UBS Switzerland AG: 2021 Standalone Financial Summary
Business Context and Reporting Period
This Form 6-K filing, dated March 7, 2022, presents the audited standalone financial statements for UBS Switzerland AG for the year ended December 31, 2021. UBS Switzerland AG is a wholly-owned subsidiary of UBS AG and operates as a systemically relevant bank (SRB) under Swiss banking law. The entity primarily serves the Swiss market, with 86% of total assets located in Switzerland. The financial statements are prepared in accordance with Swiss GAAP (FINMA Accounting Ordinance).
Key Financial Metrics
| Metric (CHF million) | 2021 | 2020 |
|---|---|---|
| Total Operating Income | 8,490 | 7,185 |
| Net Interest Income | 3,200 | 2,597 |
| Net Fee and Commission Income | 4,324 | 3,509 |
| Operating Profit | 3,018 | 1,595 |
| Net Profit for the Period | 2,452 | 1,271 |
| Total Assets | 320,656 | 316,829 |
| Total Equity | 14,736 | 12,634 |
| Total Liabilities | 305,919 | 304,194 |
Material Changes vs. Prior Period
- Profitability Surge: Net profit increased by 93% (CHF 1.18 billion) to CHF 2.45 billion. This was driven by a 97% increase in operating profit, primarily due to a significant release of credit loss provisions (CHF 105 million release in 2021 vs. CHF 470 million expense in 2020) and higher net fee income.
- Fee Income Growth: Net fee and commission income rose 23% to CHF 4.32 billion, reflecting strong performance in securities and investment business.
- Asset Base Expansion: Total assets grew by 1.2% to CHF 320.7 billion. Mortgage loans increased to CHF 159.6 billion, and customer deposits rose to CHF 261.2 billion.
- Regulatory Capital: Common Equity Tier 1 (CET1) capital increased to CHF 12.6 billion, with a CET1 ratio of 11.85%. Risk-weighted assets (RWA) decreased to CHF 106.4 billion.
- Liquidity: The Liquidity Coverage Ratio (LCR) stood at 143%, and the Net Stable Funding Ratio (NSFR) was 142%, both exceeding Swiss regulatory requirements.
Outlook, Risks, and Contingencies
- Geopolitical Risk (Russia/Ukraine): As of March 4, 2022, direct country risk exposure to Russia was approximately CHF 0.3 billion, which has been reduced since year-end. Indirect exposure via collateral was approximately CHF 0.1 billion. Management stated there were no material adverse effects on financial statements as of that date, though monitoring continues.
- Joint and Several Liability: UBS Switzerland AG retains joint liability for approximately CHF 5 billion of contractual obligations of UBS AG existing as of the 2015 asset transfer date. The probability of an outflow is assessed as remote.
- Dividend Proposal: The Board of Directors proposed an ordinary dividend distribution of CHF 1,950 million out of the total profit of CHF 2,452 million.
- Climate Risk: Climate-related risks are integrated into the Group's risk appetite framework, with specific metrics introduced for the legal entity in 2021.
Investor Verification Checklist
- Credit Quality: Verify the sustainability of the credit loss release (CHF 105 million) and the composition of Stage 1, 2, and 3 assets, particularly within the mortgage portfolio (CHF 159.6 billion).
- Regulatory Compliance: Confirm that the CET1 ratio (11.85%) and LCR (143%) remain above the specific Swiss SRB requirements (14.32% going concern capital requirement including buffers).
- Related Party Transactions: Review the significant exposure to UBS Group AG and subsidiaries (CHF 4.97 billion due from, CHF 25.93 billion due to qualified shareholders).
- Off-Balance Sheet Exposure: Assess the impact of contingent liabilities (CHF 9.6 billion net) and irrevocable commitments (CHF 17.4 billion net) on future liquidity.
- Dividend Payout: Confirm the approval of the proposed CHF 1.95 billion dividend at the Annual General Meeting.