Business Context and Reporting Period
This Form 6-K filing by UBS Group AG, dated November 7, 2023, presents standalone financial information for the six months ended June 30, 2023. The reporting period is significantly impacted by the formal acquisition of Credit Suisse Group AG on June 12, 2023, which was applied retroactively to January 1, 2023, in the standalone statements. The financials are prepared under Swiss Law on Accounting and Financial Reporting and are unaudited.
Key Financial Metrics
| Metric (USD millions) | YTD June 30, 2023 | YTD June 30, 2022 |
|---|---|---|
| Operating Income | 9,091 | 5,374 |
| Impairment of Credit Suisse Investment | (21,855) | - |
| Operating Profit / (Loss) Before Tax | (14,950) | 4,409 |
| Net Profit / (Loss) | (14,941) | 4,399 |
| Total Assets | 184,876 | 109,404 (Dec 31, 2022) |
| Total Liabilities | 140,344 | 71,311 (Dec 31, 2022) |
| Equity Attributable to Shareholders | 44,532 | 38,093 (Dec 31, 2022) |
Dividend Income: USD 6,000 million from the investment in UBS AG.
Extraordinary Items: Extraordinary income of USD 17,317 million and expenses of USD 16,319 million related to the write-off of Credit Suisse AT1 instruments.
Material Changes Versus Prior Period
- Profitability Reversal: The entity shifted from a net profit of USD 4,399 million in the prior year to a net loss of USD 14,941 million. This is primarily driven by a one-time impairment charge of USD 21,855 million on the investment in Credit Suisse AG.
- Balance Sheet Expansion: Total assets increased by approximately 69% (from USD 109.4 billion to USD 184.9 billion) and liabilities by 97% (from USD 71.3 billion to USD 140.3 billion) compared to year-end 2022, reflecting the retroactive consolidation of Credit Suisse assets and liabilities.
- Capital Structure: Share capital currency was changed from Swiss Francs to US Dollars. Additionally, 62.5 million shares were cancelled, reducing share capital by USD 7 million.
Guidance, Outlook, and Significant Events
Acquisition of Credit Suisse: UBS Group AG acquired Credit Suisse Group AG via merger by absorption. Assets of USD 108.0 billion and liabilities of USD 83.5 billion were recognized. Contingent liabilities of USD 879 million were assumed.
AT1 Write-off: On March 19, 2023, Credit Suisse AT1 instruments totaling USD 17.3 billion were written off, recorded as extraordinary income, matched by internal AT1 write-offs of USD 16.3 billion recorded as extraordinary expenses.
Impairment Rationale: The USD 21.9 billion impairment was recorded to align the book value of acquired assets and liabilities with the fair value of treasury shares provided to Credit Suisse shareholders (consideration paid approach).
Dividends: An ordinary cash dividend of USD 0.55 per share (totaling USD 1,679 million) was paid in Q2 2023, sourced half from the capital contribution reserve and half from total profit available for appropriation.
Risks and Contingencies: The filing includes a cautionary statement that the report is for information purposes only and not a solicitation. It notes that numbers may not add up precisely due to rounding.
Investor Verification Checklist
- Verify the retroactive application of the Credit Suisse acquisition to January 1, 2023, and its impact on comparability with prior periods.
- Confirm the treatment of the USD 21.9 billion impairment charge and its classification as a one-time event versus ongoing operational risk.
- Review the details of the AT1 instrument write-off (USD 17.3 billion) and the corresponding internal write-off to understand the net impact on equity.
- Examine the change in share capital currency from CHF to USD and the associated accounting adjustments to the capital contribution reserve.
- Assess the liquidity position given the significant increase in total liabilities (USD 140.3 billion) post-acquisition.