UBS Group AG current report, Q4 FY2022

Business Context and Reporting Period

This Form 6-K filing, dated March 6, 2023, presents the audited standalone financial statements and regulatory information for UBS Switzerland AG for the year ended December 31, 2022. UBS Switzerland AG is a wholly-owned subsidiary of UBS AG and operates as a systemically relevant bank (SRB) under Swiss banking law. The financial statements are prepared in accordance with Swiss GAAP.

Key Financial Metrics

Metric 2022 (CHF m) 2021 (CHF m)
Total Operating Income 8,760 8,490
Net Profit 2,707 2,452
Total Assets 315,657 320,656
Total Equity 15,493 14,736
Common Equity Tier 1 (CET1) Capital 12,586 12,609
Risk-Weighted Assets (RWA) 107,208 106,399
CET1 Ratio 11.74% 11.85%
Liquidity Coverage Ratio (LCR) 142.41% 142.57%
Net Stable Funding Ratio (NSFR) 136.59% 142.49%

Material Changes vs. Prior Period

  • Profitability: Net profit increased by CHF 255 million (10.4%) to CHF 2.7 billion, driven by higher operating income (up CHF 270 million) despite a slight increase in total operating expenses.
  • Balance Sheet: Total assets decreased by CHF 5.0 billion to CHF 315.7 billion. This reduction was primarily due to a decrease in "Due from customers" and "Receivables from securities financing transactions."
  • Capital Ratios: The CET1 ratio decreased slightly to 11.74% from 11.85%, while the Leverage Ratio improved to 5.41% from 5.30%.
  • Liquidity: The NSFR decreased by 4.5 percentage points to 136.6%, driven by an increase in required stable funding (due to higher loans) and a decrease in available stable funding (due to lower customer deposits). The LCR remained robust at 142.4%.
  • Invested Assets: Total invested assets (including double counts) declined to CHF 644 billion from CHF 715 billion, largely due to market movements of CHF -84 billion.

Guidance, Outlook, and Risks

  • Dividend Proposal: The Board of Directors proposes an ordinary dividend distribution of CHF 2,700 million out of the total profit of CHF 2,707 million for the year ended December 31, 2022.
  • Regulatory Compliance: The entity remains well above prudential requirements for capital and liquidity. The going concern capital requirement is 15.07%, and the eligible capital ratio stands at 16.77%.
  • Joint and Several Liability: UBS Switzerland AG retains joint and several liability for approximately CHF 4 billion of contractual obligations of UBS AG existing as of the 2015 asset transfer date. Management assesses the probability of an outflow under this liability as remote.
  • Climate Risk: Climate-related risks are managed at the Group level. Specific metrics for UBS Switzerland AG are reported in conjunction with UBS Group AG disclosures.

Investor Verification Checklist

  • Verify the proposed dividend distribution of CHF 2,700 million at the Annual General Meeting of Shareholders.
  • Confirm the impact of the NSFR decrease (to 136.6%) on future funding strategies and deposit retention.
  • Review the composition of the CHF 4 billion joint and several liability exposure to UBS AG obligations.
  • Monitor the trend in invested assets, which declined significantly due to market movements in 2022.
  • Assess the stability of the CET1 ratio (11.74%) against the Swiss SRB going concern requirement of 15.07% (including buffers).