Business Context and Reporting Period
This Form 6-K filing, dated August 14, 2024, presents the standalone interim financial information for UBS Switzerland AG for the six-month period ended June 30, 2024. The financial statements are prepared in accordance with Swiss GAAP and are unaudited. The entity operates as a significant regulated subsidiary within the UBS Group structure, primarily handling Personal & Corporate Banking and Wealth Management businesses in Switzerland.
Key Financial Metrics
| Metric (CHF m) | YTD Jun 30, 2024 | YTD Jun 30, 2023 |
|---|---|---|
| Total Operating Income | 4,834 | 4,960 |
| Net Interest Income | 1,954 | 2,270 |
| Net Fee and Commission Income | 2,200 | 2,119 |
| Net Trading Income | 564 | 479 |
| Total Operating Expenses | 3,327 | 2,772 |
| Operating Profit | 1,507 | 2,188 |
| Net Profit for the Period | 1,247 | 1,784 |
| Total Assets | 319,947 | 314,231 (Dec 31, 2023) |
| Total Liabilities | 305,958 | 298,305 (Dec 31, 2023) |
| Total Equity | 13,989 | 15,926 (Dec 31, 2023) |
Liquidity and Debt: Cash and balances at central banks stood at CHF 72,135 million. Total liabilities include CHF 16,272 million in subordinated liabilities subject to mandatory conversion or debt waiver. The filing does not provide a specific cash flow statement; however, the balance sheet indicates a net increase in assets of approximately CHF 5.7 billion compared to year-end 2023.
Material Changes vs. Prior Period
- Profitability Decline: Net profit decreased by approximately 30% year-over-year, falling from CHF 1,784 million to CHF 1,247 million. Operating profit declined from CHF 2,188 million to CHF 1,507 million.
- Expense Growth: Total operating expenses rose significantly by 20% to CHF 3,327 million, driven largely by a 32% increase in general and administrative expenses (from CHF 1,633 million to CHF 2,148 million).
- Revenue Mix Shift: While Net Interest Income declined by 14% (CHF 1,954 million vs. CHF 2,270 million), Net Fee and Commission Income increased by 4% to CHF 2,200 million, and Net Trading Income grew by 18% to CHF 564 million.
- Balance Sheet Expansion: Total assets increased by CHF 5.7 billion to CHF 319.9 billion, primarily due to growth in "Due from customers" (CHF 53.3 billion) and "Financial investments" (CHF 16.5 billion).
Outlook, Risks, and Unusual Items
Merger with Credit Suisse (Schweiz) AG: A material event occurred post-reporting period. The merger between UBS Switzerland AG and Credit Suisse (Schweiz) AG became legally effective on July 1, 2024. For tax and inter partes purposes, the merger has a retroactive effect to April 1, 2024. Assets of CHF 220.2 billion and liabilities of CHF 209.0 billion were taken over. Despite the legal merger, interim financial information for the six months ended June 30, 2024, is still reported separately for the two entities.
Joint and Several Liability: As of June 30, 2024, UBS Switzerland AG retains a joint and several liability for contractual obligations of UBS AG amounting to CHF 3 billion. Management assesses the probability of an outflow under this liability as remote.
Restructuring: Following the merger, participations in Credit Suisse Asset Management (Schweiz) AG and Credit Suisse Fund Management (Luxembourg) SA were transferred to UBS Asset Management AG on July 19, 2024, at book value.
Risks: The filing includes standard cautionary statements regarding forward-looking information and notes that the report is for information purposes only and not a solicitation to buy or sell securities.
Key Facts for Investor Verification
- Profitability Pressure: Verify the drivers behind the 32% surge in general and administrative expenses and the 30% drop in net profit.
- Merger Integration: Confirm the timeline and financial impact of the full integration of Credit Suisse (Schweiz) AG assets and liabilities, which are currently reported separately despite the July 1 legal merger.
- Interest Rate Sensitivity: Assess the impact of rising interest rates on the 14% decline in Net Interest Income despite higher funding costs.
- Contingent Liabilities: Monitor the CHF 3 billion joint and several liability exposure to UBS AG and the assessment of its "remote" probability of outflow.
- Asset Quality: Review the composition of the CHF 168.4 billion in mortgage loans and the CHF 16.5 billion in financial investments for potential impairment risks.