS Americas Inc. (formerly PaineWebber) and preferred securities issued by UBS Preferred Funding Trust IV and V. Holders of these guaranteed securities are subordinated to the prior payment in full of deposit liabilities and other liabilities of UBS AG.
  • Joint Liability: Following the June 2015 asset transfer, UBS Switzerland AG assumed joint liability for contractual obligations of UBS AG existing on the transfer date, including the aforementioned guarantees.
  • Unusual Items: The filing notes a significant transfer of cash and cash equivalents of CHF 33,283 million from UBS AG to UBS Switzerland AG to reflect the business transfer.

Investor Verification Checklist

  • Verify the impact of the June 2015 asset transfer on the standalone financials of UBS AG versus UBS Switzerland AG.
  • Confirm the maturity dates and terms of the CHF 145 million PaineWebber senior notes and the USD 1.3 billion preferred securities.
  • Review the full Q2 2015 report (filed July 28, 2015) for detailed segment performance and management commentary not included in this supplemental filing.
  • Assess the liquidity position given the CHF (19,876) million decrease in cash and cash equivalents during the period.
  • Check the status of the non-consolidated US-domiciled entities (UBS Preferred Funding Trust IV & V) and their impact on consolidated equity.