Business context and reporting period
UBS Group AG’s Form 20-F, filed March 6, 2023, covers the fiscal year ended December 31, 2022—not a standalone fourth-quarter report. It reports UBS Group AG and UBS AG consolidated results under IFRS, in US dollars. UBS operates Global Wealth Management, Personal & Corporate Banking, Asset Management and the Investment Bank.
Key financial metrics
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Total revenues | USD 34.6bn | USD 35.4bn | Down 2% |
| Operating profit before tax | USD 9.6bn | USD 9.5bn | Up 1% |
| Net profit attributable to shareholders | USD 7.6bn | USD 7.5bn | Up 2% |
| Diluted EPS | USD 2.25 | USD 2.06 | Up 9% |
| Operating expenses | USD 24.9bn | USD 26.1bn | Down 4% |
| Cost/income ratio | 72.1% | 73.6% | Improved |
| Return on CET1 capital | 17.0% | 17.5% | Down 0.5 percentage points |
| Total assets / equity attributable to shareholders | USD 1.104tn / USD 56.9bn | USD 1.117tn / USD 60.7bn | Assets down 1%; equity down 6% |
| CET1 capital ratio / leverage ratio | 14.2% / 4.42% | 15.0% / 4.24% | CET1 ratio down; leverage ratio up |
| Liquidity coverage ratio / net stable funding ratio | 163.7% / 119.8% | 155.5% / 118.5% | Both improved |
Net interest income was USD 6.6bn, down 1%; higher interest income and fair-value-related income were offset by lower fees and commissions, which fell 15% to USD 19.0bn. Credit loss expense was USD 29m, compared with a USD 148m release in 2021.
Cash flows were USD 14.6bn from operating activities, negative USD 12.4bn from investing and negative USD 9.1bn from financing. Cash and cash equivalents fell USD 12.6bn to USD 195.3bn, including negative USD 5.7bn of foreign-exchange effects. Customer deposits were USD 525.1bn, down 3%; short-term borrowings were USD 41.3bn. Debt issued at fair value and long-term debt issued at amortized cost totaled USD 158.6bn.
Material changes versus 2021
- Revenue pressure was concentrated in fee businesses: Global Wealth Management revenue fell 2%, Asset Management revenue excluding disposal gains fell 18%, and Investment Bank revenue fell 8%, mainly reflecting weaker underwriting, brokerage and transaction activity.
- Higher interest rates supported deposit income in wealth management and Swiss personal and corporate banking. Investment Bank Global Markets revenue rose 13%, partly reflecting elevated rates and foreign-exchange volatility and the prior-year prime-brokerage client loss.
- Operating expenses declined, partly because 2021 included French cross-border litigation provisions. Lower expenses and disposal gains supported profit despite lower total revenue.
- RWA rose USD 17.4bn to USD 319.6bn, including increases in credit, counterparty and operational risk. The CET1 ratio consequently declined to 14.2%; share repurchases and dividends also used capital.
- Invested assets declined 14% to USD 4.0tn, primarily from market and currency effects, while net new fee-generating assets were USD 60.1bn at Global Wealth Management and Asset Management reported USD 24.8bn of net new money.
Outlook, management commentary, risks and unusual items
Management said UBS entered 2023 from a position of strength, emphasizing disciplined growth, cost control, technology investment and capital returns. Guidance remained for a CET1 ratio of around 13% and a CET1 leverage ratio above 3.7%. UBS proposed a 2022 dividend of USD 0.55 per share, up 10%, and expected a progressive dividend and more than USD 5bn of share repurchases in 2023.
UBS forecast a 2023 effective tax rate of around 23%, excluding potential deferred-tax remeasurement and material tax-rate changes. It estimated that the revised Basel III framework could add approximately USD 12bn to RWA before mitigation and the phased-in output floor; regulatory model updates were expected to add about USD 4bn of RWA in 2023. Swiss authorities’ future liquidity requirement increases remained uncertain.
Management’s 2023 economic outlook anticipated lower inflation but slower growth: projected GDP growth was 0.8% in both the US and Eurozone, 0.4% in Switzerland, and 4.9% in China; the UK was forecast to contract 0.4%. These are management expectations, not guaranteed results.
- Legal and regulatory exposure: UBS reported a French cross-border appeal following a Court of Appeal judgment imposing aggregate penalties and damages of EUR 1.8bn; UBS appealed. The balance sheet included a EUR 1.1bn provision for that matter. The filing warns aggregate potential exposure across legal matters may substantially exceed provisions.
- Other litigation and conduct matters: RMBS, Puerto Rico, Madoff, benchmark-rate and other matters remain at varying stages. In September 2022, UBS agreed to USD 200m in SEC and CFTC penalties over business-communications recordkeeping and began remediation.
- Unusual items: Asset Management recognized an USD 848m gain on the sale of its Japanese real-estate joint venture. Other disposal gains included the Spain wealth business, UBS Swiss Financial Advisers and the US alternative-investments administration business. The Investment Bank’s 2021 comparison also included an USD 861m loss from a prime-brokerage client default.
- Key risks: geopolitical conflict and sanctions, inflation and interest-rate shifts (including deposit outflows), credit and Swiss real-estate exposure, foreign-exchange sensitivity, cyber and operational resilience, regulatory and capital changes, and litigation. UBS also cautioned that climate and sustainability targets depend on evolving methodologies, available data and broader government and industry action.
Important facts for investors to verify
- Confirm the proposed USD 0.55 dividend, its shareholder approval and payment, and the timing and funding of the planned 2023 buybacks.
- Review the French cross-border appeal, the EUR 1.1bn provision, and the status and potential exposure of other material legal proceedings.
- Track deposit trends, liquidity metrics and the sensitivity of earnings to further interest-rate changes; UBS estimated a parallel 100-basis-point move could change first-year wealth-management and Swiss banking net interest income by about USD 1.5bn.
- Check actual RWA and capital-ratio effects as Basel III and regulatory model changes are implemented, including the estimated USD 12bn framework impact and 2023 model-related increase.
- Assess the underlying performance of Asset Management and other businesses excluding disposal gains, and the drivers behind invested-asset and net-new-money movements.