Business Context and Reporting Period
This Form 6-K filing by UBS Group AG and UBS AG, dated July 23, 2021, presents standalone interim financial information for the six months ended June 30, 2021. The filing includes unaudited financial statements for UBS Group AG (the holding company) and UBS Switzerland AG (a significant regulated subsidiary). UBS Group AG's primary revenue source is dividends from its investment in UBS AG, while UBS Switzerland AG operates as a banking entity under Swiss GAAP.
Key Financial Metrics
UBS Group AG (Holding Company)
| Metric (USD Million) | YTD Jun 30, 2021 | YTD Jun 30, 2020 |
|---|
| Operating Income | 5,607 | 3,461 |
| Operating Profit Before Tax | 4,672 | 2,560 |
| Net Profit | 4,668 | 2,559 |
| Total Assets | 104,501 | 100,071 (Dec 31, 2020) |
| Total Liabilities | 62,409 | 60,071 (Dec 31, 2020) |
| Equity Attributable to Shareholders | 42,092 | 40,000 (Dec 31, 2020) |
UBS Switzerland AG (Subsidiary)
| Metric (CHF Million) | YTD Jun 30, 2021 | YTD Jun 30, 2020 |
|---|
| Total Operating Income | 4,224 | 3,799 |
| Net Interest Income | 1,588 | 1,501 |
| Net Fee and Commission Income | 2,131 | 1,767 |
| Operating Profit | 1,382 | 819 |
| Net Profit | 1,121 | 654 |
| Total Assets | 323,291 | 316,829 (Dec 31, 2020) |
| Total Liabilities | 309,886 | 304,194 (Dec 31, 2020) |
| Total Equity | 13,405 | 12,634 (Dec 31, 2020) |
Material Changes vs. Prior Period
- UBS Group AG Profit Surge: Net profit increased by approximately 82% year-over-year (from USD 2,559 million to USD 4,668 million), driven primarily by a rise in dividend income from UBS AG (USD 4,539 million vs. USD 2,550 million).
- UBS Switzerland AG Growth: Operating profit rose 69% (CHF 1,382 million vs. CHF 819 million). This was supported by higher net fee and commission income (up 21%) and a reduction in amortization of goodwill (CHF 0 vs. CHF 263 million in 2020).
- Balance Sheet Expansion: UBS Switzerland AG total assets grew by CHF 6.5 billion, largely due to an increase in mortgage loans (CHF 158.7 billion) and receivables from securities financing transactions.
- Share Capital Reduction: UBS Group AG executed the cancellation of 156.6 million shares, reducing share capital by USD 16 million and adjusting reserves accordingly.
Guidance, Outlook, Risks, and Unusual Items
- Dividend Payment: An ordinary cash dividend of USD 0.37 per share (totaling USD 1,301 million) was paid in Q2 2021, funded half from the capital contribution reserve and half from available profits.
- Business Transfer Reversal: UBS reversed a planned transfer of Global Wealth Management business from UBS Switzerland AG to UBS AG. Consequently, beneficial ownership was re-transferred to UBS Switzerland AG effective December 31, 2020. A CHF 212 million compensation payment from UBS AG for 2020 profits was recorded as a fee and commission expense in 2021.
- Joint and Several Liability: UBS Switzerland AG retains joint liability for approximately CHF 7 billion of UBS AG's contractual obligations (down from CHF 9 billion at year-end 2020) stemming from a 2015 asset transfer. Management assesses the probability of an outflow under this liability as remote.
- Accounting Basis: UBS Group AG statements follow Swiss Law on Accounting; UBS Switzerland AG follows Swiss GAAP (FINMA requirements). Both are unaudited.
Investor Verification Checklist
- Verify the sustainability of the dividend income from UBS AG, which constitutes the vast majority of UBS Group AG's operating income.
- Confirm the impact of the CHF 212 million fee expense related to the reversed business transfer on future comparability.
- Monitor the CHF 7 billion joint and several liability exposure of UBS Switzerland AG for UBS AG obligations.
- Review the reduction in share capital and the specific allocation of reserves following the cancellation of 156.6 million shares.
- Assess the growth in mortgage loans and securities financing receivables at UBS Switzerland AG in the context of current interest rate environments.
