UBS AG Annual Report 2020 for ESEF

 
UBS Group AG 
and UBS AG 
Annual Report 2020

 
 
Our external reporting approach
The 
scope 
and 
content 
of
 
our 
external 
reports 
are
 
determined
 
by 
Swiss 
legal 
and 
regulatory 
requirements, 
accounting 
standards, 
relevant 
stock 
and 
debt 
listing 
rules, 
including 
regulations 
promulgated 
by 
FINMA, 
the 
SIX 
Swiss 
Exchange, 
the US 
Securities and 
Exchange 
Commission (the 
SEC) 
and 
other 
regulatory 
requirements, 
as 
well 
as 
by 
our 
financial reporting policies. 
At 
the 
center 
of 
our 
external 
reporting 
approach 
is 
the 
annual 
report 
of 
UBS 
Group
 
AG
, 
which 
consists 
of
 
disclosures 
for
 
UBS 
Group 
AG 
and 
its 
consolidated 
subsidiaries. 
We 
also 
provide 
a 
combined 
annual 
report 
for 
UBS Group AG and 
UBS AG consolidated, which 
additionally 
includes the 
consolidated financial 
statements of 
UBS AG 
as 
well 
as 
supplemental 
disclosures 
required 
under 
SEC 
regulations and is the basis for our SEC Form 20-F filing. 
 
 

 
 
 
 
 
 
 
 
 
Contents
2 
Letter to shareholders
7 
Highlights of the 2020 financial year
8 
Our key figures
10 
Our Board of Directors
12 
Our Group Executive Board
14 
Our evolution
1 
Our strategy, business model and 
environment 
16 
Our strategy
18 
Performance targets and capital guidance
19
Our businesses
29 
Our environment
34 
How we create value for our stakeholders
49 
Regulation and supervision
52 
Regulatory and legal developments
56 
Risk factors
2
Financial and 
operating performance 
68 
Accounting and financial reporting
70 
Group performance
78 
Global Wealth Management
81 
Personal & Corporate Banking
84 
Asset Management
86 
Investment Bank
88 
Group Functions
3
Risk, capital, liquidity and funding, 
and balance sheet
90 
Risk management and control
143 
Capital, liquidity and funding, and balance sheet
 
 
4 
Corporate governance 
and compensation
182 
Corporate governance
220 
Compensation
5 
Financial 
statements
282 
UBS Group AG consolidated financial statements
429 
UBS AG consolidated financial statements
573 
Standalone financial statements
6 
Significant regulated subsidiary and sub-
group information 
598 
Financial and regulatory key figures for our significant 
regulated subsidiaries and sub-groups
7 
Additional 
regulatory information
603 
UBS Group AG consolidated supplemental disclosures 
required under SEC regulations
626 
UBS AG consolidated supplemental disclosures required 
under SEC regulations
Appendix 
649 
Alternative performance measures
652 
Abbreviations frequently used in our financial reports
655 
Information sources
656 
Cautionary statement
 
 

Annual Report 2020 | Letter to shareholders 
2 
Dear shareholders, 
For all 
of us, 
2020 was 
a year 
like no 
other. 
We’d like 
to share 
with you 
the developments 
and challenges 
that faced 
our firm. 
Some shaped 
our year, 
some demonstrated 
our progress, 
some 
highlig
hted 
new 
opportunities 
–
 
all 
aim 
to 
give 
you 
a 
clear 
picture of who we are and where we want to go. 
Our overall performance 
In a 
very challenging 
year on 
both a 
global and 
a human 
scale, 
our 
clients 
put 
their 
trust 
in 
us. 
We 
remained 
close 
to 
them, 
helping 
them 
navigate 
uncertainty 
and 
offering 
them 
tailored 
advice and 
solutions. As 
a result, 
our financial 
performance was 
strong, 
with 
revenues 
up 
12%, 
and 
we 
generated 
a 
return 
on 
CET1 
capital 
of 
17.4%, 
or 
a 
12.8% 
return 
on 
tangible 
equity. 
Invested assets reached record 
levels and we met or exceeded all 
of our growth, return and cost targets. 
What 
we’re 
particularly 
proud 
of 
is 
how 
every 
business 
division 
and 
region 
played 
a 
role 
in 
our 
performance. 
Global 
Wealth 
Management and 
Asset Management 
recorded dou 
ble-
digit 
profit-before-tax 
growth, 
while 
the 
Investment 
Bank 
achieved a return on attributed equity of nearly 20%. Regionally, 
profit 
before 
tax 
increased 
by 
over 
USD 1 
billion 
in 
both 
the 
Americas 
and 
in 
Asia Pacific. 
Our 
universal 
bank 
in Switzerland 
benefited 
from 
a 
resilient 
economy, 
supported 
by 
an 
effective 
government-backed lending 
program in 
partnership with 
banks. 
We 
delivered 
the 
best 
of 
UBS 
to 
our 
clients 
and 
extended 
our 
leadership 
in 
sustainability. 
Our unity 
and 
broad-based 
strength 
allowed 
us 
to 
stand 
together 
as 
a 
team, 
alongside 
our 
clients, 
and support those in need throughout a challenging year. 
Supporting clients, employees and society 
We continued to deploy resources for our clients, employees and 
society 
throughout 
2020, 
including 
increasing 
our 
lending 
and 
commitments to 
clients during 
the year. 
In our 
home market 
of 
Switzerland, 
we 
supported 
the 
government-backed 
COVID-19 
loan 
program 
for 
small 
and 
medium-sized 
entities. 
We 
also 
contributed 
to 
the 
Paycheck 
Protection 
Program 
in 
the 
US 
and 
helped corporate clients raise debt and equity in capital markets. 
The pandemic 
brought increased 
hardship to 
communities all 
over the world. We felt it 
was our responsibility to be part of 
the 
solution, and 
therefore committed 
USD 30 million 
to various 
aid 
projects related to 
COVID-19. Some of 
the aid has 
been used to 
match 
the 
USD 15 
million 
contributed 
by 
our 
clients 
and 
employees 
through 
the 
UBS 
Optimus 
Foundation’s 
COVID-19 
Response 
Fund. 
We 
also 
introduced 
a 
variety 
of 
measures 
to 
help 
our 
employees 
adapt 
to 
the 
challenging 
working 
environment, 
including 
extra 
flexibility 
for 
childcare, 
as 
well 
as 
new 
tools 
and 
resources 
to 
support 
physical, 
mental, 
financial 
and social well-being. 
And we doubled 
the number of 
paid days 
for our employees who volunteer. 
Throughout 
the 
year, 
our 
employees 
had 
access 
to 
various 
resources 
to 
help 
them 
navigate 
the 
evolving 
environment 
caused by 
the pandemic. 
As a 
sign of 
our appreciation 
for their 
contributions 
throughout 
this 
challenging 
year, 
and 
acknowledging 
that 
the 
pandemic 
may 
have 
resulted 
in 
unforeseen 
expenses, 
we 
awarded 
less 
senior 
staff 
a 
one-time 
cash payment equivalent to one week’s salary. 
Our capital returns today and in the future 
Our
 
strong 
CET1
 
capital 
generation 
in 
2020 
contributed 
to 
healthy 
capital 
ratios 
and 
to 
funding 
attractive 
returns 
to 
our 
shareholders. 
This 
robust 
capital 
position 
supports 
client 
needs 
and business growth, as well as future dividends and buybacks. 
We delivered on our USD 2.6 billion dividend commitment for 
2019. 
For 
2020, 
the 
Board 
of 
Directors 
intends 
to 
propose 
a 
dividend of 
USD 0.37 per 
share to 
UBS Group 
AG shareholders. 
Subject 
to 
approval 
by 
shareholders 
at 
the 
Annual 
General 
Meeting (the AGM) scheduled for 8 April 
2021, the dividend will 
be paid 
on 15 April 
2021 to 
shareholders of 
record on 
14 April 
2021. 
Before 
restrictions 
on 
share 
repurchases 
were 
introduced 
in 
early 2020 
in response 
to COVID-19, 
we bought 
back CHF 350 
million 
of 
our 
shares 
and 
during 
the 
second 
half 
of 
2020 
we 
established 
a 
capital 
reserve 
of 
USD 2 
billion 
for 
future 
share 
repurchases. 
In 
the 
first 
quarter 
of 
2021, 
we 
repurchased 
the 
remaining 
CHF 100 
million 
of 
our 
2018–2021 
USD 2 
billion 
share repurchase program, which is now complete and closed. 
Looking 
ahead, 
we 
have 
commenced 
a 
new 
repurchase 
program 
of 
up 
to 
CHF 4 
billion 
and 
expect 
to 
execute 
up 
to 
USD 1 
billion 
of 
repurchases 
under 
this 
program 
by 
the 
end 
of 
the first quarter of 2021. 
The 
balance 
between 
cash 
dividends 
and 
share 
repurchases 
has 
been 
adjusted 
from 
2020 
onward, 
with 
a 
greater 
weight 
toward share repurchases 
as compared with 
prior years’ returns. 
This rebalancing 
of our 
capital return 
profile is 
a more 
attractive 
way to return capital to shareholders and it allows us to maintain 
capital flexibility. Importantly, 
we remain committed 
to returning 
excess capital to our shareholders. 
 
 
 
 
 
 
 
 
 

 
3 
 
Axel A. Weber 
Chairman of the Board of Directors 
Ralph A.J.G. Hamers 
Group Chief Executive Officer 
 
Management priorities 
Change 
is 
constant. 
Our 
aim 
is 
to 
be 
flexible 
and 
ensure 
UBS 
remains 
fit for 
the future. 
First and 
foremost, we’re 
focused on 
serving 
our 
clients and 
building 
on 
the positive 
momentum we 
achieved in 2020. 
That means building 
on our existing 
strengths 
–
 
namely, 
our 
position 
as 
the 
largest 
truly 
global 
wealth 
manager, 
supported by a 
focused investment bank, 
strong asset 
management capabilities, 
and a 
leading personal 
and corporate 
bank in Switzerland. 
Having clarity around 
our purpose 
is key as 
we build the 
UBS 
of 
tomorrow. We’ll 
focus on 
six areas 
in this 
next phase 
of our 
journey: 
i) growing 
our 
client 
franchise; 
ii) strengthening 
our 
high-performance 
culture 
to 
be 
more 
purpose-led, 
more 
agile 
and 
more 
inclusive; 
iii) operating 
ever 
more 
efficiently; 
iv) enhancing 
our 
digital 
capabilities 
with 
technology 
that 
differentiates 
us; 
v) building 
on 
our 
edge 
in 
sustainability; 
and 
vi) maintaining our balance sheet for all seasons. 
Leading in sustainability
 
We 
have 
long 
been 
committed 
to 
creating 
long-term 
value 
for 
clients, 
employees, 
investors 
and 
society. 
Last 
year, 
our 
commitments 
were 
again 
externally recognized: 
we maintained 
the 
top 
ranking 
in 
the 
Dow 
Jones 
Sustainability 
Indices 
for 
the 
sixth 
year 
running 
and 
were 
recognized 
for 
leadership 
in 
corporate 
sustainability 
by 
the 
global 
environmental 
non-profit 
CDP. 
We’re 
one 
of 
only 
5% 
of 
the 
5,800+ 
companies 
scored 
that 
are 
A-listed 
for 
environmental 
transparency 
and 
action 
to 
cut emissions, mitigate climate 
risks and develop the 
low-carbon 
economy. 
In 
2020, 
our 
sustainable 
finance 
activities 
saw 
strong 
momentum. 
Our 
core
 
sustainable 
investing 
assets 
increased 
significantly 
during 
the 
year, 
to 
USD 793 
billion 
at 
the 
end 
of 
2020. We also 
became the first 
major global financial 
institution 
to 
make 
sustainable 
investments 
our 
preferred 
solution 
for 
private clients 
investing globally. 
Our private 
clients benefit from 
diversified 
portfolios 
of 
sustainable 
investments. 
Our 
100% 
sustainable 
multi
-
asset 
portfolio 
surpassed
 
USD
 
17
 
billion 
in 
assets 
under 
management 
in 
2020, 
up 
from 
just 
over 
USD 1 
billion three 
years ago. In 
Asset Management, 
we rolled out 
our 
Climate 
Aware 
strategies 
across 
additional 
asset 
classes, 
which 
will 
allow 
more 
clients 
to 
align 
their 
investment 
goals 
with 
environmental 
goals, 
and 
we 
saw 
net 
new 
money 
of 
USD 32 
billion flow into sustainability-focused strategies. 
Our climate 
strategy supports 
an 
orderly transition 
to 
a low-
carbon 
economy, 
as 
defined 
by 
the 
Paris 
Agreement. 
Our 
exposure to 
carbon-related assets 
on our 
banking balance 
sheet 
is 
low, 
at 
1.9% 
or 
USD 5.4 
billion, 
as 
of 
31 December 
2020, 
a 
decrease 
from 2.3% at the end of 
2019 and 2.8% at the 
end of 
2018. 
We were 
also a 
founding member 
of the 
Net Zero 
Asset 
Managers 
initiative, 
which 
brings 
together 
a 
group 
of 
30 
international 
asset 
management firms 
committed 
to 
supporting 
investing 
aligned 
with 
the 
goal 
of 
net 
zero 
greenhouse 
gas 
emissions by 2050 or sooner. 
Key growth opportunities
 
We believe the future of 
finance belongs to firms that have scale 
where it matters and leverage that scale for the benefit 
of clients 
and 
shareholders. 
In 
our 
leading 
global 
asset 
gathering 
businesses, 
we 
have 
invested 
assets 
exceeding 
USD 3 
trillion 
in 
wealth 
management 
and 
over 
USD 1 
trillion 
in 
asset 
management. 
We 
are 
a 
leading 
bank 
in 
Switzerland 
and 
the 
largest 
wealth 
manager 
in 
Asia 
Pacific. 
In 
investment 
banking, 
we’re in the top five in the equities 
business and the top three in 
foreign-exchange 
trading. 
Our 
growth 
objectives 
capitalize 
on 
our 
existing 
strengths, 
such 
as 
business 
and 
regional 
diversification, 
as 
we 
continue 
to 
build 
our 
presence 
in 
the 
world’s largest and fastest-growing markets. 
We’re 
also 
well-positioned 
to 
benefit 
from 
secular 
trends, 
such as wealth creation and transfer, and the search for yield.
 
 
 

Annual Report 2020 | Letter to shareholders 
4 
Bringing the best of UBS to clients
 
Our 
global 
reach 
and 
breadth 
of 
expertise 
are 
sources 
of 
competitive 
advantage. 
Our 
firm-wide 
thought 
leadership 
translates 
into 
opportunities 
for 
client 
conversations 
and 
interactions each 
day. 
And we still 
have more 
potential, as 77% 
of our wealth management 
clients are telling us 
they want more 
contact and ideas. 
 
Building on 
the best 
of our 
Global Wealth 
Management and 
Investment 
Bank 
capabilities, 
we 
created 
a 
unified 
capital 
markets 
group 
and 
global 
family 
office 
segment 
focus. 
Asset 
Management 
and 
Global 
Wealth 
Management 
in 
the 
US 
also 
teamed 
up 
on 
separately 
managed 
accounts. 
These 
examples 
demonstrate 
how 
UBS 
works 
together 
–
 
across 
regions, 
businesses 
and 
fields 
of 
expertise 
–
 
to 
deliver 
better, 
more 
streamlined services and 
comprehensive advice and 
solutions for 
our clients. 
Evolution of the financial sector 
The 
move 
toward 
digital 
everything 
has 
increased 
the 
need 
to 
invest 
in 
technology, 
and 
the pandemic 
has 
accelerated clients’ 
expectations 
and 
adoption 
rates 
of 
digital 
services, 
possibly 
by 
several years. 
Moreover, 
the divergence 
of business 
models into 
either niche and 
advisory firms or 
firms with global or 
local scale 
has 
been 
accelerated. 
Newer 
entrants, 
including 
large-platform 
technology 
firms, 
are 
targeting 
select
ed
 
components 
of 
the 
financial 
industry’s 
value 
chain. 
While 
we 
have 
not 
yet 
seen 
a 
fundamental 
unbundling 
of 
these 
processes 
and 
client 
relationships, 
the 
trend 
of 
forging 
partnerships 
between 
new 
entrants and incumbent banks will likely 
continue, as technology 
and 
innovation 
help 
banks 
overcome 
new 
challenges and 
offer 
new solutions 
for clients. 
One thing 
is clear: 
financial firms 
that 
have the scale also have the advantage in this area. 
Digitalization 
provides 
new 
opportunities 
and 
potential 
for 
significant 
efficiencies. 
As 
banks 
face 
heightened 
challenges 
from 
digitalization, 
intensified 
competition, 
and 
low 
and 
persistently 
negative 
interest 
rates, 
as 
well 
as 
expectations 
of 
continuing 
easy 
monetary 
policy, 
there 
may 
be 
further 
industry 
consolidation. 
Another 
trend 
that 
has 
been 
gaining 
importance 
–
 
long 
before 
the 
pandemic, 
but 
also 
accelerated 
by 
it 
– 
is 
the 
shift 
toward sustainable 
finance. In 
2020, returns 
on our 
sustainable 
investing mandates showed that investing for good doesn’t have 
to 
come 
at 
the 
expense 
of 
returns. 
The 
degree 
to 
which 
firms 
are 
able 
to 
establish 
their 
sustainable 
offerings 
will 
likely 
drive 
their competitiveness and reputation in coming years. 
Digital transformation 
Technology 
allows 
us 
to 
differentiate 
the 
services 
we 
offer 
clients and 
also provides 
operational benefits. 
We aim 
to enable 
our 
clients 
and 
staff 
to 
work 
and 
interact 
in 
a 
flexible 
and 
productive way. 
As we 
transform our 
infrastructure, we 
seek to 
anticipate 
and 
address 
our 
clients’ 
preferences 
for 
digital 
interactions 
and 
services, 
as 
well 
as 
gain 
new 
insights 
through 
effective 
data management. 
This will 
facilitate the 
development 
of responsible 
artificial intelligence to 
better tailor our 
client and 
employee 
experiences. 
Underpinning 
all 
of 
this, 
we 
prioritize 
data 
security, 
availability 
and 
reliability, 
supporting systems 
and 
application stability. 
Continued 
investments 
in 
technology 
have 
allowed 
us 
to 
manage the remote-working challenges caused by the 
pandemic 
very 
effectively. 
More 
than 
95% 
of 
internal 
and 
external 
staff 
were 
able 
to 
work 
on 
a 
remote 
basis, 
and 
we 
deepened 
our 
client 
relationships 
through 
the 
use 
of 
digital 
capabilities. 
For 
example, 
our 
UBS My 
Way
 
application 
offers 
clients in 
selected 
markets 
a 
comprehensive 
view 
of 
their 
investment 
portfolio. 
Clients can 
work with 
their advisors 
to interactively 
design their 
own 
portfolio. 
We 
also 
introduced 
multi-banking 
for 
our 
Swiss 
corporate 
clients, 
which 
integrates 
third-party 
banks 
for 
full 
transparency across accounts and convenient 
payment execution 
through 
a 
single 
platform 
– 
a 
unique 
value 
proposition 
in 
the 
Swiss market. 
Our Investment Bank strives 
to be the digital investment 
bank 
of 
the 
future. 
We’ve 
developed 
a 
state-of-the-art 
foreign 
exchange 
pricing 
system 
to 
provide 
client-tailored 
pricing 
streams 
and 
hedging 
optimization. 
And 
we 
also 
launched 
UBS 
Neo 
Question 
Bank,
 
the 
largest 
global 
database 
of 
market
-
related 
questions 
asked 
by 
professional 
investors. 
There 
are 
many other 
examples of 
digital innovation, 
which you 
can read 
about in our annual report. 
 
 

 
5 
Developing tomorrow’s leaders 
We 
believe 
the 
future 
of 
work 
will 
require 
an 
agile 
and 
connected 
workforce 
to 
respond 
to 
an 
ever
-
changing 
environment, 
as well as evolving client behavior and preferences. 
Building on our experience 
and capabilities, we embrace 
cultural 
and digital 
transformation as 
a way 
to enable 
our employees 
to 
succeed in new environments and to remain 
a widely recognized 
employer of choice. 
At UBS, 
it isn’t 
just about 
jobs, it’s 
about offering 
career and 
development 
opportunities. 
Internal 
mobility 
and 
talent 
development 
leads 
to greater 
employee 
engagement, improved 
collaboration, 
better 
productivity 
and 
reduced 
attrition, 
all 
of 
which benefits our employees, businesses and clients. 
A 
diverse 
workforce 
is 
a 
strong 
competitive 
advantage 
and 
we 
aim 
to 
shape 
a 
diverse 
and 
inclusive 
organization 
that’s 
innovative, provides outstanding 
service to our 
clients and offers 
equal opportunities. In short, a great place to work for 
everyone. 
Our 
approach 
encompasses 
a 
number 
of 
diversity 
aspects, 
but 
increasing gender 
and ethnic 
diversity are 
our highest 
near-term 
priorities.
 
The French cross-border matter
 
The 
trial 
at 
the 
Court 
of 
Appeal 
is 
scheduled 
for 
8 March 
to 
24 March 
2021, 
with 
its 
judgment 
expected 
later 
in 
the 
year. 
UBS denies 
any criminal 
wrongdoing 
in this 
case. Our 
provision 
remains 
at 
EUR 450 million 
(USD 549 million), 
unchanged 
since 
year-end 
2018. 
We 
have 
published 
responses 
to 
questions 
frequently 
asked 
by 
shareholders, 
clients, 
employees 
and 
other 
stakeholders 
on 
this 
matter. 
They’re 
available 
at 
ubs.com/investors
.
 
Virtual AGM in 2021 
 
Protecting 
the 
health 
of 
shareholders 
and 
employees 
continues 
to be 
our number 
one priority. 
And due 
to the ongoing 
COVID-
19 pandemic, related 
restrictions and continued 
uncertainty, 
the 
Board 
of 
Directors 
has 
decided 
to 
hold 
the 
2021 
AGM 
as 
a 
webcast again. As 
such, it won’t be 
possible to physically 
attend 
the AGM. 
Nevertheless, we 
look forward 
to your 
feedback and 
to welcoming you to this year’s virtual AGM on 8 April. 
 
Thank you for your ongoing support. 
 
Yours sincerel 
y, 
 
 
 
 
 
Axel A. Weber
 
Ralph A.J.G. Hamers
 
Chairman of the 
 
Group Chief Executive Officer
 
Board of Directors 
 
 

 
 
 
 
 
 
6 
 
Corporate information 
UBS Group AG
 
is incorporated and domiciled in 
Switzerland
 
and operates 
under Art. 620ff. of the Swiss Code of Obligations 
as an Aktiengesellschaft, a 
corporation limited by shares. Its registered office is at Bahnhofstrasse 
45, 
CH-8001 Zurich, 
Switzerland
, telephone +41-44-234 11 11, and its corporate 
identification number is CHE-395.345.924. 
UBS Group AG
 
was incorporated 
on 10 June 2014 and was established in 2014 
as the holding company of the 
UBS Group. UBS Group AG shares are listed on the SIX Swiss 
Exchange and 
on the New York Stock Exchange (ISIN: CH0244767585; CUSIP: H42097107). 
UBS Group AG owns 100% of the outstanding shares of 
UBS AG. 
UBS AG
 
is incorporated and domiciled in 
Switzerland
 
and operates under 
Art. 620ff. of the Swiss Code of Obligations as 
an 
Aktiengesellschaft
, a 
corporation limited by shares. The addresses and telephone 
numbers of the 
two registered offices of UBS AG are: 
Bahnhofstrasse 45, CH-8001 Zurich, 
Switzerland, telephone +41-44-234 11 11; and Aeschenvorstadt 1, CH-4051 
Basel, Switzerland, telephone +41-61-288 50 50
. The corporate identification 
number is CHE-101.329.561. 
UBS AG is a bank
. The company was formed on 
29 June 1998, when Union Bank of Switzerland 
(founded in 1862) and 
Swiss Bank Corporation (founded in 1872) 
merged to form 
UBS AG
. 
Contacts 
Switchboards 
For all general inquiries 
ubs.com/contact 
Zurich +41-44-234 1111 
London +44-207-567 8000 
New York +1-212-821 3000 
Hong Kong +852-2971 8888 
Singapore +65-6495 8000 
Investor Relations 
Institutional, professional and retail 
investors are supported by UBS’s Investor 
Relations team. 
UBS Group AG, Investor Relations 
P.O. 
Box, CH-8098 Zurich, Switzerland 
ubs.com/investors 
Zurich +41-44-234 4100 
New York +1-212-882 5734 
 
Media Relations 
Global media and journalists are supported 
by UBS’s Media Relations team. 
ubs.com/media 
Zurich +41-44-234 8500 
mediarelations@ubs.com 
London +44-20-7567 4714 
ubs-media-relations@ubs.com 
New York +1-212-882 5858 
mediarelations@ubs.com 
Hong Kong +852-2971 8200 
sh-mediarelations-ap@ubs.com 
Office of the Group Company Secretary 
The Group Company Secretary receives 
inquiries on compensation and related 
issues addressed to members of the 
Board of Directors. 
UBS Group AG, Office of the 
Group Company Secretary 
P.O. 
Box, CH-8098 Zurich, Switzerland 
sh-company-secretary@ubs.com 
Zurich +41-44-235 6652 
Shareholder Services 
UBS’s Shareholder Services team, a unit 
of the 
Group Company Secretary’s office, is 
responsible for the registration of 
UBS Group AG registered shares. 
UBS Group AG, Shareholder Services 
P.O. 
Box, CH-8098 Zurich, Switzerland 
sh-shareholder-services@ubs.com 
Zurich +41-44-235 6652 
US Transfer Agent 
For global registered share-related 
inquiries in the US. 
Computershare Trust Company NA 
P.O. 
Box 505000 
Louisville, KY 40233-5000, USA 
Shareholder online inquiries: 
www-us.computershare.com/ 
investor/Contact 
Shareholder website: 
computershare.com/investor 
Calls from the US 
+1-866-305-9566 
Calls from outside the US 
+1-781-575-2623 
TDD for hearing impaired 
+1-800-231-5469 
TDD for foreign shareholders 
+1-201-680-6610 
Corporate calendar UBS Group AG 
Publication of the Sustainability Report 2020: 
 
Thursday, 11 March 2021
 
Annual General Meeting 2021: 
 
Thursday, 8 April 2021
 
Publication of the first quarter 2021 report: 
 
Tuesday, 
27 April 2021
 
Publication of the second quarter 2021 report: 
 
Tuesday, 
20 J
uly 2021
 
Publication of the third quarter 2021 report: 
 
Tuesday, 
26 October 2021
 
Corporate calendar UBS AG 
Publication of the first q
uarter 202
1
 
report: 
 
Friday
, 
30
 
April
 
202
1
 
Publication of the second 
quarter 202
1
 
report: 
 
Friday, 2
3
 
July 202
1
 
 
Additional publication dates of quarterly and 
annual reports 
will be made available as part of the corporate 
calendar of UBS AG at 
ubs.com/investors. 
Imprint 
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com 
Language: English 
© UBS 2021. The key symbol and UBS are among 
the registered and 
unregistered trademarks of UBS. All rights reserved. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2020 
8 
Our key figures 
 
As of or for the year ended 
USD million, except where indicated 
31.12.20 
31.12.19
1
31.12.18
1
Group results 
Operating income 
 
32,390 
 
28,889 
 
30,213 
Operating expenses 
 
24,235 
 
23,312 
 
24,222 
Operating profit / (loss) before tax 
 
8,155 
 
5,577 
 
5,991 
Net profit / (loss) attributable to shareholders 
 
6,557 
 
4,304 
 
4,516 
Diluted earnings per share (USD)
2
 
1.77 
 
1.14 
 
1.18 
Profitability and growth
3
Return on equity (%) 
 
11.3 
 
7.9 
 
8.6 
Return on tangible equity (%) 
 
12.8 
 
9.0 
 
9.8 
Return on common equity tier 1 capital (%) 
 
17.4 
 
12.4 
 
13.1 
Return on risk-weighted assets, gross (%) 
 
11.7 
 
11.0 
 
11.8 
Return on leverage ratio denominator, gross (%)
4
 
3.4 
 
3.2 
 
3.3 
Cost / income ratio (%) 
 
73.3 
 
80.5 
 
79.9 
Effective tax rate (%) 
 
19.4 
 
22.7 
 
24.5 
Net profit growth (%) 
 
52.3 
 
(4.7) 
 
366.0 
Resources
3
Total assets 
 
1,125,765 
 
972,194 
 
958,500 
Equity attributable to shareholders 
 
59,445 
 
54,501 
 
52,896 
Common equity tier 1 capital
5
 
39,890 
 
35,535 
 
34,073 
Risk-weighted assets
5
 
289,101 
 
259,208 
 
263,747 
Common equity tier 1 capital ratio (%)
5
 
13.8 
 
13.7 
 
12.9 
Going concern capital ratio (%)
5
 
19.4 
 
20.0 
 
17.5 
Total loss-absorbing capacity ratio (%)
5
 
35.2 
 
34.6 
 
31.7 
Leverage ratio denominator
5
 
1,037,150 
 
911,322 
 
904,595 
Leverage ratio denominator (with temporary FINMA exemption)
6
 
944,323 
Common equity tier 1 leverage ratio (%)
5
 
3.85 
 
3.90 
 
3.77 
Common equity tier 1 leverage ratio (%) (with temporary FINMA exemption)
6
 
4.22 
Going concern leverage ratio (%)
5
 
5.4 
 
5.7 
 
5.1 
Going concern leverage ratio (%) (with temporary FINMA exemption)
6
 
5.9 
Total loss-absorbing capacity leverage ratio (%)
5
 
9.8 
 
9.8 
 
9.3 
Liquidity coverage ratio (%)
7
 
152 
 
134 
 
136 
Other 
Invested assets (USD billion)
8
 
4,187 
 
3,607 
 
3,101 
Personnel (full-time equivalents) 
 
71,551 
 
68,601 
 
66,888 
Market capitalization
9
 
50,013 
 
45,661 
 
45,907 
Total book value per share (USD)
9
 
16.74 
 
15.07 
 
14.34 
Total book value per share (CHF)
9
 
14.82 
 
14.59 
 
14.10 
Tangible book value per share (USD)
9
 
14.91 
 
13.28 
 
12.54 
Tangible book value per share (CHF)
9
 
13.21 
 
12.86 
 
12.33 
1 Refer to the 
“Accounting and 
financial reporting” and 
“Consolidated financial statements” 
sections of this 
report for information 
on the restatement 
of comparative information, 
where applicable. 
2 Refer to 
“Share information and earnings per share” in the “Consolidated 
financial statements” section of this report for more information. 
3 Refer to the “Performance targets and capital 
guidance” section of this report 
for more 
information about 
our performance 
targets. 
4 The leverage 
ratio denominators 
used for 
the return 
calculations relating 
to the 
respective periods 
in 2020 
do not 
reflect the 
effects of 
the temporary 
exemption that has been granted by FINMA in connection with 
COVID-19. Refer to the “Regulatory and legal developments” 
section of this report for more information. 
5 Based on the Swiss systemically relevant 
bank framework 
as of 
1 January 2020. 
Refer to 
the “Capital, 
liquidity and 
funding, and 
balance sheet” 
section of 
this report 
for more 
information. 
6 Refer to 
the “Regulatory 
and legal 
developments” and 
“Capital, liquidity and funding, 
and balance sheet” sections 
of this report for 
further details about the 
temporary FINMA exemption. 
7 Refer to the “Capital, 
liquidity and funding, and 
balance sheet” section 
of 
this report for more information. 
8 Consists of invested assets 
for Global Wealth Management, 
Asset Management and Personal 
& Corporate Banking. 
Refer to “Note 32 
Invested assets and net new 
money” in 
the “Consolidated financial statements” section of this report for more information. 
9 Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information. 
 
 
Events subsequent to the publication of the unaudited fourth quarter 2020 report 
The 2020 results 
and the balance 
sheet as of 
31 December 2020 
differ from 
those presented in 
the unaudited fourth 
quarter 2020 
report 
published 
on 
26 
January 
2021 
as 
a 
result 
of 
events 
adjusted 
for 
after 
the 
balance 
sheet 
date. 
Provisions 
for 
litigation, 
regulatory 
and 
similar 
matters 
increased, 
which 
reduced 
2020 
operating 
profit 
before 
tax 
and 
2020 
net 
profit 
attributable 
to 
shareholders 
each by 
USD 72 
million. As 
a result, 
basic earnings 
per share 
decreased 
by USD 
0.02 and 
diluted earnings 
per share 
decreased by USD 0.02. 
 
 

Alternative performance measures

An alternative performance

measure (an

APM) is a

financial measure

of historical or

future financial

performance, financial position

cash

flows

other

than

financial

measure

defined

specified

the

applicable

recognized

accounting

standards

other

applicable regulations. We

report a number of APMs

in the discussion of the

financial and operating performance of

the Group, our

business divisions and our

Group Functions. We

use APMs to provide

a more complete picture

of our operating performance and

reflect

management’s

view

the

fundamental

drivers

our

business

results.

definition

each

APM,

the

method

used

calculate

it and

the information

content are

presented

under “Alternative

performance measures”

the appendix

this report.

Our APMs may qualify as non-GAAP measures as defined by US Securities and Exchange Commission (SEC) regulations.

Terms used in this report, unless the context requires otherwise

“UBS,” “UBS Group,” “UBS Group AG consolidated,” “Group,”

“the Group,” “we,” “us” and “our”

UBS Group AG and its consolidated subsidiaries

“UBS AG consolidated”

UBS AG and its consolidated subsidiaries

“UBS Group AG” and “UBS Group AG standalone”

UBS Group AG on a standalone basis

“UBS AG” and “UBS AG standalone”

UBS AG on a standalone basis

“UBS Switzerland AG” and “UBS Switzerland AG standalone”

UBS Switzerland AG on a standalone basis

“UBS Europe SE consolidated”

UBS Europe SE and its consolidated subsidiaries

“UBS Americas Holding LLC” and

“UBS Americas Holding LLC consolidated”

UBS Americas Holding LLC and its consolidated subsidiaries

In this report, unless the context requires otherwise, references to any gender shall apply to all genders.

Our Board of Directors

 
11 
The 
Board 
of 
Directors 
(BoD) 
of 
UBS 
Group 
AG, 
under 
the 
leadership of 
the Chairman, 
consists 
of between 6 to 12 
members 
as per our Articles 
of Association. 
The BoD decides 
on the strategy 
of the Group 
upon recommendation 
by the Group 
Chief Executive 
Officer (Group 
CEO) and 
is 
responsible for 
the 
overall direction, 
supervision 
and control of the 
Group and its management, 
as well 
as 
for 
supervising 
compliance 
with 
applicable 
laws, 
rules 
and 
regulations. The BoD exercises oversight over UBS Group AG and 
its 
subsidiaries and 
is 
responsible for 
establishing a 
clear 
Group 
governance 
framework 
to 
provide 
effective 
steering 
and 
supervision of the Group, taking 
into account the material 
risks to 
which UBS 
Group AG 
and its 
subsidiaries are 
exposed. The 
BoD 
has 
ultimate responsibility for 
the 
success of 
the 
Group 
and 
for 
delivering 
sustainable shareholder 
value 
within 
a 
framework of 
prudent and 
effective controls, 
approves all 
financial statements 
for 
issue 
and 
appoints 
and 
removes 
all 
Group 
Executive 
Board 
(GEB) members.
 

 
12 
Our Group Executive Board
UBS 
Group 
AG 
operates under 
a 
strict dual 
board 
structure, as 
mandated by Swiss 
banking law, and therefore the BoD delegates 
the management 
of the business 
to the GEB. Under 
the leadership 
of the Group 
CEO, the GEB was comprised of 
13 members as of 
31 December 2020 and 
has executive management responsibility 
for the 
steering of the 
Group and its 
business. It assumes overall 
responsibility for 
developing and 
implementing the 
strategies of 
the Group, 
business divisions and 
Group functions, 
as 
approved 
by the BoD. 
›
 
Refer to “Board of Directors” and “Group Executive 
Board” in the 
“Corporate governance” section of 
this report or to ubs.com/bod 
and ubs.com/geb for the full biographies 
of our BoD and GEB 
members 
 
 
 
 

 
14 
Our evolution
Since 
our 
origins 
in 
the 
mid
-
19th 
century, 
many
 
financial 
institutions 
have 
become 
part 
of 
the 
history 
of 
our 
firm 
and 
helped shape our development. 1998 was a major turning point: 
two of the 
three largest Swiss 
banks, Union Bank 
of Switzerland 
and 
Swiss 
Bank 
Corporation 
(SBC), 
merged 
to 
form 
UBS. 
Both 
banks 
were 
well 
established 
and 
successful 
in 
their 
own 
right. 
Union Bank of Switzerland had grown organically to become 
the 
largest Swiss 
bank. In 
contrast, SBC 
had grown 
mainly through 
strategic 
partnerships 
and 
acquisitions, 
including 
S.G. 
Warburg 
in 1995. 
In 2000, we acquired PaineWebber, 
a US brokerage and asset 
management 
firm 
with 
roots 
going 
back 
to 
1879, 
establishing 
us as 
a significant 
player in 
the US. 
Over the 
past 50 
years, we 
have 
also 
built 
a 
strong 
presence 
in 
the 
Asia 
Pacific 
region, 
where we are 
the largest wealth 
manager (by invested 
assets), a 
top-tier 
investment 
bank 
and 
an 
established 
player 
in 
asset 
management. 
After incurring significant losses in 
the 2008 financial crisis, in 
2011 
we 
started 
a 
strategic 
transformation 
toward 
a 
business 
model 
focused 
on 
our 
core 
businesses: 
wealth 
management, 
and personal 
and corporate 
banking in 
Switzerland. We 
sought 
to 
revert 
to 
our 
roots, 
emphasizing a 
client-centric model 
that 
requir
es
 
less 
risk
-
taking 
and 
capital, 
and 
we 
successfully 
completed 
that transformation. 
Today, we are 
a global financial 
services firm, the 
largest truly 
global 
wealth 
manager 
with 
over 
USD 3.0 
trillion 
in 
invested 
assets, 
a 
leading 
Swiss 
personal 
and 
corporate 
bank, 
a 
large-
scale 
and 
diversified
 
global 
asset 
manager
 
and 
a 
focused 
investment bank. 
In 
2014, 
we 
began 
adapting 
our 
legal 
entity 
structure 
in 
response 
to 
too-big-to-fail 
requirements 
and 
other 
regulatory 
initiatives. 
First, 
we 
established 
UBS 
Group 
AG 
as 
the 
ultimate 
parent holding 
company for 
the Group. 
In 2015, 
we transferred 
personal 
and 
corporate 
banking 
and
 
Swiss
-
booked
 
wealth 
management businesses 
from UBS 
AG to 
the newly 
established 
UBS 
Switzerland 
AG. 
That 
same 
year 
we 
set 
up 
UBS 
Business 
Solutions 
AG 
as 
the 
Group’s 
service 
company. 
In 
2016, 
UBS 
Americas 
Holding 
LLC 
became 
the 
intermediate 
holding 
company 
for 
our 
US 
subsidiaries 
and 
our 
wealth 
management 
subsidiaries 
across 
Europe 
were merged 
into 
UBS Europe 
SE. In 
2019, 
we 
merged 
UBS 
Limited, 
our 
UK-headquartered 
subsidiary, 
into 
UBS 
Europe 
SE, 
our 
Germany-headquartered 
European subsidiary. 
The 
chart 
below 
gives 
an 
overview 
of 
our 
principal 
legal 
entities and our legal entity structure. 
›
 
Refer to 
ubs.com/history
 
for more information 
›
 
Refer to the “Risk factors” 
and “Regulatory and legal 
developments” 
sections 
of this report for more information 
The legal structure of the UBS Group as of 5 March 2021 
 

 
Our strategy, 
business 
model and 
environment 
Management report 
1

Our strategy, business model and environment 
| Our strategy 
16 
Our strategy
Our strategy 
is centered around 
our clients: 
how we can make the 
most of our capabilities across 
the firm to help them achieve their 
financial goals, whether 
they are wealthy individuals, 
retail clients, 
or 
corporations 
and 
institutions. 
We 
aim 
to 
drive 
attractive 
shareholder
 
returns 
by 
growing 
and 
leveraging 
our 
unique, 
integrated and complementary business portfolio 
and geographic 
footprint. 
UBS is 
the largest truly 
global wealth 
manager, 
and a 
leading 
personal 
and 
corporate 
bank 
in 
Switzerland, 
with 
a 
large-scale 
and 
diversified 
global asset 
manager 
and 
a 
focused 
investment 
bank. We 
concentrate on 
capital-efficient businesses 
in targeted 
markets 
where 
we 
have 
a 
strong 
competitive 
position 
and 
an 
attractive 
long-term 
growth 
or 
profitability 
outlook. 
We 
view 
capital strength as the foundation of our strategy. 
In delivering 
all of 
UBS as 
one firm 
to our 
clients, we 
intend 
to: 
strengthen 
our 
leading 
client 
franchises 
and 
grow 
share; 
position 
UBS 
for 
growth 
by 
expanding 
our 
services 
and 
capabilities; 
drive 
greater 
efficiencies 
and 
scale; 
and 
further 
intensify 
the 
joint 
efforts 
across 
the 
firm 
for 
the 
benefit 
of 
our 
clients. 
Driving increasing shareholder returns 
We 
manage 
UBS 
for 
the 
long 
term, 
focusing 
on 
sustainable 
profit 
growth 
and responsible 
resource 
deployment. We 
aim to 
balance growth 
opportunities with cost 
and capital efficiency 
, 
in 
order 
to 
drive 
attractive 
risk-adjusted 
returns 
and 
sustainable 
performance. 
In Global Wealth 
Management, we are 
focused on remaining 
close 
to 
clients, 
increasing 
time 
spent 
with 
them, 
empowering 
regions and 
improving our 
responsiveness and 
speed to 
market, 
as well as delivering 
on all of the 
firm’s capabilities through joint 
efforts 
with 
the 
Investment 
Bank 
and 
Asset 
Management. 
Furthermore, 
we 
are 
expanding 
our 
product 
offering 
while 
becoming more 
efficient, leveraging 
scale through 
partnerships, 
and optimizing 
processes to 
increase productivity. 
As a 
result of 
this, 
we 
aim 
to 
increase 
profit 
before 
tax 
by 
10–15% 
annually 
over the 
cycle and 
drive higher 
pre-tax margins 
by elevating 
our 
leading franchise. 
In 
the 
Investment 
Bank, 
we 
intend 
to 
improve 
returns 
sustainably 
by 
driving 
profitable 
growth, 
by 
further 
optimizing 
resources 
and 
through 
collaboration. 
We 
will 
maintain 
our 
capital-light 
business 
model 
that 
is 
focused 
on 
advice 
and 
execution 
and 
leverages 
our 
digital 
capabilities. 
Together 
with 
the 
other business 
divisions, 
and through 
external 
partnerships, 
we 
aim 
to 
deliver 
market-leading 
digital, 
research 
and 
banking 
capabilities 
to 
our 
clients, 
while 
consuming 
up 
to 
one-third 
of 
Group resources. 
In 
Asset 
Management, 
we 
are 
capitalizing 
on 
our 
differentiated 
client 
offering 
to 
achieve 
further 
growth, 
performance 
and 
scale. 
We 
plan 
to 
build 
on 
our 
strengths 
in 
fast-growing areas of 
the industry, such 
as sustainable investing, 
private markets and alternative investments. 
In 
Personal 
& 
Corporate 
Banking, 
we 
aim 
to 
enhance 
our 
digital initiatives 
and services 
while improving 
efficiency in 
order 
to 
deliver 
steady 
profit 
growth. 
By 
expanding 
our 
leading 
position in digital 
services in Switzerland, 
along with broadening 
our 
advisory 
solutions 
and 
products 
offering, 
we 
expect 
to 
increase 
profits 
despite 
the 
current 
negative 
interest 
rate 
environment, 
although 
we 
do 
face 
headwinds 
due 
to 
the 
uncertainty resulting from the COVID-19 pandemic. 
We 
want 
to 
deliver 
more 
as 
one 
firm 
to 
our 
clients. 
Joint 
efforts across 
our business 
divisions are 
critical to 
the success 
of 
our 
strategy 
and 
a 
source 
of 
competitive 
advantage. 
This 
collaboration also provides further 
revenue growth potential and 
enables us to better meet client needs. 
We are fully committed to our sustainability activities, through 
which 
we 
aim 
to 
maximize 
the 
positive 
effects 
of 
such 
investments 
while 
mitigating 
negative 
impacts. 
Our 
growing 
range of sustainable 
finance products and 
services enables us 
to 
help 
our 
clients 
to 
mobilize 
capital 
toward 
the 
achievement 
of 
specific environmental 
or social 
outcomes. Our 
goal is 
to be 
the 
financial 
provider 
of 
choice 
for 
these 
clients. 
During 
2020, 
we 
became 
the 
first 
major 
global 
financial 
institution 
to 
make 
sustainable investments 
the preferred 
solution for 
private clients 
investing globally.
 
Our 
environmental 
and 
social 
risk 
framework 
helps 
us 
to 
better 
understand 
and 
respond 
to 
potential 
risks 
to 
the 
environment and human rights. 
We are 
widely recognized for our sustainable practices. 
During 
2020 
we 
were 
named 
an 
industry 
leader 
in 
the 
Dow 
Jones 
Sustainability Indices, 
for 
the sixth 
consecutive year, rated 
AA by 
MSCI and 
included 
in CDP’s 
Climate 
change 
A List.
 
›
 
Refer to “Society” and “Our focus on sustainability” 
in the “How 
we create value for our stakeholders” section 
of this report for 
more information about our engagement and 
leadership in 
sustainability matters 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information 
 
We aim to drive 
improvements in firm-wide efficiency to 
fund 
growth and enhance returns. We 
believe continued optimization 
of 
our 
processes, 
platforms, 
organization 
and 
capital 
resources 
will help us to achieve this. 
Our 
targets 
for 
the 
immediate 
future 
include 
realizing 
the 
benefits 
of 
existing 
external 
partnerships 
and 
exploring 
select 
new opportunities. 
We see 
technology as 
a key 
lever to 
differentiate the 
services 
we 
offer 
our 
clients, 
through 
an 
omni-channel 
experience 
and 
leveraging 
insights 
from 
data 
and 
connectivity, 
while 
enabling 
our firm to operate 
more effectively and efficiently. 
Our aim is to 
enable 
our 
clients 
and 
staff 
to 
work 
and 
interact 
in 
an 
easy, 
flexible and 
productive way. 
As we 
transform our 
infrastructure 
to 
support 
new 
products 
and 
channels, 
we 
can 
anticipate 
and 
address 
our 
clients’ 
preference 
for 
digital 
interactions 
and 
services, 
while also 
gaining 
new 
insights 
through effective 
data 
management. 
This 
enables 
the 
development 
of 
responsible 
artificial intelligence 
for better 
tailoring our 
client and 
employee 
experience. Underpinning all of this, 
we prioritize availability and 
reliability, supporting system and application stability. 
 
 

 
17 
Attractive capital return profile 
We plan 
to maintain 
an attractive 
capital return 
profile through 
dividends 
and 
share 
repurchases. 
Our 
capital 
strength 
and 
capital-accretive business 
model enable 
us to 
grow our 
business 
while delivering attractive capital returns to our shareholders. 
The 
balance 
between 
cash 
dividends 
and 
share 
repurchases 
has 
been 
adjusted 
from 
2020 
onward, 
with 
a 
greater 
weight 
toward share repurchases 
as compared with 
prior years’ 
returns. 
We 
remain 
committed 
to 
returning 
excess 
capital 
to 
our 
shareholders 
and delivering 
total 
capital returns 
consistent with 
our 
previous 
levels. 
We 
intend to 
propose an 
ordinary 
dividend 
per 
share 
of 
USD 0.37 
for 
the 
2020 
financial 
year, 
to 
be 
approved 
at 
the 
2021 
general 
meeting 
of 
shareholders. 
In 
addition, before 
COVID-related restrictions 
on share 
repurchases 
were 
introduced, 
we 
repurchased 
CHF 350 
million 
(USD 364 
million) of our shares, and 
in the second half of 
2020, we built a 
capital reserve of USD 2.0 
billion for potential share repurchases. 
For reference, 
total capital 
returns to 
shareholders for 
the 2019 
financial year 
were USD 3.4 
billion. In 
the first 
quarter of 
2021, 
we 
repurchased 
the 
remaining 
CHF 100 
million 
of 
our 
2018–
2021 
USD 
2 
billion 
share 
repurchase 
program, 
which 
is 
now 
complete 
and 
closed. 
On 
8 
February 
2021, 
we 
commenced 
a 
new three-year share repurchase program 
of up to CHF 4 billion, 
of which we expect to 
execute up to USD 1 billion 
by the end of 
the 
first 
quarter 
of 
2021. 
We 
consider 
business 
conditions 
and 
developments 
or 
strategic 
opportunities 
when 
determining 
excess capital available for share repurchases. 
Strategic update 
On 26 January 2021, our Group 
CEO outlined the focus areas to 
deliver 
on 
UBS’s 
future, 
with 
strategic 
updates 
to 
be 
provided 
during 
the 
second 
quarter 
of 
2021 
and 
beyond. 
We 
are 
currently 
conducting thorough 
firm-wide reviews 
so as 
to be 
fit 
for the future and 
to capture growth opportunities. 
We will look 
to 
become more 
flexible and 
agile, 
while 
delivering 
the 
firm to 
our 
clients 
in 
a 
seamless 
way. 
As 
part 
of 
this 
process, 
we 
are 
enhancing 
accountability, 
and 
reviewing 
metrics 
and 
targets 
to 
deliver attractive shareholder returns. 
 
 
 
 
 
 

 
 
 
 
 
Our strategy, business model and environment 
| Performance targets and capital guidance 
18 
Performance targets and capital guidance
The 
table 
below 
shows 
the 
performance 
targets 
and 
capital 
guidance, based on reported results. 
›
 
Refer to “Alternative performance 
measures” in the appendix to 
this report for definitions of and further information 
about our 
performance measures
 
 
Performance 
against 
targets 
and 
capital 
guidance 
is 
taken 
into account when determining variable compensation. 
›
 
Refer to the “Compensation” section 
of this report for more 
information about variable compensation 
 
 
 
 
Targets and capital guidance 
(on a reported basis)
 
Group returns 
12–15% 
return on CET1 capital (RoCET1) 
Cost efficiency 
Positive operating leverage and 
75–78% 
cost / income ratio 
Growth 
10–15% 
profit before tax growth in Global Wealth Management 
over the cycle 
Capital allocation 
Up to 
1
⁄
3
 
of Group RWA and LRD in the Investment Bank
Capital guidance 
~13% 
CET1 capital ratio 
>3.7% 
CET1 leverage ratio 
 
 

 
19 
Our businesses 
Delivering as one firm
We 
operate 
through 
four 
business 
divisions: 
Global 
Wealth 
Management, 
Personal 
& 
Corporate 
Banking, 
Asset 
Management and the Investment Bank. Our global reach and the 
breadth of our 
expertise are 
major assets 
setting us apart 
from our 
competitors. 
We 
see 
joint 
efforts 
as 
key 
to 
our 
growth, 
both 
within 
and 
between 
business 
divisions. 
We 
are 
at 
our 
best 
when 
we
combine 
our 
strengths 
to 
pro
vide 
our 
clients 
more
 
c
o
mprehensive 
and 
b
et
ter 
solutions
 
through, 
for 
example,
 
a 
u
nified 
c
apital 
m
arkets 
group 
across 
Global 
Wealth 
Management 
and 
the 
Investment 
Bank, 
and 
a 
Global 
Family 
Office
 
joint 
venture
.
 
Initiatives 
such 
as 
the 
Group 
Franchise 
Awards
 
encourage 
employees to 
look for 
ways to 
build bridges 
across teams and offer the whole firm to our clients. 
 
 
 
 
 
 
 
 

Our strategy, business model and environment 
| Our businesses 
20 
Global Wealth Management 
As 
the 
largest 
truly 
global 
wealth 
manager, 
with 
over 
USD 3.0 
trillion 
in 
invested 
assets, 
our 
goal 
is 
providing 
tailored 
advice 
and solutions to wealthy individuals and families. 
More 
than 
22,000 
Global 
Wealth 
Management 
employees 
help clients 
achieve their 
goals. We 
are proud 
to serve 
our ultra 
high net worth 
and global family 
office (GFO) clients, 
where our 
presence 
is 
particularly 
strong, 
and 
we 
have 
access 
to 
the 
majority of billionaires worldwide.
1
 
Organizational changes 
In 
January 
2020, 
we 
announced 
several 
initiatives 
designed 
to 
achieve Global 
Wealth Management’s 
growth ambitions 
and to 
elevate 
the 
quality 
and 
value 
of 
services 
delivered 
to 
clients. 
Three 
distinct 
business 
units 
in 
EMEA 
were 
created 
– 
Europe; 
Central 
and 
Eastern Europe 
, 
Greece 
and 
Israel; 
and 
the 
Middle 
East 
and 
Africa – 
to 
better 
capture 
the diverse 
opportunities 
in 
these 
markets. 
In 
May 
2020, 
we 
introduced 
the 
new 
Global 
Lending 
team, 
a 
cross-divisional 
group 
designed 
to 
serve 
the 
financing 
and 
lending 
needs 
of 
UBS 
clients 
worldwide 
using 
a 
faster, 
simpler and 
more client-centric 
approach that 
establishes 
a 
single 
global 
center 
of 
excellence 
to
 
strengthen 
UBS’s 
financing 
and 
lending 
capabilities 
in 
every 
region. 
We 
also 
further strengthened 
our joint 
efforts 
with the 
Investment Bank 
and 
Asset 
Management 
so as 
to 
better 
deliver 
all 
of 
the 
firm’s 
capabilities to clients. 
As 
part 
of 
our 
organizational 
changes, 
ultra 
high 
net 
worth 
client 
relationships 
and 
advisors 
were 
integrated 
into 
our 
regional 
business 
units 
to 
in
crease 
speed
 
to
 
market 
and 
proximity 
to 
clients. 
By 
combining 
our 
capital 
markets 
teams 
across Global Wealth Management and the Investment Bank, we 
are 
able 
to 
provide 
clients 
with 
an 
enhanced 
offering, 
faster 
execution and more competitive conditions. 
Our focus 
We 
serve 
high 
net 
worth 
and 
ultra 
high 
net 
worth 
individuals, 
families and 
family offices 
worldwide, as 
well as 
affluent clients 
in 
selected 
markets. 
Our 
dedicated 
GFO 
unit 
works 
with 
ultra 
high 
net 
worth 
individuals 
and 
their 
families 
to 
deliver 
sustainable financial 
returns and 
long-lasting impact. 
In addition 
to 
extensive 
global 
wealth 
management 
services
,
 
it 
provides
 
access 
to 
our 
Investment 
Bank 
and 
Asset 
Managemen
t 
capabilities across geographies. 
Already a 
market leader 
in the 
ultra high 
net worth 
segment 
outside 
the 
US,
2
 
we 
believe 
we 
can 
also 
become 
the 
firm 
of 
choice 
for 
the 
wealthiest 
clients 
in 
the 
US, 
many 
of 
whom 
already 
have 
relationship
s
 
with 
UBS. 
Our 
diversified 
global 
footprint 
allows 
us 
to 
capture 
growth 
in 
the 
largest 
and 
the 
fastest
-
growing 
wealth 
markets
 
(the 
US
 
and 
Asia 
Pacific
, 
respectively). 
Through 
the 
expertise 
of 
our 
Chief 
Investment 
Office, 
we 
focus on increasing mandate 
and lending penetration, delivering 
innovative solutions for 
clients (e.g., structured 
solutions, private 
markets, 
sustainability 
and 
other 
types 
of 
thematic 
investing), 
and
 
enhancing 
advisor 
productivity 
by 
making 
operational 
processes more 
efficient. We 
also look 
to maintain 
low attrition 
and increase our share of clients’ business. 
Our investment in 
operating platforms and 
tools that support 
our 
clients 
and 
client 
advisors 
is 
aimed 
at 
better 
serving 
our 
clients’ 
needs 
and 
improv
ing
 
efficiency. 
As 
of 
31
 
December 
2020, 
some 85% 
of invested 
assets 
outside the 
Americas 
were 
booked 
on 
our 
strategic 
Wealth 
Management 
Platform
.
 
In 
the 
US, 
in 
collaboration 
with 
software 
provider 
Broadridge, 
we 
are 
building the 
Wealth Management 
Americas Platform
,
 
for which 
we expect to complete first phase software 
delivery in 2021. The 
development 
of 
our 
platforms 
is 
happening 
alongside 
enhancements 
to 
our 
digital 
capabilities, 
for 
the 
benefit 
of 
our 
clients and advisors. 
›
 
Refer to “Clients” in the “How 
we create value for our 
stakeholders” section of this report for more information 
about 
innovation and digitalization 
How we operate 
Our 
global 
footprint 
and 
presence 
in 
the 
world’s 
largest 
and 
fastest-growing 
markets 
position 
us 
well 
to 
serve 
clients 
with 
global 
interests 
and 
demands. 
The 
US 
is 
our 
largest 
market, 
accounting 
for 
around 
half 
of 
our 
invested 
assets. 
We 
are 
the 
largest 
wealth 
manager 
in 
Asia 
Pacific 
and 
second 
largest 
in 
Latin America, in terms of invested assets.
2
 
In 
Switzerland, 
we 
hold 
a 
leading 
market 
position
2
 
and 
can 
deploy 
the 
full 
range 
of 
UBS’s 
products 
and 
services 
across 
all 
business 
divisions
.
 
Our 
broad 
domestic 
footprint 
in 
Europe 
allows 
us 
to 
provide 
locally 
adapted 
offerings, 
and 
our 
local 
offices across Central Europe, the Middle East and Africa keep us 
close to our clients. 
Joint 
efforts 
with 
the 
Investment 
Bank, 
Asset 
Management 
and 
selected 
external 
partners 
enable 
us 
to 
offer 
clients 
broad 
access 
to 
financing, 
global 
capital 
markets 
and 
portfolio 
solutions. 
›
 
Refer to “Delivering as one firm” in this 
section for examples of 
the joint efforts of the business divisions 
 
Our 
competitors 
fall 
into 
two 
categories: 
peers, 
such 
as 
Morgan 
Stanley 
and 
JP 
Morgan, 
with 
a 
strong 
position 
in 
the 
Americas 
but 
more 
limited 
global 
footprints; 
and 
peers 
with 
similar 
international 
footprints 
and 
operating 
models, 
such 
as 
Credit 
Suisse 
and 
Julius 
Baer, 
but 
with 
significantly 
smaller 
presences 
than UBS 
in the 
US. In 
addition, we 
have strategically 
strong positions in the fastest-growing client 
segment (ultra high 
net 
worth) 
and 
region 
(Asia 
Pacific). 
The 
size 
and 
the 
diversification 
of 
our 
footprint, 
as 
well 
as 
our 
premium 
brand 
and reputation, 
would be difficult and expensive to replicate. 
 
1
 
Based on UBS internal analysis. 
2
 
Statements of market position for Global Wealth Management are UBS’s estimates 
based on published invested assets and internal estimates. 

 
21 
 
 
What we offer 
Our distinctive 
approach 
to 
wealth 
management is 
designed 
to 
strengthen engagement 
with our 
clients 
and help 
them achieve 
their financial and investing goals. 
Operating 
as 
a 
unified 
business, 
we 
aim 
to 
offer 
clients 
the 
best 
solutions, 
services 
and 
expertise 
globally. 
Our 
experts 
provide 
thought leadership, 
investment analysis 
and 
investment 
strategies, 
and develop 
and source 
solutions for 
our clients. 
The 
Chief 
Investment 
Office
 
provides 
our 
UBS 
House 
View
, 
identifying
 
investment 
opportunities 
designed 
to 
protect 
and 
increase 
our 
clients’ 
wealth 
over 
generations. 
Regional 
client 
strategy 
teams 
deepen 
our 
understanding 
of 
clients’ 
needs, 
behaviors 
and 
preferences, 
enabling 
us 
to
 
better
 
tailor 
our 
offerings. 
Our 
product 
specialists 
deliver 
investment 
solutions, 
including 
our 
flagship 
investment 
mandates, 
innovative 
long-
term themes and sustainable investment offerings. 
Clients 
benefit 
from 
our 
comprehensive 
expertise, 
including 
wealth planning, 
investing, philanthropy, 
corporate and banking 
services, 
and 
family 
advisory 
services. 
We 
also 
offer 
extensive 
mortgage, securities-based and structured lending expertise. 
In 
September 
2020
,
 
we 
became 
the 
first 
major 
global 
financial 
institution 
to 
make 
sustainable 
investments 
the 
preferred 
solution 
for 
private 
clients 
investing 
globally. 
This 
reflects 
our 
belief 
in 
sustainable 
and 
impact 
investing 
from 
a 
performance 
perspective 
and 
increased 
client 
demand 
for 
relevant advice 
and solutions. 
In line 
with this 
view, 
our 100%-
sustainable 
investing 
portfolios 
and 
bespoke 
sustainable 
investing portfolio solutions had grown 
to over USD 20 billion as 
of 31 December 2020, 
and a new personalized 
advisory solution 
was 
launched 
in 
2020.
 
This
 
solution
,
 
tailored 
to 
clients
’
 
individual 
sustainable 
investing 
preferences, 
continues 
to 
gain 
traction as it 
becomes available in 
additional locations and 
client 
segments. 
UBS 
continues 
to 
successfully 
launch 
private 
market 
impact 
offerings 
related 
to 
the 
Sustainable 
Development 
Goals. 
For 
example, in 
2020, we 
launched Oncology 
Impact Fund 
II, which 
is a biotech 
venture capital fund 
that has raised 
USD 600 million 
in client commitments. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about sustainability matters 
 
We also continue 
to broaden our offering 
across asset classes 
and 
themes, 
collaborating 
with 
external 
partners, 
such 
as 
Rockefeller 
Asset 
Management, 
Rethink 
Impact 
and 
Bridge 
Investment 
Group, 
to 
provide clients 
with 
various differentiated 
sustainable and impact investing opportunities. 
We work 
constantly on 
responding swiftly 
to changing 
client 
needs. 
The 
following 
three 
key 
product 
developments 
in 
2020 
illustrate 
our 
efforts
 
to 
further 
differentiate 
our 
leading 
discretionary 
and 
advisory 
mandate 
offerings. 
In 
March 
2020, 
we 
successfully 
launched 
UBS 
Manage 
Advanced 
[My 
Way]
, 
a 
solution that lets clients truly individualize their portfolios. 
›
 
Refer to “Clients” in the “How 
we create value for our 
stakeholders” section of this report for more information 
about 
innovation and digitalization 
 
In 
April
 
2020
, 
together 
with 
Asset 
Management
,
 
we 
launched 
a 
premium 
discretionary 
offering 
for 
our 
GFO 
clients, 
designed 
to 
fully 
leverage 
Asset 
Management
’s
 
investment 
management 
and 
content 
capa
bilities
,
 
including 
customized 
asset allocations. 
In November 2020, as part of our long-term 
cooperation with 
Partners 
Group, 
we 
enhanced 
our 
discretionary 
and 
advisory 
mandate offering by 
broadening access to 
private equity. Clients 
can diversify their mandates into 
private equity by accessing fully 
paid-in solutions provided by Partners Group and UBS. 
 

Our strategy, business model and environment 
| Our businesses 
22 
Personal & Corporate Banking
As 
a 
leading 
Swiss 
personal 
and 
corporate 
bank, 
we 
provide 
comprehensive 
financial 
products 
and 
services 
to 
private, 
corporate and institutional clients. Personal & Corporate Banking 
is the core of our universal bank delivery model in Switzerland. 
Our focus 
We 
aim 
to 
provide 
a 
superior 
client 
experience 
by 
combining 
excellence 
in 
personal 
client 
relationship
s
 
and 
interaction 
through new technology. 
Client service excellence is 
at the heart 
of our business, 
as was demonstrated 
in 2020, when 
we were a 
strong 
partner 
at 
the 
side 
of 
corporate 
clients 
through 
the 
COVID-19 pandemic. 
We made 
available billions 
of Swiss 
francs 
of liquidity 
and offered 
flexibility, for 
example with 
amortization 
payments. 
We 
continue 
to 
support 
our 
clients 
with 
extensive 
services, individual advice and a wide range of digital products. 
We 
established 
several 
growth 
initiatives 
over 
the 
course 
of 
2020. 
One of 
these was 
key4
,
 
an online 
platform for 
financing 
owner-occupied homes, which we 
launched in June 2020. 
It is a 
continuation 
of 
the 
platform 
business 
we 
started 
in 
2017 
with 
the 
income
-
producing 
real 
estate 
mortgage 
platform 
UBS 
Atrium
. 
As 
part 
of 
an 
open 
banking 
approach, 
numerous 
lead 
generation 
partners 
(mortgage 
brokers, 
real 
estate 
agents 
and 
business-to-customer 
platforms) 
were 
onboarded 
in 
2020 
and 
added to 
key4
 
and 
UBS Atrium
. Both platforms and partnerships 
are central parts of our Swiss digital strategy. 
Technology 
plays 
a 
key 
role 
in 
our 
client-centered 
operating 
model and 
we aim 
to expand 
our 
digital leadership. 
Our multi-
year 
digitalization 
program 
is
 
further 
enhanc
ing
 
the 
client 
experience. 
T
echnological 
solutions
 
allow 
us 
to
 
offer 
new 
products 
to 
clients, 
such as 
the innovative 
UBS Global 
Card
 
for 
frequent 
travelers 
and 
o
nline
 
s
hopp
ing,
 
and 
to 
identify 
new 
cross
-
selling 
opportunities 
in 
more 
targeted 
way
s
. 
We 
are 
planning to launch 
the first Swiss 
virtual consumer credit 
card in 
early 
2021. 
Virtual 
issuance 
will 
enable 
customers 
to 
use 
an 
issued credit card 
immediately in e-commerce 
transactions or via 
their 
e-wallets, 
without 
waiting 
for 
a 
physical 
card 
to 
arrive 
in 
the mail. 
›
 
Refer to “Clients” in the “How we create value 
for our 
stakeholders” section of this report for more information 
about 
innovation and digitalization 
 
To 
further 
strengthen 
our 
position 
as 
a 
leader 
in 
terms 
of 
sustainability, 
we 
became 
the 
first 
Swiss 
bank 
to 
convert 
all 
second and 
third pillar 
pension funds 
(the 
UBS Vitainvest 
family, 
at 
the 
time 
of 
conversion 
approximately 
CHF 8 
billion 
of 
assets 
under management) to sustainable investment 
strategies aligned 
with 
defined 
environmental, 
social 
and 
governance 
criteria. 
Furthermore, we 
are extending 
sustainability-linked loans 
to our 
large 
corporate clients 
in order 
to increase 
the attractiveness 
of 
acting sustainably and advising them on issuing green bonds. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about sustainability matters 
 
We 
also 
collaborate 
successfully 
with 
insurance 
companies. 
For 
example, 
we 
work 
with 
Swiss 
Re 
subsidiary 
iptiQ 
to 
offer 
clients 
life 
insurance 
that 
fits 
seamlessly 
into 
our 
mortgage 
advice. 
And, 
with 
Zurich 
Insurance, 
we 
have 
launched 
a 
new 
bancassurance offering for start-ups to cover the needs of young 
entrepreneurs in Switzerland. 
How we operate 
We 
operate 
primarily 
in 
our 
Swiss 
home 
market. 
With 
our 
business 
areas 
of 
Personal 
Banking, 
Corporate 
& 
Institutional 
Clients, and 
Digital Platforms & 
Marketplaces, 
we 
are 
organized 
into 
10 
regions 
(with 
239 
branches as 
of 
31 
December 2020), 
covering distinct Swiss economic areas. We plan to further adjust 
our branch 
network to 
changing client 
behavior and 
are 
closing 
44 
branches 
in 
the 
first 
quarter 
of 
2021
;
 
our 
services 
are 
increasingly 
provided 
through 
the 
more 
in
-
demand 
digital 
channels. 
We 
also 
support 
the 
international 
business 
activities 
of 
our 
Swiss 
corporate 
and 
institutional 
clients 
through 
local 
hubs 
in 
Frankfurt, New York, 
Hong Kong and 
Singapore. No other 
Swiss 
bank 
offers 
its 
corporate 
clients 
local 
banking 
capabilities 
abroad. 
In 
Swiss 
Personal 
Banking, 
our 
main 
competitors 
are 
Credit 
Suisse, 
PostFinance, 
Raiffeisen, 
cantonal 
banks
,
 
and 
other 
regional 
and 
local 
Swiss 
banks; 
we 
also 
face 
competition 
from 
international 
neobanks 
and 
other 
national 
digital 
market 
participants. 
Areas 
of 
competition 
are 
basic 
banking 
services, 
mortgages 
and 
foreign 
exchange, 
as 
well 
as 
investment 
mandates and funds. 
In Corporate & 
Institutional Clients, our 
main competitors are 
Credit Suisse, 
cantonal banks 
and globally 
active foreign 
banks. 
We compete 
in basic 
banking services, 
cash management, 
trade 
and 
export 
finance, 
asset 
servicing, 
investment 
advice 
for 
institutional clients, corporate finance and lending, 
and cash and 
securities transactions for banks. 
 
 
 

 
23 
What we offer 
Our 
personal 
banking 
clients 
have 
access 
to 
a 
comprehensive, 
life 
cycle
-
based 
offering
,
 
a 
broad 
range 
of 
basic 
banking 
products, 
from 
payments 
to 
deposits, 
cards, 
and 
convenient 
online 
and 
mobile 
banking, 
as 
well 
as 
lending 
(predominantly 
mortgages), 
investments 
and 
retirement 
services. 
Th
is 
is 
complemented 
by 
our 
UBS 
KeyClub
 
reward 
program, 
which 
provides 
clients 
in 
Switzerland 
with 
exclusive 
and 
attractive 
offers 
(some 
from 
third-party 
partners). 
We 
work 
closely 
with 
Global 
Wealth 
Management 
to 
offer 
leading 
private 
banking 
and wealth management services. 
Our 
corporate 
and 
institutional 
clients 
benefit 
from 
our 
financing and 
investment solutions, 
particularly access 
to equity 
and 
debt 
capital 
markets, 
syndicated 
and 
structured 
credit, 
private 
placements, 
leasing, 
and 
traditional 
financing. 
We 
offer 
transaction 
banking 
solutions 
for 
payment 
and 
cash 
management 
services, 
trade 
and 
export 
finance, 
and 
global 
custody solutions for institutional clients. 
We 
work 
closely 
with 
the 
Investment 
Bank 
to 
offer 
capital 
market and 
foreign exchange 
products, hedging 
strategies, and 
trading 
capabilities, 
as 
well 
as 
corporate 
finance 
advice. 
In 
cooperation with 
Asset Management, 
we also 
provide fund 
and 
portfolio management solutions. 
›
 
Refer to “Delivering as one firm” in this 
section for examples of 
the joint efforts of the business divisions
 
 
 
 
 
1 
As of 31 December 2020. We are closing 44 branches in the first quarter of 2021. Larger circles indicate a higher number of branches 
in a location. 
 
 
 

Our strategy, business model and environment 
| Our businesses 
24 
Asset Management
UBS 
Asset 
Management 
is 
a 
large-scale 
and 
diversified 
global 
asset manager, 
with USD 1.1 trillion 
in invested assets. 
We offer 
investment capabilities and 
styles across 
all major traditional and 
alternative 
asset 
classes, 
as 
well 
as 
advisory 
support 
to 
institutions, 
wholesale 
intermediaries 
and 
Global 
Wealth 
Management clients around the world. 
Organizational changes 
In 
2020, 
we 
changed 
the 
operational 
setup 
of 
Asset 
Management’s platforms businesses to provide greater 
scale and 
breadth of 
offering to 
our clients, 
and to 
support their 
ongoing 
development 
in 
a 
highly 
competitive 
marketplace, 
while 
at 
the 
same time enabling 
us to sharpen 
our focus on 
the execution of 
the 
division’s strategic 
priorities. As 
a 
result, 
we sold 
a majority 
stake 
(51.2%) in 
UBS Fondcenter 
AG to 
Clearstream, 
Deutsche 
Börse Group’s 
post-trade services provider. 
UBS holds a 
minority 
(48.8%) 
shareholding 
in 
the 
business, 
and 
Global 
Wealth 
Management 
continues 
to 
leverage 
the 
platform’s 
leading 
capabilities 
as 
its 
preferred 
provider. 
In 
addition, 
UBS 
Partner
 
was 
transferred 
to 
become 
part 
of 
UBS’s 
“Banks 
for 
Banks” 
offering in Personal & Corporate Banking. 
›
 
Refer to “Delivering as one firm” in this 
section for examples of 
the joint efforts of the business divisions 
Our focus 
Our 
strategy 
is 
focused 
on 
capitalizing 
on 
the 
areas 
where 
we 
have 
a 
leading 
position 
and 
differentiated 
capabilities, 
so 
as 
to 
drive further profitable growth and scale.
 
 
Sustainable 
and 
impact 
investing 
remains 
a 
key 
area, 
as 
clients increasingly 
seek solutions 
that combine 
their investment 
goals 
with 
sustainability 
objectives. 
We 
are 
continu
ing
 
the 
expansion of our world-class capabilities in areas such as climate-
aware 
solutions. 
We 
do 
this 
through: 
product 
and 
service 
innovation; 
dedicated 
research; 
the 
integration 
of 
environmental, 
social 
and 
governance 
factors 
into 
our 
investment 
processes, 
leveraging 
our 
proprietary 
analytics; 
and 
active corporate engagement. At the start of 
2020, we launched 
our new 
Climate Aware 
framework, an 
innovative solution 
that 
can be customized 
to clients‘ objectives 
to support them 
in their 
own 
climate-change 
transition. 
Designed 
to 
protect 
assets 
against 
climate 
risks, 
this 
approach 
considers 
a 
company‘s 
forward-looking 
commitment 
to 
carbon 
reduction 
and 
is 
underpinned 
by 
our 
climate 
engagement 
strategy, 
investing 
in 
companies 
at 
the 
heart 
of 
the 
shift 
to 
a 
climate-smart 
future. 
Alongside 
this, 
we 
launched 
a 
suite 
of 
active 
Climate 
Aware 
products, 
building 
on 
our 
award-winning 
passive 
offering. 
Our 
Climate Aware 
assets under 
management (AuM) 
have grown 
to 
more 
than 
USD 15 
billion, 
while 
our 
wider 
sustainable-focused 
AuM 
have 
reached 
over 
USD 97 
billion. 
In 
addition, 
reflecting 
our commitment to support investor networks and drive the ESG 
agenda in 
financial markets, in 
2020 we 
joined the “One 
Planet 
Asset 
Managers” 
initiative 
and 
became 
one 
of 
the 
founding 
members of the “Net Zero Asset Managers” initiative. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about sustainability matters 
 
In 
response 
to 
the 
increasing 
importance 
of 
private 
markets 
and 
alternative 
investments, 
we 
are 
building 
on 
our 
existing 
expertise 
in 
these 
areas, 
including 
our 
real 
estate 
and 
hedge 
fund businesses, 
as well 
as our 
capabilities across 
infrastructure, 
private equity and private debt. 
We also continue to develop our award-winning
1
 
indexed and 
alternative 
beta 
businesses 
globally, 
including 
exchange-traded 
funds 
(ETFs) 
in 
Europe 
and 
Switzerland. 
We 
provide 
customization 
while 
leveraging 
our 
highly 
scalable 
platform, 
with 
a 
particular 
focus 
on 
key 
areas 
such 
as 
sustainability 
and 
fixed income products. 
›
 
Refer to “Clients” in the “How we create value 
for our 
stakeholders” section of this report for more information 
about 
innovation and digitalization 
 
Geographically, we continue 
to invest in our 
leading presence 
and 
products 
in 
China, 
both 
onshore 
and 
offshore, 
one 
of 
the 
fastest-growing 
asset 
management 
markets 
in 
the 
world, 
building on our extensive and long-standing presence in the 
Asia 
Pacific region. We are 
rated the number one 
foreign manager of 
inbound AuM in Greater China.
2
 
In the 
rapidly evolving 
and attractive 
wholesale segment, 
we 
aim 
to 
significantly 
expand 
our 
market 
share 
through 
a 
combination 
of continued 
increase in 
share of 
clients’ business, 
expansion of our strategic partnerships with distributors, and the 
build-out of our client service and product shelf offerings, as well 
as 
the 
launch 
of 
new 
white-labelling 
and 
implementation 
capabilities. 
To drive 
further growth 
in our 
Investment Solutions 
business, 
which 
provides 
access 
to 
and 
combines 
the 
breadth 
and 
depth 
of 
our 
capabilities 
across 
public 
and 
private 
markets, 
we 
are 
focused 
on delivering 
superior multi-asset 
strategies and 
white-
label solutions to meet the needs of clients around the world. 
We also 
continue to 
intensify our 
joint efforts 
with our 
other 
business 
divisions, 
in 
particular 
wit
h 
Global 
Wealth 
Management, 
to 
enable 
our 
teams 
to 
draw 
on 
the 
best 
ideas, 
solutions and capabilities 
from across the 
firm in order 
to deliver 
superior investment performance and experiences for our clients. 
For 
example, 
the 
separately 
managed 
accounts 
initiative 
with 
Global Wealth 
Management in 
the US 
generated USD 53 
billion 
in net 
new money 
inflows in 
2020 and 
strongly positions 
us to 
capture 
attractive 
opportunities in 
other 
channels by 
leveraging 
our world-class expertise 
and capabilities to 
meet growing client 
demand. 
›
 
Refer to “Delivering as one firm” in this 
section for examples of 
the joint efforts of the business divisions 
 
 
1
 
Passive Manager of the Year in the European Pensions 
Awards 2020 and ranked fourth largest ETF provider in Europe as of 
December 2020 (source: ETFGI). 
2 
Ranking compiled by Broadridge in April 2020. 
 
 

 
25 
To 
support 
our 
growth, 
we 
are 
focused 
on 
disciplined 
execution 
of 
our 
operational 
excellence 
initiatives. 
This 
includes 
further 
automation, 
simplification, 
process 
optimization 
and 
offshoring / 
nearshoring of 
selected activities, 
complemented by 
continued 
modernization 
of 
our 
platform 
and 
development 
of 
our analytics and data capabilities. 
How we operate 
Our 
business 
division 
is 
organized 
along 
six
 
areas: 
Client 
Coverage, Investments, 
Real Estate 
& Private 
Markets, Products, 
Multi-Manager Solutions, and the COO. 
We cover 
the main 
asset management 
markets globally, 
and 
have 
a 
local 
presence 
in 
23 
markets 
across 
four 
regions: 
the 
Americas; Europe, 
the Middle 
East and 
Africa; Switzerland; 
and 
Asia 
Pacific. 
We 
have 
nine 
main 
hubs: 
Chicago, 
Hong 
Kong, 
London, 
New 
York, 
Shanghai, 
Singapore, 
Sydney, 
Tokyo 
and 
Zurich. 
Our 
main 
competitors 
are 
global 
firms 
with 
wide-ranging 
capabilities 
and 
distribution 
channels, 
such 
as 
Amundi, 
BlackRock, 
DWS, 
Goldman 
Sachs 
Asset 
Management, 
Invesco,
JPMorgan 
Asset 
Management, 
Morgan 
Stanley 
Investment 
Management 
and 
Schroders, 
as 
well 
as 
firms 
with 
a 
specific 
market or asset-class focus. 
What we offer 
We 
offer 
clients 
a 
wide
 
range 
of 
investment 
products 
and 
services 
in 
different 
asset 
classes, 
in 
the 
form 
of 
segregated, 
pooled 
or 
advisory 
mandates, 
as 
well 
as 
registered 
investment 
funds in various jurisdictions. 
Our 
traditional 
and 
alternative 
capabilities 
include 
equities, 
fixed income, 
hedge funds, 
real estate 
and private 
markets, and 
indexed 
and 
alternative 
beta 
strategies 
(including 
exchange-
traded 
funds), 
as 
well 
as 
sustainable 
and 
impact 
investing 
products and solutions. 
Our 
Investment 
Solutions 
business 
draws 
on 
the 
breadth 
of 
our capabilities to offer: asset allocation and currency investment 
strategies 
across 
the 
risk 
/ 
return 
spectrum; 
customized 
multi-
asset 
solutions, 
advisory 
and 
fiduciary 
services; 
and 
multi-
manager hedge fund solutions and advisory services. 
 
 

Our strategy, business model and environment 
| Our businesses 
26 
Investment Bank
The Investment 
Bank provides 
services to 
institutional, corporate 
and 
wealth 
management 
clients
,
 
help
ing
 
them
 
raise 
capital, 
grow their 
businesses, invest 
for growth 
and manage 
risks. Our 
traditional strengths 
are in 
equities, foreign 
exchange, research, 
advisory
 
services
 
and
 
capital 
markets
,
 
complemented 
by 
a 
targeted 
rates 
and 
credit 
platform
.
 
W
e 
u
se 
our 
data
-
driven
 
research 
and technology 
capabilities to 
support clients 
adapting 
to 
evolving 
market 
structures
 
and 
changes 
in
 
regulatory, 
technological, economic and competitive landscapes. 
A
im
ing
 
to 
deliver 
market
-
leading 
solutions
 
by
 
using 
our 
intelle
ctual 
capital 
and 
electronic 
platforms
,
 
w
e 
work 
closely 
with 
Global 
Wealth 
Management, 
Personal 
& 
Corporate 
Banking 
and 
Asset 
Management 
to 
bring 
the 
best 
of 
UBS’s 
capabilities 
to 
our 
clients
. 
We 
do 
so 
with
 
a 
disciplined 
approach 
to balance 
sheet 
deployment 
and costs. 
Organizational changes 
In 
January 
2020, 
we 
realigned 
the 
Investment 
Bank 
to 
meet 
clients
’
 
evolving 
needs 
and 
to 
further 
focus 
resources 
on 
opportunities 
for 
profitable 
growth 
and 
digital 
transformation. 
Corporate 
Client 
Solutions 
and 
Investor 
Client 
Services 
were 
renamed 
Global 
Banking 
and 
Global 
Markets, 
respectively. 
Global 
Banking 
operates 
with
 
two 
product 
verticals: 
Capital 
Markets 
(which 
includes 
Public 
Capital 
Markets 
and 
Private 
Financing 
Markets) 
and 
Advisory 
(which 
includes 
Mergers 
& 
Acquisitions), adopting a global coverage 
model. Global Markets 
combined Equities with Foreign 
Exchange, Rates and Credit, 
and 
introduced 
three 
product 
verticals 
(Execution 
& 
Platform, 
Derivatives 
& 
Solutions, 
and 
Financing) 
and 
three 
horizontal 
functions 
(Risk 
& 
Trading, 
Distribution, 
and 
Digital
 
Transformation). 
This 
Global 
Markets 
structure 
is 
designed 
to 
align 
business 
processes 
and 
operations
,
 
and 
to 
reduce 
inefficiencies 
and 
duplication. 
It 
offers 
a 
more 
holistic 
understanding of clients’ 
cross-product needs 
and aims to 
foster 
tighter coordination of client 
coverage and distribution, enabling 
improved 
oversight 
of 
key 
risks 
and 
allocation 
of 
resources. 
Investment 
Bank 
Research 
and 
UBS 
Evidence 
Lab 
Innovations 
have 
been 
moved 
to 
Group 
Functions, 
in 
Group 
Research 
and 
Analytics, 
but 
remain 
critical 
parts 
of 
our 
advisory 
and 
content 
offering. 
Our focus 
Our priority 
is the 
provision of 
seamless client 
service and 
high-
quality 
execution. 
In 
Global 
Banking, 
we 
position 
ourselves 
as 
trusted 
advisor 
through
 
our 
deep 
client 
coverage 
and 
by 
providing access to the full capabilities of UBS. 
Our 
global 
coverage 
model 
utilizes 
our
 
deep 
international 
industry expertise and product 
capabilities to meet the 
emerging 
needs 
of 
clients. 
We 
provide 
our 
clients 
with 
excellence 
in 
execution, financing and structured solutions through our Global 
Markets franchise. 
In Global Markets, our sharpest competitive edge 
comes from 
coordinating 
our 
services 
across 
a 
wide 
range 
of 
asset 
classes 
and products. 
L
ed 
by 
our 
businesses, 
o
ur 
digital 
strategy 
harness
es
 
technology 
to 
provide 
access 
to 
a 
wide 
range 
of 
sources 
of 
global liquidity 
and differentiated 
content. 
UBS Investment Bank 
Innovation Lab
 
aims to speed up 
innovation by facilitating proofs 
of 
concept. 
G
lobal 
Research
 
continue
s
 
to 
publish 
research 
informed 
by 
primary
 
data
 
to 
concentrate 
on 
data
-
driven 
outcomes and insights. 
Our 
balanced 
global 
reach 
gives 
attractive 
options
 
for 
growth. 
In 
the 
Americas, 
the 
largest 
investment 
banking 
fee 
pool 
globally, 
we 
focus 
on 
increasing 
market 
share 
in 
our 
core 
Global 
Banking 
and 
Globa 
l 
Markets 
businesses 
. 
In 
Asia 
Pacific
,
 
opportunities 
arise 
mainly 
from 
expected 
market 
internationalization 
and 
growth 
in 
China. 
We 
plan 
to 
grow 
by 
strengthening 
our 
presence
,
 
both 
onshore 
and 
offshore.
 
In 
EMEA, 
we 
plan 
to 
leverage 
our 
strong 
base 
and 
brand 
recognition even further. 
Joint 
efforts
 
between 
the 
Investment
 
Bank
 
and 
the 
other 
business divisions 
(e.g., the 
creation of 
a unified 
capital markets 
group) and, externally, strategic partnerships (e.g., 
UBS BB jointly 
with 
Banco 
do 
Brasil, 
focused 
on 
Latin 
America
)
 
are 
a 
key 
strategic priority. 
We expect these initiatives to lead to growth by 
delivering global 
products to 
each region, 
leveraging our 
global 
connectivity 
across borders, 
sharing and 
strengthening 
our best 
client relationships. 
›
 
Refer to “Delivering as one firm” in this 
section for examples of 
the joint efforts of the business divisions 
How we operate 
Our 
business 
division 
consists 
of 
two 
areas: 
Global 
Banking 
and 
Global 
Markets. 
Governed 
by 
the 
executive, 
operating, 
risk, 
and 
asset 
and 
liability 
committees 
, 
each 
business 
area 
is 
organized 
globally by 
product. 
Our 
geographically 
balanced 
business 
has 
a 
global 
reach, 
with 
a 
presence 
in 
more 
than 
30 
countries 
and 
offices 
in 
the 
major financial 
hubs. 
Competing 
firms 
operate 
in 
many 
of 
our 
markets, 
but 
our 
strategy 
differentiates 
us, 
with 
its 
focus 
on 
leadership 
in 
the 
areas where 
we have 
chosen to 
compete, and 
a business model 
that leverages talent and technology rather than balance sheet. 
Our main 
competitors are 
the major 
global investment banks 
(e.g., 
Morgan 
Stanley, 
Credit 
Suisse 
and 
Goldman 
Sachs
)
 
and 
corporate 
investment 
banks 
(e.g.
,
 
Bank 
of 
America, 
Barclays, 
Citigroup, BNP Paribas, Deutsche 
Bank and JPMorgan Chase). We 
also compete with 
boutique investment 
banks and fintech 
firms in 
certain regions 
and products. 
Joint 
efforts
 
with 
Global 
Wealth 
Management 
and 
Asset 
Management 
enable 
us 
to 
provide 
clients 
with 
broad 
access to 
financing, global capital markets and portfolio solutions. 
›
 
Refer to “Delivering as one firm” in this 
section for examples of 
the joint efforts of the business divisions 
 
 
 

 
27 
What we offer 
Our Global Banking business advises clients 
on strategic business 
opportunities and helps them raise capital to fund their activities. 
Our 
Global 
Markets 
business 
enables 
our 
clients 
to 
buy, 
sell 
and 
finance 
securities 
on 
capital 
markets 
worldwide 
and 
to 
manage their risks and liquidity. 
In
 
cooperation 
with 
Glo
bal 
Research,
 
we 
offer 
clients 
differentiated 
content 
on major 
financial 
markets and 
securities 
around 
the 
globe, 
spanning 
more 
than 
30 
countries 
and 
50 
sectors. Separately, 
our experts 
in UBS 
Evidence Lab 
Innovations 
create insight-ready data sets on diverse topics. 
We 
seek 
to 
develop 
new 
products 
and 
solutions 
consistent 
with our capital-efficient business model, 
typically related to new 
technologies or changing market standards. 
›
 
Refer to “Clients” in the “How we create value 
for our 
stakeholders” section of this report for more information 
about 
innovation and digitalization 
 
Since 2005, 
we have 
addressed increasing 
client demand 
for 
sustainable 
investing
,
 
providing 
thematic 
and 
sector 
research
 
and investment solutions through socially responsible and impact 
exchange-traded 
funds 
and 
index-linked 
notes. 
In 
addition, 
we 
offer 
capital-raising 
and 
strategic 
advisory 
services 
globally 
to 
companies 
that 
make 
positive 
contributions 
to 
climate 
change 
mitigation and adaptation. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about sustainability matters 
 
 
 
 
 

Our strategy, business model and environment 
| Our businesses 
28 
Group Functions
Group 
Functions 
(formerly 
named 
Corporate 
Center) 
provides 
services to 
the Group 
, 
focusing on 
effectiveness, 
risk mitigation 
and efficiency. 
Group 
Functions also 
includes the 
Non-core and 
Legacy Portfolio unit. 
How we are organized 
Group Functions 
The 
major 
areas 
within
 
Group 
Functions
 
are 
Group 
Services
 
(
which 
consist
s
 
of 
Technology, 
Corporate 
Services, 
Human 
Resources
, 
Operations
, 
Finance
, 
Legal
, 
Risk 
Control
, 
Research 
and 
Analytics, 
Compliance
, 
Regulatory 
& 
Governance
,
 
Communications 
& 
Branding 
and 
UBS 
in 
S
ociety
), 
Group 
Treasury 
and Non-core and Legacy Portfolio. 
Investment Bank 
Research and 
UBS Evidence 
Lab Innovations 
have 
been 
moved 
to 
Group 
Functions, 
in 
Group 
Research 
and 
Analytics. 
In 
recent 
years
,
 
we 
have 
aligned 
support 
functions 
and 
business 
divisions. 
The 
vast 
majority 
of 
such 
functions 
are 
fully 
aligned or shared among business 
divisions, where they have full 
management 
responsibility.
 
By 
keeping 
the 
activities 
of 
the 
businesses 
and 
support 
functions 
close, 
we 
increase 
efficiency 
and 
create 
a 
working 
environment 
built 
on 
accountability 
and 
collaboration. 
No
n
-
core 
and 
Legacy 
Portfolio
, 
a 
small 
residual 
set 
of 
activities in Group Treasury and certain other costs mainly related 
to 
deferred 
tax 
assets 
and 
costs 
relating 
to 
our 
legal 
entity 
transformation program, is retained centrally. 
Group Treasury 
Group 
Tre
asury
 
manages 
balance 
sheet 
structural 
risk 
(e
.
g.,
 
interest 
rate, 
structural 
foreign 
exchange 
and 
collateral 
risks) 
and
 
the 
risks 
associated 
with 
our 
liquidity 
and 
funding 
portfolios. 
Group 
Treasury 
serves 
all 
business 
divisions 
and 
its 
risk 
management 
is integrated 
into 
the Group 
risk 
governance 
framework. 
Non-core 
and Legacy Portfolio 
Non-core 
and 
Legacy 
Portfolio 
manages 
legacy 
positions 
from 
businesses 
exited 
by 
the 
Investment 
Bank, 
following 
a 
largely 
passive 
wind-down 
strategy. 
Overseen 
by 
a 
committee 
chaired 
by 
the 
Group 
Chief 
Risk 
Officer
,
 
its 
portfolio 
also 
includes 
positions 
relating 
to 
legal 
matters 
arising 
from 
businesses 
transferred to it at the time of its formation. 
›
 
Refer to “Note 18 Provisions and contingent 
liabilities” in the 
“Consolidated financial statements” section 
of this report for 
more information about litigation, regulatory and 
similar 
matters 
 

 
29 
Our environment
 
Our response to COVID-19
The COVID-19 
pandemic caused an 
unprecedented situation 
for 
UBS 
and 
its 
employees 
in 
2020. 
It 
has 
required 
our 
ongoing 
focus on safeguarding the well-being of our employees and their 
families, serving our clients and ensuring operational continuity. 
In 
response 
to 
the 
pandemic, 
governments 
have 
taken 
measures 
to 
severely 
constrain 
movement, 
limiting 
public 
gatherings, 
requiring 
working 
from 
home 
where 
possible, 
and 
closing 
down 
or 
restricting 
non-essential 
retail 
and 
business 
activity. 
These 
measures 
have 
had 
a 
severely 
adverse 
effect 
on 
global 
economic 
activity, 
resulting 
in 
the 
sharpest 
downturn 
in 
global GDP since 
World War II in 
the first half 
of 2020, followed 
by 
an 
uneven 
rebound 
in 
economic 
activity 
during 
the 
second 
half of the year. 
Governmental measures to support the economy 
Governments 
and 
central 
banks 
offered 
and 
continue 
to 
offer 
significant 
fiscal 
and 
monetary 
support 
intended 
to 
help 
firms 
and 
employees 
to 
remain 
solvent 
through 
the 
COVID-19 
pandemic, 
and 
financial 
services 
firms 
were 
provided 
with 
exceptional access to liquidity in 
the first phase of the pandemic. 
In 
addition, 
a 
number 
of 
regulatory 
and 
supervisory 
measures 
have 
been 
temporarily 
introduced, 
seeking 
to 
provide 
banks 
with 
increased 
flexibility 
in 
deploying 
capital 
and 
liquidity 
resources to support economies. 
›
 
Refer to the “Regulatory and legal developments” 
section of this 
report 
Our support for clients and the economies in which we 
operate 
Throughout 
2020, 
we 
actively 
engaged 
in 
lending 
activities 
across 
our 
businesses 
to 
support 
our 
clients 
and 
the 
real 
economy. 
As 
the 
pandemic 
intensified 
and 
market 
liquidity 
became 
limited, 
we 
experienced 
higher 
drawdowns 
on 
committed credit 
facilities by 
corporate clients 
in the 
Investment 
Bank and in Personal & Corporate Banking. 
The 
program 
established 
by 
the 
Swiss
 
Federal 
Council 
in 
March 
2020 to 
support small 
and medium-sized 
entities (SMEs) 
by 
granting 
loans 
closed 
on 
31 July 
2020. 
As 
of 
that 
date, 
we 
had 
committed 
CHF 2.7 
billion 
of 
loans 
up 
to 
CHF 0.5 million, 
which 
are 
100% 
guaranteed 
by 
the 
Swiss 
government, 
and 
CHF 0.6 
billion 
of 
loans 
between 
CHF 0.5 million 
and 
CHF 20 
million, 
which 
are 
85% 
government
-
guaranteed. 
As 
of 
31 December 
2020, 
the 
total 
committed 
loans 
amounted 
to 
CHF 3.0 billion (31 July 
2020: CHF 3.3 billion), 
of which CHF 1.8 
billion 
was 
drawn. 
We 
intend 
to 
donate 
any 
economic 
profits 
from this 
program to 
COVID-19 relief 
efforts, although 
no such 
profits were made in 2020. 
In 
the 
US, 
we 
are 
supporting 
the 
lending 
programs 
created 
under 
the 
CARES 
Act 
for 
small 
businesses. 
Working 
with 
a 
partner, 
we 
made 
up 
to 
USD 2 
billion 
available 
under 
the 
Paycheck 
Protection 
Program 
during 
2020 
and 
provided 
loans 
under 
the 
program 
in 
the 
amount 
of 
USD 656 
million 
as 
of 
31 December 
2020. 
We 
donated 
around 
USD 2 
million 
of 
fees 
earned on such loans in 2020 to COVID-19 relief efforts. 
Our 
previous 
investments 
in 
technology 
enabled 
us 
to 
maintain effective 
connectivity within 
and across 
our businesses 
and support functions. 
Leveraging existing and 
newly integrated 
tools, 
this 
resulted 
in 
new 
ways 
of 
digitally 
interacting 
with 
clients. 
Across 
our 
business 
divisions, 
we 
continued 
to 
support 
our 
clients 
with 
advice 
needed 
to 
manage 
their 
assets, 
along 
with 
actively developing investment solutions 
and global insights. Our 
dynamic risk 
management enabled 
our business 
and our 
clients 
to successfully navigate the volatile market conditions. 
Our support for communities 
Recognizing 
the 
strain 
and 
hardship 
the 
current 
situation 
is 
causing 
across 
our 
communities, we 
committed 
USD 30 
million 
to various aid 
projects related 
to COVID-19 that 
provide support 
across 
the 
communities 
in 
which 
we 
operate. 
A 
part 
of 
this 
amount 
has 
been 
used 
to 
match 
the 
USD 15 
million 
raised 
by 
our clients and our employees for the UBS Optimus Foundation’s 
COVID-19 Response Fund, which supports various organizations, 
including 
healthcare 
organizations 
that 
facilitate 
testing 
and 
increase capacity for emergency treatments.
 
 
 
 

Our strategy, business model and environment 
| Our environment 
30 
Our support for employees 
Our employees’ response 
to the pandemic has 
been remarkable: 
they 
have 
demonstrated 
resilience, 
dedication 
and 
client 
focus 
through 
an 
unrelenting 
year. 
More 
than 
95% 
of 
internal 
and 
external 
staff 
are 
able 
to 
work 
concurrently 
on 
a 
remote 
basis, 
and 
our 
employees 
have 
been 
working 
from 
home 
to 
a 
significant 
degree 
since 
the 
first 
quarter 
of 
2020. 
We 
continue 
to monitor 
country- and 
location-specific developments, 
as well 
as 
governmental 
requirements, 
and 
adapt 
our 
plans 
for 
the 
return 
of 
employees 
to 
our 
offices 
accordingly, 
prioritizing 
the 
health of our employees and clients. 
Recognizing 
the additional 
pressure placed 
on 
employees 
by 
closed 
workplaces 
and 
schools, 
restricted 
activities 
and 
varying 
degrees 
of 
lockdown, 
we 
introduced 
a 
range 
of 
measures 
throughout 
2020 
to 
help 
employees 
adapt. 
For 
example, 
we 
offered 
extra 
flexibility 
to 
care 
for 
children 
and 
introduced 
a 
variety 
of 
tools 
and 
resources 
to 
support 
employees’ 
physical, 
mental, financial and social well-being. 
As 
a 
sign 
of 
appreciation 
for 
their 
contribution 
throughout 
this 
challenging 
year, 
and 
acknowledging 
that 
the 
pandemic 
may have 
resulted in 
unforeseen expenses, 
the Group 
Executive 
Board awarded 
UBS’s employees 
at less 
senior ranks 
a one-time 
cash payment 
equivalent to 
one week’s 
salary. Furthermore, 
we 
paused restructuring 
activities during 
2020 that 
would have 
led 
to 
redundancies, 
providing 
our 
employees 
with 
some 
stability 
during these uncertain times. 
In 
the 
third 
quarter 
of 
2020, 
we 
modified 
the 
forfeiture 
conditions of certain outstanding deferred 
compensation awards 
for 
eligible 
employees 
in 
order 
to 
provide 
additional 
career 
flexibility 
during 
this 
time 
of 
uncertainty. 
Outstanding 
deferred 
compensation 
awards 
granted 
to 
Group 
Executive 
Board 
members and those granted under the Long-Term Incentive Plan, 
as well as those granted to 
financial advisors in the US, were 
not 
affected by these changes. 
Operational resilience 
With the 
bulk 
of 
our 
workforce 
working 
outside 
of 
our 
offices 
since late 
March 2020, 
we face new 
challenges and 
operational 
risks, 
including 
maintenance 
of 
supervisory 
and 
surveillance 
controls, 
as 
well as 
increased 
fraud and 
data 
security risks. 
The 
existing resilience 
built into our 
operations and 
the effectiveness 
of 
our 
business 
continuity 
management 
and 
operational 
risk 
procedures have 
been critical in handling 
the ongoing pandemic 
and circumstances related to it, 
and have enabled us to continue 
to serve our stakeholders without material negative impact. 
As 
a 
result 
of 
our 
prior 
investments 
in 
infrastructure 
and 
execution 
of 
our 
established 
business 
continuity 
management 
frameworks, 
we 
managed 
the 
record 
transaction 
volumes 
experienced 
in 
March 
2020, 
along 
with 
extreme 
spikes 
in 
volatility and 
limited liquidity 
in some 
markets, without 
material 
disruption in our service to clients. 
›
 
Refer to “Operational risk” in the “Risk 
management and 
control” section of this report for more information about 
operational risk 
Effects of the COVID-19 pandemic on our financial and 
capital position 
Despite the 
uncertainties caused 
by the 
pandemic, the 
negative 
effects 
of 
the 
COVID-19 
crisis 
on 
our 
financial 
and 
capital 
positions were limited in 2020. 
Although 
we experienced 
an increase 
in 
credit loss 
expenses 
under 
IFRS 
9 
in 
2020, 
we 
maintained 
a 
strong 
capital 
and 
liquidity 
position 
in 
the 
face 
of 
the 
adverse 
economic 
developments, 
the 
sharp 
decline 
in 
market 
valuations 
and 
the 
increased levels of volatility. 
Overall, we 
expect elevated 
credit loss 
expenses to 
persist for 
at 
least 
as 
long 
as 
the 
COVID-19 
containment 
measures 
continue, although 
at levels lower 
than in 
the first half 
of 2020. 
Due to the credit quality of our portfolio, 
we remain confident in 
our 
ability 
to 
maintain 
our 
overall 
strength 
and 
stability 
and 
to 
continue to support our clients. 
 

 
31 
Current market climate
Global economic developments in 2020 
In 
a 
year 
shaped 
by 
the 
COVID
-
19 
pandemic,
 
the 
global 
economy 
contracted 
as 
governments 
imposed 
restrictions 
to 
stem the spread of the 
disease. Global GDP shrank by 3.4%, 
the 
most 
severe 
downturn since 
World 
War 
II, 
after grow 
ing 
2.9% 
in 
2019. 
These 
developments 
were 
met 
with 
unprecedented 
fiscal and monetary support. 
Swiss GDP 
fell 3%, 
compared with 
a growth 
rate of 1.1% 
in 
2019. 
US 
GDP 
declined 
by 
3.5
%,
 
following
 
growth 
of 
2.2% 
in 
2019, as COVID-19-related restrictions curbed economic activity. 
The contraction was even more 
acute in the Eurozone, 
with a 
6.8% 
fall 
in 
GDP, 
after 
a 
1.3% 
expansion 
in 
2019. 
Eurozone 
economies have 
suffered more 
than the 
US from 
a reduction 
in 
global 
trade 
flows. 
Germany’s 
economy 
contracted 
by 
5.3%, 
after growing by 0.6% in 2019. 
The 
UK 
suffered 
the 
largest 
contraction 
of 
all, 
with 
GDP 
down 9.9%. 
China 
was 
among 
the 
first 
nations 
that 
started 
to 
recover 
from 
the pandemic 
and suffered 
to a 
lesser extent 
from further 
waves 
of 
the 
virus 
than 
Europe 
or 
the 
US. 
Growth 
slowed 
to 
2.3%, 
following growth 
of 
6.1% in 
2019. 
Other leading 
Asian 
economies 
also 
weathered 
the 
pandemic 
relatively 
well, 
with 
South 
Korea
’
s 
economy 
contracting 
just 
1%, 
after
 
grow
ing
 
2.7% 
in 
2019
.
 
Taiwan 
was 
a 
rare 
example 
of 
a 
developed 
economy 
that managed 
to grow 
in 
2020, 
with 
GDP expanding 
3%. 
Top 
emerging 
markets 
outside 
Asia 
were 
generally 
less 
resilient. 
Mexico
’
s 
economy 
shrank 
8.5
%
 
after 
a 
0.3% 
contraction in 
2019. Brazil’s 
growth was 
minus 4.7%, 
after just 
1.1% growth in 2019. 
Major central banks attempted to cushion the economic 
blow 
from 
the 
pandemic, 
lowering 
interest 
rates, 
expanding 
quantitative 
easing 
programs, 
and 
introducing 
emergency 
lending 
facilities. 
Notably, 
the 
Federal 
Reserve’s 
balance 
sheet 
expanded 
from 
around 
USD
 
4
 
tr
illion
 
to 
USD
 
7
 
tr
illion
. 
The 
European 
Central 
Bank 
(the 
ECB) 
held 
rates 
at 
minus 
50 
basis 
points, 
while 
rates 
remained 
at 
minus 
75 
basis 
points 
in 
Switzerland. That did 
not stop inflation undershooting 
targets in 
most countries: in 
the US, inflation was 
1.9%, versus a target 
of 
2%; 
the 
Eurozone 
saw 
just 
0.4% 
inflation, 
compared 
with 
a 
target of at or just below 2%. 
But 
central 
bank 
easing
, 
substantial 
fiscal 
support
 
and 
optimism over the start of vaccine rollouts helped 
equity markets 
to 
advance 
despite 
the 
economic 
headwinds. 
The 
MSCI 
All 
Country 
World 
Index 
rose 
14.3
%
 
and 
the 
S&P 
500 
was 
up 
16.2%. The biggest advance came in the technology sector, with 
the Nasdaq 
Composite climbing 
43.6%. China’s 
CSI 300 
was a 
notable outperformer, rising 27.2%. 
It was 
also a 
favorable year for 
investors holding 
government 
bonds. 
The 
yield 
on 
10-year 
US 
Treasury 
bonds 
fell 
around 
100 basis 
points 
to 
0.92%. 
The 
yield 
on 
the 
10-year 
German 
Bund fell 35 basis points to negative 0.53%. 
Economic and market outlook for 2021 
We 
expect 
2021 
to 
be 
a 
year 
of 
renewal. 
Economic 
activity 
in 
China has already largely 
normalized. The latest progress 
toward 
vaccination raises the 
prospect that Switzerland, 
the US, the UK, 
and 
the 
Eurozone 
are 
on 
the 
way 
to 
returning 
to 
economic 
normality 
and 
a 
sustained 
recovery. 
We 
expect 
developed 
market earnings in 
2021 to have 
the potential to 
roughly match 
2019 
levels. 
Meanwhile, 
we 
expect 
listed 
emerging 
market 
companies 
will 
earn 
more 
in 
2021 
than 
in 
2019, 
powered 
by 
robust earnings growth in Asia.
 
US relations with 
China will, in 
our view, remain 
strained and 
we do not predict a 
major rollback of US tariffs 
or restrictions on 
selected Chinese 
technology firms. 
But we 
do expect 
the Biden 
administration 
to 
pursue 
a 
less 
confrontational, 
more 
multi-
lateral 
approach 
with 
China. President 
Biden is 
also likely 
to 
be 
less willing than his predecessor to use tariffs as an instrument of 
foreign 
policy. 
This 
combination, 
in 
our 
view, 
removes 
a 
major 
source of market volatility. 
With 
the 
50-50 
split 
in 
the 
US 
Senate 
and 
the 
Democratic 
Party’s 
slim 
margin 
in 
the 
House 
of 
Representatives, 
the 
Biden 
administration may find it difficult to 
implement its USD 2 trillion 
green 
spending 
election 
proposal. 
Nevertheless, 
we 
expect 
President 
Biden 
to 
use 
executive 
orders 
and 
other 
regulatory 
tools 
to 
promote 
his 
administration’s 
green 
agenda. 
With 
European governments 
committed to 
a green 
recovery from 
the 
COVID-19 
pandemic, 
we 
believe 
sustainable 
investing 
will 
gain 
further in prominence in 2021 and in the years to come. 
We 
expect 
central 
banks 
and 
governments 
to 
maintain 
economic 
stimulus 
through 
2021,
 
at 
least
 
until 
widespread 
vaccination makes a return 
to economic normality possible. Even 
then, policymakers will 
likely be reluctant 
to imperil the 
recovery 
through 
a 
premature 
return 
to
 
tighter 
monetary 
policy 
or
 
austerity. 
We 
do 
not 
expect 
rate 
increases 
from 
the 
Swiss 
National Bank, 
the Fed, the 
ECB, the Bank 
of Japan or 
the Bank 
of 
England 
in 
2021. 
We 
expect 
government 
bond 
yields 
to 
remain 
relatively 
low. 
To 
fund 
social 
support 
packages,
 
governments 
ran 
an 
aggregate 
deficit 
of 
over 
11% 
of 
global 
GDP 
in 
2020;
 
however, 
w
e 
see
 
significant 
tax 
increases 
as 
unlikely in major economies. 
We 
believe 
gradual 
economic 
normalization 
and 
continued 
policy support 
will enable 
financial markets 
to advance 
in 2021. 
We 
expect 
gains 
in 
equity 
markets 
in 
the 
Eurozone, 
the 
UK, 
Switzerland and Japan. 
But we do 
see the leadership 
of the rally 
shifting. 
While 
mega-cap 
US 
technology 
firms 
outperformed 
in 
2020, 
we 
believe 
more 
cyclical 
parts 
of 
the 
market 
will 
lead 
in 
2021, including mid- and small-cap stocks. 
 

Our strategy, business model and environment 
| Our environment 
32 
Industry trends
Although 
our 
industry 
has 
been 
heavily 
affected 
by 
continuous 
regulatory 
developments 
over 
the 
past 
decade, 
technology 
has 
clearly 
emerged 
as 
the 
main 
driver 
of 
change 
today 
and 
increasingly 
affects 
the competitive 
landscape and 
our products 
and 
operations. 
In 
parallel, 
our 
industry 
is 
materially 
driven 
by 
market and macroeconomic conditions. 
›
 
Refer to “Current market climate” in this section 
for information 
about global economic growth 
Digitalization 
Technology is 
changing the way banks 
operate and we 
expect it 
will 
continue
 
to 
do 
so
, 
in 
step 
with 
advances 
in 
computing 
capability, evolving client needs, 
and digital trends. Investment in 
technology 
is 
no 
longer 
solely 
considered 
a 
means 
of 
making 
banks more efficient. 
Today, 
such investment 
is the key 
to keeping 
banks flexible 
and competitive 
in a digitalized 
world, and it 
creates 
the opportunity 
to develop 
new business 
models. 
The 
global 
impact 
of 
COVID-19 
has 
accelerated 
digital 
transformation and also 
influenced the way 
in which institutions 
interact with clients. 
Clients’ preference for 
omni-channel advice 
is 
stronger 
than 
ever
:
 
there 
has 
been 
growth
 
in 
client 
engagement 
across 
all 
digital 
channels, 
as 
well 
as 
increases 
in 
the number of client-facing webinars 
and virtual client meetings. 
Clients 
care about 
the ease 
of 
access 
to 
information 
and 
client 
advisors, and the simplicity of doing business using technology. 
 
As 
the 
digital 
transformation accelerates, 
clients 
now 
accept 
digitalized 
personalized 
advice 
as 
complementary 
to 
human 
interaction. 
Some 
of 
the 
opportunities 
for 
growth 
stem 
from 
providing new digitally enabled advisory services that help 
clients 
tailor their product 
portfolios and take 
advantage of customized 
life-planning 
or 
business 
advice.
1
 
Going 
forward, 
clients 
will 
expect 
banks 
to 
offer 
more 
digital 
and 
mobile-based 
tools 
for 
financial management advice. 
Technological 
advances 
make 
banking 
operations 
more 
efficient as 
well as 
more resilient 
and able 
to provide 
continuity 
for 
employee 
access. 
There 
is 
a 
trend 
for 
the 
automation 
of 
banking processes that are repetitive and labor 
intensive, such as 
data collection, data crunching and data reporting tasks. 
Consolidation 
Many regions and businesses in the financial services industry are 
still 
highly 
fragmented. 
We 
expect 
further 
consolidation, 
with 
the 
key drivers 
being ongoing 
margin 
pressure, a 
push for 
cost 
efficiencies 
and 
increasing 
scale 
advantages 
resulting 
from 
the 
fixed 
costs 
of 
technology 
and 
regulatory 
developments. 
Many 
banks now 
seek increasing 
exposure and 
access to 
regions with 
attractive 
growth 
profiles, 
such 
as 
Asia 
and 
other 
emerging 
markets, 
through 
local 
acquisitions 
or 
partnerships. 
T
he 
increased focus 
on core 
capabilities and 
geographical footprints 
and 
the 
ongoing 
simplification 
of 
business 
models 
to 
reduce 
operational 
and 
compliance 
risks 
will 
result 
in 
further 
disposals 
of non-core businesses and assets. 
The impact of the COVID-19 pandemic may further accelerate 
consolidation
,
 
as 
banks 
face 
increasing 
threat
s
 
from 
digitalization, 
low 
interest 
rates 
and 
intensified 
competition. 
There 
are 
likely 
to 
be 
more 
mergers 
and 
acquisitions 
in 
the US 
and especially the EU, with growing regulatory appetite. 
New competitors 
Our 
competitive 
environment 
is 
evolving. 
In 
addition 
to 
traditional 
competitors 
in 
the 
asset-gathering 
businesses, 
new 
entrants 
are 
targeting 
selected 
parts
 
of 
the 
value 
chain. 
However, 
we 
have 
not 
yet 
seen 
a 
fundamental 
unbundling 
of 
the 
value 
chain and 
client 
relationships, 
which 
might ultimately 
result 
in 
the 
disintermediation 
of 
banks 
by 
new 
competitors. 
Over 
the 
long 
term, 
we 
believe 
large 
platform 
companies 
entering 
the 
financial 
services 
industry 
could 
pose 
a 
significant 
competitive 
threat, 
given 
their 
strong 
client 
franchises 
and 
access 
to 
client 
data. 
Fintech 
firms 
are 
gaining 
momentum, 
particularly 
due 
to 
COVID-19 
as 
consumers 
respond 
and 
adapt 
to 
the 
crisis. 
However, 
such 
firms 
have 
not 
to 
date 
materially 
disrupted 
our 
asset-gathering 
businesses. 
The 
trend 
for 
forging 
partnerships 
between 
new 
entrants 
and 
incumbent 
banks 
has 
continued 
throughout 
the 
pandemic 
and 
is 
set 
to 
go 
on, 
as 
technology 
and 
innovation 
help 
banks 
overcome 
new 
challenges. 
Regulation 
The 
COVID-19 
pandemic 
dominated 
the 
regulatory 
agenda 
in 
2020 and 
caused a 
shift in 
regulatory and 
supervisory priorities. 
Although 
the 
financial 
sector 
has 
demonstrated
 
resilience, 
a 
number of unintended 
implications of the 
regulatory framework 
led to new discussions 
that we expect to 
shape regulation in the 
coming 
years, 
such 
as 
the 
role 
and 
use 
of 
capital 
and 
liquidity 
buffers, 
and 
procyclical 
effects 
in 
areas 
such as 
the market 
risk 
and accounting frameworks. 
The pandemic has 
also significantly 
increased 
the 
regulatory 
focus 
on 
operational 
resilience, 
with 
several jurisdictions 
proposing measures 
to enhance 
operational 
resilience in the financial sector. 
While 
policymakers 
delayed 
the 
Basel 
III 
implementation 
timeline 
due to 
COVID-19, 
the reforms 
remain 
on the 
agenda, 
as 
rulemaking 
at 
the 
national 
level 
continues. 
We 
also 
expect 
further 
adjustments 
to 
the 
Swiss 
too-big-to 
-fail 
framework, 
with 
additional 
liquidity 
requirements 
for 
systemically 
important banks. 
 
 
 
 
 
1 
The 2020 Accenture Global Banking Consumer Study published on 8 December 2020: 
accenture.com/ca-en/insights/banking/consumer-study-making-digital-banking-more-human
 
 
 

 
33 
Looking 
ahead, 
we 
expect 
increased 
regulatory 
policy 
developments 
in areas 
including 
digital innovation, 
the use 
and 
protection 
of 
data, 
cybersecurity 
and 
anti-money 
laundering. 
We 
also 
expect 
further 
progress 
on 
sustainability-related 
policy 
proposals, 
with 
a 
focus 
on 
climate 
risks, 
sustainable 
finance 
taxonomies 
and 
overall 
disclosure 
requirements. 
Regulators 
will 
address 
more 
recent 
challenges 
that 
could 
impact 
financial 
stability, 
such 
as 
the 
non-banking 
financial 
industry 
and 
digital 
currencies. 
Many of 
these developments 
are taking 
place in 
a new 
wave 
of 
national 
focus 
that 
could 
pose 
additional 
challenges 
to 
the 
provision 
of 
cross-border 
financial 
services. 
Further 
restrictions 
with 
regard 
to 
market 
access 
into 
the 
EU 
in 
particular 
would 
have 
a 
significant 
effect 
on 
Switzerland 
as 
a 
financial 
center, 
affecting UBS. 
In addition, 
the relationship 
between the 
UK and 
the 
EU 
following 
the 
expiration 
of 
the 
transition 
period 
on 
31 
December 
2020 
may 
affect
 
future 
regulatory 
priorities 
and
 
financial 
services 
in 
Europe. 
Variations 
in 
how 
countries 
implement 
rules, 
and 
increased 
national 
focus, 
bring 
risks 
of 
additional 
regulatory 
fragmentation, 
which 
in 
turn 
may 
lead 
to 
higher costs for us and new financial stability risks. 
However, we believe the continuous 
refinements made to our 
business 
model 
and 
the 
proactive 
management 
of 
regulatory 
change 
put 
us 
in 
a 
strong 
position 
to 
absorb 
future 
developments in the regulatory environment. 
›
 
Refer to the “Regulatory and legal developments” 
and “Capital, 
liquidity and funding, and balance sheet” 
sections of this report 
for more information 
Wealth creation 
All figures below 
are from the 
BCG Global Wealth 
Report 2020
1
 
and 
refer 
to 
the 
2019 
financial 
year. 
Global 
wealth 
grew 
by 
9.6% 
to 
USD 226 
trillion 
in 
2019, 
the 
fastest 
rate 
of 
increase 
since 
2005 
and 
the 
second-best 
performance 
of 
the 
past 
two 
decades. 
This 
was 
driven by 
a 
24% 
rally 
in 
global 
equities, 
the 
best year since 
2009. The rise 
in wealth marked 
a recovery from 
2018, 
which 
registered 
a 
growth 
rate 
of 
just
 
0.8%. 
North 
America 
continued 
to 
represent 
the 
largest 
concentration 
of 
wealth, at 
44%, followed 
by Western 
Europe at 
20%. But 
Asia 
has been gaining ground, with a compound growth rate of close 
to 
11% 
over 
the 
past 
decade, 
compared 
with 
6.3% 
in 
North 
America and 3.9% in Western Europe. The outlook for 
wealth in 
the coming years 
will be partly defined 
by the pace 
of economic 
recovery from 
the COVID-19 
pandemic. A 
swift rebound 
would 
likely see wealth 
rise by a 
compounded 4.5% over 
the next four 
years, falling 
to 3.2% 
in the event 
of a slow 
recovery and 1.4% 
if the pandemic leaves lasting scars on the global economy.
 
 
Wealth transfer 
Demographic 
and 
socioeconomic 
developments 
continue 
to 
generate 
shifts 
in 
wealth. 
Our 
“Riding 
the 
storm 
– 
Billionaires 
insights 2020” report 
found a next 
generation of rebuilders 
is in
the 
making. 
When 
the 
current 
storms 
pass, 
we 
expect 
a 
new 
generation 
of 
billionaire 
innovators 
will 
emerge, 
and 
that 
generation may 
well play 
a critical 
role in 
resolving many 
of the 
current 
problems. 
Using 
the 
growing 
repertoire 
of 
emerging 
technologies, 
we 
expect 
tomorrow’s 
innovators 
will 
digitize, 
refresh and 
revolutionize the 
economy. 
Whether intentionally or 
not, 
this 
can 
help 
bridge 
financial, 
social 
and 
environmental 
deficits. 
We 
are 
responding 
to 
the 
evolving 
wealth 
landscape 
with 
a 
framework
 
that 
addresses 
all 
aspects 
of 
our 
clients
’
 
financial 
lives, 
called 
UBS 
Wealth 
Way
. 
It 
begins 
with 
discovery 
questions 
and 
a 
conversation 
with 
clients 
about 
what 
is 
most 
important 
to 
them. 
We 
help 
clients 
organize 
their 
financial 
life 
along three key strategies: 
Liquidity
 
to help provide cash flow for 
short-term expenses; 
Longevity
 
for long-term 
needs; and 
Legacy
 
for needs 
that go 
beyond their 
own and 
help improve 
the lives 
of others, a key part of wealth transfer planning. 
Sustainable finance 
Markets 
around 
the 
world 
are 
undergoing 
a 
profound 
transformation 
as 
investors 
factor 
in 
climate 
change 
and 
other 
sustainable 
themes 
with 
regard 
to 
investment 
risk 
and 
return. 
Shifting 
societal 
values 
and 
greater 
regulation 
are 
further 
strengthening 
client 
demand. 
Investors 
are 
adding 
sustainable 
investing 
strategies 
to 
their 
portfolios, 
with 
fastest 
growth 
around 
funds 
focusing 
on 
energy 
transition. 
We 
think 
this 
will 
shape investments and 
markets in the 
years ahead as 
businesses 
increasingly 
embed 
sustainability. 
Our 
view 
is 
that 
this 
trend 
plays 
to 
UBS’s 
strengths, 
as 
we 
have 
been 
at 
the 
forefront 
of 
sustainable finance for 
over two decades, making 
us well placed 
to 
continue 
developing 
the 
innovative 
products 
and 
solutions 
our institutional and private clients need. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about sustainability matters 
Search for yield 
Over the last 
decade, central banks’ monetary 
policies have kept 
interest rates at historically 
low levels, which 
caused a significant 
decline 
in 
bond 
yields 
across 
advanced 
economies. 
This 
has 
created challenges for investors looking 
for income and portfolio 
diversification. 
Investors 
searching 
for 
sustainable, 
high 
returns 
for 
the 
longer 
term 
have
 
been 
diversifying 
into 
illiquid 
alternatives 
–
 
private 
equity, 
property, 
hedge 
funds 
and 
infrastructure – that can 
deliver compelling risk-adjusted returns. 
At 
the 
same 
time, 
investors 
continue 
to 
look 
for 
low-cost, 
efficient 
passive 
strategies 
across 
liquid 
equity 
markets. 
We 
expect this “barbell 
strategy” of combining 
high-alpha and low-
cost passive strategies 
will continue, and 
we believe the 
breadth 
of Asset 
Management’s investment 
expertise enables 
us to 
find 
the right solutions for clients across asset classes and regions. 
 
 
 
 
 
 
 
1 
Based on BCG Global Wealth 
Report 2020. The 
BCG Global Wealth Report 
2020 defines wealth segmentation 
as follows: wealth of greater 
than USD 20 million to 
be classified as ultra 
high net worth individuals; 
USD 1–20 million for high net worth individuals; USD 0.25–1 million for affluent individuals. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our strategy, business model and environment 
| How we create value for our stakeholders 
34 
How we create value for our stakeholders 
Stakeholder 
group 
Stakeholder needs: 
what our stakeholders expect from us 
Value proposition: 
how we create value for our 
stakeholders 
Key topics discussed: 
what was important to our 
stakeholders in 2020 
Stakeholder engagement: 
how we engage with our stakeholders 
Clients 
Advice on a broad range of products and 
services by trusted advisors 
A mix of personal interaction with our 
advisors in combination with digital 
service anywhere, anytime (convenient 
digital banking) 
Top quality solutions and the highest 
standards in terms of asset safety, data 
and information security, confidentiality 
and privacy 
A combination of global reach and local 
capabilities targeting positive investment 
outcomes 
Competitively priced products and 
services 
Delivering tailored advice and 
customized solutions, using our 
intellectual capital and digital platforms 
Building long-term personalized 
relationships with our clients 
Developing new products, solutions 
and strategic partnerships in response 
to clients’ evolving needs, 
including in 
the digital age 
Providing access to global capital 
markets and providing bespoke 
financing solutions 
Meeting increasing sustainable 
investment and private markets 
demand from clients 
Investment performance in light 
of current market environment 
Holistic goal-based financial 
planning 
Sustainable finance and 
investing opportunities 
Data privacy and security 
Products and services, 
including 
those around digital banking 
Need for even more personal 
advice during the COVID-19 
pandemic 
Individualized client meetings 
Requests for regular client feedback, 
feedback monitoring and complaint 
handling 
Primarily virtual client events and 
conferences, including information on 
key developments and opportunities 
Client satisfaction surveys 
New ways of digitally interacting with 
clients resulting from the COVID-19 
pandemic 
Investors 
Disciplined execution of our strategy 
leading to attractive capital returns 
through dividends and share repurchases 
Comprehensive and clear disclosures on 
quantitative and qualitative data 
necessary to make informed investment 
decisions 
Recognizing and proactively addressing 
strategic opportunities and challenges 
Executing our strategy with discipline 
and agility as the external environment 
evolves, while aiming to deliver cost- 
and capital-efficient growth 
Providing transparent, timely and 
reliable public disclosures 
Structural growth and return 
potential in our businesses 
Cost efficiency and ability to 
generate positive operating 
leverage 
Ability to protect or even grow 
revenues in a low-for-longer 
interest rate environment 
Asset risk and support for the 
economy in the environment 
surrounding COVID-19 
Financial reports, investor and analyst 
conference calls, and / or webcasts, as 
well as media updates on our 
performance or other disclosures 
General shareholder meetings 
Investor and analyst meetings 
New ways of digitally interacting with 
investors resulting from the COVID-19 
pandemic, with limited impact on usual 
meeting schedules 
and participation, 
given reliable virtual solutions; all 
general meetings held virtually 
Employees 
A world-class employer providing an 
engaging, supportive and inclusive 
workplace culture 
Skill and career development 
opportunities and rewards for 
performance 
An environment that provides a sense of 
belonging and of adding value to clients, 
to shareholders and to society 
Attracting and developing great talent 
Fostering a workplace culture that 
supports and engages our employees, 
enabling them to develop their careers 
and unlock their full potential 
Holistic support, including health and 
well-being initiatives, empowered 
employees and fostered resilience 
The three keys to a strong 
corporate culture 
Strategic focus on diversity and 
inclusion, with a focus on 
gender, race and ethnicity 
The future of work; preparing for 
future demands and 
circumstances 
Regular employee surveys and other 
virtual employee engagement activities 
Group Franchise Awards program and 
peer-to-peer recognition 
Regular “Ask the CEO” events, along 
with senior leadership, regional and 
functional employee sessions 
Safeguarding our employees’ 
health and 
well-being; providing extra flexibility and 
support enabling them to succeed in 
new environments 
Society 
Facilitation of economic development 
that is sustainable for the planet and 
humankind 
Maximization of our positive effects and 
minimization of any negative effects on 
society and the environment 
Proactive management of the 
environmental and societal impacts of 
our business 
Promoting significant and lasting 
improvements in the well-being of 
communities in which we operate 
Taking an active role in the transition 
of our economy toward 
environmentally and socially 
sustainable solutions 
Advising clients to align their business 
models with ESG parameters and the 
SDGs 
Sustainable finance 
Our climate strategy 
Our client and corporate 
philanthropy efforts 
Community investments and 
partnerships with social institutions 
Interaction with NGOs 
Participation in forums and round tables, 
as well as industry-, sector- 
and topic-
specific debates 
Dialogs with regulators and 
governments 
Support of COVID-19-related aid 
projects across our communities 

 
35 
Clients 
Our clients 
are 
the heart 
of our 
business. We 
are 
committed to 
building and sustaining 
long-term relationships based 
on mutual 
respect, trust and integrity. 
Understanding our clients’ needs and 
expectations 
enables 
us 
to 
best 
serve 
their 
interests 
and 
to 
create value for them. 
Our clients and what matters most to them 
There is no archetypal UBS client. Our clients have varying needs, 
but each of them expects outstanding advice and 
service, a wide 
range of choices, and an excellent client experience. 
Global 
Wealth 
Management 
focuses 
on 
serving 
the 
unique 
and 
sophisticated 
needs 
of 
high 
net 
worth 
and 
ultra 
high 
net 
worth individuals, families, 
and family offices 
worldwide, as well 
as 
affluent 
clients 
in 
selected 
markets. 
We 
give 
them 
access 
to 
outstanding 
advice, 
service, 
and 
investment 
opportunities 
from 
around 
the 
globe, 
delivered 
by 
experts 
they 
can 
trust. 
Using 
a 
holistic, goals-based approach to 
financial planning, we deliver a 
personalized 
wealth 
management 
experience 
and 
work 
side by 
side with clients 
to help them 
realize their ambitions. 
Our client-
facing advisors 
and the 
global teams 
supporting them 
focus on 
developing 
long
-
term 
client 
relationships
, 
which
 
often 
span 
generations. 
Clients look 
to us 
for expertise 
in 
helping them 
to 
plan for, protect 
and grow their 
wealth, as well 
as helping 
them 
make some 
of the 
most important 
decisions in 
their lives. 
From 
significant 
liquidity 
events 
to 
professional 
milestones 
and 
personal turning points, we aim 
to give clients the 
confidence to 
move 
forward 
and 
achieve 
their 
goals. 
Through 
extensive 
research into clients’ preferences and 
goals, and broader analysis 
of investor sentiment globally, we constantly evolve our offerings 
to 
meet 
the 
shifting 
priorities 
of 
today’s 
wealthy 
clients. 
This 
includes investing 
in digital 
capabilities and 
developing products 
to 
help 
clients fund 
their lifestyles 
and manage 
their cash 
flow, 
as 
well 
as 
offering 
guidance 
on 
how 
they 
can 
create 
a 
lasting 
and 
positive 
impact 
for 
their 
communities 
and 
the 
causes 
they 
most care 
about. We are 
the leading global 
wealth manager for 
clients 
interested 
in 
sustainable 
investing,
1
 
with 
a 
commitment 
to developing 
solutions that 
allow clients 
to align 
their financial 
goals and their personal values. 
›
 
Refer to “Global Wealth Management” 
in the “Our businesses” 
section of this report for more information about 
sustainable 
investment offerings 
 
Personal & Corporate 
Banking serves a 
total of approximately 
2.6 million 
individual clients and 
over 100,000 
corporate clients, 
companies 
ranging 
from 
start-ups 
to 
multi-nationals, 
including 
specialized 
entities, 
such 
as 
pension 
funds 
and 
insurers, 
real 
estate 
companies, 
commodity 
traders, 
and 
banks. 
As 
a 
result, 
our 
clients 
include 
more 
than 
30% 
of 
Swiss 
households, 
more 
than 90% 
of the 
largest 250 
Swiss corporations 
and more 
than 
50% 
of 
mid-size 
to 
large 
pension 
funds 
in 
Switzerland. 
Our 
clients 
look 
for 
financial 
advice 
based 
on 
their 
needs 
at 
each 
stage of 
their individual 
or corporate 
journey. We 
aim to 
deliver 
outstanding 
advice 
to 
them 
via 
a 
multi-channel 
approach. 
Clients 
have 
access 
to 
digital 
banking, 
a 
wide 
network 
of 
branches 
and 
remote 
contact 
centers.
 
These 
channels 
are 
designed to 
deliver a 
superior, 
convenient 
client experience 
with 
24/7 
availability, security 
and 
value for 
money, 
resulting 
in 
high 
levels of client satisfaction. Clients are also offered a broad range 
of 
products 
and 
services 
in 
all 
relevant 
areas: 
basic 
banking, 
investing, 
financing 
(including 
mortgages), 
retirement 
planning, 
cash management, trade and export finance, global custody, and 
company 
succession, among 
others. 
Additionally, they 
have full 
access 
to 
the 
solutions 
of 
the 
Investment 
Bank, 
Asset
 
Management and Global Wealth Management. 
In 
Asset 
Management, 
we 
deliver 
investment 
products 
and 
services directly 
to approximately 
2,600 clients around 
the world – 
including 
sovereign 
institutions, 
central 
banks, 
supranational 
corporations, pension funds, insurers and charities – as well as to 
Global 
Wealth 
Management 
and 
its 
clients, 
wholesale 
intermediaries and 
financial 
institutions. Our 
clients 
seek 
global 
insights and a holistic 
approach to tailoring 
solutions to meet 
their 
specific needs. 
By 
building 
long-term, personalized 
relationships 
with 
our 
clients 
and 
partners, 
we 
aim 
to 
achieve 
a 
deep 
understanding of their needs and to earn their trust. 
We draw on 
the 
breadth 
and 
depth 
of 
our 
global 
investment 
capabilities 
– 
across traditional and 
alternative, active and 
passive categories – 
to deliver the solutions they need. We integrate sustainability 
into 
our 
financial 
analysis 
enabling 
us 
to 
help 
clients 
meet 
their 
sustainability 
objectives 
and their 
fiduciary 
duties. 
The 
Investment 
Bank 
provides 
corporate, 
institutional 
and 
wealth 
management 
clients 
with 
expert 
advice, 
financial 
solutions, 
execution, 
and 
access to 
the 
world’s 
capital 
markets. 
Our 
business 
model 
is 
specifically 
built 
around 
our 
clients 
and 
their needs. 
Corporate clients 
can access 
advisory services, 
debt 
and 
equity 
capital 
market 
solutions, 
and 
bespoke 
financing 
through 
our 
reshaped 
Global 
Banking 
business. 
Our 
Global 
Markets business 
focuses on 
helping institutional 
clients engage 
with 
local 
markets 
around 
the 
world, 
offering 
equities 
and 
equity-linked 
products, 
and 
foreign 
exchange, 
rates 
and 
credit 
products and services. 
›
 
Refer to “Investment Bank” in the “Our 
businesses” section of 
this report for more information about organizational 
changes 
 
Our 
advisory 
and 
differentiated 
content 
offering 
is 
underpinned 
by 
Global 
Research. 
The 
differentiated 
nature 
of 
our
 
research, 
combined 
with 
UBS 
Evidence 
Lab 
Innovations
, 
which provides access to insight-ready data sets for thousands of 
companies, aims 
to give 
clients an 
informational edge. 
In 2020, 
we launched 
UBS China 
360
, new 
thematic research 
offering a 
direct window into one 
of the world’s most dynamic 
economies, 
connecting the dots across macroeconomic and industry themes, 
and leveraging 
the power 
of 
UBS Evidence 
Lab Innovations 
and 
our research franchise. 
 
 
 
 
1 
Euromoney Private Banking and Wealth Management Survey 2020: Overall Global Results. 
 
 

Our strategy, business model and environment 
| How we create value for our stakeholders 
36 
We know 
the security 
and confidentiality 
of our 
clients’ data 
is of utmost importance to them, as 
it is for UBS. That is 
why we 
put 
the 
highest 
priority 
on 
having 
comprehensive 
measures 
in 
place that 
are designed 
to ensure 
that client 
data confidentiality 
and integrity are 
maintained. We continually 
assess and improve 
our control environment 
to mitigate emerging 
cyber threats and 
meet 
expanding 
legal 
and 
regulatory 
expectations. 
Investments 
in 
our 
IT 
platforms 
preserve 
and 
improve 
our 
IT 
security 
standards, 
with 
a 
focus 
on 
giving 
clients 
secure 
access 
to 
their 
data 
via 
our 
digital 
channels 
and 
protecting 
that 
data 
from 
unauthorized 
access. 
Although 
the 
level 
of 
sophistication, 
impact and volume of cyberattacks continue to grow 
worldwide, 
we are ever vigilant, maintaining a strong 
and agile cybersecurity 
and information security 
program to mitigate and 
manage cyber 
risk by providing 
robust, consistent, secure 
and resilient business 
processes. 
Enhancing the client experience through innovation and 
digitalization 
We
 
streamline 
and 
simplify 
interactions 
with 
clients
 
through 
front-to-back digitalization and innovations. 
In 
Global 
Wealth 
Management, 
we 
develop
 
and 
deploy 
digital tools enhancing the value of 
the human relationships that 
differentiate UBS. Clients expect the convenience and 
speed that 
technology offers but, simultaneously, 
feel a personal experience 
with 
advisors 
is 
more 
important 
than 
ever. 
Our 
advisors 
use 
state-of-the-art digital tools 
to spend more time 
with clients and 
better evaluate 
the full 
scope of 
their financial 
lives. 
Our clients 
appreciate 
digital 
tools 
that 
improv
e
 
their 
experience
, 
for 
example, easy ways 
to view their portfolios 
or access to research 
that 
is 
tailored 
to 
their 
needs. 
They 
also 
want 
multiple 
ways 
in 
which to interact with 
their advisors. In 2020, 
the pandemic and 
the 
associated 
need 
for 
physical 
distancing 
caused 
clients 
to 
embrace the 
use of 
digital and 
mobile tools 
in greater 
numbers 
than 
ever 
before. 
In 
the second 
quarter alone, 
electronic check 
deposits using our mobile app increased by more than 120%. 
We continue 
to introduce 
new and 
better tools 
to meet 
and 
exceed 
clients’ 
expectations. 
For 
example, 
our 
UBS 
Manage 
Advanced [My Way] 
app offers clients 
in selected markets 
an at-
a-glance comprehensive view 
of their investment 
portfolio. With 
access to around 50 professionally managed investment modules 
(
bu
ilding 
blocks
)
, 
it 
is 
underpinned 
by 
continuous 
portfolio 
monitoring and 
risk management. It 
is digital 
and interactive, 
as 
clients 
can 
work 
with 
their 
advisors 
on 
an 
iPad 
app 
to 
design 
their own portfolio, easily including elements 
such as sustainable 
investing 
and 
themes 
to 
reflect 
their 
individual preferences 
and 
priorities. 
Built 
on 
state-of-the-art 
technology, 
our 
new 
Online 
Services 
for 
clients 
in 
the 
US 
is 
a 
simpler 
and 
more 
intuitive 
platform that makes 
managing finances online 
easy, and creates 
an 
experience 
that 
supports 
advisors 
in 
driving 
critical 
conversations 
to 
deliver 
the 
advice 
clients 
are 
looking 
for. 
In 
Switzerland, our 
UBS Mobile Banking
 
app has been enhanced so 
clients 
can 
now 
see 
relevant 
investment views 
and 
have 
access 
to 
our 
real-time 
quote 
capabilities 
before 
logging 
in. 
At 
a 
broader 
level, 
we 
continue 
to 
make 
progress 
on 
our 
multi-year 
strategy to serve 
clients globally from two 
platforms: the 
Wealth 
Management 
Americas 
Platform
 
in 
the 
US 
and 
the 
Wealth 
Management Platform 
outside the US. 
Personal & Corporate Banking introduced 
several innovations, 
reflectin
g
 
our 
digital 
transformation 
progress 
and 
continuous 
efforts 
to 
develop 
simple, 
smart 
and 
secure 
solutions. 
In 
June 
2020, we 
launched a 
digital mortgage 
platform under 
our UBS-
endorsed 
key4
 
brand 
for 
p
rivate 
clients
 
who 
prefer 
digital 
channels
. 
O
ur 
UBS 
Atrium
 
mortgage 
platform
,
 
aimed 
at 
corporate 
and 
institutional 
clients, 
has 
gained 
traction, 
already 
servicing more 
than CHF 1.8 
billion of 
credit volume. 
To expand 
into 
real-estate ecosystems 
with 
our 
two platforms 
at 
the core, 
we 
took 
an 
equity 
stake 
in 
a 
Swiss 
start-up 
providing 
homeowners with useful 
tools associated with home 
ownership, 
and 
partner 
with 
different 
online 
platforms 
focused 
on 
real 
estate and home ownership. The 
above reflects our commitment 
to 
engage 
and 
rapidly 
achieve 
scale 
for 
new 
digital 
business 
models.
 
Our
 
Digital 
Personal 
Bank 
has 
introduced 
a 
new 
coverage 
model 
to 
service 
some 
400
,000
 
retail
 
clients 
more
 
effectively 
and 
efficiently 
and 
offer 
advice 
on 
selected 
personal 
banking 
products. 
Client
s 
can 
now 
open 
a 
basic 
banking 
package
 
themselves 
via 
ubs.com
, 
putting 
together 
their 
individual package 
based on 
their needs. 
For payments 
we have 
completed 
our 
wallet 
strategy 
with 
the 
launch 
of 
Google, 
Samsung 
and 
Apple 
Pay 
for 
a 
contactless, 
secure 
and 
simple 
experience. We 
announced a new 
payment innovation: 
our 
UBS 
Global 
C
ard
, 
a
 
multi
-
currency 
card 
giv
ing
 
clients 
attractive 
conditions 
when 
shopping 
abroad. 
D
ue 
to
 
changing 
client 
needs, and 
growing demand 
for an 
integrated, holistic 
banking 
experience, 
we 
introduced 
multi-banking 
for 
corporate 
clients. 
Th
is
 
attractive 
offering 
integrates 
third
-
party 
banks 
for 
full 
transparency across accounts and convenient 
payment execution 
via 
a 
single 
platform 
– 
a 
unique 
value 
proposition 
in 
the 
Swiss 
market. Also, more than 80 bots have been deployed 
in Personal 
& 
Corporate 
Banking, 
and 
many 
more 
business-aligned 
bots, 
helping 
the 
firm 
and 
clients 
in 
these 
extraordinary 
times. 
For 
instance, 
bots 
made 
the 
rapid 
processing 
of 
COVID-19 
credit 
applications possible, 
swiftly providing 
bridging liquidity 
to small 
and 
medium-sized 
companies. 
Beyond 
banking, 
with 
a 
partner 
from 
the 
insurance 
sector 
we 
tapped 
into 
the 
bancassurance 
market by 
launching a 
start-up bancassurance 
offering to 
cover 
the 
needs 
of 
young 
entrepreneurs 
on 
our 
UBS 
Start 
Business
 
platform. 
With 
another 
insurance-sector 
partner 
we 
piloted 
a 
bespoke 
mortgage 
protection 
insurance 
product 
for 
our 
retail 
clients. 
Sustainability is 
a key 
driver of 
new product 
and 
service 
innovations. Almost 
70% of 
mandates sold 
in Personal 
Banking 
in 
2020 
were 
Sustainable 
Investing 
mandates. 
Additionally, 
we 
introduced 
a 
sustainable 
Eco 
Credit 
Card
,
 
which 
is 
over 
80% 
biodegradable; 
as 
with 
the 
older 
version 
of 
UBS 
Optimus 
Foundation credit card, 
a percentage of 
the amount spent 
using 
the 
card 
is 
donated 
to 
UBS 
Optimus 
Foundation
. 
Another 
development 
in 
the 
sustainability space 
is 
the 
support 
we offer 
for Swiss 
small and 
medium-sized entities 
in their 
energy-saving 
efforts 
and 
transition 
to 
a 
low-carbon 
economy, 
e.g., 
with 
energy check-ups. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about sustainability matters 
 
 
 
 

 
37 
In Asset 
Management, we 
are accelerating 
our investment 
in 
digitalization, 
with 
a 
focus 
on 
developing 
tools, 
technologies 
and data 
capabilities to 
enhance the 
experience and 
service for 
our clients, 
foster innovation 
and support 
alpha generation. 
For 
example, we 
are developing 
a scalable 
platform to 
enable more 
efficient 
development 
and 
management 
of 
theme-based 
investment 
products 
to 
meet 
growing 
client 
demand. 
We 
are 
also 
expanding 
the 
suite 
of 
tools 
used 
by 
our 
Quantitative 
Evidence 
& 
Data 
Science 
team, 
who 
utilize 
alternative 
and 
traditional 
data 
combined 
with 
statistical 
modeling 
to 
enhance 
and 
augment 
our 
fundamental 
and 
systematic 
investment 
processes. The 
use of 
tools and online 
events rolled out 
in 2020 
is 
being 
further 
expanded 
in 
response 
to 
the 
accelerated 
adoption of 
digital interaction 
by our 
clients during 
the COVID-
19 pandemic. 
The Investment Bank 
strives to be the digital 
investment bank 
of the 
future, with 
innovation-led businesses 
driving efficiencies 
and 
solutions. 
UBS Investment 
Bank 
Innovation 
Lab
 
is aimed 
at 
facilitating connections between business teams 
to leverage best 
practice, build and 
test proofs of concept 
safely and quickly, and 
inspire a culture 
of innovation. Our 
UBS Data Solutions
 
business, 
launched in 2018, has matured 
into a leading component of our 
digital 
content 
portfolio, 
providing 
access 
to 
a 
broad 
suite 
of 
data 
sets 
delivered 
via 
our 
Cloud-hosted 
application 
programming 
interfaces 
(APIs)
.
 
We 
strive 
to 
develop 
new 
products 
and 
solutions 
consistent 
with 
our 
capital-efficient 
business model, 
which are 
typically related 
to new 
technologies 
or 
changing 
market 
standards. 
Examples 
include 
our 
FX 
Tree
 
solution, 
which 
provides 
client-tailored 
pricing 
streams 
and 
hedging 
optimization
,
 
and 
o
ur 
eFX
 
offering, 
where 
our 
continued 
strategic 
investments 
have 
earned 
us 
a 
top-three 
ranking 
across 
major 
multi-dealer 
platforms 
and 
industry-wide 
recognition 
through 
multiple 
awards. 
UBS 
Neo
, 
our 
award
-
winning
 
multi
-
channel 
platform
,
 
lets
 
our 
professiona
l 
and 
institutional clients access a comprehensive suite of products and 
services covering 
the full 
investment life 
cycle. During 
2020, we 
launched 
UBS Neo Question Bank
, the largest global database of 
market-related questions asked by professional investors. 
Engaging with our clients 
We 
use 
a 
variety 
of 
channels 
to 
engage 
with 
clients, 
including 
regular 
client 
relationship 
/ 
service 
meetings, 
as 
well 
as 
various 
corporate 
roadshows 
and 
dedicated 
events. 
We 
also 
engage 
with our 
clients by 
supporting cultural 
and sporting 
events both 
across 
Switzerland
 
and 
internationally
.
 
During 
the 
COVID
-
19 
pandemic, 
events 
have 
been 
swiftly transitioned 
online and 
we 
expect that they will be further shifted into alternative marketing 
channels 
(e.g., 
social media 
and 
content and 
dialog marketing) 
in the future. 
Global Wealth 
Management engaged 
with clients 
in a 
range 
of ways in 2020, from personalized private briefings with 
subject 
matter experts, 
to segment-specific 
virtual events, 
to large-scale 
initiatives, 
such 
as 
UBS 
ElectionWatch 
2020
, 
which 
delivered 
insights 
to 
clients 
about 
the 
policy 
and 
market 
implications 
of 
the 
US 
elections. 
The 
global 
undertaking 
included 
virtual 
conversations with some of the most prominent US policymakers 
and 
political 
leaders 
of 
the 
past 
20 
years, 
along 
with 
UBS 
experts. 
These 
events 
were 
complemented 
by 
a 
full 
set 
of 
resources 
from 
our 
Chief 
Investment
 
Office 
exploring
 
the 
potential 
investment 
landscape 
globally 
up 
to 
and 
beyond 
the 
election.
 
We 
use 
a 
mix 
of 
digital 
and 
non
-
digital
 
channels 
(including 
marketing 
campaigns, 
events,
 
advertising, 
publications 
and 
digital
-
only 
solutions) 
to 
help 
drive
 
greate
r 
awareness of UBS 
among prospective clients 
and reinforce trust-
based relationships between advisors and clients. 
Personal 
& 
Corporate 
Banking
 
held
 
regular 
client 
events 
(mostly webcasts, 
virtual or 
hybrid events 
after the 
onset of 
the 
COVID-19 pandemic), 
covering a 
wide range 
of topics. 
In 2020, 
we increasingly engaged with clients via online channels, such as 
social media, 
online displays 
and search 
engines, 
and decreased 
our use of traditional out-of-home channels. 
In Asset Management, we have a consistent program of client 
events 
and 
engagement 
activities 
throughout 
the 
year. 
This 
includes 
our 
flagship 
conferences, 
such 
as 
the 
annual 
UBS 
Reserve Management 
Seminar
, which 
was delivered 
for the 
first 
time 
in 
a 
virtual 
format 
during 
the 
COVID
-
19
 
pandemic. 
Alongside 
this, 
in 
2020 
our 
teams 
significantly 
intensified 
the 
level of interaction with 
clients globally, facilitated by 
new digital 
tools, 
and 
increased 
our 
publication 
of 
macro 
insights 
and 
thought 
leadership 
to 
provide 
timely 
insights 
into 
the 
rapidly 
evolving 
markets. 
We 
also 
hosted 
a 
broad 
range 
of 
virtual 
events, 
including 
a 
new 
Nobel 
Perspectives 
webinar 
series, 
to 
help 
our 
clients 
better 
understand 
market 
challenges 
and 
investment 
opportunities, 
and 
continue 
to 
engage 
with 
clients 
through our social media and online channels. 
The 
Investment 
Bank 
hosted 
over 
100 
investor 
conferences 
and 
educational 
seminars 
globally 
in 
2020, 
covering 
a 
broad 
range 
of 
macro, 
sector, 
regional 
and 
regulatory 
topics. 
Proving 
the 
agility 
of 
UBS, 
almost 
all 
of 
these 
conferences 
were 
held 
online. More 
than 45,000 
clients attended 
such events 
in 2020, 
providing 
insight 
and 
access 
to 
our 
own 
opinion 
leaders, 
policymakers 
and 
leading 
industry 
experts.
 
W
e 
leverage 
our 
intellectual 
capital 
and 
relationships 
and 
use 
our 
execution 
capabilities, 
differentiated 
research 
content, 
bespoke 
solutions, 
client 
franchise 
model 
and 
global 
platform to 
expand 
coverage 
across a broad set of clients. 
 
 
 

Our strategy, business model and environment 
| How we create value for our stakeholders 
38 
How we measure client satisfaction 
We use multiple techniques 
to regularly assess our 
achievements 
and the satisfaction of our clients. 
Global 
Wealth 
Management 
is increasingly 
using 
technology 
and 
analytics 
capabilities 
to 
collect 
and 
respond 
to 
client 
feedback. 
Our 
digital 
client 
feedback 
tool 
lets
 
clients 
submit 
monthly 
input about 
overall satisfaction 
with advisors 
and UBS, 
and share both longer-term plans 
they would like to discuss with 
their 
advisor 
and 
top-of-mind 
issues 
that 
could 
impact 
their 
decision-making. 
Advisors 
and 
their 
teams 
have 
seamless, 
real-
time 
access to 
client input, 
enabling 
them to 
address concerns, 
identify 
opportunities 
for 
engagement 
and 
follow 
up 
on 
new 
topics 
of 
interest. 
The 
tool 
is 
fully 
available 
in 
the 
US 
and 
in 
selected 
Asia 
Pacific 
and 
EMEA 
markets, 
with 
further 
rollout 
globally expected in 2021. 
Personal & 
Corporate Banking 
has conducted 
annual surveys 
of Swiss 
clients since 
2011, consistently 
covering all 
private and 
corporate 
client 
segments 
annually 
since 
2015. 
Clients 
provide 
feedback on their 
satisfaction with regard to 
various topics (e.g., 
UBS overall, branches, client 
advisors, products and services) 
and 
indicate further 
product or 
advisory needs. 
Survey responses 
are 
distributed 
to 
client 
advisors, 
who 
follow 
up 
with 
each 
respondent 
individually. In 
2020, 
we had 
an all-time 
high 
client 
satisfaction and 
net promoter 
score (NPS), 
and achieved 
a 90% 
follow-up rate with non-anonymous survey participants. 
In 
Asset 
Management, 
we 
have 
an 
integrated 
process 
to 
record 
and 
manage 
client 
feedback 
through 
our 
client 
relationship management 
tool. We also 
conduct regular surveys, 
covering our 
wholesale and 
institutional clients 
globally, inviting 
them to assess 
their satisfaction with 
our client service, 
products 
and 
solutions, 
as 
well 
as 
other 
factors 
relevant 
to 
their 
investments. The 
results are 
analyzed to 
identify focus 
areas for 
improvement 
and 
our 
client 
relationship 
managers 
follow 
up 
with respondents to address specific feedback where required. 
The 
Investment 
Bank 
closely 
monitors 
client 
satisfaction 
via 
individual 
product 
coverage 
points. 
Direct 
client 
feedback 
is 
actively 
captured 
and 
tracked 
in 
our 
systems.
 
Internal
 
regional 
forums 
serve 
as 
a 
platform 
for 
senior 
management 
to 
discuss 
client 
relationships, 
possibilities
 
for 
improvement, 
potential 
opportunities 
and 
specific 
issues, 
where 
applicable. 
Other 
processes are 
in place 
to enable 
consolidated 
findings to 
be shared 
within UBS 
as appropriate. 
The Investment 
Bank also 
closely monitors external 
surveys, which provide 
feedback across 
a range of investment banking services. 
We 
thoroughly 
evaluate 
the 
feedback 
we 
receive, 
including 
complaints 
from 
clients,
 
and 
take 
measures 
to 
address 
key 
themes identified. In 2020, clients specifically expressed the need 
for more 
tailored advice 
during the 
COVID-19 pandemic, 
which 
is in line 
with our 
strategic focus to 
become part of 
the solution 
to
 
the 
crisis. 
Further 
feedback 
from 
clients 
showed 
that 
our 
support 
during 
the 
pandemic 
has 
significantly 
improved 
client 
satisfaction, despite adverse economic developments. 
A quality feedback system in Global Wealth Management and 
Personal 
& 
Corporate 
Banking 
provides 
a 
comprehensive 
and 
systematic 
platform 
to 
receive 
and 
process 
client 
feedback 
and 
suggestions. We 
receive feedback 
in various 
forms, including 
in 
writing, 
electronically, 
orally 
to 
client 
advisors 
and 
staff 
in 
our 
branches, 
via 
social 
media 
channels, and 
via 
the 
Swiss 
Banking 
Ombudsman. 
Client 
feedback, 
including 
complaints 
and 
suggestions, 
is 
vitally 
import
ant
, 
as 
it 
supports 
the 
development 
and 
introduction 
of 
new 
products
 
and 
services
,
 
as 
well 
as 
the 
adapt
ing
 
of 
our 
offering 
in 
a 
client
-
focused 
manner. 
By 
addressing 
client 
feedback, 
we 
aim 
to 
strengthen 
client 
relationships, 
improve 
client 
satisfaction 
and 
make 
tangible 
improvements 
to 
client 
and 
overall 
banking 
services. 
Having 
a 
wide 
variety 
of 
quality 
feedback 
from 
clients 
enables 
us 
to 
systematically 
evaluate 
and 
review 
our 
actions. 
By 
sharing 
their 
views, clients contribute to quality improvements at all levels. 
We aim to respond to each individual who provides 
feedback. 
On 
significant 
topics 
and 
key 
developments, 
we 
also 
provide 
a 
collective response 
in our 
external reporting. 
In 2020, key 
topics 
and 
enhancements 
included 
some 
targeted 
products 
and 
services 
that 
centered 
mostly 
around 
digital 
banking 
functionalities. 
These 
stemmed 
in 
particular 
from 
requests 
and 
suggestions regarding existing and new features. 
 
 

 
39 
Our focus on sustainability
Our 
sustainability 
strategy 
is 
guided 
by 
the 
goal 
of 
being 
the 
financial 
provider 
of 
choice 
for 
clients 
who 
wish 
to 
mobilize 
capital 
toward 
the 
achievement 
of 
the 
17 
United 
Nations 
(UN) 
Sustainable 
Development 
Goals 
(the 
SDGs) 
and 
the 
orderly 
transition to 
a low-carbon 
economy. 
We 
work toward 
this goal 
by 
integrating 
sustainability 
into 
our 
mainstream 
offerings 
and 
by 
advising 
clients 
on 
their 
philanthropic 
works. 
We 
also 
continue to 
set standards 
in our 
industry, 
including through 
the 
management 
of 
environmental 
and 
social 
risks, 
the 
management 
of 
our 
environmental 
footprint 
and 
through 
our 
sustainability disclosure. 
Our sustainability ambitions and goals 
We 
are 
committed 
to 
making 
UBS 
a 
force 
for 
driving 
positive 
change 
in 
society 
and 
the 
environment 
for 
future 
generations. 
We 
do 
so 
by 
focusing 
our 
firm 
on 
creating 
long-term 
positive 
impact for clients, employees, investors and society. 
Our ambitions 
and key goals 
(goals are 
cumulative 
figures, to 
be 
achieved by 
the end of 
2025) 
Ambition: 
to 
be 
a 
leader 
in 
sustainable finance 
across 
all 
client 
segments, 
with the key 
goal of 
–
 
adding 
USD 70 
billion 
of 
invested 
assets 
classified as 
impact 
investing
1
 
or with sustainability 
focus.
2
 
Ambition: 
to 
be 
a 
recognized 
innovator 
and 
thought 
leader 
in 
philanthropy, 
with the key 
goals of 
–
 
raising USD 1 billion 
in donations to 
UBS’s 
client philanthropy 
foundations and funds
3
 
and reaching 
25 million 
beneficiaries, 
and 
–
 
helping one million beneficiaries to learn and develop skills for 
employment, decent 
jobs 
and 
entrepreneurship through 
our 
community 
investment 
activities. 
Ambition
:
 
to 
be 
a
n 
industry 
leader 
for 
sustainable 
business 
practices, 
with the key 
goals of 
–
 
achieving net 
zero 
for 
scope 1 and 
2 
greenhouse gas 
(GHG) 
emissions,
4
 
–
 
retaining favorable positions 
in 
key 
environmental, social and 
governance 
(ESG) 
ratings, 
–
 
i
mplement
ing
 
the 
Task 
Force 
on 
Climate
-
related 
Financial 
Disclosures (the TCFD) recommendations 
(by the end of 2022), 
and 
–
 
implementing the Principles for 
Responsible Banking (PRB) (by 
September 2023). 
Ambition: 
to be an employer of choice with the key goals of 
–
 
maintain
ing
 
our 
recognition 
as 
one 
of 
the 
world’s 
most 
attractive employers in key ratings and rankings,
5 
and 
–
 
increas
ing
 
the 
percentage 
of 
Director 
level
 
and 
above 
positions filled by women (aspiration to reach 30%). 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about UBS’s sustainability achievements in 2020 
and 
goals for 2021–2025 
Advancing sustainability 
UBS is fully committed to both maximizing 
the positive effects of 
our business 
activities and 
to minimizing 
their negative 
impacts. 
While 
our 
growing 
range 
of 
sustainable 
finance 
products 
and 
services supports our commitment, 
our environmental and social 
risk 
framework 
helps 
us 
to 
better 
understand 
and 
respond 
to 
potential environment and human rights risks. 
We 
are 
a 
founding 
signatory 
of 
the 
UN 
Principles 
for 
Responsible 
Banking 
(the 
Principles). 
The 
Principles 
constitute 
a 
comprehensive 
framework 
for 
the 
integration 
of 
sustainability 
across banks. They define 
accountabilities and require each bank 
to set, publish and work toward ambitious targets. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about how UBS is advancing 
sustainability in the 
financial industry and beyond 
Sustainable 
finance 
is vital 
to us and 
our clients 
As 
a 
major 
financial 
institution, 
we 
are 
conscious 
that 
the 
activities 
and 
decisions 
of 
our 
clients 
can 
have 
substantial 
impacts 
on 
society. 
That 
is 
the 
reason 
we 
strive 
to 
incorporate 
ESG considerations into 
the products and 
services we provide 
to 
clients and to 
partner with them 
to help mobilize 
capital toward 
achieving the 
SDGs and 
toward the 
orderly 
transition to 
a low-
carbon economy. 
We 
know 
ESG 
topics 
are 
becoming 
increasingly 
vital 
to 
our 
clients
, 
so
 
w
e 
are 
committed 
to 
serving 
their 
growing 
sustainable 
finance
 
needs 
and 
expectations. 
More 
fundamentally, 
we 
believe 
sustainable 
finance 
is 
the 
future 
of 
finance. 
Recognition 
of 
impact 
on 
financial 
performance, 
regulatory 
developments, 
evolving 
societal 
norms, 
investor 
demand and 
consumer preference 
are factors 
that contribute to 
driving the 
continued evolution 
of mainstream 
investing toward 
more holistic 
long-term-oriented approaches. 
Our clients 
turn to 
us for advice on how 
they can help to finance 
the transition to a 
low-carbon 
economy, 
support 
sustainable 
finance, 
align 
their 
investments 
with 
their 
personal 
values, 
and 
better 
risk 
manage 
their portfolios 
and businesses. 
They want 
to take 
advantage of 
these 
opportunities, 
as 
well 
as 
manage 
the 
numerous 
risks 
associated with this transformational challenge. 
We, 
in 
turn, 
are 
looking 
to 
create 
more 
scalable 
sustainable 
and impact 
investing solutions 
that deliver 
competitive 
financial 
returns, 
and 
to 
advise 
our 
corporate 
clients 
on 
risks 
to 
their 
business models, while driving positive 
environmental, social and 
governance 
outcomes. 
Fundamentally, 
for 
the 
benefit 
of 
our 
clients, 
we are 
shaping the 
landscape 
of 
sustainable finance 
by 
using 
thought 
leadership, 
innovation 
and 
partnerships 
to 
support them 
in their 
sustainability efforts. 
Our clients’ 
growing 
interest 
in 
sustainable 
finance 
is 
clearly 
shown 
in 
a 
number 
of 
key surveys. 
 
1 
Strategies where the intention is to generate measurable environmental and social impact alongside financial 
return.
 
2 
Strategies where sustainability is an explicit part of the investment guidelines, universe, selection, 
and / or investment process. 
3 
Includes UBS Optimus Foundation, UBS UK Donor-Advised Foundation and UBS Philanthropy Foundation 
in Switzerland. 
4 
Scope 1 accounts for direct GHG emissions by UBS. Scope 2 accounts for indirect GHG emissions associated with the generation 
of imported / purchased electricity (grid average emission factor), heat or steam. 
5 
Indicators such as global 
and country-specific Universum 
rankings, peer-leading 
position in human resources 
elements of the Dow 
Jones Sustainability Indices, 
recognition by the Bloomberg 
Gender-Equality Index, 
and market recognition in various new and established benchmarks / rankings. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our strategy, business model and environment 
| How we create value for our stakeholders 
40 
A 
global 
UBS 
Asset 
Management 
survey 
of 
600 
institutional 
investors 
found 
that European 
asset 
owner respondents 
predict 
that 
systemic 
environmental 
factors 
(climate 
crisis, 
biodiversity 
loss) 
will 
be 
more 
material 
to 
their 
investments 
in 
the 
next 
five 
years 
than 
financial 
factors.
1
 
In 
a 
survey 
of 
Swiss 
institutional 
investors, 
49% of respondents have already 
invested sustainably, 
and 
of 
those
,
 
two
-
thirds 
plan 
to 
increase 
their 
share 
of 
sustainable 
investments 
(SI).
2
 
A 
UBS 
Investment 
Bank 
survey 
of 
issuers 
and 
investors 
in 
both 
debt 
and 
equity 
capital 
markets 
found that 68% 
of corporate clients are 
considering or currently 
revising 
their 
sustainability 
strategy. 
And 
70% 
stated 
they 
are 
considering including 
ESG targets 
as part 
of their 
compensation 
framework.
3
 
The COVID-19 
pandemic has 
fundamentally changed 
what is 
expect
ed 
from 
corporations 
and
 
increased 
the 
market’s 
understanding 
of 
the 
importance 
of 
climate 
transition 
and 
the 
recognition 
of 
certain 
social 
issues
 
as 
investment 
risks
. 
We 
therefore expect investor focus on 
these issues will increase after 
COVID
-
19, 
with 
growing
 
demand 
for 
corporate 
transpar
ency 
and stakeholder accountability. 
›
 
Refer to “Sustainable finance – Ten trends for 2021” at 
ubs.com/davos-agenda-2021
 
for UBS’s perspectives regarding 
sustainable finance in 2021 and beyond 
How we define sustainable finance 
Sustainable 
finance 
refers 
to 
any 
form 
of 
financial 
service 
that 
incorporates 
ESG 
criteria 
into 
business 
or 
investment 
decisions. 
We 
provide 
sustainable 
finance 
solutions 
to 
all 
our 
client 
segments, with a particular focus on sustainable investing. 
›
 
Refer to the “Key achievements in 2020” 
chart in the 
Sustainability Report 2020, 
available from 11 March 2021 under 
“Annual reporting” at 
ubs.com/investors
 
 
Sustainable 
investing 
(SI) 
is 
an 
approach 
that 
seeks 
to 
incorporate 
ESG 
considerations 
into 
investment 
decisions. 
SI 
strategies 
seek 
to better 
risk 
manage portfolios 
to 
21st 
century 
challenges 
and 
/ 
or 
align 
investments 
with 
an 
investor’s 
values
regarding ESG topics, 
while also aiming 
to improve portfolio 
risk 
and return characteristics. 
Core 
sustainable 
investments 
are 
SI 
products 
that 
involve 
a 
strict 
and 
diligent 
asset 
selection 
process 
through 
either 
exclusions 
(of 
companies 
/ 
sectors 
from 
portfolios 
where 
the 
companies 
/ 
sectors 
are 
not 
aligned 
to 
an 
investor’s 
values) 
or 
positive 
selections 
(such 
as 
best-in-class, 
thematic 
or 
ESG 
integration and impact investing). 
We identify 
three sustainable 
investing approaches: 
exclusion 
(individual 
companies 
or 
entire 
industries 
are 
excluded 
from 
portfolios 
because 
their 
activities 
conflict 
with 
an 
investor’s 
values); 
ESG 
integration 
(which 
combines 
ESG 
factors 
with 
traditional financial 
considerations); and 
impact investing 
(which 
is 
designed 
specifically 
to 
help 
generate 
positive, 
measurable 
social and / 
or environmental impact 
alongside a financial 
return 
–
 
while 
another 
impact
-
focused 
activ
ity 
is 
shareholder 
engagement). 
We were 
among the 
early movers 
in developing 
terminology 
to describe our sustainable investing activities and to consistently 
report 
on 
them. 
We 
are, 
however, 
conscious 
of 
the 
need 
to 
simplify and standardize the 
terminology for sustainable finance, 
which 
will 
help 
to 
develop 
and 
expand 
the 
SI 
market. 
We 
are 
therefore 
actively 
involved 
in 
the 
relevant 
discussions 
and 
are 
committed to reflecting 
pertinent changes to 
terminology in our 
reporting. 
In 2020, 
we noted 
very strong momentum 
in our 
sustainable 
finance activities. A 
key indicator is 
the development of 
our core 
SI assets, 
where we more 
than doubled penetration, 
from 5.6% 
of 
total 
invested 
assets 
in 
2017 
to 
18.9% 
(USD 793 
billion) 
in 
2020 (2019: 13.5%, or USD 488 billion). 
Norms-based screening 
assets, i.e., assets that 
fall under the application 
of a UBS policy
4
 
and 
do 
not 
otherwise 
qualify 
as 
a 
core 
sustainable 
investment, 
amounted 
to 
USD 798 
billion 
as 
of 
31 December 
2020 
(a 
decrease
 
from 
USD
 
818 
billion 
in 
2019). 
Total 
sustainable 
investments, including 
norms-based screening 
assets, accounted 
for 
USD 1,591 
billion 
(2019: 
USD 1,306 
billion), 
or 
38.0% 
(2019: 36.2%), of our total invested assets. 
 
 
1 
Survey conducted in June 2019 among 600 institutional clients (ESG: Do you or Don’t you?, UBS Asset Management and Responsible Investor). 
2
 
Survey conducted in August 2020 among 110 Swiss institutional investors.
 
3
 
Survey conducted in October 2020 among 160 Investment Bank clients. 
4
 
The assets 
in discretionary 
mandates and 
in UBS’s 
actively managed 
retail and 
institutional funds, 
as well 
as those 
in our 
firm’s 
proprietary trading 
book, are 
subject to 
our firm’s 
policy on 
the prohibition 
of 
investment in and indirect financing of companies involved in the development, production or purchase of anti-personnel mines and cluster munitions. 
 
Core sustainable investments
1,2
For the year ended 
% change from 
USD billion, except where indicated 
GRI 
31.12.20 
31.12.19 
31.12.18 
31.12.19 
Core SI products and mandates 
Integration – sustainability focus
3
FS11 
127.7 
46.4 
20.0 
175.0 
Integration – ESG integration
4
FS11 
512.8 
372.3 
224.5 
37.7 
Impact investing
5
FS11 
13.1 
9.1 
4.7 
44.1 
Exclusions
6
FS11 
132.2 
52.2 
50.3 
153.4 
Third-party
7
FS11 
7.4 
8.5 
13.4 
(11.8) 
Total core sustainable investments 
FS11 
793.2 
488.5 
312.9 
62.4 
UBS total invested assets 
4,187.0 
3,607.0 
3,101.0 
16.1 
Core SI proportion of total invested assets (%) 
FS11 
18.9 
13.5 
10.1 
1 In 2020, Asset 
Management refined its reporting 
methodology by carving out 
funds with high SI 
categories from funds of 
funds or mandates 
that are classified with 
a lower or no 
SI category. 
The impact of 
this 
methodology change 
is an 
additional USD 109 
billion in 
core SI 
(USD 2 billion 
in integration 
– sustainability 
focus and 
impact investing, 
USD 28 billion 
in integration 
– ESG 
integration and 
USD 79 billion 
in 
exclusions) and a 
decrease of 
USD 29 billion 
in norms-based 
screening assets. 
2 FS represents 
the performance 
indicators defined 
in the Financial 
Services Sector 
Supplement of 
the Global 
Reporting Initiative 
reporting framework. 
3 Strategies where 
sustainability is 
an explicit 
part of 
the investment 
guidelines, 
universe, selection, 
and / 
or investment 
process. 
4 Strategies that 
integrate environmental, 
social and 
governance (ESG) 
factors into 
fundamental financial 
analysis to 
improve risk 
/ return. 
5 Strategies 
where the 
intention is 
to generate 
measurable 
environmental and 
social impact 
alongside financial 
return. 
6 Strategies that exclude companies 
from portfolios where they 
are not aligned to 
an investor’s 
values. Includes customized 
screening services (single 
or multiple exclusion 
criteria). 
7 SI products from third 
-party 
providers applying 
a strict 
and diligent 
asset selection 
process; the 
selection criteria 
have been 
reviewed for 
the end 
of the 
2020 reporting 
cycle, following 
a stricter 
approach from 
the provider 
of sustainability 
ratings. Excludes third-party products that went through a systematic Global Wealth Management 
onboarding process, now included under Integration – sustainability focus. 
 
 

 
41 
Our offering to clients 
We 
support 
clients’ 
sustainability 
efforts 
through 
thought 
leadership, 
innovation 
and 
partnerships, 
and 
we 
strive 
to 
incorporate 
ESG 
factors 
into 
the 
products 
and 
services 
we 
provide. 
Our 
private 
clients
 
can
, 
by 
investing 
sustainably, 
make 
a 
positive impact 
on the 
environment and 
society while 
achieving 
similar 
returns 
to 
traditional 
investments
, 
as 
confirmed 
by 
numerous 
studies.
1
 
In 
September 
2020, 
we 
became 
the 
first 
major 
global 
financial 
institution 
to 
make
 
sustainable 
investments 
the 
preferred 
solution 
for 
private 
clients 
investing 
globally. 
Our 
private 
clients 
benefit 
from 
fully 
diversified 
sustainable 
portfolios. 
The 
size 
of 
our 
100%-sustainable 
multi-
asset portfolio, based on our Chief Investment Office’s dedicated 
SI 
strategic 
asset 
allocation, 
surpassed 
USD 17 
billion 
under 
management in 2020, having grown from just over USD 1 billion 
roughly three years ago. 
Through 
our 
Philanthropy 
Services 
platform
, 
our 
private 
clients 
receive 
unique 
access 
to 
social 
and 
financial 
innovation 
and philanthropic advice, as 
well as tailored program 
design, co-
funding 
and 
co-development 
opportunities. 
We 
offer 
clients 
expert 
advice, 
carefully 
selected 
programs 
from 
UBS 
Optimus 
Foundation, and innovative social financing mechanisms, such as 
development 
impact 
bonds. 
In 
this 
way, 
we 
believe 
our 
clients 
can 
make 
a 
meaningful, 
and 
measurable, 
difference 
for 
their 
chosen causes. 
Institutional
 
clients 
are 
increasingly 
embracing 
ESG 
as 
a 
fundamental investment driver. This is particularly 
true in relation 
to climate risk. In 
2020, we delivered on 
a commitment made at 
the 
World 
Economic 
Forum
 
Annual 
General 
Meeting 
at 
the 
beginning of 
the year 
and broadened 
our Asset 
Management’s 
Climate Aware suite of strategies based on its innovative Climate 
Aware framework, 
including equity 
and fixed 
income, and 
both 
active 
and 
passive 
approaches. 
This 
should 
enable 
more 
clients 
to align their investment and environmental goals. 
Corporate 
clients 
are 
also 
transforming 
so 
as 
to 
align 
their 
business models 
to ESG 
parameters 
and the 
SDGs. It 
is our 
aim 
to meet 
clients, wherever 
they are 
in their 
sustainability journey, 
with advice 
and support, 
products, expertise, 
and execution. 
To 
this 
end, 
we 
offer 
assistance 
in 
areas 
such 
as 
the 
issuance 
of 
green, social 
and sustainability 
bonds, 
and the 
raising of 
capital 
on 
international 
ca
pital 
markets 
to 
further 
the 
quest 
for 
renewable energy. 
Retail 
clients 
in 
Switzerland 
benefit 
from 
access 
to 
appropriate 
and 
relevant 
sustainable 
investment 
products 
from 
Asset Management and 
Global Wealth Management that follow 
our Group-wide approach to SI. This includes the 
UBS SI Strategy 
Fund
 
a
nd
 
the 
UBS 
Manage
TM
 
SI
 
mandate 
solution
.
 
In 
2020, 
almost 
7
0% 
of 
Personal 
Banking
’
s 
mandate 
sales
 
were 
UBS 
Manage
TM
 
SI
. 
In 
2020, 
all 
funds 
of 
the 
UBS 
Vitainvest 
family, 
which 
cover 
pillar 
2 
(occupational 
pension) 
and 
pillar 
3 
(private 
retirement 
savings) 
investments 
in 
Switzerland, 
were 
brought 
into line with ESG criteria defined by UBS. 
Taking climate action 
Our climate strategy underpins our activities 
designed to support 
our clients 
and our 
firm in 
preparing for 
an increasingly 
carbon-
constrained world. It underlines our commitment to the SDGs on 
climate 
action 
and 
on 
affordable 
and 
clean 
energy, 
as 
well 
as 
the Paris Agreement. 
We 
have 
reported 
on 
our 
climate 
strategy 
aligned 
with 
the 
Financial 
Stability 
Board’s 
TCFD 
recommendations 
since 
2017. 
The recommendations 
call on companies 
to disclose the 
impacts 
of 
climate 
change 
on 
their 
businesses. 
This 
will 
allow 
investors 
and 
financial 
institutions 
to 
make 
better 
investment 
decisions 
with 
a 
common 
set 
of 
data 
to 
assess 
the 
climate-related 
risks 
and 
opportunities 
of 
specific 
companies. 
We 
are 
committed 
to 
aligning 
our 
climate 
disclosure 
within 
the 
five-year 
pathway 
outlined by 
the TCFD 
(by the 
end of 
2022) and 
to collaborating 
within the industry to close gaps. 
In 
2020, 
we 
continued 
our 
multi-year 
efforts 
to 
develop 
methodologies 
which 
enable 
more 
robust 
and 
transparent 
disclosure of climate metrics. This includes: 
the development of a 
novel transition risk heatmap methodology; improved granularity 
and 
accuracy 
of 
climate-sensitive 
sectors 
and 
carbon-related 
asset disclosure; and expansion 
of the weighted 
carbon intensity 
metric. 
On 
the 
basis 
of 
the 
enhancements 
made, 
we 
revised 
UBS’s 
exposure 
to 
carbon-related 
assets 
and 
recalculated 
previous years’ exposure figures using the enhanced approach. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 
Gunnar Friede, Timo Busch and Alexander Bassen. ESG and financial performance: 
aggregated evidence from more than 2,000 empirical studies, Journal of Sustainable Finance & Investment, 
2015.
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our strategy, business model and environment 
| How we create value for our stakeholders 
42 
Our climate strategy highlights in 2020 
–
 
Our 
exposure 
to 
carbon-related 
assets 
on 
our 
banking 
balance 
sheet 
is 
low, 
a
t 
1.9%, 
or 
USD
 
5.4 
billi
on
,
 
as 
of 
31 December 2020, decreasing further 
from 2.3% at the 
end 
of 2019 and 2.8% at the end of 2018. 
–
 
Our 
climate-related 
sustainable 
investments 
increased 
to 
USD 160.8 billion in 2020, 
from USD 108 billion in 2019. 
–
 
We actively 
engaged on 
climate topics 
with 49 
oil & 
gas and 
utilities 
companies, 
and 
voted 
on 
50 
climate
-
related 
shareholder resolutions, of which we supported 88%. 
–
 
We 
reached 
our 
goal 
of 
100% 
renewable 
electricity 
consumption. 
–
 
We 
were 
awarded 
top 
ratings 
and 
rankings 
by 
external 
experts. We were 
named climate industry 
group leader in 
the 
Dow Jones 
Sustainability 
Indices and 
were included 
in CDP’s 
Climate A List. 
 
›
 
Refer to the “Risk management and control” 
section of this 
report for 
additional information about UBS
’
s management of 
climate risks and to the Sustainability 
Report 2020, available 
from 11 March 2021 
under “Annual reporting” at 
ubs.com/investors
, for UBS
’
s full TCFD disclosures 
 
Climate-related metrics 2020 
For the year ended 
% change from 
31.12.20 
31.12.19 
31.12.18 
31.12.19 
Risk management 
Identified significant climate-related financial risk on balance sheet
1
None 
None 
None 
Carbon-related assets (USD billion)
2
5.4 
6.1 
7.5 
(10) 
Proportion of total banking products exposure, gross (%) 
1.9 
2.3 
2.8 
Total exposure to climate-sensitive sectors (USD billion)
3
38.7 
35.2 
36.1 
10 
Proportion of total banking products exposure, gross (%) 
13.7 
13.3 
13.5 
Weighted carbon intensity of Climate Aware strategies (in tonnes CO
2
e per USD million of revenue)
4
68.2 
74.5 
89.6 
(9) 
Compared to weighted carbon intensity of composite 
benchmark (%)
5
(51.0) 
(54.0) 
(54.0) 
Number of climate-related shareholder resolutions 
voted upon
6
 
50 
44 
43 
14 
Proportion of supported climate-related shareholder resolutions 
(%) 
88.0 
81.8 
88.0 
Opportunities 
Climate-related sustainable investments (USD billion)
7
160.8 
108.0 
87.5 
49 
Proportion of UBS clients’ total invested assets (%) 
3.8 
3.0 
2.8 
Total deal value in equity or debt capital market services related to climate change mitigation 
and adaptation 
(CCMA) (USD billion)
8
69.8 
52.7 
31.6 
32 
Total deal value of financial advisory services related to CCMA (USD billion) 
29.1 
34.5 
24.9 
(16) 
Number of strategic transactions in support of Switzerland’s Energy Strategy 2050 
11 
12 
8 
(8) 
Own operations 
GHG footprint (kilotonnes CO
2
e)
9
75 
104 
132 
(28) 
Percentage change from baseline 2004 (target: –75% by 2020) (%) 
(79.0) 
(71.2) 
(63.4) 
1 Methodologies 
for climate-related 
financial risk 
are emerging 
and may 
change over 
time, 
as will 
be described 
under “Scenario 
analysis“ in 
our Sustainability 
Report 2020, 
available 
from 11 
March 2021. 
2 Banking products across the Investment Bank 
and Personal & Corporate 
Banking. IFRS 9 gross exposure 
including other financial assets at amortized 
cost, but excluding cash, receivables 
from securities financing 
transactions, cash collateral 
receivables on derivative 
instruments, financial assets 
at FVOCI, irrevocable 
committed prolongation of existing 
loans and unconditionally revocable 
committed credit lines, 
and forward 
starting reverse repurchase 
and securities 
borrowing agreements. 
As recommended 
by the TCFD, 
carbon-related assets 
are defined 
as assets 
tied to 
the energy 
and utilities 
sectors (Global 
Industry Classification 
Standard). Non-carbon-related assets, 
such as renewables, 
water utilities, 
and nuclear power, 
are excluded. For 
grid utilities, the 
national grid mix 
is applied. UBS 
methodology for carbon-related 
assets has been 
revised to analyze 
underlying commodities 
in our 
commodity trade 
finance business. 
As a result, 
we have 
restated the metric 
for 2018 
and 2019 
using the 
enhanced approach. 
3 Banking products 
across the 
Investment Bank and 
Personal & 
Corporate Banking 
(IFRS 9). Climate-sensitive 
sectors defined 
as business 
activities that 
are rated 
as having 
high, moderately 
high, moderate, 
or moderately 
low vulnerability 
to 
transition risks. For 
more details, see “Scenario 
analysis“ and the “UBS corporate 
lending to climate-sensitive sectors 2020“ 
table in the “What“ section 
of our Sustainability Report 2020, 
available from 11 March 
2021. UBS methodology for climate-sensitive sectors has 
been revised to analyze underlying commodities in 
our commodity trade finance business. 
As a result, we have restated the metric for 
2018 and 2019 using 
the enhanced approach. 
4 Year-on-year 
decrease of carbon 
intensity is mainly 
driven by higher 
carbon targets of 
the investment 
strategy. Carbon 
intensity is based 
on scope 1 
and 2 CO
2
 
emissions of investee 
companies, which often rely on third-party estimates. 
Metric has been expanded in 2020 to include all equity 
and fixed income funds with a proprietary Climate Awa 
re strategy (active and rules-based). Metric is 
the 
assets under management 
(AUM)-weighted average 
of the weighted 
average carbon 
intensities of 
the portfolios. 
5 The metric 
is the 
AUM-weighted average 
of the weighted 
average carbon 
intensities of 
the 
respective benchmarks. 
6 This excludes 
proposals related 
to Japanese 
companies that 
included changes 
to the companies’ 
articles of 
association. 
7 Invested assets 
of products 
such as sustainably 
managed 
properties and infrastructure, 
and renewable energy. 
8 Refer to “Calculating and 
reporting on climate 
change-related financing and advisory 
activities” in appendix 9 
to our Sustainability Report 
2020, available 
from 11 March 
2021. 
9 GHG footprint 
equals gross 
GHG emissions minus 
GHG reductions 
from renewable 
energy and CO
2
e offsets 
(gross GHG emissions 
include: direct GHG 
emissions by 
UBS; indirect 
GHG 
emissions associated with the generation 
of imported / purchased electricity 
(grid average emission factor), heat 
or steam; and other indirect 
GHG emissions associated with business 
travel, paper consumption and 
waste disposal). A breakdown of our GHG emissions (scope 1, 2, 3) is provided in appendix 4 to our Sustainability Report 2020, 
available from 11 March 2021. 
 
 

 
43 
Our governance on sustainability 
Our 
governance 
framework 
on 
sustainability 
supports 
the 
creation 
of 
long-term 
value. 
Sustainability 
activities, 
including 
sustainable finance, are overseen at 
the highest level of UBS (the 
Board of Directors 
(the BoD) and the Group 
Executive Board (the 
GEB)) 
and are grounded 
in our Code 
of Conduct and 
Ethics (the 
Code). 
Code of Conduct and Ethics 
In 
our 
Code, 
the 
BoD 
and 
the 
GEB 
set 
out 
the 
principles 
and 
practices 
that 
define 
our 
ethical 
standards 
and 
the 
way 
we 
do 
business. These principles apply to all aspects of 
our business. All 
employees 
must 
confirm 
annually 
that 
they 
have 
read 
and 
will 
adhere to 
the Code 
and other 
key policies, 
supporting a 
culture 
where 
ethical 
and 
responsible 
behavior 
is 
part 
of 
our 
everyday 
operations. In 
our Code 
we make 
a commitment 
to integrating 
financial and 
societal performance 
for the mutual 
benefit of our 
clients 
and 
our 
firm 
– 
and 
that 
we 
are 
constantly 
looking 
for 
better 
ways 
to 
do 
business 
in 
an 
environmentally 
sound 
and 
socially responsible manner. 
In 2020, 
we amended 
the Code 
to place 
a greater 
emphasis 
on the importance 
of our firm’s 
culture. This is 
demonstrated by 
the 
inclusion 
of 
a 
new 
section 
on 
culture, 
placed 
at 
the 
beginning 
of 
the 
Code. 
In 
recognition 
of 
the 
pace 
of 
digital 
change 
globally, 
our 
Code 
also 
includes 
a 
new 
section 
on 
the 
lawful and ethical use of data. 
›
 
Refer to the Code of Conduct and Ethics 
of UBS, available at 
ubs.com/code
, for more information 
Board of Directors and Group Executive Board 
The BoD is 
responsible for 
setting UBS’s 
values and standards 
to 
ensure the Group’s obligations to stakeholders are met. Both the 
Chairman 
of 
the 
BoD 
and 
the 
Group 
CEO 
play 
a 
key 
role 
in 
safeguarding 
our 
reputation 
and 
ensuring 
we 
communicate 
effectively with all our stakeholders. 
The 
BoD’s 
Corporate 
Culture 
and 
Responsibility 
Committee 
(the 
CCRC) 
is 
the 
body 
primarily 
responsible 
for 
corporate 
culture, responsibility 
and sustainability. 
The CCRC 
oversees our 
sustainability strategy and activities. 
The Group 
CEO supervises 
the execution 
of the 
strategy and 
annual 
objectives 
of
 
UBS 
in 
Society
 
and 
provides 
the 
GEB 
and 
the CCRC 
with updates 
about 
UBS in 
Society
. Reporting 
to the 
Group 
CEO, 
the 
Head 
UBS 
in 
Society
 
is 
UBS’s 
senior-level 
representative 
for 
sustainability 
issues 
and, 
on 
behalf 
of 
the 
Group 
CEO, 
proposes 
the 
UBS 
in 
Society
 
strategy 
and 
annual 
objectives to the CCRC for approval. 
Our Sustainable Finance Committee (the 
SFC) was founded in 
2020, and 
the Chair 
of the 
SFC reports 
to the 
Group CEO. 
The 
SFC 
brings 
together 
senior 
business 
leaders 
with 
relevant 
expertise 
from 
across 
the 
firm 
in 
order 
to 
collaborate 
in 
the 
further 
development 
of 
our 
commercial 
sustainable 
finance 
business. 
The 
objective 
of 
the 
SFC 
is 
to 
help 
UBS 
achieve 
its 
ambition 
of 
being 
a 
leader 
in 
sustainable 
finance 
for 
its 
clients 
and, 
in particular, 
it helps 
provide 
leadership for 
cross-divisional 
work streams and opportunities. 
Our 
management 
of 
environmental 
and 
social 
risks 
(ESR) 
is 
steered 
by 
the 
GEB. 
It 
defines the 
ESR 
framework 
and 
controls 
that align UBS’s ESR appetite with that of 
UBS in Society
. 
›
 
Refer to “Board of Directors” in the “Corporate 
governance” 
section of this report for more information about 
the CCRC 
UBS in 
Society 
UBS 
in 
Society
 
is 
a 
dedicated 
organization 
within 
UBS 
focused 
on 
maximizing 
our 
positive 
effect 
and 
minimizing 
any 
negative 
e
ffects 
UBS 
has 
on 
society 
and 
the 
environment
 
while 
still 
delivering 
a 
desired 
performance. 
It 
covers 
all 
of 
the 
activities 
and 
capabilities 
related 
to 
sustainable 
finance 
(including 
sustainable 
investing), philanthropy, 
environmental, 
climate and 
human rights policies governing client and 
supplier relationships, 
our 
environmental 
footprint, 
human 
resources, 
and 
community 
investment. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for the 
sustainability governance chart 
Reporting to our stakeholders on our sustainability 
strategy and activities 
Information about all our 
sustainability efforts and commitments 
is 
provided 
in 
our 
Sustainability 
Report 
2020, 
available 
under 
“Annual 
reporting” 
at 
ubs.com/investors
. 
The 
content 
of 
the 
Sustainability 
Report 
2020 
has 
been 
prepared 
in 
accordance 
with 
the 
Global 
Reporting 
Initiative 
(GRI) 
Standards 
(the 
“comprehensive” 
option) 
and 
with 
the 
German
 
rules 
implementing the EU Directive on disclosure of non-financial and 
diversity 
information 
(2014/95/EU). 
Our 
reporting 
on 
sustainability has 
been reviewed 
on a 
limited assurance 
basis by 
Ernst & 
Young 
Ltd against 
the GRI 
Standards. Our 
Sustainability 
Report 
2020 also 
includes our 
full 
climate disclosure, 
which we 
have 
aligned 
with 
the 
recommendations 
provided 
by 
the 
TCFD 
since their introduction in 2017. 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for an 
overview of non-financial disclosures in accordance 
with the 
German rules implementing EU Directive 2014/95 
 

Our strategy, business model and environment 
| How we create value for our stakeholders 
44 
Investors
We generate 
long-term value 
for our 
investors by 
executing our 
strategy 
with 
discipline, 
targeting 
cost
-
 
and 
capital
-
efficient 
growth, 
long-term 
sustainable 
value 
creation, 
and 
attractive 
shareholder returns. 
Investor base 
Our investor 
base is 
well diversified. 
A substantial 
proportion of 
our 
institutional 
shareholders 
are 
based 
in 
the 
US, 
the 
UK 
and 
Switzerland. 
›
 
Refer to the “Corporate governance” 
section of this report for 
more information about disclosed shareholdings 
Alignment of interests 
We aim to align the interests of our employees 
with those of our 
equity 
and 
debt 
investors, 
and 
reflect 
that 
approach 
in 
our 
compensation philosophy and practices. 
›
 
Refer to “Our compensation philosophy” 
in the “Compensation” 
section of this report for more information 
Cost- and capital-efficient revenue growth 
We 
aim 
for 
attractive 
shareholder 
returns 
by 
growing 
and 
leveraging 
our 
unique, 
integrated 
and 
complementary 
business 
portfolio and geographic footprint. 
We aim to balance growth opportunities with cost and capital 
efficiency 
in 
order 
to 
drive 
attractive 
risk-adjusted 
returns 
and 
sustainable performance. 
Our 
primary 
measurement 
of 
performance 
for 
the 
Group 
is 
return 
on 
CET1, 
as 
regulatory 
capital 
is 
our 
binding 
constraint 
and drives our ability to return capital to shareholders. 
›
 
Refer to the “Performance targets and 
capital guidance” section 
of this report for more information 
Shareholder returns 
The balance 
between cash 
dividends and 
share repurchases 
has 
been adjusted from 2020 
onward, with a greater 
weight toward 
share 
repurchases 
as 
compared 
with 
prior 
years’ 
returns. 
We 
remain 
committed 
to 
returning 
excess 
capital 
to 
our 
shareholders 
and delivering 
total capital 
returns consistent 
with 
our 
previous 
levels. 
We 
intend to 
propose 
an ordinary 
dividend 
per 
share 
of 
USD 0.37 
for 
the 
2020 
financial 
year, 
to 
be 
approved 
at 
the 
2021 
general 
meeting 
of 
shareholders. 
In 
addition, 
before 
COVID-19-related 
restrictions 
on 
share 
repurchases 
were 
introduced 
we 
repurchased 
CHF 350 
million 
(USD 364 million) of 
our shares, and 
in the second 
half of 2020, 
we 
built 
a 
capital 
reserve 
of 
USD 2.0 
billion 
for 
potential 
share 
repurchases. 
For reference, 
total 
capital 
returns to 
shareholders 
for the 2019 financial year were USD 3.4 billion. 
In 
the 
first 
quarter 
of 
2021, 
we 
repurchased 
the 
remaining 
CHF 100 
million 
of 
our 
2018–2021 
USD 
2 
billion 
share 
repurchase 
program, 
which 
is 
now 
complete 
and 
closed. 
On 
8 
February 
2021, 
we 
commenced 
a 
new 
three-year 
share 
repurchase program 
of up 
to CHF 4 
billion, of 
which we 
expect 
to execute 
up to 
USD 1 billion by 
the end 
of the 
first quarter of 
2021. 
We 
consider 
business 
conditions 
and 
developments 
or 
strategic opportunities when determining excess capital available 
for share repurchases. 
Communications 
Our 
Investor
 
Relations 
(IR) 
function 
is 
the 
primary 
point 
of 
contact 
between 
UBS 
and 
our 
shareholders. 
Our 
senior 
management 
and 
IR 
regularly 
interact 
with 
institutional 
investors, 
financial analysts 
and 
other market 
participants, 
such 
as 
credit
 
rating 
agencies. 
Clear, 
transparent 
and 
relevant 
disclosures, 
and 
regular 
direct 
interactions 
with 
existing 
and 
prospective 
shareholders, 
form 
the 
basis 
for 
our 
communications. The 
IR team 
relays 
the views 
of and 
feedback 
on UBS from institutional investors and other market participants 
to our senior management. 
IR 
and 
Corporate 
Responsibility 
work 
together 
and 
interact 
with 
any 
investors 
interested 
in 
sustainability 
topics 
relevant 
to 
UBS and wider society. 
›
 
Refer to the first nine pages 
of the “Corporate governance” 
section of this report and “Information policy” 
in that same 
section for more information 
›
 
Refer to the Sustainability Report 2020, 
available from 11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information 
 

 
45 
Employees
We 
are 
committed 
to 
being 
a 
place 
where 
our 
employees 
can 
unlock 
their 
full 
potential. 
Our 
ability 
to 
meet 
clients’ 
needs, 
solve complex 
problems and 
develop innovative 
and sustainable 
solutions 
depends 
on 
the 
smart, 
talented, 
knowledgeable 
and 
engaged 
people 
who 
partner 
across 
UBS. 
Our 
employees 
are 
highly 
diverse 
in 
terms 
of 
experience, 
background, 
skills 
and 
interests. 
Our 
shared 
success 
is 
built 
on 
a 
cultural 
foundation 
emphasiz
ing
 
collaboration, 
inclusion, 
innovation 
and 
constant
 
improvement. 
Our culture is the basis for our success 
Our three keys to success 
are the foundation of our 
strategy and 
culture. They 
define how 
we work 
together and 
what we 
stand 
for 
as 
a 
firm 
and 
individuals; 
they 
drive 
our 
business 
strategy. 
Our 
Pillars, 
Principles 
and 
Behaviors
 
have 
long 
been 
embedded 
in 
our 
core 
HR 
management 
processes. 
2020 
saw 
our 
culture 
driven 
forward 
through 
divisional, 
regional 
and 
Group-wide 
initiatives, 
such as 
the 
Group Franchise 
Awards
 
(GFA)
 
program, 
which 
was 
developed 
in 
2016
,
 
to 
reward 
employees 
for 
improving 
cross
-
divisional 
collaboration 
and 
operational 
effectiveness. 
An 
interactive 
idea
-
sharing 
site 
encourages 
employees to 
submit ideas 
for improvement 
and collaborate 
on 
solutions. 
›
 
Refer to the foldout pages 
of this report for more information 
about our Pillars, Principles and Behaviors 
 
A 
GFA 
submission 
led 
to 
a 
new 
peer-to-peer 
appreciation 
program 
being 
launched 
in 
2020 
as 
an 
additional 
incentive 
for 
employees to 
acknowledge colleagues’ 
exemplary collaboration, 
commitment and 
behavior. As 
well as 
increasing empowerment 
and employee satisfaction, peer appreciation creates connections 
among 
employees 
and 
teams
,
 
and 
we 
have 
seen 
a 
lot 
of 
engagement, 
with 44,000 recognitions in the first month. 
I
n 
late 
2020
,
 
we 
launched 
an 
initiative 
to 
defin
e
 
UBS’s 
purpose, 
outlining 
why 
we 
do 
things 
the 
way 
we 
do. 
Once 
established, 
our 
purpose 
will 
guide 
all 
our 
actions. 
It 
will 
be 
a 
key 
element 
to 
future 
success 
and 
continue 
to 
inspire 
and 
empower our employees. 
We 
are 
convinced 
leaders 
play 
a 
key 
role, 
since 
leadership 
drives 
culture 
and 
culture 
drives 
performance. 
Thus, 
our 
House 
View 
on 
Leadership
 
outlines 
the 
behavior 
toward 
employees, 
clients and business activities expected 
from every leader at UBS. 
Key concepts are 
embedded in line 
manager training, leadership 
development 
programs, 
staff 
training 
and 
recruiting 
processes, 
and 
a 
full 
set 
of 
Group
-
wide 
culture 
metrics 
promotes 
accountability. 
Our employees are the heart of our culture, and we seek their 
input 
to 
help 
us 
advance. 
Regular 
surveys 
gather 
employee 
feedback 
on 
engagement, 
enablement, 
work 
environment, 
line 
manager effectiveness and expected behaviors. Conducted by an 
external 
provider, 
our 
employee 
survey 
anonymously 
polls 
permanent 
employees 
across 
the 
firm, 
measuring 
views 
on 
key 
strategic 
and 
cultural 
measures; 
several 
questions 
added 
this 
year 
solicited 
feedback 
on 
remote 
working 
and employee 
well-
being 
during 
the 
pandemic. 
Responses 
to 
the 
2020 
survey 
confirmed 
that 
our
 
employees 
feel 
their 
line 
managers 
are 
effective, 
and 
employee 
engagement 
and 
pride 
in 
working 
at 
UBS, as 
well as 
views of our 
talent management practices, 
were 
above the 
norm for 
both high-performing 
and financial 
services 
organizations. 
›
 
Refer to the Sustainability Report 2020, 
available from 
11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for more 
information about our employee survey 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our strategy, business model and environment 
| How we create value for our stakeholders 
46 
Diversity, 
equity and inclusion 
In 
a 
global 
business 
such 
as 
ours, 
a 
diverse 
workforce 
is 
a 
competitive 
advantage. 
Our 
strategy 
is 
to 
continue 
to 
shape 
a 
diverse 
and 
inclusive 
organization 
that 
is 
innovative, 
provides 
outstanding service 
to our 
clients, offers 
equitable opportunities 
for 
all 
and 
is 
a 
great 
place 
to 
work 
for 
everyone. 
Our 
broad 
approach 
focuses 
on
 
gender, 
race, 
ethnicity, 
LGBTQ+, 
age, 
disability, 
and 
mental 
health, 
among 
other 
aspects, 
with 
inclusive leadership 
playing an important 
role. Increasing 
gender 
and ethnic diversity 
are our highest 
near-term 
strategic diversity, 
equity 
and 
inclusion 
priorities. 
Regarding 
gender, 
we 
seek 
to 
hire, 
promote 
and retain 
more women 
across 
the firm, 
aspiring 
to increase 
the percentage 
of Director 
level and 
above positions 
filled by women to 30% by 2025. At the end of 2020, 26.0% of 
all employees 
in roles 
at Director 
level and 
above were 
women, 
up 
from 
25.2% 
in 
2019 
and 
we 
are 
on 
track 
to 
achieve 
our 
target. 
Our 
award-winning 
UBS 
Career 
Comeback
 
program, 
launched 
in 
2016, 
continues 
to 
increase 
our 
pipeline of 
female 
senior 
leaders. Professionals 
looking 
to return 
to corporate 
jobs 
after a career break are hired 
for permanent roles and supported 
with 
targeted 
onboarding, 
coaching 
and 
mentoring. 
To 
date, 
this 
global 
program 
has 
helped 
169
 
women 
and 
14
 
men 
relaunch their careers. 
We 
take 
a 
multi-faceted 
approach 
to 
increasing 
our 
ethnic 
diversity, 
including 
setting 
aspirational 
ethnicity 
targets 
in 
locations 
such as 
the US 
and UK. 
We have 
a 
global framework 
and drive our initiatives regionally, 
supported by our recruitment, 
training and 
employee network 
organizations, in 
particular. Our 
multi-cultural 
employee 
networks 
play 
an 
integral 
part 
in 
building 
a 
more 
ethnically 
inclusive 
culture 
across 
UBS, 
and 
a 
new 
firm-wide 
network 
of 
more 
than 140 
Diversity 
& 
Inclusion 
Ambassadors provides employees with advice and coaching. 
Our commitment to pay fairness and fair treatment for all 
We 
pay 
for 
performance, 
and 
a 
strong 
commitment 
to 
pay 
fairness is 
embedded in 
our compensation 
policies. We 
conduct 
both internal and independent external reviews aiming to ensure 
that all employees are paid fairly and 
to address any unexplained 
gaps. In 
April 2020, 
UBS was 
one of 
the first 
banks certified 
by 
the 
EQUAL-SALARY 
Foundation 
for 
its 
equal 
pay 
practices 
in 
Switzerland. 
This 
review 
included 
an 
independent 
audit 
across 
our HR policies 
and practices including 
a statistical review 
of our 
pay levels. 
In December, 
our US, UK, 
Hong Kong and 
Singapore 
operations 
received 
the 
same 
certification. 
These 
certifications 
are 
testament 
to 
our 
well-established 
equal 
opportunity 
environment
.
 
Our 
commitment 
to 
pay 
fairness 
is 
further 
demonstrated 
by 
the 
successful 
completion 
of 
the 
equal 
pay 
analysis 
in 
Switzerland
,
 
as 
required 
by 
the 
newly 
introduced 
Swiss 
Federal 
Act 
on 
Gender 
Equality. 
We 
had 
already 
completed this 
important analysis by 
the end 
of the 
first year of 
the three-year 
regulatory implementation 
period and 
the results 
confirm 
that 
we 
are 
fully 
compliant 
with 
Swiss 
equal 
pay 
standards. The analysis found that our statistical wage 
difference 
in Switzerland is 
only 0.6% and 
thus significantly below 
the 5% 
regulatory 
requirement. 
This 
achievement 
also 
reflects 
our 
ongoing 
efforts 
to 
address 
any 
unexplained 
pay 
gaps 
as 
we 
uncover them. 
Ernst & 
Young 
provided assurance 
regarding 
the 
analysis 
and 
affirmed 
that 
we 
comply 
with 
the 
applicable 
legal 
requirements for each legal entity in Switzerland. 
We are committed 
to ensuring a workplace 
where employees 
are 
fairly 
treated, 
with 
equal 
employment 
and 
advancement 
opportunities for all. We do not tolerate 
harassment of any kind. 
Our 
global 
measures 
include 
employee 
and 
line 
manager 
training, 
specialist 
expertise 
in 
handling 
concerns, 
and 
a 
global 
employee hotline. 
An internal 
anti-harassment officer 
appointed 
by the 
Group Head 
Human Resources 
provides an 
independent 
view 
of 
the 
firm’s 
various 
processes 
and 
procedures 
to 
prevent 
harassment and sexual misconduct. 
›
 
Refer to 
ubs.com/diversity
 
for additional information about our 
priorities, commitments and progress, and the Sustainability 
Report 2020, available from 11 March 2021 under “Annual 
reporting” at 
ubs.com/investors
,
 
for our management practices 
and detailed employee data, including 
gender- and region-
specific data 
›
 
Refer to the “Compensation” section 
of this report for more 
information about reward-related topics 
 
 
Personnel by region 
As of 
% change from 
Full-time equivalents 
31.12.20 
31.12.19 
31.12.18 
31.12.19 
Americas 
21,394 
21,036 
21,309 
2 
of which: USA 
20,528 
20,232 
20,495 
1 
Asia Pacific 
15,353 
13,956 
12,119 
10 
Europe, Middle East and Africa (excluding Switzerland) 
13,899 
12,918 
12,620 
8 
of which: UK 
6,069 
5,704 
5,782 
6 
of which: rest of Europe (excluding Switzerland) 
7,652 
7,048 
6,670 
9 
of which: Middle East and Africa 
178 
166 
168 
7 
Switzerland 
20,904 
20,691 
20,840 
1 
Total 
71,551 
68,601 
66,888 
4 
 
 
 

 
47 
The future of work, with a workforce prepared for the 
future 
We 
believe 
that 
the 
future 
of 
work 
will 
require 
an 
agile 
and 
connected workforce to respond to ever-changing 
circumstances 
as well as evolving 
client behavior and requirements. Building 
on 
our experience 
and capabilities, 
we embrace 
cultural and 
digital 
transformation 
to 
enable 
our 
employees 
to 
succeed 
in 
new 
environments 
and 
to 
remain 
a 
widely 
recognized 
employer 
of 
choice. 
To 
attract 
the 
right 
talent, 
we 
recruit 
for 
potential 
and 
for 
cultural 
fit, 
using 
innovative 
technologies 
and 
assessing 
the 
person’s 
experience, 
competencies, 
learning 
capabilities 
and 
digital aptitude. We 
hired a total 
of 9,296 external candidates in 
2020, 
with 
our 
junior 
talent 
programs 
hiring 
more 
than 
1,700 
graduate and 
other trainees, 
apprentices and 
interns. As part 
of 
our 
integrated 
workforce 
strategy, 
we 
continued 
selective 
insourcing 
and 
hiring 
activities, 
primarily 
in 
our 
Business 
Solutions 
Centers 
in 
China, 
India, 
Poland, 
Switzerland 
and 
the 
US, while reducing external resources. 
A 
key 
part 
of 
our 
talent 
management 
strategy 
is 
offering 
career 
opportunities, 
not 
just 
jobs. 
Internal 
mobility 
leads 
to 
greater 
employee 
engagement, 
improved 
collaboration, 
increased productivity 
and reduced attrition, 
all of which 
benefit 
our 
employees, 
businesses 
and 
clients. 
To 
that 
end, 
our 
Career 
Navigator tool enables employees to explore career paths, search 
for jobs, and 
connect with colleagues 
working in roles 
matching 
their 
interests, 
while 
helping 
our 
recruiters 
find 
internal 
talent 
more easily. The tool 
also identifies skill gaps 
with regard to new 
roles and provides recommended learning. 
Our 
in-house 
UBS 
University 
plays 
a 
central 
role 
in 
building 
skills and capabilities for the future. The 
training offered includes 
employee 
and 
leadership 
development, 
advisory 
and 
sales 
training, 
industry-leading 
certification 
for 
client 
advisors, 
future 
skills 
development, 
and 
health 
and 
well-being 
topics. 
We 
put 
special focus in 2020 on future skills development and new ways 
of working, providing 
dedicated and experiential 
online learning 
offerings to 
develop agile 
and digital 
skills, but 
also to 
help our 
employees 
thrive 
in 
a 
virtual 
environment. 
Our 
holistic 
health 
and 
well-being 
initiative 
was 
expanded 
in 
2020 
to 
encompass 
mental, physical, financial and 
social well-being, and we 
entered 
into 
a 
partnership 
to 
offer 
an 
app-based 
solution 
for 
guided 
mindfulness 
techniques, 
sleep, nutrition 
and 
physical 
activity 
to 
all 
employees 
globally. 
Health 
and 
well
-
being, 
including 
resilience and 
positivity, were 
and will 
continue to 
be important 
focus areas to help our 
employees manage the pandemic, 
which 
is 
both 
professionally 
and 
personally 
demanding. 
Results 
from 
our employee and 
pulse surveys underline 
the positive impact 
of 
this initiative. 
In 
2020, 
our 
permanent 
employees 
completed 
almost 
1.2 
million
 
learning 
activities, 
including 
mandatory 
training 
on 
compliance, 
business 
and 
other 
topics. 
This 
equated 
to 
an 
average of 1.9 training days per employee. 
›
 
Refer to 
ubs.com/employerawards 
and
 
ubs.com/careers 
for more 
information
 
 
 

Our strategy, business model and environment 
| How we create value for our stakeholders 
48 
Society
As 
a 
founding 
signatory 
of 
the 
Principles 
for 
Responsible 
Banking, UBS 
has committed 
to aligning 
its business 
strategy to 
be consistent with and contribute to society’s goals. 
Engaging with society 
We 
engage 
with 
representatives 
of 
wider 
society 
on 
a 
regular 
basis 
and 
on 
a 
wide 
range 
of 
topics. 
This 
engagement 
yields 
important 
information 
about 
society’s 
goals, 
expectations 
and 
concerns. 
It 
makes 
a 
critical 
contribution 
to 
our 
understanding 
and 
management 
of 
issues
 
that 
have 
a
 
potential
 
impact
 
(whether 
positive 
or 
negative) 
on 
our 
firm, 
and 
on 
society. 
By 
actively 
fostering 
such 
interactions, 
we 
are 
in 
a 
position 
to 
address expectations 
and concerns 
in an 
informed and 
effective 
manner. 
We 
also 
continue 
to 
set 
standards 
in 
our 
industry, 
including through 
the management 
of environmental 
and social 
risks, 
the 
management 
of 
our 
environmental 
footprint 
and 
through our sustainability disclosure. 
Doing business in a sustainable manner 
We 
view 
the 
proper 
firm-wide 
management 
of 
our 
environmental footprint 
and supply 
chain as 
important proof 
of 
how we 
do business 
in a 
sustainable manner 
for the 
benefit of 
society. 
This 
is 
equally 
true 
of 
our 
broad 
and 
wide
-
ranging
 
environmental and 
social risk framework 
that governs client 
and 
vendor 
relationships 
and 
is 
applied 
firm-wide. 
We 
have 
set 
environmental and 
social risk standards 
regarding environmental 
and 
human 
rights 
topics 
in 
product 
development, 
investments, 
financing 
and 
supply 
chain 
management. 
We 
have 
identified 
certain controversial activities that we will not engage in at all, or 
only under 
stringent criteria. 
As part 
of this 
process we 
engage 
with 
clients 
and 
vendors 
to 
better 
understand 
their 
processes 
and 
policies, 
and 
to 
explore 
how 
any 
environmental 
and 
social 
risks may be mitigated. 
In 
2020, 
we 
achieved 
a 
major 
milestone 
in 
reducing 
our 
environmental 
footprint 
by 
meeting 
our 
global 
RE100 
commitment of sourcing 100% of our electricity from renewable 
sources. Accomplishing 
our commitment 
to the 
RE100 initiative 
also 
means 
that 
we 
have 
reduced 
our 
greenhouse 
gas 
(GHG) 
footprint by 79% compared with our 2004 baseline. 
While business travel is a necessary part of how we work, and 
an enabler 
for business, 
travel has almost 
come to 
a halt 
during 
the 
COVID-19 
pandemic, 
as 
stay-at-home 
restrictions 
have 
required us to 
hold more virtual 
meetings. Compared with 
2019 
levels, 
in 
2020 
we 
saw 
a 
reduction 
of 
more 
than 
80% 
in 
business travel (with a concomitant reduction in GHG emissions), 
mainly 
as a result of the COVID-19 pandemic. 
›
 
Refer to the Sustainability Report 
2020, available from 
11 March 
2021 under “Annual reporting” at 
ubs.com/investors
, for full 
descriptions of our environmental management, 
our responsible 
supply chain management and our environmental 
and social risk 
management and framework 
›
 
Refer to “Our response to COVID-19” in the “Our 
environment” 
section of this report for more information about 
our activities 
supporting clients, 
the economies in which we operate, 
employees and communities 
Investing in our communities 
Recognizing 
that 
our 
firm’s 
long-term 
success 
depends 
on 
the 
health 
and 
prosperity 
of 
the 
communities 
we 
are 
part 
of, 
we 
seek 
to 
address 
social 
issues 
through 
long-term 
investments 
in 
education 
and 
entrepreneurship. 
We 
provide 
strategic 
financial 
commitments 
and 
targeted 
employee 
volunteering 
to 
drive 
impact across a number of SDGs. 
With the onset 
of the COVID-19 
pandemic and lockdowns 
in 
many 
communities, 
our 
core 
principle 
of 
responding 
to 
issues 
relevant to 
our local 
communities became of 
central importance 
during 
2020. 
For 
the 
most 
vulnerable 
members 
of 
our 
communities, 
the 
pandemic 
posed 
life-changing 
challenges, 
such 
as 
food 
insecurity, 
poverty, 
health 
and 
isolation. 
Our 
community 
affairs 
teams 
supported 
grassroots 
organizations 
working directly with 
the most vulnerable to distribute 
USD 10.6 
million of the USD 30 million UBS COVID-19 relief fund. 
›
 
 
Refer to “UBS’s charitable contributions” 
in the “What we do for 
societies and the environment” section of 
the Sustainability 
Report 2020, available from 11 March 2021 under “Annual 
reporting” at 
ubs.com/investors
, for more information 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
 
The Sustainability Report is available from 11 March 2021, and is not deemed incorporated by reference 
into the SEC Form 20-F filing. 
 

 
49 
Regulation and supervision
As a financial 
services 
provider based 
in Switzerland, 
UBS is subject 
to 
consolidated 
supervision 
by 
the 
Swiss 
Financial 
Market 
Supervisory Authority 
(FINMA). Our entities are also regulated 
and 
supervised 
by 
authorities 
in 
each 
country 
where 
they 
conduct 
business. 
Through UBS AG 
and UBS Switzerland 
AG, both licensed 
as 
banks 
in 
Switzerland, 
UBS
 
may 
engage 
in
 
a 
full 
range 
of 
financial 
services 
activities in 
Switzerland 
and 
abroad, 
including 
personal banking, 
commercial banking, 
investment banking 
and 
asset management. 
As a global systemically important bank (G-SIB), as designated 
by the 
Financial Stability 
Board, and 
a systemically relevant 
bank 
(SRB) 
in 
Switzerland, 
we 
are 
subject 
to 
stricter 
regulatory 
requirements and supervision than most other Swiss banks. 
›
 
Refer to the “Our evolution” section 
of this report for more 
information 
›
 
Refer to the “Regulatory and legal developments” 
and “Risk 
factors” sections of this report for more information 
Regulation and supervision in Switzerland 
Supervision 
UBS 
Group 
AG 
and 
subsidiaries 
are 
subject 
to 
consolidated 
supervision by 
FINMA 
under 
the 
Swiss 
Banking Act 
and 
related 
ordinances, which 
impose standards for 
matters such as minimum 
capital, 
liquidity, 
risk 
concentration 
and 
internal 
organization 
standards. 
FINMA 
meets 
its 
statutory supervisory 
responsibilities 
through licensing, 
regulation, supervision 
and 
enforcement. It 
is 
responsible for prudential 
supervision 
and mandates audit 
firms to 
perform 
regulatory 
audits 
and 
other 
supervisory 
tasks 
on 
its 
behalf. 
Capital adequacy and liquidity regulation 
As 
an 
internationally active Swiss 
SRB, 
we 
are 
subject to 
capital 
and total loss-absorbing capacity requirements that are 
based on 
both RWA 
and LRD and 
among the most 
stringent in the 
world. 
We 
are 
also 
subject to 
short-term liquidity 
coverage ratio 
rules, 
and 
after 
the 
net 
stable 
funding 
ratio 
has 
become 
effective 
in 
Switze
rland
 
on 
1 
July 
2021
, 
we 
will 
be 
subject 
to 
long
-
term 
minimum funding 
requirements. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information about 
the Swiss SRB 
framework and the Swiss too-big-to-fail 
requirements 
›
 
Refer to “Liquidity coverage ratio” in the 
“Capital, liquidity and 
funding, and balance sheet” section of 
this report for more 
information about liquidity coverage ratio 
requirements 
›
 
Refer to the “Regulatory and legal developments” 
section of this 
report for more information about the introduction of 
the net 
stable funding ratio 
Regulation and supervision outside Switzerland 
Regulation and supervision in the US 
In 
the 
US, 
UBS 
is 
subject 
to 
regulation 
and 
supervision 
by 
the 
Board 
of 
Governors 
of 
the 
Federal 
Reserve 
System 
(the 
Federal 
Reserve 
Board) 
under 
a 
number 
of 
laws. 
UBS 
Group 
AG 
and 
UBS AG 
are 
both 
subject 
to 
the 
Bank 
Holding 
Company 
Act, 
under which the Federal 
Reserve Board has 
supervisory authority 
over 
the 
US 
operations 
of 
both 
UBS 
Group 
AG 
and 
UBS 
AG. 
UBS’s US 
operations are 
also subject 
to oversight 
by the 
Federal 
Reserve 
Board’s 
Large 
Institution 
Supervision 
Coordinating 
Committee. 
In 
addition 
to 
being 
a 
financial 
holding 
company 
under 
the 
Bank 
Holding 
Company 
Act, 
UBS 
AG 
has 
several 
US 
branches 
and representative 
offices, which 
are authorized 
and supervised 
by 
the 
Office 
of 
the 
Comptroller 
of 
the 
Currency. 
UBS AG 
is 
registered as a swap 
dealer with the Commodity 
Futures Trading 
Commission (the 
CFTC) and 
we expect 
UBS AG 
will be 
required 
to 
register 
as 
a 
security-based 
swap 
dealer 
with 
the 
Securities 
and Exchange Commission (the SEC) by 6 October 2021. 
UBS 
Americas 
Holding 
LLC 
–
 
the 
intermediate 
holding 
company 
for 
our 
non-UBS 
AG 
branch 
operations 
in 
the 
US, 
as 
required under 
the Dodd–Frank 
Act – 
is subject 
to requirements 
established 
by 
the 
Federal 
Reserve 
Board 
related 
to 
risk-based 
capital, liquidity, the Comprehensive 
Capital Analysis and Review 
stress 
testing 
and 
capital 
planning 
process, 
and 
resolution 
planning and governance. 
UBS 
Bank 
USA, 
a 
Federal 
Deposit 
Insurance 
Corporation-
insured 
depository 
institution 
subsidiary, 
is 
licensed 
and 
regulated by state regulators in Utah. 
UBS Financial 
Services Inc., 
UBS Securities 
LLC and several 
other 
US subsidiaries are subject to regulation by a 
number of different 
government agencies and self-regulatory organizations, including 
the SEC, the Financial 
Industry Regulatory 
Authority, 
the CFTC, the 
Municipal 
Securities 
Rulemaking 
Board 
and 
national 
securities 
exchanges, 
depending on 
the nature 
of their business. 
Regulation and supervision in the UK 
Our regulated 
UK operations 
are mainly 
subject to 
the authority 
of the Prudential Regulation Authority (the PRA), which is part of 
the 
Bank 
of 
England, 
and 
the Financial 
Conduct 
Authority 
(the 
FCA). 
We 
are 
also 
subject 
to 
the 
rules 
of 
the 
London 
Stock 
Exchange 
and 
other 
securities 
and 
commodities 
exchanges 
of 
which UBS AG is a member. 
UBS 
AG 
has 
a
 
UK
-
registered 
branch 
in 
London
. 
UBS 
AG 
London 
Branch 
serves 
as 
a 
global 
booking 
center 
for 
our 
Investment 
Bank. 
Our 
regulated 
subsidiaries 
in 
the 
UK 
that 
provide asset management services are authorized and regulated 
mainly by 
the FCA, 
with one 
entity also 
subject to 
the authority 
of the PRA. 
 
 

Our strategy, business model and environment 
| Regulation and supervision 
50 
Regulation and supervision in Germany 
In 
2019, 
certain 
parts 
of 
the 
businesses 
of 
UBS 
Limited 
were 
transferred 
via 
cross-border 
merger 
to 
UBS 
Europe 
SE, 
a 
Frankfurt-based 
subsidiary 
of 
UBS 
AG. 
The 
businesses 
not 
merged into UBS Europe 
SE were transferred 
to UBS AG London 
Branch
. 
T
h
e
 
cross
-
border 
merger
 
led 
to
 
UBS 
Europe 
SE 
becom
ing
 
a 
significant 
entity 
and 
subject 
to 
the 
direct 
supervisi
on 
of 
the 
European 
Central 
Bank
,
 
as 
well 
as
 
to 
continued
 
conduct, 
consumer 
protection 
and 
anti
-
money 
laundering
-
related 
supervision 
by 
the 
German 
B
a
F
in
 
and 
supervisory 
support 
by 
the 
German 
Bundesbank. 
The 
entity 
is 
subject to 
EU and 
German laws and 
regulations. UBS 
Europe SE 
maintains 
branches 
in 
Austria, 
Denmark, 
France, 
Italy, 
Luxembourg, 
the 
Netherlands, 
Poland
, 
Spain, 
Sweden
 
and
 
Switzerland and 
is subject 
to conduct 
supervision by 
authorities 
in all those countries. 
Regulation and supervision in Singapore and Hong Kong 
W
e
 
operate 
13 
Asia 
Pacific 
locations 
and 
are 
subject 
to
 
the
 
regulation and 
supervision by 
local financial regulators. Our 
Asia 
Pacific 
regional 
hubs are 
Singapore 
and Hong 
Kong. 
In 
Singapore, 
we 
conduct 
our 
operations 
primarily 
through 
UBS 
AG 
Singapore 
Branch 
and 
UBS 
Securities 
Pte. 
Ltd., 
which 
are supervised 
by the 
Monetary Authority 
of Singapore 
and the 
Singapore Exchange. 
UBS 
AG 
Hong 
Kong 
Branch 
is 
primarily 
supervised 
by 
the 
Hong 
Kong 
Monetary 
Authority. 
UBS 
Securities 
Hong 
Kong 
Limited, UBS Securities Asia Limited and 
UBS Asset Management 
(Hong Kong) 
Limited are primarily 
supervised by 
the Hong Kong 
Securities 
and 
Futures 
Commission. 
In 
addition, 
UBS 
Securities 
Hong 
Kong 
Limited 
is 
supervised 
by 
the 
Hong 
Kong 
Stock 
Exchange and the Hong Kong Futures Exchange. 
Financial crime prevention 
Combating money laundering 
and terrorist financing 
has been a 
major focus 
of many 
governments 
in recent 
years. The 
US Bank 
Secrecy 
Act 
and 
other 
laws 
and 
regulations 
require 
the 
maint
aining
 
of 
effective 
policies, 
proced
ures 
and 
controls 
to 
detect, 
prevent 
and 
report 
money 
laundering 
and 
terrorist 
financing, 
and 
to 
verify 
the 
identity 
of 
clients. 
Failure 
to 
introduce 
and 
maintain 
adequate 
programs 
to 
prevent 
money 
laundering 
and 
terrorist 
financing 
can 
result 
in 
significant 
legal 
and reputation risk and fines. 
W
e 
are 
also 
subject 
to 
laws 
and 
regulations
 
prohibiting 
corrupt 
or 
illegal 
payments 
to 
government 
officials 
and 
other 
persons, including 
the US 
Foreign Corrupt 
Practices Act 
and the 
UK 
Bribery 
Act. 
We 
maintain 
policies, 
procedures 
and 
internal 
controls intended to comply with those regulations. 
Data protection 
We are subject 
to regulations concerning the 
use and protection 
of 
customer, 
employee, 
and 
other 
personal 
and 
confidential 
information. 
This 
includes 
provisions 
under 
Swiss 
law, 
the 
EU 
General 
Data 
Protection 
Regulation
 
(the 
GDPR) 
and 
laws 
of 
other jurisdictions. 
The 
Swiss 
Parliament 
passed 
a 
revised 
Swiss 
data 
protection 
law 
in 
2020. 
The 
consultation 
on 
the 
corresponding 
ordinance 
was launched 
in February 
2021 and 
we expect 
both the 
revised 
law and the ordinance to become effective as of 1 January 2022. 
The 
revision seeks 
to improve 
data 
protection for 
individuals by 
enhancing 
the 
transparency 
and 
accountability 
rules 
for 
companies 
processing 
data,
 
among 
other 
measures. 
This 
is 
intended to 
result in the equivalence necessary for the continued 
cross-border 
transmission 
of data. 
›
 
Refer to the “Risk factors” section of 
this report for more 
information about regulatory change 
Recovery and resolution 
Swiss too-big-to-fail (TBTF) legislation 
requires each Swiss 
SRB to 
establish 
an 
emergency 
plan 
to 
avoid 
impending 
insolvency 
while maintaining systemic 
functions. In response 
to these Swiss 
requirements, 
and 
similar 
ones 
in 
other 
jurisdictions, 
UBS 
has 
developed 
recovery 
plans 
and 
resolution 
strategies, 
as 
well 
as 
plans 
for 
restructuring 
or 
winding 
down 
businesses 
if 
the 
firm 
could not be stabilized otherwise.
 
In 
2013, 
FINMA 
stated 
its 
preference 
for 
a 
single 
point 
of 
entry (SPE) 
strategy for 
globally active 
SRBs, such as 
UBS, with a 
bail-in 
at 
the 
group 
holding-company 
level. 
UBS 
has 
made 
structural, financial 
and operational 
changes to 
facilitate an 
SPE 
strategy 
and 
is 
confident 
that 
a 
resolution 
of 
the 
bank 
is 
operationally 
executable 
and 
legally 
enforceable. 
In 
February 
2020, FINMA published its assessment of Swiss 
SRBs’ emergency 
and 
recovery 
and 
resolution 
plans, 
which 
confirmed 
our 
Swiss 
emergency plan 
is effective, 
subject to 
further reduction 
of joint 
and 
several 
liabilities. 
FINMA 
attested 
that 
UBS 
has 
completed 
key measures and 
made good progress with 
respect to its global 
resolvability. UBS 
understands that 
FINMA expects 
to publish 
an 
updated assessment of 
the resolvability of 
Swiss SRBs in 
the first 
half of 2021. 
UBS’s crisis management framework 
Our 
crisis 
management 
framework 
includes 
three 
key 
governance 
bodies 
(see 
chart 
below), 
which 
take 
responsibility 
and 
action 
depending 
on 
the 
nature 
of 
the 
stress 
incident 
and 
the scale of the response needed. 
–
 
For 
incident, 
risk 
and 
crisis 
management, 
the 
Group 
Crisis 
Management 
Committee 
works 
with 
incident 
management 
teams that provide monitoring and early warning indicators at 
local / regional 
level, without needing 
to activate protocols 
at 
the Group 
level. If 
a local 
response is 
insufficient, global 
task 
forces and 
crisis management teams 
provide decision-making 
guidance 
and 
coordination, 
including 
crisis 
management 
plans, 
protocols 
and 
playbooks, 
and 
contingency 
funding 
plans. 
–
 
The Group Executive 
Board and the 
Board of 
Directors would 
evaluate 
and 
decide 
upon 
the 
need 
to 
activate 
the 
Global 
Recovery 
Plan 
(the 
GRP) 
if 
a 
stress 
event 
reached 
a 
severity 
requiring that, based on the GRP’s risk indicators. 
–
 
FINMA 
has 
the 
authority 
to 
determine 
whether 
the 
point 
of 
impending 
insolvency 
as 
defined 
by 
Swiss 
law
 
has 
been 
reached and, 
in such cases, 
as part of 
the resolution strategy, 
has the 
power to 
order the 
bail-in of 
creditors to 
recapitalize 
and 
stabilize 
the 
Group, 
limit 
payments 
of 
dividends 
and 
interest, 
alter 
our 
legal 
structure, 
take 
actions 
to 
reduce 
business risk, and order a restructuring of the bank. 
 

 
51 
 
 
Global Recovery Plan 
The 
GRP 
gives 
senior 
management 
a 
tool 
to 
respond 
to 
early 
warning signs, identifying 
measures to 
restore financial 
strength 
if UBS comes under severe capital and / or liquidity stress. 
Defined 
quantitative 
and 
qualitative 
triggers 
are 
monitored 
daily 
and 
subject 
to 
predefined 
governance 
and 
escalation 
processes. 
Fully 
actionable 
recovery 
options 
are 
available 
and 
provide 
a 
basis 
for 
decisions 
regarding 
recovery. 
Recovery 
options have 
defined execution 
owners and 
playbooks with 
the 
following objectives: 
–
 
capital preservation; 
–
 
capital raising; and 
–
 
raising funding, and disposal or wind-down of businesses. 
Global Resolution Strategy 
The Global 
Resolution Strategy (the 
GRS) is 
submitted to 
FINMA 
by UBS and sets 
out measures that 
FINMA can take 
to resolve UBS 
in an orderly manner if 
the recovery process is not successful and 
the 
Group 
enters 
into 
resolution. 
FINMA 
has 
the 
ultimate 
authority 
and 
responsibility 
to 
execute 
the 
resolution, 
in 
cooperation 
with the Swiss 
National Bank, 
the Federal 
Department 
of Finance and 
other key authorities 
through a Crisis 
Management 
Group. The 
SPE 
bail-in strategy 
would involve 
writing down 
the 
Group’s 
remaining 
equity, 
and 
additional 
tier 1 
and 
tier 2 
instruments, 
as 
well 
as 
bail-in 
of 
total 
loss-absorbing 
(TLAC)-
eligible senior 
unsecured bonds 
at 
the 
UBS 
Group AG 
level. An 
internal recapitalization 
of 
affected 
subsidiaries would 
be 
made 
simultaneously, 
enabling 
them 
to 
transmit 
incurred 
losses 
to 
parent 
bank 
UBS 
AG 
and, 
ultimately, 
UBS 
Group 
AG. 
Post-
resolution 
restructuring 
measures 
could 
include 
disposal 
and 
winding down 
of 
businesses and 
assets. FINMA 
noted 
that 
we 
have 
already 
taken 
key 
preparatory 
steps 
and 
made 
good 
progress regarding global resolvability. 
Local plans 
Our US resolution 
plan sets out 
the steps that 
could be taken 
to 
resolve 
the 
UBS 
Americas 
Holding 
LLC 
group 
if 
it 
suffered 
material financial distress and the Group was unable or unwilling 
to provide 
financial support. 
As required 
by US 
regulations, our 
US 
plan 
contemplates 
that 
UBS 
Americas 
Holding 
LLC 
will 
commence US bankruptcy 
proceedings. Prior 
to commencement 
thereof, 
the 
plan 
envisages 
UBS 
Americas 
Holding 
LLC 
downstreaming 
financial 
resources 
to 
subsidiaries 
to 
facilitate 
orderly wind-down or disposal of businesses. 
Following 
the 
cross-border 
merger 
of 
UBS 
Limited 
into 
UBS 
Europe 
SE, 
the 
enlarged 
European 
operating 
subsidiary 
has 
developed 
resolution 
plans 
based 
on 
Single 
Resolution 
Board 
requirements. 
Given 
the 
relatively 
small 
size 
of 
UBS 
Europe 
SE 
compared with the overall Group, emphasis is placed on the GRP 
and 
GRS 
to 
provide 
the 
tools 
necessary 
to 
recapitalize 
and 
restructure the firm in case of material financial distress. 
The 
Swiss 
emergency 
plan 
demonstrates 
how 
UBS’s 
systemically 
important 
functions 
and 
critical 
operations 
in 
Switzerland 
can 
continue 
if 
a 
restructuring 
of 
the 
Group 
is 
deemed 
not 
to 
be 
successful. 
This 
is 
achieved 
mainly 
by 
maintaining 
UBS 
Switzerland 
AG 
as 
a 
separate 
legal 
entity. 
FINMA 
has 
confirmed 
the 
Swiss 
emergency 
plan 
is 
effective, 
subject to further reduction of joint and several liabilities. 
Other 
local 
recovery 
and 
resolution 
plans 
exist 
for 
various 
Group entities and jurisdictions. 
They show how local 
operations 
benefit from 
the GRP 
and the 
GRS, and 
also support 
the global 
plans. Our 
operational continuity 
planning is 
intended to 
ensure 
uninterrupted 
provision of 
critical services 
even if 
certain Group 
entities are discontinued in a crisis. 
 

Our strategy, business model and environment 
| Regulatory and legal developments 
52 
Regulatory and legal developments
Regulatory and legal developments related to COVID-19 
Swiss COVID-19 loans 
In 
March 
2020, 
the 
Swiss 
Federal 
Council 
adopted 
provisional 
emergency legislation 
to support 
small and 
medium-sized Swiss 
companies suffering 
from 
substantial reductions 
in revenue 
due 
to the COVID-19 pandemic. 
In 
December 
2020, 
the 
Swiss 
Parliament 
approved 
the 
COVID-19 
Joint 
and 
Several 
Guarantee 
Act, 
which 
became 
effective on 
19 December 2020. 
This Act 
codified the 
measures 
adopted 
under 
emergency 
legislation 
into 
ordinary 
law 
and 
provides 
for 
regulation 
of 
the 
loan 
programs 
and 
guarantees 
over 
their 
life
 
cycle. 
The 
new 
Act 
extends 
the 
standard 
amortization period of loans from five to eight years. 
›
 
Refer to “Our response to COVID-19” 
in the “Our environment” 
section of this report for more information 
COVID-19 regulatory measures
 
To 
support 
the 
lending 
capacity 
of 
banks, 
the 
Swiss 
Federal 
Council deactivated 
the countercyclical 
buffer on 
residential real 
estate loans in March 2020 until further 
notice, at the request of 
the 
Swiss 
National 
Bank 
(the 
SNB). 
Several 
other 
countries 
similarly 
reduced 
their 
countercyclical 
buffers. 
This 
led 
to 
a 
reduction of 
29 basis points 
of our common 
equity tier 1 (CET1) 
capital requirement as 
of 31 December 2020, with no impact 
on 
our capital ratios. 
Banks 
that 
have 
model-based market 
risk 
RWA 
calculations, 
such 
as
 
UBS, 
have 
experienced 
an 
increased 
number 
of 
backtesting 
exceptions 
driven 
by 
the 
higher 
volatility 
in 
the 
markets 
throughout 
2020. 
These 
exceptions 
could 
ultimately 
result 
in 
higher 
bank-specific minimum 
capital 
requirements. To 
prevent procyclicality 
in capital 
requirements, the 
Swiss Financial 
Market
 
Supervisory 
Authority
 
(
FINMA
)
 
introduced 
a 
temporary 
exemption, freezing 
the 
number of 
backtesting exceptions from 
1 February 2020 until 
1 July 2020, 
and subsequently 
introduced 
this 
exemption
 
into 
supervis
ory 
practice
:
 
the 
exemption 
therefore 
continued 
to 
apply 
beyond 
1 July 
2020, 
subject 
to 
future 
withdrawal 
by 
the 
regulator. 
For 
UBS, 
the 
number 
of 
negative 
backtesting 
exceptions 
within 
a 
250-business-day 
window increased from 0 
to 3 by the end 
of 2020. The resulting 
FINMA VaR 
multiplier for 
market risk RWA 
remained unchanged 
at 
3 
as 
of 
31 
December 
2020; 
UBS 
did 
not 
benefit 
from 
the 
exemption in 2020. 
In 
addition, 
FINMA 
permitted 
banks 
to 
temporarily 
exclude 
central bank 
sight deposits 
from the 
leverage ratio 
denominator 
(the LRD) for the purpose of calculating 
going concern ratios. 
This 
exemption applied 
until 1 January 
2021. Applicable 
dividends or 
similar 
distributions 
approved 
by 
shareholders 
after 
25 March 
2020 
reduce
d
 
the 
relief 
by 
the 
LRD 
equivalent 
of 
the 
capital 
distribution. As of 
31 December 2020, 
these exclusions 
resulted 
in 
a 
temporary 
reduction 
of 
our 
LRD 
for 
going 
concern 
requirement 
purposes 
of 
USD
 
93
 
billion. 
Given 
our 
existing 
buffers to 
capital requirements and 
the temporary nature 
of this 
measure, this 
had no impact 
on our 
capacity to 
provide funding 
to our clients or the Swiss economy. 
Regulators 
in 
key 
jurisdictions 
outside 
of 
Switzerland 
have 
taken 
measures 
intended 
to 
encourage 
banks 
to 
take 
an 
accommodative 
stance 
when 
dealing 
with 
customers 
facing 
financial 
stress, 
and 
also 
to 
support 
liquidity 
in 
markets. 
These 
measures 
include 
a 
temporary 
relaxation 
of 
capital 
buffer 
and 
Pillar 2 capital requirements, 
temporary modifications to 
the LRD 
and the establishment of special lending or financing facilities. 
The Basel 
Committee on 
Banking Supervision 
(the BCBS) 
has 
delayed 
the 
implementation 
deadline 
of 
Basel III 
rules 
by 
one 
year, 
to 
1 
January 
2023. 
The 
accompanying 
transitional 
arrangement for the output floor has also been 
extended by one 
year, 
to 
1 
January 
2028. 
Separately, 
the 
BCBS 
and 
the 
International 
Organization 
of 
Securities 
Commissions 
(IOSCO) 
have extended the final implementation phase 
of the framework 
for 
margin requirements 
for non-centrally 
cleared derivatives 
by 
one year, to 1 September 2022. 
In May 
2020, the 
Federal Reserve 
made a 
temporary change 
to permit 
the exclusion 
of US 
Treasury securities 
and deposits 
at 
Federal Reserve Banks from the 
calculation of the supplementary 
leverage 
ratio 
for 
bank 
holding 
companies 
(BHCs) 
and 
intermediate holding 
companies (IHCs), 
including UBS 
Americas 
Holding 
LLC; 
this 
temporary 
change 
will 
be 
in 
effect 
until 
31 March 2021. 
The 
EU 
and 
the 
European 
Central 
Bank 
(the 
ECB) 
have 
also 
communicated 
a 
series 
of 
regulatory 
measures 
to 
stabilize 
the 
economy 
in 
Europe. 
None 
of 
those 
measures 
had 
a 
significant 
impact on UBS Group during 2020. 
International action regarding capital distributions 
During 
2020, 
regulators 
in 
several 
jurisdictions 
implemented 
measures 
restricting 
bank 
capital 
distributions 
and 
share 
repurchase 
programs. 
These 
measures 
we
re 
intended 
to 
maintain 
capital 
resilience 
and 
lending 
capacity 
following 
the 
outbreak 
of 
the 
COVID-19 
pandemic. 
As 
of 
31 
December, 
no 
such measures were in place in Switzerland. 
In 
June 
2020, 
the 
European 
Systemic 
Risk 
Board 
issued 
a 
recommendation 
to
 
prevent 
EU 
financial 
institutions 
from 
making 
capital 
distributions 
and 
running 
share 
buyback 
programs
,
 
which 
was 
extend
ed
 
in 
July 
2020 
until 
1
 
January 
2021. 
In 
December 
2020, 
the 
ECB 
announced 
that 
EU 
banks 
under 
its 
supervision, 
including 
UBS 
Europe 
SE, 
should 
exercise 
extreme 
prudence 
with 
regard 
to 
dividends 
and 
share 
repurchases from 1 January until 30 September 2021. 
 
 

 
53 
In 
the 
US, 
the 
Federal 
Reserve 
Board 
(the 
FRB) 
has 
taken 
several 
actions, 
including 
a 
prohibition 
on 
increasing 
dividends 
and share repurchases, 
that started in 
the third quarter 
of 2020, 
keeping 
these 
restrictions 
largely 
unchanged 
throughout 
the 
fourth 
quarter. 
As 
a 
result, 
UBS 
Americas 
Holding 
LLC 
was 
restricted from 
distributing cash 
dividends on 
common equity 
in 
excess of 
the firm’s 
average net income 
over the 
four preceding 
quarters. 
In 
December 
2020, 
the 
FRB 
announced 
that 
it 
would 
continue 
capital 
distribution 
constraints for 
supervised 
firms for 
the 
first 
quarter 
of 
2021 
and would 
review 
the 
need 
to 
renew 
such constraints at a later date. 
UBS 
continues 
to 
monitor 
policy 
developments 
regarding 
distributions. 
›
 
Refer to the “Our strategy” and “How we 
create value for our 
stakeholders” sections of this report for more information 
about 
the capital distributions of UBS Group AG 
IFRS 9 and COVID-19: accounting for expected credit losses 
In 
March 
2020, 
the 
International 
Accounting 
Standards 
Board 
(the 
IASB) 
emphasized 
that 
entities 
should 
apply 
appropriate 
judgment 
when 
determining 
the 
effects 
of 
COVID-19 
on 
expected 
credit 
losses 
under 
IFRS 
9, 
given 
that 
significant 
uncertainty 
exi
sts
,
 
particularly 
related 
to 
the 
assessment 
of 
future macroeconomic conditions. 
FINMA, 
the 
ECB 
and 
other 
banking 
regulators 
issued 
similar 
statements emphasizing the need for appropriate judgment 
with 
regard 
to 
COVID
-
19 
effects 
on 
expected 
credit 
losses. 
Notwithstanding the measures taken 
by regulators and clarifying 
statements, 
deteriorating 
economic 
forecasts 
have 
caused 
an 
increase in credit loss expenses and hence greater volatility in the 
income statement. 
Deferrals and moratoria of payments 
In 
March 
2020, 
the 
Coronavirus 
Aid, 
Relief 
and 
Economic 
Security Act of 2020 (the CARES 
Act) came into effect in 
the US, 
providing certain borrowers relief 
from mortgage foreclosures by 
enabling 
them 
to 
benefit 
from 
moratoria 
on 
payments 
for 
defined 
federally 
or 
government-sponsored 
enterprise 
insured, 
guaranteed, owned or funded mortgages and student loans. 
In 
April 
2020, 
the 
European 
Banking 
Authority
 
(the 
EBA
)
 
published 
its 
guidelines 
on 
legislative 
and 
non-legislative 
loan 
repayment moratoria, allowing 
banks to 
grant payment holidays 
to 
customers.
 
UBS 
E
urope 
SE 
has 
experienced 
a 
negligible 
number of such requests under the moratoria. 
Other regulatory and legal developments 
Revision of the Swiss Banking Act 
In 
June 2020, 
the Swiss 
Federal Council 
adopted 
a dispatch 
on 
the partial 
revision 
of 
the Banking 
Act. The 
proposed 
measures 
would 
strengthen 
the 
Swiss 
depositor 
protection 
scheme 
by 
requiring 
banks to 
deposit half 
of 
their contribution 
obligations 
for 
the 
deposit 
protection 
scheme 
in 
securities 
or 
cash 
with 
a 
custodian. 
A related 
adjustment to 
the 
Intermediated Securities 
Act would 
require custodians 
of securities to 
separate their own 
portfolios 
from 
the 
portfolios 
of 
their 
clients. 
Furthermore, 
the 
revision 
would amend 
the 
section of 
the Swiss 
Banking 
Act on 
bank 
insolvency 
provisions, 
including 
the 
ranking 
of 
claims 
in 
case of a bail-in and 
the required subordination 
of bail-in bonds, 
except 
those 
issued 
by 
a 
holding 
company 
with 
pari
 
passu 
liabilities of less than 5% of the total bail-in bond capital. 
As the next step, both chambers of the Parliament will debate 
the bill; 
the revised 
Banking Act 
is not 
anticipated to 
come into 
force 
until 
the 
start 
of 
2022. 
We 
expect 
moderate 
additional 
costs for all Switzerland-based Group entities in scope. 
Swiss Withholding Tax Act 
In April 2020, 
the Swiss Federal 
Council launched a 
consultation 
on various 
suggested amendments 
to the 
Withholding Tax 
Act. 
Based on 
the consultation 
results, the 
Federal Council 
proposed 
in September 
2020 to 
maintain 
the withholding 
tax on 
interest 
carried on bank accounts 
by natural persons with tax 
domicile in 
Switzerland 
and 
to 
abolish 
the 
tax 
on 
all 
other 
interest 
payments. 
As 
the 
next 
step, 
the 
Federal 
Council 
will 
submit 
a 
dispatch to Parliament in the second quarter of 2021. 
Furthermore, 
the 
Swiss 
Federal 
Council 
has 
proposed 
to 
extend 
the 
current 
withholding 
tax 
exemption 
for 
total 
loss-
absorbing capacity 
and additional 
tier 1 
instruments from 
2021 
until 
the 
end 
of 
2026. 
This 
extension 
will 
be 
subject 
to 
parliamentary debate in 2021. 
Climate-related risks; environmental, social and governance 
(ESG) matters 
We actively 
participate in 
discussions on 
corporate responsibility 
and 
sustainability 
issues 
with 
authorities 
and 
policymakers 
and 
contribute 
our 
experience 
and 
knowledge 
to
 
their 
efforts 
to 
define corresponding regulatory and reporting frameworks. 
In 
September 
2020, 
the 
International 
Financial 
Reporting 
Standards 
Foundation 
(the 
IFRS 
Foundation) 
issued 
a 
consultation 
to 
assess 
the 
demand 
for 
global 
sustainability 
reporting 
standards 
and 
the 
contribution 
the 
IFRS 
Foundation 
itself 
could 
make 
in 
developing 
such 
standards, 
including 
the 
possibility of establishing a new Sustainability Standards Board. 
In Switzerland, the 
Federal Council published a 
report in June 
2020 
on 
sustainable 
finance 
assessing 
10 
recommendations 
to 
further 
develop 
Switzerland 
as 
a 
hub 
for 
sustainable 
finance. 
Overall, 
the 
report 
underpins 
the 
commitment 
of 
the 
government to a market-led approach to sustainable finance. 
In September 2020, 
the Swiss Parliament 
adopted the revised 
CO
2
 
Act, mandating 
FINMA and 
the SNB 
to regularly 
assess the 
climate
-
related 
financial 
risks 
in 
the 
financial 
sector. 
As 
a 
referendum has been successfully called for, 
the next step will be 
a public vote on the revised law on 13 June 2021. 
In 
November 
2020, 
FINMA 
launched 
a 
consultation 
on 
new 
climate-related 
financial 
disclosure 
requirements, 
based 
on 
the 
recommendations 
of 
the 
Financial 
Stability 
Board 
(FSB) 
Task 
Force 
on 
Climate-related 
Financial 
Disclosures 
(the 
TCFD). 
The 
requirements 
include 
principles-based 
elements 
on 
governance, 
strategy, 
risk 
management 
and 
quantitative 
information 
on 
climate-related 
financial 
risks 
and 
apply 
to 
Swiss 
systemically 
relevant 
banks, 
including 
UBS. 
The 
new 
circular 
is 
expected 
to 
become applicable for the 2021 reporting year. 
In 
January 
2021, 
the 
Swiss 
government 
officially 
expressed 
support 
for 
the 
TCFD. 
Since 
the 
launch 
of 
the 
TCFD 
recommendations in 
2017, we 
have continuously 
improved and 
expanded 
our 
climate-related 
disclosures 
to 
demonstrate 
our 
active 
engagement 
for 
an 
orderly 
transition 
to 
a 
low-carbon 
economy. 
 
 

Our strategy, business model and environment 
| Regulatory and legal developments 
54 
In 
December 
2020, 
the 
US 
Federal 
Reserve 
joined 
the 
Network 
of 
Central 
Banks 
and 
Supervisors 
for 
Greening 
the 
Financial 
System 
(the 
NGFS). 
As 
a 
result, 
all 
global 
systemically 
important banks (G-SIBs) 
are now supervised by 
members of the 
NGFS. 
The 
NGFS 
advocates 
for 
a 
more 
sustainable 
financial 
system and issued a 
range of prudential supervisory 
practices for 
climate- 
and environment-related topics in 2020. 
Furthermore, 
the 
Federal 
Reserve 
has 
indicated 
that 
it 
will 
work 
closely 
with 
other 
agencies 
and 
authorities, 
including 
the 
BCBS Task 
Force on 
Climate-related Financial 
Risks and 
the FSB, 
to 
better 
understand, 
measure 
and 
mitigate 
climate-related 
financial risks. 
In Europe, 
the ECB has 
issued a guide 
on climate-related 
and 
environmental 
risks 
and 
announced 
plans 
for 
a 
2022 
climate 
stress test. 
Also, the 
EBA has 
consulted on 
the inclusion 
of ESG 
matters in supervisory practices, and the European Securities 
and 
Markets 
Authority 
(
ESMA
)
 
has 
consulted 
on 
Disclosure 
Regulation 
technical 
standards, 
including 
adverse 
impact 
requirements. 
The 
EU 
has 
formally 
adopted 
the 
Taxonomy 
Regulation 
with 
a 
legislative 
base 
for 
technical 
standards 
to 
define a green taxonomy. 
NSFR implementation 
In 
September
 
2020, 
the 
Swiss 
Federal 
Council 
adopted 
an 
amendment 
to 
the 
Liquidity 
Ordinance 
for 
the 
implementation 
of 
the net 
stable 
funding ratio 
(the 
NSFR). The 
NSFR regulation 
was 
finalized 
in 
the 
fourth quarter 
of 
2020 
with 
the release 
of 
the revised FINMA liquidity 
circular, and will become 
effective on 
1 July 2021. It applies to UBS Group AG at the consolidated level 
and 
to 
UBS 
AG, 
UBS 
Switzerland 
AG 
and 
UBS 
Swiss 
Financial 
Advisers 
AG 
at 
the 
standalone 
level. 
UBS 
is 
on 
schedule 
to 
operationalize 
the 
NSFR 
regulation; 
its 
overall 
effect 
on 
UBS 
is 
expected to be limited. 
In 
October 
2020, 
the 
US 
banking 
regulators 
finalized 
the 
NSFR 
rule 
for 
supervised 
firms 
to 
ensure 
a 
minimum 
level 
of 
stable funding. The rule 
becomes effective as of 
1 July 2021 and 
will 
require 
semi-annual 
disclosure 
from 
1 January 
2023. 
As 
a 
Category 
III 
firm 
under 
the 
Federal 
Reserve’s 
Tailoring 
Rule 
(2019), 
UBS’s 
intermediate 
holding 
company, 
UBS 
Americas 
Holding 
LLC, 
and 
its 
subsidiary 
bank, 
UBS 
Bank 
USA, 
will 
be 
subject to an NSFR requirement of 85%. 
In 
the 
European 
Union, 
the 
European 
Commission 
(the 
EC) 
adopted 
the 
updated 
Capital 
Requirements 
Regulation 
in 
June 
2019, 
which 
will 
become 
effective 
from 
28 
June 
2021. 
The 
regulation 
requires UBS 
Europe SE 
to 
provide 
a 
detailed annual 
NSFR disclosure and a semi-annual NSFR key metrics disclosure. 
Gone concern capital requirements 
As 
of 
1 
January 
2020, 
the 
amendments 
to 
the 
Swiss 
Capital 
Adequacy 
Ordinance 
came 
into 
force. 
The 
revisions 
introduce 
gone 
concern 
capital 
requirements 
for 
Switzerland-based 
intermediate 
parent 
banks 
of 
G-SIBs 
on 
a 
standalone 
basis, 
impacting UBS AG 
standalone. UBS Switzerland 
AG is subject 
to 
a 
lower 
gone 
concern 
requirement 
effective 
1 
January 
2020, 
corresponding 
to 
62% 
of 
the 
Group’s 
gone 
concern 
requirement (before applicable reductions). 
US CCAR 
In 
June 
2020, 
the 
Federal 
Reserve 
released 
the 
results 
of 
its 
annual Dodd–Frank Act Stress Tests 
(DFAST) and Comprehensive 
Capital Analysis and Review (CCAR). 
Our 
intermediate 
holding 
company, 
UBS 
Americas 
Holding 
LLC, exceeded minimum 
capital requirements under 
the severely 
adverse 
scenario 
and 
the 
Federal 
Reserve 
did 
not 
object 
to 
its 
capital 
plan. 
As 
a 
result, 
UBS 
Americas 
Holding 
LLC 
will 
no 
longer 
be 
subject 
to 
the 
qualitative 
assessment 
component 
of 
CCAR. 
Following 
the 
completion 
of 
the 
annual 
DFAST 
and 
CCAR, 
UBS 
Americas 
Holding 
LLC 
was 
assigned 
a 
stress 
capital 
buffer 
(an SCB) of 6.7% 
under the SCB rule (based 
on Dodd–Frank Act 
stress test results 
and planned future 
dividends), which results 
in 
the imposition 
of restrictions 
if the 
SCB is not 
maintained above 
specified regulatory minimum capital requirements. 
The 
Federal 
Reserve 
also 
conducted 
sensitivity 
analyses 
to 
model 
the 
economic 
effects 
of 
the 
COVID-19 
pandemic. 
As 
a 
result 
of 
these 
supplementary 
analy
ses,
 
the 
Federal 
Reserve 
determined 
that 
firms 
should 
resubmit 
revised 
capital 
plans 
based on 
a new 
stress scenario. 
In December 
2020, the 
Federal 
Reserve 
released 
the results 
of this 
second CCAR 
of 2020. 
UBS 
Americas 
Holding 
LLC’s 
projected 
stress 
capital 
ratios 
exceeded 
regulatory 
capital 
minima 
under 
the 
updated
 
supervisory 
scenarios. 
Brexit 
Following the UK’s withdrawal from the EU 
on 31 January 2020, 
a 
regulation 
granting 
equivalence 
to 
Switzerland
’
s 
stock 
exchanges 
was 
approved 
by 
the 
UK 
Parliament 
and 
came 
into 
force 
on 
3 
February 
2021. 
In
 
response, 
Switzerland 
granted 
recognition 
for 
UK 
trading 
venues 
that 
allows 
shares 
issued 
by 
Swiss-incorporated companies 
to be 
admitted to 
trading on 
UK 
trading venues. 
Also
, 
the 
negotiation 
on 
the 
Trade 
and 
Cooperation 
Agreement, which governs 
the relationship between 
the EU and 
the UK on free trade in certain goods 
and mutual market access, 
among other matters, was finalized on 24 December 2020. 
In September 2020, 
the EC adopted 
a temporary equivalence 
decision for 
UK central 
counterparties (CCPs) 
for the 
purpose of 
facilitating 
derivatives 
clearing. 
The 
temporary 
equivalence 
decision, 
applicable 
from 
1 January 
2021 
until 
30 June 
2022, 
does 
not 
require 
UBS 
Europe 
SE 
to 
migrate 
its 
exposures 
to 
an 
EU CCP before the end of the transition period. 
In March 2019, 
UBS completed a business 
transfer and cross-
border 
merger 
of 
UBS 
Limited 
and 
UBS 
Europe 
SE 
in 
order 
to 
continue serving 
EEA clients 
following the 
end of 
the transition 
period. 
We 
continue 
to 
align 
our 
Investment 
Bank 
activities 
to 
respond to ongoing regulatory guidance. 
 
 

 
55 
Developments related to the transition away from LIBOR 
The ICE Benchmark 
Administration (IBA), the 
FCA-regulated and 
authorized administrator of LIBOR, is 
consulting on the timing of 
the 
cessation 
of 
LIBOR. 
IBA 
expects 
that 
one-week 
and 
two-
month 
USD 
LIBOR 
settings, 
and 
all 
GBP, 
JPY, 
EUR 
and 
CHF 
LIBOR 
settings, 
will 
cease 
by 
the 
end 
of 
2021, 
and 
that 
the 
remaining 
USD 
LIBOR 
settings 
will 
cease 
by 
the 
end 
of 
June 
2023. 
The 
UK 
Government 
announced 
that 
the 
FCA 
will 
be 
given 
additional 
powers 
to 
ensure 
a 
smooth 
wind-down 
of 
LIBOR 
and deal 
with 
certain 
legacy contracts 
that 
cannot easily 
transition from LIBOR. 
In 
October 
2020, 
the 
International 
Swaps 
and 
Derivatives 
Association (ISDA) 
launched the 
IBOR Fallbacks 
Supplement and 
IBOR Fallbacks Protocol, 
amending the ISDA 
standard definitions 
for 
interest-rate 
derivatives 
to 
incorporate 
fallbacks 
for 
derivatives linked 
to certain 
interbank offered 
rates (IBORs). 
The 
changes 
came 
into 
effect 
on 
25 
January 
2021 
and, 
from 
that 
date, 
all 
new 
cleared 
and 
non-cleared 
derivatives 
between 
adhering parties that reference the definitions 
now include these 
fallbacks. 
UBS 
adhered 
to 
the 
protocol 
since 
November 
2020, 
ahead of the effective date in January 2021. 
Digitalization 
In 
2020, 
the 
Swiss 
Parliament 
passed 
a 
revised 
Swiss 
data 
protection 
law. 
The 
consultation 
on 
the 
corresponding 
ordinance 
is 
expected 
to 
be 
launched 
in 
the 
second 
quarter 
of 
2021 
and 
we 
anticipate 
both 
the 
law 
and 
the 
ordinance 
to 
become 
effective 
as 
of 
1 
January 
2022. 
The 
revision 
seeks 
to 
improve 
data 
protection 
for 
individuals 
by 
enhancing 
the 
transparency 
and 
accountability 
rules 
for 
companies 
processing 
data, 
among 
other 
measures. 
This 
is 
intended 
to 
result 
in 
the 
equivalence necessary 
for the continued cross-border 
transmission 
of data with 
EU member 
states. 
The 
Swiss 
Parliament 
also 
adopted 
the 
Federal 
Act 
on 
the 
Adaptation 
of 
Federal 
Law 
to 
Developments 
in 
Distributed 
Ledger Technology (the DLT 
Act), among other matters, enabling 
the 
introduction 
of 
ledger-based 
securities 
that are 
represented 
in a 
blockchain. Part 
of the 
DLT Act 
has become 
effective as 
of 
February 2021, 
the remainder 
is expected 
to enter 
into force 
in 
the second half of 2021. 
The 
Swiss 
P
arliament 
also 
passed 
the 
Federal 
Act 
on 
Electronic 
Identification 
Services 
(
the 
e
-
ID 
Act), 
thereby 
introducing 
a 
federally 
recognized
 
electronic 
identity
. 
As 
a 
referendum
 
has 
been 
successfully 
called 
for, 
the 
law 
will 
be 
subject 
to 
a 
public 
vote 
in 
March 
2021. 
In 
the 
EU, 
the 
EC 
has 
outlined its Digital 
Finance Package, which 
is focused on 
crypto-
assets, 
digital 
identities, 
digital 
operational 
resilience 
and 
retail 
payments strategy, 
among other 
matters. Furthermore, 
the ECB 
has launched a consultation on a possible future digital euro. 
Operational resilience 
On 
the 
international 
level,
 
in 
2020
,
 
the 
BCBS 
finished 
its 
consultation on new Principles for Operational 
Resilience, 
as well 
as on 
the revisions 
to the existing 
BCBS Principles 
for the Sound 
Management 
of 
Operational 
Risk. 
Final 
guidelines 
are 
expected 
to be released in the course of 2021. 
In 
the 
UK, 
the 
PRA 
and 
FCA 
completed 
their 
joint 
consultations 
on 
the 
new 
UK operational 
resilience 
framework, 
with final rules expected in March 2021. 
US 
banking 
regulators 
have 
further 
issued 
a 
whitepaper 
on 
operational resilience 
that broadly 
aligns with 
the BCBS 
and UK 
proposals but is not applicable to foreign banks, at present. 
EU 
institutions 
are 
also 
considering 
legislative 
proposals 
in 
relation to digital operational resilience. 
Addressing 
the 
emerging 
requirements 
across 
jurisdictions, 
we 
have 
established 
a 
global 
program 
to 
enhance 
our 
capabilities on 
operational resilience 
and enable 
alignment with 
relevant regulatory requirements and legislation. 
 

Our strategy, business model and environment 
| Risk factors 
56 
Risk factors
Certain 
risks, 
including 
those 
described 
below, 
may 
affect 
our 
ability to execute 
our strategy or our 
business activities, financial 
condition, results of operations and 
prospects. We are inherently 
exposed to 
multiple risks, many 
of which 
may become apparent 
only with 
the benefit 
of hindsight. 
As a 
result, risks 
that we 
do 
not 
consider 
to 
be 
material 
or 
of 
which 
we 
are 
not 
currently 
aware 
could also 
adversely affect 
us. Within 
each category, 
the 
risks that we consider to be most material are presented first. 
Market, 
credit and macroeconomic risks 
Our results of operations and financial condition may be 
adversely affected by the COVID-19 pandemic and the response 
to it 
The 
continued 
widespread 
COVID-19 
pandemic 
and 
the 
governmental 
measures 
taken 
to 
contain 
it 
have 
adversely 
affected, 
and 
will 
likely 
continue 
to 
adversely 
affect, 
global 
economic 
conditions, resulting 
in meaningful 
contraction in 
the 
global 
economy, 
substantial 
volatility 
in 
the 
financial 
markets, 
increased unemployment, increased 
credit and counterparty risk, 
and 
operational 
challenges, 
such 
as 
the 
temporary 
closures 
of 
businesses, 
sheltering-in-place 
directives 
and 
increased 
remote 
work 
protocols. 
Governments 
and 
central 
banks 
around 
the 
world 
have 
reacted 
to 
the 
economic 
crisis 
caused 
by 
the 
pandemic by 
implementing stimulus 
and liquidity 
programs and 
cutting 
interest 
rates. 
While 
these 
programs 
have 
had 
initial 
success 
in 
mitigating 
the 
economic 
consequences 
of 
the 
pandemic, 
it 
is 
unclear 
whether 
these 
or 
future 
actions 
will 
be 
successful in 
countering the 
economic disruption 
caused by 
the 
pandemic. 
If 
the 
pandemic 
is 
prolonged, 
vaccine 
distribution 
is 
delayed, 
or 
available 
vaccines prove 
ineffective 
against 
evolving 
strains 
of 
the 
coronavirus, 
or 
the 
actions 
of 
governments 
and 
central banks are 
unsuccessful, the adverse impact on 
the global 
economy 
will 
deepen, 
our 
results 
of 
operations 
and 
financial 
condition in future quarters may be adversely affected. 
COVID-19 
and 
related 
lockdown 
measures 
have 
significantly 
impacted 
major 
economies 
across 
the 
world. 
Uncertainties 
are 
still 
at 
a 
high 
level, 
making 
predictions 
difficult. 
The 
COVID-19 
pandemic 
has 
affected 
all 
of 
our 
businesses, 
and 
these 
effects 
could 
be 
greater 
in 
the 
future 
if 
adverse 
conditions 
persist 
or 
worsen. 
These 
effects 
have 
included 
declines 
in 
some 
asset 
prices, 
spikes 
in 
volatility, 
lower 
or 
negative 
interest 
rates, 
widening of credit spreads and credit deterioration. These effects 
have 
resulted 
in 
decreases 
in 
the 
valuation 
of 
loans 
and 
commitments, an 
increase in 
the allowance 
for credit losses 
and 
lower valuations 
of certain classes 
of trading 
assets. While 
these 
effects were 
offset by high 
levels of client 
activity in 2020 
and a 
rebound in asset 
prices in some 
sectors, this level 
of activity may 
not persist. 
Should these global market conditions continue or worsen, 
or 
the 
pandemic 
lead 
to 
additional 
market 
disruptions, 
we 
may 
experience 
reduced client 
activity and 
demand 
for our 
products 
and 
services, 
increased 
utilization 
of 
lending 
commitments, 
significantly 
increased 
client 
defaults, 
continued 
and 
increasing 
credit 
and 
valuation 
losses 
in 
our 
loan 
portfolios, 
loan 
commitments 
and 
other 
assets, 
and 
impairments 
of 
other 
financial 
assets. 
Declines 
in 
interest 
rates 
have 
decreased 
net 
interest 
margins and 
such 
declines may 
continue 
to 
sharpen. A 
decline 
in 
invested 
assets 
would 
also 
reduce 
recurring 
fee 
income 
in 
our 
Global 
Wealth 
Management 
and 
Asset 
Management businesses. 
These factors 
and other 
consequences 
of 
the 
COVID-19 
pandemic 
may 
negatively 
affect 
our 
financial 
condition, including 
possible constraints 
on capital 
and liquidity, 
as 
well 
as 
a 
higher 
cost 
of 
capital, 
and 
possible 
changes 
or 
downgrades to our credit ratings. 
Although we moved a substantial portion of our workforce to 
work-from-home 
solutions, 
including 
client-facing 
and 
trading 
staff, 
if 
significant 
portions 
of 
our 
workforce, 
including 
key 
personnel, 
are 
unable 
to 
work 
effectively 
because 
of 
illness, 
government actions, 
or other 
restrictions in 
connection with 
the 
pandemic, 
the 
adverse 
effects 
of 
the 
pandemic 
on 
our 
businesses could be 
exacerbated. In addition, 
with staff working 
from 
outside 
the 
offices, 
we 
face 
new 
challenges 
and 
operational 
risks, 
including 
maintenance 
of 
supervisory 
and 
surveillance controls, as well as increased 
fraud and data security 
risks. While we have taken measures to manage these risks, such 
measures 
have never 
been 
tested on 
the scale 
or 
duration 
that 
we 
are 
currently 
experiencing, 
and 
there 
is 
risk 
that 
these 
measures 
will 
not 
be 
effective 
in 
the 
current 
unprecedented 
operating environment. 
The 
extent 
to 
which 
the 
pandemic, 
and 
the 
related 
adverse 
economic conditions, affect 
our businesses, results 
of operations 
and 
financial 
condition, 
as 
well 
as 
our 
regulatory 
capital 
and 
liquidity 
ratios, 
will 
depend 
on 
future 
developments, 
including 
the 
scope 
and 
duration 
of 
the 
pandemic 
and 
any 
recovery 
period, the adequacy of 
vaccine distribution plans and 
execution 
of 
those 
plans, 
as 
well 
as 
the 
efficacy 
of 
vaccines 
against 
potential 
virus 
variants, 
future 
actions 
taken 
by 
governmental 
authorities, 
central banks 
and other 
third parties 
in response 
to 
the pandemic, and 
the effects on our 
customers, counterparties, 
employees and third-party service providers. 
Performance in the financial services industry is affected by 
market conditions and the macroeconomic climate 
Our 
businesses 
are 
materially 
affected 
by 
market 
and 
macroeconomic 
conditions. 
Adverse 
changes 
in 
interest 
rates, 
credit 
spreads, 
securities 
prices, 
market 
volatility 
and 
liquidity, 
foreign 
exchange 
rates, 
commodity 
prices, 
and 
other 
market 
fluctuations, as well 
as changes in 
investor sentiment, can 
affect 
our earnings and ultimately our financial and capital positions. 
 
 

 
57 
A market downturn and weak macroeconomic conditions can 
be 
precipitated 
by 
a 
number 
of 
factors, 
including 
geopolitical 
events, 
global 
trade 
disruption, 
changes 
in 
monetary 
or 
fiscal 
policy, 
changes 
in 
trade 
policies, 
natural 
disasters, 
pandemics, 
civil 
unrest, 
acts 
of 
violence, 
war 
or 
terrorism. 
Such 
developments 
can 
have 
unpredictable 
and 
destabilizing 
effects 
and, 
because 
financial 
markets 
are 
global 
and 
highly 
interconnected, 
even 
local 
and 
regional 
events 
can 
have 
widespread 
effects 
well 
beyond 
the 
countries 
in 
which 
they 
occur. 
Any 
of 
these 
developments 
may 
adversely 
affect 
our 
business or financial results. 
If 
individual 
countries 
impose 
restrictions 
on 
cross-border 
payments, 
trade, 
or 
other 
exchange 
or 
capital 
controls, 
or 
change 
their 
currency 
(for 
example, 
if 
one 
or 
more 
countries 
should 
leave 
the 
E
urozone), 
we 
could 
suffer 
losses
 
from 
enforced default by counterparties, 
be unable to access our 
own 
assets, or be unable to effectively manage our risks. 
Should the 
market experience 
significant volatility, a 
decrease 
in 
business and 
client activity 
and market 
volumes could 
result, 
which would 
adversely affect 
our ability 
to generate 
transaction 
fees, 
commissions 
and 
margins, 
particularly 
in 
Global 
Wealth 
Management 
and 
the 
Investment 
Bank, 
as 
we 
experienced 
in 
the 
fourth 
quarter 
of 
2018. 
A 
market 
downturn 
would 
likely 
reduce 
the 
volume and 
valuation 
of 
assets 
that we 
manage on 
behalf of 
clients, which 
would reduce 
recurring fee 
income that 
is 
charged 
based 
on 
invested 
assets 
in 
Global 
Wealth 
Management 
and 
Asset 
Management 
and 
performance-based 
fees in Asset 
Management. Such a 
downturn could also 
cause a 
decline 
in 
the 
value 
of 
assets 
that 
we 
own 
and 
account 
for 
as 
investments 
or 
trading 
positions. 
In 
addition, 
reduced 
market 
liquidity 
or 
volatility 
may 
limit 
trading 
opportunities 
and 
may 
therefore reduce transaction-based income and may also 
impede 
our ability to manage risks. 
We could be 
materially affected if 
a crisis develops, 
regionally 
or 
globally, 
as 
a 
result 
of 
disruptions 
in 
markets 
due 
to
 
macroeconomic 
or 
political 
developments, 
or 
as 
a 
result 
of 
the 
failure 
of 
a 
major 
market 
participant. 
Over 
time, 
our 
strategic 
plans 
have 
become 
more 
heavily 
dependent 
on 
our 
ability 
to 
generate 
growth 
and 
revenue 
in 
emerging 
markets, 
including 
China, 
causing 
us 
to 
be 
more 
exposed 
to 
the 
risks 
associated 
with such markets. 
Global 
Wealth 
Management 
derives 
revenues 
from 
all 
the 
principal 
regions, 
but 
has 
a 
greater 
concentration 
in 
Asia 
than 
many 
peers 
and 
a 
substantial 
presence 
in 
the 
US, 
unlike 
many 
European peers. 
The Investment 
Bank’s business 
is more 
heavily 
weighted to Europe and Asia than our peers, while its derivatives 
business 
is 
more 
heavily 
weighted 
to 
structured 
products 
for 
wealth 
management 
clients, 
in 
particular 
with 
European 
and 
Asian 
underlyings. 
Our 
performance 
may 
therefore 
be 
more 
affected 
by 
political, 
economic 
and 
market 
developments 
in 
these 
regions 
and 
businesses, 
including 
the 
effects 
of 
the 
COVID-19 outbreak, than some other financial service providers. 
Our credit risk exposure to clients, trading counterparties and 
other financial institutions would increase under adverse 
economic conditions 
Credit risk 
is an 
integral part 
of many 
of our activities, 
including 
lending, 
underwriting 
and 
derivatives 
activities. 
Adverse 
economic 
or 
market 
conditions 
may 
lead 
to 
impairments 
and 
defaults 
on 
these 
credit 
exposures. 
Losses 
may 
be 
exacerbated 
by 
declines 
in 
the 
value 
of 
collateral 
securing 
loans 
and 
other 
exposures. 
In 
our 
prime 
brokerage, 
securities 
finance 
and 
Lombard 
lending 
businesses, we 
extend 
substantial 
amounts of 
credit against 
securities collateral, 
the value 
or liquidity 
of which 
may decline 
rapidly. Our 
Swiss mortgage 
and corporate 
lending 
portfolios 
are 
a 
large 
part 
of 
our 
overall 
lending. 
We 
are 
therefore exposed to the risk 
of adverse economic developments 
in 
Switzerland, 
including 
property 
valuations 
in 
the 
housing 
market, 
the 
strength 
of 
the 
Swiss franc 
and 
its 
effect 
on 
Swiss 
exports, 
prevailing 
negative 
interest 
rates 
applied 
by 
the 
Swiss 
National Bank, 
economic conditions 
within the 
Eurozone or 
the 
EU, 
and 
the evolution 
of 
agreements 
between 
Switzerland 
and 
the 
EU 
or 
European 
Economic 
Area, 
which 
represent 
Switzerland’s 
largest export 
market. We 
have exposures 
related 
to 
real 
estate 
in 
various countries, 
including a 
substantial 
Swiss 
mortgage 
portfolio. 
Although 
we 
believe 
this 
portfolio 
is 
prudently managed, 
we could nevertheless 
be exposed 
to losses 
if a substantial deterioration in the 
Swiss real estate market were 
to occur. 
As we experienced 
in 2020, under 
the IFRS 
9 expected credit 
loss 
(ECL) 
regime, 
credit 
loss 
expenses 
may 
increase 
rapidly 
at 
the onset 
of an 
economic downturn 
as a 
result of 
higher levels 
of 
credit 
impairments 
(stage 
3), 
as 
well 
as 
higher 
ECL 
from 
stages 
1 
and 
2. 
These 
increases 
may 
only 
gradually 
diminish 
once 
the 
economic 
outlook 
improves. 
Substantial 
increases 
in 
ECL 
could 
exceed 
expected 
loss 
for 
regulatory 
capital 
purposes 
and adversely affect our common equity tier 1 (CET1) capital and 
regulatory capital ratios. 
Low and negative interest rates in Switzerland, the US and the 
Eurozone and elsewhere could continue to negatively affect our 
net interest income 
The 
continuing 
low 
or 
negative 
interest 
rate 
environment, 
particularly 
in 
Switzerland, 
the 
US 
and 
the 
E
urozone,
 
may 
further 
erode 
interest 
margins 
and 
adversely 
affect 
the 
net 
interest income 
generated by 
the Personal 
& Corporate Banking 
and Global 
Wealth Management 
businesses. The 
Swiss National 
Bank permits Swiss 
banks to make 
deposits up to 
a threshold 
at 
zero 
interest. 
Any 
reduction 
in 
or 
limitation 
on 
the 
use 
of 
this 
exemption from 
the otherwise 
applicable negative 
interest rates 
would 
exacerbate 
the 
effect 
of 
negative 
interest 
rates 
in 
Switzerland on our business. 
Low 
and 
negative 
interest 
rates 
may 
also 
affect 
customer 
behavior 
and 
hence 
our 
overall 
balance 
sheet 
structure. 
Mitigating actions that we have taken, or may take in the future, 
such 
as 
the 
introduction 
of 
selective 
deposit 
fees 
or 
minimum 
lending rates, have 
resulted and may 
further result in 
the loss of 
customer 
deposits 
(a 
key 
source 
of 
funding 
for 
us), 
net 
new 
money 
outflows 
and 
a 
declining 
market 
share 
in 
our 
Swiss 
lending business. 
Our 
shareholders’ 
equity 
and 
capital 
are 
also 
affected 
by 
changes 
in 
interest 
rates. 
In 
particular, 
the 
calculation 
of 
our 
Swiss 
pension 
plan’s 
net 
defined 
benefit 
assets 
and 
liabilities 
is 
sensitive 
to 
the applied 
discount rate 
and to 
fluctuations in 
the 
value 
of 
pension 
plan 
assets. 
Any 
further 
reduction 
in 
interest 
rates 
may 
lower 
the 
discount 
rates 
and 
result 
in 
pension 
plan 
deficits 
as 
a 
result 
of 
the 
long 
duration 
of 
corresponding 
liabilities. 
This 
could 
lead 
to 
a 
corresponding 
reduction 
in 
our 
equity and CET1 capital. 
 
 

Our strategy, business model and environment 
| Risk factors 
58 
Our plans to ensure uninterrupted business dealings as the UK 
withdraws from the EU may not be effective 
To 
prepare 
our business 
for the 
UK withdrawal 
from 
the EU, 
in 
2019, 
we 
completed 
a 
merger 
of 
UBS 
Limited, 
our 
UK-based 
subsidiary, 
into 
UBS 
Europe 
SE, 
our 
Germany-headquartered 
European subsidiary, 
which is under the direct 
supervision of the 
European 
Central 
Bank.
 
Our 
plans 
to 
ensure 
uninterrupted 
business dealings 
now 
that the 
UK 
has 
withdrawn from 
the 
EU 
may 
not 
be 
effective 
if 
the 
EU 
and 
the 
UK 
do 
not 
conclude 
effective 
negotiations 
regarding 
the 
handling 
of 
the 
financial 
sector before temporary 
equivalence decisions 
expire or significant 
divergence 
in regulatory 
regimes emerges. 
Currency
 
fluctuation may have an adverse effect on our profits, 
balance sheet and regulatory capital
 
We 
are 
subject 
to 
currency 
fluctuation 
risks. 
Although 
our 
change 
from 
the Swiss 
franc 
to the 
US dollar 
as 
our 
functional 
and 
presentation 
currency 
in 
2018 
reduces 
our 
exposure 
to 
currency 
fluctuation 
risks 
with 
respect 
to 
the 
Swiss 
franc, 
a 
substantial portion 
of our 
assets and 
liabilities are 
denominated 
in 
currencies 
other than 
the US 
dollar. 
Additionally, 
in 
order 
to 
hedge 
our 
CET1 
capital 
ratio, 
our 
CET1 
capital 
must 
have 
foreign currency exposure, which leads 
to currency sensitivity. 
As 
a 
consequence, 
it 
is 
not 
possible 
to 
simultaneously 
fully 
hedge 
both 
the 
amount 
of 
capital 
and 
the 
capital 
ratio. 
Accordingly, 
changes 
in 
foreign 
exchange 
rates 
may 
continue 
to 
adversely 
affect 
our 
profits, 
balance 
sheet 
and 
capital
,
 
leverage 
and 
liquidity coverage ratios. 
Regulatory and legal risks 
Material legal and regulatory risks arise in the conduct of our 
business 
As 
a 
global 
financial 
services 
firm 
operating 
in 
more 
than 
50 
countries, 
we 
are 
subject 
to 
many 
different 
legal, 
tax 
and 
regulatory regimes, 
including extensive regulatory 
oversight, and 
are 
exposed to 
significant liability risk. We 
are subject 
to a 
large 
number 
of 
claims, 
disputes, 
legal 
proceedings 
and 
government 
investigations, and we expect that our ongoing business activities 
will continue to give rise to such matters in the future. The extent 
of 
our 
financial exposure 
to 
these and 
other matters 
is 
material 
and could substantially 
exceed the level 
of provisions 
that we have 
established. We 
are 
not 
able 
to 
predict 
the 
financial and 
non-
financial consequences 
these matters 
may have when 
resolved. 
We 
may 
be 
subject to 
adverse 
preliminary determinations or 
court decisions 
that may 
negatively affect 
public perception and 
our 
reputation, result 
in 
prudential actions 
from 
regulators, and 
cause us to record additional provisions 
for the matter even when 
we believe we have substantial defenses and expect to ultimately 
achieve a 
more favorable 
outcome. This 
risk is 
illustrated by 
the 
award of 
aggregate penalties and damages of 
EUR 4.5 billion by 
the court of first instance in France, which we have appealed and 
is scheduled 
to be retried 
in the Court 
of Appeal in 
March 2021. 
Resolution of regulatory proceedings may require us 
to obtain 
waivers 
of 
regulatory 
disqualifications 
to 
maintain 
certain 
operations; may entitle regulatory authorities to limit, suspend or 
terminate licenses and regulatory authorizations; and may permit 
financial 
market 
utilities 
to 
limit, 
suspend 
or 
terminate 
our 
participation 
in 
them. 
Failure 
to 
obtain 
such 
waivers, 
or 
any 
limitation, suspension 
or termination of licenses, authorizations 
or 
participations, 
could have 
material adverse 
consequences 
for us. 
Our settlements 
with governmental 
authorities in 
connection 
with foreign 
exchange, London 
Interbank Offered 
Rates (LIBOR) 
and 
other 
benchmark 
interest 
rates 
starkly 
illustrate 
the 
significantly increased level of financial and reputational risk now 
associated 
with 
regulatory 
matters 
in 
major 
jurisdictions. 
In 
connection 
with 
investigations 
related 
to 
LIBOR 
and 
other 
benchmark 
rates and 
to foreign 
exchange 
and precious 
metals, 
very 
large 
fines 
and 
disgorgement 
amounts 
were 
assessed 
against 
us, 
and 
we 
were 
required 
to 
enter 
guilty 
pleas 
despite 
our 
full 
cooperation 
with 
the 
authorities 
in 
the 
investigations, 
and 
despite 
our 
receipt 
of 
conditional 
leniency 
or 
conditional 
immunity from anti-trust authorities 
in a number 
of jurisdictions, 
including the US and Switzerland. 
Ever 
since 
our 
material 
losses 
arising 
from 
the 
2007–2009 
financial 
crisis, 
we 
have 
been 
subject 
to 
a 
very 
high 
level 
of 
regulatory 
scrutiny 
and 
to 
certain 
regulatory 
measures 
that 
constrain 
our 
strategic 
flexibility. 
While 
we 
believe 
we 
have 
remediated the deficiencies that led 
to those losses, as well as to 
the 
unauthorized 
trading 
incident 
announced 
in 
September 
2011, 
the effects 
on our 
reputation, 
as well 
as on 
relationships 
with 
regulatory 
authorities 
of 
the 
LIBOR-related 
settlements 
of 
2012 and settlements with some regulators of 
matters related to 
our 
foreign 
exchange 
and 
precious 
metals 
business, 
as 
well 
as 
the 
extensive 
efforts 
required 
to 
implement 
new 
regulatory 
expectations, have resulted in continued scrutiny. 
We are in active dialog with regulators concerning the actions 
we are 
taking to 
improve our operational 
risk management, 
risk 
control, 
anti-money 
laundering, 
data 
management 
and 
other 
frameworks, 
and 
otherwise 
seek 
to 
meet 
supervisory 
expectations, but there 
can be no 
assurance that our 
efforts will 
have 
the 
desired effects. 
As a 
result 
of 
this history, 
our 
level of 
risk with respect 
to regulatory enforcement 
may be greater 
than 
that of some of our peers. 
 
 

 
59 
Our financial results may be negatively affected by changes to 
assumptions and valuations, as well as changes to accounting 
standards 
We prepare 
our consolidated financial 
statements in accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS). 
The 
application 
of 
these 
accounting 
standards 
requires 
the 
use 
of 
judgment based on 
estimates and assumptions 
that may involve 
significant 
uncertainty 
at 
the 
time 
they 
are 
made. 
This 
is 
the 
case, for example, with respect 
to the measurement of 
fair value 
of 
financial 
instruments, 
the 
recognition 
of 
deferred 
tax 
assets, 
the 
assessment 
of 
the 
impairment 
of 
goodwill, 
expected 
credit 
losses 
and 
estimation 
of 
provisions 
for 
contingencies, 
including 
litigation, 
regulatory 
and 
similar 
matters. 
Such 
judgments, 
including 
the 
underlying 
estimates 
and 
assumptions, 
which 
encompass historical 
experience, expectations 
of the 
future and 
other 
factors, 
are 
regularly 
evaluated 
to 
determine 
their 
continuing 
relevance 
based 
on 
current 
conditions. 
Using 
different 
assumptions could 
cause the 
reported results 
to differ. 
Changes 
in 
assumptions, 
or 
failure 
to 
make 
the 
changes 
necessary 
to 
reflect 
evolving 
market 
conditions, 
may 
have 
a 
significant effect on the financial statements in the periods when 
changes occur. 
Estimates of provisions 
for contingencies may 
be 
subject 
to 
a 
wide 
range 
of 
potential 
outcomes 
and 
significant 
uncertainty. 
For example, the broad range of potential outcomes 
in 
UBS AG’s 
proceeding 
in 
France 
increases 
the 
uncertainty 
associated 
with 
assessing 
the 
appropriate 
provision. 
If 
the 
estimates 
and 
assumptions 
in 
future 
periods 
deviate 
from 
the 
current 
outlook, 
UBS 
AG’s 
financial 
results 
may 
also 
be 
negatively affected. 
Changes 
to 
IFRS 
or 
interpretations 
thereof 
may 
cause 
future 
reported 
results 
and 
financial 
position 
to 
differ 
from 
current 
expectations, or 
historical results 
to differ 
from those 
previously 
reported 
due 
to 
the 
adoption 
of 
accounting 
standards 
on 
a 
retrospective basis. 
Such changes 
may also 
affect our 
regulatory 
capital and ratios. 
For example, the introduction 
of the expected 
credit loss 
(ECL) framework 
under IFRS 
9 in 
2018 fundamentally 
changed 
how credit 
risk arising 
from 
loans, loan 
commitments, 
guarantees 
and 
certain 
revocable 
facilities 
is 
accounted 
for. 
Under 
the 
regime, 
credit 
loss 
expenses 
may 
increase 
rapidly 
at 
the onset 
of an 
economic downturn 
as a 
result of 
higher levels 
of 
credit 
impairments 
(stage 3), 
as 
well 
as 
higher 
ECL 
from 
stages 1 
and 
2, 
only 
gradually 
diminishing 
once 
the 
economic 
outlook 
improves. 
As 
we 
observed 
in 
the 
first 
and 
second 
quarters 
of 
2020, 
this 
effect 
may 
be 
more 
pronounced 
in 
a 
deteriorating 
economic 
environment.
 
Substantial 
increases 
in 
ECL 
could 
exceed 
expected 
loss 
for 
regulatory 
capital 
purposes 
and 
adversely 
affect 
our 
CET1 
capital 
and 
regulatory 
capital 
ratios. 
If we experience financial difficulties, FINMA has the power to 
open restructuring or liquidation proceedings or impose 
protective measures in relation to UBS Group AG, UBS AG or 
UBS Switzerland AG, and such proceedings or measures may 
have a material adverse effect on our shareholders and creditors 
Under 
the 
Swiss 
Banking 
Act, 
FINMA 
is 
able 
to 
exercise 
broad 
statutory 
powers 
with 
respect 
to 
Swiss banks 
and 
Swiss parent 
companies of 
financial groups, 
such as 
UBS Group 
AG, UBS 
AG 
and 
UBS 
Switzerland 
AG, 
if 
there 
is 
justified 
concern 
that 
the 
entity 
is 
over-indebted, 
has 
serious 
liquidity 
problems 
or, 
after 
the expiration 
of any 
relevant deadline, 
no longer 
fulfills capital 
adequacy requirements. Such powers include ordering protective 
measures, 
instituting 
restructuring 
proceedings 
(and 
exercising 
any 
Swiss 
resolution 
powers 
in 
connection 
therewith), 
and 
instituting 
liquidation 
proceedings, 
all 
of 
which
 
may 
have 
a 
material 
adverse 
effect 
on 
shareholders 
and 
creditors 
or 
may 
prevent 
UBS 
Group 
AG, 
UBS 
AG 
or 
UBS 
Switzerland 
AG 
from 
paying dividends or making payments on debt obligations. 
UBS 
would 
have 
limited 
ability 
to 
challenge 
any 
such 
protective measures, 
and creditors 
and shareholders 
would have 
no right 
under Swiss 
law or 
in Swiss 
courts to 
reject them, 
seek 
their 
suspension, 
or 
challenge 
their 
imposition, 
including 
measures that require or result in the deferment of payments. 
If 
restructuring 
proceedings 
are 
opened 
with 
respect 
to 
UBS 
Group 
AG, 
UBS 
AG 
or 
UBS 
Switzerland 
AG, 
the 
resolution 
powers 
that 
FINMA 
may 
exercise 
include 
the 
power 
to: 
(i) transfer 
all 
or 
some 
of 
the 
assets, 
debt 
and 
other 
liabilities, 
and 
contracts 
of 
the 
entity 
subject 
to 
proceedings 
to 
another 
entity; 
(ii) stay 
for 
a 
maximum 
of 
two 
business 
days 
(a) 
the 
termination 
of, 
or 
the 
exercise 
of 
rights 
to 
terminate, 
netting 
rights, 
(b) 
rights 
to 
enforce 
or 
dispose 
of 
certain 
types 
of 
collateral 
or 
(c) 
rights 
to 
transfer 
claims, 
liabilities 
or 
certain 
collateral, 
under 
contracts 
to 
which 
the 
entity 
subject 
to 
proceedings is 
a party; 
and / 
or (iii) partially 
or fully 
write down 
the 
equity 
capital 
and, 
if 
such 
equity 
capital 
is 
fully 
written 
down, 
convert 
into 
equity 
or 
write 
down 
the 
capital and 
other 
debt 
instruments 
of 
the 
entity 
subject 
to 
proceedings. 
Shareholders 
and 
creditors 
would have 
no 
right to 
reject, 
or to 
seek the suspension of, any restructuring plan pursuant to 
which 
such 
resolution 
powers 
are 
exercised. 
They 
would 
have 
only 
limited 
rights 
to 
challenge 
any 
decision 
to 
exercise 
resolution 
powers 
or 
to 
have 
that 
decision 
reviewed 
by 
a 
judicial 
or 
administrative process or otherwise. 
Upon full or 
partial write-down of 
the equity and 
debt of the 
entity 
subject 
to 
restructuring 
proceedings, 
the 
relevant 
shareholders and 
creditors would 
receive no 
payment in 
respect 
of 
the 
equity 
and 
debt 
that 
is 
written 
down, 
the 
write-down 
would be permanent, 
and the investors 
would not, at 
such time 
or 
at 
any 
time 
thereafter, 
receive 
any 
shares 
or 
other 
participation 
rights, or 
be entitled 
to any 
write-up 
or any 
other 
compensation in the 
event of a 
potential recovery of 
the debtor. 
If 
FINMA 
orders 
the 
conversion of 
debt 
of 
the entity 
subject 
to 
restructuring 
proceedings 
into 
equity, 
the 
securities 
received 
by 
the 
investors 
may 
be 
worth 
significantly 
less 
than 
the 
original 
debt and 
may have a 
significantly different risk 
profile, and such 
conversion 
would 
also 
dilute 
the 
ownership 
of 
existing 
shareholders. 
In 
addition, 
creditors 
receiving 
equity 
would 
be 
effectively subordinated to 
all creditors of 
the restructured entity 
in 
the 
event 
of 
a 
subsequent 
winding 
up, 
liquidation 
or 
dissolution 
of 
the restructured 
entity, 
which 
would 
increase the 
risk that investors would lose all or some of their investment. 
FINMA has 
significant discretion 
in the 
exercise of 
its powers 
in 
connection 
with 
restructuring 
proceedings. 
Furthermore, 
certain 
categories 
of 
debt 
obligations, 
such 
as 
certain 
types 
of 
deposits, 
are 
subject 
to 
preferential 
treatment. 
As 
a 
result, 
holders 
of 
obligations 
of 
an 
entity 
subject 
to 
a 
Swiss 
restructuring 
proceeding 
may 
have 
their 
obligations 
written 
down or 
converted into 
equity even 
though obligations 
ranking 
on 
par with 
or 
junior to 
such obligations 
are not 
written down 
or converted.
 
 
 

Our strategy, business model and environment 
| Risk factors 
60 
Substantial changes in regulation may adversely affect our 
businesses and our ability to execute our strategic plans 
We 
are 
subject 
to 
significant 
new 
regulatory 
requirements, 
including 
recovery 
and 
resolution 
planning, 
changes 
in 
capital 
and prudential standards, changes in taxation regimes as 
a result 
of changes in 
governmental administrations, as 
well as new 
and 
revised 
market 
standards 
and 
fiduciary 
duties. 
Notwithstanding 
attempts 
by 
regulators 
to 
align 
their 
efforts, 
the 
measures 
adopted 
or 
proposed 
for 
banking 
regulation 
differ 
significantly 
across 
the 
major 
jurisdictions, 
making 
it 
increasingly 
difficult 
to 
manage
 
a 
global 
institution. 
In 
addition, 
Swiss 
regulatory 
changes with regard to such matters as 
capital and liquidity have 
often 
proceeded 
more 
quickly 
than 
those 
in 
other 
major 
jurisdictions, 
and 
Switzerland’s 
requirements 
for 
major 
international banks are among the strictest of the major financial 
centers. 
This 
could 
put 
Swiss 
banks
,
 
such 
as 
UBS
,
 
at 
a 
disadvantage 
when 
competing 
with 
peer 
financial 
institutions 
subject to more lenient regulation or 
with unregulated non-bank 
competitors. 
Our 
implementation 
of 
additional 
regulatory 
requirements 
and changes in 
supervisory standards, as 
well as our 
compliance 
with 
existing 
laws 
and 
regulations, 
continue 
to 
receive 
heightened 
scrutiny 
from 
supervisors. 
If 
we 
do 
not 
meet 
supervisory expectations in 
relation to these 
or other matters, 
or 
if 
additional 
supervisory 
or 
regulatory 
issues 
arise, 
we 
would 
likely 
be 
subject 
to 
further 
regulatory 
scrutiny 
as 
well 
as 
measures that may further constrain our strategic flexibility. 
Resolvability 
and 
resolution 
and 
recovery 
planning: 
We 
have 
moved 
significant 
operations 
into 
subsidiaries 
to 
improve 
resolvability 
and 
meet 
other 
regulatory 
requirements, 
and 
this 
has 
resulted 
in 
substantial 
implementation 
costs, 
increased 
our 
capital and 
funding costs 
and reduced 
operational flexibility. 
For 
example, we 
have transferred 
all of 
our US 
subsidiaries under 
a 
US 
intermediate 
holding 
company 
to 
meet 
US 
regulatory 
requirements, 
and 
have 
transferred 
substantially 
all 
the 
operations of 
Personal & 
Corporate Banking 
and Global 
Wealth 
Management 
booked 
in 
Switzerland 
to 
UBS 
Switzerland 
AG to 
improve resolvability. 
These 
changes 
require 
significant 
time 
and 
resources 
to 
implement, and create operational, capital, liquidity, funding and 
tax 
inefficiencies. 
Our 
operations 
in 
subsidiaries 
are 
subject 
to 
local capital, 
liquidity, stable 
funding, capital planning 
and stress 
testing 
requirements. 
These 
requirements 
have 
resulted 
in 
increased 
capital 
and 
liquidity 
requirements 
in 
affected 
subsidiaries, which 
limit our operational 
flexibility and negatively 
affect 
our 
ability 
to 
benefit 
from 
synergies 
between 
business 
units and to distribute earnings to the Group. 
Under 
the 
Swiss 
too-big-to-fail 
(TBTF) 
framework, 
we 
are 
required to 
put in 
place viable 
emergency plans 
to preserve 
the 
operation 
of 
systemically 
important 
functions 
in 
the 
event 
of 
a 
failure. 
Moreover, 
under 
this 
framework 
and 
similar 
regulations 
in 
the 
US, 
the 
UK, 
the 
EU 
and 
other 
jurisdictions 
in 
which 
we 
operate, 
we 
are 
required 
to 
prepare 
credible 
recovery 
and 
resolution 
plans 
detailing 
the measures 
that would 
be taken 
to 
recover in 
a significant 
adverse event 
or in 
the event 
of winding 
down 
the 
Group 
or 
the 
operations 
in 
a 
host 
country 
through 
resolution 
or 
insolvency 
proceedings. 
If 
a 
recovery 
or 
resolution 
plan that 
we produce 
is determined 
by the 
relevant authority 
to 
be 
inadequate 
or 
not 
credible, 
relevant 
regulation 
may 
permit 
the 
authority 
to 
place 
limitations 
on 
the 
scope 
or 
size 
of 
our 
business in that jurisdiction, 
or oblige us to 
hold higher amounts 
of capital or liquidity or 
to change our legal structure 
or business 
in order to remove the relevant impediments to resolution. 
Capital and 
prudential standards: 
As an 
internationally active 
Swiss 
systemically 
relevant 
bank 
(an 
SRB), 
we 
are 
subject 
to 
capital 
and 
total 
loss-absorbing 
capacity 
(TLAC) 
requirements 
that are among the most stringent in the world. Moreover, 
many 
of 
our subsidiaries 
must comply 
with 
minimum capital, 
liquidity 
and 
similar 
requirements 
and, 
as 
a 
result, 
UBS 
Group 
AG 
and 
UBS 
AG 
have 
contributed 
a 
significant 
portion 
of 
their 
capital 
and 
provide 
substantial 
liquidity 
to 
these 
subsidiaries. 
These 
funds 
are available 
to 
meet funding 
and collateral 
needs in 
the 
relevant entities, but are generally not readily available for use by 
the Group as a whole. 
We expect our 
risk-weighted assets (RWA) 
to further increase 
as 
the 
effective 
date 
for 
additional 
capital 
standards 
promulgated 
by 
the 
Basel 
Committee 
on 
Banking 
Supervision 
(the BCBS) draws nearer. 
Increases 
in capital 
and liquidity 
standards 
could 
significantly 
curtail 
our 
ability 
to 
pursue 
strategic 
opportunities 
and 
to 
distribute risk. 
Market 
regulation 
and 
fiduciary 
standards: 
Our 
wealth 
and 
asset 
management 
businesses 
operate 
in 
an 
environment 
of 
increasing 
regulatory 
scrutiny 
and 
changing 
standards 
with 
respect to fiduciary and other standards of care and the focus on 
mitigating or eliminating conflicts of interest between a manager 
or advisor and the 
client, which require effective implementation 
across the global systems 
and processes of investment 
managers 
and 
other 
industry 
participants. 
For 
example, 
we 
have 
made 
material 
changes 
to 
our 
business 
processes, 
policies 
and 
the 
terms on which we 
interact with these clients 
in order to comply 
with SEC 
Regulation Best Interest, 
which is intended 
to enhance 
and clarify the duties 
of brokers and investment advisers 
to retail 
customers, the Volcker Rule, which limits our 
ability to engage in 
proprietary 
trading, 
as 
well 
as 
changes 
in 
European 
and 
Swiss 
market 
conduct regulation. 
Future 
changes in 
the regulation 
of 
our duties to 
customers may require us 
to make further changes 
to our 
businesses, which 
would result 
in additional 
expense and 
may adversely 
affect our 
business. We 
may also 
become subject 
to 
other 
similar 
regulations 
substantively 
limiting 
the 
types 
of 
activities 
in 
which 
we 
may 
engage 
or 
the 
way 
we 
conduct 
our 
operations. 
 
 

 
61 
Some of the 
regulations applicable to 
UBS AG as 
a registered 
swap 
dealer 
with 
the 
Commodity 
Futures 
Trading 
Commission 
(the 
CFTC) 
in 
the 
US, 
and 
certain 
regulations 
that 
will 
be 
applicable 
when 
UBS 
AG 
registers 
as 
a 
security-based 
swap 
dealer 
with 
the 
US 
Securities 
and 
Exchange 
Commission 
(the 
SEC), apply to 
UBS AG globally, 
including those relating 
to swap 
data 
reporting, 
record-keeping, 
compliance 
and 
supervision. 
As 
a 
result, 
in 
some 
cases, 
US 
rules duplicate 
or 
may 
conflict 
with 
legal 
requirements 
applicable 
to 
us 
elsewhere, 
including 
in 
Switzerland, and 
may place 
us at 
a competitive 
disadvantage to 
firms that 
are not 
required to 
register in 
the US 
with the 
SEC or 
CFTC. 
In 
many 
instances, 
we 
provide 
services 
on 
a 
cross-border 
basis, 
and 
we 
are 
therefore 
sensitive 
to 
barriers 
restricting 
market access 
for third-country firms. 
In particular, 
efforts in 
the 
EU to harmonize the regime 
for third-country firms to access 
the 
European 
market 
may 
have 
the 
effect 
of 
creating 
new 
barriers 
that 
adversely 
affect 
our 
ability 
to 
conduct 
business 
in 
these 
jurisdictions 
from 
Switzerland. 
In 
addition, 
a 
number 
of 
jurisdictions 
are 
increasingly 
regulating 
cross-border 
activities 
based 
on 
determinations 
of 
equivalence 
of 
home 
country 
regulation, substituted compliance or similar principles of comity. 
A 
negative 
determination 
with 
respect 
to 
Swiss 
equivalence 
could 
limit 
our 
access 
to 
the 
market 
in 
those 
jurisdictions 
and 
may 
negatively 
influence 
our 
ability 
to 
act 
as 
a 
global firm. 
For 
example, 
the 
EU 
declined 
to 
extend 
its 
equivalence 
determination 
for Swiss 
exchanges, 
which lapsed 
as 
of 
30 June 
2019. 
UBS 
experienced 
cross-border 
outflows 
over 
a 
number 
of 
years 
as 
a 
result 
of 
heightened 
focus 
by 
fiscal 
authorities 
on 
cross-border 
investment 
and 
fiscal 
amnesty 
programs, 
in 
anticipation 
of 
the implementation 
in Switzerland 
of 
the global 
automatic 
exchange 
of 
tax 
information, 
and 
as 
a 
result 
of 
the 
measures 
UBS 
has 
implemented 
in 
response 
to 
these 
changes. 
Further 
changes 
in 
local 
tax 
laws 
or 
regulations 
and 
their 
enforcement, 
the 
implementation 
of 
cross-border 
tax 
information 
exchange 
regimes, 
national 
tax 
amnesty 
or 
enforcement programs 
or similar 
actions may 
affect our 
clients’ 
ability 
or 
willingness to 
do 
business with 
us and 
could result 
in 
additional cross-border outflows. 
Capital strength is a key component of our business model 
Capital strength 
enables us 
to grow 
our businesses, 
and absorb 
increases in 
regulatory and 
capital requirements. 
It reassures 
our 
clients and stakeholders, allows 
us to maintain our 
capital return 
policy and contributes to our credit 
ratings. Our capital ratios are 
driven 
primarily 
by 
RWA, 
the 
leverage 
ratio 
denominator 
and 
eligible capital, all of 
which may fluctuate based 
on a number of 
factors, 
some 
of 
which 
are 
outside 
our 
control. 
Our 
ability 
to 
maintain our capital ratios is subject 
to numerous risks, including 
the 
financial 
results of 
our 
businesses, 
the effect 
of 
changes 
to 
capital 
standards, 
methodologies 
and 
interpretations 
that 
may 
adversely 
affect 
the 
calculation 
of 
our 
CET1 
ratios, 
the 
imposition of risk 
add-ons or capital 
buffers, and the 
application 
of 
additional 
capital, 
liquidity 
and 
similar 
requirements 
to 
subsidiaries. 
The 
results 
of 
our 
businesses 
may 
be 
adversely 
affected by events arising 
from other factors described 
herein. In 
some cases, such as litigation and regulatory risk and operational 
risk 
events, 
losses 
may 
be 
sudden 
and 
large. 
These 
risks 
could 
reduce the amount of capital available 
for return to shareholders 
and hinder 
our ability 
to achieve 
our 
capital returns 
target of 
a 
progressive 
cash 
dividend 
coupled 
with 
a 
share 
repurchase 
program. 
Our 
eligible 
capital 
may 
be 
reduced 
by 
losses 
recognized 
within net profit 
or other comprehensive 
income. Eligible capital 
may 
also 
be 
reduced 
for 
other 
reasons, 
including 
acquisitions 
which 
change 
the 
level 
of
 
goodwill
, 
changes 
in 
temporary 
differences 
related 
to 
deferred 
tax 
assets 
included 
in 
capital, 
adverse 
currency 
movements 
affecting 
the 
value 
of 
equity, 
prudential 
adjustments 
that 
may 
be 
required 
due 
to 
the 
valuation 
uncertainty 
associated with 
certain 
types of 
positions, 
and 
changes 
in 
the 
value 
of 
certain 
pension 
fund 
assets 
and 
liabilities 
or 
in 
the 
interest 
rate 
and 
other 
assumptions 
used 
to 
calculate 
the 
changes 
in 
our 
net 
defined 
benefit 
obligation 
recognized in other comprehensive income. 
RWA are driven 
by our business 
activities, 
by changes in 
the risk 
profile 
of 
our 
exposures, 
by 
changes 
in 
our 
foreign 
currency 
exposures 
and 
foreign 
e
xchange 
rates
,
 
and 
by 
regulation. 
For 
instance, substantial 
market volatility, 
a widening of 
credit spreads, 
adverse 
currency 
movements, 
increased 
counterparty 
risk, 
deterioration 
in 
the 
economic 
environment 
or 
increased 
operational 
risk 
could 
result 
in 
an 
increase 
in 
RWA. 
We 
have 
significantly 
reduced our market risk and credit 
risk RWA in recent 
years. 
However, 
increases 
in 
operational 
risk 
RWA, 
particularly 
those arising 
from litigation, 
regulatory and 
similar matters, 
and 
regulatory changes 
in the calculation 
of RWA, 
and regulatory 
add-
ons 
to 
RWA, 
have offset 
a 
substantial portion of 
this reduction. 
Changes in 
the calculation of 
RWA, 
the imposition of 
additional 
supplemental 
RWA 
charges 
or 
multipliers 
applied 
to 
certain 
exposures 
and 
other 
methodology 
changes, 
as 
well 
as 
the 
implementation 
of the capital standards 
promulgated by the Basel 
Committee 
on 
Banking 
Supervision
,
 
which 
will 
take 
effect 
in 
2023, 
are expected 
to increase 
our RWA. 
The 
leverage 
ratio 
is 
a 
balance 
sheet-driven 
measure 
and 
therefore 
limits 
balance 
sheet-intensive 
activities, 
such 
as 
lending, 
more 
than 
activities 
that 
are 
less 
balance 
sheet 
intensive, 
and 
it 
may 
constrain 
our 
business 
even 
if 
we 
satisfy 
other 
risk-based 
capital 
requirements. 
Our 
leverage 
ratio 
denominator is driven 
by, among other 
things, the level 
of client 
activity, 
including 
deposits 
and 
loans, 
foreign 
exchange 
rates, 
interest 
rates 
and 
other 
market 
factors. 
Many 
of 
these 
factors 
are wholly or partly outside of our control. 
 
 

Our strategy, business model and environment 
| Risk factors 
62 
The effect of taxes on our financial results is significantly 
influenced by tax law changes and reassessments of our 
deferred tax assets 
Our effective 
tax rate 
is highly sensitive 
to our performance, 
our 
expectation of 
future profitability 
and any 
potential increases 
or 
decreases in statutory tax rates, such as the potential increases in 
corporate 
tax 
rates 
under 
discussion 
in 
the 
United 
States. 
Further, 
based 
on 
prior 
years’ 
tax 
losses, 
we 
have 
recognized 
deferred 
tax 
assets 
(DTAs) 
reflecting 
the 
probable 
recoverable 
level based 
on future 
taxable profit 
as informed 
by our 
business 
plans. 
If 
our 
performance 
is 
expected 
to 
produce 
diminished 
taxable profit 
in future 
years, particularly 
in the 
US, we 
may be 
required 
to 
write 
down 
all 
or 
a 
portion 
of 
the 
currently 
recognized 
DTAs 
through 
the 
income 
statement 
in 
excess 
of 
anticipated 
amortization. 
This 
would 
have 
the 
effect 
of 
increasing 
our effective 
tax rate 
in the 
year in 
which any 
write-
downs 
are 
taken. 
Conversely, 
if 
we 
expect 
the 
performance 
of 
entities 
in 
which 
we 
have 
unrecognized 
tax 
losses 
to 
improve, 
particularly in 
the US 
or the 
UK, we 
could potentially 
recognize 
additional DTAs. 
The effect 
of doing 
so would 
be to 
reduce our 
effective 
tax 
rate 
in 
years 
in 
which 
additional 
DTAs 
are 
recognized and 
to increase 
our effective 
tax rate in 
future years. 
Our effective tax 
rate is also 
sensitive to any 
future reductions 
in 
statutory tax rates, particularly 
in the US, which would 
cause the 
expected 
future 
tax 
benefit 
from 
items 
such 
as 
tax 
loss 
carry-
forwards 
in 
the 
affected 
locations 
to 
diminish 
in 
value. 
This, 
in 
turn, 
would 
cause 
a 
write-down 
of 
the 
associated 
DTAs. 
For 
example, 
the 
reduction 
in 
the 
US 
federal 
corporate 
tax 
rate 
to 
21% 
from 
35% 
introduced 
by 
the 
US 
Tax 
Cuts 
and 
Jobs 
Act 
resulted in a USD 2.9 billion net write-down in the Group’s 
DTAs 
in the fourth quarter of 2017. 
We 
generally 
revalue 
our 
DTAs 
in 
the 
fourth 
quarter 
of 
the 
financial 
year 
based 
on 
a 
reassessment 
of 
future 
profitability 
taking into account our updated business plans. We consider the 
performance 
of 
our 
businesses 
and 
the 
accuracy 
of 
historical 
forecasts, 
tax 
rates 
and 
other 
factors 
in 
evaluating 
the 
recoverability of our DTAs, including the remaining tax loss carry-
forward 
period 
and 
our 
assessment 
of 
expected 
future 
taxable 
profits 
over 
the 
life 
of 
DTAs. 
Estimating 
future 
profitability 
is 
inherently 
subjective 
and 
is 
particularly 
sensitive 
to 
future 
economic, 
market 
and 
other 
conditions, 
which 
are 
difficult 
to 
predict. 
Our results 
in past 
years have 
demonstrated 
that changes 
in 
the recognition of 
DTAs can have a 
very significant effect on 
our 
reported results. Any 
future change in 
the manner in 
which UBS 
remeasures 
DTAs 
could 
affect 
UBS’s 
effective 
tax 
rate, 
particularly in the year in which the change is made. 
Our full-year 
effective tax 
rate could 
change if 
aggregate tax 
expenses 
in 
respect 
of 
profits 
from 
branches 
and 
subsidiaries 
without 
loss 
coverage 
differ
 
from 
what 
is 
expected
, 
or
 
if
 
branches 
and 
subsidiaries 
generate 
tax 
losses 
that 
we 
cannot 
benefit from 
through the 
income statement. 
In particular, 
losses 
at 
entities
 
or 
branches
 
that 
cannot 
offset 
for 
tax 
purposes 
taxable profits in other group entities, and which do 
not result in 
additional 
DTA recognition, 
may increase 
our 
effective 
tax 
rate. 
In addition, tax laws 
or the tax authorities in 
countries where we 
have 
undertaken 
legal 
structure 
changes 
may 
cause 
entities 
to 
be 
subject 
to 
taxation 
as 
permanent 
establishments 
or 
may 
prevent the 
transfer of 
tax losses 
incurred in 
one legal 
entity to 
newly 
organized 
or 
reorganized subsidiaries 
or 
affiliates 
or 
may 
impose 
limitations 
on 
the 
utilization 
of 
tax 
losses 
that 
relate 
to 
businesses 
formerly 
conducted 
by 
the 
transferor. 
Were 
this 
to 
occur 
in 
situations 
where 
there 
were 
also 
limited 
planning 
opportunities to utilize the tax losses in the originating entity, the 
DTAs 
associated 
with 
such 
tax 
losses 
may 
be 
required 
to 
be 
written down through the income statement. 
Changes 
in 
tax 
law 
may 
materially 
affect 
our 
effective 
tax 
rate, 
and, in some cases, may substantially 
affect the profitability 
of 
certain 
activities. 
In 
addition, 
statutory 
and 
regulatory 
changes, as 
well as 
changes to 
the way 
in which 
courts and 
tax 
authorities 
interpret 
tax 
laws, 
including 
assertions 
that 
we 
are 
required 
to 
pay 
taxes 
in 
a 
jurisdiction 
as 
a 
result 
of 
activities 
connected 
to 
that 
jurisdiction 
constituting 
a 
permanent 
establishment 
or 
similar 
theory, and 
changes 
in 
our 
assessment 
of uncertain 
tax positions, 
could cause 
the amount 
of taxes 
we 
ultimately pay to materially differ from the amount accrued. 
Discontinuance of, or changes to, benchmark rates may require 
adjustments to our agreements with clients and other market 
participants, as well as to our systems and processes 
Since April 
2013, the 
UK Financial 
Conduct Authority 
(the FCA) 
has 
regulated 
LIBOR, 
and 
regulators 
in 
other 
jurisdictions 
have 
increased oversight 
of other 
interbank offered 
rates (IBORs) 
and 
similar benchmark rates. 
The 
UK 
Prudential 
Regulation 
Authority 
(the 
PRA) 
has 
confirmed the end-of-2021 deadline 
for transitioning away from 
LIBOR 
for 
most 
currencies. 
The 
ICE 
Benchmark 
Administration 
(IBA), the 
FCA-regulated and 
authorized administrator 
of LIBOR, 
is 
consulting 
on 
the 
timing 
of 
the 
cessation 
of 
USD 
LIBOR. 
IBA 
expects 
that one 
-week and 
two-month 
USD 
LIBOR settings 
will 
cease 
by 
the 
end 
of 
2021, 
and 
that 
the 
remaining 
USD 
LIBOR 
settings will cease by the end of June 2023. 
We have a substantial number of contracts linked to 
IBORs. In 
some 
cases
,
 
contracts 
may 
contain 
provisions 
intended
 
to 
provide 
a 
fall
back 
interest 
rate 
in 
the 
event 
of 
a 
brief 
unavailability of 
the relevant 
IBOR. These 
provisions may 
not be 
effective 
or 
may 
produce 
arbitrary 
results 
in 
the 
event 
of
 
a 
permanent 
cessation 
of 
the 
relevant 
IBOR. 
While 
efforts 
to 
transition 
outstanding 
new 
transactions, 
and 
historical 
transactions, 
as 
well 
as 
operational 
systems, 
from 
IBORs 
to 
alternative 
reference 
rates 
(
ARRs
)
 
have 
made 
substantial 
progress, including 
through industry-wide 
protocols such 
as the 
International 
Swaps 
and 
Derivatives 
Association 
(ISDA) 
IBOR 
Fallbacks Supplement 
and IBOR 
Fallbacks Protocol, 
there remain 
substantial 
volumes 
of 
transactions 
that require 
modification to 
effectively transition to ARRs. 
 
 

 
63 
Strategy, management and operational risks 
We may not be successful in the ongoing execution of our 
strategic plans 
We 
have 
transformed 
UBS 
to 
focus 
on 
our 
Global 
Wealth 
Management 
business 
and 
our 
universal 
bank 
in 
Switzerland, 
complemented by Asset 
Management and a 
significantly smaller 
and 
more 
capital
-
efficient 
Investment 
Bank; 
we 
have 
substantially reduced 
the risk-weighted assets 
and leverage ratio 
denominator 
usage 
in 
Group 
Functions; 
and 
made 
significant 
cost 
reductions. 
Risk 
remains 
that 
going 
forward 
we 
may 
not 
succeed in 
executing our 
strategy or 
achieving our 
performance 
targets, 
or 
may 
be 
delayed 
in 
doing 
so
.
 
Macroeconomic 
conditions, 
geopolitical 
uncertainty, 
changes 
to 
regulatory 
requirements 
and 
the 
continuing 
costs 
of 
meeting 
these 
requirements 
have 
prompted 
us 
to 
adapt 
our 
targets 
and 
ambitions 
in 
the 
past 
and 
we 
may 
need 
to 
do 
so 
again 
in 
the 
future. 
To achieve our strategic plans, we expect to continue 
to make 
significant 
expenditures 
on 
technology 
and 
infrastructure 
to 
improve 
client 
experience, 
improve 
and 
further 
enable 
digital 
offerings 
and 
increase 
efficiency. 
Our 
investments 
in 
new 
technology 
may not 
fully achieve 
our objectives 
or improve 
our 
ability 
to 
attract 
and 
retain 
customers. 
In 
addition, 
we 
face 
competition 
in 
providing 
digitally 
enabled 
offerings 
from 
both 
existing 
competitors 
and 
new 
financial 
service 
providers 
in 
various 
portions 
of 
the 
value 
chain. 
For 
example, 
technological 
advances and 
the growth 
of e-commerce 
have made 
it possible 
for 
e-commerce 
firms 
and 
other 
companies 
to 
offer 
products 
and services 
that were 
traditionally offered only 
by banks. These 
advances 
have 
also 
allowed 
financial 
institutions 
and 
other 
companies 
to 
provide 
digitally
 
based 
financial 
solutions, 
including electronic 
securities 
trading, payments 
processing and 
online automated 
algorithmic-based investment 
advice at 
a low 
cost to their customers. We may have 
to lower our prices, or risk 
losing 
customers 
as 
a 
result. 
Our 
ability 
to 
develop 
and 
implement competitive 
digitally enabled 
offerings and 
processes 
will be an important factor in our ability to compete. 
As 
part 
of 
our 
strategy, 
we 
seek 
to 
improve 
our 
operating 
efficiency, 
in part 
by controlling 
our costs. 
We may 
not be 
able 
to 
identify 
feasible 
cost 
reduction 
opportunities 
that 
are 
consistent 
with 
our 
business 
goals 
and 
cost 
reductions 
may 
be 
realized 
later 
or 
may 
be 
smaller 
than 
we 
anticipate. 
Higher 
temporary 
and permanent 
regulatory 
costs and 
higher 
business 
demand than 
anticipated have 
partly offset 
cost reductions 
and 
delayed the achievement 
of our past 
cost reduction targets, 
and 
we 
could 
continue 
to 
be 
challenged 
in 
the 
execution 
of 
our 
ongoing efforts to improve operating efficiency. 
Changes 
in 
our 
workforce 
as 
a 
result 
of 
outsourcing, 
nearshoring, 
offshoring, 
insourcing 
or 
staff 
reductions 
may 
introduce new operational risks that, if 
not effectively addressed, 
could 
affect our 
ability 
to 
achieve 
cost and 
other benefits 
from 
such changes, or could result in operational losses. 
As 
we 
implement 
effectiveness 
and 
efficiency 
programs, 
we 
may 
also 
experience 
unintended 
consequences, 
such 
as 
the 
unintended 
loss 
or 
degradation 
of 
capabilities 
that 
we 
need 
in 
order to maintain 
our competitive position, 
achieve our targeted 
returns 
or 
meet 
existing 
or 
new 
regulatory 
requirements 
and 
expectations. 
Operational risks affect our business 
Our businesses 
depend on our 
ability to 
process a 
large number 
of transactions, many 
of which are 
complex, across multiple 
and 
diverse 
markets 
in 
different 
currencies, 
to 
comply 
with 
requirements 
of many 
different 
legal and 
regulatory 
regimes 
to 
which 
we 
are 
subject 
and 
to 
prevent, 
or 
promptly 
detect 
and 
stop, unauthorized, fictitious 
or fraudulent transactions. We 
also 
rely on access to, 
and on the functioning of, 
systems maintained 
by 
third 
parties, 
including 
clearing 
systems, 
exchanges, 
information processors and 
central counterparties. Any failure 
of 
our 
or 
third-party 
systems 
could 
have 
an 
adverse 
effect 
on 
us. 
Our 
operational 
risk 
management 
and 
control 
systems 
and 
processes 
are 
designed 
to 
help 
ensure 
that 
the 
risks 
associated 
with 
our 
activities 
– 
including 
those 
arising 
from 
process 
error, 
failed 
execution, 
misconduct, 
unauthorized 
trading, 
fraud, 
system 
failures, 
financial 
crime, 
cyberattacks, 
breaches 
of 
information 
security, 
inadequate 
or 
ineffective 
access 
controls 
and failure of security and physical protection – are appropriately 
controlled. 
If 
our 
internal 
controls 
fail 
or 
prove 
ineffective 
in 
identifying 
and 
remedying 
these 
risks, 
we 
could 
suffer 
operational 
failures 
that might 
result 
in material 
losses, such 
as 
the 
substantial 
loss 
we 
incurred 
from 
the 
unauthorized 
trading 
incident announced in September 2011. 
We 
use 
automation 
as 
part 
of 
our 
efforts 
to 
improve 
efficiency, 
reduce 
the 
risk 
of 
error 
and 
improve 
our 
client 
experience. We 
intend to 
expand the 
use of 
robotic processing, 
machine learning and artificial intelligence to further these goals. 
Use 
of 
these 
tools 
presents 
their 
own 
risks, 
including 
the 
need 
for effective 
design and 
testing; the 
quality of 
the data 
used for 
development 
and 
operation 
of 
machine 
learning 
and 
artificial 
intelligence 
tools 
may 
adversely 
affect 
their 
functioning 
and 
result in errors and other operational risks. 
We 
and 
other 
financial 
services 
firms 
have 
been 
subject 
to 
breaches 
of 
security 
and 
to 
cyber- 
and 
other 
forms 
of 
attack, 
some of 
which 
are 
sophisticated 
and 
targeted attacks 
intended 
to 
gain 
access 
to 
confidential 
information 
or 
systems, 
disrupt 
service or destroy data. These attacks may be attempted through 
the introduction of viruses or malware, phishing and 
other forms 
of 
social 
engineering, 
distributed 
denial 
of 
service 
attacks 
and 
other 
means. 
These 
attempts 
may 
occur 
directly, 
or 
using 
equipment 
or 
security 
passwords 
of 
our 
employees, 
third-party 
service 
providers 
or 
other users. 
In 
addition 
to 
external 
attacks, 
we 
have 
experienced 
loss 
of 
client 
data 
from 
failure 
by 
employees and 
others to 
follow internal 
policies and 
procedures 
and from misappropriation of our data by employees and others. 
We may not 
be able to anticipate, 
detect or recognize 
threats to 
our systems 
or data 
and our 
preventative measures 
may not 
be 
effective to 
prevent an 
attack or 
a security 
breach. In 
the event 
of a security breach, 
notwithstanding our preventative measures, 
we 
may 
not 
immediately 
detect 
a 
particular 
breach 
or 
attack. 
Once 
a 
particular 
attack 
is 
detected, 
time 
may 
be 
required 
to 
investigate 
and 
assess 
the 
nature 
and 
extent 
of 
the 
attack. 
A 
successful breach 
or circumvention 
of security 
of our 
systems or 
data 
could 
have 
significant 
negative 
consequences 
for 
us, 
including 
disruption 
of 
our 
operations, 
misappropriation 
of 
confidential 
information 
concerning 
us 
or 
our 
customers, 
damage to our 
systems, financial losses 
for us or 
our customers, 
violations 
of 
data 
privacy 
and 
similar 
laws, 
litigation 
exposure 
and damage to our reputation. 
 
 

Our strategy, business model and environment 
| Risk factors 
64 
We are subject 
to complex and frequently 
changing laws and 
regulations governing the protection of 
client and personal data, 
such 
as 
the 
EU 
General 
Data 
Protection 
Regulation. 
Ensuring 
that 
we 
comply 
with 
applicable 
laws 
and 
regulations 
when 
we 
collect, 
use 
and 
transfer 
personal 
information 
requires 
substantial 
resources 
and 
may 
affect 
the 
ways 
in 
which 
we 
conduct 
our 
business. 
In 
the 
event 
that 
we 
fail 
to 
comply 
with 
applicable 
laws, 
we 
may 
be 
exposed 
to 
regulatory 
fines 
and 
penalties and 
other sanctions. 
We may 
also incur 
such penalties 
if 
our 
vendors 
or 
other 
service 
providers 
or 
clients 
or 
counterparties 
fail 
to 
comply 
with 
these 
laws 
or 
to 
maintain 
appropriate controls over 
protected data. In addition, 
any loss or 
exposure 
of 
client 
or 
other 
data 
may 
adversely 
damage 
our 
reputation and adversely affect our business. 
A 
major 
focus 
of 
US 
and 
other 
countries’ 
governmental 
policies relating 
to financial 
institutions in 
recent years 
has been 
on 
fighting 
money 
laundering 
and 
terrorist 
financing. 
We 
are 
required 
to 
maintain 
effective 
policies, 
procedures 
and 
controls 
to 
detect, 
prevent 
and 
report 
money 
laundering 
and 
terrorist 
financing, and to verify 
the identity of our 
clients under the laws 
of 
many 
of 
the 
countries 
in 
which 
we 
operate. 
We 
are 
also 
subject 
to 
laws 
and 
regulations 
related 
to 
corrupt 
and 
illegal 
payments 
to 
government 
officials 
by 
others, 
such 
as 
the 
US 
Foreign Corrupt 
Practices Act 
and the 
UK Bribery 
Act. We 
have 
implemented 
policies, 
procedures 
and internal 
controls 
that are 
designed 
to 
comply 
with 
such 
laws 
and 
regulations. 
Notwithstanding 
this, 
US 
regulators 
have 
found 
deficiencies 
in 
the design 
and operation 
of anti-money 
laundering programs 
in 
our US operations. We have undertaken a 
significant program to 
address 
these 
regulatory 
findings 
with 
the 
objective 
of 
fully 
meeting 
regulatory 
expectations 
for 
our 
programs. 
Failure 
to 
maintain 
and implement 
adequate 
programs 
to 
combat 
money 
laundering, terrorist financing or corruption, or any 
failure of our 
programs in 
these areas, 
could have 
serious consequences 
both 
from 
legal 
enforcement 
action 
and 
from 
damage 
to 
our 
reputation. 
Frequent 
changes 
in 
sanctions 
imposed 
and 
increasingly 
complex 
sanctions 
imposed 
on 
countries, 
entities 
and 
individuals 
increase 
our 
cost 
of 
monitoring 
and 
complying 
with 
sanctions 
requirements 
and 
increase 
the 
risk 
that 
we 
will 
not 
identify 
in 
a 
timely 
manner 
previously 
permissible 
client 
activity that is subject to a sanction. 
As a 
result of 
new and 
changed regulatory requirements and 
the 
changes 
we 
have 
made 
in 
our 
legal 
structure, the 
volume, 
frequency and 
complexity of 
our 
regulatory and 
other reporting 
has remained elevated. 
Regulators 
have also significantly 
increased 
expectations 
regarding 
our 
internal 
reporting 
and 
data 
aggregation, as well as management reporting. 
We have incurred 
and continue to incur significant 
costs to implement infrastructure 
to 
meet 
these 
requirements. Failure 
to 
meet 
external 
reporting 
requirements accurately 
and in a timely manner or failure to meet 
regulatory 
expectations 
of 
internal 
reporting, 
data 
aggregation 
and management reporting could result in enforcement action or 
other adverse 
consequences 
for us. 
Certain 
types 
of 
operational 
control 
weaknesses and 
failures 
could 
also 
adversely 
affect 
our 
ability 
to 
prepare 
and 
publish 
accurate and timely financial reports. 
In 
addition, 
despite 
the 
contingency 
plans 
that 
we 
have 
in 
place, our 
ability to 
conduct business 
may be 
adversely affected 
by a disruption in 
the infrastructure that supports 
our businesses 
and 
the 
communities 
in 
which 
we 
operate. 
This 
may 
include 
a 
disruption 
due to 
natural disasters, 
pandemics, 
civil 
unrest, 
war 
or 
terrorism 
and 
involve 
electrical, 
communications, 
transportation or 
other services 
that we 
use or 
that are 
used by 
third parties with whom we conduct business. 
We may not be successful in implementing changes in our 
wealth management businesses to meet changing market, 
regulatory and other conditions 
In 
recent 
years, 
inflows 
from 
lower
-
margin 
segments 
and 
markets 
have 
been 
replacing 
outflows 
from 
higher-margin 
segments and markets, 
in particular for cross 
-border clients. This 
dynamic, 
combined 
with 
changes 
in 
client 
product 
preferences 
as 
a 
result 
of 
which 
low-margin 
products 
account 
for 
a 
larger 
share 
of 
our 
revenues 
than 
in 
the 
past, 
has 
put 
downward 
pressure on Global Wealth Management’s margins. 
We 
are 
exposed 
to 
possible 
outflows 
of 
client 
assets 
in 
our 
asset-gathering 
businesses 
and 
to 
changes 
affecting 
the 
profitability 
of 
Global 
Wealth 
Management, 
in 
particular. 
Initiatives 
that 
we 
may 
implement 
to 
overcome 
the 
effects 
of 
changes in the business environment on our profitability, balance 
sheet 
and 
capital 
positions 
may 
not 
succeed 
in 
counteracting 
those 
effects 
and 
may 
cause 
net 
new 
money 
outflows 
and 
reductions 
in 
client 
deposits, 
as 
happened 
with 
our 
balance 
sheet 
and 
capital 
optimization 
program 
in 
2015. 
There 
is 
no 
assurance 
that we 
will be 
successful in 
our efforts 
to offset 
the 
adverse effect of these or similar trends and developments. 
We may be unable to identify or capture revenue or competitive 
opportunities, or retain and attract 
qualified employees 
The 
financial 
services 
industry 
is 
characterized 
by 
intense 
competition, 
continuous 
innovation, 
restrictive, 
detailed, 
and 
sometimes 
fragmented 
regulation 
and 
ongoing 
consolidation. 
We face 
competition at 
the level 
of local 
markets and 
individual 
business 
lines, 
and 
from 
global 
financial 
institutions 
that 
are 
comparable 
to 
us 
in 
their 
size and 
breadth. 
Barriers 
to 
entry 
in 
individual 
markets 
and 
pricing 
levels 
are 
being 
eroded 
by 
new 
technology. 
We 
expect 
these 
trends 
to 
continue 
and 
competition 
to 
increase. 
Our 
competitive 
strength 
and 
market 
position 
could 
be 
eroded 
if 
we 
are 
unable 
to 
identify 
market 
trends 
and 
developments, 
do 
not 
respond 
to 
such 
trends 
and 
developments by 
devising and 
implementing 
adequate business 
strategies, do 
not adequately 
develop or 
update our 
technology 
including our 
digital channels and 
tools, or are 
unable to attract 
or retain the qualified people needed. 
The 
amount and 
structure 
of our 
employee 
compensation 
is 
affected not only by our business results 
, 
but also by competitive 
factors and regulatory considerations. 
In 
recent 
years, 
in 
response 
to 
the 
demands 
of 
various 
stakeholders, 
including 
regulatory 
authorities 
and 
shareholders, 
and in 
order to 
better align 
the interests 
of our 
staff with 
other 
stakeholders, 
we 
have 
increased 
average 
deferral 
periods 
for 
stock 
awards, 
expanded 
forfeiture 
provisions 
and, 
to 
a 
more 
limited extent, introduced clawback provisions for certain awards 
linked 
to 
business 
performance. 
We 
have 
also 
introduced 
individual caps on 
the proportion of 
fixed to variable 
pay for the 
Group Executive 
Board (GEB) 
members, as 
well as 
certain other 
employees. 
 
 

 
65 
Constraints 
on 
the 
amount 
or 
structure 
of
 
employee 
compensation, higher 
levels 
of 
deferral, performance 
conditions 
and 
other 
circumstances 
triggering 
the 
forfeiture 
of 
unvested 
awards may 
adversely affect our 
ability to 
retain and 
attract key 
employees. 
The 
loss 
of 
key 
staff 
and 
the 
inability 
to 
attract 
qualified replacements could 
seriously compromise our 
ability to 
execute 
our 
strategy and 
to 
successfully improve 
our 
operating 
and 
control 
environment, 
and 
could 
affect 
our 
business 
performance. Swiss 
law 
requires 
that 
shareholders approve 
the 
compensation of 
the 
Board of 
Directors (the 
BoD) 
and 
the 
GEB 
each year. If 
our shareholders 
fail to approve 
the compensation 
for 
the 
GEB 
or 
the 
BoD, 
this 
could 
have 
an 
adverse 
effect 
on 
our 
ability to 
retain experienced 
directors 
and our senior 
management. 
We depend on our risk management and control processes to 
avoid or limit potential losses in our businesses 
Controlled 
risk-taking 
is 
a 
major 
part 
of 
the 
business 
of 
a 
financial services 
firm. Some losses 
from risk-taking 
activities are 
inevitable, but 
to be 
successful over 
time, we 
must balance 
the 
risks we 
take against 
the returns 
generated. Therefore 
we must 
diligently identify, 
assess, manage and control 
our risks, not only 
in 
normal 
market 
conditions 
but 
also 
as 
they 
might 
develop 
under 
more 
extreme, 
stressed 
conditions, 
when 
concentrations 
of exposures can lead to severe losses. 
As seen during the financial crisis of 2007–2009, 
we have not 
always been 
able to 
prevent serious 
losses arising 
from extreme 
or 
sudden 
market 
events 
that 
are 
not 
anticipated 
by 
our 
risk 
measures and systems. Our risk measures, concentration controls 
and 
the 
dimensions 
in 
which 
we 
aggregated 
risk 
to 
identify 
correlated 
exposures 
proved 
inadequate 
in 
a 
historically 
severe 
deterioration 
in 
financial 
markets. 
As 
a 
result, 
we 
recorded 
substantial 
losses 
on 
fixed-income trading 
positions, particularly 
in 
2008 
and 
2009. 
We 
have 
substantially 
revised 
and 
strengthened 
our risk 
management and 
control framework 
and 
increased 
the 
capital 
that 
we hold 
relative 
to 
the 
risks 
that 
we 
take. Nonetheless, we 
could suffer further 
losses in the future 
if, 
for example: 
–
 
we do not 
fully identify the 
risks in our portfolio, 
in particular 
risk concentrations and correlated risks; 
–
 
our 
assessment 
of 
the 
risks 
identified, 
or 
our 
response 
to 
negative 
trends, 
proves 
to 
be 
untimely, 
inadequate, 
insufficient or incorrect; 
–
 
our 
risk 
models 
prove 
insufficient 
to 
predict 
the 
scale 
of 
financial risks the bank faces; 
–
 
markets 
move 
in 
ways 
that 
we 
do 
not 
expect 
– 
in 
terms 
of 
their speed, 
direction, severity 
or correlation 
– and 
our ability 
to 
manage 
risks 
in 
the 
resulting 
environment 
is, 
therefore, 
affected; 
–
 
third 
parties 
to 
whom 
we 
have 
credit 
exposure 
or 
whose 
securities 
we 
hold 
are 
severely 
affected 
by 
events 
and 
we 
suffer 
defaults and 
impairments beyond 
the level 
implied 
by 
our risk assessment; or 
–
 
collateral or other security provided by 
our counterparties and 
clients 
proves 
inadequate 
to 
cover 
their 
obligations 
at 
the 
time of default. 
 
We 
also 
hold 
legacy 
risk 
positions, 
primarily 
in 
Group 
Functions, 
that, 
in 
many 
cases, 
are 
illiquid 
and 
may 
again 
deteriorate in value. 
We 
also 
manage 
risk 
on 
behalf 
of 
our 
clients. 
The 
performance of 
assets we 
hold for 
our clients 
may be 
adversely 
affected 
by 
the 
same 
factors 
mentioned 
above. 
If 
clients 
suffer 
losses 
or 
the performance 
of 
their 
assets 
held 
with 
us is 
not in 
line 
with 
relevant 
benchmarks 
against 
which 
clients 
assess 
investment performance, we may suffer reduced 
fee income and 
a 
decline 
in 
assets 
under 
management, 
or 
withdrawal 
of 
mandates. 
Investment positions, such as equity investments made as part 
of 
strategic 
initiatives 
and 
seed 
investments 
made 
at 
the 
inception 
of 
funds 
that 
we 
manage, 
may 
also 
be 
affected 
by 
market 
risk 
factors. 
These 
investments 
are 
often 
not 
liquid 
and 
generally 
are 
intended 
or 
required to 
be 
held 
beyond 
a 
normal 
trading 
horizon. 
Deteriorations 
in 
the 
fair 
value 
of 
these 
positions would have a negative effect on our earnings. 
As UBS Group AG is a holding company, its operating results, 
financial condition and ability to pay dividends and other 
distributions and / or to pay its obligations in the future depend 
on funding, dividends and other distributions received directly or 
indirectly from its subsidiaries, which may be subject to 
restrictions 
UBS Group 
AG’s ability 
to pay 
dividends and 
other distributions 
and to 
pay its 
obligations in 
the future 
will depend 
on the 
level 
of 
funding, 
dividends 
and 
other 
distributions, 
if 
any, 
received 
from 
UBS 
AG 
and 
other 
subsidiaries. 
The 
ability 
of 
such 
subsidiaries to 
make loans 
or distributions, 
directly 
or indirectly, 
to UBS Group AG may 
be restricted as a result 
of several factors, 
including 
restrictions 
in 
financing 
agreements 
and 
the 
requirements 
of 
applicable 
law 
and 
regulatory, 
fiscal 
or 
other 
restrictions. 
In 
particular, 
UBS 
Group 
AG’s 
direct 
and 
indirect 
subsidiaries, 
including 
UBS 
AG, 
UBS 
Switzerland 
AG, 
UBS 
Americas 
Holding 
LLC 
and 
UBS 
Europe 
SE, 
are 
subject 
to 
laws 
and 
regulations 
that 
restrict 
dividend 
payments, 
authorize 
regulatory 
bodies 
to 
block 
or 
reduce 
the 
flow 
of 
funds 
from 
those subsidiaries 
to UBS 
Group AG, 
or could 
affect their 
ability 
to 
repay 
any 
loans 
made 
to, 
or 
other 
investments 
in, 
such 
subsidiary by 
UBS Group 
AG or 
another member 
of the 
Group. 
For example, in 
the early stages 
of the COVID-19 
pandemic, the 
European Central Bank ordered all 
banks under its supervision to 
cease 
dividend 
distributions 
and 
the 
Federal 
Reserve 
Board 
has 
limited 
capital 
distributions 
by 
bank 
holding 
companies 
and 
intermediate 
holding 
companies. 
Restrictions 
and 
regulatory 
actions 
of 
this 
kind 
could 
impede 
access 
to 
funds 
that 
UBS 
Group AG 
may need 
to meet 
its obligations 
or to 
pay dividends 
to shareholders. In addition, 
UBS Group AG’s right to 
participate 
in 
a 
distribution 
of 
assets 
upon 
a 
subsidiary’s 
liquidation 
or 
reorganization 
is 
subject 
to 
all 
prior 
claims 
of 
the 
subsidiary’s 
creditors. 
Our capital instruments 
may contractually prevent 
UBS Group 
AG from proposing the distribution of 
dividends to shareholders, 
other 
than 
in 
the 
form 
of 
shares, 
if 
we 
do 
not 
pay 
interest 
on 
these instruments. 
 
 

Our strategy, business model and environment 
| Risk factors 
66 
Furthermore, 
UBS 
Group 
AG 
may 
guarantee 
some 
of 
the 
payment obligations 
of certain 
of the 
Group’s subsidiaries 
from 
time 
to 
time. 
These 
guarantees 
may 
require 
UBS 
Group 
AG 
to 
provide 
substantial 
funds 
or 
assets 
to 
subsidiaries 
or 
their 
creditors 
or 
counterparties at 
a time 
when 
UBS Group 
AG is 
in 
need of liquidity to fund its own obligations. 
The 
credit 
ratings 
of 
UBS 
Group 
AG 
or 
its 
subsidiaries 
used 
for 
funding 
purposes 
could 
be 
lower 
than 
the 
ratings 
of 
the 
Group’s 
operating 
subsidiaries, 
which 
may 
adversely 
affect 
the 
market 
value 
of 
the 
securities 
and 
other 
obligations 
of 
UBS 
Group AG or those subsidiaries on a standalone basis. 
Our reputation is critical to our success 
Our 
reputation 
is 
critical 
to 
the 
success 
of 
our 
strategic 
plans, 
business 
and 
prospects. 
Reputational 
damage 
is 
difficult 
to 
reverse, 
and 
improvements 
tend 
to 
be 
slow 
and 
difficult 
to 
measure. 
Our 
reputation 
has 
been 
adversely 
affected 
by 
our 
losses 
during 
the 
financial 
crisis, 
investigations 
into 
our 
cross-
border 
private 
banking 
services, 
criminal 
resolutions 
of 
LIBOR-
related 
and foreign 
exchange matters, 
as well 
as other 
matters. 
We believe 
that reputational 
damage as 
a result 
of these 
events 
was 
an 
important 
factor 
in 
our 
loss 
of 
clients 
and 
client 
assets 
across 
our 
asset-gathering 
businesses. 
New 
events 
that 
cause 
reputational damage could have a material adverse effect 
on our 
results of operation 
and financial condition, as 
well as our ability 
to achieve our strategic goals and financial targets. 
Liquidity and funding risk 
Liquidity and funding management are critical to UBS’s ongoing 
performance 
The 
viability 
of 
our 
business 
depends 
on 
the 
availability 
of 
funding 
sources, 
and 
our 
success 
depends 
on 
our 
ability 
to 
obtain funding at times, 
in amounts, for tenors 
and at rates that 
enable 
us 
to 
efficiently 
support 
our 
asset 
base 
in 
all 
market 
conditions. Our 
funding sources 
have generally 
been stable, 
but 
could 
change 
in 
the 
future 
because 
of, 
among 
other 
things, 
general 
market 
disruptions 
or 
widening 
credit 
spreads, 
which 
could 
also 
influence 
the 
cost 
of 
funding. 
A 
substantial 
part 
of 
our liquidity and 
funding requirements 
are met 
using short-term 
unsecured 
funding 
sources, 
including 
retail 
and 
wholesale 
deposits and 
the regular 
issuance of money 
market securities. A 
change 
in 
the 
availability 
of 
short-term 
funding 
could 
occur 
quickly. 
Moreover, 
more 
stringent 
capital 
and 
liquidity 
and 
funding 
requirements 
will 
likely 
lead 
to 
increased 
competition 
for 
both 
secured funding and 
deposits as a 
stable source of 
funding, and 
to higher funding costs. The addition 
of loss-absorbing debt as a 
component of 
capital requirements, the 
regulatory requirements 
to 
maintain 
minimum 
TLAC 
at 
UBS’s 
holding 
company 
and 
at 
subsidiaries, as well as the 
power of resolution authorities to 
bail 
in TLAC 
and other 
debt obligations, 
and uncertainty 
as to 
how 
such powers 
will be 
exercised, will 
increase our 
cost of 
funding 
and 
could 
potentially 
increase 
the 
total 
amount 
of 
funding 
required, in the absence of other changes in our business. 
Reductions 
in 
our 
credit 
ratings 
may 
adversely 
affect 
the 
market value of the securities 
and other obligations and increase 
our 
funding 
costs, 
in 
particular 
with 
regard 
to 
funding 
from 
wholesale unsecured 
sources, and 
could affect 
the availability of 
certain 
kinds 
of 
funding. 
In 
addition, 
as 
experienced 
in 
connection 
with 
Moody’s 
downgrade 
of 
UBS 
AG’s 
long-term 
debt 
rating 
in 
June 2012, 
rating 
downgrades 
can 
require 
us 
to 
post 
additional 
collateral 
or 
make 
additional 
cash 
payments 
under trading 
agreements. Our 
credit ratings, 
together with 
our 
capital 
strength 
and 
reputation, 
also 
contribute 
to 
maintaining 
client and 
counterparty confidence, 
and it 
is possible that 
rating 
changes 
could 
influence 
the 
performance 
of 
some 
of 
our 
businesses. 
The 
requirement 
to 
maintain 
a 
liquidity 
coverage 
ratio 
of 
high-quality 
liquid 
assets 
to 
estimated 
stressed 
short-term 
net 
cash 
outflows, 
and 
other 
similar 
liquidity 
and 
funding 
requirements, 
oblige 
us 
to 
maintain 
high 
levels 
of 
overall 
liquidity, 
limit 
our 
ability 
to 
optimize 
interest 
income 
and 
expense, make certain lines of business less attractive and reduce 
our 
overall 
ability 
to 
generate 
profits. 
In 
particular, 
UBS 
AG 
is 
subjected to increased liquidity 
coverage requirements under the 
direction 
of 
FINMA. 
Regulators 
may 
consider 
it 
necessary 
to 
increase these 
requirements in 
light of the 
anticipated economic 
stresses 
resulting 
from 
the 
COVID-19 
pandemic. 
The 
liquidity 
coverage 
ratio 
and 
net 
stable 
funding 
ratio 
requirements 
are 
intended to 
ensure that 
we are 
not overly 
reliant on 
short-term 
funding 
and 
that 
we 
have 
sufficient 
long-term 
funding 
for 
illiquid assets. The relevant 
calculations make assumptions about 
the 
relative 
likelihood 
and 
amount 
of 
outflows 
of 
funding 
and 
available sources of 
additional funding in 
market-wide and firm-
specific 
stress 
situations. 
There 
can 
be 
no 
assurance 
that 
in 
an 
actual 
stress 
situation 
our 
funding 
outflows 
would 
not 
exceed 
the assumed amounts. 
 

 
Financial and 
operating 
performance 
Management report 
 
2

Financial and operating performance | Accounting and financial reporting 
68 
Accounting and financial reporting 
Critical accounting estimates and judgments 
In 
preparing 
our 
financial 
statements 
in 
accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS), 
as 
issued 
by 
the 
International 
Accounting 
Standards 
Board 
(the 
IASB), 
we 
apply judgment 
and make 
estimates and 
assumptions that 
may 
involve 
significant 
uncertainty 
at 
the 
time 
they 
are 
made. 
We 
regularly 
reassess 
those 
estimates 
and 
assumptions, 
which 
encompass historical 
experience, expectations 
of the 
future and 
other pertinent 
factors, to 
determine their 
continuing relevance 
based 
on 
current 
conditions, 
and 
update 
them 
as 
necessary. 
Changes 
in 
estimates 
and 
assumptions 
may 
have 
significant 
effects 
on 
the 
financial 
statements. 
Furthermore, 
actual 
results 
may differ 
significantly from our 
estimates, which could 
result in 
significant 
losses 
to 
the 
Group, 
beyond 
what 
we 
expected 
or 
provided for. 
Key 
areas 
involving 
a 
high 
degree 
of 
judgment 
and 
areas 
where 
estimates 
and 
assumptions 
are 
significant 
to 
the 
consolidated financial statements include: 
–
 
expected credit loss measurement; 
–
 
fair value measurement; 
–
 
income taxes; 
–
 
provisions and contingent liabilities; 
–
 
post-employment benefit plans; 
–
 
goodwill; and 
–
 
consolidation of structured entities. 
›
 
Refer to “Note 1a Significant accounting 
policies” in the 
“Consolidated financial statements” section 
of this report for 
more information 
›
 
Refer to the “Risk factors” section of 
this report for more 
information 
Significant accounting and financial reporting changes in 
2020 
Presentation of reported results only 
Effective 
from 
1 January 
2020, 
we 
no 
longer 
report 
adjusted 
results 
in 
our 
financial 
reports, 
as 
the 
effects 
of 
legacy 
cost 
programs have 
been phased 
out and 
all of 
our financial 
targets 
are now 
based on 
reported results. 
We will 
continue to 
disclose 
material 
restructuring 
and 
litigation 
expenses 
for 
each 
business 
division and other material 
profit or loss items 
that management 
believes 
are 
neither 
representative 
of
 
underlying 
business 
performance 
nor 
expected 
to 
routinely 
recur 
in 
the 
“Group 
performance” sections of our financial reports. 
Streamlining of business division expense reporting and 
renaming of Corporate Center to Group Functions 
Effective from 1 January 2020, we have streamlined our business 
division 
expense 
reporting 
to 
better 
reflect 
how 
the 
Group 
is 
managed. We 
no longer 
disclose a 
detailed cost 
breakdown by 
business 
division. 
We 
continue 
to 
provide 
more 
detailed 
information 
on
 
operating 
expenses 
at 
t
he 
Group 
level, 
and 
explain the drivers of 
changes in divisional operating 
expenses in 
our divisional management discussion and analysis. 
Corporate 
Center 
has 
been 
renamed 
Group 
Functions 
and 
includes 
Group 
Treasury, 
Non-core 
and 
Legacy 
Portfolio, 
and 
Group 
Services. 
These 
changes 
had 
no 
effect 
on 
business 
division or Group operating income, operating expenses or profit 
before tax. 
›
 
Refer to the “Global Wealth Management,” “Personal 
& 
Corporate Banking,” Asset Management,” 
“Investment Bank” 
and “Group Functions” sections of this report for 
more 
information 
›
 
Refer to “Note 2 Segment reporting” in the “Consolidated 
financial statements” section of this 
report for more information 
about segment reporting 
Adoption of hedge accounting requirements of IFRS 9, 
Financial 
Instruments 
Effective 
from 
1 January 
2020, 
we 
have 
adopted 
the 
hedge 
accounting requirements 
of IFRS 9, 
Financial Instruments
, for 
all 
our 
existing 
hedge 
accounting 
programs, 
except 
for 
fair 
value 
hedges of 
portfolio interest 
rate risk 
related 
to loans, 
which, as 
permitted 
under 
IFRS 9, 
continue 
to 
be 
accounted 
for 
under 
IAS 39, 
Financial 
Instruments: 
Recognition 
and 
Measurement
. 
The 
adoption 
of 
these 
requirements 
as 
of 
1 January 
2020 
had 
no financial effect on our financial statements. 
Under 
the 
new 
guidance, 
and 
to 
reduce 
income 
statement 
volatility, 
we 
have 
designated cross-currency 
swaps 
and 
foreign 
currency debt in fair 
value hedge relationships, applying 
the cost 
of hedging approach to the foreign currency basis spread. 
›
 
Refer to “Note 1b 
Changes in accounting policies, comparability 
and other adjustments” and “Statement 
of comprehensive 
income” in the “Consolidated financial statements” 
section of 
this report for more information 
 
 

 
69 
Modification of deferred compensation awards 
During 
2020, 
we 
modified 
the 
forfeiture 
conditions 
of 
certain 
outstanding 
deferred 
compensation 
awards 
for 
eligible 
employees, in order 
to provide additional 
career flexibility during 
times 
of 
uncertainty. 
As 
a 
result, 
UBS 
accelerated 
the 
expense 
recognition 
related 
to 
these 
awards. 
Outstanding 
deferred 
compensation 
awards 
granted 
to 
Group 
Executive 
Board 
members 
and 
those 
granted 
under 
the 
Long-Term 
Incentive 
Plan, as well as 
those granted to financial 
advisors in the US, 
are 
not affected by these changes. 
›
 
Refer to “Note 1b Changes in accounting 
policies, comparability 
and other adjustments” in the “Consolidated 
financial 
statements” section of this report for more information 
Restatement of compensation-related liabilities 
During 
2020, 
UBS 
restated 
its 
balance 
sheet 
and 
statement 
of 
changes 
in 
equity 
as 
of 
1 January 
2018 
to 
correct 
a 
liability 
understatement 
in 
connection 
with 
a 
legacy 
Global 
Wealth 
Management 
deferred 
compensation 
plan 
in 
the 
Americas 
region
,
 
resulting 
in 
a 
dec
rease 
in 
equity 
attributable 
to 
shareholders 
of 
USD 32 
million. 
The 
restatement 
had 
no 
effect 
on 
Net profit 
/ (loss)
 
or basic 
and diluted 
earnings per 
share for 
the current period or for any comparative periods. 
›
 
Refer to “Note 1b Changes in accounting 
policies, comparability 
and other adjustments” in the “Consolidated 
financial 
statements” section of this report for more information 
 
Significant accounting and financial reporting changes in 
2021 
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 
(
Interest Rate Benchmark Reform – Phase 2
) 
In 
August 
2020, 
the 
IASB 
issued 
Interest 
Rate 
Benchmark 
Reform 
– 
Phase 
2
, 
addressing 
a 
number 
of 
financial 
reporting 
areas that 
arise when 
IBOR rates 
are reformed 
or replaced. 
UBS 
adopted 
these 
amendments 
on 
1 January 
2021 
and 
does 
not 
expect a material effect on the Group’s financial statements. 
›
 
Refer to “Note 1c International Financial 
Reporting Standards 
and Interpretations to be adopted in 2021 and 
later and other 
changes” in the “Consolidated financial statements” 
section of 
this report for more information

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial and operating performance | Group performance 
70 
Group performance 
Income statement 
For the year ended 
% change from 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.19 
Net interest income 
5,862 
4,501 
5,048 
30 
Other net income from financial instruments measured 
at fair value through profit or loss 
6,960 
6,842 
6,960 
2 
Credit loss (expense) / release 
(694) 
(78) 
(118) 
790 
Fee and commission income 
20,961 
19,110 
19,598 
10 
Fee and commission expense 
(1,775) 
(1,696) 
(1,703) 
5 
Net fee and commission income 
19,186 
17,413 
17,895 
10 
Other income 
1,076 
212 
428 
409 
Total operating income 
32,390 
28,889 
30,213 
12 
Personnel expenses 
17,224 
16,084 
16,132 
7 
General and administrative expenses 
4,885 
5,288 
6,797 
(8) 
Depreciation and impairment of property, equipment and software 
2,069 
1,765 
1,228 
17 
Amortization and impairment of goodwill and intangible 
assets 
57 
175 
65 
(67) 
Total operating expenses 
24,235 
23,312 
24,222 
4 
Operating profit / (loss) before tax 
8,155 
5,577 
5,991 
46 
Tax expense / (benefit) 
1,583 
1,267 
1,468 
25 
Net profit / (loss) 
6,572 
4,310 
4,522 
52 
Net profit / (loss) attributable to non-controlling interests 
15 
6 
7 
156 
Net profit / (loss) attributable to shareholders 
6,557 
4,304 
4,516 
52 
Comprehensive income 
Total comprehensive income 
8,312 
5,091 
4,231 
63 
Total comprehensive income attributable to non-controlling interests 
36 
2 
5 
Total comprehensive income attributable to shareholders 
8,276 
5,089 
4,225 
63 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
71 
Performance of our business divisions and Group Functions
1
For the year ended 31.12.20 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Manage- 
ment 
Investment 
Bank 
Group 
Functions 
Total 
Operating income 
17,045 
3,651 
2,974 
9,214 
(494) 
32,390 
of which: net gain from the sale of a majority stake in Fondcenter AG 
60 
571 
631 
of which: gain on the sale of intellectual property rights 
215 
215 
of which: net gains from properties sold or held for sale 
64 
64 
of which: valuation gain on auction rate securities in the fourth quarter of 
2020
2
134 
134 
of which: gain related to investment in associates 
6 
19 
26 
of which: gain on the sale of equity investment measured 
at fair value through profit or loss 
4 
18 
22 
Operating expenses 
13,026 
2,392 
1,519 
6,732 
567 
24,235 
of which: acceleration of expenses in relation to outstanding deferred 
compensation awards in 
the third quarter of 2020
3
46 
3 
22 
229 
58 
359 
of which: expenses associated with terminated real estate 
leases 
72 
72 
of which: impairment of internally generated software
4
67 
67 
of which: net restructuring expenses
5
72 
5 
6 
24 
0 
107 
Operating profit / (loss) before tax 
4,019 
1,259 
1,455 
2,482 
(1,060) 
8,155 
For the year ended 31.12.19 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Manage- 
ment 
Investment 
Bank 
Group 
Functions 
Total 
Operating income 
16,353 
3,715 
1,938 
7,269 
(385) 
28,889 
of which: net foreign currency translation losses
6
(35) 
(35) 
of which: net losses from properties held for sale 
(29) 
(29) 
Operating expenses 
12,955 
2,274 
1,406 
6,485 
192 
23,312 
of which: impairment of goodwill 
110 
110 
of which: net restructuring expenses
5
68 
17 
33 
168 
(2) 
284 
Operating profit / (loss) before tax 
3,397 
1,441 
532 
784 
(577) 
5,577 
For the year ended 31.12.18 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Manage- 
ment 
Investment 
Bank 
Group 
Functions 
Total 
Operating income 
16,785 
4,161 
1,852 
8,041 
(626) 
30,213 
of which: gains related to investments in associates 
101 
359 
460 
of which: gains on sale of real estate 
31 
31 
of which: gains on sale of subsidiaries and businesses 
25 
25 
of which: remeasurement loss related to UBS Securities China 
(270) 
(270) 
Operating expenses 
13,531 
2,365 
1,426 
6,554 
346 
24,222 
of which: gain related to changes to the Swiss pension plan 
(66) 
(38) 
(10) 
(5) 
(122) 
(241) 
of which: net restructuring expenses
5
258 
47 
67 
193 
(4) 
561 
Operating profit / (loss) before tax 
3,254 
1,796 
426 
1,486 
(971) 
5,991 
1 The components 
of operating income 
and operating expenses 
disclosed in this 
table are items 
that are not recurring 
or necessarily representative 
of the underlying 
business performance for 
the reporting period 
specified. 
2 Reflects a valuation gain recognized 
in the fourth quarter of 2020 
as a result of a recovery in 
underlying market conditions, 
following a change in valuation methodology. 
Refer to “Note 21 Fair 
value 
measurement” in the “Consolidated 
financial statements” section of 
this report for more 
information. This gain 
was more than offset 
by valuation losses 
recognized earlier in the year. 
3 Reflects the accelerated 
expense recognized in the third quarter 
of 2020 when the conditions 
for continued vesting of certain 
outstanding deferred compensation awards 
were modified. This amount 
includes approximately USD 80 
million 
of accelerated expense that would otherwise have 
been recognized in the fourth quarter of 2020. 
Refer to “Note 1 Summary of significant accounting 
policies” in the “Consolidated financial statements” 
section of 
this report for more information. The full 
year effect was an expense of approximately 
USD 280 million (Global Wealth Management: USD 30 
million, Asset Management: USD 10 million, Investment Bank: USD 
180 
million, Group Functions: USD 
60 million). 
4 Relates to impairment 
of internally generated software 
resulting from a decision 
in the fourth quarter 
of 2020 to not 
proceed with an internal 
business transfer from 
UBS Switzerland AG to UBS AG. 
5 Reflects expenses for new restructuring initiatives. 
Prior-year comparative figures 
also include restructuring expenses related to legacy 
cost programs. 
6 Related to the disposal 
or closure of foreign operations. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial and operating performance | Group performance 
72 
2020 compared with 2019 
Results 
In 
2020, 
we 
recorded 
net 
profit 
attributable to 
shareholders 
of 
USD
 
6
,
557
 
million, 
which 
included 
a 
net 
tax 
expense 
of 
USD
 
1,
583
 
million
. 
In 
201
9
, 
net 
profit 
attributable 
to 
shareholders 
was 
USD 4,304 
million, 
which 
included 
a 
net 
tax 
expense of USD 1,267 million. 
Profit before 
tax increased 
by USD 2, 
578 million, 
or 46%, 
to 
USD 8,155 
million, 
reflecting 
higher 
operating 
income, 
partly 
offset 
by an 
increase 
in operating 
expenses. 
Operating 
income 
in
creased 
by 
USD
 
3
,
501
 
million, 
or 
12
%,
 
to 
USD
 
3
2,
390
 
million,
 
reflecting
 
a 
USD
 
1,479
 
million 
in
crease 
in 
total 
combined 
net 
interest 
income 
and 
other 
net 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through 
profit 
or 
loss, 
a 
USD 1,773 
million 
increase 
in 
net 
fee 
and 
commission 
income, 
and 
USD 864 
million 
higher 
other 
income. 
This 
was 
partly 
offset 
by 
a 
USD 616 
million 
increase 
in 
net 
credit 
loss 
expenses. 
Operating expenses 
increased 
by USD 923 
million, or 
4%, to 
USD 24,235 
million. 
This increase 
was mainly 
driven 
by 
USD
 
1,
140
 
million 
high
er 
personnel
 
expenses 
and 
USD
 
304 
million 
higher 
depreciation 
and 
impairment 
of 
property, 
equipment 
and 
software. 
These 
effects 
were 
partly 
offset 
by a 
USD
 
4
03
 
million 
decrease 
in 
general 
and 
administrative 
expenses 
and 
a 
USD 118 
million 
decrease 
in 
amortization 
and 
impairment 
of goodwill 
and intangible 
assets. 
Operating income 
Net interest income and other net income from financial 
instruments measured at fair value through profit or loss 
Total 
combined net 
interest income 
and other 
net income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through 
profit 
or 
loss increased 
by USD 1,479 
million to 
USD 12,822 million. 
This 
was mainly 
driven by 
higher net 
income in 
the Investment 
Bank 
and 
Global 
Wealth 
Management, 
partly 
offset 
by 
lower 
net 
income in Group Functions. 
The 
Investment 
Bank 
increased 
by 
USD 1,454 
million 
to 
USD 5,643 
million, 
largely 
driven 
by 
Global 
Markets. 
Income 
increased 
in 
the 
Derivatives 
& 
Solutions 
business, 
reflecting 
higher 
client 
activity 
levels 
across 
foreign 
exchange, 
rates 
and 
credit 
products. 
In 
addition, 
increased 
income 
in 
the 
Financing 
and Execution 
& Platform businesses 
was driven 
by higher levels 
of Equity Financing revenues and client activity, 
respectively. 
Global Wealth 
Management increased 
by USD 126 
million to 
USD 5,039 
million, 
reflecting 
higher 
net interest 
income due 
to 
growth 
in 
lending 
revenues, 
partly 
offset 
by 
lower 
deposit 
revenues, 
as 
well 
as 
increased 
transaction-based 
income 
from 
foreign 
exchange 
and 
other 
intermediary 
activity 
as 
a 
result 
of 
higher levels of client activity. 
Group 
Functions 
decreased 
by 
USD 120 
million 
to 
negative 
USD 302 million. 
This was mainly 
due to lower 
net income from 
accounting 
asymmetries, 
including 
hedge
 
accounting
 
ineffectiveness, and 
an increase 
in the 
total amount 
of negative 
revenues related to 
centralized Group Treasury 
risk management 
services, driven by 
additional liquidity costs in 
relation to COVID-
19 
market 
stress 
in 
the 
first 
half 
of 
the 
year. 
In 
addition, 
Non-
core 
and 
Legacy 
Portfolio 
also 
recognized 
lower 
income, 
and 
together these effects were 
partly offset by an 
increase in Group 
Services, largely as a result of lower funding 
costs, mainly related 
to deferred tax assets. 
›
 
Refer to “Note 3 Net interest income and 
other net income from 
financial instruments measured at fair value through 
profit or 
loss” in the “Consolidated financial statements” 
section of this 
report for more information 
 
Net interest income and other net income from financial instruments measured at fair value through profit or loss 
For the year ended 
% change from 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.19 
Net interest income from financial instruments measured 
at amortized cost and fair value through other 
comprehensive income 
 
4,563 
 
3,490 
 
3,710 
 
31 
Net interest income from financial instruments measured 
at fair value through profit or loss 
 
1,299 
 
1,011 
 
1,338 
 
28 
Other net income from financial instruments measured 
at fair value through profit or loss 
 
6,960 
 
6,842 
 
6,960 
 
2 
Total 
 
12,822 
 
11,343 
 
12,008 
 
13 
Global Wealth Management 
 
5,039 
 
4,913 
 
5,049 
 
3 
of which: net interest income 
 
4,027 
 
3,947 
 
4,101 
 
2 
of which: transaction-based income from foreign exchange and other 
intermediary activity
1
 
1,012 
 
966 
 
948 
 
5 
Personal & Corporate Banking 
 
2,459 
 
2,436 
 
2,451 
 
1 
of which: net interest income 
 
2,049 
 
1,992 
 
2,049 
 
3 
of which: transaction-based income from foreign exchange and other 
intermediary activity
1
 
409 
 
443 
 
402 
 
(8) 
Asset Management 
 
(16) 
 
(13) 
 
(35) 
 
23 
Investment Bank
2
 
5,643 
 
4,189 
 
4,756 
 
35 
Global Banking
3
 
585 
 
414 
 
608 
 
42 
Global Markets
3
 
5,057 
 
3,775 
 
4,148 
 
34 
Group Functions 
 
(302) 
 
(182) 
 
(214) 
 
66 
1 Mainly includes spread-related income in connection with client-driven transactions, 
foreign currency translation effects and income and expenses from precious metals, 
which are included in the income statement 
line Other net income from financial instruments measured 
at fair value through profit or loss. 
The amounts reported on this 
line are one component of Transaction 
-based income in the management discussion and 
analysis of Global 
Wealth Management 
and Personal 
& Corporate Banking 
in the “Global 
Wealth Management” and 
“Personal & 
Corporate Banking” 
sections of this 
report. 
2 Investment Bank information 
is 
provided at the 
business line 
level rather 
than by 
financial statement 
reporting line 
in order 
to reflect 
the underlying business 
activities, which 
is consistent 
with the structure 
of the 
management discussion 
and 
analysis in the “Investment Bank” section of this 
report. 
3 Effective as of 1 January 2020, the Investment Bank 
was realigned into two new business lines: Global 
Banking and Global Markets. 
The presentation of 
prior-year information reflects the new structure, with no effect on the overal 
l 
results of the Investment Bank. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
73 
Net fee and commission income 
Net 
fee 
and 
commission 
income 
was 
USD
 
1
9
,
186
 
million
,
 
compared with USD 17,413 million. 
Net 
brokerage 
fees 
increased 
by 
USD
 
920 
million
 
to 
USD 3,858 million, 
reflecting a constructive 
market environment 
and higher levels of client activity in 
Global Wealth Management 
and the Investment Bank. 
Investment fund fees 
increased by USD 431 
million, driven by 
Asset Management. 
This was largely due to higher performance-
based fee income, mainly relating to the Hedge 
Fund Businesses, 
reflecting
 
investment 
performance 
in 
a 
constructive 
market 
environment. 
In 
addition, 
management 
fees 
increased, 
mainly 
resulting 
from 
a 
higher 
average 
invested 
asset 
base, 
primarily 
reflecting net 
new money 
generation and 
a constructive 
market 
backdrop. 
Fees for 
portfolio management and 
related services increased 
by 
USD
 
353 
million
,
 
driven 
by 
Global 
Wealth 
Management, 
mostly reflecting the effect of higher average invested 
assets in a 
constructive market environment. 
Underwriting fees increased by USD 344 million to USD 1,085 
million, 
mainly 
driven 
by 
the 
Investment 
Bank 
earning 
higher 
equity underwriting revenues from public offerings. 
›
 
Refer to “Note 4 Net fee and commission 
income” in the 
“Consolidated financial statements” section 
of this report for 
more information 
Other income 
Other 
income 
increased 
by 
USD 864 
million 
to 
USD 1,076 
million, mainly driven by a gain of USD 631 million on the sale of 
a 
majority 
stake 
in 
Fondcenter 
AG 
to 
Clearstream, 
Deutsche 
Börse Group’s post-trade 
services provider, 
as well as a 
USD 215 
million gain 
on the 
sale of 
intellectual property 
rights associated 
with the Bloomberg Commodity Index family. 
In 
addition, 
net 
gains 
from 
properties 
held 
for 
sale 
of 
USD 76 million 
were 
recognized 
in 
the 
year, 
compared 
with 
a 
USD 19 million net loss in 2019. 
›
 
Refer to “Note 5 Other income” in the “Consolidated 
financial 
statements” section of this report for more information 
›
 
Refer to “Note 29 Changes in organization 
and acquisitions and 
disposals of subsidiaries and businesses” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about the sale of a majority stake 
in Fondcenter AG 
Credit loss expense / release 
Total 
net 
credit 
loss 
expenses 
were 
USD 694 
million 
in 
2020, 
compared 
with 
USD
 
78
 
million, 
reflecting 
net 
credit 
loss 
expenses 
of 
USD 266 
million 
related 
to 
stage 1 and 
2 
positions 
and 
USD 429 
million 
related 
to 
credit-impaired 
(stage 3) 
positions. 
›
 
Refer to “Note 9 Financial assets at amortized 
cost and other 
positions in scope of expected credit loss measurement” 
and 
“Note 20 
Expected credit loss measurement” in the 
“Consolidated financial statements” section 
of this report for 
more information about credit loss expense / release 
›
 
Refer to the “Risk factors” section of 
this report for more 
information 
 
 
Credit loss (expense) / release 
USD million 
Global 
Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
Total 
For the year ended 31.12.20 
Stages 1 and 2 
 
(48) 
 
(129) 
 
0 
 
(88) 
 
0 
 
(266) 
Stage 3 
 
(40) 
 
(128) 
 
(2) 
 
(217) 
 
(42) 
 
(429) 
Total credit loss (expense) / release 
 
(88) 
 
(257) 
 
(2) 
 
(305) 
 
(42) 
 
(694) 
For the year ended 31.12.19 
Stages 1 and 2 
 
3 
 
23 
 
0 
 
(4) 
 
0 
 
22 
Stage 3 
 
(23) 
 
(44) 
 
0 
 
(26) 
 
(7) 
 
(100) 
Total credit loss (expense) / release 
 
(20) 
 
(21) 
 
0 
 
(30) 
 
(7) 
 
(78) 
For the year ended 31.12.18 
Stages 1 and 2 
 
0 
 
0 
 
0 
 
(9) 
 
(1) 
 
(9) 
Stage 3 
 
(15) 
 
(56) 
 
0 
 
(29) 
 
(8) 
 
(109) 
Total credit loss (expense) / release 
 
(15) 
 
(56) 
 
0 
 
(38) 
 
(8) 
 
(118) 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial and operating performance | Group performance 
74 
Operating expenses 
Personnel expenses 
Personnel 
expenses 
increased 
by 
USD 1,140 
million 
to 
USD 17,224 
million, 
primarily 
reflecting 
higher 
expenses 
for 
salaries, variable compensation and social security. 
Salary 
costs 
increased 
by 
USD 505 
million 
to 
USD 7,023 
million, mainly driven 
by foreign 
currency translation 
effects and 
a 
rebalancing 
from 
variable 
to 
fixed 
compensation 
for 
certain 
employees, 
as 
well 
as 
the 
insourcing 
of 
certain 
activities 
from 
third-party vendors to our Business Solutions Centers. 
Expenses 
for 
total 
variable 
compensation 
increased 
by 
USD 428 
million 
to 
USD 3,429 
million, 
mainly 
driven 
by 
higher 
expenses 
for 
current-year 
awards 
following 
improved 
business 
performance, 
partly 
offset 
by 
the 
aforementioned 
rebalancing. 
In 
addition, 
expenses 
for 
prior-year 
awards 
increased, 
primarily 
following the modification of conditions for continued vesting of 
certain 
outstanding 
deferred 
compensation 
awards 
in 
the 
third 
quarter 
of 
2020. 
These 
increases 
were 
partly 
offset 
by 
a 
decrease in severance expenses. 
Social 
security 
expenses 
increased 
by 
USD 100 
million 
to 
USD 899 
million, 
broadly 
in 
line 
with 
the 
higher 
expenses 
for 
salaries and variable compensation. 
›
 
Refer to the “Compensation” section 
of this report for more 
information 
›
 
Refer to “Note 6 Personnel expenses,” “Note 
26 Post-
employment benefit plans” and “Note 27 
Employee benefits: 
variable compensation” in the “Consolidated 
financial 
statements” section of this report for more information 
›
 
Refer to “Note 1b Changes in accounting 
policies, comparability 
and other adjustments” in the “Consolidated 
financial 
statements” section of this report for more information 
about 
the modification of deferred compensation awards 
General and administrative expenses 
General 
and 
administrative 
expenses 
decreased 
by 
USD 403 
million 
to 
USD
 
4,8
85
 
million. 
This
 
included
 
USD
 
209 
million 
lower 
expenses 
related 
to 
travel 
and 
entertainment, 
reflecting 
COVID-19-related 
restrictions, as 
well as 
USD 207 
million lower 
professional 
fees, 
largely 
in 
relation 
to 
consulting 
services. 
In 
addition,
 
outsourcing 
costs
 
decreased 
by 
USD
 
1
30 
million
, 
mainly 
driven 
by 
the 
aforementioned 
insourcing 
of 
certain 
activities 
from 
third
-
party 
vendors 
to 
our 
Business 
Solutions 
Centers
. 
Th
ese 
effects 
were
 
p
artly 
offset 
by 
USD
 
95 
million 
higher costs 
arising from 
rent and 
maintenance of 
IT and 
other 
equipment. 
Net 
expenses 
for 
the 
UK 
and 
German 
bank 
lev
ies
 
were 
USD 55 
million 
in 
2020 
and 
included 
a 
USD 27 
million 
credit 
related 
to 
prior 
years. 
In 
2019, 
net 
expenses 
for 
the 
UK 
and 
German bank levies were 
USD 41 million and included a 
USD 31 
million credit related to prior years. 
We 
believe 
that 
the 
industry 
continues
 
to 
operate 
in 
an 
environment 
in 
which 
expenses 
associated 
with 
litigation, 
regulatory 
and 
similar 
matters 
will 
remain 
elevated 
for 
the 
foreseeable future, and 
we continue to 
be exposed to 
a number 
of 
significant 
claims 
and 
regulatory 
matters. 
The 
outcome 
of 
many 
of 
these 
matters, 
the 
timing 
of 
a 
resolution, 
and 
the 
potential 
effects of 
resolutions on 
our 
future business, 
financial 
results or financial condition are extremely difficult to predict. 
›
 
Refer to “Note 7 General and administrative 
expenses” and 
“Note 18 Provisions and contingent liabilities” 
in the 
“Consolidated financial statements” section 
of this report for 
more information 
Depreciation, amortization and impairment 
Depreciation
 
and 
impairment 
of 
property, 
equipment
 
and
 
software 
increased 
by 
USD 304 
million 
to 
USD 2,069 
million, 
mainly 
driven 
by
 
internally 
generated 
software, 
including 
a 
USD 67 
million 
impairment 
as 
a 
result 
of 
a 
decision 
to 
not 
proceed 
with 
an 
internal 
business 
transfer 
from 
UBS 
Switzerland AG to 
UBS AG. In 
addition, expenses 
related to 
real 
estate 
increased
,
 
including 
the 
effects 
of 
accelerated 
depreciation resulting from the termination of property leases. 
Amortization 
and 
impairment 
of 
goodwill 
and 
intangible 
assets 
decreased 
by 
USD 118 
million 
to 
USD 57 
million, 
as 
the 
prior year 
included a USD 110 
million impairment 
of goodwill in 
the Investment Bank. 
›
 
Refer to “Note 12 Property, equipment and software” and “Note 
13 Goodwill and intangible assets” 
in the “Consolidated financial 
statements” 
section of this report for more information 
 
Operating expenses 
For the year ended 
% change from 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.19 
Personnel expenses 
17,224 
16,084 
16,132 
7 
of which: salaries 
7,023 
6,518 
6,448 
8 
of which: variable compensation 
3,429 
3,001 
3,238 
14 
of which: relating to current year
1
2,634 
2,352 
2,624 
12 
of which: relating to prior years
2
795
5 
650 
614 
22 
of which: financial advisor compensation
3
4,091 
4,043 
4,054 
1 
of which: other personnel expenses
4
2,680
5 
2,521 
2,391 
6 
General and administrative expenses 
4,885 
5,288 
6,797 
(8) 
of which: net expenses for litigation, regulatory and similar 
matters 
197 
165 
657 
19 
of which: other general and administrative expenses 
4,688 
5,122 
6,140 
(8) 
Depreciation and impairment of property, equipment and software 
2,069 
1,765 
1,228 
17 
Amortization and impairment of goodwill and intangible 
assets 
57 
175 
65 
(67) 
Total operating expenses 
24,235 
23,312 
24,222 
4 
1 Includes expenses 
relating to performance 
awards and 
other variable compensation 
for the respective 
performance year. 
2 Consists of 
amortization of prior 
years’ awards relating 
to performance awards 
and 
other variable 
compensation. 
3 Financial advisor 
compensation consists 
of grid-based 
compensation based 
directly on 
compensable revenues 
generated by 
financial advisors 
and supplemental 
compensation 
calculated on the 
basis of financial 
advisor productivity, 
firm tenure, 
assets and other 
variables. It 
also includes expenses 
related to compensation 
commitments with financial 
advisors entered into 
at the time 
of 
recruitment that 
are subject 
to vesting 
requirements. 
4 Consists of 
expenses related 
to contractors, 
social security, 
post-employment benefit 
plans, 
and other 
personnel expenses. 
Refer to 
“Note 6 Personnel 
expenses” in the “Consolidated financial 
statements” section of this report 
for more information. 
5 During 2020, UBS modified 
the conditions for continued vesting 
of certain outstanding deferred compensation 
awards for qualifying employees, resulting 
in an expense of approximately USD 
280 million, of which USD 240 
million is disclosed within Variable 
compensation – performance awards, 
USD 20 million within Social 
security and USD 20 million within Other personnel expenses. Refer to “Note 1 Summary of significant accounting policies” in 
the “Consolidated financial statements” section of this report for more information. 
 
 

 
75 
Tax 
Income 
tax 
expenses 
of 
USD 1,583 million 
were 
recognized 
for 
the Group 
in 2020, representing 
an effective 
tax rate of 
19.4%, 
compared 
with 
USD 1,267 million 
for 
2019, 
which 
represented 
an 
effective 
tax 
rate 
of 
22.7%. 
The 
income 
tax 
expenses 
for 
2020 included 
Swiss tax 
expenses of 
USD 598 million 
and non-
Swiss tax expenses of USD 985 million. 
The 
Swiss 
tax 
expenses 
included 
current 
tax 
expenses 
of 
USD 482 million related to taxable profits of UBS Switzerland AG 
and 
other 
Swiss 
entities. 
They 
also 
included 
deferred 
tax 
expenses 
of 
USD 116 
million, 
which 
primarily 
reflect 
the 
amortization of 
deferred tax 
assets (DTAs) 
previously recognized 
in relation to deductible temporary differences. 
The non-Swiss 
tax expenses 
included current 
tax expenses 
of 
USD 749 
million 
related 
to 
taxable 
profits 
earned 
by 
non-Swiss 
subsidiaries 
and 
branches 
and 
net 
deferred 
tax 
expenses 
of 
USD 236 million. Expenses 
of USD 444 million, 
primarily relating 
to the 
amortization of 
DTAs 
previously recognized 
in relation 
to 
tax losses 
carried forward 
and deductible 
temporary differences 
of 
UBS 
Americas 
Inc., 
were 
partly 
offset 
by 
a 
net 
benefit 
of 
USD 208 million 
in respect 
of the 
remeasurement 
of DTAs. 
This 
net 
benefit 
included 
net 
upward 
remeasurements 
of 
DTAs 
of 
USD 146 million for 
certain entities, primarily 
in connection with 
our business 
planning process, 
and USD 62 
million in 
respect of 
additional 
DTA 
recognition 
that 
resulted 
from 
the 
contribution 
of 
real 
estate 
assets 
by 
UBS 
AG to 
UBS 
Americas 
Inc. 
and 
UBS 
Financial Services 
Inc. in 
2020. This 
allowed the 
full recognition 
of DTAs in respect of the associated 
historic real estate costs that 
were 
previously 
capitalized 
for 
US 
tax 
purposes 
under 
the 
elections made in the fourth quarter of 2018. 
The 
effective 
tax 
rate 
for 
2020 
of 
19.4% 
is 
lower 
than 
the 
Group’s 
normal 
tax 
rate 
of 
around 
25%, 
mainly 
as 
a 
result 
of 
the aforementioned deferred 
tax benefit of USD 208 
million and 
also 
because 
no 
net 
tax 
expense 
was 
recognized 
in 
respect 
of 
the 
pre-tax 
gain 
of 
USD 631 million 
in 
relation 
to 
the 
sale of 
a 
majority stake in Fondcenter AG. 
Excluding 
any 
potential 
effects 
from 
the 
remeasurement 
of 
DTAs 
in 
connection with 
next year’s 
business planning 
process, 
we expect a tax rate of around 25% 
for 2021. This also excludes 
any 
impact 
from 
potential 
US 
corporate 
tax 
rate 
changes 
or 
other 
jurisdictional 
statutory 
tax 
rate 
changes 
that 
could 
be 
enacted during 2021. 
›
 
Refer to “Note 8 Income taxes” in 
the “Consolidated financial 
statements” 
section of this report for more information 
›
 
Refer to the “Risk factors” section of 
this report for more 
information 
Total comprehensive income attributable to shareholders 
In 2020, 
total comprehensive income attributable 
to shareholders 
was USD 8,276 million, reflecting net profit of 
USD 6,557 million 
and 
positive 
other 
comprehensive income 
(OCI), 
net 
of 
tax, 
of 
USD 1,719 million. 
Foreign 
currency 
translation 
OCI 
was 
positive
 
USD
 
1,095
 
million 
in 
20
20. 
This 
was 
mainly 
due 
to 
the
 
significant
 
strengthening of the Swiss franc (9%) and the euro (9%) against 
the 
US
 
doll
ar.
 
In 
201
9
, 
OCI 
related 
to 
foreign 
currency 
translation was positive USD 104 million. 
OCI 
related 
to 
cash 
flow 
hedges 
was 
positive 
USD 1,011 
million, 
mainly reflecting 
an increase 
in 
net unrealized 
gains on 
US 
dollar 
hedging 
derivatives 
resulting 
from 
decreases 
in 
the 
relevant 
long-term 
US 
dollar 
interest 
rates, 
partly 
offset 
by 
the 
reclassification of net 
gains on hedging 
instruments from OCI 
to 
the 
income 
statement 
as 
the 
hedged 
forecast 
cash 
flows 
affected profit 
or loss. In 
2019, OCI related 
to cash flow 
hedges 
was positive USD 1,143 million. 
OCI 
associated 
with 
financial 
assets 
measured 
at 
fair 
value 
through OCI was positive 
USD 136 million, 
compared 
with positive 
USD 117 million, 
primarily reflecting 
net unrealized 
gains following 
decreases 
in the 
relevant 
US dollar 
long-term 
interest 
rates 
in 2020. 
OCI related 
to own credit 
on financial 
liabilities 
designated 
at fair 
value 
was 
negative
 
USD
 
293
 
million
, 
compared 
with 
negative
 
USD 392 
million, 
primarily 
due to a tightening 
of our credit 
spreads 
in 2020. 
Defined benefit 
plan 
OCI, 
net 
of 
tax, 
was 
negative USD 218 
million, 
compared with 
negative USD 
186 million. Total 
net pre-tax 
OCI 
related 
to 
the 
Swiss 
pension 
plan 
was
 
negative 
USD
 
276 
million. 
This 
was
 
mainly 
driven 
by 
an 
extraordinary employer 
contribution 
of USD 
235 million 
that increased 
the gross 
plan assets 
but led to 
an OCI loss, 
as no net pension 
asset could 
be recognized 
on 
the balance 
sheet as 
of 
31 December 2020 due 
to 
the asset 
ceiling. 
As announced in 2018, UBS agreed to mitigate 
the effects 
from changes to the 
Swiss pension plan implemented 
in 2019 
by 
contributing 
up to CHF 720 
million (USD 
813 million at the closing 
exchange rate 
as 
of 
31 December 2020) in 
three installments in 
2020, 2021 and 2022. The extraordinary 
contribution 
of USD 235 
million in 
the 
first quarter 
of 
2020 
reflected the 
first installment 
paid. 
Total pre-tax OCI related to the 
UK pension plan was 
negative 
USD 61 
million, reflecting 
OCI losses of 
USD 449 million from the 
remeasurement 
of the 
defined 
benefit 
obligation, 
mainly 
driven 
by a 
loss of 
USD 504 
million 
due to a decrease 
in the applicable 
discount 
rate, 
partly 
offset
 
by 
an 
experience 
gain 
of 
USD
 
42 
million, 
representing
 
the 
effects 
of 
differences 
between 
the 
previous 
actuarial assumptions 
and what 
actually occurred. This was partly 
offset by OCI gains 
of USD 388 million 
due to a positive return on 
plan 
assets. 
›
 
Refer to “Statement of comprehensive income” 
in the 
“Consolidated financial statements” section 
of this report for 
more information 
›
 
Refer to “Note 21 Fair value measurement” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about own credit on financial liabilities designated 
at fair value 
›
 
Refer to “Note 25 Hedge accounting” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about cash flow hedges of forecast transactions 
›
 
Refer to “Note 26 Post-employment 
benefit plans” in the 
“Consolidated financial statements” section 
of this report for 
more information about OCI related to defined benefit 
plans 
 
 
 

Financial and operating performance | Group performance 
76 
Sensitivity to interest rate movements 
As 
of 
31 December 
2020, 
we 
estimate 
that 
a 
parallel 
shift 
in 
yield 
curves 
by 
+100 
basis 
points 
could 
lead 
to 
a 
combined 
increase in annual 
net interest income 
of approximately 
USD 1.6 
billion in 
Global Wealth 
Management and Personal 
& Corporate 
Banking. 
A 
parallel 
shift 
in 
yield 
curves 
by 
–100 
basis 
points 
could 
lead 
to 
a 
combined 
reduction 
in 
annual 
net 
interest 
income of approximately USD 0.4 billion. 
These 
estimates 
are 
based 
on 
a 
hypothetical 
scenario 
of 
an 
immediate 
change 
in 
interest 
rates, 
equal 
across 
all 
currencies 
and 
relative 
to 
implied 
forward 
rates 
as 
of 
31 December 
2020 
applied to our banking book. 
These estimates further assume no 
change 
to 
balance 
sheet 
size 
and 
structure, 
constant 
foreign 
exchange rates, and no specific management action. 
Seasonal characteristics 
Our 
revenues 
may 
show 
seasonal 
patterns, 
notably 
in 
the 
Investment 
Bank 
and 
Global 
Wealth 
Management. 
These 
business divisions 
typically show 
the highest 
client activity 
levels 
in the 
first quarter, 
with lower 
levels throughout 
the rest 
of the 
year,
 
especially 
during 
the 
summer 
months 
and 
end
-
of
-
year 
holiday season. 
Net 
new 
money 
can 
be 
affected 
by 
annual 
tax 
payments, 
which are 
usually concentrated 
in the 
second quarter 
in the 
US, 
but which 
for 2020 
were concentrated 
in the 
third quarter, 
as a 
result of US tax payment extensions granted due to COVID-19. 
Key figures 
Below 
we 
provide 
an 
overview 
of 
selected 
key 
figures 
of 
the 
Group. 
For 
further 
information 
about 
key 
figures 
related 
to 
capital management, refer to the “Capital, liquidity 
and funding, 
and balance sheet” section of this report. 
Cost / income ratio 
The 
cost 
/ 
income 
ratio 
was 
73.3%, 
compared 
with 
80.5%, 
reflecting 
a
n
 
increase 
in
 
operating 
income
,
 
with 
a 
partly 
offsetting effect 
driven by 
higher operating 
expenses. The 
cost / 
income 
ratio 
is 
measured 
based 
on 
income 
before 
credit 
loss 
expenses or releases. 
Common equity tier 1 capital 
Common equity tier 1 (CET1) capital increased by USD 4.4 billion 
to USD 39.9 
billion, mainly as 
a result 
of operating profit 
before 
tax 
of 
USD 8.2 
billion, 
foreign 
currency 
translation 
effects 
of 
USD 1.2 billion and deferred 
tax assets on temporary 
differences 
of USD 0.4 
billion. The 
increase was 
partly offset 
by our 
capital 
reserve 
for 
potential 
share 
repurchases
 
of 
USD
 
2.0 
billion
, 
accruals for dividends 
of USD 1.3 billion, 
current tax expenses 
of 
USD 1.2 
billion, 
share 
repurchases 
under 
our 
share 
repurchase 
program
 
of 
USD 
0.4 
billion
, 
and 
defined 
benefit 
plans 
of 
USD 0.3 billion. 
Return on CET1 capital 
Our 
return 
on 
CET1 
capital 
(RoCET1) 
was 
17.4%, 
compared 
with 
12.4%, 
reflecting 
a 
USD 2.3 
billion 
increase 
in 
net 
profit 
attributable to shareholders, 
with a partly offsetting effect driven 
by USD 2.9 billion higher average CET1 capital. 
Risk-weighted assets 
R
isk
-
weighted 
assets 
(RWA)
 
increased 
by 
USD
 
29.9 
billion 
to 
USD 289.1 
billion, 
driven 
by 
increases 
of 
USD 25.1 
billion 
in 
credit 
and 
counterparty 
credit 
risk 
RWA,
 
including 
USD
 
7.7 
billion from currency effects 
, 
USD 5.3 billion in market risk RWA, 
and USD 1.3 billion 
in non-counterparty-related risk 
RWA, partly 
offset by a reduction of USD 1.8 billion in operational risk RWA. 
Common equity tier 1 capital ratio 
Our 
CET1 
capital 
ratio 
increased 
0.
1
 
percentage 
points 
to 
13.8%, 
reflecting a 
USD 4.4 billion increase 
in CET1 
capital that 
was partly offset by the aforementioned increase in RWA. 
Leverage ratio denominator (excluding temporary exemption 
from FINMA) 
The 
leverage 
ratio 
denominator 
(LRD) 
increased 
by 
USD 126 
billion to USD 1,037 billion. The increase was driven by asset 
size 
and other 
movements of 
USD 82 billion 
and currency 
effects of 
USD 43 billion. 
Common equity tier 1 leverage ratio (excluding temporary 
exemption from FINMA) 
Our CET1 
leverage ratio 
decreased from 
3.90% to 
3.85% as 
of 
31 December 
2020, as 
the aforementioned 
increase 
in 
the LRD 
more than offset the USD 4.4 billion increase in CET1 capital. 
Going concern leverage ratio (excluding temporary exemption 
from FINMA) 
Our 
going 
concern 
leverage 
ratio 
decreased 
from 
5.7% 
to 
5.4%, 
as 
the 
USD
 
4.
3
 
billion 
increase 
in 
our 
going 
concern 
capital 
was 
more 
than 
offset 
by 
the 
aforementioned 
USD 126 
billion increase in the LRD. 
Personnel 
We 
employed 
71,551 
personnel 
(full-time 
equivalents) 
as 
of 
31
 
December 
20
20
, 
a
 
net 
increase 
of 
2,
950
 
compared 
with 
31 December 
2019, 
mostly 
reflecting 
the 
insourcing 
of 
certain 
activities 
from 
third
-
party 
vendors 
to 
our 
Business
 
Solutions 
Centers. 
 
 
 

Return on equity

As of or for the year ended

USD million, except where indicated

31.12.20

31.12.19

31.12.18

Net profit

Net profit / (loss) attributable to shareholders

6,557

4,304

4,516

Equity

Equity attributable to shareholders

59,445

54,501

52,896

Less: goodwill and intangible assets

6,480

6,469

6,647

Tangible equity attributable to shareholders

52,965

48,032

46,249

Less: other CET1 deductions

13,075

12,497

12,176

Common equity tier 1 capital

39,890

35,535

34,073

Return on equity

Return on equity (%)

11.3

7.9

8.6

Return on tangible equity (%)

12.8

9.0

9.8

Return on common equity tier 1 capital (%)

17.4

12.4

13.1

Net new money and invested assets

Management’s discussion and analysis

on net new money

and invested assets is

provided in the

“Global Wealth Management”

and

“Asset Management” sections of this report.

Net new money

For the year ended

USD billion

31.12.20

31.12.19

31.12.18

Global Wealth Management

43.3

31.6

24.7

Asset Management

80.1

17.8

32.2

of which: excluding money market flows

87.5

12.6

24.7

of which: money market flows

(7.4)

5.2

7.5

1 Net new money excludes interest and dividend income.

Invested assets

As of

% change from

USD billion

31.12.20

31.12.19

31.12.18

31.12.19

Global Wealth Management

3,016

2,635

2,260

Asset Management

1,092

903

781

of which: excluding money market funds

995

801

686

of which: money market funds

102

(4)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial and operating performance | Global Wealth Management 
78 
Global Wealth Management 
Global Wealth Management
1
As of or for the year ended 
% change from 
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.19 
Results 
Net interest income 
4,027 
3,947 
2 
Recurring net fee income
2
9,372 
9,258 
1 
Transaction-based income
3
3,576 
3,059 
17 
Other income 
159 
110 
45 
Income 
17,134 
16,373 
5 
Credit loss (expense) / release 
(88) 
(20) 
337 
Total operating income 
17,045 
16,353 
4 
Total operating expenses 
13,026 
12,955 
1 
Business division operating profit / (loss) before tax 
4,019 
3,397 
18 
Performance measures and other information 
Recurring income
4
13,399 
13,205 
1 
Recurring income as a percentage of income (%) 
78.2 
80.6 
Financial advisor variable compensation
5,6
3,589 
3,501 
3 
Compensation commitments with recruited financial advisors
5,7
502 
542 
(7) 
Pre-tax profit growth (%) 
18.3 
4.4 
Cost / income ratio (%) 
76.0 
79.1 
Average attributed equity (USD billion)
8
17.1 
16.6 
3 
Return on attributed equity (%)
8
23.6 
20.5 
Risk-weighted assets (USD billion)
8
87.2 
78.1 
12 
Leverage ratio denominator (USD billion)
8,9
371.2 
312.7 
19 
Goodwill and intangible assets (USD billion) 
5.1 
5.1 
0 
Net new money (USD billion) 
43.3 
31.6 
Invested assets (USD billion) 
3,016 
2,635 
14 
Net margin on invested assets (bps)
10
15 
14 
11 
Gross margin on invested assets (bps) 
65 
66 
(2) 
Client assets (USD billion)
11
3,382 
2,909 
16 
Loans, gross (USD billion)
12
213.1 
179.3 
19 
Customer deposits (USD billion)
12
348.0 
296.1 
18 
Recruitment loans to financial advisors
5
1,872 
2,053 
(9) 
Other loans to financial advisors
5
697 
824 
(15) 
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
13,14
0.4 
0.3 
Advisors (full-time equivalents) 
9,575 
10,077 
(5) 
1 Comparatives may 
differ as a 
result of adjustments following 
organizational changes, 
restatements due to 
the retrospective adoption 
of new accounting 
standards or changes 
in accounting policies, 
and events 
after the reporting period. 
2 Recurring net fee income consists of fees for services 
provided on an ongoing basis, such as 
portfolio management fees, asset-based investment fund fees 
and custody fees, which are 
generated on client assets, as 
well as credit card fees and 
administrative fees for accounts. 
3 Transaction-based 
income consists of the non-recurring portion 
of net fee and commission income, 
mainly composed 
of brokerage and 
transaction-based investment fund fees, 
as well as fees for 
payment and foreign exchange transactions, 
together with other net income 
from financial instruments measured 
at fair value through 
profit or 
loss. 
4 Recurring income 
consists of 
net interest 
income and 
recurring net 
fee income. 
5 Relates to 
licensed professionals 
with the 
ability to 
provide investment 
advice to 
clients in 
the Americas. 
6 Financial advisor variable 
compensation consists 
of formulaic compensation 
based directly on 
compensable revenues 
generated by 
financial advisors and 
supplemental compensation 
calculated on 
the basis of 
financial advisor productivity, 
firm tenure, 
new assets and 
other variables. 
7 Compensation commitments 
with recruited financial 
advisors represent expenses 
related to compensation 
commitments granted 
to 
financial advisors at the time of recruitment that are subject to vesting requirements. 
8 Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more 
information. 
9 The leverage 
ratio 
denominator 
as 
of 
31 December 
2020 
does 
not 
reflect 
the 
effects 
of 
the 
temporary 
exemption 
that 
has 
been 
granted 
by 
FINMA 
in 
connection 
with 
COVID-19. 
Refer 
to 
the 
“Regulatory 
and 
legal 
developments” section of this report for more 
information. 
10 Calculated as operating profit before 
tax (annualized as applicable) divided by average 
invested assets. 
11 Client assets are composed of invested 
assets and 
other assets 
held purely 
for transactional 
purposes or 
custody only. 
12 Loans 
and Customer 
deposits in 
this table 
include customer 
brokerage 
receivables 
and payables, 
respectively, 
which are 
presented in a separate reporting line 
on the balance sheet. 
13 Refer to the “Risk management 
and control” section of this report 
for more information about (credit-)impaired 
exposures. 
14 Excludes loans to 
financial advisors. 
 
 

 
79 
2020 compared with 2019 
Results 
Profit 
before 
tax 
increased 
by 
USD 622 
million, 
or 
18%, 
to 
USD 4,019 
million, 
driven 
by 
higher 
operating 
income, 
which 
was partly offset by higher operating expenses. 
Operating income 
Total 
operating income increased 
by USD 692 million, 
or 4%, to 
USD 17,045 
million, 
driven by 
increases 
across 
all 
income 
lines, 
partly offset by higher credit loss expenses. 
Net 
interest 
income 
increased 
by 
USD 80 
million 
to 
USD 4,027 million, mostly reflecting 
growth in lending revenues, 
partly offset 
by lower 
deposit revenues, 
mainly due 
to lower 
US 
dollar interest rates and despite higher deposit volumes. 
Recurring 
net 
fee 
income 
increased 
by 
USD 114 
million 
to 
USD 9,372 
million, 
primarily 
driven 
by 
higher 
average 
invested 
assets, offset 
by lower 
margins, largely 
due to 
flows into 
lower-
margin funds and mandates. 
Transaction 
-based 
income 
increased 
by 
USD 517 
million 
to 
USD 3,576 
million, 
reflecting 
high 
levels 
of 
client 
activity 
in 
all 
regions 
and 
constru
ctive 
market 
opportunities. 
In 
2019, 
transaction-based income included a USD 75 million fee received 
from Personal & 
Corporate Banking for the 
shift of USD 6 billion 
of 
business 
volume 
from 
Global 
Wealth 
Management 
to 
Personal & Corporate Banking. 
Other 
income 
increased 
by 
USD 49 
million 
to 
USD 159 
million, 
primarily 
driven 
by 
a 
gain 
of 
USD 60 
million 
related 
to 
the 
sale 
in 
2020 
of 
a 
majority 
stake 
in 
Fondcenter 
AG. 
2019 
included 
gains 
related 
to 
the 
repositioning 
of 
the 
liquidity 
portfolio in the Americas and legacy security positions. 
›
 
Refer to “Note 29 Changes in organization 
and acquisitions and 
disposals of subsidiaries and businesses” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about the sale of a majority stake 
in Fondcenter AG 
 
Net credit loss 
expenses were USD 88 
million, compared with 
net 
expenses 
of 
USD 20 
million. 
Stage 1 
and 
2 
credit 
loss 
expenses were 
USD 48 million, 
largely resulting 
from an 
update 
to 
the 
forward
-
looking 
scenarios
 
and 
their 
associated 
weightings, 
factoring 
in 
updated 
macroeconomic 
assumptions 
to 
reflect 
the 
effects 
of 
the 
COVID-19 
pandemic, 
in 
particular 
updated GDP and unemployment 
assumptions, as well as 
model 
updates. 
Stage 3 
net 
credit 
loss 
expenses 
were 
USD 40 
million, 
mostly 
reflecting 
losses 
from 
a 
small 
number 
of 
collateralized 
and securities-based lending positions. 
Operating expenses 
Total 
operating 
expenses 
increased 
by 
USD 71 
million 
to 
USD 13,026 million, mainly driven by higher personnel expenses, 
related 
to 
financial 
advisor 
variable 
compensation 
and 
the 
modification 
of 
certain 
outstanding 
deferred 
compensation 
awards, 
and 
an 
increase 
in 
provisions 
for 
litigation, 
regulatory 
and similar matters. This was mostly offset by lower costs for 
 
professional fees, travel 
and marketing (as a 
result of COVID-19-
related impacts). 
›
 
Refer to the “Group performance” section 
and “Note 1b Changes 
in accounting policies, comparability 
and other adjustments” in 
the “Consolidated financial statements” 
section of this report for 
more information about the modification 
of deferred 
compensation awards 
Pre-tax profit growth 
Pre-tax profit 
growth in 2020 
was 18.3%, compared 
with 4.4% 
in 2019. Our target range is 10–15% over the cycle. 
Cost / income ratio 
The 
cost 
/ 
income 
ratio 
decreased 
to 
76.0% 
from 
79.1%, 
reflecting positive operating leverage.
 
Invested assets 
Invested 
assets 
increased 
by 
USD
 
38
1
 
billion, 
or 
14%, 
to 
USD
 
3,016 
billion, 
predominantly
 
driven 
by 
positive 
market 
performance 
of 
USD 291 
billion, 
positive 
currency 
effects 
of 
USD 48 billion and net new money inflows of USD 43 billion. 
Net 
new 
money 
of 
USD 43 
billion 
was 
mainly 
driven 
by 
inflows 
in 
Asia 
Pacific 
and 
EMEA. 
Mandate 
penetration 
decreased to 34.0% from 34.3%. 
Loans 
Loans 
increased 
by 
USD 33.8 
billion, 
or 
19%, 
to 
USD 213.1 
billion, 
primarily 
driven 
by 
net 
new 
loans 
of 
USD 26.3 
billion, 
USD 5.9 
billion 
from 
foreign 
exchange 
translation 
and 
USD 1.6 
billion 
from 
the 
transfer 
of 
the 
aircraft 
leasing 
business 
from 
Personal 
& 
Corporate Banking 
in 
the 
first 
quarter 
of 
2020. 
Net 
new loans 
were largely 
driven by 
an increase 
in Lombard 
loans. 
Loan penetration increased to 7.1% from 6.8% in 2019. 
›
 
Refer to the “Risk management and control” 
section of this 
report for more information 
 
Net new fee-generating assets 
Starting from 
the first 
quarter of 
2021, we 
will introduce 
a new 
performance 
measure: 
net 
new 
fee-generating 
assets, 
which 
captures 
the 
growth 
in 
clients’ 
invested 
assets 
from 
net 
flows 
related 
to 
mandates, 
investment 
funds 
with 
recurring 
fees, 
hedge 
funds 
and 
private 
markets 
investments, 
combined 
with 
dividend and 
interest payments 
into mandates, 
less fees 
paid by 
clients 
to 
UBS. 
The 
underlying 
assets 
and 
products 
generate 
most 
of 
Global 
Wealth 
Management’s 
recurring 
fees 
and 
a 
portion of its transaction-based income. 
Compared 
with 
net 
new 
money, 
which 
we 
will 
continue 
to 
disclose exclusively in our Annual Report going forward, 
net new 
fee-generating 
assets 
will 
exclude 
flows 
related 
to 
assets 
that 
generate revenues only when 
traded in the form of 
commissions 
and 
transaction 
spreads. 
The 
new 
measure, 
unlike 
net 
new 
money, will also 
exclude deposit flows 
that generate net 
interest 
income. 
We 
believe 
that 
net 
new 
fee-generating 
assets, 
by 
including 
only 
flows 
that 
are 
directly 
linked 
to 
recurring 
revenues, is a better indicator of future profitability than net new 
money. 
We 
will 
continue 
to 
disclose 
transaction-based 
income 
performance 
in 
our 
quarterly 
and 
annual 
reporting, 
given 
its 
importance to 
our business, 
as well 
as net 
new loans 
by region 
as a key driver of net interest income. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial and operating performance | Global Wealth Management 
80 
Regional breakdown of performance measures 
As of or for the year ended 31.12.20 
USD billion, except where indicated 
Americas
1
Switzerland 
EMEA
2
Asia Pacific 
Global Wealth 
Management
3
Total operating income (USD million) 
 
9,027 
 
1,700 
 
3,556 
 
2,735 
 
17,045 
Total operating expenses (USD million) 
 
7,667 
 
1,058 
 
2,599 
 
1,674 
 
13,026 
Operating profit / (loss) before tax (USD million) 
 
1,360 
 
642 
 
957 
 
1,061 
 
4,019 
Cost / income ratio (%) 
 
84.4 
 
61.7 
 
72.7 
 
61.2 
 
76.0 
Loans, gross 
 
72.5
4
 
41.9 
 
48.3 
 
49.8 
 
213.1 
Net new loans 
 
9.8 
 
2.4 
 
8.2 
 
5.9 
 
26.3 
Loan penetration (%)
5
 
4.6 
 
15.3 
 
7.9 
 
8.9 
 
7.1 
Mandate volume 
 
620 
 
98 
 
236 
 
72 
 
1,026 
Net new mandates 
 
19.9 
 
1.9 
 
5.2 
 
5.8 
 
32.5 
Mandate penetration (%)
5
 
39.5 
 
35.7 
 
38.6 
 
12.9 
 
34.0 
Invested assets 
 
1,568 
 
273 
 
612 
 
560 
 
3,016 
Net new money 
 
(4.4) 
 
3.7 
 
19.5 
 
25.0 
 
43.3 
Advisors (full-time equivalents) 
 
6,305 
 
695 
 
1,573 
 
911 
 
9,575 
1 Including the following business units: United States and Canada; and Latin America. 
2 Including the following business units: Europe; Central and Eastern Europe, 
Greece and Israel; and Middle East and Africa. 
3 Including minor functions, which are not included in the four regions individually presented in this table, 
with USD 28 million of total operating income, USD 28 million of total operating expenses, 
USD 0 million of 
operating profit 
before tax, USD 0.7 
billion of loans, 
USD 0.0 billion 
of net new 
loan inflows, 
USD 0.3 billion 
of mandate volume, 
USD 0.3 billion 
of net new 
mandate outflows, 
USD 3 billion 
of invested assets, 
USD 0.5 billion of net new money outflows and 
92 advisors in 2020. 
4 Loans include customer brokerage 
receivables, which are presented 
in a separate reporting line on 
the balance sheet. 
5 Loans, gross, and 
mandate volume, respectively, as a percentage of invested assets. 
 
Regional comments: 2020 compared with 2019 
Americas 
Profit 
before 
tax 
increased 
by 
USD 86 
million 
to 
USD 1,360 
million, 
driven 
by 
lower 
operating 
expenses, 
which 
were 
partly 
offset 
by lower 
operating 
income. Operating 
income 
decreased 
by 
USD 31 
million 
to 
USD 9,027 
million, 
driven 
by 
lower 
net 
interest income, 
which resulted 
primarily from 
US dollar 
interest 
rate 
headwinds 
despite 
higher 
loan 
volumes, 
and 
higher 
credit 
loss expenses. 
This was 
partly offset 
by an 
increase in 
recurring 
net fee income 
as a result 
of higher average 
invested assets and 
higher 
transaction-based 
income. 
The 
cost 
/ 
income 
ratio 
decreased 
from 
85.7% 
to 
84.4%. 
Loans 
increased 
16% 
to 
USD 72 
billion, 
reflecting 
USD 9.8 
billion 
of 
net 
new 
loans. 
Mandate penetration increased from 39.2% to 39.5%. 
Switzerland 
Profit before tax increased by USD 64 million to USD 642 million. 
Operating 
income 
increased 
by 
USD 117 
million 
to 
USD 1,700 
million, 
mainly 
driven 
by 
higher 
net 
interest 
income
 
from
 
increased
 
lending 
revenues, 
and 
higher 
transaction
-
based 
income. 
The 
cost 
/ 
income 
ratio 
decreased 
from 
63.7% 
to 
61.7%. 
Loans 
increased 
1
6% 
to 
USD
 
42 
billion, 
mostly
 
reflecting foreign currency 
effects and net new 
loans of USD 2.4 
billion. Mandate penetration decreased from 37.5% to 35.7%. 
EMEA 
Profit before tax increased by USD 28 million to USD 957 million, 
driven 
by 
higher 
operating 
income, 
which 
was 
partly 
offset 
by 
higher 
operating 
expenses. 
Operating 
income 
increased 
by 
USD 142 
million 
to 
USD 3,556 
million, 
due 
to 
higher 
transaction-based income, net 
interest income and 
recurring net 
fee income, 
reflecting higher 
average invested 
assets. The 
cost / 
income 
ratio 
was 
stable 
at 
72.7%. 
Loans 
increased 
30% 
to 
USD 48 
billion, 
mainly 
reflecting 
USD 8.2 
billion 
of 
net 
new 
loans 
and 
foreign 
currency 
effects. 
Mandate 
penetration 
increased from 37.7% to 38.6%. 
Asia Pacific 
Profit 
before 
tax 
increased 
by 
USD 501 
million 
to 
USD 1,061 
million. 
Operating 
income 
increased 
by 
USD 515 
million 
to 
USD 2,735 
million, 
mostly 
driven 
by 
transaction-based 
income, 
net interest 
income and 
recurring net 
fee income, 
as a 
result of 
higher 
average 
invested 
assets. 
The 
cost 
/ 
income 
ratio 
decreased 
from 
74.8% 
to 
61.2%. 
Loans 
increased 
16% 
to 
USD 50 billion, 
with USD 5.9 
billion of 
net new 
loans. Mandate 
penetration decreased 
from 13.4% to 12.9%. 
 

Personal & Corporate Banking

Personal & Corporate Banking – in Swiss francs

As of or for the year ended

% change from

CHF million, except where indicated

31.12.20

31.12.19

Results

Net interest income

1,916

1,980

(3)

Recurring net fee income

676

634

Transaction-based income

985

1,041

(5)

Other income

Income

3,650

3,714

(2)

Credit loss (expense) / release

(243)

(22)

Total operating income

3,407

3,692

(8)

Total operating expenses

2,233

2,259

(1)

Business division operating profit / (loss) before tax

1,175

1,433

(18)

Performance measures and other information

Average attributed equity (CHF billion)

8.3

8.4

(1)

Return on attributed equity (%)

14.1

17.1

Pre-tax profit growth (%)

(18.0)

(18.6)

Cost / income ratio (%)

61.2

60.8

Net interest margin (bps)

142

150

Risk-weighted assets (CHF billion)

63.8

65.0

(2)

Leverage ratio denominator (CHF billion)

4,5

219.9

217.1

Business volume for Personal Banking (CHF billion)

179

168

Net new business volume for Personal Banking (CHF billion)

11.6

7.3

Net new business volume growth for Personal Banking (%)

6.9

4.7

Active Digital Banking clients in Personal Banking (%)

66.1

62.1

Active Digital Banking clients in Corporate & Institutional

Clients (%)

77.9

76.4

Mobile Banking log-in share in Personal Banking (%)

68.0

61.9

Client assets (CHF billion)

702

685

Loans, gross (CHF billion)

136.4

132.2

Customer deposits (CHF billion)

161.1

150.5

Secured loan portfolio as a percentage of total loan portfolio, gross (%)

92.9

92.6

Impaired loan portfolio as a percentage of total loan portfolio, gross (%)

1.1

1 Comparatives may

differ as a

result of adjustments

following organizational changes,

restatements due to

the retrospective adoption

of new accounting

standards or changes

in accounting policies,

and events

after the reporting period.

2 Recurring net fee income consists of

fees for services provided on an ongoing

basis, such as portfolio management

fees, asset-based investment fund fees

and custody fees, which are

generated on client

assets, as

well as administrative

fees for accounts.

3 Transaction-based

income consists of

the non-recurring portion

of net fee

and commission income,

mainly composed of

brokerage and

transaction-based investment

fund fees,

and credit

card fees,

as well

as fees

for payment

and foreign

exchange transactions,

together with

other net

income from

financial instruments

measured at

fair value

through profit or loss.

4 Refer to the “Capital,

liquidity and funding, and

balance sheet” section of this

report for more information.

5 The leverage ratio

denominator as of 31 December

2020 does not reflect

the effects of the temporary exemption

that has been granted by

FINMA in connection with COVID-19.

Refer to the “Regulatory and legal

developments” section of this report

for more information.

6 Calculated

as net new

business volume for

the period (annualized

as applicable) divided

by business volume

at the beginning

of the period.

7 “Clients” refers

to the number

of unique business

relationships operated

Personal Banking and “active” means at least one log

-in within the past month (log-in time stamp is allocated to

all business relationship numbers in a digital banking contract).

Excluded are persons under the age

of 15, clients who

do not have a

private account, clients

domiciled outside Switzerland,

and clients who

have defaulted on loans

or credit facilities.

In 2020, 83.3% of

clients of Personal

Banking were “activated

users” of Digital

Banking (i.e., clients

who had logged

into Digital Banking

at least once

in the course

of their relationship

with UBS).

8 “Clients” refers

to the number

of unique business

relationships or legal

entities operated by Corporate

& Institutional Clients and “active”

means at least one log-in

within the past month (log-in

time stamp is allocated to

all business relationship numbers or

per legal entity in a digital

banking contract). Excluded are clients that do not

have an account, mono-product clients and clients that

have defaulted on loans or credit facilities.

9 Mobile Banking app log-ins as a percentage of

total log-ins

via E-Banking

and Mobile

Banking app

in Personal

Banking (if

a digital

banking contract

is linked

to multiple

business relationships,

the log-in

is attributed

to the

business relationship

with the

most banking

products in use).

10 Client assets

are composed

of invested assets

and other assets

held purely for

transactional purposes

or custody only.

Net new

money is not

measured for Personal

& Corporate

Banking.

11 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.

Financial and operating performance | Personal & Corporate Banking 
82 
2020 compared with 2019 
Results 
Profit 
before 
tax 
decreased 
by 
CHF 258 
million, 
or 
18%, 
to 
CHF 1,175 
million, 
reflecting 
higher 
credit 
loss 
expenses 
and 
lower income, partly offset by lower operating expenses. 
Operating income 
Total 
operating income decreased by CHF 285 million, 
or 8%, to 
CHF 3,407 million, reflecting 
higher net credit 
loss expenses and 
lower net interest and transaction-based 
income, 
partly offset by 
record recurring net fees and higher other income. 
Net 
interest 
income 
decreased 
by 
CHF 64 
million 
to 
CHF 1,916 
million, 
mainly 
driven 
by 
lower 
deposit 
revenues, 
reflecting a decrease 
in margins due 
to the ongoing 
low interest 
rate environment. 
Recurring 
net 
fee 
income 
increased 
by 
CHF 42 
million 
to 
CHF 676 
million, 
primarily 
reflecting 
higher 
custody 
fees 
from 
increased 
client 
assets, 
as 
well 
as 
higher 
income 
from 
bundled 
products. 
Transaction 
-based 
income 
decreased 
by 
CHF 56 
million 
to 
CHF 985 
million, 
largely 
driven 
by 
lower 
revenues 
from 
credit 
card 
fees 
and 
foreign 
exchange 
transactions, 
reflecting 
lower 
spending 
on 
travel 
and 
leisure 
by 
clients 
due 
to 
the 
COVID-19 
pandemic. In 2019, transaction-based income included a 
CHF 73 
million 
fee paid 
to 
Global Wealth 
Management 
for 
the shift 
of 
CHF 6 
billion 
of 
business 
volume 
from 
Global 
Wealth 
Management 
to 
Personal 
& 
Corporate 
Banking
,
 
while 
2020 
included 
a 
gain 
of 
CHF 17 
million 
in 
relation 
to 
the 
sale 
of 
an 
equity investment measured at fair value through profit or loss. 
Other income 
increased by 
CHF 14 million 
to CHF 74 
million, 
mostly 
from 
a 
valuation 
gain 
on 
our 
equity 
ownership 
of 
SIX 
Group. 
Net 
credit 
loss 
expenses 
were 
CHF 243 
million, 
compared 
with 
expenses 
of 
CHF 22 
million. 
Stage 1 
and 
2 
net 
expenses 
were 
CHF 123 
million, 
mainly 
reflecting 
expenses 
for 
selected 
exposures 
to 
large 
Swiss 
corporate 
clients, 
small 
and 
medium-
sized 
entities, 
financial 
intermediaries, 
and, 
to 
a 
lesser 
extent, 
real estate. 
These modeled 
expected losses 
were predominantly 
driven by 
the update 
to the 
forward-looking scenarios 
and their 
associated 
weightings, 
factoring 
in 
updated 
macroeconomic 
assumptions to reflect 
the effects of 
the COVID-19 pandemic, 
in 
particular 
Swiss 
GDP, 
unemployment 
and 
real 
estate 
prices, 
as 
well 
as 
post-model 
adjustments. 
Stage 3 
net 
expenses 
were 
CHF 120 million, 
primarily reflecting 
expenses of 
CHF 54 million 
related 
to 
a 
case 
of 
fraud 
at 
a 
commodity 
trade 
finance 
counterparty, 
which 
affected 
a 
number 
of 
lenders, 
including 
UBS. 
These 
stage 3 
expenses 
also 
were 
driven 
by 
a 
number 
of 
other defaults, 
mainly across our 
corporate portfolios, 
as well as 
a 
further 
deterioration 
of 
corporate 
counterparties 
that 
were 
credit-impaired as of 31 December 2019. 
Operating expenses 
Total 
operating 
expenses 
decreased 
by 
CHF 26 
million, 
or 
1%, 
to 
CHF
 
2,233
 
million, 
mostly
 
driven 
by
 
lower 
variable 
compensation in line with lower profit. 
Cost / income ratio 
The cost / income 
ratio slightly increased to 
61.2% from 60.8%, 
reflecting lower income and lower operating expenses. 
 
 
 

Personal & Corporate Banking – in US dollars

As of or for the year ended

% change from

USD million, except where indicated

31.12.20

31.12.19

Results

Net interest income

2,049

1,992

Recurring net fee income

725

638

Transaction-based income

1,054

1,045

Other income

Income

3,908

3,736

Credit loss (expense) / release

(257)

(21)

Total operating income

3,651

3,715

(2)

Total operating expenses

2,392

2,274

Business division operating profit / (loss) before tax

1,259

1,441

(13)

Performance measures and other information

Average attributed equity (USD billion)

8.9

8.4

Return on attributed equity (%)

14.2

17.1

Pre-tax profit growth (%)

(12.6)

(19.7)

Cost / income ratio (%)

61.2

60.9

Net interest margin (bps)

143

149

Risk-weighted assets (USD billion)

72.1

67.1

Leverage ratio denominator (USD billion)

4,5

248.3

224.2

Business volume for Personal Banking (USD billion)

202

174

Net new business volume for Personal Banking (USD billion)

12.3

7.3

Net new business volume growth for Personal Banking (%)

7.1

4.6

Active Digital Banking clients in Personal Banking (%)

66.1

62.1

Active Digital Banking clients in Corporate & Institutional

Clients (%)

77.9

76.4

Mobile Banking log-in share in Personal Banking (%)

68.0

61.9

Client assets (USD billion)

793

708

Loans, gross (USD billion)

154.0

136.6

Customer deposits (USD billion)

181.9

155.5

Secured loan portfolio as a percentage of total loan portfolio, gross (%)

92.9

92.6

Impaired loan portfolio as a percentage of total loan portfolio, gross (%)

1.1

1 Comparatives may

differ as a

result of adjustments

following organizational changes,

restatements due to

the retrospective adoption

of new accounting

standards or changes

in accounting policies,

and events

after the reporting period.

2 Recurring net fee income consists of fees for

services provided on an ongoing basis,

such as portfolio management fees, asset

-based investment fund fees and custody fees,

which are

generated on client

assets, as

well as administrative

fees for accounts.

3 Transaction-based

income consists of

the non-recurring portion

of net fee

and commission income,

mainly composed of

brokerage and

transaction-based investment

fund fees,

and credit

card fees,

as well

as fees

for payment

and foreign

exchange transactions,

together with

other net

income from

financial instruments

measured at

fair value

through profit or loss.

4 Refer to the “Capital,

liquidity and funding, and balance

sheet” section of this report

for more information.

5 The leverage ratio

denominator as of 31 December

2020 does not reflect

the effects of the temporary exemption

that has been granted by FINMA

in connection with COVID-19.

Refer to the “Regulatory and legal developments”

section of this report for more information.

6 Calculated

as net new

business volume for

the period (annualized

as applicable) divided

by business volume

at the beginning

of the period.

7 “Clients” refers

to the number

of unique business

relationships operated

Personal Banking and “active” means at least one log-in within the past

month (log-in time stamp is allocated to all business relationship numbers in a

digital banking contract). Excluded are persons under the age

of 15, clients who

do not have a

private account, clients

domiciled outside Switzerland,

and clients who have

defaulted on loans or

credit facilities. In

2020, 83.3% of clients

of Personal Banking

were “activated

users” of Digital

Banking (i.e., clients

who had logged

into Digital Banking

at least once

in the course

of their relationship

with UBS).

8 “Clients” refers

to the number

of unique business

relationships or legal

entities operated by Corporate &

Institutional Clients and “active” means

at least one log-in within

the past month (log-in time stamp

is allocated to all business relationship

numbers or per legal entity in

a digital

banking contract). Excluded are clients that do not have

an account, mono-product clients and clients that have

defaulted on loans or credit facilities.

9 Mobile Banking app log-ins as a percentage of

total log-ins

via E-Banking

and Mobile

Banking app

in Personal

Banking (if

a digital

banking contract

is linked

to multiple

business relationships,

the log-in

is attributed

to the

business relationship

with the

most banking

products in use).

10 Client assets

are composed of

invested assets and

other assets held

purely for transactional

purposes or custody

only. Net

new money

is not measured

for Personal

& Corporate

Banking.

11 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.

Financial and operating performance | Asset Management

Asset Management

As of or for the year ended

% change from

USD million, except where indicated

31.12.20

31.12.19

Results

Net management fees

1,950

1,778

Performance fees

455

160

185

Net gain from disposal of subsidiary

571

Credit loss (expense) / release

(2)

Total operating income

2,974

1,938

Total operating expenses

1,519

1,406

Business division operating profit / (loss) before tax

1,455

532

174

Performance measures and other information

Average attributed equity (USD billion)

2.0

1.8

Return on attributed equity (%)

74.2

29.7

Pre-tax profit growth (%)

173.6

24.9

Cost / income ratio (%)

51.0

72.6

Risk-weighted assets (USD billion)

6.9

4.6

Leverage ratio denominator (USD billion)

3,4

5.8

5.0

Goodwill and intangible assets (USD billion)

1.2

1.4

(9)

Net margin on invested assets (bps)

146

Gross margin on invested assets (bps)

Information by business line / asset

class

Net new money (USD billion)

Equities

65.1

30.9

Fixed Income

7.3

(9.2)

of which: money market

(7.4)

5.2

Multi-asset & Solutions

6.6

(2.0)

Hedge Fund Businesses

(1.1)

(3.2)

Real Estate & Private Markets

2.3

1.3

Total net new money

80.1

17.8

of which: net new money excluding money market

87.5

12.6

Invested assets (USD billion)

Equities

506

374

Fixed Income

274

253

of which: money market

102

(4)

Multi-asset & Solutions

172

148

Hedge Fund Businesses

Real Estate & Private Markets

Total invested assets

1,092

903

of which: passive strategies

457

374

Information by region

Invested assets (USD billion)

Americas

254

206

Asia Pacific

181

155

Europe, Middle East and Africa (excluding Switzerland)

294

236

Switzerland

363

306

Total invested assets

1,092

903

Information by channel

Invested assets (USD billion)

Third-party institutional

648

552

Third-party wholesale

128

UBS’s wealth management businesses

316

253

Total invested assets

1,092

903

1 Comparatives may

differ as a

result of adjustments

following organizational changes,

restatements due to

the retrospective adoption

of new accounting

standards or changes

in accounting policies,

and events

after the reporting period.

2 Net management fees include transaction fees, fund administration

revenues (including net interest and trading income from lending activities and

foreign exchange hedging as part of

the fund services offering), gains or

losses from seed money and co-investments,

funding costs, and other

items that are not Asset Management’s

performance fees.

3 Refer to the “Capital, liquidity

and funding,

and balance sheet” section of this report for more

information.

4 The leverage ratio denominator as of

31 December 2020 does not reflect the effects

of the temporary exemption that has been granted

by FINMA

in connection

with COVID-19.

Refer to

the “Regulatory

and legal

developments” section

of this

report for

more information.

5 Calculated

as operating

profit before

tax (annualized

as applicable)

divided by

average invested assets.

6 Comparative figures have been restated

as a result of an adjustment

in asset classification, effective as of

1 April 2020, in order

to better reflect the underlying nature

of certain assets,

following an internal asset reporting review in light of

the evolution of our separately managed accounts

initiative in the US with Global Wealth

Management. The restatement had no effect

on total net new money

and no effect on total invested assets. It resulted in an increase of

USD 7 billion, or 2%, in invested assets in Equities and a decrease

of USD 7 billion, or 5%, in invested assets in Multi-asset & Solutions for

the year

ended 31 December 2019.

 
 
 
 
 
 
85 
2020 compared with 2019 
Results 
Profit 
before 
tax 
increased 
by 
USD 923 
million, 
or 
174%, 
to 
USD 1,455 
million. 
The 
increase 
included 
a 
gain 
of 
USD 571 
million related 
to the 
sale of 
a majority 
stake in 
Fondcenter AG, 
our 
business-to-business 
(B2B) 
fund 
distribution 
platform, 
to 
Clearstream. 
Excluding 
this 
gain, 
profit 
before 
tax 
increased 
by 
USD 353 million, 
or 66%, 
to USD 884 
million, 
reflecting 
strong 
operating leverage. 
›
 
Refer to “Note 29 Changes in organization 
and acquisitions and 
disposals of subsidiaries and businesses” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about the sale of a majority stake 
in Fondcenter AG 
Operating income 
Total operating income 
increased by USD 1,036 million, 
or 53%, 
to 
USD 2,974 
million. 
Excluding 
the 
aforementioned 
gain 
of 
USD 571 
million, 
total 
operating 
income 
increased 
by 
USD 466 
million, or 24%. 
Net management fees increased by 
USD 172 million, or 10%, 
to 
USD 1,950 
million, 
mainly 
resulting 
from 
a 
higher 
average 
invested asset base, driven by a combination of continued strong 
net new money 
generation, a constructive market 
backdrop and 
positive currency translation effects. 
Performance 
fees 
increased 
by 
USD 295 
million 
to 
USD 455 
million, 
mostly 
from 
increases 
in 
our 
Hedge 
Fund 
Businesses, 
reflecting 
strong 
investment 
performance 
in 
a 
constructive 
market environment. 
Operating expenses 
Total 
operating expenses 
increased 
by USD 113 
million, or 
8%, 
to 
USD
 
1,519 
million
, 
mainly 
driven 
by 
higher 
personnel 
expenses, 
reflecting 
higher 
compensable 
revenues, 
partly 
offset 
by lower general and administrative expenses. 
Cost / income ratio 
The 
cost 
/ 
income 
ratio 
was 
51.0%. 
Excluding 
the 
aforementioned gain of 
USD 571 million, the cost 
/ income ratio 
was 63.2%, 
compared with 72.6% in 2019. 
Invested assets 
Invested 
assets 
increased 
to 
USD 1,092 
billion 
from 
USD 903 
billion, 
reflecting
 
net 
new 
money 
inflows 
of 
USD
 
80 
billion, 
positive 
market 
performance 
of 
USD 69 
billion 
and 
positive 
foreign 
currency 
translation 
effects 
of 
USD 40 
billion. 
Excluding 
money market flows, net new money was USD 87.5 billion. 
Investment 
performance 
2020 
was 
dominated 
by 
the 
COVID-19 
pandemic. 
Economies 
around the 
world were put 
into lockdown to 
slow the spread 
of 
the 
virus, 
creating 
an 
unprecedented 
collapse 
in 
economic 
activity. 
Risk assets experienced sharp 
drawdowns in challenging 
markets early 
in the 
year, 
before concerted 
monetary and 
fiscal 
policy 
measures 
led 
to 
a 
broad-based 
recovery 
in 
valuations 
toward the end of the year. 
Our active 
and passive 
strategies had 
to contend 
with highly 
volatile markets 
and rapidly 
changing performance 
cycles. As 
of 
year-end 
2020, 
Morningstar 
assigned 
a 
four- 
or 
five-star 
rating 
to 
69% 
of 
our 
retail 
and 
institutional 
funds 
(both 
actively 
managed and 
passive), on 
an assets 
under management 
(AuM)-
weighted 
basis. 
Furthermore, 
74% 
of 
our 
actively 
managed 
open-ended retail funds 
and actively managed 
institutional AuM 
(which 
account 
in 
total 
for 
44% 
of 
our 
relevant 
AuM) 
are 
ranked, 
on an AuM-weighted basis 
over a three-year investment 
period, 
above their respective peer median. 
 
 
Investment performance as of 31 December 2020 
In % 
Total traditional 
investments 
Equities 
Fixed income 
Multi-asset 
% of UBS AM fund assets rated as 4- or 5-star
1,2
69 
74 
69 
50 
% of UBS AM above peer median over a 3-year investment period
2,3
74 
80 
69 
63 
1 Percentage 
of AuM 
to which 
Morningstar has 
assigned a 
four- 
or five-star 
rating. AuM 
reflect the 
AuM of 
Asset Management’s 
retail and 
institutional funds 
(both actively 
managed and 
passive) across 
all 
domiciles for 
which Asset 
Management owns 
the investment 
performance, 
i.e., 
Asset Management 
is either 
the sole 
portfolio manager 
or co-portfolio 
manager. 
Source: Morningstar 
(Morningstar® Essentials 
Quantitative Star Rating & 
Rankings; © 2021 Morningstar). 
Universe is approximately 
32% of all active 
and passive traditional 
fund assets of Asset 
Management (Equities, Fixed 
Income excluding money 
market, 
and Multi-asset) 
as of 
31 December 2020. 
2 Morningstar® Essentials 
Quantitative Star 
Rating & 
Rankings; © 
2021 Morningstar. 
All Rights 
Reserved. The 
information contained 
herein: (1) 
is proprietary 
to 
Morningstar and / 
or its content 
providers; (2) may 
not be copied 
or distributed; and 
(3) is not 
warranted to 
be accurate, 
complete or timely. 
Neither Morningstar nor 
its content providers 
are responsible for 
any 
damages or losses arising from any use 
of this information. Past performance 
is no guarantee of future 
results. For more detailed 
information about the Morningstar Rating, including 
its methodology, please 
go to: 
https://s21.q4cdn.com/198919461/files/doc_downloads/othe_disclosure_materials/MorningstarRatingforFunds.pdf. 
3 Percentage of AuM 
above peer median over 
a three-year investment period. 
AuM reflect the 
AuM of 
Asset Management’s 
actively managed 
open-ended retail 
funds across 
all domiciles 
and actively 
managed institutional 
AuM for 
which Asset 
Management owns 
the investment 
performance, i.e., 
Asset 
Management is either the sole portfolio manager 
or co-portfolio manager. 
Source: Morningstar (Morningstar® Essentials Quantitative Star 
Rating & Rankings; © 2021 Morningstar), 
eVestment, KGAST. 
Universe is 
approximately 44% of all 
actively managed traditional retail 
fund assets and actively managed 
traditional institutional AuM of 
Asset Management (Equities, 
Fixed Income excluding money market, 
and Multi-asset) 
as of 31 December 2020. 
 
 

Financial and operating performance | Investment Bank

Investment Bank

1,2

As of or for the year ended

% change from

USD million, except where indicated

31.12.20

31.12.19

Results

Advisory

634

707

(10)

Capital Markets

1,744

1,230

Global Banking

2,378

1,937

Execution & Platform

1,857

1,430

Derivatives & Solutions

3,609

2,374

Financing

1,674

1,557

Global Markets

7,141

5,362

of which: Equities

4,502

3,799

of which: Foreign Exchange, Rates and Credit

2,638

1,563

Income

9,519

7,299

Credit loss (expense) / release

(305)

(30)

923

Total operating income

9,214

7,269

Total operating expenses

6,732

6,485

Business division operating profit / (loss) before tax

2,482

784

217

Performance measures and other information

Pre-tax profit growth (%)

216.6

(47.3)

Average attributed equity (USD billion)

12.6

12.3

Return on attributed equity (%)

19.7

6.4

Cost / income ratio (%)

70.7

88.9

Risk-weighted assets (USD billion)

94.3

81.1

Return on risk-weighted assets, gross (%)

10.0

8.2

Leverage ratio denominator (USD billion)

3,4

315.5

293.2

Return on leverage ratio denominator, gross (%)

3.1

2.5

Goodwill and intangible assets (USD billion)

0.2

0.0

Average VaR (1-day, 95% confidence, 5 years of historical data)

1 Comparative figures in

this table have been restated

to reflect the new

structure of the Investment Bank,

split into Global Banking and

Global Markets. Global

Banking has two product verticals:

Capital Markets

and Advisory.

Global Markets

combines Equities and

Foreign Exchange,

Rates and Credit

(FRC), with three

product verticals:

Execution & Platform,

Derivatives &

Solutions, and

Financing.

2 Comparatives

may

additionally differ as

a result of

adjustments following organizational

changes, restatements

due to the

retrospective adoption of

new accounting standards

or changes in

accounting policies, and

events after the

reporting period.

3 Refer to the

“Capital, liquidity and

funding, and balance sheet”

section of this report

for more information.

4 The leverage

ratio denominator as

of 31 December 2020

does not reflect the

effects of the temporary exemption

that has been granted by

FINMA in connection with COVID

-19. Refer to the “Regulatory

and legal developments” section of

this report for more information.

5 Leverage ratio

denominators used for the return calculation in 2020 do not reflect the effects of the temporary exemption referred to in footnote 4.

 
87 
2020 compared with 2019 
Results 
Profit 
before 
tax 
increased 
by 
USD 1,698 
million, 
or 
217%, 
to 
USD 2,482 
million, 
driven 
by 
higher 
operating 
income, 
partly 
offset by higher operating expenses. 
Operating income 
Total 
operating income increased by USD 1,945 
million, or 27%, 
to 
USD
 
9,214 
million, 
with
 
higher 
revenues 
in 
both 
Global 
Markets 
and 
Global 
Banking 
partly 
offset 
by 
higher 
credit 
loss 
expenses. 
Global Banking 
Global Banking revenues 
increased by USD 441 
million, or 
23%, 
to 
USD 2,378 
million, 
reflecting 
higher 
revenues 
in 
Capital 
Markets, partly 
offset by lower 
revenues in Advisory. 
Advisory 
revenues 
decreased 
by 
USD 73 
million, 
or 
10%, 
to 
USD 634 
million, 
largely 
resulting 
from 
lower 
revenues 
from 
mergers 
and 
acquisitions, 
in 
line 
with 
a 
global fee 
pool 
decline 
of 11%. 
Capital 
Markets 
revenues 
increased 
by 
USD 514 
million, 
or 
42%, to USD 1,744 million. This was primarily 
driven by increases 
in Equity Capital Markets of USD 305 million, or 
81%, compared 
with an increase 
in the 
global fee pool 
of 90%, and 
increases in 
Leveraged Capital Markets of USD 99 million, or 31%, compared 
with 
a 
decrease 
in 
the 
global 
fee 
pool 
of 
5%. 
Mark-to-market 
losses of 
USD 66 million 
in 
leveraged capital 
markets, corporate 
lending 
and 
real 
estate 
finance 
portfolios due 
to 
fluctuation in 
credit spreads were 
mostly offset by gains 
of USD 64 million in 
a 
portfolio 
of 
instruments 
used 
to 
hedge 
credit 
exposure 
in 
the 
Investment 
Bank’s lending 
and leveraged 
loan portfolios. 
Global Markets 
Global 
Markets 
revenues 
increased 
by 
USD 1,779 
million, 
or 
33%, 
to 
USD 7,141 
million, 
due 
to 
higher 
client 
activity 
levels 
and more 
constructive market 
conditions, which 
were impacted 
by 
the 
COVID-19 
pandemic. 
The 
results 
included 
a 
USD 215 
million gain 
on the 
sale of 
intellectual property 
rights associated 
with the Bloomberg Commodity Index family. 
Execution & 
Platform revenues 
increased 
by USD 427 
million, 
or 
30%, 
to 
USD 1,857 
million, 
mainly 
driven 
by 
higher 
client 
activity levels 
in cash 
equities and 
also in 
fixed-income products 
traded over electronic platforms. 
Derivatives 
& 
Solutions 
revenues 
increased 
by 
USD 1,235 
million, 
or 
52%, 
to 
USD 3,609 
million, 
benefiting 
from 
higher 
client 
activity 
levels 
and 
more 
constructive
 
market 
conditions 
across 
rates, 
foreign 
exchange, 
credit 
and 
equity 
derivatives 
products, 
as 
well 
as 
the 
aforementioned 
USD 215 
million 
gain 
on 
the 
sale 
of 
intellectual 
property 
rights 
associated 
with 
the 
Bloomberg Commodity Index family. 
Financing 
revenues 
increased 
by USD 
117 
million, or 
7%, 
to 
USD 1,674 million, due to higher revenues in Equity Financing. 
Of which: 
Equities 
Equities 
revenues 
increased 
by 
USD 703 
million, 
or 
19%, 
to 
USD 4,502 
million, 
mostly 
due 
to 
increases 
in 
cash 
equities, 
financing 
services 
and 
equity 
derivatives 
revenues, 
as 
well 
as 
the 
aforementioned 
USD 215 
million 
gain 
on 
the 
sale 
of 
intellectual 
property 
rights 
associated 
with 
the 
Bloomberg 
Commodity 
Index family. 
Of which: Foreign Exchange, Rates and Credit 
Foreign 
Exchange, 
Rates 
and 
Credit 
revenues 
increased 
by 
USD
 
1,0
75
 
million, 
or 
69%, 
to 
USD
 
2,6
38
 
million, 
driven 
by 
higher levels of client activity. 
Credit loss expense / release 
Net 
credit 
loss 
expenses 
were 
USD 305 
million, 
compared 
with 
net 
expenses 
of 
USD 30 
million. 
Stage 1 
and 
2 
credit 
loss 
expenses
 
were 
U
SD
 
88
 
m
illion, 
mainly 
due 
to 
expenses 
of 
USD 86 million 
resulting from 
an update 
to the 
forward-looking 
scenarios 
and 
their 
associated weightings, 
factoring in 
updated 
macroeconomic assumptions to reflect 
the effects of the COVID-
19 
pandemic, 
in 
particular 
updated 
GDP 
and 
unemployment 
assumptions. 
Stage 3 
net 
credit 
loss 
expenses 
were 
USD 217 
million, 
including 
losses 
of 
USD 81 
million 
related 
to 
a 
single 
client 
in the 
travel sector 
and USD 58 
million on 
energy-related 
exposures. 
Operating expenses 
Total operating expenses increased by USD 
247 million, or 4%, to 
USD 6,732 
million. 
The 
increase 
was 
mainly 
due 
to 
higher 
personnel 
expenses, 
reflecting 
strong 
revenues 
in 
both 
Global 
Markets and Global 
Banking, as 
well as USD 179 
million related 
to 
the 
modification of 
certain 
outstanding 
deferred 
compensation 
awards. 
These 
effects 
were 
partly 
offset 
by 
lower 
restructuring 
expenses. The 
prior year 
also included 
USD 110 million 
of goodwill 
write-down. 
›
 
Refer to the “Group performance” 
section and “Note 1b 
Changes 
in accounting policies, comparability 
and other adjustments” in 
the “Consolidated financial statements” 
section of this report for 
more information about the modification 
of deferred 
compensation awards 
Cost / income ratio 
The 
cost 
/ 
income 
ratio 
decreased 
to 
70.7% 
from 
88.9%, 
reflecting positive operating leverage. 
Risk-weighted assets 
Risk-weighted 
assets 
(RWA) 
increased 
by 
USD 13 
billion, 
or 
16%, to USD 94 billion. 
Credit and counterparty credit 
risk RWA 
increased by 
USD 8 billion, 
predominantly driven 
by an 
increase 
in 
asset size 
(which 
was primarily 
due to 
higher loans 
and loan 
commitments, 
as 
well 
as 
securities 
financing 
transactions) 
and 
an increase from 
currency effects. Market 
risk RWA increased 
by 
USD 4 billion, due 
to higher stressed 
and regulatory value-at-risk 
(VaR) 
levels. 
Operational 
risk 
RWA 
increased 
by 
USD 1 
billion, 
due 
to allocation 
changes 
following 
the annual 
recalibration 
of 
the advanced measurement approach (AMA) model. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information 
Leverage ratio denominator 
The 
leverage 
ratio 
denominator 
increased 
by 
USD 22 
billion, 
or 
8%,
 
to 
USD
 
316 
billion, 
mainly 
reflecting 
both 
unfavorable 
foreign 
exchange 
movements 
and 
increased 
secured 
financing 
transaction and derivative exposures. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial and operating performance |Group Functions 
88 
Group Functions 
Group Functions
1
As of or for the year ended 
% change from 
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.19 
Results 
Total operating income 
(494) 
(385) 
28 
Total operating expenses 
567 
192 
195 
Operating profit / (loss) before tax 
(1,060) 
(577) 
84 
of which: Group Treasury 
(341) 
(69) 
393 
of which: Non-core and Legacy Portfolio 
(269) 
(84) 
222 
of which: Group Services 
(450) 
(424) 
6 
Additional information 
Risk-weighted assets (USD billion)
2
28.7 
28.3 
1 
Leverage ratio denominator (USD billion)
2,3
96.2 
76.2 
26 
1 Comparatives may 
differ as a 
result of adjustments 
following organizational changes, 
restatements due to 
the retrospective adoption 
of new accounting 
standards or changes 
in accounting policies, 
and events 
after the reporting 
period. 
2 Refer to the 
“Capital, liquidity and 
funding, and balance 
sheet” section of 
this report for 
more information. 
3 The 
leverage ratio 
denominator as of 
31 December 2020 
does not 
reflect the effects of the temporary exemption that has been granted by FINMA in connection with COVID 
-19. Refer to the “Regulatory and legal developments” section of this report for more information. 
 
 
2020 compared with 2019 
Results 
Group 
Functions 
recorded 
a 
loss 
before 
tax 
of 
USD 1,060 
million, compared with a loss of USD 577 million. 
Group Treasury 
The 
Group 
Treasury 
result 
was 
negative 
USD 341 
million, 
compared with negative USD 69 million. 
Income 
from 
accounting 
asymmetries, 
including 
hedge 
accounting 
ineffectiveness, 
was
 
net 
positive 
USD
 
6 
million, 
compared with net positive of USD 220 million. 
Revenues 
related 
to 
centralized 
Group 
Treasury 
risk 
management services were 
negative USD 279 million, 
compared 
with 
negative 
USD
 
168 
million. 
Th
is
 
decrease 
was 
driven 
by 
additional 
liquidity 
costs 
related 
to 
COVID-19 
market 
stress 
in 
the 
first 
half 
of 
202
0
, 
with
 
the 
business 
divisions 
hav
ing
 
assumed a part of these costs in the second half of the year. 
2019 
included 
net 
foreign 
currency 
translation 
losses 
of 
USD 35 million in relation to the closing of subsidiaries. 
Non-core and Legacy Portfolio 
The Non-core 
and Legacy 
Portfolio result 
was negative 
USD 269 
million, compared 
with negative 
USD 84 million. 
This result 
was 
partly due 
to 2019 
including a 
gain related 
to the 
settlement of 
a litigation claim of USD 38 million, 
income related to a claim on 
a 
defaulted 
counterparty 
position 
of 
USD 21 
million 
and 
gains 
from 
unwind 
activities 
of 
USD 20 
million. 
In 
addition, 
2020 
included 
a 
credit 
loss 
expense of 
USD 42 
million 
on an 
energy-
related 
exposure, 
as well 
as valuation 
losses of 
USD 143 million 
in 
the 
first 
quarter 
of 
the 
year 
and 
valuation 
gains 
of 
USD 134 
million in 
the fourth quarter, 
with such gains 
being the result 
of 
a 
recovery 
in underlying 
market conditions, 
following a 
change 
in 
valuation 
methodology. 
These 
factors 
result
ed
 
in 
a 
net 
valuation 
loss 
of 
USD 9 million 
on 
our 
USD 1.5 
billion 
portfolio 
of 
auction 
rate 
securities 
(ARS), 
compared 
with 
valuation 
gains 
of 
USD 11 
million 
recognized 
in 
the 
prior 
year. 
Our 
remaining 
exposure
s
 
to 
ARS 
were 
all
 
rated 
investment 
grade 
as 
of 
31 December 2020. 
Group Services 
The 
Group 
Services 
result 
was 
negative 
USD 450 
million, 
compared 
with 
negative 
USD 424 
million. 
This 
mainly 
resulted 
from real 
estate costs of 
USD 72 million in 
relation to early 
lease 
terminations 
and 
associated 
provisions, 
an 
impairment 
of 
internally 
generated 
software 
of 
USD 67 
million, 
and 
expenses 
of 
approximately 
USD 54 
million 
related 
to 
the 
modification 
of 
certain outstanding 
deferred compensation 
awards. These 
items 
were partly 
offset by 
lower funding 
costs on 
deferred tax 
assets 
and a 
net gain 
of USD 64 
million from 
properties 
held for 
sale, 
compared with a loss of USD 29 million in 2019. 
›
 
Refer to the “Group performance” section 
and “Note 1b Changes 
in accounting policies, comparability 
and other adjustments” in 
the “Consolidated financial statements” 
section of this report for 
more information about the modification 
of deferred 
compensation awards

 
 
 
 
 
 
 
Risk, capital, 
liquidity and 
funding, and 
balance sheet 
Management report 
 
3 
Audited information according to IFRS 7 and IAS 1 
Risk and 
capital disclosures provided 
in line 
with the 
requirements of
 
International Financial Reporting 
Standard 7 
(IFRS 7), 
Financial 
Instruments: 
Disclosures, 
and 
International 
Accounting 
Standard 
1 
(IAS 
1), 
Presentation 
of
 
Financial 
Statements, 
form 
part 
of 
the 
financial 
statements 
included 
in 
the 
“Consolidated 
financial 
statements” 
section 
of 
this 
report 
and 
audited 
by 
the 
independent 
registered public accounting firm Ernst & Young Ltd, Basel. This information is marked as 
“Audited” within this section of the report. 
The 
risk profile 
of 
UBS AG 
consolidated does 
not differ 
materially from 
that of 
UBS Group 
AG consolidated. 
Audited information 
provided in 
the “Risk 
management and 
control” and 
“Capital, liquidity 
and 
funding, and 
balance sheet” 
sections applies 
to 
both 
UBS Group AG consolidated and UBS AG consolidated. 
 
Signposts 
The 
Audited | 
signpost that is displayed at the beginning 
of a section, table or chart indicates that 
those items have been audited. A triangle 
symbol – 
p
 
– 
indicates the end of the audited section, table 
or chart. 
 

 
 
 
Risk management 
and control 
Table of contents 
91 
Overview of risks arising from our business activities
93 
Risk categories
94 
Top and emerging risks
95 
Risk governance
97 
Risk appetite framework
101 
Internal risk reporting
102
Model risk management
103 
Risk measurement
106 
Credit risk
124 
Market risk
133 
Country risk
137 
Environmental, social and climate risk
139 
Operational risk
 
 
 
 

 
91 
Risk management and control
 
Overview of risks arising from our business activities
The 
scale 
of 
our 
activities 
depends 
on 
the 
capital 
available 
to 
cover 
risks, 
the size 
of 
our on- 
and off 
-balance sheet 
assets via 
their 
contribution 
to 
our 
capital, 
leverage 
and 
liquidity 
ratios, 
and our risk appetite. 
While 
our 
credit 
book 
grew 
over 
the 
course 
of 
2020, 
our 
overall 
credit 
r
isk 
profile 
was 
broadly 
unchanged
 
and 
we 
continued 
to manage market 
risks at generally 
low levels. 
Operational 
resilience, 
conduct 
and 
prevention 
of 
financial 
crime remain key focus topics. 
The “Risk measures and performance” table on the next page 
shows 
risk
-
weighted 
assets 
(
RWA)
, 
the 
leverage 
ratio 
denominator 
(LRD) 
and 
risk-based 
capital 
(RBC), 
as 
well 
as 
attributed tangible equity, 
credit loss expenses 
(CLE), total assets 
and 
operating 
profit 
before 
tax 
for 
our 
business 
divisions 
and 
Group 
Functions. 
This 
shows 
how 
the 
activities 
in 
our 
business 
divisions 
and 
Group 
Functions 
mentioned 
above 
the 
table 
are 
captured 
in 
the 
risk 
measures, 
and 
shows 
their 
financial 
performance in the context of such measures. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information about 
RWA, 
LRD and 
our equity attribution framework 
›
 
Refer to “Statistical measures” in this section 
for more 
information about RBC 
›
 
Refer to “Credit loss expense / release” in this section 
for more 
information about CLE 
›
 
Refer to the “Performance of our business 
divisions and Group 
Functions” 
table in the “Group performance” section 
of this 
report for more information
 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control

Key risks by business division and Group Functions

Business divisions and Group Functions

Key risks arising from business activities

Global Wealth Management

Credit risk

from lending against securities collateral and

mortgages, derivatives trading activity

and

aircraft financing for Global Wealth Management clients

Market risk

from municipal securities and taxable fixed-income

securities

Personal & Corporate Banking

Credit risk

from retail business, mortgages, secured and unsecured corporate

lending, and a small

amount of derivatives trading activity

Minimal contribution to

market risk

Asset Management

Small amounts of credit and market risk

Investment Bank

Credit risk

from lending (take and hold,

as well as temporary loan underwriting activities),

derivatives

trading and securities financing

Market risk

from primary underwriting activities and

secondary trading

Group Functions

Credit

and

market risk

arising from management of the Group’s balance

sheet, capital, profit or loss

and liquidity portfolios

Operational risk,

which includes compliance and conduct risks,

is an inevitable consequence of being in business,

as losses can result from inadequate or

failed internal processes, people and systems,

or from external events. It can arise as

a result of our past and current business activities across all business

divisions and Group Functions.

Risk measures and performance

31.12.20

USD billion, as of or for the year ended

Global Wealth

Management

Personal &

Corporate

Banking

Asset

Management

Investment

Bank

Group

Functions

Total

Risk-weighted assets

87.2

72.1

6.9

94.3

28.7

289.1

of which: credit and counterparty credit risk

46.7

62.8

2.9

58.5

7.2

178.1

of which: market risk

1.4

0.0

9.0

1.4

11.8

of which: operational risk

32.8

7.2

3.3

23.2

9.3

75.8

Leverage ratio denominator

371.2

248.3

5.8

315.5

96.2

1,037.1

Risk-based capital

6.6

5.7

0.5

7.1

15.2

35.0

Average attributed tangible equity

12.0

8.9

0.7

12.5

17.4

51.4

Credit loss (expense) / release (USD million)

(88)

(257)

(2)

(305)

(42)

(694)

of which: stage 1 and 2 (USD million)

(48)

(129)

(88)

(266)

of which: stage 3 (USD million)

(40)

(128)

(2)

(217)

(42)

(429)

Total assets

367.7

231.7

28.6

369.7

128.1

1,125.8

Operating profit / (loss) before tax

4.0

1.3

1.5

2.5

(1.1)

8.2

31.12.19

USD billion, as of or for the year ended

Global Wealth

Management

Personal &

Corporate

Banking

Asset

Management

Investment

Bank

Group

Functions

Total

Risk-weighted assets

78.1

67.1

4.6

81.1

28.3

259.2

of which: credit and counterparty credit risk

35.0

57.3

1.8

50.6

8.3

153.0

of which: market risk

0.8

0.0

4.6

1.1

6.6

of which: operational risk

35.9

7.7

2.0

22.5

9.4

77.5

Leverage ratio denominator

312.7

224.2

5.0

293.2

76.2

911.3

Risk-based capital

6.6

4.9

0.4

7.0

16.1

35.0

Average attributed tangible equity

11.5

8.4

0.4

12.2

15.1

47.6

Credit loss (expense) / release (USD million)

(20)

(21)

(30)

(7)

(78)

of which: stage 1 and 2 (USD million)

(4)

of which: stage 3 (USD million)

(23)

(44)

(26)

(7)

(100)

Total assets

309.8

209.4

34.6

315.9

102.6

972.2

Operating profit / (loss) before tax

3.4

1.4

0.5

0.8

(0.6)

5.6

1 Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information.

2 Refer to “Statistical measures” in this section for more information about risk-based capital.

 
93 
Risk categories 
We categorize the risk exposures of our business divisions and Group Functions as outlined in the table below.

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
94 
Top and emerging risks
The 
top 
and 
emerging 
risks 
disclosed 
below 
reflect 
those 
that 
we 
currently 
think 
have 
the 
potential 
to 
materialize 
within 
one 
year 
and 
which 
could 
significantly 
affect 
the 
Group. 
Investors 
should 
also 
carefully 
review 
all 
information 
set 
out in 
the “Risk 
factors” section of this report, where 
we discuss these and other 
material 
risks 
that 
we 
consider 
could 
have 
an 
effect 
on 
our 
ability 
to 
execute 
our 
strategy 
and 
may 
affect 
our
 
business 
activities, 
financial condition, 
results 
of 
operations and 
business 
prospects. 
–
 
The 
continued 
widespread 
COVID-19 
pandemic 
and 
the 
governmental measures 
taken to 
contain it 
have significantly 
affected, 
and 
will 
likely 
continue 
to 
adversely 
affect, 
global 
economic 
conditions. 
If 
the 
pandemic 
is 
prolonged 
or 
the 
actions 
of 
governments 
and 
central 
banks 
are 
unsuccessful, 
this 
detrimental 
impact 
on 
the 
global 
economy 
will 
deepen, 
and 
UBS’s 
results 
of 
operations 
and 
financial 
condition 
in 
future 
quarters 
may 
be 
impacted
.
 
These 
effects 
may 
materialize 
through 
adverse 
market 
performance, 
increased 
credit risk or negative effects on operational resilience. 
–
 
We 
are 
exposed 
to 
a 
number 
of 
macroeconomic 
issues, 
as 
well 
as 
general 
market 
conditions. 
As 
noted 
in 
“Market, 
credit and macroeconomic risks” 
in the “Risk factors” 
section 
of this 
report, these external 
pressures may 
have a significant 
adverse effect 
on our 
business activities 
and related 
financial 
results, 
primarily
 
t
hrough 
reduced 
margins 
and 
revenues, 
asset 
impairments 
and 
other 
valuation 
adjustments. 
Accordingly, 
these 
macroeconomic 
factors 
are 
considered 
in 
the 
development 
of 
stress 
testing 
scenarios 
for 
our 
ongoing 
risk management activities. 
–
 
We 
are 
exposed 
to 
substantial 
changes 
in 
the 
regulation 
of 
our 
businesses 
that 
could 
have 
a 
material 
adverse 
effect 
on 
our 
business, 
as 
discussed 
in 
the 
“Regulatory 
and 
legal 
developments” section 
of this 
report and 
in “Regulatory 
and 
legal risks” in the “Risk factors” section 
of this report. 
–
 
We 
have 
a 
substantial 
number 
of 
contracts 
linked 
to 
LIBOR 
rates
. 
In 
November 
2020, 
t
he 
administrator 
for 
LIBOR 
announced 
a 
consultation 
on 
its 
intention 
to
 
cease 
many
 
LIBOR rates 
(including all 
non-USD LIBOR 
rates) at 
the end 
of 
2021. 
Users 
are 
urged 
to 
plan 
the 
transition 
to 
alternative 
reference 
rates 
(ARRs), 
but 
these 
do 
not 
currently 
provide 
a 
term structure, which 
will require a 
change in the 
contractual 
terms 
of 
products 
currently 
indexed 
on 
terms 
other 
than 
overnight. 
In 
some 
cases, 
contracts 
may 
contain 
provisions 
intended 
to provide 
a fallback 
interest rate 
in the 
event of 
a 
brief 
unavailability 
of 
the 
relevant 
LIBOR. 
These 
provisions 
may 
not 
be 
effective 
or 
may 
produce 
arbitrary 
results 
in 
the 
event 
of 
a 
permanent 
cessation 
of 
the 
relevant 
LIBOR. 
In 
addition, 
numerous 
of 
our 
internal 
systems, 
limits 
and 
processes make 
use of 
LIBOR as 
reference rates. 
Transition to 
replacement reference rates will require significant investment 
and effort. 
–
 
As 
a 
global 
financial 
services 
firm, 
we 
are 
subject 
to 
many 
different 
legal, 
tax 
and 
regulatory 
regimes 
and 
extensive 
regulatory 
oversight. 
We 
are 
exposed 
to 
significant 
liability 
risk 
and 
we 
are 
subject 
to 
various 
claims, 
disputes, 
legal 
proceedings 
and 
government 
investigations, 
as 
noted 
in 
“Regulatory 
and 
legal 
risks” 
in the 
“Risk 
factors” 
section 
of 
this 
report. 
Information 
about 
litigation, 
regulatory 
and 
similar 
matters 
we 
consider 
significant 
is 
disclosed 
in 
“Note
 
18
 
Provisions 
and 
contingent 
liabilities” 
in 
the 
“Consolidated financial statements” section of this report. 
–
 
One 
of 
the 
most 
critical 
risks 
facing 
the 
broader 
industry 
is 
the inability to 
keep pace with evolving 
cyber threats, such as 
data 
theft 
and data 
leakage, 
disruption 
of 
service 
and 
cyber 
fraud, 
all 
of 
which 
have 
the 
potential 
to 
significantly 
affect 
our 
business. 
Additionally, 
as 
a 
result 
of 
the 
operational 
complexity 
of 
all 
our 
businesses, we 
are 
continually exposed 
to operational resilience scenarios 
such as process error, failed 
execution, system failures and fraud. 
–
 
Conduct 
risks 
are 
inherent 
in 
our 
businesses. 
Achieving 
fair 
outcomes 
for 
our 
clients, 
upholding 
market 
integrity 
and 
cultivating the 
highest standards 
of employee 
conduct are 
of 
critical 
importance 
to 
UBS. 
Management 
of 
conduct 
risks 
is 
an integral part of our operational risk framework. 
–
 
Financial 
crime, 
including 
money 
laundering, 
terrorist 
financing, 
sanctions 
violation, 
fraud, 
bribery 
and 
corruption, 
presents 
significant 
risk. 
Heightened 
regulatory 
expectations 
and 
attention 
require 
investment 
in 
people 
and 
systems, 
while 
emerging 
technologies 
and 
changing 
geopolitical 
risks 
further increase 
the complexity 
of identifying 
and preventing 
financial crime. Refer to “Operational 
risk” in this section and 
“Strategy, 
management 
and 
operational 
risks” 
in 
the 
“Risk 
factors” section of this report for more information. 
 
 
 

 
95 
Risk governance
Our 
risk 
governance 
framework 
operates 
along 
three 
lines 
of 
defense. 
Our first 
line of 
defense, business 
management, owns 
its risk 
exposures and is 
accountable for maintaining effective 
processes 
and 
systems 
to 
manage 
its 
risks 
in 
compliance 
with 
applicable 
laws, 
external 
regulations 
and 
internal 
requirements, 
including 
identifying control weaknesses and inadequate processes. 
Our second line of defense is formed by the control functions, 
separate 
from 
the business 
and reporting 
directly 
to 
the 
Group 
CEO. 
Control 
functions 
provide 
independent 
oversight, 
challenge financial and 
non-financial risks arising 
from the firm’s 
business 
activities
,
 
and 
establish 
independent 
frameworks 
for 
risk 
assessment, 
measurement, 
aggregation 
and 
reporting, 
protecting 
against 
non-compliance 
with 
applicable 
laws 
and 
regulations. 
Our third line of 
defense, Group Internal Audit, reports 
to the 
Chairman 
and 
to 
the 
Audit 
Committee. 
This 
function 
assesses 
the 
design 
and 
operating 
effectiveness 
and 
sustainability 
of 
processes to define 
risk appetite, governance, 
risk management, 
internal controls, 
remediation activities 
and processes 
to comply 
with legal 
and regulatory 
requirements and 
internal governance 
requirements. 
The 
key 
roles 
and 
responsibilities 
for 
risk 
management 
and 
control 
are 
shown 
in 
the 
chart 
below 
and 
described 
on 
the 
following pages. 
 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
96 
Audited 
| 
The
 
Board 
of 
Directors
 
(the 
BoD) 
approves 
the 
risk 
management and control framework of the Group, including the 
Group 
and 
business 
division 
overall 
risk 
appetite. 
The 
BoD 
is 
supported 
by 
its Risk 
Committee, 
which 
monitors and 
oversees 
the 
Group’s 
risk 
profile 
and 
the 
implementation 
of 
the 
risk 
framework approved 
by the BoD, 
and approves 
the Group’s risk 
appetite methodology. 
The Corporate Culture 
and Responsibility 
Committee 
helps 
the 
BoD 
meet 
its 
duty 
to 
safeguard 
and 
advance 
UBS
’s 
reputation 
for 
responsible 
and 
sustainable 
conduct
,
 
review
ing
 
stakeholder 
c
oncerns 
and 
expectations 
pertaining 
to 
UBS’s 
societal 
contribution 
and 
corporate 
culture. 
The 
Audit 
Committee 
aids 
the 
BoD
 
with 
its 
oversight 
duty 
relating to financial 
reporting and internal 
controls over financial 
reporting, 
and 
the 
effectiveness 
of 
whistleblowing 
procedures 
and the external and internal audit functions. 
The 
Group
 
Executive Board
 
(the GEB) has overall responsibility 
for 
establishing 
and 
implementing 
a 
risk 
management 
and 
control framework in the Group, 
managing the risk profile of the 
Group as a whole. 
The 
Group 
Chief 
Executive 
Officer
 
has 
responsibility 
and 
accountability 
for 
the 
management 
and 
performance 
of 
the 
Group, 
has 
risk 
authority 
over 
transactions, 
positions 
and 
exposures, and 
allocates business 
divisions and 
Group Functions 
risk limits 
approved by 
the BoD. 
The 
business 
division 
Presidents 
and
 
Group 
function 
heads 
are 
responsible
 
for
 
the 
operation 
and 
management
 
of 
their 
business 
divisions, 
including 
controlling 
the 
dedicated 
financial 
resources and risk appetite of the business division. 
The 
regional 
Presidents
 
are 
responsible 
for 
cross
-
divisional 
collaboration 
in 
their 
region, 
and 
are 
mandated 
to 
inform 
the 
GEB 
of 
any 
activities 
/ 
issues 
that 
may 
give 
rise 
to 
actual 
or 
potentially material regulatory or reputational concerns. 
The 
Group Chief 
Risk Officer
 
(the Group 
CRO) is 
responsible 
for 
develop
ing
 
the 
Group
’
s 
risk 
management 
and 
control 
framework (including 
risk principles 
and risk 
appetite) for 
credit, 
market, 
country, 
treasury, 
model, 
and 
environmental 
and 
social 
risks. This 
includes risk 
measurement and 
aggregation, portfolio 
controls 
and 
risk reporting. 
The 
Group 
CRO 
sets 
risk limits 
and 
approves credit and 
market risk transactions 
and exposures. Risk 
Control is 
also the 
central function 
for model 
risk management 
and control 
for all 
models used 
in UBS. 
A framework 
of policies 
and authorities support the risk control process. 
The 
b
usiness 
division 
CROs 
are 
responsible 
for 
the 
implementation 
and 
enforcement 
of 
the 
risk 
management 
and 
control 
framework 
in 
the
 
respective
 
business 
division.
 
The 
regional
 
CROs
 
provide 
independent 
oversight 
of 
risks 
in 
the
 
respective region. 
The 
Group 
Chief 
Compliance 
and 
Governance 
Officer
 
is 
responsible 
for 
develop
ing
 
the 
Group
’
s 
o
perational 
r
isk 
f
ramework
, 
which
 
sets 
the 
general 
requirements 
for 
identification, 
management, 
assessment 
and 
mitigation 
of 
operational risk, 
and for 
ensuring that 
all non-financial 
risks are 
identified, 
owned 
and 
managed 
according 
to 
the 
operational 
risk 
appetite
 
objectives
, 
supported 
by 
an 
effective 
control 
framework. 
The 
Group 
Chief 
Financial 
Officer
 
is 
responsible 
for 
transparency in assessing the financial performance of the Group 
and 
the 
business 
divisions, 
and 
for 
managing 
the 
Group’s 
financial 
accounting, 
controlling
, 
forecasting, 
planning 
and 
reporting. Additional responsibilities 
include managing UBS’s 
tax 
affairs, 
as 
well 
as 
treasury 
and 
capital 
management, 
including 
funding and liquidity risk and UBS’s regulatory capital ratios. 
The 
Group 
General Counsel
 
is 
responsible for 
managing the 
Group’s 
legal 
affairs 
(including 
litigation 
involving 
UBS) and 
ensuring 
effective and 
timely 
assessment
 
of 
legal 
matters 
impacting the 
Group or its businesses, 
and for the management 
and reporting 
of 
all litigation 
matters. 
The 
Group 
Chief 
Operating 
Officer
 
is 
responsible 
for 
independent 
oversight 
and challenge 
of employment-related 
risks. 
Group 
Internal 
Audit
 
(GIA) 
independently 
assesses 
effectiveness 
of 
processes 
to 
define 
strategy 
and 
risk 
appetite 
and 
overall adherence 
to the 
approved strategy. 
It also 
assesses 
the effectiveness of governance processes and risk management, 
including compliance with legal and regulatory requirements and 
internal 
governance 
documents. 
The 
Head 
GIA 
reports 
to 
the 
Chairman of the BoD. 
GIA also has a 
functional reporting line to 
the BoD Audit Committee. 
Some 
of 
the
se
 
roles 
and 
responsibilities 
are 
replicated 
for 
certain significant legal entities of the Group. The 
legal entity risk 
officers
 
are responsible for 
independent oversight and 
control of 
financial
 
and 
non
-
financial
 
risks 
for 
certain 
significant 
legal 
entities 
of 
the 
Group 
as 
part 
of 
the 
legal 
entity 
control 
framework, 
which 
complements 
the 
Group’s 
risk 
management 
and control framework. 
p
 
 
 

 
 
 
 
 
 
97 
Risk appetite framework
We have a 
defined Group level risk appetite, covering all financial and non-financial risk types, via a 
complementary set of qualitative 
and quantitative 
risk appetite 
statements. 
This is reviewed 
and recalibrated 
annually and 
presented to 
the BoD for 
approval. 
 
Our 
risk 
appetite 
is 
defined 
at 
the 
aggregate 
Group 
level 
and 
reflects the types of 
risk that we are 
willing to accept or avoid. It 
is 
set 
via 
complementary 
qualitative 
and 
quantitative 
risk 
appetite 
statements 
defined 
at 
a 
firm
-
wide 
level 
and 
is 
embedded 
throughout 
our 
business 
divisions 
and 
legal 
entities 
by 
Group, 
business 
division 
and 
legal 
entity 
policies, 
limits 
and 
authorities. UBS is the 
largest truly global wealth 
manager 
and a 
leading 
bank 
in 
Switzerland. 
We 
are 
subject 
to 
consolidated 
supervision 
by 
the Swiss 
Financial Market 
Supervisory 
Authority 
(FINMA) 
and 
related 
ordinances, 
which 
impose, 
among 
other 
requirements, 
minimum 
standards 
for 
capital, 
liquidity, 
risk 
concentration 
and 
internal 
organization. 
Our 
risk 
appetite 
is 
reviewed and recalibrated annually, 
with an aim of ensuring that 
risk-taking 
at 
every 
level 
of 
the 
organization 
is 
in 
line 
with 
our 
strategic 
priorities, 
our 
capital 
and 
liquidity 
plans, 
our 
pillars, 
principles and behaviors, 
and minimum regulatory 
requirements. 
The risk appetite 
statements are 
critical for maintaining 
a robust 
risk 
culture 
throughout 
UBS. 
The 
“Risk 
appetite 
framework” 
chart 
below 
shows 
the 
key 
elements 
of 
the 
framework, 
which 
are described in detail in this section. 
Qualitative statements aim 
to ensure we 
maintain the desired 
risk culture. 
Quantitative risk 
appetite objectives 
are designed to 
enhance 
UBS’s 
resilience 
against 
the 
effect 
of 
potential 
severe 
adverse 
economic 
or 
geopolitical 
events. 
These 
risk 
appetite 
objectives 
cover 
UBS’s 
minimum 
capital 
and 
leverage 
ratios, 
solvency, 
earnings, 
liquidity
,
 
and 
funding, 
and
 
are 
subject 
to 
periodic review, including the annual business planning process. 
These 
objectives 
are 
complemented 
by 
operational 
risk 
appetite objectives, which are set for each of our operational risk 
categories, 
including
 
market 
conduct, 
theft, 
fraud, 
d
ata 
confidentiality 
and 
technology 
risks. 
A 
standardized 
financial 
firm-wide 
operational 
risk 
appetite 
has 
been 
established 
at 
Group level and 
is embedded throughout 
our business divisions. 
Operational risk events 
exceeding predetermined risk 
tolerances, 
expressed 
as 
percentages 
of 
UBS’s 
operating 
income, 
must 
be 
escalated 
as 
per 
the 
firm-wide 
escalation 
framework 
to 
the 
respective business division President or higher, as appropriate. 
The 
quantitative 
risk 
appetite 
objectives 
are 
supported 
by 
a 
comprehensive 
suite of 
risk 
limits 
set 
at 
a 
portfolio level. 
These 
may 
apply 
across 
the 
Group, 
within 
a 
business 
division 
or 
business, 
at 
legal 
entity 
level, 
or 
to 
an 
asset 
class. 
These 
additional quantitative 
controls are 
designed to 
monitor specific 
portfolios and to control potential risk concentrations. 
 
 
 
Risk reports listing 
aggregated measures 
of risk across products 
and 
businesses 
provide 
insight 
into 
the 
amounts, 
types, 
and 
sensitivities 
of 
our 
portfolios
’
 
various 
risks 
and 
aim 
to 
ensure 
adherence to defined limits. 
Risk officers, senior 
management and 
the 
BoD 
use 
this information 
to 
understand our 
risk profile 
and 
portfolio performance. 
The status 
of risk 
appetite objectives is evaluated each 
month 
and reported 
to the 
BoD and 
the GEB. 
As our 
risk appetite may 
change 
over 
time
,
 
portfolio 
limits 
and 
associated 
approval 
authorities 
are 
subject 
to 
periodic 
reviews 
and 
changes, 
particularly 
in the context 
of our annual 
business 
planning process. 
Our 
risk 
appetite 
framework 
is 
governed 
by 
a 
single 
overarching policy and conforms to the 
Financial Stability Board’s 
Principles 
for an Effective 
Risk Appetite 
Framework. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
98 
Risk principles and risk culture 
Maintaining a 
strong 
risk culture 
is a 
prerequisite 
for success 
in 
today’s 
highly 
complex 
operating 
environment 
and 
a 
source 
of 
sustainable 
competitive 
advantag
e. 
P
lacing 
prudent 
and 
disciplined 
risk-taking 
at 
the 
center 
of 
every 
decision 
aims 
to 
achieve 
three
 
goals
:
 
delivering 
unrivaled 
client 
satisfaction
;
 
creating long-term 
value for 
stakeholders; and 
making UBS 
one 
of the world’s most attractive companies to work for. 
Our 
risk 
appetite 
framework 
combines 
all 
the 
important 
elements 
of 
our 
risk 
culture, 
expressed 
in 
our 
Pillars, 
Principles 
and Behaviors
, our 
risk management 
and control 
principles, our 
Code 
of 
Conduct 
and 
Ethics, 
and 
our 
Total 
Reward 
Principles. 
Together, 
these 
aim 
to 
align 
our
 
decisions 
with 
the 
Group’s 
strategy, 
principles 
and 
risk 
appetite. 
They 
help 
create 
a 
solid 
foundation for promoting 
risk awareness, leading 
to appropriate 
risk-taking and 
the establishing 
of robust 
risk management 
and 
control 
processes. 
These 
principles are 
supported by 
a 
range of 
initiatives 
covering employees 
at 
all levels, 
for example 
the 
UBS 
House View on Leadership
, which is a set of explicit expectations 
for 
leaders 
that 
establishes 
consistent 
leadership 
standards 
acr
oss 
UBS. 
Another 
example 
is
 
our 
P
rinciples 
of 
G
ood 
Supervision, which 
establish clear expectations 
of managers 
and 
employees 
regarding 
supervisory 
responsibilities, 
specifically: 
to 
take 
responsibility
;
 
to 
know 
and 
organize 
their 
business
;
 
to 
know 
their employees 
and what 
they do 
; 
to create 
a good 
risk 
culture; and to respond to and resolve issues. 
›
 
Refer to the foldout pages 
of this report for more information 
about our Pillars, Principles and Behaviors 
›
 
Refer to the Code of Conduct and Ethics of 
UBS at 
ubs.com/code
 
for more information 
 
Risk management and control principles 
Protection of financial strength 
Protecting UBS’s financial strength by controlling our risk 
exposure and avoiding potential risk 
concentrations at individual exposure levels, 
at specific portfolio levels and at an aggregate firm-wide 
level across all risk types 
Protection of reputation 
Protecting our reputation through a sound risk culture characterized 
by a holistic and integrated view of 
risk, performance and reward, and through full compliance 
with our standards and principles, particularly 
our Code of Conduct and Ethics 
Business management accountability 
Maintaining management accountability, whereby business management owns 
all risks assumed 
throughout the Group and is responsible for the continuous 
and active management of all risk exposures 
to provide for balanced risk and return 
Independent controls 
Independent control functions that monitor the 
effectiveness of the businesses’ risk management 
and 
oversee risk-taking activities 
Risk disclosure 
Disclosure of risks to senior management, the BoD, 
investors, regulators, credit rating agencies 
and other 
stakeholders with an appropriate level of comprehensiveness 
and transparency 
 
Whistleblowing 
policies 
and 
procedures 
exist 
to 
support 
an 
environment where staff are 
comfortable raising concerns. There 
are multiple 
channels via which 
individuals may, either 
openly or 
anonymously, 
escalate 
suspected 
breaches 
of 
laws, 
regulations, 
rules 
and 
other 
legal 
requirements, 
our 
Code 
of 
Conduct 
and 
Ethics, policies, 
or relevant 
professional standards. 
Our program 
is 
designed 
to 
ensure 
that 
whistleblowing 
concerns 
are 
investigated and that 
appropriate and consistent 
action is taken. 
We 
are 
committed 
to 
ensuring 
appropriate 
training 
for 
and 
communication 
to 
staff 
and 
legal 
entity 
representatives 
are 
available 
on 
an 
ongoing 
basis, 
including 
with 
regard 
to 
new 
regulatory requirements. 
Mandatory 
training 
programs 
cover 
various 
compliance 
and 
risk-related 
topics, 
including 
anti-money 
laundering 
(AML) 
and 
operational 
risk. 
A
ddition
al
 
specialized 
training 
is 
provided 
depending on employees’ 
specific roles and 
responsibilities, e.g., 
credit risk 
and market 
risk training 
for those 
working in 
trading 
areas. Failure 
to complete mandatory 
training sessions within 
an 
appropriate 
timeframe 
can 
lead 
to 
consequences, 
including 
disciplinary 
action. 
Our 
operational 
risk 
and 
conduct 
risk 
frameworks 
aim to identify and manage financial, regulatory and 
reputational risks, as well as risks to clients and markets. 
We 
want 
to 
be 
the 
financial 
provider 
of 
choice 
for 
clients 
wishing 
to 
direct 
capital 
to 
investments 
support
ing
 
the 
Sustainable 
Development 
Goals 
and 
the 
transition 
to 
a 
low-
carbon 
economy. 
Our 
environmental 
and 
social 
risk 
framework 
governs all 
client and supplier 
relationships, applies 
firm-wide to 
all 
activities, 
and 
is 
integrated 
in 
management 
practices 
and 
control 
principles. 
We 
seek 
to 
protect 
our 
assets 
from 
climate 
change 
risks 
by 
limiting 
our 
risk 
appetite 
for 
carbon-related 
assets.
 
Quantitative risk appetite objectives 
Our 
quantitative 
risk appetite 
objectives 
aim 
to 
ensure 
that our 
aggregate 
risk 
exposure 
remains 
within 
desired 
risk 
capacity, 
based 
on 
capital 
and 
business 
plans. 
The 
specific 
definition 
of 
risk 
capacity 
for 
each 
objective 
is 
aimed 
at 
ensuring 
we 
have 
sufficient 
capital, earnings, 
funding and 
liquidity 
to 
protect 
our 
businesses and 
exceed minimum 
regulatory 
requirements 
under 
a 
severe 
stress 
event. 
The 
risk appetite 
objectives 
are 
evaluated 
during 
the 
annual 
business 
planning 
process 
and 
approved 
by 
the BoD. 
The comparison 
of risk exposure 
with risk 
capacity is a 
key 
consideration 
in 
decisions 
on 
potential 
adjustments 
to 
the 
business 
strategy 
and 
risk 
profile 
of 
UBS 
and 
capital 
returns 
to 
shareholders. 
 
 

 
99 
The annual 
business planning 
process reviews 
UBS’s business 
strategy, 
assesses 
the 
risk 
profile 
our 
operations 
and 
activities 
result in, 
and stress-tests that 
risk profile. We 
use both scenario-
based stress 
tests and 
statistical risk measurement 
techniques to 
assess effects 
of severe 
stress events 
at a 
firm-wide level. 
These 
complementary 
frameworks 
capture 
exposures 
to 
all 
material 
risks across our business divisions and Group Functions. 
›
 
Refer to “Risk measurement” in this section 
for more 
information about our stress testing and statistical 
stress 
frameworks 
 
 
 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
100 
Our risk 
capacity is 
underpinned by 
performance targets 
and 
capital 
guidance 
as 
per 
our 
business 
plan. 
When 
determining 
our 
risk 
capacity 
in 
case 
of 
a 
severe 
stress 
event, 
we 
estimate 
projected 
earnings 
under 
stress, 
factoring 
in 
lower 
expected 
income 
and 
also 
lower 
expenses, 
including 
lower
 
variable 
compensation 
and 
financial 
advisor 
compensation. 
We 
also 
consider 
capital 
impacts 
under 
stress 
from 
deferred 
tax 
assets, 
pension plan assets and liabilities, and accruals for capital returns 
to shareholders. 
 
Risk 
appetite 
objectives 
define 
the 
aggregate 
risk 
exposure 
acceptable 
at 
the 
firm-wide 
level, 
given 
our 
risk 
capacity. 
The 
maximum acceptable 
risk exposure 
is supported 
by a 
full set 
of 
risk limits, triggers and targets, which are cascaded to 
businesses 
and 
portfolios. 
These 
limits, 
triggers 
and 
targets 
aim 
to 
ensure 
that our total risks remain in line with risk appetite. 
Risk 
appetite 
statements 
at 
the 
business 
division 
level 
are 
derived from 
the firm-wide 
risk appetite. 
They may 
also include 
division-specific strategic goals 
related to 
that division’s activities 
and 
risks. Risk 
appetite 
statements are 
also set 
for certain 
legal 
entities, 
which 
must 
be 
consistent 
with 
the 
firm-wide 
risk 
appetite 
framework 
and 
approved 
in 
accordance 
with 
Group 
and legal entity regulations. Differences may exist that reflect the 
specific nature, size, complexity and regulations applicable to the 
relevant legal entity. 
 
 

 
101 
Internal risk reporting
Comprehensive 
and 
transparent 
reporting 
of 
risks 
is 
central 
to 
our 
risk 
governance 
framework
’s
 
control 
and 
oversight 
responsibilities 
and 
required 
by 
our 
risk 
management 
and 
control principles. 
Accordingly, 
risks are 
reported at 
a frequency 
and level 
of detail 
commensurate with 
the extent 
and variability 
of 
the 
risk 
and 
the 
needs 
of 
the 
various 
governance 
bodies, 
regulators and risk authority holders. 
The 
Group 
Risk 
Report 
provides 
a 
detailed 
qualitative 
and 
quantitative monthly 
overview of 
developments in 
financial and 
non-financial risks at the firm-wide level, along with 
breakdowns 
of 
risks 
at 
the 
divisional 
level, 
including 
the 
status 
of 
our 
risk 
appetite 
objectives 
and 
the 
results 
of 
firm-wide 
stress 
testing. 
The 
Group 
Risk 
Report 
is 
distributed 
internally 
to 
the 
BoD 
and 
the GEB, and senior 
members of Risk Control, 
GIA, Finance, and 
Legal.
 
Risk 
reports 
are 
also 
produced 
for 
significant 
Group 
entities 
(entities 
subject 
to 
enhanced 
standards 
of 
corporate 
governance) and significant branches. 
Granular divisional 
risk reports 
are provided 
to the 
respective 
business 
division 
CROs
 
and 
business 
division 
Presidents
. 
Th
at
 
monthly reporting 
is supplemented 
with daily 
or weekly reports, 
at 
various levels 
of 
granularity, 
covering 
market and 
credit 
risks 
for 
the 
business 
divisions 
to 
enable 
risk 
officers 
and 
senior 
management to monitor and control the Group’s risk profile. 
Our 
internal 
risk 
reporting 
covers 
financial 
and 
non-financial 
risks and is supported by risk data and measurement 
systems that 
are 
also 
used 
for 
external 
disclosure 
and 
regulatory 
reporting. 
Dedicated 
units 
within 
Risk 
Control 
assume 
responsibility 
for 
measurement, analysis 
and 
reporting of 
risk 
and 
for 
overseeing 
the 
quality 
and 
integrity of 
risk-related data. 
Our 
risk 
data 
and 
measurement 
systems 
are 
subject 
to 
periodic 
review 
by 
GIA, 
following a 
risk-based 
audit approach. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
102 
Model risk management
Introduction 
We 
rel
y
 
on 
models 
to 
derive 
risk 
management 
and 
control 
decisions, 
to 
measure 
risks 
or 
exposures, 
value 
instruments 
or 
positions, conduct stress 
testing, assess adequacy 
of capital, and 
manage clients’ 
assets and 
our own 
assets. Models 
may also 
be 
used 
to 
measure 
and 
monitor 
compliance 
with 
rules 
and 
regulations, 
for 
surveillance 
activities, 
or 
to 
meet 
financial 
or 
regulatory 
reporting 
requirements. 
Promoted 
by 
industry-wide 
advances 
in 
technology 
and 
data, 
the 
depth 
and 
breadth 
of 
model use across UBS continues to increase. 
Model 
risk 
is 
defined 
as 
the 
risk 
of 
adverse 
consequences 
(e.g., 
financial 
losses 
or 
reputational 
damage) 
resulting 
from 
incorrect models. 
Model governance framework 
Our 
model 
governance 
framework establishes 
requirements 
for 
identifying, 
measuring, 
monitoring, 
reporting, 
controlling 
and 
mitigating 
model 
risks. 
All 
models 
that 
we 
use 
are 
subject 
to 
governance and controls throughout 
their life cycle. This ensures 
that 
risks 
arising 
from 
model 
use 
are 
understood, 
managed, 
monitored, 
controlled 
and 
reported 
on 
both 
a 
model-specific 
and 
an 
aggregated 
level. 
Before 
they 
can 
be 
granted 
approval 
for 
use 
from 
the 
model 
sponsor, 
all 
our 
models 
are 
independently 
validated 
along 
four 
model 
risk 
dimensions: 
(i) 
model input; (ii) model methodology; (iii) model implementation; 
and (iv) model use. 
Once 
validated 
and 
approved 
for 
use, 
a 
model 
is 
subject 
to 
ongoing 
model 
performance 
monitoring 
and 
annual 
model 
confirmation, ensuring 
that the 
model is 
only used 
if it 
remains 
fit 
for 
purpose. 
All 
models 
are 
subject 
to 
periodic 
model 
re-
validation, 
with 
rigor, 
depth 
and 
frequency 
determined 
by 
the 
model’s materiality and complexity. 
Our 
model 
risk 
governance 
framework 
follows 
our 
overarching 
risk governance 
framework, 
with 
the three 
lines of 
defense (LoD) assigned as follows: 
–
 
First
 
LoD: 
m
odel 
sponsors, 
model 
owners 
and 
model 
developers 
–
 
Second 
LoD: 
Chief 
Model 
Risk 
Officer, 
Model 
Risk 
Management & Control 
–
 
Third LoD: Group Internal Audit 
 
An important 
difference as compared 
to how LoD 
are usually 
defined in financial and non-financial 
risk is that models can also 
be owned by the second LoD. 
Model risk appetite framework and statement 
The 
model 
risk 
appetite 
framework 
sets 
out 
the 
model 
risk 
appetite 
statement, 
defines 
the 
relevant 
metrics 
and 
lays 
out 
how appropriate adherence is assessed. 
Model oversight 
Model oversight 
boards and 
committees ensure 
that model 
risk 
is 
overseen 
at 
different 
levels 
of 
the 
organization, 
appropriate 
model 
risk 
management 
and 
control 
actions 
are 
taken 
and, 
where necessary, 
escalated to the next level. 
The 
Group 
Model 
Governance 
Board 
is 
our 
most 
senior 
oversight 
and 
escalation 
body 
for 
all 
models 
in 
scope 
of 
our 
model 
governance 
framework. 
It 
is 
chaired 
by 
the 
Group 
CRO 
and 
the 
Group 
CFO 
and 
is 
responsible 
for: 
(i) 
reviewing 
and 
approving 
changes 
to 
the 
framework; 
(ii) 
approving 
the 
model 
risk 
appetite 
statement; 
(iii) 
overseeing 
adherence 
to 
the 
UBS 
model 
risk 
governance 
framework; 
and 
(iv) 
monitoring 
model 
risk at a firm-wide level. 
 
 
 

 
103 
Risk measurement
Audited |
 
We apply 
a variety 
of methodologies 
and measurements 
to 
quantify 
the 
risks 
of 
our 
portfolios 
and 
potential 
risk 
concentrations. Risks 
that are 
not fully 
reflected within 
standard 
measures 
are 
subject 
to 
additional 
controls, 
which 
may 
include 
preapproval 
of 
specific 
transactions 
and 
the 
application 
of 
specific 
restrictions. 
Models 
to 
quantify 
risk 
are 
generally 
developed 
by 
dedicated 
units 
within 
control 
functions 
and 
are 
subject to independent validation. 
p
 
›
 
Refer to “Credit risk,” “Market risk” and “Operational 
risk” in 
this section for more information about model 
confirmation 
procedures 
Stress testing 
We 
perform 
stress 
testing 
to 
estimate 
losses 
that 
could 
result 
from 
extreme 
yet 
plausible 
macroeconomic 
and 
geopolitical 
stress 
events 
so 
as 
to 
identify, 
better 
understand 
and 
manage 
our 
potential 
vulnerabilities 
and 
risk 
concentrations. 
Stress 
testing has 
a key 
role in 
our limits 
framework at 
the firm-wide, 
business 
division, 
legal 
entity 
and 
portfolio 
levels. 
Stress 
test 
results 
are 
regularly 
reported 
to 
the 
BoD 
and 
the 
GEB. 
As 
described 
in 
“Risk 
appetite 
framework,” 
stress 
testing, 
along 
with 
statistical 
loss 
measures, 
has 
a 
central 
role 
in 
our 
risk 
appetite and business planning processes. 
Our 
stress 
testing 
framework 
has 
three 
pillars: 
(i) 
combined 
stress tests; (ii) an extensive set of portfolio- 
and risk type-specific 
stress tests; and (iii) reverse stress testing. 
Our 
combined 
stress 
test 
(CST) 
framework 
is 
scenario-based 
and 
aims 
to 
quantify 
overall 
firm-wide 
losses 
that 
could 
result 
from 
various 
potential 
global 
systemic 
events. 
The 
framework 
captures all material risks, as 
covered in “Risk categories” above. 
Scenarios 
are 
forward-looking 
and 
encompass 
macroeconomic 
and 
geopolitical 
stress 
events 
calibrated 
to 
different 
levels 
of 
severity. 
We 
implement 
each 
scenario 
through 
the 
expected 
evolution 
of 
market 
indicators 
and 
economic 
variables 
under 
that 
scenario
 
and 
then 
estimate 
the 
overall 
loss
 
and 
capital 
implications were the scenario 
to occur. At least 
once a year, the 
Risk Committee 
approves the 
most relevant 
scenario, known 
as 
the 
binding 
scenario, 
for 
use 
as 
the 
main 
scenario 
for 
regular 
CST 
reporting 
and 
for 
monitoring 
risk 
exposure 
against 
our 
minimum 
capital, 
earnings 
and 
leverage 
ratio 
objectives 
in 
our 
risk appetite framework. 
We 
provide 
detailed 
stress 
loss 
analyses 
to 
FINMA 
and 
regulators 
of 
our 
legal 
entities 
in 
accordance 
with 
their 
requirements. 
For 
example, 
in 
addition 
to 
CST, 
we 
perform 
a 
Loss 
Potential 
Analysis 
(LPA) 
required
 
by 
FINMA, 
a 
Comprehensive 
Capital 
Analysis 
and 
Review 
(CCAR) 
for 
Americas Holding LLC 
required by the US 
Federal Reserve Board, 
and 
regular 
stress 
tests
 
for 
UBS 
Europe 
SE 
required 
by 
the 
European Central Bank. 
Our 
Enterprise-wide 
Stress 
Committee 
(the 
ESC) 
aims 
to 
ensure 
the 
consistency 
and 
adequacy 
of 
the 
assumptions 
and 
scenarios 
used 
for 
firm-wide 
stress 
measures. 
As 
part 
of 
its 
responsibilities, 
the 
ESC 
seeks 
to 
ensure 
that 
the 
set 
of 
stress 
scenarios adequately reflects current and potential developments 
in the macroeconomic and geopolitical environment, current and 
planned 
business 
activities, 
and 
actual 
or 
potential 
risk 
concentrations 
and 
vulnerabilities 
in 
our 
portfolios. 
The 
ESC 
meets 
at 
least 
quarterly 
and 
is 
composed 
of 
Group, 
business 
division 
and 
legal 
entity
 
representatives 
of 
Risk 
Control. 
In 
executing 
its 
responsibilities, 
the 
ESC 
considers 
input 
from 
the 
Think 
Tank, a 
panel 
of 
senior representatives 
from 
the business 
divisions, 
Risk 
Control 
and 
economic 
research
 
that 
meets 
quarterly 
to 
review 
the 
current 
and 
possible 
future 
market 
environment 
so 
as 
to 
identify 
potential 
stress 
scenarios 
that 
could 
materially affect 
the Group’s 
profitability. This 
results in 
a 
range 
of 
internal 
stress 
scenarios 
developing 
and 
evolving 
over 
time. 
Each 
scenario 
captures 
a 
wide
 
range 
of 
macroeconomic 
variables
,
 
includ
ing
 
GDP, 
equity 
prices, 
interest 
rates, 
foreign 
exchange 
rates, 
commodity 
prices, 
property 
prices 
and 
unemployment. 
We 
use 
assumed 
changes 
in 
these 
macroeconomic 
and 
market 
variables in 
each 
scenario 
to 
stress 
the 
key 
risk 
drivers 
of 
our 
portfolios. 
For 
example, 
lower 
GDP 
growth and rising interest rates may reduce the income of clients 
we 
have 
lent 
money
 
to
, 
which 
changes 
the 
credit 
risk 
parameters 
for 
probability 
of 
default, 
loss 
given 
default 
and 
exposure at 
default, and 
results in 
higher predicted 
credit losses 
within 
the 
stress 
scenario. 
We 
also 
capture 
the 
business 
risk 
resulting 
from 
lower 
fee, 
interest 
and 
trading 
income 
net 
of 
lower 
expenses. 
These 
effects 
are 
measured 
for 
all 
businesses 
and 
material 
risk 
types 
to 
calculate 
the 
aggregate 
estimated 
effect 
of 
the 
scenario 
on 
profit 
or 
loss, 
other 
comprehensive 
income, 
RWA, 
LRD 
and, 
ultimately, 
capital 
and 
leverage 
ratios. 
The 
assumed 
changes 
in 
macroeconomic 
variables 
are 
updated 
periodically 
to 
account 
for 
changes 
in 
the 
current 
and 
possible 
future market environment. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
104 
In 2020, the 
binding scenario for CST 
was the internal 
Global 
Crisis scenario
, which is characterized by 
a combined crisis in the 
Eurozone, 
US 
and 
China 
and 
was 
updated 
over 
the 
course 
of 
2020 to incorporate 
risks related to 
COVID-19. In Europe, 
a lack 
of 
confidence 
in 
the 
trajectory 
of 
several 
peripheral 
European 
economies 
leads 
to 
a 
sudden 
spike 
in 
their 
bond 
yields, 
which 
eventually 
result
s
 
in 
the
m
 
los
ing
 
market 
access
, 
followed 
by 
bailouts 
and 
debt 
restructurings; 
Greece 
leaves 
the 
Eurozone. 
Protectionist 
measures and 
geopolitical 
tensions contribute 
to a 
hard landing in China. 
This, coupled with a 
contraction in global 
trade, 
weighs 
on 
the economic 
recovery. 
Attempting 
to 
restore 
confidence and stimulate growth, central banks 
in the Eurozone, 
Switzerland 
and 
Japan 
push 
policy 
rates 
further 
into 
negative 
territory; 
however, that fails to avert a severe global recession. 
The 
incorporation 
of 
pandemic-related 
risks 
led 
to 
severe 
scenario assumptions, in 
particular macroeconomic assumptions, 
such 
as 
deteriorating 
GDP 
and 
rising 
unemployment. 
Stress 
testing 
models 
are 
reviewed 
regularly 
with 
subject 
matter 
experts 
and 
relevant 
governance 
bodies. 
Notwithstanding 
the 
market 
turbulence 
and 
economic 
disruptions 
caused 
by 
the 
outbreak of COVID-19, the 
CST risk exposure was broadly 
stable 
over 2020, 
with most 
of the 
month-on-month variability 
arising 
primarily 
from 
changes 
in 
volumes 
of 
temporary 
loan 
underwriting exposure in the Investment Bank. 
As 
part 
of 
the 
CST 
framework, 
we 
routinely 
monitored 
four 
additional stress scenarios throughout 2020: 
–
 
The 
Failure of a Major 
Financial Institution
 
scenario represents 
renewed 
financial 
market 
turmoil 
reflecting 
the 
failure 
of 
a 
major 
global 
financial 
institution, 
leading 
to 
prolonged 
financial deleveraging and plunging activity around the globe.
 
–
 
The 
US 
Monetary 
Crisis 
scenario
 
represents 
a 
loss 
of
 
confidence 
in 
the 
US, 
which 
leads 
to 
international 
portfolio 
repositioning 
out 
of 
US 
dollar-denominated 
assets, 
sparking 
an abrupt and 
substantial US dollar 
sell-off. The US 
is pushed 
back 
into 
recession, 
other 
industrialized 
countries 
replicate 
this 
pattern 
and 
inflationary 
concerns 
lead 
to 
an 
overall 
higher interest rate level. 
–
 
The
 
Global 
Depression 
scenario
 
represents 
a 
severe 
and 
prolonged 
E
urozone 
crisis 
in 
which 
several 
peripheral 
countries 
default 
and 
exit 
the 
Eurozone, 
and 
advanced 
economies 
are 
pulled 
into 
a 
prolonged 
period 
of 
economic 
stagnation.
 
So 
as 
to 
better 
monitor 
the 
risks 
related 
to 
COVID-19, 
in 
mid-2020 
the 
Global 
Depression 
scenario
 
was 
put 
on 
hold 
and
 
the 
Extreme 
Coronavirus 
scenario
 
was 
introduced. 
The 
Extreme 
Coronavirus 
scenario
 
represents 
a 
return 
to 
stringent 
containment 
measures 
at 
a 
global 
level, 
resulting 
in 
a 
deep 
and 
prolonged 
contraction 
in 
economic 
activity 
beyond 
that 
envisaged 
in 
the 
Global 
Depression 
scenario
. 
The 
scenario 
was 
selected 
from 
a 
range 
of 
new 
COVID-19 scenarios. 
–
 
The 
Global 
Interest 
Rate 
Steepening 
scenario 
represents 
a 
sudden shift in 
market sentiment, causing a 
disorderly sell-off 
in 
long-dated 
bonds 
and 
a 
rapid 
steepening 
of 
the 
yield 
curve, exacerbated 
by a 
lack of 
liquidity in 
financial markets. 
This 
in 
turn 
triggers 
a 
sovereign 
crisis 
in 
Japan 
and 
a 
global 
recession.
 
 
We 
have 
updated 
the 
binding 
stress 
scenario 
in 
our 
CST 
framework for 
2021. The 
updated 
Global Crisis 
scenario
 
reflects 
the 
weaker 
fiscal 
conditions 
result
ing
 
from 
the 
COVID
-
19 
pa
ndemic 
and 
still
 
focus
es
 
on 
the 
ensuing 
Eurozone 
crisis, 
China’s hard landing and increasing global protectionism. 
Portfolio-specific 
stress tests
 
are measures tailored to 
the risks 
of 
specific 
portfolios. 
Our 
portfolio 
stress 
loss 
measures 
are 
derived 
from 
data 
on 
past 
events, 
but 
also 
include 
forward-
looking 
elements
;
 
e.g.,
 
we 
derive 
the 
expected 
market 
movements 
in 
our 
liquidity-adjusted 
stress 
metric 
using 
a 
combination of 
historical market 
behavior, based 
on an 
analysis 
of 
historical 
events, 
and 
forward-looking 
analysis, 
including 
consideration of 
defined scenarios 
that are 
not modeled 
on any 
historical events. 
Results of 
portfolio-specific stress 
tests may 
be 
subject 
to 
limits 
to 
explicitly 
control 
risk-taking, 
or 
may 
be 
monitored without limits to identify vulnerabilities. 
Reverse 
stress 
testing
 
starts 
from 
a 
defined 
stress 
outcome 
(e.g., 
a 
specified 
loss 
amount, 
reputational 
damage, 
a 
liquidity 
shortfall 
or 
a 
breach 
of 
regulatory 
capital 
ratios) 
and 
works 
backward to 
identify economic 
or financial 
scenarios that 
could 
result 
in 
such 
an 
outcome. 
As 
such, 
reverse 
stress 
testing 
is 
intended to complement scenario-based 
stress tests by assuming 
“what 
if” 
outcomes 
that 
could 
extend 
beyond 
the 
range 
normally 
considered, 
and 
thereby 
potentially 
challenge 
assumptions regarding severity and plausibility. 
We 
also routinely 
analyze the effect 
of increases 
or decreases 
in interest rates and changes in the structure of yield curves. 
Within 
Group 
Treasury
, 
we 
also
 
perform 
stress 
testing 
to 
determine 
the optimum 
asset and 
liability 
structure allowing 
us 
to 
maintain 
an 
appropriately 
balanced 
liquidity 
and 
funding 
position 
under 
various 
scenarios. 
These 
scenarios 
differ 
from 
those 
outlined 
above, 
because 
they 
focus 
on 
specific 
situations 
that 
could generate 
liquidity 
and 
funding 
stress, as 
opposed to 
the 
scenarios 
used 
in 
the 
CST 
framework, 
which 
focus 
on 
the 
effect on profit or loss and capital. 
›
 
Refer to “Credit risk” and “Market risk” in this section 
for more 
information about stress loss measures 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information about 
stress testing 
Statistical measures 
As well as 
our scenario-based CST 
measures, we use 
a statistical 
stress 
framework 
to 
calculate 
and 
aggregate 
risks 
using 
statistical 
techniques 
to 
derive 
stress 
events 
at 
chosen 
confidence levels. 
This 
framework 
is 
used 
to 
derive 
a 
distribution 
of 
potential 
earnings 
based 
on 
historically 
observed 
market 
changes 
in 
combination 
with 
the 
firm’s 
actual 
risk 
exposures, 
considering 
effects on 
both income 
and expenses. 
From that, 
we determine 
earnings
-
at
-
risk 
(EaR), 
measur
ing
 
the 
potential 
shortfall 
in 
earnings 
(i.e., 
the 
deviation 
from 
forecast 
earnings) 
at 
a 
95% 
confidence 
level 
and 
evaluated 
over 
a 
one-year 
horizon. 
EaR 
is 
used 
for 
the 
assessment 
of 
the 
earnings 
objectives 
in 
our 
risk 
appetite framework. 
 
 

 
105 
We 
extend 
the 
EaR 
measure
,
 
incorporating 
the 
effects 
of 
gains 
and 
losses 
recognized 
through 
other 
comprehensive 
income, 
to 
derive 
a 
distribution 
of 
potential 
effects 
of 
stress 
events 
on 
CET1 
capital. 
From 
this 
distribution, 
we 
derive 
our 
capital-at-risk (CaR) buffer measure at a 95% 
confidence level to 
assess our capital and 
leverage ratio risk 
appetite objectives, and 
derive our CaR solvency 
measure at a 99.9% 
confidence level to 
assess our solvency risk appetite objective. 
We use 
the CaR 
solvency measure 
as a 
basis for 
deriving the 
contributions 
of 
business 
divisions 
to 
risk-based 
capital 
(RBC), 
which is 
a component of 
our equity attribution 
framework. RBC 
measures 
the 
potential 
capital 
impairment 
from 
an 
extreme 
stress event at a 99.9% confidence level. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information about 
the equity 
attribution framework 
Portfolio and position limits 
UBS maintains a 
comprehensive set of 
risk limits across 
its major 
risk 
portfolios. 
These 
portfolio 
limits 
are 
set 
based 
on 
our 
risk 
appetite 
and 
periodically 
reviewed 
and 
adjusted 
as 
part 
of 
the 
business planning process. 
Firm-wide 
stress and 
statistical metrics 
are 
complemented by 
more granular 
portfolio and 
position limits, 
triggers and 
targets. 
C
ombin
ing
 
these 
measures 
provides 
a 
comprehensive 
control 
framework 
to 
apply 
to 
our 
business 
divisions, 
as 
well 
as 
the 
significant legal 
entities, as 
relevant to 
the key 
risks arising 
from 
their businesses. 
We 
apply 
limits 
to 
a 
variety 
of 
exposures 
at 
portfolio 
level, 
using statistical and 
stress-based measures, such 
as value-at-risk, 
liquidity-adjusted stress, loan underwriting limits, economic value 
sensitivity and portfolio default simulations for loan books. These 
are complemented 
with a set 
of controls for 
net interest income 
sensitivity, mark-to-market 
losses on 
available-for-sale 
portfolios, 
and 
the 
effect 
of 
foreign 
exchange 
movements 
on 
capital 
and 
capital ratios. 
Portfolio 
measures 
are 
supplemented 
with 
position-level 
controls. 
Risk 
measures 
for 
position 
controls 
are 
based 
on 
market 
risk 
sensitivities 
and 
counterparty-level 
credit 
risk 
exposures. 
Market 
risk 
sensitivities 
include 
sensitivities 
to 
changes 
in 
gen
eral 
market 
risk 
factors 
(e.g., 
equity 
indices, 
foreign 
exchange 
rates 
and 
interest 
rates) 
and 
sensitivities 
to 
issuer-specific 
factors 
(e.g., 
changes 
in 
an 
issuer’s 
credit 
spread 
or 
default 
risk). 
We 
monitor 
numerous 
market 
risk 
controls 
for 
the 
Investmen
t 
Bank 
and 
Group 
Functions
 
on 
a 
daily 
basis. 
Counterparty measures 
capture the 
current and 
potential future 
exposure 
to 
an 
individual 
counterparty, 
taking 
into 
account 
collateral and legally enforceable netting agreements. 
›
 
Refer to “Credit risk” in this section for more information 
about 
counterparty limits 
›
 
Refer to “Risk appetite framework” 
in this section for more 
information about the risk appetite 
framework 
Risk concentrations 
Audited |
 
A risk concentration exists 
where (i) a 
position is affected 
by 
changes 
in 
a 
group 
of 
correlated 
factors, 
or 
a 
group 
of 
positions 
are 
affected 
by 
changes 
in 
the 
same 
risk 
factor 
or 
a 
group 
of 
correlated 
factors; 
and 
(ii) 
the 
exposure 
could, 
in 
the 
event 
of 
large 
but 
plausible 
adverse 
developments, 
result 
in 
significant losses. 
The categories 
where 
risk concentrations 
may 
occur 
include 
counterparties, industries, 
legal entities, 
countries 
or geographical regions, products, and businesses. 
Identification 
of 
risk 
concentrations 
requires 
judgment, 
as 
potential 
future 
developments 
cannot 
be 
accurately 
predicted 
and 
may 
vary 
from 
period 
to 
period. 
In 
determining 
if 
a 
risk 
concentration 
exists, 
we 
consider 
a 
number 
of 
elements, 
both 
individually 
and 
collectively. 
These 
elements 
include 
the 
shared 
characteristics 
of 
the 
positions 
and 
counterparties, 
the 
size 
of 
the position 
or group 
of positions, 
the sensitivity 
of the 
position 
or group of 
positions to changes in 
risk factors and the 
volatility, 
and 
the 
correlations
 
of 
those 
factors. 
Also 
important 
in 
our 
assessment is the liquidity of the markets where the positions are 
traded, as 
well as 
the availability 
and effectiveness 
of hedges 
or 
other 
potential 
risk-mitigating 
factors. 
The 
value 
of 
a 
hedging 
instrument may 
not always 
move in 
line with 
the position 
being 
hedged; 
this 
mismatch 
is 
referred 
to 
as 
basis 
risk. 
In 
addition, 
operational 
risk 
concentrations 
may 
result 
from 
a 
single 
issue 
that 
is 
large 
on 
its 
own 
(i.e., 
has 
the 
potential 
to 
produce 
a 
single 
high-impact loss 
or a 
number of 
losses that 
together are 
high-impact) or 
related issues 
that may 
link together 
to create 
a 
high impact. 
Risk 
concentrations 
are 
subject 
to 
increased 
oversight 
by 
Group 
Risk 
Control 
and 
Group 
Compliance, 
Regulatory 
& 
Governance and 
assessed to 
determine whether 
they should 
be 
reduced or mitigated, 
depending on available means 
to do so. 
It 
is 
possible 
that 
material 
losses 
could 
occur 
on 
asset 
classes, 
positions and hedges, 
particularly if the correlations 
that emerge 
in a 
stressed environment 
differ markedly 
from those 
envisaged 
by risk models. 
p
 
›
 
Refer to “Credit risk” and “Market risk” in this 
section for more 
information about the composition of our 
portfolios 
›
 
Refer to the “Risk factors” section of 
this report for more 
information 
Asset Management fund liquidity risk 
Asset 
management 
is 
a 
fiduciary 
for 
its 
clients’ 
assets 
and 
is 
exposed 
to 
fund 
liquidity 
risk 
which 
can 
lead 
to 
reputational 
risks. 
Fund liquidity 
risk is 
defined as 
the risk 
that a 
fund could 
be 
unable
 
meet
 
redemption 
requests, 
whil
e
 
also 
fulfilling 
ongoing obligations to its remaining 
shareholders, including that 
fund’s duty 
to pursue 
its stated 
investment objective, 
strategies, 
and 
policies. 
Liquidity 
of 
funds 
is 
monitored 
using 
a 
variety 
of 
tools, including third 
-party liquidity assessment 
models, covering 
both 
the 
assets 
(fund 
holdings) 
and 
liabilities 
(shareholder 
redemptions), 
and 
including 
a 
range 
of 
market 
scenario 
assumptions. 
Furthermore, 
reverse 
stress 
tests 
are 
applied 
to 
determine 
the 
deterioration 
required 
to 
trigger 
liquidity 
considerations. 
Liquidity 
events 
can 
also 
be 
managed 
via 
the 
enactment 
of 
liquidity 
tools 
available 
to 
the 
funds. 
Overall, 
our 
funds 
fared 
well 
during 
the 
heightened 
market 
volatility 
in 
March 2020. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
106 
Credit risk
Key developments 
In 
Global 
Wealth 
Management
,
 
the 
Lombard 
and 
mortgage 
books showed 
significant growth over 
the course of 
2020 while 
keeping 
a 
stable 
risk 
profile 
with 
regard 
to 
concentrations 
and 
collateral 
liquidity, 
and 
with 
no 
material 
incurred 
losses 
after 
undergoing a real-life stress test in the first quarter of 2020. 
Our Swiss corporate banking products 
exposure increased over 
the course 
of 2020, 
mainly due to 
the appreciation of 
the Swiss 
franc
 
and
 
COVID
-
19 
facilities 
guaranteed 
by 
the 
Swiss 
government, 
as well 
as several 
large single positions. Due 
to our 
strong 
footprint 
in 
our 
home 
market, 
we 
are 
exposed 
to 
the 
development 
of 
the 
Swiss 
economy 
and 
the 
effects 
of 
the 
ongoing 
and 
highly 
uncertain COVID-19 
pandemic. 
Within 
our 
Swiss corporate book, 
risks related to certain industries, including 
the tourism; 
watches; 
and culture, 
sports and 
education sectors, 
where we have 
modest exposure, 
have increased. 
Our 
Swiss 
real 
estate 
portfolio 
increased 
over 
the 
course 
of 
2020, 
mainly due 
to the 
appreciation of the 
Swiss franc. It 
is of 
high quality but carefully 
monitored, 
due to its materiality. We are 
paying particularly close attention to the level of risk 
in our Swiss 
commercial retail and office real estate portfolio and 
its resilience 
to the economic 
impact of 
COVID-19. 
Our 
loans 
to 
customers in 
the 
Investment Bank 
are 
modest 
compared 
with 
our 
Personal 
& 
Corporate 
Banking 
and 
Global 
Wealth Management 
loan 
books. Over 
the 
course of 
2020, 
we 
have seen 
defaults in 
industries impacted by 
COVID-19, 
such as 
energy, 
real 
estate 
and 
travel, 
and 
we 
are 
watchful 
of 
further 
impairments. 
Credit loss expense / release 
Total 
net 
credit 
loss 
expenses 
were 
USD 694 
million 
in 
2020, 
compared 
with 
USD 78 
million 
in 
the 
prior 
year, 
reflecting 
net 
expenses 
of 
USD 266 million 
related 
to 
stage 1 and 
2 positions 
and 
net expenses 
of 
USD 429 million 
related 
to 
credit-impaired 
(stage 3) 
positions. 
The 
most 
notable 
contributors 
to 
stage 3 
credit loss expenses were: USD 81 million in the Investment Bank 
related 
to 
an 
exposure 
to 
a 
client 
in 
the 
travel 
sector; 
USD 59 
million 
in 
Personal 
& 
Corporate 
Banking 
related 
to 
a 
case 
of 
fraud 
at 
a 
commodity 
trade 
finance 
counterparty, 
which 
affected a number of lenders, including UBS; and 
USD 42 million 
in Group Functions from an energy-related 
exposure in Non-core 
and Legacy Portfolio. 
›
 
Refer to “Note 1 Summary of significant accounting 
policies,” 
“Note 9 Financial assets at amortized cost 
and other positions in 
scope of expected credit loss measurement” and “Note 
20 
Expected credit loss measurement” 
in the “Consolidated 
financial 
statements” 
section of this report for more information about 
IFRS 9 and expected credit losses 
Audited |
 
Main sources of credit risk 
–
 
Global 
Wealth 
Management
 
predominant
ly
 
conduct
s
 
securities-based (Lombard) lending and mortgage lending. 
–
 
A substantial portion of lending exposure arises from Personal 
& 
Corporate 
Banking, 
which 
offers 
mortgage 
loans, 
secured 
mainly 
by 
residential 
properties 
and 
income-producing 
real 
estate, as 
well as 
corporate loans, 
and therefore 
depends on 
the performance of the Swiss economy. 
–
 
The 
Investment 
Bank’s 
credit 
exposure 
arises 
mainly 
from 
lending, 
derivatives 
trading 
and 
securities 
financing. 
Derivatives 
trading 
and 
securities 
financing 
are 
mainly
 
investment 
grade. 
Loan 
underwriting 
activity 
can 
be 
lower 
rated and give rise to temporary concentrated exposure. 
–
 
Credit 
risk 
within 
Non-core 
and 
Legacy 
Portfolio 
relates 
to 
derivative 
transactions, predominantly 
carried out 
on a 
cash-
collateralized basis, and securitized positions. 
p
 
 
Credit loss (expense) / release 
USD million 
Global 
Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
Total 
For the year ended 31.12.20 
Stages 1 and 2 
 
(48) 
 
(129) 
 
0 
 
(88) 
 
0 
 
(266) 
Stage 3 
 
(40) 
 
(128) 
 
(2) 
 
(217) 
 
(42) 
 
(429) 
Total credit loss (expense) / release 
 
(88) 
 
(257) 
 
(2) 
 
(305) 
 
(42) 
 
(694) 
For the year ended 31.12.19 
Stages 1 and 2 
 
3 
 
23 
 
0 
 
(4) 
 
0 
 
22 
Stage 3 
 
(23) 
 
(44) 
 
0 
 
(26) 
 
(7) 
 
(100) 
Total credit loss (expense) / release 
 
(20) 
 
(21) 
 
0 
 
(30) 
 
(7) 
 
(78) 
For the year ended 31.12.18 
Stages 1 and 2 
 
0 
 
0 
 
0 
 
(9) 
 
(1) 
 
(9) 
Stage 3 
 
(15) 
 
(56) 
 
0 
 
(29) 
 
(8) 
 
(109) 
Total credit loss (expense) / release 
 
(15) 
 
(56) 
 
0 
 
(38) 
 
(8) 
 
(118) 
 
 

 
107 
Audited |
 
Overview of measurement, monitoring and 
management techniques 
–
 
Credit 
risk 
from 
transactions with 
individual counterparties is 
based on our estimates of probability of default (PD), exposure 
at 
default 
(EAD) 
and 
loss 
given 
default
 
(LGD)
. 
Limits 
are 
established for individual counterparties and groups of 
related 
counterparties covering banking and traded products, 
and for 
settlement amounts. Risk authorities 
are approved by the BoD, 
and 
are 
delegated 
to 
the 
Group 
CEO, 
the 
Group 
CRO 
and 
divisional 
CROs, 
based 
on 
risk 
exposure 
amounts
, 
internal 
credit rating 
and potential 
loss. 
–
 
Limits apply 
not only 
to the 
current outstanding amount, 
but 
also 
to 
contingent 
commitments 
and 
the 
potential 
future 
exposure of traded products. 
–
 
The 
Investment 
Bank 
monitoring, 
measurement 
and 
limit 
framework 
distinguishes 
between 
exposures 
intended 
to 
be 
held to maturity (take-and-hold 
exposures) and those intended 
for distribution 
or risk transfer 
(temporary 
exposures). 
–
 
We 
use 
models 
to 
derive 
portfolio 
credit 
risk 
measures 
of 
expected loss, statistical 
loss and stress loss at Group-wide and 
business division 
levels, 
and to establish 
portfolio limits. 
–
 
Credit 
risk 
concentrations can 
arise 
if 
clients are 
engaged 
in 
similar 
activities, located 
in 
the 
same 
geographical region 
or 
have comparable economic 
characteristics, 
e.g., if 
their ability 
to meet 
contractual obligations would be similarly affected by 
changes 
in 
economic, 
political 
or 
other 
conditions. To 
avoid 
credit 
risk 
concentrations, 
we 
establish 
limits 
/ 
operational 
controls that constrain 
risk concentrations 
at portfolio and sub-
portfolio levels 
with regard to sector 
exposure, country 
risk and 
specific product 
exposures. 
p
 
Credit risk profile of the Group 
The 
exposures 
detailed 
in 
this 
section 
are 
based 
on 
management
’s
 
view 
of 
credit 
risk, 
which 
differs 
in 
certain 
re
spects 
from 
the 
expected 
credit 
loss 
(
ECL
)
 
measurement 
requirements of IFRS. 
Internally, 
we 
put
 
credit 
risk 
exposures 
into 
two 
broad 
categories: 
banking 
products 
and 
traded 
products. 
Banking 
products 
include
 
drawn 
loans, 
guarantees 
and 
loan 
commitments, 
am
ounts 
due 
from 
banks
,
 
balances 
at
 
central 
banks
,
 
and 
other 
financial 
assets 
at 
amortized 
cost
. 
Traded 
products 
include 
over-the-counter 
derivatives, 
exchange-traded 
derivatives 
and 
securities 
financing 
transactions, 
consisting 
of 
securities 
borrowing 
and 
lending, 
and 
repurchase 
and 
reverse 
repurchase agreements. 
Banking products 
Breakdowns of banking products 
exposures in the “Banking 
and 
traded 
products 
exposure 
in 
our 
business 
divisions 
and 
Group 
Functions” 
table 
on 
the 
next 
page 
are 
gross 
before 
allowances 
and provisions 
for ECLs and 
credit hedges. 
Guarantees and loan 
commitments 
are 
shown 
on 
a 
notional 
basis, 
without 
applying 
credit conversion factors. 
The 
table 
reflects 
the 
total 
exposures 
(stages 1–3) 
in 
scope 
of 
ECL 
requirements 
, 
allowances 
and 
provisions 
by 
ECL 
stages 
and 
separately 
credit-impaired 
exposures, 
gross 
(stage 3). 
Total 
gross 
banking 
products 
exposure 
was USD 
639 billion 
as of 
31 
December 
2020, 
compared 
with USD 
515 billion 
at the 
end of 
the prior 
year. 
The 
gross 
exposure 
for 
banking 
products 
as 
shown 
in 
the 
table corresponds 
to an 
ECL gross 
exposure of 
USD 802 billion. 
The 
gross 
exposure 
shown 
in 
the 
table 
includes 
other 
financial 
assets 
measured 
at 
amortized 
cost, 
but
 
excludes 
cash, 
receivables from 
securities financing 
transactions, cash 
collateral 
receivables 
on 
derivative 
instruments, 
financial 
assets 
at 
fair 
value through 
other comprehensive 
income (FVOCI), 
irrevocable 
committed 
prolongation 
of 
existing 
loans, 
unconditionally 
revocable 
committed 
credit 
lines, 
and 
forward 
starting 
reverse 
repurchase and securities borrowing agreements 
›
 
Refer to “Note 1 Summary of significant accounting 
policies” in 
the “Consolidated financial statements” 
section of this report for 
more information about our accounting policy 
for allowances 
and provisions for ECLs 
›
 
Refer to “Note 9 Financial assets at amortized 
cost and other 
positions in scope of expected credit loss measurement” 
and 
“Note 20 Expected credit loss measurement” in the 
“Consolidated financial statements” section 
of this report for 
more information about ECL measurement requirements under 
IFRS 
›
 
Refer to “Note 14a Other financial assets 
measured at amortized 
cost” in the “Consolidated financial 
statements” section of this 
report for more details 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
108 
Banking and traded products exposure in our business divisions and Group Functions 
31.12.20 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
Total 
Banking products
1,2
Gross exposure 
300,368 
227,139 
3,374 
56,237 
52,199 
639,317 
of which: loans and advances to customers (on-balance sheet) 
208,324 
153,975 
1 
13,964 
4,324 
380,589 
of which: guarantees and loan commitments (off-balance sheet) 
10,153 
28,814 
0 
15,936 
3,550 
58,453 
Traded products
2,3
Gross exposure 
9,919 
1,201 
0 
40,215 
51,335 
of which: over-the-counter derivatives 
6,946 
1,182 
0 
11,236 
19,364 
of which: securities financing transactions 
0 
0 
0 
21,753 
21,753 
of which: exchange-traded derivatives 
2,973 
19 
0 
7,227 
10,218 
Other credit lines, gross
4
12,201 
24,950 
0 
2,952 
31 
40,134 
Total credit-impaired exposure, gross (stage 3)
1
1,324 
1,997 
0 
450 
7 
3,778 
Total allowances and provisions for expected credit losses (stages 1 to 3) 
318 
842 
1 
298 
10 
1,468 
of which: stage 1 
103 
130 
0 
70 
3 
306 
of which: stage 2 
54 
216 
0 
63 
0 
333 
of which: stage 3 (allowances and provisions for credit-impaired 
exposures) 
160 
497 
1 
165 
6 
829 
31.12.19 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
Total 
Banking products
1,2
Gross exposure 
239,032 
194,395 
2,914 
48,170 
30,570 
515,081 
of which: loans and advances to customers (on-balance sheet) 
174,510 
136,572 
1 
10,585 
5,882 
327,550 
of which: guarantees and loan commitments (off-balance sheet) 
5,578 
23,142 
0 
16,009 
960 
45,689 
Traded products
2,3
Gross exposure 
8,830 
841 
0 
38,233 
47,904 
of which: over-the-counter derivatives 
6,571 
804 
0 
9,832 
17,207 
of which: securities financing transactions 
0 
0 
0 
20,821 
20,821 
of which: exchange-traded derivatives 
2,259 
36 
0 
7,580 
9,876 
Other credit lines, gross
4
10,735 
20,986 
0 
3,227 
144 
35,092 
Total credit-impaired exposure, gross (stage 3)
1
902 
1,694 
0 
91 
427 
3,113 
Total allowances and provisions for expected credit losses (stages 1 to 3) 
209 
696 
0 
87 
37 
1,029 
of which: stage 1 
59 
81 
0 
38 
3 
181 
of which: stage 2 
34 
122 
0 
3 
0 
160 
of which: stage 3 (allowances and provisions for credit-impaired 
exposures) 
116 
493 
0 
46 
34 
688 
1 ECL gross exposure including other financial 
assets at amortized cost, but excluding cash, 
receivables from securities financing transactions, 
cash collateral receivables on derivative 
instruments, financial assets at 
FVOCI, 
irrevocable committed 
prolongation 
of existing 
loans and 
unconditionally revocable 
committed 
credit lines 
and forward 
starting reverse 
repurchase and 
securities borrowing 
agreements. 
2 Internal 
management view of credit risk, which differs 
in certain respects from IFRS. 
3 As counterparty risk for traded 
products is managed at counterparty level, 
no further split between exposures in the 
Investment Bank 
and Group Functions is provided. 
4 Unconditionally revocable committed credit lines. 
 
 
Global Wealth Management 
Gross 
banking 
products 
exposure 
within 
Global 
Wealth 
Management increased to USD 300 billion from USD 239 billion. 
Our 
Global 
Wealth 
Management 
loan 
portfolio 
is 
mainly 
secured by securities (Lombard loans) and by residential property. 
Most of the Lombard loans were of high quality, 
with 92% rated 
as investment 
grade based 
on our 
internal ratings, 
and they 
are 
typically 
short 
term in 
nature. Moreover, 
Lombard loans 
can be 
canceled 
immediately, 
if 
the 
collateral 
quality 
deteriorates 
or 
margin calls 
are not 
met. In 
2020, the 
Lombard book 
increased 
by 
20%, 
while 
keeping 
a 
stable 
risk 
profile 
with 
regard 
to 
concentrations
 
and 
collateral 
liquidity
 
and 
with 
no 
material 
losses. 
The 
increase 
was 
mainly 
driven 
by 
higher 
volumes 
of 
loans in Switzerland, 
the US, and Asia Pacific. 
The mortgage 
book increased 
by 13%, 
equally driven 
by the 
effects of the US dollar 
depreciating against the Swiss franc 
on a 
mostly 
Swiss-franc 
denominated 
portfolio 
and 
a 
higher 
volume 
of mortgage 
loans in 
Switzerland and 
the US, 
distributed across 
various clients. 
During 
2020, 
aircraft 
leasing 
was 
gradually 
transitioned 
to 
Global 
Wealth 
Management 
from 
Personal 
& 
Corporate 
Banking, shifting loans of USD 1.8 billion. 
Due 
to 
negative 
market 
movements 
during 
the 
COVID-19 
global 
outbreak, 
the 
number 
of 
margin 
calls 
in 
Global 
Wealth 
Management 
for 
Lombard and 
securities-based 
loans 
materially 
spiked 
in 
mid-March. 
Since 
mid-April, 
both 
the 
number 
of 
margin calls 
and their 
volumes were 
within normal 
ranges, with 
no material credit losses. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
109 
Global Wealth Management and Personal & Corporate Banking loans and advances to customers, gross 
Global Wealth Management 
Personal & Corporate Banking 
USD million 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Secured by residential property 
60,021 
54,383 
111,554 
100,645 
Secured by commercial / industrial property
1
3,273 
2,619 
19,623 
17,131 
Secured by cash 
22,722 
16,852 
2,860 
1,569 
Secured by securities 
104,652 
88,684 
2,003 
1,766 
Secured by guarantees and other collateral 
15,605 
10,591 
6,942 
5,351 
Unsecured loans and advances to customers 
2,051 
1,381 
10,994 
10,111 
Total loans and advances to customers, gross 
208,324 
174,510 
153,975 
136,572 
Allowances 
(190) 
(93) 
(676) 
(595) 
Total loans and advances to customers, net of allowances 
208,134 
174,417 
153,299 
135,978 
1 Includes exposures with mixed collateral as security, where the primary purpose of the loan is not to finance 
a specific property. 
 
Personal 
& Corporate 
Banking 
Gross 
banking 
products 
exposure 
(excluding 
exposure 
re-
allocated 
from 
Group 
Treasury) 
within 
Personal 
& 
Corporate 
Banking 
increased 
to 
USD 187 
billion 
(CHF 165 
billion) 
from 
USD 163 
billion 
(CHF 158 
billion), 
predominantly 
driven 
by the 
appreciation 
of the Swiss 
franc. Net 
banking products 
exposure 
was USD 186 
billion (CHF 
165 billion) 
, 
compared 
with USD 162 
billion
 
(CHF
 
15
7
 
billion)
, 
of 
which 
approximately 
6
5
% 
was 
classified 
as 
investment 
grade, 
compared 
with 
63% 
in 
2019. 
Around 
50% of 
the exposure 
is categorized 
in the 
lowest 
LGD 
bucket 
of 
0–25%, 
similar 
to 
2019. 
The 
size 
of 
Personal 
& 
Corporate 
Banking’s 
gross 
loan portfolio 
increased 
to USD 
154 
billion 
(CHF 136 
billion) 
from USD 
137 billion 
(CHF 132 
billion). 
This 
portfolio 
is 
predominantly 
denominated 
in 
Swiss 
francs 
and 
thus 
the 
increase 
is 
largely 
due 
to 
the 
US 
dollar 
depreciating 
. 
As 
of 
31 December 
2020, 
93% 
of 
this 
portfolio 
was 
secured 
by 
collateral, 
mainly 
residential 
and 
commercial 
property. 
Of the 
total 
unsecured 
amount, 
81% related 
to cash 
flow
-
based 
lending 
to 
corporate 
counterparties 
and 
4
% 
related 
to 
lending 
to 
public 
authorities. 
Based 
on 
our 
internal 
ratings, 
45% 
of 
the 
unsecured 
loan 
portfolio 
was 
rated 
as 
investment 
grade, compared 
with 46% in 
2019. 
Although
 
credit 
loss 
expense
s
 
for 
banking 
products 
increased 
significantly 
in 
2020 
compared 
with 
2019, 
they 
remained 
within 
our 
expectations 
, 
considering 
the 
COVID-19 
pandemic. 
This 
was 
achieved 
due 
to 
our 
careful 
risk 
management 
, 
as 
well 
as 
external 
measures, 
such 
as 
the 
Swiss 
federal 
and 
cantonal 
credit 
programs 
and 
Kurzarbeit
 
(short-
time 
work 
benefit), 
supporting 
the 
Swiss 
economy. 
Given 
the 
credit 
quality 
of 
our 
portfolio 
and 
prudent 
risk 
management 
approach
,
 
alongside 
improved 
macroeconomic 
forecasts
,
 
we 
currently 
do not 
expect 
credit 
loss expense 
to increase 
in 2021 
from 
2020
.
 
Our 
Swiss 
corporate 
banking 
products 
portfolio, 
which 
was
 
USD
 
35
 
billion
 
(CHF
 
31
 
billion) 
compared 
with 
USD
 
2
6
 
billion 
(CHF
 
2
6
 
billion) 
in 
201
9
, 
consists 
of 
loans, 
guarantees 
an
d 
loan 
commitments 
to 
multi
-
national 
and 
domestic 
counterparties. 
The 
increase 
compared 
with 
2019 
is 
mainly 
due 
to 
the 
COVID-19 
facilities 
guaranteed 
by 
the 
Swiss 
government 
of 
CHF 3 
billion 
(USD 3 
billion) 
and 
several 
large 
single 
positions.
 
The 
small 
and
 
medium
-
sized 
ent
ity 
(SME)
 
portfolio, 
in 
particular
, 
is 
well 
diversified 
across 
industries. 
However, 
such companies 
are reliant 
on 
the domestic 
economy 
and 
the 
economies 
to 
which 
they 
export, 
in 
particular 
the 
EU 
and the 
US. In 
addition, the 
change in 
the EUR 
/ CHF 
exchange 
rate is an important risk factor for Swiss corporate clients. 
The 
delinquency ratio 
was 0.4% 
for 
the 
corporate 
portfolio, 
compared with 0.5% at the end of 2019. 
›
 
Refer to “Credit risk models” in this section 
for more information 
about loss given default, rating grades and 
rating agency 
mappings 
Swiss mortgage loan portfolio 
Our 
Swiss 
mortgage 
loan 
portfolio 
secured 
by 
residential 
and 
commercial real estate in Switzerland 
continues to be our largest 
loan 
portfolio. 
These 
mortgage 
loans, 
totaling 
USD 170 
billion 
(CHF 150 
billion), 
mainly 
originate 
from 
Personal 
& 
Corporate 
Banking, 
but 
also 
from 
Global 
Wealth 
Management 
Region 
Switzerland. 
USD
 
1
5
3 
billion 
(CHF
 
1
3
6
 
billion) 
of 
those 
mortgage 
loans 
related 
to 
residential 
properties 
that 
the 
borrower was either 
occupying or renting 
out, with full recourse 
to 
the 
borrower. 
Of 
this 
USD
 
1
5
3 
billion 
(CHF
 
1
36
 
billion), 
USD 111 billion (CHF 98 
billion) is related 
to properties occupied 
by 
the 
borrower, 
with 
an 
average 
loan-to-value 
(LTV) 
ratio 
of 
54%, 
unchanged 
compared 
with 
31 
December 
2019. 
The 
average 
LTV 
for 
newly 
originated 
loans 
for 
this 
portfolio 
was 
67%, 
compared 
with 
65% 
in 
2019. 
The 
remaining 
USD 43 
billion 
(CHF 38 
billion) 
of 
the 
Swiss 
residential 
mortgage 
loan 
portfolio 
relates 
to 
properties 
rented 
out 
by 
the 
borrower 
and 
the average LTV of 
that portfolio was 53%, compared with 54% 
as of 
31 December 2019. 
The average 
LTV 
for newly 
originated 
Swiss residential mortgage loans for properties 
rented out by the 
borrower was 56%, compared with 58% in 2019. 
As 
illustrated 
in 
the 
“Swiss 
mortgages: 
distribution 
of 
net 
exposure 
at 
default 
(EAD) 
across 
exposure 
segments 
and 
loan-
to-value (LTV) 
buckets” table 
on the next 
page, more than 
99% 
of 
the 
aggregate 
amount 
of 
Swiss 
residential 
mortgage 
loans 
would continue to be covered by the real estate 
collateral even if 
the 
value 
assigned 
to 
that collateral 
were to 
decrease 
by 20%, 
and 
98% 
would 
remain 
covered 
by 
the 
real 
estate 
collateral 
even if 
the value 
assigned to 
that collateral 
were to 
decrease by 
30%. 
In 
this 
table, 
the 
amount 
of 
each 
mortgage 
loan 
is 
allocated across the LTV buckets 
to indicate the portion at 
risk at 
the various value levels shown; for example, a loan of 75 with an 
LTV ratio 
of 75% 
(i.e., a 
collateral value 
of 100) 
would result 
in 
allocations of 30 in the 
less-than-30% LTV bucket, 20 in 
the 31–
50% 
bucket, 
10 
in 
the 
51–60% 
bucket, 
10 
in 
the 
61–70% 
bucket and 5 in the 71–80% bucket. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
110 
Personal & Corporate Banking: distribution of banking products exposure across internal UBS ratings and loss given 
default (LGD) buckets
1
USD million, except where indicated 
31.12.20 
31.12.19 
LGD buckets 
Weighted 
average 
LGD (%) 
Weighted 
average 
LGD (%) 
Internal UBS rating
2
Exposure 
0–25% 
26–50% 
51–75% 
76–100% 
Exposure 
Investment grade 
121,386 
72,522 
37,724 
9,522 
1,617 
26 
102,491 
27 
Sub-investment grade 
63,266 
25,720 
23,644 
11,891 
2,011 
33 
58,597 
34 
of which: 6−9 
58,141 
23,714 
21,850 
10,794 
1,783 
33 
53,811 
34 
of which: 10−13 
5,125 
2,006 
1,794 
1,098 
228 
35 
4,786 
32 
Defaulted / Credit-impaired 
1,997 
53 
1,702 
241 
0 
41 
1,694 
40 
Total exposure before deduction of allowances and provisions 
186,648 
98,296 
63,070 
21,654 
3,628 
29 
162,782 
29 
Less: allowances and provisions 
(795) 
(660) 
Net banking products exposure
1
185,853 
162,121 
1 Excluding balances at central banks and Group Treasury 
reallocations. 
2 The ratings of the major credit rating agencies, 
and their mapping to our internal rating scale, are shown in the “Internal 
UBS rating scale 
and mapping of external ratings” table in this section. 
 
Personal & Corporate Banking: unsecured loans by industry sector 
31.12.20 
31.12.19 
USD million 
% 
USD million 
% 
Construction 
157 
1.4 
135 
1.3 
Financial institutions 
2,553 
23.2 
1,873 
18.5 
Hotels and restaurants 
133 
1.2 
81 
0.8 
Manufacturing 
1,572 
14.3 
1,536 
15.2 
Private households 
1,648 
15.0 
1,609 
15.9 
Public authorities 
472 
4.3 
497 
4.9 
Real estate and rentals 
498 
4.5 
236 
2.3 
Retail and wholesale 
1,756 
16.0 
1,981 
19.6 
Services 
1,896 
17.3 
1,850 
18.3 
Other 
309 
2.8 
313 
3.1 
Exposure, gross 
10,994 
100.0 
10,111 
100.0 
 
Swiss mortgages: distribution of net exposure at default (EAD) across exposure segments and loan-to-value (LTV) 
buckets 
USD billion, except where indicated 
31.12.20 
31.12.19 
LTV buckets 
Exposure segment 
≤30% 
31–50% 
51–60% 
61–70% 
71–80% 
81–100% 
>100% 
Total 
Total 
Residential mortgages 
Net EAD 
86.6 
38.8 
10.9 
5.4 
1.7 
0.4 
0.2 
143.9 
127.7 
as a % of row total 
60 
27 
8 
4 
1 
0 
0 
100 
Income-producing real estate 
Net EAD 
14.7 
5.8 
1.4 
0.6 
0.2 
0.1 
0.0 
22.8 
18.7 
as a % of row total 
65 
25 
6 
3 
1 
0 
0 
100 
Corporates 
Net EAD 
6.9 
2.6 
0.7 
0.3 
0.1 
0.1 
0.0 
10.8 
9.6 
as a % of row total 
64 
24 
6 
3 
1 
1 
0 
100 
Other segments 
Net EAD 
0.6 
0.2 
0.0 
0.0 
0.0 
0.0 
0.0 
0.8 
0.7 
as a % of row total 
68 
21 
5 
3 
1 
1 
0 
100 
Mortgage-covered exposure 
Net EAD 
108.8 
47.3 
13.0 
6.4 
2.0 
0.5 
0.2 
178.3 
156.7 
as a % of total 
61 
27 
7 
4 
1 
0 
0 
100 
Mortgage-covered exposure 31.12.19 
Net EAD 
94.6 
41.7 
11.8 
6.1 
2.1 
0.4 
0.1 
156.7 
as a % of total 
60 
27 
8 
4 
1 
0 
0 
100 
 
Asset Management 
Gross banking products exposure within Asset Management was 
USD
 
3
.
4
 
billion 
as 
of 
31
 
December 
2020
, 
compared 
with 
USD
 
2.
9
 
billion 
as 
of 
31
 
December 
20
19
. 
Banking 
products 
relate 
primarily 
to 
balances 
at 
central 
banks 
and 
to 
a 
lesser 
extent 
to 
cash 
at 
banks 
held 
by 
individual 
Asset 
Management 
legal entities, liquid assets and receivables. 
Investment Bank 
The 
Investment 
Bank’s 
lending 
activities 
are 
largely 
associated 
with corporate 
and non-bank 
financial institutions. 
The business 
is broadly 
diversified across industry 
sectors, but concentrated 
in 
North America. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111 
The 
gross 
banking 
products 
exposure 
including 
balances 
at 
central 
banks 
and 
Group 
Treasury 
reallocations 
was 
USD 56 
billion 
as 
of 
31 December 
2020, 
compared 
with 
USD 48 
billion 
as 
of 
31
 
December 
201
9
. 
Gross 
banking 
products 
exposure 
excluding 
b
alances 
at 
central 
banks 
and 
Group 
Treasury 
reallocations 
increased 
to 
USD 37 
billion 
from 
USD 32 
billion, 
mostly driven 
by increases 
in loans 
and advances 
to 
customers. 
Based 
on 
our 
internal 
ratings, 
53% 
of 
this 
gross 
banking 
products 
exposure 
was 
classified 
as 
investment 
grade. 
The 
vast 
majority 
of 
the 
gross 
banking 
products 
exposure 
had 
an 
estimated LGD below 50%. 
Our 
loan 
underwriting 
business’s 
overall 
ability 
to 
distribute 
risk 
remained 
sound. 
Total 
mandated 
temporary 
loan 
underwriting exposure ended 2020 at USD 4.9 
billion, compared 
with
 
USD
 
4.
4
 
billion 
at 
the 
end 
of
 
the 
prior 
year
.
 
Loan 
underwriting 
exposures 
are 
classified 
as 
held 
for 
trading, 
with 
fair values reflecting market conditions at the end of 2020. 
›
 
Refer to “Credit risk models” in this section for more 
information 
about LGD, rating grades and rating 
agency mappings 
 
Investment Bank: distribution of banking products exposure across internal UBS ratings and loss given default (LGD) 
buckets
1
USD million, except where indicated 
31.12.20 
31.12.19 
LGD buckets 
Weighted 
average 
LGD (%) 
Weighted 
average 
LGD (%) 
Internal UBS rating
2
Exposure 
0–25% 
26–50% 
51–75% 
76–100% 
Exposure 
Investment grade 
19,303 
6,858 
8,478 
3,680 
288 
36 
17,541 
40 
Sub-investment grade 
16,785 
4,598 
5,111 
6,957 
120 
17 
14,598 
18 
of which: 6−9 
12,030 
3,014 
2,060 
6,836 
120 
11 
10,746 
14 
of which: 10−13 
4,756 
1,584 
3,051 
121 
0 
30 
3,852 
30 
Defaulted / Credit-impaired 
450 
92 
113 
233 
12 
53 
91 
40 
Banking products exposure
1
36,538 
11,547 
13,701 
10,870 
420 
27 
32,229 
30 
1 Excluding balances at central banks and Group Treasury 
reallocations. 
2 The ratings of the major credit rating agencies, 
and their mapping to our internal rating scale, are shown in the “Internal 
UBS rating scale 
and mapping of external ratings” table in this section. 
 
 
Investment Bank: banking products exposure by geographical region
1
31.12.20 
31.12.19 
USD million 
% 
USD million 
% 
Asia Pacific 
7,216 
19.7 
5,080 
15.8 
Latin America 
1,584 
4.3 
844 
2.6 
Middle East and Africa 
428 
1.2 
467 
1.5 
North America 
15,462 
42.3 
16,553 
51.4 
Switzerland 
720 
2.0 
779 
2.4 
Rest of Europe 
11,129 
30.5 
8,505 
26.4 
Exposure
1
36,538 
100.0 
32,229 
100.0 
1 Excluding balances at central banks and Group Treasury reallocations. 
 
 
Investment Bank: banking products exposure by industry sector
1
31.12.20 
31.12.19 
USD million 
% 
USD million 
% 
Banks 
7,286 
19.9 
5,375 
16.7 
Chemicals 
876 
2.4 
766 
2.4 
Electricity, gas, water supply 
448 
1.2 
534 
1.7 
Financial institutions, excluding banks 
13,130 
35.9 
12,944 
40.2 
Manufacturing 
1,681 
4.6 
1,705 
5.3 
Mining 
1,558 
4.3 
1,699 
5.3 
Public authorities 
1,273 
3.5 
872 
2.7 
Real estate and construction 
1,421 
3.9 
1,291 
4.0 
Retail and wholesale 
2,041 
5.6 
1,842 
5.7 
Technology and communications 
3,443 
9.4 
2,302 
7.1 
Transport and storage 
445 
1.2 
458 
1.4 
Other 
2,937 
8.0 
2,441 
7.6 
Exposure
1
36,538 
100.0 
32,229 
100.0 
1 Excluding balances at central banks and Group Treasury reallocations. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
112 
Group Functions 
Gross banking products exposure 
within Group Functions, which 
arises 
primarily 
in 
connection 
with 
treasury 
activities, 
increased 
by 
USD 22 
billion 
to 
USD 52 
billion. 
Of 
this 
increase, 
USD 18 
billion 
came 
from 
balances 
at 
central 
banks
,
 
as 
the 
Gro
up 
increased its liquidity reserves in a volatile market environment. 
›
 
Refer to “Balance sheet assets” in the “Capital, 
liquidity and 
funding, and balance sheet” section of 
this report for more 
information 
›
 
Refer to the “Group Functions” 
section of this report for more 
information 
Traded products 
Audited 
|
 
Counterparty 
credit 
risk 
arising 
from 
traded 
products, 
which 
include 
over
-
the
-
counter 
(
OTC
)
 
derivatives
,
 
exchange
-
traded 
derivatives
 
(
ETD
)
 
exposures 
and
 
securities 
financing 
transactions (SFTs 
), 
originating in the Investment 
Bank, Non-core 
and Legacy 
Portfolio, and 
Group Treasury 
is generally 
managed 
on 
a close 
-out basis. 
This takes 
into account 
possible effect 
s 
of 
market 
movements 
on
 
the 
exposure 
and 
any 
associated 
collateral over 
the time 
it would 
take to 
close out 
our positions. 
In the Investment 
Bank, limits are 
applied to the potential 
future 
exposure per 
counterparty, 
with the 
size of 
the limit 
dependent 
on 
the 
creditworthiness 
(as 
determined 
by 
Risk 
Control) 
of 
the 
counterparty. 
Limit 
frameworks 
are 
also 
applied 
to 
control 
overall exposure 
to specific 
classes or 
categories of 
collateral on 
a 
portfolio 
level. 
Such 
portfolio
 
limits 
are 
monitored 
and 
reported to senior management.
 
Trading 
in 
OTC 
derivatives 
is 
conducted 
through 
central 
counterparties 
(CCPs) 
where 
practicable. 
Where 
CCPs 
are 
not 
used, we have 
clearly defined 
policies and 
processes for 
trading on 
a 
bilateral 
basis. 
Trading 
is 
typically 
conducted 
under 
bilateral 
International Swaps 
and 
Derivatives Association (ISDA) 
or 
similar 
master 
netting 
agreements, which 
generally allow 
for 
close-out 
and netting of 
transactions 
in case of 
default, 
subject to 
applicable 
law. 
For 
most 
major 
market 
participant 
counterparties, we 
use 
two-way collateral 
agreements under 
which either 
party can 
be 
required to 
provide collateral in 
the 
form of 
cash or 
marketable 
securities 
when 
the 
exposure 
exceeds 
specified 
levels. 
This 
collateral typically 
consists of well-rated 
government debt or other 
collateral 
permitted 
by 
applicable 
regulations. 
For 
certain 
counterparties, an initial 
margin is 
taken to 
cover some 
or all 
of 
the 
calculated 
close-out 
exposure. 
This 
is 
in 
addition 
to 
the 
variation 
margin 
taken 
to 
settle 
changes 
in 
market 
value 
of 
transactions. Regulations 
on margining uncleared OTC derivatives 
continue to evolve. These generally expand the 
scope of bilateral 
derivatives activity 
subject 
to 
margining. They 
will 
also 
result 
in 
greater amounts 
of 
initial margin 
received from, 
and 
posted to, 
certain bilateral trading counterparties than had been 
required in 
the past. These changes should result in lower 
close-out risk over 
time. 
p
 
›
 
Refer to “Note 10 
Derivative 
instruments” 
in the “Consolidated 
financial 
statements” 
section of this report for more information 
about OTC derivatives settled through central 
counterparties 
›
 
Refer to “Note 22 
Offsetting 
financial 
assets 
and financial 
liabilities” 
in the “Consolidated 
financial 
statements” 
section of this report 
for more information about the effect of netting 
and collateral 
arrangements on derivative exposures 
 
Credit 
risk 
arising 
from 
traded 
products, 
after 
the 
effects 
of 
master 
netting 
agreements 
but 
excluding 
credit 
valuation 
adjustments 
and 
hedges, 
increased 
by 
USD 3 
billion 
to 
USD 51 
billion 
as 
of 
31 December 2020. 
OTC 
derivatives 
accounted 
for 
USD 19 
billion, 
exposures 
from 
SFTs 
were 
USD 22 
billion, 
and 
ETD 
exposures 
amounted 
to 
USD 10 
billion. 
OTC 
derivatives 
exposures 
are 
generally 
measured 
as 
net 
positive 
replacement 
values 
after 
the 
application 
of 
legally 
enforceable 
netting 
agreements and the deduction of 
cash and marketable securities 
held as collateral. SFT exposures are reported taking into account 
collateral 
received, 
and 
ETD 
exposures 
take 
into 
account 
collateral margin calls. 
O
f 
the 
total 
of 
USD
 
51 
billion 
gross 
traded 
products 
exposures, USD 40 billion 
was within the 
Investment Bank, Non-
core 
and 
Legacy 
Portfolio, 
and 
Group 
Treasury, 
compared 
with 
USD 38 billion therein as 
of 31 December 2019. As 
counterparty 
risk for traded products is 
managed at the counterparty level, 
no 
further 
split 
is 
provided 
between 
exposures 
in 
the 
Investment 
Bank 
and 
those 
in 
Non-core 
and 
Legacy 
Portfolio 
and 
Group 
Treasury. The 
tables on 
the next 
page provide 
more information 
about 
the 
OTC 
derivatives, 
SFT 
and 
ETD 
exposures 
of 
the 
Investment 
Bank, 
Non
-
core 
and 
Legac
y 
Portfolio
,
 
and 
Group 
Treasury. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
113 
Investment Bank, Non-core and Legacy Portfolio and Group Treasury: 
traded products exposure 
USD million 
OTC derivatives 
SFTs 
ETD 
Total 
Total 
31.12.20 
31.12.19 
Total exposure, before deduction of credit valuation adjustments and hedges 
11,236 
21,753 
7,227 
40,215 
38,232 
Less: credit valuation adjustments and allowances 
(54) 
0 
0 
(54) 
(38) 
Less: credit protection bought (credit default swaps, notional) 
(126) 
0 
0 
(126) 
(242) 
Net exposure after credit valuation adjustments, allowances and hedges 
11,056 
21,753 
7,227 
40,035 
37,952 
 
Investment Bank, Non-core and Legacy Portfolio and Group Treasury: 
distribution of net OTC derivatives and SFT 
exposure across internal UBS ratings and loss given default (LGD) buckets 
USD million, except where indicated 
31.12.20 
31.12.19 
LGD buckets 
Weighted 
average 
LGD (%) 
Weighted 
average 
LGD (%) 
Internal UBS rating
1
Exposure 
0–25% 
26–50% 
51–75% 
76–100% 
Exposure 
Net OTC derivatives exposure 
Investment grade 
10,436 
195 
8,343 
1,475 
423 
49 
9,247 
47 
Sub-investment grade 
620 
113 
109 
313 
85 
55 
304 
56 
of which: 6−9 
487 
93 
87 
246 
61 
55 
176 
57 
of which: 10−12 
114 
3 
22 
67 
21 
62 
112 
58 
of which: 13 and defaulted 
19 
17 
0 
0 
2 
12 
16 
19 
Total net OTC derivatives exposure, after credit valuation adjustments 
and hedges 
11,056 
307 
8,453 
1,788 
508 
49 
9,550 
47 
Net SFT exposure 
Investment grade 
21,155 
253 
18,883 
1,518 
501 
40 
20,524 
40 
Sub-investment grade 
598 
94 
223 
84 
197 
59 
297 
62 
Total net SFT exposure 
21,753 
347 
19,106 
1,602 
698 
40 
20,821 
40 
1 The ratings of the major credit rating agencies, and 
their mapping to our internal rating scale, are shown in the “Internal UBS rating 
scale and mapping of external ratings” table in this section. 
 
Investment Bank, Non-core and Legacy Portfolio and Group Treasury: 
net OTC derivatives and SFT exposure 
by geographical region 
Net OTC derivatives exposure 
Net SFT exposure 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
USD million 
% 
USD million 
% 
USD million 
% 
USD million 
% 
Asia Pacific 
2,139 
19.3 
1,383 
14.5 
5,123 
23.6 
5,055 
24.3 
Latin America 
162 
1.5 
97 
1.0 
18 
0.1 
4 
0.0 
Middle East and Africa 
263 
2.4 
123 
1.3 
939 
4.3 
900 
4.3 
North America 
2,539 
23.0 
2,421 
25.3 
4,778 
22.0 
4,714 
22.6 
Switzerland 
667 
6.0 
1,022 
10.7 
1,329 
6.1 
852 
4.1 
Rest of Europe 
5,286 
47.8 
4,503 
47.2 
9,566 
44.0 
9,297 
44.7 
Exposure 
11,056 
100.0 
9,550 
100.0 
21,753 
100.0 
20,821 
100.0 
 
Investment Bank, Non-core and Legacy Portfolio and Group Treasury: 
net OTC derivatives and SFT exposure 
by industry sector 
Net OTC derivatives exposure 
Net SFT exposure 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
USD million 
% 
USD million 
% 
USD million 
% 
USD million 
% 
Banks 
5,181 
46.9 
4,608 
48.3 
3,796 
17.5 
3,713 
17.8 
Chemicals 
10 
0.1 
4 
0.0 
0 
0.0 
0 
0.0 
Electricity, gas, water supply 
127 
1.2 
99 
1.0 
0 
0.0 
0 
0.0 
Financial institutions, excluding banks 
3,439 
31.1 
3,188 
33.4 
15,907 
73.1 
15,593 
74.9 
Manufacturing 
68 
0.6 
67 
0.7 
0 
0.0 
0 
0.0 
Mining 
12 
0.1 
9 
0.1 
0 
0.0 
0 
0.0 
Public authorities 
1,339 
12.1 
1,019 
10.7 
2,050 
9.4 
1,514 
7.3 
Retail and wholesale 
44 
0.4 
17 
0.2 
0 
0.0 
0 
0.0 
Transport, storage and communication 
481 
4.3 
383 
4.0 
0 
0.0 
0 
0.0 
Other 
356 
3.2 
156 
1.6 
1 
0.0 
0 
0.0 
Exposure 
11,056 
100.0 
9,550 
100.0 
21,753 
100.0 
20,821 
100.0 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
114 
Credit risk mitigation 
Audited |
 
We actively manage credit 
risk in our portfolios by 
taking 
collateral against exposures and by utilizing credit hedging. 
p
 
Lending secured by real estate 
Audited |
 
We use 
a scoring 
model as 
part of 
a standardized 
front-
to
-
back 
process 
for 
credit 
decisions 
on 
the 
originati
ng
 
or 
modifying of Swiss mortgage loans. 
The model’s two key factors 
are 
an affordability 
calculation relative 
to gross 
income and 
the 
LTV ratio. 
p
 
The 
calculation 
of 
affordability 
takes 
into 
account 
interest 
payments, 
minimum 
amortization 
requirements, 
potential 
property 
maintenance 
costs 
and, 
for 
rental 
properties, 
the level 
of 
rental 
income. 
Interest 
payments 
are 
estimated 
using 
a 
predefined
 
framework, 
which 
considers 
the 
potential 
for 
significant 
interest 
rates 
increases over 
the 
lifetime 
of 
the 
loan. 
The interest rate is set at 5% per annum. 
For 
residential 
properties 
occupied 
by 
the 
borrower, 
the 
maximum 
LTV 
for 
the 
standard 
approval 
process 
is 
80% 
and 
60% 
for 
holiday 
homes 
and 
luxury 
real 
estate. 
For 
other 
properties, 
the 
maximum 
LTV 
allowed 
within 
the 
standard 
approval 
process 
ranges 
from 
30% 
to 
80%, 
depending 
on 
the 
type 
and 
age 
of 
the 
property, 
and 
the 
amount 
of 
renovation 
work needed. 
Audited |
 
The value 
we assign 
to each 
property is 
based on 
the 
lowest 
value 
determined 
from 
model
-
derived
 
valuations, 
the 
purchase 
price 
and, 
in 
some 
cases, 
an 
additional 
external 
valuation. 
p
 
Two separate 
models 
provided 
by 
a 
market-leading 
external 
vendor 
are 
used 
to 
derive 
property 
valuations 
for 
owner-
occupied 
residential 
properties 
(ORPs) 
and 
income-producing 
real estate (IPRE). We estimate 
the current value of an 
ORP using 
a 
regression 
model 
(
a 
hedonic 
model) 
based 
on 
statistical 
comparison 
against 
current 
transaction 
data. 
We 
derive 
the 
property value from the characteristics 
of the real estate itself, as 
well 
as 
those of 
its location. 
In addition 
to the 
initial 
valuation, 
values 
for 
ORPs 
are 
updated 
quarterly 
over 
the 
lifetime 
of 
the 
loan 
using 
region-specific 
real 
estate 
price 
indices. 
The 
price 
indices 
are 
sourced 
from 
an 
external 
vendor 
and 
subject 
to 
internal 
validation 
and 
benchmarking. 
We 
use 
these 
valuations 
quarterly 
to 
compute 
indexed 
LTV 
for 
all 
ORPs 
and 
consider 
them along 
with other 
risk measures 
(e.g., rating 
migration and 
behavioral 
information) 
to 
identify 
higher-risk 
loans, 
which 
are 
then 
each 
reviewed 
by 
client 
advisors 
and 
credit 
officers, 
with 
necessary action taken. 
For 
IPRE, 
the 
capitalization 
rate 
model 
is 
used 
to 
determine 
the 
property 
valuation 
by 
discounting 
estimated 
sustainable 
future 
income 
using 
a 
capitalization 
rate 
based 
on 
various 
attributes. 
These 
attributes 
consider 
regional 
and
 
specific 
property characteristics, 
such as 
market and 
location 
data (e.g., 
vacancy rates), 
benchmarks (e.g., 
for running 
costs) and 
certain 
other 
standardized 
input 
parameters 
(e.g., 
property 
condition). 
Rental 
income 
from 
IPRE 
is 
reviewed 
at 
least 
once 
every 
three 
years, 
but 
indications 
of 
significant 
changes 
in 
the 
amount 
of 
rental 
income 
or 
in 
the 
vacancy 
rate 
can 
trigger 
an 
interim 
reappraisal. 
To take 
market developments 
into account 
for these 
models, 
the 
external 
vendor 
regularly 
updates 
the 
parameters 
and 
/ 
or 
refines 
the 
architecture 
for 
each 
model. 
Model 
changes 
and 
parameter updates are subject to the same validation procedures 
as our internally developed models. 
Audited 
|
 
We 
similarly 
apply 
underwriting 
guidelines 
for 
our 
Global 
Wealth 
Management 
Region 
Americas 
mortgage 
loan 
portfolio, 
taking 
into 
account 
loan 
affordability 
and 
collateral 
sufficiency. 
LTV 
standards 
are 
defined 
for 
the 
various 
mortgage 
types, 
such 
as 
residential 
mortgages 
or 
investment 
properties, 
based on associated risk factors, such as property type, loan 
size, 
and 
purpose. 
The 
maximum 
LTV 
allowed 
within 
the 
standard 
approval 
process 
ranges from 
45% 
to 
80%. In 
addition 
to 
LTV, 
other 
credit 
risk 
metrics, 
such 
as 
debt-to-income 
ratios, 
credit 
scores 
and 
required 
client 
reserves, 
are 
also 
part 
of 
our 
underwriting guidelines. 
A 
risk 
limit 
framework 
is 
applied 
to 
the 
Global 
Wealth 
Management 
Region 
Americas 
mortgage 
loan 
portfolio. 
Limits 
are 
set 
to 
govern 
exposures 
within 
LTV 
categories, 
geographic 
concentrations, 
portfolio 
growth 
and 
high-risk 
mortgage 
segments, 
such as interest-only loans. These limits are 
monitored 
by 
a 
specialized 
credit 
risk 
monitoring 
team 
and 
reported 
to 
senior 
management. 
Supplementing 
this 
limit 
framework 
is 
a 
real 
estate 
lending 
policy and 
procedures 
framework, 
set 
up to 
govern 
real 
estate 
lending 
activities. 
Quality 
assurance 
and 
quality 
control 
programs 
monitor 
compliance 
with 
mortgage 
underwriting and documentation requirements. 
p
 
›
 
Refer to “Swiss mortgage loan portfolio” 
in this section for more 
information about LTV in our Swiss mortgage portfolio 
Lombard lending 
Audited 
|
 
Lombard 
loans 
are 
secured 
by 
pledges 
of 
marketable 
securities, 
guarantees 
and 
other 
forms 
of 
collateral. 
Eligible 
financial 
securities 
are 
primarily 
liquid 
and 
actively 
traded 
transferable 
securities 
(such 
as 
bonds 
and 
equities), 
and 
other 
transferable securities, 
such as approved 
structured products 
for 
which 
regular 
prices are 
available and 
the issuer 
of the 
security 
provides a market. To 
a lesser degree, less liquid 
collateral is also 
used. 
We 
derive 
lending 
values 
by 
applying 
discounts 
(haircuts) 
to 
the 
pledged 
collateral’s 
market 
value. 
Haircuts 
for 
marketable 
securities are calculated 
to cover possible 
change in value 
over a 
given close-out 
period and 
confidence level. 
Less liquid 
or more 
volatile collateral will typically have larger haircuts. 
We assess concentration and 
correlation risks across collateral 
posted 
at 
a 
counterparty 
level, 
and 
at 
a 
divisional 
level 
across 
counterparties. We 
also perform targeted Group-wide reviews of 
concentration. 
Concentration 
of 
collateral 
in 
single 
securities, 
issuers 
or 
issuer 
groups, 
industry 
sectors, 
countries, 
regions 
or 
currencies may result 
in higher risk and 
reduced liquidity. In such 
cases, the 
lending value 
of the 
collateral, margin 
call and 
close-
out levels are adjusted accordingly. 
p
 
 
 

 
115 
Exposures 
and 
collateral 
values are 
monitored 
daily 
with 
the 
aim 
of 
ensuring 
that 
the 
credit 
exposure 
is 
always 
within 
the 
established 
risk 
tolerance. 
A 
shortfall 
occurs 
when 
the 
lending 
value 
drops 
below 
the 
exposure; 
if 
it 
exceeds 
a 
defined 
trigger 
level, 
a 
margin 
call 
is 
initiated, 
requiring 
the 
client 
to 
provide 
additional collateral, reduce the 
exposure or take other 
action to 
bring 
exposure 
in 
line 
with 
the 
agreed 
lending 
value 
of 
the 
collateral. 
If 
a 
shortfall 
increases 
and 
exceeds 
a 
further 
trigger 
level, or the 
shortfall is not 
corrected within the 
required period, 
a 
close-out 
is 
initiated, 
through 
which 
collateral 
is 
liquidated, 
open derivative positions are closed and guarantees are called. 
We 
conduct 
stress 
testing 
of 
collateralized 
exposures 
to 
simulate 
market 
events 
that 
reduce 
collateral 
value, 
increase 
exposure 
of 
traded 
products, 
or 
do 
both. 
For 
certain 
classes of 
counterparties, 
limits 
on 
such 
calculated 
stress 
exposures 
are 
applied 
and 
controlled 
at 
a 
counterparty 
level. 
Also, 
portfolio 
limits are applied across certain businesses or collateral types. 
›
 
Refer to “Stress loss” in this section for more 
information about 
our stress testing 
Credit hedging 
Audited |
 
We use 
single-name credit 
default swaps 
(CDSs), credit-
index 
CDSs, 
bespoke 
protection 
and 
other 
instruments 
to 
actively manage credit 
risk in the 
Investment Bank and 
Non-core 
and Legacy 
Portfolio. The 
aim is 
reducing 
concentrations of 
risk 
from 
specific 
counterpa
rties, 
sectors 
or 
portfolios 
and, 
for 
counterparty 
credit 
risk, 
the 
profit 
or 
loss 
effect 
arising 
from 
changes in credit valuation adjustments (CVAs). 
We have 
strict guidelines 
with regard 
to taking 
credit hedges 
into 
account 
for 
credit 
risk 
mitigation 
purposes. 
For 
example, 
when 
monitoring 
exposures 
against 
counterparty 
limits, 
we 
do 
not 
usually 
apply 
certain
 
credit 
risk 
mitigants
,
 
such 
as 
proxy 
hedges (credit 
protection on 
a correlated 
but different 
name) or 
credit
-
index 
CDSs
,
 
to 
reduce 
counterparty 
expos
ures
. 
Buying 
credit protection 
also creates 
credit exposure 
with regard 
to the 
protection 
provider. 
We 
monitor 
and 
limit 
exposures 
to 
credit 
protection providers, and also 
monitor the effectiveness of 
credit 
hedges 
as 
part 
of 
our 
overall 
credit 
exposures 
to 
the 
relevant 
counterparties. 
Trading 
with 
such 
counterparties 
is 
typically 
collateralized. 
For 
credit 
protection 
purchased 
to 
hedge 
the 
lending portfolio, 
this includes 
monitoring mismatches 
between 
the maturity 
of credit 
protection purchased 
and the 
maturity of 
the associated loan. Such mismatches result in basis risk and may 
reduce the effectiveness of the credit 
protection. Mismatches are 
routinely 
reported 
to 
credit 
officers 
and 
mitigating 
actions 
are 
taken when necessary. 
p
 
›
 
Refer to “Note 10 Derivative instruments” 
in the “Consolidated 
financial statements” 
section of this report for more information 
Mitigation of settlement risk 
To 
mitigate 
settlement 
risk, 
we 
reduce 
actual 
settlement 
volumes 
by 
using 
multi-lateral 
and 
bilateral 
agreements 
with 
counterparties including payment netting. 
Foreign exchange transactions are 
our most significant source 
of 
settlement 
risk. 
We 
are 
a 
member 
of 
Continuous 
Linked 
Settlement 
(CLS), an 
industry utility 
that provides 
a multi-lateral 
framework 
to 
settle 
transactions 
on 
a 
delivery-versus-payment 
basis, 
th
us
 
reducing 
foreign 
exchange
-
related 
settlement 
risk 
relative 
to 
the 
volume 
of 
business. 
However, 
mitigation 
of 
settlement 
risk 
through 
CLS 
and 
other 
means 
does 
not 
fully 
eliminate 
credit 
risk 
in 
foreign 
exchange 
transactions 
resulting 
from 
changes 
in 
exchange 
rates 
prior 
to 
settlement, 
which 
is 
managed as 
part of 
our overall 
credit 
risk management 
of OTC 
derivatives. 
Credit risk models 
Basel III – A-IRB credit risk models
 
Audited |
 
We have 
developed tools 
and models 
to estimate 
future 
credit losses that may be implicit in our current portfolio. 
Exposures 
to 
individual 
counterparties 
are 
measured 
using 
three 
generally 
accepted 
parameters: 
PD, 
EAD 
and 
LGD. 
For 
a 
given credit facility, the product of these three parameters results 
in 
the 
expected 
loss. 
These 
parameters 
are 
the 
basis 
for 
the 
majority 
of 
our 
internal 
measures 
of 
credit 
risk, 
and 
key 
inputs 
for 
regulatory 
capital 
calculation 
under 
the 
advanced 
internal 
ratings-based 
(A-IRB) 
approach 
of 
the 
Basel 
III 
framework. 
We 
also 
use 
models 
to 
derive 
the 
portfolio 
credit 
risk 
measures 
of 
expected loss, statistical loss and stress loss. 
p
 
The 
“Key 
features 
of 
our 
main 
credit 
risk 
models” 
table 
on 
the next page shows the number and key features of the 
models 
we use 
to derive 
PD, LGD 
and EAD 
for our 
main portfolios 
and 
asset 
classes, 
and 
is 
followed 
by 
more 
detailed 
explanations 
of 
these models and parameters.
 
›
 
Refer to the 31 December 2020 Pillar 3 
report, available under 
“Pillar 3 disclosures” at 
ubs.com/investors
,
 
for more information 
about the regulatory capital calculation 
under the advanced 
internal ratings-based approach 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
116 
Key features of our main credit risk models 
Portfolio in scope 
Asset class 
Model 
approach 
Number of 
main models 
Main drivers 
Number of 
years of loss 
data
1
Probability of 
default 
Sovereigns and central banks 
Central governments and 
central banks 
Scorecard 
1 
Political, institutional and economic indicators 
>10 
Owner-occupied mortgages in 
Switzerland and the US 
Retail: residential 
mortgages 
Scorecard 
2 
Behavioral data, affordability relative to income, 
property type, loan-to-value. Separate models for 
mortgages in Switzerland and the US 
26 
Income-producing real estate 
mortgages 
Retail: residential 
mortgages, 
Corporates: specialized 
lending 
Scorecard 
1 
Loan-to-value, debt service coverage, financial data 
(for large corporates only), behavioral data. Weights 
of risk drivers differ between corporate and private 
clients 
26 
Lombard lending 
Retail: other 
Merton type 
1 
Loan-to-value, historical asset returns, behavioral 
data 
14 
Small and medium-sized 
enterprises 
Corporates: other lending 
Scorecard 
1 
Financial data including balance sheet ratios and 
profit and loss, behavioral data. Weights of risk 
drivers differ depending on the corporate client sub-
segment 
26 
Banks 
Banks and securities 
dealers 
Scorecard 
4 
Financial data including balance sheet ratios and 
profit and loss. Separate models for banks – 
developed markets, banks – emerging markets, 
broker-dealers and investment banks, and private 
banks 
13 
Commodity traders 
Corporates: specialized 
lending 
Scorecard 
1 
Financial data including balance sheet ratios and 
profit and loss, as well as non-financial criteria 
22 
Aircraft financing 
Corporates: other lending 
Rating 
template 
1 
Financial structure of the transaction 
14 
Large corporates 
Corporates: other lending 
Scorecard / 
market data 
3 
Financial data including balance sheet ratios and 
profit and loss, and market data. Separate rating 
tools for corporates with publicly traded and highly 
liquid stocks (market intelligence tool), private 
corporates, and leveraged corporates 
13 
Other portfolios 
Corporates: other 
lending, 
Public-sector entities and 
multi-lateral development 
banks 
Scorecard / 
pooled rating 
approach / 
rating 
template 
9 
Financial data and / or historical portfolio 
performance for pooled ratings. Separate models for 
hedge funds, managed funds, insurance companies, 
commercial real estate loans, mortgage originators, 
public-sector entities and multi-lateral development 
banks / supranationals 
13 
Loss given default 
Owner-occupied mortgages in 
Switzerland and the US 
Retail: residential 
mortgages 
Statistical 
model 
2 
Loan-to-value, time since last valuation. Separate 
models for mortgages in Switzerland and the US 
11 
Income-producing real estate 
mortgages 
Retail: residential 
mortgages, Corporates: 
specialized lending 
Statistical 
model 
1 
Loan-to-value, time since last valuation, property 
type, location indicator 
11 
Lombard lending 
Retail: other 
Statistical 
model, 
simulation 
1 
Historical observed loss rates 
12 
Small and medium-sized 
enterprises 
Corporates: other lending 
Statistical 
model 
2 
Separate models for mortgage and non-mortgage 
LGDs. Mortgage models: loan-to-value, time since 
last valuation, property type, location indicator. Non-
mortgage models: historical observed loss rates 
11–17 
Investment Bank – all 
counterparties 
Across the asset classes 
Statistical 
model 
2 
Counterparty and facility specific, including industry 
segment, collateral, seniority, legal environment and 
bankruptcy procedures. Specific model for sovereign 
LGDs based on econometric modeling of past default 
events using GDP per capita, government debt, and 
other quantitative and qualitative factors such as the 
share of multi-lateral debt service, the size of the 
banking sector and institutional quality 
5–10 
Exposure at default 
Banking products 
Across the asset classes 
Statistical 
model 
3 
Separate models based on exposure type (committed 
credit lines, revocable credit lines, contingent 
products) 
>10 
Traded products 
Across the asset classes 
Statistical 
model 
2 
Product-specific market drivers, e.g., interest rates. 
Separate models for OTC derivatives, ETDs and SFTs 
that generate the simulation of risk factors used for 
the credit exposure measure 
n/a 
1 For sovereign and Investment Bank PD models, the length of internal portfolio history is 
shown in “Number of years of loss data”. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
117 
Audited | 
 
Internal UBS rating scale and mapping of external ratings 
Internal UBS rating 
1-year PD range in % 
Description 
Moody’s Investors 
Service mapping 
Standard & Poor’s 
mapping 
Fitch mapping 
0 and 1 
0.00–0.02 
Investment grade 
Aaa 
AAA 
AAA 
2 
0.02–0.05 
Aa1 to Aa3 
AA+ to AA– 
AA+ to AA– 
3 
0.05–0.12 
A1 to A3 
A+ to A– 
A+ to A– 
4 
0.12–0.25 
Baa1 to Baa2 
BBB+ to BBB 
BBB+ to BBB 
5 
0.25–0.50 
Baa3 
BBB– 
BBB– 
6 
0.50–0.80 
Sub-investment grade 
Ba1 
BB+ 
BB+ 
7 
0.80–1.30 
Ba2 
BB 
BB 
8 
1.30–2.10 
Ba3 
BB– 
BB– 
9 
2.10–3.50 
B1 
B+ 
B+ 
10 
3.50–6.00 
B2 
B 
B 
11 
6.00–10.00 
B3 
B– 
B– 
12 
10.00–17.00 
Caa 
13 
>17 
Ca to C 
CCC to C 
CCC to C 
Counterparty is in default 
Default 
Defaulted 
D 
D 
p
 
 
Probability of default 
PD 
estimates 
the 
likelihood of 
a 
counterparty defaulting 
on 
its 
contractual obligations over 
the next 
12 
months. PD 
ratings are 
used for 
credit risk measurement and 
are an 
important input for 
determining credit risk approval authorities. For calculating 
RWA, 
a 
three-basis-point PD 
floor is 
applied to 
banks, corporates 
and 
retail 
exposures 
as 
required 
under 
the 
Basel 
III 
framework. We 
apply 
an 
eight-basis-point 
PD 
floor 
for 
Swiss 
owner-occupied 
mortgages and 
a four-basis-point 
PD floor for 
Lombard loans. 
PD 
is 
assessed 
using 
rating 
tools 
tailored 
to 
the 
various 
categories 
of 
counterparties. 
Statistically 
developed 
scorecards, 
based on key attributes 
of the obligor, are 
used to determine PD 
for 
many 
corporate 
clients 
and 
loans 
secured 
by 
real 
estate. 
Where available, market 
data may also 
be used to 
derive the PD 
for large corporate counterparties. For low-default portfolios, we 
take into 
account available 
relevant external 
default data 
in the 
rating 
tool 
development. 
For 
Lombard 
loans, 
our 
rating 
approach 
us
es 
Merton
-
type 
historical 
return
-
based 
model 
simulations 
taking 
into 
account 
potential 
changes 
in 
securities 
collateral 
value. 
These 
categories 
are 
also 
calibrated 
to 
our 
internal 
credit 
rating 
scale 
(masterscale), 
designed 
to 
ensure 
a 
consistent 
assessment 
of 
default 
probabilities 
across 
counterparties. 
Our 
masterscale 
expresses 
one-year 
default 
probabilities determined 
using our various 
rating tools by 
means 
of 
distinct 
classes, 
with 
each 
class 
incorporat
ing
 
a 
range 
of 
default 
probabilities. 
Counterpartie
s 
move 
between 
rating 
classes as our assessment of their PD changes. 
The ratings of major credit rating agencies, and their mapping 
to 
our 
masterscale 
and 
internal 
PD 
bands, 
are 
shown 
in 
the 
“Internal 
UBS 
rating 
scale 
and 
mapping 
of 
external 
ratings” 
table above. For Moody’s and 
Standard & Poor’s, the mapping 
is 
based 
on 
the 
long-term 
average 
of 
one-year 
default 
rates 
available 
from 
these 
rating 
agencies, 
with 
Fitch 
ratings 
being 
mapped 
to 
the 
equivalent 
Standard 
& 
Poor’s 
ratings. 
For 
each 
external 
rating 
category, 
average 
default 
rate 
is 
compared 
with 
our internal PD 
bands to derive 
a mapping to 
our internal rating 
scale. 
Our 
internal 
rating 
of 
a 
counterparty 
may 
thus 
diverge 
from one or more of the correlated external ratings shown in the 
table. 
Observed 
defaults 
by 
rating 
agencies 
may 
vary 
through 
economic 
cycles, 
and 
we 
do 
not 
necessarily 
expect 
the 
actual 
number 
of 
defaults 
in 
our 
equivalent 
rating 
band 
to 
equal 
the 
rating 
agencies’ 
average 
in 
any 
given 
period. 
We 
periodically 
assess 
the 
long-term 
average 
default 
rates 
of 
credit 
rating 
agencies’ ratings, and adjust their mapping to our masterscale as 
needed to reflect any material changes. 
Exposure at default 
EAD is 
the amount 
we expect 
to be 
owed by 
a counterparty 
at 
the 
time 
of 
a 
possible 
default. 
We 
derive 
EAD 
from 
current 
exposure 
to 
the 
counterparty 
and 
possible 
future 
exposure 
development. 
The 
EAD of 
an 
on-balance sheet loan 
is its 
notional amount. 
For 
off-balance 
sheet 
commitments that 
are 
not 
drawn, 
credit 
conversion factors (CCFs) are used in order to obtain an expected 
on
-
balance 
sheet
 
amount. 
Such 
CCFs 
are 
based 
on 
historical 
observations
.
 
To 
comply 
with 
regulatory 
guidance, 
we 
floor 
individual observed CCF values at zero in the CCF model; i.e., we 
assume 
that 
the 
drawn 
EAD 
will 
be 
no 
less
 
than 
the 
drawn 
amount one 
year prior 
to default. 
For traded products, we derive EAD 
by modeling the range of 
possible 
exposure 
outcomes 
at 
various 
points 
in 
time 
using 
scenario and statistical 
techniques. 
We assess the net amount 
that 
may be 
owed to 
us 
or 
that we 
may owe 
to 
others, taking 
into 
account the 
effect of market 
movements over 
the potential 
time it 
would take 
to 
close out 
positions. For 
ETDs, calculation 
of 
EAD 
takes 
into 
account 
collateral 
margin 
calls. 
When 
measuring 
individual counterparty 
exposure against credit limits, we consider 
the 
maximum 
likely 
exposure 
measured 
to 
a 
high 
level
 
of 
confidence. 
However, 
when 
aggregating 
exposures 
to 
different 
counterparties for 
portfolio risk 
measurement purposes, 
we 
use 
the expected 
exposure to 
each counterparty 
at a given 
time period 
(usually one 
year) generated 
by the same 
model. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
118 
We 
assess 
exposures 
where 
there 
is 
a 
material 
correlation 
between the factors driving the credit quality of the counterparty 
and 
those 
driving 
the 
potential 
future 
value 
of 
our 
traded 
products 
exposure 
(wrong-way 
risk), 
and 
we 
have 
established 
specific controls to mitigate such risks. 
Loss given default 
LGD is 
the magnitude 
of the 
likely loss 
if there 
is a 
default. Our 
LGD estimates, which consider downturn conditions, include loss 
of principal, 
interest and 
other amounts (such 
as workout 
costs, 
including 
the 
cost 
of 
carrying 
an 
impaired 
position 
during 
the 
workout 
process) 
less 
recovered 
amounts. 
We 
determine 
LGD 
based 
on 
the 
likely 
recovery 
rate 
of 
claims 
against 
defaulted 
counterparties, which 
depends on 
the type 
of counterparty 
and 
any 
credit 
mitigation 
due 
to
 
collateral 
or 
guarantees. 
Our 
estimates 
are 
supported 
by 
internal 
loss 
data 
and 
external 
informatio
n,
 
where 
available. 
If 
we 
hold 
collateral, 
such 
as 
marketable 
securities 
or 
a 
mortgage 
on 
a 
property, 
LTV 
ratios 
are 
typically 
a 
key 
parameter 
in 
determining 
LGD. 
For 
low-
default 
portfolios, 
where 
av
ailable
,
 
we 
take 
into 
account 
relevant external 
default data 
in the 
rating tool 
development. In 
RWA 
calculation, 
a 
regulatory 
LGD 
floor 
of 
10% 
is 
applied 
for 
exposures 
secured 
by 
residential 
properties. 
Additionally, 
we 
apply 
a 
30% 
LGD 
floor 
for 
Lombard 
loans 
in 
Global 
Wealth 
Management outside Region Americas 
and a 25% LGD floor 
for 
Lombard loans 
in Global Wealth 
Management Region Americas. 
All other LGDs are subject to a 5% floor. 
Expected loss 
Credit 
losses 
are 
an 
inherent 
cost 
of 
doing 
business 
and 
the 
occurrence 
and 
amount 
of 
credit 
losses 
can 
be 
erratic. 
We 
use 
the concept of expected 
loss to quantify future 
credit losses that 
may be 
implicit in 
our current 
portfolio. The 
expected loss 
for a 
given 
credit 
facility 
is 
a 
product 
of 
the 
three 
components 
de
scribed 
above
,
 
i.e.,
 
PD, 
EAD 
and 
LGD. 
We 
aggregate 
the 
expected 
loss 
for 
individual 
counterparties 
to 
derive 
our 
expected portfolio credit losses. 
Expected 
loss 
(EL) 
for 
regulatory 
and 
internal 
risk 
control 
purposes 
is 
a 
statistical 
measure 
used 
to 
estimate 
the 
average 
annual 
costs 
we 
expect 
to 
experience 
from 
positions 
that 
become impaired. 
EL is 
the basis 
for quantifying 
credit risk 
in all 
our 
portfolios. 
We 
use 
a 
statistical 
modeling 
approach 
to 
estimate 
the 
loss 
profile 
of 
each 
of 
our 
credit 
portfolios 
over 
a 
one-year 
period 
to 
a 
specified 
level 
of 
confidence. 
The 
mean 
value of this 
loss distribution is the 
expected loss. EL 
provides an 
indication of 
the level 
of risk 
in our 
portfolio and 
it may 
change 
over 
time. 
Some 
parameters 
have 
to 
be 
estimated 
on 
a 
conservative 
basis in 
order to 
meet 
the regulatory 
requirements 
for 
banks 
applying 
the 
internal 
ratings-based 
approach 
to 
determine RWA. 
IFRS 9 – ECL credit risk models 
Comparison of Basel III EL and IFRS 9 ECL credit risk models 
The 
IFRS 
9 
expected 
credit 
loss 
(ECL) 
concept 
has 
a 
number 
of 
key differences from 
our standard credit 
risk models, both in the 
loss 
estimation 
process 
and 
the 
result 
thereof. 
Most 
notably, 
regulatory 
Basel III 
EL 
parameters 
are 
through-the-cycle 
/ 
downturn 
estimates, 
which 
might 
include 
a 
margin 
of 
conservatism, while 
IFRS 9 ECL parameters 
are typically 
point-in-
time, reflecting 
current economic conditions 
and future outlook. 
The 
table 
on 
the 
next 
page 
summarizes 
the 
main 
differences. 
Stage 1 
and 2 
ECL expenses 
in 2020 
were USD 266 
million and 
respective 
allowances 
and 
provisions 
as 
of 
31 
December 
2020 
were 
USD
 
639 
million
.
 
This 
includes
 
ECL 
allowances 
and 
provisions 
of 
USD 555 
million 
related 
to 
positions 
under 
the 
Basel 
III 
advanced 
internal 
ratings
-
based
 
approach. 
Basel 
III 
Expected Loss for 
non-defaulted positions increased 
by USD 123 
million to USD 885 million. 
›
 
Refer to “Note 1 Summary of significant accounting 
policies” in 
the “Consolidated financial statements” 
section of this report for 
more information about our accounting policy 
for allowances 
and provisions for ECL including key definitions 
relevant for the 
ECL calculation under IFRS 9 
Expected credit loss 
Expected 
credit 
losses 
(ECLs) 
are 
defined 
as
 
the 
difference 
between 
contractual 
cash 
flows 
and 
those 
UBS 
expects 
to 
receive, 
discounted 
at 
the 
effective 
interest 
rate 
(EIR). 
For 
loan 
commitments 
and 
other 
credit 
facilities 
in 
scope 
of 
ECL 
requirements, 
expected 
cash 
shortfalls 
are 
determined 
by 
considering 
expected 
future 
drawdowns. 
Rather 
than 
focusing 
on 
an 
average 
through-the-cycle 
expected 
annual 
loss, 
the 
purpose of ECL 
is to estimate the 
amount of losses inherent 
in a 
portfolio 
based 
on 
current 
conditions 
and 
future 
outlook 
(a 
point-in-time 
measure), 
whereby 
such 
a 
forecast 
has 
to include 
all 
information 
available 
without 
undue 
cost 
and 
effort, 
and 
address multiple 
scenarios where there 
is perceived 
non-linearity 
between 
changes 
in 
economic 
conditions 
and 
their 
effect 
on 
credit 
losses. 
From 
a 
credit 
risk 
modeling 
perspective, 
ECL 
parameters 
are 
generally 
derivations 
of 
the factors 
assessed 
for 
regulatory Basel III EL. 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
119 
The table below shows the main differences between the two expected loss measures. 
 
Basel III EL (advanced internal 
ratings-based approach) 
IFRS 9 ECL 
Scope 
The Basel III advanced internal ratings-based 
(A-IRB) 
approach applies to most credit risk exposures. It includes 
transactions measured at amortized cost, at fair value 
through profit or loss and at fair value through OCI, 
including loan commitments and financial guarantees. 
The IFRS 9 expected credit loss (ECL) calculation 
mainly applies to 
financial assets measured at amortized cost 
and debt instruments 
measured at fair value through OCI, as well as loan 
commitments 
and financial guarantees not at fair value through profit 
or loss. 
12-month versus 
lifetime expected 
loss 
The Basel III A-IRB approach takes into account expected 
losses resulting from expected default events occurring 
within the next 12 months. 
In the absence of a significant increase in credit risk 
(SICR), a 
maximum 12-month ECL is recognized to reflect lifetime 
cash 
shortfalls that will result if a default event occurs 
in the 12 months 
after the reporting date (or a shorter period if the 
expected lifetime 
is less). Once an SICR event has occurred, a lifetime 
ECL is 
recognized considering expected default events over 
the life of the 
transaction. 
Exposure at default 
(EAD) 
EAD is the amount we expect a counterparty 
to owe us at 
the time of a possible default. For banking products, 
EAD 
equals book value as of the reporting date; for traded 
products, such as securities financing transactions, 
EAD is 
modeled. EAD is expected to remain constant over 
a 12-
month period. For loan commitments, a credit 
conversion 
factor is applied to model expected future drawdowns 
over 
the 12-month period, irrespective of the actual maturity 
of a 
particular transaction. The credit conversion factor includes 
downturn adjustments. 
EAD is generally calculated on the basis of the 
cash flows that are 
expected to be outstanding at the individual 
points in time during 
the life of the transaction, discounted to the reporting 
date using 
the effective interest rate. For loan commitments, a credit 
conversion factor is applied to model expected 
future drawdowns 
over the life of the transaction without including 
downturn 
assumptions. In both cases, the time period 
is capped at 12 
months, unless an SICR has occurred. 
Probability of 
default 
(PD) 
PD estimates are determined on a through-the-cycle (TTC) 
basis. They represent historical average PDs, taking into 
account observed losses over a prolonged historical 
period, 
and therefore are less sensitive to movements in the 
underlying economy. 
PD estimates will be determined on a point-in-time 
(PIT) basis, 
based on current conditions and incorporating forecasts 
for future 
economic conditions at the reporting date. 
Loss given default 
(LGD) 
LGD includes prudential adjustments, such 
as downturn LGD 
assumptions and floors. Similar to PD, LGD 
is determined on 
a TTC basis. 
LGD should reflect the losses that are reasonably expected 
and 
prudential adjustments should therefore not be applied. 
Similar to 
PD, LGD is determined on the basis of a PIT 
approach. 
Use of scenarios 
N/A 
Multiple forward-looking scenarios have to be taken 
into account 
to determine a probability-weighted ECL. 
 
Further key aspects of credit risk models
 
Stress loss 
We 
complement 
our 
statistical 
modeling 
approach 
with 
scenario-based stress loss measures. 
Stress tests are run 
regularly 
to 
monitor 
potential 
effects 
of 
extreme, 
but 
nevertheless 
plausible, 
events 
on 
our 
portfolios, 
under 
which 
key 
credit 
risk 
parameters 
are 
assumed 
to deteriorate 
substantially. 
Where 
we 
consider it appropriate, we apply limits on this basis. 
Stress scenarios 
and methodologies 
are tailored 
to portfolios’ 
natures, 
ranging 
from 
regionally 
focused 
to 
global 
systemic 
events, 
and 
varying 
in 
time 
horizon. 
For 
example, 
for 
our 
loan 
underwriting 
portfolio, 
we 
apply 
a 
global 
market 
event 
under 
which, 
simultaneously, 
the 
market 
for 
loan 
syndication 
freezes, 
market 
conditions 
significantly 
worsen, 
and 
credit 
quality 
deteriorates. 
Similarly, 
for 
Lombard 
lending 
we 
use 
a 
range 
of 
scenarios 
representing 
instantaneous 
market 
shocks 
to 
all 
collateral 
and 
exposure 
positions, 
taking 
into 
consideration 
liquidity and potential concentration. 
The portfolio-specific stress 
test for 
our mortgage 
lending business 
in Switzerland 
reflects a 
multi-year 
event, 
and 
the 
overarching 
stress 
test 
for 
global 
wholesale and 
counterparty credit 
risk exposure 
to corporations 
uses 
a 
one-year 
global 
stress 
event 
and 
takes 
into 
account 
exposure concentration to single counterparties. 
 
›
 
Refer to “Stress testing” in this section for 
more information 
about our stress testing framework 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
120 
Credit risk model confirmation 
Our approach 
to model 
confirmation involves 
both quantitative 
methods, 
e.g., 
monitoring 
compositional 
changes 
in 
portfolios 
and results 
of backtesting, 
and qualitative 
assessments, such 
as 
feedback from 
users on 
model output 
as a 
practical indicator of 
a model’s performance and reliability. 
Material changes 
in portfolio 
composition may 
invalidate the 
conceptual soundness of a 
model. We therefore perform 
regular 
analyses 
of 
the evolution 
of 
portfolios 
to 
identify 
such 
changes 
in 
the 
structure 
and 
credit 
quality 
of 
portfolios. 
This 
includes 
ana
lyse
s
 
of 
changes 
in 
key 
attributes, 
changes 
in 
portfolio 
concentration measures and changes in RWA. 
›
 
Refer to “Risk measurement” in this section 
for more 
information about our approach to model confirmation 
procedures 
Backtesting 
We 
monitor 
the 
performance 
of 
models 
by 
backtesting 
and 
benchmarking 
them, 
with
 
model 
outcomes 
compared 
with 
actual 
results, 
based 
on 
our 
internal 
experience 
and 
externally 
observed 
results. 
To 
assess 
the 
predictive 
power 
of 
credit 
exposure 
models 
for 
traded 
products, 
such 
as 
OTC 
derivatives 
and 
ETD 
products, 
we 
statistically 
compare 
predicted 
future 
exposure distributions at different forecast horizons with realized 
values. 
For 
PD, 
we 
use 
statistical 
modeling 
to 
derive 
a 
predicted 
distribution of 
the number 
of defaults. 
The observed 
number of 
defaults 
is 
compared 
with 
this 
distribution, 
letting 
us 
derive 
a 
statistical level of confidence in the 
model conservatism. We 
also 
derive a lower and upper limit for the average 
default rate. If the 
portfolio average 
PD lies 
outside the 
derived interval, 
the rating 
tool is, as a general rule, recalibrated. 
For 
LGD, 
backtesting 
statistically 
tests 
whether 
the 
mean 
difference 
between 
the 
observed 
and 
predicted 
LGD 
is 
zero. 
If 
the test fails, there is evidence that our predicted LGD 
is too low. 
In 
such 
cases, 
and 
where 
these 
differences 
are 
outside 
expectations, 
models are recalibrated. 
 
Main credit models backtesting by regulatory asset class 
Length of time series 
used for the calibration 
(in years) 
Actual rates in % 
Estimated average rates 
at the start of 
2020 in % 
Average of last 
5 years
1
Min. of last 
5 years
2
Max. of last 
5 years
2
Probability of default
3
Central governments and central banks 
>10
4
0.00 
0.00 
0.00 
0.16 
Banks and securities dealers 
>10 
0.16 
0.00 
0.53 
0.67 
Public-sector entities, multi-lateral development banks 
>10 
0.04 
0.00 
0.21 
0.21 
Corporates: specialized lending 
>10 
0.36 
0.20 
0.60 
1.24 
Corporates: other lending 
>10 
0.28 
0.24 
0.33 
0.41 
Retail: residential mortgages 
>20 
0.22 
0.12 
0.28 
0.55 
Retail: other 
>10 
0.01 
0.00 
0.01 
0.29 
Loss given default 
Central governments and central banks 
>10 
52.20 
Banks and securities dealers 
>10 
48.60 
Public-sector entities, multi-lateral development banks 
>10 
27.20 
Corporates: specialized lending 
>10 
8.00 
0.00 
34.60 
22.90 
Corporates: other lending 
>10 
23.60 
5.80 
28.00 
38.00 
Retail: residential mortgages 
>20 
0.70 
0.00 
1.70 
19.90 
Retail: other 
>10 
17.30 
16.70 
17.90 
28.40 
Credit conversion factors 
Corporates 
>10 
18.60 
6.90 
37.90 
42.60 
1 Average of 
all observations 
over the last 
five years. 
2 Minimum / 
maximum annual average 
of observations 
in any single 
year from the 
last five years. 
Yearly averages 
are only calculated 
where five or 
more 
observations occurred during that year. 
3 Average PD estimation is based on all 
rated clients in the portfolio. 
4 Sovereign PD model is calibrated to UBS 
masterscale, length of time series shows 
span of internal 
history for this portfolio. 
 
 

 
121 
CCFs, 
used 
for 
the 
calculation 
of 
EAD 
for 
undrawn 
facilities 
with 
corporate 
counterparties, 
are 
dependent 
on 
several 
credit 
facility 
contractual 
dimensions. 
We 
compare 
the 
predicted 
amount 
drawn with 
observed historical 
use 
of 
such facilities 
by 
defaulted 
counterparties. 
If 
any 
statistically 
significant 
deviation 
is observed, the relevant CCFs are redefined. 
The 
“Main 
credit 
models 
backtesting 
by 
regulatory 
asset 
class” 
table 
on 
the 
previous 
page 
compares 
the 
current 
model 
calibration for PD, 
LGD and CCFs 
with historical observed 
values 
over the last five years. 
Changes to models and model parameters during the period 
Part 
of 
our 
continuous 
efforts 
to 
enhance 
models 
to 
reflect 
market 
developments 
and 
newly 
available 
data 
was 
updating 
several models in 2020. 
Personal 
& 
Corporate 
Banking 
introduced 
a 
redeveloped 
PD 
and 
LGD model 
for the 
commodity trade 
finance business. 
The 
RWA impact of 
the new model was 
neutralized, as requested by 
FINMA, 
pending 
further 
analysis 
and 
review 
of 
the 
model’s 
calibration level. We 
also recalibrated the risk parameters for real 
estate 
portfolios 
and 
Lombard 
loans 
in 
Personal 
& 
Corporate 
Banking and Global Wealth Management. 
A new rating model for debt REITs went live in 
the Investment 
Bank. Non-profit organization 
segment clients have 
been moved 
to standardized 
RWA for 
capital calculation. 
Both changes 
have 
an immaterial RWA impact. 
For counterparty credit risk (CCR) 
models, we recalibrated the 
market 
parameters 
in 
the 
securities 
financing 
transactions 
(SFT) 
model. 
Where 
required, 
changes 
to 
models 
and 
model 
parameters 
were approved by FINMA before being made. 
›
 
Refer to “Risk-weighted assets” in the “Capital, 
liquidity and 
funding, and balance sheet” section of 
this report for more 
information about the effect of the changes 
to models and 
model parameters on credit risk RWA 
Future credit risk-related 
regulatory capital developments 
In December 2017, the Basel Committee 
on Banking Supervision 
(the BCBS) announced the finalization of the Basel III framework, 
which 
we 
do 
not 
expect 
to 
become 
mandatory 
in 
Switzerland 
until after the BCBS 
target effective date of 
1 January 2023. The 
updated framework makes 
a number of 
revisions to the 
internal 
ratings-based 
(IRB) 
approaches, 
namely: 
(i) removing 
the 
option 
of 
using 
the 
A-IRB approach 
for 
certain 
asset 
classes 
(including 
large and 
medium-sized corporate 
clients, and 
banks and 
other 
financial 
institutions); 
(ii) placing 
floors 
on 
certain 
model 
inputs 
under 
the IRB 
approach, 
e.g., PD 
and LGD; 
and (iii) introducing 
various requirements to reduce RWA variability (e.g., 
for LGD). 
The published 
framework has a 
number of 
requirements that 
are 
subject 
to 
national 
discretion. 
Also, 
revisions 
to 
the 
CVA 
framework 
were 
published, 
including 
the 
removal 
of 
the 
advanced CVA 
approach. UBS 
has a 
close dialog 
with FINMA 
to 
discuss in detail the 
implementation objectives and 
prepare for a 
smooth transition of the capital regime for credit risk. 
›
 
Refer to “Capital management objectives, 
planning and 
activities” in the “Capital, liquidity and 
funding, and balance 
sheet” section of this report for more information about 
the 
development of RWA 
›
 
Refer to “Risk measurement” in this section 
for more 
information about our approach to model confirmation 
procedures 
›
 
Refer to the “Regulatory and legal developments” 
and “Risk 
factors” sections of this report for more information 
Credit policies for distressed assets 
The 
“Exposure 
categorization” 
chart 
on 
the 
next 
page 
shows 
how 
we 
categorize 
banking 
products 
and 
securities 
financing 
transactions as 
non-performing, defaulted 
/ credit 
-impaired 
and 
purchased or originated credit-impaired. 
Non-performing 
Audited |
 
In line with the regulatory definition, we report a claim as 
non-performing when: 
(i) it is more 
than 90 
days past due; 
(ii) it 
is 
subject 
to 
restructuring 
proceedings, 
where 
preferential 
conditions 
concerning 
interest 
rates, 
subordination, 
tenor, 
etc. 
have been 
granted in order 
to avoid default 
of the 
counterparty 
(forbearance); 
or (iii) the 
counterparty is 
subject to 
bankruptcy / 
enforced 
liquidation 
proceedings 
in 
any 
form, 
even 
if 
there 
is 
sufficient 
collateral 
to 
cover 
the 
due 
payment; 
or 
(iv) there 
is 
other 
evidence 
that 
payment 
obligations 
will 
not 
be 
fully 
met 
without recourse to collateral. 
 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
122 
Default and credit-impaired 
UBS uses 
a single 
definition of 
default for 
classifying assets 
and 
determining 
the 
PD 
of 
its 
obligors 
for 
risk 
modeling 
purposes. 
The definition of 
default is based 
on quantitative and 
qualitative 
criteria. 
A 
counterparty 
is 
classified 
as 
defaulted 
when 
material 
payments of interest, principal or fees are overdue 
for more than 
90 days, or 
more than 180 
days for certain exposures 
in relation 
to 
loans 
to 
private 
and 
commercial 
clients 
in 
Personal 
& 
Corporate 
Banking 
and 
to 
private 
clients 
of 
Global 
Wealth 
Management 
Region 
Switzerland. 
UBS 
does 
not 
consider 
the 
general 90-day 
presumption for 
default recognition 
appropriate 
for those 
portfolios, given 
the cure 
rates, which 
show that 
strict 
application 
of 
the 
90-day 
criterion 
would 
not 
accurately 
reflect 
the 
inherent 
credit 
risk. 
Counterparties 
are 
also 
classified 
as 
defaulted when: bankruptcy, 
insolvency proceedings or enforced 
liquidation have commenced; obligations have been restructured 
on 
preferential 
terms 
(forbearance); 
or 
there 
is 
other 
evidence 
that payment 
obligations will 
not be 
fully met 
without recourse 
to 
collateral. 
The 
latter 
may 
be 
the 
case 
even 
if, 
to 
date, 
all 
contractual 
payments 
have 
been 
made 
when 
due. 
If 
one 
claim 
against 
a
 
counterparty 
is 
defaulted
 
on
, 
generally 
all 
claims 
against the counterparty are treated as defaulted. 
An 
instrument 
is 
classified 
as 
credit-impaired 
if 
the 
counterparty is 
classified as 
defaulted and 
/ or 
the instrument 
is 
identified as 
purchased or 
originated credit-impaired 
(POCI). An 
instrument is POCI if it has been purchased at a deep discount to 
its 
carrying 
amount 
following 
a 
risk 
event 
of 
the 
issuer 
or 
originated with 
a defaulted 
counterparty. Once 
a financial 
asset 
is 
classified 
as 
defaulted 
/ 
credit-impaired 
(except 
POCI), 
it 
is 
reported as 
a stage 3 
instrument and 
remains as 
such unless 
all 
past due amounts have 
been rectified, additional payments 
have 
been 
made 
on 
time, 
the 
position 
is 
not 
classified 
as 
credit-
restructured, and 
there is 
general evidence 
of credit 
recovery. A 
three-month 
probation 
period 
is 
applied 
before 
a 
transfer 
back 
to 
stages 
1 or 
2 
can 
be 
triggered. 
However, 
most 
instruments 
remain in 
stage 3 for a 
longer period. As 
of 31 December 2020, 
we have no instruments classified as POCI on our books.
p
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
123 
Forbearance (credit restructuring) 
Audited 
|
 
If 
payment 
default 
is 
imminent 
or 
default 
has 
already 
occurred, 
we 
may 
grant 
concessions 
to 
borrowers 
in 
financial 
difficulties 
that we 
would otherwise 
not consider 
in the 
normal 
course 
of 
business, 
such 
as 
offering 
preferential 
interest 
rates, 
extending maturity, 
modifying the schedule 
of repayments, debt 
/ equity 
swap, subordination, 
etc. When 
a forbearance 
measure 
takes 
place, 
each 
case 
is 
considered 
individually 
and 
the 
exposure 
is 
generally 
classified 
as 
de
fault
ed
. 
Forbearance 
classification remains 
until the loan 
is repaid or 
written off, non-
preferential 
conditions 
are 
granted 
that 
supersede 
the 
preferential 
conditions 
or 
the 
counterparty 
has 
recovered 
and 
the preferential conditions no longer exceed our risk tolerance. 
Contractual 
adjustments 
when 
there 
is 
no 
evidence 
of 
imminent 
payment 
default, 
or 
where 
changes 
to 
terms 
and 
conditions are within our usual risk tolerance, 
are not considered 
to be forborne. 
p
 
Loss history statistics 
An instrument 
is classified 
as credit-impaired 
if the 
counterparty 
has 
defaulted. 
This 
also 
includes 
credit-impaired 
exposures 
for 
which no 
loss has 
occurred or 
for which 
no allowance 
has been 
recognized 
(e.g., 
because 
we 
expect 
to 
fully 
recover
 
the
 
exposures via collateral held). 
The 
“Loss 
history 
statistics” 
table 
below 
provides 
a 
five-year 
history of credit 
loss experience for 
loans and advances 
to banks 
and customers, and ratios of those credit losses relative to 
credit-
impaired and 
non-performing loans 
and advances 
to banks 
and 
customers. 
For 
201
6
 
and 
2017, 
the 
amounts 
are 
based 
on 
IAS
 
37 
and 
IAS
 
3
9; 
for 
2018 
and 
onward,
 
the 
amounts 
are 
based on IFRS 9. 
Credit-impaired 
loans 
and advances 
to 
banks 
and 
customers 
(stage 3 
pursuant 
to 
the 
IFRS 9 
ECL 
framework) 
were 
USD 2.9 
billion as 
of 31 December 
2020, compared 
with USD 2.3 
billion 
as of 31 December 2019. 
The 
majority of 
the credit-impaired 
exposure relates 
to loans 
and advances in our Swiss domestic business. 
The ratio of credit-
impaired 
loans 
and 
advances 
to 
banks 
and 
customers 
to 
total 
loans 
and 
advances 
to 
banks 
and 
customers 
was 
0.7%, 
unchanged compared with 31 December 2019. 
›
 
Refer “Note 9 Financial assets at amortized 
cost and other 
positions in scope of expected credit loss measurement” 
and 
“Note 20 
Expected credit loss measurement” in the 
“Consolidated financial statements” section 
of this report for 
more information about ECL measurement 
›
 
Refer to “Note 14a Other financial assets 
measured at amortized 
cost” in the “Consolidated financial 
statements” section of this 
report for more details 
 
Loss history statistics 
USD million, except where indicated 
31.12.20 
IFRS 9 
31.12.19 
IFRS 9 
31.12.18 
IFRS 9 
31.12.17 
IAS 37, IAS 39 
31.12.16 
IAS 37, IAS 39 
Loans and advances to banks and customers (gross) 
396,049 
340,003 
338,000 
342,604 
314,485 
Credit-impaired loans and advances to banks and customers 
2,945 
2,309 
2,300 
1,104 
958 
Non-performing loans and advances to banks and customers 
3,176 
2,466 
2,419 
2,149 
2,357 
ECL allowances and provisions for credit losses
1,2
1,468 
1,029 
1,054 
712 
642 
of which: allowances for loans and advances to banks and customers
1
1,076 
770 
780 
678 
589 
Write-offs 
356 
142 
210 
101 
121 
of which: write-offs for loans and advances to banks and customers 
348 
122 
192 
101 
121 
Credit loss (expense) / release
3
(694) 
(78) 
(118) 
(131) 
(38) 
Ratios 
Credit-impaired loans and advances to banks and customers as 
a percentage of loans and advances to banks 
and customers (gross) 
0.7 
0.7 
0.7 
0.3 
0.3 
Non-performing loans and advances to banks and customers as 
a percentage of loans and advances to banks 
and customers (gross) 
0.8 
0.7 
0.7 
0.6 
0.7 
ECL allowances for loans and advances to banks and customers as a percentage 
of loans and advances to 
banks and customers (gross) 
0.3 
0.2 
0.2 
0.2 
0.2 
Write-offs as a percentage of average loans and advances to banks 
and customers (gross) outstanding during 
the period 
0.1 
0.0 
0.1 
0.0 
0.0 
1 
Includes 
collective 
loan 
loss 
allowances 
(until 
31 
December 
2017). 
Until 
31 
December 
2017 
did 
not 
include 
allowances 
for 
other 
receivables 
(31 
December 
2017: 
USD 
19 
million; 
31 
December 
2016: 
USD 0 million). 
2 Includes 
provisions for 
ECL of 
guarantees and 
loan commitments 
and allowances 
for securities financing 
transactions. 
3 Includes credit 
loss (expense) 
/ release for 
other financial 
assets at 
amortized cost, guarantees, loan commitments, and securities financing transactions. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
124 
Market risk
Key developments 
Market 
risk remained 
at low 
levels as 
a 
result 
of 
our continued 
focus on 
managing tail 
risks. Average 
management VaR 
(1-day, 
95% confidence level) 
increased to USD 13 
million from USD 11 
million in 
the prior 
year, 
mainly driven 
by the 
Investment Bank’s 
Global 
Markets
 
business. 
The 
increase 
was 
due 
to
 
unprecedented and 
sharp market 
moves across 
asset classes, 
as 
well as 
updates to 
the VaR 
model time 
series to 
incorporate the 
extreme 
shocks 
observed 
in 
March. 
The 
number 
of 
negative 
backtesting 
exceptions 
within 
a 
250-business-day 
window 
increased 
from 
0 
to 3 
in March, 
and remained 
at 
3 as 
of year-
end. 
The 
FINMA 
VaR 
multiplier 
for 
market 
risk 
RWA 
remained 
unchanged at 3 as of 31 December 2020. 
Audited |
 
Main sources of market risk 
Market 
risks 
arise 
from 
both 
trading 
and 
non-trading 
business 
activities. 
–
 
Trading market 
risks are 
mainly connected 
with 
primary debt 
and equity 
underwriting and securities and 
derivatives trading 
for 
market-making 
and 
client 
facilitation 
in 
our 
Investment 
Bank, 
as 
well 
as 
the 
remaining 
positions 
in 
Non-core 
and 
Legacy 
Portfolio 
in
 
Group 
Functions
 
and 
our 
municipal 
securities 
trading business 
in Global Wealth 
Management. 
–
 
Non-trading 
market 
risks 
arise 
predominantly 
in 
the 
form 
of 
interest 
rate 
and 
foreign 
exchange 
risks 
connect
ed
 
with 
personal 
banking 
and 
lending 
in 
our 
wealth 
management 
businesses, 
our
 
Swiss
 
p
ersonal 
and 
c
orporate 
b
anking 
business and 
the Investment 
Bank’s lending 
business, as 
well 
as treasury activities. 
–
 
Group 
Treasury
 
assumes 
market 
risks 
in 
the 
process 
of 
managing 
interest 
rate 
risk, 
structural 
foreign 
exchange 
risk 
and 
the 
Group
’s
 
liquidity 
and 
funding 
profile
,
 
including 
HQLA. 
–
 
Equity and debt investments can also give rise to market 
risks, 
as 
can 
some 
aspects 
of 
employee 
benefits, 
such 
as 
defined 
benefit pension schemes. 
p
 
Audited |
 
Overview of measurement, monitoring and 
management techniques 
–
 
Market risk limits are set for the Group, the business divisions, 
Group Treasury and Non-core and Legacy Portfolio at granular 
levels 
in 
the 
various business 
lines, 
reflecting 
the nature 
and 
magnitude of the market risks. 
–
 
Management VaR 
measures exposures 
under the 
market risk 
framework, 
including 
trading 
market 
risks 
and 
some 
non-
trading market risks. Non-trading 
market risks not included 
in 
VaR 
are 
also 
covered 
in 
the 
risks 
controlled 
by 
Market 
& 
Treasury Risk Control, as set out below. 
–
 
Our 
primary 
portfolio 
measures 
of 
market 
risk 
are 
liquidity-
adjusted 
stress 
(LAS) 
loss 
and 
VaR. 
Both 
are 
common 
to 
all 
business 
divisions 
and 
subject to 
limits 
that 
are 
approved 
by 
the Board of Directors (the BoD). 
–
 
These 
measures 
are 
complemented 
by 
concentration 
and 
granular 
limits 
for 
general 
and 
specific 
market 
risk 
factors. 
Our 
trading 
businesses 
are 
subject 
to 
multiple 
market 
risk 
limits, which 
take into 
account the 
extent of 
market liquidity 
and 
volatility, 
available 
operational 
capacity, 
valuation 
uncertainty 
and, 
for our 
single-name 
exposures, issuer 
credit 
quality. 
–
 
Trading 
market 
risks 
are 
managed 
on 
an 
integrated 
basis 
at 
portfolio 
level. As 
risk factor 
sensitivities change 
due to 
new 
transactions, transaction 
expiries or 
changes in 
market levels, 
risk factors 
are dynamically 
rehedged to 
remain within 
limits. 
Thus 
we 
do 
not 
generally 
seek 
to 
distinguish 
in 
the 
trading 
portfolio between specific positions and associated hedges. 
–
 
Issuer 
risk 
is 
controlled 
by 
limits 
applied 
at 
business 
division 
level 
based 
on 
jump-to-zero 
measures, 
which 
estimate 
maximum 
default 
exposure 
(the 
default 
event 
loss 
assuming 
zero recovery). 
–
 
Non-trading 
foreign 
exchange 
risks 
are 
managed 
under 
market 
risk 
limits, 
with 
the 
exception 
of 
Group 
Treasury 
management of consolidated capital activity. 
 
Our Market & 
Treasury Risk Control 
function applies a 
holistic 
risk 
framework, 
set
ting
 
the 
appetite 
for 
treasury
-
related 
risk
-
taking 
activities 
across 
the 
Group. 
A 
key 
element 
of 
the 
framework is 
an overarching 
economic value sensitivity 
limit, set 
by the 
BoD. That 
limit is 
linked to 
the level 
of Basel III 
common 
equity 
tier 1 
(CET1) 
capital, 
and takes 
into account 
risks arising 
from 
interest 
rates, 
foreign 
exchange 
and 
credit 
spreads. 
Also, 
the sensitivity 
of net 
interest income to 
changes in 
interest rates 
is 
monitored 
against 
targets 
set 
by 
the 
Group 
CEO, 
so 
as 
to 
analyze 
the 
outlook 
and 
volatility 
of 
net 
interest 
income 
based 
on market-expected interest 
rates. Limits are also 
set by the BoD 
to 
balance 
the 
effect 
of 
foreign 
exchange 
movements 
on 
our 
CET1 
capital 
and 
CET1 
capital 
ratio. 
Non-trading 
interest 
rate 
and foreign exchange 
risks are included in 
Group-wide statistical 
and 
stress 
testing 
metrics, 
which 
flow 
into 
our 
risk 
appetite 
framework. 
Equity 
and 
debt 
investments 
are 
subject 
to 
a 
range 
of 
risk 
controls, 
including 
preapproval of 
new 
investments 
by 
business 
management 
and 
Risk 
Control 
and 
regular 
monitoring 
and 
reporting. 
They 
are 
also 
included 
in 
Group-wide 
statistical 
and 
stress testing metrics. 
p
 
›
 
Refer to “Currency management” in the “Capital, 
liquidity and 
funding, and balance sheet” section of 
this report for more 
information about Group Treasury’s management of foreign 
exchange risks 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information about 
the sensitivity 
of our CET1 capital and CET1 capital ratio 
to currency 
movements 
 
 

 
125 
Market risk stress loss 
We measure and 
manage market risks through 
a comprehensive 
framework of non 
-statistical measures and 
related limits, 
as well 
as VaR. This 
includes an extensive set of 
stress tests and scenario 
analyses, 
continuously 
evaluated 
to 
ensure 
that 
losses 
resulting 
from 
an 
extreme 
yet 
plausible 
event 
do 
not 
exceed 
our 
risk 
appetite. 
Liquidity-adjusted stress 
LAS 
is 
our 
primary 
stress 
loss 
measure 
for 
Group-wide 
market 
risk. The LAS framework captures 
the economic losses that could 
arise 
under 
specified 
stress 
scenarios. 
This 
is, 
partially, 
done 
by 
replacing 
the 
standard 
1
-
day 
and 
10
-
day 
holding 
period 
assumptions 
used 
for 
management 
and 
regulatory 
VaR
 
with 
liquidity-adjusted 
holding 
periods, 
as 
explained 
below. 
Shocks 
are 
applied 
to 
positions 
based 
on 
expected 
market 
movements 
in
 
the 
liquidity
-
adjusted 
holding 
periods 
resulting 
from 
the 
specified scenario. 
The holding 
periods used 
for LAS are 
calibrated to reflect 
the 
amount of 
time needed to 
reduce or hedge 
the risk of 
positions 
in 
each 
major 
risk 
factor 
in 
a 
stressed 
environment, 
assuming 
maximum 
utilization 
of 
the 
relevant 
position 
limits. 
We 
apply 
minimum holding periods, regardless 
of observed liquidity levels, 
as 
identification 
of 
and 
reaction 
to 
a 
crisis 
may 
not 
always 
be 
immediate. 
The expected 
market movements 
are 
derived using 
historical 
market 
behavior 
(
based 
on 
analysis 
of 
historical 
events
)
 
and 
forward
-
looking 
analysis 
includ
ing
 
consideration 
of 
defined 
scenarios that have not occurred in the past. 
LAS
-
based 
limits 
appl
y
 
at 
several 
levels: 
Group, 
business 
division
, 
Group 
Treasury 
and 
Non
-
core 
and 
Legacy 
Portfolio
;
 
business area; and 
sub-portfolio. LAS is also 
the core market risk 
component 
of 
our 
combined 
stress 
test 
framework 
and 
therefore integral to our overall risk appetite framework. 
›
 
Refer to “Risk appetite framework” in this 
section for more 
information 
›
 
Refer to “Stress testing” in this section for 
more information 
about our stress testing framework 
Value-at-risk 
VaR definition
 
Audited 
|
 
VaR 
is a 
statistical 
measure 
of 
market 
risk, 
representing 
the potential 
market risk 
losses over 
a set 
time horizon 
(holding 
period) 
at 
an 
established 
level 
of 
confidence. 
VaR 
assumes 
no 
change 
in 
the 
Group’s 
trading 
positions 
over 
the 
set 
time 
horizon. 
We 
calculate 
VaR 
daily. 
The 
profit 
or 
loss 
distribution 
VaR 
is 
derived 
from 
our 
internally 
developed 
VaR 
model
, 
which
 
simulates returns over the holding period for those risk factors to 
which 
our 
trading 
positions 
are 
sensitive, 
and 
subsequently 
quantifies 
the 
profit 
/ 
loss 
effect of 
these 
risk 
factor 
returns on 
trading 
positions. 
Risk 
factor 
returns 
associated 
with 
general 
interest 
rate, 
foreign 
exchange 
and 
commodities 
risk
 
factor 
classes are based 
on a pure historical 
simulation approach, using 
a 
five-year 
look-back 
window. 
Risk 
factor 
returns 
for 
selected 
issuer-based risk factors, e.g., equity price and credit spreads, are 
split 
into 
systematic 
and 
residual 
issuer
-
specifi
c 
components 
using a 
factor model 
approach. Systematic 
returns are 
based on 
historical 
simulation, 
and 
residual 
returns 
on 
a 
Monte 
Carlo 
simulation. VaR 
model profit 
or loss 
distribution is 
derived from 
the sum of systematic and residual returns in such a way 
that we 
consistently 
capture 
systematic 
and 
residual 
risk. 
Correlations 
among 
risk 
factors 
are 
implicitly 
captured 
via 
a 
historical 
simulation 
approach. 
When
 
modeling 
risk 
factor 
returns, 
we 
consider the stationarity properties of the historical time 
series of 
risk factor 
changes. Depending 
on the 
stationarity properties 
of 
the risk 
factors within 
a given 
factor class, 
we model 
the factor 
returns using 
absolute returns 
or logarithmic 
returns. Risk 
factor 
return distributions are updated fortnightly. 
Our 
VaR model 
does not 
have full 
revaluation capability, 
but 
we source full revaluation grids 
and sensitivities from front-office 
systems, enabling us 
to capture material 
non-linear profit or 
loss 
effects. 
We 
use 
a 
single 
VaR 
model 
for 
both 
internal 
management 
purposes 
and 
determining 
market 
RWA, 
although 
we 
consider 
different 
confidence 
levels 
and 
time 
horizons. 
For 
internal 
management 
purposes, 
we 
establish 
risk 
limits 
and 
measure 
exposures 
using 
VaR 
at 
a 
95% 
confidence 
level 
with 
a 
1-day 
holding 
period, 
aligned 
to 
the 
way 
we 
consider 
the 
risks 
associated with 
our trading 
activities. The 
regulatory measure of 
market risk used to 
underpin the market risk 
capital requirement 
under 
Basel III 
requires 
a 
measure 
equivalent 
to 
a 
99% 
confidence 
level 
using 
a 
10-day 
holding 
period. 
To 
calculate 
a 
10-day 
holding 
period 
VaR, 
we 
use 
10-day 
risk 
factor 
returns, 
with all observations equally weighted. 
Additionally, 
the 
portfolio 
population 
for 
management 
and 
regulatory 
VaR 
is 
slightly 
different. 
The 
one 
for 
regulatory 
VaR 
meets 
regulatory 
requirements 
for 
inclusion 
in 
regulatory 
VaR. 
Management 
VaR 
includes 
a 
broader 
range 
of 
positions. 
For 
example, 
regulatory 
VaR 
excludes 
credit 
spread 
risks 
from 
the 
securitization 
portfolio, 
which 
are 
treated 
instead 
under
 
the 
securitization approach for regulatory purposes. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
126 
We also use 
stressed VaR (SVaR) 
for the calculation 
of market 
risk 
RWA. 
SVaR 
uses 
broadly 
the 
same 
methodology 
as 
regulatory 
VaR 
and 
is 
calculated 
using 
the 
same 
population, 
holding 
period 
(10-day) 
and 
confidence 
level 
(99%). 
Unlike 
regulatory VaR, 
the historical 
data set 
for SVaR 
is not 
limited to 
five 
years, 
instead spanning 
the period 
from 1 January 
2007 to 
the 
present. 
In 
deriving 
SVaR, 
we 
seek
 
the 
largest 
10
-
day 
holding 
period 
VaR 
for 
the 
current 
Group 
portfolio 
across 
all 
one
-
year 
look
-
back 
windows
 
from
 
1
 
January 
2007 
to 
the 
present. SVaR is computed weekly. 
p
 
›
 
Refer to the 31 December 2020 Pillar 3 
report, available under 
“Pillar 3 disclosures” at 
ubs.com/investors
, for more information 
about the regulatory capital calculation 
under the advanced 
internal ratings-based approach 
Management VaR for the period 
The 
tables 
below 
show 
minimum, 
maximum, 
average 
and 
period-end 
management 
VaR 
by 
business 
division 
and 
Group 
Functions, 
and 
by 
general 
market 
risk 
type. 
We 
continued 
to 
maintain
 
management 
VaR 
at 
low 
levels
,
 
with 
average 
VaR 
increasing 
to 
USD 13 
million 
from 
USD 11 
million 
in 
the 
prior 
year. 
 
 
Audited |
 
Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of our business divisions and Group 
Functions by general market risk type
1
For the year ended 31.12.20 
USD million 
Equity 
Interest 
rates 
Credit 
spreads 
Foreign 
exchange 
Commodities 
Min. 
3 
6 
5 
2 
2 
Max. 
29 
11 
11 
7 
6 
Average 
10 
8 
7 
4 
4 
31.12.20 
6 
8 
8 
3 
3 
Total management VaR, Group 
8 
31 
13 
11 
Average (per business division and risk type) 
Global Wealth Management 
0 
2 
1 
1 
0 
1 
1 
0 
0 
Personal & Corporate Banking 
0 
0 
0 
0 
0 
0 
0 
0 
0 
Asset Management 
0 
0 
0 
0 
0 
0 
0 
0 
0 
Investment Bank 
7 
32 
12 
10 
10 
7 
6 
4 
4 
Group Functions 
4 
7 
5 
6 
0 
4 
3 
1 
0 
Diversification effect
2,3
(5) 
(8) 
0 
(4) 
(4) 
(1) 
0 
For the year ended 31.12.19 
USD million 
Equity 
Interest 
rates 
Credit 
spreads 
Foreign 
exchange 
Commodities 
Min. 
2 
6 
3 
2 
1 
Max. 
14 
12 
8 
8 
6 
Average 
6 
9 
5 
3 
2 
31.12.19 
5 
8 
5 
3 
3 
Total management VaR, Group 
6 
18 
11 
9 
Average (per business division and risk type) 
Global Wealth Management 
0 
1 
1 
1 
0 
1 
1 
0 
0 
Personal & Corporate Banking 
0 
0 
0 
0 
0 
0 
0 
0 
0 
Asset Management 
0 
0 
0 
0 
0 
0 
0 
0 
0 
Investment Bank 
4 
17 
9 
7 
6 
7 
4 
3 
2 
Group Functions 
4 
8 
5 
5 
1 
5 
2 
1 
0 
Diversification effect
2,3
(5) 
(4) 
(1) 
(4) 
(2) 
(1) 
0 
1 Statistics at individual levels may not be 
summed to deduce the corresponding aggregate 
figures. The minima 
and maxima for each level may well occur 
on different days, and likewise, 
the VaR for each 
business 
line or risk 
type, being driven 
by the extreme 
loss tail of 
the corresponding distribution 
of simulated profits 
and losses for 
that business line 
or risk type, 
may well be 
driven by different 
days in the 
historical time 
series, rendering invalid the simple 
summation of figures to arrive at 
the aggregate total. 
2 Difference between the sum of 
the standalone VaR for 
the business divisions and Group Functions 
and the VaR for 
the 
Group as a whole. 
3 As the minima and maxima for different business divisions and Group Functions occur on different days, 
it is not meaningful to calculate a portfolio diversification effect. 
p
 
 
 

 
127 
VaR limitations 
Audited 
|
 
Actual realized 
market risk 
losses may 
differ 
from 
those 
implied by VaR for a variety of reasons. 
–
 
VaR 
is 
calibrated 
to 
a 
specified 
level 
of 
confidence 
and 
may 
not indicate potential losses beyond this confidence level. 
–
 
The 
1
-
day 
time 
horizon 
used 
for 
VaR 
for 
internal 
management 
purposes 
(10-day 
for 
regulatory 
VaR) 
may 
not 
fully 
capture 
market 
risk 
of 
positions 
that 
cannot 
be 
closed 
out or hedged within the specified period. 
–
 
In 
some 
cases, 
VaR 
calculations 
approximate 
the 
effect 
of 
changes 
in 
risk 
factors 
on 
the 
values 
of 
positions 
and 
portfolios. This may happen due 
to the number of risk factors 
included in the VaR model needing to be limited. 
–
 
E
ffect
s
 
of 
extreme 
market 
movements 
are 
subject 
to 
estimation 
errors, 
which 
may 
result 
from 
non-linear 
risk 
sensitivities, 
and
 
the 
potential 
for 
actual 
volatility 
and 
correlation 
levels 
to 
differ 
from 
assumptions 
implicit 
in 
VaR 
calculations. 
–
 
Using a 
five-year window 
means sudden 
increases in 
market 
volatility will tend 
not to increase VaR 
as quickly as the 
use of 
shorter 
historical observation 
periods, but 
such increases 
will 
affect VaR 
for a longer 
period of 
time. Similarly, 
after periods 
of increased volatility, 
as markets stabilize 
VaR predictions will 
remain 
more conservative 
for a 
period of 
time influenced 
by 
the length of the historical observation period. 
 
SVaR 
is 
subject 
to 
the 
limitations 
noted 
for 
VaR 
above, 
but 
the use of 
one-year data sets avoids 
the smoothing effect of 
the 
five-year data set 
used for VaR, 
and the absence 
of the five-year 
window gives a longer history of potential loss events. Therefore, 
although 
the significant 
period of 
stress 
during 
the 
2007–2009 
financial 
crisis 
is 
no 
longer 
contained 
in 
the 
historical 
five-year 
period 
used 
for 
management 
and 
regulatory 
VaR, 
SVaR 
continues 
to 
use 
that 
data. 
This 
approach 
aims 
to 
reduce 
the 
procyclicality 
of 
the 
regulatory 
capital 
requirements 
for 
market 
risks. 
We recognize 
that no 
single measure 
can encompass 
all risks 
associated 
with 
a 
position 
or 
portfolio. 
Thus, 
we 
use 
a 
set 
of 
metrics 
with 
both 
overlapping 
and 
complementary 
characteristics to create a 
holistic framework that aims 
to ensure 
material 
completeness 
of 
risk 
identification 
and 
measurement. 
As 
a 
statistical 
aggregate 
risk 
measure, 
VaR 
supplements 
our 
liquidity-adjusted 
stress 
and 
comprehensive 
stress 
testing 
frameworks. 
We also 
have a 
framework to 
identify and 
quantify potential 
risks not 
fully captured by 
our VaR model 
and refer to 
such risks 
as 
risks 
not 
in 
VaR. 
The 
framework 
underpins 
these 
potential 
risks 
with 
regulatory 
capital, 
calculated 
as 
a 
multiple 
of 
regulatory VaR and stressed VaR. 
p
 
Backtesting of VaR 
VaR backtesting is a performance measurement process 
in which 
a 
1-day 
VaR 
prediction 
is 
compared 
with 
the 
realized 
1-day 
profit 
or 
loss (P&L). 
We 
compute backtesting 
VaR 
using a 
99% 
confidence level and 1-day holding period for the regulatory 
VaR 
population. Since 
99% VaR 
at UBS 
is defined 
as a 
risk measure 
that 
operates 
on 
the 
lower 
tail 
of 
the 
P&L 
distribution, 
99% 
backtesting 
VaR 
is 
a 
negative 
number. 
Backtesting 
revenues 
exclude 
non-trading 
revenues, 
such 
as 
valuation 
reserves, 
fees 
and 
commissions
,
 
and 
revenues 
from 
intraday 
trading, 
to 
provide 
for 
a 
like-for-like 
comparison. 
A 
backtesting 
exception 
occurs 
when 
backtesting 
revenues 
are 
lower 
than 
the 
previous 
day’s backtesting VaR. 
 
 
 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
128 
Statistically, 
given 
the 
99% 
confidence 
level, 
two 
or 
three 
backtesting 
exceptions a 
year can 
be expected. 
More than 
four 
exceptions could 
indicate that 
the VaR 
model is 
not performing 
appropriately, 
as 
could 
too 
few 
exceptions 
over 
a 
long 
period. 
However, as 
noted for 
VaR limitations 
above, a 
sudden increase 
(or decrease) 
in market volatility 
relative to the 
five-year window 
could 
lead 
to 
a 
higher 
(
or 
lower
)
 
number 
of 
exceptions. 
Accordingly, Group-level backtesting exceptions 
are investigated, 
as 
are 
exceptional 
positive 
backtesting 
revenues, 
with 
results 
reported 
to 
senior 
business 
management, 
the 
Group 
CRO 
and 
the 
Group 
Chief 
Market 
& 
Treasury 
Risk 
Officer. 
Internal 
and 
external 
auditors 
and 
relevant 
regulators 
are 
also 
informed 
of 
backtesting exceptions. 
The “Group: development 
of regulatory backtesting 
revenues 
and 
actual 
trading 
revenues 
against 
backtesting 
VaR” 
chart 
on 
the 
previous 
page 
shows 
the 
12-month 
development 
of 
backtesting 
VaR 
against 
the 
Group’s 
backtesting 
revenues 
and 
actual 
trading 
revenues 
for 
2020. 
The 
chart 
shows 
both 
the 
99% and 
the 1% backtesting 
VaR. The 
asymmetry between 
the 
negative and 
positive tails 
is due 
to the 
long gamma 
risk profile 
historically run in the Investment Bank. 
The 
actual 
trading 
revenues 
include, 
as 
well 
as 
backtesting 
revenues, intraday revenues. 
The number of 
negative backtesting exceptions 
within a 250-
business-day 
window 
increased 
from 
0 
to 
3 
in 
March, 
and 
remained 
at 
3 
as 
of 
year-end. 
The 
FINMA 
VaR 
multiplier 
for 
market 
risk RWA 
remained 
unchanged at 
3 
as 
of 
31 December 
2020. 
FINMA’s 
freeze 
on 
backtesting 
exceptions 
did 
not 
affect 
this multiplier. 
VaR model confirmation 
As well 
as for 
regulatory-purposes backtesting 
described above, 
we
 
conduct 
extended 
backtesting 
for 
our 
internal 
model 
confirmation 
purposes. 
This 
includes 
observing 
model 
performance across the 
entire P&L distribution, 
not just the tails, 
and at multiple levels within the business division hierarchies. 
›
 
Refer to “Risk measurement” in this section 
for more 
information about our approach to model confirmation 
procedures 
VaR model developments in 2020 
Audited 
|
 
There 
were 
no 
material 
changes 
to 
the 
VaR 
model 
in 
2020. 
p
 
Future market risk-related regulatory capital developments 
In 
January 
2019, 
the 
Basel 
Committee 
on 
Banking 
Supervision 
published 
the 
final 
standards
 
on 
the 
minimum 
capital 
requirements 
for 
market 
risk 
(the 
Fundamental 
Review 
of 
the 
Trading 
Book). 
We 
do 
not 
expect 
these 
standards 
to 
become 
mandatory 
in 
Switzerland 
until 
after 
the 
BCBS 
target 
effective 
date of 1 January 2023. 
Key 
elements 
of 
the 
revised 
market 
risk 
framework 
include: 
(i) changes 
to 
the 
internal 
model-based 
approach, 
including 
changes 
to 
the 
model approval 
and performance 
measurement 
process; (ii) changes 
to the 
standardized approach 
with the 
aim 
of 
it 
being 
a 
credible 
fallback 
method 
for 
an 
internal 
model-
based 
approach; 
and 
(iii) a 
revised 
boundary 
between 
trading 
book 
and 
banking 
book. 
UBS 
maintains 
a 
close 
dialog 
with 
FINMA 
to 
discuss 
the 
implementation 
objectives 
in 
more 
detail 
and 
to 
provide 
a 
smooth 
transition 
of 
the 
capital 
regime 
for 
market risk. 
›
 
Refer to “Risk-weighted assets” 
in the “Capital, liquidity and 
funding, and balance sheet” 
section of this report for more 
information about the development 
of RWA 
›
 
Refer to “Risk measurement” in this section 
for more 
information about our approach to model confirmation 
procedures 
›
 
Refer to the “Regulatory and legal developments” 
and “Risk 
factors” sections of this report for more information 
Interest rate risk in the banking book 
Interest rate risk in the banking book disclosure 
Our 
financial 
reports’ 
interest 
rate 
risk 
in 
the 
banking 
book 
(IRRBB) 
disclosure 
is 
aligned 
to 
the 
Pillar 3 
requirements 
set 
by 
FINMA Circular 
“2019/2 Interest 
Rate Risk 
– Banks,” 
which sets 
minimum 
standards 
for 
measuring, 
managing, 
monitoring 
and 
controlling 
IRRBB. 
In 
particular, 
the 
economic 
value 
of 
equity 
(EVE) 
sensitivity 
is 
assessed 
under 
the 
six 
regulatory 
rate-shock 
scenarios 
set 
in 
the 
FINMA 
circular, 
which 
are 
currency-specific 
and not subject to flooring. 
Sources of interest rate risk in the banking book 
Audited |
 
IRRBB arises 
from 
balance sheet 
positions such 
as 
Loans 
and 
advances 
to 
banks
, 
Loans 
and 
advances 
to 
customers
, 
Financial assets at 
fair value not held 
for trading
, 
Financial assets 
measured 
at 
amortized 
cost
, 
Customer 
deposits
, 
Debt 
issued 
measured 
at 
amortized 
cost
, 
and 
derivatives, 
including 
those 
used 
for 
cash 
flow 
hedging 
purposes. 
Fair 
value 
changes 
to 
these positions may 
affect other 
comprehensive income (OCI) 
or 
the 
income 
statement, 
depending 
on 
their 
accounting 
treatment. 
 
 

 
129 
Our 
largest 
banking 
book 
interest 
rate 
exposures 
arise 
from 
customer 
deposits 
and 
lending 
products 
in 
Global 
Wealth 
Management 
and 
Personal 
& 
Corporate 
Banking. 
The 
inherent 
interest 
rate 
risks 
are 
generally 
transferred 
from 
Global 
Wealth 
Management 
and 
Personal 
& 
Corporate 
Banking 
to 
Group 
Treasury, 
to 
manage 
them 
centrally. This 
enables 
the netting 
of 
interest 
rate 
risks 
across 
different 
sources, 
while 
leaving 
the 
originating 
businesses 
with 
commercial 
margin 
and 
volume 
management. 
The 
residual 
interest 
rate 
risk 
is 
mainly 
hedged 
with interest 
rate swaps, 
to the 
vast majority 
of which 
we apply 
hedge accounting. 
Short-term exposures 
and high-quality 
liquid 
assets 
classified 
as 
Financial 
assets 
at 
fair 
value 
not 
held 
for 
trading
 
are hedged with derivatives 
accounted for on a 
mark-to-
market 
basis. 
Long-term 
fixed-rate 
debt 
issued 
is 
hedged 
with 
interest 
rate 
swaps 
designated 
in 
fair 
value 
hedge 
accounting 
relationships. 
Risk management and governance 
IRRBB 
is 
measured 
using 
several 
metrics, 
the 
most 
relevant 
of 
which are the following. 
–
 
Interest rate sensitivities 
to changes in 
yield curves, calculated 
as 
changes 
in 
the 
present 
value 
of 
future 
cash 
flows 
irrespective 
of 
accounting 
treatment. 
These 
are 
also 
the 
key 
risk 
factors 
for 
statistical 
and 
stress-based 
measures, 
e.g., 
value-at-risk 
and 
stress 
scenarios 
(including 
EVE 
sensitivity), 
and 
are 
measured 
and 
reported 
daily. 
EVE 
sensitivity 
is 
the 
exposure 
arising 
from 
the 
most 
adverse 
regulatory 
interest 
rate 
scenario 
after 
netting 
across 
currencies. 
As 
well 
as 
the 
regulatory 
measure, 
we 
appl
y
 
an 
internal 
EVE 
sensitivity 
metric 
that 
includes 
equity, 
goodwill, 
real 
estate 
and 
additional tier 1 (AT1) capital instruments. 
–
 
Net interest 
income (NII) sensitivity 
assesses NII 
change over a 
set 
time 
horizon 
compared 
with 
baseline 
NII, 
which 
we 
internally calculate by 
assuming interest rates 
in all currencies 
develop according 
to their 
market-implied forward 
rates and 
assum
ing
 
constant 
business 
volumes 
and 
no 
specific 
management 
actions. 
Internal 
NII 
sensitivity, 
which 
includes 
the 
contribution 
from 
cash 
held 
at 
central 
banks, 
unlike 
the 
Pillar 3 
disclosure 
requirements, 
is 
measured 
and 
reported 
monthly. 
 
We actively 
manage IRRBB, 
aiming to 
reduce the 
volatility of 
NII, 
while 
keeping 
the 
EVE 
sensitivity 
within 
set 
internal 
risk 
limits. 
EVE 
and 
NII 
sensitivity 
are 
monitored 
against 
limits 
and 
triggers, 
at 
consolidated 
and 
significant 
legal 
entity 
levels. 
We 
also 
assess 
the 
sensitivity of 
EVE 
and 
NII under 
stressed market 
conditions 
by 
applying 
a 
suite 
of 
parallel 
and 
non-parallel 
interest rate scenarios, as well as specific economic scenarios. 
The 
Interest 
Rate 
Risk 
in 
the 
Banking 
Book 
Strategy 
Committee, 
a 
sub-committee 
of 
the 
Group 
Asset 
and 
Liability 
Committee (ALCO), and, 
where relevant, ALCOs at 
a legal entity 
level 
perform 
independent 
oversight 
over 
the 
management 
of 
IRRBB. 
IRRBB is 
also subject 
to Group 
Internal Audit 
and model 
governance. 
›
 
Refer to “Group Internal Audit” in the “Corporate 
governance” 
section of this report and to “Risk measurement” in 
this section 
for more information 
Key modeling assumptions 
The 
cash 
flows 
from 
customer 
deposits 
and 
lending 
products 
used in calculation of EVE sensitivity exclude commercial 
margins 
and 
other 
spread 
components, 
are 
aggregated 
by 
daily 
time-
buckets 
and 
are 
discounted 
using 
risk-free 
rates. 
Our 
external 
issuances 
are 
discounted 
using 
UBS’s 
senior 
debt 
curve, 
and 
capital 
instruments 
are 
modeled 
to 
the 
first 
call 
date. 
NII 
sensitivity, 
which includes commercial margins, is 
calculated over 
a 
one-year 
time 
horizon, 
assuming 
constant 
balance 
sheet 
structure 
and 
volumes, 
and 
considers 
the 
flooring 
effect 
of 
embedded interest rate options. 
The average 
repricing maturity 
of non-maturing 
deposits and 
loans 
is 
determined 
via 
replication 
portfolio 
strategies 
designed 
to 
protect 
product 
margin. 
Optimal 
replicating 
portfolios 
are 
determined 
at 
granular 
currency- 
and 
product-specific 
levels 
by 
simulating 
and 
applying 
a 
real-world 
market 
rate 
model 
to 
historically calibrated client rate and volume models. 
We 
use 
an 
econometric 
prepayment 
model 
to 
forecast 
prepayment 
rates on 
US mortgage 
loans 
in UBS 
Bank USA 
and 
agency 
mortgage-backed 
securities 
(MBSs) 
held 
in 
various 
liquidity 
portfolios 
of 
UBS 
Americas 
Holding 
LLC 
consolidated. 
These prepayment rates are used to forecast both mortgage loan 
and MBS 
balances under 
various macroeconomic 
scenarios. The 
prepayment 
model 
is 
used 
for 
a 
variety 
of 
purposes, 
including 
risk management 
and regulatory stress 
testing. Swiss 
mortgages 
and fixed-term deposits generally do not 
carry similar optionality, 
due to prepayment and early redemption penalties. 
p
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
130 
Effect of interest rate changes on shareholders’ equity and 
CET1 capital 
The “Accounting and 
capital effect 
of changes in 
interest rates” 
table below shows 
the effects on 
shareholders’ equity and 
CET1 
capital of 
gains and 
losses from 
changes in 
interest rates 
in the 
main banking 
book positions. 
For instruments held 
at fair 
value, 
changes in interest rates result 
in an immediate fair value gain or 
loss, recognized 
either in 
the income statement 
or through 
OCI. 
Typically, 
increases 
in 
interest 
rates 
would 
lead 
to 
immediate 
reductions 
in the value of our long-term 
assets held at fair value, 
but 
we 
would 
expect 
such 
reductions 
to 
be 
offset 
over 
time 
through higher NII on core banking products. 
For assets and 
liabilities measured at 
amortized cost, changes 
in interest 
rates do 
not result 
in changes 
in the 
carrying amount 
of 
the 
instruments, 
but 
could 
affect 
the 
amount 
of 
interest 
income 
or 
expense 
recognized 
over 
time 
in 
the 
income 
statement. 
In 
addition 
to 
the 
differing 
accounting 
treatments, 
banking 
book 
positions 
have 
different 
sensitivities 
to 
different 
points on 
yield 
curves. 
For example, 
portfolios of 
debt securities, 
whether 
measured 
at 
amortized 
cost 
or 
at 
fair 
value, 
and 
interest 
rate 
swaps, whether designated as cash flow hedges 
or transacted as 
economic 
hedges, 
are 
generally 
more 
sensitive 
to 
changes 
in 
longer-duration interest rates, whereas deposits and 
a significant 
portion 
of loans 
contributing 
to NII 
are more 
sensitive to 
short-
term rates. 
These factors 
are important, 
as yield 
curves may 
not 
shift on 
a parallel 
basis and 
could, for 
example, exhibit 
an initial 
steepening followed by a flattening over time. 
Due to 
the accounting 
treatment and 
yield curve 
sensitivities 
outlined 
above, 
in 
a 
rising 
rate 
scenario 
we 
would 
expect 
to 
have an initial 
decrease in shareholders’ equity, 
as a result 
of fair 
value losses recognized in 
OCI. This would be 
compensated over 
time 
by 
increased 
NII, 
as 
increases 
in 
interest 
rates 
affect 
the 
shorter 
end 
of 
the 
yield 
curve in 
particular. The 
effect on 
CET1 
capital would be less pronounced, as gains and losses on interest 
rate 
swaps 
designated 
as 
cash 
flow 
hedges 
are 
not 
recognized 
for regulatory 
capital purposes. 
Fair value 
losses on 
instruments 
designated at fair value should be offset by economic hedges. 
 
Accounting and capital effect of changes in interest rates
1
Recognition 
Shareholders’ equity 
CET1 capital 
Timing 
Income statement / OCI 
Gains 
Losses 
Gains 
Losses 
Loans and deposits at amortized cost
2,3
Gradual 
Income statement 
l
l
l
l
Other financial assets and liabilities measured at amortized 
cost
2
Gradual 
Income statement 
l
l
l
l
Debt issued measured at amortized cost
2,3
Gradual 
Income statement 
l
l
l
l
Receivables and payables from securities financing transactions
2
Gradual 
Income statement 
l
l
l
l
Financial assets at fair value not held for trading 
Immediate 
Income statement 
l
l
l
l
Financial assets at fair value through other comprehensive income 
Immediate 
OCI 
l
l
l
Derivatives designated as cash flow hedges 
Immediate 
OCI
4
l
l
Derivatives designated as fair value hedges
5
Immediate 
Income statement 
l
l
l
l
Derivatives transacted as economic hedges 
Immediate 
Income statement 
l
l
l
l
1 Refer 
to the 
“Reconciliation of 
IFRS equity 
to Swiss 
SRB common 
equity tier 
1 capital” 
table in 
the “Capital, 
liquidity and 
funding, and 
balance sheet” 
section of 
this report 
for more 
information about 
the 
differences between shareholders’ equity and CET1 capital. 
2 For fixed-rate financial instruments, 
changes in interest rates affect the income statement 
when these instruments roll over and reprice. 
3 For hedge 
accounted items, 
a fair value 
adjustment is applied 
in line with 
the treatment of 
the hedging derivatives. 
4 Excluding hedge 
ineffectiveness that is 
recognized in the 
income statement in 
accordance with IFRS. 
5 The fair value of the derivatives is offset 
by the fair value adjustment of the hedged items. 
Under the fair value hedge program applied to cross-currency 
swaps and foreign currency debt, the foreign currency basis 
spread is excluded from the hedge designation and accounted for through OCI, which is included in CET1. 
 
 
Net interest income sensitivity 
The NII sensitivity of Global 
Wealth Management and Personal & 
Corporate 
Banking 
is 
assessed 
using
 
a 
number 
of 
scenarios 
assuming 
parallel 
and 
non-parallel 
shifts 
in 
yield 
curves, 
with 
various 
degrees 
of 
severity. 
The 
results 
are 
compared 
with 
a 
baseline 
NII, 
calculated 
assuming 
that 
interest 
rates 
in 
all 
currencies 
develop 
according 
to 
their 
market-implied 
forward 
rates 
and 
under 
the 
assumption 
of 
constant 
business 
volumes 
and no specific management actions. 
In 
addition 
to 
the 
above 
scenario 
analysis, 
we 
monitor 
NII 
sensitivity to 
immediate parallel 
shocks of 
–200 and 
+200 basis 
points 
against the 
defined 
thresholds, 
under 
the assumption 
of 
constant balance sheet volume and structure. 
As 
of 
31 December 
2020, 
the baseline 
NII 
would have 
been 
approximately 
8% 
lower 
under 
a 
parallel 
shock 
of 
–200 
basis 
points, 
whereas 
under 
a 
parallel 
+200-basis-point 
shock 
the 
baseline NII would have been approximately 51% higher. 
To shelter our 
NII level from 
the persistently low 
and negative 
interest 
rate 
environment, 
in 
particular 
in 
Swiss 
francs, 
we 
rely 
on self-funding our 
lending businesses through our 
deposit base 
in 
Global 
Wealth 
Management 
and 
Personal 
& 
Corporate 
Banking, 
along 
with 
appropriate 
additional 
adjustments 
to 
our 
interest rate-linked 
product pricing. 
The loss 
of such 
equilibrium 
on 
the 
balance 
sheet, 
for 
example 
due 
to 
unattractive 
pricing 
relative to 
peers for 
either mortgages 
or deposits, 
could lead 
to 
our NII decreasing in a persistently 
low and negative interest rate 
environment. 
As 
we 
assume 
constant 
business 
volumes, 
these 
risks 
do 
not 
appear 
in 
the 
aforementioned 
interest 
rate 
scenarios. 
Moreover, 
should 
the 
low 
and 
negative 
interest 
rate 
environment 
worsen, 
our 
NII 
could 
come 
under 
additional 
pressure 
and 
we 
could 
face 
additional 
costs 
for 
holding 
our 
Swiss 
franc 
HQLA 
portfolio. 
A 
reduction 
of 
the 
Swiss 
National 
Bank’s deposit exemption threshold for 
banks would also reduce 
our 
NII, as 
we might 
not 
be able 
to 
offset 
higher 
costs 
for 
our 
cash 
holdings, for 
example 
by passing 
on 
some of 
the 
costs 
to 
our 
depositors. 
Should 
euro 
interest 
rates 
also 
decline 
further, 
that could likewise 
increase liquidity costs 
and put NII 
generated 
from 
euro-denominated 
loans 
and 
deposits 
under 
pressure. 
Depending 
on 
the 
overall 
economic 
and 
market 
environment, 
sustained and significant negative rates could also 
lead to Global 
Wealth 
Management and 
Personal 
& Corporate 
Banking 
clients 
paying 
down 
their 
loans, 
along 
with 
reducing 
any 
excess 
cash 
they hold with 
us as deposits. 
That would reduce 
the underlying 
business volume and lower our NII accordingly. 
 
 

 
 
 
 
 
 
 
 
 
 
 
131 
The NII impact of a net decrease in deposits would depend on 
various factors, 
including the 
currency, its 
interest rate 
level and 
the 
balance 
sheet 
situation, as 
the 
impact 
could be 
offset by 
a 
reduction 
in 
negative-yielding 
liquidity 
portfolios 
or 
require 
alternative 
funding. 
If 
funding 
were 
required, 
the 
cost 
would 
also 
significantly 
depend 
on 
term 
and 
nature 
of 
replacement 
funding, whether such 
funding is raised 
in wholesale markets or 
from 
swapping 
with 
available 
other 
currency
-
denominated 
funding. 
Furthermore, 
imbalances 
leading 
to 
an 
excess 
deposit 
position 
could require 
additional 
investments at 
negative yields, 
which 
our 
excess 
deposit 
balance 
charging 
mechanisms 
might 
not be able to sufficiently compensate for. 
Economic value sensitivity 
Audited 
|
 
Interest 
rate 
risk 
in 
the 
banking 
book 
is 
subject 
to 
a 
regulatory EVE 
sensitivity threshold 
of 15% of 
tier 1 capital. 
The 
exposure 
is 
calculated 
as 
the 
theoretical 
change 
in 
the 
present 
value 
of 
the 
banking 
book 
under 
the 
most 
adverse 
of 
the 
six 
FINMA interest rate scenarios. 
As 
of 
31 December 
2020, 
the 
interest 
rate 
sensitivity 
of 
our 
banking 
book 
to 
a 
+1-basis-point 
parallel 
shift 
in 
yield 
curves 
was 
negative 
USD
 
27
.
2 
million. 
The 
reported 
interest 
rate 
sensitivity excludes the 
additional tier 1 (AT1) 
capital instruments 
as 
per 
FINMA 
Pillar 3 
disclosure 
requirements, 
with 
a 
sensitivity 
of USD 4.2 
million per 
basis point, 
and our 
equity, goodwill 
and 
real 
estate, 
with 
a 
modeled 
sensitivity 
of 
USD 22.2 
million 
per 
basis 
point, 
of 
which 
USD 5.6 million 
and 
USD 15.9 
million are 
attributable 
to 
the 
Swiss 
franc 
and 
the 
US 
dollar 
portfolios, 
respectively. 
The 
most 
adverse 
of 
the 
six 
FINMA 
interest 
rate 
scenarios 
would 
be 
the 
“Parallel 
up” 
scenario, 
which 
would 
result 
in 
a 
change 
in 
the 
economic 
value 
of 
equity 
of 
negative 
USD 5.6 
billion, 
representing 
a 
pro 
forma 
reduction 
of 
10.0% 
of 
tier 1 
capital, which would 
be well below 
the regulatory outlier 
test of 
15% of 
tier 1 capital. 
The immediate 
effect of 
the “Parallel 
up” 
scenario 
on 
tier 1 
capital 
as 
of 
31 December 
2020 
would 
be 
a 
reduction 
of 
1.2%, 
or 
USD 0.7 
billion, 
arising 
from 
the 
part 
of 
our banking book that is measured at fair value through profit or 
loss and from the 
financial assets measured at fair 
value through 
OCI. This scenario 
would, however, have 
a positive effect 
on net 
interest income.
p
 
›
 
Refer to “Note 11 Financial assets measured 
at fair value 
through other comprehensive income” 
in the “Consolidated 
financial statements” 
section of this report for more information 
›
 
Refer to the “Group performance” 
section of this report for more 
information about sensitivity to interest rate movements 
 
Audited |
 
Interest rate risk – banking book 
USD million 
+1 bp 
Parallel up
1
Parallel down
1
Steepener
2
Flattener
3
Short-term up
4
Short-term down
5
CHF 
(5.2) 
(735.8) 
832.3 
(369.6) 
225.5 
(74.5) 
79.0 
EUR 
(0.9) 
(164.9) 
163.2 
(73.1) 
29.9 
(20.4) 
(4.7) 
GBP 
0.2 
48.7 
(42.0) 
(31.7) 
40.2 
56.9 
(47.5) 
USD 
(20.7) 
(4,612.8) 
3,999.8 
(395.5) 
(630.5) 
(2,188.9) 
2,397.9 
Other 
(0.6) 
(140.0) 
3.6 
20.8 
(59.3) 
(105.7) 
10.5 
Total effect on economic value of equity as per Pillar 3 requirement as of 
31.12.20 
(27.2) 
(5,604.8) 
4,956.9 
(849.1) 
(394.1) 
(2,332.7) 
2,435.2 
Additional tier 1 (AT1) capital instruments 
4.2 
815.1 
(868.4) 
(92.8) 
272.8 
573.6 
(599.0) 
Total including AT1 capital instruments as of 31.12.20 
(23.0) 
(4,789.7) 
4,088.5 
(942.0) 
(121.2) 
(1,759.1) 
1,836.2 
1 Rates across 
all tenors move 
by ±150 bps 
for Swiss franc, 
±200 bps for 
euro and US 
dollar and ±250 
bps for pound 
sterling. 
2 Short-term rates 
decrease and long-term 
rates increase. 
3 Short-term rates 
increase and long-term rates decrease. 
4 Short-term rates increase more than long-term rates. 
5 Short-term rates decrease more than long-term rates. 
p
 
 
Other market risk exposures 
Own credit 
We are 
exposed to 
changes in 
UBS’s own 
credit reflected 
in the 
valuation 
of 
financial 
liabilities 
designated 
at 
fair 
value 
when 
UBS’s 
own 
credit 
risk 
would 
be 
considered 
by 
market 
participants, 
except 
for 
fully 
collateralized 
liabilities 
or 
other 
obligations 
for 
which 
it 
is 
established 
market 
practice 
to 
not 
include an own-credit component. 
›
 
Refer to “Note 21 Fair value measurement” 
in the “Consolidated 
financial statements” 
section of this report for more information 
about own credit 
Structural foreign exchange risk 
Upon 
consolidation, 
assets 
and 
liabilities 
held 
in 
foreign 
operations 
are 
translated 
into 
US 
dollars 
at 
the 
closing 
foreign 
exchange rate 
on the 
balance sheet 
date. Value 
changes (in 
US 
dollars) 
of 
non-US 
dollar 
assets 
or 
liabilities 
due 
to 
foreign 
exchange movements are recognized in 
OCI and therefore affect 
shareholders’ equity and CET1 capital. 
Group 
Treasury 
uses 
strategies 
to 
manage 
this 
foreign 
currency 
exposure, 
including 
matched 
funding 
of 
assets 
and 
liabilities and net investment hedging. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information about 
our exposure 
to and management of structural foreign exchange 
risk 
›
 
Refer to “Note 10 Derivative instruments” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about our hedges of net investments 
in foreign operations 
Equity investments 
Audited 
|
 
Under 
International Financial 
Reporting 
Standards 
(IFRS) 
effective 
on 
31 December 
2020, 
equity 
investments 
not 
in 
the 
trading 
book 
may 
be 
classified 
as 
Financial 
assets 
at 
fair 
value
 
not held for trading 
or 
Investments in associates
. 
We 
make 
direct 
investments 
in 
a 
variety 
of 
entities 
and 
buy 
equity 
ho
ldings 
in 
both 
listed 
and 
unlisted 
companies
,
 
for 
a 
variety of purposes, including 
investments such as exchange 
and 
clearing 
house 
memberships 
held 
to 
support 
our 
business 
activities. 
We 
may 
also 
make 
investments 
in 
funds 
that 
we 
manage 
in 
order 
to 
fund 
or 
seed 
them 
at 
inception 
or 
to 
demonstrate that 
our interests 
align with 
those of 
investors. We 
also 
buy, 
and 
are 
sometimes 
required 
by 
agreement 
to 
buy, 
securities and units from funds that we have sold to clients. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
132 
The fair value of equity 
investments tends to be influenced by 
factors specific 
to the 
individual investments. 
Equity investments 
are generally 
intended to 
be held 
for the 
medium or 
long term 
and 
may 
be 
subject 
to 
lock-up 
agreements. 
For 
these 
reasons, 
we generally do not control these exposures by using market risk 
measures 
applied 
to 
trading 
activities. 
However, 
such 
equity 
investments 
are 
subject 
to 
a 
different 
range 
of 
controls, 
including 
preapproval 
of 
new 
investments 
by 
business 
management 
and 
Risk 
Control, 
portfolio 
and 
concentration 
limits, 
and 
regular 
monitoring 
and 
reporting 
to 
senior 
management. 
They 
are 
also 
included 
in 
our 
Group-wide 
statistical 
and 
stress 
testing 
metrics, 
which 
flow 
into 
our 
risk 
appetite framework. 
As 
of 
31 December 
2020, 
we 
held 
equity 
investments 
totaling 
USD 3.1 billion, 
of 
which 
USD 1.5 
billion 
was classified 
as 
Financial assets at 
fair value not 
held for trading
 
and USD 1.6 
billion as 
Investments in associates
. 
p
 
›
 
Refer to “Note 21 Fair value measurement” 
and “Note 28 
Interests in subsidiaries and other entities” in 
the “Consolidated 
financial statements” 
section of this report for more information 
›
 
Refer to “Note 1 Summary of significant accounting 
policies” in 
the “Consolidated financial statements” 
section of this report for 
more information about the classification 
of financial 
instruments 
Debt investments 
Audited |
 
Debt investments 
classified as 
Financial assets 
measured 
at 
fair 
value 
through 
OCI
 
as 
of 
31
 
December 
20
20
 
were 
measured 
at 
fair 
value 
with 
changes 
in 
fair 
value 
recorded 
through 
Equity
, 
and 
can 
broadly 
be 
categorized 
as 
money 
market 
instruments 
and 
debt 
securities 
primarily 
held 
for 
statutory, regulatory 
or liquidity reasons. 
The 
risk 
control 
framework 
applied 
to 
debt 
instruments 
classified as 
Financial assets 
measured at 
fair value 
through OCI
 
depends 
on 
the nature 
of 
the instruments 
and 
the purpose 
for 
which we 
hold them. 
Our exposures 
may be 
included in 
market 
risk 
limits 
or 
be 
subject 
to 
specific 
monitoring 
and 
interest 
rate 
sensitivity 
analysis. 
They 
are 
also 
included 
in 
our 
Group-wide 
statistical 
and 
stress 
testing 
metrics, 
which 
flow 
into 
our 
risk 
appetite framework. 
Debt 
instruments 
classified 
as 
Financial 
assets 
measured 
at 
fair 
value 
through OCI
 
had a 
fair value 
of 
USD 8.3 billion 
as of 
31
 
December 
2020 
compared 
with 
USD
 
6.3 
billion 
as 
of 
31 December 2019. 
p
 
›
 
Refer to “Note 21 Fair value measurement” 
in the “Consolidated 
financial statements” 
section of this report for more information 
›
 
Refer to “Economic value sensitivity” in 
this section for more 
information 
›
 
Refer to “Note 1 Summary of significant accounting 
policies” in 
the “Consolidated financial statements” 
section of this report for 
more information about the classification 
of financial 
instruments 
Pension risk 
We 
provide 
a 
number 
of 
pension 
plans 
for 
past 
and 
current 
employees, 
some 
classified 
as 
defined 
benefit 
pension 
plans 
under IFRS that can have a material effect on our IFRS equity and 
CET1 capital. 
In 
order 
to 
meet 
the 
expected 
future 
benefit 
payments, 
the 
plans 
invest 
employee 
and 
employer 
contributions 
in 
various 
asset 
classes. 
A 
plan’s 
funded 
status 
is 
the 
difference 
between 
the fair value 
of its assets 
and the present 
value of the 
expected 
future 
benefit 
payments 
to 
plan 
members
,
 
i.e., 
the 
defined 
benefit obligation. 
Pension 
risk 
is 
the 
risk 
that 
defined 
benefit 
plans’ 
funded 
status might 
decrease, negatively affecting 
our IFRS 
equity and / 
or CET1 capital. 
This can result from 
falls in the value 
of a plan’s 
assets or 
in the 
investment returns, 
increases 
in defined 
benefit 
obligations, or combinations 
of the above. 
Important risk 
factors affecting 
the fair 
value of 
plans’ assets 
include equity market returns, interest rates, bond yields and real 
estate 
prices. 
Important 
risk 
factors 
affecting 
the 
present 
value 
of 
expected 
future 
benefit 
payments 
include 
high-grade 
bond 
yields, interest rates, inflation rates and life expectancy. 
Pension 
risk 
is 
included 
in 
our 
Group-wide 
statistical 
and 
stress 
testing 
metrics, 
which 
flow 
into 
our 
risk 
appetite 
framework. The 
potential effects 
are 
thus captured 
in the 
post-
stress CET1 capital ratio calculation.
 
›
 
Refer to “Note 1 Summary of significant accounting 
policies” and 
“Note 26 Post-employment benefit plans” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about defined benefit plans 
UBS own share exposure 
Group 
Treasury 
holds 
UBS 
Group 
AG 
shares 
to 
hedge 
future 
share 
delivery 
obligations 
related 
to 
employee 
share-based 
compensation 
awards, 
and 
also 
holds 
shares 
purchased 
under 
the share 
repurchase program. 
In addition, 
the Investment Bank 
holds a 
limited number 
of UBS Group 
AG shares, 
primarily in its 
capacity as a market-maker with regard to UBS Group AG shares 
and 
related 
derivatives, 
and 
to 
hedge 
certain 
issued 
structured 
debt instruments. 
›
 
Refer to “UBS shares” in the “Capital, liquidity 
and funding, and 
balance sheet” 
section of this report for more information 
 
 

 
133 
Country risk
Country risk framework 
Country 
risk 
includes 
all 
country-specific 
events 
occurring 
in 
a 
sovereign 
jurisdiction 
that 
may 
lead 
to 
impairment 
of 
UBS’s 
exposures. 
It may 
take the 
form of: 
sovereign risk, 
which is 
the 
ability 
and 
willingness 
of 
a 
government 
to 
honor 
its 
financial 
commitments; 
transfer 
risk, 
which 
arises 
if 
a 
counterparty 
or 
issuer cannot 
acquire foreign 
currencies following 
a moratorium 
by 
a 
central 
bank 
on 
foreign 
exchange 
transfers; 
or 
“other” 
country 
risk. 
“Other” 
country 
risk 
may 
manifest 
itself 
through, 
on the one hand, increased and multiple 
counterparty and issuer 
default 
risk 
(systemic 
risk) 
and, 
on 
the 
other 
hand, 
events 
that 
may 
affect 
a 
country
’s
 
standing, 
such 
as 
adverse 
shocks 
affecting 
political stability 
or institutional 
and legal 
frameworks. 
We have 
a well-established 
risk control 
framework to 
assess the 
risk profiles 
of all countries where we have exposure. 
We assign a country rating to each country, which reflects our 
view of the country’s creditworthiness and of the probability of a 
country 
risk 
event 
occurring. 
Country 
ratings 
are 
mapped 
to 
statistically 
derived 
default 
probabilities
,
 
described 
under 
“Probability 
of 
default” 
in 
this 
section. 
We 
use 
this
 
internal 
analysis 
to 
set 
the 
credit 
ratings 
of 
governments 
and 
central 
banks, estimate the probability of a transfer event occurring, and 
establish 
rules 
as 
to 
how 
aspects 
of 
country 
risk 
should 
be 
incorporated 
in 
counterparty 
ratings 
of 
non-sovereign 
entities 
domiciled in the respective country. 
Country ratings 
are also 
used to 
define our 
risk appetite 
and 
risk 
exposure 
to 
foreign 
countries. 
A 
country 
risk 
limit
 
(i.e., 
maximum 
aggregate 
exposure) 
applies 
to 
exposures 
to 
counterparties 
or 
issuers 
of 
securities 
and 
financial 
investments 
in 
the 
given 
foreign 
country. 
We 
may 
limit 
the 
extension 
of 
credit, 
transactions 
in 
traded 
products 
or 
positions 
in 
securities 
based 
on 
a 
country 
risk 
ceiling 
even 
if 
our 
exposure 
to 
a 
counterparty is otherwise acceptable. 
For internal measurement and control 
of country risk, we also 
consider 
the 
financial 
effect 
of 
market 
disruptions 
arising 
prior 
to, during and 
after a country 
crisis. These may 
take the form of 
a 
severe deterioration 
in a 
country’s debt, 
equity or 
other asset 
markets 
or 
a 
sharp 
depreciation 
of 
its 
currency. 
We 
use 
stress 
testing 
to 
assess 
potential 
financial 
effects 
of 
severe 
country or 
sovereign 
crises. 
This involves 
the developing 
of 
plausible 
stress 
scenarios 
for 
combined 
stress 
testing 
and 
the 
identification 
of 
countries 
that 
may 
potentially 
be 
subject 
to 
a 
crisis 
event, 
determining 
potential 
losses 
and 
making 
assumptions 
about 
recovery 
rates 
depending 
on 
the 
types 
of 
credit 
transactions 
involved 
and 
their 
economic 
importance 
to 
the 
affected 
countries. 
Our 
exposures 
to 
market 
risks 
are 
subject 
to 
regular 
stress 
tests 
covering 
major 
global 
scenarios, 
which 
are 
also 
used 
for 
combined stress testing, where we apply market shock factors to 
equity 
indices, 
interest 
rates 
and 
currency 
rates 
in 
all 
relevant 
countries and consider the potential liquidity of the instruments. 
Country risk exposure 
Country risk exposure measure 
The 
presentation 
of 
country 
risk 
follows 
our 
internal 
risk 
view, 
where 
the 
basis 
for 
measur
ing
 
exposures 
depends 
on 
the 
product 
category 
in 
which 
we 
classified 
the 
exposures. 
In 
addition to 
the classification of 
exposures into 
banking products 
and 
traded 
products, 
covered 
in 
“Credit 
risk 
profile 
of 
the 
Group” in this section, 
in trading inventory we 
classify issuer risk 
on securities 
such as 
bonds and 
equities, as 
well as 
risk relating 
to underlying reference assets for derivative positions. 
As we 
manage 
the trading 
inventory 
on a 
net 
basis, we 
net 
the value of long positions 
against short positions with 
the same 
underlying 
issuer. 
Net 
exposures 
are, 
however, 
floored 
at 
zero 
per issuer 
in the 
figures presented 
in 
the following 
tables. As 
a 
result, 
we 
do 
not 
recognize 
potentially 
offsetting 
benefits 
of 
certain hedges and short positions across issuers. 
We 
do 
not 
recognize 
any 
expected 
recovery 
values 
when 
reporting 
country 
exposures 
as 
exposure 
before 
hedges,
 
except 
for 
risk-reducing 
effects 
of 
master 
netting 
agreements 
and 
collateral 
held 
in 
either 
cash 
or 
portfolios 
of 
diversified 
marketable 
securities, 
which 
we 
deduct 
from 
the 
positive 
exposure values. 
Within banking 
products and 
traded products, 
risk-reducing effects of credit protection is taken into account 
on 
a notional basis when determining the net of hedge exposures. 
Country risk exposure allocation 
In 
general, 
exposures 
are 
shown 
against 
the 
country 
of 
domicile 
of 
the 
contractual 
counterparty 
or 
the 
issuer 
of 
the 
security. 
For 
some 
counterparties 
whose 
economic 
substance 
in terms 
of assets 
or source 
of revenues 
is primarily 
located in 
a 
different 
country, 
the exposure 
is allocated 
to the 
risk domicile 
of those assets 
or revenues 
. 
We apply a 
specific approach for 
banking products exposures 
to branches of banks that are located in a country other than the 
legal 
entity’s 
domicile. 
In 
such cases, 
exposures 
are 
recorded 
in 
full 
against 
the 
country 
of 
domicile 
of 
the 
counterparty 
and 
additionally 
in 
full 
against 
the 
country 
in 
which 
the 
branch 
is 
located. 
In 
the 
case 
of 
derivatives, 
we 
show 
counterparty 
risk 
associated 
with 
positive 
replacement 
value 
(PRV) 
against 
the 
counterparty
’s
 
country 
of 
domicile 
(presented 
within 
traded 
products). 
In addition, 
risk associated 
with instantaneous 
fall in 
value 
of 
underlying 
reference 
asset
s
 
to 
zero 
(assuming 
no 
recovery) is 
shown against 
the country 
of domicile 
of the 
issuer 
of the 
reference asset 
(presented 
within trading 
inventory). 
This 
approach 
allows 
us 
to 
capture 
both 
counterparty 
and, 
where 
applicable, 
issuer 
elements 
of 
risk 
arising 
from 
derivatives 
and 
applies 
comprehensively 
for 
all 
derivatives, 
including 
single-
name credit default swaps 
(CDSs) and other credit 
derivatives. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
134 
Exposures to selected Eurozone countries 
Our 
exposure 
to 
peripheral 
European 
countries, 
i.e., 
Greece, 
Italy
, 
Ireland, 
Portugal, 
and 
Spain,
 
remains 
limited, 
but 
we 
nevertheless 
remain 
watchful 
of 
potential 
broader 
implications 
of 
adverse 
developments 
in 
the 
E
urozone.
 
As 
noted 
under 
“Stress 
testing” in 
this section, 
a Eurozone 
crisis remains 
a core 
part 
of 
the 
binding 
Global 
Crisis
 
scenario
 
for 
combined 
stress 
test 
purposes, 
making 
it 
central 
to 
the 
regular 
monitoring 
of 
risk 
exposure 
against 
minimum 
capital, 
earnings 
and 
leverage 
ratio objectives 
in our risk 
appetite framework. 
The “Exposures to Eurozone countries rated lower than AAA / 
Aaa 
by at 
least 
one major 
rating agency” 
table 
below provides 
an 
overview 
of 
our 
exposures 
to 
such 
countries 
as 
of 
31 December 2020. 
 
Exposures to Eurozone countries rated lower than AAA / Aaa by at least one major rating agency 
USD million 
Total 
Banking products 
(loans, guarantees, loan commitments) 
Traded products 
(counterparty risk from derivatives and 
securities financing) 
after master netting agreements 
and net of collateral 
Trading inventory 
(securities and potential 
benefits / remaining 
exposure from 
derivatives) 
31.12.20 
Net of 
hedges
1
Exposure 
before 
hedges 
Net of 
hedges
1
of which: 
unfunded 
Exposure 
before hedges 
Net of 
hedges 
Net long 
per issuer 
Austria 
1,665 
1,664 
198 
197 
190 
616 
616 
851 
Sovereign, agencies and central bank 
671 
671 
0 
0 
572 
572 
99 
Local governments 
0 
0 
0 
0 
0 
0 
0 
Banks 
662 
662 
33 
33 
34 
34 
595 
Other
2
333 
331 
165 
164 
10 
10 
157 
Belgium 
869 
869 
172 
172 
62 
412 
412 
285 
Sovereign, agencies and central bank 
249 
249 
0 
0 
0 
0 
249 
Local governments 
0 
0 
Banks 
536 
536 
155 
155 
380 
380 
2 
Other
2
84 
84 
17 
17 
32 
32 
35 
Finland 
394 
394 
40 
40 
4 
65 
65 
289 
Sovereign, agencies and central bank 
123 
123 
0 
0 
0 
0 
123 
Local governments 
153 
153 
0 
0 
1 
1 
152 
Banks 
106 
106 
40 
40 
55 
55 
11 
Other
2
12 
12 
0 
0 
9 
9 
2 
France 
7,473 
7,344 
1,307 
1,306 
490 
1,538 
1,409 
4,628 
Sovereign, agencies and central bank 
4,299 
4,170 
0 
0 
552 
424 
3,746 
Local governments 
0 
0 
0 
0 
0 
0 
0 
Banks 
543 
543 
249 
249 
229 
229 
64 
Other
2
2,632 
2,631 
1,058 
1,057 
756 
756 
818 
Greece 
23 
15 
20 
12 
11 
0 
0 
3 
Sovereign, agencies and central bank 
0 
0 
0 
0 
0 
0 
0 
Local governments 
0 
0 
Banks 
20 
12 
20 
12 
0 
0 
0 
Other
2
3 
3 
0 
0 
0 
0 
3 
Ireland 
938 
909 
609 
580 
23 
61 
61 
269 
Sovereign, agencies and central bank 
96 
96 
0 
0 
0 
0 
96 
Local governments 
0 
0 
Banks 
43 
43 
30 
30 
12 
12 
0 
Other
2
800 
771 
579 
550 
48 
48 
173 
Italy 
1,571 
1,528 
1,328 
1,286 
571 
221 
220 
22 
Sovereign, agencies and central bank 
614 
614 
611 
610 
4 
4 
0 
Local governments 
52 
51 
0 
0 
52 
51 
0 
Banks 
611 
601 
567 
557 
39 
39 
5 
Other
2
295 
262 
151 
119 
126 
126 
18 
Portugal 
55 
55 
31 
31 
31 
22 
21 
2 
Sovereign, agencies and central bank 
0 
0 
0 
0 
0 
0 
0 
Local governments 
0 
0 
Banks 
14 
14 
13 
13 
1 
1 
0 
Other
2
41 
40 
18 
18 
20 
20 
2 
Spain 
822 
724 
579 
481 
393 
60 
60 
184 
Sovereign, agencies and central bank 
10 
10 
0 
0 
0 
0 
10 
Local governments 
0 
0 
Banks 
86 
86 
53 
53 
4 
4 
29 
Other
2
727 
629 
526 
428 
56 
56 
145 
Other
3
1,096 
1,071 
1,027 
1,002 
6 
41 
41 
28 
Total 
14,907 
14,573 
5,311 
5,107 
1,781 
3,035 
2,905 
6,561 
1 Before deduction 
of IFRS 9 
ECL allowances 
and provisions. 
2 Includes corporates, 
insurance companies 
and funds. 
3 Represents aggregate 
exposures to Andorra, 
Cyprus, Estonia, 
Latvia, Lithuania, 
Malta, 
Monaco, Montenegro, San Marino, Slovakia 
and Slovenia. 
 
 

 
 
 
 
 
 
135 
CDSs 
are 
primarily 
bought 
and 
sold 
in 
relation 
to 
our 
trading 
businesses, 
and to 
a much 
lesser degree 
used to 
hedge 
credit 
valuation 
adjustments 
(CVAs). 
As of 
31 December 
2020, 
and 
not 
taking 
into 
account 
risk-reducing 
effects 
of 
master 
netting 
agreements, 
we 
had 
purchased 
USD 5.4 
billion 
gross 
notional 
of single 
-name CDS 
protection 
on issuers 
domiciled 
in 
Italy and 
had sold USD 
5.7 billion 
gross notional 
of single-name 
CDS 
protection. 
The 
amount 
of 
CDS
s
 
bought 
and 
sold 
in 
relation 
to 
Greece, 
Ireland, 
Portugal 
and 
Spain 
remains 
immaterial. 
All 
gross 
protection 
purchased 
was 
from 
investment 
grade-rated 
counterparties 
(based 
on 
our 
internal 
ratings) and 
on a collateralized 
basis. 
Holding 
CD
Ss
 
for 
credit 
default 
protection 
does 
not 
necessarily 
protect 
the 
buyer 
of 
protection 
against 
losses, 
as 
contracts only pay 
out under certain 
scenarios. The effectiveness 
of our CDS protection 
as a hedge of 
default risk is influenced 
by 
a 
number 
of 
factors, 
including 
the 
contractual 
terms 
under 
which 
a 
CDS 
was 
written. 
Generally, 
only 
occurrence 
of 
credit 
events 
as defined by 
the CDS 
terms (which may 
include, 
among 
other events, failure to 
pay, restructuring or bankruptcy) result 
in 
payments 
under 
the 
purchased 
credit 
protection 
contracts. 
For 
CDS contracts 
on sovereign 
obligations, repudiation 
can also 
be 
deemed 
as 
a default 
event. 
The 
determination as 
to 
whether a 
credit 
event 
has 
occurred 
is 
made 
by 
the 
relevant 
International 
Swaps 
and 
Derivatives 
Association 
(ISDA) 
determination 
committees (composed of 
various ISDA member 
firms) based on 
the 
terms 
of 
the 
CDS 
and 
the 
facts 
and 
circumstances 
surrounding the event. 
Exposure to emerging market countries 
The 
“Emerging 
market
s
 
net 
exposure 
by 
major 
geographical 
region and 
product type” 
table on the 
next page shows 
the five 
largest 
emerging 
market 
country 
exposures 
in 
each 
major 
geographical 
area 
by 
product 
type 
as 
of 
31 December 
2020 
compared 
with 
31 December 
2019. 
Based 
on 
the 
sovereign 
rating 
categories, 
as 
of 
31
 
December 
2020
, 
83
% 
of 
our 
emerging market 
country exposure 
was rated investment 
grade, 
compared with 79% as of 31 December 2019. 
Our 
direct 
net 
exposure 
to 
China 
was 
USD 7.4 
billion, 
an 
in
crease 
of 
USD
 
2.7
 
billion 
compared 
with 
the 
prior 
year, 
predominantly driven by 
banking products and 
trading inventory 
across 
issuer 
risk 
and 
margin 
loans. 
Our 
direct 
net 
exposure 
to 
South Korea 
was USD 2.3 
billion, an 
increase of 
USD 1.1 billion, 
largely driven by trading inventory. 
 
Emerging markets net exposure¹ by internal UBS country rating category 
USD million 
31.12.20 
31.12.19 
Investment grade 
19,580 
13,693 
Sub-investment grade 
4,005 
3,721 
Total 
23,585 
17,414 
1 Net of credit hedges (for banking products and for traded products); net long per issuer (for trading inventory). Before deduction 
of IFRS 9 ECL allowances and provisions. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
136 
Emerging markets net exposures by major geographical region and product type 
USD million 
Total 
Banking products 
(loans, guarantees, loan 
commitments) 
Traded products 
(counterparty risk from derivatives 
and securities financing) 
after master netting agreements 
and net of collateral 
Trading inventory 
(securities and potential 
benefits / remaining 
exposure from derivatives) 
Net of hedges
1
Net of hedges
1
Net of hedges 
Net long per issuer 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Emerging America 
1,597 
1,512 
723 
613 
247 
368 
627 
531 
Brazil 
1,119 
1,262 
474 
498 
88 
288 
557 
476 
Mexico 
187 
121 
41 
22 
131 
56 
14 
43 
Chile 
65 
20 
22 
9 
10 
8 
33 
2 
Panama 
49 
18 
46 
17 
2 
1 
0 
0 
Peru 
49 
4 
46 
3 
0 
0 
3 
1 
Other 
128 
87 
95 
63 
15 
15 
18 
9 
Emerging Asia 
16,566 
11,627 
5,901 
3,306 
2,739 
2,235 
7,927 
6,086 
China 
7,389 
4,717 
2,551 
1,140 
1,010 
456 
3,828 
3,121 
Hong Kong 
2,840 
2,850 
1,498 
1,000 
395 
823 
946 
1,027 
South Korea 
2,259 
1,118 
426 
60 
526 
403 
1,307 
655 
Thailand 
1,494 
616 
146 
62 
41 
26 
1,306 
528 
Taiwan 
958 
584 
191 
133 
566 
267 
200 
185 
Other 
1,627 
1,742 
1,087 
911 
201 
261 
339 
570 
Emerging Europe 
1,962 
1,382 
1,552 
1,076 
156 
138 
253 
169 
Turkey 
871 
398 
826 
359 
4 
4 
41 
34 
Russia 
668 
547 
447 
380 
84 
93 
137 
74 
Azerbaijan 
183 
186 
146 
184 
36 
0 
0 
2 
Poland 
87 
42 
63 
17 
8 
4 
16 
21 
Croatia 
33 
5 
32 
2 
0 
0 
1 
3 
Other 
120 
205 
38 
133 
24 
37 
58 
35 
Middle East and Africa 
3,459 
2,893 
1,532 
1,316 
1,202 
1,027 
725 
550 
Saudi Arabia 
804 
556 
166 
147 
438 
401 
201 
7 
United Arab Emirates 
677 
624 
431 
404 
218 
215 
27 
5 
Kuwait 
457 
277 
103 
56 
354 
222 
1 
0 
Qatar 
416 
187 
197 
120 
0 
0 
219 
67 
South Africa 
339 
668 
52 
176 
93 
129 
194 
363 
Other 
766 
581 
583 
414 
99 
60 
84 
108 
Total 
23,585 
17,414 
9,708 
6,311 
4,344 
3,767 
9,533 
7,335 
1 Before deduction of IFRS 9 ECL allowances and provisions. 
 
 

 
137 
Environmental, social and climate risk
Environmental and social risk 
Environmental and 
social risk (ESR) 
can arise when 
UBS supports 
clients 
and 
transactions, 
or 
sources 
products 
or 
services 
from 
suppliers, 
that may 
cause or 
contribute to 
severe environmental 
damage, climate 
change, or 
human rights 
infringements. ESR 
is 
gaining importance 
amid a 
global drive 
to meet 
the Sustainable 
Development 
Goals 
and 
transition 
to 
a 
low-carbon 
economy, 
and 
further 
to 
this, 
regulators 
across 
multiple 
jurisdictions 
increasingly 
focus 
on 
climate 
change 
impacts. 
Our 
broad 
and 
wide
-
ranging
 
ESR 
framework 
governs 
client 
and 
supplier 
relationships, applies 
firm-wide to 
all activities, 
and is 
integrated 
in management 
practices and 
control principles. 
The framework 
includes 
identifying, 
assessing
,
 
monitoring
 
and 
reporting
 
environmental 
and 
social 
risks 
in 
our 
standard 
risk, 
compliance 
and 
operations 
processes. 
These 
include 
client 
onboarding, 
transaction due 
diligence, product 
development and 
investment 
decision 
processes, 
own 
operations, supply 
chain management, 
and 
portfolio 
reviews. 
This 
framework 
is 
geared 
toward 
identifying clients, 
transactions or 
suppliers potentially 
in breach 
of 
our 
standards 
or 
otherwise 
subject 
to 
significant 
environmental and human 
rights controversies, including climate 
change. 
›
 
Refer to “Environmental and social risk policy 
framework” in 
appendix 6 to the Sustainability Report 
2020, available from 
11 March 2021 under “Annual reporting” at 
ubs.com/investors
, 
for more information 
Climate risk 
The 
physical 
and 
transition 
risks 
from 
a 
changing 
climate 
contribute 
to 
a 
structural 
change 
across 
economies 
and 
therefore 
affect 
banks 
and 
the 
financial 
sector 
as 
a 
whole. 
In 
order 
to 
protect 
our 
clients’ 
assets 
and 
our 
own 
assets 
from 
climate-related 
risks, 
we 
continue 
to 
drive 
the 
integration 
of 
such 
risk 
into 
our 
standard 
risk 
management 
framework. 
We 
manage climate risk in 
our own operations, balance sheet, 
client 
assets and 
value chain. 
We are 
embedding climate 
risk into 
our 
risk appetite framework and 
operational risk appetite statement. 
In 2020, 
we further 
integrated climate 
risk in 
risk identification, 
management, 
stress 
testing 
methodology 
and 
reporting 
processes across the 
organization. We have 
consistently reduced 
our exposure 
to carbon-related 
assets and 
continued our 
multi-
year efforts to develop methodologies which enable more robust 
and 
transparent 
disclosure 
of 
climate 
metrics. 
This 
work 
will 
continue 
our 
efforts 
to 
ensure 
we 
are 
prepared 
to 
respond 
to 
increased 
regulatory 
requirements 
on 
climate 
risk, 
align 
our 
disclosure 
with 
the 
Task 
Force 
on 
Climate-related 
Financial 
Disclosures (the 
TCFD) recommendations 
and collaborate 
within 
the industry to close gaps. 
We 
have 
led 
the 
effort, 
together 
with 
the 
United 
Nations 
Environment 
Programme 
Finance 
Initiative 
(UNEP 
FI) 
and 
peer 
banks, to define an inventory 
of climate-sensitive activities based 
on TCFD, regulators’ and rating agencies’ climate risk definitions. 
Our current exposure to climate-sensitive activities is summarized 
in the table below at the sector level. 
›
 
Refer to “Our climate strategy” in the 
Sustainability Report 2020, 
available from 11 March 2021 under “Annual 
reporting” at 
ubs.com/investors
, for more information 
 
 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control

138

UBS corporate lending to climate-sensitive sectors, 2020

Inventory of exposure to transition-risk-sensitive sectors, across the Investment

Bank and

Personal & Corporate Banking

As of 31.12.20

USD million, except where indicated

Gross exposure

Share of total exposure

to all sectors (%)

Climate-sensitive sector

Aerospace and defense

962

0.3

Automotive

966

0.3

Chemicals

2,021

0.7

Constructions and materials

3,905

1.4

Food and beverage

1,754

0.6

Industrial materials

151

0.1

Machinery and equipment

2,778

1.0

Mining

3,276

1.2

Oil and gas

4,951

1.7

Plastics and rubber

373

0.1

Primary materials

249

0.1

Textile products and apparel

1,128

0.4

Real estate

13,357

4.7

Transportation

2,337

0.8

Utilities

493

0.2

Total exposure to climate-sensitive sectors

38,700

13.7

Total exposure to all sectors

283,376

100.0

1 Banking

products across

the Investment

Bank and

Personal

& Corporate

Banking.

2 Climate-sensitive

sectors defined

as business

activities that

are rated

as having

high, moderately

high, moderate,

moderately low

vulnerability to

transition risks,

including policy,

technology,

and demand

risk factors.

Further details

on UBS’s

sub-sector level

exposures and

exposures by

transition risk

rating are

available in

our Sustainability Report 2020, available from 11 March 2021.

 
139 
Operational risk
Key developments 
Operational 
resilience, 
conduct 
and 
financial 
crime 
remain 
the 
key 
non-financial risk 
themes for 
UBS and 
the financial 
services 
industry. 
Operational resilience also 
continues to be 
a focus area 
for 
regulators 
globally, 
with 
particular 
emphasis 
on 
measures 
taken to respond to the COVID-19 pandemic. 
To 
address 
developing 
regulatory 
requirements 
on 
resilience, 
we 
have 
established 
a 
global 
program 
to 
enhance 
our 
current 
capabilities. The 
existing resilience 
built into 
our operations 
and 
the 
effectiveness 
of 
our 
business 
continuity 
management 
and 
operational 
risk 
procedures 
(including 
those 
for 
third
-
party 
service 
providers) 
have 
been 
critical 
in 
handling 
the 
ongoing 
COVID-19 
pandemic 
and 
enabled 
us 
to 
continue 
to 
serve 
our 
clients 
without 
material 
impact. 
We 
have 
maintained 
stable 
operations 
while 
complying 
with 
containment 
requirements 
imposed 
in 
many 
of 
our 
principal 
locations, 
and 
we 
remain 
focused on the safety and well-being of our staff. 
Increases 
in 
the 
sophistication 
of 
COVID
-
19
-
themed 
cyberattacks 
and 
frauds 
are 
being 
seen 
worldwide, 
and 
during 
2020 
we 
continuously
 
enhanced 
our 
monitoring 
for 
such 
COVID-19-related 
cyber 
threats. 
Regular 
communications 
were 
and 
are 
provided 
to 
remind 
employees 
about 
associated 
risks, 
including 
hints 
and 
tips 
for 
staying 
cybersafe 
with 
remote 
working. To 
date, our 
security controls 
have been 
effective, and 
no significant cyber incidents affected us during 2020. 
Achieving 
fair 
outcomes 
for 
our 
clients, 
upholding 
market 
integrity 
and 
cultivating 
the 
highest 
standards 
of 
employee 
conduct 
are 
of 
critical 
importance 
to 
the 
firm. 
As 
such, 
management 
of 
conduct 
risks 
is 
an 
integral 
part 
of 
our 
operational risk 
framework. We 
continue to 
focus on 
effectively 
embedding 
the 
conduct 
risk 
framework 
across 
our 
activities, 
enhancing 
management 
information 
and 
maintaining 
momentum 
on 
fostering 
a 
strong 
culture. 
Conduct-related 
management 
information 
is 
reviewed 
at 
the 
business 
and 
regional 
governance 
levels, 
providing 
metrics 
on 
employee 
conduct, 
clients 
and 
markets. 
Employee 
conduct 
is 
a 
central 
consideration 
in 
the 
annual 
compensation 
process, 
where 
our 
incentive 
schemes 
distinguish 
clearly 
between 
quantitative 
performance 
and 
conduct-related 
behaviors, 
so 
that 
achievement against financial targets is not the only determinant 
of 
our 
employees’ 
performance 
assessment. 
Furthermore, 
we 
continue to pursue behavioral initiatives, such as the Principles of 
Good 
Supervision, 
and 
provide 
mandatory 
compliance 
and 
risk 
training. 
Suitability 
risk, 
product 
selection, 
cross-divisional 
service 
offerings, 
quality 
of 
advice 
and 
price 
transparency 
also 
remain 
areas 
of 
heightened 
focus 
for 
UBS 
and 
for 
the 
industry 
as 
a 
whole, 
as 
low 
interest 
rates, 
market 
volatility 
and 
major 
legislative 
change 
programs 
(e.g., 
FIDLEG 
(the 
Swiss 
Financial 
Services 
Act) in 
Switzerland, 
Regulation 
Best 
Interest in 
the US, 
and the 
Markets in 
Financial Instruments 
Directive II (MiFID 
II) in 
the 
EU
)
 
all 
significantly 
impact 
the 
industry 
and 
require 
adjustments 
to 
control 
processes 
on 
a 
geographically 
aligned 
basis. We 
regularly monitor 
our suitability, 
product and 
conflicts 
of 
interest 
control 
frameworks 
to 
assess 
whether 
they 
are 
reasonably 
designed 
to 
facilitate 
adherence 
to 
applicable 
laws 
and regulatory expectations. 
Financial 
crime 
(e.g., 
money 
laundering, 
terrorist 
financing, 
sanctions violations, 
fraud, bribery 
and corruption) 
continues to 
present a major risk, as technological innovation and 
geopolitical 
developments 
increase 
the 
complexity 
of 
doing 
business 
and 
heightened regulatory attention 
continues. An effective 
financial 
crime 
prevention 
program 
remains 
essential 
for 
UBS. 
Money 
laundering 
and 
financial 
fraud 
techniques 
are 
becoming 
increasingly 
sophisticated, 
and 
geopolitical 
volatility 
makes 
the 
sanctions landscape 
more complex, 
and new 
risks emerge, 
such 
as virtual currencies and related activities or investments. 
The Office of 
the Comptroller of 
the Currency issued 
a Cease 
and 
Desist 
Order 
against 
UBS 
in 
May 
2018 
relating 
to 
this 
risk 
category. In response, 
we initiated a 
comprehensive program for 
the 
purpose 
of 
ensuring 
sustainable remediation 
of 
US-relevant 
Bank Secrecy Act / 
anti-money-laundering (AML) issues across 
all 
our 
US legal 
entities. 
We implemented 
significant improvement 
measures 
in 
2019 
and 
2020
,
 
and 
expect 
to 
continue 
implementing 
such 
measures 
in
 
the 
first 
half 
of 
2021, 
and 
expect to have 
delivered the planned enhancements 
to our AML 
controls by then. 
We 
continued 
to 
focus 
in 
2020 
on 
strategic 
enhancements 
for 
AML, 
know-your-client 
(KYC) 
and 
sanctions 
programs 
on 
a 
global 
scale 
to 
cope 
with 
evolving 
risk 
profiles 
and 
regulatory 
expectations. 
This 
includes 
our 
significant 
investments 
in 
detection capabilities 
and systems 
as part 
of our 
financial crime 
prevention 
program. 
We 
are 
exploring 
new 
technologies 
to 
combat 
financial 
crime, 
and 
implementing 
more 
sophisticated 
rule-based 
monitoring 
by 
applying 
self-learning 
systems 
to 
identify 
potentially 
suspicious 
transactions. 
W
e 
continue 
to 
actively 
participate 
in 
AML 
public–private 
partnerships 
with 
public-sector 
stakeholders, 
including 
law 
enforcement, 
to 
improve information sharing and better detect financial crimes. 
M
easures 
have 
been
 
taken 
to 
respond 
to 
the 
COVID
-
19 
pandemic, including programs 
to educate 
clients and employees 
about 
fraud 
risk, 
and 
our 
protocols 
for 
interaction 
to 
mitigate 
this risk have been 
updated. We stay abreast 
of emerging trends 
in order to take further mitigating activity as necessary. 
Cross-border 
risk remains 
an area 
of regulatory 
attention 
for 
global 
financial 
institutions,
 
with 
a 
strong 
focus 
on 
fiscal 
transparency. 
There 
is 
also 
ongoing 
high 
attention 
on 
the 
risk 
related 
to 
permanent 
establishments 
as 
a 
result 
of 
changes 
to 
the 
global 
economy 
that 
could 
lead 
tax 
authorities 
to 
assert 
permanent 
establishments 
retrospectively 
even 
on 
the 
basis 
of 
new 
interpretations 
of 
existing 
law. 
UBS 
actively 
assesses 
and 
applies permanent establishment-related controls. 
During 
2020, 
thanks 
to 
the 
continued 
focus 
on 
sustainable 
remediation 
and 
resolution 
of 
underlying 
root 
causes, 
the 
portfolio 
of 
significant 
operational 
risk 
issues 
was 
reduced 
by 
more 
than 
two
-
thirds 
(68%), 
while 
the 
number 
of 
new 
deficiencies 
discovered 
decreased 
by 
approximately 
three
-
quarters (73%) compared with 2019. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Risk management and control 
140 
Operational risk framework 
Operational risk is 
an inherent part 
of the firm’s 
business. Losses 
can 
result 
from 
inadequate 
or 
failed 
internal 
processes, 
people 
and systems, or from 
external causes. UBS follows 
a Group-wide 
operational 
risk 
framework 
(ORF) 
that 
establishes 
requirements 
for 
identifying, 
managing, 
assessing 
and 
mitigating 
operational 
risks 
(including 
compliance 
and 
conduct 
risks) 
to 
achieve 
an 
agreed 
balance 
between 
risk 
and 
return. 
It 
is 
built 
on 
the 
following pillars: 
–
 
classifying 
inherent 
risks 
through 
the 
operational 
risk 
taxonomy, which 
defines the 
universe of 
material operational 
risks 
that 
can 
arise 
as 
a 
consequence 
of 
the 
firm’s 
business 
activities and external factors; 
–
 
assessing 
the 
design 
and 
operating 
effectiveness 
of 
controls 
through the control assessment process; 
–
 
proactively 
and 
sustainably 
remediating 
identified 
control 
deficiencies; 
–
 
defining 
operational 
risk 
appetite 
(including 
a 
financial 
operational 
risk 
appetite 
statement 
at 
Group, 
UBS 
AG 
and 
business 
division 
levels 
for 
operational 
risk 
events) 
through 
quantitative metrics 
and thresholds 
and qualitative 
measures, 
and assessing risk exposure against appetite; and 
–
 
assessing 
inherent 
and 
residual 
risk 
through 
risk 
assessment 
processes, 
and 
determining 
whether 
additional 
remediation 
plans are required to address identified deficiencies. 
 
Divisional 
Presidents 
and 
legal 
entity 
responsible 
executives 
are 
accountable 
for 
the 
effectiveness 
of 
operational 
risk 
management and for the robustness of 
the front-to-back control 
environment within 
their respective areas. 
Group function heads 
are accountable for supporting the divisional Presidents and legal 
entity responsible executives of our legal entities in the 
discharge 
of 
this 
responsibility, 
by 
confirming 
completeness 
and 
effectiveness 
of 
the 
control 
environment 
and 
operational 
risk 
management within 
their Group 
function. Collectively, 
divisional 
Presidents, 
central 
Group 
function 
heads 
and 
legal 
entity 
responsible 
executives 
are 
in 
charge 
of 
implementing 
the 
operational risk framework. 
Compliance 
& 
Operational 
Risk 
Control 
(C&ORC) 
is 
responsible 
for providing 
an independent 
and objective 
view of 
the adequacy of operational 
risk management across the 
Group, 
and ensuring 
that operational 
risks are 
understood, owned 
and 
managed 
in 
accordance 
with 
the 
firm’s 
risk 
appetite. 
C&ORC-
aligned 
teams 
sit 
within 
the 
Group 
Compliance, 
Regulatory 
& 
Governance 
(GCRG) 
function, 
reporting 
to 
the 
Group 
Chief 
Compliance 
and 
Governance 
Officer, 
who 
is 
a 
member 
of 
the 
Group 
Executive 
Board. 
C&ORC 
teams 
are 
integrated, 
covering 
both 
operational 
risk 
and 
compliance 
and 
conduct 
topics. 
The 
head 
of 
Operational 
Risk 
Control, 
together 
with 
dedicated 
divisional 
and 
regional 
ORC 
leaders, 
ensures 
a 
coherent 
global 
approach 
to 
operational 
risk, 
fostering 
strong 
front-to-back 
coverage. 
The 
ORF 
forms the 
common 
basis 
for 
managing and 
assessing 
operational 
risk, 
and 
there 
are 
additional 
C&ORC 
activities 
intended 
to 
ensure 
UBS 
is 
able 
to 
demonstrate 
compliance with applicable laws, rules and regulations. 
In 2020, 
UBS has 
continued to 
review and 
enhance the 
ORF, 
considering feedback 
and input 
from both 
internal and 
external 
stakeholders, 
and 
has 
implemented 
strengthened 
ORF 
governance and 
stakeholder management 
through the 
setup of 
the 
ORF 
design 
authority. 
The 
Risk 
Control 
Self-Assessment 
process 
has 
been 
enhanced 
to 
increase 
the 
level 
of 
granularity 
and data to drive front-to-back review and challenge. Ownership 
of 
firm-wide 
risk 
appetite 
was 
transferred 
to 
Group 
Functions 
that 
are 
responsible 
for 
management 
of 
the 
underlying 
processes and associated risks. 
All functions within UBS are required to 
assess the design and 
operating effectiveness of 
their internal controls 
periodically. The 
output of 
these assessments 
forms the 
basis for 
the assessment 
and 
testing 
of 
internal 
controls 
over 
financial 
reporting 
as 
required by the Sarbanes–Oxley Act, Section 404 (SOX 404). 
Key control 
deficiencies identified 
during the 
internal control 
and 
risk 
assessment 
processes 
must 
be 
reported 
in 
the 
operational 
risk inventory, 
and sustainable 
remediation must 
be 
defined and executed. 
These control deficiencies 
are assigned to 
owners 
at 
senior 
management 
level 
and 
the 
remediation 
progress 
is 
reflected 
in 
the 
respective 
manager’s 
annual 
performance 
measurement 
and 
management 
objectives. 
To 
assist with prioritizing 
the most material 
control deficiencies and 
measuring 
aggregated 
risk 
exposure, 
irrespective 
of 
origin, 
a 
common rating 
methodology 
is applied 
across all 
three 
lines of 
defense, as well as by external audit. 
 
 

 
 
141 
Advanced measurement approach model 
The 
operational 
risk 
framework 
outlined 
above 
underpins 
the 
calculation 
of 
regulatory 
capital 
for 
operational 
risk, 
which 
enables 
us 
to 
quantify 
operational 
risk 
and 
define effective 
risk 
mitigating 
management 
incentives 
as 
part 
of 
the 
related 
operational 
risk 
capital 
allocation 
approach 
to 
the 
business 
divisions. 
We 
measure 
Group 
operational 
risk 
exposure 
and 
calculate 
operational 
risk 
regulatory 
capital 
using
 
the 
advanced 
measurement 
approach 
(AMA) 
in 
accordance 
with 
FINMA 
requirements. 
An 
entity-specific 
AMA 
model 
has 
been 
applied 
for 
UBS 
Switzerland 
AG, 
while 
for 
other 
regulated 
entities 
the 
basic 
indicators or standardized approaches are adopted for regulatory 
capital 
in 
agreement 
with 
local 
regulators. 
Also
, 
the 
methodology 
of the 
Group AMA 
is leveraged 
for entity-specific 
Internal Capital Adequacy Assessment Processes. 
Currently, 
the 
model 
includes 
16 
AMA 
units 
of 
measure 
(UoM), which 
are aligned 
with our operational 
risk taxonomy 
as 
closely 
as 
possible.
 
F
requency 
and 
severity 
distributions 
are 
calibrated
 
f
or 
each 
of 
the 
model’s 
UoM. 
The 
modeled 
distribution 
functions 
for 
both 
frequency 
and 
severity 
are 
used 
to 
generate 
the 
annual 
loss 
distribution. 
The 
resulting 
99.9% 
quantile 
of 
the 
overall 
annual 
operational 
risk 
loss 
distribution 
across 
all 
UoM 
determines 
the 
required 
regulatory 
capital. 
Currently, 
we do not reflect 
mitigation through insurance or 
any 
other risk transfer mechanism in our AMA model. 
AMA model calibration and review 
A 
key 
assumption 
when 
calibrating 
data-driven 
frequency 
and 
severity 
distributions 
is 
that 
historical 
losses 
form 
a 
reasonable 
proxy for 
future events. 
In line 
with regulatory 
expectations, the 
AMA 
methodology 
utilizes 
both 
historical 
internal 
losses 
and 
external 
losses 
suffered 
by 
the 
broader 
industry 
for 
model 
calibration. 
Initial 
model outputs 
driven by 
loss 
history 
are 
reviewed and 
adjusted to reflect 
fast-changing external developments, 
such as 
new 
regulations, 
geopolitical 
change, 
volatile 
market 
and 
economic 
conditions, 
and 
internal 
factors 
(e.g.
,
 
changes 
in 
business 
strategy 
and 
control 
framework 
enhancements). 
The 
resulting 
baseline 
data-driven 
frequency 
and 
severity 
distributions 
are 
reviewed 
by 
subject 
matter 
experts 
and 
where 
necessary adjusted 
based on 
a review 
of qualitative 
information 
about 
the business 
environment and 
internal control 
factors, as 
well as expert judgment with the aim of forecasting losses. 
Our 
model 
is 
reviewed 
regularly 
to 
maintain 
risk 
sensitivity 
and 
recalibrated 
at 
least 
annually. 
Any 
changes 
to 
regulatory 
capital as a 
result of a 
recalibration or methodology 
changes are 
presented 
to 
FINMA 
for 
approval 
prior 
to 
use 
for 
disclosure 
purposes. 
AMA model governance 
The 
Group 
and 
entity-specific 
AMA 
models 
are 
subject 
to 
an 
independent 
validation 
performed 
by 
Model 
Risk 
Management 
& 
Control 
in 
line 
with 
the 
Group’s 
model 
risk 
management 
framework. 
›
 
Refer to “Capital planning and activities” 
in the “Capital, 
liquidity and funding, and balance sheet” 
section of this report 
for more information about the development 
of risk-weighted 
assets 
›
 
Refer to “Risk measurement” in this section 
for more 
information about our approach to model confirmation 
procedures 
›
 
Refer to the “Regulatory and legal developments” 
and “Risk 
factors” 
sections of this report for more information 
 
 

 
 
 
Capital, liquidity 
and funding, 
and balance sheet 
Table of contents 
144 
Capital management
144 
Capital management objectives, planning and activities
145 
Swiss SRB total loss-absorbing capacity framework
149 
Total loss-absorbing capacity
153 
Risk-weighted assets
155 
Leverage ratio denominator
157 
UBS AG consolidated total loss-absorbing capacity and 
leverage ratio information
162 
Equity attribution and return on attributed equity
163 
Liquidity and funding management
163 
Strategy, objectives and governance
163 
Liquidity management
164 
Funding management
165 
Liquidity coverage ratio
166 
Net stable funding ratio
167 
Balance sheet and off-balance sheet
167 
Balance sheet
173 
Off-balance sheet
175 
Cash flows
176 
Currency management
177 
UBS shares
 
 
 
 

Risk, capital, liquidity and funding, and balance sheet | Capital management 
144 
Capital management 
Capital management objectives, planning and activities 
Capital management objectives 
Audited |
 
An adequate level of 
total loss-absorbing capacity (TLAC) 
meeting both internal assessment and regulatory requirements 
is 
a 
prerequisite 
for 
conducting 
our 
business 
activities.
p
 
We 
are 
therefore committed 
to maintaining 
a strong 
TLAC position 
and 
sound 
TLAC 
ratios 
at 
all 
times, 
in 
order 
to 
meet 
regulatory 
capital requirements and our target capital ratios, and to support 
the growth of our businesses. 
As 
of 
31 December 
2020, 
our 
common 
equity 
tier 
1 
(CET1) 
capital 
ratio 
was 
13.8% 
and 
our 
CET1 
leverage 
ratio 
3.85%, 
each 
above 
our 
capital 
guidance, 
along 
with 
the 
requirements 
for 
Swiss 
systemically 
relevant 
banks 
(SRBs) 
and 
the 
Basel 
Committee on Banking Supervision (the BCBS) requirements. We 
believe that our capital strength is a source of 
confidence for our 
stakeholders, contributes 
to our 
sound credit 
ratings and 
is one 
of the foundations of our success. 
The 
BCBS 
announced 
the 
finalization 
of 
the 
Basel III 
framework in 
December 2017, 
and published 
the final 
rules on 
the 
minimum 
capital 
requirements 
for 
market 
risk 
(the 
Fundamental 
Review 
of 
the 
Trading 
Book) 
in 
January 
2019. 
In 
response 
to 
COVID-19, 
the 
Group 
of 
Central 
Bank 
Governors 
and Heads 
of Supervision, 
which acts 
as the 
Basel Committee’s 
oversight 
body, 
endorsed 
the 
deferral 
of 
the 
implementation 
date 
by 
one 
year
,
 
to 
1
 
January 
2023
. 
The 
a
ccompanying 
transitional 
arrangements 
for 
the 
output 
floor 
have 
also 
been 
extended 
by 
one 
year 
to 
1 
January 
2028. 
We 
will 
monitor 
the 
introduction 
and 
assess 
the 
effect 
on 
UBS 
once 
the 
final 
Swiss 
regulations are available. We do not expect the Swiss 
regulations 
to become 
mandatory until 
after the 
BCBS target 
effective date 
of 1 January 
2023. In the 
absence of the 
final Swiss regulations, 
we 
continue 
to 
make 
progress 
on 
our 
internal 
assessment 
of 
infrastructure 
design 
and 
operational 
governance 
to 
anticipate 
the 
upcoming 
adoption 
of 
these 
rules. 
We 
currently 
estimate 
that 
the 
revised 
Basel III 
framework 
may 
lead 
to 
a 
further 
net 
increase in 
risk-weighted assets 
(RWA) of 
USD 20 billion 
to USD 
30 
billion, 
before 
taking 
into 
account 
mitigating 
actions. 
In 
addition, 
the 
transition 
to 
the 
standardized
 
measurement
 
approach 
for 
operational 
risk 
RWA 
is 
expected 
to 
result 
in 
a 
further 
increase 
in 
RWA.
 
These 
estimates 
are 
based 
on 
our 
current understanding of the relevant standards and may change 
as 
a 
result 
of 
new 
or 
changed 
regulatory 
interpretations, 
the 
implementation 
of 
the 
Basel III 
standards 
into 
national 
law, 
changes 
in 
business 
growth, 
market 
conditions 
and 
other 
factors. 
›
 
Refer to the “Our strategy” and “Performance 
targets and 
capital guidance” sections of this report 
for more information 
about our capital and resource guidelines 
›
 
Refer to “Capital strength is a key component 
of our business 
model” in the “Risk factors” section 
of this report for more 
information about capital ratio-related risks 
Capital planning and activities 
Audited 
|
 
We 
manage 
our 
balance 
sheet, 
RWA,
 
leverage 
ratio 
denominator 
(LRD) 
and 
TLAC 
ratio 
levels 
on 
the 
basis 
of 
our 
regulatory TLAC 
requirements and 
within our 
internal limits and 
targets. 
Our 
strate
gic 
focus 
is 
on
 
achiev
ing
 
an 
optimal 
attribution and 
use of 
financial resources 
between our 
business 
divisions 
and 
Group 
Functions, 
as 
well 
as 
between 
our 
legal 
entities, while 
remaining within 
the limits 
defined for 
the Group 
and allocated 
to the 
business divisions by 
the Board 
of Directors 
(the 
BoD). 
These 
resource 
allocations, 
in 
turn, 
affect 
business 
plans and earnings projections, which 
are reflected in our 
capital 
plans. 
The 
annual 
strategic 
planning 
process 
includes
 
a 
capital
-
planning component that is 
key in defining our 
capital targets. It 
is based on 
an attribution of 
Group RWA and 
LRD internal limits 
to the business divisions. 
Limits 
and 
targets 
are 
established 
at 
Group 
and 
business 
division levels, and 
are approved by 
the BoD at 
least annually. In 
the target-setting process, 
we take into 
account the current 
and 
potential future TLAC 
requirements, our aggregate 
risk exposure 
in 
terms 
of 
capital-at-risk, 
the 
assessment 
by 
rating 
agencies, 
comparisons 
with 
peers 
and 
the 
effect 
of 
expected 
accounting 
policy 
changes.
p
 
Monitoring 
is 
based 
on 
these 
internal 
limits 
and targets and provides indications if changes are 
required. Any 
breach of limits 
in place triggers a 
series of required 
remediating 
actions. 
Group 
Treasury 
plans 
for, 
and 
monitors, 
consolidated 
TLAC 
information 
on 
an 
ongoing 
basis, 
reflecting 
business 
and 
legal 
entity 
requirements
,
 
as 
well 
as 
regulatory 
developments 
in 
capital regulations. 
In addition, 
capital planning 
and monitoring 
are performed 
at legal entity 
level for our 
significant subsidiaries 
and 
sub-groups 
that 
are 
subject 
to 
prudential 
supervision 
and 
must meet capital and other supervisory requirements. 
›
 
Refer to “Capital and capital ratios of 
our significant regulated 
subsidiaries” in this section for more information 
 
 

 
145 
Swiss SRB total loss-absorbing capacity framework
The disclosures in this section are provided for UBS Group AG on 
a consolidated 
basis and 
focus on 
key developments 
during the 
reporting period and information 
in accordance with the 
Basel III 
framework, as applicable to Swiss SRBs. 
Additional 
regulatory 
disclosures 
for 
UBS 
Group 
AG 
on 
a 
consolidated basis are provided in our 31 December 2020 Pillar 3 
report. The Pillar 3 report further includes 
information relating to 
our 
significant 
regulated 
subsidiaries 
and 
sub-groups 
(UBS 
AG 
standalone, 
UBS 
Switzerland 
AG 
standalone, 
UBS 
Europe 
SE 
consolidated and 
UBS Americas 
Holding LLC 
consolidated) as 
of 
31 December 
2020 
and 
is 
available 
under 
“Pillar 3 
disclosures” 
at 
ubs.com/investors
. 
Capital 
and 
other 
regulatory 
information 
for 
UBS AG 
consolidated 
in 
accordance 
with 
the 
Basel III 
framework, 
as 
applicable to Swiss SRBs, is provided in the combined UBS Group 
AG and 
UBS AG 
Annual Report 
2020, available 
under “Annual 
reporting” at 
ubs.com/investors
.
 
Regulatory framework 
The 
Basel III 
framework 
came 
into 
effect 
in 
Switzerland 
on 
1 January 2013 and 
is embedded 
in the Swiss 
Capital Adequacy 
Ordinance 
(the CAO). 
The CAO 
also includes 
the too-big-to-fail 
provisions 
applicable 
to 
Swiss SRBs, 
which became 
effective 
on 
1 July 2016 and have been fully phased-in since 1 January 2020. 
Under 
the 
Swiss 
SRB 
framework, 
going 
and 
gone 
concern 
requirements 
represent 
the 
Group’s 
TLAC 
requirement. 
TLAC 
encompasses 
regulatory 
capital, 
such 
as 
CET1, 
loss-absorbing 
additional 
tier
 
1 
(AT1) 
and 
tier
 
2 
capital 
instruments, 
and 
liabilities 
that 
can 
be 
written 
down 
or 
converted 
into 
equity 
in 
case of resolution or for the purpose of restructuring measures. 
Capital and other instruments contributing to our total 
loss-absorbing capacity 
In addition to CET1 
capital, the following instruments 
contribute 
to our loss-absorbing capacity: 
–
 
loss-absorbing 
AT1 capital 
instruments 
(high- 
and low-trigger); 
–
 
loss-absorbing 
tier 2 capital 
instruments 
(high- 
and low-trigger); 
–
 
non-Basel III-compliant tier 2 capital instruments; and 
–
 
TLAC-eligible senior unsecured debt instruments. 
 
Under 
the 
Swiss 
SRB 
rules 
applicable 
since 
1 January 
2020, 
going 
concern 
capital 
includes 
CET1 
and 
high-trigger 
loss-
absorbing 
AT1 
capital 
instruments. 
Under 
the 
transitional 
rules 
for 
the 
Swiss 
SRB 
framework, 
outstanding 
low-trigger 
loss-
absorb
ing 
AT1 
capital 
instruments 
are
 
available 
to 
meet 
the 
going concern capital requirements until their first call date, even 
if 
the first 
call date 
is after 
31 December 2019. 
As of 
their first 
call 
date, 
these 
instruments 
are 
eligible 
to 
meet 
the 
gone 
concern 
requirements. 
Outstanding 
high
-
 
and 
low
-
trigger 
loss
-
absorbing 
tier
 
2 
capital 
instruments, 
non-Basel III-compliant 
tier 2 
capital 
instruments 
and 
TLAC-eligible 
senior 
unsecured 
debt 
instruments are eligible to meet gone concern requirements until 
one 
year 
before 
maturity. 
A 
maximum 
of 
25% 
of 
the 
gone 
concern requirements 
can be 
met with 
instruments that 
have a 
remaining 
maturity 
of 
between 
one 
and 
two 
years 
(i.e., 
are 
in 
the 
last 
year 
of 
eligibility). 
However, 
once 
at 
least 
75% 
of 
the 
gone 
concern requirement 
has been 
met with 
instruments that 
have 
a 
remaining 
maturity 
of 
greater 
than 
two
 
years, 
all 
instruments that have 
a remaining maturity of 
between one and 
two 
years 
remain 
eligible 
to 
be 
included 
in 
the 
total
 
gone 
concern 
capital. 
Our 
gone 
concern 
instruments 
are 
reasonably 
evenly 
distributed 
across 
maturities, 
with 
no 
major
 
cliffs; 
therefore this 25% restriction has not affected 
us and we do not 
expect that it will affect us in the future. 
›
 
Refer to “Bondholder information,” available 
at 
ubs.com/investors
,
 
for more information about the eligibility 
of 
capital and senior unsecured debt instruments 
and key features 
and terms and conditions of capital instruments 
Total loss-absorbing capacity and leverage ratio requirements 
Going concern capital requirements 
Under 
the 
Swiss 
SRB 
requirements 
fully 
phased
-
in 
since 
1 January 2020, 
total going 
concern minimum 
requirements for 
all Swiss SRBs are a 
capital ratio requirement of 
12.86% of RWA 
and a 
leverage 
ratio 
requirement 
of 
4.5%. 
In 
addition 
to these 
minimum 
requirements, 
an 
add-on 
reflecting 
the 
degree 
of 
systemic importance is 
applied, based on 
market share and 
LRD. 
The add-on 
for UBS 
remains unchanged 
at 1.08% 
of RWA 
and 
0.375% 
of 
our 
LRD. 
Effective 
from 
27 March 
2020, 
the 
Swiss 
Federal 
Council 
has 
deactivated 
the 
countercyclical 
buffer 
requirement 
of 
2% 
of 
RWA 
for 
mortgage 
loans 
on 
residential 
property 
in 
Switzerland
,
 
t
o 
support 
the 
lending 
capacity 
of 
banks
. 
However, 
we 
c
ontinued 
to 
apply 
additional 
countercyclical 
buffer 
requirements 
introduced 
in 
other 
BCBS 
member 
jurisdictions, 
which 
result 
in 
an 
additional 
buffer 
requirement 
of 
0.02%
.
 
The 
total 
going 
concern 
capital 
requirements 
applicable 
are
 
1
3.96
%
 
of 
RWA 
(
in
cluding 
countercyclical 
buffer 
requirements) 
and 
4.875% 
of 
the 
LRD. 
Furthermore, 
of 
the 
total 
going 
concern 
capital 
requirement 
of 
13.96% 
of RWA, 
at least 9.66% 
must be met with CET1 capital, 
while 
a 
maximum 
of 
4.3% 
can 
be 
met 
with 
high-trigger 
loss-
absorbing 
AT1 
capital 
instruments. 
Similarly, 
of 
the 
total 
going 
concern leverage ratio requirement of 4.875%, 3.375% must be 
met 
with 
CET1 
capital, 
while a 
maximum 
of 
1.5% 
can 
be 
met 
with high-trigger loss-absorbing AT1 capital instruments. 
Since 
the 
first 
quarter 
of 
2020
,
 
and 
in 
connection 
with 
COVID
-
19
, 
FINMA 
permitted 
banks 
to 
temporarily 
exclude
 
central 
bank 
sight 
deposits 
from 
the 
LRD 
for 
the 
purpose 
of 
calculating 
going 
concern 
ratios. 
This 
exemption 
applied 
until 
1 January 
2021. 
Applicable 
dividends 
or 
similar 
distributions 
approved by 
shareholders after 25 March 
2020 reduce 
the relief 
by the LRD 
equivalent of the 
capital distribution. This 
exemption 
increase
d
 
our 
total 
going 
concern 
leverage 
r
atio
 
as
 
of 
31 December 2020 from 5.42% to 5.95%. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Capital management 
146 
Gone concern loss-absorbing 
capacity requirements 
As 
an 
internationally 
active 
Swiss 
SRB, 
UBS 
is 
also 
subject 
to 
gone 
concern 
loss-absorbing 
capacity 
requirements. 
The 
gone 
concern requirements also include 
add-ons for market share 
and 
the 
LRD, 
and 
may 
be 
met 
with 
senior 
unsecured 
debt 
that 
is 
TLAC eligible. 
Under 
the 
Swiss 
SRB 
framework, 
banks 
are 
eligible 
for 
a 
rebate on the gone concern requirement if they take actions that 
facilitate 
recovery 
and 
resolvability 
beyond 
the 
minimum 
requirements. 
The 
amount 
of 
the 
rebate 
for 
improved 
resolvability is assessed 
annually by FINMA. 
Based on actions 
we 
had 
completed 
by 
December 
2019 
to 
improve 
resolvability, 
FINMA 
granted 
a 
rebate 
on 
the 
gone 
concern 
requirement 
of 
47.5% 
of 
the 
aforementioned 
maximum 
rebate 
in 
the 
third 
quarter 
of 
2020, 
which 
resulted 
in 
a 
reduction 
of 
2.54 percentage 
points 
for 
the 
RWA-based 
requirement 
and 
0.89 percentage points for the LRD-based requirement. 
Our 
gone 
concern 
requirements 
are 
further 
reduced 
when 
higher quality capital 
instruments (CET1 capital, 
low-trigger loss-
absorbing 
AT1 
or 
certain 
low-trigger 
tier 2 
capital 
instruments) 
are 
used 
to 
meet 
gone 
concern 
requirements
. 
As 
of 
31 December 
2020, 
UBS 
has 
used 
low-trigger 
tier 2 
capital 
instruments 
to 
fulfill 
gone 
concern 
requirements, 
resulting 
in 
a 
reduction 
o
f 
1.2
5
 
percentage 
points 
for 
the 
RWA
-
based 
requirement 
and 
0.35 percentage 
points 
for 
the 
LRD-based 
requirement. 
Until 31 December 2021, the gone concern 
requirement after 
the 
application 
of 
the 
rebate 
for 
resolvability 
measures 
and 
the 
reduction 
for 
the 
use 
of 
higher 
quality 
capital 
instruments 
is 
floored 
at 
8.6% 
and 
3% 
for 
the 
RWA
-
 
and 
LRD
-
based 
requirements, 
respectively. 
From 
1 
January 
2022 
onward, 
this 
floor increases to 
10% and 3.75% 
for the RWA- 
and LRD-based 
requirements, 
respectively. 
In 
this
 
report
,
 
we 
refer 
to 
the 
RWA
-
based 
gone 
concern 
requirements 
as 
gone 
concern 
loss-absorbing 
capacity 
requirements and 
the RWA-based 
gone concern 
ratio is 
referred 
to as the gone concern loss-absorbing capacity ratio. 
The table on the next page provides the RWA- and LRD-based 
requirements 
and
 
information 
as 
of 
3
1
 
December
 
2020, 
excluding 
the 
effects 
of 
the
 
temporary 
exemption 
of 
central 
bank 
sight 
deposits 
for 
the
 
going 
concern 
leverage 
ratio 
calculation 
granted by 
FINMA on 
25 March 2020 
in connection 
with COVID-19. 
The 
effects of the 
temporary exemption are 
presented on the 
page after next. 
›
 
Refer to the “Regulatory and legal developments” 
section of this 
report for more information about COVID-19-related regulatory 
and legal developments 
 
 
 
 

147

Swiss SRB going and gone concern requirements and information

As of 31.12.20

RWA

LRD

USD million, except where indicated

in %

Required going concern capital

Total going concern capital

13.96

40,345

4.88

50,561

Common equity tier 1 capital

9.66

27,914

3.38

35,004

of which: minimum capital

4.50

13,010

1.50

15,557

of which: buffer capital

5.14

14,860

1.88

19,447

of which: countercyclical buffer

0.02

Maximum additional tier 1 capital

4.30

12,431

1.50

15,557

of which: additional tier 1 capital

3.50

10,119

1.50

15,557

of which: additional tier 1 buffer capital

0.80

2,313

Eligible going concern capital

Total going concern capital

19.43

56,178

5.42

56,178

Common equity tier 1 capital

13.80

39,890

3.85

39,890

Total loss-absorbing additional tier 1 capital

5.63

16,288

1.57

16,288

of which: high-trigger loss-absorbing additional tier 1 capital

4.74

13,711

1.32

13,711

of which: low-trigger loss-absorbing additional tier 1 capital

0.89

2,577

0.25

2,577

Required gone concern capital

Total gone concern loss-absorbing capacity

10.16

29,367

3.64

37,724

of which: base requirement

12.86

37,178

4.50

46,672

of which: additional requirement for market share and LRD

1.08

3,122

0.38

3,889

of which: applicable reduction on requirements

(3.78)

(10,933)

(1.24)

(12,838)

of which: rebate granted (equivalent to 47.5% of maximum rebate)

(2.54)

(7,333)

(0.89)

(9,237)

of which: reduction for usage of low-trigger tier 2 capital instruments

(1.25)

(3,600)

(0.35)

(3,600)

Eligible gone concern capital

Total gone concern loss-absorbing capacity

15.75

45,545

4.39

45,545

Total tier 2 capital

2.68

7,744

0.75

7,744

of which: low-trigger loss-absorbing tier 2 capital

2.49

7,201

0.69

7,201

of which: non-Basel III-compliant tier 2 capital

0.19

543

0.05

543

TLAC-eligible senior unsecured debt

13.08

37,801

3.64

37,801

Total loss-absorbing capacity

Required total loss-absorbing capacity

24.11

69,713

8.51

88,285

Eligible total loss-absorbing capacity

35.19

101,722

9.81

101,722

Risk-weighted assets / leverage ratio denominator

Risk-weighted assets

289,101

Leverage ratio denominator

1,037,150

1 LRD-based requirements and the LRD presented in this

table do not reflect the effects of the temporary

exemption that has been granted by FINMA in

connection with COVID-19. Refer to the “Regulatory and

legal

developments” section of

this report and

to the COVID-19-related

information in this

section.

2 Includes applicable

add-ons of

1.08% for RWA

and 0.375% for

LRD.

3 Includes outstanding

low-trigger loss-

absorbing additional tier 1 (AT1)

capital instruments, which are available

under the Swiss SRB framework to

meet the going concern requirements until

their first call date. As of

their first call date, these

instruments

are eligible to meet the gone concern requirements.

4 From 1 January 2020 onward,

a maximum of 25% of the gone concern

requirements can be met with instruments that have

a remaining maturity of between

one and two

years. Once

at least 75%

of the minimum

gone concern requirement

has been met

with instruments that

have a remaining

maturity of greater

than two years,

all instruments that

have a remaining

maturity of

between one

and two

years remain

eligible to

be included

in the

total gone

concern capital.

5 The

gone concern

requirement after

the application

of the

rebate for

resolvability measures

and the

reduction for

the use

of higher

quality capital

instruments

is floored

at 8.6%

and 3%

for the

RWA-

and LRD-based

requirements,

respectively.

This

means that

the combined

reduction may

not exceed

5.34

percentage points for the RWA-based requirement of 13.94% and 1.875 percentage points for the LRD-based requirement of 4.875%.

Risk, capital, liquidity and funding, and balance sheet | Capital management

148

Application of the temporary COVID-19-related FINMA

exemption of central bank sight deposits

line

with

the

FINMA

exemption

rules

that

appl

ied

until

1 January

2021,

the

eligible

LRD

relief

applicable

UBS

reduced

the

going

concern

LRD

equivalent

the

capital

distribution that UBS made for the 2019 financial year.

The

table

below

summarizes

the

effects

our

Swiss

SRB

going concern capital requirements

and information. The FINMA

exemption

rules

had

effect on

our

Swiss

SRB

gone

concern

capital requirements and ratios.

Outside

this

section,

for

simplicity

and

due

the

short-

term

nature

the

FINMA

exemption,

have

chosen

present the LRD excluding the temporary FINMA exemption.

Swiss SRB going concern requirements and information including temporary FINMA exemption

As of 31.12.20

LRD

USD million, except where indicated

in %

Leverage ratio denominator before temporary exemption

1,037,150

Effective relief

(92,827)

of which: central bank sight deposits eligible for relief

(146,308)

of which: reduction of relief due to paid dividend distribution

53,481

Leverage ratio denominator after temporary exemption

944,323

Required going concern capital

Total going concern capital

4.88

46,036

Common equity tier 1 capital

3.38

31,871

Eligible going concern capital

Total going concern capital

5.95

56,178

Common equity tier 1 capital

4.22

39,890

1 Represents the leverage

ratio denominator equivalent

to a 4.875% going

concern leverage ratio

requirement applied to

the 2019 paid dividend

of USD 2,607

million (USD 0.365 per

share, paid on

7 May 2020

and 27 November 2020).

149

Total loss-absorbing capacity

Swiss SRB going and gone concern information

USD million, except where indicated

31.12.20

31.12.19

Eligible going concern capital

Total going concern capital

56,178

51,842

Total tier 1 capital

56,178

51,842

Common equity tier 1 capital

39,890

35,535

Total loss-absorbing additional tier 1 capital

16,288

16,306

of which: high-trigger loss-absorbing additional tier 1 capital

13,711

13,892

of which: low-trigger loss-absorbing additional tier 1 capital

2,577

2,414

Eligible gone concern capital

Total gone concern loss-absorbing capacity

45,545

37,753

Total tier 2 capital

7,744

7,431

of which: low-trigger loss-absorbing tier 2 capital

7,201

6,892

of which: non-Basel III-compliant tier 2 capital

543

540

TLAC-eligible senior unsecured debt

37,801

30,322

Total loss-absorbing capacity

101,722

89,595

Risk-weighted assets / leverage ratio denominator

Risk-weighted assets

289,101

259,208

Leverage ratio denominator

1,037,150

911,322

Capital and loss-absorbing capacity ratios (%)

Going concern capital ratio

19.4

20.0

of which: common equity tier 1 capital ratio

13.8

13.7

Gone concern loss-absorbing capacity ratio

15.8

14.6

Total loss-absorbing capacity ratio

35.2

34.6

Leverage ratios (%)

Going concern leverage ratio

5.4

5.7

of which: common equity tier 1 leverage ratio

3.85

3.90

Gone concern leverage ratio

4.4

4.1

Total loss-absorbing capacity leverage ratio

9.8

1 Refer to

the “Accounting

and financial

reporting” and

“Consolidated financial

statements” sections

of this

report for

information on

the restatement

of comparative

information, where

applicable.

2 As of

1 January 2020, instruments available to meet gone concern

requirements remain eligible until one year before maturity without

a haircut of 50% in the last year of eligibility.

Refer to “Total loss-absorbing capacity

and movement” in the “Capital management” section of our first quarter

2020 report, available under “Quarterly reporting” at ubs.com/investors

for more information.

3 Leverage ratio denominators (LRDs) and

leverage ratios for 31 December 2020 do not reflect the effects of the temporary

exemption that has been granted by FINMA in connection with COVID

-19. Refer to the “Regulatory and legal developments” section

of this report and to the COVID-19-related information in this section.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Capital management 
150 
Audited |
 
 
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital 
USD million 
31.12.20 
31.12.19
1
Total IFRS equity 
 
59,765 
 
54,675 
Equity attributable to non-controlling interests 
 
(319) 
 
(174) 
Defined benefit plans, net of tax 
 
(41) 
 
(9) 
Deferred tax assets recognized for tax loss carry-forwards 
 
(5,617) 
 
(6,121) 
Deferred tax assets on temporary differences, excess over threshold 
 
(5) 
 
(235) 
Goodwill, net of tax
2
 
(6,319) 
 
(6,178) 
Intangible assets, net of tax 
 
(296) 
 
(195) 
Compensation-related components (not recognized in net 
profit) 
 
(1,349) 
 
(1,717) 
Expected losses on advanced internal ratings-based portfolio less provisions 
 
(330) 
 
(495) 
Unrealized (gains) / losses from cash flow hedges, net of tax 
 
(2,321) 
 
(1,260) 
Own credit related to gains / losses on financial liabilities 
measured at fair value that existed at the balance sheet date 
 
382 
 
93 
Own credit related to gains / losses on derivative financial instruments 
that existed at the balance sheet date 
 
(45) 
 
(46) 
Unrealized gains related to debt instruments at fair value through 
OCI, net of tax 
 
(152) 
 
(32) 
Prudential valuation adjustments 
 
(150) 
 
(104) 
Accruals for dividends to shareholders 
 
(1,314) 
 
(2,628) 
Capital reserve for potential share repurchases 
 
(2,000) 
Other 
 
0 
 
(40) 
Total common equity tier 1 capital 
 
39,890 
 
35,535 
1 Refer to 
the “Accounting 
and financial reporting” 
and “Consolidated financial 
statements” sections of 
this report for 
information on the 
restatement of comparative 
information, where applicable. 
2 Includes 
goodwill related to significant investments in financial institutions of USD 413 million as of 31 December 2020 (31 December 2019: USD 178 million) presented 
on the balance sheet line Investments in associates. 
p
 
Total loss-absorbing capacity and movement 
Our 
total 
loss-absorbing 
capacity 
increased 
by 
USD 12.1 
billion 
to USD 101.7 billion as of 31 December 2020. 
Going concern capital and movement 
Audited |
 
Our CET1 
capital mainly 
consists of: 
share capital; 
share 
premium, 
which 
primarily 
consists 
of 
additional 
paid-in 
capital 
related 
to 
shares 
issued;
 
and 
retained 
earnings. 
A 
detailed 
reconciliation 
of 
IFRS 
equity 
to 
CET1 
capital 
is 
provided 
in 
the 
“Reconciliation of IFRS equity to Swiss SRB 
common equity tier 1 
capital” table. 
Our 
CET1 
capital 
increased 
by 
USD 4.4 
billion 
to 
USD 39.9 
billion as 
of 31 December 
2020, mainly 
as a 
result of 
operating 
profit 
before tax 
of USD 8.2 
billion, 
foreign currency 
translation 
effects 
of 
USD 1.2 billion 
and deferred 
tax 
assets on 
temporary 
differences of 
USD 0.4 billion. 
The 
increase was 
partly offset 
by 
our 
capital 
reserve 
for 
potential 
share 
repurchases 
of 
USD 2.0 
billion
, 
accruals 
for 
dividends
 
of 
USD
 
1.3 
billion
, 
current 
tax 
expenses 
of 
USD 1.2 billion, 
share 
repurchases 
under 
our 
share 
repurchase 
program
 
of 
USD
 
0.4 
billion
, 
and 
defined 
benefit 
plans of USD 0.3 billion. 
›
 
Refer to “UBS shares” in this section for more 
information about 
the share repurchase program 
 
Our loss-absorbing additional tier 1 (AT1) capital was stable at 
USD 16.3 
billion, 
as 
the 
call 
of 
a 
USD 1.25 
billion 
AT1 
capital 
instrument was 
offset by 
a USD 0.75 
billion issuance 
of an 
AT1 
capital 
instrument, 
as 
well 
as 
foreign 
currency 
translation 
and 
interest rate risk hedge effects.
p
 
Gone concern loss-absorbing capacity and movement 
Audited | 
Our total 
gone concern 
loss-absorbing capacity 
included 
USD 37.8 
billion 
of 
TLAC-eligible 
senior 
unsecured 
debt, 
and 
increased 
by 
USD
 
7.8
 
billio
n 
to 
USD
 
45.5
 
billion
 
as 
of 
31 December 2020.
p
 
The increase 
was due 
to twelve 
issuances 
of 
TLAC-eligible 
senior 
unsecured 
debt 
instruments 
denominated 
in 
US dollars, 
euro 
and 
Australian dollars, 
as 
well 
as interest rate risk hedge, foreign currency translation and other 
effects, 
partly 
offset 
by 
a 
net 
decrease 
in 
eligibility 
of 
two 
instruments 
and 
the 
call 
of 
a 
TLAC-eligible 
senior 
unsecured 
debt instrument denominated in Australian dollars. 
Loss-absorbing capacity and leverage ratios 
Our 
CET1 
capita
l 
ratio 
increased 
0.
1
 
percentage 
points 
to 
13.8%, reflecting 
a USD 4.4 billion 
increase in 
CET1 capital that 
was partly offset by a USD 29.9 billion increase in RWA. 
Our CET1 
leverage ratio 
decreased from 
3.90% to 
3.85% as 
of 
31 December 2020, 
as 
the aforementioned 
increase in 
CET1 
capital was more than offset by 
a USD 126 billion increase in the 
LRD. 
Our 
gone 
concern 
loss-absorbing 
capacity 
ratio 
increased 
from 14.6% to 15.8%, whereas our gone concern leverage ratio 
increased 
from 
4.1% 
to 
4.4%
, 
mainly
 
driven 
by 
the 
aforementioned 
increase 
in 
gone 
concern 
loss
-
absorbing 
capacity. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
151 
Swiss SRB total loss-absorbing capacity movement 
USD million 
Going concern capital 
Swiss SRB 
Common equity tier 1 capital as of 31.12.19
1
35,535 
Operating profit before tax 
8,155 
Current tax (expense) / benefit 
(1,231) 
Foreign currency translation effects 
1,227 
Share repurchase program 
(364) 
Goodwill and intangible assets 
(242) 
Defined benefit plans
2
(250) 
Deferred tax assets on temporary differences 
412 
Capital reserve for potential share repurchases 
(2,000) 
Accruals for proposed dividends to shareholders 
(1,314) 
Other 
(38) 
Common equity tier 1 capital as of 31.12.20 
39,890 
Loss-absorbing additional tier 1 capital as of 31.12.19 
16,306 
Issuance of high-trigger loss-absorbing additional tier 1 capital 
750 
Call of a high-trigger loss-absorbing additional tier 1 capital 
instrument 
(1,250) 
Interest rate risk hedge, foreign currency translation and other effects 
482 
Loss-absorbing additional tier 1 capital as of 31.12.20 
16,288 
Total going concern capital as of 31.12.19
1
51,841 
Total going concern capital as of 31.12.20 
56,178 
Gone concern loss-absorbing capacity 
Tier 2 capital as of 31.12.19 
7,431 
Interest rate risk hedge, foreign currency translation and other effects 
312 
Tier 2 capital as of 31.12.20 
7,744 
TLAC-eligible senior unsecured debt as of 31.12.19 
30,322 
Issuance of TLAC-eligible senior unsecured debt instruments 
7,126 
Call of TLAC-eligible senior unsecured debt instruments 
(74) 
Decrease in eligibility due to shortening of residual tenor
3
(1,379) 
Interest rate risk hedge, foreign currency translation and other effects 
1,806 
TLAC-eligible senior unsecured debt as of 31.12.20 
37,801 
Total gone concern loss-absorbing capacity as of 31.12.19 
37,753 
Total gone concern loss-absorbing capacity as of 31.12.20 
45,545 
Total loss-absorbing capacity 
Total loss-absorbing capacity as of 31.12.19
1
89,594 
Total loss-absorbing capacity as of 31.12.20 
101,722 
1 Refer to the “Accounting 
and financial reporting” and “Consolidated 
financial statements” sections of this 
report for information on the restatement 
of comparative information, where 
applicable. 
2 Includes a 
USD 235 
million payment 
of the 
first installment 
to employees’ 
retirement assets 
in the 
Swiss pension 
fund, as 
announced in 
2018. Similar 
contributions to 
be made 
in the 
first quarters 
of 2021 
and 2022, 
respectively. Refer 
to “Note 
29 Pension 
and other 
post-employment benefit 
plans” in 
the “Consolidated 
financial statements” 
section of 
the Annual 
Report 2019 
for more 
information. 
3 Includes 
the partial 
cancellation of 
a TLAC-eligible 
senior unsecured 
debt instrument 
on 8 
December 2020 
(ISIN US90351DAD93 
issued on 
5 April 
2016 and 
maturing on 
15 April 
2021), amounting 
to USD 
150 million, 
as this 
instrument became not eligible to meet gone concern requirements in its final year of eligibility since April 2020. 
 
Additional information 
Active management of sensitivity to currency movements 
Group 
Treasury 
is 
mandated 
to 
minimize 
adverse 
effects 
from 
changes 
in 
currency 
rates 
on 
our 
CET1 
capital 
and 
/ 
or 
CET1 
capital ratio. 
A significant 
portion of 
our CET1 
capital and 
RWA 
are
 
denominated 
in 
Swiss 
francs,
 
euro
, 
pounds 
s
terling 
and 
other currencies. 
In order 
to hedge 
the CET1 
capital ratio, 
CET1 
capital 
needs 
to 
have 
foreign 
currency 
exposure, 
leading 
to 
currency 
sensitivity 
of 
CET1 
capital. As 
a 
consequence, 
it is 
not 
possible to 
simultaneously fully 
hedge the 
CET1 capital 
and the 
capital 
ratio. 
As 
the 
proportion 
of 
RWA 
denominated 
in 
currencies 
other than 
the US 
dollar outweighs 
the CET1 
capital 
in 
such 
currencies, 
a 
significant 
appreciation 
of 
the 
US 
dollar 
against 
such currencies 
could benefit 
our 
capital ratios, 
while a 
significant depreciation 
of the US 
dollar against 
these currencies 
could 
adversely 
affect 
our 
capital 
ratios. 
The 
Group 
Asset 
and 
Liability 
Committee
 
(
the
 
Group
 
ALCO)
, 
a 
committee 
of 
the 
Group Executive 
Board, has 
mandated Group 
Treasury 
to adjust 
the 
currency 
mix 
in 
capital, 
within 
limits 
set 
by 
the 
Board 
of 
Directors, to 
balance the 
effect of 
foreign exchange 
movements 
on the 
CET1 capital 
and capital 
ratio. Limits 
are in 
place for 
the 
sensitivity of 
both CET1 
capital and 
the CET1 
capital ratio 
to an 
appreciation 
or 
depreciation 
of 
10% 
in 
the 
value 
of 
the 
US dollar against other currencies. 
Sensitivity to currency movements 
Risk-weighted 
assets 
We 
estimate 
that 
a 10% 
depreciation 
of 
the 
US dollar 
against 
other 
currencies 
would 
have 
increased 
our 
RWA 
by 
USD 13 
billion 
and 
our 
CET1 
capital 
by 
USD
 
1.
3
 
billion
 
as 
of 
31
 
December
 
2020 
(31
 
December 
2019
: 
USD
 
11 
billion 
and 
USD 1.1 
billion, 
respectively 
) 
and 
decreased 
our 
CET1 
capital 
ratio 
1
5
 
basis 
points
 
(31
 
December 
2019
: 
14
 
basis 
points)
. 
Conversely, 
we 
estimate 
that 
a 
10% 
appreciation 
of 
the 
US 
dollar 
against 
other currencies 
would have 
decreased 
our RWA 
by 
USD
 
1
2
 
billion
 
and 
our 
CET1 
capital 
by 
USD
 
1.
2
 
billion
 
(3
1
 
December 
2019
: 
USD
 
10 
billion 
and 
USD
 
1.
0 
billion, 
respectively
) 
and 
increased
 
our 
CET1 
capital 
ratio 
1
5
 
basis 
points (31 
December 2019 
: 
14 basis points) 
. 
 
 

Risk, capital, liquidity and funding, and balance sheet | Capital management 
152 
Leverage ratio denominator 
Our 
leverage 
ratio 
is 
also 
sensitive 
to 
foreign 
exchange 
movements 
as 
a 
result 
of 
the 
currency 
mix 
of 
our 
capital 
and 
LRD. 
When 
adjusting 
the 
currency 
mix 
in 
capital,
 
potential 
effects 
on 
the 
going 
concern 
leverage 
ratio 
are 
taken 
into 
account 
and 
the 
sensitivity 
of 
the 
going 
concern leverage 
ratio 
to 
an 
appreciation 
or 
depreciation 
of 
10% 
in 
the 
value 
of 
the 
US dollar against other currencies is actively monitored. 
We estimate that a 10% depreciation of 
the US dollar against 
other currencies would have increased our LRD 
by USD 65 billion 
as 
of 
31 December 
2020 
(31 December 
2019: 
USD 57 
billion) 
and 
decreased
 
our 
Swiss 
SRB 
going 
concern 
leverage 
ra
tio 
1
6
 
basis 
points
 
(31
 
December 
2019
: 
18
 
basis 
points)
. 
Conversely, 
we 
estimate 
that 
a 
10% 
appreciation 
of 
the 
US 
dollar against other currencies would have 
decreased our LRD by 
USD
 
58
 
billion 
(
31
 
December 
2019
: 
USD
 
51 
billion) 
and 
increased 
our 
Swiss 
SRB 
going 
concern 
leverage 
ratio 
16 basis 
points (31 December 
2019: 
18 basis points) 
. 
The
 
aforementioned
 
sensitivities 
do 
not 
consider 
foreign 
currency translation effects related to defined benefit plans other 
than 
those related 
to 
the currency 
translation 
of 
the net 
equity 
of foreign operations. 
Estimated effect on capital from litigation, regulatory and similar 
matters subject to provisions and contingent liabilities 
We 
have estimated 
the 
loss 
in 
capital 
that 
we 
could 
incur 
as 
a 
result 
of 
the 
risks 
associated 
with 
the 
matters 
described 
in 
“
Note
 
18 
Provisions 
and 
contingent 
liabilities
”
 
in 
the
 
“Consolidated 
financial 
statements” 
section 
of 
this 
report. 
We 
have 
employed
 
for 
this 
purpose 
the 
advanced 
measurement 
approach 
(AMA) 
methodology 
that 
we 
use 
when 
determining 
the capital requirements 
associated with operational 
risks, based 
on 
a 
99.9% 
confidence 
level 
over 
a 
12-month 
horizon. 
The 
methodology 
takes 
into 
consideration 
UBS 
and 
industry 
experience 
for 
the 
AMA 
operational 
risk 
categories 
to 
which 
those 
matters 
correspond, 
as 
well 
as 
the 
external 
environment 
affecting 
risks 
of 
these 
types, 
in 
isolation 
from 
other 
areas. 
On 
this 
standalone 
basis, 
we estimate 
the 
maximum 
loss 
in 
capital 
that 
we 
could 
incur 
over 
a 
12-month 
period 
as 
a 
result 
of 
our 
risks associated with these operational risk 
categories at USD 4.0 
billion 
as 
of 
31 December 
2020, 
a 
reduction 
of 
USD 0.3 
billion 
from 
31 December 
2019. 
This 
estimate 
is 
not 
related 
to 
and 
does not 
take into 
account any provisions 
recognized for 
any of 
these matters and does not constitute a subjective assessment of 
our actual exposure in any of these matters. 
›
 
Refer to “Operational risk” in the “Risk 
management and 
control” section of this report for more information 
›
 
Refer to “Note 18 Provisions and contingent 
liabilities” in the 
“Consolidated financial statements” 
section of this report for 
more information 
Capital and capital ratios of our significant regulated subsidiaries 
UBS Group AG is 
a holding company conducting substantially 
all 
operations through UBS AG and 
subsidiaries thereof. UBS Group 
AG and 
UBS AG 
have 
contributed a 
significant portion 
of 
their 
respective 
capital 
to, 
and 
provide
d
 
substantial
 
liquidity 
to
,
 
subsidiaries. Many of these subsidiaries are subject to regulations 
requiring compliance 
with minimum 
capital, liquidity 
and similar 
requirements. 
Regulatory 
capital 
components 
and 
capital 
ratios 
of 
our 
significant 
regulated 
subsidiaries 
determined 
under 
the 
regulatory 
framework of 
each subsidiary’s 
home jurisdiction 
are 
provided 
in 
the 
“Financial 
and 
regulatory 
key 
figures 
for 
our 
significant regulated subsidiaries and 
sub-groups” section of this 
report. 
Supervisory 
authorities 
generally 
have 
discretion 
to 
impose 
higher 
requirements, 
or 
to 
otherwise 
limit 
the 
activities 
of 
subsidiaries. 
Supervisory 
authorities 
also 
may 
require 
entities 
to 
measure 
capital 
and 
leverage 
ratios 
on 
a 
stressed 
basis, 
and 
may limit 
the ability 
of the 
entity to 
engage in 
new activities 
or 
take capital actions based on the results of those tests. 
›
 
Refer to the 31 December 2020 Pillar 3 
report, available under 
“Pillar 3 disclosures” at 
ubs.com/investors
,
 
for more capital and 
other regulatory information about our significant 
regulated 
subsidiaries and sub-groups 
Joint liability of UBS AG and UBS Switzerland AG 
In 
June 
2015, 
upon 
the 
transfer 
of 
the 
Personal 
& 
Corporate 
Banking and 
Global Wealth 
Management businesses 
booked in 
Switzerland from 
UBS AG 
to UBS 
Switzerland AG, 
UBS AG 
and 
UBS 
Switzerland 
AG 
assumed 
joint 
liability 
for 
obligations 
transferred 
to 
UBS 
Switzerland 
AG 
and 
existing 
at 
UBS 
AG, 
respectively. 
Under certain circumstances, 
the Swiss Banking 
Act 
and FINMA’s 
Banking Insolvency 
Ordinance 
authorize FINMA 
to 
modify, 
extinguish 
or 
convert 
to 
common 
equity 
liabilities 
of 
a 
bank in connection with a resolution or insolvency of such bank. 
The 
joint 
liability 
amounts 
have 
declined 
as 
obligations 
matured, 
terminated 
or 
were 
novated 
following 
the 
transfer 
date. 
As of 
31 December 
2020, 
the 
liability 
of 
UBS Switzerland 
AG 
amounted 
to 
CHF 8.9 
billion 
(the 
equivalent 
of 
USD 10.1 
billion)
, 
a 
decrea
se 
by 
CHF
 
7.9 
billion
 
compared 
with 
31 
December 
2019. 
The 
respective 
liability 
of 
UBS 
AG 
has 
been 
substantially extinguished. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
153 
Risk-weighted assets
RWA development in 2020 
During 
2020, RWA 
increased 
by USD 29.9 
billion 
to USD 289.1 
billion, 
driven 
by 
increases 
of 
USD 25.1 
billion 
in 
credit 
and 
counterparty 
credit 
risk 
RWA, 
including 
USD 7.7 
billion 
from 
currency 
effects, 
USD
 
5.3 
billion 
in 
market 
risk 
RWA, 
and 
USD 1.3 
billion 
in 
non-counterparty-related 
risk 
RWA, 
partly 
offset by a reduction of USD 1.8 billion in operational risk RWA. 
›
 
Refer to the 31 December 2020 Pillar 3 
report, 
available under 
“Pillar 3 disclosures” at 
ubs.com/investors
,
 
for more information 
about RWA movements and definitions of RWA movement key 
drivers 
 
Movement in risk-weighted assets by key driver 
USD billion 
RWA as of 
31.12.19 
Currency 
effects 
Methodology 
and policy 
changes 
Model 
updates / 
changes 
Regulatory 
add-ons 
Asset size and 
Other
 
1 
RWA as of 
31.12.20 
Credit and counterparty credit risk
2
153.0 
7.7 
2.7 
1.4 
(0.2) 
13.5 
178.1 
Non-counterparty-related risk 
22.1 
0.6 
0.0 
0.0 
0.0 
0.7 
23.4 
Market risk 
6.6 
0.0 
(3.3) 
1.9 
(0.9) 
7.6 
11.8 
Operational risk 
77.5 
0.0 
0.0 
(1.8) 
0.0 
0.0 
75.8 
Total 
259.2 
8.3 
(0.6) 
1.5 
(1.1) 
21.7 
289.1 
1 
Includes 
the 
Pillar 
3 
categories 
“Asset 
size,” 
“Credit 
quality 
of 
counterparties,” 
“Acquisitions 
and 
disposals” 
and 
“Other.” 
Refer 
to 
the 
31 
December 
2020 
Pillar 
3 
report 
under 
“Pillar 
3 
disclosures” 
at 
ubs.com/investors for more information. 
2 Includes settlement risk, credit valuation adjustments, equity exposures in the banking 
book and securitization exposures in the banking book. 
 
Credit and counterparty credit risk 
Credit 
and counterparty 
credit risk 
RWA 
increased 
by USD 25.1 
billion 
to 
USD
 
178
.
1 
billion
 
as 
of 
31
 
December 
2020. 
This 
increase was 
partly driven by 
asset size and 
other movements of 
USD 13.5 billion, 
predominantly reflecting 
a higher 
asset size 
in 
the 
Investment 
Bank, 
mainly 
driven 
by 
higher 
RWA 
from 
loans 
and 
loan 
commitments 
as 
well 
as 
securities 
financing 
transactions, and 
in Global 
Wealth Management, 
mainly due 
to 
increased 
RWA 
from 
loans 
and 
loan 
commitments. 
Also, 
2020 
included 
an 
increase 
from 
currency 
effects 
of 
USD 7.7 
billion, 
methodology 
and 
policy 
changes 
of 
USD 2.7 
billion 
and 
model 
updates of USD 1.4 billion. 
 
Movement in credit and counterparty credit risk RWA by key driver
1
USD billion 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group Functions 
Group 
Total credit and counterparty credit risk RWA as of 31.12.19 
35.0 
57.3 
1.8 
50.6 
8.3 
153.0 
Asset size 
7.3 
0.8 
0.4 
9.5 
(1.6) 
16.4 
Asset quality 
1.9 
(0.6) 
0.0 
(3.8) 
0.0 
(2.5) 
Model updates 
1.4 
0.5 
0.0 
(0.5) 
0.0 
1.4 
Methodology and policy changes 
0.6 
0.5 
0.7 
0.8 
0.1 
2.7 
Regulatory add-ons 
0.0 
0.1 
0.0 
0.0 
(0.2) 
(0.2) 
Acquisitions and disposals 
0.0 
0.0 
0.0 
0.0 
0.0 
0.0 
Foreign exchange movements 
1.3 
4.4 
0.1 
1.6 
0.4 
7.7 
Other 
(0.8) 
(0.1) 
0.0 
0.3 
0.3 
(0.3) 
Total movement 
11.7 
5.5 
1.1 
7.9 
(1.1) 
25.1 
Total credit and counterparty credit risk RWA as of 31.12.20 
46.7 
62.8 
2.9 
58.5 
7.2 
178.1 
1 Refer to the 31 December 2020 Pillar 3 report under “Pillar 3 disclosures” at ubs.com/investors for the definitions of credit and 
counterparty credit risk RWA movement categories. 
 
Model updates 
The 
increase 
in 
credit 
and 
counterparty 
credit 
risk 
RWA 
from 
model 
updates 
of 
USD 1.4 
billion 
was 
primarily 
driven 
by 
real 
estate portfolios 
in Global 
Wealth Management 
and Personal 
& 
Corporate 
Banking
, 
partly 
offset 
by 
reductions 
related 
to
 
securities 
financing 
transactions 
(
SFT
s
)
 
and
 
derivatives
 
in 
the 
Investment Bank. 
›
 
Refer to “Credit risk models” in the “Risk management 
and 
control” section of this report for more information about 
model 
updates 
Methodology changes 
The 
increase 
in 
credit 
and 
counterparty 
credit 
risk 
RWA 
from 
methodology changes 
of USD 2.7 billion 
was primarily driven 
by 
the 
implementation 
of 
the 
standardized 
approach 
for 
counterparty credit 
risk (SA-CCR) 
amounting to 
USD 1.8 billion, 
predominantly 
in 
the 
Investment 
Bank 
and 
Global 
Wealth 
Management
,
 
and 
revised 
capital 
requirements 
for 
fund 
investments 
amounting 
to 
USD 0.6 
billion, 
mainly 
affecting 
the 
Asset Management business. 
›
 
Refer to the “Risk management and control” 
section of this 
report and the 31 December 2020 Pillar 3 report, available 
under 
“Pillar 3 disclosures” at 
ubs.com/investors
, for more information 
about credit and counterparty credit risk developments 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Capital management 
154 
We 
expect 
that 
further 
methodology 
changes 
and 
model 
updates, 
as 
well 
as 
regulatory 
add-ons, 
will 
increase 
credit 
and 
counterparty credit 
risk RWA 
by around 
USD 10 billion 
in 2021. 
The 
extent 
and
 
timing 
of 
RWA 
changes 
may 
vary 
as 
methodology 
changes 
and 
model 
updates 
are 
completed 
and 
receive 
regulatory 
approval. 
In 
addition, 
changes 
in 
the 
composition 
of the 
relevant portfolios 
and other 
market factors 
will affect RWA. 
Non-counterparty-related risk 
Non-counterparty 
credit 
risk 
RWA 
increased 
by 
USD 1.3 
billion 
to USD 23.4 billion 
as of 31 
December 2020, primarily 
driven by 
currency effects and increases in deferred tax assets. 
Market risk 
Market 
risk 
RWA 
increased 
by 
USD 5.3 
billion 
to 
USD 11.8 
billion as 
of 31 December 
2020, mainly 
driven by 
asset size 
and 
other 
movements 
of 
USD 7.6 
billion 
in 
the 
Investment 
Bank’s 
Global 
Markets 
business. 
This 
increase 
in 
turn 
was 
driven 
by 
higher 
average 
regulatory 
and 
stressed 
VaR 
(SVaR) 
levels, 
primarily due 
to unprecedented 
and sharp 
market moves 
across 
asset classes 
observed during 
the first 
half of the 
year as 
well as 
very 
high 
credit 
shocks 
being 
applied 
against 
the 
long 
credit 
inventory 
as 
the 
SVaR 
window 
included 
COVID-19-period 
shocks. 
Furthermore, 
2020 
included 
an 
increase 
from 
model 
updates 
of 
USD 1.9 
billion, 
mainly 
related 
to 
the 
ongoing 
parameter update of our VaR model. 
These increases were partly 
offset 
by a 
reduction 
from 
methodology 
and 
policy 
of 
USD 3.3 
billion, 
mainly 
related 
to 
the 
removal 
of 
a 
FINMA-required 
temporary 
market 
risk 
RWA 
multiplier 
following 
our 
demonstration 
of 
model 
performance 
in 
certain 
sub-portfolios. 
In 
addition, 
regulatory 
add-ons 
decreased 
by 
USD 0.9 
billion, 
reflecting 
updates 
from 
the 
monthly 
risks-not-in-VaR 
(RniV) 
assessment. 
›
 
Refer to the “Risk management and control” 
section of this 
report and the 31 December 2020 Pillar 3 report, available 
under 
“Pillar 3 disclosures” at 
ubs.com/investors,
 
for more information 
about market risk developments 
Operational risk 
Operational risk 
RWA 
decreased by 
USD 1.8 billion 
to USD 75.8 
billion 
as 
of 
31 December 
2020, 
driven 
by 
the 
annual 
recalibration 
of 
the 
advanced 
measurement 
approach 
(AMA) 
model used 
for the 
calculation of 
operational 
risk capital 
in the 
fourth quarter of 2020. 
›
 
Refer to “Advanced measurement approach model” 
in the “Risk 
management and control” section of this 
report for more 
information about the AMA model 
 
Risk-weighted assets by business division and Group Functions 
USD billion 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Manage- 
ment 
Investment 
Bank 
Group 
Functions 
Total 
RWA 
31.12.20 
Credit and counterparty credit risk
1
46.7 
62.8 
2.9 
58.5 
7.2 
178.1 
Non-counterparty-related risk
2
6.2 
2.1 
0.7 
3.6 
10.7 
23.4 
Market risk 
1.4 
0.0 
0.0 
9.0 
1.4 
11.8 
Operational risk 
32.8 
7.2 
3.3 
23.2 
9.3 
75.8 
Total 
87.2 
72.1 
6.9 
94.3 
28.7 
289.1 
31.12.19 
Credit and counterparty credit risk
1
35.0 
57.3 
1.8 
50.6 
8.3 
153.0 
Non-counterparty-related risk
2
6.4 
2.1 
0.8 
3.4 
9.5 
22.1 
Market risk 
0.8 
0.0 
0.0 
4.6 
1.1 
6.6 
Operational risk 
35.9 
7.7 
2.0 
22.5 
9.4 
77.5 
Total 
78.1 
67.1 
4.6 
81.1 
28.3 
259.2 
31.12.20 vs 31.12.19 
Credit and counterparty credit risk
1
11.7 
5.5 
1.1 
7.9 
(1.1) 
25.1 
Non-counterparty-related risk
2
(0.2) 
0.0 
(0.1) 
0.2 
1.3 
1.3 
Market risk 
0.6 
0.0 
0.0 
4.4 
0.3 
5.3 
Operational risk 
(3.1) 
(0.5) 
1.3 
0.7 
(0.1) 
(1.8) 
Total 
9.0 
5.0 
2.4 
13.2 
0.4 
29.9 
1 Includes 
settlement risk, 
credit valuation 
adjustments, equity 
exposures in 
the banking 
book and 
securitization exposures 
in the 
banking book. 
2 Non-counterparty-related 
risk includes 
deferred tax 
assets 
recognized for temporary 
differences (31 December 
2020: USD 10.0 billion; 
31 December 2019: 
USD 9.0 billion), as 
well as property, 
equipment, software 
and other items 
(31 December 2020: 
USD 13.4 billion; 
31 December 2019: USD 13.1 billion). 
 
 

 
 
 
 
 
 
 
 
 
155 
Leverage ratio denominator 
The 
LRD 
increased 
by 
USD 126 
billion 
to 
USD 1,037 
billion 
as 
of 
31 December 
2020, 
primarily 
driven 
by 
asset 
size 
and 
other 
movements of USD 82 billion and an increase from currency effects of USD 43 billion. 
 
Movement in leverage ratio denominator by key driver
1
USD billion 
LRD as of 
31.12.19
3
Currency 
effects 
Asset size and 
other 
LRD as of 
31.12.20 
On-balance sheet exposures (excluding derivative exposures 
and SFTs)
2
690.3 
36.3 
80.1 
806.6 
Derivative exposures 
89.0 
3.6 
4.0 
96.6 
Securities financing transactions 
117.5 
2.3 
(4.4) 
115.3 
Off-balance sheet items 
27.9 
1.4 
2.0 
31.3 
Deduction items 
(13.3) 
(0.1) 
0.6 
(12.8) 
Total 
911.3 
43.5 
82.3 
1,037.1 
1 This table does not 
reflect the effects of the temporary 
exemption that has been granted 
by FINMA in connection with 
COVID-19. Refer to the 
“Regulatory and legal developments” section 
of this report and to 
the COVID-19-related information in this section for more information. 
2 Excludes positive replacement values, 
cash collateral receivables on derivative instruments, 
cash collateral on securities borrowed, reverse 
repurchase agreements, margin loans and prime brokerage receivables 
related to securities financing transactions, which are presented separately 
under Derivative exposures and Securities financing transactions in 
this table. 
3 Refer to the “Accounting and financial reporting” and “Consolidated 
financial statements” sections of this report for information on the restatement of comparative information, where applicable. 
 
The LRD movements described below exclude currency effects. 
On-balance 
sheet 
exposures 
(excluding 
derivative 
exposures 
and 
SFTs
) 
increased 
by 
USD
 
80
 
billion, 
mainly 
driven 
by
 
an 
increase 
in 
cash 
and
 
balances 
at
 
central 
banks
 
in 
Group 
Functions, 
as 
well 
as 
higher 
lending 
assets 
in 
Global 
Wealth 
Management and Personal & Corporate Banking. 
Derivative 
exposures 
increased 
by 
USD
 
4
 
billion
, 
mainly 
reflecting 
market-driven 
movements 
on 
foreign 
exchange 
and 
equity derivative contracts in the Investment Bank. 
SFTs decreased by USD 4 billion, as a result of trade roll-offs in 
order to provide funding to the Investment 
Bank, partly offset by 
higher brokerage receivables. 
›
 
Refer to “Balance sheet and off-balance sheet” 
in this section for 
more information about balance sheet movements 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Capital management 
156 
Leverage ratio denominator by business division and Group Functions
1
USD billion 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
Total 
31.12.20 
Total IFRS assets 
367.7 
231.7 
28.6 
369.7 
128.1 
1,125.8 
Difference in scope of consolidation
2
(0.1) 
0.0 
(21.1) 
0.0 
0.1 
(21.2) 
Less: derivative exposures and SFTs
3
(34.0) 
(16.7) 
(0.7) 
(191.6) 
(54.9) 
(298.0) 
On-balance sheet exposures 
333.6 
215.0 
6.7 
178.0 
73.3 
806.6 
Derivative exposures 
6.6 
2.0 
0.0 
82.7 
5.3 
96.6 
Securities financing transactions 
30.1 
15.1 
0.7 
46.5 
22.9 
115.3 
Off-balance sheet items 
6.1 
16.3 
0.0 
8.5 
0.4 
31.3 
Items deducted from Swiss SRB tier 1 capital 
(5.2) 
(0.1) 
(1.6) 
(0.3) 
(5.5) 
(12.8) 
Total 
371.2 
248.3 
5.8 
315.5 
96.2 
1,037.1 
31.12.19
4
Total IFRS assets 
309.8 
209.4 
34.6 
315.9 
102.6 
972.2 
Difference in scope of consolidation
2
(0.1) 
0.0 
(28.2) 
0.0 
0.1 
(28.3) 
Less: derivative exposures and SFTs
3
(34.9) 
(20.6) 
(0.9) 
(141.9) 
(55.3) 
(253.6) 
On-balance sheet exposures 
274.7 
188.8 
5.5 
173.9 
47.4 
690.3 
Derivative exposures 
6.4 
1.4 
0.0 
73.2 
8.0 
89.0 
Securities financing transactions 
32.1 
19.6 
0.9 
38.9 
26.0 
117.5 
Off-balance sheet items 
4.7 
14.8 
0.0 
7.3 
1.0 
27.9 
Items deducted from Swiss SRB tier 1 capital 
(5.2) 
(0.4) 
(1.4) 
(0.2) 
(6.2) 
(13.3) 
Total 
312.7 
224.2 
5.0 
293.2 
76.2 
911.3 
31.12.20 vs. 31.12.19 
Total IFRS assets 
57.9 
22.3 
(6.0) 
53.8 
25.5 
153.6 
Difference in scope of consolidation
2
0.0 
0.0 
7.1 
0.0 
0.0 
7.1 
Less: derivative exposures and SFTs
3
0.9 
3.9 
0.2 
(49.7) 
0.4 
(44.3) 
On-balance sheet exposures 
58.9 
26.2 
1.3 
4.1 
25.9 
116.3 
Derivative exposures 
0.2 
0.6 
0.0 
9.5 
(2.7) 
7.6 
Securities financing transactions 
(2.0) 
(4.4) 
(0.2) 
7.7 
(3.2) 
(2.1) 
Off-balance sheet items 
1.4 
1.5 
0.0 
1.2 
(0.7) 
3.4 
Items deducted from Swiss SRB tier 1 capital 
0.0 
0.2 
(0.3) 
(0.1) 
0.6 
0.5 
Total 
58.5 
24.1 
0.9 
22.4 
20.0 
125.8 
1 This table does 
not reflect the effects 
of the temporary 
exemption that has been 
granted by FINMA 
in connection with COVID 
-19. Refer to the 
“Regulatory and legal 
developments” section of this 
report and to 
the COVID-19-related 
information in 
this section 
for more 
information. 
2 Represents 
the difference 
between the 
IFRS and 
the regulatory 
scope of 
consolidation, which 
is the 
applicable scope 
for the 
LRD 
calculation. 
3 Consists of 
derivative financial 
instruments, cash 
collateral receivables 
on derivative 
instruments, receivables 
from securities 
financing transactions, 
and margin loans, 
as well as 
prime brokerage 
receivables and 
financial assets at 
fair value 
not held for 
trading, both 
related to securities 
financing transactions, 
in accordance 
with the regulatory 
scope of consolidation, 
which are presented 
separately under 
Derivative exposures and Securities financing transactions. 
4 Refer to the “Accounting and financial reporting” and “Consolidated 
financial statements” sections of this report for information on the restatement of 
comparative information, where applicable. 
 

 
157 
UBS AG consolidated total loss-absorbing capacity and leverage 
ratio information
Going and gone concern requirements and information 
UBS 
is 
considered 
an 
SRB 
under 
Swiss 
banking 
law 
and, 
on 
a 
consolidated 
basis, 
both 
UBS 
Group 
AG 
and 
UBS 
AG 
are 
required 
to 
comply 
with 
regulations 
based 
on 
the 
Basel 
III 
framework as applicable for Swiss SRBs. 
The Swiss SRB framework and requirements applicable to UBS 
AG 
consolidated 
are 
consistent 
with 
those 
applicable 
to 
UBS 
Group 
AG 
consolidated 
and 
are 
described 
in 
the 
“Capital, 
liquidity and funding, and balance sheet” section of this report. 
›
 
Refer to “Regulatory framework” in 
this section for more 
information about total loss-absorbing 
capacity, leverage ratio 
requirements and gone concern rebate 
UBS 
AG 
is 
subject 
to 
going 
and 
gone 
concern 
requirements 
on a 
standalone basis. 
Capital and 
other regulatory 
information 
for 
UBS 
AG 
standalone 
is 
provided 
under 
“Holding 
company 
and 
significant 
regulated 
subsidiaries 
and 
sub-groups” 
at 
ubs.com/investors
 
and 
in 
the 
31 December 
2020 
Pillar 
3 
report 
available under “Pillar 3 disclosures” at 
ubs.com/investors
. 
The table on the next page provides the RWA- and LRD-based 
requirements and 
information as 
of 31 December 
2020 for 
UBS 
AG 
consolidated
, 
excluding 
the 
effects 
of 
the 
temporary 
exemption of 
central bank 
sight deposits 
for the 
going concern 
leverage ratio 
calculation granted 
by FINMA 
on 25 
March 2020 
in 
connection with 
COVID-19 until 
1 
January 2021. 
The 
effects 
of the temporary exemption are presented in a 
separate table on 
the next page. 
›
 
Refer to the “Regulatory and legal developments” 
section of this 
report for more information about the COVID-19-related 
regulatory and legal developments 
 
 
 

Risk, capital, liquidity and funding, and balance sheet | Capital management

158

Swiss SRB going and gone concern requirements and information

As of 31.12.20

RWA

LRD

USD million, except where indicated

in %

in USD million

in %

in USD million

Required going concern capital

Total going concern capital

13.96

40,017

4.88

50,543

Common equity tier 1 capital

9.66

27,687

3.38

34,991

of which: minimum capital

4.50

12,903

1.50

15,552

of which: buffer capital

5.14

14,739

1.88

19,439

of which: countercyclical buffer

0.02

Maximum additional tier 1 capital

4.30

12,330

1.50

15,552

of which: additional tier 1 capital

3.50

10,036

1.50

15,552

of which: additional tier 1 buffer capital

0.80

2,294

Eligible going concern capital

Total going concern capital

18.35

52,610

5.07

52,610

Common equity tier 1 capital

13.32

38,181

3.68

38,181

Total loss-absorbing additional tier 1 capital

5.03

14,430

1.39

14,430

of which: high-trigger loss-absorbing additional tier 1 capital

4.13

11,854

1.14

11,854

of which: low-trigger loss-absorbing additional tier 1 capital

0.90

2,575

0.25

2,575

Required gone concern capital

Total gone concern loss-absorbing capacity

10.16

29,128

3.64

37,710

of which: base requirement

12.86

36,875

4.50

46,655

of which: additional requirement for market share and LRD

1.08

3,097

0.38

3,888

of which: applicable reduction on requirements

(3.78)

(10,844)

(1.24)

(12,833)

of which: rebate granted (equivalent to 47.5% of maximum rebate)

(2.54)

(7,273)

(0.89)

(9,234)

of which: reduction for usage of low-trigger additional

tier 1 and tier 2 capital instruments

(1.25)

(3,571)

(0.35)

(3,599)

Eligible gone concern capital

Total gone concern loss-absorbing capacity

15.88

45,545

4.39

45,545

Total tier 2 capital

2.70

7,744

0.75

7,744

of which: low-trigger loss-absorbing tier 2 capital

2.51

7,201

0.69

7,201

of which: non-Basel III-compliant tier 2 capital

0.19

543

0.05

543

TLAC-eligible senior unsecured debt

13.18

37,801

3.65

37,801

Total loss-absorbing capacity

Required total loss-absorbing capacity

24.11

69,145

8.51

88,252

Eligible total loss-absorbing capacity

34.23

98,155

9.47

98,155

Risk-weighted assets / leverage ratio denominator

Risk-weighted assets

286,743

Leverage ratio denominator

1,036,771

1 LRD-based requirements

and the LRD

presented in this

table do not

reflect the effects

of the temporary

exemption that has

been granted by

FINMA in connection

with COVID-19. Refer

to the “Regulatory

and

legal developments” section

of this report

and to the

COVID-19-related information

in this section.

2 Includes applicable add-ons

of 1.08% for

RWA and 0.375%

for LRD.

3 The relevant

capital instruments

were issued

after the

new Swiss

SRB framework

had been

implemented. Effective

from 30 June

2020, these

instruments can

qualify as

going concern

capital at

the UBS

AG consolidated

level, as

agreed with

FINMA.

4 From 1 January 2020 onward,

a maximum of 25% of

the gone concern requirements can be met

with instruments that have a

remaining maturity of between one

and two years. Once

at least 75% of

the minimum gone

concern requirement

has been

met with instruments

that have a

remaining maturity

of greater than

two years,

all instruments

that have

a remaining maturity

of between

one and two

years

remain eligible to be included in the total

gone concern capital.

5 The gone concern requirement after

the application of the rebate for resolvability

measures and the reduction for the use

of higher quality capital

instruments is floored at 8.6%

and 3% for the

RWA-

and LRD-based requirements respectively.

This means that

the combined reduction may

not exceed 5.34 percentage

points for the RWA

-based requirement of

13.94% and 1.875 percentage points for the LRD-based requirement of 4.875%.

Swiss SRB going concern requirements and information including temporary FINMA exemption

As of 31.12.20

LRD

USD million, except where indicated

in %

Leverage ratio denominator before temporary exemption

1,036,771

Effective relief

(67,375)

of which: central bank sight deposits eligible for relief

(146,308)

of which: reduction of relief due to paid dividend distribution

78,933

Leverage ratio denominator after temporary exemption

969,396

Required going concern capital

Total going concern capital

4.88

47,258

Common equity tier 1 capital

3.38

32,717

Eligible going concern capital

Total going concern capital

5.43

52,610

Common equity tier 1 capital

3.94

38,181

159

Swiss SRB going and gone concern information

USD million, except where indicated

31.12.20

31.12.19

Eligible going concern capital

Total going concern capital

52,610

47,191

Total tier 1 capital

52,610

47,191

Common equity tier 1 capital

38,181

35,233

Total loss-absorbing additional tier 1 capital

14,430

11,958

of which: high-trigger loss-absorbing additional tier 1 capital

11,854

11,958

of which: low-trigger loss-absorbing additional tier 1 capital

2,575

Eligible gone concern capital

Total gone concern loss-absorbing capacity

45,545

40,168

Total tier 1 capital

2,415

of which: low-trigger loss-absorbing additional tier 1 capital

2,415

Total tier 2 capital

7,744

7,431

of which: low-trigger loss-absorbing tier 2 capital

7,201

6,892

of which: non-Basel III-compliant tier 2 capital

543

540

TLAC-eligible senior unsecured debt

37,801

30,322

Total loss-absorbing capacity

98,155

87,359

Risk-weighted assets / leverage ratio denominator

Risk-weighted assets

286,743

257,831

Leverage ratio denominator

1,036,771

911,228

Capital and loss-absorbing capacity ratios (%)

Going concern capital ratio

18.3

of which: common equity tier 1 capital ratio

13.3

13.7

Gone concern loss-absorbing capacity ratio

15.9

15.6

Total loss-absorbing capacity ratio

34.2

33.9

Leverage ratios (%)

Going concern leverage ratio

5.1

5.2

of which: common equity tier 1 leverage ratio

3.68

3.87

Gone concern leverage ratio

4.4

Total loss-absorbing capacity leverage ratio

9.5

9.6

1 Refer

to the

“Accounting

and financial

reporting” and

“Consolidated financial

statements” sections

of this

report for

information on

the restatement

of comparative

information, where

applicable.

2 The

relevant capital instruments were issued after

the new Swiss SRB framework had

been implemented. Effective from 30 June

2020, these instruments can qualify as

going concern capital of UBS AG,

as agreed with

FINMA.

3 As of 1 January

2020, instruments available to

meet gone concern requirements remain

eligible until one year before

maturity without a haircut of

50% in the last year

of eligibility.

4 Leverage ratio

denominators (LRDs) and leverage

ratios for 31

December 2020 do not

reflect the effects of

the temporary exemption

that has been

granted by FINMA

in connection with

COVID-19. The

effects of the temporary

exemption granted by FINMA in connection with COVID-19 are presented on the previous page of this section.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Capital management 
160 
UBS Group AG vs UBS AG consolidated loss-absorbing 
capacity and leverage ratio information 
The going 
concern capital of 
UBS AG consolidated 
was USD 3.6 
billion 
lower 
than 
the 
going 
concern 
capital 
of 
UBS 
Group 
AG 
consolidated 
as 
of 
31 
December 
2020, 
reflecting 
lower 
going 
concern loss-absorbing 
additional tier 
1 (AT1) 
capital of USD 1.9 
billion and lower CET1 capital of USD 1.7 billion. 
The 
aforementioned 
difference in 
CET1 
capital was 
primarily 
due 
to 
a 
lower 
UBS 
AG 
consolidated 
IFRS 
equity 
of 
USD 1.7 
billion 
and 
higher 
UBS 
AG 
accruals 
for 
dividends, 
as 
well 
as 
a 
higher 
capital 
deduction 
at
 
the 
UBS 
AG 
consolidated 
level 
related 
to 
deferred 
tax 
assets
 
on 
temporary 
differences
. 
The 
aforementioned factors were partly offset by a capital 
reserve for 
potential share repurchases and compensation 
related regulatory 
capital accruals at the UBS Group AG level. 
The 
going 
concern 
loss-absorbing 
AT1 
capital 
of 
UBS 
AG 
consolidated was 
USD 1.9 billion 
lower than 
that of 
UBS Group 
AG 
consolidated 
as 
of 
31 December 
2020, 
reflecting 
deferred 
contingent capital plan awards 
granted at Group level 
to eligible 
employees for performance years 2015 to 2019. 
Differences 
in 
capital 
between 
UBS 
Group 
AG 
consolidated 
and 
UBS 
AG 
consolidated 
related 
to 
employee 
compensation 
plans will reverse to the extent underlying services are performed 
by employees of, 
and are consequently 
charged to, UBS 
AG and 
its 
subsidiaries. 
Such 
reversal 
generally 
occurs 
over 
the 
service 
period of the employee compensation plans. 
The 
leverage 
ratio 
framework 
for 
UBS 
AG 
consolidated 
is 
consistent 
with 
that 
of 
UBS 
Group 
AG 
consolidated. 
As 
of 
31 December 2020, the going concern 
leverage ratio of UBS AG 
consolidated was 
0.3 percentage 
points lower 
than that 
of UBS 
Group 
AG 
consolidated, 
mainly 
because 
the 
going 
concern 
capital of UBS AG consolidated was USD 3.6 billion lower. 
 
 
 
Audited | 
 
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital (UBS Group AG vs UBS AG consolidated) 
As of 31.12.20 
USD million 
UBS Group AG 
(consolidated) 
UBS AG 
(consolidated) 
Difference 
Total IFRS equity 
59,765 
58,073 
1,691 
Equity attributable to non-controlling interests 
(319) 
(319) 
0 
Defined benefit plans, net of tax 
(41) 
(41) 
0 
Deferred tax assets recognized for tax loss carry-forwards 
(5,617) 
(5,617) 
0 
Deferred tax assets on temporary differences, excess over threshold 
(5) 
(126) 
121 
Goodwill, net of tax 
(6,319) 
(6,319) 
0 
Intangible assets, net of tax 
(296) 
(296) 
0 
Compensation-related components (not recognized in net 
profit) 
(1,349) 
0 
(1,349) 
Expected losses on advanced internal ratings-based portfolio less provisions 
(330) 
(330) 
0 
Unrealized (gains) / losses from cash flow hedges, net of tax 
(2,321) 
(2,321) 
0 
Own credit related to gains / losses on financial liabilities 
measured at fair value that existed at the balance sheet 
date 
382 
382 
0 
Own credit related to gains / losses on derivative financial instruments 
that existed at the balance sheet date 
(45) 
(45) 
0 
Unrealized gains related to debt instruments at fair value through 
OCI, net of tax 
(152) 
(152) 
0 
Prudential valuation adjustments 
(150) 
(150) 
0 
Accruals for dividends to shareholders 
(1,314) 
(4,539) 
3,225 
Capital reserve for potential share repurchases 
(2,000) 
0 
(2,000) 
Other 
0 
(20) 
20 
Total common equity tier 1 capital 
39,890 
38,181 
1,709 
p
 
 
 

161

Swiss SRB going and gone concern information (UBS Group AG vs UBS AG consolidated)

As of 31.12.20

USD million, except where indicated

UBS Group AG

(consolidated)

UBS AG

(consolidated)

Difference

Eligible going concern capital

Total going concern capital

56,178

52,610

3,567

Total tier 1 capital

56,178

52,610

3,567

Common equity tier 1 capital

39,890

38,181

1,709

Total loss-absorbing additional tier 1 capital

16,288

14,430

1,858

of which: high-trigger loss-absorbing additional tier 1 capital

13,711

11,854

1,857

of which: low-trigger loss-absorbing additional tier 1 capital

2,577

2,575

Eligible gone concern capital

Total gone concern loss-absorbing capacity

45,545

Total tier 2 capital

7,744

of which: low-trigger loss-absorbing tier 2 capital

7,201

of which: non-Basel III-compliant tier 2 capital

543

TLAC-eligible senior unsecured debt

37,801

Total loss-absorbing capacity

101,722

98,155

3,567

Risk-weighted assets / leverage ratio denominator

Risk-weighted assets

289,101

286,743

2,358

Leverage ratio denominator

1,037,150

1,036,771

379

Capital and loss-absorbing capacity ratios (%)

Going concern capital ratio

19.4

18.3

1.1

of which: common equity tier 1 capital ratio

13.8

13.3

0.5

Gone concern loss-absorbing capacity ratio

15.8

15.9

(0.1)

Total loss-absorbing capacity ratio

35.2

34.2

1.0

Leverage ratios (%)

Going concern leverage ratio

5.4

5.1

0.3

of which: common equity tier 1 leverage ratio

3.85

3.68

0.16

Gone concern leverage ratio

4.4

0.0

Total loss-absorbing capacity leverage ratio

9.8

9.5

0.3

1 Leverage

ratio denominators

(LRDs) and

leverage

ratios do

not reflect

the effects

of the

temporary

exemption that

has been

granted by

FINMA in

connection with

COVID-19. The

effects of

the temporary

exemption granted by FINMA in connection with COVID-19 are presented in the “Swiss SRB going concern requirements and information

including temporary FINMA exemption” table in this section.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Capital management 
162 
Equity attribution and return on attributed equity
Under
 
our 
equity 
attribution 
framework, 
tangible 
equity 
is 
attributed based 
on a 
weighting of 
50% each 
for average 
RWA 
and average 
LRD, which 
both include 
resource 
allocations 
from 
Group 
Functions 
to 
the 
business 
divisions 
(the 
BDs). 
Average 
RWA 
and 
LRD 
are 
converted 
to 
CET1 
capital 
equivalents 
using 
capital ratios of 12.5% and 3.75%, respectively. 
If the attributed 
tangible equity calculated under 
the weighted-driver approach 
is 
less than 
the CET1 
capital equivalent 
of risk-based 
capital (RBC) 
for any BD, the 
CET1 capital equivalent of 
RBC is used as 
a floor 
for that BD. 
In 
addition 
to 
tangible equity, 
we 
allocate 
equity 
to 
our 
BDs 
to support goodwill and intangible assets. 
Furthermore, 
we 
allocate 
to 
BDs attributed 
equity 
related 
to 
certain 
CET1 
deduction 
items, 
such 
as 
compensation-related 
components 
and 
expected 
losses 
on 
advanced 
internal 
ratings-
based portfolio less general provisions. 
 
We attribute 
all remaining 
Basel III capital 
deduction items 
to 
Group Functions. 
These items 
include deferred 
tax assets 
(DTAs) 
recognized 
for 
tax 
loss 
carry-forwards 
and 
DTAs 
on 
temporary 
differences in 
excess of 
the threshold, which 
together constitute 
the 
largest 
component, 
dividend 
accruals 
and 
unrealized 
gains 
from cash flow hedges. 
Average 
equity 
attributed 
to 
BDs 
and 
Group 
Functions 
increased 
by 
USD 3.7 
billion 
to 
USD 57.8 
billion 
in 
2020, 
primarily 
due 
to 
an 
increase 
in 
attributed 
equity 
for 
Group 
Functions, 
mainly 
reflecting 
higher 
unrealized 
gains 
from 
cash 
flow 
hedges 
and 
the 
capital 
reserve 
for 
potential 
share 
repurchases. 
›
 
Refer to “Balance sheet and off-balance sheet” 
in this section for 
more information about movements in equity 
attributable to 
shareholders 
 
 
 
 
 
Average attributed equity 
For the year ended 
USD billion 
31.12.20 
31.12.19 
31.12.18 
Global Wealth Management 
17.1 
16.6 
16.3 
Personal & Corporate Banking 
8.9 
8.4 
8.0 
Asset Management 
2.0 
1.8 
1.8 
Investment Bank 
12.6 
12.3 
13.0 
Group Functions 
17.4 
15.1 
13.3 
of which: deferred tax assets
1
6.7 
7.1 
7.1 
of which: related to retained RWA and LRD
2,3
3.4 
2.8 
3.0 
of which: accruals for shareholder returns and others 
7.2 
5.1 
3.2 
Average equity attributed to business divisions and Group Functions 
57.8 
54.2 
52.4 
1 Includes average attributed equity related to the Basel 
III capital deduction items for deferred tax assets (deferred tax 
assets recognized for tax loss carry-forwards and deferred 
tax assets on temporary differences, 
excess over threshold), as 
well as retained 
RWA and LRD related 
to deferred tax assets. 
2 Excludes average 
attributed equity related 
to retained RWA 
and LRD related to 
deferred tax assets. 
3 The temporary 
exemption granted by FINMA until 1 January 
2021 is not considered for average 
attributed equity. Refer to the 
“Regulatory and legal developments” section of 
this report for more information about the 
temporary 
exemption granted by FINMA. 
 
 
Return on attributed equity
1
For the year ended 
In % 
31.12.20 
31.12.19 
31.12.18 
Global Wealth Management 
23.6 
20.5 
20.0 
Personal & Corporate Banking 
14.2 
17.1 
22.5 
Asset Management 
74.2 
29.7 
23.5 
Investment Bank 
19.7 
6.4 
11.5 
1 Return on attributed equity for Group Functions is not shown, as it is not meaningful. 

 
163 
Liquidity and funding management
We 
manage 
the 
structural 
risk 
of 
our 
balance 
sheet, 
including 
interest 
rate 
risk, structural 
foreign 
exchange 
risk and 
collateral 
risk, as well as the risks 
associated with our liquidity and funding 
portfolios. 
This 
section 
provides 
information 
about
 
regulatory 
requirements, 
our 
governance 
structure, 
liquidity 
and 
funding 
management 
(including 
our 
sources 
of 
liquidity 
and 
funding), 
our 
contingency 
planning
,
 
and 
stress 
testing
.
 
The 
balances 
disclosed 
in 
this 
section 
represent 
year-end 
positions, 
unless 
indicated 
otherwise. 
Intra-period 
balances 
fluctuate 
in 
the 
ordinary 
course 
of 
business 
and 
may 
differ 
from 
year-end 
positions. 
Strategy, objectives and governance 
Audited |
 
Our management of balance 
sheet, liquidity and 
funding 
positions 
has 
the 
overall 
objective 
of 
optimizing 
our 
franchise’s 
value
 
across 
a 
broad 
range 
of 
market 
conditions 
while 
considering 
current 
and 
future 
regulatory 
constraints. 
We 
employ a 
number of 
measures to 
monitor these 
positions under 
normal 
and 
stressed 
conditions. 
In 
particular, 
we 
use 
stress 
scenarios 
to 
apply 
behavioral 
adjustments 
to 
our 
balance 
sheet 
and 
calibrate 
the results 
from 
these 
internal stress 
models 
with 
external measures, primarily the liquidity coverage ratio (the LCR) 
and 
the 
net 
stable 
funding 
ratio 
(the 
NSFR). 
Our 
liquidity 
and 
funding 
strategy 
is 
proposed 
by 
Group 
Treasury 
and 
approved 
by the 
Group Asset 
and Liability 
Committee (the 
Group ALCO), 
which 
is 
a 
committee 
of 
the 
Group 
Executive 
Board 
(the 
GEB) 
that is overseen by 
the Risk Committee of the 
Board of Directors 
(the BoD). 
p
 
Group 
Treasury 
monitors 
and 
oversees 
the 
implementation 
and 
execution 
of 
our 
liquidity 
and 
funding 
strategy 
and 
is 
responsible for adherence to 
policies, limits, triggers and 
targets. 
This 
enables 
close 
control 
of 
both 
our 
cash 
and 
collateral, 
including 
our 
high-quality 
liquid 
assets, 
and 
centralizes 
the 
Group’s 
general 
access 
to 
wholesale 
cash 
markets 
in 
Group 
Treasury. 
In addition, 
should a crisis 
require contingency 
funding 
measures 
to 
be 
invoked, 
Group 
Treasury 
is 
responsible 
for 
coordinating 
liquidity 
generation 
with 
representatives 
of 
the 
relevant 
business 
areas. 
Group 
Treasury 
reports 
on 
the 
Group’s 
overall 
liquidity 
and 
funding 
position, 
including 
funding 
status 
and 
concentration 
risks, 
at 
least 
monthly, 
to 
the 
Group 
ALCO 
and the Risk Committee of the BoD. 
Audited 
|
 
Liquidity 
and 
funding 
limits, 
triggers 
and targets 
are 
set 
at 
Group 
and, 
where 
appropriate, 
at 
legal 
entity 
and 
business 
division 
levels, 
and 
are 
reviewed 
and 
reconfirmed 
at 
least 
once 
a 
year 
by 
the 
BoD, 
the 
Group 
ALCO, 
the 
Group 
Chief 
Financial 
Officer, 
the 
Group 
Treasurer 
and 
the 
business 
divisions, 
taking 
into 
consideration 
current 
and 
projected 
business 
strategy 
and 
risk 
tolerance. 
The 
principles 
underlying 
our 
limit
, 
trigger
 
and 
target 
framework 
are 
designed 
to 
maximize 
and 
sustain 
the 
value 
of 
our 
business 
franchise 
and 
maintain 
an 
appropriate 
balance 
in 
the 
asset 
and 
liability 
structure. 
Structural 
limits, 
triggers 
and 
targets 
focus 
on 
the 
structure 
and 
composition 
of 
the 
balance 
sheet, 
with 
supplementary 
limits, 
triggers and 
targets designed 
to drive 
the 
utilization, 
diversification 
and 
allocation 
of 
funding 
resources. 
To 
complement 
and 
support 
this 
framework, 
Group 
Treasury 
monitors 
the 
markets 
for 
early 
warning 
indicators 
regarding 
the 
current 
liquidity 
situation. 
These 
liquidity 
status 
indicators 
are 
used 
at 
the 
Group 
level 
to 
assess 
both 
the 
overall 
global 
and 
regional 
situations 
for 
potential 
threats. 
Treasury 
Risk 
Control
 
provides 
independent 
oversight 
over 
liquidity 
and 
funding risks. 
p
 
›
 
Refer to the “Corporate governance” 
section of this report for 
more information 
›
 
Refer to the “Risk management and control” 
section of this 
report for more information 
Liquidity management 
Audited 
|
 
Our 
liquidity 
risk 
management 
aims 
to 
ensure 
that 
the 
firm has 
sufficient liquidity 
or access to 
funding sources 
to meet 
its 
liabilities 
when 
due, 
meet 
prudential 
requirements 
and 
to 
survive 
a 
severe 
three-month 
idiosyncratic 
and 
market-wide 
liquidity stress 
event; 
allowing for 
discrete 
management actions 
instructed 
by 
Group 
Treasury 
in 
addition 
to 
monetizing 
the 
bank’s liquidity reserves. 
Our 
liquid 
assets 
are 
managed 
using 
limits, 
triggers 
and 
targets to 
maintain an 
appropriate level 
of diversification 
(issuer, 
tenor and 
other risk 
characteristics) in 
response to 
any expected 
or 
unexpected 
volatility 
in 
funding 
availability 
or 
requirements 
caused 
by 
adverse 
market, 
operational 
or 
other 
firm-specific 
events. The liquid asset 
portfolio size is managed 
dynamically, 
so 
as to operate at all 
times within the risk appetite of 
the BoD and 
relevant
 
Group 
and 
subsidiary 
liquidity 
requirements
.
 
p
 
We 
experienced 
the 
effects 
of 
heightened 
market 
activity 
on 
our 
balance 
sheet 
in 
March 
2020 
due 
to 
the 
COVID-19 
pandemic. 
The 
established 
liquidity 
risk 
management 
framework 
operated 
effectively 
and 
we 
were 
well 
positioned 
in 
the 
volatile 
market 
environment. 
Stress testing 
Audited |
 
We perform stress 
testing to determine the 
optimal asset 
and liability structure 
that allows us to maintain 
an appropriately 
balanced liquidity 
and funding 
position under 
various scenarios. 
Liquidity 
crisis 
scenario 
analysis 
and 
contingency 
funding 
planning 
support the 
liquidity management 
process 
and 
aim to 
ensure 
that 
immediate 
corrective 
measures 
to 
absorb 
potential 
sudden liquidity shortfalls can be put into effect. 
p
 
We 
model 
our 
liquidity 
exposures 
under 
two 
main 
potential 
scenarios: 
a 
structural 
market-wide 
scenario 
and 
a 
combined 
scenario.
 
We 
continuously 
refine 
the 
assumptions 
used 
to 
maintain a robust, actionable and tested contingency plan. 
›
 
Refer to “Risk measurement” in the “Risk management 
and 
control” section of this report for more information about 
stress 
testing 
 
 

Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 
164 
Structural market-wide 
scenario 
As a 
liquidity crisis 
could have 
a myriad 
of causes, 
the structural 
market
-
wi
de
 
scenario 
encompasses 
potential 
stress 
effects 
across all markets, 
currencies and products, 
but it is 
typically not 
firm-specific. 
In 
addition 
to 
the 
loss 
of 
the 
ability 
to 
replace 
maturing 
wholesale 
funding, 
it 
assumes 
a 
gradual 
decline 
of 
otherwise 
stable 
client 
deposits 
and 
liquidity 
outflows 
corresponding 
to 
a 
one-notch 
downgrade 
in 
our 
long-term 
credit rating, 
and a 
corresponding downgrade 
in our 
short-term 
rating. 
We use 
a cash 
capital metric 
that incorporates 
the structural 
market-wide 
scenario 
and 
measures 
the 
amount 
of 
long-term 
funding available 
to fund 
franchise and 
illiquid assets. 
Franchise 
assets consist 
of lending exposure 
to clients or 
assets to support 
franchise 
client 
activities. 
The 
illiquid 
portion 
of 
an 
asset 
is 
the 
difference 
between 
the 
carrying 
amount 
of 
the 
asset 
and 
its 
effective
 
stressed
 
cash 
value 
when 
monetized 
within 
the 
scenario 
horizon. 
Long-term 
funding 
used 
as 
cash 
capital 
to 
support 
franchise 
and 
illiquid 
assets 
is 
composed 
of 
unsecured 
funding with 
a remaining 
time to 
maturity of 
at least 
one year, 
deposits that have a 
behavioral maturity of at 
least one year and 
shareholders’ equity. 
Combined scenario 
The 
combined 
scenario 
represents 
an 
extreme 
stress 
event 
that 
combines 
a 
firm-specific 
crisis 
with 
market 
disruption. 
This 
scenario 
assumes: 
(i)
 
substantial 
outflows 
o
f
 
otherwise 
stable 
client 
deposits, mainly 
due on 
demand; (ii) inability 
to renew 
or 
replace 
maturing 
unsecured 
wholesale 
funding;
 
(iii)
 
unusually 
large drawdowns on 
loan commitments; (iv) reduced 
capacity to 
generate 
liquidity 
from 
trading 
assets;
 
(v)
 
liquidity 
outflows 
corresponding 
to 
a 
three-notch 
downgrade 
in 
our 
long-term 
credit rating, 
and a 
corresponding downgrade 
in our 
short-term 
rating
;
 
(vi)
 
triggering 
contractual 
obligations 
to 
unwind 
deri
vative 
positions 
or 
to 
deliver 
additional 
collateral;
 
(vii) additional 
collateral 
requirements 
due 
to 
adverse 
movements in the market values of derivatives; 
and (viii) elevated 
liquidity 
requirements 
in 
support 
of 
continuous 
payment 
and 
settlement activity. 
The combined scenario 
is run daily 
to project 
potential 
cash 
outflows 
under 
it
 
and 
is 
assessed 
as 
part 
of 
ongoing risk management activities. 
Contingency Funding Plan 
Audited |
 
Our Group 
Contingency Funding 
Plan is 
an integral 
part 
of 
our 
global 
crisis 
management 
framework, 
which 
covers 
various 
types 
of 
crisis 
events. 
This 
Contingency 
Funding 
Plan 
contains 
an 
assessment 
of 
contingent 
funding 
sources 
and 
liquidity preservation 
actions in 
a stressed 
environment, liquidity 
status 
indicators 
and metrics, 
and 
contingency 
procedures. 
Our 
funding 
diversification 
and 
global 
scope 
help 
to 
protect 
our 
liquidity position in 
the event of 
a crisis. We 
regularly assess and 
test all 
material known 
and expected 
cash flows, 
as well 
as the 
level and 
availability of 
high-grade collateral 
that could 
be used 
to 
raise 
additional 
funding 
if 
required. 
Our 
contingent 
funding 
sources 
include 
our 
high-quality 
liquid 
asset 
(HQLA) 
portfolios, 
available and unutilized liquidity 
facilities at several major 
central 
banks, 
contingent 
reductions 
of 
liquid 
trading 
portfolio 
assets, 
and other available management actions. 
p
 
Funding management 
Audited 
|
 
Group 
Treasury 
regularly 
monitors 
our 
funding 
status, 
including concentration risks, aiming 
to ensure that 
we maintain 
a 
well-balanced 
and 
diversified 
liability 
structure. 
Our 
funding 
risk 
management 
aims 
for 
the 
optimal 
asset 
and 
liability 
structure 
to 
finance 
our 
businesses 
reliably 
and 
cost-efficiently. 
Our 
funding 
activities 
are 
planned 
by 
analyzing 
the 
overall 
liquidity 
and 
funding 
profile 
of 
our 
balance 
sheet, 
taking 
into 
account the 
amount of 
stable funding 
that would 
be needed 
to 
support 
ongoing 
business 
activities 
through 
periods 
of 
difficult 
market conditions. 
p
 
The funding 
strategy of 
UBS Group 
AG is 
set annually 
in the 
Funding Plan 
and is 
reviewed on 
a quarterly 
basis. The 
Funding 
Plan is developed by 
Group Treasury and approved 
by the Group 
ALCO
.
 
Group 
Treasury 
proposes, 
sets 
and 
oversees 
limits
, 
triggers
 
an
d 
targets 
for 
funding 
generation
,
 
including 
concentration 
limits, 
weighted 
average 
maturity 
floors 
and 
volume. Funding diversification is monitored continuously, with a 
focus 
on 
product 
type, 
single-counterparty 
exposure 
(as 
a 
percentage 
of 
the 
total), 
mat
urity 
profile, 
and 
the
 
overall 
contribution of a particular funding source to the liability mix. 
›
 
Refer to “Balance sheet liabilities” 
in this section for more 
information about the development 
of our short-term and long-
term debt during 2020 
 
Global 
Wealth 
Management 
and 
Personal 
& 
Corporate 
Banking provide 
significant, cost-efficient and 
reliable sources of 
funding. 
These 
include 
core 
deposits 
and 
Swiss 
covered 
bonds, 
which 
use 
(as 
a 
pledge) 
a 
portion 
of 
our 
portfolio 
of 
Swiss 
residential 
mortgages 
as 
collateral 
to 
generate 
long-term 
funding. In addition, 
we have several 
short-, medium- and 
long-
term funding 
programs under 
which we 
issue senior 
unsecured 
debt 
and 
structured 
notes, 
as 
well 
as 
short-term 
debt. 
These 
programs 
enable
 
institutional 
and 
private 
investors 
who 
are 
active 
in 
the 
markets 
of 
Europe, 
the 
US 
and 
Asia 
Pacific 
to 
customize 
their 
investments 
in 
UBS’s 
debt. 
Collectively, 
these 
broad product 
offerings and 
funding sources, 
together with 
the 
global 
scope 
of 
our 
business 
activities,
 
support 
our 
funding 
stability. 
Internal funding and funds transfer pricing 
We use 
an integrated liquidity and funding framework to govern 
the 
liquidity 
management 
of 
all 
our 
branches 
and 
subsidiaries, 
and our major sources of liquidity are 
channeled through entities 
that 
are 
fully 
consolidated. 
Group 
Treasury
 
meets 
internal 
demands 
for 
funding 
by 
channeling 
funds 
from 
entities 
generating surplus 
cash to 
those in 
need of 
financing, except 
in 
circumstances where transfer restrictions exist. 
Funding 
costs 
and
 
benefits 
are 
allocated 
to 
our 
business 
divisions according to our liquidity and funding risk management 
framework. 
Our internal 
funds transfer 
pricing 
system, which 
is 
governed 
by 
Group 
Treasury, 
is 
designed 
to 
provide 
the 
proper 
liability 
structure to 
support the 
assets and 
planned activities 
of 
each business division. 
 
 
 

 
 
 
 
 
 
165 
Credit ratings 
Credit 
ratings 
can 
affect 
the 
cost 
and 
availability 
of 
funding, 
especially funding from 
wholesale unsecured sources. 
Our credit 
ratings 
can 
also 
influence 
the 
performance 
of 
some 
of 
our 
businesses and 
the levels 
of client 
and counterparty 
confidence. 
Rating 
agencies 
take 
into 
account 
a 
range 
of 
factors 
when 
assessing 
creditworthiness 
and 
setting 
credit 
ratings. 
These 
include 
the 
company’s 
strategy, 
its 
business 
position 
and 
franchise 
value, 
stability 
and 
quality 
of 
earnings, 
capital 
adequacy, 
risk profile 
and 
management, 
liquidity management, 
diversification 
of 
funding 
sources, 
asset 
quality, 
and 
corporate 
governance. 
Credit 
ratings 
reflect 
the 
opinions 
of 
the 
rating 
agencies and can change at any time. 
In 
evaluating 
our 
liquidity 
and 
funding 
requirements, 
we 
consider 
the 
potential 
effect 
of 
a 
reduction 
in 
UBS’s 
long-term 
credit 
ratings 
and 
a 
corresponding 
reduction 
in 
short-term 
ratings. 
If 
our 
credit 
ratings 
were 
to 
be 
downgraded, 
rating 
trigger 
clauses 
could 
result 
in an 
immediate 
cash 
settlement or 
the 
need 
to 
deliver 
additional 
collateral 
to 
counterparties 
from 
contractual 
obligations 
relat
ed 
to 
over
-
the
-
counter 
(OTC) 
derivative 
positions 
and 
other 
obligations. 
Based 
on 
our 
credit 
ratings as of 31 December 2020, 
USD 0.0 billion, USD 0.6 billion 
and 
USD 1.2 
billion 
would 
have 
been 
required 
for 
such 
contractual 
obligations 
in 
the event 
of 
a 
one-notch, 
two-notch 
and 
three-notch 
reduction 
in 
long-term 
credit 
ratings, 
respectively. Of 
these, the 
portion related 
to additional 
collateral 
is 
USD 0.0 
billion, 
USD 0.2 
billion 
and 
USD 0.5 
billion, 
respectively. 
There was 
one main 
rating action 
with regard 
to UBS 
Group 
AG’s and 
UBS AG’s 
solicited credit 
ratings in 
2020. As 
part of 
a 
series 
of 
rating 
actions 
over 
several 
weeks 
across 
the 
sector 
to 
reflect 
the 
disruption 
caused 
by 
the 
COVID-19 
pandemic, 
Fitch 
Ratings revised the 
outlooks for issuer 
ratings of UBS Group 
AG, 
UBS 
AG 
and 
the 
rated 
subsidiaries 
from 
stable 
to 
negative 
on 
31 March 
2020. 
On 
2 
March 
2021, 
Fitch 
Ratings 
revised 
the 
outlooks 
for 
the 
issuer 
ratings 
of 
UBS 
Group 
AG, 
UBS 
AG 
and 
the rated subsidiaries from negative back to stable. 
›
 
Refer to “Liquidity and funding management 
are critical to UBS’s 
ongoing performance” in the “Risk factors” 
section of this report 
for more information 
Liquidity coverage ratio 
The LCR 
measures the 
short-term resilience 
of a 
bank’s liquidity 
profile 
by 
comparing 
whether 
sufficient 
HQLA 
are 
available 
to 
survive 
expected 
net 
cash 
outflows 
from 
a 
significant 
liquidity 
stress scenario, as defined by the relevant regulator. 
For 
UBS, 
HQLA 
are 
low-risk 
unencumbered assets 
under 
the 
control 
of 
Group 
Treasury 
that 
are 
easily 
and 
immediately 
convertible into cash at little or no loss of 
value, in order to meet 
liquidity 
needs. 
Our 
HQLA 
predominantly 
consist 
of 
assets 
that 
qualify as 
Level 1 
in the 
LCR framework, 
including cash, 
central 
bank reserves 
and government 
bonds. Group 
HQLA are 
held by 
UBS AG 
and its 
subsidiaries, and 
may include 
amounts that 
are 
available 
to 
meet 
funding 
and 
collateral 
needs 
in 
certain 
jurisdictions, but are not readily available for use by the Group as 
a 
whole. 
These 
limitations 
are 
typically 
the 
result 
of 
local 
regulatory requirements, 
including local 
LCR and 
large exposure 
requirements. 
Funds 
that 
are 
effectively 
restricted 
are 
excluded 
from 
the 
calculation of 
Group HQLA 
to 
the extent 
they exceed 
the 
outflow 
assumptions 
for 
the 
subsidiary 
that 
holds 
the 
relevant 
HQLA
. 
On 
this 
basis, 
USD
 
47
 
billion 
of 
assets 
were 
excluded 
from 
our 
daily 
average 
Group 
HQLA 
for 
the 
fourth 
quarter 
of 
2020. 
Amounts 
held 
in 
excess 
of 
local 
liquidity 
requirements 
that 
are 
not 
subject 
to 
other 
restrictions 
are 
generally available for transfer within the Group. 
The 
Basel 
Committee 
on 
Banking 
Supervision 
(the 
BCBS) 
standards 
require 
an 
LCR 
of 
at 
least 
100%. 
In 
a 
period 
of 
financial stress, 
the Swiss Financial 
Market Supervisory 
Authority 
(FINMA) 
may 
allow 
banks 
to 
use 
their 
HQLA 
and 
let 
their 
LCR 
temporarily 
fall 
below the 
minimum threshold. 
We monitor 
the 
LCR in all 
significant currencies in 
order to manage 
any currency 
mismatches between 
HQLA and the 
net expected 
cash outflows 
in times of stress. 
Our 
daily 
average 
LCR 
for 
the 
fourth 
quarter 
of 
2020 
was 
152%, 
compared 
with 
134% 
in 
the 
fourth 
quarter 
of 
2019, 
remaining 
above 
the 
prudential 
requirement 
communicated 
by 
FINMA. 
The 
average 
LCR 
increase 
was 
primarily 
driven 
by 
higher 
HQLA 
balances 
due 
to 
debt 
issuances, 
lower 
net 
funding 
consumption 
by 
the 
business 
divisions 
and 
higher 
customer 
deposit 
balances, 
partly 
offset 
by 
an 
increase in 
excess 
liquidity 
subject to 
transfer restrictions. Net 
cash outflows 
increased, due 
to 
higher 
outflows 
from 
higher 
customer 
deposit 
balances 
and 
derivatives, 
which 
were 
partly 
offset 
by 
an 
increase 
in 
inflows 
from higher customer lending balances. 
›
 
Refer to the 31 December 2020 Pillar 3 
report, available under 
“Pillar 3 disclosures” at 
ubs.com/investors
,
 
for more information 
about the LCR 
›
 
Refer to the “Significant regulated subsidiary 
and sub-group 
information” 
section of this report
 
for more information about 
the LCR of UBS AG and UBS Switzerland 
AG 
 
 
Liquidity coverage ratio 
USD billion, except where indicated 
Average 4Q20
1
Average 4Q19
1
High-quality liquid assets 
 
214 
 
166 
Net cash outflows 
 
141 
 
124 
Liquidity coverage ratio (%) 
 
152 
 
134 
1 Calculated based on an average of 63 data points in the fourth quarter of 2020 and 64 data points in the fourth quarter of 2019. 
 
 

 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 
166 
Net stable funding ratio
 
The 
net 
stable 
funding 
ratio 
(NSFR) 
framework 
is 
intended 
to 
limit 
overreliance 
on 
short-term 
wholesale 
funding, 
to 
encourage a better assessment 
of funding risk across 
all on- and 
off-balance 
sheet 
items 
and 
to 
promote 
funding 
stability. 
The 
NSFR 
has 
two 
components: 
available 
stable 
funding 
(ASF) 
and 
required 
stable 
funding 
(RSF). ASF 
is 
the 
portion 
of 
capital 
and 
liabilities 
expected 
to 
be 
available 
over 
the 
period 
of 
one 
year. 
RSF is 
a measure 
of the 
stable funding 
requirement 
of an 
asset 
based on its 
maturity, 
encumbrance and other 
characteristics, as 
well 
as 
the 
potential 
for 
contingent 
calls 
on 
funding 
liquidity 
from 
off-balance 
sheet 
exposures. 
The 
BCBS 
NSFR 
regulatory 
framework requires a ratio of at least 100%. 
In 
September 
2020, 
the 
Swiss 
Federal 
Council 
adopted 
an 
amendment 
to 
the 
Liquidity 
Ordinance 
for 
the 
implementation 
of 
the 
NSFR. 
The 
NSFR 
regulation 
was 
finalized 
in 
the 
fourth 
quarter 
of 
2020 with 
the release 
of 
the revised 
FINMA liquidity 
circular. We are on schedule to implement 
the final regulation by 
July 2021. 
›
 
Refer to the “Regulatory and legal developments” 
section of this 
report for more information about the finalization 
of the NSFR 
regulation 
 
As of 31 December 
2020, our estimated 
pro forma NSFR 
was 
119
%, 
an 
increase 
of 
8
 
percentage 
point
s
 
compared 
with 
31 December 
2019. 
This 
reflected 
a 
USD 75 
billion 
increase 
in 
available 
stable 
funding, 
mainly 
driven 
by 
higher
 
customer 
deposits, capital and 
debt issuances. This 
was partly offset 
by an 
increase 
in 
required 
stable 
funding 
of
 
USD
 
31
 
billion
,
 
mainly 
driven by an 
increase in loans 
and advances to 
customers, partly 
offset by certain alignments with final FINMA rules. 
 
Pro forma net stable funding ratio 
USD billion, except where indicated 
31.12.20 
31.12.19 
Available stable funding 
 
563 
 
488 
Required stable funding 
 
473 
 
442 
Pro forma net stable funding ratio (%) 
 
119 
 
111 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
167 
Balance sheet and off-balance sheet
Balance sheet 
Balance sheet assets 
As 
of 
31 
December 
2020, 
balance 
sheet 
assets 
totaled 
USD
 
1,
12
6
 
billion, 
an 
increase 
of 
USD
 
154
 
billion 
from 
31
 
December 
201
9
, 
of 
which 
currency 
effects 
accounted 
for 
approximately 
USD
 
42 
billion, 
driven 
mainly 
by 
increases 
in 
lending assets and cash and balances 
at central banks, as well as 
in 
derivatives 
and 
cash 
collateral 
receivables 
on 
derivative 
instruments, 
partly 
offset 
by 
decreases 
in 
securities 
financing 
transactions at amortized cost. 
Lending assets 
increased by 
USD 56 billion, 
of which 
USD 34 
billion 
was in 
Global Wealth 
Management and 
mainly reflect 
ed 
increases 
in 
Lombard 
loans 
and 
currency 
effects. 
In 
Personal 
& 
Corporate 
Banking, 
lending 
assets 
increased 
by 
USD 18 
billion, 
mainly 
driven 
by 
currency 
effects
 
and
 
increases 
in 
mortgage 
loans, 
as well 
as loans 
related to 
the Swiss 
government-backed 
COVID-19 lending program. 
Cash 
and 
balances 
at 
central 
banks
 
increased 
by 
U
SD
 
51 
billion, predominantly in Group 
Treasury 
, 
as the Group increased 
its 
liquidity 
reserves 
in 
a 
volatile 
market 
environment, 
and 
also 
due 
to 
currency 
effects. 
The 
cash 
inflow 
was 
generated 
mainly 
from 
issuances 
of 
money 
market 
paper,
 
higher 
customer 
deposits and net proceeds from securities financing transactions. 
Derivatives 
and 
cash 
collateral 
receivables 
on 
derivative 
instruments 
increased 
by 
USD
 
47 
billion,
 
mainly 
in 
our 
Derivatives 
& Solutions 
business in 
the Investment 
Bank, largely 
due 
to
 
market
-
driven 
movements 
from 
foreign 
currency 
contracts on the back of the volatility in exchange rates and, 
to a 
lesser extent, 
from equity contracts and interest rate contracts. 
Other 
financial 
assets 
measured 
at 
amortized 
cost 
and 
fair 
value increased 
by USD 10 billion, 
largely due to 
higher volumes 
of HQLA 
securities in 
the liquidity 
buffer within 
Group Treasury 
. 
Brokerage 
receivables 
increased 
by 
USD 7 
billion, 
mainly 
in 
our 
Financing Business 
in the 
Investment Bank, as 
clients invested 
in 
the market. 
These increases 
were partly 
offset by 
a decrease 
in securities 
financing 
transactions 
at 
amortized 
cost 
of 
USD 10 
billion, 
mainly 
in 
Group 
Treasury 
, 
and 
a 
decrease 
of 
USD 5 
billion 
in 
non-financial 
assets 
and 
financial 
assets 
for 
unit-linked 
investment 
contracts, 
largely 
in 
Asset 
Management, 
as 
a 
result 
of 
client 
shifts 
from 
unit-linked 
investments 
into 
segregated 
mandates. 
Trading 
portfolio 
assets 
decreased 
by 
USD 2 
billion, 
mainly in the Investment Bank, reflecting 
lower inventory held to 
hedge client positions. 
›
 
Refer to the “Consolidated financial statements” 
section of this 
report for more information 
›
 
Refer to the “Our environment” section 
of this report for more 
information about UBS’s response to the COVID-19 pandemic 
and our involvement in the Swiss government-backed 
lending 
program 
 
 
Assets 
As of 
% change from 
USD billion 
31.12.20 
31.12.19 
31.12.19 
Cash and balances at central banks 
 
158.2 
 
107.1 
 
48 
Lending
1
 
395.0 
 
339.2 
 
16 
Securities financing transactions at amortized cost 
 
74.2 
 
84.2 
 
(12) 
Trading portfolio
2
 
125.4 
 
127.5 
 
(2) 
Derivatives and cash collateral receivables on derivative instruments 
 
192.4 
 
145.1 
 
33 
Brokerage receivables 
 
24.7 
 
18.0 
 
37 
Other financial assets measured at amortized cost and fair 
value
3
 
95.1 
 
85.6 
 
11 
Non-financial assets and financial assets for unit-linked investment contracts 
 
60.9 
 
65.4 
 
(7) 
Total assets 
 
1,125.8 
 
972.2 
 
16 
1 Consists of loans and advances to banks 
and customers. 
2 Consists of financial assets at fair value 
held for trading. 
3 Consists of financial assets at fair value 
not held for trading, financial assets measured 
at 
fair value through other comprehensive income and other financial assets measured at amortized cost, but excludes financial assets for unit-linked 
investment contracts. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 
168 
Asset encumbrance 
The 
table 
below 
provides 
a 
breakdown 
of 
on- 
and 
off-balance 
sheet assets 
between encumbered 
assets, unencumbered 
assets 
and assets that cannot be pledged as collateral. 
Assets 
are 
presented 
as 
Encumbered
 
if 
they 
have 
been 
pledged as collateral 
against an existing 
liability or are 
otherwise 
not available for securing additional funding. Included within the 
latter 
category 
are 
assets 
protected 
under 
client 
asset 
segregation 
rules, 
financial 
assets 
for 
unit-linked 
investment 
contracts, 
assets 
held 
in 
certain 
jurisdictions 
to 
comply 
with 
explicit 
minimum 
local 
asset 
maintenance 
requirements 
and 
assets 
held 
in 
consolidated 
bankruptcy 
remote 
entities, 
such 
as 
certain investment funds and other structured entities. 
›
 
Refer to “Note 23 Restricted and transferred 
financial assets” 
in 
the “Consolidated financial statements” 
section of this report for 
more information 
Assets 
that 
cannot 
be 
pledged 
as 
collateral
 
represent 
assets 
that are 
not encumbered 
but by 
their nature 
are not 
considered 
available to secure funding or meet 
collateral needs. They mainly 
include 
collateral 
trading assets, 
derivative 
financial assets, 
cash 
collateral 
receivables 
on 
derivative 
instruments, 
deferred 
tax 
assets, goodwill and intangible assets and other assets. 
All other 
assets are 
presented as 
Unencumbered
. Assets 
that 
are 
considered 
to 
be 
readily 
available 
to 
secure 
funding 
on 
a 
Group 
and
 
/
 
or 
legal 
entity 
level 
are 
shown 
separately 
and 
consist 
of 
cash 
and 
securities 
readily 
realizable 
in 
the 
normal 
course of 
business. These 
include our 
HQLA and 
unencumbered 
positions in 
our trading portfolio. 
Unencumbered assets that 
are 
considered 
to 
be 
available 
to 
secure 
funding 
on 
a 
legal 
entity 
level may be subject 
to restrictions that limit 
the total amount of 
assets available 
to the 
Group as 
a whole. 
Other unencumbered 
assets, which are not 
considered to be readily 
available to secure 
funding on 
a Group 
and 
/ or 
legal entity 
level, primarily 
consist 
of loans and advances to banks. 
 
Asset encumbrance as of 31 December 2020 
USD billion 
Encumbered 
Unencumbered 
Assets that 
cannot be 
pledged as 
collateral 
Total Group 
Assets 
pledged 
as collateral 
Assets 
otherwise 
restricted and 
not available 
to secure 
funding 
Cash and 
securities 
available to 
secure funding 
on a Group 
and / or legal 
entity level 
Other 
realizable 
assets 
Balance sheet 
Cash and balances at central banks 
 
158.2 
 
158.2 
Loans and advances to banks 
 
3.7 
 
11.7 
 
15.4 
Receivables from securities financing transactions 
 
74.2 
 
74.2 
Cash collateral receivables on derivative instruments 
 
3.8 
 
29.0 
 
32.7 
Loans and advances to customers 
 
20.4 
 
0.8 
 
354.4 
 
4.0 
 
379.5 
Other financial assets measured at amortized cost 
 
2.5 
 
0.1 
 
16.3 
 
1.4 
 
6.8 
 
27.2 
Total financial assets measured at amortized cost 
 
22.9 
 
8.4 
 
174.5 
 
367.6 
 
114.0 
 
687.3 
Financial assets at fair value held for trading 
 
64.4
1 
 
0.7 
 
57.3 
 
3.0 
 
125.4 
Derivative financial instruments 
 
159.6 
 
159.6 
Brokerage receivables 
 
24.7 
 
24.7 
Financial assets at fair value not held for trading 
 
2.1
1 
 
23.2 
 
37.8 
 
10.3 
 
6.9 
 
80.4 
Total financial assets measured at fair value through profit or loss 
 
66.5 
 
24.0 
 
95.1 
 
13.3 
 
191.1 
 
390.0 
Financial assets measured at fair value through other comprehensive income 
 
0.1
1 
 
8.1 
 
8.3 
Non-financial assets 
 
0.0 
 
6.3 
 
14.7 
 
19.2 
 
40.1 
Total balance sheet assets as of 31 December 2020 
 
89.5 
 
32.3 
 
284.0 
 
395.6 
 
324.3 
 
1,125.8 
Total balance sheet assets as of 31 December 2019 
 
76.2 
 
37.2 
 
234.0 
 
343.0 
 
281.8 
 
972.2 
Off-balance sheet 
Fair value of securities accepted as collateral as of 31 December 2020 
 
367.3 
 
12.4 
 
113.4 
 
7.7 
 
500.7 
Fair value of securities accepted as collateral as of 31 December 2019 
 
350.5 
 
7.0 
 
112.0 
 
6.2 
 
475.7 
Total balance sheet assets and off-balance sheet securities accepted as collateral as of 
31 December 2020 
 
456.8 
 
44.7 
 
397.3 
 
403.3 
 
324.3 
 
1,626.5 
of which: high-quality liquid assets 
 
214.1 
Total balance sheet assets and off-balance sheet securities accepted as collateral as of 
31 December 2019 
 
426.7 
 
44.2 
 
346.0 
 
349.2 
 
281.8 
 
1,447.9 
of which: high-quality liquid assets 
 
178.6 
1 Includes assets pledged as 
collateral that may be 
sold or repledged by counterparties. 
The respective amounts 
are disclosed in “Note 23 
Restricted and transferred financial 
assets” in the “Consolidated 
financial 
statements” section of this report. 
 
Assets available to secure funding on a Group and / or legal entity level by currency 
USD billion 
31.12.20 
31.12.19 
Swiss franc 
109.2 
79.8 
US dollar 
163.3 
146.6 
Euro 
48.1 
32.8 
Other 
76.7 
86.8 
Total 
397.3 
346.0 
 
 

 
169 
Balance sheet liabilities 
Total 
liabilities as 
of 31 December 
2020 were 
USD 1,066 billion, 
an 
increase 
of 
USD
 
148 
billion
 
from 
31
 
December 
2019
, 
of 
which currency 
effects accounted 
for approximately 
USD 38 billion, 
driven mainly 
by increases 
in customer 
deposits, derivatives 
and 
cash 
collateral 
payables 
on 
derivative 
instruments, 
as 
well 
as 
short-term 
borrowings, 
partly 
offset 
by 
decreases 
in 
non-
financial 
liabilities 
and 
financial 
liabilities 
related 
to 
unit-linked 
investment contracts. 
Customer 
deposits 
i
ncreased 
by 
USD
 
76
 
billion, 
of 
which 
USD 50 
billion 
was in 
Global Wealth 
Management and 
USD 26 
billion 
in 
Personal 
& 
Corporate 
Banking, 
as 
a 
result 
of 
clients 
holding 
higher levels 
of 
cash, as 
well 
as 
currency 
effects. 
As of 
31
 
December 
2020, 
our 
ratio 
of 
customer 
deposits 
to 
outstanding 
loan 
balances 
was 
138% 
(31 December 
2019: 
137%). 
Derivatives 
and 
cash 
collateral 
payables 
on 
derivatives 
instruments 
increased 
by 
USD
 
46 
billion
,
 
in 
line 
with 
the 
movement 
on 
the 
asset 
side. 
Short-term 
borrowings 
increased 
by 
USD 29 
billion, 
predominantly 
as 
Group 
Treasury 
increased 
the 
liquidity 
available 
to 
the 
Group. 
Trading 
portfolio 
liabilities 
in
creased 
by 
USD
 
3 
billion
, 
mainly
 
in 
the 
Investment 
Bank
,
 
reflecting 
lower 
netting 
with 
equivalent 
trading 
portfolio assets 
following client-driven disposals on the asset side. 
These 
increases 
were 
partly 
offset 
by 
decreases 
in 
non-
financial 
liabilities 
and 
financial 
liabilities 
related 
to 
unit-linked 
investment 
contracts 
of 
USD
 
6 
billion
,
 
driven 
by 
unit
-
linked 
investment 
contracts, 
in 
line 
with 
the 
movement 
on 
the 
asset 
side. 
Long-term 
debt 
issued 
decreased 
by 
USD 2 
billion, 
driven 
by 
a 
USD 6 
billion 
decrease 
in 
debt 
issued 
designated 
at 
fair 
value, mainly reflecting 
net client redemptions, 
partly offset by 
a 
USD 4 billion 
increase in 
long-term debt 
held at 
amortized cost. 
The 
increase 
in 
long
-
term 
debt 
held 
at 
amortized 
cost
 
wa
s 
primarily 
the 
result 
of 
foreign 
exchange 
and 
hedge 
accounting 
effects, 
as 
net 
issuances 
of 
USD 8.0 
billion 
equivalent 
of 
euro-, 
Australian dollar-, 
pound sterling-, and Swiss 
franc-denominated 
senior 
unsecured 
debt 
were 
largely 
offset 
by 
USD 6.5 
billion 
of 
net 
redemptions 
of 
mainly 
US 
dollar
-
denominated 
senior 
unsecured debt. 
During 
2021, 
USD
 
2.9
 
billion 
equivalent 
of 
TLAC
-
eligible 
benchmark 
instruments will 
mature. 
In 
February 2021, 
USD 1.5 
billion equivalent of 
loss-absorbing additional tier 
1 (AT1) 
capital 
and 
USD 2.4 
billion 
equivalent 
of 
loss-absorbing 
tier 2 
capital 
were 
called. 
UBS 
is 
already 
compliant 
with 
its 
2021 
going 
and 
gone concern 
capital requirements 
and expects 
to act 
rationally 
and 
strategically 
with 
respect 
to 
the 
refinancing 
of 
any 
callable 
capital instruments and any potential incremental issuances. 
›
 
Refer to the document titled “UBS Group AG 
consolidated 
capital instruments and TLAC-eligible senior 
unsecured debt,” 
available under “Bondholder information” 
at
 
ubs.com/investors
,
 
for more information 
›
 
Refer to the “Consolidated financial statements” 
section of this 
report for more information 
Equity 
Equity 
attributable 
to 
shareholders 
increased 
by 
USD 4,944 
million to USD 59,445 million as of 31 December 2020. 
Total comprehensive 
income attributable 
to shareholders 
was 
positive 
USD 8,276 
million, 
reflecting 
net 
profit 
of 
USD 6,557 
million 
and 
positive 
other 
comprehensive 
income 
(OCI) 
of 
USD 1,719 million. OCI mainly 
included positive foreign currency 
translation 
OCI 
of 
USD 1,095 
million, 
positive 
cash 
flow 
hedge 
OCI 
of 
USD 1,011 
million 
and 
positive 
OCI 
related 
to 
financial 
assets 
measured 
at 
fair 
value 
through 
OCI 
of 
USD 136 
million, 
partly 
offset 
by 
USD 293 
million 
negative 
OCI 
related 
to 
own 
credit and negative defined benefit plan OCI of USD 218 million. 
Distributions 
to 
shareholders 
reduced 
retained 
earnings 
by 
USD 1,304 million, 
reflecting the 
payment of 
50% of 
the 2019 
dividend of 
USD 0.73 per 
share. The 
other 50% 
was distributed 
from 
the 
capital 
contribution 
reserve 
within 
share 
premium. 
Swiss 
tax 
law 
effective 
1 
January 
2020 
requires 
Switzerland-
domiciled 
companies 
with 
shares listed 
on 
a 
stock exchange 
to 
pay 
no 
more 
than 
50% 
of 
dividends 
from 
capital 
contribution 
reserves, 
with 
the 
remainder 
required 
to 
be 
paid 
from 
retained 
earnings. 
Share 
premium 
decreased 
by 
USD 1,311 
million, 
mainly 
due 
to
 
the
 
aforementioned 
dividend
 
distribution 
of 
USD
 
1,30
4
 
million 
to 
shareholders 
out 
of 
the 
capital 
contribution 
reserve 
and a reduction 
of USD 628 million 
from the delivery of 
treasury 
shares 
under 
share-based 
compensation 
plans, 
partly 
offset 
by 
an 
increase 
of 
USD 691 
million 
that 
was 
primarily 
due 
to 
the 
amortization 
of 
deferred 
equity 
compensation 
awards 
in 
the 
income statement. 
This included 
approximately USD 110 
million 
of 
amortization of 
certain equity-settled 
deferred compensation 
awards following the modification of the terms of such awards. 
Net 
treasury 
share 
activity 
decreased 
equity 
attributable 
to 
shareholders 
by 
USD
 
742
 
million
.
 
This 
was
 
mainly 
due 
to 
purchases 
of 
USD 925 
million 
to 
hedge 
our 
share 
delivery 
obligations 
related 
to 
employee 
share-based 
compensation 
and 
participation 
plans 
and 
share 
repurchases 
of 
USD 364 
million 
under 
our 
2018–2021 
share 
repurchase 
program, 
partly 
offset 
by 
a 
net 
disposal 
of 
treasury 
shares 
related 
to 
employee 
share-
based compensation awards. 
Equity 
attributable 
to 
non-controlling 
interests 
increased 
by 
USD
 
145
 
million 
to 
USD
 
319
 
million
, 
mainly 
reflecting 
the 
establishment of 
a banking 
partnership with 
Banco do 
Brasil on 
30 September 2020. 
›
 
Refer to the “Group performance” and “Consolidated 
financial 
statements” 
sections of this report for more information 
›
 
Refer to “Note 1b Changes in accounting 
policies, comparability 
and other adjustments” in the “Consolidated 
financial 
statements” 
section of this report for more information about 
a 
restatement of compensation-related liabilities affecting 
opening retained earnings, 
and for more information about the 
modification of deferred compensation awards 
›
 
Refer to “UBS shares” in this section for more 
information about 
the share repurchase program 
›
 
Refer to “Note 29 Changes in organization 
and acquisitions and 
disposals of subsidiaries and businesses” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about the banking partnership with Banco 
do Brasil 
 
 

Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet

170

Liabilities and equity

As of

% change from

USD billion

31.12.20

31.12.19

Short-term borrowings

57.7

28.4

103

Securities financing transactions at amortized cost

6.3

7.8

(19)

Customer deposits

524.6

448.3

Long-term debt issued

153.8

155.5

(1)

Trading portfolio

33.6

30.6

Derivatives and cash collateral payables on derivative instruments

198.4

152.3

Brokerage payables

38.7

37.2

Other financial liabilities measured at amortized cost and fair

value

19.1

17.5

Non-financial liabilities and financial liabilities related

to unit-linked investment contracts

33.7

40.0

(16)

Total liabilities

1,066.0

917.5

Share capital

0.3

Share premium

16.8

18.1

(7)

Treasury shares

(4.1)

(3.3)

Retained earnings

38.8

34.1

Other comprehensive income

7.6

5.3

Total equity attributable to shareholders

59.4

54.5

Equity attributable to non-controlling interests

0.3

0.2

Total equity

59.8

54.7

Total liabilities and equity

1,125.8

972.2

1 Consists

of short-term

debt issued

measured at

amortized cost

and amounts

due to

banks.

2 Consists

of long-term

debt issued

measured at

amortized cost

and debt

issued designated

at fair

value.

The

classification of

debt issued

into short-term

and long-term

does not

consider any

early redemption

features. Long-term

debt issued

also includes

debt with

a remaining

time to

maturity of

less than

one year.

3 Consists of

financial liabilities

at fair

value held

for trading.

4 Consists

of other

financial liabilities

measured at

amortized cost

and other

financial liabilities

designated at

fair value,

but excludes

financial

liabilities related to unit-linked investment contracts.

5 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Liabilities by product and currency 
USD billion 
As a percentage of total liabilities 
All currencies 
All currencies 
USD 
CHF 
EUR 
Other 
12.20 
12.19 
12.20 
12.19 
12.20 
12.19 
12.20 
12.19 
12.20 
12.19 
12.20 
12.19 
Short-term borrowings 
7 
4 
4 
1 
0 
6 
6 
3 
0 
6 
9 
7 
of which: due to banks 
0 
6 
0 
7 
3 
2 
5 
3 
1 
1 
1 
2 
of which: short-term debt issued
1
7 
8 
4 
4 
7 
4 
0 
0 
9 
5 
8 
5 
Securities financing transactions at 
amortized cost 
3 
8 
6 
8 
5 
8 
0 
0 
0 
0 
1 
0 
Customer deposits 
6 
3 
2 
9 
7 
0 
1 
4 
2 
8 
2 
6 
of which: demand deposits 
4 
0 
2 
2 
4 
4 
2 
6 
3 
4 
4 
7 
of which: retail savings / deposits 
9 
6 
7 
4 
3 
0 
8 
8 
5 
5 
0 
0 
of which: time deposits 
3 
3 
8 
8 
8 
8 
2 
3 
1 
0 
7 
7 
of which: fiduciary deposits 
0 
4 
5 
5 
2 
7 
9 
8 
3 
8 
1 
2 
Long-term debt issued
2
8 
5 
4 
9 
6 
0 
6 
6 
7 
4 
5 
9 
Trading portfolio 
6 
6 
2 
3 
3 
1 
1 
1 
5 
5 
2 
7 
Derivatives and cash collateral 
payables on derivative instruments 
4 
3 
6 
6 
2 
7 
2 
2 
0 
8 
1 
9 
Brokerage payables 
7 
2 
6 
1 
7 
0 
0 
1 
2 
3 
7 
6 
Other financial liabilities measured at 
amortized cost and fair value
3
1 
5 
8 
9 
1 
2 
2 
2 
2 
2 
3 
3 
Non-financial liabilities and financial 
liabilities related to unit-linked 
investment contracts 
7 
0 
2 
4 
6 
6 
2 
2 
2 
1 
2 
4 
Total liabilities 
1,066.0 
5 
0 
0 
6 
0 
0 
1 
1 
7 
3 
2 
Short-term debt issued consists 
of certificates of deposit, commercial 
paper, acceptances 
and promissory notes, 
and other money market 
paper. 
Consists of long-term debt 
issued measured at amortized 
cost 
and debt issued designated at fair 
value. The classification 
of debt issued into short-term 
and long-term does not consider 
any early redemption features. 
Long-term debt issued also includes 
debt with a remaining 
time to maturity of less than one year. 
Consists of other financial liabilities measured at amortized cost 
and other financial liabilities designated at fair value, 
but excludes financial liabilities related to unit-linked 
investment contracts. 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 
172 
Maturity analysis of assets and liabilities 
The 
table 
below 
provides 
an 
analysis 
of 
on- 
and 
off-balance 
sheet assets 
and liabilities 
by residual 
contractual maturity 
as of 
the 
balance 
sheet 
date. 
The 
contractual 
maturity 
of 
assets 
is 
based 
on 
carrying 
amounts 
and 
includes 
the 
effect 
of 
callable 
features. 
The 
contractual 
maturity 
of 
liabilities 
is 
based 
on 
carrying 
amounts 
and 
the 
earliest 
date 
on 
which 
we 
could 
be 
required to pay. 
The presentation of liabilities at carrying amount 
in this 
table differs 
from “Note 
24 Maturity 
analysis of 
financial 
liabilities” in 
the “Consolidated 
financial statements” 
section of 
this 
report, 
where 
such
 
liabilities 
are 
presented 
on 
an 
undiscounted 
basis, 
as 
required 
by 
International 
Financial 
Reporting Standards (IFRS). 
Deriv
ative 
financial 
instruments 
and 
f
inancial 
assets 
and 
liabilities 
at 
fair 
value 
held 
for 
trading 
are 
assigned 
to 
the 
Due 
within 
1 
month
 
column
,
 
although 
one 
should 
note 
that 
the 
respective 
contractual 
maturities 
may 
extend 
over 
significantly 
longer periods. 
Assets 
held 
to 
hedge 
unit-linked 
investment 
contracts 
(presented 
within 
Financial 
assets 
at 
fair 
value 
not 
held 
for 
trading
) 
are 
assigned 
to 
the 
Due 
within 
1 
month
 
column
, 
consistent 
with 
the 
maturity 
assigned 
to 
the 
related 
amounts 
due 
under 
unit-linked 
investment 
contracts 
(presented 
within 
Other financial liabilities designated at fair value
). 
Other 
financial 
assets 
and 
liabilities 
with 
no 
contractual 
maturity, such as equity securities, 
are included in the 
Perpetual / 
Not 
applicable
 
time 
bucket. 
Undated 
or 
perpetual 
instruments 
are 
classified 
based 
on 
the 
contractual 
notice 
period 
that 
the 
counterparty of the instrument is 
entitled to give. Where there 
is 
no contractual notice 
period, undated or perpetual 
contracts are 
included in the 
Perpetual / Not applicable
 
time bucket. 
Non-financial 
assets 
and 
liabilities 
with 
no 
contractual 
maturity are 
generally included 
in the 
Perpetual / 
Not applicable
 
time bucket. 
Loan 
commitments 
are 
classified 
on 
the 
basis 
of 
the 
earliest 
date they can be drawn down. 
 
Maturity analysis of assets and liabilities 
USD billion 
Due 
within 
1 month 
Due 
between 
1 and 3 
months 
Due 
between 
3 and 6 
months 
Due 
between 
6 and 9 
months 
Due 
between 
9 and 12 
months 
Due 
between 
1 and 2 
years 
Due 
between 
2 and 5 
years 
Due over 
5 years 
Perpetual / 
Not 
applicable 
Total 
Assets 
Total financial assets measured at amortized cost 
 
400.3 
 
54.8 
 
22.9 
 
11.7 
 
13.4 
 
45.5 
 
69.4 
 
69.3 
 
687.3 
Loans and advances to customers 
 
137.3 
 
42.0 
 
15.6 
 
9.6 
 
12.1 
 
41.5 
 
59.5 
 
62.0 
 
 
379.5 
Total financial assets measured at fair value through profit or 
loss 
 
339.4 
 
9.3 
 
9.6 
 
6.8 
 
4.2 
 
7.4 
 
8.7 
 
3.1 
 
1.5 
 
390.0 
Financial assets at fair value not held for trading 
29.7 
 
9.3 
 
9.6 
 
6.8 
 
4.2 
 
7.4 
 
8.7 
 
3.1 
 
1.5 
 
80.4 
Financial assets measured at fair value through other 
comprehensive income 
 
0.1 
 
0.0 
 
0.2 
 
0.1 
 
0.2 
 
0.1 
 
0.4 
 
7.1 
 
0.0 
 
8.3 
Total non-financial assets 
 
8.3 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
1.4 
 
0.0 
 
30.4 
 
40.1 
Total assets as of 31 December 2020 
 
748.1 
 
64.2 
 
32.7 
 
18.6 
 
17.8 
 
53.0 
 
79.9 
 
79.6 
 
31.8 
 
1,125.8 
Total assets as of 31 December 2019 
 
633.4 
 
59.8 
 
24.4 
 
16.2 
 
15.7 
 
45.3 
 
79.6 
 
66.6 
 
31.2 
 
972.2 
Liabilities 
Total financial liabilities measured at amortized cost 
 
576.4 
 
17.1 
 
20.5 
 
12.8 
 
13.4 
 
18.2 
 
32.5 
 
22.9 
 
14.4 
 
728.3 
Customer deposits 
 
512.8 
 
6.6 
 
2.0 
 
0.5 
 
0.8 
 
0.7 
 
0.9 
 
0.2 
 
524.6 
Debt issued measured at amortized cost 
 
8.8 
 
7.6 
 
17.6 
 
11.7 
 
11.3 
 
16.5 
 
30.3 
 
21.1 
 
14.4 
 
139.2 
Total financial liabilities measured at fair value through 
profit or loss 
 
281.6 
 
17.3 
 
3.7 
 
4.3 
 
0.9 
 
9.0 
 
0.7 
 
7.6 
 
325.1 
Debt issued designated at fair value 
 
20.3 
 
16.7 
 
3.6 
 
3.8 
 
0.9 
 
8.9 
 
0.1 
 
6.9 
 
61.2 
Total non-financial liabilities 
 
7.1 
 
2.9 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
2.7 
 
12.7 
Total liabilities as of 31 December 2020 
 
865.1 
 
37.3 
 
24.1 
 
17.1 
 
14.4 
 
27.2 
 
33.2 
 
30.5 
 
17.1 
 
1,066.0 
Total liabilities as of 31 December 2019 
 
727.1 
 
41.2 
 
22.7 
 
14.3 
 
10.7 
 
22.0 
 
33.3 
 
29.4 
 
16.8 
 
917.5 
Guarantees, loan commitments and forward 
starting transactions
1
Guarantees, loan commitments and forward starting 
transactions as of 31 December 2020 
 
61.3 
 
0.5 
 
0.3 
 
0.1 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
62.2 
Guarantees, loan commitments and forward starting 
transactions as of 31 December 2019 
 
47.5 
 
0.5 
 
0.2 
 
0.1 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
48.3 
1 Starting with 
the fourth quarter 
of 2020, the 
notional amounts associated 
with derivative 
loan commitments, 
as well as 
forward starting 
repurchase and reverse 
repurchase agreements, 
measured at fair 
value 
through profit or loss 
are presented together with 
notional amounts related to 
derivative instruments and 
have been excluded from 
the table above. 
Prior periods in the 
table above have been 
amended to ensure 
comparability. Refer to “Note 10 Derivative instruments” in the “Consolidated financial 
statements” section of this report for information about the notional amounts of these instruments. 

 
 
 
 
 
 
 
 
 
 
 
173 
Off-balance sheet 
In 
the 
normal 
course 
of 
business, 
we 
enter 
into 
transactions 
where, 
pursuant 
to 
I
FRS
,
 
the 
maximum 
contractual 
exposure 
may not be recognized in 
whole or in part on our 
balance sheet. 
These 
transactions 
include 
derivative 
instruments, 
guarantees 
and 
similar 
arrangements, 
as 
well 
as 
some 
purchased 
and 
retained 
interests 
in non 
-consolidated structured 
entities, which 
are 
transacted for 
a number 
of reasons, 
including hedging 
and 
market-making activities, to meet 
specific needs of our 
clients or 
to offer 
investment opportunities to 
clients through 
entities that 
are not controlled by us. 
When we 
incur an 
obligation or 
become entitled 
to an 
asset 
through these arrangements, we 
recognize them on the 
balance 
sheet. 
It 
should 
be 
noted 
that 
in 
certain 
instances 
the 
amount 
recognized on the balance 
sheet does not represent the 
full gain 
or loss potential inherent in such arrangements. 
›
 
Refer to “Note 1a Significant accounting 
policies,” items 1, 2a 
and 2e, 
and “Note 28 Interests in subsidiaries and 
other entities” 
in the “Consolidated financial statements” 
section of this report 
for more information 
 
The 
following 
paragraphs 
provide 
more 
information 
about 
certain 
off-balance 
sheet 
arrangements. 
Additional 
off-balance 
sheet 
information 
is 
primarily 
provided 
in 
Notes 
9, 
10, 
18, 
20, 
21
i, 
2
3
 
and 
28
 
in
 
the 
“Consolidated 
financial 
statements” 
section 
of 
this 
report, 
and 
in 
the 
31 December 
2020 
Pillar 
3 
report, available under “Pillar 3 disclosures” at
 
ubs.com/investors.
 
Guarantees, 
loan commitments and similar arrangements 
In 
the 
normal 
course 
of 
business, 
we 
issue 
various 
forms 
of 
guarantees, 
commitments 
to 
extend 
credit, 
standby 
and 
other 
letters 
of 
credit 
to 
support 
our 
clients, 
forward 
starting 
transactions, 
note 
issuance 
facilities 
and 
revolving 
underwriting 
facilities. 
With 
the 
exception 
of 
related 
premiums, 
generally 
these guarantees 
and similar 
obligations are 
kept as 
off-balance 
sheet 
items
,
 
unless 
a
 
provision 
to 
cover 
probable 
losses 
or 
expected credit losses is required. 
Guarantees 
represent 
irrevocable 
assurances 
that, 
subject 
to 
the 
satisfying 
of 
certain 
conditions, 
we 
will 
make 
payments 
if 
our 
clients 
fail 
to 
fulfill 
their 
obligations 
to 
third 
parties. 
As 
of 
31 December 2020, the 
net exposure (i.e., 
gross values less 
sub-
participations) 
from 
guarantees 
and 
similar 
instruments 
was 
USD
 
1
5
.0
 
billion
,
 
compared 
with 
USD
 
1
6
.
5
 
billion 
as 
of 
31 December 
2019. 
Fee 
income 
from 
issuing 
guarantees 
was 
not significant to total revenues in 2020 and 2019. 
We also enter 
into commitments to 
extend credit in 
the form 
of 
credit 
lines 
available 
to 
secure 
the 
liquidity 
needs 
of 
clients. 
The 
majority 
of 
loan 
commitments 
range 
in 
maturity 
from 
one 
month 
to one 
year. Committed 
unconditionally revocable 
credit 
lines are generally open-ended. 
During 
2020, 
loan 
commitments 
increased 
by 
USD 13.8 
billion
, 
mainly 
in 
Personal 
& 
Corporate 
Banking
,
 
driven 
by 
additional
 
liquidity 
facilities 
made 
available 
to 
large 
Swiss
 
corporate
 
clients 
and
 
the 
Swiss
 
government
-
backed 
lending 
program
.
 
Committed
 
unconditionally 
revocable 
credit 
lines 
increased 
by 
USD 5.0 
billion, 
mainly 
driven 
by 
higher 
Lombard 
facilities in 
Global Wealth 
Management, as 
well as 
higher credit 
lines, 
mainly 
for 
corporate 
clients 
in 
Personal 
& 
Corporate 
Banking. 
F
orward 
starting
 
repurchase 
agreements 
remai
ned 
broadly 
stable. 
Forward 
starting 
r
everse
 
repurchase 
agreements 
increased by USD 1.6 billion, predominantly in Group Treasury. 
 
 
 
 
 
Off-balance sheet
1
As of 
% change from 
USD billion 
31.12.20 
31.12.19 
31.12.19 
Guarantees
2
 
15.0 
 
16.5 
 
(9) 
Loan commitments
2,3
 
41.4 
 
27.5 
 
50 
Committed unconditionally revocable credit lines 
 
40.1 
 
35.1 
 
14 
Forward starting reverse repurchase agreements
3
 
3.2 
 
1.7 
 
96 
Forward starting repurchase agreements
3
 
0.4 
 
0.4 
 
(8) 
1 Starting with 
the fourth quarter 
of 2020, the 
notional amounts associated 
with derivative 
loan commitments, 
as well as 
forward starting 
repurchase and reverse 
repurchase agreements, 
measured at fair 
value 
through profit or loss are presented together with notional 
amounts related to derivative instruments. 
The presentation of prior periods has 
been aligned to ensure comparability. 
The fair values of these instruments 
continue to be 
presented within derivative 
instruments. 
2 Guarantees and 
Loan commitments are 
shown net of 
sub-participations. 
3 Refer to 
“Note 10 Derivative 
instruments” in the 
“Consolidated financial 
statements” section of this report for information about loan commitments, forward starting repurchase 
and reverse repurchase agreements measured at fair value through profit or loss. 
 
 
If 
customers 
fail 
to 
meet 
their 
obligations, 
our 
maximum 
exposure 
to 
credit 
risk 
is 
the 
contractual 
amount 
of 
these 
instruments. The 
risk is 
similar to 
the 
risk involved 
in extending 
loan 
facilities 
and 
is 
subject 
to 
the 
same 
risk 
management 
and 
control 
framework. 
In 
2020, 
we 
recognized 
net 
credit 
loss 
expenses
 
of 
USD
 
138 
million 
related 
to 
loan 
commitments, 
guarantees 
and 
other 
credit 
facilities 
in 
the 
scope 
of 
expected 
credit loss measurement, compared with 
net credit loss expenses 
of USD 6 
million in 
2019. Provisions 
recognized for 
guarantees, 
loan 
commitments 
and 
other 
credit 
facilities 
in 
the 
scope 
of 
expected 
credit 
loss 
measurement 
were 
USD 257 
million 
as 
of 
31
 
December 
2020
, 
compared 
with
 
USD
 
114 
million 
as 
of 
31 December 2019. 
›
 
Refer to “Note 9 Financial 
assets at 
amortized 
cost and 
other 
positions 
in scope 
of expected 
credit loss 
measurement” 
and 
“Note 20 Expected 
credit loss 
measurement” 
in the “Consolidated 
financial 
statements” 
section of this report for more information 
about expected credit loss provisions 
 
 

 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 
174 
For certain obligations we 
enter into partial sub-participations 
to 
mitigate 
various 
risks 
from 
guarantees 
and 
loan 
commitments. 
A 
sub-participation 
is 
an 
agreement 
by 
another 
party to 
take a 
share of the 
loss in the 
event that 
the obligation 
is 
not 
fulfilled 
by 
the 
obligor 
and, 
where 
applicable, 
to 
fund 
a 
part 
of 
the credit 
facility. We 
retain the 
contractual relationship 
with 
the 
obligor, 
and 
the 
sub-participant 
has 
only 
an 
indirect 
relationship. 
We 
only 
enter 
into 
sub-participation 
agreements 
with banks to which we 
ascribe a credit rating equal 
to or better 
than that of the obligor. 
We 
also 
provide 
to 
third 
parties 
representations, 
warranties 
and indemnifications in the normal course of business. 
Support provided to non-consolidated investment funds 
In 2020, the Group did not 
provide material support, financial or 
otherwise, to unconsolidated 
investment funds 
when the Group 
was 
not 
contractually 
obligated 
to 
do 
so, 
nor 
does 
the 
Group 
have an intention to do so. 
Clearing house and exchange memberships 
We 
are 
a 
member 
of 
numerous 
securities
 
and 
derivative 
exchanges and clearing houses. In connection with some of 
such 
memberships, we may be required to pay a share of the financial 
obligations 
of 
another 
member 
who 
defaults, 
or 
we 
may 
be 
otherwise exposed 
to additional 
financial obligations. 
While the 
membership rules 
vary, 
obligations generally 
would arise 
only if 
the exchange or 
clearing house had 
exhausted its resources. 
We 
consider 
the 
probability 
of 
a 
material 
loss 
due 
to 
such 
obligations to be remote. 
Deposit insurance 
Swiss 
banking 
law 
and 
the 
deposit 
insurance 
system 
require 
Swiss 
banks 
and 
securities 
dealers 
to 
jointly 
guarantee 
an 
amount 
of 
up 
to 
CHF 6 
billion 
for 
privileged 
client 
deposits 
in 
the 
event 
that 
a 
Swiss 
bank 
or 
securities 
dealer 
becomes 
insolvent. 
FINMA 
estimates 
our 
share 
in 
the 
deposit 
insurance 
system to be CHF 0.9 billion. 
As 
a 
member 
of 
the 
Deposit 
Protection 
Fund 
of
 
the 
Association 
of 
German 
Banks, 
we 
are 
required 
to 
provide 
an 
indemnity 
related 
to 
coverage 
of 
certain 
non
-
institutional 
deposits 
(for 
amounts 
above 
EUR 100,000 
and 
below 
EUR 565 
million
 
per 
depositor
)
 
in 
the
 
event 
UBS 
Europe 
SE 
becomes 
unable to meet its obligations. 
The 
aforementioned 
deposit 
insurance 
requirements 
represent 
a 
contingent 
payment 
obligation 
and 
expose 
us 
to 
additional 
risk. 
As 
of 
31 
December 
2020, 
we 
considered 
the 
probability of a material loss from our obligations to be remote. 
 
 
Contractual obligations 
Payment due by period 
USD million 
Within 1 year 
1–3 years 
3–5 years 
Over 5 years 
Total 
Long-term debt obligations 
 
58,529 
 
41,792 
 
20,930 
 
45,100 
 
166,350 
Lease obligations 
 
654 
 
1,161 
 
869 
 
1,808 
 
4,492 
Purchase obligations 
 
712 
 
607 
 
247 
 
99 
 
1,665 
Total as of 31 December 2020 
 
59,895 
 
43,560 
 
22,045 
 
47,007 
 
172,508 
 
 
Contractual obligations 
The 
table 
above 
summarizes 
payments 
due 
by 
period 
under 
contractual obligations as of 31 December 2020. 
All 
contractual 
obligations 
included 
in 
this 
table, 
with 
the 
exception of purchase obligations, 
are recognized as liabilities on 
our balance 
sheet. Purchase 
obligations represent 
commitments 
to purchase 
goods or 
services in 
the future, 
with expenses 
only 
recognized 
as 
goods are 
transferred 
or 
services 
rendered in 
the 
future
. 
Amounts 
in 
the 
table 
above 
are 
presented 
on 
an 
undiscounted basis. 
Long-term 
debt 
obligations 
as 
of 
31 December 
2020 
were 
USD 166 billion. They 
consisted of debt issued 
designated at fair 
value 
(USD 64 
billion) 
and 
long-term 
debt 
issued 
measured 
at 
amortized cost 
(USD 102 billion) 
and represent 
estimated future 
interest and principal payments on an undiscounted basis. 
›
 
Refer to “Note 
24 Maturity analysis of financial liabilities” 
in the 
“Consolidated financial statements” section 
of this report for 
more information 
 
More than half of total long-term debt obligations had a fixed 
rate 
of 
interest. 
Amounts 
due 
on 
interest 
rate 
swaps 
used 
to 
hedge 
interest 
rate 
risk 
inherent 
in 
fixed-rate 
debt 
issued, 
and 
designated in 
fair value 
hedge accounting 
relationships, are 
not 
included 
in 
the 
table 
above. 
The 
notional 
amount 
of 
these 
interest rate swaps 
was USD 67 billion as 
of 31 December 2020. 
Debt issued designated at fair value 
mainly consists of structured 
notes and is 
generally economically hedged, 
but it would not 
be 
practicable 
to 
estimate 
the 
amount 
and
 
/
 
or 
timing 
of 
the 
payments on 
interest swaps 
used to 
hedge these instruments 
as 
interest rate 
risk inherent 
in respective 
liabilities is 
generally risk-
managed on a portfolio level. 
Our 
liabilities 
recognized 
on 
the 
balance 
sheet 
as 
Amounts 
due 
to 
banks
, 
Payables 
from 
securities
 
financing
 
transactions, 
Cash 
collateral 
payables 
on 
derivative 
instruments, 
Customer 
deposits, 
Other 
financial 
liabilities 
measured 
at 
amortized 
cost, 
Financial 
liabilities 
at 
fair 
value 
held 
for 
trading, 
Derivative 
financial 
instruments, 
Brokerage 
payables 
designated 
at 
fair 
value, 
Other 
financial 
liabilities 
designated 
at 
fair 
value, 
Provisions 
and
 
Other 
non-financial 
liabilities
 
are 
excluded 
from 
the table above. 
›
 
Refer to the respective Notes, including “Note 
25 Hedge 
accounting,” 
in the “Consolidated financial statements” 
section 
of this report for more information 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
175 
Cash flows 
As a 
global financial 
institution, our cash 
flows are 
complex and 
often may bear 
little relation 
to our net 
earnings and net 
assets. 
Consequently, 
we believe 
that a 
traditional cash 
flow analysis 
is 
less 
meaningful 
when evaluating 
our liquidity 
position than 
the 
liquidity, 
funding 
and 
capital 
management 
frameworks 
and 
measures described elsewhere in this section.
 
Cash and cash equivalents 
As 
of 31 
December 
2020, 
cash 
and 
cash 
equivalents 
totaled 
USD
 
1
7
3.5
 
billion, 
a
n
 
increase
 
of 
USD
 
5
3.7
 
billion 
from 
31 December 
2019, 
driven 
by 
net 
cash 
inflows 
from 
operating 
and 
financing 
activities, 
as 
well as 
the effect 
s 
of 
exchange 
rate 
differences 
on 
cash 
and 
cash 
equivalents, 
mainly 
reflecting 
an 
appreciation 
of 
the 
Swiss 
franc 
against 
the 
US 
dollar 
in 
2020. 
These 
effects 
were 
partly 
offset 
by 
net 
cash 
outflows 
from 
investing activities.
 
Operating activities 
Net cash inflows 
from operating activities 
were USD 37 billion 
in 
2020. 
Net 
operating 
cash 
flow, 
before 
changes 
in 
operating 
assets 
and 
liabilities 
and 
income 
taxes 
paid, 
was 
an 
inflow 
of 
USD
 
4.
1
 
billion
. 
Changes 
in 
operating 
assets 
and 
liabilities
 
resulted in net cash 
inflows of USD 32.8 billion, mainly 
driven by 
net inflows of 
USD 51.8 billion related 
to customer deposits 
and 
USD 11.3 billion 
from 
financial assets 
and liabilities 
at fair 
value 
held 
for 
trading 
and 
derivative 
financial 
instruments 
and 
a 
USD
 
9.6
 
billion
 
inflow 
from 
securities 
financing 
transactions
. 
These 
inflows were 
partly offset 
by a 
net outflow 
from 
lending 
balances 
to 
customers 
of 
USD 33.7 
billion 
and 
a 
net 
outflow 
from brokerage receivables and payables of USD 5.2 billion. 
In 
2019, 
net 
cash 
inflows 
from 
operating 
activities 
were 
USD 19.7 
billion. 
Net 
operating 
cash 
flow, 
before 
changes 
in 
operating 
assets 
and 
liabilities 
and 
income 
taxes 
paid, 
was 
an 
inflow
 
of 
USD
 
14
.3
 
billion. 
Changes 
in 
operating 
assets 
and 
liabilities 
resulted 
in 
net 
cash 
inflows 
of 
USD 5.4 
billion, 
mainly 
driven 
by 
a
 
USD
 
23
.2
 
billion
 
net 
inflow 
related 
to 
customer 
deposits and 
an USD 8.7 
billion inflow 
from securities 
financing 
transactions. 
These 
inflows 
were 
partly 
offset 
by 
a 
net 
outflow 
from 
financial 
assets and 
liabilities at 
fair value 
held 
for 
trading 
and derivative 
financial instruments 
of USD 18.8 
billion and 
net 
outflows 
from 
loans 
and 
advances 
to 
banks 
of 
USD 4.3 
billion 
and from lending balances to customers of USD 3.1 billion. 
Investing activities 
Investing 
activities 
resulted 
in 
a 
net 
cash 
outflow 
of 
USD 6.8 
billion 
in 
2020, 
primarily 
related 
to 
a 
cash 
outflow 
of 
USD 6.3 
billion 
from 
the 
purchase 
of 
financial 
assets 
measured 
at 
fair 
value through other comprehensive income and a net outflow of 
USD 4.2 billion from 
purchase and redemption 
of debt securities 
measured 
at 
amortized 
cost. 
These 
outflows 
were 
partly 
offset 
by 
a
n
 
inflow
 
from 
the 
disposal 
and 
redemption 
of 
financial 
assets 
measured 
at 
fair 
value 
through 
other 
comprehensive 
income of USD 4.5 billion. 
In 2019, 
investing activities 
resulted in 
a net 
cash outflow 
of 
USD 1.6 billion. 
Financing activities 
Financing 
activities 
r
esulted 
in 
a 
net 
cash 
inflow
 
of 
USD
 
12
.4
 
billion in 2020, 
mainly due to net 
issuance proceeds of USD 23.9 
billion from short-term debt. 
This inflow was 
partly offset by 
the 
net 
repayment 
of 
USD
 
6.8
 
billion 
of 
long
-
term 
debt
,
 
which 
includes 
debt 
issued 
designated 
at 
fair 
value,
 
a 
dividend 
distribution to shareholders of USD 2.6 
billion and net 
cash used 
to acquire treasury 
shares of USD 
1.4 billion. 
In 2019, 
financing activities 
resulted in 
a net 
cash outflow 
of 
USD 25.6 billion, 
mainly due 
to the 
net repayment 
of USD 17.1 
billion 
of 
short-term 
debt 
and 
the 
net 
repayment 
of 
USD 3.8 
billion of long-term 
debt, which includes 
debt issued designated 
at fair 
value. In 
addition, a 
dividend distribution 
to shareholders 
of USD 2.5 billion and 
net cash used to acquire 
treasury shares of 
USD 1.6 billion 
contributed to the net cash outflow. 
›
 
Refer to “Primary financial statements” 
in the “Consolidated 
financial statements” section of this 
report for more information 
about cash flows 
 
Statement of cash flows (condensed) 
For the year ended 
USD billion 
31.12.20 
31.12.19 
Net cash flow from / (used in) operating activities 
37 
20 
Net cash flow from / (used in) investing activities 
(7) 
(2) 
Net cash flow from / (used in) financing activities 
12 
(26) 
Effects of exchange rate differences on cash and cash equivalents 
 
11 
1 
Net increase / (decrease) in cash and cash equivalents 
 
54 
(6) 
Cash and cash equivalents at the end of the year 
 
174 
120 
 

Risk, capital, liquidity and funding, and balance sheet | Currency management 
176 
Currency management
Strategy, objectives and governance 
Group 
Treasury 
focuses 
on 
three 
main 
areas 
of 
currency 
risk 
management: 
(i) 
currency-matched 
funding 
and 
investment 
of 
non-US dollar assets and liabilities; (ii) sell-down of non-US dollar 
profits and 
losses; and 
(iii) selective 
hedging of 
anticipated non-
US 
dollar 
profits 
and 
losses 
to 
further 
mitigate 
the 
effect 
of 
structural 
imbalances 
in 
the 
balance sheet. 
Non-trading 
foreign 
exchange 
risks 
arising 
from 
transactions 
denominated 
in 
a 
currency other than the reporting entity’s functional currency are 
managed under market risk 
limits. Group Treasury 
also manages 
structural currency composition at the consolidated Group level. 
Currency-matched funding and investment of non-US dollar 
assets and liabilities 
For monetary 
balance sheet 
items and 
other investments, 
as far 
as is 
practical and 
efficient, we 
follow the 
principle of 
matching 
the currencies 
of our 
assets and 
liabilities for 
funding purposes. 
This avoids profits and losses 
arising from the translation of 
non-
US dollar assets and liabilities. 
Net investment 
hedge accounting 
is applied 
to non-US 
dollar 
core 
investments 
to 
balance 
the 
effect 
of 
foreign 
exchange 
movements on both CET1 capital and the CET1 capital ratio. 
›
 
Refer to “Note 1a Significant accounting 
policies” and “Note 25 
Hedge accounting” 
in the “Consolidated financial statements” 
section of this report for more information 
Sell-down of non-US dollar reported profits and losses 
Income statement 
items of 
foreign subsidiaries 
and branches 
of 
UBS AG 
with a 
functional currency 
other than 
the US 
dollar are 
translated 
into 
US 
dollars 
at 
average 
rates. 
To 
reduce 
earnings 
volatility 
on the 
translation of 
previously 
recognized 
earnings in 
foreign 
currencies, 
Group 
Treasury 
centralizes 
the 
profits 
and 
losses (under 
IFRS) arising 
in UBS 
AG and 
its branches 
and sells 
or buys 
the profit 
or loss 
for US 
dollars on 
a monthly 
basis. Our 
foreign 
subsidiaries 
follow 
a 
similar 
monthly 
sell-down 
process 
into 
their 
own 
functional 
currencies. 
Retained 
earnings 
in 
foreign subsidiaries with a 
functional currency other 
than the US 
dollar are integrated and managed 
as part of our net investment 
hedge accounting program. 
Hedging of anticipated non-US dollar profits and losses 
The 
Group 
ALCO 
may 
at 
any 
time 
instruct 
Group 
Treasury 
to 
execute hedges to protect anticipated future profits and losses in 
foreign 
currencies 
against 
possible 
adverse 
trends 
of 
foreign 
exchange 
rates. 
Although 
intended 
to 
hedge 
future 
earnings, 
these transactions 
are accounted 
for as 
open currency 
positions 
and 
subject 
to 
internal 
market 
risk 
limits 
for 
value-at-risk 
and 
stress loss limits. 
›
 
Refer to “Capital management” 
in this section for more 
information about our active management 
of sensitivity to 
currency movements and the effect thereof on our key ratios 
Dividend distribution
 
UBS 
Group 
AG 
declares 
dividends 
in 
US 
dollars. 
Shareholders 
holding 
shares 
through 
SIX 
(ISIN: CH0244767585) 
will 
receive 
dividends 
in 
Swiss 
francs, 
based 
on 
a 
published 
exchange 
rate 
calculated up 
to five 
decimal places, 
on the 
day prior 
to the 
ex-
dividend 
date. 
Shareholders 
holding 
shares 
through 
DTC 
(ISIN: CH0244767585; 
CUSIP: H42097107) 
will 
be 
paid 
dividends in US dollars. 
›
 
Refer to the “Standalone financial statements” 
section of this 
report for more information about the proposed dividend 
distribution of UBS Group AG 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
177 
UBS
 
shares
UBS Group AG shares 
Audited 
|
 
As 
of 
31 
December 
20
20
,
 
IFRS 
equity 
attributable 
to 
shareholders 
amounted 
to 
USD 59,445 
million, 
represented 
by 
3,859,055,395 
shares 
issued. 
Shares 
issued 
did 
not 
change 
in 
2020. 
Each share has 
a nominal value 
of CHF 0.10, carries 
one vote 
if entered into the 
share register as having 
the right to vote, 
and 
also 
entitles 
the 
holder 
to 
a 
proportionate 
share 
of 
distributed 
dividends.
 
All 
shares 
are 
fully 
paid 
up. 
As 
the 
a
rticles 
of 
association of UBS Group AG 
indicate, there are no other classes 
of shares and no preferential rights for shareholders. 
p
 
›
 
Refer to the “Corporate governance” 
section of this report for 
more information about UBS shares
 
 
UBS Group share information 
As of or for the year ended 
% change from 
31.12.20 
31.12.19 
31.12.19 
Shares issued 
3,859,055,395 
3,859,055,395 
0 
Treasury shares 
307,477,002 
243,021,296 
27 
of which: related to share repurchase program 
148,975,800 
117,706,540 
27 
Shares outstanding 
3,551,578,393 
3,616,034,099 
(2) 
Basic earnings per share (USD)
1
1.83 
1.17 
56 
Diluted earnings per share (USD)
1
1.77 
1.14 
55 
Basic earnings per share (CHF)
2
1.71 
1.17 
46 
Diluted earnings per share (CHF)
2
1.65 
1.14 
45 
Equity attributable to shareholders (USD million) 
59,445 
54,501 
9 
Less: goodwill and intangible assets (USD million) 
6,480 
6,469 
0 
Tangible equity attributable to shareholders (USD million) 
52,965 
48,032 
10 
Ordinary cash dividends declared per share (USD)
3,4
0.37 
0.73 
(49) 
Total book value per share (USD) 
16.74 
15.07 
11 
Tangible book value per share (USD) 
14.91 
13.28 
12 
Share price (USD)
5
14.08 
12.63 
12 
Market capitalization (USD million) 
50,013 
45,661 
10 
1 Refer to “Share information and earnings 
per share” in the “Consolidated 
financial statements” section of this 
report for more information. 
2 Basic and diluted earnings per 
share in Swiss francs 
are calculated 
based on 
a translation 
of net 
profit / 
(loss) under 
our US 
dollar presentation 
currency. 
3 Dividends 
and / 
or distributions 
out of 
the capital 
contribution reserve 
are normally 
approved and 
paid in 
the year 
subsequent to 
the reporting 
period. 
4 Refer 
to “Statement 
of proposed 
appropriation of 
total profit 
and dividend 
distribution out 
of total 
profit and 
capital contribution 
reserve” in 
the “Standalone 
financial 
statements” section of this report for more information. 
5 Represents the share price as listed on the SIX Swiss Exchange, translated to US dollars 
using the closing exchange rate as of the respective date. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk, capital, liquidity and funding, and balance sheet | UBS shares 
178 
Holding of UBS Group AG shares 
Group 
Treasury 
holds 
UBS 
Group 
AG 
shares 
to 
hedge 
future 
share 
delivery 
obligations 
related 
to 
employee 
share-based 
compensation 
awards, 
and 
also 
holds 
shares 
purchased 
under 
the 
share 
repurchase 
program. 
As 
of 
31 December 
2020, 
we 
held a total of 307,744,002 
treasury shares (31 December 
2019: 
243,021,296), 
or 
8.0% 
(31 December 
2019: 
6.3%) 
of 
shares 
issued. 
Shares 
acquired 
under 
our 
2018
–
2021
 
share 
repurchase 
program 
totaled 
149.0 
million 
as 
of 
31 December 
2020 
(31 December 
2019: 
117.7 
million) 
for 
a 
total 
consideration 
of 
CHF 1,900 
million 
(USD 1,931 
million). 
This 
program 
was 
completed 
on 
2
 
February 
2021 
with 
the 
purchase 
of 
an 
additional 7.7 
million shares 
in January 
and February 
2021 for a 
total 
consideration 
of 
CHF 
100 
million 
(USD 
112 
million). 
The 
shares 
repurchased 
under 
this
 
program 
are 
expected 
to
 
be 
canceled 
by 
means 
of 
a 
capital 
reduction, 
to 
be 
proposed 
for 
shareholder 
approval 
at 
the 2021 
Annual 
General Meeting. 
On 
8
 
February
 
2021, 
we
 
commenced 
a 
new 
three
-
year 
share 
repurchase program 
of up 
to CHF 
4 billion, 
of which 
we expect 
to execute 
up to 
USD 1 billion by 
the end 
of the 
first quarter of 
2021. 
Treasury 
shares 
held 
to 
hedge 
our 
share 
delivery 
obligations 
related 
to 
employee 
share-based 
compensation 
awards 
totaled 
157.1 million 
shares 
as 
of 
31 December 
2020 
(31 December 
2019: 
125.2 
million). 
Share 
delivery 
obligations 
related 
to 
employee share-based 
compensation awards totaled 
172 million 
shares 
as 
of 
31 December 
2020 
(31 December 
2019: 
156 
million) and are calculated 
on the basis of 
undistributed notional 
share 
awards, 
taking 
into 
account 
applicable 
performance 
conditions. 
Treasury 
shares 
held 
are 
delivered 
to 
employees 
at 
exercise or 
vesting. As 
of 31 December 
2020, up 
to 122 
million 
UBS 
Group 
AG 
shares 
(31 
December 
2019: 
122 
million) 
could 
have 
been 
issued 
out 
of 
conditional 
capital 
to 
satisfy 
share 
delivery 
obligations 
of 
any 
future 
employee 
share 
option 
programs or similar awards. 
The 
Investment 
Bank 
also 
holds 
a 
limited 
number 
of 
UBS Group AG 
shares, 
primarily 
in 
its 
capacity 
as 
a 
market-
maker 
with 
regard 
to 
UBS 
Group 
AG 
shares 
and 
related 
derivatives, 
and 
to 
hedge 
certain 
issued 
structured 
debt 
instruments. 
The 
table 
below 
outlines 
the 
market 
purchases 
of 
UBS Group AG shares by 
Group Treasury. It 
does not include 
the 
activities of the Investment Bank. 
 
Treasury 
share purchases 
Share repurchase program
1
Other treasury shares purchased
2
Month of purchase
3
Number of shares 
Average price in CHF 
Remaining volume of 
share repurchase 
program in CHF million 
at month-end 
Number of shares 
Average price in USD 
January 2020 
8,124,500 
12.31 
350 
5,250,000 
12.54 
February 2020 
7,928,760 
12.61 
250 
26,250,000 
12.67 
March 2020 
15,216,000 
9.86 
100 
3,000,000 
8.21 
April 2020 
100 
May 2020 
100 
June 2020 
100 
July 2020 
100 
August 2020 
100 
September 2020 
100 
October 2020 
100 
7,500,000 
11.92 
November 2020 
100 
30,000,000 
13.75 
December 2020 
100
4 
1 In March 2018, UBS initiated a share 
repurchase program of up to CHF 2 
billion over a three-year period and 
this program was completed on 
2 February 2021. As noted 
above, on 8 February 
2021, a new three-
year program of up to CHF 4 billion commenced. The share repurchase information in this table is disclosed 
in Swiss francs as the share buybacks were transacted in Swiss francs on a separate 
trading line on the SIX 
Swiss Exchange. 
2 This table 
excludes purchases for 
the purpose of 
hedging derivatives linked 
to UBS Group AG 
shares and for 
market-making in UBS 
Group AG shares. 
The table also 
excludes UBS Group AG 
shares purchased by 
post-employment benefit funds 
for UBS employees, 
which are managed 
by a board 
of UBS management 
and employee representatives 
in accordance with 
Swiss law. 
UBS’s post-employment 
benefit funds purchased 1,757,855 
UBS Group AG 
shares during the year 
and held 14,853,861 UBS 
Group AG shares as 
of 31 December 2020. 
3 Based on the 
transaction date of 
the respective treasury share 
purchases. 
4 The remaining 
volume of the 
share repurchase program 
as of 31 December 
2020 was USD 
113 million. This 
was calculated based 
on the remaining 
volume of CHF 
100 million as 
of 31 December 
2020 and the respective closing exchange rate as of this date. The 
share repurchase program was completed on 2 February 2021. 
 
 
Trading volumes 
For the year ended 
1,000 shares 
31.12.20 
31.12.19 
31.12.18 
SIX Swiss Exchange total 
5,095,908 
4,161,555 
3,277,995 
SIX Swiss Exchange daily average 
20,222 
16,713 
13,165 
New York Stock Exchange total 
260,681 
203,967 
166,728 
New York Stock Exchange daily average 
1,030 
809 
664 
Source: Reuters 

 
 
 
 
 
 
 
 
 
179 
Listing of UBS Group AG shares 
UBS Group AG shares 
are listed on the 
SIX Swiss Exchange (SIX). 
They are also 
listed on the New 
York 
Stock Exchange (the 
NYSE) 
as 
global 
registered 
shares. 
As 
such, 
they 
can 
be 
traded 
and 
transferred 
across 
applicable 
borders
,
 
without 
the 
need 
for 
conversion, 
with 
identical 
shares 
traded 
on 
different 
stock 
exchanges in different currencies. 
During 
2020, 
the 
average 
daily 
trading 
volume 
of 
UBS Group AG 
shares 
was 
20.2 
million 
shares 
on 
SIX 
and 
1.0 
million shares 
on the 
NYSE. SIX 
is expected 
to remain 
the main 
venue for determining the movement in our share price, 
because 
of the high volume traded on this exchange. 
During 
the 
hours 
in 
which 
both 
SIX 
and 
the 
NYSE 
are 
simultaneously 
open 
for 
trading 
(generally 
3:30 
p.m. 
to 
5:30 
p.m. 
Central 
European 
Time), 
price 
differences 
between 
these 
exchanges 
are 
likely 
to 
be 
arbitraged 
away 
by 
professional 
market-makers. 
Accordingly, 
the 
share 
price 
will 
typically 
be 
similar 
between 
the 
two 
exchanges 
when 
considering 
the 
prevailing 
US 
dollar 
/ 
Swiss 
franc 
exchange 
rate. 
When 
SIX 
is 
closed 
for 
trading, 
globally 
traded 
volumes 
will 
typically 
be 
lower. 
However, 
the 
specialist 
firm 
making 
a 
market 
in 
UBS 
Group AG 
shares on 
the NYSE 
is required 
to facilitate 
sufficient 
liquidity and maintain an orderly market in UBS Group AG shares 
throughout normal NYSE trading hours. 
 
 
Ticker symbols UBS Group AG 
Trading exchange 
SIX/NYSE 
Bloomberg 
Reuters 
SIX Swiss Exchange 
UBSG 
UBSG SW 
UBSG.S 
New York Stock Exchange 
UBS 
UBS UN 
UBS.N 
Security identification codes 
ISIN 
CH0244767585 
Valoren 
24 476 758 
CUSIP 
CINS H42097 10 7 
 
 

 
 
 
 
Corporate 
governance and 
compensation 
Management report 
 
4 
 
 
 
 
 
 
 
 
 
 
 
 
 
Audited information according to the Swiss law and applicable regulatory 
requirements and guidance 
Disclosures provided 
are in 
line with 
the requirements 
of Art. 
663c para. 
1 and 
3 of 
the Swiss Code 
of Obligations 
(supplementary 
disclosures 
for 
companies 
whose 
shares 
are 
listed 
on 
a 
stock 
exchange: 
shareholdings) 
and 
the 
Ordinance 
against 
Excessive 
Compensation in 
Listed Stock 
Corporations (tables 
containing such 
information are 
marked as 
“Audited” throughout 
this section), 
as well as other applicable regulations and guidance.
 
 
 
 

Corporate governance and compensation | Corporate governance 
182 
Corporate governance
UBS 
Group 
AG 
is 
subject 
to, 
and 
complies 
with, 
all 
relevant 
Swiss 
legal 
and 
regulatory 
requirements 
regarding 
corporate 
governance, 
including 
the 
SIX 
Swiss 
Exchange’s 
Directive 
on 
Information 
relating 
to 
Corporate 
Governance 
(the 
SIX 
Swiss 
Exchange 
Corporate 
Governance 
Directive), 
and 
the 
standards 
established 
in 
the 
Swiss 
Code 
of 
Best 
Practice 
for 
Corporate 
Governance, including the appendix on executive compensation. 
As 
a 
foreign 
company 
with 
shares 
listed 
on 
the 
New 
York 
Stock Exchange (the NYSE), UBS Group AG also complies with all 
relevant 
corporate 
governance 
standards 
applicable 
to 
foreign 
private issuers. 
The Organization 
Regulations of 
UBS Group 
AG, adopted 
by 
the Board of Directors (the BoD) based on Art. 716b of 
the Swiss 
Code 
of 
Obligations 
and 
articles 
25 
and 
27 
of 
the 
Articles 
of 
Association of 
UBS Group 
AG, constitute 
our primary 
corporate 
governance guidelines. 
To 
the 
extent 
practicable, 
the 
governance 
structures 
of 
UBS 
Group 
AG 
and 
UBS 
AG 
are 
aligned. 
UBS 
AG 
complies 
with 
all 
relevant 
Swiss 
legal 
and 
regulatory 
corporate 
governance 
requirements. 
As 
a 
foreign 
private 
issuer 
with 
debt 
securities 
listed 
on 
the 
NYSE, 
UBS 
AG 
also 
complies 
with 
the 
relevant 
NYSE 
corporate 
governance 
standards. 
The 
discussion 
in 
this 
section 
refers 
to 
both 
UBS 
Group 
AG 
and 
UBS 
AG, 
unless 
specifically 
noted otherwise 
or unless 
the information 
discussed 
is relevant only to listed 
companies and therefore only applicable 
to UBS Group AG. This approach is in 
line with US Securities and 
Exchange Commission regulations and NYSE listing standards. 
›
 
Refer to the Articles of Association of 
UBS Group AG and of 
UBS AG, and to the Organization Regulations 
of UBS Group AG, 
available at 
ubs.com/governance
 
and 
ubs.com/ 
ubs-ag-governance,
 
for more information 
›
 
The SIX Swiss Exchange Corporate Governance 
Directive is 
available at
 
ser-ag.com/dam/downloads/regulation/listing/
 
directives/DCG-en.pdf,
 
the Swiss Code of Best Practice for 
Corporate Governance at 
economiesuisse.ch/en/publications/ 
swiss-code-best-practice-corporate-governance
 
and the NYSE 
rules at 
nyse.com/publicdocs/nyse/listing/ 
NYSE_Corporate_Governance_Guide.pdf
 
 
Differences from corporate governance standards relevant 
to US-listed companies 
T
he 
NYSE 
listing 
standards 
on 
corporate 
governance
 
require
 
foreign 
private issuers 
to 
disclose any 
significant ways 
in 
which 
their corporate governance practices differ 
from those 
that have 
to 
be 
followed 
by 
domestic 
companies. 
Such 
differences 
are 
discussed 
below. 
Responsibility of the Audit Committee regarding independent 
auditors 
Our 
Audit 
Committee 
is 
responsible 
for 
the 
compensation, 
retention 
and oversight 
of independent 
auditors. It 
assesses the 
performance and 
qualifications of 
external auditors 
and submits 
proposal
s
 
for 
appointment, 
reappointment 
or 
removal 
of 
independent auditors to the BoD. As 
required by the Swiss 
Code 
of 
Obligations, 
the 
BoD 
submits 
its 
proposals 
for 
shareholder 
vote
 
at 
the 
Annual 
General 
Meeting 
(the 
AGM). 
Under 
NYSE 
standards 
audit 
committees 
are 
responsible 
for 
appointing 
independent auditors. 
Discussion of risk assessment and risk management policies by 
the Risk Committee 
As per 
the Organization 
Regulations of 
UBS Group 
AG and 
UBS 
AG, the Risk Committee, instead of the 
Audit Committee, as per 
NYSE standards, 
oversees our risk 
principles and risk 
capacity on 
behalf 
of 
the 
BoD. 
The 
Risk 
Committee 
is 
responsible 
for 
monitoring 
our 
adherence 
to 
those 
risk 
principles 
and 
monitoring 
whether 
business 
divisions 
and 
control 
units 
maintain appropriate systems of risk management and control. 
Supervision of the internal audit function 
Although under NYSE standards only audit 
committees supervise 
internal 
audit 
functions, 
the 
Chairman 
of 
the 
BoD 
(the 
Chairman) 
and 
the 
Audit 
Committee 
share 
the 
supervisory 
responsibility 
and 
authority 
with 
respect 
to 
the 
internal 
audit 
function. 
Responsibility of the Compensation Committee for performance 
evaluations of senior management of UBS Group AG 
In 
line 
with Swiss 
law, 
our Compensation 
Committee, together 
with 
the 
BoD, 
proposes 
for 
shareholder 
approval 
at 
the 
AGM 
the maximum 
aggregate amount 
of compensation 
for the 
BoD, 
the maximum 
aggregate amount 
of fixed 
compensation for 
the 
Group Executive 
Board (the 
GEB) and 
the aggregate 
amount of 
variable 
compensation 
for 
the 
GEB. 
The 
members 
of 
the 
Compensation Committee are 
elected by the AGM. 
Under NYSE 
standards it 
is the 
responsibility of 
compensation committees 
to 
evaluate 
senior 
management’s 
performance 
and 
to 
determine 
and 
approve, 
as 
a 
committee 
or 
together 
with 
the 
other 
independent directors, the compensation thereof. 
Proxy statement reports of the Audit Committee and the 
Compensation Committee 
NYSE
 
standards 
require 
the 
aforementioned 
committees 
to 
submit 
their 
reports 
directly 
to 
shareholders. 
However, 
under 
Swiss 
law 
all 
reports 
to 
shareholders, 
including 
those 
from 
the 
aforementioned 
committees, 
are 
provided 
to 
and 
approved 
by 
the BoD, which has ultimate responsibility to the shareholders. 
Shareholder votes on equity compensation plans 
NYSE standards require shareholder 
approval for the establishing 
of 
and 
material 
revisions 
to 
all 
equity 
compensation 
plans. 
However, 
as 
per 
Swiss 
law, 
the 
BoD 
approves 
compensation 
plans. 
Shareholder 
approval 
is 
only 
mandatory 
if 
equity-based 
compensation 
plans 
require 
an 
increase 
in 
capital. 
No 
shareholder 
approval 
is 
required 
if 
shares 
for 
such 
plans 
are 
purchased in the market. 
›
 
Refer to “Board of Directors” in this section for more 
information about the BoD’s committees 
›
 
Refer to “Share capital structure” in this section 
for more 
information about UBS Group AG’s capital 
 

 
 
 
 
 
 
183 
Group structure and shareholders
Operational Group structure 
As of 31 December 2020, the operational structure of the Group 
is 
composed 
of 
the 
Global 
Wealth 
Management, 
Personal 
& 
Corporate 
Banking, 
Asset 
Management 
and 
Investment 
Bank 
business divisions, as well as Group Functions. 
›
 
Refer to the “Our businesses” section on 
page 19 of this report 
for more information about our business 
divisions and Group 
Functions 
›
 
Refer to “Financial and operating performance” 
on page 67 and 
to “Note 2 Segment reporting” in the “Consolidated 
financial 
statements” 
section on page 312 of this report 
for more 
information 
›
 
Refer to the “Our evolution” section 
on page 14 of this report 
for more information 
Listed and non-listed companies belonging to the Group 
The Group 
includes a 
number of 
consolidated entities, 
of which 
only UBS Group AG shares are listed. 
UBS 
Group 
AG’s 
registered 
office 
is 
at 
Bahnhofstrasse 
45, 
CH-8001 Zurich, Switzerland. UBS Group AG shares are listed on 
the SIX Swiss 
Exchange (ISIN: CH0244767585) 
and on the 
NYSE 
(CUSIP: H42097107). 
›
 
Refer to “UBS shares” in the “Capital, liquidity 
and funding, and 
balance sheet” 
section on page 177 
of this report for 
information about UBS Group AG’s market capitalization and 
shares held by Group entities 
›
 
Refer to “Note 28 Interests in subsidiaries and 
other entities” in 
the “Consolidated financial statements” 
section on page 396 of 
this report for more information about the significant 
subsidiaries of the Group 
Significant shareholders 
General rules 
Under the 
Swiss Federal 
Act on 
Financial Market 
Infrastructures 
and 
Market 
Conduct 
in 
Securities 
and 
Derivatives 
Trading 
of 
19 June 2015 
(the FMIA), 
anyone directly 
or indirectly, 
or acting 
in concert 
with third 
parties, holding 
shares in 
a company 
listed 
in 
Switzerland 
or 
holding 
derivative 
rights 
related 
to 
shares 
in 
such 
a 
company 
must 
notify 
the 
company 
and 
the 
SIX 
Swiss 
Exchange (SIX) if the holding 
reaches, falls below or exceeds 
one 
of 
the 
following 
percentage 
thresholds: 
3, 
5, 
10, 
15, 
20, 
25, 
33
1
⁄
3
, 50 or 66
2
⁄
3
% of voting rights, regardless of 
whether or not 
such 
rights 
may 
be 
exercised. 
Nominee 
companies 
that 
cannot 
autonomously 
decide 
how 
voting 
rights 
are 
exercised 
are 
not 
required to 
notify the 
company and 
SIX if 
they reach, 
exceed or 
fall below the above-mentioned thresholds. 
Pursuant 
to 
the 
Swiss 
Code 
of 
Obligations, 
we 
disclose 
in 
“Note 
2
3
 
Significant 
shareholders” 
to 
the 
UBS 
Group 
AG 
standalone 
financial 
statements 
the 
identity 
of 
any 
shareholder 
with a holding of more than 5% of the total share capital of UBS 
Group AG. 
Shareholders subject to FMIA disclosure notifications 
According 
to 
the 
mandatory 
FMIA 
disclosure 
notifications 
filed 
with 
UBS 
Group 
AG 
and 
SIX, 
as 
of 
31 
December 
2020, 
the 
following entities 
held more 
than 3% 
of the 
total 
share 
capital 
of 
UBS 
Group 
AG: 
Artisan 
Partners 
Limited 
Partnership, 
Milwaukee, 
which 
disclosed 
a 
holdin
g 
of 
3.15% 
on 
18 
November 
2020; 
BlackRock 
Inc., 
New 
York, 
which 
disclosed 
a 
holding 
of 
4.70% 
on 
26 
May 
2020; 
and 
Norges 
Bank, 
Oslo, 
which 
disclosed 
a 
holding 
of 
3.01% 
on 
24
 
July 
2019
.
 
As 
registration 
in 
the 
UBS 
share 
register 
is 
optional, 
shareholders 
crossing 
the 
aforementioned 
thresholds 
requiring 
SIX 
notification 
under 
the 
FMIA 
do 
not 
necessarily 
appear 
in 
the 
table below. 
No 
new 
disclosures 
of 
significant 
shareholdings 
have 
been 
made since 31 December 2020. 
In 
accordance 
with 
the 
FMIA, 
the 
aforementioned 
holdings 
are calculated in 
relation to the 
total share capital 
of UBS Group 
AG 
reflected 
in 
the 
Articles 
of 
Association 
at 
the 
time 
of 
the 
respective disclosure notification. 
Information on 
disclosures under the 
FMIA is available 
at 
ser-
ag.com/en/resources/notifications-market-participants/ 
significant-shareholders.html. 
Shareholders registered in the UBS share register with 3% or 
more of the share capital of UBS Group AG 
As 
a 
supplement 
to 
the 
mandatory 
disclosure 
requirements 
according 
to 
the 
SIX 
Swiss 
Exchange 
Corporate 
Governance 
Directive, we disclose in the 
table below the
 
shareholders (acting 
in 
their 
own 
name 
or 
in 
their 
capacity 
as 
nominees 
for 
other 
investors 
or 
beneficial 
owners) who 
were 
registered 
in 
the 
UBS 
share register with 
3% or more 
of the total 
share capital of 
UBS 
Group AG as of 31 December 2020. 
›
 
Refer to “Shareholders’ participation rights” 
on page 189 of this 
section for more information about voting rights, 
restrictions 
and representation 
Cross-shareholdings 
UBS 
Group 
AG 
has 
no 
cross-shareholdings 
where 
reciprocal 
ownership would 
be in 
excess of 
5% of 
capital or 
voting rights 
with any other company. 
 
Audited |
 
Shareholders registered in the UBS share register with 3% or more of the total share capital
1
% of share capital 
31.12.20 
31.12.19 
31.12.18 
Chase Nominees Ltd., London
2
 
10.39 
 
10.94 
 
12.08 
Nortrust Nominees Ltd., London
2
 
5.15 
 
4.90 
 
4.14 
DTC (Cede & Co.), New York
2,3
 
4.99 
 
7.57 
 
7.23 
1 As registration in the UBS share 
register is optional, shareholders crossing the 
threshold percentages requiring SIX notification under 
the FMIA do not necessarily appear 
in this table. 
2 Nominee companies and 
securities clearing organizations 
cannot autonomously 
decide how voting 
rights are 
exercised and 
are therefore 
not obligated 
to notify 
UBS and 
SIX if 
they reach, exceed 
or fall 
below the 
threshold percentages 
requiring disclosure notification under 
the FMIA. Consequently, 
they do not appear 
in the “Shareholders subject 
to FMIA disclosure notifications” 
section above. 
3 DTC (Cede & Co.), 
New York, “The 
Depository 
Trust Company,” 
is a US securities clearing organization. 
p
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate governance and compensation | Corporate governance 
184 
Share capital structure
Ordinary share capital 
At 
year-end 
2020, 
UBS 
Group 
AG 
had 
3,859,055,395 
issued 
shares 
with 
a 
nominal 
value 
of 
CHF 0.10 
each, 
leading 
to 
a 
share capital of CHF 385,905,539.50. 
Under 
Swiss 
company 
law, 
shareholders 
must 
approve 
in 
a 
general 
meeting 
of 
shareholders 
an 
ordinary 
share 
capital 
increase 
or 
reduction
,
 
or 
the 
creation 
of 
conditional 
or 
authorized 
share 
capital. 
In 
2020, 
our 
shareholders 
were 
not 
asked 
to 
approve 
an 
ordinary 
share 
capital 
increase 
or 
the 
creation of conditional or authorized share capital. 
The 
share 
capital 
remained 
unchanged
 
during 
2020. 
No
 
shares 
were 
issued 
out 
of 
existing 
conditional 
capital, 
as 
there 
were 
no 
employee 
options 
and 
stock 
appreciation 
rights 
outstanding. 
 
 
Issued share capital of UBS Group AG 
Share capital in CHF 
Number of shares 
Nominal value in CHF 
As of 31 December 2019 
 
385,905,540 
 
3,859,055,395 
 
0.10 
Issue of shares out of conditional capital due to employee options 
exercised in 2020 
 
0 
 
0 
 
0.10 
As of 31 December 2020 
 
385,905,540 
 
3,859,055,395 
 
0.10 
 
 
Distribution of UBS shares 
As of 31 December 2020 
Shareholders registered 
Shares registered 
Number of shares registered 
Number 
% 
Number 
% of shares issued 
1–100 
 
23,150 
 
10.9 
 
1,281,654 
 
0.0 
101–1,000 
 
107,277 
 
50.4 
 
51,471,722 
 
1.3 
1,001–10,000 
 
74,047 
 
34.8 
 
220,129,283 
 
5.7 
10,001–100,000 
 
7,825 
 
3.7 
 
187,065,356 
 
4.8 
100,001–1,000,000 
 
588 
 
0.3 
 
174,930,523 
 
4.5 
1,000,001–5,000,000 
 
93 
 
0.0 
 
194,523,407 
 
5.0 
5,000,001–38,590,553 (1%) 
 
25 
 
0.0 
 
303,908,409 
 
7.9 
1–2% 
 
3 
 
0.0 
 
142,323,637 
 
3.7 
2–3% 
 
0 
 
0.0 
 
0 
 
0.0 
3–4% 
 
0 
 
0.0 
 
0 
 
0.0 
4–5% 
 
0 
 
0.0 
 
0 
 
0.0 
Over 5% 
 
3
1 
 
0.0 
 
792,409,734 
 
20.5 
Total registered 
 
213,011 
 
100.0 
 
2,068,043,725
2 
 
53.6 
Unregistered
3
 
1,791,011,670 
 
46.4 
Total 
 
213,011 
 
100.0 
 
3,859,055,395 
 
100.0 
1 On 
31 December 
2020, Chase 
Nominees Ltd., 
London, entered 
as a 
nominee, was 
registered with 
10.39% of 
all UBS 
shares issued. 
However, 
according to 
the provisions 
of UBS 
Group AG, 
voting rights 
of 
nominees are limited to 
a maximum of 5% 
of all UBS shares 
issued. The US 
securities clearing organization 
DTC (Cede & Co.), 
New York, 
was registered with 
4.99% of all UBS 
shares issued and is 
not subject to 
this 5% voting limit as a securities clearing organization. 
2 Of the total shares registered, 385,022,965 shares did not carry voting rights. 
3 Shares not entered in the UBS share register as of 31 December 2020. 
 
 

 
 
 
 
 
 
185 
Conditional share capital 
At 
year-end 
2020, 
the 
following 
conditional 
share 
capital 
was 
available to UBS Group AG’s BoD: 
–
 
A 
maximum 
of 
CHF 38,000,000 
represented 
by 
up 
to 
380,000,000 fully paid registered shares 
with a nominal value 
of 
CHF 0.10 
each, 
to 
be 
issued 
through 
the 
voluntary 
or 
mandatory 
exercise 
of 
conversion 
rights 
and 
/ 
or 
warrants 
granted 
in 
connection 
with 
the 
issuance 
of 
bonds 
or 
similar 
financial 
instruments 
on 
national 
or 
international 
capital 
markets. 
This 
conditional 
capital 
allowance 
was 
approved 
at 
the 
Extraordinary 
General 
Meeting 
(EGM) 
held 
on 
26 November 
2014, 
originally 
approved 
at 
the 
AGM of 
UBS 
AG 
on 
14 April 
2010. 
The 
BoD 
has 
not 
made 
use 
of 
such 
allowance. 
–
 
A maximum 
of CHF 12,170,583 
represented by 
121,705,830 
fully paid 
registered shares 
with a 
nominal value 
of CHF 0.10 
each, 
to 
be 
issued 
upon 
exercise 
of 
employee 
options 
and 
stock 
appreciation 
rights 
issued 
to 
employees 
and 
members 
of the management and of the 
BoD of UBS Group AG and 
its 
subsidiaries. This 
conditional capital 
allowance was 
approved 
by the shareholders at the same EGM in 2014. 
›
 
Refer to article 4a of the Articles of Association 
of UBS Group AG 
for more information about the terms and 
conditions of the 
issue of shares out of existing conditional capital. 
The Articles of 
Association are available at
 
ubs.com/governance 
 
 
 
Conditional capital of UBS Group AG 
As of 31 December 2020 
Maximum number of shares to 
be issued 
Year approved by Extraor- 
dinary General Meeting 
% of shares issued 
Employee equity participation plans 
 
121,705,830 
2014 
 
3.15 
Conversion rights / warrants granted in connection with bonds 
 
380,000,000 
2014 
 
9.85 
Total 
 
501,705,830 
 
13.00 
 
 
Authorized share capital 
UBS 
Group 
AG 
had 
no 
authorized 
capital 
available 
to 
issue 
on 
31 December 2020. 
Changes in capital 
In 
accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS), 
Group 
equity 
attributable 
to 
shareholders 
was 
USD 59.4 
billion 
as 
of 
31 
December 
2020 
(2019: 
USD 54.5 
billion; 
and 
2018: USD 52.9 billion). UBS Group AG shareholders’ equity was 
represented 
by 3,859,055,395 
issued shares 
as of 
31 December 
2020 
(2019: 
3,859,055,395 
shares; 
and 
2018: 
3,855,634,749 
shares). 
›
 
Refer to “Statement of changes in 
equity” in the “Consolidated 
financial statements” 
section on page 286 
of this report for more 
information about changes in shareholders’ 
equity over the last 
three years 
Ownership 
Ownership of UBS 
Group AG shares 
is widely spread. 
The tables 
in this 
section provide information 
about the distribution 
of UBS 
Group 
AG 
shareholders 
by 
category 
and 
geographic 
location. 
This 
information 
relates 
only 
to 
shareholders 
registered 
in 
the 
UBS share 
register and 
cannot be 
assumed to 
be representative 
of UBS 
Group AG’s 
entire investor 
base or 
the actual 
beneficial 
ownership. Only 
shareholders registered 
in the 
share register 
as 
“shareholders with 
voting rights” 
are entitled 
to exercise 
voting 
rights. 
›
 
Refer to “Shareholders’ participation rights” in 
this section for 
more information 
 
As 
of 
31 
December 
2020, 
1,683,020,760 
UBS 
Group 
AG 
shares 
were 
registered 
in 
the 
share 
register 
and 
carried 
voting 
rights, 385,022,965 
shares were 
registered in 
the share 
register 
without 
voting 
rights, 
and 
1,791,011,670 
shares 
were 
not 
registered in the 
UBS share register. 
All shares were 
fully paid up 
and 
eligible 
for 
dividends. 
There 
are 
no 
preferential 
rights 
for 
shareholders, and no other classes of 
shares have been issued by 
UBS Group AG. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate governance and compensation | Corporate governance 
186 
Shareholders, legal entities and nominees: type and geographical distribution 
Shareholders registered 
As of 31 December 2020 
Number 
% 
Individual shareholders 
 
208,606 
 
97.9 
Legal entities 
 
4,216 
 
2.0 
Nominees, fiduciaries 
 
189 
 
0.1 
Total registered shares 
Unregistered shares 
Total 
 
213,011 
 
100.0 
Individual shareholders 
Legal entities 
Nominees 
Total 
Number 
% 
Number 
% 
Number 
% 
Number 
% 
Americas 
 
1,859 
 
0.9 
 
113 
 
0.1 
 
84 
 
0.0 
 
2,056 
 
1.0 
of which: USA 
 
1,319 
 
0.6 
 
60 
 
0.0 
 
81 
 
0.0 
 
1,460 
 
0.7 
Asia Pacific 
 
5,177 
 
2.4 
 
103 
 
0.0 
 
24 
 
0.0 
 
5,304 
 
2.5 
Europe, Middle East and Africa 
 
12,353 
 
5.8 
 
241 
 
0.1 
 
47 
 
0.0 
 
12,641 
 
5.9 
of which: Germany 
 
3,901 
 
1.8 
 
25 
 
0.0 
 
3 
 
0.0 
 
3,929 
 
1.8 
of which: UK 
 
4,680 
 
2.2 
 
8 
 
0.0 
 
7 
 
0.0 
 
4,695 
 
2.2 
of which: rest of Europe 
 
3,494 
 
1.6 
 
203 
 
0.0 
 
36 
 
0.0 
 
3,733 
 
1.8 
of which: Middle East and Africa 
 
278 
 
0.1 
 
5 
 
0.0 
 
1 
 
0.0 
 
284 
 
0.1 
Switzerland 
 
189,217 
 
88.8 
 
3,759 
 
1.8 
 
34 
 
0.0 
 
193,010 
 
90.6 
Total registered shares 
Unregistered shares 
Total 
 
208,606 
 
97.9 
 
4,216 
 
2.0 
 
189 
 
0.1 
 
213,011 
 
100.0 
 
At 
year-end 
2020, 
UBS 
owned 307,47 
7,002 
UBS 
Group AG 
registered 
shares, 
which 
corresponded 
to 
7.97% 
of 
the 
total 
share 
capital 
of 
UBS 
Group 
AG. 
At 
the 
same 
time, 
UBS 
had 
acquisition 
and 
disposal 
positions 
relating 
to 
338,597,130 
and 
189,374,964 
voting rights 
of UBS 
Group AG, 
corresponding to 
8.77% 
and 4.91% 
of the 
total voting 
rights of 
UBS Group 
AG, 
respectively. Of the disposal positions, 4.46% consisted of voting 
rights on 
shares deliverable 
in respect 
of employee 
awards. The 
calculation 
methodology 
for 
the 
acquisition 
and 
disposal 
positions 
is 
based 
on 
the 
Ordinance 
of 
the 
Swiss 
Financial 
Market Supervisory Authority 
on Financial Market 
Infrastructures 
and Market Conduct in 
Securities and Derivatives Trading, 
which 
sets 
forth 
that 
all 
future 
potential 
share 
delivery 
obligations, 
irrespective 
of 
the 
contingent 
nature 
of 
the 
delivery, 
must 
be 
taken into account. 
Employee share ownership 
Employee share ownership is encouraged and made possible in a 
variety 
of 
ways. 
One 
example 
is 
our 
Equity 
Plus 
Plan. 
This 
is 
a 
voluntary 
plan 
that 
provides 
eligible 
employees 
with 
the 
opportunity 
to purchase 
UBS Group 
AG shares 
at market 
value 
and receive, 
at no 
additional cost, 
one notional 
UBS Group 
AG 
share 
for every 
three 
shares 
purchased. 
If 
the shares 
purchased 
are 
held 
for 
a 
period 
of 
up 
to 
three 
years 
and 
the 
employee 
remains 
in 
employment, 
the 
notional 
shares 
vest. 
Another 
example 
is 
the 
Equity 
Ownership 
Plan 
(EOP)
, 
which
 
is 
a 
mandatory 
deferral 
plan 
for 
all 
employees 
excluding 
GEB 
members, 
Group 
Managing 
Directors 
(GMDs) 
and 
Group 
or 
Divisional 
Vice 
Chair 
role 
holders, 
with 
total 
compensation 
greater than 
USD / CHF 300,000. These 
employees receive 
60% 
of their 
deferred performance 
award 
under the 
EOP in 
notional 
shares (variations apply for 
Asset Management). Effective for 
the 
performance 
year 
2019, 
our 
most 
senior 
leaders 
(i.e., 
Group 
Executive Board 
(GEB) members, 
GMDs and 
Group or 
Divisional 
Vice 
Chair 
role 
holders) 
received 
the 
equity-based 
Long-Term 
Incentive 
Plan 
(the 
LTIP) 
instead 
of 
the 
EOP. 
Both 
the 
EOP 
and 
LTIP 
include 
provisions 
that 
allow 
the 
firm 
to 
reduce 
or 
fully 
forfeit 
the 
unvested 
deferred 
portion 
of 
the 
granted 
EOP 
and 
LTIP 
award if 
an employee 
commits certain 
harmful acts, 
and in 
most 
cases 
trigger
 
forfeiture 
where 
employment 
has 
been 
terminated. 
To 
encourage 
our 
employees 
to 
develop 
and 
manage 
the business 
in a 
way that 
delivers sustainable 
returns, 
EOP 
awards 
granted 
to 
certain 
senior 
employees 
and 
all 
LTIP 
awards 
will 
only 
vest 
if 
Group 
and, 
where 
applicable, 
business 
division 
performance 
conditions 
are 
met
 
or 
any 
other 
predetermined 
performance 
conditions 
(e.g., 
rTSR 
performance 
against G-SIBs Index) are met. 
As of 31 December 2020, UBS 
employees held at least 7% of 
UBS 
shares 
outstanding 
(including 
approximately 
4% 
in 
unvested
 
notional 
shares 
from 
our 
compensation 
programs). 
These 
figures 
are 
based 
on 
known 
shareholding 
information 
from 
employee 
participation 
plans, 
personal 
holdings 
with 
UBS 
and selected 
individual retirement 
plans. At 
the end 
of 2020, 
at 
least 
30% 
of all 
employees held 
UBS 
shares 
through 
the firm’s 
employee share participation plans. 
›
 
Refer to the “Compensation” 
section on page 220 of this report 
for more information 
Shares and participation certificates 
UBS Group 
AG has a 
single class of 
shares, which are 
registered 
shares in the form of uncertificated securities (in the 
sense of the 
Swiss 
Code 
of 
Obligations) 
and 
intermediary-held 
securities 
(in 
the sense 
of the 
Swiss Federal 
Act on 
Intermediated Securities). 
Each 
registered 
share 
has 
a 
nominal 
value 
of 
CHF 0.10 
and 
carries 
one 
vote
,
 
subject 
to 
the 
restrictions 
set 
out 
under 
“Transferability, 
voting rights and nominee registration” below. 
We have no participation certificates outstanding. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
187 
Shares registered 
Number 
% 
 
477,538,856 
 
12.4 
 
543,206,476 
 
14.1 
 
1,047,298,393 
 
27.1 
 
2,068,043,725 
 
53.6 
 
1,791,011,670 
 
46.4 
 
3,859,055,395 
 
100.0 
Individual shareholders 
Legal entities 
Nominees 
Total 
Number of shares 
% 
Number of shares 
% 
Number of shares 
% 
Number of shares 
% 
 
2,588,572 
 
0.1 
 
23,093,718 
 
0.6 
 
297,122,607 
 
7.7 
 
322,804,897 
 
8.4 
 
1,136,719 
 
0.0 
 
17,679,015 
 
0.5 
 
296,874,735 
 
7.7 
 
315,690,469 
 
8.2 
 
23,317,716 
 
0.6 
 
16,118,902 
 
0.4 
 
8,685,441 
 
0.2 
 
48,122,059 
 
1.2 
 
46,740,794 
 
1.2 
 
67,139,152 
 
1.7 
 
718,579,456 
 
18.6 
 
832,459,402 
 
21.6 
 
12,880,664 
 
0.3 
 
489,097 
 
0.0 
 
12,856,049 
 
0.3 
 
26,225,810 
 
0.7 
 
20,942,930 
 
0.5 
 
295,414 
 
0.0 
 
664,437,108 
 
17.2 
 
685,675,452 
 
17.8 
 
11,488,402 
 
0.3 
 
27,509,691 
 
0.7 
 
41,241,773 
 
1.1 
 
80,239,866 
 
2.1 
 
1,428,798 
 
0.0 
 
38,844,950 
 
1.0 
 
44,526 
 
0.0 
 
40,318,274 
 
1.0 
 
404,891,774 
 
10.5 
 
436,854,704 
 
11.3 
 
22,910,889 
 
0.6 
 
864,657,367 
 
22.4 
 
477,538,856 
 
12.4 
 
543,206,476 
 
14.1 
 
1,047,298,393 
 
27.1 
 
2,068,043,725 
 
53.6 
 
0 
 
0 
 
0 
 
1,791,011,670 
 
46.4 
 
477,538,856 
 
12.4 
 
543,206,476 
 
14.1 
 
1,047,298,393 
 
27.1 
 
3,859,055,395 
 
100.0 
 
Our shares are 
listed on the 
NYSE as global 
registered shares. 
As 
such, 
they 
can 
be 
traded 
and 
transferred 
across 
applicable 
borders, 
without 
the 
need 
for 
conversion, 
with 
identical 
shares 
traded on different stock exchanges in different currencies. 
›
 
Refer to “UBS shares” in the “Capital, liquidity 
and funding, and 
balance sheet” 
section on page 177 
of this report for more 
information 
Distributions to shareholders 
The decision 
to pay 
a dividend 
and the 
amount of 
any dividend 
depend 
on 
a 
variety 
of 
factors, including 
our 
profits, 
cash 
flow 
generation and capital ratios. 
Following 
a 
request 
from 
FINMA
 
in 
April 
2020
, 
the 
Bo
D 
proposed to split the 
dividend for the 2019 
financial year. At the 
2020 AGM, the shareholders approved a dividend distribution 
of 
USD 0.365 
per 
share 
and 
a 
special 
dividend 
reserve 
of 
USD 0.365 
per 
share. 
At 
an 
extraordinary 
general 
meeting 
on 
19
 
November 
2020
,
 
the 
shareholders 
approved 
the 
second 
tranche of 
the 2019 dividend, 
of USD 
0.365 per 
share, paid 
out 
of the special dividend reserve established at the 2020 AGM. 
At 
the 
2021 
AGM, 
the 
BoD 
intends 
to 
propose 
to 
shareholders 
for 
approval 
a 
dividend of 
USD 0.37 per 
share 
for 
the 
2020 
financial 
year. 
Shareholders 
whose 
shares 
are 
held 
through SIX 
SIS AG 
will receive 
dividends in 
Swiss francs, 
based 
on 
a 
public 
exchange 
rate 
on 
the 
day 
prior 
to 
the 
ex-dividend 
date. Shareholders 
holding shares 
through The 
Depository Trust 
Company 
in 
New 
York 
and 
Computershare 
will 
be 
paid 
dividends in US dollars. 
In compliance with Swiss tax law, 50% of the dividend will 
be 
paid out of retained earnings and the balance will 
be paid out of 
the 
capital 
contribution 
reserve. 
Dividends 
paid 
out 
of 
capital 
contribution 
reserves 
are 
not 
subject 
to 
Swiss 
withholding 
tax. 
The portion of the 
dividend paid out of 
retained earnings will be 
subject to 
a 35% 
Swiss withholding 
tax. For 
US federal 
income 
tax 
purposes, 
we 
expect 
that 
the 
dividend 
will 
be 
paid 
out 
of 
current or accumulated earnings and profits. 
Provided 
that 
the 
proposed 
dividend 
distribution 
out 
of 
retained earnings and 
out of the capital 
contribution reserve will 
be 
approved 
at 
the 
AGM 
on 
8 
April 
2021, 
the 
payment 
of 
USD 0.37 per share 
will be made 
on 15 April 2021 
to holders of 
shares 
on 
the 
record 
date 
14 
April 
2021. 
The 
shares 
will 
be 
traded ex-dividend as 
of 13 April 
2021 and, accordingly, 
the last 
day 
on 
which 
the 
shares 
may 
be 
traded 
with 
entitlement 
to 
receive the dividend will be 12 April 2021. 
In March 
2018, UBS 
initiated a 
share repurchase 
program of 
up 
to 
CHF 2 billion 
over a 
three-year 
period. This 
program 
was 
completed on 
2 February 2021 
and the 
UBS shares 
repurchased 
under 
the program 
are expected 
to be 
canceled by 
means of 
a 
capital reduction, to be proposed for shareholder approval at 
the 
2021 
AGM. 
Under 
the 
program, 
UBS 
repurchased 
shares 
totaling 
USD 2.0 
billion 
(CHF 2 
billion) 
during 
2018, 
2019 
and 
2020, 
as 
well 
as 
in 
January 
and 
February 
2021. 
In 
February 
2021, we commenced a new three-year program of up 
to CHF 4 
billion, of which we expect 
to execute up to USD 1 billion 
by the 
end of the first quarter of 2021. 
›
 
Refer to “UBS shares” in the “Capital, liquidity 
and funding, and 
balance sheet” 
section on page 177 of this report for more 
information about the share repurchase program 
 
 

Corporate governance and compensation | Corporate governance 
188 
Transferability, voting rights and nominee registration 
We 
do 
not 
apply 
any 
restrictions 
or 
limitations 
on 
the 
transferability of 
shares. Voting 
rights may 
be exercised 
without 
any restrictions 
by shareholders entered 
into the share 
register if 
they 
expressly 
render 
a 
declaration 
of 
beneficial 
ownership 
according to the provisions of the Articles of Association. 
We 
have 
special 
provisions 
for 
the 
registration 
of 
nominees. 
Nominees are entered 
in the share 
register with voting 
rights up 
to a total of 5% 
of all issued UBS Group 
AG shares if they agree 
to 
disclose, 
upon 
our 
request, 
beneficial 
owners 
holding 
0.3% 
or more of 
all issued UBS 
Group AG shares. 
An exception to 
the 
5% 
voting 
limit 
rule 
is 
in 
place 
for 
securities 
clearing 
organizations, 
such 
as 
The 
Depository 
Trust 
Company 
in 
New 
York. 
›
 
Refer to “Shareholders’ participation rights” in 
this section for 
more information 
Convertible bonds and options 
As 
of 
31
 
December 
2020
, 
there 
were 
no 
contingent 
capital 
securities 
or 
convertible 
bonds 
outstanding 
requiring 
the 
issuance of new shares. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section on page 143 of this report for more information 
about 
our outstanding capital instruments 
 
As 
of 
31 December 
2020, 
there 
were 
no 
employee 
options 
and 
stock 
appreciation 
rights 
outstanding. 
Option
-
based 
compensation 
plans 
are 
sourced 
by 
issuing 
new 
shares 
out 
of 
conditional 
capital. 
As 
of 
31 December 
2020, 
121,705,830 
unissued UBS Group 
AG shares in 
conditional share capital 
were 
available for the issuance of new shares for this purpose.
 
 
›
 
Refer to “Conditional share capital” in this section 
for more 
information 
›
 
Refer to “Note 27 Employee benefits: variable 
compensation” in 
the “Consolidated financial statements” 
section on page 391 of 
this report for more information about outstanding 
options and 
stock appreciation rights 
 
 

 
189 
Shareholders’ participation rights
We 
are 
committed 
to 
shareholder 
participation 
in 
decision-
making 
processes. 
Our 
online 
voting 
platform 
offers 
registered 
shareholders 
a 
convenient 
log
-
in 
and 
online
 
voting 
process. 
Registered 
shareholders 
are 
sent 
personal 
invitations 
to 
the 
general 
meetings. 
Together 
with 
the 
invitation 
materials, 
they 
receive 
a 
personal 
one-time 
password 
and 
a 
QR 
code 
to 
easily 
log in 
to the 
online voting 
platform, where 
they can 
enter their 
voting 
instructions 
or 
order 
an 
admission 
card 
for 
the 
general 
meeting. 
Shareholders 
who 
choose 
not 
to 
receive 
the 
comprehensive 
invitation materials 
are informed 
of upcoming 
general meetings 
by a 
short letter containing 
a personal one-time 
password, a QR 
code 
for 
online voting 
and a 
reference 
to 
ubs.com/agm
,
 
where 
all information for the upcoming meeting is available. 
General meetings 
offer 
shareholders the 
opportunity to 
raise 
questions for the BoD, GEB and internal and external auditors. 
Voting rights, restrictions and representation 
We 
place 
no 
restrictions 
on 
share 
ownership 
and 
voting rights. 
However, 
pursuant to general 
principles formulated 
by the BoD, 
nominee 
companies, 
which 
normally 
represent 
a 
large 
number 
of individual shareholders 
and may hold an 
unlimited number of 
shares, 
have 
voting 
rights 
limited 
to 
a 
maximum 
of 
5% 
of 
all 
issued UBS 
Group AG 
shares. 
This is 
to avoid 
large shareholders 
being entered 
in UBS’s 
share register 
via nominee 
companies so 
as 
to 
exercise 
influence 
without 
directly 
registering 
their 
shares 
with 
UBS.
 
Securities 
clearing 
organizations, 
such 
as 
The 
Depository Trust 
Company in 
New York, 
are 
not subject 
to this 
5% voting limit. 
Shareholders 
can 
exercise 
voting 
rights 
conferred 
by 
shares 
only if they are registered in our share register 
with voting rights. 
To 
register, 
shareholders 
must 
confirm 
that 
they 
have 
acquired 
UBS 
Group 
AG 
shares 
in 
their 
own 
name 
and 
for 
their 
own 
account. Nominee companies 
are required to 
sign an agreement 
confirming 
their 
willingness 
to 
disclose, 
upon 
our 
request, 
individual 
beneficial 
owners 
holding 
more 
than 
0.3% 
of 
all 
issued UBS Group AG shares. 
All 
shareholders 
registered 
with 
voting 
rights 
are 
entitled 
to 
participate in 
general meetings. 
If they 
do not 
wish to 
attend in 
person, they 
may issue 
instructions to 
support, reject 
or abstain 
for each individual item 
on the meeting agenda, 
either by giving 
instructions 
to an 
independent proxy 
in 
accordance 
with article 
14 
of 
the 
Articles 
of 
Association 
(the 
AoA) 
or 
by 
appointing 
another 
registered 
shareholder 
of 
their 
choice 
to 
vote 
on 
their 
behalf. 
Alternatively, 
registered 
shareholders 
may 
issue 
their 
voting 
instructions 
to 
the 
independent 
proxy 
electronically 
through 
our 
online 
voting 
platform. 
Nominee 
companies 
normally submit 
the proxy material 
to the beneficial 
owners and 
forward the collected votes to the independent proxy. 
In 2020, physical attendance at our general meetings 
was not 
possible, due 
to COVID-19-related 
restrictions, and 
voting rights 
could 
only 
be 
exercised 
through 
the 
independent 
proxy. 
The 
same set-up is planned for our AGM on 8 April 2021. 
›
 
Refer to article 14 of the Articles of Association 
of UBS Group 
AG, available at 
ubs.com/governance
, for more information 
about the issuing of instructions to independent 
voting right 
representatives 
Statutory quorums 
Motions, 
including those 
regarding 
the 
election an 
d 
re-election 
of BoD members and the election 
of the auditors, are decided at 
a 
general 
meeting 
by 
an 
absolute 
majority 
of 
the 
votes 
cast, 
excluding 
blank 
and 
invalid 
ballots. 
For 
the 
approval 
of 
certain 
specific issues, 
the Swiss 
Code of 
Obligations requires 
a positive 
vote from 
a two-thirds 
majority of 
the votes 
represented 
at the 
given 
general 
meeting, 
and 
from 
an 
absolute 
majority 
of 
the 
nominal value of 
shares represented 
thereat. Such issues 
include 
creatin
g
 
shares 
with 
privileged 
voting 
rights, 
intro
duc
ing
 
restrictions on the transferability of registered 
shares, conditional 
and 
authorized 
capital 
increases 
and 
restricti
ng
 
or 
exclu
ding
 
shareholders’ preemptive rights. 
The 
AoA 
also 
require 
a 
two-thirds 
majority 
of 
votes 
represented 
for 
approval 
of 
any
 
change 
to 
their 
provisions 
regarding the 
number of 
BoD members, any 
decision to 
remove 
one-quarter or 
more of 
the BoD 
members and 
any modification 
to the provision establishing this qualified quorum. 
Votes 
and elections 
are 
generally 
conducted electronically 
to 
ascertain 
the 
exact 
number 
of 
votes 
cast. 
Voting 
by 
a 
show 
of 
hands 
is possible 
if 
a 
clear majority 
is predictable. 
Shareholders 
representing 
at 
least 
3% 
of 
the 
votes 
represented 
may 
request 
that a 
vote or election 
be carried out 
electronically or 
by written 
ballot. 
In 
order 
to 
allow 
shareholders 
to 
clearly 
express 
their 
views on all individual 
topics, each agenda item 
is separately put 
to a 
vote and 
BoD members 
are 
elected on 
a person-by-person 
basis. 
 
 

Corporate governance and compensation | Corporate governance 
190 
Convocation of general meetings of shareholders 
The 
AGM 
must 
be 
held 
within 
six 
months 
of 
the 
close 
of 
the 
financial 
year 
(i.e., 
31 
December). 
In 
2021, 
the 
AGM 
will 
take 
place on 8 April. 
Extraordinary 
General 
Meetings 
(EGMs) 
may 
be 
convened 
whenever 
the 
BoD 
or 
the 
auditors 
consider 
it 
necessary. 
Shareholders individually 
or jointly 
representing at 
least 10% 
of 
the 
share 
capital 
may 
at 
any 
time, 
including 
during 
an 
AGM, 
require, 
by 
way 
of 
a 
written 
statement, 
that 
an 
EGM 
be 
convened to address a specific issue they put forward. 
A 
personal 
invitation, 
including 
a 
detailed 
agenda, 
is 
made 
available to 
every registered 
shareholder at 
least 20 
days ahead 
of 
each 
scheduled 
general 
meeting. 
The 
items 
on 
the 
agenda 
are also published 
in the Swiss Official 
Gazette of Commerce, as 
well as at 
ubs.com/agm.
 
Placing of items on the agenda 
Pursuant 
to 
our 
AoA
,
 
shareholders 
individually 
or 
jointly 
representing 
shares 
with an 
aggregate 
minimum 
nominal 
value 
of 
CHF 62,500 
may 
submit 
proposals 
for 
matters 
to 
be 
placed 
on the 
agenda for 
consideration at 
the next 
general meeting 
of 
shareholders. 
At 
the 
beginning 
of 
January, 
the 
invitation 
to 
submit 
such 
proposals is published in the Swiss Official 
Gazette of Commerce 
and 
at 
ubs.com/agm.
 
Requests 
for 
items 
to 
be 
placed 
on 
the 
agenda 
must 
include 
the 
actual 
motions 
to 
be 
put 
forward, 
together 
with 
a 
short 
explanation. 
Such 
requests 
must 
be 
submitted 
to 
the 
BoD 
50 
days 
prior 
to 
the 
general 
meeting 
of 
shareholders, 
including 
a 
statement 
from 
the 
depository 
bank 
confirming 
the 
number 
of 
shares 
held 
by 
the 
requesting 
shareholder(s) 
and that 
these shares 
are blocked 
from 
sale until 
the 
end 
of 
the 
general 
meeting 
of 
shareholders. 
The 
BoD 
formulates 
opinions 
on 
the 
proposals, 
which 
are 
published 
together with the motions. 
Registrations in the share register 
Around 
220,000 shareholders 
are 
directly 
registered 
in the 
UBS 
share register 
and some 186,000 
US shareholders 
are registered 
via nominee companies. 
The share register of 
UBS Group AG is an 
internal, non-public 
register 
subject 
to 
statutory 
confidentiality, 
secrecy, 
privacy 
and 
data protection regulations protecting registered shareholders. In 
general, third parties 
and shareholders 
have no inspection 
rights 
with 
regard to 
data related 
to other 
shareholders. 
Disclosure of 
such 
data 
is 
permitted 
only 
in 
specific 
and 
limited 
instances. 
In 
line with the Swiss Federal Act on Data 
Protection, the disclosure 
of personal 
data as 
defined thereunder 
is only 
allowed with 
the 
consent of the registered shareholder and in cases where there is 
an overriding private or public interest or if 
explicitly provided for 
by 
Swiss 
law. 
The 
Swiss 
Federal 
Act 
on 
Financial 
Market 
Infrastructures and 
Market Conduct in 
Securities and 
Derivatives 
Trading 
contains specific 
reporting 
duties, such 
as 
in relation 
to 
significant 
shareholders 
(refer 
to 
“Significant 
shareholders” 
in 
this 
section 
for 
more 
information). 
Disclosure 
may 
also 
be 
required or 
requested by 
a court 
of a 
competent jurisdiction, 
by 
any 
regulatory 
body 
that 
regulates 
the 
conduct 
of 
UBS 
Group 
AG or by other statutory provisions. 
The general 
rules for 
entry into 
our Swiss 
share register 
with 
voting 
rights 
as 
described 
in 
article 
5 
of 
our 
AoA 
also 
apply 
before 
general 
meetings 
of 
shareholders. 
The 
same 
rules 
apply 
to our 
US transfer 
agent that 
operates the 
US share 
register for 
all 
UBS 
Group 
AG 
shares 
in 
a 
custodian 
account 
in 
the 
US. 
In 
order 
to 
determine 
the 
voting 
rights 
of 
each 
shareholder, 
our 
share 
register 
generally 
closes 
two 
business 
days 
prior 
to 
a 
general meeting. Our 
independent proxy agent 
processes voting 
instructions 
from 
shareholders 
as 
long 
as 
technically 
possible, 
generally also 
until two 
business days before 
a general meeting. 
Such 
technical 
closure 
of 
our 
share 
register 
facilitates 
the 
determination 
of 
the 
actual 
voting 
rights 
of 
every 
shareholder 
that 
issued 
a 
voting 
instruction. 
Irrespective 
of 
this
 
technical 
closure, shares 
that are registered 
in our share 
register are 
never 
immobilized 
and 
are 
freely 
tradable 
at 
any 
time, 
irrespective 
of 
any issued voting instructions. 
 
 
 

 
191 
Board of Directors
The 
BoD 
of 
UBS 
Group 
AG, 
led 
by 
the 
Chairman, 
consists 
of 
between 6 and 12 members, as per our AoA. 
The 
BoD 
decides 
on 
the 
strategy 
of 
the 
Group
,
 
upon 
recommendation 
by 
the 
Group 
Chief 
Executive 
Officer 
(the 
Group 
CEO)
,
 
and 
is 
responsible 
for 
the 
overall 
direction, 
supervision and 
control of 
the Group 
and its 
management. It 
is 
also responsible for supervising 
compliance with applicable laws, 
rules 
and 
regulations. 
The 
BoD 
exercises 
oversight 
over 
UBS 
Group AG and its 
subsidiaries, and is responsible for 
establishing 
a 
clear 
Group 
governance 
framework 
to 
provide 
effective 
steering 
and 
supervision 
of 
the 
Group, 
taking 
into 
account 
the 
material 
risks 
to 
which 
UBS 
Group 
AG 
and 
its 
subsidiaries 
are 
exposed. 
The 
BoD 
has 
ultimate 
responsibility 
for 
the 
success of 
the 
Group 
and 
for 
delivering 
sustainable 
shareholder 
value 
within 
a 
framework 
of 
prudent 
and 
effective 
controls. 
It 
approves 
all 
financial 
statements 
and 
appoints 
and 
removes 
all 
GEB members. 
The 
BoD 
of 
UBS AG, 
led 
by 
the 
Chairman, 
decides 
on 
the 
strategy 
of 
UBS AG 
upon 
recommendation 
by 
the 
President 
of 
its
 
Executive 
Board 
and 
exercises 
the 
ultimate 
supervision 
o
f
 
management. 
Its 
ultimate 
responsibility 
for 
the 
success 
of 
UBS AG is exercised subject to the parameters set by the Group. 
Members of the Board of Directors 
At 
the 
AGM 
on 
29 
April 
2020
,
 
Jeremy 
Anderson, 
William 
Dudley, 
Reto 
Francioni, 
Fred 
Hu, 
Julie 
Richardson, 
Beatrice 
Weder 
di Mauro, 
Dieter 
Wemmer 
and 
Jeanette 
Wong 
were 
re-
elected 
as 
members 
of 
the 
BoD. 
David 
Sidwell, 
Isabelle 
Romy 
and Robert 
Scully did 
not stand 
for re 
-election; the 
biographies 
of David 
Sidwell, Isabelle 
Romy and 
Robert Scully 
can be 
found 
on 
pages 
215 
and 
218 
of 
the 
UBS 
Group 
AG 
Annual 
Report 
2019, 
available under 
“Annual reporting” 
at 
ubs.com/investors
. 
Mark 
Hughes 
and 
Nathalie 
Rachou 
were 
elected 
for 
their 
first 
term. At 
that same AGM, 
Axel Weber 
was re-elected Chairman, 
and 
Julie 
Richardson, 
Reto 
Francioni, 
Dieter 
Wemmer 
and 
Jeanette 
Wong 
were elected 
as members 
of the 
Compensation 
Committee. 
ADB 
Altorfer 
Duss 
& 
Beilstein 
AG 
was 
elected 
as 
independent 
proxy 
agent. 
Following 
his 
re-election, 
the 
BoD 
appointed 
Jeremy 
Anderson 
as 
Vice 
Chairman 
and 
Senior 
Independent Director of UBS Group AG. 
On 
15 
January 
2021
,
 
the 
BoD 
announced 
that 
Beatrice 
Weder 
di 
Mauro 
would 
not 
stand 
for 
re-election 
at 
the 
forthcoming 
AGM, 
after serving 
on 
the 
BoD of 
UBS 
Group AG 
and 
UBS 
AG 
for 
nine 
years, 
and 
that 
Claudia 
Böckstiegel 
and 
Patrick Firmenich would be nominated for election to 
the BoD of 
UBS Group 
AG and 
UBS AG 
at the 
forthcoming annual 
general 
meetings. 
Claudia 
Böckstiegel 
is 
the 
General 
Counsel 
of 
Roche 
Holding AG 
and Patrick 
Firmenich is 
the Chairman 
of the 
Board 
of 
Firmenich 
International 
SA, 
the 
world’s 
largest 
privately 
owned fragrances and flavorings company. 
Article 
31 
of 
our 
AoA 
limits 
the 
number 
of 
mandates 
that 
members 
of 
the 
BoD 
may 
hold 
outside 
the 
UBS 
Group 
to 
four 
mandates 
in 
listed 
companies 
and 
five 
additional 
mandates 
in 
non
-
listed 
companies
.
 
Mandates 
in 
companies 
that 
are 
controlled 
by 
us 
or 
that 
control 
us 
are 
not 
subject 
to 
this 
limitation. 
In addition, 
members of 
the 
BoD 
may hold 
no 
more 
than 
10 
mandates 
at 
UBS’s 
request 
and 
10 
mandates 
in 
associations, 
charitable 
organizations, 
foundations, 
trusts, 
and 
employee 
welfare 
foundatio
ns. 
On 
31 
December 
2020
,
 
no 
member 
of 
the 
BoD 
reached 
the 
thresholds 
described 
in 
article 
31 of our AoA. 
The following biographies provide 
information about the BoD 
members 
who 
were in 
office in 
2020 and 
the Group 
Company 
Secretary. 
In 
addition 
to 
information 
on 
mandates, 
the 
biographies 
include 
information 
on 
memberships 
or 
other 
activities 
or 
functions, 
as 
required 
by 
the 
SIX 
Swiss 
Exchange 
Corporate Governance Directive. 
No member of the BoD currently carries out or has carried out 
over 
the past 
three years 
operational management 
tasks within 
the 
Group
;
 
therefore
,
 
all 
members 
of 
the 
Board 
are 
non
-
executive members. 
All 
members 
of 
UBS 
Group 
AG’s 
BoD 
are 
also 
members 
of 
UBS AG’s BoD, and committee membership 
is the same for both 
entities. The Senior Independent Director 
function relates only to 
UBS Group AG. 
In 
2020, 
UBS 
AG’s 
BoD 
had 
three 
permanent 
committees: 
the 
Audit 
Committee, 
the 
Compensation 
Committee 
and 
the 
Risk 
Committee. 
In 
addition 
to 
those 
permanent 
committees, 
UBS 
Group 
AG 
also 
had 
the 
Corporate 
Culture 
and 
Responsibility 
Committee 
and 
the 
Governance 
and 
Nominating 
Committee. 
 

Corporate governance and compensation | Corporate governance 
192 
 
 
 
Axel A. Weber 
 
Chairman, non-executive member of the Board 
 
 
Year of initial election 
UBS: 2012 (UBS Group AG: 2014, 
UBS AG: 2012) 
 
Year of birth | Nationality 
1957 | German 
 
Professional history and education 
Axel A. Weber was elected to the BoD of UBS AG at 
the 2012 AGM and 
of UBS 
Group AG 
in 2014. He 
is Chairman of 
the BoD 
of both UBS 
AG 
and 
UBS 
Group 
AG. 
He 
has 
chaired 
the 
Governance and 
Nominating 
Committee 
since 
2012 
and 
became 
Chairperson 
of 
the 
Corporate 
Culture and Responsibility Committee in 2013. Mr. 
Weber was President 
of the German Bundesbank between 2004 and 2011, during which time 
he also 
served as 
a member 
of the 
Governing Council 
of the 
European 
Central 
Bank, as 
a 
member 
of 
the 
Board 
of 
Directors 
of 
the 
Bank 
for 
International 
Settlements, 
as 
German 
governor 
of 
the 
International 
Monetary 
Fund, 
and 
as 
a 
member 
of 
the 
G7 
and 
G20 
Ministers 
and 
Governors. 
He 
was 
a 
member 
of 
the 
steering 
committees 
of 
the 
European Systemic 
Risk Board 
in 2011 
and the 
Financial Stability 
Board 
from 2010 to 2011. From 2002 to 2004, Mr. Weber served as a member 
of 
the 
German 
Council 
of 
Economic 
Experts. 
His 
academic 
career 
encompasses 
professorships 
in 
international 
economics, 
monetary 
economics and economic theory at the universities of Cologne, Frankfurt 
am 
Main, 
Bonn 
and 
Chicago. 
Mr. 
Weber 
holds 
a 
master’s 
degree 
in 
economics 
from 
the 
University 
of 
Constance 
and 
a 
PhD 
in 
economics 
from the University of Siegen, where 
he also received his habilitation. He 
holds 
honorary 
doctorates 
from 
the 
universities 
of 
Duisburg-Essen 
and 
Constance. 
 
Other activities and functions 
–
 
Member of the Board of the Swiss Bankers Association 
–
 
Member of the Board of Trustees of Avenir Suisse 
–
 
Member of the Board of the Swiss Finance Council 
–
 
Chairman of the Board of the Institute of International 
Finance 
–
 
Member of the European Financial Services Round Table 
–
 
Member of the European Banking Group 
–
 
Member of the International Advisory Councils 
of the China Banking 
and Insurance Regulatory Commission and China 
Securities Regulatory 
Commission 
–
 
Member of the International Advisory Panel, 
Monetary Authority of 
Singapore 
–
 
Member of the Group of Thirty, Washington, DC 
–
 
Chairman of the Board of Trustees of DIW Berlin 
–
 
Member of the Advisory Board of the Department of 
Economics, 
University of Zurich 
–
 
Member of the Trilateral Commission 
 
Key competencies 
–
 
Finance, audit, accounting 
–
 
Risk management, compliance and legal 
–
 
Regulatory authority, central bank 
–
 
ESG (environmental, social and governance) 
 
Leadership experience 
–
 
CEO, Chairman 
Jeremy Anderson 
 
Vice Chairman and 
Senior Independent Director, 
non-executive member 
of the Board
 
 
Year of initial election 
UBS: 2018 
 
Year of birth | Nationality 
1958 | British 
 
Professional history and education 
Jeremy Anderson was elected to the BoD of UBS AG 
and UBS Group AG 
at the 2018 AGM. He is 
Vice Chairman and Senior Independent Director 
and 
has 
chaired 
the 
Audit 
Committee 
since 
2018 
and 
has 
been 
a 
member of the 
Governance and Nominating Committee 
since 2019. He 
was 
Chairman of 
Global Financial 
Services at 
KPMG International 
from 
2010 to 2017. He has spent over 30 years working with the 
banking and 
insurance 
industry 
in 
an 
advisory 
capacity, 
covering 
a 
broad 
range 
of 
topics, 
including 
strategy, 
audit 
and 
risk 
management, 
technology-
enabled transformation, 
mergers and 
bank restructuring. 
Mr. 
Anderson 
was 
the founding 
sponsor of 
KPMG’s Global 
Fintech Network 
in 
2014 
and is 
a regular 
participant at 
fintech events 
across Europe, 
the US 
and 
Asia. He 
joined KPMG 
International in 
2004 and 
was Head 
of Financial 
Services 
KPMG 
Europe 
from 
2006 
to 
2011 
as 
well 
as 
Head 
of 
Clients 
and Markets KPMG 
Europe from 
2008 to 2011. 
From 2004 
to 2008 he 
was 
in 
charge 
of 
its 
UK 
Financial 
Services 
Practice. 
Prior 
to 
that, 
he 
served 
as 
a 
member 
of 
the 
Group 
Management 
Board 
of 
Atos 
Origin 
and as 
Head of 
its UK 
operations after Atos 
acquired KPMG 
Consulting 
UK 
in 
2002. 
In 
this 
capacity 
he 
managed 
Atos’s 
consulting, 
systems 
integration and 
IT outsourcing 
services in 
the UK. 
Mr. 
Anderson joined 
KPMG’s UK 
consulting business 
in 1985 
and led 
the firm 
as CEO 
from 
2000 to 
2002, having 
previously been 
a Partner 
in its 
financial services 
business. 
He 
started 
his 
career 
as 
a 
software 
developer 
with 
Triad 
Computing Systems in 1980. Mr. 
Anderson holds a bachelor’s degree 
in 
economics from University College London. 
 
Listed company boards 
–
 
Member of the Board of Prudential plc 
 
Other activities and functions 
–
 
Trustee of the UK’s Productivity Leadership Group 
–
 
Trustee of Kingham Hill Trust 
–
 
Trustee of St. Helen’s Bishopsgate 
 
Key competencies 
–
 
Banking (wealth management, asset management, personal 
and 
corporate banking; insurance) 
–
 
Finance, audit, accounting 
–
 
Risk management, compliance and legal 
–
 
Technology, 
cybersecurity 
 
Leadership experience 
–
 
Executive board leadership 

 
193 
 
 
 
William C. Dudley 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2019 
 
Year of birth | Nationality 
1953 | American (US) 
 
Professional history and education 
William C. Dudley was elected to the BoD 
of UBS AG and UBS Group AG 
at the 2019 AGM. He has 
been a member of the Corporate Culture 
and 
Responsibility 
Committee 
and 
of 
the 
Risk 
Committee 
since 
2019 
and 
became 
a 
member 
of 
the 
Governance 
and 
Nominating 
Committee 
in 
2020. Currently, 
Mr. Dudley is 
a Senior Research Scholar at the Griswold 
Center 
for 
Economic Policy 
Studies at 
Princeton 
University. 
He 
became 
CEO of the Federal 
Reserve Bank of New York 
(the NY Fed) in 
2009 and 
held that 
position until 
2018. During 
this time, 
his focus 
areas included 
cultural behavior and social and governance topics in the financial world. 
As CEO, 
he served 
as the 
Vice Chairman 
and a 
permanent member 
of 
the 
Federal 
Open Market 
Committee. 
Previously, 
Mr. 
Dudley 
served as 
Executive Vice President 
of the 
Markets Group 
at the 
NY Fed 
and Head 
of the Markets 
Group from 2007 
to 2009. Prior 
to his time 
with the NY 
Fed, Mr. 
Dudley joined 
Goldman Sachs 
in 1986 
and held 
several senior 
management positions. He was a Partner and Managing Director and for 
a 
decade the 
Chief US 
Economist. In 
2012, Mr. 
Dudley was 
appointed 
Chairman of the Committee 
on the Global Financial 
System of the 
Bank 
for International 
Settlements (BIS). 
Prior to 
that, he 
served as 
Chairman 
of the former Committee on Payment and Settlement Systems of the BIS 
from 2009 
to 2012. He 
was a member 
of the 
Board of 
Directors of 
the 
BIS from 2009 to 
2018. Mr. Dudley 
holds a bachelor’s degree from 
New 
College 
of 
Florida 
and 
received 
his 
doctorate 
in 
economics 
from 
the 
University of California, Berkeley in 1982. 
 
Non-listed company boards 
–
 
Member of the Board of Treliant LLC 
 
Other activities and functions 
–
 
Member of the Group of Thirty 
–
 
Member of the Council on Foreign Relations 
–
 
Chair of the Bretton Woods Committee Board of Directors 
–
 
Member of the Board of the Council for Economic 
Education 
 
Key competencies 
–
 
Investment banking, capital markets 
–
 
Risk management, compliance and legal 
–
 
Regulatory authority, 
central bank 
–
 
ESG (environmental, social and governance) 
 
Leadership experience 
–
 
CEO, 
Chairman 
Reto Francioni 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2013 (UBS Group AG: 2014, UBS AG: 2013) 
 
Year of birth | Nationality 
1955 | Swiss 
 
Professional history and education 
Reto Francioni was elected to the BoD of 
UBS AG at the 2013 AGM and 
of 
UBS 
Group 
AG 
in 
2014. 
He 
has 
been 
a 
member 
of 
the 
Risk 
Committee since 2015 and of the Compensation Committee since 2019. 
He was CEO 
of Deutsche Börse 
AG from 2005 
to 2015. Since 
2006, he 
has 
been a 
professor 
of 
Financial Market 
Research 
at 
the University 
of 
Basel. 
From 
2002 
to 
2005, 
Mr. 
Francioni 
was 
Chairman 
of 
the 
Supervisory Board and 
President of the 
SWX Group, Zurich, 
placing him 
at the 
heart of 
digitalization within 
the industry. 
Mr. 
Francioni was 
Co-
CEO 
and 
Spokesman 
for 
the 
Board 
of 
Directors 
of 
Consors 
AG, 
Nuremberg, 
from 
2000 
to 
2002. 
Between 
1993 
and 
2000, 
he 
held 
various management 
positions at 
Deutsche Börse 
AG, including 
that of 
Deputy 
CEO 
from 
1999 
to 
2000. 
There
 
he 
drove 
a 
fundamental 
transformation to shape it as a world leader in technology. From 1992 to 
1993, he served in the corporate finance division of Hoffmann-La Roche, 
Basel. 
Prior 
to 
that, 
he 
was 
on 
the 
Executive 
Board 
of 
Association 
Tripartite 
Bourses for 
several years. 
From 
1985 to 
1988, he 
worked for 
Credit 
Suisse, 
holding 
positions 
in 
the 
equity 
sales 
and 
legal 
departments. He started his professional career in 1981 in the commerce 
division of 
Union Bank 
of Switzerland. 
Mr. 
Francioni completed 
his law 
degree at the University 
of Zurich in 1981 and 
earned his PhD from 
that 
same university in 1987. 
 
Listed company boards 
–
 
Member of the Board of Coca-Cola HBC AG (Senior Independent 
Non-Executive Director, chair of the nomination committee) 
 
Non-listed company boards 
–
 
Chairman of the Board of Swiss International 
Air Lines AG 
–
 
Member of the Board of MTIP AG 
–
 
Executive Director and member of myTAMAR GmbH 
 
Key competencies 
–
 
Investment banking, capital markets 
–
 
Risk management, compliance and legal 
–
 
Human resources management, including compensation 
–
 
Technology, 
cybersecurity 
 
Leadership experience 
–
 
CEO, 
Chairman 
 

Corporate governance and compensation | Corporate governance 
194 
 
 
 
Fred Hu 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2018 
 
Year of birth | Nationality 
1963 | Chinese 
 
Professional history and education 
Fred Hu 
was elected 
to the 
BoD of 
UBS AG 
and UBS 
Group AG 
at the 
2018 AGM. He 
has been a member 
of the Governance and 
Nominating 
Committee 
and 
the 
Risk 
Committee 
since 
2020. 
Mr. 
Hu 
has 
been 
Chairman of 
Primavera Capital Group, 
a China-based 
global investment 
firm, 
since 
2010. 
Through 
his 
numerous 
investments 
in 
leading 
technology 
companies 
over 
the 
years, 
he 
has 
obtained 
profound 
knowledge 
in 
the 
areas 
of 
mobile 
internet, 
digitalization 
and 
cybersecurity. 
Prior 
to 
founding 
Primavera, 
Mr. 
Hu 
held 
various 
senior 
positions at 
Goldman Sachs 
from 1997 
to 2010. 
He was 
a Partner 
and 
Chairman of 
Greater China 
from 2008 
to 2010 
and a 
Partner and 
Co-
Head of 
Investment Banking China 
from 2004 
to 2008. 
Before that, 
he 
held the position of Goldman Sachs’s Chief China Economist. From 1991 
to 1996, 
he served as 
an economist at 
the International Monetary 
Fund 
in 
Washington, 
DC, 
and 
after 
that 
was 
Co-Director 
of 
the 
National 
Center 
for 
Economic 
Research 
and 
a 
professor 
at 
Tsinghua 
University. 
Mr. Hu holds a 
master’s in engineering science from Tsinghua University, 
and a master’s and a PhD in economics from Harvard University. 
 
Listed company boards 
–
 
Non-executive Chairman of the Board of Yum China Holdings 
(chair of the nomination and governance committee) 
–
 
Member of the Board of ICBC 
–
 
Member of the Board of Hong Kong Exchanges and 
Clearing Ltd. 
 
Non-listed company boards 
–
 
Chairman of Primavera Capital Ltd 
–
 
Member of the Board of Ant Group 
–
 
Member of the Board of Minsheng Financial Leasing Co. 
 
Other activities and functions 
–
 
Trustee of the China Medical Board 
–
 
Governor of the Chinese International 
School in Hong Kong 
–
 
Co-Chairman of the Nature Conservancy Asia Pacific Council 
 
Key competencies 
–
 
Investment banking, capital markets 
–
 
Risk management, compliance and legal 
–
 
Technology, 
cybersecurity 
–
 
Regulatory authority, central 
bank 
 
Leadership experience 
–
 
CEO, 
Chairman 
Mark Hughes 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2020 
 
Year of birth | Nationality 
1958 | Canadian, British and American (US) 
 
Professional history and education 
Mark Hughes was 
elected to the 
BoD of UBS 
AG and UBS 
Group AG at 
the 2020 
AGM. He 
has been 
a member 
of the 
Corporate Culture 
and 
Responsibility 
Committee 
and 
chaired 
the 
Risk 
Committee 
since 
2020. 
Mr. Hughes was Group Chief Risk Officer 
of Royal Bank of Canada (RBC) 
from 2014 
to 2018. 
He joined 
RBC in 
1981 and 
spent his 
entire career 
working for 
that bank 
in Canada, 
the US 
and the 
UK. He 
held various 
senior 
leadership 
positions
,
 
such 
as 
Chief 
Operating 
Officer 
Capital 
Markets (2008 to 
2013) and Head 
of Global Credit 
(2001 to 2008). 
Mr. 
Hughes served 
on boards 
of RBC’s 
subsidiaries for 
more than 
20 years. 
Mr. 
Hughes 
holds 
a 
Bachelor 
of 
Laws 
degree 
from 
the 
University 
of 
Leeds and an MBA in finance from Manchester Business School. 
 
Other activities and functions 
­
 
Chair of the Board of Directors of the Global Risk Institute 
­
 
Visiting lecturer at the University of Leeds 
­
 
Senior advisor to McKinsey & Company 
 
Key competencies 
–
 
Banking (wealth management, asset management, personal 
and 
corporate banking; insurance) 
–
 
Investment banking, capital markets 
–
 
Risk management, compliance and legal 
–
 
Technology, 
cybersecurity 
 
Leadership experience 
­
 
Executive board leadership 
 
 

 
195 
 
 
 
Nathalie Rachou 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2020 
 
Year of birth | Nationality 
1957 | French 
 
Professional history and education 
Nathalie Rachou was elected 
to the BoD of 
UBS AG and 
UBS Group AG 
at the 2020 AGM. 
She has been a 
member of the Risk 
Committee since 
2020. 
Ms. 
Rachou 
was 
a 
senior 
advisor 
for 
Clartan 
Associés 
(formerly 
Rouvier 
Associés) 
from 
2015 
to 
April 
2020. 
In 
1999, 
she 
founded 
Topiary Finance Ltd, an asset management company based in London, of 
which she was CEO until its merger 
with Rouvier Associés in 2014. From 
1978 
to 
1999, 
Ms. 
Rachou held 
a 
number 
of 
positions within 
Banque 
Indosuez and Crédit Agricole Indosuez, including roles 
in capital markets 
and 
as 
Chief 
Operating 
Officer 
of 
the 
brokerage 
subsidiary 
of 
Banque 
Indosuez. 
Ms. 
Rachou 
holds 
a 
master’s 
degree 
in 
management 
from 
HEC in Paris and an executive MBA from INSEAD. 
 
Listed company boards 
­
 
Member of the Board of Euronext N.V. 
­
 
Member of the Board of Veolia Environnement SA 
 
Key competencies 
­
 
Banking (wealth management, asset management, personal 
and 
corporate banking; insurance) 
­
 
Investment banking, capital markets 
­
 
Risk management, compliance and legal 
­
 
Finance, audit, accounting 
Julie G. Richardson 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2017 
 
Year of birth | Nationality 
1963 | American (US) 
 
Professional history and education 
Julie G. 
Richardson was 
elected to 
the BoD 
of UBS 
AG and 
UBS Group 
AG 
at 
the 
2017 
AGM. 
She 
has 
been a 
member 
of 
the Compensation 
Committee 
since 
2018 
and 
its 
Chairperson 
since 
2019. 
She 
also 
has 
been 
a 
member 
of 
the 
Risk 
Committee 
since 
2017 
and 
of 
the 
Governance 
and 
Nominating 
Committee 
since 
2019. 
From 
2003 
to 
2012, Ms. Richardson was a Partner and Head of the New York Office of 
Providence 
Equity 
Partners, 
a 
global 
private 
equity 
firm 
specializing 
in 
equity 
investments 
in 
media, 
communications, 
education 
and 
information companies. She 
acted as a 
senior advisor to 
the partnership 
until 2014. From 1998 to 2003, Ms. Richardson served as Vice Chairman 
of the 
Investment Banking division 
of JPMorgan Chase 
& Co. 
and Head 
of 
its 
Global 
Telecommunications, 
Media 
and 
Technology 
group. 
Throughout 
her 
career, 
she 
has 
spent 
significant 
time 
with 
both 
incumbent 
and 
new 
technology 
companies, 
including 
being 
a 
board 
member, since 2015, of a digital knowledge management company and, 
since 
2019, 
of 
a 
leading 
cloud 
monitoring 
company. 
She 
began 
her 
career in 
1986 with 
Merrill Lynch, 
where she 
worked until 
1998, in 
her 
last 
position 
as 
Managing 
Director 
Media 
and 
Communications 
Investment 
Banking. 
Ms. 
Richardson 
graduated 
from 
the 
University 
of 
Wisconsin–Madison with a bachelor’s degree in business 
administration. 
 
Listed company boards 
–
 
Member of the Board of Yext (chair of the audit committee) 
–
 
Member of the Board of Vereit, Inc. (chair of the compensation 
committee) 
–
 
Member of the Board of Datadog (chair of the audit committee) 
 
Key competencies 
–
 
Investment banking, capital markets 
–
 
Risk management, compliance and legal 
–
 
Human resources management, including compensation 
–
 
Technology, 
cybersecurity
 
 
 

Corporate governance and compensation | Corporate governance 
196 
 
 
 
Beatrice Weder di Mauro 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2012 (UBS Group AG: 2014, UBS AG: 2012) 
 
Year of birth | Nationality 
1965 | Swiss and Italian 
 
Professional history and education 
Beatrice Weder di Mauro was elected to the BoD of UBS AG at the 2012 
AGM 
and 
of UBS 
Group AG 
in 
2014. She 
has 
been a 
member 
of 
the 
Audit 
Committee since 
2012 and 
became a 
member of 
the Corporate 
Culture 
and 
Responsibility 
Committee 
in 
2017. 
She 
was 
a 
member 
of 
the 
Risk 
Committee 
from 
2013 
to 
2017. 
Since 
2019, 
Ms. 
Weder 
di Mauro 
has 
been 
a 
professor 
of 
international 
economics 
at 
the 
Graduate Institute Geneva 
(IHEID) and since 
2018 has been 
President of 
the Centre for Economic 
Policy Research in London. 
Since 2016, she has 
been 
a 
research 
professor 
and 
distinguished 
fellow 
at 
the 
Emerging 
Markets Institute at 
INSEAD in Singapore. 
From 2001 
to 2018, she 
held 
the Chair 
of International 
Macroeconomics at 
the Johannes 
Gutenberg 
University 
of 
Mainz 
and 
was 
a 
member 
of 
the 
German 
Council 
of 
Economic Experts 
from 2004 
to 2012. 
She held 
visiting positions 
at the 
International Monetary 
Fund 
(IMF) 
in 
Washington, 
DC, 
at 
the 
National 
Bureau 
of 
Economic 
Research 
in 
Cambridge, 
MA, 
and 
at 
the 
United 
Nations University in Tokyo. Prior 
to that, she worked as an economist at 
the IMF and the World Bank in Washington, DC. She received a PhD and 
a habilitation in economics from 
the University of Basel. Since 2005, 
Ms. 
Weder di Mauro has served as 
an independent director on the boards 
of 
globally 
leading 
companies 
in 
development 
finance, 
pharmaceuticals, 
technology and insurance. 
 
Non-listed company boards 
–
 
Member of the Supervisory Board of Robert Bosch GmbH 
 
Other activities and functions 
–
 
Member of the Swiss National COVID-19 Science 
Task Force, Bern 
–
 
Member of the French Commission sur l’avenir des finances 
publiques 
–
 
Member of the Foundation Board of the International 
Center for 
Monetary and Banking Studies (ICMB) 
–
 
Member of the Franco-German Council of Economic 
Experts 
–
 
President of the Centre 
for Economic Policy Research 
–
 
Commissioner on Pan-European Commission on Health and 
Sustainable Development, 
the World Health Organization, Geneva 
–
 
Advisor to the Board of Unigestion 
 
Key competencies 
–
 
Finance, audit, accounting 
–
 
Risk management, compliance and legal 
–
 
Regulatory authority, central bank 
–
 
ESG (environmental, social and governance) 
Dieter Wemmer 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2016 
 
Year of birth | Nationality 
1957 | Swiss and German 
 
Professional history and education 
Dieter Wemmer 
was elected to 
the BoD of 
UBS AG and 
UBS Group AG 
at 
the 
2016 
AGM. 
He 
has 
been 
a 
member 
of 
the 
Compensation 
Committee 
since 
2018. 
In 
2019, 
he 
became 
a 
member 
of 
the 
Audit 
Committee and in 
2020, a member 
of the Governance 
and Nominating 
Committee. Mr. 
Wemmer was Chief Financial Officer (CFO) of 
Allianz SE 
from 
2013 to 
2017. He 
joined Allianz 
SE 
in 2012 
as a 
member of 
the 
Board of Management, 
responsible for the insurance 
business in France, 
Benelux, 
Italy, 
Greece 
and 
Turkey 
and 
for 
the 
“Global 
Property 
& 
Casualty” 
Center 
of 
Competence. 
He 
was 
CFO 
of 
Zurich 
Insurance 
Group 
from 
2007 
to 
2011. 
From 
2010 
to 
2011, 
he 
was 
Zurich’s 
Regional Chairman 
of Europe. 
Prior to 
that, 
Mr. 
Wemmer was 
CEO of 
the 
Europe 
General Insurance 
business and 
member 
of Zurich’s 
Group 
Executive 
Committee 
from 
2004 
to 
2007. 
He 
held 
various 
other 
management 
positions 
in 
the 
Zurich 
Group, 
such 
as 
Chief 
Operating 
Officer 
of 
the 
Europe 
General 
Insurance 
business 
from 
2003 
to 
2004, 
Head 
of 
Mergers 
and 
Acquisitions 
from 
1999 
to 
2003 
and 
Head 
of 
Financial Controlling from 1997 
to 1999. Mr. 
Wemmer began his career 
in 
the insurance 
industry within 
the Zurich 
Group 
in 1986 
in Cologne, 
after graduating 
from the 
University of 
Cologne with a 
master’s degree 
and acquiring his doctorate in mathematics in 1985. 
 
Listed company boards 
–
 
Member of the Board of Ørsted A/S (chair of the 
audit and risk 
committee) 
 
Non-listed company boards 
–
 
Chairman of Marco Capital Holdings Limited, 
Malta 
 
Other activities and functions 
–
 
Member of the Berlin Center of Corporate Governance 
 
Key competencies 
–
 
Banking (wealth management, asset management, personal 
and 
corporate banking; insurance) 
–
 
Investment banking, capital markets 
–
 
Finance, audit, accounting 
–
 
Risk management, compliance and legal 
 
Leadership experience 
–
 
Executive board leadership 
 
 

 
 
197 
 
 
 
Jeanette Wong 
 
Non-executive member of the Board 
 
Year of initial election 
UBS: 2019 
 
Year of birth | Nationality 
1960 | Singaporean 
 
Professional history and education 
Jeanette Wong was elected to the BoD of UBS AG and UBS Group AG at 
the 2019 
AGM. She 
has been 
a member 
of the 
Audit Committee 
since 
2019. In 2020, 
she became a member 
of the Compensation Committee 
and a 
member of 
the Corporate 
Culture and 
Responsibility Committee. 
Ms. Wong was Group 
Executive responsible for the institutional 
banking 
business at the 
Singapore-based DBS Group 
from 2008 to 
March 2019, 
encompassing Corporate Banking, Global 
Transaction 
Services, Strategic 
Advisory 
and 
Mergers 
& 
Acquisitions. 
Previously, 
she 
served 
as 
Chief 
Financial Officer of 
the DBS Group 
between 2003 and 
2008. Ms. Wong 
has spent 
more than 
30 years 
working in 
different senior 
management 
roles within the 
financial industry in Singapore. She 
started her career in 
1982 with 
positions at 
Banque Paribas 
and Citibank, 
before 
helping to 
build 
up 
JP 
Morgan’s 
Asia 
and
 
emerging 
markets 
business 
over 
a 
sixteen-year 
career 
with 
the 
firm. 
Ms. 
Wong 
holds 
a 
bachelor’s 
in 
business administration from the National University of Singapore and an 
MBA from the University of Chicago. 
 
Listed company boards 
–
 
Member of the Board of EssilorLuxottica (chair of the corporate 
social 
responsibility committee)
 
 
Non-listed company boards 
–
 
Member of the Board of Jurong Town Corporation 
–
 
Member of the Board of PSA International 
–
 
Member of the Board of FFMC Holdings Pte. Ltd. 
and of Fullerton 
Fund Management Company Ltd. 
 
Other activities and functions 
–
 
Member of the Global Advisory Board, Asia, University of 
Chicago 
Booth School of Business 
–
 
Member of the Securities Industry Council 
–
 
Member of the Board of Trustees of the National University of 
Singapore 
 
Key competencies 
–
 
Banking (wealth management, asset management, personal 
and 
corporate banking; insurance) 
–
 
Investment banking, capital markets 
–
 
Finance, audit, accounting 
–
 
ESG (environmental, social and governance) 
 
Leadership experience 
–
 
Executive board leadership 
Markus Baumann 
 
Group Company Secretary 
 
 
 
 
Year of birth | Nationality 
1963 | Swiss 
 
Professional history and education 
Markus 
Baumann 
was 
appointed 
Group 
Company 
Secretary of 
UBS Group 
AG and 
Company Secretary 
of 
UBS 
AG 
by 
the 
BoD in 
2017. He 
has 
been 
with 
UBS 
for 
more 
than 
40 
years 
and 
has 
held 
a 
broad 
range 
of 
leadership 
roles 
across 
the 
Group 
in 
Switzerland, 
the 
US 
and 
Japan, 
including 
Chief 
of 
Staff 
to 
the 
Chairman 
of 
the 
BoD 
since 
2015 
and 
Chief Operating Officer of Group Internal Audit from 
2006 
to 
2015. 
Before 
that, 
he 
worked 
as 
Chief 
Operating Officer EMEA for UBS Asset Management. 
Earlier 
in his 
career, 
Mr. 
Baumann worked 
in Japan 
for 
four 
years, 
as 
Corporate 
Planning 
Officer 
and 
assistant 
to 
the 
CEO. 
He 
joined 
UBS 
in 
1979 
as 
a 
banking 
apprentice, 
covering 
the 
full 
range 
of 
universal 
banking 
activities. 
Mr. 
Baumann 
holds 
an 
MBA 
from 
INSEAD 
Fontainebleau 
and 
a 
Swiss 
Federal Diploma as a Business Analyst. 
 
 

Corporate governance and compensation | Corporate governance 
198 
Elections and terms of office 
Shareholders 
annually 
elect 
each 
member 
of 
the 
BoD 
individually, 
as 
well 
as 
the 
Chairman 
and 
the 
members 
of 
the 
Compensation Committee, based on proposals from the BoD. 
As set out in 
the Organization Regulations, BoD 
members are 
normally 
expected 
to 
serve 
for 
at 
least 
three 
years. 
No 
BoD 
member may serve for more than 10 consecutive terms of office; 
in exceptional circumstances the BoD may extend that limit. 
›
 
Refer to “Skills, expertise and training 
of the Board of Directors” 
in this section for more information 
Organizational principles and structure 
Following 
each 
AGM, 
the 
BoD 
meets 
to 
appoint 
one 
or 
more 
Vice 
Chairmen, 
a 
Senior 
Independent 
Director, 
the 
BoD 
committee 
members 
(other 
than the 
Compensation Committee 
members, 
who 
are 
elected 
by 
the 
shareholders) 
and 
the 
respective 
committee 
Chairpersons. 
At 
the 
same 
meeting 
the 
BoD appoints 
the Group 
Company Secretary, 
who, pursuant 
to 
the 
Organization 
Regulations, 
acts 
as 
secretary 
to 
the 
BoD 
and 
its committees. 
Pursuant 
to 
the 
AoA 
and 
the 
Organization 
Regulations, 
the 
BoD 
meets 
as 
often 
as 
business 
requires, 
but 
it 
must 
meet 
at 
least 
six 
times 
a 
year. 
Due 
to 
COVID
-
19
, 
from 
March 
2020
 
onward 
the 
meetings 
were 
organized 
as 
video 
calls. 
Additional 
video 
calls 
were 
also 
organized 
during 
the 
reporting 
period 
to 
facilitate engagement between the 
members of the BoD. During 
2020, a 
total of 
23 BoD 
meetings were 
held, 15 
of which 
were 
attended 
by 
GEB 
members. 
Average 
participation 
in 
the 
BoD 
meetings 
was 
99%. 
In 
addition 
to 
the 
BoD 
meetings 
attended 
by 
GEB 
members, 
the 
Group 
CEO 
attended 
some 
of 
the 
meetings 
of 
the 
BoD 
without 
GEB 
participation. 
The 
meetings 
had an 
average duration 
of 105 
minutes and 
covered both 
UBS 
Group AG 
and UBS AG. 
Additionally, 11 ad 
hoc calls were 
held, 
5 of which were 
attended by GEB members. 
The BoD held three 
days 
of 
strategy 
workshops, 
including 
deep 
dives 
on 
environmental, 
social 
and 
governance 
(ESG) 
topics, 
our 
three 
keys to 
success (our 
Pillars, Principles 
and Behaviors), 
and UBS’s 
purpose. 
A 
two-day 
crisis 
management 
and 
simulation 
exercise 
was also held. 
At every 
BoD meeting, 
each committee 
Chairperson provides 
the 
BoD 
with 
an 
update 
on 
current 
activities 
of 
his 
or 
her 
committee and important committee issues. 
In 2020, four UBS AG BoD meetings were held with members 
of 
the 
Executive 
Board 
in 
attendance. 
Standalone 
meetings are 
held regularly 
to discuss 
and agree 
on finance, 
risk, compliance, 
operational risk, 
regulatory and 
other topics 
related to 
UBS AG. 
W
e 
also 
enhanced 
the 
coordination 
and 
exchange 
of 
information 
between 
UBS 
Group 
AG 
and 
its 
significant 
group 
entities. Joint 
meetings between 
the Group 
BoD and 
the boards 
of 
directors 
of 
all 
significant group 
entities, 
as 
well 
as 
between 
the respective chairs of the risk and audit committees, have been 
held. 
As 
in 
prior 
years, 
the 
annual 
workshop
,
 
attended 
by 
independent 
members 
of 
the 
boards 
of 
the 
Group 
and 
significant group entities, was conducted, albeit virtually and in a 
shortened format. 
 
 

 
199 
Performance assessment 
Every 
third 
year, 
an 
external assessment 
of 
the 
effectiveness 
of 
the 
BoD 
is 
conducted; 
the 
most 
recent 
one 
was 
in 
2019. 
In 
2020, 
a 
self-assessment 
was 
completed 
for 
the 
BoD 
and 
its 
committees. The 
results of 
the self-assessment 
did not 
raise any 
material 
issues and 
concluded that 
the BoD 
and its 
committees 
were 
operating 
effectively. 
A 
number 
of 
minor 
recommendations 
were 
considered 
for 
future 
agenda 
setting 
and 
the 
feedback 
served 
as 
a 
source 
for 
the 
definition 
of 
the 
BoD’s 
priorities 
for 2020–2021. 
Particular 
priorities 
for 
the 
BoD 
were 
support
ing
 
a 
smooth 
CEO 
transition 
and 
provid
ing
 
oversight 
with 
regard 
to 
dealing 
with
 
the 
pandemic
. 
Overall 
corporate 
strategy 
and 
divisional 
strategic 
growth 
initiatives, 
as 
well as 
oversight of 
digital transformation, 
remained at 
the core 
of 
the 
BoD’s 
mandate. 
The 
BoD 
also 
continued 
to 
focus 
on 
regulatory, 
risk, 
legal 
and 
remediation 
issues.
 
ESG
 
topics
, 
in 
particular 
sustainability and 
the continued 
emphasis on 
cultural 
values, 
were other key priorities. 
BoD committees 
The 
committees listed 
on the 
following pages 
assist the 
BoD in 
the 
performance 
of 
its 
responsibilities. 
These 
committees 
and 
their 
charters 
are 
described 
in 
the 
Organization 
Regulations, 
available at 
ubs.com/governance.
 
The committees meet 
as often 
as 
their 
business 
requires, 
although 
the 
Audit 
Committee, 
the 
Risk 
Committee 
and 
the 
Compensation 
Committee 
must 
each 
meet at 
least four 
times a 
year, 
and the 
Corporate Culture 
and 
Responsibility 
Committee 
and 
the 
Governance 
and 
Nominating 
Committee 
must 
each 
meet 
at 
least 
twice 
a 
year. 
Topics 
of 
common 
interest 
or 
affecting 
more 
than 
one 
committee 
are 
discussed 
at 
joint 
committee 
meetings. 
The 
Audit 
Committee 
and the Risk Committee hold at least four joint meetings a year. 
During 2020, a 
total of seven 
joint committee meetings 
were 
held for UBS 
Group AG (six 
joint committee meetings 
were held 
simultaneously 
for 
UBS 
AG). 
The 
Risk 
Committee 
held 
one 
meeting 
with 
the 
Compensation 
Committee, 
one 
with 
the 
Corporate 
Culture 
and 
Responsibility 
Committee, 
and 
five 
with 
the Audit Committee. 
 
 
 
 
 

Corporate governance and compensation | Corporate governance 
200 
Audit Committee 
In 
2020, 
the 
Audit 
Committee 
consisted 
of 
five 
BoD 
members 
before the AGM, and four members after the AGM, all of 
whom 
were 
determined 
by 
the 
BoD 
to 
be 
fully 
independent. 
As 
a 
group, 
members 
of 
the 
Audit 
Committee 
must 
have 
the 
necessary qualifications 
and skills 
to perform 
all their 
duties and 
together 
must 
possess 
financial 
literacy 
and 
experience 
in 
banking and risk management. 
The Audit 
Committee itself 
does not 
perform audits; 
instead, 
it oversees the 
work of the external 
auditors, Ernst & Young 
Ltd, 
who 
in 
turn 
are 
responsible 
for 
auditing 
the 
annual 
financial 
statements of UBS Group AG 
and UBS AG and for reviewing 
the 
quarterly financial statements. 
In 
particular, 
the 
Audit 
Committee 
monitors 
the 
integrity 
of 
the financial statements 
of UBS Group 
AG and UBS 
AG and any 
announcements 
related 
to 
financial 
performance, 
and 
reviews 
significant 
financial 
reporting 
judgments 
contained 
in 
them, 
before 
recommending 
their 
approval 
to 
the 
BoD 
or 
proposing 
any adjustments the Audit Committee considers appropriate. 
The 
Aud
it 
Committee 
oversees 
the 
relationship 
with
,
 
and 
assesses 
the 
qualifications, 
expertise, 
effectiveness, 
independence and performance of, the external auditors and the 
lead 
audit 
partner, 
and 
supports 
the 
BoD 
in 
reaching 
decisions 
on the 
appointment, reappointment 
or dismissal 
of the 
external 
auditors and the rotation of the lead audit partner. The BoD then 
submits proposals for shareholder approval at the AGM. 
During 
2020
,
 
the 
Audit 
Committee 
held 
14 
committee 
meetings
,
 
with 
a
n 
average
 
participation 
rate 
o
f 
98
%. 
The 
meetings had an average duration of approximately 160 minutes 
and covered both 
UBS Group AG 
and UBS AG. 
All the meetings 
of 
the 
Audit 
Committee 
were 
attended 
by 
the 
Group 
Chief 
Financial Officer and the 
Group Controller and Chief Accounting 
Officer. 
The 
Chairperson 
and 
the 
committee 
continued 
to 
maintain regular contact with core supervisory authorities. 
All 
Audit 
Committee 
members 
have 
accounting 
or 
related 
financial 
management 
expertise 
and, 
in 
compliance 
with 
the 
rules 
established 
pursuant 
to 
the 2002 
US 
Sarbanes–Oxley 
Act, 
at 
least 
one 
member 
qualifies 
as 
a 
financial 
expert. 
The 
NYSE 
listing standards on corporate governance and Rule 10A-3 
under 
the US Securities Exchange 
Act set more stringent independence 
requirements 
for 
members 
of 
audit 
committees 
than 
for 
the 
other 
members 
of 
the 
BoD. 
Throughout 
2020, 
all 
members 
of 
the Audit Committee, in addition to 
satisfying our independence 
criteria, satisfied these requirements, in that 
they did not receive, 
directly 
or 
indirectly, 
any 
consulting, 
advisory 
or 
compensatory 
fees from any 
member of the 
Group other than 
in their capacity 
as a BoD 
member, did not 
hold, directly or 
indirectly, UBS Group 
AG 
shares 
in 
excess 
of 
5% 
of 
the 
outstanding 
capital, and 
did 
not 
serve 
on 
the 
audit 
committees 
of 
more 
than 
two 
other 
public companies. 
 
 
 
 
 

 
201 
Compensation Committee 
The 
Compensation 
Committee 
consisted 
of 
four 
independent 
BoD members throughout 2020, as indicated 
in the table below. 
In addition to the key responsibilities indicated in the 
same table, 
the 
Compensation 
Committee 
reviews 
the 
compensation 
disclosures included in this report. 
During 
2020
,
 
the 
Co
mpensation 
Committee 
held 
seven 
meetings, 
with a 
participation rate 
of 100%. 
The meetings 
had 
an average 
duration of 
approximately 105 
minutes and 
covered 
both UBS Group 
AG and UBS AG. 
In addition, three ad 
hoc calls 
took 
place. 
All 
meetings 
were 
held 
in 
the 
presence 
of 
the 
Chairman 
and 
most 
were 
attended 
by 
the 
Group 
CEO 
and 
external 
advisors. 
In 
2020, 
the 
Chairperson 
met 
regularly 
with 
core supervisory authorities. 
›
 
Refer to “Compensation for the Board of Directors” 
in the 
“Compensation” section on page 250 of 
this report for more 
information about the Compensation 
Committee’s decision-
making procedures 
Corporate Culture and Responsibility Committee 
In 
2020, 
the 
Corporate 
Culture 
and 
Responsibility 
Committee 
consisted 
of 
the 
Chairperson 
and 
three 
independent 
BoD 
members before the AGM, 
as listed in the 
table below; after the 
AGM, 
there 
were 
four 
independent 
members. 
The 
Group 
CEO 
and 
the 
Head 
UBS 
in 
Society 
are 
permanent 
guests 
of 
the 
Corporate 
Culture 
and 
Responsibility 
Committee. 
During 
2020, 
six 
meetings 
were 
held, 
with 
an 
average 
participation 
rate 
of 
93%. 
The 
average 
duration 
of 
each 
of 
the 
meetings 
was 
approximately 95 minutes. 
 
 
 
 
 
 
 

Corporate governance and compensation | Corporate governance 
202 
Governance and Nominating Committee 
In 2020, 
the Governance 
and Nominating 
Committee consisted 
of 
the 
Chairperson 
and 
four 
independent 
members 
before 
the 
AGM, as listed in the table below; after the AGM there were five 
independent members. 
During 2020, 
eight meetings 
were held, 
with an average participation rate of 
98%. The average duration 
of 
each 
of 
the 
meetings 
was 
approximately 
6
0
 
minutes
. 
In 
addition, four 
ad hoc 
calls took place. 
The Group 
CEO attended 
meetings as appropriate. 
Risk Committee 
In 
2020, 
the 
Risk 
Committee 
comprised 
five 
independent 
BoD 
members before the AGM, 
as listed in the 
table below; after the 
AGM, 
there 
were 
six 
independent 
members. 
During 
2020, 
the 
Risk 
Committee 
held 
twenty 
committee 
meetings
,
 
with 
a
n 
average participation rate of 99%. 
The average duration of each 
of the 
meetings was 
approximately 
155 minutes, 
covering both 
UBS 
Group 
AG and 
UBS AG. 
The 
Group 
CEO, the 
Group 
CFO, 
the Group Chief Risk Officer, 
the Group Chief Operating Officer, 
the 
Group 
Treasurer, 
the 
Group 
Chief 
Compliance 
and 
Governance Officer 
, 
the Group 
General Counsel, 
and the 
Head 
Group 
Internal 
Audit 
(GIA) 
attended 
all 
the 
meetings. 
In 
2020, 
the Chairperson or 
the full committee 
met with core 
supervisory 
authorities. 
Ad hoc committees 
The Special 
Committee and 
the Strategy 
Committee are 
two ad 
hoc 
committees, 
which 
have 
a 
standing 
composition 
and 
hold 
meetings as and when required. 
The Special Committee is composed of four BoD members. Its 
primary 
purpose 
is 
to 
oversee 
activities 
related 
to 
key 
litigation 
and 
investigation 
matters, 
review 
management’s 
respective 
proposals and 
send to 
the BoD 
recommendations 
for decisions. 
In
 
202
0, 
the 
key 
focus 
was 
the 
French 
cross
-
border 
matter, 
following 
the 
verdict 
of 
the 
court 
of 
first 
instance 
in 
2019. 
Jeremy 
Anderson 
chaired 
the 
Special 
Committee, 
with 
Julie 
Richardson, 
David 
Sidwell 
and 
Axel 
Weber 
as 
additional 
members
;
 
after 
the 
AGM, 
Nath
alie 
Rachou 
replaced 
David 
Sidwell. The 
Group CEO 
was a 
permanent guest. 
During 2020, 
five meetings 
were held, 
covering both 
UBS Group AG 
and UBS 
AG. 
The Strategy 
Committee is 
composed of 
four BoD 
members. 
Its primary purpose is to 
support management and the BoD with 
regard to the assessment of strategic considerations and to assist 
with 
the 
planning of 
the annual 
strategy meetings 
for 
the BoD 
and 
the 
GEB. 
The 
committee 
sends 
recommendations 
for 
decision
s
 
to 
the 
BoD. 
Axel 
Weber 
chaired 
the 
Strategy 
Committee, with 
Fred Hu, 
Robert Scully 
and Dieter 
Wemmer as 
additional 
members; 
after 
the 
AGM, 
William 
Dudley 
replaced 
Robert 
Scully. 
The 
Group 
CEO, 
the 
Group 
CFO 
and 
the 
Head 
Corporate Development & 
Performance were permanent 
guests. 
During 
2020
,
 
three
 
meetings
 
were 
held
, 
covering 
both 
UBS 
Group AG and UBS AG. 
 
 
 
 

 
203 
Roles and responsibilities of the Chairman of the Board of 
Directors 
Axel 
Weber 
serves 
as 
the 
full-time 
Chairman 
of 
the 
BoD. 
The 
Chairman coordinates 
tasks within 
the BoD, 
calls BoD 
meetings 
and sets 
their agendas. 
He presides 
over all 
general meetings of 
shareholders 
and 
works 
with 
the 
committee 
Chairpersons 
to 
coordinate 
the 
work 
of 
all 
BoD 
committees. 
Together 
with 
the 
Group 
CEO, 
the 
Chairman 
is 
responsible 
for 
effective 
communication 
with 
shareholders 
and 
other 
stakeholders, 
including 
government 
officials, 
regulators 
and 
public 
organizations. This is 
in addition to 
establishing and maintaining 
close working 
relationships 
with the 
Group CEO 
and other 
GEB 
members, 
and providing 
advice and 
support when 
appropriate, 
including 
advice 
regarding 
the 
firm’s 
cultural 
change 
as 
a 
key 
priority on the basis of our Pillars, Principles and Behaviors. 
›
 
Refer to “Employees” in the “How we 
create value for our 
stakeholders” section on page 45 and the 
foldout pages of this 
report for information about our Pillars, Principles 
and Behaviors 
 
In 
2020, 
the 
Chairman 
met 
regularly 
with 
core 
supervisory 
authorities 
in 
all 
major 
regions 
where 
UBS 
is 
active. 
Meetings 
with 
important 
supervisory 
authorities 
in 
other 
regions 
were 
scheduled on an ad hoc or needs-driven basis. 
Roles and responsibilities of the Vice Chairmen and the 
Senior Independent Director
 
 
The 
BoD 
appoints 
one 
or 
more 
Vice 
Chairmen 
and 
a 
Senior 
Independent 
Director. 
If 
the 
BoD 
appoints 
more 
than 
one 
Vice 
Chairman, 
one 
of 
them 
must 
be 
independent. 
Both 
the 
Vice 
Chairman 
and 
the 
Senior 
Independent 
Director 
support 
the 
Chairman with 
regard 
to his 
responsibilities and 
authorities and 
provide him 
with advice. 
In conjunction 
with the 
Chairman and 
the 
Governance 
and 
Nominating 
Committee, 
they 
facilitate 
good 
Group-wide 
corporate 
governance, 
as 
well 
as 
balanced 
leadership 
and 
control 
within 
the 
Group, 
the 
Board 
and 
the 
committees. 
Jeremy 
Anderson
 
has 
been 
appointed 
as 
Vice 
Chairman 
and Senior 
Independent 
Director. 
The 
Vice Chairman 
is 
required 
to 
lead 
and 
has 
led 
meetings 
of 
the 
BoD 
in 
the 
temporary 
absence 
of 
the 
Chairman. 
Together 
with 
the 
Governance 
and 
Nominating 
Committee, 
he 
is 
tasked 
with 
the 
ongoing monitoring and the annual 
evaluation of the Chairman. 
He 
also 
represents 
UBS on 
behalf 
of 
the Chairman 
in 
meetings 
with 
internal 
or 
external 
stakeholders. 
The 
Senior 
Independent 
Director 
enables 
and 
supports 
communication 
and 
the 
flow 
of 
information 
among 
the 
independent 
BoD 
members. 
At 
least 
twice 
a 
year, 
he 
organizes 
and 
leads 
a 
meeting 
of 
the 
independent 
BoD 
members 
without 
the 
participation 
of 
the 
Chairman. 
In 2020, 
two independent 
BoD meetings 
were held, 
covering both 
UBS Group 
AG and 
UBS AG, 
with a 
participation 
rate 
of 
100% 
and 
an 
average 
duration 
of 
approximately 
110 
minutes. 
One 
ad 
hoc 
meeting 
took 
place. 
The 
Senior 
Independent 
Director 
also 
relays 
to 
the 
Chairman 
any 
issues or 
concerns raised by 
the independent BoD 
members and acts 
as a 
point 
of 
contact 
for 
shareholders 
and 
stakeholders 
seeking 
discussions with an independent BoD member. 
Important business connections of independent members 
of the Board of Directors 
As 
a 
global 
financial 
services 
provider 
and 
a 
major 
Swiss 
bank, 
we enter into business 
relationships with many large 
companies, 
including 
some 
in 
which 
our 
BoD 
members 
have 
management 
or 
independent 
board 
responsibilities. 
The 
Governance 
and 
Nominating Committee determines in each instance whether the 
nature of the Group’s business relationship with such a company 
might 
compromise 
our 
BoD 
members’ 
capacity 
to 
express 
independent judgment. 
Our 
Organization 
Regulations 
require 
three-quarters 
of 
the 
UBS Group AG 
BoD members and 
one-third of those 
at UBS AG 
to 
be 
independent. 
For 
this 
purpose, 
independence 
is 
determined 
in 
accordance 
with 
FINMA 
Circular 
2017/1 
“Corporate governance – banks” and the NYSE rules. 
In 
2020, 
our 
BoD 
met 
the 
standards 
of 
the 
Organization 
Regulations 
for the 
percentage of 
directors who 
are 
considered 
independent 
under 
the 
criteria 
described 
above. 
Since 
our 
Chairman has a 
full-time contract with UBS 
Group AG, he is 
not 
considered independent. No other BoD member has 
a significant 
business 
connection 
to 
UBS 
or 
any 
of 
its 
subsidiaries. 
No 
other 
BoD 
member 
currently 
carries 
out, 
or 
has 
carried 
out 
over 
the 
past 
three 
years, 
operational 
management 
tasks 
within 
the 
Group. 
All 
relationships 
and 
transactions 
with 
UBS 
Group 
AG’s 
independent BoD members are conducted in 
the ordinary course 
of business and are 
on the same terms as 
those prevailing at the 
time for comparable 
transactions with non-affiliated 
persons. All 
relationships 
and 
transactions 
with 
BoD 
members’ 
associated 
companies are conducted at arm’s length. 
›
 
Refer to “Note 31 Related parties” 
in the “Consolidated financial 
statements” 
section on page 404 of this report for more 
information 
Checks and balances: Board of Directors and Group 
Executive Board 
We operate 
under a strict 
dual board 
structure, as 
mandated by 
Swiss 
banking 
law. 
The 
separation 
of 
responsibilities 
between 
the 
BoD 
and 
the 
GEB 
is 
clearly 
defined 
in 
the 
Organization 
Regulations. 
The 
BoD 
decides 
on 
the 
strategy 
of 
the 
Group, 
upon 
recommendations 
by 
the 
Group 
CEO, 
and 
exercises 
ultimate 
supervision 
over 
management; 
whereas 
the 
GEB, 
headed 
by 
the 
Group 
CEO, 
has 
executive 
management 
responsibility. 
The 
functions 
of 
Chairman 
and 
Group 
CEO 
are 
assigned 
to 
two 
different 
people, 
leading 
to 
a 
separation 
of 
power. 
This 
structure 
establishes 
checks 
and 
balances 
and 
preserves 
the 
institutional 
independence 
of 
the 
BoD 
from 
the 
day-to-day management of the Group, for which 
responsibility is 
delegated 
to the 
GEB, under 
the leadership 
of the 
Group CEO. 
No 
member 
of 
one board 
may simultaneously 
be a 
member 
of 
the other. 
Supervision 
and 
control 
of 
the 
GEB 
remains 
with 
the 
BoD. 
The 
authorities 
and 
responsibilities 
of 
the 
two 
bodies 
are 
governed by the AoA and the Organization Regulations. 
 
 

Corporate governance and compensation | Corporate governance 
204 
Skills, expertise and training of the Board of Directors 
The 
BoD 
is 
composed 
of 
members 
with 
a 
broad 
spectrum 
of 
skills, educational backgrounds, 
experience and expertise 
from a 
range of 
sectors that 
reflect 
the nature 
and scope 
of the 
firm’s 
business. 
With a 
view 
to 
recruiting 
needs, 
the Governance 
and 
Nominating 
Committee 
uses 
a 
competencies 
and 
experience 
matrix to identify any 
gaps in the competencies 
considered most 
relevant to the BoD, taking into consideration 
the firm’s business 
exposure, risk profile, strategy and geographic reach. 
We 
asked 
our 
BoD 
members 
to 
select
 
their 
four 
key 
competencies 
from 
the 
following 
eight 
categories 
and 
to 
indicate whether they have ever 
been a chief executive officer 
or 
chairperson 
of 
a 
listed 
company 
or 
a 
member 
of 
the 
executive 
board of such a company: 
Key competencies 
–
 
banking 
(wealth 
management, 
asset 
management, 
personal 
and corporate banking; insurance) 
–
 
investment banking, capital markets 
–
 
finance, audit, accounting 
–
 
risk management, compliance and legal 
–
 
human resources management, including compensation 
–
 
technology, cybersecurity 
–
 
regulatory authority, central bank 
–
 
environmental, 
social and governance (ESG) 
Leadership experience 
–
 
experience as chief executive officer or chairperson 
–
 
executive board 
leadership experience 
(e.g., as 
chief financial 
officer, 
chief 
risk 
officer 
or 
chief 
operating 
officer 
of 
a 
listed 
company) 
 
The 
Governance 
and 
Nominating 
Committee 
reviews 
these 
categories 
and 
ratings 
annually 
to 
confirm 
that 
the 
BoD 
continues 
to 
possess 
the 
most 
relevant 
experience 
and 
competencies to perform its duties. 
With 
regard 
to 
the 
BoD 
composition 
after 
the 
2020 
AGM, 
members 
thereof 
identified 
all 
of 
the 
target 
competencies 
as 
being 
their 
key 
competencies.
 
Particularly 
strong 
levels 
of 
experience and expertise existed in these areas: 
–
 
financial services 
–
 
risk management, compliance and legal 
–
 
finance, audit, accounting 
 
Furthermore, 8 of the 11 BoD members have held or currently 
hold chairperson, 
CEO or 
other executive 
board-level leadership 
positions. 
Moreover, 
education 
remained 
an 
important 
priority 
for 
our 
BoD 
members. 
In 
addition 
to 
a 
comprehensive 
induction 
program for new 
BoD members, continuous 
training and topical 
deep dives are part of the BoD agenda. 
›
 
Refer to “Risk governance” in the 
“Risk management and 
control” section on page 95 of this report for information 
about 
our risk governance framework 
 
 
 
 
 

 
205 
Succession planning 
Succession planning is one 
of the key responsibilities of 
both the 
BoD 
and 
the 
GEB. 
Across 
all 
divisions 
and 
regions, 
an 
inclusive 
talent 
development 
and 
succession 
planning 
process 
is in 
place 
that 
aims 
to 
foster 
the 
personal 
development 
and 
Group-wide 
mobility of 
our employees. 
While the 
recruiting process 
for BoD 
and 
GEB 
members 
takes 
into 
account 
a 
broad 
spectrum 
of 
factors, 
such 
as 
skills, 
backgrounds, 
experience 
and 
expertise, 
our 
approach 
with 
regard 
to 
diversity 
considerations 
does 
not 
constitute 
a 
diversity 
policy 
within 
the 
meaning 
of 
the 
EU 
Directive 
on 
Non-Financial 
Reporting 
and 
Swiss 
law 
does 
not 
require UBS to maintain such a policy. 
In 
2020, 
the 
Chairman 
and 
the 
members 
of 
the 
BoD 
supported 
the 
CEO 
transition 
from 
Sergio 
Ermotti 
to 
Ralph 
Hamers. Despite 
challenges related 
to COVID-19, 
a smooth 
and 
professional transition 
supported the 
new CEO, 
who started 
his 
tenure 
well 
prepared. 
At 
the 
same 
time, 
he 
and 
the 
GEB 
launched 
several 
strategic 
initiatives 
with 
the 
close 
involvement 
of the 
BoD and 
with the 
aim of 
further strengthening 
UBS. The 
succession plans for the GEB and the management layer below it 
are managed under the lead of the Group CEO. The BoD reviews 
and approves the succession plans of the GEB. 
For 
the 
BoD, 
the 
Chairman 
leads 
a 
systematic 
succession 
planning process as illustrated in the chart below. 
 
 
Our 
strategy 
and 
the 
business 
environment 
constitute 
the 
main 
drivers 
in 
our 
succession 
planning 
process 
for 
new 
BoD 
members, 
as they 
define the 
key competencies 
required on 
the 
BoD. 
Taking 
diversity 
and 
tenure 
of 
the 
existing 
BoD 
into 
account, 
the 
Governance 
and 
Nominating 
Committee 
defines 
the 
recruiting 
profile 
for 
the 
search. 
Both 
external 
and 
internal 
sources 
contribute 
to 
identifying 
suitable 
candidates. 
The 
Chairman and the 
members of the 
Governance and Nominating 
Committee 
meet 
with 
potential 
candidates 
and, 
with 
the 
support of 
the full BoD, 
nominations are submitted 
to the 
AGM 
for approval. New 
BoD members follow 
an in-depth 
onboarding 
process 
designed 
to 
enable 
them 
to 
integrate 
efficiently 
and 
become 
effective 
in 
their 
new 
role. 
Due 
to
 
this 
succes
sion 
planning process, 
the composition of 
the BoD 
is in 
line with 
the 
demanding 
requirements 
of 
a 
leading 
global 
financial 
services 
firm. 
The 
succession 
of 
the 
Chairman 
is 
planned 
for 
the 
2022 
AGM, 
when 
Axel 
Weber 
will 
have 
served 
as 
Chairman 
for 
10 
years. 
The 
search 
for 
his 
successor 
began 
in 
early 
2021 
and 
is 
being led 
by the 
Senior Independent 
Director, Jeremy 
Anderson. 
In 2020, 
the Governance 
and Nominating 
Committee expanded 
to 
include 
additional 
members, 
so 
that 
a 
broader 
range 
of 
perspectives are taken into consideration during the process. The 
Chairman and the CEO are also involved in the search process. 
 
 

Corporate governance and compensation | Corporate governance 
206 
Information and control instruments with regard to the 
Group Executive Board 
The BoD is 
kept informed of 
the GEB’s activities in 
various ways, 
including 
regular 
meetings 
between 
the 
Chairman, 
the 
Group 
CEO 
and 
GEB 
members. 
The 
Group 
CEO 
and 
other 
GEB 
members 
also 
participate 
in 
BoD 
meetings 
to 
update 
its 
members on 
all significant 
issues. The 
BoD also 
receives 
regular 
comprehensive 
reports, 
covering 
financial, 
capital, 
funding, 
liquidity, 
regulatory, 
compliance and legal developments, 
as well 
as performance 
against plan 
and forecasts 
for the 
remainder of 
the 
year. 
For 
important 
developments, 
BoD 
members 
are 
also 
updated 
by 
the 
GEB 
in 
between 
meetings. 
In 
addition, 
the 
Chairman receives the 
meeting material and minutes 
of the GEB 
meetings. 
BoD members 
may request 
from other 
BoD or 
GEB members 
any 
information about 
matters concerning 
the Group 
that they 
require 
in 
order 
to 
fulfill 
their 
duties. 
When 
these 
requests 
are 
raised outside BoD 
meetings such requests 
must go through 
the 
Group Company Secretary and be addressed to the Chairman. 
The 
BoD 
is 
supported 
in 
discharging 
its 
governance 
responsibilities 
by 
GIA, 
which 
independently 
assesses 
whether 
risk 
management, 
control 
and 
governance 
processes 
are 
designed and operating sustainably and effectively. 
The 
Head 
GIA 
reports 
directly 
to 
the 
Chairman. 
In 
addition, 
GIA 
has 
a 
functional 
reporting 
line 
to 
the 
Audit 
Committee 
in 
accordance 
with 
its 
responsibilities 
as 
set 
forth 
in 
our 
Organization 
Regulations. 
The 
Audit 
Committee 
assesses 
the 
independence and 
performance of 
GIA and 
the effectiveness 
of 
both the 
Head GIA 
and GIA 
as an 
organization, approves 
GIA’s 
annual 
audit 
plan 
and 
objectives 
and 
monitors 
GIA’s 
discharge 
of these objectives. 
The 
committee is 
also in 
regular contact 
with the 
Head GIA. 
GIA 
issues 
quarterly 
reports 
that 
provide: 
a 
broad 
overview 
of 
significant 
audit 
results 
and 
key 
issues; 
control 
themes 
and 
trends 
based 
on 
individual 
audit 
results; 
continuous 
risk 
assessment; and issue assurance results. The reports are provided 
to 
the 
Chairman, 
the 
members 
of 
the 
Audit 
and 
the 
Risk 
Committees, 
the 
GEB 
and 
other 
stakeholders. 
The 
Head 
GIA 
regularly 
updates 
the 
Chairman 
and 
the 
Audit 
Committee 
on 
GIA’s 
activities, 
processes, 
audit 
plan 
execution, 
resourcing 
requirements and 
other important 
developments. 
GIA issues 
an 
annual 
Activity 
Report, 
which 
is 
provided 
to 
the 
Chairman 
and 
the 
Audit 
Committee 
to 
support 
their 
assessment 
of 
GIA’s 
effectiveness. 
 
›
 
Refer to “Group Internal Audit” in this section 
for more 
information 
›
 
Refer to “Internal risk reporting” in the 
“Risk management and 
control” section on page 101 of this report for information 
about 
reporting to the BoD 
 

 
207 
Group Executive Board
The 
BoD 
delegates 
the 
management 
of 
the 
business 
to 
the 
Group Executive Board (the GEB). 
Responsibilities, authorities and organizational principles 
of the Group Executive Board 
On 
31 
December 
2020, 
the 
GEB, 
under 
the 
leadership 
of 
the 
Group 
CEO, 
consist
ed
 
of 
13 
members. 
It 
has 
executive 
management responsibility 
for the 
steering of 
the Group and 
its 
business 
and 
assumes 
overall 
responsibility 
for 
developing 
and 
implementing the strategies of the Group, 
business divisions and 
Group 
Functions 
as 
approved 
by 
the 
BoD. 
The 
GEB 
is 
also 
the 
risk 
council 
of 
the 
Group, 
with 
overall 
responsibility 
for 
establishing 
and 
supervising 
the 
implementation 
of 
risk 
management and control 
principles, as well as for 
managing the 
risk profile of 
the Group, as determined by 
the BoD and the Risk 
Committee. 
In 2020, 
the GEB 
held a 
total of 
69 meetings 
for UBS 
Group 
AG, 
including 
14 
COVID-19 
Group 
Steering 
Committee 
meetings. 
At 
UBS 
AG, 
management 
of 
the 
business 
is 
also 
delegated, 
and its Executive Board, under the leadership of its President, has 
executive 
management 
responsibility 
for 
UBS 
AG 
and 
its 
business. 
In 
2020, 
all 
members 
of 
the 
GEB 
were 
members 
of 
UBS AG’s Executive 
Board, with the 
exception of Axel 
Lehmann, 
who 
served 
as 
President 
of 
UBS 
Switzerland 
AG. 
The 
Executive 
Board held four standalone meetings for UBS AG in 2020.
 
›
 
Refer to the Organization Regulations 
of UBS Group AG, 
available at 
ubs.com/governance
, for more information about 
the authorities of the Group Executive Board 
New Group CEO and members of the Group Executive 
Board 
On 19 
February 2020, 
the BoD 
appointed Ralph 
Hamers as 
the 
new 
Group 
CEO, 
succeeding 
Sergio 
Ermotti. 
Ralph 
Hamers 
joined UBS 
as a 
member 
of the 
GEB on 
1 September 2020 
and 
became 
Group 
CEO 
on 
1 November 
2020. 
Before 
joining 
UBS, 
Ralph 
Hamers 
served 
as 
CEO 
and 
Chairman 
of 
the 
Executive 
Board of 
ING Group 
from 2013 
to June 
2020, spending 
in total 
29 
years 
of 
his 
career 
at 
the 
company. 
On 
4 
December 
2020, 
UBS 
appointed 
Sabine 
Keller
-
Busse 
as 
the 
successor 
to
 
Axel 
Lehmann (who will leave 
UBS) for the roles of 
President Personal 
& 
Corporate 
Banking 
and 
President 
UBS 
Switzerland, 
effective 
1 February 
2021, 
while 
retaining 
her 
position 
of 
Group 
Chief 
Operating Officer ad 
interim in the GEB 
and the Executive Board 
of 
UBS 
AG. 
In 
addition 
to 
his 
responsibility 
as 
Co-President 
Global 
Wealth 
Management, 
Iqbal 
Khan 
assumed 
the 
role 
of 
President 
UBS 
EMEA 
from 
Sabine 
Keller-Busse 
as 
of 
1 February 
2021.
 
On 
15 
February 
2021, 
Robert 
Karofsky 
was 
appointed 
sole President Investment Bank, following Piero 
Novelli’s decision 
to 
step 
down as 
Co-President 
Investment Bank 
as 
of 
31 March 
2021.
 
The 
biographies 
on 
the 
following 
pages 
provide 
information 
about the 
GEB members 
in office 
as of 
31 December 
2020 and 
Sergio 
Ermotti
,
 
who 
stepped 
down 
as 
Group 
CEO 
on 
31 October 
2020. 
In 
addition 
to 
information 
on 
mandates, 
the 
biographies 
include 
memberships 
and 
other 
activities 
or 
functions, 
as 
required 
by 
the 
SIX 
Swiss 
Exchange 
Corporate 
Governance Directive. 
In line 
with Swiss 
law, article 
36 of 
UBS Group 
AG’s Articles 
of Association limits the number of mandates that GEB members 
may 
hold 
outside 
the 
UBS 
Group 
to 
one 
mandate 
in 
a 
listed 
company and 
five additional 
mandates in 
non-listed companies. 
Mandates 
in 
companies 
that 
are 
controlled 
by 
UBS 
or 
that 
control 
UBS 
are 
not 
subject 
to 
this 
limitation. 
In 
addition, 
GEB 
members may not 
hold more than 
10 mandates at a 
time at the 
request 
of 
the 
company 
and 
eight 
mandates 
in 
associations, 
charitable 
organizations, 
foundations, 
trusts 
and 
employee 
welfare foundations. 
On 31 December 
2020, no 
member of the 
GEB reached the aforementioned thresholds. 
Responsibilities and authorities of the Asset and Liability 
Committees 
The 
Asset 
and 
Liability 
Committees 
(ALCOs) 
of 
UBS 
Group 
AG 
and 
UBS 
AG 
support 
the 
GEB 
and 
the 
Executive 
Board 
with 
regard to 
their responsibility 
to promote 
the usage 
of the 
assets 
and 
liabilities in 
line 
with 
the strategy, 
regulatory 
commitments 
and 
the 
interests 
of 
shareholders 
and 
other 
stakeholders. 
The 
ALCO 
of 
UBS 
Group 
AG 
proposes 
the 
framework 
for 
capital 
management, 
capital 
allocation, 
funding 
and 
liquidity 
risk, 
and 
proposes 
limits 
and 
targets 
for 
the 
Group 
to 
the 
BoD 
for 
approval. 
It 
oversees 
the 
balance 
sheet 
management 
of 
the 
Group, 
its business 
divisions and 
Group Functions. 
In 2020, 
the 
ALCOs of UBS Group AG and UBS AG held 11 meetings. 
Management contracts 
We 
have 
not 
entered 
into 
management 
contracts 
with 
any 
companies or natural persons that do not belong to the Group. 
 
 

Corporate governance and compensation | Corporate governance 
208 
 
 
 
Ralph A. J. G. Hamers 
 
Group Chief Executive Officer (from 1 November 2020) 
 
 
Year of initial appointment 
UBS: 2020 
 
Year of birth | Nationality 
1966 | Dutch 
 
Professional history and education 
Ralph 
A. J. G. 
Hamers 
has 
been 
Group 
Chief 
Executive 
Officer 
of 
UBS 
Group 
AG 
and 
President 
of 
the 
Executive 
Board 
of 
UBS 
AG 
since 
1 November 2020. He 
became a member 
of the Group 
Executive Board 
of UBS 
Group AG 
in September 
2020. Before 
joining UBS, 
Mr. 
Hamers 
served as CEO and 
Chairman of the Executive 
Board of ING 
Group from 
2013 to June 2020. 
During his 29-year 
career at ING, 
he held a 
number 
of 
leadership 
positions, 
such 
as 
CEO 
of 
ING 
Belgium and 
Luxembourg 
from 
2011 to 
2013, Head 
of Network 
Management for 
Retail Banking 
Direct 
& 
International 
from 
2010 
to 
2011 
and 
Global 
Head 
of 
the 
Commercial 
Banking 
network 
from 
2007 
to 
2010. 
Prior 
to 
that, 
Mr. 
Hamers was CEO 
of ING Bank Netherlands 
from 2005 to 
2007 and was 
General Manager of 
the ING Bank 
branch network from 
2002 to 2005, 
as 
well as 
General Manager 
of 
ING 
Romania 
from 
1999 
to 
2002. Mr. 
Hamers holds a master’s degree in business econometrics and operations 
research from Tilburg University in the Netherlands. 
 
Other activities and functions 
–
 
Chair of the Board of UBS Optimus Foundation 
–
 
Member of the Board of the Swiss-American Chamber of 
Commerce 
–
 
Member of the Institut International d’Etudes 
Bancaires 
–
 
Member of the McKinsey Advisory Council 
–
 
Member of the World Economic Forum International 
Business Council 
–
 
Governor of the World Economic Forum (Financial 
Services) 
Sergio P. 
Ermotti 
 
Group Chief Executive Officer (until 31 October 2020) 
 
 
Year of initial appointment 
UBS: 2011 (UBS Group AG: 2014, UBS AG: 2011) 
 
Year of birth | Nationality 
1960 | Swiss 
 
Professional history and education 
Sergio P. 
Ermotti was 
Group Chief 
Executive Officer 
of UBS 
Group AG 
from 2014 until October 2020, having held the same position at UBS AG 
from 2011 to 2020. Mr. Ermotti was a member of the GEB from 2011 to 
2020 
and 
Chairman 
and 
CEO 
of 
UBS 
Group 
Europe, 
Middle 
East 
and 
Africa before 
taking over as 
Group CEO. From 
2007 to 2010, 
he served 
as 
Group 
Deputy 
Chief 
Executive 
Officer 
at
 
UniCredit, 
and 
was 
responsible for the strategic 
business areas of Corporate 
and Investment 
Banking, and 
Private Banking. 
He joined 
UniCredit in 
2005 as 
Head of 
the Markets 
& Investment 
Banking Division. 
His career 
began at 
Merrill 
Lynch in 
1987, where he 
held various positions 
within equity derivatives 
and capital 
markets until 2003. 
In his 
last two 
years there, 
he served as 
Co-Head 
of 
Global 
Equity 
Markets 
and 
as 
a 
member 
of 
the 
Executive 
Management Committee for Global 
Markets & Investment 
Banking. Mr. 
Ermotti 
is 
a 
Swiss-certified 
banking 
expert 
and 
is 
a 
graduate 
of 
the 
Advanced Management Program at Oxford University. 
 
Other activities and functions (as of 31 October 
2020) 
–
 
Chair of the Board of UBS Optimus Foundation 
–
 
Member of the Board of Swiss Re Ltd. 
–
 
Chairman of the Fondazione Ermotti, Lugano 
–
 
Member of the Board of the Swiss-American Chamber of 
Commerce 
–
 
Member of the Board of the Global Apprenticeship Network 
–
 
Member of the Institut International d’Etudes 
Bancaires 
–
 
Member of the Saïd Business School Global Leadership 
Council, 
University of Oxford 
 
 

 
209 
 
 
 
Christian Bluhm 
 
Group Chief Risk Officer 
 
 
Year of initial appointment 
UBS: 2016 
 
Year of birth | Nationality 
1969 | German 
 
Professional history and education 
Christian 
Bluhm 
became 
a 
member 
of 
the 
GEB 
and 
was 
appointed 
Group 
Chief 
Risk 
Officer 
of 
UBS 
Group 
AG 
and 
UBS 
AG 
in 
2016. 
He 
joined UBS 
from FMS 
Wertmanagement, where he 
had been Chief 
Risk 
& 
Financial 
Officer 
since 
2010 
and 
Spokesman 
of 
the 
Executive 
Board 
from 
2012 to 
2015. From 
2004 to 
2009, he 
worked for 
Credit Suisse, 
where 
he 
was 
Managing 
Director 
responsible 
for 
Credit 
Risk 
Management in Switzerland 
and Private 
Banking worldwide. Mr. 
Bluhm 
was Head of 
Credit Portfolio Management 
until 2008 and 
then Head of 
Credit Risk Management Analytics & Instruments after 
the financial crisis 
in 2008. From 2001 to 2004, he 
worked for Hypovereinsbank in Munich 
in Group 
Credit Portfolio Management, 
heading a team 
that specialized 
in Structured 
Finance Analytics. 
Before starting 
his banking 
career 
with 
Deutsche 
Bank 
in 
Credit 
Risk 
Management 
in 
1999, 
he 
worked 
as 
a 
postdoctoral fellow 
at 
Cornell University 
and 
as 
a 
scientific assistant 
at 
the University 
of Greifswald. 
Mr. 
Bluhm holds 
a degree 
in mathematics 
and informatics from the University of Erlangen-Nuremberg and received 
his PhD in mathematics from the same university in 1996. 
 
Other activities and functions 
–
 
Member of the Board of UBS Switzerland AG 
–
 
Member of the Foundation Board of the UBS Pension 
Fund 
–
 
Member of the Foundation Board – International Financial 
Risk 
Institute 
Markus U. Diethelm 
 
Group General Counsel 
 
 
Year of initial appointment 
UBS: 2008 (UBS Group AG: 2014, UBS AG: 2008) 
 
Year of birth | Nationality 
1957 | Swiss
 
 
Professional history and education 
Markus U. Diethelm has been Group 
General Counsel of UBS Group 
AG 
since 2014, having held 
the same position at 
UBS AG since 
2008, when 
he 
became a 
member of 
the GEB. 
He was 
a member 
of the 
Executive 
Board of 
UBS Business Solutions 
AG from 
2015 to 
2016. From 
1998 to 
2008, he 
served as 
Group Chief 
Legal Officer 
at Swiss 
Re, and 
he was 
appointed 
to 
that 
company’s 
Group 
Executive 
Board 
in 
2007. 
Prior 
to 
that, he was 
with Los Angeles-based 
law firm Gibson, 
Dunn & Crutcher 
and focused 
on corporate 
matters, securities 
transactions, litigation and 
regulatory 
investigations 
while 
working 
out 
of 
the 
firm’s 
Brussels 
and 
Paris offices. From 1989 to 
1992, he practiced at Shearman & Sterling in 
New York, 
specializing in mergers 
and acquisitions. In 
1988, he worked 
at Paul, 
Weiss, Rifkind, 
Wharton & Garrison 
in New York. 
After starting 
his career 
in 1983 
with Bär 
& Karrer, 
he served 
as a 
law clerk 
at Uster 
District Court 
in Switzerland 
from 1984 
to 1985. 
Mr. Diethelm 
holds a 
law 
degree from 
the University 
of Zurich 
and 
a 
master’s degree 
and 
a 
PhD 
from 
Stanford 
Law 
School. 
He 
is 
a 
qualified 
attorney-at-law 
admitted to the bar in Zurich, Geneva and New 
York State. 
 
Other activities and functions 
–
 
Chairman of the Swiss-American Chamber of Commerce’s legal 
committee 
–
 
Chairman of the Swiss Advisory Council of the American 
Swiss 
Foundation 
–
 
Member of the Supervisory Board of the Fonds de 
Dotation LUMA / 
Arles 
–
 
Member of the New York State Council of Business Leaders in 
Support of Access to Justice 
 
 

Corporate governance and compensation | Corporate governance 
210 
 
 
 
Kirt Gardner 
 
Group Chief Financial Officer
 
 
 
Year of initial appointment 
UBS: 2016 
 
Year of birth | Nationality 
1959 | American (US)
 
 
Professional history and education 
Kirt Gardner 
became a 
member of 
the GEB 
and 
was appointed 
Group 
Chief Financial 
Officer of 
UBS Group 
AG and 
UBS AG 
in 2016. 
He was 
CFO Wealth 
Management from 
2013 to 
2015. Prior 
to that, 
he held 
a 
number of leadership positions 
at Citigroup, including CFO 
and Head of 
Strategy within Global Transaction 
Services from 2010 
to 2013, Head of 
Strategy, 
Planning and 
Risk Strategy 
for the 
Corporate and 
Institutional 
Division 
from 
2006 
to 
2010 
and 
Head 
of 
Global 
Strategy 
and 
Cost 
Management for 
the Consumer Bank 
from 2004 to 
2006. Prior to 
that, 
Mr. Gardner 
held 
the 
position 
of 
Global 
Head 
of 
Financial 
Services 
Strategy for BearingPoint, for which he worked in Asia and New York for 
four 
years. 
From 
1994 
to 
2000, 
he 
was 
Managing 
Director 
at 
Barents 
Group, working in 
the US, Asia, Latin 
America and Europe. Mr. 
Gardner 
holds 
a 
bachelor’s 
degree 
in 
economics 
from 
Williams 
College, 
a 
master’s 
degree 
from 
the 
University 
of 
Pennsylvania 
and 
an 
MBA 
in 
finance from the Wharton School. 
 
Other activities and functions 
–
 
Member of the Board of UBS Business Solutions AG 
Suni Harford 
 
President Asset Management 
 
 
Year of initial appointment 
UBS: 2019 
 
Year of birth | Nationality 
1962 | American (US) 
 
Professional history and education 
Suni Harford became a member of the GEB and was appointed President 
Asset Management of UBS Group AG and UBS AG in October 2019. She 
has been 
with UBS 
since 2017 
and joined 
as Group 
Managing Director 
and 
Head 
Investments 
in 
the 
Asset 
Management 
business 
division. 
Before joining UBS, Ms. Harford worked for almost 25 years at Citigroup 
Inc. in 
various senior 
management positions: 
she was 
Regional Head 
of 
Markets 
for 
North 
America 
from 
2008 
to 
2017, 
with 
responsibility for 
sales, 
trading, 
origination 
and 
research 
across 
all 
fixed 
income, 
currencies, commodities, equities and municipal businesses. She was also 
a 
member of 
Citi’s 
Pension Plan 
Investment Committee 
and 
a 
Director 
on the Board 
of Citibank Canada. From 
2004 to 2008, Ms. Harford 
was 
Global 
Head 
of 
Fixed 
Income 
Research 
and, 
from 
1995 
to 
2004, 
Co-
Head Debt Capital Markets, Origination, Financial Institutions 
Group. She 
started 
her 
career 
as 
an 
investment 
banker 
at 
Merrill 
Lynch 
& 
Co 
in 
1988. Ms. Harford holds a bachelor’s degree in physics and mathematics 
from 
Denison 
University, 
Ohio
,
 
and 
an 
MBA 
from 
Tuck 
School 
of 
Business at Dartmouth. 
 
Other activities and functions 
–
 
Chairman of the Board of Directors of UBS Asset Management 
AG 
–
 
Member of the Leadership Council of the Bob Woodruff Foundation 
–
 
Member of the Board of UBS Optimus Foundation 
 
 

 
211 
 
 
 
Robert Karofsky 
 
Co-President Investment Bank 
 
 
 
 
Year of initial appointment 
UBS: 2018 
 
Year of birth | Nationality 
1967 | American (US) 
 
Professional history and education 
Robert Karofsky 
is Co-President 
Investment Bank at 
UBS Group 
AG and 
UBS AG and 
became a member 
of the GEB 
in October 2018. 
He joined 
UBS 
in 
2014 
as 
Global 
Head 
Equities 
and 
has 
been 
President 
UBS 
Securities LLC 
since 2015. 
From 2011 
to 2014, 
he was 
Global Head 
of 
Equity 
Trading 
at 
AllianceBernstein. 
He 
began 
his 
career 
at 
Morgan 
Stanley in 
1994 and 
joined Deutsche 
Bank as 
Head of 
North American 
Equities 
in 
2005, later 
taking over 
as 
Co-Head 
of 
Global Equities 
from 
2008 
to 
2010. 
Mr. Karofsky 
holds 
a 
bachelor’s 
degree 
in 
economics 
from 
Hobart 
and 
William 
Smith 
Colleges 
and 
an 
MBA 
in 
finance 
and 
statistics from the University of Chicago’s Booth School of 
Business. 
 
Other activities and functions 
–
 
Member of the Board of UBS Securities LLC 
–
 
Trustee of the UBS Americas Inc. Political Action Committee 
Sabine Keller-Busse 
 
President Personal & Corporate Banking and President UBS Switzerland 
(from 1 February 2021) 
Group Chief Operating Officer ad interim 
President UBS Europe, Middle East and Africa (until 31 January 2021) 
 
Year of initial appointment 
UBS: 2016 
 
Year of birth | Nationality 
1965 | Swiss and German 
 
Professional history and education 
Sabine 
Keller-Busse 
was 
appointed 
President 
Personal 
& 
Corporate 
Banking 
at 
UBS 
Group 
AG 
and 
President 
UBS 
Switzerland 
in 
February 
2021. She also 
holds the position 
of President of 
the Executive Board 
of 
UBS 
Switzerland 
AG. 
She 
has 
been 
Group 
Chief 
Operating 
Officer 
of 
UBS Group 
AG and UBS 
AG as 
well as President 
of the Executive 
Board 
of UBS 
Business Solutions 
AG since 
2018. 
From 2019 
to January 
2021, 
she was President UBS Europe, Middle East and 
Africa and from 2014 to 
2017, 
she 
held 
the 
position 
of 
Group 
Head 
Human 
Resources. 
Ms. 
Keller-Busse 
became a 
member of 
the GEB 
in 2016. 
Having joined 
UBS 
in 
2010, 
she 
served 
as 
Chief 
Operating 
Officer 
UBS 
Switzerland 
until 
2014. Prior 
to that, 
she led 
Credit Suisse’s 
Private Clients 
Region Zurich 
division for 
two years. 
From 1995 
to 2008, 
she worked 
for McKinsey & 
Company, where 
she was a Partner from 
2002. Ms. Keller-Busse 
holds a 
master’s 
degree 
and 
a 
PhD, 
both 
in 
business 
administration, 
from 
the 
University of St. Gallen. 
 
Other activities and functions 
–
 
Member of the Board of UBS Business Solutions AG 
–
 
Member of the Foundation Council of the UBS International 
Center of 
Economics in Society 
–
 
Vice-Chairman of the Board of Directors of SIX Group (Chairman of 
the nomination & compensation committee) 
–
 
Member of the Foundation Board of the UBS Pension Fund 
–
 
Member of the Board of the University Hospital Zurich Foundation 
 
 

Corporate governance and compensation | Corporate governance 
212 
 
 
 
Iqbal Khan 
 
Co-President 
Global 
Wealth 
Management 
and 
(since 
1 
February 
2021) 
President UBS Europe, Middle East and Africa 
 
Year of initial appointment 
UBS: 2019 
 
Year of birth | Nationality 
1976 | Swiss 
 
Professional history and education 
Iqbal 
Khan 
became 
a 
member 
of 
the 
GEB 
and 
was 
appointed 
Co-
President Global Wealth Management 
of UBS Group AG and 
UBS AG in 
October 2019. He was appointed President UBS Europe, Middle East and 
Africa in February 2021. Mr. 
Khan joined UBS from Credit 
Suisse, where 
he was CEO 
International Wealth Management from 
2015 to 2019 
and 
CFO Private Banking & Wealth Management from 2013 to 2015. Prior to 
that, he worked for 
Ernst & Young 
(EY), Switzerland, which he 
joined in 
2001. At EY he was Managing Partner Assurance 
and Advisory Services – 
Financial Services, as 
well as being 
a member of 
the Swiss management 
committee from 2011 to 2013. Before that, from 
2009 to 2011, he held 
the 
position 
of 
Industry 
Lead 
Partner 
Banking 
and 
Capital 
Markets, 
Switzerland 
and 
EMEA 
Private 
Banking. 
Mr. 
Khan 
holds 
an 
Advanced 
Master of International Business Law degree (LLM) from the University of 
Zurich. In 
addition, he 
is a 
Certified International 
Investment Analyst, 
a 
Swiss Certified Public Accountant and a Swiss Certified 
Trustee. 
 
Other activities and functions 
–
 
Member of the Supervisory Board of UBS Europe SE (since 1 
February 
2021) 
–
 
Member of the Board of Room to Read Switzerland 
 
Edmund Koh 
 
President UBS Asia Pacific 
 
 
Year of initial appointment 
UBS: 2019 
 
Year of birth | Nationality 
1960 | Singaporean 
 
Professional history and education 
Edmund 
Koh 
became 
a 
member 
of 
the 
GEB 
and 
was 
appointed 
President 
UBS 
Asia 
Pacific 
at 
UBS 
Group 
AG 
and 
UBS 
AG 
in 
January 
2019. 
He 
was 
Head 
Wealth 
Management 
Asia 
Pacific 
from 
2016 
to 
2018 
and 
Country 
Head 
Singapore 
from 
2012 
to 
2018. 
Mr. Koh 
has 
more 
than 30 
years’ experience 
in senior 
roles 
in financial 
services. He 
joined UBS 
in 2012 
as Head 
Wealth Management 
South East 
Asia and 
Asia 
Pacific 
Hub 
and 
Country 
Head 
Singapore 
from 
Taiwan-based 
Ta 
Chong 
Bank, where 
he served 
as President 
and 
Director 
from 
2008 to 
2011. 
From 
2001 
to 
2008, 
Mr. Koh 
was 
Managing 
Director 
and 
Regional Head 
Consumer Banking 
of DBS 
Bank in 
Singapore. 
In 2001, 
he became 
CEO of 
Alverdine Pte 
Ltd and 
two years 
earlier he 
held the 
same 
position 
for 
Prudential 
Assurance, 
both 
companies 
based 
in 
Singapore. 
Mr. Koh 
holds 
a 
bachelor 
of 
science 
degree 
in 
psychology 
from the University of Toronto. 
 
Other activities and functions 
–
 
Member of the two sub-committees of the Singapore Ministry 
of 
Finance’s Committee on the Future Economy 
–
 
Member of the Financial Centre Advisory Panel of the 
Monetary 
Authority of Singapore 
–
 
Council member of the Asian Bureau of Finance and 
Economic 
Research
 
–
 
Member of the Board of Trustees of the Wealth Management 
Institute, Singapore 
–
 
Member of the Board of Next50 Limited, Singapore 
–
 
Member of the Board of Medico Suites (S) Pte Ltd 
–
 
Member of the Board of Medico Republic (S) Pte 
Ltd 
–
 
Council member of the KidSTART program of the Early Childhood 
Development Agency, 
Singapore 
–
 
Trustee of the Cultural Matching Fund, 
Singapore 
–
 
Member of University of Toronto’s International Leadership Council 
for Asia 
 
 

 
213 
 
 
 
Axel P. 
Lehmann 
 
President Personal 
& Corporate 
Banking and 
President UBS 
Switzerland 
(until 31 January 2021) 
 
Year of initial appointment 
UBS: 2016 (UBS Group AG: 2016, UBS AG: 2016–2017) 
 
Year of birth | Nationality 
1959 | Swiss 
 
Professional history and education 
Axel 
P. 
Lehmann 
was 
President 
Personal 
& 
Corporate 
Banking 
at 
UBS 
Group 
AG 
and 
President 
UBS 
Switzerland, 
as 
well 
as 
President 
of 
the 
Executive Board 
of UBS 
Switzerland AG 
from 2018, 
and stepped 
down 
on 31 
January 2021. 
Mr. 
Lehmann became 
a member 
of the 
GEB and 
was 
appointed 
Group 
Chief 
Operating 
Officer 
of 
UBS 
Group 
AG 
and 
UBS AG in 2016. He was a member of the BoD of UBS AG from 2009 to 
2015 and of UBS Group AG from 2014 to 2015. Mr. Lehmann became a 
member of the group 
executive committee of Zurich 
Insurance Group in 
2002, 
holding 
various 
management 
positions, 
including 
CEO 
for 
the 
European 
and 
North 
America 
businesses. 
From 
2008 
to 
2015, 
he 
was 
Chief Risk 
Officer with 
additional responsibilities 
for Group 
IT, 
Regional 
Chairman 
for 
Europe, 
Middle 
East 
and 
Africa 
as 
well 
as 
Chairman 
for 
Farmers 
Group 
Inc. 
In 
2001, 
he 
was 
appointed 
CEO 
for 
Northern, 
Central and Eastern Europe and Zurich Group Germany, having served as 
a member of the company’s Group 
Management Board since 2000 with 
responsibility 
for 
group-wide 
business development 
functions. In 
1996, 
he joined 
Zurich as 
a member 
of the 
Executive Committee 
Switzerland, 
and 
previously 
he 
was 
Head 
of 
Corporate Planning 
and 
Controlling 
at 
SwissLife, 
Vice President 
of 
the Institute 
of 
Insurance Economics 
and 
a 
visiting 
professor 
at 
Bocconi University 
in 
Milan. 
Mr. 
Lehmann 
holds 
a 
master’s 
degree 
and 
a 
PhD 
in 
business 
administration 
and 
economics 
from the University 
of St. Gallen. 
He is also 
a graduate of 
the Advanced 
Management Program of the Wharton School. 
 
Other activities and functions 
–
 
Adjunct professor and Chairman of the Board of the Institute of 
Insurance Economics, University of St. Gallen 
–
 
Member of the HSG Advisory Board, University of St. Gallen 
–
 
Vice Chairman of the Swiss Finance Institute Foundation 
Board 
–
 
Member of the IMD Foundation Board, Lausanne 
–
 
Member of the Board and Board Committee, Zurich Chamber of 
Commerce 
–
 
Member of the Swiss-American Chamber of Commerce Chapter 
Doing Business in USA 
Tom 
Naratil 
 
Co-President Global Wealth Management and President UBS Americas 
 
 
Year of initial appointment 
UBS: 2011 (UBS Group AG: 2014, UBS AG: 2011) 
 
Year of birth | Nationality 
1961 | American (US) 
 
Professional history and education 
Tom 
Naratil 
became 
Co-President 
Global 
Wealth 
Management 
at 
UBS 
Group AG 
and UBS AG 
as well as 
CEO of UBS 
Americas Holding LLC 
in 
2018. He was 
appointed President UBS 
Americas at UBS 
Group AG and 
UBS AG in 
2016 and served as 
President Wealth Management 
Americas 
from 2016 to 
2018. He became 
a member of the 
GEB in 2011 and 
was 
Group CFO 
of UBS 
AG from 
2011 to 
2015. He 
held the 
same position 
for UBS Group 
AG from 2014 
to 2015. In 
addition to the 
role of Group 
CFO, 
he 
was 
Group 
Chief 
Operating 
Officer 
from 
2014 
to 
2015. 
Mr. 
Naratil was 
President 
of the 
Executive Board 
of UBS 
Business Solutions 
AG 
from 
2015 
to 
2016. 
He 
served 
as 
CFO 
and 
Chief 
Risk 
Officer 
of 
Wealth 
Management 
Americas 
from 
2009 
until 
his 
appointment 
as 
Group CFO 
in 2011. 
Before 2009, 
he held 
various senior 
management 
positions 
within 
UBS, 
including 
heading 
the 
Auction 
Rate 
Securities 
Solutions 
Group 
during 
the 
financial 
crisis 
in 
2008. 
Mr. 
Naratil 
was 
named 
Global 
Head 
of 
Marketing, 
Segment 
& 
Client 
Development 
in 
2007, 
Global 
Head 
of 
Market 
Strategy 
& 
Development 
in 
2005, 
and 
Director 
of 
Banking 
and 
Transactional 
Solutions, 
Wealth 
Management 
USA, 
in 
2002. 
During 
this 
time, 
he 
was 
a 
member 
of 
the 
Group 
Managing 
Board. 
He 
joined 
Paine 
Webber 
Incorporated 
in 
1983 
and 
after the 
merger with 
UBS became 
Director of 
the Investment 
Products 
Group. 
Mr. 
Naratil 
holds 
a 
bachelor’s 
degree 
in 
history 
from 
Yale 
University and an MBA in economics from New York University. 
 
Other activities and functions 
–
 
Member of the Board of UBS Americas Holding LLC 
–
 
Member of the Board of the American Swiss Foundation 
–
 
Member of the Board of Consultors for the College 
of Nursing at 
Villanova University 
 
 

Corporate governance and compensation | Corporate governance 
214 
 
 
 
Piero Novelli 
 
Co-President Investment Bank 
 
Year of initial appointment 
UBS: 2018 
 
Year of birth | Nationality 
1965 | Italian 
 
Professional history and education 
Piero Novelli is Co-President Investment 
Bank at UBS Group AG and UBS 
AG 
and 
became 
a 
member 
of 
the 
GEB 
in 
October 
2018. 
He 
was 
appointed Co-Executive Chairman Global Investment Banking, 
Corporate 
Client Solutions in 2017 
and in 2016 became 
sole Global Head Advisory 
Services 
including 
Global 
Mergers 
and 
Acquisitions 
(M&A). 
Mr. Novelli 
rejoined 
UBS 
in 
2013 
as 
Chairman Global 
M&A 
and 
Group 
Managing 
Director. 
From 
2011 
to 
2012, 
he 
was 
Global 
Co-Head 
of 
M&A 
at 
Nomura, having worked as Global Head M&A at UBS between 2004 and 
2009. Before 
that he 
worked for 
Merrill Lynch 
and held 
the position 
of 
Head 
of 
European 
M&A 
and 
Head 
of 
European 
Industrials. Mr. 
Novelli 
holds a 
master‘s degree 
in management 
from the 
MIT Sloan 
School of 
Management 
and 
a 
master’s 
degree 
in 
mechanical 
engineering 
from 
Università degli Studi di Roma. 
 
Other activities and functions 
None 
Markus Ronner 
 
Group Chief Compliance and Governance Officer 
 
Year of initial appointment 
UBS: 2018 
 
Year of birth | Nationality 
1965 | Swiss 
 
Professional history and education 
Markus 
Ronner 
is 
Group 
Chief 
Compliance and 
Governance Officer 
at 
UBS 
Group 
AG 
and 
UBS 
AG 
and 
became 
a 
member 
of 
the 
GEB 
in 
November 
2018. 
In 
this 
role, 
he 
is 
responsible 
at 
the 
Group 
level 
for 
compliance 
and 
operational 
risk 
control, 
governmental 
and 
regulatory 
affairs 
as 
well 
as 
investigations 
and 
governance 
matters. 
He 
became 
Head 
Group 
Regulatory 
and 
Governance in 
2012. 
During 
his 
39 
years 
with 
UBS, 
Mr. 
Ronner 
has 
held 
various 
positions 
across 
the 
bank, 
including: Group-wide program manager 
“too big to fail” 
(2011–2013); 
Chief 
Operating 
Officer 
(COO) 
Wealth 
Management 
& 
Swiss 
Bank 
(2010–2011); 
Head 
Products 
and 
Services 
of 
Wealth 
Management 
& 
Swiss 
Bank 
(2009–2010); 
COO 
Asset 
Management 
(2007–2009); 
and 
Head Group 
Internal Audit 
(2001–2007). Mr. 
Ronner joined 
the firm 
as 
an apprentice in 1981 and holds a Swiss Banking Diploma. 
 
Other activities and functions 
None 
 
 

 
215 
Change of control and defense measures
 
Our 
Articles 
of 
Association 
do 
not 
provide 
any 
measures 
for 
delaying, deferring or preventing a change of control. 
Duty to make an offer 
Pursuant 
to 
the 
Swiss 
Federal 
Act 
on 
Financial 
Market 
Infrastructures and 
Market Conduct in 
Securities and 
Derivatives 
Trading 
of 19 
June 2015, 
an 
investor 
who 
has 
acquired 
more 
than 
33
1
⁄
3
% 
of 
all 
voting 
rights 
of 
a 
company 
listed 
in 
Switzerland 
(whether 
directly, 
indirectly 
or 
in 
concert 
with 
third 
parties), 
whether 
such 
rights 
are 
exercisable 
or 
not, 
is 
required 
to 
submit 
a 
takeover 
offer 
for 
all 
listed 
shares 
outstanding. 
We 
have 
not 
elected 
to 
change 
or 
opt 
out 
of 
this 
rule. 
Clauses on change of control 
Neither the full-time 
contract with the 
Chairman of the 
BoD nor 
any 
employment 
contracts 
with 
GEB 
members 
or 
employees 
holding 
key 
functions 
within 
the 
company 
(e.g., 
Group 
Managing Directors) contain change of control clauses. 
All 
employment 
contracts 
with 
GEB 
members 
stipulate 
a 
notice 
period 
of 
six 
months. 
During 
the 
notice 
period, 
GEB 
members 
are 
entitled 
to 
their 
salaries 
and 
the 
continuation 
of 
existing 
employment 
benefits 
and 
may 
be 
eligible 
to 
be 
considered for a discretionary performance award 
based on their 
contribution during their tenure. 
In 
case 
of 
a 
change 
of 
control, 
we 
may, 
at 
our 
discretion, 
accelerate 
the 
vesting 
of 
and 
/ 
or 
relax 
applicable 
forfeiture 
provisions of employees’ awards. 
›
 
Refer to the “Compensation” section 
of this report on page 220 
for more information 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate governance and compensation | Corporate governance 
216 
Auditors 
Audit 
is 
an 
integral 
part 
of 
corporate 
governance. 
While 
safeguarding 
their 
independence, 
the 
external 
auditors 
closely 
coordinate their work with Group Internal Audit (GIA). The Audit 
Committee 
and, 
ultimately, 
the BoD 
supervise 
the effectiveness 
of audit work. 
›
 
Refer to “Board of Directors” in this section for more 
information about the Audit Committee 
External independent auditors 
The AGM 
in 2020 
re-elected Ernst & 
Young 
Ltd (EY) 
as auditors 
for the Group 
for a one-year term 
of office. EY 
assumes virtually 
all auditing functions 
according to laws, 
regulatory requests 
and 
the 
AoA. 
Bob 
Jacob 
is 
the 
EY 
lead 
partner 
in 
charge 
of 
the 
overall 
coordination 
of 
the 
UBS 
Group 
financial 
and 
regulatory 
audits and the co-signing 
partner of the financial 
audit. In 2020, 
Maurice 
McCormick 
became 
the 
lead 
audit 
partner 
for 
the 
financial 
statement 
audit 
and 
has 
an 
incumbency 
limit 
of 
five 
years. Patrick 
Schwaller has 
been the 
Lead Auditor 
to the 
Swiss 
Financial Market Supervisory 
Authority (FINMA) since 2015, 
with 
an incumbency limited 
to six years 
because of prior 
audit service 
to 
the Group 
in another 
role. 
He 
will be 
succeeded in 
2021 by 
Hannes 
Smit, 
with 
an 
incumbency 
limit 
of 
seven 
years. 
Daniel 
Martin 
has 
been 
the 
co-signing 
partner 
for 
the 
FINMA 
audit 
since 2019, with an incumbency limit of seven years. 
During 
2020
,
 
the 
Audit 
Committee 
held 
twelve
 
meetings
 
with 
the 
external 
auditors. 
The 
Audit 
Committee 
assesses 
the 
performance, 
effectiveness 
and 
independence 
of 
the 
external 
auditors 
on 
an 
annual 
basis. 
The 
assessment 
is 
based 
on 
interviews 
with 
senior 
management 
and 
survey 
feedback 
from 
stakeholders 
across 
the 
Group. 
Assessment 
criteria 
include 
quality 
of 
service 
delivery, 
quality 
and 
competence 
of 
the 
audit 
team, 
value 
added 
as 
part 
of 
the 
audit, 
insightfulness, 
and 
the 
overall 
relationship 
with 
EY. 
Based 
on 
its 
own 
analysis 
and 
the 
assessment 
results, 
the 
Audit 
Committee 
concluded 
that 
EY’s 
audit has been effective. 
Special auditors for potential capital increases 
At 
the 
AGM 
on 
3 
May 
2018, 
BDO 
AG 
was 
reappointed 
as 
special 
auditors for 
a 
three-year 
term of 
office. 
Special auditors 
provide 
audit 
opinions 
in 
connection 
with 
potential 
capital 
increases independently from other auditors. 
Services performed and fees 
The Audit 
Committee oversees 
all services 
provided to 
the bank 
by the external auditors. For 
services requiring the approval 
from 
the Audit Committee, a 
preapproval may be 
granted either for a 
specific 
mandate 
or 
in 
the 
form 
of 
a 
blanket 
preapproval 
authorizing 
a 
limited 
and 
well-defined 
type 
and 
amount 
of 
services. 
The 
fees (including 
expenses) paid 
to 
EY are 
set forth 
in 
the 
table 
below. 
In 
addition, 
EY 
received 
USD 32.7 
million 
in 
2020 
(USD 30.2 
million 
in 
2019) 
for 
services 
performed 
on 
behalf 
of 
our 
investment 
funds, 
many 
of 
which 
have 
independent 
fund 
boards or trustees. 
Audit 
work 
includes 
all 
services 
necessary 
to 
perform 
the 
audit 
for 
the 
Group 
in 
accordance 
with 
applicable 
laws 
and 
generally accepted auditing standards, as well as other assurance 
services 
that conventionally 
only the 
auditor 
can provide. 
These 
include 
statutory 
and regulatory 
audits, 
attestation 
services 
and 
the review 
of documents 
to be 
filed with 
regulatory bodies. 
The 
additional 
services 
classified 
as 
audit 
in 
2020 
included 
several 
engagements 
for 
which 
EY 
was 
mandated 
at 
the 
request 
of 
FINMA. 
 
Fees paid to external independent auditors 
UBS Group 
AG and 
its subsidiaries 
(including UBS 
AG) paid 
the following 
fees (including 
expenses) to 
their external 
independent 
auditors. 
For the year ended 
USD million 
31.12.20 
31.12.19 
Audit 
Global audit fees 
 
53 
 
52 
Additional services classified as audit (services required 
by law or statute, including work of a non-recurring nature mandated by 
regulators) 
 
10 
 
13 
Total audit
1
 
64 
 
65 
Non-audit 
Audit-related fees 
 
8 
 
9 
of which: assurance and attestation services 
 
3 
 
4 
of which: control and performance reports 
 
5 
 
4 
of which: consultation concerning financial accounting and 
reporting standards 
 
0 
 
0 
Tax fees 
 
1 
 
2 
All other fees 
 
0 
 
2 
Total non-audit
1
 
9 
 
13 
1 Total audit and non-audit fees amounted to USD 73 million for UBS Group AG consolidated as of 31 
December 2020 (31 December 2019: USD 78 million), of which USD 46 million related to UBS AG consolidated 
(31 December 2019: USD 52 million). 
 
 

 
217 
Audit-related 
work 
comprises 
assurance 
and 
related 
services 
traditionally 
performed 
by 
auditors, 
such 
as 
attestation 
services 
related 
to 
financial 
reporting, 
internal 
control 
reviews 
and 
performance 
standard 
reviews, 
as 
well 
as 
consultation 
concerning financial accounting and reporting standards. 
Tax 
work 
involves 
services 
performed 
by professional 
staff 
in 
EY’s 
tax 
division 
and 
includes 
tax 
compliance 
and 
tax 
consultation with respect to our own affairs. 
“Other” 
services 
are 
permitted 
services, 
which 
include 
technical IT security control reviews and assessments. 
Group Internal Audit 
Group 
Internal 
Audit 
(GIA) 
performs 
the 
internal 
auditing 
role 
for 
the 
Group. 
It 
is 
an 
independent 
function 
that 
provides 
expertise 
and 
insights 
to 
confirm 
controls 
are 
functioning 
well 
and 
highlight 
where 
UBS 
needs 
to 
better 
manage 
current 
and 
emerging risks. 
In 2020, 
it operated 
with an 
average headcount 
of 582 full-time equivalent employees. 
GIA 
supports 
the 
BoD 
in 
discharging 
its 
governance 
responsibilities 
by 
taking 
a 
dynamic 
approach 
to 
audit, 
issue 
assurance 
and 
risk 
assessment, 
calling 
attention 
to 
key 
risks 
in 
order 
to 
drive 
action 
to 
prevent 
unexpected 
loss 
or 
damage 
to 
the 
firm’s 
reputation.
 
To 
support 
the 
achievement 
of 
UBS’s 
objectives, 
GIA 
independently, 
objectively 
and 
systematically 
assesses the: 
(i)
 
soundness of the Group’s risk and control culture; 
(ii)
 
reliability 
and 
integrity 
of 
financial 
and 
operational 
information, 
including 
whether 
activities 
are 
properly, 
accurately 
and 
completely 
recorded, 
and 
the 
quality 
of 
underlying data and models; and 
(iii)
 
design, operating effectiveness and sustainability of: 
–
 
processes to define strategy and risk appetite, as well 
as 
the overall adherence to the approved strategy; 
–
 
governance processes; 
–
 
risk 
management, 
including 
whether 
risks 
are 
appropriately identified and managed; 
–
 
internal 
controls, 
specifically 
whether 
they 
are 
commensurate with the risks taken; 
–
 
remediation activities; and 
–
 
processes
 
to 
comply 
with 
legal 
and 
regulatory 
requirements, 
internal 
policies, 
and 
the 
Group’s 
constitutional documents and contracts. 
 
Audit 
reports 
that 
include 
significant 
issues 
are 
provided 
to 
the 
Group 
CEO, 
relevant 
GEB 
members 
and 
other 
responsible 
management. The Chairman, 
the Audit Committee 
and the Risk 
Committee of the BoD are 
regularly informed of 
such issues. 
In 
addition, 
GIA 
provides 
independent 
assurance 
on 
the 
effective 
and 
sustainable 
remediation 
of 
control 
deficiencies 
within its mandate, taking a prudent 
and conservative risk-based 
approach and assessing at the issue 
level whether the root cause 
and 
the 
potential 
exposure 
for 
the 
firm 
have 
been 
holistically 
and sustainably 
addressed. GIA 
also cooperates 
closely with 
risk 
control 
functions 
and 
internal 
and 
external 
legal 
advisors 
on 
investigations into major control issues. 
To 
maximize 
GIA’s 
independence 
from 
management, 
the 
Head GIA 
reports to 
the Chairman 
of the 
BoD and 
to the 
Audit 
Committee, which 
assesses annually 
whether GIA 
has sufficient 
resources 
to 
perform 
its 
function, 
as 
well 
as 
its 
independence 
and 
performance. 
In 
the 
Audit Committee’s 
assessment, 
GIA is 
sufficiently 
resourced 
to 
fulfill 
its 
mandate 
and 
complete 
its 
auditing 
objectives. 
GIA’s 
role, 
position, 
responsibilities 
and 
accountability 
are 
set 
out 
in 
our 
Organization 
Regulations 
and 
the Charter 
for GIA, available 
at 
ubs.com/governance.
 
The latter 
also 
applies 
to 
UBS 
AG’s 
internal 
audit 
function. 
GIA 
has 
unrestricted 
access 
to 
all 
accounts, 
books, 
records, 
systems, 
property 
and 
personnel, 
and 
must 
be 
provided 
with 
all 
information 
and 
data 
that 
it 
needs 
to 
fulfill 
its 
auditing 
responsibilities. GIA also conducts special audits at the request of 
the Audit Committee, or other BoD members, committees or the 
Group CEO in consultation with the Audit Committee. 
GIA enhances 
the efficiency of 
its work 
through coordination 
and close cooperation with the external auditors. 
 

 
 
 
 
 
 
 
Corporate governance and compensation | Corporate governance 
218 
Information policy 
We 
provide 
regular 
information to 
our 
shareholders 
and to 
the 
financial community. 
Financial reports for UBS Group AG are expected to be 
published on the following dates: 
First quarter 2021 
27 April 2021 
Second quarter 2021 
20 July 2021 
Third quarter 2021 
26 October 2021 
The annual general meetings 
of the shareholders of UBS 
Group AG will take place on the following dates: 
2021 
8 April 2021 
2022 
6 April 2022 
 
›
 
Refer to the corporate calendar at 
ubs.com/investors
 
for future 
financial report publication and other key 
dates, including UBS 
AG’s financial report publication dates 
 
We 
meet 
with 
institutional 
investors 
worldwide 
throughout 
the 
year 
and 
regularly 
hold 
results 
presentations, 
attend 
and 
present 
at 
investor 
conferences, 
and, 
from 
time 
to 
time, 
host 
investor 
days. 
When 
appropriate, 
investor 
meetings 
are 
hosted 
by 
senior 
management 
and 
are 
attended 
by 
members 
of 
our 
Investor 
Relations 
team. 
We 
use 
various 
technologies, 
such 
as 
webcasting, audio links 
and cross-location videoconferencing, 
to 
widen 
our 
audience 
and 
maintain 
contact 
with 
shareholders 
globally. 
We 
make 
our 
publications 
available 
to 
all 
shareholders 
simultaneously 
to 
provide 
them 
with 
equal 
access 
to 
our 
financial information. 
All 
o
ur 
financial 
publ
ications 
are 
available 
at
 
ubs.com/investors
. 
Shareholders 
may 
opt 
to 
receive 
a 
printed 
copy of 
our annual 
report. They 
may also 
request a 
copy of 
our 
annual 
review, 
which 
reflects 
on 
specific 
initiatives 
and 
achievements 
of 
the 
Group 
and 
provides 
an 
overview 
of 
the 
Group’s 
activities 
during 
the 
year, 
as 
well 
as 
key 
financial 
information.
 
 
›
 
Refer to 
ubs.com/investors
 
for a complete set of published 
reporting documents and a selection of senior 
management 
industry conference presentations 
›
 
Refer to the “Information sources” section 
on page 655 of this 
report for more information 
›
 
Refer to “Corporate information” and 
“Contacts” on page 6 of 
this report for more information 
Financial disclosure principles 
We 
fully 
support 
transparency, 
and 
consistent 
and 
informative 
disclosure. We 
aim to communicate 
our strategy and results 
in a 
manner 
that allows 
stakeholders to 
gain 
a 
good understanding 
of 
how 
our 
Group 
works, 
what our 
growth 
prospects 
are, 
and 
the 
risks that 
our 
businesses and 
our strategy 
entail. We 
assess 
feedback 
from 
analysts 
and 
investors 
on 
a 
regular 
basis 
and, 
where 
appropriate, 
reflect 
this 
in 
our 
disclosures. 
To 
continue 
achieving 
these 
goals, 
we 
apply 
the 
following 
principles 
in 
our 
financial reporting and disclosure: 
–
 
transparency 
that 
enhances 
the 
understanding 
of 
economic 
drivers and builds trust and credibility; 
–
 
c
onsistency
 
within 
each 
reporting 
period 
and 
between 
reporting periods; 
–
 
simplicity that allows readers to gain a good understanding of 
the performance of our businesses; 
–
 
relevance,
 
by
 
focusing 
not 
only 
on 
what 
is 
required 
by 
regulation 
or 
statute 
but 
also 
on 
what 
is 
relevant 
to 
our 
stakeholders; 
and 
–
 
best practice that leads to improved standards. 
 
We regard 
the continuous 
improvement of 
our disclosures 
as 
an ongoing commitment. 
 
 

 
219 
Financial reporting policies 
We 
report 
our 
Group’s 
results 
for 
each 
financial 
quarter, 
including 
a 
breakdown 
of 
results 
by 
business 
division 
and 
disclosures 
or 
key 
developments 
relating 
to 
risk 
management 
and 
control, 
capital, 
liquidity 
and 
funding 
management. 
Each 
quarter, 
we 
publish 
quarterly 
financial 
reports 
for 
UBS 
Group 
AG, on the same day as the earnings releases. 
The consolidated 
financial statements 
of UBS 
Group AG 
and 
UBS AG 
are prepared 
in accordance 
with International 
Financial 
Reporting 
Standards 
as 
issued 
by 
the 
International 
Accounting 
Standards Board. 
›
 
Refer to “Note 1 Summary of significant accounting 
policies” in 
the “Consolidated financial statements” 
section on page 293 of 
this report for more information about the basis 
of accounting 
 
We 
are 
committed 
to 
maintaining 
the 
transparency 
of 
our 
reported results 
and to 
allowing analysts 
and investors 
to make 
meaningful 
comparisons 
with 
prior 
periods. 
If 
there 
is 
a 
major 
reorganization 
of 
our 
business 
divisions 
or 
if 
changes 
to 
accounting 
standards 
or 
interpretations 
lead 
to 
a 
material 
change 
in 
the Group’s 
reported 
results, 
our 
results are 
restated 
for 
previous 
periods 
as 
required 
by 
applicable 
accounting 
standards. These restatements show 
how our results would have 
been 
reported 
on the 
new basis 
and provide 
clear explanations 
of all relevant changes. 
US disclosure requirements 
As 
a 
foreign 
private 
issuer, 
we 
must 
file 
reports 
and 
other 
information, 
including 
certain 
financial
 
reports, 
with 
the 
US 
Securities 
and 
Exchange 
Commission 
(the 
SEC) 
under 
the 
US 
federal 
securities 
laws. 
We 
file 
an 
annual 
report 
on 
Form 
20-F 
and 
furnish 
our 
quarterly 
financial 
reports 
and 
other 
material 
information under 
cover of 
Form 6-K 
to the 
SEC. These 
reports 
are 
available 
at 
ubs.com/investors
 
and 
on 
the 
SEC’s 
website, 
sec.gov.
 
An 
evaluation 
of 
the 
effectiveness 
of 
our 
disclosure 
controls 
and 
procedures 
(as 
defined 
in 
Rule 
13a–15e) 
under 
the 
US 
Securities 
Exchange 
Act 
of 
1934, 
has 
been 
carried 
out, 
under 
the 
supervision 
of 
management, including 
the 
Group 
CEO, 
the 
Group 
CFO 
and 
the 
Group 
Controller 
and 
Chief 
Accounting 
Officer. Based on that evaluation, the 
Group CEO and the Group 
CFO concluded that our disclosure 
controls and procedures were 
effective as 
of 31 
December 2020. 
No significant 
changes have 
been made to our internal controls 
or to other factors that could 
significantly affect these controls subsequent 
to the date of 
their 
evaluation. 
›
 
Refer to the “Consolidated financial statements” 
section on page 
282 of this report for more information 
 

 
 
 
 
Advisory vote 
 
220 
Compensation
Julie G. Richardson
 
Chair of the 
Compensation Committee 
of the Board of Directors 
 
 
 
 
Dear Shareholders, 
The Board 
of Directors 
and I wish 
to thank you 
for your support 
once 
again 
at 
last 
year’s 
Annual
 
General 
Meeting 
and 
for 
sharing your 
views on 
our compensation 
practices over 
the past 
year. 
 
Throughout 
2020, 
the 
Board 
of 
Directors 
(BoD) 
Compensation 
Committee 
continued 
to 
oversee 
the 
compensation 
process, 
ensuring 
that 
rewards 
reflect 
performance, 
appropriate 
risk-
taking 
and 
support 
the 
alignment 
of 
employees’ 
interests 
with 
those 
of 
our 
shareholders. 
As 
the 
Chair 
of 
the 
Compensation 
Committee, 
I 
am 
pleased 
to 
present 
our 
Compensation 
Report 
for 2020. 
 
As 
part 
of 
our 
ongoing 
engagement 
with 
shareholders 
during 
2020, 
we received 
positive feedback 
in response 
to the 
changes 
we 
made 
in 
2019, 
notably 
the 
introduction 
of 
a 
long-term 
incentive 
plan. 
In 
our 
annual 
review 
of 
the 
compensation 
framework, we 
concluded that 
it remains 
well suited 
to support 
us in achieving 
our ambitions for 
the Group and 
that it provides 
strong alignment with shareholders’ interests. 
Strategy and execution leading to strong results 
2020 
resulted 
in
 
unprecedent
ed 
times 
and 
challenges 
for 
society, clients and employees due to 
the COVID-19 pandemic. It 
required 
us 
to
 
focus 
on 
safeguarding 
the 
well
-
being 
of 
our 
employees 
and 
their 
families, 
serving 
our 
clients 
and 
ensuring 
operational continuity. 
Our employees met these 
challenges with energy, 
determination 
and 
commitment 
to 
continue 
delivering 
value 
for 
both 
our 
clients and shareholders. 
 
Clients continued to place their trust in UBS during a tough 
year, 
as 
they 
sought 
stability, 
and 
we 
helped 
them 
navigate 
uncertainty 
through 
advice 
and 
solutions. 
UBS’s 
strength 
and 
resilience 
allowed 
us 
to 
responsibly 
deploy 
resources 
for 
the 
benefit 
of 
clients, 
employees 
and 
society 
throughout 
the 
pandemic. 
 
UBS 
performed 
well 
in 
this 
environment, 
demonstrating 
the 
strength 
of 
its 
strategy, 
as 
well 
as 
its 
integrated and 
diversified 
business model. 
The resilience 
of our 
operations, our 
disciplined 
risk 
management 
and 
our 
ongoing 
investment 
in 
technology 
and 
infrastructure 
have 
been 
critical 
in 
successfully 
operating 
through the 
pandemic. Our full-year 
results further 
demonstrate 
that 
our 
strategy 
is 
the 
right 
one 
for 
UBS 
as 
we 
continuously 
adapt and accelerate the pace of change. 
 
Our 
employees
 
work
ed
 
from 
home 
to 
a 
significant 
degree 
throughout 
2020, serving 
our clients 
and enabling 
us to 
deliver 
on our targets, 
to make progress 
toward our strategic 
objectives 
and 
to 
accelerate 
progress 
on our 
digitalization 
agenda. 
This is 
also 
reflected 
in 
our 
total 
shareholder 
returns 
in 
2020, 
which 
outperformed those of our peers. 
 
We met or exceeded 
all our financial targets in 
2020. Our return 
on 
CET1 
capital 
was 
17.4%, 
compared 
with 
our 
target 
of 
12–
15%, 
and 
our 
return 
on 
tangible 
equity 
was 
12.8%. 
We 
delivered 
the 
lowest 
cost 
/ 
income 
ratio 
since 
2006 
at 
73.3%, 
compared with our target of 75–78%. Every region and business 
division contributed over USD 1 billion in profits, as we benefited 
from our business and geographical diversification. 
›
 
Refer to “Financial and operating performance” 
in our Annual 
Report 2020 for further details about our 
Group and business 
division performance 
 
 
 
Supporting society and clients 
–
 
We 
committed USD 30 million
 
to various COVID-19-related aid projects that 
provide support across the communities in 
which we 
operate. 
–
 
A part 
of this 
amount has 
been used 
to match 
the 
USD 15 million
 
raised by 
our clients 
and our 
employees for 
the UBS 
Optimus 
Foundation’s COVID-19 Response Fund. 
–
 
Lending and commitments 
to clients globally 
significantly increased in 2020
, including CHF 3 billion 
to Swiss small 
and medium-
sized entities (SMEs) under the Swiss government-backed program and USD 656 million 
under the US Paycheck Protection Program. 
–
 
As previously communicated, we intend to donate any economic profits from these programs 
to COVID-19 relief efforts
. 
›
 
Refer to 
ubs.com/insociety
 
for more information about how we support society 
and clients 
 

 
221 
Delivered on our capital returns commitment 
Our 
financial 
position 
remained 
very 
strong 
despite 
the 
uncertainties 
caused 
by
 
the 
COVID
-
19 
pandemic. 
Credit 
impairments 
and 
expected 
credit 
loss 
expenses 
under 
IFRS 
9 
were 
elevated 
compared 
with 
prior 
years, 
although 
our 
loan 
impairment 
ratios 
remain 
low 
by 
industry 
standards, 
reflecting 
the quality 
of our 
loan book. 
UBS neither 
required 
nor received 
any 
COVID-19-related 
financial 
support 
from 
the 
Swiss 
federal 
government. Our strong financial position and capital generation 
by 
our 
businesses 
enabled 
us 
to 
pay 
out 
the 
full 
dividend 
for 
2019
 
and
 
accru
e
 
a 
dividend 
for 
the 
2020 
financia
l 
year.
The balance 
between cash 
dividends and 
share repurchases 
has 
been 
adjusted 
from 
2020 
onward, 
with 
a 
greater 
weight 
on 
share 
repurchases 
compared 
with 
prior 
years. 
We 
remain 
committed 
to 
returning 
excess 
capital 
to 
our 
shareholders 
and 
delivering 
total 
capital 
returns 
consistent 
with 
our 
previous 
levels. 
For 
2020, 
the 
BoD 
intends 
to 
propose 
a 
dividend 
of 
USD 0.37 per share 
for approval at 
the Annual General 
Meeting 
of shareholders on 8 April 2021. 
 
In 
the 
first 
quarter 
of 
2021, 
we 
repurchase
d
 
the 
remaining 
CHF
 
100 
million 
of 
our 
2018
–
2021
 
USD 
2 
billion
 
share 
repurchase 
program, 
which 
is 
now 
complete 
and 
closed. 
In 
February 2021, 
we launched 
a new 
three-year share 
repurchase 
program 
of up 
to CHF 4 
billion, of 
which we 
expect to 
execute 
up to USD 1 billion by the end of the first quarter of 2021. 
 
 
 
 
 
 
2020 performance award pool 
Over 
the 
past 
years, 
our 
performance 
award 
pool 
has 
consistently 
reflected 
our 
strict 
pay-for-performance 
philosophy 
and 
our 
disciplined 
approach 
in 
managing 
compensation 
over 
business cycles, 
as well 
as alignment 
with shareholder 
interests. 
This 
was 
especially 
evident 
in 
2019, 
when 
our 
performance 
award 
pool 
reflected 
factors 
such 
as 
risk-adjusted 
profit, 
the 
impact 
of 
the 
verdict 
from 
the 
Court 
of 
First 
Instance 
in 
the 
French 
cross-border 
matter 
and 
the 
resulting 
share 
price 
development, leading to a year-on-year performance award 
pool 
reduction beyond that implied by underlying performance. 
 
For 
2020, 
although
 
business 
performance 
was 
strong
, 
we 
remain 
committed 
to 
moderation 
in 
performance-related 
pay. 
The 2020 performance award pool is aligned with previous 
years 
in 
which 
we 
delivered 
strong 
performance. 
It 
further 
considers 
the 
economic 
impact 
of 
COVID-19 
and 
regulatory 
directives 
to 
maintain capital flexibility. 
Given the reduction in our 2019 performance award pool, which 
was 
a 
negative 
outlier 
versus 
many 
peers, 
we 
believe 
it 
is 
important 
to 
compare 
the 
2020 
pool 
not 
only 
with 
the 
2019 
outlier but 
also with 
the 2018 
pool. For 
2020, the 
performance 
award 
pool 
for 
the 
Group 
was 
USD 
3.3 
billion, 
an 
increase 
of 
6% compared with 2018 (or 24% 
compared with 2019). 
 
The 
Group 
E
xecutive 
B
oard 
(
GEB
)
 
performance 
award 
pool, 
which includes the Group CEOs’ 
performance awards 
and is part 
of the 
Group pool, 
was CHF 85.0 million, 
an increase 
of 1% on 
a 
per 
capita 
basis 
and 
16% 
overall 
compared 
with 
2018 
(and 
+18% per 
capita and 
+21% overall 
compared 
with 2019). 
This 
reflects 
a 
smaller increase 
in executive 
compensation compared 
with the 
overall pool 
development in 
2020. As 
a percentage 
of 
Group 
profit 
before 
tax, the 
GEB performance 
award 
pool 
was 
1.1%, well below the cap of 2.5%. 
›
 
Refer to the “Group compensation” section 
of this report for 
more information 

 
 
 
 
Advisory vote 
 
222 
Our focus on ESG including diversity, 
equity and inclusion 
We 
remain 
fully 
committed 
to 
our 
ESG-related 
objectives 
and 
reflect 
them 
in 
our 
performance 
and 
compensation 
processes. 
We 
are 
widely 
recognized 
for 
our 
sustainable 
practices. 
During 
2020, 
we 
were 
named 
an 
industry 
leader 
in 
the 
Dow 
Jones 
Sustainability Indices 
for the 
sixth consecutive 
year, 
rated AA 
by 
MSCI, and were included in CDP’s Climate A List. 
We 
pay 
for 
performance, 
and 
a 
strong 
commitment 
to 
pay 
fairness is 
embedded in 
our compensation 
policies. We 
conduct 
both internal and independent external reviews aiming to ensure 
that all 
employees are 
paid fairly. 
In 2020, 
UBS was 
certified by 
the 
EQUAL-SALARY 
Foundation 
for 
its 
equal 
pay 
practices 
in 
Switzerland, 
the US, the UK, Hong Kong and Singapore. 
In 
a 
global 
business 
such 
as 
ours, 
a 
diverse 
workforce 
is 
a 
competitive 
advantage. 
Our 
strategy is 
to 
continuously 
shape a 
diverse 
and 
inclusive 
organization 
that 
is 
innovative, 
provides 
outstanding service 
to our 
clients, offers 
equitable opportunities 
for all and 
is a great 
place to work 
for everyone. While 
race and 
ethnicity 
were 
already 
a 
priority 
in 
prior 
years, 
in
 
2020 
we 
elevated 
our 
focus 
on 
this 
important 
topic.
 
T
o 
increase 
the 
representation 
of diverse 
heritage employees 
at UBS, 
we take 
a 
multi-faceted 
approach, 
including 
setting 
aspirational 
ethnicity 
goals in several locations, such as the 
US and the UK, and rolling 
out race awareness training to all employees. 
Our broad approach focuses on gender, 
race, ethnicity, LGBTQ+, 
age, 
disability, 
and 
mental 
health, 
among 
other 
aspects, 
with 
inclusive leadership 
playing an important 
role. Increasing 
gender 
and ethnic diversity 
are our highest 
near-term 
strategic diversity, 
equity and inclusion priorities. 
 
Supporting our employees 
–
 
A large proportion of our workforce 
worked from home
 
throughout 2020, with more than 
95%
 
of internal and external staff able 
to work 
concurrently on 
a 
remote basis. 
We provided 
extra flexibility
 
for employees 
to care 
for their 
families and 
address their 
evolving needs. 
–
 
In 
2020, 
we 
suspended 
any 
new 
restructuring 
activities 
that 
would 
have 
resulted 
in 
redundancies
 
and 
potential 
loss 
of 
employment for our employees. 
–
 
As a sign of appreciation 
for their contributions throughout the pandemic, 
employees at less senior ranks 
received a 
one-time cash 
payment
 
equivalent to one week’s salary. 
–
 
We introduced a 
mindfulness app-based solution
 
designed to help 
our employees find more 
balance. It also 
gives helpful advice 
on physical exercises and healthy living, improving sleeping habits, and increasing energy levels overall. 
–
 
Our 
Employee Assistance 
Program (EAP)
 
supports 
our employees, 
as well 
as their 
family members, 
with any 
personal or 
work-
related issues that may be affecting their well-being. 
–
 
To further 
support the 
health, connectivity and 
resilience
 
of our employees 
worldwide, UBS provided 
them with 
relevant tools 
and resources on 
key topics, such as 
working from home, team 
building in a virtual 
set up, leading 
remote teams, thriving at 
home 
and at work, keeping one’s mind and body fit, and relieving stress and anxiety. 
–
 
We are very proud that our 2020 employee survey results indicated strong improvements across 
all dimensions and in particular with 
regard to employees feeling supported by UBS and being part of a highly professional 
and respectful work environment. 
›
 
Refer to 
ubs.com/global/en/our-firm/our-employees/working-at-ubs
 
for more information about how we support 
our employees 
 
Change at the top 
Ralph 
Hamers
 
joined 
UBS 
as 
a 
member 
of 
the 
GEB 
on 
1 September 2020 
and took 
over from 
Sergio Ermotti 
as Group 
CEO on 1 November 2020. 
We sincerely thank Sergio 
Ermotti for his exceptional 
commitment 
and contribution to the 
success of our 
firm since taking 
office in 
2011. 
He 
led 
the 
transformation of 
UBS 
into 
the 
largest 
truly 
global
 
wealth 
manager, 
and 
the 
leading 
bank 
in 
Switzerland, 
supported by a global, 
focused investment 
bank and a large-scale 
and diversified asset manager with 
a strong 
focus on sustainable 
investing. 
Since 
2011, 
UBS 
has 
strengthened 
its 
profitability, 
generating USD 
36 billion of 
CET1 capital, 
of which USD 
23 billion 
has 
been 
returned 
to 
shareholders
 
or 
reserved 
for 
return
s
 
to 
shareholders. 
Today, 
we operate a capital-efficient 
business model 
with 
a 
strong 
competitive position 
in 
our 
key 
markets 
and 
we 
have an attractive 
outlook for 
long-term 
and sustainable 
growth. 
Under 
Sergio 
Ermotti’s 
strong 
leadership 
in 
a 
challenging 
year 
marked 
by 
the 
COVID-19 
pandemic, 
UBS 
demonstrated 
the 
strength 
of 
its 
business 
model 
and 
delivered 
excellent 
financial 
results. 
Finally, 
Sergio 
Ermotti 
contributed 
to 
a 
smooth 
and 
efficient 
Group 
CEO 
transition, 
supporting 
this 
critical 
process 
effectively beyond his step-down 
in October until his departure at 
the end of 2020. 
2021 Annual General Meeting 
At the 
2021 AGM 
on 8 
April, we 
will seek 
your support 
on the 
following compensation-related items: 
–
 
the 
maximum 
aggregate 
amount 
of 
compensation 
for 
the 
BoD for the period from the 2021 AGM to the 2022 AGM; 
–
 
the 
maximum 
aggregate 
amount 
of 
fixed 
compensation 
for 
the GEB for 2022; 
–
 
the aggregate 
amount of 
variable compensation 
for the 
GEB 
for 2020; and 
–
 
shareholder 
endorsement 
in 
an 
advisory 
vote 
for 
this 
Compensation Report. 
 
On 
behalf 
of 
the 
Compensation 
Committee 
and 
the 
BoD, 
I 
thank 
you 
again 
for 
your 
feedback 
and 
we 
respectfully 
ask 
for 
your continued support at the upcoming AGM. 
 
 
 
 
Julie G. Richardson 
Chair of the Compensation Committee of the Board of Directors 
 

 
 
223 
Shareholder engagement and say on pay 
The feedback 
we seek 
from our 
shareholders on 
compensation-
related 
topics 
is 
very 
important 
to 
us, 
as 
we 
are 
committed 
to 
maintaining 
a 
strong 
link 
between 
the 
interests 
of 
our 
employees and those of our shareholders. 
We 
continued 
engaging 
with 
shareholders 
during 
2020 
and 
received 
positive 
feedback 
in 
response 
to 
the 
significant 
enhancements made to our compensation framework in 2019. 
Our 
annual 
review 
of 
the 
compensation 
framework 
in 
2020 
concluded that 
it remains 
well suited 
to support 
us in 
achieving 
our ambitions for the 
Group and provides strong alignment 
with 
shareholders’ interests. 
The 
responses 
below 
provide 
answers 
to 
the 
questions 
we 
most frequently receive from shareholders. 
Responses to frequently asked questions 
How 
does 
variable 
compensation 
reflect 
the 
business 
performance in 2020 (“pay for performance”)? 
Our 
compensation 
philosophy 
is 
to 
align 
the 
interests 
of 
our 
employees 
with 
those of 
our investors 
and 
clients. Our 
variable 
compensation 
reflects 
a 
strict 
pay-for-performance 
approach 
that 
considers 
a 
number 
of 
factors, 
including 
Group, 
division, 
team and 
individual performance, 
as well 
as behaviors 
that help 
build and protect the firm’s reputation. 
For 
2020, 
although 
business 
performance 
was 
strong, 
we 
remained committed 
to moderation 
in performance-related 
pay. 
The 
resulting 
2020 
performance 
award 
pool 
thus 
reflects 
our 
pay-for-performance principles and is aligned with previous years 
in 
which 
we 
delivered 
strong 
performance. 
It 
further 
considers 
the 
economic impact 
of COVID-19, 
and regulatory 
directives to 
maintain capital flexibility. 
T
he 
Compensation 
Committee 
applie
s
 
discretionary 
adjustments to the performance 
award pool. This has resulted 
in 
an average 
3% downward 
adjustment over 
the past 
eight years 
with the largest negative adjustment made for the 2020 pool. 
 
How did UBS support society, clients and employees 
during the COVID-19 pandemic? 
During 
2020, 
lending 
and 
commitments 
to 
clients 
globally 
significantly 
increased, 
including 
CHF 3 
billion 
to 
Swiss 
SMEs 
under 
the 
government-backed 
program 
and 
USD 656 
million 
under 
the 
US 
Paycheck 
Protection 
Program 
(PPP). 
As 
previously 
communicated, we 
intend to 
donate any 
economic profits 
from 
these 
programs to 
COVID-19 relief 
efforts. We 
donated around 
USD 2 
million 
of 
fees 
earned 
on 
the 
loans 
provided 
under 
the 
PPP in 2020 to COVID-19 relief efforts. 
We 
committed 
USD 30 
million 
to 
various 
COVID-19-related 
aid 
projects 
that 
provide 
support 
across 
the 
communities 
in 
which 
we 
operate. 
A 
part 
of 
this 
amount 
has 
been 
used 
to 
match 
the 
USD 15 
million 
raised 
by 
our 
clients 
and 
our 
employees 
for 
the 
UBS 
Optimus 
Foundation’s 
COVID-19 
Response Fund. 
Recognizing the additional pressure 
placed on employees due 
to 
varying 
degrees 
of 
lockdown, 
we 
introduced 
a 
variety 
of 
measures 
throughout 
2020 
to 
help 
employees 
adapt. 
For 
example, 
we 
suspended 
any 
new 
restructuring 
activities 
that 
would 
have 
resulted 
in 
redundancies
 
and 
potential 
loss 
of 
employment 
for 
our 
employees. 
Furthermore, 
we 
offered 
extra 
flexibility 
to 
care 
for 
children 
and 
introduced 
a 
variety 
of 
tools 
and 
resources 
to 
support 
employees’ physical, 
mental, 
financial 
and social well-being. 
As 
a 
sign 
of 
appreciation 
for 
their 
contribution 
throughout 
this 
challenging 
year, 
employees 
at 
less 
senior 
ranks 
received a 
one-time 
cash 
payment 
equivalent 
to 
one 
week’s 
salary. 
This 
had 
an 
impact 
of 
USD 27 
million 
on personnel 
expenses 
in 
the 
fourth quarter of 2020. 
 
How does UBS support diversity and pay fairness? 
In 
a 
global 
business 
such 
as 
ours, 
a 
diverse 
workforce 
is 
a 
competitive 
advantage. 
Our 
strategy is 
to 
continuously 
shape a 
diverse 
and 
inclusive 
organization 
that 
is 
innovative, 
provides 
outstanding service 
to our 
clients, offers 
equal opportunities 
for 
all and is a great place to work for everyone. 
Our 
broad 
approach 
focuses 
on 
gender, 
race, 
ethnicity, 
LGBTQ+, 
age, 
disability, 
and 
mental 
health, 
among 
other 
aspects, 
with 
inclusive 
leadership 
playing 
an 
important 
role. 
Regarding 
gender, 
we 
seek 
to 
hire, 
promote 
and 
retain 
more 
women 
across 
the 
firm, 
aspiring 
to 
increase 
the 
percentage 
of 
women at Director level and above to 30% by 2025. 
We 
pay 
for 
performance, 
and 
a 
strong 
commitment 
to 
pay 
fairness is 
embedded in 
our compensation 
policies. We 
conduct 
both internal and independent external reviews aiming to ensure 
that all employees are paid fairly and 
to address any unexplained 
gaps. 
In 
2020, 
UBS 
was 
certified 
by 
the 
EQUAL-SALARY 
Foundation for its equal pay practices in Switzerland, 
the US, the 
UK, 
Hong 
Kong 
and 
Singapore. 
These 
certifications 
are 
a 
testament 
to 
our 
well-established 
equal 
opportunity 
environment. 
 
How is UBS compensating the new Group CEO? 
We 
have 
a 
competitive 
compensation 
framework 
for 
all 
GEB 
members, 
including the Group CEO. This framework 
also applies 
f
or 
our 
new 
Group 
CEO.
 
The 
Compensation 
Committee 
annually 
reviews 
this 
framework. 
The 
most 
important 
elements 
of the framework have remained unchanged since 2012. 
The annual 
base salary 
for the 
Group CEO 
role has 
remained 
unchanged at CHF 2.5 million since 2011, and 
remains 
the same 
for 
the 
new 
Group 
CEO. 
When 
determining 
the 
Group 
CEO’s 
performance 
award, 
the 
Compensation 
Committee 
factors 
in 
the achievement of financial performance 
targets and qualitative 
goal achievements relative 
to Pillars, Principles 
and Behaviors. To 
judge 
the 
quality 
and 
sustainability 
of 
the 
financial 
results, 
the 
Compensation Committee considers a 
range of factors including 
relative 
performance 
and 
market 
conditions, 
as 
well 
as 
ESG-
related aspects. 
 
 

 
Advisory vote 
Corporate governance and compensation | Compensation 
224 
What happens to deferred compensation of the former 
Group CEO? 
The deferred 
compensation of the 
former Group 
CEO continues 
to 
vest in 
line 
with standard 
compensation award 
plan 
rules as 
per the original 
vesting schedule. No 
accelerated payouts will 
be 
made
. 
All 
deferred 
awards 
will 
continue 
to 
be 
subject 
to 
forfeiture and performance conditions. 
As previously 
disclosed, a 
portion of 
the former 
Group CEO’s 
2019 
Long
-
Term 
Incentive 
Plan 
(
LTIP
)
 
award 
is 
additionally 
subject 
to 
forfeiture 
depending 
on 
the 
final 
outcome 
of 
the 
French cross-border matter. 
 
How is litigation considered in the compensation process? 
Litigation 
and 
regulatory 
matters, 
and 
their 
resolution 
and 
remediation, 
are 
taken 
into 
consideration 
throughout 
the 
compensation 
decision-making 
process. 
The 
Compensation 
Committee 
distinguishes 
between 
current 
matters, 
where 
the 
underlying 
issues 
are 
within 
the 
responsibility 
of 
management, 
and 
legacy 
matters, 
where 
management 
is 
accountable 
for 
resolving them but not responsible for the underlying issue. 
Current 
matters 
have 
a 
direct 
impact 
on 
the 
performance 
award 
pool, 
individual 
performance 
assessments 
and 
resulting 
compensation 
decisions, 
as 
well 
as 
the 
payout 
of 
deferred 
awards. 
For 
legacy 
matters, 
the 
Compensation 
Committee 
seeks 
to 
incentivize 
management 
to 
resolve 
these 
matters 
in 
the 
best 
interest 
of shareholders 
and we 
hold 
management accountable 
for 
the 
effective 
and 
efficient 
resolution 
of 
these 
matters. 
Therefore, 
the 
performance 
and 
compensation 
assessment 
reflects 
management’s 
responsibility 
for 
achieving 
a 
resolution 
without 
creating 
an 
incentive 
to 
settle 
inappropriately 
or 
take 
inappropriate 
risks 
on 
such 
matters. 
In 
addition, 
the 
use 
of 
reported
 
return 
on 
common 
equity 
tier
 
1
 
capital
 
(
RoCET1
)
 
supports the focus 
on ensuring the 
cost of litigation 
matters has 
a 
direct 
impact 
on 
the 
compensation 
awarded 
and 
realized 
by 
our most senior leaders, including the GEB. 
 
What progress has been made on resolving the French 
cross-border matter and how is this reflected in GEB 
compensation? 
In 
February 
2019, 
UBS 
appealed 
the 
decision 
of 
the 
Court 
of 
First 
Instance 
relating 
to 
the 
French 
cross-border 
matter. 
The 
Court 
of 
Appeal 
has 
scheduled 
the 
case 
to 
be 
heard 
anew 
between 
8–24 
March 
2021. 
As 
with 
all 
litigation 
matters, 
the 
final outcome 
of the 
French cross-border 
matter will 
impact the 
RoCET1 
metric, 
and 
therefore, 
the 
final 
payout 
of 
the 
LTIP 
awards 
of 
all 
GEB 
members, 
reflecting 
alignment 
with 
shareholders. 
Furthermore, 
as 
outlined 
in 
our 
2019 
Compensation 
Report, 
up 
to 
CHF 7.9 
million, 
or 
30% 
of 
the 
2019 
LTIP 
awards 
at 
grant 
for 
GEB 
members 
active 
in 
March 
2017, 
as 
well 
as 
the 
Chairman 
of 
the 
BoD’s 
unvested 
share 
award, 
continues 
to 
be 
at 
risk 
and 
directly 
linked 
to 
the 
final 
resolution of the French cross-border matter. In addition, a 
malus 
clause 
allows 
the 
Compensation 
Committee 
to 
assess 
any 
new 
information 
that 
becomes 
available 
in 
the 
future 
and 
to 
retrospectively 
reduce 
the 
2019 
LTIP 
award 
by 
up 
to 
the 
full 
amount 
if 
such 
new 
information 
would 
have 
impacted 
our 
compensation decision in 2019. 
Impact of litigation matters on the LTIP 
 
 
How is ESG considered in the compensation process? 
ESG 
objectives 
are
 
considered 
in 
the 
compensation 
determination 
process 
in 
objective 
setting, 
performance 
award 
pool 
funding, 
performance 
assessment 
and 
compensation 
decisions. 
In 
the 
performance 
award 
pool 
funding, 
ESG 
is 
reflected 
through 
the 
qualitative 
assessment 
of 
legal, 
compliance, 
reputational 
and 
operational 
risks,
 
as 
well 
as 
regulatory 
compliance. 
In 
addition, 
ESG-related 
objectives 
have 
been 
embedded 
in 
our 
Pillars 
and 
Principles 
since 
they 
were 
established 
in 
2011 
and 
are 
reflected 
in 
governance 
and 
risk 
management, 
talent 
management 
and 
diversity, 
client 
satisfaction, 
and 
corporate 
responsibility, 
including 
goals 
for 
reducing 
our 
carbon 
footprint 
and 
corporate 
waste, 
as 
well 
as 
progressing our 
philanthropic efforts. 
Achievements versus 
ESG-
related goals are part of the qualitative performance assessments 
and affect final compensation decisions. 
Therefore, 
ESG 
is 
taken 
into 
consideration 
when 
the 
Compensation 
Committee 
assesses 
not 
only 
what 
results 
were 
achieved, 
but also how they were achieved. 
 
 

 
 
 
 
 
 
 
 
 
 
225 
Say-on-pay votes at the AGM 
In line with the Swiss Ordinance 
against Excessive Compensation 
in 
Listed 
Stock 
Corporations, 
we 
seek 
binding 
shareholder 
approval 
for 
the 
aggregate 
compensation 
awarded 
to 
the 
GEB 
and the 
BoD. Prospective 
approval of 
the fixed compensation 
of 
the 
BoD 
and 
GEB 
provides 
the 
firm 
and 
its 
governing 
bodies 
with 
the 
certainty 
needed 
to 
operate 
effectively. 
Retrospective 
approval 
of 
the 
GEB’s 
variable 
compensation 
aligns 
their 
compensation with performance and contribution. 
These 
binding 
votes 
on 
compensation 
and 
the advisory 
vote 
on 
our 
compensation 
framework 
reflect 
our 
commitment 
to 
shareholders having their say on pay. 
›
 
Refer to “Provisions of the Articles of Association 
related to 
compensation” in the “Supplemental 
information” section of 
this report for more information 
Approved fixed compensation 
At 
the 
2019 
AGM
,
 
shareholders 
approved 
a 
maximum 
aggregate 
fixed 
compensation 
amount 
of 
CHF 33.0 
million 
for 
GEB 
members 
for 
the 
2020 
performance 
year. 
This 
amount 
includes 
base 
salaries, 
role-based 
allowances 
in 
response 
to 
Capital 
Requirements 
Directive 
IV, 
estimated 
standard 
contributions 
to 
retirement 
benefit 
plans, 
other 
benefits 
and 
a 
buffer. 
The aggregate 
fixed compensation 
paid in 
2020 to 
GEB 
members was below the approved amount for 2020. 
 
›
 
Refer to “2020 total compensation for GEB 
members” in the 
“Compensation for GEB members” section 
of this report 
 
 
Say on pay – compensation-related votes at the 2020 AGM 
2020 AGM say-on-pay voting schemes 
2020 AGM actual shareholder votes 
Vote “for” 
Binding vote on GEB variable compensation 
Shareholders approved CHF 70,250,000 for the 2019 financial 
year
1,2,3
83.8% 
Binding vote on GEB fixed compensation 
Shareholders approved CHF 33,000,000 for the 2021 financial 
year
1,2,3
91.3% 
Binding vote on BoD compensation 
Shareholders approved CHF 13,000,000 for the period 
from the 2020 AGM 
to the 2021 AGM
1,2,4
87.9% 
Advisory vote on the Compensation Report 
Shareholders approved the UBS Group AG Compensation Report 
2019 in an advisory vote 
84.6% 
1 
Local currencies are converted into Swiss francs at 
the exchange rates stated in “Note 33 
Currency translation rates” in the 
“Consolidated financial statements” section of our Annual 
Report 2020. 
2
 
Excludes the 
portion related to 
the legally required 
employer’s social 
security contributions. 
3
 
As stated in 
“Group Executive Board” 
in the “Corporate 
governance” section of 
our Annual Report 
2020, thirteen GEB 
members 
were in office on 31 December 2020 and on 31 December 2019, although not identical composition. 
4 
Eleven BoD members were in office on 31 December 2020. 
 
 
 

 
 
 
 
 
 
 
 
Advisory vote 
Corporate governance and compensation | Compensation 
226 
Compensation-related proposals for 2021 
At the 
2021 AGM, 
we will 
ask our 
shareholders to 
vote on 
the 
variable 
compensation 
for 
the 
GEB 
for 
2020, 
the 
fixed 
compensation 
for 
the 
GEB 
for 
2022 
and 
the 
compensation 
for 
the BoD from the 2021 AGM to the 2022 AGM. 
In
 
addition, we will also 
ask shareholders for 
an advisory vote 
on 
our 
Compensation 
Report, 
which 
describes 
our 
compensation policy, including framework and governance. 
The 
table 
below 
outlines 
our 
compensation 
proposals, 
including 
supporting 
rationales, 
that 
we 
plan 
to 
submit 
to 
the 
2021 
AGM 
for 
binding 
votes 
(in 
line 
with 
the 
Swiss 
Ordinance 
against 
Excessive 
Compensation 
in 
Listed 
Stock 
Corporations 
and our Articles of Association (AoA)). 
 
Compensation-related proposals for binding votes at the 2021 AGM 
Item 
Proposal 
Rationale 
GEB variable 
compensation 
The Board of Directors proposes an 
aggregate amount of variable 
compensation of CHF 85,000,000 
for the members of the GEB for the 
2020 financial year. 
The proposed amount reflects our strong financial performance 
despite the uncertainties caused by 
the COVID-19 pandemic. For 2020, although 
business performance was strong, we remain 
committed to moderation in performance-related pay. The GEB performance award 
pool, which 
includes the Group CEOs’ performance awards and is 
part of the Group pool, increased 1% on a 
per capita basis and 16% overall compared with 
2018 (and +18% per capita and +21% 
overall 
compared with 2019). This reflects a smaller increase in 
executive compensation compared with the 
overall pool development in 2020. 
GEB fixed 
compensation 
The Board of Directors proposes a 
maximum aggregate amount of 
fixed compensation of 
CHF 33,000,000 for the members 
of the GEB for the 2022 financial 
year. 
The proposed amount for 2022 is unchanged from the 
previous year, reflecting unchanged base 
salaries for the Group CEO and other GEB members. 
Since the budget is a maximum spend, we 
include a reserve to maintain flexibility in light of 
evolving EU regulations, Brexit effects, competitive 
considerations for potential additional RBAs, 
and potential changes in GEB composition 
or GEB 
roles, as well as other factors (e.g., 
changes in FX rates or benefits). 
BoD 
compensation 
The Board of Directors proposes a 
maximum aggregate amount of 
compensation of CHF 13,000,000 
for the members of the Board of 
Directors for the period from the 
2021 AGM to the 2022 AGM. 
The proposed amount is unchanged compared with 
the previous period. The amount includes the 
Chairman’s compensation, which is unchanged 
since it was reduced by CHF 0.8 million effective 
from the 2019 AGM, as well as fees for the independent 
BoD members, which are also unchanged 
since the reduction effective from the 2020 AGM. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
227 
Compensation 
philosophy 
and governance
 
 
Our compensation philosophy
Total Reward Principles 
Our 
compensation 
philosophy 
is 
to 
align 
the 
interests 
of 
our 
employees 
with 
those 
of 
our 
investors 
and 
clients, 
building 
on 
our 
three 
keys 
to 
success: 
our 
Pillars, 
Principles 
and 
Behaviors. 
Our Total 
Reward Principles 
establish a 
framework for balancing 
sustainable 
performance 
and 
supporting 
growth 
ambitions 
and 
appropriate risk 
-taking, with 
a focus 
on conduct 
and sound 
risk 
management practices. 
Our 
compensation 
approach 
is 
aligned 
with 
our 
strategic 
priorities 
and 
encourages 
our 
employees 
to 
focus 
on 
clients, 
create 
sustainable 
value, 
deliver 
on 
growth 
ambitions 
and 
achieve 
the 
highest 
performance 
standards. 
W
e 
reward 
behaviors 
that 
help 
build 
and 
protect 
the 
firm’s 
reputation, 
specifically integrity, 
collaboration and 
challenge. Compensation 
for each employee is based on individual, 
team, business division 
and 
Group 
performance, 
within 
the 
context 
of 
the 
markets 
in 
which we operate. 
Total Reward Principles 
Our Total 
Reward Principles apply to all employees worldwide, but may vary in certain locations according to 
local legal requirements 
and regulations. The table below provides a summary of our Total 
Reward Principles. 
 
Attract and retain a diverse, talented workforce 
We provide pay that is fair, reflecting equal treatment of employees, appropriately balanced between 
fixed and variable elements, competitive in the 
market, 
and delivered over an appropriate period. 
Foster effective individual performance 
management and communication 
Thorough evaluation of individual performance 
and adherence to our Behaviors, combined with 
effective communication, aims to ensure there is a direct connection 
between achieving business 
objectives and compensation across the firm. 
Align reward with sustainable performance, 
as 
well as supporting our growth ambitions 
We embrace a culture of diversity, inclusiveness and collaboration. Our approach to compensation 
fosters engagement among employees and 
serves to align their long-term interests with those 
of 
clients and stakeholders. 
Support appropriate and controlled risk-taking 
Compensation is structured such that employees 
behave in a manner consistent with the firm’s 
risk 
framework and tolerance, thereby protecting our capital 
and reputation and enhancing the quality of 
our financial results in line with what our stakeholders 
expect from us. 
 
 
Our Total Reward approach 
At 
UBS, 
we 
apply 
a 
holistic 
Total 
Reward 
approach, 
generally 
consist
ing
 
of 
fixed 
compensation 
(base 
salary 
and 
role
-
based 
allowances, 
if 
applicable), 
performance 
awards
,
 
pension 
contributions 
and 
benefits.
 
Our 
Total 
Reward 
approac
h 
is 
structured to support sustainable results and growth ambitions. 
For 
employees 
whose 
total 
compensation 
exceeds 
certain 
levels, 
performance 
awards 
are 
delivered 
in 
a 
combination 
of 
cash 
and 
deferred 
contingent 
capital 
awards 
and 
deferred 
equity-based awards. 
A substantial 
portion of 
performance award 
s 
is deferred 
and 
vests 
over 
a 
five-year 
period 
(or 
longer 
for 
certain 
regulated 
employees). 
This 
deferral 
approach 
supports 
alignment 
of 
employee 
and 
investor 
interests, 
our 
capital 
base 
and 
the 
creation of sustainable shareholder value. 
›
 
Refer to the “Compensation elements 
for all employees” section 
of this report for more information 
Note: illustrative 
 
 

Advisory vote 
Corporate governance and compensation | Compensation 
228 
Compensation governance
Board of Directors and Compensation Committee 
The 
BoD 
is 
ultimately 
responsible 
for 
approving 
the 
compensation 
strategy 
proposed 
by 
the 
Compensation 
Committee, 
which 
determines 
compensation-related 
matters 
in 
line with the principles set forth in the AoA. 
As 
determined 
in 
the 
A
oA
 
and 
the 
firm’s 
Organization 
Regulations, 
the 
Compensation 
Committee 
supports 
the 
BoD 
with 
its 
duties 
to 
set 
guidelines on 
compensation and 
benefits, 
to 
approve 
certain 
compensation, 
and 
to 
scrutinize 
executive 
compensation. Responsible 
for governance 
and oversight 
of our 
compensation 
process 
and 
practices 
(such 
as 
the 
alignment 
between 
pay and 
performance and 
ensuring 
our compensation 
system 
does 
not 
encourage 
inappropriate 
risk
-
taking
),
 
the
 
Compensation 
Committee 
consists 
of 
four 
independent 
BoD 
members elected annually by the shareholders at the AGM. 
A
nnual
ly,
 
and 
on 
behalf 
of 
the 
BoD, 
the 
Compensation 
Committee: 
–
 
reviews our Total Reward 
Principles; 
–
 
reviews and approves the compensation framework design; 
–
 
reviews performance award 
funding throughout the 
year and 
proposes the final performance award pool for BoD approval; 
–
 
with 
the 
Group 
CEO, 
reviews 
performance 
targets 
and 
performance 
assessments 
and 
proposes 
base 
salaries 
and 
annual 
performance 
awards 
for 
the 
other 
GEB 
members 
to 
the BoD, which approves the 
total compensation of each GEB 
member; 
–
 
with 
the 
Chairman, 
establishes 
performance 
targets 
for 
the 
Group 
CEO, 
evaluates 
the 
Group 
CEO’s 
performance 
and 
proposes compensation to the BoD accordingly; 
–
 
approves the total compensation for the Chairman; 
–
 
with 
the 
Chairman, 
proposes 
the 
total 
individual 
compensation 
of
 
independent 
BoD 
members
 
for 
BoD 
approval; 
–
 
with the 
BoD, proposes 
the maximum 
aggregate amounts 
of 
BoD and GEB compensation for approval at the AGM; 
–
 
approves 
remuneration 
/ 
fee 
frameworks 
for 
external 
supervisory board 
members of 
Significant Group 
Entities and 
periodically 
reviews 
remuneration 
/ 
fee 
frameworks 
for 
external 
supervisory 
board 
members 
of 
Significant 
Regional 
Entities; and 
–
 
proposes 
for 
BoD 
approval 
the 
compensation 
report 
and 
approves any material public disclosures on compensation. 
 
The 
Compensation 
Committee 
is 
required 
to 
meet 
at 
least 
four 
ti
mes 
each 
year. 
During 
2020, 
the 
Compensation 
Committee 
held 
seven 
meetings, 
with 
a 
participation 
rate 
of 
100%. 
In 
addition, 
three 
ad 
hoc 
calls 
took 
place. 
All 
meetings 
were 
held 
in 
the 
presence 
of 
the 
Chairman 
and 
most 
were 
attended 
by 
the 
Group 
CEO 
and 
external 
advisors. 
Individuals, 
including 
the Chairman 
and the 
Group CEO, 
are 
not permitted 
to attend 
a meeting 
or participate 
in a 
discussion on 
their own 
performance and compensation. 
After 
the 
meetings, 
the 
Chair 
of 
the 
Compensation 
Committee 
reports 
to 
the 
BoD 
on 
the 
Compensation 
Committee’s activities 
and discussions 
and, if 
necessary, submits 
proposals 
for 
approval 
by 
the 
full 
BoD. 
Compensation 
Committee meeting minutes 
are also sent 
to all members 
of the 
BoD. 
On 
31 December 
2020, 
the 
members 
of 
the 
Compensation 
Committee were 
Julie Richardson 
(Chair), Reto 
Francioni, Dieter 
Wemmer and Jeanette Wong. 
External advisors 
The 
Compensation 
Committee 
may 
retain 
external 
advisors 
to 
support it 
in fulfilling 
its duties. In 
2020, 
HCM International Ltd. 
(HCM) 
provided 
independent 
advice 
on 
compensation 
matters. 
HCM 
holds 
no 
other 
mandates 
with 
UBS. 
Additionally, 
Willis 
Towers 
Watson 
provided 
the 
Compensation 
Committee 
with 
data 
on 
market 
trends 
and 
pay 
levels. 
Various 
subsidiaries 
of 
Willis 
Towers 
Watson 
provide 
similar 
information 
to 
Human 
Resources 
in 
relation 
to 
compensation 
for 
employees. 
Willis 
Towers 
Watson 
holds no 
other compensation-related 
mandates 
with UBS. 
The Risk Committee’s role in compensation 
The Risk Committee, a committee of the BoD, works closely with 
the Compensation 
Committee to 
ensure that 
our compensation 
approach 
reflects 
proper 
risk 
management 
and 
control. 
It 
supervises 
and 
sets 
appropriate 
risk 
management 
and 
risk 
control principles 
and is regularly 
briefed on how 
risk is factored 
into the 
compensation process. It 
also monitors the 
involvement 
of 
Group 
Risk Control 
and 
Compliance and 
Operational Risk 
in 
compensation 
and 
reviews 
risk-related 
aspects 
of 
the 
compensation process. 
›
 
Refer to 
ubs.com/governance
 
for more information 
 
 

229

Compensation Committee 2020 / 2021 key activities and timeline

April

July

Sept¹

Oct

Dec¹

Jan

Feb

Strategy, policy and governance

Total Reward Principles

Three-year strategic plan on variable compensation

Compensation disclosure and stakeholder communication matters

AGM reward-related items

Compensation Committee governance

Annual compensation review

Accruals and full-year forecast of the performance award pool

funding

Performance targets and performance assessment of the Group CEO

and GEB members

Group CEO and GEB members’ salaries and individual performance

awards

Update on market practice, trends and peer group matters

Pay for performance, including governance on certain higher-paid employees, and

non-standard compensation arrangements

Board of Directors remuneration

Compensation framework

Compensation framework and deferred compensation matters

Risk and regulatory

Risk management in the compensation approach and

joint meeting with

BoD Risk Committee

Regulatory activities impacting employees and engagement

with regulators

The Compensation Committee held two meetings in September 2020 and two meetings in December 2020.

Compensation governance

The table below provides an overview of compensation governance by specific role.

Recipients

Compensation recommendations proposed by

Approved by

Chairman of the BoD

Chairperson of the Compensation Committee

Compensation Committee

Independent BoD members

(remuneration system and fees)

Compensation Committee and Chairman of

the BoD

BoD

Group CEO

Compensation Committee and Chairman of

the BoD

BoD

Other GEB members

Compensation Committee and Group CEO

BoD

Key Risk Takers (KRTs)

(senior) employees

Respective GEB member and functional management

team

Individual compensation for KRTs and senior employees:

Group CEO

Aggregate variable compensation and maximum aggregate amount of fixed compensation for the GEB,

as well as aggregate remuneration for the BoD, are subject to shareholder approval.

 
 
 
 
 
 
 
 
 
Advisory vote 
Corporate governance and compensation | Compensation 
230 
Environmental, Social and Governance at UBS
In 
2020, 
UBS 
continued to 
enhance 
its 
position 
as 
a 
leader 
in 
sustainable 
finance 
and 
to 
fulfil
l
 
its 
ambitions 
of 
be
ing
 
a
 
recognized 
innovator 
and 
thought 
leader 
in 
philanthropy, 
an 
industry leader in sustainable business practices and 
an employer 
of choice. 
Last 
year,
 
we 
again 
gained 
ind
ustry 
recognition 
for 
our 
commitment 
to 
improving 
performance 
under 
ESG 
criteria 
and 
for 
our 
efforts 
in 
offering 
clients 
world-class 
expertise 
and 
sustainable products. For the sixth year running, 
we were named 
the 
best 
performer 
in 
the 
Diversified 
Financial 
Services 
and 
Capital Markets 
Industry of 
the Dow 
Jones Sustainability 
Indices 
(the 
DJSI), 
the 
most 
widely 
recognized 
corporate 
sustainability 
rating. MSCI ESG Research maintained our rating at AA and CDP 
moved UBS up into its top ranking, the A List. 
We 
support 
clients’ 
sustainability 
efforts 
through 
thought 
leadership, 
innovation 
and 
partnerships, 
and 
we 
strive 
to 
incorporate 
ESG factors 
into the products 
and services 
we provide. 
An 
important 
part 
of 
our 
sustainable 
activities 
includes 
engagement 
in 
client 
philanthropy. 
We 
offer 
clients 
expert 
advice, 
carefully 
selected 
programs 
from 
UBS 
Optimus 
Foundation, and innovative social financing mechanisms, such as 
development impact bonds. 
We 
measure 
our 
culture-building 
progress 
through 
regular 
employee 
surveys. 
We 
have 
an 
ongoing 
focus 
on 
inclusive 
leadership 
and 
in 
2020,
 
our 
in
-
house 
UBS 
University 
further 
updated 
its 
curriculum 
to 
emphasize 
development 
of 
skills 
needed 
for 
the 
future 
and 
personal 
growth 
for 
all 
employees. 
The table below summarizes our key achievements. 
›
 
Refer to “Our focus on sustainability,” “Employees” and 
“Society” in the “How we create value for our 
stakeholders” 
section of our Annual Report 2020 for 
more information 
›
 
Refer to 
ubs.com/gri
 
for more information about ESG-related 
topics 
 
 
What we achieved in 2020 
Serving clients’ sustainable 
finance needs 
-
 
USD 793 billion in core sustainable investment assets 
(62% increase) 
-
 
USD 6.9 billion directed in SDG-related impact investments 
-
 
USD 15.3 billion in Climate Aware strategies 
-
 
33 green, social and sustainability bond transactions 
supported 
-
 
100% of assets of UBS retirement savings funds converted 
into sustainable investments (~USD 9 
billion) 
Transitioning to a low-carbon 
economy 
-
 
1.9% share of carbon-related assets on banking balance 
sheet 
-
 
USD 161 billion climate-related sustainable investment 
assets (49% 
increase) 
-
 
49 oil & gas and utilities companies were actively engaged 
on climate topics 
-
 
100% of our electricity consumption sourced from renewable 
sources 
Addressing societal challenges 
-
 
USD 168 million in donations raised by UBS 
Optimus Foundation (74% increase) 
-
 
USD 30 million committed to COVID-19-related 
aid projects supporting the communities 
-
 
519,534 beneficiaries reached through strategic community 
affairs activities 
-
 
3.7 million vulnerable people received support thanks 
to UBS Optimus Foundation 
Shaping a high-performing 
organization 
-
 
26% of Directors and above are women 
-
 
20.7% of UK / 19.5% of US employees 
are from underrepresented ethnicities at Director level and above 
-
 
EQUAL-SALARY certification for equal pay practices 
in Switzerland, the US, the UK, Hong Kong 
and Singapore 
Leader in key sustainability 
ratings 
-
 
Industry group leader (Dow Jones Sustainability 
Indices) 
-
 
Climate A List (CDP) 
-
 
AA rating (MSCI) 
-
 
Included in Top 50 World’s Most Attractive Employers (Universum) 
›
 
Refer to the “Banking on sustainability” 
section of the Sustainability Report 
2020, available from 11 March 2021 under “Annual 
reporting“ 
at 
ubs.com/investors
, for more information 
 
ESG in the compensation determination process 
ESG objectives are considered in the compensation determination 
process 
in 
objective 
setting, 
performance 
award 
pool 
funding, 
performance 
assessment 
and compensation 
decisions. 
At 
the 
beginning 
of 
the 
year, 
objectives 
related 
to 
Group, 
business 
divisions, 
Pillars, 
Principles and 
Behaviors 
are 
set. ESG- 
related 
objectives 
have 
been 
embedded 
in 
our 
Pillars 
and 
Principles 
since 
they 
were 
established 
in 
2011. 
This 
long-term 
focus 
on 
ESG 
topics 
is 
reflected 
in 
the 
achievements 
outlined 
above. To maintain the focus on 
these important ESG topics, our 
Group 
CEO 
and 
other 
GEB 
members 
have 
specific 
ESG-aligned 
goals under 
Pillars and 
Principles, including 
governance and 
risk 
management, 
talent 
management 
and 
diversity, 
client 
satisfaction, and 
corporate responsibility. These 
include goals for 
reducing 
our 
carbon 
footprint 
and 
corporate 
waste, 
as 
well 
as 
for 
progressing 
our 
philanthropic 
efforts. 
Therefore, 
achievements versus ESG-related goals are 
part of the qualitative 
performance 
assessments 
and 
affect 
final 
compensation 
decisions. 
In 
the 
performance 
award 
pool 
funding, 
ESG 
is 
reflected 
through 
the 
qualitative 
assessment 
of 
legal, 
compliance, 
reputational 
and 
operational 
risks, 
a
s 
well 
as 
regulatory 
compliance. Therefore, ESG is taken into consideration 
when the 
Compensation 
Committee 
assesses 
not 
only 
what 
results 
were 
achieved but also how they were achieved. 
 
 

 
231 
Our commitment to pay fairness, diversity, equity and 
inclusion 
We 
pay 
for 
performance, 
and 
a 
strong
 
commitment 
to 
pay 
fairness is 
embedded in 
our compensation 
policies. We 
conduct 
both internal and independent external reviews aiming to ensure 
that all employees are paid fairly and 
to address any unexplained 
gaps. 
In 
2020
,
 
UBS 
was 
certified 
by 
the 
EQUAL
-
SALARY 
Foundation for its equal pay practices in Switzerland, 
the US, the 
U
K
, 
Hong 
Kong 
and 
Singapore.
 
These 
certifications 
are 
test
ament
 
to
 
our 
well
-
established 
equal 
opportunity 
environment. 
Our 
commitment 
to 
pay 
fairness is 
further 
demonstrated 
by 
the 
successful 
completion 
of 
the 
equal 
pay 
analysis 
in 
Switzerland 
as 
required 
by 
the 
newly 
introduced 
Swiss 
Federal 
Act 
on 
Gender 
Equality. 
We 
had 
already 
completed 
this 
important analysis 
by the 
end of 
the first 
year of 
the three-year 
regulatory 
implementation 
period 
and 
the 
results 
confirm 
that 
we 
are 
fully 
compliant 
with 
Swiss 
equal 
pay 
standards. 
The 
analysis found that 
our statistical wage 
difference in Switzerland 
is 
only 
0.6% 
and 
thus 
significantly 
below 
the 
5% 
regulatory 
requirement. 
This achievement 
also 
reflects 
our 
ongoing efforts 
to address any 
unexplained pay gaps 
as we uncover 
them. Ernst 
& Young provided 
assurance regarding the 
analysis and affirmed 
that we 
comply with 
the applicable 
legal requirements 
for each 
legal entity in Switzerland. 
We are committed 
to ensuring a workplace 
where employees 
are 
fairly 
treated, 
with 
equal 
employment 
and 
advancement 
opportunities for all. We do not tolerate 
harassment of any kind. 
Our 
global 
measures 
include 
employee 
and 
line 
manager 
training, 
specialist 
expertise 
in 
handling 
concerns, 
and 
a 
global 
employee hotline. 
An internal 
anti-harassment officer 
appointed 
by the 
Group Head 
Human Resources 
provides an 
independent 
view 
of 
the 
firm’s 
various 
processes 
and 
procedures 
to 
prevent 
harassment and sexual misconduct. 
In 
a 
global 
business 
such 
as 
ours, 
a 
diverse 
workforce 
is 
a 
competitive 
advantage. 
Our 
strategy is 
to 
continuously 
shape a 
diverse 
and 
inclusive 
organization 
that 
is 
innovative, 
provides 
outstanding service 
to our 
clients, offers 
equal opportunities 
for 
all 
and 
is 
a 
great 
place 
to 
work 
for 
everyone. 
Our 
broad 
approach 
focuses 
on 
gender, 
race, 
ethnicity, 
LGBTQ+, 
age, 
disability, and mental health, among other aspects, with inclusive 
leadership 
playi
ng 
an 
important 
role
. 
Increasing 
gender 
and 
ethnic 
diversity 
are
 
our 
highest 
near
-
term 
strateg
ic
 
diversity
, 
equity and inclusion priorities. 
We 
take 
a 
multi-faceted 
approach 
to 
increasing 
our 
ethnic 
diversity, 
including 
setting 
aspirational 
ethnicity 
targets 
in 
locations 
such as 
the US 
and UK. 
We have 
a 
global framework 
and drive our initiatives regionally, 
supported by our recruitment, 
training and 
employee network 
organizations, in 
particular. Our 
multi-cultural 
employee 
networks 
play 
an 
integral 
part 
in 
building 
a 
more 
ethnically 
inclusive 
culture 
across 
UBS, 
and 
a 
new 
firm-wide 
network 
of 
more 
than 
140 
Diversity 
& 
Inclusion 
Ambassadors provide employee advice and coaching. 
Pay equity 
is not 
the same 
as gender 
pay gap, 
which looks 
at 
the 
average pay 
for all 
women versus 
all 
men. Our 
gender pay 
gap 
reflects 
a 
representation 
gap 
brought 
about 
by 
having 
unequal 
numbers 
of 
men 
and 
women 
at 
each 
level, 
with 
a 
greater proportion of men in more senior positions. 
We seek 
to hire, promote 
and retain more 
women across the 
firm, 
aspiring 
to 
increase 
the 
percentage 
of 
women 
at 
Director 
level and above to 30% 
by 2025. At the end 
of 2020, 26.0% of 
all employees 
in roles 
at Director 
level and 
above were 
women, 
up 
from 
25.2% 
in 
2019, 
and 
we 
are 
on 
track 
to 
achieve 
our 
target. 
Addressing 
gender representation 
is a 
priority we 
share with 
many 
other 
organizations, 
in 
both 
financial 
services 
and 
other 
sectors. 
To 
share 
best 
practices, 
learn 
from 
peers 
and 
receive 
feedback, 
we 
take 
an 
active 
role 
in 
initiatives 
such 
as 
the 
Bloomberg 
Gender-Equality 
Index 
and 
the 
DJSI, 
where 
we 
maintain top ratings. 
›
 
Refer to 
ubs.com/diversity
 
for additional information about our 
priorities, commitments and progress, and the Sustainability 
Report 2020, available from 11 March 2021 under “Annual 
reporting” at 
ubs.com/investors
, for our management practices 
and detailed employee data, including 
gender- and region-
specific data 
›
 
Refer to "Employees" in the "How we 
create value for our 
stakeholders" section of our Annual Report 
2020 for more 
information. 
 
 
 

 
Advisory vote 
Corporate governance and compensation | Compensation 
232 
Performance award pool funding
Our 
compensation 
philosophy 
focuses 
on 
balancing 
performance with 
appropriate risk-taking 
and retaining 
talented 
employees. 
We 
reduce 
our 
overall 
performance 
award 
funding 
percentage as financial performance increases. 
In years of strong 
financial performance, this prevents 
excessive compensation and 
results 
in 
an 
increased 
proportion 
of 
profit 
before 
performance 
award 
available 
for 
distribution 
to 
shareholders 
or 
growing 
the 
Group’s 
capital. 
In 
years 
where 
performance 
declines
,
 
the 
performance 
award 
pool 
will 
generally 
decrease; 
however, 
the 
funding percentage may increase. 
Our performance award 
pool funding framework 
is based on 
Group 
and 
business 
division 
performance, 
including 
achievement against defined performance measures. In assessing 
performance, 
w
e 
also 
consider 
industry 
peers,
 
market 
competitive
ness 
of 
our 
results 
and 
pay 
position
,
 
as 
well 
as
 
progress 
against 
our 
strategic 
objectives, 
including 
returns, 
capital growth, risk-weighted 
assets and cost 
efficiency. We look 
at 
the 
firm’s 
risk 
profile 
and 
culture, 
the 
extent 
to 
which 
operational 
risks 
and 
audit 
issues 
have 
been 
identified 
and 
resolved, 
and 
the 
success 
of 
risk 
reduction 
initiatives. 
The 
funding 
for 
Group 
Functions 
is 
linked
 
to 
overall 
Group 
performance 
and 
reflects 
headcount, 
workforce 
location 
and 
demographics. 
For 
each 
functional 
area, 
quantitative 
and 
qualitative 
assessments 
evaluate 
service 
quality, 
risk 
management 
and 
financial 
achievements. 
Our 
decisions 
also 
balance 
consideration of 
financial 
performance 
with a 
range of 
qualitative 
factors
,
 
including 
ESG, 
the 
impact 
of 
risk 
management, 
litigation, 
regulatory 
costs, 
the 
effect 
of 
changes 
in 
financial 
accounting 
standards, 
capital 
returns 
and 
relative 
total shareholder return. 
Before 
making 
its 
final 
recommendation 
to 
the 
BoD, 
the 
Compensation 
Committee 
considers 
the 
CEO’s 
proposals 
and 
can apply 
a positive 
or negative 
discretionary adjustment 
to the 
performance award pool. 
When 
considering the 
above proposals 
and factors, 
over the 
past 
eight 
years 
the 
Compensation 
Committee 
has 
applied 
discretionary 
adjustments 
to 
the 
performance 
award 
pool, 
resulting in an 
average 3% downward 
adjustment over 
the past 
eight 
years 
with 
the 
largest 
negative 
adjustment 
made 
for 
the 
2020 pool. 
›
 
Refer to “2020 Group performance outcomes” 
in the “Group 
compensation” section of this report 
›
 
Refer to the “Group performance” section 
of our Annual Report 
2020 for more information about our results
 
Performance award pool funding process – illustrative overview 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
233 
Compensation for GEB members 
GEB compensation framework
In 
2020, 
we 
made 
no 
changes 
to 
our 
GEB 
compensation 
framework. 
The 
chart 
below 
illustrates 
the 
compensation 
elements, 
pay 
mix 
and 
key 
features 
for 
GEB 
members. 
Of 
the 
annual 
performance 
awards, 
20% 
is 
paid 
in 
the 
form 
of 
cash 
and 
80% is 
deferred 
over a 
period of 
five 
years,
1
 
with 50% 
of 
the 
annual 
performance 
awards 
granted 
under 
the 
LTIP 
and 
30% under the DCCP. 
›
 
Refer to “Our deferred compensation plans” 
in the “Group 
compensation” 
section of this report for more information
2020 compensation framework for GEB members (illustrative example) 
 
1 
Senior Management Functions Holders 
(SMFs) have extended 
deferral periods, with 
the deferred performance awards 
vesting no faster than 
pro rata between 
years 3 and 7. 
SMFs and Material Risk 
Takers 
(MRTs) 
have an additional 12-month 
blocking period on their awards 
post vest. 
2
 
Due to regulatory requirements, 
LTIP awards 
granted to UK MRTs 
and SMFs will be subject 
to an additional non-financial 
conduct-related 
metric with a 
downward adjustment 
of up to 
100% of the 
entire award. 
3
 
SMFs and MRTs 
receive 50% in 
the form of 
immediately vested shares 
which are blocked 
for 12 months. 
4
 
May include role-based 
allowances in line with market practice and regulatory requirements. 
Pay-for-performance safeguards for GEB members 
Performance 
award caps 
–
 
Cap on total GEB performance award pool (2.5% 
of profit before tax)
1
 
–
 
Caps on individual performance awards (for the 
Group CEO capped at five times the fixed compensation 
and at seven times for 
the other 
GEB members) 
–
 
Cap of 20% of performance award in cash 
Delivery and 
deferral 
–
 
80% of performance awards are at risk of forfeiture 
–
 
Long-term deferral over five years (or longer 
for certain regulated GEB members) 
–
 
Alignment with shareholders (through the LTIP) 
and bondholders (through the DCCP) 
–
 
Final payout of equity-based LTIP 
award (50% of performance award) subject to absolute 
and relative performance 
conditions (three-year 
performance period) 
Contract 
terms 
–
 
No severance terms 
–
 
Six-month notice period 
Other 
safeguards 
–
 
Share ownership requirements 
–
 
No hedging allowed 
 
1 
The Compensation Committee may consider adjustments to profit for items that are not reflective of underlying performance.
 
 

Advisory vote

Corporate governance and compensation | Compensation

234

GEB share ownership requirements

align

the

interests

GEB

members

with

those

our

shareholders

and

demonstrate

personal

commitment

the

firm, we require

the Group CEO

and the other

GEB members to

hold

substantial

number

UBS

shares.

GEB

members

must

build up their minimum shareholding

within five years from their

appointment

and

retain

throughout

their

tenure.

The

total

number

UBS

held

GEB

member

consists

any

vested

unvested

and

any

privately

held

shares.

GEB

members

may

not

sell

any

UBS

before

they

reach

the

minimum ownership thresholds mentioned

below. At

the end of

2020,

all GEB members met their share ownership requirements,

except

for

those

appointed

within

the

last

four

years,

who

still

have time to build up and meet the required share ownership.

As of 31 December 2020,

our GEB members held shares

with

aggregate

value

approximately

USD

million

demonstrating their

commitment to

our strategy

and alignment

with shareholders.

Share ownership requirements

Group CEO

min. 1,000,000 shares

Must be built up within five years from their appointment

and retained throughout

their tenure.

Other GEB members

min. 500,000 shares

GEB base salary and role-based allowance

Each GEB member receives a

fixed base salary, which is reviewed

annually

the

Compensation

Committee.

The

2020

annual

base salary for

the Group CEO

role was CHF 2.5

million and has

remained unchanged

since 2011.

The other

GEB members

each

received

base

salary

CHF 1.5

million

(or

local

currency

equivalent), also unchanged since 2011.

2020,

two

GEB

members

were

considered

Material

Risk

Takers

(MRTs),

including

one

Senior

Management

Function

(SMF), for

UK / EU

entities due to

their impact on

those entities,

regardless

personal

domicile.

Base

salary

and

role-based

allowances are considered fixed compensation.

the

AGM,

shareholders

are

asked

approve

the

maximum

aggregate

amount

fixed

compensation

for

GEB

members for the

following financial year.

The amount requested

includes

reserve

consider

potential

future

changes

GEB

composition or role

changes, and potential additional

role-based

allowances.

›

Refer to the “Supplemental information”

section of this report

for more information about MRTs and SMFs

›

Refer to the “Shareholder engagement and

say on pay” section

of this report for more information about the

AGM vote on

fixed compensation for the GEB

Caps on the GEB performance award pool

The

size

the

GEB

performance

award

pool

may

not

exceed

2.5% of

the Group

profit before

tax. This

limits the

overall GEB

compensation based on the firm’s profitability.

For

2020,

the

Group’s

profit

before

tax

was

USD 8.2

billion

and

the

total

GEB

performance

award

pool

was

CHF 85.0

million.

The

GEB

performance

award

pool

percentage

Group profit before tax was 1.1%, well below the 2.5% cap.

line

with

the

individual

compensation

caps

the

proportion

fixed

pay

variable

pay

for

all

GEB

members

(introduced

2013),

the

Group

CEO’s

granted

performance

award

capped

five

times

his

fixed

compensation.

Granted

performance awards of other GEB

members are capped at seven

times their

fixed compensation

(or two

times for

GEB members

who

are

also

MRTs). For

2020, performance

awards

granted to

GEB members

and the

Group CEO

were, on

average, 3.1

times

their

fixed

compensation

(excluding

one-time

replacement

awards, benefits and contributions to retirement benefit plans).

›

Refer to “Performance award pool funding” in

the

“Compensation philosophy and governance”

section of this

report for more information

GEB employment contracts and severance terms

GEB

members’

employment contracts

not include

severance

terms

supplementary

pension

plan

contributions

and

are

subject to a

notice period of at

least six months.

A GEB member

leaving

UBS

before

the

end

performance

year

may

considered for a performance award.

Such awards are subject to

approval

by the

BoD, and

ultimately

by the

shareholders at

the

AGM.

Benchmarking for GEB members

When

recommending

performance

awards

for

the

Group

CEO

and

the

other

GEB

members,

the

Compensation

Committee

reviews the respective total compensation for

each role against a

financial

industry

peer group.

The

peer

group

is selected

based

on comparability of their size, business mix, geographic presence

and

the

extent

which

they

compete

with

for

talent.

The

Compensation

Committee

considers

our

peers’

strategies,

practices and pay

levels, as well

as their regulatory

environment;

also

periodically

reviews

other

firms’

pay

levels

practices,

including

both

financial

and

non-financial

sector

peers

applicable. The

total compensation

for a

GEB member’s

specific

role

considers

the

compensation

paid

our

peers

for

comparable

role

and

performance

within

the

context

our

organizational

profile.

The

Compensation

Committee

periodically reviews and approves the peer group composition.

The table

below presents

the composition

of our

peer group

approved

the

Com

pensation

Committee

for

the

2020

performance year.

Bank of America

Goldman Sachs

Barclays

HSBC

BlackRock

JPMorgan Chase

BNP Paribas

Julius Baer

Citigroup

Morgan Stanley

Credit Suisse

Standard Chartered

Deutsche Bank

State Street

 
 
235 
GEB performance assessments
We 
assess 
each 
GEB 
member’s 
performance 
against 
several 
financial 
targets 
and 
qualita
tive 
goals 
related 
to
 
our
 
Pillars, 
Principles and Behaviors. 
Financial 
measures 
are 
assessed 
quantitatively 
based 
on 
full-
year 
financial 
results 
versus 
predetermined 
targets 
and 
plan 
figures. 
The 
financial 
targets 
for 
the 
Group 
CEO 
are 
based 
on 
overall 
Group 
performance. 
For 
the 
other 
GEB 
members, 
such 
targets 
are 
based 
on 
both 
Group 
performance 
and 
the 
performance 
of 
the 
relevant 
business 
division 
and 
/ 
or 
region; 
those 
who 
lead 
a 
Group 
f
unction 
are 
assessed 
on 
the 
performance 
of 
the 
Group 
and 
the 
function 
they 
oversee. 
A 
significant 
weight 
is 
given 
to 
Group 
measures 
for 
all 
GEB 
members. 
To judge 
the quality 
and sustainability 
of the 
financial results, 
the 
Compensation 
Committee 
considers 
a 
range 
of 
qualitative 
factors, including relative performance and market conditions, as 
well as ESG-related aspects, 
such as client satisfaction, 
employee 
satisfaction, 
talent 
management, 
diversity 
and 
inclusion, 
sustainable 
business 
practice, 
sustainable 
finance, 
and 
philanthropy. 
These factors 
are reflected 
in our 
Pillars, Principles 
and Behaviors 
and assessed 
qualitatively based 
on the 
five-point 
scale
 
outlined 
on 
the 
next 
page. 
The
 
total 
of 
all 
weighted 
achievement 
scores 
across 
financial 
measures 
and 
qualitative 
goals cannot exceed 100%. 
The 
Compensation 
Committee 
exercises 
its 
judgment 
with 
respect 
to 
the 
performance 
achieved 
relative 
to 
the 
prior 
year, 
the 
strategic 
plan 
and 
competitors, 
and 
considers 
the 
Group 
CEO’s 
recommendations. 
The 
Compensation 
Committee’s 
recommendations are subject to approval by the BoD. 
The 
Compensation 
Committee,
 
and 
then 
the 
full 
BoD, 
follows 
a 
similar 
process 
for 
the 
Group 
CEO, 
except 
that 
the 
recommendation comes from the Chairman of the BoD. 
Overview of the GEB compensation determination process 
The 
compensation 
for 
the 
Group 
CEO 
and 
the 
other 
GEB 
members 
is 
governed 
by 
a 
rigorous 
process 
under 
Compensation 
Committee and BoD oversight. The chart below shows how compensation for all GEB members is determined. 
 
 
 

Advisory vote

Corporate governance and compensation | Compensation

236

Overview of performance assessment measures

The table below presents the measures for the 2020 performance assessment of the Group CEO and GEB members.

Group measures

A range of financial measures,

including reported Group profit before tax, reported Group cost / income

ratio, reported return on CET1 capital, and CET1 ratios.

Business division, regional and / or

functional measures (if applicable)

Business division and / or regional measures vary,

but may include: net new money, assets under

management, divisional / regional profit before tax, cost / income

ratio, net new business volume growth

rate, net interest margin, RoAE, RWA and LRD.

Specific functional measures for Group Functions

GEB members.

Pillars

Capital strength

Establishes and maintains capital. Generates

efficiencies and deploys our capital more efficiently and

effectively.

Efficiency and effectiveness

Contributes to the development and execution

of our strategy and success across all business

lines,

functions and regions. Considers market conditions,

relative performance and other factors.

Risk management

Reinforces risk management through an effective control framework.

Captures the degree to which risks

are self-identified and focuses on the individual’s

success to comply with all the various regulatory

frameworks. Helps shape the firm’s relationship with

regulators through ongoing dialog.

Principles

Client focus

Increases client satisfaction and maintains high levels

of satisfaction over the long term.

This includes

promoting collaboration across business divisions and fostering

the delivery of the whole firm to our clients.

Excellence

Human Capital Management – develops successors

for the most senior positions, facilitates talent

mobility

within the firm and promotes a diverse and inclusive

workforce.

Product and Service Quality – strives for excellence in

the products and services we offer to our clients.

Sustainable performance

Brand and Reputation – protects the Group’s reputation and reinforces

full compliance with our standards

and principles. Culture and Growth – takes a personal role in

making Principles and Behaviors front and

center of the business requirements, including a focus on

sustainable growth. Furthermore, this measure

evaluates the individual’s ability to reinforce a culture of accountability

and responsibility, demonstrating

our commitment to be a responsible corporate

citizen and reinforcing our collective behaviors.

Behaviors

Integrity

Is responsible and accountable for what they say

and do; cares about clients, investors, and colleagues;

acts

as a role model.

Collaboration

Places the interests of clients and the firm before their own

and those of their business; works across the

firm; respects and values diverse perspectives.

Challenge

Encourages self and others to constructively

challenge the status quo; learns from mistakes

and

experiences.

Both regional and functional measures may include qualitative measures.

Qualitative performance assessment scale

The table below

presents the five-point

scale used for

the qualitative assessment

of the performance

against goals related

to Pillars,

Principles and Behaviors.

Below expectations

Met most expectations

Met expectations

Exceeded expectations

Significantly exceeded

expectations

Performance failed to meet

the standard expected,

immediate improvement

required

Reasonable performance, but

not consistently up to the

standard expected, some

improvement required

Performance consistently

met standard expected,

may have exceeded a few

goals

Performance exceeded most

expectations on a regular

basis

Consistently achieved truly

exceptional results

Achievement score: 0–30%

Achievement score: 40%

Achievement score: 60%

Achievement score: 80%

Achievement score: 100%

237

2020 performance for the Group CEOs

Effective 1

November

2020,

Sergio

Ermotti

was

succeeded

Ralph

Hamers

Group

CEO,

but

continued

advisory

capacity

the

GEB

until

the

end

his

employment

31 December

2020.

provide

shareholders

with

comprehensive

and

transparent

information,

disclose

performance

assessments

for

both

Sergio

Ermotti

and

Ralph

Hamers, as well as their awarded

compensation and realized pay

for 2020.

The

performance

awards

for

the

Group

CEOs

are

based

the achievement of financial performance

targets and qualitative

goal achievements

relative to

Pillars, Principles

and Behaviors,

described earlier in this section. These

targets and goals were set

reflect

the

strategic

priorities

determined

the

Chairman

and

the

BoD.

judge

the

quality

and

sustainability

the

financial

results,

the Compensation

Committee considers

in the

qualitative

goal

assessment

range

additional

factors

including relative performance

and market conditions,

as well as

ESG

aspects,

such

client

satisfaction,

employee

satisfaction,

talent

management,

diversity

and

inclusion,

sustainable

business

practice,

sustainable

finance,

and

philanthropy.

The

Group

CEOs

’

performance

awards

are

subject

shareholder approval as part of the aggregate GEB 2020 variable

compensation.

›

Refer to “Compensation framework

for GEB members” in this

section of this report for more information

Performance assessment for Sergio Ermotti

The

BoD

recognizes

that

Sergio

Ermotti

successfully

led

UBS

through

very

challenging

year

marked

the

COVID-19

pandemic. Under his strong

leadership, the Group demonstrated

during

this

global

crisis

the

overall

strength

its

business

model,

the

stability

and

quality

its

services

and

support

provided

clients,

strong

culture

and

the ability

adapt to

changing circumstances. As

a result, the

firm was able

to deliver

excellent financial

results and

achieve significant

progress in

key

strategic

areas

including

risk

management,

progressing

regulatory initiatives and collaboration across the firm.

The

table

below

illustrates

the

assessment

criteria

used

evaluate the achievements of Sergio Ermotti in 2020.

Financial performance

Weight

Performance measures

2020

target /

guidance

2020

results

Achieve-

ment

Weighted

assess-

ment

2020 commentary

30%

Return on CET1 capital

16%

17.4%

100%

30%

The

Group

delivered

exceptionally

strong

performance with a

return on CET1

capital of

17.4%

, up

from 12.4%

in 2019

and exceeding

the 2020 target and expectations.

20%

Group profit before tax

USD 6.3

billion

USD 8.2

billion

100%

20%

The

Group

achieved

profit

before

tax

USD 8.2

billion

significantly

from

the

USD 5.6

billion

2019

and

exceeding

the

2020 target

10%

Cost / income ratio

75%

73.3%

100%

2,3

10%

Costs

were

effectively

and

prudently

managed

despite the challenges resulting from the COVID-

19 pandemic, resulting in a

cost / income ratio

73.3%

substantial

improvement

compared with 2019 and

exceeding the target

for 2020.

10%

Capital management

10%

UBS

maintained

strong

capital

position

throughout

the

COVID-19

pandemic,

enabling

delivery of our 2019 dividend,

as well as building

USD 2

billion

reserve

for

future

repurchases.

CET1

capital

ratio

13.8%

and

CET1

leverage ratio of 3.85% were above targets.

CET1 capital ratio

13.0%

13.8%

100%

CET1 leverage ratio

3.7%

3.85%

100%

Post-stress CET1 capital ratio

Above

one-year

minimum

objective

Achieved

100%

The return on CET1 capital and

cost / income ratio performance targets

are set at a stretch-target level

relative to the Group return on CET1

capital target range of 12–15% and

the cost / income ratio target

range

of 75–78% in the spirit of setting ambitious goals

to reach a 100% performance achievement.

Achievement score capped at 100%.

For the assessment of the cost / income

ratio, each 1% difference between

actual and target affects the score by 10%.

Advisory vote

Corporate governance and compensation | Compensation

238

Performance assessment for Sergio Ermotti (continued)

Qualitative goals

Weight

Performance

measures

Achieve-

ment

Weighted

assess-

ment

2020 commentary

15%

Pillars and

Principles

Exceeded

expectations

(80%)

12%

In 2020, Sergio Ermotti

demonstrated his

leadership strength

and ability to

manage the

firm through challenging periods

. As a result,

the Group showed

exemplary resilience

and

strong

ability

respond

the

COVID-19

challenges

and

was

able

provide

excellent client service

and deliver

strong financial results

Sergio Ermotti continued

invest significant efforts

in preparing and

positioning UBS

for the

future

, in

particular through

successful implementation

growth initiatives

, a

positive momentum

for

stronger

collaboration

and leveraging

capabilities across

the

Group, as well as important structural changes

simplify client delivery

Sergio Ermotti continued his

personal engagement with clients

, thereby setting the tone

from the

top for

the rest

of the

organization. He focused

the Group

on further

improving

client

centricity

and

the

client

experience

and

delivering

excellent, uninterrupted

services

Sergio Ermotti continued to be a

strong leader in risk management

and to drive effective

and sustainable progress on

regulatory initiatives that further strengthened the Group’s

risk

and control environment overall, which was positively

acknowledged by core regulators.

Through 2020, Sergio Ermotti

continued to support the positioning

of the firm as

leader

sustainability

including

making

sustainable

investments

the

preferred

solutions

for

clients.

These

efforts

were

recognized

externally

through

the

nomination

industry

leader

the

Dow

Jones

Sustainability

Indices

for

the

sixth

consecutive

year

and

surpassing

the

2022

target

directing

USD

illio

client

assets

into

impact

investments as per our commitment to the UN’s

Sustainable Development Goals.

Sergio Ermotti

also continued

to focus

the organization

on the

importance of

diversity,

including ethnicity and female representation

. Overall, UBS’s attractiveness as employer

remained

high,

retaining

Top

ranking

the

World’s

Most

Attractive

Employers

(Universum), as well as

being recognized for its

diversity and inclusion efforts. The

excellent

results of the employee survey,

including record levels of participation

and pride in working

for UBS, confirm Sergio Ermotti’s positive impact on

the firm’s culture and the effectiveness

of his leadership and his decisive actions in

response to the COVID-19 pandemic.

15%

Behaviors

Exceeded

expectations

(80%)

12%

Sergio

Ermotti

continued

role

model

for

the

UBS

behaviors

particular,

steered

the

Group

toward

stronger

collaboration

and

leveraging

synergies

the

interests

clients.

consistently

set

strong

tone

from

the

top

encouraging

constructive

challenge

and

displayed

unwavering

commitment

for

continuous

improvements

through questioning the status quo.

Sergio Ermotti was once again the most influential ambassador for the

Group’s

culture and

behavior programs.

Total weighted assessment

(maximum 100%)

94%

In addition

to Sergio

Ermotti’s achievements

in 2020

outlined in

the

performance

assessment

table

above

the

BoD

also

considered

other

factors

such

the

positive

relative

and

absolute share price developments and

his excellent contribution

in the Group CEO transition process.

The

BoD

approved

the

proposal

the

Compensation

Committee

grant

Sergio

Ermotti

performance

award

CHF 10.5

million

(down

compared

with

2018

and

compared

with

2019)

resulting

total

compensation

for

2020

CHF 13.0

million

(excluding benefits

and

contributions

to his retirement benefit plan).

The

performance

award

will

delivered

20%

(CHF 2.1

million) in cash and the

remaining 80% (CHF 8.4 million) subject

deferral

and

forfeiture

provisions,

well

meeting

performance conditions over five years.

 
 
239 
 
Performance assessment for Ralph Hamers 
Ralph 
Hamers 
joined 
UBS 
on 
1
 
September 
2020 
as 
the 
designated 
Group 
CEO, 
the 
role 
he 
took 
over 
on 
1 November 
2020. This 
assessment covers 
his performance 
since joining 
UBS 
but, 
in light 
of 
the short 
tenure, 
it is 
an abbreviated 
qualitative 
assessment. 
Ralph 
Hamers 
demonstrated 
great 
commitment 
and 
strong 
engagement 
during 
the 
two 
months 
of 
the 
CEO 
transition 
phase. 
He effectively 
leveraged this 
period to 
establish a 
strong 
understanding of 
UBS and 
its strategy, 
culture, clients, 
products 
and services, and employees. 
Ralph 
Hamers 
decisively 
led 
UBS 
as 
Group 
CEO 
through 
the 
fourth 
quarter 
and 
delivered 
very 
strong 
results, 
thereby 
successfully 
completing 
the 
year 
and 
contributing 
to 
achieving 
the best 
results 
for UBS 
in a 
decade. He 
set a 
strong tone 
from 
the top, 
continuing to 
execute on the 
capital and 
risk objectives 
of the firm. 
Ralph Hamers 
has launched 
a number 
of strategic 
initiatives, 
all with 
the aim 
of ensuring 
the continued 
long-term success 
of 
UBS. 
Furthermore, 
Ralph 
Hamers 
fully 
embraced 
UBS
’s
 
core 
behavioral values 
and drove 
measures to 
improve collaboration, 
ownership 
and 
accountability, 
as 
well 
as 
constructive 
challenge 
across all levels. 
Considering 
these 
strong 
achievements 
of 
Ralph 
Hamers 
in 
his 
first 
year 
with 
UBS, 
the 
BoD 
approved 
the 
proposal 
by 
the 
Compensation Committee to grant Ralph Hamers a performance 
award 
of 
CHF 3.0 million, 
resulting 
in 
a 
total 
compensation for 
2020 of CHF 3.8 million 
(excluding benefits and contributions 
to 
his retirement benefit plan). 
The 
performance 
award 
will 
be 
delivered 
20% 
(CHF 0.6 
million) in cash and the 
remaining 80% (CHF 2.4 million) subject 
to 
deferral 
and 
forfeiture 
provisions, 
as 
well 
as 
meeting 
performance conditions over five years. 
 

Advisory vote

Corporate governance and compensation | Compensation

240

2020 total compensation for the GEB members

The

aggregate

performance

award

pool

for

the

GEB

for

2020

was CHF

85.0 million

(USD 90.7

million);

on a

per capita

basis,

this

reflects

increase

compared

with

2018,

18%

compared with

2019. This

is a smaller

increase than

the change

the

overall

performance

award

pool

the

firm,

which

increased

compared

with

2018,

24%

compared

with

2019.

Group

profit

before

tax

was

USD

8.2

billion,

36%

compared with 2018 and 46% compared with 2019.

The

Compensation

Committee

has

confirmed

that

performance conditions for all GEB members’ awards due to vest

in March 2021 have been satisfied and will therefore vest in full.

the

2021

AGM,

shareholders

will

vote

the

aggregate

2020

total

variable

compensation

for

the

GEB

Swiss

francs.

The

tables

below

provide

the

awarded

compensation

for

the

Group

CEO

and

the

GEB

members

Swiss

francs

and,

for

reference, the total

amounts in US

dollars for comparability

with

financial

performance.

The

individual

variable

performance

awards

for

each

GEB

member

will

only

confirmed

upon

shareholder approval at the AGM.

›

Refer to “Provisions of the Articles of Association

related to

compensation” in the “Supplemental

Information” section of

this report for more information

Audited |

Total

compensation for GEB members

CHF, except where indicated

USD (for reference)

For the

year

Base salary

Contribution

to retirement

benefit plans

Benefits

Total fixed

compensa-

tion

Cash

Performance

award

under LTIP

Performance

award

under

DCCP

Total

variable

compensa-

tion

Total fixed

and vari-

able com-

pensation

Total fixed

compensa-

tion

Total

variable

compensa-

tion

Total fixed

and vari-

able com-

pensation

Highest Paid Executive (former Group CEO Sergio

Ermotti)

2020

2,500,000

244,353

78,891

2,823,244

2,100,000

5,250,000

3,150,000

10,500,000

13,323,244

3,011,952

11,201,828

14,213,780

2019

2,500,000

244,353

65,048

2,809,401

1,940,000

4,850,000

2,910,000

9,700,000

12,509,401

Group CEO Ralph A.J.G. Hamers

2020

833,333

62,124

314,260

1,209,717

600,000

1,500,000

900,000

3,000,000

4,209,717

1,290,576

3,200,522

4,491,098

Aggregate of all GEB members

8,9,10,11,12

2020

27,469,369

2,249,276

1,145,489

30,864,135

16,625,062

42,874,938

25,500,000

85,000,000

115,864,135

32,927,117

90,681,465

123,608,582

2019

28,169,646

2,333,935

1,350,439

31,854,020

14,050,000

35,125,000

21,075,000

70,250,000

102,104,020

1 Swiss franc

amounts have been

translated into

US dollars for

reference at the

2020 performance

award currency

exchange rate

of CHF /

USD 1.0668.

2 All benefits

are valued

at market

price.

3 For

GEB

members who are also MRTs

or SMFs, the

cash portion includes blocked

shares.

4 LTIP

awards for performance year

2020 were awarded at

a value of

65.9% of maximum which reflects

our best estimate of

the

fair value of the award. The

maximum number of shares is determined

by dividing the awarded amount

by the estimated fair value of

the award at grant,

divided by CHF 13.810 or USD

15.411, the average closing

price of UBS shares over

the last ten trading

days leading up to

and including the grant

date.

5 The amounts reflect

the amount of the notional

additional tier 1 (AT1)

capital instrument excluding future

notional

interest.

6 Excludes the portion related to the legally required employer’s

social security contributions for 2020 and 2019, which are estimated at

grant at CHF 5,497,811 and CHF 4,969,844, respectively,

of which

CHF 880,496 and CHF 797,938, respectively, are for the highest-paid GEB member.

The legally required employees’ social security contributions are included in the amounts shown

in the table above, as appropriate.

7 Reflects compensation for

12 months until the

end of his GEB

employment on 31 December

2020.

8 As stated in “Group

Executive Board” in the

“Corporate governance” section of

our Annual Report 2020,

thirteen GEB members

were in office

on 31 December

2020 and on

31 December 2019,

although not identical

composition.

9 Includes compensation

paid under employment

contracts during notice

periods for

GEB members who

stepped down during

the respective years.

10 Includes compensation

for newly appointed

GEB members for

their time in

office as GEB

members during the

respective years.

11 For

2020,

Ralph A.J.G. Hamers received a one-time replacement award

of CHF 163,399. This replacement award is not included

in the above table; including this, the 2020 total aggregate compensation

of all GEB members is

CHF 116,027,534. For 2019, Iqbal Khan

received a one-time replacement award of CHF 8,053,022.

This replacement award is not included

in the above table; including this,

the 2019 total aggregate compensation

of all GEB members is CHF 110,157,042.

12 Base salary may include role-based allowances in line with market practice

in response to regulatory requirements.

241

Total realized compensation for the Group CEOs

The realized

compensation reflects

the total

amount paid

out in

the

year.

includes

the

base

salary,

cash

performance

award

payments,

and

all

deferred

performance

awards

vested

the

year.

As such,

realized pay

is the

natural culmination

of awards

granted and approved by shareholders in previous years.

illustrate

the

effect

our

long-term

deferral

approach,

which

has

been

place

since

2012,

disclose

the

annual

realized

compensation

Sergio

Ermotti

and

Ralph

Hamers,

including a comparison with their total awarded compensation.

Total realized pay for Sergio Ermotti

Total

realized compensation vs awarded compensation for Sergio P.

Ermotti¹

CHF

Realized

Awarded

For the year

Base salary

Cash award

Deferred cash

award

3,4

Performance

award under

equity plans

4,5

Performance

award under

DCCP

Total realized

fixed and variable

compensation

Total awarded

fixed and variable

compensation

2020

2,500,000

1,940,000

4,374,061

2,520,000

11,334,061

13,000,000

2019

2,500,000

2,000,000

4,533,741

2,370,000

11,403,741

12,200,000

2018

2,500,000

2,000,000

4,986,563

2,440,000

11,926,563

13,800,000

2017

2,500,000

1,000,000

2,951,043

6,451,043

13,900,000

2016

2,500,000

1,000,000

1,667,128

5,167,128

13,400,000

2015

2,500,000

1,018,440

3,518,440

14,000,000

2014

2,500,000

1,000,000

373,441

537,217

4,410,658

10,900,000

2013

2,500,000

349,622

423,623

3,273,245

10,400,000

2012

2,500,000

553,200

3,606,400

8,600,000

1 Appointed on 24

September 2011 as Group

CEO ad interim and

confirmed on 15 November

2011.

2 Paid out

based on the previous

performance year.

For 2012 this

includes Cash Balance Plan

installments

(discontinued in 2012).

3 Cash Balance

Plan installments.

For 2012,

due to applicable

UK FSA regulations,

deferred cash includes

blocked shares.

4 Excludes dividend

/ interest

payments.

5 Includes

all

installments paid

out under

the EOP,

Senior Executive

Equity Ownership

Plan (SEEOP,

discontinued in

2012) and

Performance Equity

Plan (PEP,

discontinued in

2012).

6 Excludes

contributions to

retirement

benefit plans and benefits. Includes social security contributions paid by Sergio P.

Ermotti but excludes the portion related to the legally required social security contributions paid by UBS.

The

chart

below

further

illustrates

the

effect

our

deferral

approach

over

time.

The

bars

for

realized

pay

show

which

components (base salary, cash, equity plans, or DCCP) deliver the

realized

compensation in

the year

indicated

and for

which

year

the respective component was initially awarded.

The

bars

for awarded

compensation show

the split

between

fixed

compensation

(base

salary)

and

variable

compensation

(cash

component

and

deferred

awards)

and

highlight

that

significant portion of the variable compensation is deferred.

Excludes contributions to retirement benefit plans and benefits. Includes

social security contributions paid by Sergio P.

Ermotti but excludes the portion related to the legally required

social security contributions paid

by UBS.

Paid out

based on

the previous

performance year.

2012, 2013

and 2014

include Cash

Balance Plan

installments.

Includes all

installments paid

out under

respective EOP,

SEEOP and

PEP plans,

excludes dividend payments.

Advisory vote

Corporate governance and compensation | Compensation

242

Total realized pay for Ralph Hamers

Total

realized compensation vs awarded compensation for Ralph A.J.G. Hamers

CHF

Realized

Awarded

For the year

Base salary

Cash award

Deferred cash

award

Performance

award under

equity plans

Performance

award under

DCCP

Total realized

fixed and variable

compensation

Total awarded

fixed and variable

compensation

3, 4

2020

833,333

3,833,333

1 Includes compensation

for 4 months

as Ralph A.J.G.

Hamers joined UBS

on 1 September

2020.

2 Excludes dividend

/ interest

payments.

3 Excludes contributions

to retirement benefit

plans and benefits.

Includes social security contributions paid by Ralph A.J.G. Hamers but excludes the portion related

to the legally required social security contributions paid by UBS.

4 Excludes the one-time replacement award.

 
243 
Group compensation 
Compensation elements for all employees 
A
ll 
elements 
of 
pay
 
are 
considered
 
when 
making 
our 
compensation decisions. 
We 
regularly 
review our 
principles and 
compensation 
framework 
in 
order 
to 
remain 
competitive 
and 
aligned 
with 
stakeholders. 
In 
2020
,
 
we 
made 
no 
material 
changes 
to 
our 
overall 
framework. 
We 
will 
continue 
to 
review 
our 
approach 
to 
salaries 
and 
performance 
awards, 
considering 
market developments, our 
performance and our 
commitment to 
deliver sustainable returns to shareholders. 
Base salary and role-based allowance 
Employees’ 
fixed 
compensation 
(e.g., 
base 
salary) 
reflects 
their 
level 
of 
skill, 
role 
and 
experience, 
as 
well 
as 
local 
market 
practice. Base 
salaries are 
usually paid 
monthly or 
fortnightly, 
in 
line 
with 
local 
market 
practice. 
We 
offer 
competitive 
base 
salaries 
that 
reflect 
location, 
function 
and 
role. 
Salary 
increases 
generally consider promotions, 
skill set, performance 
and overall 
responsibility. 
In addition 
to base salary, 
and as 
part of 
fixed compensation, 
some 
employees 
may
 
receive 
a 
role
-
based 
allowance. 
This 
allowance is 
a shift 
in the 
compensation mix 
between fixed 
and 
variable compensation, 
not an increase 
in total 
compensation. It 
reflects 
the 
market 
value 
of 
a 
specific 
role 
and 
is 
fixed, 
non-
forfeitable compensation. Unlike salary, a role-based allowance is 
paid only 
if the employee 
is in a 
specific role. Similar 
to previous 
years, 
2020 
role-based 
allowances 
consisted 
of 
a 
cash 
portion 
and, where applicable, a blocked UBS share award. 
 
Pensions and benefits 
We 
offer 
certain 
benefits 
for 
all 
employees, 
such 
as 
health 
insurance and 
retirement benefits. 
These vary 
depending on 
the 
employee’s 
location 
and 
are 
reviewed 
periodically 
for 
competitiveness. 
Pension 
contributions 
and 
pension 
plans 
also 
vary in 
accordance with 
local requirements 
and market 
practice. 
However, 
pension 
plan 
rules 
in 
any 
one 
location 
are 
generally 
the same for all employees, including management. 
GEB members’ 
pension contributions 
and benefits 
are in 
line 
with local practices 
for other employees. 
There are no 
enhanced 
or supplementary pension contributions for the GEB. 
Performance award 
Most 
of 
our 
employees 
are 
eligible 
for 
an 
annual 
performance 
award
.
 
The 
level 
of 
this
 
award, 
where 
applicable, 
generally 
depends 
on 
the 
firm’s 
overall 
performance, 
the 
employee’s 
business 
division, 
team 
and 
individual 
performance, 
and 
behavior, 
reflecting 
their 
overall 
contribution 
to 
the 
firm’s 
results. 
The
se
 
award
s
 
are 
in 
line 
with 
applicable 
local 
employment conditions and at the discretion of the firm. 
In 
addition 
to 
the 
firm’s 
Pillars 
and 
Principles, 
Behaviors 
related 
to 
integrity, 
collaboration 
and 
challenge 
are 
part 
of 
the 
performance management 
approach. Therefore, 
when assessing 
performance, we 
consider not 
only what 
was achieved 
but also 
how it was achieved. 
.
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote 
Corporate governance and compensation | Compensation 
244 
Our deferred compensation plans 
To 
reinforce 
our 
emphasis 
on sustainable 
performance and 
risk 
management, 
and our focus on 
achieving growth ambitions, 
we 
deliver 
part 
of
 
our 
employees’
 
annual 
variable 
compensation 
through 
deferred 
compensation 
plans. 
We 
are 
convinced 
that 
our approach 
, 
with a 
single incentive 
decision and 
a deferral, 
is 
simple, 
transparent 
and 
well
 
suited 
to 
implementing 
our 
compensation 
philosophy 
and 
delivering 
sustainable 
performance. 
This 
aligns 
the 
interests 
of 
our 
employees 
and 
shareholders 
and 
appropriately 
links 
compensation 
to 
longer-
term sustainable performance. 
Our 
mandatory 
deferral 
approach 
applies 
to 
all 
employees 
with 
regulatory-driven 
deferral 
requirements 
or 
total 
compensation 
greater 
than 
USD 
/ 
CHF
 
300,000
.
 
Certain 
regulated 
employees, 
such 
as 
SMFs 
and 
MRTs, 
are 
subject 
to 
additional 
requirements 
(e.g., 
an 
additional 
non-financial 
conduct-related 
performance 
metric 
under 
the 
LTIP, 
more 
stringent 
deferral 
requirements, 
additional 
blocking 
periods). 
In 
addition, 
SMFs 
and 
MRTs 
receive 
50% 
of 
their 
cash 
portion 
in 
the 
form 
of 
immediately 
vested 
shares, 
which 
are 
blocked 
for 
12 months. 
The deferred amount increases at higher marginal rates in line 
with the 
value of 
the performance 
award. The 
effective deferral 
rate 
therefore 
depends 
on 
the 
amount 
of 
the 
performance 
award and the amount of total compensation. 
We believe our deferral regime has 
one of the longest vesting 
periods 
in the 
industry. The 
average deferral 
period is 
4.4 years 
for 
GEB 
members, 
4 
years 
for 
GMDs 
and 
3.5 
years 
for 
employees below 
GEB / GMD 
level. On an 
exceptional basis, we 
may 
utilize 
alternative 
deferred 
compensation 
arrangements 
to 
remain competitive in specific business areas. 
To 
further 
promote 
sustainable 
performance, 
all 
of 
our 
deferred 
compensation 
plans 
include 
malus 
conditions. 
These 
enable 
the 
firm 
to 
reduce 
or 
fully 
forfeit 
unvested 
deferred 
awards 
under 
certain 
circumstances, 
pursuant 
to 
performance 
and harmful acts 
provisions. In addition, 
forfeiture is triggered in 
most cases where employment has been terminated. 
Our 
share 
delivery 
obligations 
related 
to 
notional 
share 
awards are satisfied by delivering treasury shares to employees at 
vesting. 
›
 
Refer to “Note 27 Employee benefits: variable 
compensation” in 
the “Consolidated financial statements” 
section of our Annual 
Report 2020 for more information 
›
 
Refer to the “Supplemental information” 
section of this report 
for more information about MRTs and SMFs 
Variable compensation elements by employee category 
 
Deferred compensation plans – key features 
Delivery 
Vesting period
1
Performance conditions 
LTIP 
–
 
Notional shares (eligible for 
dividend equivalents
2
) 
–
 
Generally delivered as shares 
–
 
For GEB members, award vests in equal installments 
in years 3, 4 and 5 after the grant year 
–
 
For GMDs and Divisional Vice Chair role holders, 
award cliff-vests in year 3 after the grant year 
–
 
Achievement of RoCET1 and rTSR measured over 
a 
three-year performance period starting with the 
grant year 
EOP 
–
 
Notional shares (eligible for 
dividend equivalents
2
) 
–
 
Generally delivered as shares 
For AM EOP: 
–
 
Notional funds (eligible for 
dividend equivalents
2
) 
–
 
Generally delivered as cash 
–
 
Award vests 50% in year 2 and 50% in year 3 after 
the grant year 
For AM EOP: 
–
 
For AM investment areas, award vests 40% in 
year 2, 40% in year 3 and 20% in year 5 after 
the 
grant year 
–
 
For AM non-investment areas, award vests 35% in 
year 2, 35% in year 3 and 30% in year 5 after 
the 
grant year 
–
 
For AM GMDs, award vests 50% in year 3 and 
50% 
in year 5 after the grant year 
–
 
For KRTs, Highly Paid Employees
3
, SMFs and certain 
MRTs, the awards granted will only vest if the 
Group performance condition (RoCET1) is met 
DCCP
 
–
 
Notional bonds (eligible for 
notional interest
2
) 
–
 
Settled as either a cash 
payment or a perpetual, 
marketable AT1 capital 
instrument 
–
 
Award cliff-vests in year 5 after the grant year 
–
 
Awards are forfeited if a viability event occurs 
–
 
Awards are written down for GEB members if the 
Group’s CET1 capital ratio falls below 10% and for 
all other employees if it falls below 7% 
–
 
GEB members forfeit 20% of their award for 
each 
year that UBS does not achieve a reported Group 
profit before tax during the vesting period 
1
 
Variations apply for 
regulated employees. 
2
 
Excluding MRTs, 
who are ineligible to receive 
dividends, including dividend 
equivalents, as well 
as notional interest. 
3
 
Employees with a total compensation 
exceeding 
USD / CHF 2.5 million). 

245

Long-Term Incentive Plan

The

LTIP

mandatory

deferral

plan

for

senior

leaders

the

Group

(i.e.,

GEB

members,

GMDs

and

Group

Divisional

Vice

Chair role

holders). For

the 2020

performance year,

we granted

LTIP

awards

115

employees

fair

value

65.9

maximum.

The

value

was

calculated

independent

third

party using a well-established valuation methodology.

The performance metrics

of the equity-based

LTIP

awards are

average

reported

return

CET1

capital

(RoCET1)

and

relative

total

shareholder

return

(rTSR)

over

three-year

performance

period starting

in the

year of

grant. Performance

outcomes and

actual

payout

levels

will

disclosed

the

end

the

performance period.

The three-year

average reported

RoCET1 performance

metric

reflects our strategic return ambitions:

–

the required

RoCET1 performance

for a

maximum payout

set

18%,

which

represents

stretch

objective

relative

our communicated ambitions;

–

the required

performance threshold

of 6%

for the

minimum

payout

supports

our

focus

delivering

sustainable

results

and appropriate risk-taking; and

–

the

linear

payout

design

between

threshold

and

maximum

level reflects

our focus on

sustainable performance,

supports

our

growth

ambitions,

and

does

not

encourage

excessive

risk-taking.

The rTSR

performance metric

over the

three-year period

further

aligns the interests of employees with shareholders:

–

the metric compares the total shareholder return

(TSR) of UBS

with

the

TSR

index

consisting

listed

Global

Systemically

Important

Banks

(G-SIBs)

determined

the

Financial Stability Board;

–

the

G-SIBs

are

independently

defined

and

reflect

companies

with

comparable

risk

profile

and

impact

the

global

economy;

–

the

index,

which

includes

publicly

traded

G-SIBs,

equal

weighted,

calculated

Swiss

francs

and

maintained

independent

index

provider

increase

transparency

and

ensure independence of the TSR calculation; and

–

the payout interval of

±25 percentage points versus the

index

performance

demonstrates

our

ambition

delivering

attractive

relative

returns

shareholders.

The

linear

payout

and

the threshold

level

set below

index performance

further

support sustainability of results and prudent risk-taking.

Global Systemically Important Banks (G-SIBs) listed companies

Agricultural Bank of China

Goldman Sachs

Santander

Bank of America

Groupe Crédit Agricole

Société Générale

Bank of China

HSBC

Standard Chartered

Bank of New York Mellon

ING Bank

State Street

Barclays

ICBC

Sumitomo Mitsui FG

BNP Paribas

JPMorgan Chase

Toronto-Dominion

China Construction Bank

Mitsubishi UFJ FG

UniCredit

Citigroup

Mizuho FG

Wells Fargo

Credit Suisse

Morgan Stanley

Deutsche Bank

Royal Bank of Canada

As of November 2020.

LTIP award

reflect the

long-term focus

of our

compensation

framework. The final number of shares as determined at

the end

the

three-year

performance

period

will

vest

three

equal

installments

each

the

three

years

following

the

performance period

for GEB

members, and

cliff-vest in

the first

year

following

the

performance

period

for

GMDs

and

Group

Divisional

Vice

Chair

role

holders

(longer

deferral

periods

may

apply for regulated employees).

LTIP payout illustration

–

The final number of notional

shares vesting will vary based on

the achievement versus the

performance metrics.

–

Linear payout between threshold

and maximum performance.

–

Vesting levels are a percentage of

the maximum opportunity of the

LTIP and cannot exceed 100%.

–

Full forfeiture for performance

below the predefined threshold

levels.

–

SMFs and UK MRTs are subject to

an additional non-financial metric

based on a conduct assessment.

Performance metric:

average reported RoCET1 (50% of award)

Below threshold (<6%)

Threshold (6%) up to

maximum (18%)

Maximum and above (>18%)

Full forfeiture

Partial vest

(payout between 33% and <100%)

Full vest

Performance metric:

rTSR vs G-SIBs index (50% of award)

Below threshold (<–25 pps)

Threshold (–25 pps) up to

maximum (+25 pps)

Maximum and above (>+25 pps)

Full forfeiture

Partial vest

(payout between 33% and <100%)

Full vest

 
 
 
 
Advisory vote 
Corporate governance and compensation | Compensation 
246 
Equity Ownership Plan 
The EOP 
is the 
deferred 
compensation plan 
for employees 
who 
are subject 
to deferral 
requirements but 
do not 
receive LTIP. 
For 
the 
2020 
performance 
year, 
we 
granted 
EOP 
awards 
to 
3,934 
employees. 
Delivering sustainable performance 
is a key objective 
for UBS, 
and 
we 
therefore 
link 
EOP 
award 
vesting 
with 
minimum 
performance thresholds over 
a multi-year time 
horizon. Our EOP 
awards 
have 
no 
upward 
leverage, 
and 
this 
approach 
promotes 
sustainable 
performance 
by 
establishing 
a 
minimum 
level 
of 
performance, 
below 
which 
awards 
are 
subject 
to 
full 
or 
partial 
forfeiture. 
EOP awards 
vest in 
equal installments 
in 
years 2 
and 3 
after 
the 
grant 
year. 
For 
KRTs 
(including 
Highly 
Paid 
Employees) 
and 
SMFs, 
EOP
 
awards 
granted 
will 
vest 
based 
on 
the 
average 
reported RoCET1 
over the 
applicable performance 
period. If 
the 
Group 
performance 
condition 
RoCET1 
outcome 
is 
equal 
to 
or 
above 
the threshold, 
the award 
will vest 
in full; 
if it 
is between 
0% 
and 
the 
threshold, 
the 
award 
will 
vest 
on 
a 
linear 
basis 
between 0% 
and 100%. 
If the 
outcome is 
0% or 
negative, the 
installment will be 
fully forfeited. The 
Compensation Committee 
retains discretion 
to adjust 
the award 
if the 
performance metric 
does not reflect a fair measure of performance. 
Asset 
Management 
employees 
receive 
some 
or 
all 
of 
their 
EOP 
in 
the 
form 
of 
notional 
funds 
under 
the 
AM 
EOP 
to 
align 
their 
compensation 
more 
closely 
with 
industry 
standards. 
This 
plan is generally delivered in cash at vesting. 
The 
Compensation 
Committee 
sets 
the 
minimum 
future 
performance 
threshold 
at 
levels 
to 
demonstrate 
that 
the 
long-
term quality 
of the 
past year’s 
performance is 
sustainable. Once 
set, the threshold remains 
in place for that 
particular award. The 
Compensation 
Committee 
also 
determines 
whether 
the 
performance condition has been met. 
›
 
Refer to “Vesting of outstanding awards granted in prior 
years 
subject to performance conditions” in 
the “Supplemental 
information” section of this report for more information
 
Deferred Contingent Capital Plan 
All 
employees 
subject
 
to 
deferral 
requirements 
receive 
DCCP
 
awards
. 
For 
the 
2020
 
performance 
year, 
we 
granted 
DCCP 
awards to 4,013 employees. 
Employees are awarded notional additional tier 1 (AT1) capital 
instruments, which, 
at the 
discretion of 
the firm, 
can be 
settled 
as 
a 
cash 
payment 
or 
a 
perpetual, 
marketable 
AT1 
capital 
instrument. Prior 
to granting, 
employees can 
elect to 
have their 
DCCP awards denominated in Swiss francs or US dollars. 
DCCP awards vest in full after five years (up to seven years for 
SMFs), 
unless 
a 
trigger 
event 
occurs. 
Awards 
are 
forfeited 
if 
a 
viability 
event 
occurs, 
i.e., 
if 
FINMA 
notifies 
the 
firm 
in 
writing 
that 
the 
DCCP 
awards 
must 
be 
written 
down 
to 
prevent 
an 
insolvency, bankruptcy 
or failure 
of UBS 
or if 
the firm 
receives a 
commitment of extraordinary support from the public sector that 
is 
necessary 
to 
prevent 
such 
an 
event. 
DCCP 
awards 
are 
also 
written down for GEB members 
if the Group’s CET1 capital 
ratio 
falls below 10% and for all other employees if it falls below 7%. 
As an additional performance condition, GEB members 
forfeit 
20% 
of 
DCCP 
awards 
for 
each 
loss-making 
year 
during 
the 
vesting period. 
This means 
100% of 
the award 
is subject 
to risk 
of forfeiture. 
Under 
the 
DCCP, 
employees 
who 
are 
not 
MRTs 
may 
receive 
discretionary 
annual 
notional 
interest 
payments. 
The 
notional 
interest 
rate 
for 
grants 
in 
2021 
was 
2.6
% 
for 
awards 
denominated in Swiss 
francs and 4.0% for 
awards denominated 
in 
US 
dollars. 
These 
interest 
rates 
are 
based 
on 
the 
current 
market rates for similar AT1 capital instruments. Notional interest 
will be 
paid out 
annually, subject 
to review 
and confirmation 
by 
the Compensation Committee. 
Over the last 
five years, USD 1.9 
billion of DCCP 
awards have 
been 
issued, 
contributing 
to 
the 
Group’s 
total 
loss-absorbing 
capacity 
(TLAC).
 
Therefore, 
DCCP 
awards 
not 
only 
support 
competitive 
pay 
but 
also 
provide 
a 
loss 
absorption 
buffer 
that 
protects the firm’s capital position. The 
following table illustrates 
the contribution 
of the 
DCCP to 
our AT1 
and the 
effect on 
our 
TLAC ratio. 
›
 
Refer to the “Supplemental information” 
section of this report 
for more information about performance award- and 
personnel-
related expenses 
›
 
Refer to the “Supplemental information” 
section of this report 
for more information about longer vesting 
and clawback periods 
for MRTs and SMFs 
 
 
 
Contribution of the Deferred Contingent Capital Plan to our loss-absorbing capacity
1
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.18 
Deferred Contingent Capital Plan (DCCP), eligible 
as high-trigger loss-absorbing additional 
tier 1 capital 
1,875 
1,962 
2,005 
DCCP contribution to the total loss-absorbing capacity 
ratio (%) 
0.6 
0.8 
0.8 
1 Refer to “Bondholder information” at ubs.com/investors for more information about the capital instruments of UBS Group 
AG and UBS AG both on a consolidated and a standalone basis. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
247 
Replacement awards and forfeitures 
In line 
with industry 
practice, our 
compensation framework 
and 
plans include provisions 
generally requiring reduction 
/ forfeiture 
of 
a 
terminated 
employee’s 
unvested 
or 
deferred 
awards. 
In 
particular, 
these 
provisions 
apply 
if 
the 
terminated 
employee 
joins 
another 
financial 
services 
organization 
and 
/ 
or 
violates 
restrictive covenants, such as solicitation of clients or employees. 
Conversely, to 
support talent 
acquisition, and 
consistent with 
industry 
practice, 
we 
may 
offer 
replacement 
awards 
to 
attract 
senior 
candidates 
by 
offse
t
t
ing
 
deferred 
compensation 
being 
forfeited 
at 
their 
previous 
employer 
as 
a 
result 
of 
joining 
UBS. 
When 
making 
such 
awards
,
 
we 
aim 
to 
match 
the 
previous 
employer’s 
terms and 
conditions for 
the awards 
to be 
forfeited 
upon joining UBS. 
Ralph 
Hamers 
joined 
UBS 
on 
1 September 
2020 
as 
a 
GEB 
member, and 
subsequently became 
Group CEO 
on 1 November 
2020. 
He 
received 
replacement 
awards 
for 
deferred 
compensation 
forfeited 
at 
his 
previous 
employer 
as 
a 
result 
of 
joining UBS. 
Ralph Hamer’s 
replacement payment 
consists of 
an 
EOP share 
award representing 
14,841 UBS 
shares (denominated 
in 
Swiss 
francs) 
with 
a 
grant 
date 
total 
fair 
market 
value 
of 
CHF 163,399. 
The 
award 
will 
vest 
in 
various 
installments 
between 
2021 and 
2025 but 
will 
only be 
delivered in 
line 
with 
additional 
blocking 
periods 
between 
2023 
and 
2026, 
all 
consistent 
with 
the 
terms 
of 
the 
original 
awards. 
This 
replacement award is subject to UBS’s harmful acts provisions. 
The 
total 
2020 
forfeitures 
of 
USD 145 
million 
of 
previously 
awarded 
deferred 
compensation 
offset 
the 
2020 
total 
sign-on 
payments, 
replacement 
payments 
and 
guarantees 
of 
USD 94 
million. 
Other variable compensation components 
To 
support hiring 
and retention, 
particularly at 
senior levels, 
we 
may offer other compensation components, 
such as: 
–
 
retention payments 
to key employees 
to induce them 
to stay, 
particularly during 
critical periods 
for the 
firm, such 
as a 
sale 
or wind-down of a business; 
–
 
on 
a 
limited 
basis, 
guarantees 
may 
be 
required 
to 
attract 
individuals 
with 
certain 
skills 
and 
experience 
– 
these 
awards 
are fixed 
incentives subject 
to our standard 
deferral rules and 
limited to the first full year of employment; 
–
 
award 
grants 
to 
employees 
hired 
late 
in 
the 
year 
to 
replace 
performance 
awards 
that 
they 
would 
have 
earned 
at 
their 
previous employers, but have foregone by joining UBS – these 
awards 
are 
generally 
structured 
with 
the 
same 
level 
of 
deferral as for employees at a similar level at UBS; and 
–
 
in 
exceptional 
cases, 
candidates 
may 
be 
offered 
a 
sign-on 
award to increase the chances of them accepting our offer. 
 
These other variable compensation components are subject to 
a 
comprehensive 
governance 
process, 
which 
may 
involve 
the 
Compensation Committee, depending on the 
amount or type of 
such payments. 
Below-GEB 
level 
employees 
who 
are 
made 
redundant 
may 
receive 
severance 
payments. 
Our 
severance 
terms 
comply 
with 
the applicable 
local laws 
(legally obligated 
severance). In 
certain 
locations, 
we 
may 
provide 
severance 
packages 
that 
are 
negotiated with our local social partners and 
may go beyond the 
applicable 
minimum 
legal 
requirements 
(standard 
severance). 
Such 
payments 
are 
governed 
by 
location-specific 
severance 
policies. 
In 
addition, 
we 
may 
make 
severance 
payments 
that 
exceed legally 
obligated or 
standard severance 
payments where 
we 
believe 
these 
are 
aligned 
with 
market 
practice 
and 
appropriate under the circumstances (supplemental severance). 
 
 
Sign-on payments, replacement payments, guarantees and severance payments 
Total 2020 
of which: expenses 
recognized in 2020
5
of which: expenses 
to be recognized in 
2021 and later
5
Total 2019 
Number of beneficiaries 
USD million, except where indicated 
2020 
2019 
Total sign-on payments
1
 
20 
 
14 
 
7 
 
31 
 
99 
 
644 
of which: Key Risk Takers
2
 
2 
 
1 
 
1 
 
9 
 
3 
 
6 
Total replacement payments
3
 
58 
 
11 
 
47 
 
57 
 
200 
 
178 
of which: Key Risk Takers
2
 
17 
 
1 
 
16 
 
22 
 
13 
 
12 
Total guarantees
3
 
16 
 
10 
 
6 
 
27 
 
32 
 
32 
of which: Key Risk Takers
2
 
5 
 
2 
 
2 
 
6 
 
2 
 
3 
Total severance payments
1,4
 
134 
 
103
6
 
0 
 
144 
 
1,019 
 
1,444 
of which: Key Risk Takers
2
 
0 
 
0 
 
0 
 
3 
 
0 
 
18 
1 GEB 
members are 
not eligible 
for sign-on 
or severance 
payments. 
2 Expenses 
for Key 
Risk Takers 
are full-year 
amounts for 
individuals in 
office on 
31 December 
2020. Key 
Risk Takers 
as defined 
by UBS, 
including all employees with a total compensation exceeding USD 
/ CHF 2.5 million (Highly Paid Employees). 
3 Includes replacement payments for one GEB member in 2020 
and for another GEB member in 2019. 
No GEB member received a guarantee 
in 2020 or 2019. 
4 Includes legally obligated and standard 
severance payments as well as 
payments in lieu of notice. 
5 Expenses before post-vesting transfer 
restrictions. 
6 Represents expenses recognized in 2020 associated with payments made in 2020 as well as provisions for expected payments in 2021. 
 
Forfeitures
1
Total 2020 
Total 2019 
Population affected 
USD million, except where indicated 
2020 
2019 
Total forfeitures 
 
145 
 
173 
 
588 
 
653 
of which: former GEB members 
 
0 
 
16 
 
0 
 
1 
of which: Key Risk Takers
2
 
6 
 
6 
 
3 
 
6 
1 For notional share awards, 
forfeitures are calculated as units forfeited 
during the year, 
valued at the share price on 
31 December 2020 (USD 14.13) for 
2020. The 2019 data is 
valued using the share price 
on 31 
December 2019 (USD 12.58). For LTIP 
the forfeited units reflect the fair value awarded at 
grant. For the notional funds awarded to 
Asset Management employees under the EOP, 
this represents the forfeiture credits 
recognized in 2020 and 
2019. For the 
DCCP, 
the fair value at 
grant of the 
forfeited awards during 
the year is reflected. 
Numbers presented may 
differ from the effect 
on the income statement 
in accordance with 
IFRS. 
2 Key Risk Takers 
as defined by UBS, including all employees 
with a total compensation exceeding USD / CHF 
2.5 million (Highly Paid Employees) and 
excluding former GEB members who forfeited awards 
in 
2020 or 2019. 
 
 

Advisory vote 
Corporate governance and compensation | Compensation 
248 
Benchmarking for employees other than GEB members 
We 
generally consider 
market practice 
in our 
pay decisions 
and 
framework. Our 
market review 
reflects several 
factors, including 
the 
comparability 
of 
the 
business 
division, 
location, 
scope 
and 
the 
diversity 
of 
our 
businesses. 
For 
certain 
businesses 
or 
roles, 
we 
may 
consider 
practices 
at 
other 
major 
international 
banks, 
other 
large 
Swiss 
private 
banks, 
private 
equity 
firms, 
hedge 
funds 
and 
non-financial 
firms. 
We 
also 
internally 
benchmark 
employee compensation 
for comparable 
roles within 
and across 
business divisions and locations. 
Employee share ownership 
According 
to
 
available 
records 
on 
employee 
shareholdings
,
 
including 
unvested 
deferred 
compensation, 
as 
of 
31 
December 
2020, employees 
held at 
least USD 3.6 
billion of 
UBS shares 
(of 
which 
approximately 
USD
 
2.2
 
billion 
were 
unvested), 
representing 
approximately 
7% 
of 
our 
total 
shares 
issued. 
Our 
senior 
leaders 
(i.e., 
GEB 
members 
and 
GMDs, 
excluding 
GMDs 
on notice) held 
approximately USD 416 million 
of UBS shares (of 
which approximately USD 279 million were unvested). 
The Equity Plus Plan is our 
employee share purchase program. 
It 
allows 
employees 
at 
Executive 
Director 
level 
and 
below 
to 
voluntarily invest up 
to 30% of 
their base salary 
and / or 
regular 
commission 
payments 
to 
purchase 
UBS 
share
s
. 
In 
addition 
(where 
offered), 
eligible 
employees 
can 
invest 
up 
to 
35% 
of 
their performance award under the 
program. Participation in the 
program 
is 
capped 
at 
USD 
/ 
CHF 20,000 
annually. 
Eligible 
employees may purchase 
UBS shares at market 
price and receive 
one 
additional 
share 
for 
every 
three 
shares 
purchased 
through 
the 
program. 
Additional 
shares 
vest 
after 
a 
maximum 
of 
three 
years, provided the employee 
remains employed by UBS 
and has 
retained the purchased shares throughout the holding period. 
›
 
Refer to “Note 27 Employee benefits: variable 
compensation” in 
the “Consolidated financial statements” 
section of our Annual 
Report 2020 for more information 
Compensation for US financial advisors in Global Wealth 
Management 
In 
line 
with 
market 
practice 
for 
US 
wealth 
management 
businesses, the 
compensation for 
US financial advisors 
in Global 
Wealth 
Management 
is 
comprised 
of 
production 
payout 
and 
deferred 
compensation 
awards. 
Production 
payout, 
paid 
monthly, 
is 
primarily 
based 
on 
compensable 
revenue. 
Financial 
advisors 
may 
also 
qualify 
for 
deferred 
compensation 
awards, 
which 
generally 
vest 
over 
a 
six-year 
period. 
The 
awards 
are 
based on strategic 
performance measures, including 
production, 
length 
of 
service 
with 
UBS 
and 
net 
new 
business. 
Production 
payout 
rates 
and 
deferred 
compensation 
awards 
may 
be 
reduced 
for, 
among 
other 
things, 
errors, 
negligence 
or 
carelessness, 
or 
failure 
to 
comply 
with 
the 
firm’s 
rules, 
standards, 
practices 
and 
/ 
or 
policies, 
and 
/ 
or 
applicable 
laws 
and regulations. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
249 
2020 Group performance outcomes
Performance 
awards granted 
for the 2020 
performance 
year 
The “Variable 
compensation” table below 
shows the amount 
of 
variable 
compensation 
awarded 
to 
employees 
for 
the 
2020 
performance year, 
together with the 
number of beneficiaries 
for 
each type of 
award granted. In 
the case of 
deferred awards, 
the 
final 
amount 
paid 
to 
an 
employee 
depends 
on 
performance 
conditions 
and 
consideration 
of 
relevant 
forfeiture 
provisions. 
The deferred 
share award 
amount is 
based on 
the market 
value 
of these awards on the date of grant. 
 
Variable compensation
1
Expenses recognized 
in the IFRS income 
statement 
Expenses deferred to 
future periods
4
Adjustments
4
Total 
Number of beneficiaries 
USD million, except where indicated 
2020 
2019 
2020 
2019 
2020 
2019 
2020 
2019 
2020 
2019 
Non-deferred cash 
 
2,167 
 
1,894 
 
0 
 
0 
 
0 
 
0 
 
2,167 
 
1,894 
 
58,843 
 
54,179 
Deferred compensation awards 
 
341 
 
299 
 
756 
 
429 
 
51 
 
51 
 
1,148 
 
779 
 
3,937 
 
3,572 
of which: Equity Ownership Plan 
 
137 
 
122 
 
306 
 
205 
 
35
5 
 
35
5 
 
478 
 
362 
 
3,566 
 
3,228 
of which: Deferred Contingent Capital Plan 
 
112 
 
113 
 
280 
 
173 
 
0 
 
0 
 
392 
 
286 
 
3,910 
 
3,552 
of which: Long-Term Incentive Plan 
 
42 
 
39 
 
50 
 
25 
 
16
5 
 
16
5 
 
109 
 
80 
 
115 
 
119 
of which: Asset Management EOP 
 
49 
 
25 
 
120 
 
26 
 
0 
 
0 
 
169 
 
51 
 
335 
 
307 
Variable compensation – performance 
award pool 
 
2,508 
 
2,193 
 
756 
 
429 
 
51 
 
51 
 
3,315 
 
2,673 
 
58,850 
 
54,210 
Variable compensation – other
2
 
126 
 
159 
 
181 
 
117 
 
(74)
6 
 
(50)
6 
 
233 
 
226 
Total variable compensation excluding 
financial advisor variable compensation 
 
2,634 
 
2,352 
 
938 
 
545 
 
(23) 
 
2 
 
3,548 
 
2,899 
Financial advisor (FA) variable compensation
3
 
3,378 
 
3,265 
 
822 
 
548 
 
0 
 
0 
 
4,200 
 
3,813 
 
6,305 
 
6,549 
Total variable compensation including FA variable 
compensation 
 
6,012 
 
5,617 
 
1,760 
 
1,093 
 
(23) 
 
2 
 
7,749 
 
6,711 
1 Expenses 
under “Variable 
compensation – 
other” and 
“Financial advisor 
variable compensation” 
are not 
part of 
UBS’s 
performance award 
pool. 
2 Comprised 
of replacement 
payments, forfeiture 
credits, 
severance payments, 
retention plan 
payments and 
interest expense 
related to 
the Deferred 
Contingent Capital 
Plan. 
3 Financial 
advisor compensation 
consists of 
formulaic compensation 
based directly 
on 
compensable revenues 
generated by 
financial advisors 
and supplemental 
compensation calculated 
based on 
financial advisor 
productivity, 
firm tenure, 
new assets 
and other 
variables. 
It also 
includes expenses 
related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesti 
ng requirements. 
4 Estimates as of 31 December 2020 and 2019. Actual amounts to be 
expensed in future 
periods may vary, 
e.g., due 
to forfeiture 
of awards. 
5 Represents estimated 
post-vesting transfer 
restriction and 
permanent forfeiture 
discounts. 
6 Included in 
expenses deferred to 
future 
periods is an amount of USD 74 
million (2019: USD 50 million) in 
interest expense related to the Deferred 
Contingent Capital Plan. As the 
amount recognized as performance award 
represents the present value of 
the award at the date it is granted to the employee, this amount is excluded. 
 
 
2020 performance award pool and expenses 
The 
performance 
award 
pool, 
which 
includes 
performance-
based 
variable 
awards 
for 
2020, 
was 
USD 3.3 
billion, 
reflecting 
an increase of 24% from 2019. Performance award expenses for 
2020 
increased 
16% 
to 
USD 3.2 
billion, 
reflecting 
the 
increase 
of 
the 
performance 
award 
pool 
for 
2020
 
and
 
additional 
expenses 
relating 
to 
prior 
years 
as 
a 
result 
of 
modifying 
the 
terms 
of 
certain 
outstanding 
deferred 
compensation 
awards. 
The 
“Performance 
award 
pool 
and 
expenses” 
table 
below 
compares the performance 
award pool with 
performance award 
expenses. 
›
 
Refer to “Note 1b Changes in accounting 
policies, comparability 
and other adjustments” in the “Consolidated 
financial 
statements” section of our Annual Report 
2020 for more 
information 
 
 
Performance award pool and expenses 
USD million, except where indicated 
2020 
2019 
% change 
Performance award pool
1
 
3,315 
 
2,673 
 
24 
of which: expenses deferred to future periods and accounting 
adjustments
2,3
 
807 
 
480 
 
68 
Performance award expenses accrued in the performance year 
 
2,508 
 
2,193 
 
14 
Performance award expenses related to prior performance years 
 
701 
 
562 
 
25 
Total performance award expenses recognized for the year
4
 
3,209 
 
2,755 
 
16 
1 Excluding employer-paid 
taxes and social 
security. 
2 Estimate as 
of the end 
of the performance 
year. 
Actual amounts expensed 
in future 
periods may 
vary, e.g., 
due to forfeiture 
of awards. 
3 Accounting 
adjustments represent estimated 
post-vesting transfer 
restriction and permanent 
forfeiture discounts. 
4 Refer to 
“Note 27 Employee benefits: 
variable compensation” in 
the “Consolidated financial 
statements” 
section of our Annual Report 2020 for more information 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote 
Corporate governance and compensation | Compensation 
250 
Compensation for the Board of Directors
Chairman of the BoD 
Under 
the 
leadership 
of 
the 
Chairman, 
Axel 
Weber, 
the 
BoD 
determines, 
among 
other 
things, 
the 
strategy 
for 
the 
Group, 
based 
on 
recommendations 
by 
the 
Group 
CEO, 
exercises 
ultimate 
supervision 
over 
management 
and 
appoints 
all 
GEB 
members. 
The 
Chairman 
leads 
all 
general 
meetings 
and 
BoD 
meetings 
and works 
with the 
committee chairpersons 
to coordinate 
their 
work. 
Together 
with 
the 
Group 
CEO, 
the 
Chairman 
is 
responsible 
for 
effective 
communication 
with 
shareholders 
and 
stakeholders, 
including 
clients, 
government 
officials, 
regulators 
and 
public 
organizations. 
The 
Chairman 
works 
closely 
with 
the 
Group 
CEO 
and 
other 
GEB 
members
,
 
providing 
advice 
and 
support 
when 
appropriate
,
 
and
 
continues 
to 
strengthen 
and 
promote 
our 
culture 
through 
the 
three 
keys 
to 
success
:
 
our
 
Pillars, Principles and Behaviors. 
The Chairman’s total compensation 
for the period from 
AGM 
to 
AGM is 
contractually 
fixed without 
any 
variable 
component. 
For the 
current period 
from the 
2020 AGM 
to 
the 2021 
AGM, 
his 
total 
compensation 
was 
CHF 4.9 
million, 
excluding 
benefits 
and 
pension 
fund 
contributions
.
 
The 
Chairman’s 
total
 
compensation 
for 
the 
current 
period 
consisted 
of 
a 
cash 
payment of 
CHF 3.5 million 
and a 
share component 
of CHF 1.4 
million 
consisting 
of 
101,375
 
UBS 
shares 
at 
CHF
 
13.810
 
per
 
share. The 
share component 
aligns the 
Chairman’s pay with 
the 
Group’s long-term performance. 
Thus, 
his 
total 
reward, 
including 
benefits 
and 
pension 
fund 
contributions, 
for his service 
as Chairman for 
the current period, 
was CHF 5,243,283. 
The Chairman’s employment 
agreement does not 
provide for 
severance 
terms 
or 
supplementary 
contributions 
to 
pension 
plans. 
The 
benefits 
for 
the 
Chairman 
are 
in 
line 
with 
local 
practices 
for 
UBS 
employees. 
The 
Chair 
of 
the 
Compensation 
Committee 
proposes 
and 
the 
Compensation 
Committee 
approves 
the 
Chairman’s 
compensation 
annually 
for 
the 
upcoming AGM-to-AGM period, taking into consideration fee or 
compensation 
levels 
for 
comparable 
roles 
based 
on 
our 
core 
financial 
industry 
peers 
and
 
other 
relevant 
leading 
Swiss 
companies included in the Swiss Market Index. 
›
 
Refer to “Board of Directors” in the “Corporate 
governance” 
section of our Annual Report 2020 for 
more information about 
the responsibilities of the Chairman
 
 
Audited |
 
Compensation details and additional information for non-independent BoD members 
CHF, except where indicated 
USD 
(for reference) 
Name, function
1
For the period 
AGM to AGM 
Base salary 
Annual share 
award
2
Benefits
3
Contributions 
to retirement 
benefit plans
4
Total
5
Total
5,6
Axel A. Weber, Chairman 
2020/2021 
 
3,500,000 
 
1,400,000 
 
98,243 
 
245,040 
 
5,243,283 
 
5,593,748 
2019/2020 
 
3,500,000 
 
1,400,000 
 
90,790 
 
244,353 
 
5,235,143 
1 Axel A. 
Weber was the 
only non-independent member 
in office on 
31 December 2020 
and 31 December 
2019. 
2 These shares 
are blocked 
for four years. 
3 Benefits are 
all valued at 
market price 
and are 
estimates. For the period 
from the 2019 AGM to the 
2020 AGM, the actual benefits amount 
was CHF 96,847. 
4 Includes the portion related to UBS’s 
contribution to the statutory pension scheme. 
For the period 
from the 2020 AGM to the 2021 AGM, contribution 
to retirement benefit plans amount is an estimate. 
5 Excludes the portion related to the legally required 
social security contributions paid by UBS, which for the 
period from the 2020 AGM to the 
2021 AGM is estimated at 
grant at CHF 332,243 and for the 
period from the 2019 AGM to 
the 2020 AGM at CHF 323,677. 
The legally required social security 
contributions paid 
by the non-independent BoD members 
are included in the 
amounts shown in this table, 
as appropriate. 
6 Swiss franc amounts 
have been translated into 
US dollars for reference at 
the 2020 performance award 
currency exchange rate of CHF / USD 1.0668. 
p
 
 
 

 
 
251 
Independent BoD members 
As 
outlined 
in 
the 
table 
below, 
all 
BoD 
members, 
except 
the 
Chairman, 
are 
deemed 
independent 
and 
receive 
fixed 
fees 
for 
their services 
on the 
BoD and 
its committees. 
Independent BoD 
members 
do 
not 
receive 
performance 
awards, 
severance 
payments, 
benefits or pension contributions. 
In the current period, the roles of Senior Independent Director 
and Vice 
Chairman are 
both held 
by one 
BoD member, 
but the 
additional 
fee 
is 
only 
paid 
once. 
Independent 
BoD 
members 
must 
use 
a 
minimum 
of 
50% 
of 
their 
fees 
to 
purchase 
UBS 
shares, which 
are blocked 
for four 
years, and 
they may 
elect to 
use up to 100% of 
their fees to purchase blocked UBS 
shares. In 
all 
cases, 
the 
number
 
of 
shares 
is 
calculated 
based 
on 
the 
average 
closing price 
of 
the 
10 
trading 
days 
leading 
up 
to and 
including the grant date. 
At 
each 
AGM, 
shareholders 
are 
invited 
to 
approve 
the 
aggregate 
amount 
of 
BoD 
remuneration, 
including 
compensation 
for 
the 
Chairman, 
which 
applies 
until 
the 
next 
AGM. 
The 
tables 
on 
the 
following 
page 
provide 
details 
on 
the 
fee structure for the independent BoD members. 
The 
fee structure 
for independent 
BoD 
members is 
reviewed 
annually 
based 
on 
the 
Chairman’s 
proposal 
to 
the 
Compensation 
Committee, 
which 
in 
turn 
submits 
a 
recommendation to 
the BoD 
for approval. 
In our 
regular review 
of 
the 
BoD 
fee 
structure, 
and 
following 
several 
adjustments 
to 
the 
framework 
to 
simplify
, 
rebalance
 
and, 
in 
certain 
cases, 
reduce
 
the 
BoD 
fee 
stru
cture 
effective 
from 
the
 
2020 
AGM
 
onward, 
we 
concluded 
that 
our 
overall 
approach 
for 
independent 
BoD 
member 
compensation 
remains 
appropriate 
and thus unchanged. 
 
 
Remuneration framework for independent BoD members 
 
 

Advisory vote

Corporate governance and compensation | Compensation

252

Audited |

Total

payments to BoD members

CHF, except where indicated

USD (for reference)

For the period AGM to AGM

Total

1,2

Aggregate of all BoD members

2020/2021

11,843,283

12,634,898

2019/2020

12,510,143

1 Includes social

security contributions paid

by the BoD

members but excludes

the portion related

to the legally

required social security

contributions paid by

UBS, which for

the period from

the 2020 AGM

to the

2021 AGM is estimated at grant

at CHF 719,763 and for the period

from the 2019 AGM to the

2020 AGM at CHF 662,357.

2 Swiss franc amounts have

been translated into US dollars for

reference at the 2020

performance award currency exchange rate of CHF / USD 1.0668.

Audited |

Remuneration details and additional information for independent BoD members

CHF, except where indicated

Name, function

Audit Committee

Compensation

Committee

Corporate Culture and

Responsibility

Committee

Governance and

Nominating Committee

Risk Committee

For the period

AGM to AGM

Base fee

Committee

fee(s)

Additional

payments

Total

percentage

Number of

5,6

Jeremy Anderson,

Vice Chairman and Senior

Independent Director

2020/2021

300,000

400,000

150,000

850,000

30,774

2019/2020

325,000

450,000

775,000

35,288

David Sidwell,

former Vice Chairman and Senior

Independent Director

2020/2021

2019/2020

325,000

500,000

250,000

1,075,000

48,948

William C. Dudley,

member

2020/2021

300,000

350,000

650,000

23,533

2019/2020

325,000

250,000

575,000

26,181

Reto Francioni,

member

2020/2021

300,000

600,000

21,723

2019/2020

325,000

300,000

625,000

28,458

Fred Hu,

member

2020/2021

300,000

600,000

100

32,053

2019/2020

325,000

100,000

425,000

100

27,283

Mark Hughes, member

2020/2021

300,000

400,000

700,000

25,343

2019/2020

Nathalie Rachou, member

2020/2021

300,000

200,000

500,000

18,102

2019/2020

Julie G. Richardson,

member

2020/2021

300,000

500,000

800,000

28,964

2019/2020

325,000

600,000

925,000

42,118

Isabelle Romy,

former member

2020/2021

2019/2020

325,000

300,000

625,000

28,458

Robert W. Scully,

former member

2020/2021

2019/2020

325,000

200,000

525,000

23,904

Beatrice Weder di Mauro,

member

2020/2021

300,000

250,000

550,000

19,913

2019/2020

325,000

250,000

575,000

26,181

Dieter Wemmer,

member

2020/2021

300,000

400,000

700,000

25,343

2019/2020

325,000

300,000

625,000

28,458

Jeanette Wong,

member

2020/2021

300,000

350,000

650,000

100

34,730

2019/2020

325,000

200,000

525,000

100

33,772

Total 2020/2021

6,600,000

Total 2020/2021 in USD

(for reference)

7,041,151

Total 2019/2020

7,275,000

Legend: C = Chairperson of the respective Committee, M = Member of the respective Committee

1 Ten

independent BoD members

were in office

on 31 December

2020. At the

2020 AGM,

Mark Hughes and

Nathalie Rachou were

newly elected and

David Sidwell, Isabelle

Romy and Robert

W. Scully

did not

stand for re-election. Eleven independent BoD members

were in office on 31 December 2019.

2 These payments are associated with the Vice

Chairman and the Senior Independent Director function.

3 Excludes

UBS’s portion related

to the legally required social

security contributions, which

for the period from

the 2020 AGM

to the 2021 AGM

is estimated at grant

at CHF 387,520 and which

for the period from the

2019

AGM to

the 2020

AGM was

estimated at

grant at

CHF 338,680. The

legally required

social security

contributions paid

by the

independent BoD

members are

included in

the amounts

shown in

this table,

appropriate.

4 Fees are paid

50% in cash and

50% in blocked

UBS shares. However,

independent BoD members

may elect to have

100% of their rem

uneration paid in blocked

UBS shares.

For 2020, UBS

shares were valued at CHF 13.810 (average

closing price of UBS shares over the last

10 trading days leading up to and

including the grant date). For

2019, UBS shares, valued

at CHF 12.919 (average closing price

of UBS shares over the last 10 trading

days leading up to and including the grant

date), were granted with a price discount

of 15%. These shares are bloc

ked for four years.

6 Number of shares is reduced in case

of the 100% election to deduct legally

required contributions. All remuneration

payments are, where applicable,

subject to social security contributions

and / or withholding tax.

7 Swiss franc amounts have

been

translated into US dollars for reference at the 2020 performance award currency exchange rate of

CHF / USD 1.0668.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
253 
Supplemental information 
Fixed and variable compensation for GEB members
 
Fixed and variable compensation for GEB members
1,2,3
Total for 2020 
Not deferred 
Deferred
4
Total for 2019 
CHF million, except where indicated 
Amount 
% 
Amount 
% 
Amount 
% 
Amount 
Total compensation 
Amount
5
 
112 
 
100 
 
44 
 
39 
 
68 
 
61 
 
98 
Number of beneficiaries 
 
16 
 
16 
Fixed compensation
5,6
 
27 
 
24 
 
27 
 
100 
 
0 
 
0 
 
28 
Cash-based 
 
24 
 
21 
 
24 
 
0 
 
24 
Equity-based 
 
4 
 
4 
 
4 
 
0 
 
4 
Variable compensation 
 
85 
 
76 
 
17 
 
20 
 
68 
 
80 
 
70 
Cash
7
 
17 
 
15 
 
17 
 
0 
 
14 
Long-Term Incentive Plan (LTIP)
8
 
43 
 
38 
 
0 
 
43 
 
35 
Deferred Contingent Capital Plan (DCCP)
8
 
26 
 
23 
 
0 
 
26 
 
21 
1 The figures include all GEB members in office during 
the respective years. 
2 Includes compensation paid under the employment contract 
during the notice period for GEB members who stepped down 
during the 
respective years. 
3 Includes compensation for 
newly appointed GEB members 
for their time in 
office as a GEB 
member during the 
respective years. 
4 Based on the specific 
plan vesting and reflecting 
the total 
award value at grant, which 
may differ from the expense recognized in 
the income statement in accordance with 
IFRS. 
5 Excludes benefits and employer’s 
contributions to retirement benefit plans. 
Includes social 
security contributions paid by GEB members but 
excludes the portion related to the 
legally required social security contributions paid 
by UBS. For 2020, 
Ralph A.J.G. Hamers 
received a one-time replacement award 
of CHF 0.2 million. This 
replacement award is not 
included in the above 
table; including this, 
the 2020 total aggregate 
compensation of all GEB members 
is CHF 113 million. For 
2019, Iqbal Khan received 
a one-
time replacement award of CHF 8 million. This replacement 
payment is not included in the above table; including this, 
the 2019 total compensation of GEB members is CHF 106 million. 
6 Includes base salary and 
role-based allowances, 
rounded to the 
nearest million. 
7 Includes allocation of 
vested but blocked 
shares, in line 
with the remuneration 
section of the 
UK Prudential Regulation 
Authority Rulebook. 
8 For the 
GEB members who are also 
MRTs (or SMFs), 
the awards do not 
include dividend and interest 
payments. Accordingly, 
the amounts reflect for 
the LTIP 
the fair value of 
the non-dividend-bearing awards and 
for the 
DCCP the fair value of the granted non-interest-bearing awards. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote 
Corporate governance and compensation | Compensation 
254 
Regulated staff
Key Risk Takers 
KRTs 
are defined as those employees who, by the 
nature of their 
roles, have been 
determined to materially set, 
commit or control 
significant 
amounts 
of 
the 
firm’s 
resources 
and 
/ 
or 
exert 
significant influence 
over its 
risk profile. This 
includes employees 
that 
work 
in 
front-office 
roles, 
logistics 
and 
control 
functions. 
Identifying 
KRTs 
globally 
is 
part 
of 
our 
risk 
control 
framework 
and 
an 
important 
element 
in 
ensuring 
we 
incentivize 
only 
appropriate 
risk-taking. For 
2020, in 
addition 
to GEB 
members, 
647
 
employees 
were 
classified 
as 
KRTs 
throughout 
the 
UBS 
Group 
globally, 
including 
all 
GMDs 
and 
all 
employees 
with 
a 
total compensation exceeding USD / CHF 2.5 
million (Highly Paid 
Employees), 
who 
may 
not 
have 
been 
identified 
as 
KRTs 
during 
the performance year. 
In 
line 
with 
regulatory 
requirements, 
the 
performance 
of 
employees 
identified 
as 
KRTs 
during 
the 
performance 
year 
is 
evaluated 
by 
the 
control 
functions. 
In 
addition, 
KRTs’ 
performance awards 
are subject 
to a 
mandatory deferral 
rate of 
at 
least 
50%, 
regardless 
of 
whether 
the 
deferral 
threshold 
has 
been met 
(excluding KRTs 
with de 
minimis performance 
awards 
below a 
pre-determined threshold 
where standard deferral 
rates 
apply). 
A KRT’s deferred compensation award will only vest if the 
Group performance conditions are met. Consistent with all other 
employees, the deferred 
portion of a KRT’s 
compensation is also 
subject 
to 
forfeiture 
or 
reduction 
if 
the 
KRT 
commits 
harmful 
acts. 
 
 
Fixed and variable compensation for Key Risk Takers
1
Total for 2020 
Not deferred 
Deferred
2
Total for 2019 
USD million, except where indicated 
Amount 
% 
Amount 
% 
Amount 
% 
Amount 
Total compensation 
Amount 
 
1,400 
 
100 
 
783 
 
56 
 
617 
 
44 
 
1,056 
Number of beneficiaries 
 
647 
 
661 
Fixed compensation
3,4
 
417 
 
30 
 
417 
 
100 
 
0 
 
0 
 
388 
Cash-based 
 
417 
 
30 
 
417 
 
0 
 
383 
Equity-based 
 
1 
 
0 
 
1 
 
0 
 
6 
Variable compensation 
 
983 
 
70 
 
365 
 
37 
 
617 
 
63 
 
667 
Cash
5
 
365 
 
26 
 
365 
 
0 
 
282 
Long-Term Incentive Plan (LTIP) / Equity Ownership 
Plan (EOP)
6
 
404 
 
29 
 
0 
 
404 
 
230 
Deferred Contingent Capital Plan (DCCP)
6
 
213 
 
15 
 
0 
 
213 
 
155 
1 Includes employees 
with a total 
compensation exceeding 
USD / CHF 
2.5 million (Highly 
Paid Employees), 
excluding GEB members 
who were in 
office during 
the performance year, 
except the 
new GEB member 
appointed during 2019, who is included for compensation received 
in their role as a KRT 
prior to being appointed to the GEB. 
2 Based on the specific plan vesting and reflecting the total 
value at grant, which may 
differ from the expense recognized in the income statement 
in accordance with IFRS. 
3 Excludes benefits and employer's contributions to retirement benefits 
plan. Includes social security contributions paid by KRTs 
but excludes 
the legally 
required social 
security contributi 
ons paid 
by UBS. 
4 Includes 
base salary 
and role-based 
allowances. 
5 Includes 
allocation of 
vested but 
blocked 
shares, 
in line 
with regulatory 
requirements where applicable. 
6 KRTs who are also 
MRTs do not receive dividend and 
interest payments. Accordingly, 
the amounts for the EOP / LTIP 
reflect the fair value of the non-dividend-bearing 
awards and 
for the DCCP the fair value of the granted non-interest-bearing awards. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
255 
GEB and KRTs deferred compensation 
The table 
below shows 
the current 
economic value 
of unvested 
outstanding 
deferred 
variable 
compensation 
awards 
subject 
to 
ex-post adjustments. 
For share-based 
plans, the 
economic value 
is determined 
based on 
the closing 
share price 
on 31 December 
2020. 
For 
notional 
funds
,
 
it 
is 
determined 
using 
the 
latest 
available 
market 
price 
for 
the 
underlying 
funds 
at 
year-end 
2020, and for deferred 
cash plans, it is determined 
based on the 
outstanding amount of cash owed to award recipients. 
 
 
GEB and KRTs 
deferred compensation
1,2,3
USD million, except where indicated 
Relating to awards 
for 2020
4
Relating to 
awards for prior 
years
5
Total 
of which: exposed to 
ex-post explicit and / 
or implicit adjustments 
Total deferred 
compensation 
year-end 2019 
Total amount of 
deferred compensation 
paid out in 2020
6
GEB 
Deferred Contingent Capital Plan 
 
27 
 
99 
 
126 
 
100% 
 
120 
 
11 
Equity Ownership Plan (including notional 
funds) 
 
0 
 
102 
 
102 
 
100% 
 
129 
 
22 
Long-Term Incentive Plan 
 
46 
 
39 
 
85 
 
100% 
 
35 
 
0 
KRTs 
Deferred Contingent Capital Plan 
 
213 
 
787 
 
1,000 
 
100% 
 
989 
 
123 
Equity Ownership Plan (including notional 
funds) 
 
346 
 
713 
 
1,059 
 
100% 
 
880 
 
188 
Long-Term Incentive Plan 
 
58 
 
50 
 
109 
 
100% 
 
48 
 
0 
Total GEB and KRTs 
 
690 
 
1,790 
 
2,480 
 
2,202 
 
344 
1 Based on 
the specific 
plan vesting 
and reflecting 
the economic 
value of 
the outstanding 
awards, which 
may differ 
from the 
expense recognized 
in the 
income statement 
in accordance 
with IFRS. 
Year-to-year 
reconciliations would also need 
to consider the impacts 
of additional items including 
off-cycle awards, 
FX movements, population 
changes, and dividend 
equivalent reinvestments. 
2 Refer to “Note 27 
Employee 
benefits: variable compensation” 
in the “Consolidated financial 
statements” section of the 
Annual Report 2020 
for more information. 
3 GEB members and 
KRTs who are 
also MRTs do 
not receive dividend and 
interest payments. 
Accordingly, the 
amounts for 
the EOP 
/ LTIP 
reflect the fair 
value of 
the non-dividend-bearing 
awards and 
for the 
DCCP the fair 
value of 
the granted 
non-interest-bearing awards. 
4 Where 
applicable, amounts 
are translated 
into US dollars 
at the performance 
award currency 
exchange rate. 
LTIP 
values reflect 
the fair 
value awarded 
at grant. 
5 Takes 
into account the 
ex-post implicit adjustments, 
given the share 
price movements since 
grant. Where applicable, 
amounts are translated 
from award 
currency into US 
dollars using FX 
rates as of 
31 December 2020. 
LTIP values 
reflect the fair 
value awarded 
at 
grant. 
6 Valued at distribution price and FX rate for all awards distributed 
in 2020. 
 
 
The 
table 
below 
shows 
the 
value 
of 
actual 
ex-post 
explicit 
and 
implicit 
adjustments 
to 
outstanding 
deferred 
compensation 
in 
the 2020 financial year for GEB members and KRTs. 
Ex-post adjustments 
occur after 
an award 
has been 
granted. 
Explicit 
adjustments 
occur 
when 
we 
adjust 
compensation 
by 
forfeiting deferred 
awards. Implicit 
adjustments are 
unrelated to 
any 
action 
taken 
by 
the 
firm 
and 
occur 
as 
a 
result 
of 
price 
movements that affect the value of an award. 
The 
total 
value 
of 
ex-post 
explicit 
adjustments 
made 
to 
UBS 
share 
awards 
in 
2020, 
based 
on 
the 
approximately 
6.3 
million 
shares forfeited during 2020, is a reduction of USD 88.5 million. 
 
 
 
GEB and KRTs 
ex-post explicit and implicit adjustments to deferred compensation 
Ex-post explicit adjustments 
to unvested awards
1
Ex-post implicit adjustments 
to unvested awards
2
USD million 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
GEB 
Deferred Contingent Capital Plan 
 
0 
 
0 
 
0 
 
0 
Equity Ownership Plan (including notional funds, if applicable) 
 
0 
 
0 
 
13 
 
(11) 
Long-Term Incentive Plan 
 
0 
 
0 
 
5 
 
0 
KRTs 
Deferred Contingent Capital Plan 
 
(3) 
 
(3) 
 
0 
 
0 
Equity Ownership Plan (including notional funds) 
 
(3) 
 
(3) 
 
98 
 
(44) 
Long-Term Incentive Plan 
 
0 
 
0 
 
6 
 
0 
Total GEB and KRTs 
 
(6) 
 
(6) 
 
122 
 
(55) 
1 For notional share awards, 
ex-post explicit adjustments are calculated 
as units forfeited during the 
year, valued 
at the share price on 31 
December 2020 (USD 14.13) for 2020 
(which may differ from the 
expense 
recognized in the income statement in accordance with IFRS). The 2019 data is valued using the 
share price on 31 December 2019 (USD 12.58). For LTIP 
the forfeited units reflect the fair value awarded at grant. For 
the notional funds awarded 
to Asset Management employees under 
the EOP, 
this represents the forfeiture credits 
recognized in 2020 and 
2019. For the DCCP, 
the fair value at 
grant of the forfeited awards 
during 
the year is 
reflected. 
2 Ex-post implicit 
adjustments for UBS 
shares are calculated 
based on the 
difference between the 
weighted average 
grant date 
fair value 
and the share 
price at year-end. 
The amount 
for 
notional funds is calculated using the mark-to-market change during 2020 and 2019. For 
the GEB member who was appointed to the GEB during 2020, awards have been fully reflected in the GEB entries. 
 
 

Advisory vote 
Corporate governance and compensation | Compensation 
256 
Material Risk Takers 
For 
relevant 
EU-regulated 
entities, 
we 
identify 
individuals 
who 
are deemed to 
be MRTs 
based on local 
regulatory requirements, 
the respective 
EU Commission Delegated 
Regulation and the 
EU 
Capital 
Requirements 
Directive 
of 
2013 
(CRD 
IV). 
This 
group 
consists 
of 
senior 
management, 
risk 
takers, 
selected 
staff 
in 
control 
or support 
functions and 
certain employees 
whose total 
compensation 
is 
above 
a 
specified 
threshold. 
For 
2020
,
 
UBS 
identified 672 MRTs 
in relation to its EU / UK entities. 
Variable compensation awarded 
to MRTs is 
subject to specific 
requirements from 
local regulators, 
such as 
a maximum 
variable 
to 
fixed 
compensation 
rati
o.
 
UBS 
has 
obtained 
approval 
as 
appropriate 
through 
relevant 
shareholder 
votes 
to 
increase 
the 
variable 
to fixed 
compensation ratio 
to 200%. 
Other applicable 
regulatory 
requirements 
for 
this 
population 
include 
a 
minimum 
deferral 
rate 
of 
40–60% 
on 
performance 
awards 
and 
the 
delivery 
of 
at 
least 
50% 
of 
any 
upfront 
performance 
award 
in 
UBS shares that vest immediately but are blocked for 12 months. 
As 
for 
deferred 
awards, 
any 
instruments 
granted 
to 
MRTs 
under UBS’s 
deferred compensation 
plans for 
their performance 
in 
2020 
are 
subject 
to 
6- 
or 
12-month 
blocking 
periods 
post 
vesting 
and 
do 
not 
pay 
out 
dividends 
or 
interest 
during 
the 
deferral period. 
For 
seven 
years 
after 
grant, 
performance 
awards 
granted 
to 
MRTs are subject to clawback 
provisions, which allow the firm 
to 
claim 
repayment 
of 
both 
the 
upfront 
and 
the 
vested 
deferred 
element 
of 
any 
performance 
award 
if 
an 
individual 
is 
found 
to 
have 
contributed 
substantially 
to 
significant 
financial 
losses 
for 
the Group or 
corporate structure in 
scope, a material downward 
restatement of disclosed results, 
or engaged in misconduct 
and / 
or failed 
to take 
expected actions 
that contributed 
to significant 
reputational harm. 
Due to UK regulatory requirements LTIP awards granted to UK 
MRTs 
and 
SMFs 
are 
subject 
to 
an 
additional 
non-financial 
conduct-related metric. 
UK Senior Managers and Certification Regime 
The 
Senior 
Managers 
and 
Certification 
Regime 
(the 
SMCR) 
of 
the 
UK 
Prudential 
Regulation 
Authority 
and 
Financial 
Conduct 
Authority requires 
that individuals 
with specified 
responsibilities, 
performing certain 
significant functions and 
/ or 
those in certain 
other identified categories be designated as SMFs. 
SMFs 
are 
subject 
to 
specific 
compensation 
requirements, 
including 
longer 
deferral, 
blocking 
and 
clawback 
periods. 
The 
deferral 
period 
for 
SMFs 
is 
seven 
years, 
with 
the 
deferred 
performance awards vesting no faster than pro 
rata from years 3 
to 
7. 
Such 
awards 
are 
also 
subject 
to 
a 
12-month 
blocking 
period 
post 
vesting. 
The 
clawback 
policy 
for 
SMFs 
permits 
clawback 
for 
up 
to 
10 
years 
from 
the 
date 
of 
performance 
award 
grants 
(applicable 
if 
an 
individual 
is 
subject 
to 
an 
investigation 
at 
the 
end 
of 
the 
initial 
seven-year 
clawback 
period). 
All 
SMFs 
are 
also 
identified 
as 
MRTs 
and, 
as 
such, 
subject 
to 
the 
same 
prohibitions 
on 
dividend 
and 
interest 
payments. 
Control functions and Group Internal Audit 
Our control 
functions must 
be independent 
in order 
to monitor 
risk 
effectively. 
Therefore
,
 
their 
compensation 
is 
determined 
separately from the revenue areas that they oversee, supervise or 
monitor. 
Their 
performance 
award 
pool 
is 
based 
not 
on 
the 
performance of these businesses, but 
on the performance of the 
Group as 
a whole. 
We also 
consider other 
factors, such 
as how 
effectively the function 
has performed, and 
our market position. 
Decisions on individual compensation for the 
senior managers of 
the 
control 
functions 
are 
made 
by 
the 
function 
heads 
and 
approved 
by 
the 
Group 
CEO. 
Decisions 
on 
individual 
compensation 
for 
the 
members 
of 
Group 
Internal 
Audit 
(GIA) 
are 
made 
by 
the 
Head 
GIA 
and 
approved 
by 
the 
Chairman. 
Following 
a 
proposal 
by 
the 
Chairman, 
total 
compensation 
for 
the Head GIA is approved by the Compensation Committee. 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
257 
2020 Group personnel expenses
We 
employed 
71,551 
personnel 
(full-time 
equivalents) 
as 
of 
31
 
December 
2020, 
a 
net 
increase 
of 
2,950 
compared
 
with 
31 December 
2019, 
mostly 
reflecting 
the 
insourcing 
of 
certain 
activities 
from 
third-party 
vendors 
to 
our 
Business 
Solutions 
Centers. 
The 
table 
below 
shows 
our 
total 
personnel 
expenses 
for 
2020
,
 
includ
ing
 
salaries, 
pension 
expenses, 
social 
security 
contributions, variable 
compensation and 
other personnel 
costs. 
Variable 
compensation 
includes 
cash 
performance 
awards 
paid 
in 
2021 
for
 
the 
2020 
performance 
year
, 
amortization 
of 
unvested deferred awards granted in 
previous years and the cost 
of 
deferred 
awards 
granted 
to 
employees 
that 
are 
eligible 
for 
retirement in 
the context of the compensation 
framework at the 
date of grant. 
The 
performance 
award 
pool 
reflects 
the 
value 
of 
performance 
awards 
granted 
relating 
to the 
2020 performance 
year, 
including awards 
that are 
paid out 
immediately and 
those 
that 
are 
deferred. 
To 
determine 
our 
variable 
compensation 
expenses, 
the 
following 
adjustments 
are 
required 
in 
order 
to 
reconcile 
the 
performance 
award 
pool 
to 
the 
expenses 
recognized 
in 
the 
Group’s 
financial 
statements 
prepared 
in 
accordance with IFRS: 
–
 
reduction 
for 
expenses 
deferred 
to 
future 
periods 
(amortization 
of 
unvested 
awards 
granted 
in 
2021 
for 
the 
2020 performance year) and accounting adjustments; and 
–
 
addition 
for 
2020 amortization 
of 
unvested 
deferred 
awards 
granted in prior years. 
 
As a 
large part 
of compensation 
consists of 
deferred awards, 
the 
amortization 
of 
unvested 
deferred 
awards 
granted 
in 
prior 
years forms 
a significant 
part of 
the IFRS 
expenses in 
both 2020 
and 
2021. 
During 
2020, 
in 
order 
to 
provide 
additional 
career 
flexibility during times 
of uncertainty, 
UBS modified the 
terms of 
certain 
outstanding 
deferred 
compensation 
awards 
granted 
for 
performance 
years 
2015 
through 
2019
 
by 
removing 
the 
requirement 
to 
provide 
future 
service 
for 
qualifying 
employees. 
These awards 
remain subject 
to forfeiture 
if certain 
non-vesting 
conditions 
are 
not 
satisfied
.
 
As 
a 
result, 
UBS 
recognized 
an 
expense of USD 359 million in the third 
quarter of 2020. The full 
year effect was an expense of approximately USD 280 million. 
›
 
Refer to “Note 1b Changes in accounting 
policies, comparability 
and other adjustments,” “Note 6 Personnel 
expenses” and “Note 
27 Employee benefits: variable compensation” 
in the 
“Consolidated financial statements” section 
of our Annual 
Report 2020 for more information 
 
 
Personnel expenses 
Expenses recognized in the IFRS income statement 
USD million 
Related to the 
performance year 2020 
Related to prior 
performance years 
Total expenses 
recognized in 
2020 
Total expenses 
recognized in 
2019 
Total expenses 
recognized in 
2018 
Salaries
1
 
7,023 
 
0 
 
7,023 
 
6,518 
 
6,448 
Non-deferred cash 
 
2,167 
 
(26) 
 
2,141 
 
1,868 
 
2,057 
Deferred compensation awards 
 
341 
 
727 
 
1,068 
 
887 
 
938 
of which: Equity Ownership Plan 
 
137 
 
327 
 
463 
 
422 
 
526 
of which: Deferred Contingent Capital Plan 
 
112 
 
351 
 
463 
 
375 
 
357 
of which: Long-Term Incentive Plan 
 
42 
 
11 
 
54 
 
39 
 
0 
of which: Asset Management EOP 
 
49 
 
39 
 
88 
 
51 
 
53 
of which: Other performance awards 
 
0 
 
0 
 
0 
 
0 
 
2 
Variable compensation – performance awards
2
 
2,508 
 
701 
 
3,209 
 
2,755 
 
2,995 
of which: guarantees for new hires 
 
10 
 
15 
 
25 
 
29 
 
43 
Variable compensation – other
2,3
 
126 
 
94 
 
220 
 
246 
 
243 
Total variable compensation excluding financial advisor variable compensation 
 
2,634 
 
795 
 
3,429 
 
3,001 
 
3,238 
Contractors 
 
375 
 
0 
 
375 
 
381 
 
489 
Social security 
 
850 
 
49 
 
899 
 
799 
 
791 
Pension and other post-employment benefit plans
4
 
845 
 
0 
 
845 
 
787 
 
457 
Financial advisor variable compensation
2,5
 
3,378 
 
713 
 
4,091 
 
4,043 
 
4,054 
Other personnel expenses 
 
519 
 
42 
 
561 
 
555 
 
654 
Total personnel expenses 
 
15,625 
 
1,599 
 
17,224 
 
16,084 
 
16,132 
1 Includes 
role-based 
allowances. 
2 Refer 
to 
“Note 27 
Employee 
benefits: variable 
compensation” 
in the 
“Consolidated 
financial 
statements” 
section of 
our 
Annual Report 
2020 
for more 
information. 
3 Comprised of replacement payments, forfeiture credits, 
severance payments, retention plan payments and interest 
expense related to the Deferred Contingent Capital Plan. 
4 Refer to “Note 26 Post-employment 
benefit plans” in 
the “Consolidated financial 
statements” section of 
our Annual Report 
2020 for more 
information. 
5 Consists of 
formulaic compensation based 
directly on compensable 
revenues generated 
by 
financial advisors and 
supplemental compensation 
calculated based on 
financial advisor 
productivity, firm 
tenure, new 
assets and 
other variables. 
It also 
includes expenses related 
to compensation 
commitments 
with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 
 
 
 
 

Advisory vote

Corporate governance and compensation | Compensation

258

Deferred compensation

Vesting of outstanding awards granted in prior years subject to performance conditions

The tables

below show

the extent

to which

the performance

conditions for

awards granted

in prior

years have

been met

and the

percentage of the installment that will vest in 2021.

Equity Ownership Plan (EOP) 2015 /

2016, EOP 2016 / 2017, EOP 2017 / 2018

and

EOP 2018 / 2019

Performance conditions

Performance achieved

% of installment vesting

Return on common equity tier 1 capital

(RoCET1) and divisional return on

attributed equity

The Group and divisional performance conditions

have been satisfied. For EOP

2015 / 2016, the third and final installment for

the Group Executive Board (GEB)

members vests in full. For EOP 2016 / 2017, the

second installment for the GEB

members vests in full. For EOP 2017 / 2018, the

first installment for the GEB

members and the second installment for

all other employees covered under the

plan vest in full. For EOP 2018 / 2019, the first

installment for all other employees

covered under the plan vests in full.

100%

Deferred Contingent Capital Plan (DCCP) 2015

/ 2016

Performance conditions

Performance achieved

% of installment vesting

Common equity tier 1 (CET1) capital

ratio, viability event and, additionally for

GEB, Group profit before tax

The performance conditions have been satisfied.

DCCP 2015

/ 2016

vests in full.

100%

Performance may be adjusted for disclosed items generally not representative of underlying business performance.

259

List of tables

Page

Share ownership / entitlements of GEB members

260

Total of all vested and unvested shares of GEB members

260

Number of shares of BoD members

261

Total of all blocked and unblocked shares of BoD members

261

Loans granted to GEB members

262

Loans granted to BoD members

262

Compensation paid to former BoD and GEB members

262

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote 
Corporate governance and compensation | Compensation 
260 
 
Audited |
 
Share ownership / entitlements of GEB members
1
Name, function 
on 
31 December 
Number of 
unvested 
shares / at 
risk
2
Number of 
vested shares 
Total number 
of shares 
Potentially 
conferred 
voting 
rights in % 
Ralph A.J.G. Hamers, Group Chief Executive Officer 
2020 
 
14,841 
 
0 
 
14,841 
 
0.001 
2019 
- 
- 
- 
Sergio P. Ermotti, former Group Chief Executive Officer 
2020 
- 
- 
- 
- 
2019 
 
1,862,480 
 
2,150,003 
 
4,012,483 
 
0.227 
Christian Bluhm, Group Chief Risk Officer 
2020 
 
582,787 
 
218 
 
583,005 
 
0.035 
2019 
 
440,953 
 
0 
 
440,953 
 
0.025 
Markus U. Diethelm, Group General Counsel 
2020 
 
706,845 
 
617,858 
 
1,324,703 
 
0.079 
2019 
 
698,402 
 
458,426 
 
1,156,828 
 
0.065 
Kirt Gardner, Group Chief Financial Officer 
2020 
 
696,500 
 
165,223 
 
861,723 
 
0.051 
2019 
 
532,643 
 
129,807 
 
662,450 
 
0.037 
Suni Harford, President Asset Management 
2020 
 
352,329 
 
0 
 
352,329 
 
0.021 
2019 
 
63,211 
 
0 
 
63,211 
 
0.004 
Robert Karofsky, Co-President Investment Bank 
2020 
 
627,748 
 
357,621 
 
985,369 
 
0.059 
2019 
 
577,606 
 
492,476 
 
1,070,082 
 
0.061 
Sabine Keller-Busse, Group Chief Operating Officer and President UBS EMEA 
2020 
 
639,087 
 
349,834 
 
988,921 
 
0.059 
2019 
 
423,778 
 
315,922 
 
739,700 
 
0.042 
Iqbal Khan, Co-President Global Wealth Management 
2020 
 
742,546 
 
68,253 
 
810,799 
 
0.048 
2019 
 
712,342 
 
0 
 
712,342 
 
0.040 
Edmund Koh, President Asia Pacific 
2020 
 
421,930 
 
337,062 
 
758,992 
 
0.045 
2019 
 
380,340 
 
183,104 
 
563,444 
 
0.032 
Axel P. Lehmann, President Personal & Corporate Banking and President UBS Switzerland 
2020 
 
690,537 
 
331,677 
 
1,022,214 
 
0.061 
2019 
 
522,202 
 
277,978 
 
800,180 
 
0.045 
Tom Naratil, Co-President Global Wealth Management and President UBS Americas 
2020 
 
1,383,854 
 
770,780 
 
2,154,634 
 
0.128 
2019 
 
1,307,554 
 
609,477 
 
1,917,031 
 
0.108 
Piero Novelli, Co-President Investment Bank 
2020 
 
660,240 
 
408,897 
 
1,069,137 
 
0.064 
2019 
 
599,156 
 
429,652 
 
1,028,808 
 
0.058 
Markus Ronner, Group Chief Compliance and Governance Officer 
2020 
 
302,584 
 
130,097 
 
432,681 
 
0.026 
2019 
 
214,850 
 
68,097 
 
282,947 
 
0.016 
Total 
2020 
 
7,821,828 
 
3,537,520 
 
11,359,348 
 
0.675 
2019 
 
8,335,517 
 
5,114,942 
 
13,450,459 
 
0.761 
1 Includes all 
vested and unvested 
shares of GEB 
members, including 
those held 
by related parties. 
No options were 
held in 2020 
and 2019 
by any GEB 
member or any 
of its related 
parties. Refer 
to “Note 
27 
Employee benefits: variable compensation” in the “Consolidated 
financial statements” section of our Annual Report 
2020 for more information. 
2 Includes shares granted under variable compensation 
plans with 
forfeiture provisions. LTIP 
values reflect the fair value awarded 
at grant. The actual number of 
shares vesting in the future will be calculated 
under the terms of the plans. Refer 
to the “Group compensation” section 
of this report for more information about the plans. 
p
 
 
Audited |
 
Total 
of all vested and unvested shares of GEB members
1,2
Total 
of which: vested 
of which: vesting 
2021 
2022 
2023 
2024 
2025 
2026 
Shares on 31 December 2020 
 
11,359,348 
 
3,537,520 
 
1,424,063 
 
1,854,660 
 
2,070,158 
 
1,656,600 
 
774,416 
 
41,931 
2020 
2021 
2022 
2023 
2024 
2025 
Shares on 31 December 2019 
 
13,450,459 
 
5,114,942 
 
1,798,389 
 
1,811,721 
 
2,199,926 
 
1,517,110 
 
1,008,371 
 
0 
1 Includes shares 
held by related 
parties. 
2 Includes shares 
granted under variable 
compensation plans with 
forfeiture provisions. 
The actual 
number of 
shares vesting in 
the future will 
be calculated under 
the 
terms of the plans. Refer to the “Group compensation” section of this report for more information. 
p
 
 
 

261

Audited |

Number of shares of BoD members

Name, function

on 31 December

Number of shares held

Voting rights in %

Axel A. Weber, Chairman

2020

1,046,994

0.062

2019

938,627

0.053

David Sidwell, former Vice Chairman and Senior Independent Director

2020

2019

167,595

0.009

Jeremy Anderson, Vice Chairman and Senior Independent Director

2020

66,744

0.004

2019

31,456

0.002

William C. Dudley, member

2020

26,181

0.002

2019

0.000

Reto Francioni, member

2020

154,086

0.009

2019

125,628

0.007

Fred Hu, member

2020

42,428

0.003

2019

15,145

0.001

Mark Hughes, member

2020

4,920

0.000

2019

Nathalie Rachou, member

2020

0.000

2019

Julie G. Richardson, member

2020

88,401

0.005

2019

46,283

0.003

Isabelle Romy, former member

2020

2019

143,928

0.008

Robert W. Scully, former member

2020

2019

71,540

0.004

Beatrice Weder di Mauro, member

2020

198,578

0.012

2019

172,397

0.010

Dieter Wemmer, member

2020

88,743

0.005

2019

60,285

0.003

Jeanette Wong, member

2020

33,722

0.002

2019

0.000

Total

2020

1,750,797

0.104

2019

1,772,884

0.100

1 Includes blocked and unblocked

shares held by BoD members, including

those held by related parties. No

options were granted in 2020 and 2019.

2 At the 2020 AGM, Mark Hughes and

Nathalie Rachou were

newly elected and David Sidwell, Isabelle Romy and Robert W. Scully did not stand for re-election.

Audited |

Total

of all blocked and unblocked shares of BoD members

Total

of which:

unblocked

of which: blocked until

2021

2022

2023

2024

Shares on 31 December 2020

1,750,797

658,642

205,961

197,395

332,743

356,056

2020

2021

2022

2023

Shares on 31 December 2019

1,772,884

502,095

264,889

299,357

270,111

436,432

1 Includes shares held by related parties.

Advisory vote

Corporate governance and compensation | Compensation

262

Audited |

Loans granted to GEB members

In line with article 38 of the Articles of Association of UBS Group

AG, GEB

members may

be granted

loans. Such

loans are

made

the

ordinary

course

business

substantially

the

same

terms

those

granted

other

employees,

including

interest

rates

and

collateral,

and

neither

involve

than

the

normal

risk

collectability

nor

contain

any

other

unfavorable

features

for

the

firm.

The

total

amount

such

loans

must

not

exceed

CHF 20 million per GEB member.

CHF, except where indicated

USD

(for reference)

Name, function

on 31 December

Loans

Markus U. Diethelm, Group General Counsel (highest loan in 2020)

2020

6,131,500

6,924,058

Axel P. Lehmann, President Personal & Corporate Banking and President UBS Switzerland (highest loan in 2019)

2019

9,140,000

Aggregate of all GEB members

2020

31,830,394

35,944,791

2019

30,700,354

1 No loans have been

granted to related parties

of the GEB members

at conditions not customary

in the market.

2 Swiss franc and

US dollar amounts disclosed

represent local currency amounts

translated at the

relevant year-end closing exchange rate.

3 All loans granted are secured loans.

4 No unused uncommitted credit facilities in 2020 and 2019.

Audited |

Loans granted to BoD members

In line with article 33 of the Articles of Association of UBS Group

AG,

loans

independent

BoD

members

are

made

the

ordinary

course

business

general

market

conditions.

The

Chairman, as a non-independent member,

may be granted loans

the

ordinary

course

business

substantially

the

same

terms

those

granted

employees,

including

interest

rates

and collateral,

and neither

involve more

than the

normal risk

collectability nor

contain any

other unfavorable

features

for the

firm.

The

total

amount

such

loans

must

not

exceed

CHF 20

million per BoD member.

CHF, except where indicated

USD

(for reference)

on 31 December

Loans

3,4

Loans

3,4

Aggregate of all BoD members

2020

2,100,000

2,371,446

2019

890,439

1 No loans have been granted

to related parties of the

BoD members at conditions not customary

in the market.

2 Swiss franc and US

dollar amounts disclosed represent local currency

amounts translated at the

relevant year-end closing exchange

rate.

3 All loans granted are secured

loans.

4 CHF 600,000 for Reto Francioni

and CHF 1,500,000 for Beatrice

Weder di Mauro in 2020

and CHF 600,000 for Reto

Francioni

and CHF 290,439 for Dieter Wemmer in 2019.

Audited |

Compensation paid to former BoD and GEB members

CHF, except where indicated

USD

(for reference)

For the year

Compensation

Benefits

Total

Former BoD members

2020

2019

Aggregate of all former GEB members

2020

206,048

232,682

2019

51,912

Aggregate of all former BoD and GEB members

2020

206,048

232,682

2019

51,912

1 Compensation or

remuneration that

is related to

the former members’

activity on the

BoD or GEB

or that is

not at market

conditions.

2 Swiss franc

and US dollar

amounts disclosed represent

local currency

amounts translated at the relevant year-end closing exchange rate.

3 Includes benefit payments

in 2020 to two former GEB members,

and for 2019 to one former GEB member.

 
 
 
263 
 
Provisions of the Articles of Association related to compensation
 
 
Swiss say-on-pay provisions give 
shareholders of companies listed in 
Switzerland significant influence over 
board and management compensation. 
At UBS, this is achieved by means of an 
annual binding say-on-pay vote in 
accordance with the following provisions 
of the Articles of Association (the AoA). 
 
Say on pay
 
In line with article 43 of the AoA of UBS 
Group AG, the General Meeting approves 
proposals from the BoD in relation to: 
a) the maximum aggregate amount of 
compensation of the BoD for the period 
until the next AGM; 
b) the maximum aggregate amount of 
fixed compensation of the GEB for the 
following financial year; and 
c) the aggregate amount of variable 
compensation of the GEB for the 
preceding financial year. 
 
The BoD may submit for approval by the 
General Meeting deviating or additional 
proposals relating to the same or different 
periods. If the General Meeting does not 
approve a proposal from the BoD, the 
BoD will determine, taking into account 
all relevant factors, the respective 
(maximum) aggregate amount or 
(maximum) partial amounts and submit 
the amount(s) so determined for approval 
by the General Meeting. UBS Group AG 
or companies controlled by it may pay or 
grant compensation prior to approval by 
the General Meeting, subject to 
subsequent approval. 
Principles of compensation
 
In line with articles 45 and 46 of the AoA 
of UBS Group AG, compensation of the 
members of the BoD includes base 
remuneration and may include other 
compensation elements and benefits. 
Compensation of the members of the 
BoD is intended to recognize the 
responsibility and governance nature of 
their role, to attract and retain qualified 
individuals, and to ensure alignment with 
shareholders’ interests. 
 
Compensation of the members of the 
GEB includes fixed and variable 
compensation elements. Fixed 
compensation includes the base salary 
and may include other compensation 
elements and benefits. Variable 
compensation elements are governed by 
financial and non-financial performance 
measures that take into account the 
performance of UBS Group AG and / or 
parts thereof, targets in relation to the 
market, other companies or comparable 
benchmarks, short- and long-term 
strategic objectives, and / or individual 
targets. The BoD or, where delegated to 
it, the Compensation Committee 
determines the respective performance 
measures, the overall and individual 
performance targets, and their 
achievements. The BoD or, where 
delegated to it, the Compensation 
Committee aims to ensure alignment with 
sustainable performance and appropriate 
risk-taking through adequate deferrals, 
forfeiture conditions, caps on 
compensation, harmful acts provisions 
and similar means with regard to parts of 
or all of the compensation. Parts of 
variable compensation are subject to a 
multi-year vesting period. 
 
Additional amount for GEB members 
appointed after the vote on the 
aggregate amount of compensation by 
the AGM
 
In line with article 46 of the AoA of UBS 
Group AG, if the maximum aggregate 
amount of compensation already 
approved by the General Meeting is not 
sufficient to also cover the compensation 
of a person who becomes a member of or 
is being promoted within the GEB after 
the General Meeting has approved the 
compensation, UBS Group AG, or 
companies controlled by it, is authorized 
to pay or grant each such GEB member a 
supplementary amount during the 
compensation period(s) already approved. 
The aggregate pool for such 
supplementary amounts per 
compensation period cannot exceed 40% 
of the average of total annual 
compensation paid or granted to the GEB 
during the previous three years. 
›
 
Refer to 
ubs.com/governance
 
for more 
information
 
 
 
 
 
 

Advisory vote 
Corporate governance and compensation | Compensation 
264

 
Financial 
statements 
 
5

 
 
266 
Consolidated 
financial statements 
Table of contents 
268 
Management’s report on internal control over financial 
reporting
269 
Report of the independent registered public accounting 
firm on internal control over financial reporting
270 
Report of the independent registered public accounting 
firm on the consolidated financial statements
275 
Statutory auditor’s report on the audit of the consolidated 
financial statements
282 
UBS Group AG consolidated financial statements
282 
Primary financial statements
 
and share information 
282 
Income statement
283 
Statement of comprehensive income
285 
Balance sheet
286 
Statement of changes in equity
290 
Share information and earnings per share
291 
Statement of cash flows
293 
Notes to the UBS Group AG consolidated financial 
statements
293 
1 
Summary of significant accounting policies
312 
2 
Segment reporting
315 
Income statement notes
315 
3 
Net interest income and other net income from 
financial instruments measured at fair value through 
profit or loss
316 
4 
Net fee and commission income
316 
5 
Other income
317 
6 
Personnel expenses
317 
7 
General and administrative expenses
318 
8 
Income taxes
 
 
 
321 
Balance sheet notes 
321 
9 
Financial assets at amortized cost and other 
positions in scope of expected credit loss 
measurement
326 
10 
Derivative instruments
328 
11 
Financial assets measured at fair value through 
other comprehensive income
328 
12 
Property, equipment and software
329 
13 
Goodwill and intangible assets
332 
14 
Other assets
332 
15 
Amounts due to banks and customer deposits
333 
16 
Debt issued designated at fair value
334 
17 
Debt issued measured at amortized cost
336 
18 
Provisions and contingent liabilities
342 
19 
Other liabilities
343 
Additional information
343 
20 
Expected credit loss measurement
354 
21 
Fair value measurement
370 
22 
Offsetting financial assets and financial liabilities
372 
23 
Restricted and transferred financial assets
375 
24 
Maturity analysis of financial liabilities
376 
25 
Hedge accounting
380 
26 
Post-employment benefit plans
391 
27 
Employee benefits: variable compensation
396 
28 
Interests in subsidiaries and other entities
402 
29 
Changes in organization and acquisitions and 
disposals of subsidiaries and businesses
403 
30 
Finance lease receivables
404 
31 
Related parties
406 
32 
Invested assets and net new money
407 
33 
Currency translation rates
407 
34 
Events after the reporting period
408 
35 
Main differences between IFRS and Swiss GAAP
 
 
 

 
 
267 
412 
UBS AG consolidated financial information
413 
UBS AG consolidated key figures
414 
Comparison between UBS Group AG consolidated and 
UBS AG consolidated
415 
Management’s report on internal control over financial 
reporting
416 
Report of the independent registered public accounting 
firm on internal control over financial reporting
417 
Report of the independent registered public accounting 
firm on the consolidated financial statements
422 
Statutory auditor’s report on the audit of the consolidated 
financial statements
429 
UBS AG consolidated financial statements
429 
Primary financial statements
 
and share information 
429 
Income statement
430 
Statement of comprehensive income
432 
Balance sheet
433 
Statement of changes in equity
437 
Share information and earnings per share
438 
Statement of cash flows
441 
Notes to the UBS AG consolidated financial statements
441 
1 
Summary of significant accounting policies
460 
2 
Segment reporting
463 
Income statement notes
463 
3 
Net interest income and other net income from 
financial instruments measured at fair value 
through profit or loss
464 
4 
Net fee and commission income
464 
5 
Other income
465 
6 
Personnel expenses
465 
7 
General and administrative expenses
466 
8 
Income taxes
 
469 
Balance sheet notes
469 
9 
Financial assets at amortized cost and other 
positions in scope of expected credit loss 
measurement
474 
10 
Derivative instruments
476 
11 
Financial assets measured at fair value through 
other comprehensive income
476 
12 
Property, equipment and software
477 
13 
Goodwill and intangible assets
480 
14 
Other assets
480 
15 
Amounts due to banks, customer deposits, and 
funding from UBS Group AG and its subsidiaries
481 
16 
Debt issued designated at fair value
482 
17 
Debt issued measured at amortized cost
484 
18 
Provisions and contingent liabilities
490 
19 
Other liabilities
491 
Additional information
491 
20 
Expected credit loss measurement
502 
21 
Fair value measurement
518 
22 
Offsetting financial assets and financial liabilities
520 
23 
Restricted and transferred financial assets
523 
24 
Maturity analysis of financial liabilities
525 
25 
Hedge accounting
529 
26 
Post-employment benefit plans
541 
27 
Employee benefits: variable compensation
546 
28 
Interests in subsidiaries and other entities
552 
29 
Changes in organization and acquisitions and 
disposals of subsidiaries and businesses
553 
30 
Finance lease receivables
554 
31 
Related parties
557 
32 
Invested assets and net new money
558 
33 
Currency translation rates
558 
34 
Events after the reporting period
559 
35 
Main differences between IFRS and Swiss GAAP
562 
36 
Supplemental guarantor information required 
under SEC regulations
 
 
 

 
268 
Management’s report on internal control over financial 
reporting 
Management’s responsibility for internal control over financial 
reporting 
The 
Board 
of 
Directors 
and 
management 
of 
UBS 
Group 
AG 
(UBS) are 
responsible for 
establishing and 
maintaining adequate 
internal 
control 
over 
financial 
reporting. 
UBS’s 
internal 
control 
over 
financial 
reporting 
is 
designed 
to 
provide 
reasonable 
assurance 
regarding 
the 
preparation 
and 
fair 
presentation 
of 
published 
financial 
statements 
in 
accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS), 
as 
issued 
by 
the 
International Accounting Standards Board (IASB). 
UBS’s 
internal 
control 
over 
financial 
reporting 
includes 
those 
policies and procedures that: 
–
 
pertain 
to 
the 
maintenance 
of 
records 
that, 
in 
reasonable 
detail, 
accurately 
and 
fairly 
reflect 
transactions 
and 
dispositions of assets; 
–
 
provide 
reasonable 
assurance 
that 
transactions 
are 
recorded 
as 
necessary 
to 
permit 
preparation 
and 
fair 
presentation 
of 
financial 
statements, 
and 
that 
receipts 
and 
expenditures 
of 
the 
company 
are 
being 
made 
only 
in 
accordance 
with 
authorizations of UBS management; and 
–
 
provide 
reasonable 
assurance 
regarding 
prevention 
or 
timely 
detection 
of 
unauthorized 
acquisition, 
use 
or 
disposition 
of 
the company’s assets that 
could have a material effect 
on the 
financial statements. 
 
Because 
of 
its 
inherent 
limitations, 
internal 
control 
over 
financial 
reporting 
may 
not 
prevent 
or 
detect 
misstatements. 
Also, 
projections 
of 
any 
evaluation 
of 
effectiveness 
to 
future 
periods 
are 
subject 
to 
the 
risk 
that 
controls 
may 
become 
inadequate because of changes in 
conditions, or that the degree 
of compliance with the policies or procedures may deteriorate. 
Management’s assessment of internal control over financial 
reporting as of 31 December 
2020
 
UBS 
management 
has 
assessed 
the 
effectiveness 
of 
UBS’s 
internal control over financial reporting 
as of 31 December 2020 
based on 
the criteria 
set forth 
by the 
Committee of 
Sponsoring 
Organizations 
of 
the 
Treadway 
Commission 
(COSO) 
in 
Internal 
Control 
– 
Integrated 
Framework 
(2013 
Framework). 
Based 
on 
this assessment, 
management believes 
that, as 
of 31 
December 
2020, 
UBS’s 
internal 
control 
over 
financial 
reporting 
was 
effective. 
The 
effectiveness 
of 
UBS’s 
internal 
control 
over 
financial 
reporting as of 
31 December 2020 
has been 
audited by 
Ernst & 
Young Ltd, 
UBS’s independent registered public 
accounting firm, 
as stated in their 
report appearing on page 269, which expresses 
an 
unqualified 
opinion 
on 
the 
effectiveness 
of 
UBS’s 
internal 
control over 
financial reporting 
as of 31 December 
2020. 
Reports of the statutory auditor / independent registered 
public accounting firm
 
The accompanying 
reports of 
the independent 
registered 
public 
accounting 
firm 
on 
the 
consolidated 
financial 
statements 
(refer 
to 
pages 
270 
to 
274) 
and 
internal 
control 
over 
financial 
reporting 
(refer 
to page 
269) of 
UBS Group 
AG are 
included in 
our 
filing 
on 
5 
March 
2021 
with 
the 
Securities 
and 
Exchange 
Commission on Form 20-F pursuant to US reporting obligations. 
The 
accompanying 
statutory auditor’s 
report 
on the 
audit of 
the consolidated financial statements (refer to pages 275 to 281) 
of UBS 
Group AG, 
in addition 
to the 
aforementioned reports, 
is 
included 
in 
our 
Annual 
Report 
2020 
available 
on 
our 
website 
and 
filed 
on 
5 
March 
2021 
with 
all 
other 
relevant 
non-US 
exchanges. 
 

280

281

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
282 
 
UBS Group AG consolidated financial 
statements 
Primary financial statements and share information 
Audited | 
Income statement 
For the year ended 
USD million 
Note 
31.12.20 
31.12.19 
31.12.18 
Interest income from financial instruments measured at 
amortized cost and fair value through 
other comprehensive income 
 
3 
 
8,810 
 
10,684 
 
10,100 
Interest expense from financial instruments measured at 
amortized cost 
 
3 
 
(4,247) 
 
(7,194) 
 
(6,391) 
Net interest income from financial instruments measured 
at fair value through profit or loss 
 
3 
 
1,299 
 
1,011 
 
1,338 
Net interest income 
 
3 
 
5,862 
 
4,501 
 
5,048 
Other net income from financial instruments measured 
at fair value through profit or loss 
 
3 
 
6,960 
 
6,842 
 
6,960 
Credit loss (expense) / release 
 
20 
 
(694) 
 
(78) 
 
(118) 
Fee and commission income 
 
4 
 
20,961 
 
19,110 
 
19,598 
Fee and commission expense 
 
4 
 
(1,775) 
 
(1,696) 
 
(1,703) 
Net fee and commission income 
 
4 
 
19,186 
 
17,413 
 
17,895 
Other income 
 
5 
 
1,076 
 
212 
 
428 
Total operating income 
 
32,390 
 
28,889 
 
30,213 
Personnel expenses 
 
6 
 
17,224 
 
16,084 
 
16,132 
General and administrative expenses 
 
7 
 
4,885 
 
5,288 
 
6,797 
Depreciation and impairment of property, equipment and software 
 
12 
 
2,069 
 
1,765 
 
1,228 
Amortization and impairment of goodwill and intangible 
assets 
 
13 
 
57 
 
175 
 
65 
Total operating expenses 
 
24,235 
 
23,312 
 
24,222 
Operating profit / (loss) before tax 
 
8,155 
 
5,577 
 
5,991 
Tax expense / (benefit) 
 
8 
 
1,583 
 
1,267 
 
1,468 
Net profit / (loss) 
 
6,572 
 
4,310 
 
4,522 
Net profit / (loss) attributable to non-controlling interests 
 
15 
 
6 
 
7 
Net profit / (loss) attributable to shareholders 
 
6,557 
 
4,304 
 
4,516 
Earnings per share (USD) 
Basic 
 
1.83 
 
1.17 
 
1.21 
Diluted 
 
1.77 
 
1.14 
 
1.18

283

Statement of comprehensive income

For the year ended

USD million

Note

31.12.20

31.12.19

31.12.18

Comprehensive income attributable to shareholders

Net profit / (loss)

6,557

4,304

4,516

Other comprehensive income that may be reclassified to the income

statement

Foreign currency translation

Foreign currency translation movements related to net assets of foreign operations, before tax

2,103

200

(725)

Effective portion of changes in fair value of hedging instruments

designated as net investment hedges, before tax

(936)

(134)

181

Foreign currency translation differences on foreign operations reclassified to the

income statement

(7)

Effective portion of changes in fair value of hedging instruments

designated as net investment hedges reclassified

the income statement

(14)

Income tax relating to foreign currency translations, including the effect of

net investment hedges

(67)

(2)

Subtotal foreign currency translation, net of tax

1,095

104

(541)

Financial assets measured at fair value through other comprehensive income

Net unrealized gains / (losses), before tax

223

189

(56)

Realized gains reclassified to the income statement from

equity

(40)

(33)

Realized losses reclassified to the income statement from

equity

Income tax relating to net unrealized gains / (losses)

(48)

(41)

Subtotal financial assets measured at fair value through other comprehensive

income, net of tax

136

117

(45)

Cash flow hedges of interest rate risk

Effective portion of changes in fair value of derivative instruments designated

as cash flow hedges, before tax

2,012

1,571

(42)

Net (gains) / losses reclassified to the income statement from

equity

(770)

(175)

(294)

Income tax relating to cash flow hedges

(231)

(253)

Subtotal cash flow hedges, net of tax

1,011

1,143

(269)

Cost of hedging

Change in fair value of cost of hedging, before tax

(46)

Amortization of initial cost of hedging to the income statement

Income tax relating to cost of hedging

Subtotal cost of hedging, net of tax

(13)

Total other comprehensive income that may be reclassified to the income statement, net

of tax

2,230

1,363

(855)

Other comprehensive income that will not be reclassified to the income

statement

Defined benefit plans

Gains / (losses) on defined benefit plans, before tax

(327)

(146)

(220)

Income tax relating to defined benefit plans

109

(41)

276

Subtotal defined benefit plans, net of tax

(218)

(186)

Own credit on financial liabilities designated at fair value

Gains / (losses) from own credit on financial liabilities designated

at fair value, before tax

(293)

(400)

517

Income tax relating to own credit on financial liabilities designated

at fair value

(8)

Subtotal own credit on financial liabilities designated at

fair value, net of tax

(293)

(392)

509

Total other comprehensive income that will not be reclassified to the income statement,

net of tax

(511)

(578)

565

Total other comprehensive income

1,719

785

(290)

Total comprehensive income attributable to shareholders

8,276

5,089

4,225

Table

continues on the next page.

Consolidated financial statements | UBS Group AG consolidated financial statements

284

Statement of comprehensive income (continued)

Table

continued from previous page.

For the year ended

USD million

Note

31.12.20

31.12.19

31.12.18

Comprehensive income attributable to non-controlling

interests

Net profit / (loss)

Other comprehensive income that will not be reclassified to the income

statement

Foreign currency translation movements, before tax

(4)

(1)

Income tax relating to foreign currency translation movements

Subtotal foreign currency translation, net of tax

(4)

(1)

Total other comprehensive income that will not be reclassified to the income statement,

net of tax

(4)

(1)

Total comprehensive income attributable to non-controlling interests

Total comprehensive income

Net profit / (loss)

6,572

4,310

4,522

Other comprehensive income

1,740

781

(292)

of which: other comprehensive income that may be reclassified

to the income statement

2,230

1,363

(855)

of which: other comprehensive income that will not be reclassified

to the income statement

(490)

(582)

563

Total comprehensive income

8,312

5,091

4,231

1 Mainly

driven by

the strengthening

of the

Swiss franc

(9%) and

the euro

(9%) against

the US

dollar.

2 Mainly

reflects an

increase in

net unrealized

gains on

US dollar

hedging derivatives

resulting from

decreases in the

relevant long-term US

dollar interest rates,

partly offset by

the reclassification of

net gains on

hedging instruments from

OCI to the

income statement

as the hedged

forecast cash flows

affected

profit or loss.

3 Mainly includes a net pre-tax OCI

loss of USD 276 million related to the Swiss

pension plan (primarily driven by an extraordinary

employer contribution of USD 235 million

that increased the gross

plan assets, but led to an OCI loss as no net pension

asset could be recognized on the balance sheet as of 31 December

2020 due to the asset ceiling) and a net pre-tax OCI loss of

USD 61 million related to the UK

pension plan (driven by an increase in the defined benefit obligation, mainly resulting from a lower discount rate). Refer to Note 26 for more information.

285

Balance sheet

USD million

Note

31.12.20

31.12.19

Assets

Cash and balances at central banks

158,231

107,068

Loans and advances to banks

15,444

12,447

Receivables from securities financing transactions

9, 22

74,210

84,245

Cash collateral receivables on derivative instruments

9, 22

32,737

23,289

Loans and advances to customers

379,528

326,786

Other financial assets measured at amortized cost

9, 14a

27,194

22,980

Total financial assets measured at amortized cost

687,345

576,815

Financial assets at fair value held for trading

125,397

127,514

of which: assets pledged as collateral that may be sold or repledged

by counterparties

47,098

41,285

Derivative financial instruments

10, 21, 22

159,617

121,841

Brokerage receivables

24,659

18,007

Financial assets at fair value not held for trading

80,364

83,944

Total financial assets measured at fair value through profit or loss

390,037

351,307

Financial assets measured at fair value through other comprehensive income

11, 21

8,258

6,345

Investments in associates

28b

1,557

1,051

Property, equipment and software

13,109

12,804

Goodwill and intangible assets

6,480

6,469

Deferred tax assets

9,212

9,548

Other non-financial assets

14b

9,768

7,856

Total assets

1,125,765

972,194

Liabilities

Amounts due to banks

11,050

6,570

Payables from securities financing transactions

6,321

7,778

Cash collateral payables on derivative instruments

37,312

31,415

Customer deposits

524,605

448,284

Debt issued measured at amortized cost

139,232

110,497

Other financial liabilities measured at amortized cost

19a

9,729

9,712

Total financial liabilities measured at amortized cost

728,250

614,256

Financial liabilities at fair value held for trading

33,595

30,591

Derivative financial instruments

10, 21, 22

161,102

120,880

Brokerage payables designated at fair value

38,742

37,233

Debt issued designated at fair value

16, 21

61,243

66,809

Other financial liabilities designated at fair value

19b, 21

30,387

35,940

Total financial liabilities measured at fair value through profit or loss

325,069

291,452

Provisions

18a

2,828

2,974

Other non-financial liabilities

19c

9,854

8,837

Total liabilities

1,066,000

917,519

Equity

Share capital

338

Share premium

16,753

18,064

Treasury shares

(4,068)

(3,326)

Retained earnings

38,776

34,122

Other comprehensive income recognized directly in equity, net of tax

7,647

5,303

Equity attributable to shareholders

59,445

54,501

Equity attributable to non-controlling interests

319

174

Total equity

59,765

54,675

Total liabilities and equity

1,125,765

972,194

Consolidated financial statements | UBS Group AG consolidated financial statements

286

Statement of changes in equity

USD million

capital

premium

Treasury shares

Retained

earnings

Balance as of 31 December 2017

338

23,598

(2,210)

25,932

Effect of adoption of IFRS 9

(518)

Effect of adoption of IFRS 15

(25)

Effect of retained earnings restatement

(32)

Balance as of 1 January 2018 after the adoption of IFRS 9 and IFRS 15 and

restatement of retained earnings

338

23,598

(2,210)

25,357

Issuance of share capital

Acquisition of treasury shares

(1,608)

Delivery of treasury shares under share-based compensation

plans

(1,009)

1,137

Other disposal of treasury shares

Premium on shares issued and warrants exercised

Share-based compensation expensed in the income statement

676

Tax (expense) / benefit

Dividends

(2,440)

Translation effects recognized directly in retained earnings

(21)

New consolidations / (deconsolidations) and other increases

/ (decreases)

(7)

Total comprehensive income for the year

5,080

of which: net profit / (loss)

4,516

of which: other comprehensive income (OCI) that may be

reclassified to the income statement, net of tax

of which: OCI that will not be reclassified to the income

statement, net of tax – defined benefit plans

of which: OCI that will not be reclassified to the income

statement, net of tax – own credit

509

of which: OCI that will not be reclassified to the income

statement, net of tax – foreign currency translation

Balance as of 31 December 2018

338

20,843

(2,631)

30,416

Effect of adoption of IFRIC 23

(11)

Balance as of 1 January 2019 after the adoption of IFRIC 23

338

20,843

(2,631)

30,405

Issuance of share capital

Acquisition of treasury shares

(1,771)

Delivery of treasury shares under share-based compensation

plans

(886)

983

Other disposal of treasury shares

(2)

Premium on shares issued and warrants exercised

Share-based compensation expensed in the income statement

619

Tax (expense) / benefit

Dividends

(2,544)

Translation effects recognized directly in retained earnings

(9)

New consolidations / (deconsolidations) and other increases

/ (decreases)

(6)

Total comprehensive income for the year

3,726

of which: net profit / (loss)

4,304

of which: other comprehensive income (OCI) that may be

reclassified to the income statement, net of tax

of which: OCI that will not be reclassified to the income

statement, net of tax – defined benefit plans

(186)

of which: OCI that will not be reclassified to the income

statement, net of tax – own credit

(392)

of which: OCI that will not be reclassified to the income

statement, net of tax – foreign currency translation

Balance as of 31 December 2019

338

18,064

(3,326)

34,122

287

Other comprehensive

income recognized

directly in equity,

net of tax

of which:

foreign currency

translation

of which:

financial assets at

fair value through

other comprehensive

income

of which:

cash flow

hedges

of which:

cost of hedging

Total equity

attributable to

shareholders

Non-controlling

interests

Total equity

4,838

4,466

360

52,495

52,554

(74)

(591)

(25)

(32)

4,764

4,466

(61)

360

51,847

51,906

(1,608)

128

676

(2,440)

(10)

(2,450)

(7)

122

115

(855)

(541)

(45)

(269)

4,225

4,231

4,516

4,522

(855)

(541)

(45)

(269)

(855)

509

(1)

3,930

3,924

(103)

109

52,896

176

53,071

(11)

3,930

3,924

(103)

109

52,885

176

53,060

(1,771)

619

(2,544)

(8)

(2,552)

(6)

(1)

1,363

104

117

1,143

5,089

5,091

4,304

4,310

1,363

104

117

1,143

1,363

(186)

(392)

(4)

5,303

4,028

1,260

54,501

174

54,675

Consolidated financial statements | UBS Group AG consolidated financial statements

288

Statement of changes in equity (continued)

USD million

capital

premium

Treasury shares

Retained

earnings

Balance as of 31 December 2019

338

18,064

(3,326)

34,122

Issuance of share capital

Acquisition of treasury shares

(1,584)

Delivery of treasury shares under share-based compensation

plans

(628)

719

Other disposal of treasury shares

(11)

123

Premium on shares issued and warrants exercised

Share-based compensation expensed in the income statement

691

Tax (expense) / benefit

Dividends

(1,304)

Translation effects recognized directly in retained earnings

(49)

Share of changes in retained earnings of associates and

joint ventures

(40)

New consolidations / (deconsolidations) and other increases

/ (decreases)

(76)

Total comprehensive income for the year

6,046

of which: net profit / (loss)

6,557

of which: other comprehensive income (OCI) that may be

reclassified to the income statement, net of tax

of which: OCI that will not be reclassified to the income

statement, net of tax – defined benefit plans

(218)

of which: OCI that will not be reclassified to the income

statement, net of tax – own credit

(293)

of which: OCI that will not be reclassified to the income

statement, net of tax – foreign currency translation

Balance as of 31 December 2020

338

16,753

(4,068)

38,776

1 Excludes other comprehensive income

related to defined benefit

plans and own credit, which

is recorded directly in

Retained earnings.

2 Opening retained earnings

as of 1 January

2018 have been restated

reflect a reduction of USD

32 million in connection

with the retrospective recognition

of a USD 43

million increase in compensation-related

liabilities and an USD

11 million increase in deferred

tax assets. Refer

Note 1b for more information.

3 Includes treasury shares acquired and disposed of by the Investment Bank in its capacity as a market

-maker with regard to UBS shares and related derivatives,

and to hedge certain

issued structured

debt instruments.

These acquisitions

and disposals

are reported

based on

the sum

of the

net monthly

movements.

4 Reflects

the payment

of an

ordinary cash

dividend of

USD 0.73

(2019:

CHF 0.70, 2018: CHF

0.65) per dividend

-bearing share.

From 2020

onward, Swiss

tax law effective

1 January 2020

requires that Switzerland-domiciled

companies with shares

listed on a

stock exchange

pay no

more than

50% of

dividends from

capital contribution

reserves, with

the remainder

required to

be paid

from retained

earnings.

5 During

2020, UBS

modified the

conditions for

continued vesting

of certain

outstanding deferred compensation

awards for qualifying

employees, resulting in

an increase of approximately

USD 110 million in

share premium for

equity-settled awards.

Refer to Note 1b

for more information.

6 Mainly relates to the establishment of a banking partnership with Banco do Brasil. Refer to Note 29 for more information.

 
289 
 
Other comprehensive 
income recognized 
directly in equity, 
net of tax
1
of which: 
foreign currency 
translation 
of which: 
financial assets at 
fair value through 
other comprehensive 
income 
of which: 
cash flow 
hedges 
of which: 
cost of hedging 
Total equity 
attributable to 
shareholders 
Non-controlling 
interests 
Total equity 
 
5,303 
 
4,028 
 
14 
 
1,260 
 
54,501 
 
174 
 
54,675 
 
0 
 
0 
 
(1,584) 
 
(1,584) 
 
90 
 
90 
 
112 
 
112 
 
0 
 
0 
 
691 
 
691 
 
18 
 
18 
 
(2,607) 
 
(6) 
 
(2,613) 
 
49 
 
0 
 
49 
 
0 
 
0 
 
(40) 
 
(40) 
 
65 
 
65 
 
(12) 
 
115 
 
103 
 
2,230 
 
1,095 
 
136 
 
1,011 
 
(13) 
 
8,276 
 
36 
 
8,312 
 
6,557 
 
15 
 
6,572 
 
2,230 
 
1,095 
 
136 
 
1,011 
 
(13) 
 
2,230 
 
2,230 
 
(218) 
 
(218) 
 
(293) 
 
(293) 
 
0 
 
21 
 
21 
 
7,647 
 
5,188 
 
151 
 
2,321 
 
(13) 
 
59,445 
 
319 
 
59,765

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
290 
 
Share information and earnings per share 
Ordinary share capital 
As 
of 
31 
December 
2020, 
UBS 
Group 
AG 
had 
3,859,055,395 
issued shares 
with a nominal value 
of CHF 0.10 
each, leading to 
a share capital of CHF 385,905,539.50. 
Conditional share capital 
As of 31 December 2020, the 
following conditional share capital 
was available to UBS Group AG’s Board of Directors (BoD): 
–
 
A 
maximum 
of 
CHF 38,000,000 
represented 
by 
up 
to 
380,000,000 fully paid registered shares 
with a nominal value 
of 
CHF 0.10 
each, 
to 
be 
issued 
through 
the 
voluntary 
or 
mandatory 
exercise 
of 
conversion 
rights 
and 
/ 
or 
warrants 
granted 
in 
connection 
with 
the 
issuance 
of 
bonds 
or 
similar 
financial 
instruments 
on 
national 
or 
international 
capital 
markets. 
This 
conditional 
capital 
allowance 
was 
approved 
at 
the 
Extraordinary 
General 
Meeting 
(EGM) 
held 
on 
26 November 
2014, 
originally 
approved 
at 
the 
Annual 
General 
Meeting 
(AGM) 
of 
UBS 
AG 
on 
14 
April 
2010. 
The 
BoD has not made use of such allowance. 
–
 
A maximum 
of CHF 12,170,583 
represented by 
121,705,830 
fully paid 
registered shares 
with a 
nominal value 
of CHF 0.10 
each, 
to 
be 
issued 
upon 
exercise 
of 
employee 
options 
and 
stock 
appreciation 
rights 
issued 
to 
employees 
and 
members 
of the management and of 
the BoD of UBS Group AG 
and its 
subsidiaries. This 
conditional capital 
allowance was 
approved 
by the shareholders at the same EGM in 2014. 
Authorized share capital 
UBS 
Group 
AG 
had 
no 
authorized 
capital 
available 
to 
issue 
on 
31 December 2020. 
Share repurchase program 
In March 
2018, UBS 
initiated a 
share repurchase 
program of 
up 
to 
CHF 
2 
billion 
over 
a 
three-year 
period. 
Under 
this 
program, 
UBS 
repurchased 
31 
million 
shares 
totaling 
USD 364 
million 
in 
2020 (2019: 69 million shares totaling USD 806 million). 
The 
program 
was 
completed 
on 
2 February 
2021 
and 
the 
shares 
repurchased 
under 
the 
program 
are 
expected 
to 
be 
canceled 
by 
means 
of 
a 
capital 
reduction, 
to 
be 
proposed 
for 
shareholder approval at the 2021 AGM. 
In 
February 
2021, 
UBS 
commenced 
a 
new 
three-year 
share 
repurchase program of up to CHF 4 billion. 
 
 
As of or for the year ended 
31.12.20 
31.12.19 
31.12.18 
Shares outstanding 
Shares issued 
Balance at the beginning of the year 
 
3,859,055,395 
 
3,855,634,749 
 
3,853,096,603 
Shares issued 
 
3,420,646 
 
2,538,146 
Balance at the end of the year 
 
3,859,055,395 
 
3,859,055,395 
 
3,855,634,749 
Treasury shares 
Balance at the beginning of the year 
 
243,021,296 
 
166,467,802 
 
132,301,550 
Acquisitions 
 
128,372,257 
 
146,876,692 
 
103,979,927 
Disposals 
 
(63,916,551) 
 
(70,323,198) 
 
(69,813,675) 
Balance at the end of the year 
 
307,477,002 
 
243,021,296 
 
166,467,802 
Shares outstanding 
 
3,551,578,393 
 
3,616,034,099 
 
3,689,166,947 
Basic and diluted earnings (USD million) 
Net profit / (loss) attributable to shareholders for basic 
EPS 
 
6,557 
 
4,304 
 
4,516 
Less: (profit) / loss on own equity derivative contracts 
 
(1) 
 
0 
 
(2) 
Net profit / (loss) attributable to shareholders for diluted 
EPS 
 
6,556 
 
4,304 
 
4,514 
Weighted average shares outstanding 
Weighted average shares outstanding for basic EPS
1
 
3,583,176,189 
 
3,663,278,238 
 
3,730,297,877 
Effect of dilutive potential shares resulting from notional 
employee shares, in-the-money options and warrants 
outstanding
2
 
123,852,137 
 
103,881,600 
 
111,271,269 
Weighted average shares outstanding for diluted EPS 
 
3,707,028,326 
 
3,767,159,838 
 
3,841,569,146 
Earnings per share (USD) 
Basic 
 
1.83 
 
1.17 
 
1.21 
Diluted 
 
1.77 
 
1.14 
 
1.18 
Potentially dilutive instruments
3
Employee share-based compensation awards 
 
2,536,789 
 
3,605,198 
Other equity derivative contracts 
 
11,414,728 
 
21,632,879 
 
11,912,450 
Total 
 
13,951,517 
 
21,632,879 
 
15,517,648 
1 The 
weighted average 
shares outstanding 
for basic 
EPS are 
calculated by 
taking the 
number of 
shares at 
the beginning 
of the 
period, adjusted 
by the 
number of 
shares acquired 
or issued 
during the 
period, 
multiplied by a 
time-weighted factor for 
the period 
outstanding. As a 
result, balances are 
affected by the 
timing of acquisitions 
and issuances during 
the period. 
2 The 
weighted average 
number of shares 
for 
notional employee awards with performance conditions reflects all potentially dilutive shares that are expected 
to vest under the terms of the awards. 
3 Reflects potential shares that could dilute basic earnings per 
share in the future, but were not dilutive for the periods presented. 
 
 

291

Statement of cash flows

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Cash flow from / (used in) operating activities

Net profit / (loss)

6,572

4,310

4,522

Non-cash items included in net profit and other adjustments:

Depreciation and impairment of property, equipment and software

2,069

1,765

1,228

Amortization and impairment of goodwill and intangible

assets

175

Credit loss expense / (release)

694

118

Share of net profits of associates / joint ventures and impairment

of associates

(84)

(45)

(528)

Deferred tax expense / (benefit)

352

477

425

Net loss / (gain) from investing activities

(698)

220

(46)

Net loss / (gain) from financing activities

3,246

6,493

(4,828)

Other net adjustments

(8,076)

854

(1,179)

Net change in operating assets and liabilities:

Loans and advances to banks / amounts due to banks

3,586

(4,336)

3,504

Securities financing transactions

9,588

8,678

(11,230)

Cash collateral on derivative instruments

(3,487)

2,839

(1,447)

Loans and advances to customers

(33,656)

(3,128)

(5,213)

Customer deposits

51,805

23,217

9,138

Financial assets and liabilities at fair value held for trading and derivative financial

instruments

11,259

(18,829)

11,107

Brokerage receivables and payables

(5,199)

(2,347)

11,432

Financial assets at fair value not held for trading, other financial assets

and liabilities

320

11,115

Provisions, other non-financial assets and liabilities

(387)

1,682

Income taxes paid, net of refunds

(1,002)

(804)

(951)

Net cash flow from / (used in) operating activities

36,958

19,705

28,913

Cash flow from / (used in) investing activities

Purchase of subsidiaries, associates and intangible assets

(46)

(26)

(287)

Disposal of subsidiaries, associates and intangible assets

674

114

137

Purchase of property, equipment and software

(1,854)

(1,584)

(1,688)

Disposal of property, equipment and software

366

114

Purchase of financial assets measured at fair value through other

comprehensive income

(6,290)

(3,424)

(1,999)

Disposal and redemption of financial assets measured at

fair value through other comprehensive income

4,530

3,913

1,361

Net (purchase) / redemption of debt securities measured

at amortized cost

(4,166)

(562)

(3,770)

Net cash flow from / (used in) investing activities

(6,785)

(1,558)

(6,132)

Table

continues on the next page.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
292 
 
Statement of cash flows (continued) 
Table 
continued from previous page. 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Cash flow from / (used in) financing activities 
Net short-term debt issued / (repaid) 
 
23,845 
 
(17,149) 
 
(12,245) 
Net movements in treasury shares and own equity derivative 
activity 
 
(1,387) 
 
(1,559) 
 
(1,431) 
Distributions paid on UBS shares 
 
(2,607) 
 
(2,544) 
 
(2,440) 
Repayment of lease liabilities 
 
(569) 
 
(518) 
Issuance of long-term debt, including debt issued designated 
at fair value 
 
80,255 
 
65,047 
 
60,682 
Repayment of long-term debt, including debt issued designated 
at fair value 
 
(87,098) 
 
(68,883) 
 
(44,344) 
Net changes in non-controlling interests and preferred notes 
 
(6) 
 
(8) 
 
(31) 
Net cash flow from / (used in) financing activities 
 
12,432 
 
(25,614) 
 
190 
Total cash flow 
Cash and cash equivalents at the beginning of the year 
 
119,873 
 
126,079 
 
104,834 
Net cash flow from / (used in) operating, investing and financing 
activities 
 
42,605 
 
(7,467) 
 
22,971 
Effects of exchange rate differences on cash and cash equivalents 
 
11,052 
 
1,261 
 
(1,726) 
Cash and cash equivalents at the end of the year
2
 
173,531 
 
119,873 
 
126,079 
of which: cash and balances at central banks
3
 
158,088 
 
106,957 
 
108,268 
of which: loans and advances to banks 
 
14,028 
 
11,386 
 
15,678 
of which: money market paper
4
 
1,415 
 
1,530 
 
2,133 
Additional information 
Net cash flow from / (used in) operating activities includes: 
Interest received in cash 
 
11,915 
 
15,315 
 
14,645 
Interest paid in cash 
 
6,320 
 
10,769 
 
9,206 
Dividends on equity investments, investment funds and associates 
received in cash
5
 
1,901 
 
3,145 
 
2,322 
1 Includes cash 
proceeds from the 
sale of the 
majority stake 
in Fondcenter AG 
of USD 426 
million for the 
year ended 31 
December 2020. Refer 
to Note 29 for 
more information. Also 
includes dividends received 
from associates. 
2 USD 
3,828 million, 
USD 3,192 
million and 
USD 5,245 
million of 
cash and 
cash equivalents 
(mainly reflected 
in Loans 
and advances 
to banks) 
were restricted 
as of 
31 December 
2020, 
31 December 2019 and 31 December 2018, respectively. 
Refer to Note 23 for more information. 
3 Includes only balances with an original 
maturity of three months or less. 
4 Money market paper is 
included in 
the balance sheet under Financial assets at fair value held for trading (31 December 2020: 
USD 117 million; 31 December 2019: USD 235 million; 31 December 2018: USD 366 million), Financial assets measured 
at 
fair value 
through other 
comprehensive income 
(31 December 2020: USD 178 
million; 31 December 2019: 
USD 24 million; 
31 December 2018: USD 8 
million), Financial 
assets at 
fair value 
not held 
for trading 
(31 December 2020: USD 536 
million; 31 December 2019: 
USD 920 million; 
31 December 2018: USD 1,556 
million) and 
Other financial 
assets measured 
at amortized 
cost (31 December 2020: 
USD 584 million; 
31 December 2019: USD 351 million; 31 December 2018: USD 204 million). 
5 Includes dividends received from associates reported within Net cash flow from / (used in) investing activities. 
 
Changes in liabilities arising from financing activities 
USD million 
Debt issued 
measured at 
amortized 
cost 
of which: 
short-term 
of which: 
long-term 
Debt issued 
designated at fair 
value 
Over-the-
counter debt 
instruments
2
Total 
Balance as of 1 January 2019 
 
132,271 
 
39,025 
 
93,246 
 
57,031 
 
2,450 
 
191,752 
Cash flows 
 
(22,704) 
 
(17,149) 
 
(5,555) 
 
2,144 
 
(425) 
 
(20,985) 
Non-cash changes 
 
930 
 
(39) 
 
969 
 
7,634 
 
(3) 
 
8,560 
of which: foreign currency translation 
 
(476) 
 
(39) 
 
(438) 
 
212 
 
(6) 
 
(270) 
of which: fair value changes 
 
7,421 
 
3 
 
7,424 
of which: other
1
 
1,406 
 
1,406 
 
1,406 
Balance as of 31 December 2019 
 
110,497 
 
21,837 
 
88,660 
 
66,809 
 
2,022 
 
179,327 
Cash flows 
 
22,428 
 
23,845 
 
(1,417) 
 
(5,420) 
 
(6) 
 
17,002 
Non-cash changes 
 
6,308 
 
984 
 
5,324 
 
(146) 
 
44 
 
6,207 
of which: foreign currency translation 
 
4,980 
 
984 
 
3,995 
 
1,764 
 
81 
 
6,824 
of which: fair value changes 
 
(1,909) 
 
(37) 
 
(1,946) 
of which: other
1
 
1,328 
 
1,328 
 
1,328 
Balance as of 31 December 2020 
 
139,232 
 
46,666 
 
92,566 
 
61,243 
 
2,060 
 
202,535 
1 Includes the effect of fair value hedges on long-term debt. Refer to Note 1a item 2j and Note 17 for more information. 
2 Included in balance sheet line Other financial liabilities designated at fair value. 
 

 
 
293 
Notes to the UBS Group AG consolidated financial statements 
 
Note 1 
Summary of significant accounting policies 
The following table provides an overview of information included in this Note.
 
 
 
294 
a)
 
Significant accounting policies
 
294 
Basis of accounting
294 
1)
 
Consolidation
 
295 
2) 
Financial instruments
295 
a.
 
Recognition
 
295 
b.
 
Classification, measurement and presentation
 
299 
c.
 
Loan commitments and financial guarantees
 
299 
d.
 
Interest income and expense
 
299 
e. 
Derecognition
299 
f. 
Fair value of financial instruments
300 
g. 
Allowances and provisions for expected 
credit losses
303 
h. 
Restructured and modified financial assets
303 
i.
 
Offsetting
 
304 
j. 
Hedge accounting
 
304 
3) 
Fee and commission income and expenses
305 
4) 
Cash and cash equivalents
305 
5) 
Share-based and other deferred compensation plans
305 
6) 
Post-employment benefit plans
306 
7) 
Income taxes
307 
8) 
Investments in associates 
307 
9) 
Property, equipment and software
307 
10) 
Goodwill and intangible assets
308 
11) 
Provisions and contingent liabilities
308 
12) 
Foreign currency translation
309 
13) 
Equity, treasury shares and contracts 
on UBS Group AG shares
309 
14) 
Leasing
310 
b) 
Changes in accounting policies, comparability 
and other adjustments
311 
c) 
International Financial Reporting Standards and 
Interpretations to be adopted in 2021 and later 
and other changes
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
294 
 
Note 1 
Summary of significant accounting policies (continued) 
a) Significant accounting policies 
This Note 
describes the 
significant accounting policies 
applied in 
the 
preparation 
of 
the 
consolidated 
financial 
statements 
(the 
Financial Statements) of 
UBS Group AG 
and its subsidiaries 
(UBS 
or 
the 
Group). 
On 
25 
February 
2021, 
the 
Financial 
Statements 
were authorized for issue by the Board of Directors. 
Basis of accounting 
The Financial Statements have been prepared in accordance with 
International 
Financial 
Reporting 
Standards 
(IFRS), 
as 
issued 
by 
the 
International 
Accounting 
Standards 
Board 
(the 
IASB), 
and 
are presented in US dollars (USD). 
Disclosures 
marked 
as 
audited 
in 
the 
“Risk, 
capital, 
liquidity 
and funding, 
and balance 
sheet” section 
of this 
report form 
an 
integral part of the Financial 
Statements. These disclosures relate 
to requirements 
under IFRS 7, 
Financial Instruments: 
Disclosures
, 
and 
IAS 
1, 
Presentation 
of 
Financial 
Statements
,
 
and 
are 
not 
repeated in this section. 
The 
accounting 
policies 
described 
in 
this 
Note 
have 
been 
applied 
consistently 
in 
all 
years 
presented
 
unless 
otherwise 
stated 
in 
Note 
1b. 
In 
addition, 
effective 
from 
1 
January 
2019, 
the Group 
applies IFRS 
16, 
Leases,
 
which sets 
out the 
principles 
for 
the 
recognition, 
measurement, 
presentation 
and 
disclosure 
of leases. Within this Note, policies applied for periods that differ 
from 
those 
applied 
to 
the 
financial 
year 
ended 
31 
December 
2020 are identified as “Comparative policy.” 
 
Critical accounting estimates and judgments 
Preparation of these Financial 
Statements under IFRS requires 
management 
to 
apply 
judgment 
and 
make 
estimates 
and 
assumptions 
that 
affect 
reported amounts of assets, liabilities, income 
and expenses and disclosure 
of contingent 
assets and liabilities, 
and may involve 
significant 
uncertainty 
at 
the time they are made. Such estimates and assumptions 
are based on the 
best 
available 
information. UBS 
regularly 
reassesses 
such
estimates 
and 
assumptions, which 
encompass historical experience, 
expectations of 
the 
future and other pertinent factors, to determine their continuing relevance 
based on current conditions, 
updating them 
as necessary. Changes 
in those 
estimates and 
assumptions may have 
a 
significant effect on 
the Financial 
Statements. Furthermore, actual results may differ significantly from UBS’s 
estimates, 
which could 
result in 
significant 
losses to 
the Group, 
beyond what 
was anticipated 
or provided 
for. 
The 
following 
areas 
contain 
estimation 
uncertainty 
or 
require 
critical 
judgment 
and 
have 
a 
significant 
effect 
on 
amounts 
recognized 
in 
the 
Financial Statements: 
–
 
expected credit loss measurement (refer to item 2g in this Note and to 
Note 20); 
–
 
fair value measurement (refer to item 2f in this Note 
and to Note 21); 
–
 
income taxes (refer to item 7 in this Note and to Note 
8); 
–
 
provisions and 
contingent liabilities (refer 
to item 
11 in 
this Note 
and 
to Note 18); 
–
 
post-employment benefit 
plans 
(refer 
to 
item 
6 
in 
this 
Note 
and 
to 
Note 26); 
–
 
goodwill (refer to item 10 in this Note and to Note 
13); and 
–
 
consolidation of structured entities (refer to 
item 1 in this Note 
and to 
Note 28). 
1) Consolidation 
The 
Financial 
Statements 
comprise 
the 
financial 
statements 
of 
the 
parent 
company 
(UBS 
Group 
AG) 
and 
its 
subsidiaries, 
presented 
as 
a 
single 
economic 
entity
;
 
intercompany 
transactions 
and 
balances 
have 
been 
eliminated. 
UBS 
consolidates 
all 
entities 
that 
it 
controls, 
including 
structured 
entities 
(SEs), 
which 
is the 
case when 
it 
has: 
(i) 
power over 
the 
relevant 
activities 
of 
the 
entity
;
 
(ii) 
exposure 
to 
an 
entity
‘s
 
variable returns; 
and (iii) 
the ability 
to use 
its power 
to affect 
its 
own returns. 
Consideration 
is 
given 
to 
all 
facts 
and 
circumstances 
to 
determine 
whether 
the 
Group 
has 
power 
over 
another 
entity, 
i.e., the current ability to direct the 
relevant activities of an entity 
when decisions about those activities need to be made. 
Subsidiaries, 
including 
SEs, 
are 
consolidated 
from 
the 
date 
when control 
is gained 
and deconsolidated 
from the 
date when 
control ceases. 
Control, or 
the lack thereof, 
is reassessed 
if facts 
and circumstances indicate that there is a change to one or more 
elements required to establish that control is present. 
Business combinations are accounted for using the acquisition 
method. The 
amount of 
non-controlling interest 
is measured 
at 
the 
non-controlling 
interest’s 
proportionate 
share 
of 
the 
acquiree’s identifiable net assets. 
›
 
Refer to Note 28
 
for more information 
 
Critical accounting estimates and judgments 
Each 
individual 
entity 
is 
assessed 
for 
consolidation 
in 
line 
with 
the 
aforementioned 
consolidation principles. 
The 
assessment 
of 
control 
can 
be complex 
and requires 
the use 
of significant judgment, 
in particular in 
determining whether 
UBS has 
power over 
the entity. 
As the 
nature and 
extent of UBS’s involvement is unique for each entity, 
there is no uniform 
consolidation outcome 
by 
entity. 
Certain entities 
within 
a 
class may 
be 
consolidated while 
others may 
not. When 
carrying out 
the consolidation 
assessment, judgment 
is exercised 
considering all 
the relevant 
facts and 
circumstances, including the 
nature and activities 
of the 
investee, as well 
as the substance of voting and similar rights. 
›
 
Refer to Note 28
 
for more information 
 

 
 
295 
 
Note 1 
Summary of significant accounting policies (continued) 
2) Financial instruments 
a. Recognition 
UBS recognizes financial instruments when it 
becomes a party to 
contractual 
provisions 
of an 
instrument. UBS 
applies settlement 
date 
accounting 
to 
all 
standard 
purchases 
and 
sales 
of 
non-
derivative financial instruments. 
In transactions 
where UBS 
acts as 
a transferee, 
to the 
extent 
such 
financial 
asset 
transfer 
does 
not 
qualify 
for 
derecognition 
by 
the 
transferor, 
UBS 
does 
not 
recognize 
the 
transferred 
instrument as its asset. 
UBS also acts in a fiduciary capacity, which results in it holding 
or 
placing 
assets 
on 
behalf 
of 
individuals, 
trusts, 
retirement 
benefit plans and 
other institutions. Unless 
these items meet the 
definition 
of 
an 
asset 
and 
the 
recognition 
criteria 
are 
satisfied, 
such 
assets are 
not recognized 
on UBS’s 
balance sheet 
and the 
related income is excluded from the Financial Statements. 
Client 
cash balances 
associated with 
derivatives 
clearing and 
execution 
services 
are 
not 
recognized 
on 
the 
balance 
sheet 
if, 
through 
contractual 
agreement, 
regulation 
or 
practice, 
UBS 
neither obtains benefits from nor controls such cash balances. 
b. Classification, measurement and presentation 
Financial assets 
All 
financial 
instruments 
are 
on 
initial 
recognition 
measured 
at 
fair value and classified as measured at 
amortized cost, fair value 
through
 
other 
comprehensive 
income 
(FVOCI) 
or 
fair 
value 
through 
profit 
or 
loss 
(FVTPL)
. 
For
 
financial 
instruments 
subsequently 
measured 
at 
amortized 
cost 
or 
FVOCI, 
the 
initial 
fair value is adjusted for directly attributable transaction costs. 
Where 
the 
contractual 
terms 
of 
a 
debt 
instrument 
result 
in 
cash 
flows 
that 
are 
solely 
payments 
of 
principal 
and 
interest 
(SPPI) on 
the principal amount 
outstanding, the 
debt instrument 
is 
classified 
as 
measured at 
amortized 
cost 
if 
it 
is 
held 
within a 
business model 
that has 
an objective 
to hold 
financial assets 
to 
collect 
contractual 
cash flows, 
or 
at 
FVOCI if 
it 
is held 
within a 
business 
model 
with 
the 
objective 
being
 
achieved 
by 
both 
collecting contractual cash flows and selling financial assets. 
All 
other 
financial 
assets 
are 
measured 
at 
FVTPL, 
including 
those 
held 
for 
trading 
or 
those 
managed 
on 
a 
fair 
value 
basis, 
except 
for 
derivatives 
designated 
in 
a 
hedge 
relationship, 
in 
which 
case hedge 
accounting requirements 
apply (refer 
to item 
2j in this Note for more information). 
Business model assessment and contractual cash flow 
characteristics 
UBS 
determines 
the 
nature 
of 
a 
business 
model 
by 
considering 
the 
way 
financial 
assets 
are 
managed 
to 
achieve 
a 
particular 
business objective. 
In assessing 
whether the 
contractual cash 
flows are 
SPPI, the 
Group 
considers whether 
the contractual 
terms of 
the 
financial 
asset contain a 
term that could change 
the timing or 
amount of 
contractual cash flows arising over the life of the instrument. 
Financial liabilities 
Financial liabilities measured at amortized cost 
Debt 
issued 
measured 
at 
amortized 
cost 
includes 
contingent 
capital 
instruments 
contain
ing
 
contractual 
provisions 
under 
which 
the 
principal 
amounts 
would 
be 
written 
down 
or 
converted 
into 
equity 
upon 
either 
a 
specified 
common 
equity 
tier
 
1 
(
CET1
)
 
ratio 
breach 
or 
a 
determination 
by 
the 
Swiss 
Financial 
Market 
Supervisory 
Authority 
(FINMA) 
that 
a 
viability 
event 
has 
occurred. 
Such 
contractual 
provisions 
are 
not 
derivatives, 
as 
the 
underlying 
is 
deemed 
to 
be 
a 
non-financial 
variable specific to a party to the contract. 
Where 
there 
is 
a 
legal 
bail-in 
mechanism 
for 
write-down 
or 
conversion 
into 
equity 
(as 
is 
the 
case, 
for 
instance, 
with 
senior 
unsecured 
debt 
issued 
by 
the 
Group 
that 
is 
subject 
to 
write-
down 
or 
conversion 
under 
resolution 
authority 
granted 
to 
FINMA 
under 
Swiss 
law), 
the 
amortized 
cost 
accounting 
treatment applied to these instruments is not affected. 
If the 
debt were 
to be written 
down or 
converted into equity 
in 
a 
future 
period, 
it 
would 
be 
partially 
or 
fully 
derecognized, 
with 
the 
difference 
between 
its 
carrying 
amount 
and 
the 
fair 
value of any equity issued recognized in the income statement. 
A 
gain 
or 
loss 
is 
recognized 
in 
Other 
income
 
when 
debt 
issued 
is 
subsequently 
repurchased 
for 
market-making 
or 
other 
activities. 
A 
subsequent 
sale 
of 
own 
bonds 
in 
the 
market 
is 
treated as a reissuance of debt. 
Financial liabilities measured at fair value through profit or loss 
UBS 
designates 
certain 
issued 
debt 
instruments 
as 
financial 
liabilities 
at 
fair 
value 
through 
profit 
or 
loss, 
on 
the 
basis 
that 
such financial instruments include embedded derivatives 
and / or 
are 
managed on 
a 
fair value 
basis (refer 
to the 
table below 
for 
more 
information), 
in 
which 
case 
bifurcation 
of 
the 
embedded 
derivative 
component 
is 
not 
required. 
Financial 
instruments 
including 
embedded 
derivatives 
arise 
predominantly 
from 
the 
issuance of certain structured debt instruments. 
Measurement and presentation 
After initial recognition, UBS 
classifies, measures and presents 
its 
financial 
assets 
and 
liabilities 
in 
accordance 
with 
IFRS 
9, 
as 
described in the table on the following pages. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
296 
 
Note 1 
Summary of significant accounting policies (continued) 
 
Classification, measurement and presentation 
of financial assets 
Financial assets classification 
Significant items included 
Measurement and presentation 
Measured at 
amortized cost 
This classification includes: 
–
 
cash and balances at central banks; 
–
 
loans and advances to banks; 
–
 
cash collateral receivables on securities borrowed; 
–
 
receivables on reverse repurchase agreements; 
–
 
cash collateral receivables on derivative instruments; 
–
 
residential and commercial mortgages; 
–
 
corporate loans; 
–
 
secured loans, including Lombard loans, and 
unsecured loans; 
–
 
loans to financial advisors; 
and 
–
 
debt securities held as high-quality liquid 
assets 
(HQLA). 
Measured at amortized cost using the effective interest 
method less allowances for expected credit losses 
(ECL) 
(refer to items 2d and 2g in this Note for more information). 
The following items are recognized in the income 
statement: 
–
 
interest income, which is accounted for in accordance 
with item 2d 
in this Note; 
–
 
ECL and reversals; 
and 
–
 
foreign exchange translation gains and losses. 
When the financial asset at amortized cost 
is derecognized, 
the gain or loss is recognized 
in the income statement. 
For amounts arising from settlement of certain derivatives, 
refer to the next page. 
Measured 
at FVOCI 
Debt instruments 
measured at 
FVOCI 
This classification primarily includes debt securities 
and 
certain asset-backed securities held as HQLA. 
Measured at fair value, 
with unrealized gains and losses 
reported in 
Other comprehensive income, 
net of applicable 
income taxes, until such investments are derecognized. 
Upon derecognition, any accumulated balances in 
Other 
comprehensive income 
are reclassified to the income 
statement and reported within 
Other income. 
The following items, which are determined on the 
same 
basis as for financial assets measured at amortized 
cost, 
are 
recognized in the income statement: 
–
 
interest income, which is accounted for in accordance 
with item 2d 
in this Note; 
–
 
ECL and reversals; 
and 
–
 
foreign exchange translation gains and losses. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
297 
 
Note 1 
Summary of significant accounting policies (continued) 
 
Classification, measurement and presentation 
of financial assets 
Financial assets classification 
Significant items included 
Measurement and presentation 
Measured at 
FVTPL 
Held for 
trading 
Financial assets held for trading include: 
–
 
all derivatives with a positive replacement value, 
except 
those that are designated and effective hedging 
instruments; and 
–
 
other financial assets acquired principally for the 
purpose of selling or repurchasing in the near term, or 
that are part of a portfolio of identified financial 
instruments that are managed together and for 
which 
there is evidence of a recent actual pattern of short-
term profit taking. Included in this category are debt 
instruments (including those in the form of 
securities, 
money market paper, 
and traded corporate and bank 
loans) and equity instruments. 
Measured at fair value, 
with changes recognized in the 
income statement. 
Derivative assets (including derivatives that 
are designated 
and effective hedging instruments) are generally 
presented as 
Derivative financial instruments
, except those 
exchange-traded and OTC-cleared derivatives that 
are 
considered to be settled on a daily basis or in substance 
net settled on a daily basis, which are presented within 
Cash collateral receivables on derivative instruments.
Changes in fair value, initial transaction costs, 
dividends 
and gains and losses arising on disposal or redemption 
are 
recognized in 
Other net income from financial 
instruments measured at fair value through 
profit or loss
,
1
except interest income on instruments other than 
derivatives (refer to item 2d in this Note), interest on 
derivatives designated as hedging instruments 
in hedges 
of interest rate risk and forward points on certain short- 
and long-duration foreign exchange contracts 
acting as 
economic hedges, which are reported in 
Net interest 
income. 
Changes in the fair value of derivatives that 
are 
designated and effective hedging instruments are 
presented either in the income statement or 
Other 
comprehensive income
, depending on the type of hedge 
relationship (refer to item 2j in this Note for more 
information). 
Mandatorily 
measured at 
FVTPL – Other 
This classification includes financial assets 
mandatorily 
measured at FVTPL that are not held for trading, as 
follows: 
–
 
certain structured loans, certain commercial loans, 
receivables under reverse repurchase and cash collateral 
on securities borrowing agreements that are managed 
on a fair value basis; 
–
 
loans managed on a fair value basis, including those 
hedged with credit derivatives; 
–
 
certain debt securities held as HQLA and 
managed on a 
fair value basis; 
–
 
certain investment fund holdings and assets 
held to 
hedge delivery obligations related to cash-settled 
employee compensation plans; 
–
 
brokerage receivables, for which contractual cash flows 
do not meet the SPPI criterion because the aggregate 
balance is accounted for as a single unit of 
account, 
with interest being calculated on the individual 
components; 
–
 
auction rate securities, for which contractual cash 
flows 
do not meet the SPPI criterion because interest may 
be 
reset at rates that contain leverage; 
–
 
equity instruments; 
and 
–
 
assets held under unit-linked investment contracts. 
1
 
Effective from 1 January 2019, this line item 
includes dividends (prior to 1 January 2019, dividends 
were included within 
Net interest income
), intermediation income arising from certain client-driven 
Global Wealth 
Management and Personal & Corporate Banking 
financial transactions, foreign currency translation effects and income and expenses 
from exposures to precious metals. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
298 
 
Note 1 
Summary of significant accounting policies (continued) 
 
Classification, measurement and presentation 
of financial liabilities 
Financial liabilities classification 
Significant items included 
Measurement and presentation 
Measured at amortized cost 
This classification includes: 
–
 
demand and time deposits; 
–
 
retail savings / deposits; 
–
 
amounts payable under repurchase agreements; 
–
 
cash collateral on securities lent; 
–
 
non-structured fixed-rate bonds; 
–
 
subordinated debt; 
–
 
certificates of deposit and covered bonds; and 
–
 
cash collateral payables on derivative instruments. 
Measured at amortized 
cost using the effective interest 
method. 
When the financial liability at amortized cost 
is 
derecognized, the gain or loss is recognized in the income 
statement. 
Measured at 
fair value 
through 
profit or loss 
Held for trading 
Financial liabilities held for trading include: 
–
 
all derivatives with a negative replacement value 
(including certain loan commitments), 
except those 
that are designated and effective hedging 
instruments; and 
–
 
obligations to deliver financial instruments, 
such as 
debt and equity instruments, that UBS has 
sold to 
third parties but does not own (short positions). 
Measurement and presentation of financial liabilities 
classified at FVTPL follow the same principles 
as for 
financial assets classified at FVTPL, except that 
the amount 
of change in the fair value of the financial liability 
designated at FVTPL that is attributable to changes 
in 
UBS’s own credit risk is presented in 
Other comprehensive 
income
 
directly within 
Retained earnings 
and is never 
reclassified to the income 
statement. 
Derivative liabilities (including derivatives that 
are 
designated and effective hedging instruments) 
are 
generally presented as 
Derivative financial instruments
, 
except those exchange-traded and OTC-cleared 
derivatives that are considered to be settled on a daily 
basis or in substance net settled on a 
daily basis, which 
are presented within 
Cash collateral payables on derivative 
instruments. 
Designated at 
FVTPL 
UBS designates 
at FVTPL the following financial 
liabilities: 
–
 
issued hybrid debt instruments that primarily 
include 
equity-linked, credit-linked and rates-linked bonds 
or 
notes; 
–
 
issued debt instruments managed on a fair 
value 
basis; 
–
 
certain payables under repurchase agreements and 
cash collateral on securities lending agreements that 
are managed in conjunction with associated reverse 
repurchase agreements and cash collateral on 
securities borrowed; 
–
 
amounts due under unit-linked investment contracts 
whose cash flows are linked to financial assets 
measured at FVTPL and eliminate an accounting 
mismatch; 
and 
–
 
brokerage payables, which arise in conjunction with 
brokerage receivables and are measured at FVTPL to 
achieve measurement consistency. 
 
 
 

 
 
299 
 
Note 1 
Summary of significant accounting policies (continued)
c. Loan commitments and financial guarantees 
Loan 
commitments 
are 
arrangements 
to 
provide 
credit 
under 
defined terms and 
conditions. Irrevocable loan 
commitments are 
classified 
as: 
(i) 
derivative 
loan 
commitments 
measured 
at 
fair 
value through profit 
or loss; (ii) loan 
commitments designated at 
fair 
value 
through 
profit 
or 
loss; 
or 
(iii) 
loan 
commitments 
not 
measured 
at 
fair 
value. 
Financial 
guarantee 
contracts 
are 
contracts 
that 
require 
UBS 
to 
make 
specified 
payments 
to 
reimburse 
the 
holder 
for 
an 
incurred 
loss 
because 
a 
specified 
debtor fails to make payments when 
due in accordance with the 
terms of a specified debt instrument. 
d. Interest income and expense 
Interest 
income 
and 
expense 
are 
recognized 
in 
the 
income 
statement 
based 
on 
the 
effective 
interest 
method
. 
When 
calculating 
the 
effective 
interest 
rate 
(EIR) 
for 
financial 
instruments 
(other 
than 
credit-impaired 
financial 
instruments), 
UBS 
estimates 
future 
cash 
flows 
considering 
all 
contractual 
terms of the instrument, 
but not expected credit 
losses, with the 
EIR applied to the gross 
carrying amount of the financial asset or 
the 
amortized 
cost 
of 
a 
financial 
liability. 
However, 
when 
a 
financial 
asset 
becomes 
credit-impaired 
after 
initial 
recognition, 
interest 
income 
is 
determined 
by 
applying 
the 
EIR 
to 
the 
amortized 
cost 
of 
the 
instrument, 
which 
represents 
the 
gross 
carrying amount adjusted for any credit loss allowance. 
Upfront 
fees, 
including 
fees 
on 
loan 
commitments 
not 
measured 
at 
fair 
value 
where 
a 
loan 
is 
expected 
to 
be 
issued, 
and direct costs 
are included within 
the initial measurement of 
a 
financial 
instrument 
measured 
at 
amortized 
cost 
or 
FVOCI 
and 
recognized over the expected 
life of the instrument 
as part of its 
EIR. 
Fees related 
to loan 
commitments where 
no loan 
is expected 
to 
be 
issued, 
as 
well 
as 
loan 
syndication 
fees 
where 
UBS 
does 
not 
retain a 
portion 
of 
the 
syndicated 
loan 
or 
where 
UBS 
does 
retain a portion of the syndicated loan at the same effective yield 
for comparable risk 
as other participants, are 
included in 
Net fee 
and 
commission 
income 
and 
either 
recognized 
over 
the 
life 
of 
the commitment or when syndication occurs. 
›
 
Refer to item 3 in this Note for more information 
 
Interest 
income 
on 
financial 
assets, 
excluding 
derivatives, 
is 
included 
in 
interest 
incom
e
 
when 
positive 
and 
in 
i
nterest 
expense 
when 
negative. 
Similarly, 
interest 
expense 
on 
financial 
liabilities, 
excluding 
derivatives, 
is 
included 
in 
interest 
expense, 
except 
when 
interest 
rates 
are 
negative, 
in 
which 
case 
it 
is 
included in interest income. 
›
 
Refer to item 2b 
in this Note and Note 3 for more information 
e. Derecognition 
Financial assets 
UBS 
derecognizes 
a 
financial 
asset, 
or 
a 
portion 
of 
a 
financial 
asset, 
when 
the 
contractual 
rights 
to 
the 
cash 
flows 
from 
the 
financial 
asset 
expire, 
or 
UBS 
has 
either 
(i) 
transferred 
the 
contractual rights to 
receive the cash 
flows from the 
asset, or (ii) 
retained 
the contractual 
rights to 
receive the 
cash flows 
of that 
asset, 
but 
assumed 
a 
contractual 
obligation 
to 
pay 
the 
cash 
flows 
to 
one 
or 
more 
entities, 
subject 
to 
certain 
criteria. 
Transferred 
financial 
assets 
are 
derecognized 
if 
the 
purchaser 
has received substantially all the risks and rewards of the asset or 
a 
significant 
part 
of 
the 
risks 
and 
rewards 
combined 
with 
a 
practical ability to sell or pledge the asset. 
Where 
financial 
assets 
have 
been 
pledged 
as 
collateral 
or 
in 
similar 
arrangements, 
they 
are 
considered 
to 
have 
been 
transferred 
if 
the 
counterparty 
has 
received 
the 
contractual 
right
s
 
to 
the 
cash 
flows 
of 
the 
pledged 
assets, 
as 
may 
be 
evidenced 
by, 
for 
example, 
the 
counterparty’s 
right 
to 
sell 
or 
repledge the assets. 
In transfers where 
control over the 
financial 
asset 
is 
retained, 
UBS 
continues 
to 
recognize 
the 
asset 
to 
the 
extent 
of 
its 
continuing 
involvement, 
determined 
by 
the 
extent 
to which it 
is exposed to 
changes in the 
value of the 
transferred 
asset following the transfer. 
Certain over-the-counter 
(OTC) derivative 
contracts and 
most 
exchange-traded 
futures 
and 
option 
contracts 
cleared 
through 
central clearing 
counterparties and 
exchanges are 
considered to 
be settled on a daily 
basis, as the payment or 
receipt of variation 
margin on a 
daily basis represents 
legal or economic 
settlement, 
which results in derecognition of the associated derivatives. 
›
 
Refer to item 2i in this Note, Note 22 and 
Note 23 for more 
information 
Financial liabilities 
UBS 
derecognizes 
a 
financial 
liability 
from 
its 
balance 
sheet 
when it is extinguished; 
i.e., when the obligation specified in 
the 
contract 
is 
discharged, 
canceled 
or 
expires. 
When 
an 
existing 
financial 
liability 
is 
exchanged 
for 
a 
new 
one 
from 
the 
same 
lender 
on 
substantially 
different 
terms, 
or 
the 
terms 
of 
an 
existing liability 
are substantially 
modified, the 
original liability 
is 
derecognized and 
a new 
liability recognized 
with any 
difference 
in 
the 
respective 
carrying 
amounts 
recognized 
in 
the 
income 
statement. 
f. Fair value of financial instruments 
UBS accounts 
for a 
significant portion 
of its 
assets and 
liabilities 
at 
fair 
value. 
Fair 
value 
is 
the 
price 
on 
the 
measurement 
date 
that 
would 
be 
received 
for 
the 
sale 
of 
an 
asset 
or 
paid 
to 
transfer 
a 
liability 
in 
an 
orderly 
transaction 
between 
market 
participants in the principal market, or in the most advantageous 
market in the absence of a principal market. 
›
 
Refer to Note 21 for more information 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
300 
 
Note 1 
Summary of significant accounting policies (continued)
Critical accounting estimates and judgments 
The use 
of valuation techniques, modeling 
assumptions and estimates 
of 
unobservable market 
inputs in 
the fair 
valuation of 
financial instruments 
requires 
significant judgment and could affect the 
amount of gain or loss 
recorded 
for 
a 
particular 
position. 
Valuation 
techniques 
that 
rely 
more 
heavily 
on 
unobservable 
inputs
and 
sophisticated 
models
inherently 
require a 
higher level of 
judgment and may 
require adjustment to 
reflect 
factors that 
market participants 
would consider 
in estimating 
fair value, 
such as close-out costs, which are presented in Note 21d. 
UBS‘s 
governance 
framework 
over 
fair 
value 
measurement 
is 
described 
in 
Note 
21b, 
and 
UBS 
provides 
a 
sensitivity 
analysis 
of 
the 
estimated effects arising from changing significant unobservable inputs in 
Level 
3 
financial 
instruments 
to 
reasonably 
possible 
alternative 
assumptions within Note 21g. 
›
 
Refer to Note 21 for more information 
g. Allowances and provisions for expected credit losses 
Expected 
credit 
losses 
(ECL) 
are 
recognized 
for 
financial 
assets 
measured at amortized cost, 
financial assets measured at 
FVOCI, 
fee 
and 
lease 
receivables, 
financial 
guarantees 
and 
loan 
commitments
 
not 
measured 
at 
fair 
value
. 
ECL 
are 
also 
recognized on the 
undrawn portion of revolving 
revocable credit 
lines, 
which 
include 
UBS’s 
credit 
card 
limits 
and 
master 
credit 
facilities, 
and 
are 
referred 
to 
by 
UBS 
as 
“other 
credit 
lines.” 
Though these other credit 
lines are revocable 
at any time, UBS is 
exposed 
to 
credit 
risk 
because 
the 
borrower 
has 
the 
ability 
to 
draw 
down 
funds 
before 
UBS 
can 
take 
credit 
risk 
mitigation 
actions. 
Recognition of expected credit losses 
ECL are recognized on the following basis: 
–
 
Stage 1 instruments: Maximum 12-month 
ECL are recognized 
from initial recognition, 
reflecting the portion 
of lifetime cash 
shortfalls 
that 
would 
result 
if 
a 
default 
occurs 
in 
the 
12 
months 
after 
the 
reporting 
date, 
weighted 
by 
the 
risk 
of 
a 
default occurring. 
–
 
Stage 2 
instruments: 
Lifetime 
ECL 
are 
recognized 
if 
a 
significant increase in credit risk (SICR) is observed subsequent 
to the 
instrument’s initial 
recognition, reflecting 
lifetime cash 
shortfalls 
that 
would 
result 
from 
all 
possible 
default 
events 
over the 
expected life 
of a 
financial instrument, 
weighted by 
the 
risk 
of 
a 
default 
occurring. 
When 
an 
SICR 
is 
no 
longer 
observed, the instrument will move back to stage 1. 
–
 
Stage 3 
instruments: 
Lifetime 
ECL 
are 
always 
recognized 
for 
credit-impaired 
financial 
instruments, 
as 
determined 
by 
the 
occurrence 
of 
one 
or 
more 
loss 
events, 
by 
estimating 
expected 
cash 
flows 
based 
on 
a 
chosen 
recovery 
strategy. 
Credit-impaired exposures may include 
positions for which no 
allowance has been recognized, for example because they are 
expected to be fully recoverable through collateral held. 
–
 
Changes 
in 
lifetime 
ECL 
since 
initial 
recognition 
are 
also 
recognized for 
assets that 
are purchased 
or originated 
credit-
impaired (POCI). POCI financial instruments include those that 
are purchased 
at a 
deep discount 
or newly 
originated with 
a 
defaulted counterparty; they 
remain a separate 
category until 
derecognition. 
All 
or 
part 
of 
a 
financial 
asset 
is 
written 
off 
if 
it 
is 
deemed 
uncollectible or forgiven. 
Write-offs reduce the 
principal amount 
of a 
claim and 
are charged 
against related 
allowances for 
credit 
losses. 
Recoveries, 
in 
part 
or 
in 
full, 
of 
amounts 
previously 
written 
off 
are 
generally 
credited 
to 
Credit 
loss 
(expense) 
/ 
release
. 
ECL 
are 
recognized 
in 
the 
income 
statement 
in 
Credit 
loss 
(expense) 
/ 
release
. 
A 
corresponding 
ECL 
allowance 
is 
reported 
as 
a 
decrease 
in 
the 
carrying 
amount 
of 
financial 
assets 
measured 
at 
amortized 
cost on 
the 
balance sheet. 
For financial 
assets 
that 
are 
FVOCI, 
the 
carrying amount 
is not 
reduced, but 
an 
accumulated 
amount 
is 
recognized 
in 
Other 
comprehensive 
income
. 
For 
off-balance 
sheet 
financial 
instruments 
and 
other 
credit lines, provisions for ECL are presented in 
Provisions. 
Default and credit impairment 
UBS 
applies 
a 
single 
definition 
of 
default 
for 
credit 
risk 
management 
purposes, 
regulatory 
reporting 
and 
ECL, 
with 
a 
counterparty 
classified 
as 
defaulted 
based 
on 
quantitative 
and 
qualitative criteria. 
›
 
Refer to ‘’Credit policies for distressed assets’’ in the ‘’Risk 
management and control’’ 
section of this report for more 
information 
Measurement of expected credit losses 
IFRS 
9 
ECL 
reflect 
an 
unbiased, 
probability-weighted 
estimate 
based 
on 
loss 
expectations 
resulting 
from 
default 
events. 
The 
method 
used 
to 
calculate 
ECL 
applies 
the 
following 
principal 
factors: probability 
of default 
(PD), loss 
given default 
(LGD) and 
exposure 
at default 
(EAD). Parameters 
are 
generally determined 
on an 
individual financial 
asset level. Based 
on the materiality 
of 
the 
portfolio, 
for 
credit 
card 
exposures 
and 
personal 
account 
overdrafts 
in 
Switzerland, 
a 
portfolio 
approach 
is 
applied 
that 
derives an average 
PD and LGD 
for the entire 
portfolio. PDs and 
LGDs 
used 
in 
the 
ECL 
calculation 
are 
point-in-time 
(PIT)-based 
for 
key 
portfolios 
and 
consider 
both 
current 
conditions 
and 
expected cyclical 
changes. For material 
portfolios, PDs and 
LGDs 
are determined 
for different 
scenarios, whereas 
EAD projections 
are treated as scenario independent. 
For the 
purpose of 
determining the 
ECL-relevant parameters, 
UBS leverages its 
Pillar 1 internal 
ratings-based (IRB) models 
that 
are also used in determining expected loss (EL) and risk-weighted 
assets 
under 
the 
Basel III 
framework 
and 
Pillar 2 
stress 
loss 
models. Adjustments 
have been made 
to these models 
and IFRS 
9-related 
models 
have 
been 
developed 
that 
consider 
the 
complexity, 
structure 
and 
risk 
profile 
of 
relevant 
portfolios 
and 
take 
account 
of 
the 
fact 
that 
PDs 
and 
LGDs 
used 
in 
the 
ECL 
calculation 
are 
PIT-based, 
as 
opposed 
to 
the 
corresponding 
Basel III through-the-cycle 
(TTC) parameters. 
All models 
that are 
relevant 
for 
measuring 
expected 
credit 
losses 
are
 
subject 
to 
UBS’s model validation and oversight processes. 
 
 

 
 
301 
 
Note 1 
Summary of significant accounting policies (continued)
Probability 
of 
default: 
PD 
represents 
the 
likelihood 
of 
a 
default over 
a specified 
time period. 
A 12-month 
PD represents 
the likelihood of default determined 
for the next 12 months and 
a 
lifetime 
PD 
represents 
the 
probability 
of 
default 
over 
the 
remaining 
lifetime 
of 
the 
instrument. 
PIT 
PDs 
are 
derived 
from 
TTC 
PDs 
and 
scenario 
forecasts. 
The 
modeling 
is 
region-, 
industry
-
 
and 
client 
segment
-
specific 
and 
considers 
both 
macroeconomic 
scenario 
dependencies 
and 
client-idiosyncratic 
information. 
Exposure 
at 
default: 
EAD 
represents 
an 
estimate 
of 
the 
exposure 
to 
credit 
risk 
at 
the 
time 
of 
a 
potential 
default 
occurring, 
considering 
expected 
repayments, 
interest 
payments 
and 
accruals, 
discounted 
at 
the 
EIR. 
Future 
drawdowns 
on 
facilities are 
considered through 
a credit 
conversion factor 
(CCF) 
that is reflective of historical drawdown and default patterns and 
the characteristics of the respective portfolios. 
Loss given 
default: 
LGD represents 
an 
estimate of 
the loss 
at 
the 
time 
of 
a 
potential 
default 
occurring, 
taking 
into 
account 
expected 
future 
cash 
flows 
from 
collateral 
and 
other 
credit 
enhancements, 
or expected payouts 
from bankruptcy 
proceedings 
for unsecured claims and, where applicable, time to realization of 
collateral 
and 
the 
seniority 
of 
claims. 
The 
LGD 
is 
commonly 
expressed as 
a percentage 
of the EAD. 
Estimation of expected credit losses 
Number of scenarios and estimation of scenario weights 
The 
determination 
of 
the 
probability-weighted 
ECL 
requires 
evaluating 
a 
range 
of 
diverse 
and 
relevant 
future 
economic 
conditions, 
especially 
with 
a 
view 
to 
modeling 
the 
non-linear 
effect 
of 
assumptions 
about 
macroeconomic 
factors 
on 
the 
estimate. 
To 
accommodate 
this 
requirement, 
UBS 
uses 
different 
economic 
scenarios 
in 
the 
ECL 
calculation
.
 
Each 
scenario 
is 
represented 
by 
a 
specific 
scenario 
narrative, 
which 
is 
relevant 
considering 
the 
exposure 
of 
key 
portfolios 
to 
economic 
risks, 
and 
for 
which 
a 
set 
of 
consistent 
macroeconomic 
variables 
is 
determined. 
An econometric 
model is 
used to 
provide an 
input 
into 
the 
scenario 
weight 
assessment 
process 
giving 
a 
first 
indication of the 
probability that the 
GDP forecast used 
for each 
scenario 
would materialize, 
if historically 
observed 
deviations of 
GDP 
growth 
from 
trend 
growth 
were 
representative. 
As 
such 
historical 
analyses 
of 
GDP 
development 
do 
not 
include 
an 
assessment 
of 
the 
underlying 
economic 
or 
political 
causes, 
management 
positions 
the 
model 
output 
into 
the 
context 
of 
current 
conditions and 
future expectations 
and applies 
material 
judgment in determining the final scenario weights. 
The 
determined 
weights 
constitute 
the 
probabilities 
that 
the 
respective 
set 
of 
macroeconomic 
conditions 
will 
occur 
and 
not 
that 
the 
chosen 
particular 
narratives 
with 
the 
related 
macroeconomic variables will materialize. 
Macroeconomic and other factors 
The 
range 
of 
macroeconomic, 
market 
and 
other 
factors 
that 
is 
modeled 
as 
part 
of 
the 
scenario 
determination 
is 
wide, 
and 
historical information is 
used to support 
the identification of 
the 
key factors. 
As the 
forecast horizon 
increases, the 
availability of 
information 
decreases, 
requiring 
an 
increase 
in 
judgment. 
For 
cycle-sensitive PD and LGD determination purposes, UBS projects 
the relevant 
economic factors 
for a 
period of 
three years 
before 
reverting, over a 
specified period, to 
a cycle-neutral PD 
and LGD 
for longer-term projections. 
Factors relevant 
for ECL 
calculation vary 
by type 
of exposure. 
Regional 
and 
client-segment 
characteristics 
are 
generally 
taken 
into 
account, 
with 
specific 
focus 
on 
Switzerland 
and 
the 
US, 
considering UBS’s key ECL-relevant portfolios. 
For 
UBS, 
the 
following 
forward-looking 
macroeconomic 
variables represent the most relevant factors for ECL calculation: 
–
 
GDP growth rates, given 
their significant effect on 
borrowers’ 
performance; 
–
 
unemployment 
rates, given 
their significant 
effect on 
private 
clients’ ability to meet contractual obligations; 
–
 
house price indices, given 
their significant effect on mortgage 
collateral valuations; 
–
 
interest rates, 
given their 
significant effect 
on counterparties’ 
abilities to service debt; 
–
 
consumer 
price 
indices, 
given 
their 
overall 
relevance 
for 
companies’ 
performance, 
private 
clients’ 
purchasing 
power 
and economic stability; and 
–
 
equity indices, 
given that 
they are 
an important 
factor in 
our 
corporate rating tools. 
Scenario generation, review process and governance 
A 
team 
of 
economists, 
who 
are 
part 
of 
Group 
Risk 
Control, 
develop 
the 
forward-looking 
macroeconomic 
assumptions 
with 
involvement from a broad range of experts. 
The 
scenarios, their 
weight and 
the key 
macroeconomic and 
other factors 
are subject 
to a 
critical assessment by 
the Scenario 
and 
Operating 
Committees, 
which 
include 
senior 
management 
from 
Group Risk 
and 
Group Finance. 
Important 
aspects 
for 
the 
review
 
include 
whether 
there 
may 
be 
particular 
credit 
risk 
concerns 
that 
may 
not 
be 
capable 
of 
being 
addressed 
systematically 
and 
require 
post-model 
adjustments 
for 
stage 
allocation and ECL allowance. 
The Group Model Governance Board, 
as the highest authority 
under UBS’s model 
governance framework, ratifies 
the decisions 
taken by the Operating Committee. 
›
 
Refer to Note 20 for more information 
ECL measurement period 
The 
period 
for 
which 
lifetime 
ECL 
are 
determined 
is 
based 
on 
the 
maximum 
contractual 
period 
that 
UBS 
is 
exposed 
to 
credit 
risk, taking 
into account 
contractual extension, 
termination and 
prepayment 
options. 
For 
irrevocable 
loan 
commitments 
and 
financial 
guarantee 
contracts, 
the 
measurement 
period 
represents 
the 
maximum 
contractual 
period 
for 
which 
UBS 
has 
an obligation to extend credit. 
 
 
 

 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
302 
 
Note 1 
Summary of significant accounting policies (continued)
Additionally, 
some 
financial 
instruments 
include 
both 
an 
on-
demand loan and 
a revocable undrawn 
commitment, where the 
contractual 
cancelation 
right 
does 
not 
limit 
UBS’s 
exposure 
to 
credit risk 
to the 
contractual notice 
period, as 
the client 
has the 
ability to 
draw down 
funds before 
UBS can 
take risk-mitigating 
actions. 
In 
such 
cases, 
UBS 
is 
required 
to 
estimate 
the 
period 
over which it is exposed to credit risk. This applies to UBS’s credit 
card 
limits, 
which 
do 
not 
have 
a 
defined 
contractual 
maturity 
date, 
are 
callable 
on 
demand 
and 
where 
the 
drawn 
and 
undrawn 
components 
are 
managed 
as 
one 
exposure. 
The 
exposure 
arising 
from 
UBS’s 
credit 
card 
limits 
is 
not 
significant 
and is managed 
at a portfolio 
level, with credit 
actions triggered 
when 
balances 
are 
past 
due. 
An 
ECL 
measurement 
period 
of 
seven years is applied for credit card 
limits, capped at 12 months 
for 
stage 1 
balances, 
as 
a 
proxy 
for 
the 
period 
that 
UBS 
is 
exposed to credit risk. 
Customary 
master 
credit 
agreements 
in 
the 
Swiss 
corporate 
market 
also 
include 
on-demand 
loans 
and 
revocable 
undrawn 
commitments. 
For 
smaller 
commercial 
facilities, 
a 
risk-based 
monitoring 
(RbM) 
approach 
is 
in 
place 
that 
highlights 
negative 
trends 
as 
risk 
events, 
at 
an 
individual 
facility 
level, 
based 
on 
a 
combination 
of 
continuously 
updated 
risk 
indicators. 
The 
risk 
events trigger additional 
credit reviews by 
a risk officer, 
enabling 
informed credit 
decisions to 
be taken. 
Larger corporate 
facilities 
are 
not 
subject
 
to 
RbM, 
but 
are 
reviewed 
at 
least 
annually 
through a formal credit review. UBS has assessed these credit risk 
management 
practices 
and 
considers 
both 
the 
RbM 
approach 
and formal 
credit reviews 
as substantive 
credit reviews 
resulting 
in 
a 
re-origination 
of 
the 
given 
facility. 
Following 
this, 
a 
12-
month measurement 
period from 
the reporting 
date is 
used for 
both types of facilities as an appropriate proxy of 
the period over 
which UBS is exposed to credit risk, 
with 12 months also used as 
a look-back period for assessing SICR, always from the respective 
reporting date. 
Significant increase in credit risk 
Financial 
instruments 
subject 
to 
ECL 
are 
monitored 
on 
an 
ongoing 
basis. 
To 
determine 
whether 
the 
recognition 
of 
a 
maximum 
12-month 
ECL 
continues 
to 
be 
appropriate, 
an 
assessment 
is made 
as 
to 
whether 
an 
SICR 
has 
occurred 
since 
initial 
recognition 
of 
the 
financial 
instrument, 
applying 
both 
quantitative 
and qualitative 
factors. 
Primarily, 
UBS 
assesses 
changes 
in 
an 
instrument’s 
risk 
of 
default 
on 
a 
quantitative 
basis 
by 
comparing 
the 
annualized 
forward-looking 
and 
scenario-weighted 
lifetime 
PD 
of 
an 
instrument determined at two different dates: 
–
 
at the reporting date; and 
–
 
at inception of the instrument. 
If, based on UBS’s 
quantitative modeling, an increase exceeds 
a 
set 
threshold, 
an 
SICR 
is 
deemed 
to 
have 
occurred 
and 
the 
instrument is transferred to stage 2 with lifetime ECL recognized. 
The threshold 
applied varies 
depending on 
the original 
credit 
quality 
of 
the 
borrower, 
with 
a 
higher 
SICR 
threshold 
set 
for 
those
 
instruments 
with 
a 
low 
PD
 
at 
inception. 
The 
SICR 
assessment 
based 
on 
PD 
changes 
is 
made 
at 
an 
individual 
financial 
asset 
level. 
A 
high-level 
overview 
of 
the 
SICR 
trigger, 
which 
is a 
multiple 
of 
the annualized 
remaining 
lifetime PIT 
PD 
expressed 
in 
rating 
downgrades
, 
is 
provided 
in 
the 
“SICR 
thresholds” 
table below. 
The actual 
SICR thresholds 
applied are 
defined 
on 
a 
more 
granular 
level 
by 
interpolating 
between 
the 
values shown in the table below. 
SICR thresholds 
Internal rating at origination 
of the instrument 
Rating downgrades / 
SICR trigger 
0–3 
3 
4–8 
2 
9–13 
1 
›
 
Refer to the “Risk management and control” 
section of this 
report for more details about UBS’s internal grading system 
 
Irrespective 
of 
the 
SICR 
assessment 
based 
on 
default 
probabilities, credit 
risk is 
generally deemed 
to have 
significantly 
increased 
for 
an 
instrument 
if 
the 
contractual 
payments
 
are 
more than 
30 days 
past due. 
For certain 
less material 
portfolios, 
specifically 
the 
Swiss 
credit 
card 
portfolio, 
the 
30-day 
past 
due 
criterion 
is 
used 
as 
the 
primary 
indicator 
of 
an 
SICR. 
Where 
instruments 
are 
transferred 
to 
stage 2 
due 
to 
the 
30-day 
past 
due criterion, 
a minimum 
period of 
six months 
is applied 
before 
a 
transfer 
back 
to 
stage 1 
can 
be 
triggered. 
For 
instruments 
in 
Personal & 
Corporate Banking 
and Global 
Wealth Management 
Region Switzerland 
that are 
between 90 
and 180 
days past 
due 
but 
have 
not 
been 
reclassified 
to 
stage 3, 
a 
one-year 
period 
is 
applied before a transfer back to stage 1 can be triggered. 
Additionally, 
based 
on 
individual 
counterparty-specific 
indicators, 
external 
market 
indicators 
of 
credit 
risk 
or 
general 
economic 
conditions, 
counterparties may 
be moved 
to a 
watch 
list, 
which 
is 
used 
as 
a 
secondary 
qualitative 
indicator 
for 
an 
SICR. 
Exception 
management 
is 
further 
applied, 
allowing 
for 
individual 
and 
collective 
adjustments 
on 
exposures 
sharing 
the 
same 
credit 
risk 
characteristics 
to 
take 
account 
of 
specific 
situations that are not otherwise fully reflected. 
In 
general, 
the 
overall 
SICR 
determination 
process 
does 
not 
apply 
to 
Lombard 
loans, 
securities 
financing 
transactions 
and 
certain 
other 
asset-based 
lending 
transactions, 
because 
of 
the 
risk 
management 
practices 
adopted, 
including 
daily 
monitoring 
processes with strict margining. If margin calls are not satisfied, a 
position 
is 
closed 
out 
and 
classified 
as 
a 
stage 3 
position. 
In 
exceptional 
cases, 
an 
individual 
adjustment 
and 
a 
transfer 
into 
stage 2 may be made to take account of specific facts. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
303 
 
Note 1 
Summary of significant accounting policies (continued) 
Credit risk 
officers are 
responsible for 
the identification 
of an 
SICR
, 
which
 
for 
accounting 
purposes 
is 
in 
some 
respects
 
different 
from 
internal 
credit 
risk 
management 
processes. 
This 
difference 
mainly 
arises 
because 
ECL 
accounting 
requirements 
are 
instrument-specific, such 
that a 
borrower 
can have 
multiple 
exposures 
allocated 
to 
different 
stages, 
and 
maturing 
loans 
in 
stage 2 will 
migrate to 
stage 1 upon 
renewal irrespective 
of the 
actual 
credit 
risk 
at 
that 
time. 
Under 
a 
risk-based 
approach, 
a 
holistic counterparty 
credit assessment 
and the 
absolute level 
of 
risk at any given date 
will determine what risk-mitigating actions 
may be warranted. 
›
 
Refer to the “Risk management and control” 
section of this 
report for more information 
 
Critical accounting estimates and judgments 
The 
calculation 
of 
ECL 
requires 
management 
to 
apply 
significant 
judgment 
and 
make 
estimates 
and 
assumptions 
that 
can 
result 
in 
significant changes to the timing and amount 
of ECL recognized. 
Determination of a significant increase in 
credit risk 
IFRS 
9 
does 
not 
include 
a 
definition 
of 
what 
constitutes 
an 
SICR, 
with 
UBS’s 
assessment 
considering
q
ualitative 
and 
quantitative
criteria.
An 
IFRS
9 
O
perating 
C
ommittee 
has 
been 
established 
to 
review 
and 
challenge the SICR results. 
Scenarios, scenario weights and macroeconomic 
variables 
ECL 
reflect 
an 
unbiased 
and 
probability-weighted 
amount, 
which 
UBS 
determines 
by 
evaluating 
a 
range 
of 
possible 
outcomes. 
Management 
selects forward-looking 
scenarios which 
include relevant 
macroeconomic 
variables 
and 
management’s 
assumptions 
around 
future 
economic 
conditions. An 
IFRS 
9 Scenario 
Committee, in 
addition to 
the Operating 
C
ommittee, 
is 
in 
place
to 
derive
, 
review 
and 
challenge 
the 
scenario 
selection 
and 
weights 
as 
well 
as 
to 
determine 
whether 
any 
additional 
post-model adjustments are required that may significantly 
affect ECL. 
ECL measurement period 
Lifetime 
ECL 
are 
generally 
determined 
based 
upon 
the 
contractual 
maturity of the transaction, which significantly affects ECL. For credit card 
limits and 
Swiss callable 
master credit 
facilities, judgment 
is required, 
as 
UBS must 
determine the period 
over which it 
is exposed to 
credit risk. A 
seven-year period 
is applied 
for credit 
card limits, 
capped at 
12 months 
for 
stage 1 
positions, 
and 
a 
12-month 
period 
applied 
for 
master 
credit 
facilities. 
Modeling and post-model 
adjustments 
A 
number 
of 
complex 
models 
have 
been 
developed 
or 
modified 
to 
calculate 
ECL, 
with 
additional 
post-model 
adjustments 
required 
which 
may 
significantly 
affect 
ECL. 
The 
models 
are 
governed by 
UBS’s 
model 
validation controls and 
approved by the 
Group Model Governance Board 
(the 
GMGB). 
The 
post-model 
adjustments 
are 
approved 
by 
the 
IFRS 
9 
Operating Committee and endorsed by the 
GMGB. 
The 
Group 
provides 
a 
sensitivity 
analysis 
covering 
key 
macroeconomic 
variables, scenario weights 
and SICR 
trigger points 
on ECL 
measurement 
within Note 20f. 
›
 
Refer to Note 20 for more information 
h. Restructured and modified financial assets 
When payment default 
is expected or 
where default has 
already 
occurred, 
UBS 
may 
grant 
concessions 
to 
borrowers 
in 
financial 
difficulties that 
it would not 
consider in 
the normal course 
of its 
business, 
such 
as 
preferential 
interest 
rates, 
extension 
of 
maturity, 
modifying 
the 
schedule 
of 
repayments, 
debt 
/ 
equity 
swap, 
subordination, 
etc. 
When 
a 
concession 
or 
forbearance 
measure is 
granted, each 
case is 
considered individually 
and the 
exposure 
is generally 
classified as 
being 
in default. 
Forbearance 
classification will remain until 
the loan is collected or 
written off, 
non-preferential 
conditions 
superseding 
preferential 
conditions 
are 
granted 
or 
until 
the 
counterparty 
has 
recovered 
and 
the 
preferential conditions no longer exceed UBS’s risk tolerance. 
Modifications result in an alteration of future contractual cash 
flows 
and 
can 
occur 
within 
UBS’s 
normal 
risk 
tolerance 
or 
as 
part of a 
credit restructuring where 
a counterparty is 
in financial 
difficulties. 
A restructuring or 
modification of a 
financial asset could 
lead 
to a 
substantial change 
in the 
terms and 
conditions, resulting 
in 
the 
original 
financial 
asset 
being 
derecognized 
and 
a 
new 
financial 
asset 
being 
recognized. 
Where 
the 
modification 
does 
not 
result 
in 
a 
derecognition, 
any 
difference 
between 
the 
modified 
contractual 
cash 
flows 
discounted 
at 
the 
original 
EIR 
and 
the 
existing 
gross 
carrying 
amount 
of 
the 
given 
financial 
asset 
is 
recognized 
in 
the 
income 
statement 
as 
a 
modification 
gain or loss. 
i. Offsetting 
UBS nets financial assets and liabilities on its balance sheet if (i) it 
has the unconditional and 
legally enforceable right to 
set off the 
recognized amounts, 
both in 
the normal 
course of business 
and 
in the 
event of 
default, bankruptcy 
or insolvency 
of UBS 
and its 
counterparties, and (ii) it intends either to settle on 
a net basis or 
to realize 
the asset and 
settle the liability 
simultaneously. 
Netted 
positions 
include, 
for 
example, 
certain 
derivatives 
and 
repurchase 
and 
reverse 
repurchase 
transactions 
with 
various 
counterparties, exchanges and clearing houses. 
In 
assessing 
whether 
UBS 
intends 
to 
either 
settle 
on 
a 
net 
basis, 
or 
to 
realize 
the 
asset 
and 
settle 
the 
liability 
simultaneously, 
emphasis 
is 
placed 
on 
the 
effectiveness 
of 
operational 
settlement mechanics 
in eliminating 
substantially all 
credit 
and 
liquidity 
exposure 
between 
the 
counterparties. 
This 
condition 
precludes 
offsetting 
on 
the 
balance 
sheet 
for 
substantial amounts of 
UBS’s financial assets 
and liabilities, even 
though 
they 
may 
be 
subject 
to 
enforceable 
netting 
arrangements. 
For 
OTC 
derivative 
contracts, 
balance 
sheet 
offsetting is generally only permitted 
in circumstances in which a 
market 
settlement mechanism 
exists 
via an 
exchange or 
central 
clearing 
counterparty
 
that 
effectively 
accomplishes 
net 
settlement 
through 
a 
daily 
exchange 
of 
collateral 
via 
a 
cash 
margining 
process. 
For 
repurchase 
arrangements 
and 
securities 
financing 
tr
ansactions, 
balance 
sheet
 
offsetting 
may 
be 
permitted 
only 
to 
the 
extent 
that 
the 
settlement 
mechanism 
eliminates, or results in 
insignificant, credit and liquidity risk, 
and 
processes 
the 
receivables 
and 
payables 
in 
a 
single 
settlement 
process or cycle. 
›
 
Refer to Note 22
 
for more information 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
304 
 
Note 1 
Summary of significant accounting policies (continued) 
j. Hedge accounting 
The 
Group 
applies 
hedge 
accounting 
requirements 
of 
IFRS 
9, 
unless 
stated 
otherwise 
below,
 
where 
the 
criteria 
for 
documentation 
and 
hedge 
effectiveness 
are 
met. 
If 
a 
hedge 
relationship no 
longer 
meets 
the 
criteria 
for 
hedge 
accounting, 
hedge 
accounting 
is 
discontinued. Voluntary 
discontinuation of 
hedge accounting 
is permitted 
under IAS 
39 but not 
under IFRS 
9. 
Fair value hedges of interest rate risk related to debt instruments 
The fair value change 
of the hedged item 
attributable 
to a hedged 
risk is 
reflected as 
an 
adjustment to 
the 
carrying amount of 
the 
hedged item, and recognized 
in the income statement along with 
the change 
in the fair 
value 
of the 
hedging 
instrument. 
Fair value hedges of portfolio interest rate risk related to loans 
designated under IAS 39 
The 
fair 
value 
change 
of 
the 
hedged 
item 
attributable 
to 
a 
hedged risk is reflected within 
Other financial assets measured at 
amortized 
cost 
or 
Other 
financial 
liabilities 
measured 
at 
amortized 
cost 
and 
recognized 
in 
the 
income 
statement 
along 
with the change in the fair value of the hedging instrument. 
Fair value hedges of foreign exchange risk related to debt 
instruments 
The 
fair 
value 
change 
of 
the 
hedged 
item 
attributable 
to 
a 
hedged risk 
is reflected 
in the measurement 
of the 
hedged item 
and recognized 
in the 
income statement 
along with 
the change 
in the fair value of 
the hedging instrument. The foreign 
currency 
basis 
spread 
of 
cross-currency 
swaps 
designated 
as 
hedging 
derivatives 
is 
excluded 
from 
the 
designation 
and 
accounted 
for 
as 
a 
cost 
of 
hedging 
with 
amounts 
deferred 
in 
Other 
comprehensive 
income
 
within 
Equity
. 
These 
amounts 
are 
released 
to 
the income 
statement 
over the 
term of 
the hedged 
item. 
Discontinuation of fair value hedges 
Discontinuations 
for 
reasons 
other 
than 
derecognition 
of 
the 
hedged item 
result 
in an adjustment 
to the carrying 
amount, 
which 
is amortized 
to the income 
statement 
over the 
remaining 
life of the 
hedged item 
using 
the 
effective interest 
method. If 
the 
hedged 
item 
is 
derecognized, the 
unamortized fair 
value 
adjustment or 
deferred cost of hedging 
amount is recognized 
immediately 
in the 
income statement 
as part 
of any 
derecognition 
gain or 
loss. 
Cash flow hedges of forecast transactions 
Fair value gains 
or losses associated with 
the effective portion 
of 
derivatives 
designated 
as 
cash 
flow 
hedges 
for 
cash 
flow 
repricing 
risk 
are 
recognized 
initially 
in 
Other 
comprehensive 
income 
within 
Equity
 
and reclassified to the income statement 
in 
the periods when the hedged 
forecast cash flows affect 
profit or 
loss, 
including 
discontinued 
hedges 
for 
which 
forecast 
cash 
flows are 
expected 
to occur. 
If the 
forecast 
transactions 
are 
no 
longer 
expected 
to 
occur, 
the 
deferred 
gains 
or 
losses 
are 
immediately 
reclassified to the income statement. 
Hedges of net investments in foreign operations 
Gains or losses on the hedging 
instrument 
relating to the effective 
portion of a hedge are recognized 
directly in 
Other comprehensive 
income
 
within 
Equity, 
while 
any 
gains 
or 
losses 
relating 
to 
the 
ineffective 
and / or undesignated 
portion (for 
example, the 
interest 
element 
of 
a 
forward 
contract) 
are 
recognized 
in 
the 
income 
statement. 
Upon 
disposal 
or 
partial 
disposal 
of 
the 
foreign 
operation, 
the 
cumulative 
value 
of 
any 
such 
gains 
or 
losses 
recognized in 
Equity
 
associated with 
the 
entity
 
is 
reclassified to 
Other income
. 
Interest Rate Benchmark Reform 
UBS 
can 
continue 
hedge 
accounting 
during 
the 
period 
of 
uncertainty before existing interest rate benchmarks are replaced 
with 
alternative 
risk-free 
interest 
rates. 
During 
this 
period, 
UBS 
can 
assume 
that 
the 
current 
benchmark 
rates 
will 
continue 
to 
exist, 
such 
that 
forecast 
transactions 
are 
considered 
highly 
probable 
and 
hedge 
relationships 
remain,
 
with
 
little 
or
 
no 
consequential 
impact 
on 
the 
financial 
statements. 
Upon 
replacement 
of 
existing 
interest 
rate 
benchmarks 
by 
alternative 
risk-free 
interest 
rates 
expected 
in 
2021 
and 
beyond, 
UBS 
will 
apply 
the requirements 
of 
Amendments to 
IFRS 
9, IAS 
39, 
IFRS 
7, 
IFRS 4 
and IFRS 
16 (Interest Rate 
Benchmark Reform 
– Phase 
2).
 
›
 
Refer to Note 1b and Note 1c for more information 
3) Fee and commission income and expenses 
UBS 
earns 
fee 
income 
from 
the 
diverse 
range 
of 
services 
it 
provides to its 
clients. Fee income can 
be divided into two 
broad 
categories: 
fees 
earned 
from 
services 
that 
are 
provided 
over 
a 
certain 
period 
of 
time, 
such 
as 
management 
of 
clients’ 
assets, 
custody 
services 
and 
certain 
advisory 
services; 
and 
fees 
earned 
from 
point-in-time 
services, 
such 
as 
underwriting 
fees, 
deal-
contingent 
merger 
and 
acquisitions 
(M&A) 
fees 
and 
brokerage 
fees (e.g., securities 
and derivatives execution 
and clearing). UBS 
recognizes 
fees 
earned 
on 
transaction-based 
arrangements 
when 
it 
has 
fully 
provided 
the 
service 
to 
the 
customer. 
Where 
the contract requires services to be provided over time, income is 
recognized on a systematic basis over the life of the agreement. 
Consideration 
received 
is 
allocated 
to 
the 
separately 
identifiable performance 
obligations in 
a contract. 
Owing to 
the 
nature 
of 
UBS’s 
business, 
contracts 
that 
include 
multiple 
performance 
obligations 
are 
typically 
those 
that 
are 
considered 
to 
include 
a 
series 
of 
similar 
performance 
obligations 
fulfilled 
over 
time 
with 
the 
same 
pattern 
of 
transfer 
to 
the 
client, 
e.g., 
management 
of 
client 
assets 
and 
custodial 
services. 
As 
a 
consequence, UBS 
is not 
required to 
apply significant 
judgment 
in 
allocating 
the 
consideration 
received 
across 
the 
various 
performance obligations. 
 
 

 
 
305 
 
Note 1 
Summary of significant accounting policies (continued) 
Point-in-time 
services 
are 
generally 
for 
a 
fixed 
price 
or 
dependent on 
deal size, 
e.g., a 
fixed number 
of basis 
points of 
trade 
size, 
where 
the 
amount 
of 
revenue 
is 
known 
when 
the 
performance obligation is met. 
Fixed 
period-in-time 
fees 
are 
recognized 
on 
a 
straight-line 
basis 
over 
the 
performance 
period. 
Custodial 
and 
asset 
management fees 
can be 
variable through 
reference to 
the size 
of the 
customer portfolio 
and are 
generally billed 
on a 
monthly 
or quarterly 
basis once the 
customer’s portfolio size 
is known or 
known 
with 
near 
certainty. 
This 
is 
generally 
prior 
to 
UBS’s 
reporting 
dates 
and 
such 
fees 
are 
also 
recognized 
ratably 
over 
the performance period. 
UBS 
does 
not 
recognize 
performance 
fees 
related 
to 
management 
of 
clients’ 
assets 
or 
fees 
related 
to 
contingencies 
beyond UBS’s control until such uncertainties are resolved. 
UBS’s 
fees 
are 
generally 
earned 
from 
short-term 
contracts, 
with 
the 
majority 
either 
collected 
immediately 
or 
via 
regular 
monthly 
or 
quarterly 
amounts 
deducted 
directly 
from 
clients’ 
accounts. As a 
result, UBS’s contracts 
do not include 
a financing 
component or 
result in 
the recognition 
of significant 
receivables 
or prepayment assets. Furthermore, due to the short-term nature 
of such 
contracts, UBS 
has not 
capitalized any 
material costs 
to 
obtain 
or fulfill 
a contract 
or generated 
any 
significant contract 
assets or liabilities. 
UBS 
acts 
as 
principal 
in 
the 
majority 
of 
contracts 
with 
customers, 
with 
the 
exception 
of 
derivative
s
 
execution 
and 
clearing 
services, 
resulting 
in 
fee 
and 
commission 
income 
and 
expense 
being 
presented 
gross 
on 
the 
face 
of 
the 
income 
statement. 
For 
derivatives 
execution 
and 
clearing 
services, 
UBS 
only records 
its specific 
fees in 
the income 
statement, with 
fees 
payable 
to 
other 
parties 
not 
recognized 
as 
an 
expense 
but 
instead 
directly 
offset 
against 
the 
associated 
income 
collected 
from the given client. 
UBS 
presents 
expenses 
primarily 
in 
line 
with 
their 
nature 
in 
the income statement, differentiating between expenses that are 
directly 
attributable 
to 
the 
satisfaction 
of 
specific 
performance 
obligations 
associated 
with 
the 
generation 
of 
revenues, 
which 
are 
presented 
within 
Total 
o
perating 
i
ncome
 
as 
Fee 
and 
commission 
expense
, 
and 
those 
that 
are 
related 
to 
personnel, 
general and administrative expenses, 
which are presented within 
Total operating expenses
. 
›
 
Refer to Note 4 for more information, including 
the 
disaggregation of revenues 
4) Cash and cash equivalents 
For the 
purpose 
of 
the statement 
of 
cash 
flows, cash 
and cash 
equivalents comprise 
balances with 
an original 
maturity of three 
months 
or 
less, 
including 
cash, 
money 
market 
paper 
and 
balances at central and other banks. 
5) Share-based and other deferred compensation plans 
UBS recognizes expenses for deferred compensation awards over 
the 
period 
that 
the 
employee 
is 
required 
to 
provide 
service 
to 
become 
entitled 
to 
the 
award. 
Where 
the 
service 
period 
is 
shortened, 
for 
example 
in 
the 
case 
of 
employees 
affected 
by 
restructuring 
programs 
or 
mutually 
agreed 
termination 
provisions, 
recognition 
of 
expense 
is 
accelerated 
to 
the 
termination date. Where no future service is required, such as for 
employees 
who 
are 
eligible 
for 
retirement 
or 
who 
have 
met 
certain 
age 
and 
length
-
of
-
service 
criteria, 
the 
services 
are 
presumed 
to 
have 
been 
received 
and 
compensation 
expense 
is 
recognized over the performance 
year or, 
in the case of 
off-cycle 
awards, immediately on the grant date. 
Share-based compensation plans 
Share-based compensation 
expense is 
measured by 
reference to 
the 
fair 
value 
of 
the 
equity 
instruments 
on 
the 
date 
of 
grant, 
taking 
into 
account 
the 
terms 
and 
conditions 
inherent 
in 
the 
award, 
including, 
where 
relevant, 
dividend 
rights, 
transfer 
restrictions in effect 
beyond the vesting date, 
market conditions, 
and non-vesting conditions. 
For 
equity-settled 
awards, 
the 
fair 
value 
is 
not 
remeasured 
unless the terms 
of the award are 
modified such that there 
is an 
incremental 
increase 
in 
value. 
No 
adjustments 
are 
made 
for 
modifications 
that result 
in a 
decrease in 
value. Any 
increase in 
fair 
value 
resulting 
from 
a 
modification 
is 
recognized 
as 
compensation expense, 
either over 
the remaining 
service period 
or, for 
vested awards, 
immediately. 
Expenses are 
recognized, on 
a per-tranche basis, over the 
service period based on an estimate 
of the 
number of instruments 
expected to vest 
and are adjusted 
to 
reflect 
the 
actual 
o
utcomes 
of 
service 
or 
performance 
conditions. 
For 
equity-settled 
awards, 
forfeiture 
events 
resulting 
from 
a 
breach of 
a non-vesting 
condition (i.e., 
one that 
does not 
relate 
to 
a 
service 
or 
performance 
condition) 
do 
not 
result 
in 
any 
adjustment to the share-based compensation expense. 
For cash-settled 
share-based awards, 
fair value 
is remeasured 
at 
each 
reporting 
date
,
 
so 
that 
the 
cumulative 
expense 
recognized equals the cash distributed. 
Other deferred compensation plans 
Compensation expense for other deferred 
compensation plans is 
recognized on a 
per-tranche or straight-line 
basis, depending on 
the 
nature 
of 
the 
plan. 
The 
amount 
recognized 
is 
measured 
based on 
the present 
value of 
the amount 
expected to 
be paid 
under the plan and is remeasured at each reporting 
date, so that 
the 
cumulative 
expense 
recognized 
equals 
the 
cash 
or 
the 
fair 
value of respective financial instruments distributed. 
›
 
Refer to Note 27 for more information 
6) Post-employment benefit plans 
UBS 
sponsors 
various 
post-employment 
benefit 
plans 
for 
its 
employees 
worldwide, 
which 
include 
defined 
benefit 
and 
defined contribution 
pension plans, 
and other 
post-employment 
benefits, 
such 
as 
medical 
and 
life 
insurance 
benefits 
that 
are 
payable after the completion of employment. 
›
 
Refer to Note 26 for more information 
 

 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
306 
 
Note 1 
Summary of significant accounting policies (continued) 
Defined benefit plans 
Defined 
benefit
 
plans 
specify 
an 
amount 
of 
benefit 
that 
an 
employee 
will 
receive, 
which 
usually 
depends 
on 
one 
or 
more 
factors, 
such 
as 
age, 
years 
of 
service 
and 
compensation. 
The 
defined 
benefit 
liability 
recognized 
in 
the 
balance 
sheet 
is 
the 
present value of the 
defined benefit obligation less the 
fair value 
of 
the 
plan’s 
assets 
at 
the 
balance 
sheet 
date, 
with 
changes 
resulting 
from 
remeasurements 
recorded 
immediately 
in 
Other 
comprehensive 
income
. 
If 
the 
fair 
value 
of 
the 
plan’s 
assets 
is 
higher than 
the present 
value of 
the defined 
benefit obligation, 
the recognition of the resulting net asset is limited to the present 
value of economic benefits 
available in the form of 
refunds from 
the 
plan 
or 
reductions 
in 
future 
contributions 
to 
the 
plan. 
UBS 
applies 
the 
projected 
unit 
credit 
method 
to 
determine 
the 
present 
value 
of 
its 
defined 
benefit 
obligations, 
the 
related 
current service 
cost and, 
where applicable, 
the past service 
cost. 
These amounts, 
which take into 
account the 
specific features 
of 
each 
plan, 
including 
risk 
sharing 
between 
employee 
and 
employer, 
are 
calculated 
periodically 
by 
independent 
qualified 
actuaries. 
 
Critical accounting estimates and judgments 
The net defined benefit liability or asset at the balance sheet date and the 
related personnel expense 
depend on the 
expected future benefits 
to be 
provided, 
determined 
using 
a 
number 
of 
economic 
and 
demographic 
assumptions. 
A 
range 
of 
assumptions 
could 
be 
applied, 
and 
different 
assumptions could 
significantly alter 
the defined 
benefit liability 
or asset 
and 
pension 
expense 
recognized. 
The 
most 
significant 
assumptions 
include 
life 
expectancy, 
the 
discount 
rate, 
expected 
salary 
increases, 
pension 
increases
,
and 
interest 
credits 
on
retirement 
savings 
account 
balances. Sensitivity 
analysis for 
reasonable possible 
movements in 
each 
significant assumption for UBS‘s post-employment obligations is 
provided 
within Note 26. 
›
 
Refer to Note 26
 
for more information 
Defined contribution plans 
A 
defined 
contribution 
plan 
pays 
fixed 
contributions 
into 
a 
separate entity 
from which 
post-employment and other 
benefits 
are 
paid. 
UBS 
has 
no 
legal 
or 
constructive 
obligation 
to 
pay 
further amounts if the plan does not hold sufficient assets 
to pay 
employees 
the 
benefits 
relating 
to 
employee 
service 
in 
the 
current 
and prior 
periods. Compensation 
expense is 
recognized 
when 
the 
employees 
have 
rendered 
services 
in 
exchange 
for 
contributions. 
This 
is 
generally 
in 
the 
year 
of 
contribution. 
Prepaid 
contributions 
are 
recognized 
as 
an 
asset 
to 
the 
extent 
that a cash refund or a reduction in future payments is available. 
7) Income taxes 
UBS is 
subject to 
the income 
tax laws 
of Switzerland 
and those 
of 
the 
non-Swiss 
jurisdictions 
in 
which 
UBS 
has 
business 
operations. 
The 
Group’s 
provision 
for 
income 
taxes 
is 
composed 
of 
current and deferred taxes. Current income taxes represent 
taxes 
to 
be 
paid 
or 
refunded 
for 
the 
current 
period
 
or 
previous 
periods. 
Deferred 
taxes 
are 
recognized 
for 
temporary 
differences 
between 
the
 
carrying 
amounts 
and 
tax 
bases 
of 
assets 
and 
liabilities 
that 
will 
result 
in 
taxable 
or 
deductible 
amounts 
in 
future 
periods 
and 
are 
measured 
using 
the 
applicable 
tax 
rates 
and laws that have been enacted or substantively enacted by 
the 
end of the 
reporting period and 
that will be 
in effect when 
such 
differences are expected to reverse. 
Deferred 
tax 
assets arise 
from a 
variety 
of 
sources, the 
most 
significant being: 
(i) tax 
losses that 
can be 
carried forward 
to be 
used against profits in future years; and (ii) temporary differences 
that 
will 
result 
in 
deductions 
against 
profits 
in 
future 
years. 
Deferred 
tax 
assets 
are 
recognized 
only 
to 
the 
extent 
it 
is 
probable 
that 
sufficient 
taxable 
profits 
will 
be 
available 
against 
which 
these 
differences 
can 
be 
used. 
When 
an 
entity 
or 
tax 
group has 
a history 
of recent losses, 
deferred tax 
assets are only 
recognized 
to 
the 
extent 
there 
are 
sufficient 
taxable 
temporary 
differences 
or 
there 
is 
convincing 
other 
evidence 
that 
sufficient 
taxable 
profit 
will 
be 
available 
against 
which 
the 
unused 
tax 
losses can be utilized. 
Deferred 
tax 
liabilities 
are 
recognized 
for 
temporary 
differences between the carrying amounts of assets and liabilities 
in 
the 
balance 
sheet 
that 
reflect 
the 
expectation 
that 
certain 
items will give rise to taxable income in future periods. 
Deferred and current tax assets and 
liabilities are offset when: 
(i) 
they arise 
in the 
same tax 
reporting 
group; (ii) 
they 
relate to 
the same tax authority; (iii) the legal right to offset exists; and (iv) 
they are intended to be settled net or realized simultaneously. 
Current 
and 
deferred 
taxes 
are 
recognized 
as 
income 
tax 
benefit 
or 
expense in 
the 
income statement, 
except for 
current 
and deferred taxes recognized in relation to: 
(i) the acquisition of 
a 
subsidiary 
(for 
which 
such amounts 
would 
affect the 
amount 
of goodwill 
arising from 
the acquisition); 
(ii) gains 
and losses 
on 
the 
sale 
of 
treasury 
shares 
(for 
which 
the 
tax 
effects 
are 
recognized 
directly 
in 
Equity
); 
(iii) 
unrealized 
gains 
or 
losses 
on 
financial instruments 
that are 
classified at 
FVOCI; (iv) 
changes in 
fair 
value 
of 
derivative 
instruments 
designated 
as 
cash 
flow 
hedges; 
(v) 
remeasurements 
of 
defined 
benefit 
plans; 
or 
(vi) 
certain 
foreign 
currency 
translations 
of 
foreign 
operations. 
Amounts 
relating 
to 
points 
(iii) 
through 
(vi) 
are 
recognized 
in 
Other comprehensive income
 
within 
Equity
. 
UBS reflects 
the potential effect 
of uncertain tax 
positions for 
which acceptance by 
the relevant tax 
authority is not 
considered 
probable 
by 
adjusting 
current 
or 
deferred 
taxes, 
as 
applicable, 
using either 
the most 
likely amount 
or expected 
value methods, 
depending on which method is deemed a 
better predictor of the 
basis 
on 
which 
and 
extent 
to 
which 
the 
uncertainty 
will 
be 
resolved. 
 

 
 
 
 
 
 
 
 
 
 
 
 
307 
 
Note 1 
Summary of significant accounting policies (continued) 
Critical accounting estimates and judgments 
Tax 
laws 
are 
complex, 
and 
judgment 
and 
interpretations 
about 
the 
application of such 
laws are required 
when accounting for 
income taxes. 
UBS 
considers 
the 
performance 
of 
its 
businesses 
and 
the 
accuracy 
of 
historical forecasts and other 
factors in evaluating the 
recoverability of its 
deferred tax assets, including the remaining tax loss 
carry-forward period, 
and 
its 
assessment 
of 
expected 
future 
taxable 
profits 
in 
the 
forecast 
period 
used 
for 
recognizing 
deferred 
tax 
assets. 
Estimating 
future 
profitability 
and 
business 
plan 
forecasts 
is 
inherently 
subjective 
and 
is 
particularly sensitive to future economic, 
market and other conditions. 
Forecasts 
are 
reviewed 
annually, 
but 
adjustments 
may 
be 
made 
at 
other 
times, 
if 
required. 
If 
recent 
losses 
have 
been 
incurred, 
convincing 
evidence is 
required 
to prove 
there is 
sufficient future 
profitability given 
the 
value 
of 
UBS’s 
deferred 
tax 
assets 
may 
be 
affected, 
with 
effects 
primarily recognized through the income statement. 
In 
addition, 
judgment 
is 
required 
to 
assess 
the 
expected 
value 
of 
uncertain 
tax 
positions 
and 
the 
related 
probabilities, 
including 
interpretation 
of 
tax 
laws, 
the 
resolution 
of 
any 
income 
tax-related 
appeals and litigation. 
›
 
Refer to Note 8 for more information 
8) Investments in associates 
Interests in 
entities where 
UBS has 
significant influence 
over the 
financial and 
operating policies 
of the 
entity but 
does not 
have 
control are 
classified as investments 
in associates and 
accounted 
for 
under 
the 
equity 
method 
of 
accounting. 
Typically, 
UBS 
has 
significant 
influence 
when 
it 
holds 
or 
has 
the 
ability 
to 
hold 
between 
20% 
and 
50% 
of 
a 
company’s 
voting 
rights. 
Investments in associates 
are initially recognized 
at cost, and 
the 
carrying 
amount 
is 
increased 
or 
decreased 
after 
the 
date 
of 
acquisition 
to 
recognize 
the 
Group’s 
share 
of 
the 
investee’s 
comprehensive income and any impairment losses. 
The 
net 
investment 
in 
an 
associate 
is 
impaired 
if 
there 
is 
objective 
evidence 
of 
a 
loss 
event 
and 
the 
carrying 
amount 
of 
the investment in the associate exceeds its recoverable amount. 
›
 
Refer to Note 28 for more information 
9) Property, equipment and software 
Property, 
equipment and software includes own-used properties, 
leasehold 
improvements, 
information 
technology
 
hardware, 
externally 
purchased 
and 
internally generated 
software, 
as 
well 
as 
communication
s
 
and 
other 
similar 
equipment. 
Property, 
equipment 
and 
software 
is 
measured 
at 
cost 
less 
accumulated 
dep
reciation 
and 
impairment 
losses
 
and 
is 
reviewed 
at 
each 
reporting 
date 
for 
indication 
for 
impairment. 
Software 
development 
costs 
are 
capitalized 
only 
when 
the 
costs 
can 
be 
measured 
reliably 
and 
it 
is 
probable 
that 
future 
economic 
benefits 
will 
arise. 
Depreciation 
of 
property, 
equipment 
and 
software begins 
when they are 
available for use 
(i.e., when they 
are
 
in 
the 
location 
and 
condition 
necessary 
for 
them
 
to 
be 
capable of 
operating in 
the manner 
intended by 
management). 
Depreciation is 
calculated on 
a straight-line 
basis over 
an asset‘s 
estimated 
useful 
life. 
The 
estimated 
useful 
economic 
lives 
of 
UBS‘s property, 
equipment and software are: 
–
 
properties, excluding land: ≤ 67 years 
–
 
IT hardware and communications equipment: ≤ 7 years 
–
 
other machines and equipment: ≤ 10 years 
–
 
software: ≤ 10 years 
–
 
leased properties 
and leasehold improvements: 
the shorter of 
the 
lease 
term 
or 
the 
economic 
life 
of 
asset 
(typically 
≤ 
20 
years). 
 
Property, 
equipment 
and 
software 
are 
generally 
tested 
for 
impairment at 
the appropriate 
cash-generating unit 
(CGU) level, 
alongside goodwill and 
intangible assets as 
described in item 
10 
in this 
Note. An impairment 
charge is, however, 
only recognized 
for such assets 
if both the 
asset’s fair value 
less costs of 
disposal 
and value in use 
(if determinable) are below its 
carrying amount. 
The 
fair 
values 
of 
such 
assets, 
other 
than 
property 
that 
has 
a 
market price, are 
generally determined using 
a replacement cost 
approach 
that 
reflects 
the 
amount 
that 
would 
be 
currently 
required 
by 
a 
market participant 
to 
replace 
the 
service 
capacity 
of 
the 
asset. 
If 
such 
assets 
are 
no 
longer 
used, 
they 
are 
tested 
individually for impairment. 
›
 
Refer to Note 12 for more information 
10) Goodwill and intangible assets 
Goodwill 
represents 
the 
future 
economic 
benefits 
arising 
from 
other 
assets 
acquired 
in 
a 
business 
combination 
that 
are 
not 
individually identified and recognized. Goodwill is not 
amortized, 
but
 
is 
assessed 
for 
impairment
 
at 
the 
end 
of 
each 
reporting 
period, 
or when indicators 
of impairment exist. 
UBS tests goodwill 
for 
impairment
 
annually
, 
irrespective 
of 
whether 
there 
is 
any 
indication 
of impairment. 
The 
impairment 
test 
is 
performed 
for 
each 
CGU
 
to 
which 
goodwill is allocated 
by comparing 
the recoverable 
amount, based 
on its value in use, to the carrying amount of the respective 
CGU. 
An 
impairment charge 
is 
recognized in 
the 
income statement 
if 
the carrying 
amount exceeds 
the recoverable 
amount. 
Intangible 
assets 
include
 
separately 
identifiable 
intangible 
items arising 
from business 
combinations and 
certain purchased 
trademarks and similar 
items. Intangible assets 
are recognized at 
cost. 
The 
cost 
of 
an 
intangible 
asset 
acquired 
in 
a 
business 
combination is its 
fair value at the 
date of acquisition. Intangible 
assets 
with 
a 
finite 
useful 
life 
are 
amortized 
using 
the 
straight-
line 
method 
over 
their 
estimated 
useful 
life, 
generally 
not 
exceeding 20 
years. In 
rare cases, 
intangible assets 
can have 
an 
indefinite 
useful 
life, 
in 
which 
case 
they 
are 
not 
amortized. 
At 
each 
reporting 
date, 
intangible 
assets 
are 
reviewed 
for 
indications of impairment. If such indications exist, the intangible 
assets 
are 
analyzed 
to 
assess 
whether 
their 
carrying 
amount 
is 
fully recoverable. An impairment loss is recognized if the carrying 
amount exceeds the recoverable amount. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
308 
 
Note 1 
Summary of significant accounting policies (continued) 
Critical accounting estimates and judgments 
UBS‘s methodology for 
goodwill impairment testing is 
based on a 
model 
that 
is 
most 
sensitive 
to 
the 
following 
key 
assumptions: 
(i) 
forecasts 
of 
earnings available to shareholders in years one to three; (ii) changes in the 
discount rates; and (iii) changes in the long-term 
growth rate. 
Earnings 
available 
to 
shareholders 
are 
estimated 
on 
the 
basis 
of 
forecast results, which are part of the business plan approved by the BoD. 
The 
discount 
rates 
and 
growth 
rates 
are 
determined 
using 
external 
information, as well as considering inputs from both internal and external 
analysts and the view of management. 
The 
key assumptions 
used 
to determine 
the recoverable 
amounts of 
each cash-generating unit are tested for sensitivity by applying reasonably 
possible changes to those assumptions. 
›
 
Refer to Notes 2 and 13 for more information 
11) Provisions and contingent liabilities 
Provisions 
are 
liabilities 
of 
uncertain 
timing 
or 
amount, 
and 
are 
generally 
recognized 
in 
accordance 
with 
IAS 
37, 
Provisions, 
Contingent Liabilities and Contingent Assets
, when: (i) UBS has a 
present 
obligation 
as 
a 
result 
of 
a 
past 
event; 
(ii) 
it 
is 
probable 
that 
an 
outflow 
of 
resources 
will 
be 
required 
to 
settle 
the 
obligation; 
and 
(iii) 
a 
reliable 
estimate 
of 
the 
amount 
of 
the 
obligation can be made. 
The majority of UBS’s provisions 
relate to litigation, regulatory 
and 
similar 
matters, 
restructuring, 
and 
employee 
benefits. 
Restructuring 
provisions 
are 
generally 
recognized 
as 
a 
consequence of 
management agreeing 
to materially 
change the 
scope 
of 
the 
business 
or 
the 
manner 
in 
which 
it 
is 
conducted, 
including 
changes 
in 
management 
structure. 
Provisions 
for 
employee 
benefits 
relate 
mainly 
to 
service 
anniversaries 
and 
sabbatical 
leave, 
and 
are 
recognized 
in 
accordance 
with 
measurement 
principles 
set 
out 
in 
item 
6
 
in 
this 
Note. 
In 
addition, 
UBS 
presents 
expected 
credit 
loss 
allowances 
within 
Provisions
 
if 
they 
relate 
to 
a 
loan 
commitment, 
financial 
guarantee contract or a revolving revocable credit line. 
IAS 37 provisions 
are measured considering 
the best estimate 
of the 
consideration required 
to settle 
the present 
obligation at 
the balance sheet date. 
When 
conditions 
required 
to 
recognize 
a 
provision 
are 
not 
met, a contingent liability is disclosed, unless the 
likelihood of an 
outflow 
of 
resources 
is 
remote. 
Contingent 
liabilities 
are 
also 
disclosed for 
possible obligations that 
arise from past 
events the 
existence 
of 
which 
will 
be 
confirmed 
only 
by 
uncertain 
future 
events not wholly within the control of UBS. 
 
 
 
Critical accounting estimates and judgments 
Recognition of provisions 
often involves significant judgment 
in assessing 
the 
existence 
of 
an 
obligation 
that 
results 
from
past 
events 
and 
in 
estimating 
the 
probability, 
timing 
and 
amount 
of 
any 
outflows 
of 
resources. This is 
particularly the case for 
litigation, regulatory and similar 
matters, 
which, 
due 
to 
their 
nature, 
are 
subject 
to 
many 
uncertainties, 
making their outcome difficult to predict. 
The 
amount 
of 
any 
provision 
recognized 
is 
sensitive 
to 
the 
assumptions used and there 
could be a 
wide range of possible 
outcomes 
for any particular matter. 
Management regularly reviews 
all the available 
information regarding 
such 
matters, 
including 
legal 
advice, 
to 
assess 
whether 
the 
recognition 
criteria for provisions have been satisfied and to determine the timing and 
amount of any potential outflows. 
›
 
Refer to Note 18 for more information 
12) Foreign currency translation 
Transactions 
denominated 
in 
a 
foreign 
currency 
are 
translated 
into 
the 
functional 
currency 
of 
the 
reporting 
entity 
at 
the 
spot 
exchange 
rate 
on 
the 
date 
of 
the 
transaction. 
At 
the 
balance 
sheet 
date, 
all 
monetary 
assets, 
including 
those 
at 
FVOCI, 
and 
monet
ary 
liabilities 
denominated 
in 
foreign 
currency 
are 
translated 
into
 
the 
functional 
currency 
using 
the 
closing 
exchange rate. 
Translation 
differences are 
reported in 
Other net 
income 
from 
financial 
instruments
 
m
easured 
at 
fair 
value 
through profit or loss
. 
Non-monetary items measured at historical cost are translated 
at the exchange rate on the date of the transaction. 
Upon consolidation, assets and liabilities of 
foreign operations 
are translated into US 
dollars, UBS’s presentation currency, at the 
closing exchange rate 
on the balance sheet date, and income 
and 
expense items and other comprehensive income are translated at 
the 
average 
rate 
for 
the 
period. 
The 
resulting 
foreign 
currency 
translation differences are recognized in 
Equity
 
and reclassified to 
the 
income 
statement when 
UBS 
disposes of, 
partially or 
in 
its 
entirety, 
the 
foreign 
operation and 
UBS 
no 
longer 
controls 
the 
foreign operation. 
Share 
capital issued, 
share premium 
and 
treasury shares 
held 
are 
translated 
at 
the 
historic 
average 
rate, 
with 
the 
difference 
between the historic average rate 
and the spot rate realized upon 
repayment of share capital or disposal of treasury shares reported 
as 
Share 
premium.
 
Cumulative 
amo
unts 
recogniz
ed 
in 
OCI 
in 
respect 
of 
cash 
flow 
hedges 
and 
financial 
assets 
measured 
at 
FVOCI 
are
 
translated 
at
 
the
 
closing
 
exchange 
rate 
as 
of 
the 
balance sheet dates, with 
any translation effects 
adjusted through 
Retained earnings
. 
›
 
Refer to Note 33 for more information 
 

 
 
309 
 
Note 1 
Summary of significant accounting policies (continued) 
13) Equity, treasury shares and contracts on UBS Group AG 
shares 
UBS Group AG shares held (treasury shares) 
UBS 
Group 
AG 
shares 
held 
by 
the 
Group, 
including 
those 
purchased 
as 
part of 
market-making activities, 
are 
presented 
in 
Equity
 
as 
Treasury 
shares
 
at 
thei
r 
acquisition 
cost 
and 
are 
deducted 
from 
Equity
 
until 
they 
are 
canceled 
or 
reissued. 
The 
difference 
between 
the 
proceeds 
from 
sales 
of 
treasury 
shares 
and their weighted average cost (net of tax, if any) 
is reported as 
Share premium
. 
Non-controlling interests 
If 
UBS 
has 
an 
obligation 
to 
purchase 
a 
non-controlling 
interest 
subject 
to 
option 
or 
forward 
arrangements, 
the 
amounts 
allocated 
to non-controlling 
interests 
are 
reduced 
and a 
liability 
equivalent 
to 
the 
exercise 
price 
of 
the 
option
 
or 
forward
 
is 
recognized, 
with 
any 
difference 
between 
these 
two 
amounts 
recorded in 
Share premium. 
 
Net cash settlement contracts 
Contracts involving 
UBS Group 
AG shares 
that require 
net cash 
settlement, or provide the counterparty or UBS with a settlement 
option that includes a choice of settling net in cash, are classified 
as derivatives held for trading. 
14) Leasing 
UBS 
predominantly enters into 
lease contracts, 
or 
contracts that 
include 
lease 
components, as 
a 
lessee 
of 
real 
estate, 
including 
offices, retail 
branches and sales 
offices, with a small 
number of IT 
hardware 
leases. 
UBS 
identifies 
non-lease 
components 
of 
a 
contract 
and 
accounts 
for 
them 
separately 
from 
lease 
components. 
When UBS is a lessee in a lease 
arrangement, UBS 
recognizes a 
lease 
liability 
and 
corresponding right-of-use 
(RoU) 
asset 
at 
the 
commencement of the 
lease term 
when UBS 
acquires control of 
the physical use of the asset. Lease liabilities are presented within 
Other 
financial 
liabilities 
measured 
at 
amortized 
cost
 
and 
RoU 
assets within 
Property, equipment and software
. The lease liability 
is 
measured based 
on 
the 
present value 
of 
the 
lease 
payments 
over the lease term, discounted using UBS’s unsecured 
borrowing 
rate
,
 
given 
that 
the 
rate 
implicit 
in 
a 
lease 
is 
generally 
not 
observable. 
Interest 
expense 
on 
the 
lease 
liability 
is 
presented 
within 
Interest 
expense 
from 
financial 
instruments 
measured 
at 
amortized cost
. The RoU asset is recorded at an amount equal to 
the 
lease 
liability 
but 
is 
adjusted 
for 
rent 
prepayments, 
initial 
direct costs, any costs 
to refurbish the leased asset 
and / or lease 
incentives 
received. The RoU asset is depreciated over the shorter 
of the 
lease term 
or the 
useful life 
of the 
underlying asset, 
with 
the 
depreciation presented 
within 
Depreciation and 
impairment 
of property, equipment and software
. 
Lease payments generally include fixed and variable 
payments 
that 
depend 
on 
an 
index 
(such 
as 
an 
inflation 
index). 
When 
a 
lease 
contains 
an 
extension 
or 
termination 
option 
that 
the 
Group considers reasonably certain to be exercised, the expected 
rental payments 
or costs 
of termination 
are included 
within the 
lease payments used to generate 
the lease liability. UBS does 
not 
typically enter into leases with purchase 
options or residual value 
guarantees. 
Where UBS acts as a lessor or sub-lessor under 
a finance lease, 
a 
receivable is 
recognized in 
Other financial 
assets measured 
at 
amortized cost
 
at 
an 
amount equal 
to 
the 
present value 
of 
the 
aggregate of the 
lease payments plus any 
unguaranteed residual 
value that 
UBS expects 
to 
recover at 
the end 
of 
the lease 
term. 
Initial direct costs 
are also 
included in the 
initial measurement of 
the 
lease 
receivable. 
Lease 
payments 
received 
during 
the 
lease 
term are 
allocated as 
repayments of 
the 
outstanding receivable. 
Interest income 
reflects a constant 
periodic rate 
of return on UBS’s 
net investment using the interest rate implicit in 
the lease (or, for 
sub-leases, 
the rate for the 
head lease). UBS 
reviews the estimated 
unguaranteed 
residual value 
annually, 
and if the estimated 
residual 
value 
to 
be 
realized 
is 
less 
than 
the 
amount 
assumed 
at 
lease 
inception, a 
loss is 
recognized for 
the 
expected shortfall. Where 
UBS 
acts 
as 
a 
lessor 
or 
sub-lessor 
in 
an 
operating 
lease, 
UBS 
recognizes the operating 
lease income 
on a straight-line 
basis over 
the lease term. 
Lease 
receivables 
are 
subject 
to 
impairment 
requirements 
as 
set 
out 
in 
item 
2g 
in 
this 
Note. 
ECL 
on 
lease 
receivables 
are 
determined 
following 
the 
general 
impairment 
model 
within 
IFRS 9, 
Financial 
Instruments
, 
without 
utilizing 
the 
simplified 
approach 
of 
always 
measuring 
impairment 
at 
the 
amount 
of 
lifetime ECL. 
 
Comparative 
policy 
| 
Policy 
applicable 
prior 
to 1 January 
2019
 
Operating 
lease rentals 
payable 
were recognized 
as an expense 
on a 
straight
-
line 
basis 
over 
the 
lease 
term, 
which 
commence
d
 
with 
control of the 
physical use of 
the property. Lease incentives were 
treated as a reduction 
of rental expense 
and were recognized 
on a 
consistent 
basis over the lease term. Operating lease 
expenses of 
USD 533 
million 
were 
presented 
within 
General 
and 
administrative 
expenses 
in 
2018. As 
at 
the date 
of 
adoption of 
IFRS 
16
,
 
UBS 
had 
USD
 
24 
million 
of 
finance 
leases 
and 
accounted 
for 
them 
consistently 
with 
the 
policy 
applied 
from 
1 January 
2019 above. 
The 
adoption 
of 
IFRS 16 
had no 
impact 
on retained earnings. 
›
 
Refer to Note 12 and 30 for more information 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
310 
 
Note 1 
Summary of significant accounting policies (continued) 
b) Changes in accounting policies, comparability and other adjustments
 
New or amended accounting standards 
Adoption of hedge accounting requirements of IFRS 9, Financial 
Instruments 
Effective 
from 
1 January 
2020, 
UBS 
has 
prospectively 
adopted 
the 
hedge
 
accounting 
requirements 
of 
IFRS 
9, 
Financial 
Instruments
, 
for 
all 
of 
its 
existing 
hedge 
accounting 
programs, 
except for fair 
value hedges of portfolio 
interest rate risk, which, 
as permitted 
under IFRS 
9, continue 
to be 
accounted for 
under 
IAS 39, 
Financial Instruments: Recognition and Measurement
. 
The adoption 
of these 
requirements has 
not changed 
any of 
the 
hedge 
designations 
disclosed 
in 
the 
Annual 
Report 
2019 
with 
only 
minor 
amendments 
to 
hedge 
documentation 
and 
hedge 
effectiveness 
testing 
methodologies 
required 
to 
make 
them 
compliant 
with 
IFRS 
9. 
The 
adoption 
had 
no 
financial 
effect 
on 
UBS’s 
financial 
statements. 
However, 
starting 
on 
1 January 2020, UBS began to designate cross-currency swaps as 
Fair 
value 
hedges 
of 
foreign 
exchange
 
risk 
related 
to 
debt 
instruments
 
and 
utilized 
the 
cost 
of 
hedging 
approach 
introduced by IFRS 9. 
›
 
Refer to Note 1a item 2j for more information 
about the Group’s 
hedge accounting policies under IFRS 
9 and Note 25 for more 
information about Fair value hedges of 
foreign exchange risk 
related to debt instruments 
Other changes to financial reporting 
Modification of deferred compensation awards 
During 
2020, 
UBS 
modified 
the 
terms 
of 
certain 
outstanding 
deferred 
compensation 
awards 
granted 
for 
performance 
years 
2015 
through 
2019 
by 
removing 
the 
requirement 
to 
provide 
future 
service 
for 
qualifying 
employees. 
These 
awards 
remain 
subject 
to 
forfeiture 
if 
certain 
non-vesting 
conditions 
are 
not 
satisfied. 
As 
a 
result, 
UBS 
recognized 
an 
expense 
of 
USD 359 
million 
in 
the 
third 
quarter 
of 
2020, 
of 
which 
USD 314 
million 
was 
recorded 
within 
Variable 
compensation 
–
 
performance 
awards
, USD 24 million within 
Social security
 
and USD 21 million 
within 
Other 
personnel 
expenses
, 
with 
a 
USD 212 
million 
increase 
in 
compensation-related 
liabilities 
for 
cash-settled 
awards 
and 
social 
security-related 
accruals, 
and 
a 
USD 147 
million increase 
in share 
premium for 
equity-settled awards. 
The 
full 
year 
effect 
was 
an 
expense
 
of
 
approximately 
USD 
2
8
0
 
million, 
of 
which 
USD 
240 
million 
is 
disclosed 
within 
Variable 
compensation 
–
 
performance 
awards
, 
USD 
20 
million 
within 
Social 
security
 
and 
USD 
20 
million 
within 
Other 
personnel 
expenses
, 
with 
increases 
of 
approximately 
USD 
170 
million 
in 
compensation-related 
liabilities 
for 
cash-settled 
awards 
and 
social 
security
-
related 
accruals 
and 
approximately 
USD 
110
 
million in share premium for equity-settled awards. 
Outstanding 
deferred 
compensation 
awards 
granted 
to 
Group Executive Board members, those granted under 
the Long-
Term Incentive Plan, as well as those granted to financial advisors 
in the US, were not affected by these changes. 
Restatement of compensation-related 
liabilities 
During 
2020, 
UBS 
restated 
its 
balance 
sheet 
and 
statement 
of 
changes 
in 
equity 
as 
of 
1 
January 
2018 
to 
correct 
a 
USD 43 
million 
liability 
understatement 
in 
connection 
with 
a 
legacy 
Global 
Wealth 
Management 
deferred 
compensation 
plan, 
with 
the 
effects 
presented 
in 
the 
table 
below. 
The 
restatement 
resulted 
from 
a correction 
of an 
actuarial 
calculation associated 
with 
compensation-related 
liabilities. 
The 
effects 
of 
the 
understatement 
were 
not 
material 
to 
prior-year 
financial 
statements; however, 
such effects 
would have 
been material 
to 
the quarterly 
reporting period 
in which 
the understatement 
was 
identified 
and 
therefore 
prior 
years 
were 
restated. 
The 
restatement 
had 
no 
effect 
on 
Net 
profit 
/ 
(loss)
 
or 
basic 
and 
diluted 
earnings 
per 
share 
for 
the 
current 
period 
or 
for 
any 
comparative periods. 
 
 
31.12.19 
31.12.18 
1.1.18 
USD million 
As reported 
Effect 
Restated 
As reported 
Effect 
Restated 
As reported 
Effect 
Restated 
Balance sheet assets 
Deferred tax assets 
9,537 
11 
9,548 
10,105 
11 
10,116 
10,184 
11 
10,195 
Total assets 
972,183 
11 
972,194 
958,489 
11 
958,500 
938,788 
11 
938,799 
Balance sheet liabilities 
Other non-financial liabilities 
8,794 
43 
8,837 
9,022 
43 
9,065 
9,443 
43 
9,486 
of which: Compensation-related liabilities 
6,812 
43 
6,855 
7,278 
43 
7,321 
7,873 
43 
7,916 
of which: financial advisor compensation plans 
1,463 
43 
1,506 
1,458 
43 
1,501 
 
Not disclosed 
Total liabilities 
917,476 
43 
917,519 
905,386 
43 
905,429 
886,851 
43 
886,894 
Equity 
Retained earnings 
34,154 
(32) 
34,122 
30,448 
(32) 
30,416 
25,389 
(32) 
25,357 
Equity attributable to shareholders 
54,533 
(32) 
54,501 
52,928 
(32) 
52,896 
51,879 
(32) 
51,847 
Total equity 
54,707 
(32) 
54,675 
53,103 
(32) 
53,071 
51,938 
(32) 
51,906 
Total liabilities and equity 
972,183 
11 
972,194 
958,489 
11 
958,500 
938,788 
11 
938,799 
 
 

 
 
 
311 
 
Note 1 
Summary of significant accounting policies (continued) 
Segment reporting 
Effective 
from 
1 
January 
2020, 
UBS 
no 
longer 
discloses 
a 
detailed cost 
breakdown by 
financial statement 
line item 
within 
its 
segment 
reporting 
disclosures 
provided 
in 
Note 
2. 
The 
modified 
approach 
of 
presenting 
operating 
expenses 
for 
each 
division aligns 
the reporting 
with the 
way that 
UBS manages 
its 
cost base 
. 
This change 
has no 
effect 
on the 
income 
statement, 
or on the net profit of any business division. 
Presentation of interest income and expense from financial 
instruments measured at fair value through profit or loss 
Effective from 1 January 2020, UBS 
presents interest income and 
interest 
expense 
from 
financial 
instruments 
measured 
at 
fair 
value through 
profit or loss 
on a net 
basis, in line 
with how UBS 
assesses 
and 
reports 
interest 
and 
in 
accordance 
with 
IFRS. 
This 
presentation change 
has no 
effect on 
Net interest 
income
 
or on 
Net profit / 
(loss)
 
attributable to shareholders
. Prior periods 
have 
been 
aligned 
with 
this 
change 
in 
presentation. 
Further 
information 
about 
net 
interest 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through 
profit 
or 
loss 
is 
provided in Note 3. 
 
 
 
 
c) International Financial Reporting Standards and Interpretations to be adopted in 2021 and later and other changes 
Amendments to IAS 39, IFRS 9 and IFRS 7 (
Interest Rate 
Benchmark Reform – Phase 2
) 
In 
August 
2020, 
the 
IASB 
issued 
Interest 
Rate 
Benchmark 
Reform – Phase 2, 
Amendments to IFRS 9, 
IAS 39, IFRS 7, 
IFRS 4 
and IFRS 16
 
addressing a 
number of issues 
in financial reporting 
areas that arise when IBOR rates are reformed or replaced. 
The amendments provide 
a practical expedient 
which permits 
certain 
changes 
in 
the 
contractual 
cash 
flows 
of 
debt 
instruments 
attributable 
to 
the 
replacement 
of 
IBOR 
rates 
with 
alternative 
risk-free 
interest 
rates 
(RFRs) 
to 
be 
accounted 
for 
prospectively by updating the instrument’s EIR. 
In terms of 
hedge accounting, the 
amendments provide relief 
from 
discontinuing 
hedge 
relationships 
because 
of 
changes 
resulting 
from 
the 
replacement 
of 
IBOR 
rates 
and 
temporary 
relief 
from 
having 
to 
ensure 
that 
the 
designated
 
RFR
 
risk 
component 
is 
separately 
identifiable. 
Additionally, 
the 
amendments 
do 
not 
require 
remeasurement 
or 
immediate 
release 
to 
the 
income 
statement 
of 
the 
accumulated 
amounts 
resulting from IBOR hedges upon the change to RFRs. 
Furthermore, the amendments introduce 
additional disclosure 
requirements 
covering 
any 
new 
risks 
arising 
from 
the 
reforms 
and 
how 
the 
transition 
to 
alternative 
benchmark 
rates 
is 
managed. 
UBS 
will 
adopt 
these 
amendments 
on 
1 
January 
2021 
and 
does 
not 
expect 
a 
material 
effect 
on 
the 
Group’s 
financial 
statements. 
›
 
Refer to Note 25 for more information 
IFRS 17,
 
Insurance Contracts 
In 
May 
2017, 
the 
IASB 
issued 
IFRS 
17, 
Insurance 
Contracts
, 
which 
sets 
out 
the 
accounting 
requirements 
for 
contractual 
rights and 
obligations that 
arise from 
insurance contracts 
issued 
and 
reinsurance 
contracts 
held. 
IFRS 
17 
is 
effective 
from 
1 January 
2023. 
UBS 
is 
assessing 
the 
standard, 
but 
does 
not 
expect 
it 
to 
have 
a 
material 
effect 
on 
the 
Group’s 
financial 
statements. 
Amendments to IAS 1, 
Presentation of Financial Statements
, IFRS 
Practice Statement 2, 
Making Materiality Judgements
 
and IAS 8, 
Accounting Policies, Changes in Accounting Estimates and Errors
 
In 
February 
2021, 
the 
IASB 
issued 
amendments 
to 
IAS 
1, 
Presentation of 
Financial Statements
, IFRS 
Practice Statement 
2, 
Making 
Materiality 
Judgements
 
and 
amendments 
to 
IAS 
8, 
Accounting 
Policies, 
Changes 
in 
Accounting 
Estimates 
and 
Errors
,
 
to 
help 
improve 
accounting 
policy 
disclosures 
and 
distinguish 
changes 
in 
accounting 
estimates 
from 
changes 
in 
accounting 
policies. 
These 
amendments 
are 
effective 
from 
1 January 
2023, 
with 
early 
application 
permitted. 
UBS 
is 
currently 
assessing 
the 
effect 
on 
the 
Group’s 
financial 
statements. 
Annual Improvements to IFRS Standards 2018–2020 Cycle and 
narrow-scope amendments to IFRS 3, 
Business Combinations
, 
and IAS 37, 
Provisions, Contingent Liabilities and Contingent 
Assets
 
In May 2020, the IASB issued 
several narrow-scope amendments 
to 
a 
number 
of 
standards 
as 
well 
as 
Annual 
Improvements 
to 
IFRS Standards 
2018–2020 Cycle
. These 
minor amendments 
are 
effective 
from 
1 
January 
2022. 
UBS 
is 
currently 
assessing 
the 
effect on the Group’s financial statements. 
 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
312 
 
Note 2a 
Segment reporting 
UBS’s 
businesses 
are 
organized 
globally 
into 
four 
business 
divisions: 
Global 
Wealth 
Management, 
Personal 
& 
Corporate 
Banking, 
Asset Management 
and the 
Investment Bank. 
All four 
business divisions 
are supported 
by Group 
Functions and 
qualify 
as 
reportable 
segments 
for 
the 
purpose 
of 
segment 
reporting. 
Together 
with 
Group 
Functions, 
the 
four 
business 
divisions 
reflect the management structure of the Group: 
 
–
 
Global 
Wealth 
Management
 
provides 
investment 
advice 
and solutions, 
as well 
as lending 
solutions, to 
private clients, 
in 
particular in 
the ultra 
high 
net 
worth 
and high 
net worth 
segments. 
The 
business 
is 
managed 
globally 
across 
the 
regions. 
–
 
Personal 
& 
Corporate 
Banking
 
provides 
comprehensive 
financial 
products 
and 
services 
to 
private, 
corporate 
and 
institutional 
clients, 
operating 
across 
all 
banking 
markets 
in 
Switzerland. 
–
 
Asset 
Management
 
is 
a 
large-scale 
and 
diversified 
global 
asset 
manager. 
It 
offers 
investment 
capabilities 
and 
styles 
across 
all 
major 
traditional 
and 
alternative 
asset 
classes, 
as 
well 
as 
advisory 
support 
to 
institutions, 
wholesale 
intermediaries and wealth management clients globally. 
–
 
The 
Investment 
Bank
 
provides 
a 
range 
of 
services 
to 
institutional, 
corporate 
and 
wealth 
management 
clients 
globally, 
to 
help 
them 
raise 
capital, 
grow 
their 
businesses, 
invest 
and 
manage 
risks. 
Offerings 
include 
advisory 
services, 
capital 
markets, 
cash 
and 
derivatives 
trading 
across 
equities 
and fixed income and financing. 
–
 
Group 
Functions
 
–
 
formerly 
named 
Corporate 
Center, 
is 
made up of 
the following major 
areas: Group Services 
(which 
consists of Technology, Corporate Services, Human 
Resources, 
Operations
,
 
Finance,
 
Legal, 
Risk 
Control, 
Research
 
and 
Analytics, 
Compliance, 
Regulatory 
& 
Governance, 
Communications 
& 
Branding 
and 
UBS 
in 
S
ociety
)
, 
Group 
Treasury and Non-core and Legacy Portfolio. 
 
Financial 
information 
about 
the 
four 
business 
divisions 
and 
Group Functions is presented 
separately in internal management 
reports 
to 
the 
Group 
Executive 
Board 
(the 
GEB), 
which 
is 
considered 
the 
“chief 
operating 
decision 
maker” 
pursuant 
to 
IFRS 8, 
Operating Segments
. 
UBS’s 
internal 
accounting 
policies, 
which 
include 
management 
accounting 
policies 
and 
service 
level 
agreements, 
determine 
the 
revenues 
and 
expenses 
directly 
attributable 
to 
each 
reportable 
segment. 
Transactions 
between 
the 
reportable 
segments 
are 
carried 
out 
at 
internally 
agreed 
rates 
and 
are 
reflected 
in 
the 
operating 
results 
of 
the 
reportable 
segments. 
Revenue-sharing agreements 
are used 
to allocate 
external client 
revenues 
to 
reportable 
segments 
where
 
several 
reportable 
segments 
are 
involved 
in 
the 
value 
creation 
chain. 
Total 
intersegment 
revenues 
for 
the 
Group 
are 
immaterial, 
as 
the 
majority 
of 
the 
revenues 
are 
allocated 
across 
the 
segments 
by 
means 
of 
revenue-sharing 
agreements. 
Interest 
income 
earned 
from 
managing 
UBS’s 
consolidated 
equity 
is 
allocated 
to 
the 
reportable 
segments 
based 
on 
average 
attributed 
equity 
and 
currency 
composition. 
Assets 
and 
liabilities 
of 
the 
reportable 
segments 
are 
funded 
through 
and 
invested 
with 
Group 
Functions, and 
the net 
interest margin 
is reflected 
in the 
results 
of each reportable segment. 
Segment 
assets 
are 
based 
on 
a 
third-party 
view 
and 
do 
not 
include intercompany 
balances. This 
view is 
in line 
with internal 
reporting to the 
GEB. If one 
operating segment is 
involved in an 
external transaction together with another operating segment or 
Group Functions, 
additional criteria 
are considered 
to determine 
the 
segment 
that 
will 
report 
the 
associated 
assets. 
This 
will 
include 
a 
consideration 
of 
which 
segment’s 
business 
needs 
are 
being 
addressed 
by 
the 
transaction 
and 
which 
segment 
is 
providing the 
funding and 
/ or resources. 
Allocation of 
liabilities 
follows the same principles. 
Non-current 
assets disclosed 
for segment 
reporting 
purposes 
represent assets that are expected 
to be recovered more than 
12 
months after the reporting date, 
excluding financial instruments, 
deferred tax assets and post-employment benefits. 
Effective 
from 
1 January 
2020, 
UBS 
only 
reports 
total 
operating 
expenses 
for 
each 
business 
division 
and 
no 
longer 
discloses 
a 
detailed 
cost 
breakdown 
by 
financial 
statement 
line 
item. This 
change streamlines 
reporting, ensures 
alignment with 
how UBS manages its cost base and has no effect on the 
income 
statement, or on the net profit of any business division. 
 
 

 
313 
 
Note 2a 
Segment reporting (continued) 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
UBS 
For the year ended 31 December 2020 
Net interest income 
 
4,027 
 
2,049 
 
(17) 
 
284 
 
(481) 
 
5,862 
Non-interest income
1
 
13,107 
 
1,858 
 
2,993 
 
9,235 
 
30 
 
27,222 
Income 
 
17,134 
 
3,908 
 
2,975 
 
9,519 
 
(452) 
 
33,084 
Credit loss (expense) / release 
 
(88) 
 
(257) 
 
(2) 
 
(305) 
 
(42) 
 
(694) 
Total operating income 
 
17,045 
 
3,651 
 
2,974 
 
9,214 
 
(494) 
 
32,390 
Total operating expenses 
 
13,026 
 
2,392 
 
1,519 
 
6,732 
 
567 
 
24,235 
Operating profit / (loss) before tax 
 
4,019 
 
1,259 
 
1,455 
 
2,482 
 
(1,060) 
 
8,155 
Tax expense / (benefit) 
 
1,583 
Net profit / (loss) 
 
6,572 
Additional information 
Total assets 
 
367,714 
 
231,657 
 
28,589 
 
369,683 
 
128,122 
 
1,125,765 
Additions to non-current assets 
 
5 
 
12 
 
385 
 
150 
 
2,294 
 
2,847 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
UBS 
For the year ended 31 December 2019 
Net interest income 
 
3,947 
 
1,992 
 
(25) 
 
(669) 
 
(744) 
 
4,501 
Non-interest income 
 
12,426 
 
1,744 
 
1,962 
 
7,968 
 
367 
 
24,467 
Income 
 
16,373 
 
3,736 
 
1,938 
 
7,299 
 
(378) 
 
28,967 
Credit loss (expense) / release 
 
(20) 
 
(21) 
 
0 
 
(30) 
 
(7) 
 
(78) 
Total operating income 
 
16,353 
 
3,715 
 
1,938 
 
7,269 
 
(385) 
 
28,889 
Total operating expenses 
 
12,955 
 
2,274 
 
1,406 
 
6,485 
 
192 
 
23,312 
Operating profit / (loss) before tax 
 
3,397 
 
1,441 
 
532 
 
784 
 
(577) 
 
5,577 
Tax expense / (benefit) 
 
1,267 
Net profit / (loss) 
 
4,310 
Additional information 
Total assets
2
 
309,766 
 
209,405 
 
34,565 
 
315,855 
 
102,603 
 
972,194 
Additions to non-current assets 
 
68 
 
10 
 
0 
 
1 
 
5,217 
 
5,297 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
UBS 
For the year ended 31 December 2018 
Net interest income 
 
4,101 
 
2,049 
 
(29) 
 
(459) 
 
(613) 
 
5,048 
Non-interest income 
 
12,700 
 
2,168 
 
1,881 
 
8,538 
 
(4) 
 
25,283 
Income 
 
16,800 
 
4,217 
 
1,852 
 
8,079 
 
(617) 
 
30,330 
Credit loss (expense) / release 
 
(15) 
 
(56) 
 
0 
 
(38) 
 
(8) 
 
(118) 
Total operating income 
 
16,785 
 
4,161 
 
1,852 
 
8,041 
 
(626) 
 
30,213 
Total operating expenses 
 
13,531 
 
2,365 
 
1,426 
 
6,554 
 
346 
 
24,222 
Operating profit / (loss) before tax 
 
3,254 
 
1,796 
 
426 
 
1,486 
 
(971) 
 
5,991 
Tax expense / (benefit) 
 
1,468 
Net profit / (loss) 
 
4,522 
Additional information 
Total assets
2 
 
313,737 
 
200,703 
 
28,140 
 
302,253 
 
113,667 
 
958,500 
Additions to non-current assets 
 
196 
 
23 
 
1 
 
89 
 
1,666 
 
1,975 
1 Includes 
a USD 
631 million 
net gain 
on the 
sale of 
a majority 
stake in 
Fondcenter AG, 
of which 
USD 571 
million was 
recognized in 
Asset Management 
and USD 
60 million 
was recognized 
in Global 
Wealth 
Management. Refer to Note 29 for more information. 
2 Information has been restated where applicable. Refer to Note 1b for more information.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
314 
 
Note 2b 
Segment reporting by geographic location 
The 
operating 
regions 
shown 
in 
the 
table 
below 
correspond to 
the regional management 
structure of the 
Group. The allocation 
of 
operating 
income 
to 
these regions 
reflects, 
and 
is consistent 
with, 
the 
basis 
on 
which 
the 
business 
is 
managed 
and 
its 
performance is 
evaluated. These 
allocations involve 
assumptions 
and 
judgments 
that 
management 
considers 
to 
be 
reasonable, 
and 
may 
be 
refined 
to 
reflect 
changes 
in 
estimates 
or 
management 
structure. 
The 
main 
principles 
of 
the 
allocation 
methodology 
are 
that 
client 
revenues 
are 
attributed 
to 
the 
domicile 
of 
the 
given 
client 
and 
trading 
and 
portfolio 
management 
revenues 
are 
attributed 
to 
the 
country 
where 
the 
risk 
is 
managed. 
This 
revenue 
attribution 
is 
consistent 
with 
the 
mandate 
of 
the 
regional 
Presidents. 
Certain 
revenues, 
such 
as 
those 
related 
to 
N
on
-
core 
and 
L
egacy 
P
ortfolio 
in 
Group 
Functions, 
are 
managed 
at 
a 
Group 
level. 
These 
revenues 
are 
included in the 
Global
 
line. 
The geographic analysis 
of non-current assets 
is based on 
the 
location of the entity in which the given assets are recorded. 
 
For the year ended 31 December 2020 
Total operating income 
Total non-current assets 
USD billion 
Share % 
USD billion 
Share % 
Americas 
 
13.0 
 
40 
 
9.0 
 
42 
of which: USA 
 
11.7 
 
36 
 
8.4 
 
40 
Asia Pacific 
 
6.0 
 
18 
 
1.5 
 
7 
Europe, Middle East and Africa (excluding Switzerland) 
 
6.5 
 
20 
 
3.0 
 
14 
Switzerland 
 
6.9 
 
21 
 
7.6 
 
36 
Global 
 
0.1 
 
0 
 
0.0 
 
0 
Total 
 
32.4 
 
100 
 
21.1 
 
100 
For the year ended 31 December 2019 
Total operating income
1
Total non-current assets 
USD billion 
Share % 
USD billion 
Share % 
Americas 
 
12.0 
 
42 
 
8.9 
 
44 
of which: USA 
 
10.9 
 
38 
 
8.5 
 
42 
Asia Pacific 
 
4.7 
 
16 
 
1.4 
 
7 
Europe, Middle East and Africa (excluding Switzerland) 
 
5.8 
 
20 
 
3.0 
 
15 
Switzerland 
 
6.7 
 
23 
 
7.1 
 
35 
Global 
 
(0.3) 
 
(1) 
 
0.0 
 
0 
Total 
 
28.9 
 
100 
 
20.3 
 
100 
For the year ended 31 December 2018 
Total operating income
1
Total non-current assets 
USD billion 
Share % 
USD billion 
Share % 
Americas 
 
12.6 
 
42 
 
7.4 
 
43 
of which: USA 
 
11.5 
 
38 
 
7.0 
 
41 
Asia Pacific 
 
4.9 
 
16 
 
0.9 
 
5 
Europe, Middle East and Africa (excluding Switzerland) 
 
6.2 
 
21 
 
2.0 
 
12 
Switzerland 
 
7.1 
 
24 
 
6.8 
 
40 
Global 
 
(0.6) 
 
(2) 
 
0.0 
 
0 
Total 
 
30.2 
 
100 
 
17.1 
 
100 
1 Effective as 
of 1 January 
2020, the Investment 
Bank was realigned 
into two new 
business lines, 
Global Banking and 
Global Markets, 
which affects how 
the business is 
managed and therefore 
the allocation of 
operating income to the regions. The presentation of prior-year 
information reflects the new regional management structure of the Investment Bank. 

315

Income statement notes

Note 3

Net interest

income and other

net income

from financial

instruments

measured at

fair value

through profit

or loss

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Net interest income from financial instruments measured

at fair value through profit or loss

1,299

1,011

1,338

Other net income from financial instruments measured

at fair value through profit or loss

6,960

6,842

6,960

of which: net gains / (losses) from financial liabilities designated

at fair value

1,509

(8,748)

9,382

Total net income from financial instruments measured at fair value through profit or loss

8,259

7,853

8,298

Net interest income

Net interest income from financial instruments measured at amortized

cost and fair value through other comprehensive income

Interest income from loans and deposits

6,690

8,008

7,801

Interest income from securities financing transactions

862

2,005

1,567

Interest income from other financial instruments measured

at amortized cost

335

364

266

Interest income from debt instruments measured at fair

value through other comprehensive income

101

120

142

Interest income from derivative instruments designated as cash

flow hedges

822

188

324

Total interest income from financial instruments measured at amortized cost and fair

value through other comprehensive income

8,810

10,684

10,100

Interest expense on loans and deposits

1,031

2,634

1,980

Interest expense on securities financing transactions

870

1,152

1,130

Interest expense on debt issued

2,237

3,285

3,281

Interest expense on lease liabilities

110

122

Total interest expense from financial instruments measured at amortized cost

4,247

7,194

6,391

Total net interest income from financial instruments measured at amortized cost and fair

value through other comprehensive income

4,563

3,490

3,710

Net interest income from financial instruments measured at fair value through profit

or loss

Net interest income from financial instruments at fair value held for

trading

841

1,214

1,105

Net interest income from brokerage balances

682

339

575

Net interest income from securities financing transactions at fair

value not held for trading

116

115

Interest income from other financial instruments at fair

value not held for trading

585

914

901

Interest expense on other financial instruments designated

at fair value

(886)

(1,571)

(1,357)

Total net interest income from financial instruments measured at fair value through profit or loss

1,299

1,011

1,338

Total net interest income

5,862

4,501

5,048

1 Excludes

fair value

changes of

hedges related

to financial

liabilities designated

at fair

value and

foreign currency

translation effects

arising from

translating foreign

currency transactions

into the

respective

functional currency, both

of which are reported within

Other net income from financial

instruments measured at fair value

through profit or loss.

2019 and 2018 included a

net loss of USD 1,830

million and a net

gain of USD 2,152 million, respectively,

driven by financial liabilities related

to unit-linked investment contracts,

which are designated at fair value

through profit or loss. This

was offset by a net

gain of USD 1,830

million and a net loss of USD

2,134 million in 2019 and 2018,

respectively, related to financial

assets for unit-linked investment

contracts that are mandatorily measured

at fair value through profit

or loss not held

for trading.

2 Consists

of interest

income from

cash and

balances at

central banks,

loans and advances

to banks and

customers, and

cash collateral

receivables on

derivative instruments,

as well

as negative

interest on amounts due to banks, customer

deposits, and cash collateral payables

on derivative instruments.

3 Includes interest income on receivables

from securities financing transactions and negative

interest,

including fees, on

payables from securities

financing transactions.

4 Consists of interest

expense on amounts

due to banks,

cash collateral payables

on derivative instruments,

and customer deposits,

as well as

negative interest on cash and

balances at central ba

nks, loans and advances

to banks, and cash

collateral receivables on

derivative instruments.

5 Includes interest expense on

payables from securities financing

transactions and negative interest, including fees, on receivables from securities financing transactions.

6 Includes interest expense on securities financing transactions designated at fair value.

Consolidated financial statements | UBS Group AG consolidated financial statements

316

Note 4

Net fee and commission income

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Fee and commission income

Underwriting fees

1,085

741

811

of which: equity underwriting fees

657

360

431

of which: debt underwriting fees

428

382

380

M&A and corporate finance fees

736

774

768

Brokerage fees

4,132

3,248

3,521

Investment fund fees

5,289

4,858

4,954

Portfolio management and related services

8,009

7,656

7,756

Other

1,710

1,832

1,786

Total fee and commission income

20,961

19,110

19,598

of which: recurring

13,009

12,544

12,911

of which: transaction-based

7,491

6,402

6,594

of which: performance-based

461

163

Fee and commission expense

Brokerage fees paid

274

310

316

Distribution fees paid

589

590

580

Other

912

797

807

Total fee and commission expense

1,775

1,696

1,703

Net fee and commission income

19,186

17,413

17,895

of which: net brokerage fees

3,858

2,938

3,205

1 For the

year ended 31

December 2020, reflects

third-party fee and

commission income of

USD 12,475 million

for Global Wealth

Management, USD 1,426

million for Personal

& Corporate Banking,

USD 3,129

million for Asset

Management, USD

3,882 million

for the Investment

Bank and USD

49 million for

Group Functions

(for the year

ended 31

December 2019:

USD 11,694

million for Global

Wealth Management,

USD 1,307 million for Personal & Corporate Banking, USD 2,659

million for Asset Management, USD 3,355 million for the Investment Bank

and USD 94 million for Group Functions; for the year ended 31 December

2018: USD 12,059 million for Global

Wealth Management, USD 1,338

million for Personal &

Corporate Banking, USD 2,579 million

for Asset Management, USD 3,525

million for the Investment Bank and

USD 97

million for Group Functions).

Note 5

Other income

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Associates, joint ventures and subsidiaries

Net gains / (losses) from acquisitions and disposals of

subsidiaries

635

(36)

(290)

Net gains / (losses) from disposals of investments in associates

Share of net profits of associates and joint ventures

529

Impairments related to associates

(1)

Total

719

284

Net gains / (losses) from disposals of financial assets measured

at fair value through other comprehensive income

Income from properties

Net gains / (losses) from properties held for sale

(19)

Other

216

160

Total other income

1,076

212

428

1 Includes foreign exchange

gains / (losses) reclassified

from other comprehensive income

related to the disposal

or closure of foreign

operations.

2 Includes a USD 631

million net gain on

the sale of a

majority

stake in Fondcenter AG.

Refer to Note 29 for more

information.

3 Includes a valuation gain

of USD 26 million on UBS’s

equity ownership of SIX Group.

4 Includes a valuation gain

of USD 460 million on UBS’s

equity ownership

of SIX Group

related to

the sale

of SIX Payment

Services to

Worldline.

5 Includes rent

received from

third parties.

6 Includes net

gains of USD

140 million

arising from

sale-and-leaseback

transactions,

primarily related

to a

property in

Geneva, partly

offset by

remeasurement losses

relating to

properties that

were reclassified

as held

for sale.

7 Includes a

USD 215 million

gain on

the sale

intellectual property rights associated with the Bloomberg Commodity Index family.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
317 
 
Note 6 
Personnel expenses 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Salaries
1
 
7,023 
 
6,518 
 
6,448 
Variable compensation – performance awards
2
 
3,209
3 
 
2,755 
 
2,995 
of which: guarantees for new hires 
 
25 
 
29 
 
43 
Variable compensation – other
2
 
220 
 
246 
 
243 
Financial advisor compensation
2,4
 
4,091 
 
4,043 
 
4,054 
Contractors 
 
375 
 
381 
 
489 
Social security 
 
899
3 
 
799 
 
791 
Post-employment benefit plans
5
 
845 
 
787 
 
457
6 
Other personnel expenses 
 
561
3 
 
555 
 
654 
Total personnel expenses 
 
17,224 
 
16,084 
 
16,132 
1 Includes role-based allowances. 
2 Refer to Note 27 for more information. 
3 During 2020, UBS modified the conditions for continued vesting of certain 
outstanding deferred compensation awards for qualifying 
employees, resulting in an 
expense of approximately USD 
280 million, of which USD 
240 million is disclosed within 
Variable compensation – 
performance awards, USD 
20 million within Social security 
and USD 20 
million within 
Other personnel 
expenses. Refer 
to Note 
1b for 
more information. 
4 Financial 
advisor compensation 
consists of 
grid-based compensation 
based directly 
on compensable 
revenues generated 
by 
financial advisors and 
supplemental compensation 
calculated on the 
basis of financial 
advisor productivity, 
firm tenure, 
assets and other 
variables. It 
also includes expenses 
related to compensation 
commitments 
with financial advisors entered into at the time of 
recruitment that are subject to vesting requirements. 
5 Refer to Note 26 for more information. 
6 Changes to the pension fund of UBS in Switzerland 
announced 
in 2018 resulted in 
a reduction in the 
pension obligation recognized 
by UBS. As 
a consequence, a 
pre-tax gain of 
USD 241 million was 
recognized in the 
income statement in 2018, 
with no overall 
effect on total 
equity. Refer to Note 26 for more information. 
 
 
 
Note 7 
General and administrative expenses 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Occupancy 
 
412 
 
381 
 
914 
Rent and maintenance of IT and other equipment 
 
813 
 
718 
 
654 
Communication and market data services 
 
615 
 
627 
 
638 
Administration 
 
565 
 
551 
 
590 
of which: UK and German bank levies
1
 
55 
 
41 
 
58 
Marketing and public relations
2
 
293 
 
317 
 
366 
Travel and entertainment 
 
169 
 
378 
 
425 
Professional fees 
 
675 
 
882 
 
1,015 
Outsourcing of IT and other services 
 
1,028 
 
1,158 
 
1,427 
Litigation, regulatory and similar matters
3
 
197 
 
165 
 
657 
Other 
 
117 
 
111 
 
110 
Total general and administrative expenses 
 
4,885 
 
5,288 
 
6,797 
1 The UK bank 
levy expenses of USD 
38 million (USD 30 
million for 2019 and 
USD 40 million for 
2018) included a credit 
of USD 27 million 
(USD 31 million for 
2019 and USD 45 
million for 2018) related 
to prior 
years. 
2 Includes charitable 
donations. 
3 Reflects the net 
increase in provisions 
for litigation, regulatory 
and similar matters 
recognized in the 
income statement. Refer 
to Note 18 
for more information. 
Also 
includes recoveries from third parties of USD 3 million in 2020 (USD 11 million in 2019 and USD 29 million in 2018). 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
318 
 
Note 8 
Income taxes 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Tax expense / (benefit) 
Swiss 
Current 
 
482 
 
365 
 
469 
Deferred 
 
116 
 
265 
 
2,377 
Total Swiss 
 
598 
 
630 
 
2,846 
Non-Swiss 
Current 
 
749 
 
426 
 
575 
Deferred 
 
236 
 
211 
 
(1,953) 
Total non-Swiss 
 
985 
 
637 
 
(1,378) 
Total income tax expense / (benefit) recognized in the income statement 
 
1,583 
 
1,267 
 
1,468 
 
 
Income tax recognized in the income statement 
Income 
tax 
expenses 
of 
USD 1,583 million 
were 
recognized 
for 
the Group 
in 2020, representing 
an effective 
tax rate of 
19.4%. 
This 
included 
Swiss 
tax 
expenses 
of 
USD 598 
million 
and 
non-
Swiss tax expenses of USD 985 million. 
The 
Swiss 
tax 
expenses 
included 
current 
tax 
expenses 
of 
USD 482 million related to taxable profits of UBS Switzerland AG 
and 
other 
Swiss 
entities. 
They 
also 
included 
deferred 
tax 
expenses 
of 
USD 116 
million, 
which 
primarily 
reflect 
the 
amortization of 
deferred tax 
assets (DTAs) 
previously recognized 
in relation to deductible temporary differences. 
The non-Swiss 
tax expenses 
included current 
tax expenses 
of 
USD 749 
million 
related 
to 
taxable 
profits 
earned 
by 
non-Swiss 
subsidiaries 
and 
branches
,
 
and
 
net 
deferred 
t
ax 
expenses 
of 
USD 236 million. Expenses 
of USD 444 
million, primarily relating 
to the 
amortization of 
DTAs previously 
recognized in 
relation to 
tax 
losses carried 
forward and 
deductible 
temporary differences 
of 
UBS 
Americas 
Inc., 
were 
partly 
offset 
by 
a 
net 
benefit 
of 
USD 208 
million in 
respect of 
the remeasurement 
of DTAs. 
This 
net 
benefit 
included 
net 
upward 
remeasurements 
of 
DTAs 
of 
USD 146 million for 
certain entities, primarily 
in connection with 
our business 
planning process, 
and USD 62 
million in 
respect of 
additional DTA recognition that resulted from the contribution of 
real 
estate 
assets 
by 
UBS 
AG 
to 
UBS 
Americas 
Inc. 
and 
UBS 
Financial Services 
Inc. in 
2020. This 
allowed the 
full recognition 
of DTAs in respect of the associated historic 
real estate costs that 
were 
previously 
capitalized 
for 
US 
tax 
purposes 
under 
the 
elections that were made in the fourth quarter of 2018. 
The 
effective 
tax 
rate 
for 
2020 
of 
19.4% 
is 
lower 
than 
the 
Group’s 
normal 
tax 
rate 
of 
around 
25%, 
mainly 
as 
a 
result 
of 
the 
aforementioned 
deferred 
tax 
benefit 
of 
USD 208 
million 
in 
respect of 
the remeasurement 
of DTAs 
and also 
because no 
net 
tax 
expense 
was 
recognized 
in 
respect 
of 
the 
pre-tax 
gain 
of 
USD 631 
million 
in 
relation 
to 
the 
sale 
of 
a 
majority 
stake 
in 
Fondcenter AG. 
 
 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Operating profit / (loss) before tax 
 
8,155 
 
5,577 
 
5,991 
of which: Swiss 
 
3,403 
 
2,571 
 
1,843 
of which: non-Swiss 
 
4,752 
 
3,006 
 
4,148 
Income taxes at Swiss tax rate of 19.5% for 2020, 20.5% 
for 2019 and 21% for 2018 
 
1,590 
 
1,143 
 
1,258 
Increase / (decrease) resulting from: 
Non-Swiss tax rates differing from Swiss tax rate 
 
110 
 
82 
 
55 
Tax effects of losses not recognized 
 
144 
 
131 
 
223 
Previously unrecognized tax losses now utilized 
 
(212) 
 
(265) 
 
(25) 
Non-taxable and lower-taxed income 
 
(394) 
 
(351) 
 
(430) 
Non-deductible expenses and additional taxable income 
 
385 
 
732 
 
905 
Adjustments related to prior years – current tax 
 
(67) 
 
(5) 
 
114 
Adjustments related to prior years – deferred tax 
 
12 
 
(6) 
 
26 
Change in deferred tax recognition 
 
(381) 
 
(294) 
 
(795) 
Adjustments to deferred tax balances arising from changes 
in tax rates 
 
234 
 
(9) 
 
0 
Other items 
 
161 
 
107 
 
137 
Income tax expense / (benefit) 
 
1,583 
 
1,267 
 
1,468 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
319 
 
Note 8 
Income taxes (continued) 
The 
components 
of 
operating 
profit 
before 
tax, 
and 
the 
differences 
between 
income 
tax 
expense 
reflected 
in 
the 
financial 
statements and the amounts calculated at the Swiss tax rate, are provided in the table on the previous page and explained below. 
 
Component 
Description 
Non-Swiss tax rates 
differing from Swiss tax 
rate 
To the extent that Group profits or losses arise outside Switzerland, the applicable local tax 
rate may differ from the Swiss tax 
rate. This item reflects, for such profits, an adjustment 
from the tax expense that would arise at the 
Swiss tax rate to the tax 
expense that would arise at the applicable local 
tax rate. Similarly, it reflects, for such losses, an adjustment from the tax 
benefit that would arise at the Swiss tax rate 
to the tax benefit that would arise at the 
applicable local tax rate. 
Tax effects of losses not 
recognized 
This item relates to tax losses of entities arising in the 
year that are not recognized as DTAs and where no tax benefit arises in 
relation to those losses. Therefore, the tax benefit calculated 
by applying the local tax rate to those losses 
as described above 
is reversed. 
Previously unrecognized 
tax losses now utilized 
This item relates to taxable profits of the year that are offset by tax losses 
of previous years for which no DTAs were previously 
recorded. Consequently, no current tax or deferred tax expense arises in relation to those taxable 
profits and the tax expense 
calculated by applying the local tax rate on 
those profits is reversed. 
Non-taxable and lower-
taxed income 
This item relates to tax deductions for the year in 
respect of permanent differences. These include deductions in 
respect of 
profits that are either not taxable or are taxable at a lower rate 
of tax than the local tax rate. They also 
include deductions 
made for tax purposes, which are not reflected in the 
accounts. 
Non-deductible expenses 
and additional taxable 
income 
This item relates to additional taxable income for 
the year in respect of permanent differences. These include 
income that is 
recognized for tax purposes by an entity but is not 
included in its profit that is reported in the financial 
statements, as well as 
expenses for the year that are non-deductible (e.g., 
client entertainment costs are not deductible 
in certain locations). 
Adjustments related to 
prior years – current tax 
This item relates to adjustments to current tax expense for 
prior years (e.g., if the tax payable for a year is 
agreed with the tax 
authorities in an amount that differs from the amount previously 
reflected in the financial statements). 
Adjustments related to 
prior years – deferred tax 
This item relates to adjustments to deferred tax positions 
recognized in prior years (e.g., if a tax loss 
for a year is fully 
recognized and the amount of the tax loss agreed with 
the tax authorities is expected to differ from the 
amount previously 
recognized as DTAs in the accounts). 
Change in deferred tax 
recognition 
This item relates to changes in DTAs, including changes in DTAs previously recognized resulting from reassessments of 
expected future taxable profits. It also includes changes 
in temporary differences in the year, for which deferred tax is not 
recognized. 
Adjustments to deferred 
tax balances arising from 
changes in tax rates 
This item relates to remeasurements of DTAs and liabilities recognized due to changes 
in tax rates. These have the effect of 
changing the future tax saving that is expected from tax 
losses or deductible tax differences and therefore the amount 
of 
DTAs recognized or, alternatively, 
changing the tax cost of additional taxable income 
from taxable temporary differences and 
therefore the deferred tax liability. 
Other items 
Other items include other differences between profits or losses 
at the local tax rate and the actual local tax 
expense or 
benefit, including movements in provisions for uncertain 
positions in relation to the current year and other items. 
 
 
Income tax recognized directly in equity 
A net 
tax 
expense of 
USD 237 million 
was recognized 
in 
Other 
comprehensive 
income
 
(2019: 
net 
expense 
of 
USD 326 
million) 
and 
a 
net 
tax 
benefit 
of 
USD 18 
million 
recognized 
in 
Share 
premium 
(2019: benefit of USD 11 million). 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
320 
 
Note 8 
Income taxes (continued) 
Deferred tax assets and liabilities 
The Group has gross 
DTAs, valuation 
allowances and recognized 
DTAs 
related 
to 
tax 
loss 
carry-forwards 
and 
deductible 
temporary differences, 
and also 
deferred tax 
liabilities in 
respect 
of 
taxable 
temporary differences, 
as 
shown 
in 
the 
table 
below. 
The valuation 
allowances reflect 
DTAs 
that were 
not recognized 
because, as 
of the 
last remeasurement 
period, management 
did 
not 
consider 
it 
probable 
that 
there 
would 
be 
sufficient 
future 
taxable 
profits 
available
 
to 
utilize 
the 
related 
tax 
loss 
carry
-
forwards and deductible temporary differences. 
Of 
the 
recognized 
DTAs 
as 
of 
31 December 
2020, 
USD 8.8 
billion 
related 
to 
the 
US 
and 
USD 0.4 
billion 
related 
to 
other 
locations 
(as 
of 
31 December 
2019, 
USD 9.3 
billion 
related 
to 
the US and USD 0.2 billion related to other locations). 
The 
recognition of 
DTAs is 
supported by 
forecasts of 
taxable 
profits 
for 
the 
entities 
concerned. 
In 
addition, 
tax 
planning 
opportunities are 
available that 
would result 
in additional 
future 
taxable income and these would be utilized, if necessary. 
As of 
31 December 2020, 
the Group 
has recognized 
DTAs of 
USD 138 million 
(31 December 2019: 
USD 75 million) 
in respect 
of entities 
that incurred 
losses in 
either the 
current or 
preceding 
year. 
Deferred 
tax 
liabilities 
are 
recognized 
in 
respect 
of 
investments 
in 
subsidiaries, 
branches 
and 
associates, 
and 
interests 
in 
joint 
arrangements, 
except 
to 
the 
extent 
that 
the 
Group 
can 
control 
the 
timing 
of 
the 
reversal 
of 
the 
associated 
taxable temporary difference and it is probable 
that such will not 
reverse 
in 
the 
foreseeable 
future. 
However, 
as 
of 
31 December 
2020, this exception 
was not considered 
to apply to 
any taxable 
temporary differences. 
 
 
USD million 
31.12.20 
31.12.19
1
Deferred tax assets
2
Gross 
Valuation 
allowance 
Recognized 
Gross 
Valuation 
allowance 
Recognized 
Tax loss carry-forwards 
 
14,108 
 
(8,715) 
 
5,393 
 
14,826 
 
(8,861) 
 
5,965 
Temporary differences 
 
4,384 
 
(565) 
 
3,819 
 
4,197 
 
(613) 
 
3,583 
of which: related to real estate costs capitalized for US 
tax 
purposes 
 
2,268 
 
0 
 
2,268 
 
2,219 
 
0 
 
2,219 
of which: related to compensation and benefits 
 
1,128 
 
(173) 
 
955 
 
1,091 
 
(179) 
 
912 
of which: related to trading assets 
 
23 
 
(6) 
 
16 
 
99 
 
(5) 
 
93 
of which: other 
 
966 
 
(386) 
 
580 
 
788 
 
(429) 
 
359 
Total deferred tax assets 
 
18,492 
 
(9,280) 
 
9,212 
 
19,022 
 
(9,474) 
 
9,548 
Deferred tax liabilities 
Goodwill and intangible assets 
 
31 
 
29 
Cash flow hedges 
 
425 
 
156 
Other 
 
108 
 
126 
Total deferred tax liabilities 
 
564 
 
311 
1 Comparative-period information has been restated. Refer to Note 1b for more information. 
2 Less deferred tax liabilities as applicable. 
 
 
As of 
31 December 2020, 
USD 16.3 billion 
of the 
unrecognized 
tax 
losses 
carried 
forward 
related 
to 
the 
US
 
(these 
primarily 
related 
to UBS 
AG’s US 
branch), USD 13.8 
billion related 
to the 
UK 
and 
USD 5.0 
billion 
related 
to 
other 
locations 
(as 
of 
31
 
December 
201
9
, 
USD
 
17
.
8
 
billion 
related 
t
o 
the 
US, 
USD 14.9 billion related 
to the UK and 
USD 5.0 billion related to 
other locations). 
In 
general, 
US 
federal 
tax 
losses 
incurred 
prior 
to 
31 December 
2017 
can 
be 
carried 
forward 
for 
20 
years. 
However, US federal tax 
losses incurred after 31 
December 2017 
and 
UK 
tax 
losses 
can 
be 
carried 
forward 
indefinitely, although 
the 
utilization 
of 
such 
losses 
is 
limited 
to 
80% 
of 
the 
entity’s 
future 
year 
taxable 
profits 
for 
the 
US 
and 
generally 
to 
25% 
thereof 
for 
the 
UK. 
The 
amounts 
of 
US 
tax 
loss 
carry-forwards 
that are 
included in 
the table 
below are 
based on 
their amount 
for 
federal 
tax 
purposes 
rather 
than 
for 
state 
and 
local 
tax 
purposes. 
 
 
Unrecognized tax loss carry-forwards 
USD million 
31.12.20 
31.12.19 
Within 1 year 
 
146 
 
13 
From 2 to 5 years 
 
638 
 
609 
From 6 to 10 years 
 
13,257 
 
14,712 
From 11 to 20 years 
 
3,858 
 
4,030 
No expiry 
 
17,227 
 
18,364 
Total 
 
35,127 
 
37,728 

321

Balance sheet notes

Note 9

Financial assets at amortized cost and other positions in scope of expected credit loss measurement

The

tables

the

following

pages

provide

information

about

financial

instruments

and

certain

other

credit

lines

that

are

subject

expected

credit

loss

(ECL)

requirements.

UBS’s

ECL

disclosure

segments

“ECL

segments”

are

aggregated

portfolios

based

on shared

risk characteristics

and on

the same

similar

rating

methods

applied.

The

key

segments

are

presented in the table below.

›

Refer to Note 20 for more information about

expected credit

loss measurement

Segment

Segment description

Description of credit risk sensitivity

Business division / Group Functions

Private clients with

mortgages

Lending to private clients secured by

owner-occupied real estate and

personal account overdrafts of those

clients

Sensitive to the interest rate environment,

unemployment

levels, real estate collateral

values and other regional aspects

–

Personal & Corporate Banking

–

Global Wealth Management

Real estate financing

Rental or income-producing real estate

financing to private and corporate

clients secured by real estate

Sensitive to GDP developments, the

interest rate environment,

real estate

collateral values and other regional

aspects

–

Personal & Corporate Banking

–

Global Wealth Management

–

Investment Bank

Large corporate clients

Lending to large corporate and multi-

national clients

Sensitive to GDP developments,

unemployment levels,

seasonality,

business cycles and collateral values

(diverse collateral,

including real estate

and other collateral types)

–

Personal & Corporate Banking

–

Investment Bank

SME clients

Lending to small and medium-sized

corporate clients

Sensitive to GDP developments,

unemployment levels,

the interest rate

environment and, to some extent,

seasonality,

business cycles and collateral

values (diverse collateral,

including real

estate and other collateral types)

–

Personal & Corporate Banking

Lombard

Loans secured by pledges of marketable

securities, guarantees and other forms

of collateral

Sensitive to the market (e.g., changes in

collateral values)

–

Global Wealth Management

Credit cards

Credit card solutions in Switzerland and

the US

Sensitive to unemployment levels

–

Personal & Corporate Banking

–

Global Wealth Management

Commodity trade

finance

Working capital financing of commodity

traders, generally extended on a self-

liquidating transactional basis

Sensitive primarily to the strength of

individual transaction structures and

collateral values (price volatility of

commodities),

as the primary source for

debt service is directly linked to the

shipments financed

–

Personal & Corporate Banking

Financial intermediaries

and hedge funds

Lending to financial institutions and

pension funds, including exposures to

broker-dealers and clearing houses

Sensitive to unemployment levels, the

quality and volatility index changes, equity

market and GDP developments,

regulatory changes and political risk

–

Personal & Corporate Banking

–

Investment Bank

›

Refer to Note 20f for more details regarding sensitivity

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
322 
 
Note 9 
Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued)
The 
tables below 
and on 
the following 
pages provide 
ECL exposure 
and ECL 
allowance and 
provision 
information about 
financial 
instruments and certain non-financial instruments that are subject to ECL. 
 
USD million 
31.12.20 
Carrying amount
1
ECL allowances 
Financial instruments measured at amortized cost 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Cash and balances at central banks 
 
158,231 
 
158,231 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Loans and advances to banks 
 
15,444 
 
15,260 
 
184 
 
0 
 
(16) 
 
(9) 
 
(5) 
 
(1) 
Receivables from securities financing transactions 
 
74,210 
 
74,210 
 
0 
 
0 
 
(2) 
 
(2) 
 
0 
 
0 
Cash collateral receivables on derivative instruments 
 
32,737 
 
32,737 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Loans and advances to customers 
 
379,528 
 
356,948 
 
20,341 
 
2,240 
 
(1,060) 
 
(142) 
 
(215) 
 
(703) 
of which: Private clients with mortgages 
 
148,175 
 
138,769 
 
8,448 
 
959 
 
(166) 
 
(35) 
 
(93) 
 
(39) 
of which: Real estate financing 
 
43,429 
 
37,568 
 
5,838 
 
23 
 
(63) 
 
(15) 
 
(44) 
 
(4) 
of which: Large corporate clients 
 
15,161 
 
12,658 
 
2,029 
 
474 
 
(279) 
 
(27) 
 
(40) 
 
(212) 
of which: SME clients 
 
14,872 
 
11,990 
 
2,254 
 
628 
 
(310) 
 
(19) 
 
(23) 
 
(268) 
of which: Lombard 
 
133,850 
 
133,795 
 
0 
 
55 
 
(36) 
 
(5) 
 
0 
 
(31) 
of which: Credit cards 
 
1,558 
 
1,198 
 
330 
 
30 
 
(38) 
 
(11) 
 
(11) 
 
(16) 
of which: Commodity trade finance 
 
3,269 
 
3,214 
 
43 
 
12 
 
(106) 
 
(5) 
 
0 
 
(101) 
Other financial assets measured at amortized cost 
 
27,194 
 
26,377 
 
348 
 
469 
 
(133) 
 
(34) 
 
(9) 
 
(90) 
of which: Loans to financial advisors 
 
2,569 
 
1,982 
 
137 
 
450 
 
(108) 
 
(27) 
 
(5) 
 
(76) 
Total financial assets measured at amortized cost 
 
687,345 
 
663,763 
 
20,873 
 
2,709 
 
(1,211) 
 
(187) 
 
(229) 
 
(795) 
Financial assets measured at fair value through other comprehensive income 
 
8,258 
 
8,258 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Total on-balance sheet financial assets in scope of ECL requirements 
 
695,603 
 
672,021 
 
20,873 
 
2,709 
 
(1,211) 
 
(187) 
 
(229) 
 
(795) 
Total exposure 
ECL provisions 
Off-balance sheet (in scope of ECL) 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Guarantees 
 
17,081 
 
14,687 
 
2,225 
 
170 
 
(63) 
 
(14) 
 
(15) 
 
(34) 
of which: Large corporate clients 
 
3,710 
 
2,048 
 
1,549 
 
113 
 
(20) 
 
(4) 
 
(5) 
 
(12) 
of which: SME clients 
 
1,310 
 
936 
 
326 
 
48 
 
(13) 
 
(1) 
 
(1) 
 
(11) 
of which: Financial intermediaries and hedge funds 
 
7,637 
 
7,413 
 
224 
 
0 
 
(17) 
 
(7) 
 
(9) 
 
0 
of which: Lombard 
 
641 
 
633 
 
0 
 
8 
 
(2) 
 
0 
 
0 
 
(2) 
of which: Commodity trade finance 
 
1,441 
 
1,416 
 
25 
 
0 
 
(2) 
 
(1) 
 
0 
 
0 
Irrevocable loan commitments 
 
41,372 
 
36,894 
 
4,374 
 
104 
 
(142) 
 
(74) 
 
(68) 
 
0 
of which: Large corporate clients 
 
24,209 
 
20,195 
 
3,950 
 
64 
 
(121) 
 
(63) 
 
(58) 
 
0 
Forward starting reverse repurchase and securities borrowing agreements 
 
3,247 
 
3,247 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Committed unconditionally revocable credit lines 
 
40,134 
 
35,233 
 
4,792 
 
108 
 
(50) 
 
(29) 
 
(21) 
 
0 
of which: Real estate financing 
 
6,328 
 
5,811 
 
517 
 
0 
 
(12) 
 
(5) 
 
(7) 
 
0 
of which: Large corporate clients 
 
4,909 
 
2,783 
 
2,099 
 
27 
 
(9) 
 
(2) 
 
(7) 
 
0 
of which: SME clients 
 
5,827 
 
4,596 
 
1,169 
 
63 
 
(16) 
 
(12) 
 
(4) 
 
0 
of which: Lombard 
 
9,671 
 
9,671 
 
0 
 
0 
 
0 
 
(1) 
 
0 
 
0 
of which: Credit cards 
 
8,661 
 
8,220 
 
430 
 
11 
 
(8) 
 
(6) 
 
(2) 
 
0 
of which: Commodity trade finance 
 
242 
 
242 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Irrevocable committed prolongation of existing loans 
 
3,282 
 
3,277 
 
5 
 
0 
 
(2) 
 
(2) 
 
0 
 
0 
Total off-balance sheet financial instruments and other credit lines 
 
105,116 
 
93,337 
 
11,396 
 
382 
 
(257) 
 
(119) 
 
(104) 
 
(34) 
Total allowances and provisions 
 
(1,468) 
 
(306) 
 
(333) 
 
(829) 
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL 
allowances.

 
323 
 
Note 9 
Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued) 
USD million 
31.12.19 
Carrying amount
1
ECL allowances 
Financial instruments measured at amortized cost 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Cash and balances at central banks 
 
107,068 
 
107,068 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Loans and advances to banks 
 
12,447 
 
12,367 
 
80 
 
0 
 
(6) 
 
(4) 
 
(1) 
 
(1) 
Receivables from securities financing transactions 
 
84,245 
 
84,245 
 
0 
 
0 
 
(2) 
 
(2) 
 
0 
 
0 
Cash collateral receivables on derivative instruments 
 
23,289 
 
23,289 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Loans and advances to customers 
 
326,786 
 
309,499 
 
15,538 
 
1,749 
 
(764) 
 
(82) 
 
(123) 
 
(559) 
of which: Private clients with mortgages 
 
132,646 
 
124,063 
 
7,624 
 
959 
 
(110) 
 
(15) 
 
(55) 
 
(41) 
of which: Real estate financing 
 
38,481 
 
32,932 
 
5,532 
 
17 
 
(43) 
 
(5) 
 
(34) 
 
(4) 
of which: Large corporate clients 
 
9,703 
 
9,184 
 
424 
 
94 
 
(117) 
 
(15) 
 
(4) 
 
(98) 
of which: SME clients 
 
11,786 
 
9,817 
 
1,449 
 
521 
 
(303) 
 
(17) 
 
(15) 
 
(271) 
of which: Lombard 
 
112,893 
 
112,796 
 
0 
 
98 
 
(22) 
 
(4) 
 
0 
 
(18) 
of which: Credit cards 
 
1,661 
 
1,314 
 
325 
 
22 
 
(35) 
 
(8) 
 
(14) 
 
(13) 
of which: Commodity trade finance 
 
2,844 
 
2,826 
 
8 
 
10 
 
(81) 
 
(5) 
 
0 
 
(77) 
Other financial assets measured at amortized cost 
 
22,980 
 
21,953 
 
451 
 
576 
 
(143) 
 
(35) 
 
(13) 
 
(95) 
of which: Loans to financial advisors 
 
2,877 
 
2,341 
 
334 
 
202 
 
(109) 
 
(29) 
 
(11) 
 
(70) 
Total financial assets measured at amortized cost 
 
576,815 
 
558,420 
 
16,069 
 
2,326 
 
(915) 
 
(124) 
 
(137) 
 
(655) 
Financial assets measured at fair value through other comprehensive income 
 
6,345 
 
6,345 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Total on-balance sheet financial assets in scope of ECL requirements 
 
583,159 
 
564,765 
 
16,069 
 
2,326 
 
(915) 
 
(124) 
 
(137) 
 
(655) 
Total exposure 
ECL provisions 
Off-balance sheet (in scope of ECL) 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Guarantees 
 
18,142 
 
17,757 
 
304 
 
82 
 
(42) 
 
(8) 
 
(1) 
 
(33) 
of which: Large corporate clients 
 
3,687 
 
3,461 
 
203 
 
24 
 
(10) 
 
(1) 
 
0 
 
(9) 
of which: SME clients 
 
1,180 
 
1,055 
 
67 
 
58 
 
(24) 
 
0 
 
0 
 
(23) 
of which: Financial intermediaries and hedge funds 
 
7,966 
 
7,950 
 
16 
 
0 
 
(5) 
 
(4) 
 
0 
 
0 
of which: Lombard 
 
622 
 
622 
 
0 
 
0 
 
(1) 
 
0 
 
0 
 
(1) 
of which: Commodity trade finance 
 
2,334 
 
2,320 
 
13 
 
0 
 
(1) 
 
(1) 
 
0 
 
0 
Irrevocable loan commitments 
 
27,547 
 
27,078 
 
419 
 
50 
 
(35) 
 
(30) 
 
(5) 
 
0 
of which: Large corporate clients 
 
18,735 
 
18,349 
 
359 
 
27 
 
(27) 
 
(24) 
 
(3) 
 
0 
Forward starting reverse repurchase and securities borrowing agreements 
 
1,657 
 
1,657 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Committed unconditionally revocable credit lines 
 
35,092 
 
33,848 
 
1,197 
 
46 
 
(34) 
 
(17) 
 
(17) 
 
0 
of which: Real estate financing 
 
5,242 
 
4,934 
 
307 
 
0 
 
(16) 
 
(3) 
 
(13) 
 
0 
of which: Large corporate clients 
 
4,274 
 
4,188 
 
69 
 
17 
 
(1) 
 
(1) 
 
0 
 
0 
of which: SME clients 
 
4,787 
 
4,589 
 
171 
 
27 
 
(9) 
 
(8) 
 
(1) 
 
0 
of which: Lombard 
 
7,976 
 
7,975 
 
0 
 
1 
 
0 
 
0 
 
0 
 
0 
of which: Credit cards 
 
7,890 
 
7,535 
 
355 
 
0 
 
(6) 
 
(4) 
 
(2) 
 
0 
of which: Commodity trade finance 
 
344 
 
344 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Irrevocable committed prolongation of existing loans 
 
3,289 
 
3,285 
 
0 
 
4 
 
(3) 
 
(3) 
 
0 
 
0 
Total off-balance sheet financial instruments and other credit lines 
 
85,728 
 
83,626 
 
1,920 
 
182 
 
(114) 
 
(58) 
 
(23) 
 
(33) 
Total allowances and provisions 
 
(1,029) 
 
(181) 
 
(160) 
 
(688) 
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective 
ECL allowances.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
324 
 
Note 9 
Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued) 
Coverage 
ratios are 
calculated 
for 
the 
core loan 
portfolio 
by 
taking 
ECL 
allowances 
and 
provisions 
divided 
by 
the 
gross 
carrying amount of the exposures. 
Core loan exposure is defined 
as 
the 
sum 
of 
Loans 
and 
advances 
to 
customers
 
and 
Loans 
to 
financial advisors
. 
These ratios are influenced by the following key factors: 
–
 
lending 
in 
Switzerland 
includes 
government 
backed 
COVID-
19 loans; 
–
 
L
ombard 
loans 
are 
generally 
secured 
with
 
marketable 
securities 
in 
portfolios 
that 
are, 
as 
a 
rule, 
highly 
diversified, 
with 
strict 
lending 
policies 
that 
are 
intended 
to 
ensure 
that 
credit risk is minimal under most circumstances; 
–
 
mortgage loans to private clients and 
real estate financing are 
controlled 
by 
conservative
 
eligibility 
criteria
,
 
including 
low
 
loan-to-value 
ratios 
and 
strong 
debt 
service 
capabilities; 
for 
example, more than 99% of 
the aggregated amount of Swiss 
residential mortgage loans would continue to be fully covered 
by 
real 
estate 
collateral 
even 
if 
the 
value 
of 
that 
collateral 
decreased 
by 
20%, 
for 
a 
30% 
reduction, 
more 
than 
98% 
would be covered; 
–
 
the 
amount 
of 
u
nsecured 
retail 
lending
 
(including 
credit 
cards) is insignificant; 
–
 
contractual maturities in the loan portfolio, which 
are a factor 
in 
the 
calculation 
of 
ECLs, 
are 
generally 
short, 
with 
a 
large 
part of 
the loan 
portfolio having 
contractual maturities 
of 12 
months or less; and 
–
 
write-offs 
of ECL 
allowances against 
the gross 
loan 
balances 
when all or part of a financial asset is deemed 
uncollectible or 
forgiven, reduces the coverage ratios. 
 
 
 
 
 
Coverage ratios for core loan portfolio 
31.12.20 
Gross carrying amount (USD million)
ECL coverage (bps) 
On-balance sheet 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Private clients with mortgages 
 
148,341 
 
138,803 
 
8,540 
 
998 
 
11 
 
2 
 
108 
 
390 
Real estate financing 
 
43,492 
 
37,583 
 
5,883 
 
27 
 
15 
 
4 
 
75 
 
1,414 
Large corporate clients 
 
15,440 
 
12,684 
 
2,069 
 
686 
 
181 
 
21 
 
192 
 
3,089 
SME clients 
 
15,183 
 
12,010 
 
2,277 
 
896 
 
204 
 
16 
 
101 
 
2,991 
Lombard 
 
133,886 
 
133,800 
 
0 
 
86 
 
3 
 
0 
 
0 
 
3,592 
Credit cards 
 
1,596 
 
1,209 
 
342 
 
46 
 
240 
 
91 
 
333 
 
3,488 
Commodity trade finance 
 
3,375 
 
3,219 
 
43 
 
113 
 
315 
 
16 
 
2 
 
8,939 
Other loans and advances to customers 
 
19,274 
 
17,781 
 
1,402 
 
91 
 
31 
 
14 
 
25 
 
3,563 
Loans to financial advisors 
 
2,677 
 
2,009 
 
142 
 
526 
 
404 
 
135 
 
351 
 
1,446 
Total
1
 
383,266 
 
359,099 
 
20,697 
 
3,470 
 
30 
 
5 
 
106 
 
2,247 
Gross exposure (USD million) 
ECL coverage (bps) 
Off-balance sheet 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Private clients with mortgages 
 
6,285 
 
6,083 
 
198 
 
3 
 
7 
 
6 
 
16 
 
197 
Real estate financing 
 
7,056 
 
6,576 
 
481 
 
0 
 
21 
 
9 
 
185 
 
0 
Large corporate clients 
 
32,828 
 
25,026 
 
7,598 
 
205 
 
46 
 
27 
 
92 
 
565 
SME clients 
 
9,121 
 
7,239 
 
1,734 
 
148 
 
40 
 
19 
 
63 
 
779 
Lombard 
 
14,178 
 
14,170 
 
0 
 
8 
 
2 
 
1 
 
0 
 
1,941 
Credit cards 
 
8,661 
 
8,220 
 
430 
 
11 
 
9 
 
8 
 
44 
 
0 
Commodity trade finance 
 
1,683 
 
1,658 
 
25 
 
0 
 
10 
 
8 
 
15 
 
8,279 
Financial intermediaries and hedge funds 
 
7,690 
 
7,242 
 
448 
 
0 
 
26 
 
13 
 
248 
 
166 
Other off-balance sheet commitments 
 
14,366 
 
13,876
 
482
 
8 
 
13 
 
7 
 
11 
 
12,414 
Total
2
 
101,869 
 
90,090 
 
11,396 
 
382 
 
25 
 
13 
 
91 
 
894 
1 Includes Loans and 
advances to customers 
of USD 380,589 million 
and Loans to financial 
advisors of USD 2,677 
million which are 
presented on the 
balance sheet line Other 
assets measured at 
amortized cost. 
2 Excludes Forward starting reverse repurchase and securities borrowing agreements. 
 
 

 
325 
 
Note 9 
Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued) 
Coverage ratios for core loan portfolio 
31.12.19 
Gross carrying amount (USD million)
ECL coverage (bps) 
On-balance sheet 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Private clients with mortgages 
 
132,756 
 
124,077 
 
7,679 
 
1,000 
 
8 
 
1 
 
72 
 
406 
Real estate financing 
 
38,524 
 
32,937 
 
5,567 
 
21 
 
11 
 
2 
 
62 
 
1,765 
Large corporate clients 
 
9,819 
 
9,199 
 
429 
 
192 
 
119 
 
16 
 
100 
 
5,088 
SME clients 
 
12,089 
 
9,834 
 
1,464 
 
791 
 
251 
 
18 
 
104 
 
3,420 
Lombard 
 
112,915 
 
112,799 
 
0 
 
116 
 
2 
 
0 
 
0 
 
1,566 
Credit cards 
 
1,696 
 
1,322 
 
339 
 
35 
 
205 
 
60 
 
404 
 
3,718 
Commodity trade finance 
 
2,925 
 
2,831 
 
8 
 
87 
 
278 
 
17 
 
3 
 
8,844 
Other loans and advances to customers 
 
16,824 
 
16,582 
 
176 
 
67 
 
31 
 
9 
 
15 
 
5,750 
Loans to financial advisors 
 
2,987 
 
2,370 
 
344 
 
272 
 
366 
 
122 
 
305 
 
2,570 
Total
1
 
330,536 
 
311,951 
 
16,005 
 
2,580 
 
26 
 
4 
 
83 
 
2,436 
Gross exposure (USD million) 
ECL coverage (bps) 
Off-balance sheet 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Private clients with mortgages 
 
5,520 
 
5,466 
 
51 
 
2 
 
7 
 
6 
 
100 
 
245 
Real estate financing 
 
6,046 
 
5,715 
 
326 
 
4 
 
29 
 
9 
 
390 
 
0 
Large corporate clients 
 
26,706 
 
26,009 
 
630 
 
67 
 
14 
 
10 
 
59 
 
1,319 
SME clients 
 
6,782 
 
6,407 
 
273 
 
101 
 
53 
 
15 
 
115 
 
2,265 
Lombard 
 
9,902 
 
9,895 
 
0 
 
7 
 
1 
 
0 
 
0 
 
1,403 
Credit cards 
 
7,890 
 
7,535 
 
355 
 
0 
 
8 
 
5 
 
52 
 
0 
Commodity trade finance 
 
2,678 
 
2,664 
 
13 
 
0 
 
5 
 
5 
 
9 
 
2,713 
Financial intermediaries and hedge funds 
 
9,676 
 
9,651 
 
25 
 
0 
 
5 
 
5 
 
71 
 
83 
 
Other off-balance sheet commitments 
 
8,872 
 
8,626 
 
246 
 
0 
 
5 
 
4 
 
34 
 
22,592 
Total
2
 
84,070 
 
81,969 
 
1,920 
 
182 
 
14 
 
7 
 
120 
 
1,822 
1 Includes Loans and 
advances to customers 
of USD 327,550 million 
and Loans to financial 
advisors of USD 2,987 
million which are 
presented on the 
balance sheet line Other 
assets measured at 
amortized cost. 
2 Excludes Forward starting reverse repurchase and securities borrowing agreements.

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
326 
 
Note 10 
Derivative instruments 
Overview 
Over-the-counter 
(OTC) 
derivative 
contracts 
are 
usually 
traded 
under 
a 
standardized 
International 
Swaps 
and 
Derivatives 
Association 
(ISDA) 
master 
agreement 
between 
UBS 
and 
its 
counterparties. Terms 
are negotiated directly with counterparties 
and 
the 
contracts 
have 
industry-standard 
settlement 
mechanisms 
prescribed 
by 
ISDA.
 
Regulators 
in 
various 
jurisdictions have begun a 
phased introduction of rules 
requiring 
the 
payment 
and 
collection 
of 
initial 
and 
variation 
margin 
on 
certain 
OTC 
derivative 
contracts, which 
may 
have 
a 
bearing 
on 
their price 
and other 
relevant 
terms. Due 
to challenges 
brought 
on 
by 
COVID-19, 
the 
International 
Organization 
of 
Securities 
Commissions 
(IOSCO) 
has 
extended 
the 
deadline 
for 
the 
completion 
of 
the 
final 
phase-in 
of 
margin 
requirements 
for 
non-centrally cleared derivatives, to 1 September 2022. 
Other 
derivative 
contracts 
are 
standardized 
in 
terms 
of 
their 
amounts 
and 
settlement 
dates, 
and 
are 
bought 
and 
sold 
on 
regulated 
exchanges. 
These 
are 
commonly 
referred 
to 
as 
exchange-traded derivatives (ETD) contracts. 
Exchanges offer the 
benefits of pricing transparency, 
standardized daily settlement of 
changes in value and, consequently, 
reduced credit risk. 
Most of the Group’s derivative transactions relate to sales and 
market-making 
activity. 
Sales 
activities 
include 
the 
structuring 
and 
marketing 
of 
derivative 
products 
to 
customers 
to 
enable 
them 
to 
take, 
transfer, 
modify 
or 
reduce 
current 
or 
expected 
risks. Market-making aims to 
directly support the facilitation 
and 
execution 
of 
client 
activity, 
and 
involves 
quoting 
bid 
and 
offer 
prices 
to 
other 
market 
participants 
with 
the 
intention 
of 
generating 
revenues 
based 
on 
spread 
and 
volume. 
The 
Group 
also uses various derivative instruments for hedging purposes. 
›
 
Refer to Notes 16 and 21 for more information 
about derivative 
instruments 
›
 
Refer to Note 25 for more information about 
derivatives 
designated in hedge accounting relationships 
Risks of derivative instruments 
The 
derivative 
financial 
assets 
shown 
on 
the 
balance 
sheet 
can 
be 
an 
important 
component 
of 
the 
Group’s 
credit 
exposure, 
however, the 
positive replacement 
values related 
to a 
respective 
counterparty 
are 
rarely 
an 
adequate 
reflection 
of 
the 
Group’s 
credit exposure in 
its derivatives business 
with that counterparty. 
This is generally the case because, on the one hand, replacement 
values can 
increase over 
time (potential 
future exposure), 
while, 
on the 
other hand, 
exposure may 
be mitigated 
by entering 
into 
master netting agreements and bilateral collateral 
arrangements. 
Both 
the 
exposure 
measures 
used 
internally 
by 
the 
Group 
to 
control 
credit 
risk 
and 
the 
capital 
requirements 
imposed 
by 
regulators reflect these additional factors. 
›
 
Refer to Note 22 for more information about 
derivative financial 
assets and liabilities after consideration 
of netting potential 
allowed under enforceable netting arrangements 
›
 
Refer to the “Risk management and control” 
section of this 
report for more information about the risks arising 
from 
derivative instruments 
Contingent collateral features of derivative liabilities 
Certain 
derivative 
instruments 
contain 
contingent 
collateral 
or 
termination 
features 
triggered 
upon 
a 
downgrade 
of 
the 
published 
credit 
ratings 
of 
the 
Group 
in 
the 
normal 
course 
of 
business. Based on UBS’s credit ratings as of 31 
December 2020, 
USD 0.0 billion, 
USD 0.5 billion 
and USD 1.1 
billion would 
have 
been
 
required 
for 
contractual 
obligations 
related 
to 
OTC 
derivatives 
in 
the 
event 
of 
a 
one-notch, 
two-notch 
and 
three-
notch 
reduction 
in 
long-term 
credit 
ratings, 
respectively. 
In 
evaluating UBS’s liquidity requirements, 
UBS considers additional 
collateral or termination payments 
that would be required 
in the 
event 
of 
a 
reduction 
in 
UBS’s 
long-term 
credit 
ratings, 
and 
a 
corresponding reduction in UBS’s short-term ratings. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
327 
 
Note 10 
Derivative instruments (continued) 
Derivative instruments
 
31.12.20 
31.12.19 
USD billion 
Derivative 
financial 
assets 
Notional 
amounts 
related to 
derivative 
financial 
assets
2
Derivative 
financial 
liabilities 
Notional 
amounts 
related to 
derivative 
financial 
liabilities
2
Other 
notional 
amounts
2,3
Derivative 
financial 
assets 
Notional 
amounts 
related to 
derivative 
financial 
assets
2
Derivative 
financial 
liabilities 
Notional 
amounts 
related to 
derivative 
financial 
liabilities
2
Other 
notional 
amounts
2,3
Interest rate contracts 
 
50.9 
 
928.0 
 
43.9 
 
880.4 
 
11,291.5 
 
42.6 
 
1,020.2 
 
36.6 
 
975.2 
 
11,999.2 
of which: forward contracts (OTC)
1
 
0.0 
 
19.8 
 
0.4 
 
21.9 
 
2,602.5 
 
0.0 
 
16.3 
 
0.3 
 
19.6 
 
3,136.8 
of which: swaps (OTC) 
 
40.8 
 
407.0 
 
30.9 
 
364.8 
 
8,105.2 
 
34.3 
 
454.7 
 
26.2 
 
402.9 
 
8,086.0 
of which: options (OTC) 
 
10.1 
 
447.5 
 
12.5 
 
460.5 
 
8.1 
 
464.8 
 
10.0 
 
486.1 
of which: futures (ETD) 
 
480.6 
 
546.9 
of which: options (ETD) 
 
0.0 
 
53.6 
 
0.0 
 
33.1 
 
103.3 
 
0.0 
 
84.4 
 
0.0 
 
66.6 
 
229.5 
Credit derivative contracts 
 
2.4 
 
57.6 
 
2.9 
 
64.8 
 
2.0 
 
70.2 
 
3.0 
 
69.9 
of which: credit default swaps (OTC) 
 
2.2 
 
53.6 
 
2.6 
 
62.3 
 
1.7 
 
65.0 
 
2.2 
 
66.0 
of which: total return swaps (OTC) 
 
0.1 
 
1.9 
 
0.3 
 
2.5 
 
0.3 
 
2.0 
 
0.8 
 
3.3 
Foreign exchange contracts 
 
68.7 
 
2,951.1 
 
70.5 
 
2,820.4 
 
1.4 
 
52.5 
 
3,173.4 
 
54.0 
 
2,993.8 
 
1.2 
of which: forward contracts (OTC) 
 
27.3 
 
779.1 
 
29.0 
 
853.3 
 
22.4 
 
935.3 
 
23.4 
 
966.6 
of which: swaps (OTC) 
 
34.3 
 
1,727.3 
 
34.4 
 
1,567.3 
 
22.8 
 
1,573.2 
 
23.8 
 
1,418.5 
of which: options (OTC) 
 
7.1 
 
440.9 
 
7.1 
 
394.7 
 
7.3 
 
660.9 
 
6.8 
 
604.9 
Equity contracts 
 
34.8 
 
449.6 
 
41.2 
 
581.3 
 
91.3 
 
22.8 
 
420.3 
 
25.5 
 
534.5 
 
122.1 
of which: swaps (OTC) 
 
6.4 
 
89.4 
 
9.8 
 
108.4 
 
4.0 
 
81.3 
 
5.5 
 
96.3 
of which: options (OTC) 
 
7.0 
 
87.1 
 
10.9 
 
146.2 
 
5.0 
 
88.6 
 
6.8 
 
144.1 
of which: futures (ETD) 
 
67.9 
 
84.9 
of which: options (ETD) 
 
10.7 
 
273.1 
 
11.3 
 
326.8 
 
23.5 
 
7.2 
 
250.4 
 
7.8 
 
294.1 
 
37.2 
of which: agency transactions (ETD)
4
 
10.7 
 
9.1 
 
6.6 
 
5.4 
Commodity contracts 
 
2.2 
 
57.8 
 
2.0 
 
49.7 
 
10.1 
 
1.8 
 
56.1 
 
1.7 
 
60.0 
 
12.6 
of which: swaps (OTC) 
 
0.5 
 
17.7 
 
0.8 
 
18.0 
 
0.4 
 
13.8 
 
0.6 
 
15.1 
of which: options (OTC) 
 
1.0 
 
23.5 
 
0.7 
 
17.8 
 
1.0 
 
27.4 
 
0.4 
 
23.6 
of which: futures (ETD) 
 
9.3 
 
12.0 
of which: forward contracts (ETD) 
 
8.0 
 
6.3 
 
5.9 
 
4.9 
Loan commitments 
measured at FVTPL (OTC)
5
 
0.0 
 
10.2 
 
0.0 
 
7.1 
Unsettled purchases of non-derivative 
financial instruments
6
 
0.3 
 
18.3 
 
0.2 
 
10.0 
 
0.1 
 
16.6 
 
0.1 
 
6.9 
Unsettled sales of non-derivative 
financial instruments
6
 
0.2 
 
17.2 
 
0.3 
 
12.9 
 
0.1 
 
15.4 
 
0.1 
 
9.7 
Total derivative instruments, 
based on IFRS netting
7
 
159.6 
 
4,479.5 
 
161.1 
 
4,429.7 
 
11,394.4 
 
121.8 
 
4,772.2 
 
120.9 
 
4,657.0 
 
12,135.1 
1 Includes certain 
forward starting repurchase 
and reverse repurchase 
agreements that are 
classified as measured 
at fair value 
through profit or 
loss and are 
recognized within derivative 
instruments. The 
notional 
amounts related to these 
instruments were previously 
presented in the former 
Note 34 under Forward 
starting transactions (refer 
to the “Consolidated 
financial statements” section 
of the Annual Report 
2019 for 
more information). Starting 
with this report, 
the presentation of 
these notionals has 
been aligned with 
the fair values 
presented in this 
table and prior 
periods have been 
amended to ensure 
comparability. 
2 In 
cases where derivative 
financial instruments 
are presented on 
a net basis 
on the balance 
sheet, the respective 
notional amounts 
of the netted 
derivative financial 
instruments are still 
presented on a 
gross basis. 
3 Other notional amounts 
relate to derivatives 
that are cleared 
through either a 
central counterparty or 
an exchange. The 
fair value of 
these derivatives is 
presented on the 
balance sheet net 
of the corresponding 
cash margin under 
Cash collateral receivables 
on derivative instruments 
and Cash collateral 
payables on derivative 
instruments and was 
not material for 
all periods presented. 
4 Notional amounts 
of exchange-
traded agency 
transactions and 
OTC-cleared transactions 
entered into on 
behalf of clients 
are not disclosed 
as they 
have a significantly 
different risk profile. 
5 These 
notional amounts relate 
to derivative 
loan 
commitments that were 
previously presented in 
the former Note 34 
under loan commitments 
measured at fair 
value (refer 
to the “Consolidated 
financial statements” section 
of the Annual 
Report 2019 
for more 
information). Starting with this 
report, the presentation of 
these notionals has been 
aligned with the fair 
values of the derivative 
loan commitments presented 
in this table and 
prior periods have been 
amended to 
ensure 
comparability. 
6 
Changes 
in 
the 
fair 
value 
of 
purchased 
and 
sold 
non-derivative 
financial 
instruments 
between 
trade 
date 
and 
settlement 
date 
are 
recognized 
as 
derivative 
financial 
instruments. 
7 Derivative financial assets and 
liabilities are presented net 
on the balance sheet if 
UBS has the unconditional and 
legally enforceable right to offset 
the recognized amounts, 
both in the normal course 
of business 
and in 
the event 
of default, 
bankruptcy or 
insolvency of 
the entity 
and all 
of the 
counterparties, and 
intends either 
to settle 
on a 
net basis 
or to 
realize the 
asset and 
settle the 
liability simultaneously. 
Refer to 
Note 22 for more information on netting arrangements. 
 
On a notional amount basis, 
approximately 50% of OTC 
interest 
rate 
contra
cts 
held 
as 
of 
31 
December 
2020
 
(
31 
December 
2019: 
54%) mature 
within one 
year, 
30% (31 
December 2019: 
28%) 
within 
one 
to 
five 
years 
and 
20% 
(31 
December 
2019: 
18%) 
after 
five 
years. 
Notional
 
amounts
 
of 
interest 
rate 
contracts 
cleared 
through 
either 
a 
central 
counterparty 
or 
an 
exchange 
that are 
legally 
settled 
on 
a 
daily 
basis 
are 
presented 
under 
Other 
notional 
amounts
 
in 
the 
table 
above 
and 
are 
categorized 
into 
maturity 
buckets 
on 
the 
basis 
of 
contractual 
maturities of the cleared underlying derivative contracts. 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
328 
 
Note 11 
Financial assets measured at fair value through other comprehensive income 
USD million 
31.12.20 
31.12.19 
Financial assets measured at fair value through other comprehensive income
1
Debt instruments 
Government and government agencies 
 
8,155 
 
6,162 
of which: USA 
 
7,727 
 
5,814 
Banks 
 
103 
 
178 
Corporates and other 
 
0 
 
4 
Total financial assets measured at fair value through other comprehensive income 
 
8,258 
 
6,345 
Unrealized gains, before tax 
 
204 
 
41 
Unrealized (losses), before tax 
 
(4) 
 
(25) 
Net unrealized gains / (losses), before tax 
 
200 
 
16 
Net unrealized gains / (losses), after tax 
 
151 
 
15 
1 Refer to Note 21c for more information about product type and fair value hierarchy categorization. Refer also to Note 9 and 
Note 20 for more information about expected credit loss measurement. 
 
Note 12 
Property, equipment and software 
 
At historical cost less accumulated depreciation 
USD million 
Owned 
properties 
Leased 
properties
1
Leasehold 
improve- 
ments 
IT hardware and 
communication 
equipment 
Internally 
generated 
software 
Purchased 
software 
Other 
machines 
and 
equipment 
Projects in 
progress 
2020 
2019 
Historical cost 
 
Balance at the beginning of the year 
 
7,650 
 
3,745 
 
3,004 
 
1,559 
 
6,176 
 
485 
 
799 
 
1,014 
 
24,431 
 
23,321 
Additions 
 
26 
 
443
2 
 
37 
 
192 
 
131 
 
75 
 
20 
 
1,389 
 
2,312 
 
1,931 
Disposals / write-offs
3
 
(315) 
 
(8) 
 
(169) 
 
(245) 
 
(135) 
 
(76) 
 
(42) 
 
0 
 
(990) 
 
(636) 
Reclassifications
4
 
(461) 
 
0 
 
217 
 
11 
 
1,015 
 
3 
 
34 
 
(1,410) 
 
(590) 
 
(398) 
Foreign currency translation 
 
686 
 
70 
 
85 
 
65 
 
75 
 
19 
 
31 
 
43 
 
1,074 
 
213 
Balance at the end of the year 
 
7,586 
 
4,249 
 
3,174 
 
1,581 
 
7,262 
 
506
 
843 
 
1,036 
 
26,238 
 
24,431 
Accumulated depreciation 
Balance at the beginning of the year 
 
4,466 
 
519 
 
1,768 
 
1,053 
 
2,906 
 
358 
 
559 
 
0 
 
11,628 
 
10,619 
Depreciation 
 
173 
 
535 
 
236 
 
170 
 
753 
 
61 
 
69 
 
0 
 
1,997 
 
1,728 
Impairment
5
 
0 
 
4 
 
1 
 
0 
 
67 
 
0 
 
0 
 
0 
 
72 
 
37 
Disposals / write-offs
3
 
(200) 
 
(3) 
 
(164) 
 
(243) 
 
(129) 
 
(76) 
 
(42) 
 
0 
 
(855) 
 
(614) 
Reclassifications
4
 
(332) 
 
0 
 
5 
 
0 
 
0 
 
0 
 
0 
 
0 
 
(328) 
 
(254) 
Foreign currency translation 
 
406 
 
28 
 
70 
 
41 
 
35 
 
13 
 
23 
 
0 
 
616 
 
112 
Balance at the end of the year 
 
4,513 
 
1,082 
 
1,917 
 
1,021 
 
3,631 
 
356 
 
608 
 
0 
 
13,129 
 
11,628 
Net book value 
Net book value at the beginning of the 
year 
 
3,184 
 
3,226 
 
1,236 
 
506 
 
3,270 
 
126 
 
241 
 
1,014 
 
12,804 
 
12,702 
Net book value at the end of the year 
 
3,073 
 
3,167 
 
1,258 
 
560 
 
3,630 
 
150 
 
235 
 
1,036
6 
 
13,109 
 
12,804 
1 Represents right-of-use assets recognized by UBS 
as lessee. Includes immaterial leased IT 
equipment. The total cash outflow 
for leases during 2020 was 
USD 679 million (2019: USD 641 million). Interest 
expense 
on lease liabilities 
is included within 
Interest expense from 
financial instruments measured 
at amortized cost 
and Lease liabilities 
are included within 
Other financial liabilities 
measured at amortized 
cost. Refer to 
Notes 3 and 
19a, respectively. 
Also refer to 
Note 1 for 
more information about 
the nature of 
UBS’s leasing 
activities. 
2 In 2020, 
right-of-use assets included 
the Additions from 
sale-and-leaseback transactions, 
from which UBS recognized net gains of USD 140 million, included within Other income. 
Refer to Note 5. 
3 Includes write-offs of fully depreciated assets. 
4 The total net reclassification amount for the respective 
periods represents reclassifications 
to Properties and 
other non-current 
assets held for 
sale. 
5 Impairment charges 
recorded in 2020 
generally relate 
to assets that 
are no longer 
used for which 
the recoverable 
amount based on a value in use approach was determined 
to be zero. Includes the impairment of internally 
generated software resulting from a decision in 
the fourth quarter of 2020 to not proceed with an internal 
business transfer from UBS Switzerland AG to 
UBS AG. 
6 Consists of USD 855 million related to internally generated 
software, USD 92 million related 
to Owned properties and USD 89 million related to Leasehold 
improvements.

 
 
329 
 
Note 13 
Goodwill and intangible assets
Introduction 
UBS 
performs 
an 
impairment 
test 
on 
its 
goodwill 
assets 
on 
an 
annual basis or when indicators of impairment exist. 
UBS 
considers Asset 
Management 
and the 
Investment 
Bank, 
as 
they 
are 
reported 
in 
Note 
2a, 
as 
separate 
cash-generating 
units 
(CGUs), 
as 
that 
is 
the 
level 
at 
which 
the 
performance 
of 
investments (and 
the related 
goodwill) is 
reviewed and 
assessed 
by management. 
Given that 
a significant 
amount of 
goodwill in 
Global 
Wealth 
Management 
relates 
to 
the 
PaineWebber 
acquisition in 
2000, which 
mainly affected 
the Americas portion 
of 
the 
business, 
this 
goodwill 
remains 
separately 
monitored 
by 
the 
Americas
,
 
despite 
the 
formation 
of 
Global 
Wealth 
Management 
in 
2018. 
Accordingly, 
goodwill 
for 
Global 
Wealth 
Management is separately considered for impairment at the level 
of 
two 
CGUs: 
Americas; 
and 
Switzerland 
and 
International 
(consisting of EMEA, Asia Pacific and Global). 
The 
impairment 
test 
is 
performed 
for 
each 
CGU 
to 
which 
goodwill 
is 
allocated 
by 
comparing 
the 
recoverable 
amount, 
based 
on 
its 
value
 
in
 
use, 
with 
the 
carrying 
amount 
of 
the 
respective 
CGU. 
An 
impairment 
charge 
is 
recognized 
if 
the 
carrying amount exceeds the recoverable amount. 
As 
of 
31 December 
2020, 
total 
goodwill 
recognized 
on 
the 
balance sheet 
was USD 6.2 
billion, of which 
USD 3.7 billion was 
carried 
by 
the 
Global 
Wealth 
Management 
Americas 
CGU, 
USD 1.2 
billion 
was 
carried 
by the 
Global 
Wealth 
Management 
Switzerland 
and 
International
 
CGU
,
 
and 
USD
 
1.2
 
billion 
was 
carried 
by 
Asset 
Management. 
The 
Investment 
Bank 
CGU 
had 
no 
goodwill. 
Based 
on 
the 
impairment 
testing 
methodology 
described 
below, 
UBS 
concluded 
that 
the 
goodwill 
balances 
as 
of 31 December 2020 allocated to these CGUs are not impaired. 
Methodology for goodwill impairment testing 
The 
recoverable 
amounts 
are 
determined 
using 
a 
discounted 
cash 
flow 
model, 
which 
has 
been 
adapted 
to 
use 
inputs 
that 
consider 
features 
of 
the 
banking 
business 
and 
its 
regulatory 
environment. 
The 
recoverable 
amount 
of 
a 
CGU 
is 
the 
sum 
of 
the 
discounted 
earnings 
attributable 
to 
shareholders 
from 
the 
first three forecast 
years and the terminal 
value, adjusted for the 
effect 
of the 
capital assumed 
to be 
needed over 
the next 
three 
years 
and 
to 
support 
growth 
beyond 
that 
period. 
The 
terminal 
value, 
which 
covers 
all 
periods 
beyond 
the 
third 
year, 
is 
calculated 
on 
the 
basis 
of 
the 
forecast 
of 
third-year 
profit, 
the 
discount 
rate 
and 
the 
long-term 
growth 
rate, 
as 
well 
as 
the 
implied perpetual capital growth. 
The 
carrying 
amount 
for 
each 
CGU 
is 
determined 
by 
reference 
to 
the 
Group’s 
equity 
attribution 
framework. 
Within 
that framework, which 
is described in 
the “Capital, liquidity 
and 
funding, 
and 
balance 
sheet” 
section 
of 
this 
report, 
UBS 
attributes 
equity 
to 
the 
businesses 
on 
the 
basis 
of 
their 
risk-
weighted 
assets 
and 
leverage 
ratio 
denominator 
(both 
metrics 
include 
resource 
allocations 
from 
Group 
Functions 
to 
the 
business divisions), 
their goodwill 
and their 
intangible assets, 
as 
well as attributed equity related to certain CET1 deduction items. 
The 
framework 
is 
primarily 
used 
for 
the 
purpose 
of 
measuring 
the 
performance 
of 
the 
businesses 
and 
includes 
certain 
management 
assumptions. 
Attributed 
equity 
equals 
the 
capital 
that 
a 
CGU 
requires 
to 
conduct 
its 
business 
and 
is 
currently 
considered 
a 
reasonable 
approximation 
of 
the 
carrying 
amount 
of the 
CGUs. The 
attributed equity methodology 
is aligned 
with 
the business planning process, the inputs from which 
are used in 
calculating the recoverable amounts of the respective CGU. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information about 
the equity 
attribution framework 
Assumptions 
Valuation 
parameters 
used 
within 
the 
Group’s 
impairment 
test 
model 
are 
linked 
to 
external 
market 
information, 
where 
applicable. 
The 
model 
used 
to 
determine 
the 
recoverable 
amount 
is 
most 
sensitive 
to 
changes 
in 
the 
forecast 
earnings 
available to shareholders in years 
one to three, to changes 
in the 
discount rates and to 
changes in the long-term growth 
rate. The 
applied 
long-term growth 
rate is 
based on 
long-term economic 
growth rates 
for different 
regions worldwide. 
Earnings available 
to 
shareholders 
are 
estimated 
on 
the 
basis 
of 
forecast 
results, 
which 
are 
part 
of 
the 
business 
plan 
approved 
by 
the 
Board 
of 
Directors. 
The discount 
rates are 
determined by 
applying a 
capital asset 
pricing 
model-based 
approach, 
as 
well 
as 
considering 
quantitative 
and 
qualitative 
inputs 
from 
both 
internal 
and 
external analysts and the 
view of management. In 
addition, they 
take 
into 
account 
regional 
differences 
in 
risk-free 
rates 
at 
the 
level 
of 
individual 
CGUs. 
Consistently, 
long-term 
growth 
rates 
are 
determined 
based 
on 
nominal 
or 
real 
GDP 
growth 
rate 
forecasts, depending on the region. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
330 
 
Note 13 
Goodwill and intangible assets (continued)
Key assumptions 
used to determine 
the recoverable 
amounts 
of each 
CGU are 
tested 
for 
sensitivity 
by applying 
a reasonably 
possible 
change 
to 
those 
assumptions. 
Forecast 
earnings 
available 
to 
shareholders 
were 
changed 
by 
20%, 
the 
discount 
rates were changed 
by 1.5 percentage 
points and the long 
-term 
growth 
rates 
were 
changed 
by 
0.75 percentage 
points. 
Under 
all 
scenarios, 
reasonably 
possible 
changes 
in 
key 
assumptions 
did not 
result in 
an impairment 
of goodwill 
or intangible 
assets 
reported 
by 
Global 
Wealth 
Management 
Americas, 
Global 
Wealth 
Management 
Switzerland 
and 
International, 
and 
Asset 
Management. 
If 
the 
estimated 
earnings 
and 
other 
assumptions 
in 
future 
periods deviate 
from the 
current outlook, 
the value 
of goodwill 
attributable 
to 
Global 
Wealth 
Management 
Americas, 
Global 
Wealth 
Management 
Switzerland 
and 
International, 
and 
Asset 
Management may 
become impaired 
in the 
future, giving 
rise to 
losses 
in 
the income 
statement. Recognition 
of any 
impairment 
of 
goodwill 
would 
reduce 
IFRS 
equity 
and 
net 
profit. 
It 
would 
not affect cash flows and, as goodwill is required to be deducted 
from 
capital 
under 
the 
Basel 
III 
capital 
framework, 
no 
effect 
would be expected on the Group’s capital ratios. 
 
 
Discount and growth rates 
Discount rates 
Growth rates 
In % 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Global Wealth Management Americas 
 
9.5 
 
9.5 
 
5.1 
 
4.2 
Global Wealth Management Switzerland and International 
 
8.5 
 
8.5 
 
3.7 
 
3.4 
Asset Management 
 
8.5 
 
9.0 
 
3.5 
 
3.0 
Investment Bank 
 
11.0 
 
11.0 
 
4.8 
 
4.0 
 
 
Goodwill 
Intangible assets 
USD million 
Total 
Infrastructure
1
Customer 
relationships, 
contractual 
rights and other 
Total 
2020 
2019 
Historical cost 
Balance at the beginning of the year 
 
6,272 
 
760 
 
788 
 
1,548 
 
7,820 
 
8,018 
Additions 
 
147
2 
 
147 
 
147 
 
11 
Disposals 
 
(158)
3 
 
(158) 
 
(11) 
Write-offs 
 
(35) 
 
(35) 
 
(35) 
 
(185) 
Foreign currency translation 
 
69 
 
22 
 
22 
 
91 
 
(12) 
Balance at the end of the year 
 
6,182 
 
760 
 
922 
 
1,683 
 
7,865 
 
7,820 
Accumulated amortization and impairment 
Balance at the beginning of the year 
 
730 
 
621 
 
1,351 
 
1,351 
 
1,371 
Amortization 
 
30 
 
25 
 
55 
 
55 
 
65 
Impairment
4
 
2 
 
2 
 
2 
 
0 
Disposals 
 
0 
 
(8) 
Write-offs 
 
(35) 
 
(35) 
 
(35) 
 
(75) 
Foreign currency translation 
 
11 
 
11 
 
11 
 
(2) 
Balance at the end of the year 
 
760 
 
624 
 
1,385 
 
1,385 
 
1,351 
Net book value at the end of the year 
 
6,182 
 
0 
 
298 
 
298 
 
6,480 
 
6,469 
1 Consists of the branch network intangible 
asset recognized in connection with 
the acquisition of PaineWebber 
Group, Inc. 
2 Relates to the establishment of a 
banking partnership with Banco do Brasil. 
Refer to 
Note 29 
for more 
information. 
3 Relates 
to the 
sale of 
a majority 
stake in 
Fondcenter AG. 
Refer to 
Note 29 
for more 
information. 
4 Impairment 
charges recorded 
in 2020 
relate to 
assets for 
which the 
recoverable amount was determined considering their value in use (recoverable amount of 
the impaired intangible assets in 2020 was USD 5 million). 

331

Note 13

Goodwill and intangible assets (continued)

The table below presents goodwill and intangible assets by CGU for the year ended 31 December 2020.

USD million

Global Wealth

Management

Americas

Global Wealth

Management

Switzerland and

International

Asset

Management

Investment

Bank

Group Functions

Total

Goodwill

Balance at the beginning of the year

3,719

1,198

1,354

6,272

Additions

Disposals

(158)

Foreign currency translation

Balance at the end of the year

3,724

1,233

1,226

6,182

Intangible assets

Balance at the beginning of the year

197

Additions

147

Disposals

Amortization

(36)

(12)

(4)

(55)

Impairment

(2)

Foreign currency translation

(9)

Balance at the end of the year

161

298

The table below presents estimated aggregated amortization expenses for intangible assets.

USD million

Intangible assets

Estimated, aggregated amortization expenses for:

2021

2022

2023

2024

2025

Thereafter

160

Not amortized due to indefinite useful life

Total

298

Consolidated financial statements | UBS Group AG consolidated financial statements

332

Note 14

Other assets

a) Other financial assets measured at amortized cost

USD million

31.12.20

31.12.19

Debt securities

18,801

14,141

of which: government bills / bonds

9,789

8,492

Loans to financial advisors

2,569

2,877

Fee-

and commission-related receivables

2,014

1,521

Finance lease receivables

1,447

1,444

Settlement and clearing accounts

614

587

Accrued interest income

591

742

Other

1,158

1,669

Total other financial assets measured at amortized cost

27,194

22,980

b) Other non-financial assets

USD million

31.12.20

31.12.19

Precious metals and other physical commodities

6,264

4,597

Bail deposit

1,418

1,293

Prepaid expenses

1,081

927

VAT and other tax receivables

433

493

Properties and other non-current assets held for sale

246

199

Other

326

346

Total other non-financial assets

9,768

7,856

1 Refer to item 1 in Note 18b for more information.

Note 15

Amounts due to banks and customer deposits

USD million

31.12.20

31.12.19

Amounts due to banks

11,050

6,570

Customer deposits

524,605

448,284

of which: demand deposits

236,447

176,010

of which: retail savings / deposits

220,898

168,581

of which: time deposits

40,290

62,315

of which: fiduciary deposits

26,970

41,378

Total amounts due to banks and customer deposits

535,655

454,854

Customer

deposits

increased

USD 76

billion,

mainly

Switzerland

and

the

Americas,

which

USD 50

billion

was

Global

Wealth Management and USD 26

billion in Personal & Corporate Banking,

as a result of clients

holding higher levels of cash,

as well

as currency effects. Demand deposits and retail savings / deposits together increased by USD 113 billion, partly offset by decreases of

USD 36 billion in time deposits and fiduciary deposits.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
333 
 
Note 16 
Debt issued designated at fair value 
USD million 
31.12.20 
31.12.19 
Issued debt instruments 
Equity-linked
1
 
41,069 
 
41,722 
Rates-linked 
 
11,038 
 
16,318 
Credit-linked 
 
1,933 
 
1,916 
Fixed-rate 
 
3,604 
 
4,636 
Commodity-linked 
 
1,497 
 
1,567 
Other 
 
2,101 
 
649 
of which: debt that contributes to total loss-absorbing capacity 
 
1,190 
 
217 
Total debt issued designated at fair value 
 
61,243 
 
66,809 
of which: issued by UBS AG with original maturity greater than one 
year
2
 
46,427 
 
51,031 
of which: life-to-date own credit (gain) / loss 
 
418 
 
92 
1 Includes investment fund unit-linked 
instruments issued. 
2 Issued by the legal entity 
UBS AG. Based on 
original contractual maturity without 
considering any early redemption 
features. 100% of 
the balance as 
of 31 December 2020 was unsecured (31 December 2019: more than 99% of the balance was unsecured). 
 
As 
of 
31 
December 
2020
 
and 
31 
December 
2019
, 
the 
contractual 
redemption 
amount 
at 
maturity 
of 
debt 
issued 
designated at fair 
value through profit 
or loss was not 
materially 
different from the carrying amount. 
The 
table 
below 
shows 
the 
residual 
contractual 
maturity 
of 
the carrying amount of 
debt issued designated at fair 
value, split 
between 
fixed-rate 
and 
floating-rate 
instruments 
based 
on 
the 
contractual 
terms, 
and 
does 
not 
consider 
any 
early 
redemption 
features. Interest rate ranges for future interest 
payments related 
to debt issued designated at fair value have 
not been included in 
the 
table below, 
as the 
majority of 
the debt 
instruments issued 
are 
structured 
products 
and 
therefore 
the 
future 
interest 
payments 
are 
highly 
dependent 
upon 
the 
embedded 
derivative 
and prevailing 
market conditions 
at the 
point in 
time that 
each 
interest payment is made. 
›
 
Refer to Note 24 for maturity information 
on an undiscounted 
cash flow basis
 
 
Contractual maturity of carrying amount 
USD million 
2021 
2022 
2023 
2024 
2025 
2026–2030 
Thereafter 
Total 
31.12.20 
Total 
31.12.19 
UBS Group AG
1
Non-subordinated debt 
Fixed-rate 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1,375 
 
1,375 
 
217 
UBS AG
2
Non-subordinated debt 
Fixed-rate 
 
4,144 
 
1,473 
 
1,112 
 
512 
 
318 
 
227 
 
1,623 
 
9,409 
 
10,368 
Floating-rate 
 
18,145 
 
8,758 
 
5,915 
 
1,727 
 
6,454 
 
6,058 
 
2,471 
 
49,528 
 
55,299 
Subtotal 
 
22,289 
 
10,231 
 
7,027 
 
2,239 
 
6,772 
 
6,286 
 
4,094 
 
58,937 
 
65,668 
Other subsidiaries
3
Non-subordinated debt 
Fixed-rate 
 
88 
 
7 
 
0 
 
0 
 
0 
 
422 
 
22 
 
539 
 
520 
Floating-rate 
 
41 
 
185 
 
126 
 
0 
 
0 
 
0 
 
39 
 
392 
 
404 
Subtotal 
 
129 
 
192 
 
126 
 
0 
 
0 
 
422 
 
61 
 
931 
 
924 
Total 
 
22,418 
 
10,423 
 
7,153 
 
2,239 
 
6,772 
 
6,708 
 
5,530 
 
61,243 
 
66,809 
1 Comprises instruments issued by the legal entity UBS Group AG. 
2 Comprises instruments issued by the legal entity UBS AG. 
3 Comprises instruments issued by subsidiaries of UBS AG. 

Consolidated financial statements | UBS Group AG consolidated financial statements

334

Note 17

Debt issued measured at amortized cost

USD million

31.12.20

31.12.19

Certificates of deposit

15,680

5,190

Commercial paper

25,472

14,413

Other short-term debt

5,515

2,235

Short-term debt

46,666

21,837

Senior unsecured debt that contributes to total loss-absorbing

capacity (TLAC)

36,611

30,105

Senior unsecured debt other than TLAC

21,340

25,569

of which: issued by UBS AG with original maturity greater than one

year

18,464

22,349

Covered bonds

2,796

2,633

Subordinated debt

22,157

21,775

of which: high-trigger loss-absorbing additional tier 1 capital

instruments

11,837

11,931

of which: low-trigger loss-absorbing additional tier 1 capital

instruments

2,577

2,414

of which: low-trigger loss-absorbing tier 2 capital instruments

7,201

6,892

of which: non-Basel III-compliant tier 2 capital instruments

543

540

Debt issued through the Swiss central mortgage institutions

9,660

8,574

Other long-term debt

Long-term debt

92,566

88,660

Total debt issued measured at amortized cost

139,232

110,497

1 Debt

with an

original contractual

maturity of

less than

one year.

2 Issued

by the

legal entity

UBS AG.

Based on

original contractual

maturity

without considering

any early

redemption features.

As of

31 December 2020, 100% of the balance

was unsecured (31 December 2019:

100% of the balance

was unsecured).

3 Debt with an original

maturity greater than or equal to

one year. The

classification of debt

issued into short-term and long-term does not consider any early redemption features.

4 Net of bifurcated embedded derivatives, the fair value

of which was not material for the periods presented.

The Group uses interest

rate and foreign exchange

derivatives to

manage

the

risks

inherent

certain

debt

instruments

held

amortized

cost.

some

cases,

the

Group

applies

hedge

accounting

for

interest

rate risk

discussed in

item

Note

1a and

Note 25.

As a

result

of applying

hedge accounting,

the

life-to-date

adjustment

the

carrying

amount

debt

issued

was an

increase

of USD 2,401

million as

of 31

December 2020

and an

increase of

USD 1,099 million

as of

31 December

2019,

reflecting changes in fair value due to interest rate movements.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
335 
 
Note 17 
Debt issued measured at amortized cost (continued) 
Subordinated 
debt 
consists 
of 
unsecured 
debt 
obligations 
that 
are 
contractually 
subordinated 
in 
right 
of 
payment 
to 
all 
other 
present 
and 
future 
non-subordinated 
obligations 
of 
the 
respective 
issuing 
entity. 
All 
of 
the 
subordinated 
debt 
instruments 
outstanding 
as 
of 
31 
December 
2020 
pay 
a 
fixed 
rate of interest. 
The 
table 
below 
shows 
the 
residual 
contractual 
maturity 
of 
the carrying amount of 
debt issued, split between 
fixed-rate and 
floating-rate 
based 
on 
the 
contractual 
terms, 
and 
does 
not 
consider any early redemption 
features. The effects from interest 
rate 
swaps, 
which 
are 
used 
to 
hedge 
various 
fixed-rate 
debt 
issuances 
by 
changing 
the 
repricing 
characteristics 
into 
those 
similar to 
floating-rate debt, are 
also not considered 
in the 
table 
below. 
›
 
Refer to Note 24 for maturity information 
on an undiscounted 
cash flow basis
 
 
Contractual maturity of carrying amount 
USD million 
2021 
2022 
2023 
2024 
2025 
2026–2030 
Thereafter 
Total 
31.12.20 
Total 
31.12.19 
UBS Group AG
1
Non-subordinated debt 
Fixed-rate 
 
1,856 
 
3,894 
 
4,086 
 
5,522 
 
5,355 
 
12,864 
 
0 
 
33,578 
 
27,306 
Floating-rate 
 
1,001 
 
2,638 
 
2,251 
 
0 
 
0 
 
0 
 
0 
 
5,890 
 
6,012 
Subordinated debt 
Fixed-rate 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
14,413 
 
14,413 
 
14,344 
Subtotal 
 
2,857 
 
6,532 
 
6,337 
 
5,522 
 
5,355 
 
12,864 
 
14,413 
 
53,881 
 
47,662 
UBS AG
2
Non-subordinated debt 
Fixed-rate 
 
40,886 
 
5,813 
 
4,224 
 
0 
 
386 
 
0 
 
1,309 
 
52,618 
 
33,696 
Floating-rate 
 
12,007 
 
1,155 
 
1,175 
 
0 
 
962 
 
0 
 
0 
 
15,299 
 
13,119 
Subordinated debt 
Fixed-rate 
 
0 
 
2,053 
 
0 
 
2,693 
 
335 
 
2,663 
 
0 
 
7,744 
 
7,431 
Subtotal 
 
52,893 
 
9,022 
 
5,398 
 
2,693 
 
1,684 
 
2,663 
 
1,309 
 
75,661 
 
54,247 
Other subsidiaries
3
Non-subordinated debt 
Fixed-rate 
 
1,152 
 
928 
 
1,038 
 
1,106 
 
1,211 
 
3,580 
 
674 
 
9,690 
 
8,588 
Subtotal 
 
1,152 
 
928 
 
1,038 
 
1,106 
 
1,211 
 
3,580 
 
674 
 
9,690 
 
8,588 
Total 
 
56,902 
 
16,482 
 
12,774 
 
9,321 
 
8,250 
 
19,106 
 
16,397 
 
139,232 
 
110,497 
1 Comprises debt issued by the legal entity UBS Group AG. 
2 Comprises debt issued by the legal entity UBS AG. 
3 Comprises debt issued by subsidiaries of UBS AG. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
336 
 
Note 18 
Provisions and contingent liabilities 
a) Provisions 
The table below presents an overview of total provisions. 
USD million 
31.12.20 
31.12.19 
Provisions other than provisions for expected credit losses 
 
2,571 
 
2,861 
Provisions for expected credit losses 
 
257 
 
114 
Total provisions 
 
2,828 
 
2,974 
 
 
The following table presents additional information for provisions other than provisions for expected credit losses. 
USD million 
Litigation, 
regulatory and 
similar matters
1
Restructuring 
Other
3
Total 2020 
Total 2019 
Balance at the beginning of the year 
 
2,475 
 
106 
 
280 
 
2,861 
 
3,245 
Increase in provisions recognized in the income statement 
 
233 
 
101 
 
139 
 
472 
 
404 
Release of provisions recognized in the income statement 
 
(33) 
 
(13) 
 
(47) 
 
(92) 
 
(123) 
Provisions used in conformity with designated purpose 
 
(603) 
 
(113) 
 
(54) 
 
(770) 
 
(659) 
Capitalized reinstatement costs 
 
0 
 
0 
 
11 
 
11 
 
1 
Reclassifications 
 
0 
 
(14) 
 
14 
 
0 
 
0 
Foreign currency translation / unwind of discount 
 
64 
 
4 
 
20 
 
88 
 
(8) 
Balance at the end of the year 
 
2,135 
 
72
2 
 
363 
 
2,571 
 
2,861 
1 Comprises provisions for losses resulting from legal, liability and compliance 
risks. 
2 Primarily consists of provisions for onerous contracts of USD 49 
million as of 31 December 2020 (31 December 2019: USD 61 
million) and personnel-related restructuring 
provisions of USD 18 million 
as of 31 December 2020 (31 December 2019: 
USD 40 million). 
3 Mainly includes provisions related 
to real estate, 
employee benefits and 
operational risks. 
 
 
Restructuring 
provisions 
primarily 
relate 
to 
onerous 
contracts 
and 
severance 
payments. 
Onerous 
contracts 
for 
property 
are 
recognized 
when 
UBS 
is 
committed 
to 
pay 
for 
non-lease 
components, 
such 
as 
utilities, 
service 
charges, 
taxes 
and 
maintenance, when 
a property 
is vacated 
or not 
fully recovered 
from sub-tenants. Severance-related 
provisions are used within 
a 
short 
time 
period 
but 
potential 
changes 
in 
amount 
may 
be 
triggered 
when 
natural 
staff 
attrition 
reduces 
the 
number 
of 
people 
affected 
by 
a 
restructuring 
event 
and 
therefore 
the 
estimated costs. 
Information 
about 
provisions 
and 
contingent 
liabilities 
in 
respect of 
litigation, regulatory 
and similar 
matters, as 
a class, is 
included in Note 
18b. There are 
no material contingent liabilities 
associated with the other classes of provisions. 
 
b) Litigation, regulatory and similar matters 
The 
Group 
operates in 
a legal 
and regulatory 
environment 
that 
exposes 
it 
to 
significant 
litigation 
and 
similar 
risks 
arising 
from 
disputes and regulatory 
proceedings. As a 
result, UBS (which 
for 
purposes of this Note 
may refer to UBS 
Group AG and/or one or 
more 
of 
its 
subsidiaries, 
as 
applicable) 
is 
involved 
in 
various 
disputes 
and 
legal 
proceedings, 
including 
litigation, 
arbitration, 
and regulatory and criminal investigations. 
Such 
matters 
are 
subject 
to 
many 
uncertainties, 
and 
the 
outcome 
and 
the 
timing 
of 
resolution 
are 
often 
difficult 
to 
predict, particularly in 
the earlier stages 
of a case. 
There are also 
situations 
where 
the 
Group 
may 
enter 
into 
a 
settlement 
agreement. 
This 
may 
occur 
in 
order 
to 
avoid 
the 
expense, 
management 
distraction 
or 
reputational 
implications 
of 
continuing 
to contest 
liability, even 
for those 
matters 
for 
which 
the 
Group 
believes 
it 
should 
be 
exonerated. 
The 
uncertainties 
inherent in all such 
matters affect the amount 
and timing of any 
potential 
outflows 
for 
both 
matters 
with 
respect 
to 
which 
provisions have been 
established and other 
contingent liabilities. 
The Group 
makes provisions 
for such 
matters brought 
against it 
when, in the 
opinion of management 
after seeking legal 
advice, 
it 
is more 
likely than 
not 
that the 
Group has 
a 
present legal 
or 
constructive 
obligation 
as 
a 
result 
of 
past 
events, 
it 
is 
probable 
that 
an 
outflow 
of 
resources 
will 
be 
required, 
and 
the 
amount 
can 
be 
reliably 
estimated. 
Where 
these 
factors 
are 
otherwise 
satisfied, a provision 
may be established for 
claims that have not 
yet 
been 
asserted 
against 
the 
Group, 
but 
are 
nevertheless 
expected 
to 
be, 
based 
on 
the 
Group’s 
experience 
with 
similar 
asserted 
claims. 
If 
any 
of 
those 
conditions 
is 
not 
met, 
such 
matters 
result 
in 
contingent 
liabilities. 
If 
the 
amount 
of 
an 
obligation 
cannot 
be 
reliably 
estimated, 
a 
liability 
exists 
that 
is 
not 
recognized 
even 
if 
an 
outflow 
of 
resources 
is 
probable. 
Accordingly, 
no 
provision 
is 
established 
even 
if 
the 
potential 
outflow 
of 
resources 
with 
respect 
to 
such 
matters 
could 
be 
significant. 
Developments 
relating 
to 
a 
matter 
that 
occur 
after 
the 
relevant 
reporting 
period, 
but 
prior 
to 
the 
issuance 
of 
financial 
statements, which 
affect management’s 
assessment of 
the 
provision 
for 
such 
matter 
(because, 
for 
example, 
the 
developments provide 
evidence of 
conditions that 
existed at 
the 
end 
of 
the 
reporting 
period), 
are 
adjusting 
events 
after 
the 
reporting 
period 
under 
IAS 
10 
and 
must 
be 
recognized 
in 
the 
financial statements for the reporting period. 
 
 

 
 
 
 
 
 
 
 
 
 
 
337 
 
Note 18 
Provisions and contingent liabilities (continued) 
Specific litigation, 
regulatory and 
other matters 
are described 
below, including 
all such 
matters that management 
considers to 
be 
material 
and 
others 
that 
management 
believes 
to 
be 
of 
significance 
due 
to 
potential 
financial, 
reputational 
and 
other 
effects. 
The 
amount 
of 
damages 
claimed, 
the 
size 
of 
a 
transaction or other 
information is provided 
where available and 
appropriate in order to 
assist users in considering 
the magnitude 
of potential exposures. 
In 
the 
case of 
certain 
matters below, 
we state 
that we 
have 
established a 
provision, and 
for the 
other matters, 
we make 
no 
such 
statement. 
When 
we 
make 
this 
statement 
and 
we 
expect 
disclosure of the amount of a provision to 
prejudice seriously our 
position with other 
parties in the 
matter because it 
would reveal 
what 
UBS 
believes 
to 
be 
the 
probable 
and 
reliably 
estimable 
outflow, we 
do not 
disclose that 
amount. In 
some cases 
we are 
subject 
to 
confidentiality 
obligations 
that 
preclude 
such 
disclosure. 
With 
respect 
to 
the 
matters 
for 
which 
we 
do 
not 
state 
whether 
we 
have 
established 
a 
provision, 
either: 
(a) 
we 
have 
not 
established 
a 
provision, 
in 
which 
case 
the 
matter 
is 
treated as 
a contingent 
liability under 
the applicable 
accounting 
standard; 
or 
(b)
 
we 
have 
established 
a 
provision 
but 
expect 
disclosure 
of 
that 
fact 
to 
prejudice 
seriously 
our 
position 
with 
other parties 
in the 
matter because 
it would 
reveal the 
fact that 
UBS believes an outflow 
of resources to be 
probable and reliably 
estimable. 
With 
respect 
to 
certain 
litigation, 
regulatory 
and 
similar 
matters for which we have established 
provisions, we are able to 
estimate 
the 
expected 
timing 
of 
outflows. 
However, 
the 
aggregate 
amount 
of 
the 
expected 
outflows 
for 
those 
matters 
for which 
we are 
able to 
estimate expected 
timing is 
immaterial 
relative 
to 
our 
current 
and 
expected 
levels 
of 
liquidity 
over 
the 
relevant time periods. 
The 
aggregate 
amount 
provisioned 
for 
litigation, 
regulatory 
and 
similar 
matters 
as 
a 
class 
is 
disclosed 
in 
the 
“Provisions” 
table 
in 
Note 
18a 
above. 
It 
is 
not 
practicable 
to 
provide 
an 
aggregate 
estimate 
of 
liability 
for 
our 
litigation, 
regulatory 
and 
similar matters as a class of contingent liabilities. Doing so would 
require UBS to provide 
speculative legal assessments as 
to claims 
and proceedings 
that involve 
unique fact 
patterns or 
novel legal 
theories, that have not yet been initiated or are at early 
stages of 
adjudication, 
or 
as 
to 
which 
alleged 
damages 
have 
not 
been 
quantified 
by 
the 
claimants. 
Although 
UBS 
therefore 
cannot 
provide a numerical estimate of the 
future losses that could arise 
from litigation, 
regulatory and 
similar matters, 
UBS believes 
that 
the 
aggregate 
amount 
of 
possible 
future 
losses 
from 
this 
class 
that 
are 
more 
than 
remote 
substantially 
exceeds 
the 
level 
of 
current provisions. 
Litigation, 
regulatory 
and 
similar 
matters 
may 
also 
result 
in 
non-monetary 
penalties 
and 
consequences. 
For 
example, 
the 
non-prosecution 
agreement 
UBS 
entered 
into 
with 
the 
US 
Department of 
Justice (DOJ), 
Criminal Division, 
Fraud Section 
in 
connection 
with 
submissions 
of 
benchmark 
interest 
rates, 
including, 
among 
others, 
the 
British 
Bankers’ 
Association 
London 
Interbank 
Offered 
Rate 
(LIBOR), 
was 
terminated 
by 
the 
DOJ 
based 
on 
its 
determination 
that 
UBS 
had 
committed 
a 
US 
crime in relation to foreign exchange matters. As a consequence, 
UBS AG pleaded guilty to one count 
of wire fraud for conduct in 
the 
LIBOR 
matter, 
paid 
a 
fine 
and 
was 
subject 
to 
probation, 
which ended in January 2020. 
A guilty plea 
to, or conviction 
of, a crime 
could have material 
consequences for UBS. Resolution of regulatory proceedings may 
require 
UBS 
to 
obtain 
waivers 
of 
regulatory 
disqualifications 
to 
maintain certain operations, may 
entitle regulatory authorities to 
limit, 
suspend 
or 
terminate 
licenses 
and 
regulatory 
authorizations, and 
may permit financial 
market utilities 
to limit, 
suspend or 
terminate UBS’s 
participation in 
such utilities. 
Failure 
to 
obtain 
such 
waivers, 
or 
any 
limitation, 
suspension 
or 
termination 
of 
licenses, 
authorizations 
or 
participations, 
could 
have material consequences for UBS. 
The 
risk 
of 
loss 
associated 
with 
litigation, 
regulatory 
and 
similar 
matters is 
a 
component 
of 
operational 
risk 
for 
purposes 
of determining capital requirements. 
Information concerning our 
capital 
requirements 
and 
the 
calculation 
of 
operational 
risk 
for 
this 
purpose 
is 
included 
in 
the 
“Capital, 
liquidity 
and 
funding, 
and balance sheet” section of this report. 
 
 
Provisions for litigation, regulatory and similar matters 
by business division and in Group Functions
1
USD million 
Global 
Wealth 
Manage- 
ment 
Personal & 
Corporate 
Banking 
 
Asset 
Manage- 
ment 
Investment 
Bank 
Group 
Functions 
Total 2020 
Total 2019 
Balance at the beginning of the year 
 
782 
 
113 
 
0 
 
255 
 
1,325 
 
2,475 
 
2,827 
Increase in provisions recognized in the income statement 
 
213 
 
0 
 
0 
 
19 
 
1 
 
233 
 
258 
Release of provisions recognized in the income statement 
 
(24) 
 
(6) 
 
0 
 
(1) 
 
(2) 
 
(33) 
 
(81) 
Provisions used in conformity with designated purpose 
 
(154) 
 
(1) 
 
0 
 
(52) 
 
(395) 
 
(603) 
 
(518) 
Reclassifications 
 
0 
 
0 
 
0 
 
(3) 
 
3 
 
0 
 
0 
Foreign currency translation / unwind of discount 
 
44 
 
10 
 
0 
 
10 
 
0 
 
64 
 
(12) 
Balance at the end of the year 
 
861 
 
115 
 
0 
 
227 
 
932 
 
2,135 
 
2,475 
1 Provisions, if any, for matters described in this disclosure are recorded in Global Wealth 
Management (item 3 and item 4) and Group Functions (item 2). Provisions, if any, 
for the matters described in items 1 and 6 
of this 
disclosure are 
allocated between 
Global Wealth 
Management and 
Personal & 
Corporate Banking, 
and provisions, 
if any, 
for the 
matters described 
in this 
disclosure in 
item 5 
are allocated 
between the 
Investment Bank and Group Functions. 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
338 
 
Note 18 
Provisions and contingent liabilities (continued) 
1. Inquiries regarding cross-border wealth management 
businesses 
Tax 
and 
regulatory 
authorities 
in 
a 
number 
of 
countries 
have 
made 
inquiries, 
served 
requests 
for 
information 
or 
examined 
employees located 
in their 
respective jurisdictions 
relating to 
the 
cross-border 
wealth management 
services provided 
by UBS 
and 
other financial institutions. 
It is possible 
that the implementation 
of 
automatic 
tax 
information 
exchange 
and 
other 
measures 
relating to 
cross-border provision 
of financial 
services could 
give 
rise to further inquiries in 
the future. UBS has 
received disclosure 
orders 
from 
the 
Swiss 
Federal 
Tax 
Administration 
(FTA) 
to 
transfer 
information 
based 
on 
requests 
for 
international 
administrative assistance 
in tax 
matters. The 
requests 
concern a 
number 
of 
UBS 
account 
numbers 
pertaining 
to 
current 
and 
former clients and 
are based on 
data from 
2006 and 2008. 
UBS 
has 
taken 
steps 
to 
inform 
affected 
clients 
about 
the 
administrative 
assistance 
proceedings 
and 
their 
procedural 
rights, including 
the right 
to appeal. 
The requests 
are 
based on 
data 
received 
from 
the 
German 
authorities, 
who 
seized 
certain 
data 
related 
to 
UBS 
clients 
booked 
in 
Switzerland 
during 
their 
investigations 
and 
have 
apparently 
shared 
this 
data 
with 
other 
European 
countries. 
UBS 
expects 
additional 
countries 
to 
file 
similar requests. 
The Swiss 
Federal Administrative 
Court ruled 
in 2016 
that, in 
the 
administrative 
assistance 
proceedings 
related 
to 
a 
French 
bulk request, UBS has 
the right to appeal 
all final FTA client 
data 
disclosure 
orders. 
On 
30 July 
2018, 
the 
Swiss 
Federal 
Administrative 
Court 
granted 
UBS’s 
appeal 
by 
holding 
the 
French 
administrative 
assistance 
request 
inadmissible. 
The 
FTA 
filed 
a 
final 
appeal 
with 
the 
Swiss 
Federal 
Supreme 
Court. 
On 
26 July 
2019, 
the 
Supreme 
Court 
reversed 
the 
decision 
of 
the 
Federal 
Administrative 
Court. 
In 
December 
2019, 
the 
court 
released 
its 
written 
decision. 
The 
decision 
requires 
the 
FTA 
to 
obtain confirmation from 
the French authorities that 
transmitted 
data 
will 
be 
used 
only 
for 
the 
purposes 
stated 
in 
their 
request 
before transmitting 
any data. 
The stated 
purpose of 
the original 
request 
was 
to 
obtain 
information 
relating 
to 
taxes 
owed 
by 
account holders. 
Accordingly, any information 
transferred to 
the 
French authorities 
must not 
be passed 
to criminal 
authorities or 
used in connection with 
the ongoing case against 
UBS discussed 
in this 
item. In 
February 2020, 
the FTA 
ordered that 
UBS would 
not 
be 
granted 
party 
status 
in 
the 
French 
administrative 
assistance 
proceedings. 
UBS 
appealed 
this 
decision 
to 
the 
Federal 
Administrative 
Court. 
On 
15 
July, 
the 
Federal 
Administrative 
Court 
upheld 
the 
FTA’s 
decision, 
holding 
that 
UBS 
will 
no 
longer 
have 
party 
status 
in 
these 
proceedings. 
The 
Swiss Federal Supreme Court has determined that it will not hear 
UBS’s appeal of this decision. 
Since 
2013, 
UBS 
(France) 
S.A., 
UBS 
AG 
and 
certain 
former 
employees 
have 
been 
under 
investigation 
in 
France 
for 
alleged 
complicity 
in 
unlawful 
solicitation 
of 
clients 
on 
French 
territory, 
regarding 
the laundering 
of proceeds 
of tax 
fraud, and 
banking 
and financial solicitation 
by unauthorized persons. 
In connection 
with this 
investigation, the investigating 
judges ordered 
UBS AG 
to 
provide 
bail 
(“
caution
”) 
of 
EUR 1.1 
billion 
and 
UBS 
(France) 
S.A. 
to 
post 
bail 
of 
EUR 40 
million, 
which 
was 
reduced 
on 
appeal to EUR 10 million. 
A trial in the court 
of first instance took place 
from 8 October 
2018 until 
15 November 
2018. On 
20 February 2019, 
the court 
announced 
a 
verdict 
finding 
UBS
 
AG 
guilty 
of 
unlawful 
solicitation 
of 
clients 
on 
French 
territory 
and 
aggravated 
laundering 
of 
the proceeds 
of 
tax 
fraud, 
and 
UBS 
(France) S.A. 
guilty of aiding and abetting unlawful solicitation and laundering 
the proceeds 
of tax 
fraud. The 
court imposed 
fines aggregating 
EUR 3.7 
billion on 
UBS AG 
and UBS 
(France) S.A. 
and awarded 
EUR 800 
million 
of 
civil 
damages 
to 
the 
French 
state. 
UBS 
has 
appealed 
the 
decision. 
Under 
French 
law, 
the 
judgment 
is 
suspended 
while 
the 
appeal 
is 
pending. 
The 
trial 
originally 
scheduled for 2 
June 2020 has 
been rescheduled to 
8-24 March 
2021. The Court of Appeal will retry the 
case de novo as to both 
the law and the facts, and 
the fines and penalties can be greater 
than or less 
than those imposed 
by the court 
of first instance. 
A 
subsequent 
appeal 
to 
the 
Cour 
de 
Cassation, 
France’s 
highest 
court, is possible with respect to questions of law. 
UBS 
believes 
that 
based 
on 
both 
the 
law 
and 
the 
facts 
the 
judgment of 
the court 
of first 
instance should 
be reversed. 
UBS 
believes it followed its obligations under Swiss and French law as 
well 
as 
the 
European 
Savings 
Tax 
Directive. 
Even 
assuming 
liability, 
which 
it 
contests, 
UBS 
believes 
the 
penalties
 
and 
damage 
amounts 
awarded 
greatly 
exceed 
the 
amounts 
that 
could be 
supported by 
the law 
and the 
facts. In 
particular, UBS 
believes 
the 
court 
incorrectly 
based 
the 
penalty 
on 
the 
total 
regularized 
assets 
rather 
than 
on 
any 
unpaid 
taxes 
on 
those 
assets 
for 
which 
a 
fraud 
has 
been 
characterized 
and 
further 
incorrectly 
awarded 
damages 
based 
on 
costs 
that 
were 
not 
proven 
by 
the 
civil 
party. 
Notwithstanding 
that 
UBS 
believes 
it 
should 
be 
acquitted, 
our 
balance 
sheet 
at 
31 December 
2020 
reflected provisions 
with respect 
to this 
matter in 
an amount 
of 
EUR 450 
million 
(USD 549 
million 
at 
31 December 
2020). 
The 
wide 
range 
of 
possible 
outcomes 
in 
this 
case 
contributes 
to 
a 
high degree of estimation uncertainty. 
The provision reflected on 
our 
balance 
sheet 
at 
31 December 
2020 
reflects 
our 
best 
estimate 
of 
possible 
financial 
implications, 
although 
it 
is 
reasonably possible that actual penalties and 
civil damages could 
exceed the provision amount. 
In 2016, 
UBS was 
notified by 
the Belgian 
investigating judge 
that 
it 
is 
under 
formal 
investigation 
(“
inculpé
”) 
regarding 
the 
laundering 
of 
proceeds 
of 
tax 
fraud, 
of 
banking 
and 
financial 
solicitation by unauthorized persons, and of serious tax fraud. 
Our balance 
sheet at 
31 December 2020 
reflected provisions 
with 
respect 
to 
matters 
described 
in 
this 
item 
1 
in 
an 
amount 
that 
UBS 
believes 
to 
be 
appropriate 
under 
the 
applicable 
accounting 
standard. As 
in the 
case of 
other matters 
for which 
we have 
established provisions, 
the future 
outflow of 
resources 
in respect 
of such 
matters cannot 
be determined 
with certainty 
based 
on 
currently 
available 
information 
and 
accordingly 
may 
ultimately prove to 
be substantially greater 
(or may be 
less) than 
the provision that we have recognized. 
 
 

 
 
339 
 
Note 18 
Provisions and contingent liabilities (continued) 
2. Claims related to sales of residential mortgage-backed 
securities and mortgages 
From 2002 through 
2007, prior to 
the crisis in 
the US residential 
loan market, UBS was 
a substantial issuer and 
underwriter of US 
residential 
mortgage-backed 
securities 
(RMBS) 
and 
was 
a 
purchaser and seller of US residential mortgages. 
In November 
2018, 
the 
DOJ 
filed 
a 
civil 
complaint 
in 
the 
District Court for the Eastern District of New York. The complaint 
seeks 
unspecified 
civil 
monetary 
penalties 
under 
the 
Financial 
Institutions 
Reform, 
Recovery 
and 
Enforcement 
Act 
of 
1989 
related 
to 
UBS’s 
issuance, 
underwriting 
and 
sale 
of 
40 
RMBS 
transactions 
in 
2006 
and 
2007. 
UBS 
moved 
to 
dismiss 
the 
civil 
complaint 
on 
6 February 
2019. 
On 
10 December 
2019, 
the 
district court denied UBS’s motion to dismiss. 
Our balance sheet at 
31 December 2020 reflected a 
provision 
with 
respect 
to 
matters 
described 
in 
this 
item 
2 
in 
an 
amount 
that 
UBS 
believes 
to 
be 
appropriate 
under 
the 
applicable 
accounting standard. 
As in 
the case 
of other 
matters for 
which 
we have 
established provisions, 
the future 
outflow of 
resources 
in 
respect 
of 
this 
matter 
cannot 
be 
determined 
with 
certainty 
based 
on 
currently 
available 
information 
and 
accordingly 
may 
ultimately prove 
to be substantially 
greater (or may 
be less) than 
the provision that we have recognized. 
3. Madoff 
In 
relation 
to 
the 
Bernard 
L. 
Madoff 
Investment 
Securities 
LLC 
(BMIS) investment 
fraud, UBS 
AG, UBS 
(Luxembourg) S.A. 
(now 
UBS 
Europe 
SE, 
Luxembourg 
branch) 
and 
certain 
other 
UBS 
subsidiaries 
have 
been 
subject 
to 
inquiries 
by 
a 
number 
of 
regulators, 
including 
the 
Swiss 
Financial 
Market 
Supervisory 
Authority 
(FINMA) 
and 
the 
Luxembourg 
Commission 
de 
Surveillance du Secteur 
Financier. Those inquiries 
concerned two 
third-party 
funds 
established 
under 
Luxembourg 
law, 
substantially 
all 
assets 
of 
which 
were 
with 
BMIS, 
as 
well 
as 
certain 
funds 
established 
in 
offshore 
jurisdictions 
with 
either 
direct 
or 
indirect 
exposure 
to 
BMIS. 
These 
funds 
faced 
severe 
losses, 
and 
the 
Luxembourg 
funds 
are 
in 
liquidation. 
The 
documentation establishing 
both funds 
identifies UBS 
entities in 
various 
roles, 
including 
custodian, 
administrator, 
manager, 
distributor 
and 
promoter, 
and 
indicates 
that 
UBS 
employees 
serve as board members. 
In 
2009 
and 
2010, 
the 
liquidators 
of 
the 
two 
Luxembourg 
funds 
filed 
claims 
against 
UBS 
entities, 
non-UBS 
entities 
and 
certain individuals, including current 
and former UBS employees, 
seeking 
amounts 
totaling 
approximately 
EUR 2.1 
billion, 
which 
includes 
amounts 
that 
the 
funds 
may 
be 
held 
liable 
to 
pay 
the 
trustee for the liquidation of BMIS (BMIS Trustee). 
A 
large 
number 
of 
alleged 
beneficiaries 
have 
filed 
claims 
against UBS 
entities (and 
non-UBS entities) 
for purported 
losses 
relating 
to 
the 
Madoff 
fraud. 
The 
majority 
of 
these 
cases 
have 
been 
filed 
in 
Luxembourg, 
where 
decisions 
that 
the 
claims 
in 
eight 
test 
cases 
were 
inadmissible 
have 
been 
affirmed 
by 
the 
Luxembourg 
Court 
of 
Appeal, 
and 
the 
Luxembourg 
Supreme 
Court has dismissed a further appeal in one of the test cases. 
In the 
US, the 
BMIS Trustee 
filed claims 
against UBS 
entities, 
among others, in relation to the two Luxembourg funds and 
one 
of 
the 
offshore 
funds. 
The 
total 
amount 
claimed 
against 
all 
defendants 
in 
these 
actions 
was 
not 
less 
than 
USD 2 
billion. 
In 
2014, the US Supreme 
Court rejected the BMIS 
Trustee’s motion 
for 
leave 
to 
appeal 
decisions 
dismissing 
all 
claims 
except 
those 
for 
the recovery 
of 
approximately USD 125 
million of 
payments 
alleged to 
be fraudulent 
conveyances and 
preference payments. 
In 2016, the bankruptcy court dismissed 
these claims against the 
UBS 
entities. 
In 
February 
2019, 
the 
Court 
of 
Appeals 
reversed 
the dismissal of 
the BMIS Trustee’s remaining 
claims, and the US 
Supreme Court subsequently denied a 
petition seeking review of 
the Court 
of Appeals’ 
decision. The 
case has 
been remanded 
to 
the Bankruptcy Court for further proceedings. 
4. Puerto Rico 
Declines 
since 
2013 
in 
the 
market 
prices 
of 
Puerto 
Rico 
municipal 
bonds and 
of 
closed-end 
funds (funds) 
that are 
sole-
managed 
and 
co-managed 
by 
UBS 
Trust 
Company 
of 
Puerto 
Rico 
and 
distributed 
by 
UBS 
Financial 
Services 
Incorporated 
of 
Puerto 
Rico 
(UBS PR) 
led 
to 
multiple 
regulatory inquiries, 
which 
in 
2014 
and 
2015, 
led 
to 
settlements 
with 
the 
Office 
of 
the 
Commissioner of Financial Institutions for the Commonwealth of 
Puerto 
Rico, 
the 
US 
Securities 
and 
Exchange 
Commission 
(SEC) 
and 
the 
Financial 
Industry 
Regulatory 
Authority 
in 
relation 
to 
their examinations of UBS’s operations. 
Since 
that 
time 
UBS 
has 
received 
customer 
complaints 
and 
arbitrations with 
aggregate claimed damages 
of USD 3.4 billion, 
of 
which 
claims 
with 
aggregate 
claimed 
damages 
of 
USD 2.8 
billion 
have 
been 
resolved 
through 
settlements, 
arbitration 
or 
withdrawal of the 
claim. The claims 
have been filed 
by clients in 
Puerto Rico 
who own 
the funds 
or Puerto 
Rico municipal 
bonds 
and/or 
who used 
their 
UBS account 
assets as 
collateral for 
UBS 
non-purpose 
loans; 
customer 
complaint 
and 
arbitration 
allegations 
include 
fraud, 
misrepresentation and 
unsuitability of 
the funds and of the loans. 
A 
shareholder 
derivative 
action 
was 
filed 
in 
2014 
against 
various UBS 
entities and 
current and 
certain former 
directors of 
the funds, alleging hundreds 
of millions of US 
dollars in losses in 
the 
funds. 
In 
2015, 
defendants’ 
motion 
to 
dismiss 
was 
denied 
and a request for permission to appeal 
that ruling was denied by 
the Puerto Rico Supreme Court. 
In 2011, 
a purported 
derivative action 
was filed 
on behalf 
of 
the 
Employee 
Retirement 
System 
of 
the 
Commonwealth 
of 
Puerto Rico 
(System) against 
over 40 
defendants, including 
UBS 
PR, 
which 
was 
named 
in 
connection 
with 
its 
underwriting 
and 
consulting 
services. 
Plaintiffs 
alleged 
that 
defendants 
violated 
their 
purported 
fiduciary 
duties 
and 
contractual 
obligations 
in 
connection 
with the 
issuance and 
underwriting 
of USD 3 billion 
of 
bonds 
by 
the 
System 
in 
2008 
and 
sought 
damages 
of 
over 
USD 800 
million. 
In 
2016, 
the 
court 
granted 
the 
System’s 
request to join the action as a plaintiff, but ordered that plaintiffs 
must 
file 
an 
amended 
complaint. 
In 
2017, 
the 
court 
denied 
defendants’ motion to 
dismiss the amended 
complaint. In 2020, 
the court denied plaintiffs’ motion for summary judgment. 
 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
340 
 
Note 18 
Provisions and contingent liabilities (continued) 
Beginning 
in 
2015, 
certain 
agencies 
and 
public 
corporations 
of 
the 
Commonwealth 
of 
Puerto 
Rico 
(Commonwealth) 
defaulted on 
certain interest 
payments on 
Puerto Rico 
bonds. In 
2016, 
US 
federal 
legislation 
created 
an 
oversight 
board 
with 
power 
to 
oversee 
Puerto 
Rico’s 
finances 
and 
to 
restructure 
its 
debt. The 
oversight board has 
imposed a stay 
on the exercise 
of 
certain 
creditors’ 
rights. 
In 
2017, 
the 
oversight 
board 
placed 
certain of the bonds into a bankruptcy-like proceeding under the 
supervision of a Federal District Judge. 
In 
May 
2019, 
the 
oversight 
board 
filed 
complaints in 
Puerto 
Rico federal 
district court 
bringing claims 
against financial, 
legal 
and 
accounting 
firms 
that 
had 
participated 
in 
Puerto 
Rico 
municipal 
bond 
offerings, 
including 
UBS, 
seeking 
a 
return 
of 
underwriting 
and 
swap 
fees 
paid 
in 
connection 
with 
those 
offerings. UBS 
estimates that 
it received 
approximately USD 125 
million in fees in the relevant offerings. 
In August 
2019, and 
February and 
November 2020, 
four US 
insurance companies that insured issues of Puerto Rico municipal 
bonds 
sued 
UBS 
and 
several 
other 
underwriters 
of 
Puerto 
Rico 
municipal 
bonds. 
The 
actions 
collectively 
seek 
recovery 
of 
an 
aggregate of 
USD 955 million 
in damages 
from the 
defendants. 
The 
plaintiffs 
in 
these 
cases 
claim 
that 
defendants 
failed 
to 
reasonably 
investigate 
financial 
statements 
in 
the 
offering 
materials 
for 
the 
insured 
Puerto 
Rico 
bonds 
issued 
between 
2002 
and 
2007, 
which 
plaintiffs 
argue 
they 
relied 
upon 
in 
agreeing to 
insure the 
bonds notwithstanding 
that they 
had no 
contractual relationship with the underwriters. 
Our balance 
sheet at 
31 December 2020 
reflected 
provisions 
with respect 
to matters described 
in this 
item 4 in 
amounts that 
UBS believes 
to be 
appropriate under 
the applicable 
accounting 
standard. 
As 
in 
the 
case 
of 
other 
matters 
for 
which 
we 
have 
established provisions, the future 
outflow of resources 
in respect 
of 
such 
matters 
cannot 
be 
determined 
with 
certainty 
based 
on 
currently 
available 
information 
and 
accordingly 
may 
ultimately 
prove 
to 
be 
substantially 
greater 
(or 
may 
be 
less) 
than 
the 
provisions that we have recognized. 
5. Foreign exchange, LIBOR and benchmark rates, and other 
trading practices 
Foreign exchange-related 
regulatory matters:
 
Beginning in 2013, 
numerous 
authorities 
commenced 
investigations 
concerning 
possible manipulation of foreign 
exchange markets and precious 
metals 
prices. 
As 
a 
result 
of 
these 
investigations, 
UBS 
entered 
into resolutions 
with the 
UK Financial 
Conduct Authority 
(FCA), 
the US 
Commodity Futures 
Trading 
Commission (CFTC), FINMA, 
the 
Board 
of 
Governors of 
the 
Federal 
Reserve 
System 
(Federal 
Reserve Board) and the 
Connecticut Department of Banking, the 
DOJ’s Criminal 
Division and 
the European 
Commission. UBS 
has 
ongoing 
obligations 
under 
the 
Cease 
and 
Desist 
Order 
of 
the 
Federal Reserve 
Board and 
the Office 
of the 
Comptroller of 
the 
Currency 
(as 
successor 
to 
the 
Connecticut 
Department 
of 
Banking), 
and 
to 
cooperate 
with 
relevant 
authorities 
and 
to 
undertake 
certain
 
remediation 
measures. 
UBS 
has 
also 
been 
granted 
conditional 
immunity 
by 
the 
Antitrust 
Division 
of 
the 
DOJ and 
by authorities 
in other 
jurisdictions in 
connection with 
potential competition law violations relating 
to foreign exchange 
and precious metals businesses. 
Investigations relating to foreign 
exchange 
matters 
by 
certain 
authorities 
remain 
ongoing 
notwithstanding these resolutions. 
Foreign exchange-related 
civil litigation:
 
Putative class 
actions 
have 
been 
filed 
since 
2013 
in 
US 
federal 
courts 
and 
in 
other 
jurisdictions against 
UBS and 
other banks 
on behalf 
of putative 
classes of persons 
who engaged in 
foreign currency transactions 
with 
any 
of 
the 
defendant 
banks. 
UBS 
has 
resolved 
US 
federal 
court class 
actions relating 
to foreign 
currency transactions 
with 
the 
defendant 
banks 
and 
persons 
who 
transacted 
in 
foreign 
exchange futures 
contracts and options 
on such futures 
under a 
settlement agreement that provides for UBS 
to pay an aggregate 
of 
USD 141 
million 
and 
provide 
cooperation 
to 
the 
settlement 
classes. 
Certain 
class 
members 
have 
excluded 
themselves 
from 
that 
settlement 
and 
have 
filed 
individual 
actions 
in 
US 
and 
English 
courts 
against 
UBS 
and 
other 
banks, 
alleging 
violations 
of US and European competition laws and unjust enrichment. 
In 
2015, 
a 
putative 
class 
action 
was 
filed 
in 
federal 
court 
against 
UBS 
and 
numerous 
other 
banks 
on 
behalf 
of 
persons 
and 
businesses 
in 
the 
US 
who 
directly 
purchased 
foreign 
currency 
from 
the 
defendants 
and 
alleged 
co-conspirators 
for 
their own end use. In 
March 2017, the court 
granted UBS’s (and 
the other banks’) motions to dismiss the complaint. The plaintiffs 
filed an amended complaint in August 2017. In March 2018, 
the 
court 
denied 
the 
defendants’ 
motions 
to 
dismiss 
the 
amended 
complaint. 
In 2017, two 
putative class actions 
were filed in 
federal court 
in 
New York 
against UBS 
and numerous 
other banks 
on behalf 
of 
persons 
and 
entities 
who 
had 
indirectly 
purchased 
foreign 
exchange instruments from 
a defendant or 
co-conspirator in the 
US, 
and 
a 
consolidated 
complaint 
was 
filed 
in 
June 
2017. 
In 
March 2018, 
the court 
dismissed the 
consolidated complaint. 
In 
October 2018, the court 
granted plaintiffs’ motion seeking 
leave 
to 
file 
an 
amended 
complaint. 
UBS 
and 
11 
other 
banks 
have 
reached 
an 
agreement 
with 
the 
plaintiffs 
to 
settle 
the 
class 
action 
for 
a 
total 
of 
USD 10 
million. 
The 
court 
approved 
the 
settlement in November 2020. 
LIBOR 
and 
other 
benchmark-related regulatory 
matters:
 
Numerous 
government 
agencies, 
including 
the 
SEC, 
the 
CFTC, 
the 
DOJ, 
the 
FCA, 
the 
UK 
Serious 
Fraud 
Office, 
the 
Monetary 
Authority 
of 
Singapore, 
the 
Hong 
Kong 
Monetary 
Authority, 
FINMA, various state attorneys general 
in the US and competition 
authorities in 
various jurisdictions, have 
conducted investigations 
regarding potential improper attempts by UBS, 
among others, to 
manipulate 
LIBOR 
and 
other 
benchmark 
rates 
at 
certain 
times. 
UBS 
reached 
settlements 
or 
otherwise 
concluded 
investigations 
relating 
to 
benchmark 
interest 
rates 
with 
the 
investigating 
authorities. UBS 
has 
ongoing obligations 
to 
cooperate with 
the 
authorities 
with 
whom 
we 
have 
reached 
resolutions 
and 
to 
undertake 
certain 
remediation 
measures 
with 
respect 
to 
benchmark 
interest 
rate 
submissions.
 
UBS 
has 
been 
granted 
conditional leniency 
or 
conditional immunity 
from 
authorities in 
certain 
jurisdictions, including 
the 
Antitrust 
Division 
of 
the 
DOJ 
and 
the 
Swiss 
Competition Commission 
(WEKO), 
in 
connection 
with 
potential antitrust 
or 
competition law 
violations related 
to 
certain 
rates. 
However, 
UBS 
has 
not 
reached 
a 
final 
settlement 
with 
WEKO, 
as 
the 
Secretariat of 
WEKO 
has 
asserted 
that 
UBS 
does not qualify for 
full immunity. 
 
 
 

 
 
341 
 
Note 18 
Provisions and contingent liabilities (continued) 
LIBOR and 
other benchmark-related 
civil litigation:
 
A number 
of 
putative 
class 
actions 
and 
other 
actions 
are 
pending 
in 
the 
federal 
courts 
in 
New 
York 
against 
UBS 
and 
numerous 
other 
banks on behalf of parties who transacted in certain interest 
rate 
benchmark-based 
derivatives. 
Also 
pending 
in 
the 
US 
and 
in 
other jurisdictions are 
a number of 
other actions asserting 
losses 
related 
to 
various 
products 
whose 
interest 
rates 
were 
linked 
to 
LIBOR 
and 
other 
benchmarks, 
including 
adjustable 
rate 
mortgages, 
preferred 
and 
debt 
securities, 
bonds 
pledged 
as 
collateral,
 
loans, 
depository 
accounts, 
investments 
and 
other 
interest-bearing 
instruments. 
The 
complaints 
allege 
manipulation, 
through 
various 
means, 
of 
certain 
benchmark 
interest 
rates, 
including 
USD LIBOR, 
Euroyen 
TIBOR, 
Yen 
LIBOR, 
EURIBOR, 
CHF LIBOR, 
GBP 
LIBOR, 
SGD 
SIBOR 
and 
SOR 
and 
Australian BBSW, 
and seek 
unspecified compensatory 
and other 
damages under varying legal theories. 
USD LIBOR class and individual actions 
in the US: 
In 2013 and 
2015, 
the 
district 
court 
in 
the 
USD LIBOR 
actions 
dismissed, 
in 
whole 
or 
in 
part, 
certain 
plaintiffs’ 
antitrust 
claims, 
federal 
racketeering 
claims, CEA 
claims, and 
state common 
law claims. 
Although 
the 
Second 
Circuit 
vacated 
the 
district 
court’s 
judgment 
dismissing 
antitrust 
claims, 
the 
district 
court 
again 
dismissed antitrust 
claims against UBS 
in 2016. 
Certain plaintiffs 
have appealed that 
decision to the 
Second Circuit. Separately, 
in 
2018, 
the 
Second 
Circuit 
reversed 
in 
part 
the 
district 
court’s 
2015 decision 
dismissing certain 
individual plaintiffs’ 
claims and 
certain 
of 
these 
actions 
are 
now 
proceeding. 
UBS 
entered 
into 
an 
agreement 
in 
2016 
with 
representatives 
of 
a 
class 
of 
bondholders 
to 
settle 
their 
USD LIBOR 
class 
action. 
The 
agreement has received final court 
approval. In 2018, the district 
court 
denied 
plaintiffs’ 
motions 
for 
class 
certification 
in 
the 
USD class actions 
for claims 
pending against 
UBS, and 
plaintiffs 
sought permission to appeal 
that ruling to the 
Second Circuit. In 
July 
2018, 
the 
Second 
Circuit 
denied 
the 
petition 
to 
appeal 
of 
the 
class 
of 
USD lenders 
and 
in 
November 
2018 
denied 
the 
petition 
of 
the 
USD exchange 
class. 
In 
December 
2019, 
UBS 
entered 
into 
an 
agreement 
with 
representatives 
of 
the 
class 
of 
USD lenders 
to 
settle 
their 
USD LIBOR 
class 
action. 
The 
agreement has 
received final 
court approval. 
In January 
2019, a 
putative 
class 
action 
was 
filed 
in 
the 
District 
Court 
for 
the 
Southern District 
of New 
York against 
UBS and 
numerous other 
banks 
on 
behalf 
of 
US 
residents 
who, 
since 
1 February 
2014, 
directly 
transacted 
with 
a 
defendant 
bank 
in 
USD LIBOR 
instruments. 
The 
complaint 
asserts 
antitrust 
claims. 
The 
defendants moved to 
dismiss the complaint 
in August 2019. 
On 
26 March 2020 the 
court granted defendants’ motion to 
dismiss 
the 
complaint 
in 
its 
entirety. 
Plaintiffs 
have 
appealed 
the 
dismissal. 
In 
August 
2020, 
an 
individual 
action 
was 
filed 
in 
the 
Northern District 
of California 
against UBS 
and numerous 
other 
banks 
alleging that 
the defendants 
conspired to 
fix the 
interest 
rate 
used 
as 
the 
basis 
for 
loans 
to 
consumers 
by 
jointly 
setting 
the 
USD 
LIBOR 
rate 
and 
monopolized 
the 
market 
for 
LIBOR-
based consumer loans and credit cards. 
Other benchmark 
class actions 
in the 
US: 
In 2014, 
2015 and 
2017, the 
court in 
one of 
the Euroyen 
TIBOR lawsuits 
dismissed 
certain 
of 
the 
plaintiffs’ 
claims, 
including 
plaintiffs’ 
federal 
antitrust 
and 
racketeering 
claims. 
In 
August 
2020, 
the 
court 
granted defendants’ 
motion for 
judgment on 
the pleadings 
and 
dismissed the lone remaining claim in the action as impermissibly 
extraterritorial. 
Plaintiffs 
have 
appealed. 
In 
2017, 
the 
court 
dismissed 
the 
other 
Yen 
LIBOR 
/ 
Euroyen 
TIBOR 
action 
in 
its 
entirety 
on 
standing 
grounds. 
In 
April 
2020, 
the 
appeals 
court 
reversed 
the 
dismissal 
and 
in 
August 
2020 
plaintiffs 
in 
that 
action 
filed 
an 
amended 
complaint. 
Defendants 
moved 
to 
dismiss 
the 
amended 
complaint 
in 
October 
2020. 
In 
2017, 
the 
court dismissed 
the CHF LIBOR 
action on 
standing grounds 
and 
failure 
to 
state 
a 
claim. 
Plaintiffs 
filed 
an 
amended 
complaint 
following 
the 
dismissal, 
and 
the 
court 
granted 
a 
renewed 
motion 
to 
dismiss in 
September 2019. 
Plaintiffs have 
appealed. 
Also 
in 
2017, 
the 
court 
in 
the 
EURIBOR 
lawsuit 
dismissed 
the 
case as 
to UBS 
and certain 
other foreign 
defendants for 
lack of 
personal 
jurisdiction. 
Plaintiffs have 
appealed. 
In October 
2018, 
the 
court 
in 
the 
SIBOR 
/ 
SOR 
action 
dismissed 
all 
but 
one 
of 
plaintiffs’ 
claims 
against 
UBS. 
Plaintiffs 
filed 
an 
amended 
complaint 
following 
the 
dismissal, 
and 
the 
courts 
granted 
a 
renewed 
motion 
to 
dismiss 
in 
July 
2019. 
Plaintiffs 
have 
appealed. 
In 
November 
2018, 
the 
court 
in 
the 
BBSW 
lawsuit 
dismissed 
the 
case 
as 
to 
UBS 
and 
certain 
other 
foreign 
defendants 
for 
lack 
of 
personal 
jurisdiction. 
Following 
that 
dismissal, 
plaintiffs 
filed 
an 
amended 
complaint 
in 
April 
2019, 
which 
UBS 
and 
other 
defendants 
named 
in 
the 
amended 
complaint 
moved to 
dismiss. In 
February 2020, 
the court 
in the 
BBSW 
action 
granted 
in 
part 
and 
denied 
in 
part 
defendants’ 
motions 
to 
dismiss 
the 
amended 
complaint. 
In 
August 
2020, 
UBS and 
other BBSW 
defendants joined 
a motion 
for judgment 
on 
the 
pleadings. 
The 
court 
dismissed 
the 
GBP 
LIBOR 
action in 
August 2019. Plaintiffs have appealed. 
Government bonds:
 
Putative class actions 
have been filed since 
2015 in US federal courts against UBS and other banks on behalf 
of persons who 
participated in markets for US 
Treasury securities 
since 2007. A consolidated complaint 
was filed in 2017 in the US 
District Court for 
the Southern District 
of New York 
alleging that 
the banks colluded with 
respect to, and manipulated 
prices of, US 
Treasury securities 
sold 
at 
auction 
and 
in 
the 
secondary market 
and 
asserting 
claims 
under 
the 
antitrust 
laws 
and 
for 
unjust 
enrichment. 
Defendants’ 
motions 
to 
dismiss 
the 
consolidated 
complaint 
are 
pending. 
Similar 
class 
actions 
have 
been 
filed 
concerning European 
government bonds 
and 
other government 
bonds. 
UBS 
and 
reportedly 
other 
banks 
are 
responding 
to 
investigations 
and 
requests 
for 
information 
from 
various 
authorities 
regarding 
government 
bond 
trading 
practices. 
As 
a 
result of its review to date, UBS has taken appropriate action. 
With 
respect 
to 
additional 
matters 
and 
jurisdictions 
not 
encompassed 
by 
the 
settlements 
and 
orders 
referred 
to 
above, 
our balance 
sheet at 
31 December 2020 
reflected a 
provision in 
an 
amount 
that 
UBS 
believes 
to 
be 
appropriate 
under 
the 
applicable accounting 
standard. As 
in the 
case of 
other matters 
for which 
we have 
established provisions, 
the future 
outflow of 
resources in 
respect of 
such matters 
cannot be 
determined with 
certainty 
based 
on 
currently 
available 
information 
and 
accordingly 
may 
ultimately 
prove to 
be 
substantially 
greater 
(or 
may be less) than the provision that we have recognized. 
 
 

Consolidated financial statements | UBS Group AG consolidated financial statements

342

Note 18

Provisions and contingent liabilities (continued)

6. Swiss retrocessions

The

Federal

Supreme

Court

Switzerland

ruled

2012,

test

case

against

UBS,

that

distribution

fees

paid

firm

for

distributing

third-party

and

intra-group

investment

funds

and

structured products must be

disclosed and surrendered to clients

who have

entered into

a discretionary

mandate agreement

with

the firm,

absent a

valid waiver. FINMA

issued a

supervisory note

all

Swiss

banks

response

the

Supreme

Court

decision.

UBS

has

met

the

FINMA

requirements

and

has

notified

all

potentially affected clients.

The

Supreme Court

decision has

resulted, and

may continue

to result,

in a

number of

client requests

for UBS

to disclose

and

potentially

surrender

retrocessions.

Client

requests

are

assessed

on a case-by-case basis. Considerations taken into account when

assessing these cases

include, among other

things, the existence

discretionary

mandate

and

whether

not

the

client

documentation

contained

valid

waiver

with

respect

distribution fees.

Our balance sheet at

31 December 2020 reflected a

provision

with

respect

matters

described

this

item

amount

that

UBS

believes

appropriate

under

the

applicable

accounting

standard.

The

ultimate

exposure

will

depend

client

requests

and

the

resolution

thereof,

factors

that

are

difficult

predict

and

assess.

Hence,

the

case

other

matters

for

which

have

established

provisions,

the

future

outflow

resources

respect

such

matters

cannot

determined

with

certainty

based

currently

available

information

and

accordingly

may

ultimately

prove

substantially greater

(or may

be less)

than the

provision that

have recognized.

Note 19

Other liabilities

a) Other financial liabilities measured at amortized cost

USD million

31.12.20

31.12.19

Other accrued expenses

1,696

1,928

Accrued interest expenses

1,355

1,562

Settlement and clearing accounts

1,199

1,379

Lease liabilities

3,927

3,943

Other

1,553

900

Total other financial liabilities measured at amortized cost

9,729

9,712

b) Other financial liabilities designated at fair value

USD million

31.12.20

31.12.19

Financial liabilities related to unit-linked investment contracts

20,975

28,145

Securities financing transactions

7,317

5,742

Over-the-counter debt instruments

2,060

2,022

Other

Total other financial liabilities designated at fair value

30,387

35,940

of which: life-to-date own credit (gain) / loss

(36)

(4)

c) Other non-financial liabilities

USD million

31.12.20

31.12.19

Compensation-related liabilities

1,2

7,468

6,855

of which: Deferred Contingent Capital Plan

1,858

1,855

of which: financial advisor compensation plans

1,500

1,506

of which: other compensation plans

2,740

2,310

of which: net defined benefit liability

722

633

of which: other compensation-related liabilities

648

552

Deferred tax liabilities

564

311

Current tax liabilities

1,009

852

VAT and other tax payables

523

475

Deferred income

228

141

Other

202

Total other non-financial liabilities

9,854

8,837

1 In

2020, UBS

modified the

conditions for

continued vesting

of certain

outstanding deferred

compensation awards

for qualifying

employees.

Refer to

Note 1b

for more

information.

2 Comparative-period

information has been restated. Refer to Note 1b for more information.

3 Includes liabilities for payroll taxes and untaken vacation.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
343 
Additional information 
Note 20 
Expected credit loss measurement
 
 
a) Expected credit losses in the period 
Total 
net 
credit 
loss 
expenses 
were 
USD 694 
million 
in 
2020, 
reflecting net 
credit loss 
expenses of 
USD 266 million 
related to 
stage 1 
and 
2 
positions 
and 
USD 429 
million 
net 
credit 
loss 
expenses related to credit-impaired (stage 3) positions. 
Stage 1 
and 
2 
net 
credit 
loss 
expenses 
of 
USD 266 
million 
were primarily 
driven by 
a net 
expense of 
USD 200 million 
from 
updating 
the 
forward-looking 
scenarios 
and 
their 
associated 
weightings, 
factoring 
in 
updated 
macroeconomic 
assumptions 
to 
reflect 
the 
effects 
of 
the 
COVID-19 
pandemic, 
with 
approximately half 
from the 
baseline scenario 
and half 
from the 
severe 
downside 
scenario. 
The 
main 
drivers 
included 
updated 
GDP and unemployment assumptions in Switzerland and the US, 
primarily 
impacting 
Large 
corporate 
clients
 
and, 
to 
a 
lesser 
extent, 
Private clients 
with mortgages
, 
Real estate financing
 
and 
SME 
clients
. 
These 
scenario 
updates 
impacted 
remeasurements 
for stage 1 and 2 positions 
without stage transfers and triggered 
exposure movements 
between stages, 
primarily from 
stage 1 to 
stage 2 as probabilities of default increased. 
In 
addition 
to 
the 
scenario 
related 
effects, 
stage 1 
and 
2 
expenses of 
USD 73 million 
arose from 
new transactions, 
net of 
releases 
from 
derecognized 
transactions, 
primarily 
from 
Large 
corporate 
clients
 
and 
SME 
clients
. 
A 
further 
USD
 
32 
million 
stage 1 and 2 net release of 
expenses resulted from a number of 
model updates, primarily impacting 
Financial intermediaries
, 
Real 
estate 
financing
 
and 
SME 
clients
. 
The 
remaining 
stage 1 
and 2 
expenses 
of 
USD 24 
million 
mainly 
reflect 
the 
effects 
of 
post-
model adjustments 
for selected 
exposures to 
Swiss 
SME clients
, 
as 
well 
as 
remeasurements 
within the 
loan 
book, mainly 
in 
the 
Investment Bank. 
The 
changes 
in 
the 
macroeconomic 
environment 
in 
the 
second half of 
2020 generally included 
more optimistic forward-
looking assumptions 
for both 
the baseline 
and severe 
downside 
scenarios 
compared 
with 
those 
applied 
in 
the 
first 
half 
of 
the 
year. 
Management applied 
a post-model 
expense adjustment 
of 
USD 117 million 
to offset 
the stage 1 
and 2 
releases that 
would 
have otherwise arisen, 
deeming them to be 
premature given the 
high 
degree 
of 
prevailing 
uncertainties 
and 
the 
wide 
range 
of 
reasonable possible outcomes. 
›
 
Refer to Note 20b 
for more information 
 
Stage 3 
net 
expenses 
of 
USD 429 
million 
were 
recognized 
across a 
number of 
defaulted positions. 
In the 
Investment Bank, 
stage 3 
net 
expenses 
of 
USD 217 
million 
were 
recognized, 
of 
which 
USD 81 
million 
related 
to 
an 
exposure 
to 
a 
client 
in 
the 
travel 
sector. 
In 
Personal 
& 
Corporate 
Banking, 
stage 3 
net 
expenses of 
USD 128 million 
were recognized, of 
which USD 59 
million related 
to a 
case of 
fraud at 
a commodity 
trade finance 
counterparty, 
which 
affected 
a 
number 
of 
lenders, 
including 
UBS. 
In 
Global 
Wealth 
Management, 
stage 3 
net 
expenses 
of 
USD 40 million were recognized, primarily across 
a small number 
of collateralized and 
securities-based lending positions. 
In Group 
Functions, 
stage 3 
expenses of 
USD 42 million 
were recognized 
from 
one 
energy-related 
exposure 
in 
the 
Non-core 
and 
Legacy 
Portfolio. 
 
 
 
 
 
Credit loss (expense) / release 
USD million 
Global 
Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
Total 
For the year ended 31.12.20 
Stages 1 and 2 
 
(48) 
 
(129) 
 
0 
 
(88) 
 
0 
 
(266) 
Stage 3 
 
(40) 
 
(128) 
 
(2) 
 
(217) 
 
(42) 
 
(429) 
Total credit loss (expense) / release 
 
(88) 
 
(257) 
 
(2) 
 
(305) 
 
(42) 
 
(694) 
For the year ended 31.12.19 
Stages 1 and 2 
 
3 
 
23 
 
0 
 
(4) 
 
0 
 
22 
Stage 3 
 
(23) 
 
(44) 
 
0 
 
(26) 
 
(7) 
 
(100) 
Total credit loss (expense) / release 
 
(20) 
 
(21) 
 
0 
 
(30) 
 
(7) 
 
(78) 
For the year ended 31.12.18 
Stages 1 and 2 
 
0 
 
0 
 
0 
 
(9) 
 
(1) 
 
(9) 
Stage 3 
 
(15) 
 
(56) 
 
0 
 
(29) 
 
(8) 
 
(109) 
Total credit loss (expense) / release 
 
(15) 
 
(56) 
 
0 
 
(38) 
 
(8) 
 
(118) 
 
 

 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
344 
 
Note 20 
Expected credit loss measurement (continued) 
 
b) Changes to ECL models, scenarios, scenario weights and key inputs 
Refer to 
Note 1a 
for information 
about the 
principles governing 
ECL models, scenarios, scenario weights and key inputs applied. 
During 
2020, 
management 
carefully 
considered 
guidance 
issued by supervisory authorities concerning the interpretation of 
key elements 
of IFRS 
9, 
Financial instruments
, in 
the context 
of 
COVID-19. 
Governance 
Comprehensive 
cross-functional and 
cross-divisional 
governance 
processes are 
in place and 
used to 
discuss and approve 
scenario 
updates 
and 
weights, 
to assess 
whether 
significant increases 
in 
credit 
risk 
resulted 
in 
stage 
transfers, 
to 
review 
model 
outputs 
and to reach conclusions regarding post-model adjustments. 
Model changes 
During 
2020, 
the 
probability 
of 
default 
(
PD
)
 
and 
loss 
given 
default 
(LGD) 
models 
applied 
to 
Financial 
intermediaries
, 
Large 
corporate 
clients
, 
Real 
estate 
financing
 
and 
SME 
clients
 
were 
revised 
to 
reflect 
updates 
to 
PD 
and 
LGD 
risk 
drivers 
and 
macroeconomic dependencies. 
The 
model 
updates 
resulted 
in 
a 
USD 32 
million 
decrease 
in 
ECL 
allowances, 
primarily 
in 
Personal 
& 
Corporate 
Banking 
across 
Financial 
intermediaries
, 
Real 
estate 
financing
 
and 
SME 
clients
. 
Scenario and key input updates 
During 
2020, 
the 
four 
scenarios 
and 
related 
macroeconomic 
factors 
that 
were applied 
at 
the end 
of 
2019 were 
reviewed in 
light 
of 
the 
economic 
and 
political 
conditions 
and 
prevailing 
uncertainties 
through 
a 
series 
of 
governance 
meetings, 
with 
input 
from 
UBS risk 
and finance 
experts across 
the regions 
and 
business 
divisions. 
Scenario 
assumptions 
are 
benchmarked 
against 
external 
data, e.g. 
, 
from Bloomberg 
Consensus, 
Oxford 
Economics 
and 
the 
International
 
Monetary 
Fund 
World 
Economic 
Outlook 
(IMF 
WEO). 
The 
hypothetical 
scenarios, 
in 
particular the 
upside and 
mild downside 
scenarios, were 
viewed 
less 
plausible. 
Given 
the 
considerable 
uncertainties 
associated 
with 
the economic 
conditions, an 
exceptional interim 
design of 
these 
scenarios 
was 
not 
deemed 
appropriate. 
Therefore, 
management 
concluded
 
that 
the 
probability 
weights 
of 
the 
upside and the mild downside scenarios would be set to zero. 
The 
baseline scenario, 
which is 
aligned 
to the 
economic and 
market assumptions 
used for 
UBS’s business 
planning purposes, 
and the 
severe downside 
scenario, which is 
the Group’s binding 
stress 
scenario, 
were updated 
throughout 2020 
using the 
most 
recent available macroeconomic and market information. 
The 
baseline 
scenario 
updates 
during 
the 
first 
half 
of 
2020 
assumed a deterioration of GDP in relevant markets, especially 
in 
the 
US and 
in Switzerland, 
increasing 
unemployment, including 
a 
sharp 
increase 
in 
the 
US 
to 
previously 
unseen 
levels, 
lower 
equity 
prices 
and 
higher 
market 
volatility. 
House 
prices 
were 
assumed 
to 
be 
largely 
flat 
in 
Switzerland 
over 
2020 
but 
to 
decrease 
in 
the 
US. 
Overall, 
only 
modest 
economic 
improvements were expected from 
the second half of 
2020. The 
severe 
downside 
assumptions were 
considered 
to 
be 
consistent 
with 
assumptions 
for 
COVID-19-related 
disruption 
but 
to 
a 
significantly 
more 
adverse 
degree 
than 
what 
was 
considered 
under 
the 
baseline 
scenario, 
with 
a 
full 
year 
contraction 
expected 
to 
continue 
into 
2021 
and 
only 
a 
moderate 
recovery 
starting from the end of 2021. 
Improvements 
in 
macroeconomic 
forward
-
looking 
assumptions started from the third quarter 2020, with the fourth 
quarter 2020 in particular including 
more optimistic assumptions 
for the baseline, with 
increased GDP growth forecasts and 
lower 
unemployment levels 
in the 
US and 
in Switzerland 
in particular, 
given 
improvements 
in 
economic 
activity 
as 
well 
as 
greater 
optimism 
regarding 
the 
availability 
and 
effective 
distribution 
of 
vaccines 
and 
continued 
government 
support. 
In 
addition, 
the 
assumptions 
for 
the 
severe 
downside 
scenario 
were 
made 
less 
pessimistic in the second half of 2020. 
The table 
on the 
following page 
details the 
key assumptions 
for 
the 
baseline 
and 
severe 
downside 
scenarios 
applied 
as 
of 
31 December 2020. 
The outlook 
of the 
one-year and 
three-year 
cumulative 
GDP 
growth 
rates 
in 
the 
baseline 
are 
significantly 
higher 
than 
those 
seen at 
the end 
of 
2019, 
as 
the economy 
is 
expected 
to 
recover 
from 
the 
sharp 
contractions 
seen 
in 
mid-
2020. 
However, 
GDP 
levels 
are 
expected 
to 
remain 
below 
31 December 2019 
levels until 
2022 in 
the US 
and Switzerland, 
and 
until 
2023 
in 
the 
Eurozone. 
The 
GDP 
growth 
rates 
in 
the 
severe downside 
scenario are 
also higher, 
to reflect 
the recovery 
from the 
weaker starting levels. 
Under the 
baseline scenario, US 
unemployment is expected to 
decline to 5.5% by 
the end of the 
first 
year 
and 
to 
4.5% 
by 
the 
end 
of 
the 
third 
year. 
Unemployment 
rates 
in 
the 
Eurozone 
and 
Switzerland 
are 
expected 
to 
rise 
modestly 
in 
the 
first 
year 
in
 
the 
baseline
 
scenario but 
to recover 
by the 
end of 
the third 
year. The 
severe 
downside scenario includes marked increases in unemployment. 
 
 

345

Note 20

Expected credit loss measurement (continued)

Scenario weights and post-model adjustments

consequence

the

exceptional

circumstances

and

prevailing

uncertainties

during

2020

and

31 December

2020,

the

weight

allocations

shifted

significantly

since

2019,

with

the

baseline

scenario

weighted

70%

and

the

severe

downside scenario at

30% through

the end of

the third

quarter

of 2020,

to best

reflect management’s

sentiment regarding

the

boundaries of economic

outcomes. During the

fourth quarter of

2020,

changes

the

macro-economic

environment

generally

included more

optimistic forward-looking

assumptions as

stated

above.

However,

developments

31 December

2020,

including

increase

infection

and

hospitalization

rates,

well as strict

lockdowns in many jurisdictions,

led to a

continued

high

level

uncertainty

relation

the

effects

the

pandemic

and

its

impact

the

global

economy.

These

developments

gave

rise

questions

around

whether

the

assumptions

will

play

out

forecasted.

consequence,

the

fourth

quarter

2020,

management

decreased

the

weight

placed

the

baseline

scenario

from

70%

60%

and

increased

the

weight

placed

the

severe

downside

scenario

from

30%

40%

and

applied

additionally

post

model

adjustment

of USD 117

million to

offset

the stage 1

and 2

ECL

releases

which

would

have

otherwise

arisen

from

the

scenario

update effects.

ECL scenario

Assigned weights in %

31.12.20

31.12.19

Upside

0.0

7.5

Baseline

60.0

42.5

Mild downside

0.0

35.0

Severe downside

40.0

15.0

Scenario assumptions

One year

Three years cumulative

31.12.20

Baseline

Severe downside

Baseline

Severe downside

Real GDP growth (% change)

United States

2.7

(5.9)

9.1

(3.8)

Eurozone

2.5

(8.7)

9.9

(10.3)

Switzerland

3.3

(6.6)

9.0

(5.7)

Consumer price index (% change)

United States

1.7

(1.2)

5.5

0.4

Eurozone

1.4

(1.3)

3.9

(1.7)

Switzerland

0.3

(1.8)

0.9

(1.6)

Unemployment rate (end-of-period level, %)

United States

5.5

12.1

4.5

9.9

Eurozone

9.5

14.1

8.0

16.4

Switzerland

3.8

6.1

3.2

6.8

Fixed income: 10-year government bonds (change in yields, basis points)

USD

22.0

(50.0)

46.0

(15.0)

EUR

4.0

(35.0)

21.0

(25.0)

CHF

13.0

(70.0)

31.0

(35.0)

Equity indices (% change)

S&P 500

(2.9)

(50.2)

(1.7)

(40.1)

EuroStoxx 50

3.8

(57.6)

13.5

(50.4)

SPI

(0.8)

(53.6)

5.8

(44.2)

Swiss real estate (% change)

Single-Family Homes

3.4

(17.0)

7.1

(30.0)

Other real estate (% change)

United States (S&P / Case-Shiller)

2.5

(15.3)

9.2

(28.7)

Eurozone (House Price Index)

1.1

(22.9)

7.2

(35.4)

1 2020

unemployment rate

is presented

as an

end-of-period level.

2019 unemployment

rate was

presented as

a change

in levels.

The 2020

change in

level would

have been:

One year

shock in

the baseline

scenario: United States:

-3.5%, Eurozone: 0.4%

and Switzerland: 0.4%

and for the

global crisis scenario:

United States: 3.1%,

Eurozone: 5.0% and

Switzerland: 2.6%. Three

year shock in

the baseline scenario:

United States: -4.5%, Eurozone: -1.2% and Switzerland: -0.2% and for the global crisis scenario: United States: 0.9%, Eurozone: 7.2% and Switzerland: 3.4%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
346 
 
Note 20 
Expected credit loss measurement (continued) 
Scenario assumptions 
One year 
Three years cumulative 
31.12.19 
Baseline 
Severe downside 
Baseline 
Severe downside 
Real GDP growth (% change) 
United States 
 
1.9 
 
(6.4) 
 
6.4 
 
(4.3) 
Eurozone 
 
1.0 
 
(9.1) 
 
2.8 
 
(10.8) 
Switzerland 
 
1.5 
 
(7.0) 
 
4.8 
 
(6.2) 
Consumer price index (% change) 
United States 
 
1.8 
 
(1.2) 
 
6.2 
 
0.4 
Eurozone 
 
1.3 
 
(1.3) 
 
4.3 
 
(1.7) 
Switzerland 
 
0.8 
 
(1.8) 
 
2.7 
 
(1.6) 
Unemployment rate (change, percentage points) 
United States 
 
(0.4) 
 
5.7 
 
(0.5) 
 
5.6 
Eurozone 
 
(0.1) 
 
5.6 
 
(0.2) 
 
7.9 
Switzerland 
 
0.1 
 
2.6 
 
0.3 
 
3.6 
Fixed income: 10-year government bonds (change in yields, basis points) 
USD 
 
0.2 
 
(100.0) 
 
10.1 
 
(75.0) 
EUR 
 
8.4 
 
(30.0) 
 
28.2 
 
(20.0) 
CHF 
 
9.5 
 
(70.0) 
 
30.0 
 
(35.0) 
Equity indices (% change) 
S&P 500 
 
3.5 
 
(53.0) 
 
9.5 
 
(42.9) 
EuroStoxx 50 
 
0.5 
 
(60.0) 
 
4.4 
 
(52.9) 
SPI 
 
1.4 
 
(56.2) 
 
5.3 
 
(46.8) 
Swiss real estate (% change) 
Single-Family Homes 
 
0.1 
 
(15.2) 
 
2.3 
 
(27.0) 
Other real estate (% change) 
United States (S&P / Case-Shiller) 
 
4.0 
 
(13.3) 
 
16.7 
 
(23.4) 
Eurozone (House Price Index) 
 
1.2 
 
(23.0) 
 
2.2 
 
(33.2) 
 
c) Development of ECL allowances and provisions 
The ECL 
allowances and 
provisions recognized 
in the 
period are 
impacted by a variety of factors, such as: 
–
 
origination of new instruments during the period; 
–
 
effect 
of 
passage 
of 
time 
as 
the 
ECLs 
on 
an 
instrument 
for 
the 
remaining 
lifetime 
decrease 
(all 
other 
factors 
remaining 
the same); 
–
 
discount 
unwind 
within ECLs 
as 
it 
is 
measured 
on 
a 
present 
value basis; 
–
 
derecognition of instruments in the period; 
–
 
change in individual asset quality of instruments; 
–
 
effect 
of 
updating 
forward-looking 
scenarios 
and 
the 
respective weights; 
–
 
movements 
from 
a 
maximum 
12-month 
ECL 
to 
the 
recognition 
of 
lifetime 
ECLs 
(and 
vice 
versa) 
following 
transfers between stages 1 and 2; 
–
 
movements 
from 
stages 1 
and 
2 
to 
stage 3 
(credit-impaired 
status) 
when 
default 
has 
become 
certain 
and 
probability 
of 
default (PD) increases to 100% (or vice versa); 
–
 
changes in models or updates to model parameters; and 
–
 
foreign 
exchange 
translations 
for 
assets 
denominated 
in 
foreign currencies and other movements. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
347 
 
Note 20 
Expected credit loss measurement (continued) 
 
The following 
table explains 
the changes 
in the 
ECL allowances 
and provisions 
for on- 
and off-balance 
sheet financial 
instruments 
and other credit lines in scope of ECL requirements between the beginning and the end of the period due to the factors listed on the 
previous page. 
 
Development of ECL allowances and 
provisions 
USD million 
Total 
Stage 1 
Stage 2 
Stage 3 
Balance as of 31 December 2019 
 
(1,029) 
 
(181) 
 
(160) 
 
(688) 
Net movement from new and derecognized transactions
1
 
(28) 
 
(90) 
 
17 
 
46 
of which: Private clients with mortgages 
 
(2)
 
(3) 
 
2 
 
0 
of which: Real estate financing 
 
(3) 
 
(5) 
 
2 
 
0 
of which: Large corporate clients 
 
(32) 
 
(29) 
 
(4) 
 
0 
of which: SME clients 
 
(16) 
 
(14) 
 
(3) 
 
0 
of which: Other 
 
26 
 
(39) 
 
20 
 
46 
 
of which: Securities financing transactions REIT 
 
32 
 
(1) 
 
15 
 
17 
 
of which: Loans to financial advisors 
 
9 
 
(1) 
 
9 
 
0 
 
of which: Lombard loans 
 
23 
 
(6) 
 
0 
 
29 
 
of which Financial intermediaries 
 
(20) 
 
(15) 
 
(5) 
 
0 
Remeasurements with stage transfers
2
 
(427) 
 
45 
 
(134) 
 
(338) 
of which: Private clients with mortgages 
 
(19) 
 
(2) 
 
(17) 
 
0 
of which: Real estate financing 
 
(6) 
 
3 
 
(9) 
 
0 
of which: Large corporate clients 
 
(224) 
 
34 
 
(83) 
 
(175) 
of which: SME clients 
 
(43) 
 
(1) 
 
(11) 
 
(31) 
of which: Other 
 
(134) 
 
11 
 
(14) 
 
(131) 
 
of which: Securities financing transactions REIT 
 
(36) 
 
0 
 
(18) 
 
(19) 
 
of which: Loans to financial advisors 
 
(12) 
 
7 
 
(7)
 
(11) 
 
of which: Lombard loans 
 
(36) 
 
0 
 
0 
 
(36) 
 
of which Commodity Trade Finance 
 
(59) 
 
0
 
0 
 
(59) 
Remeasurements without stage transfers
3
 
(271) 
 
(88) 
 
(47) 
 
(136) 
of which: Private clients with mortgages 
 
(34) 
 
(19) 
 
(8) 
 
(7) 
of which: Real estate financing 
 
(14) 
 
(4) 
 
(11) 
 
1 
of which: Large corporate clients 
 
(149) 
 
(53) 
 
(17) 
 
(79) 
of which: SME clients 
 
(13) 
 
0 
 
(7) 
 
(6) 
of which: Other 
 
(60) 
 
(11) 
 
(4) 
 
(44) 
 
of which: Loans to financial advisors 
 
(18) 
 
(12) 
 
(3) 
 
(3) 
 
of which: Lombard loans 
 
(3) 
 
6 
 
0 
 
(9) 
 
of which: Credit cards 
 
(12) 
 
0 
 
0 
 
(12) 
Model changes
4
 
32 
 
21 
 
11 
 
0 
Total ECL allowance movements with profit or loss impact
5
 
(694) 
 
(112)
 
(154)
 
(429) 
Write-offs, FX and other movements (without profit or loss impact)
6
 
254 
 
(14) 
 
(19) 
 
287 
Balance as of 31 December 2020 
 
(1,468) 
 
(306) 
 
(333) 
 
(829) 
1 Represents the 
increase and decrease 
in allowances 
and provisions resulting 
from financial instruments 
(including guarantees and 
facilities) that were 
newly originated, purchased 
or renewed and 
from the final 
derecognition of 
loans or facilities 
on their 
maturity date 
or earlier. 
2 Represents 
the remeasurement 
between 12-month 
and lifetime 
ECL due 
to stage 
transfers. 
3 Represents the 
change in 
allowances and 
provisions related to 
changes in 
model inputs 
or assumptions, 
including changes 
in forward-looking 
macroeconomic conditions, 
changes in 
the exposure 
profile, PD 
and LGD 
changes, and 
unwinding of 
the time 
value. 
4 Represents the change in the allowances 
and provisions related to changes in models 
and methodologies. 
5 Includes ECL movements from 
new and derecognized transactions, 
remeasurement changes, 
model and methodology changes. 
6 Represents the decrease 
in allowances and 
provisions resulting from 
write-offs of the ECL 
allowance against the 
gross carrying amount when 
all or part of 
a financial asset is 
deemed uncollectible or forgiven and movements in foreign exchange rates. 
 
In 
2020, 
ECL 
allowances 
and 
provisions 
increased 
by 
USD 694 
million from net credit loss expenses impacting profit or loss: 
–
 
a 
USD 28 
million 
net 
increase 
from 
new 
and 
derecognized 
transactions
 
that
 
resulted 
from 
a 
USD
 
90 
million 
stage
 
1 
increase primarily 
in 
Large corporate 
clients
 
and 
SME 
clients
, 
offset 
by 
a 
USD 63 
million 
net 
release 
from 
stage 2 
and 
3 
transactions
, 
driven 
by 
transactions
 
that 
were 
terminated 
before 
their 
contractual 
maturity, mainly 
in 
Lombard 
lending
 
and 
Securities 
financing 
transactions 
Real 
estate 
investment 
trusts (SFT-REITs)
; 
–
 
a USD 697 million 
net increase from 
book quality movements 
that 
resulted 
from 
a 
USD 427 
million 
net 
increase 
from 
transactions moving from 
stages 
1 and 2 
into stages 2 and 
3, 
respectively, 
of 
which 
approximately 
half 
relate
d
 
to 
Large 
corporate 
clients,
 
with 
further 
substantial 
effects 
from 
Commodity 
trade 
finance
, 
SME 
clients, 
SFT
 
REITs
 
and 
Lombard 
loans
, 
and 
USD 271 
million 
from 
remeasurements 
without 
stage 
transfers, 
approximately 
half 
relating 
to 
Large 
corporate 
clients
, 
and 
another 
significant 
portion 
relating 
to 
real 
estate 
related 
lending, 
primarily 
due 
to 
the 
updates 
of 
macroeconomic factors; 
–
 
a USD 32 million net decrease that resulted 
from a number of 
model 
revisions, 
primarily 
impacting 
Financial 
intermediaries
, 
Real estate financing
 
and 
SME clients
, from updates to the PD 
and LGD risk drivers and macroeconomic dependencies. 
 
In 
addition 
to 
the 
movements 
impacting 
profit 
or 
loss, 
allowances 
decreased 
by 
USD 346 
million 
as 
a 
result 
of 
a 
number 
of 
write 
offs
. 
A 
further 
USD
 
75 
million 
allowance 
increase 
resulted 
from 
foreign 
exchange 
movements, 
almost 
entirely 
due 
to 
the 
Swiss 
franc 
strengthening 
against 
the 
US 
dollar. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
348 
 
Note 20 
Expected credit loss measurement (continued) 
 
The following 
table explains 
the changes 
in the 
ECL allowances 
and provisions 
for on- 
and off-balance 
sheet financial 
instruments 
and other credit 
lines
 
in scope of ECL 
requirements between the 
beginning and the end 
of the prior period 
due to the factors 
listed 
earlier in this note. 
 
 
USD million 
Total 
Stage 1 
Stage 2 
Stage 3 
Balance as of 31 December 2018 
 
(1,054) 
 
(176) 
 
(183) 
 
(695) 
Net movement from new and derecognized transactions
1
 
(53) 
 
(66) 
 
10 
 
3 
of which: Private clients with mortgages 
 
(1)
 
(4) 
 
3 
 
0 
of which: Real estate financing 
 
(3) 
 
(5) 
 
2 
 
0 
of which: Large corporate clients 
 
(6) 
 
(14) 
 
8 
 
0 
of which: SME clients 
 
(16) 
 
(14) 
 
(2) 
 
0 
Remeasurements with stage transfers
2
 
(125) 
 
14 
 
(35) 
 
(105) 
of which: Private clients with mortgages 
 
(5) 
 
1 
 
(5) 
 
(1) 
of which: Real estate financing 
 
5 
 
4 
 
1 
 
0 
of which: Large corporate clients 
 
(45) 
 
4 
 
(11) 
 
(38) 
of which: SME clients 
 
(64) 
 
2 
 
(11) 
 
(55) 
Remeasurements without stage transfers
3
 
73 
 
31 
 
41 
 
1 
of which: Private clients with mortgages 
 
22 
 
2 
 
30 
 
(9) 
of which: Real estate financing 
 
1 
 
0 
 
0 
 
1 
of which: Large corporate clients 
 
(24) 
 
(10) 
 
0 
 
(14) 
of which: SME clients 
 
35 
 
9 
 
10 
 
17 
Model changes
4
 
26 
 
17 
 
9 
 
0 
Total ECL allowance movements with profit or loss impact
5
 
(78) 
 
(4)
 
25
 
(100) 
Write-offs, FX and other movements (without profit or loss impact)
6
 
105 
 
(1) 
 
(2) 
 
108 
Balance as of 31 December 2019 
 
(1,029) 
 
(181) 
 
(160) 
 
(688) 
1 Represents the 
increase and decrease 
in allowances 
and provisions resulting 
from financial 
instruments (including guarantees 
and facilities) that 
were newly originated, 
purchased or renewed 
and from the 
final 
derecognition of 
loans or facilities 
on their 
maturity date 
or earlier. 
2 Represents 
the remeasurement 
between 12-month 
and lifetime 
ECL due 
to stage 
transfers. 
3 Represents the 
change in 
allowances and 
provisions related to 
changes in 
model inputs 
or assumptions, 
including changes 
in forward-looking 
macroeconomic conditions, 
changes in 
the exposure 
profile, PD 
and LGD 
changes, and 
unwinding of 
the time 
value. 
4 Represents the change in 
the allowances and provisions 
related to changes in models 
and methodologies. 
5 To align 
to the table format for 
the 2020 ECL allowance 
and provision movement, UBS 
has 
adjusted the 
2019 table 
format. Includes 
ECL movements 
from new 
and derecognized 
transactions, 
remeasurement changes, 
model and 
methodology changes. 
6 Represents the 
decrease in 
allowances 
and 
provisions resulting from write-offs of the ECL allowance against the gross carrying amount when all or part of a financial asset is deemed uncollectible 
or forgiven and movements in foreign exchange rates. 
 
 
As explained 
in Note 
1a, the 
assessment of 
an SICR 
considers a 
number 
of 
qualitative 
and 
quantitative 
factors 
to 
determine 
whether 
a 
stage 
transfer 
between 
stage 1 
and 
stage 2 
is 
required. 
The 
primary 
assessment 
considers 
changes 
in 
probability 
of 
default 
(PD) 
based 
on 
rating 
analyses 
and 
economic 
outlook. 
Additionally, 
UBS 
considers 
counterparties 
that have moved 
to a credit 
watch list and 
those with payments 
that are at least 30 days past due. 
 
Stage 2 classification by trigger 
ECL allowances / provisions as of 31 December 2020 
USD million 
Stage 2 
of which: 
PD layer 
of which: 
watch list 
of which: 
≥30 days 
past due 
On-and off-balance sheet 
 
(333) 
 
(252) 
 
(41) 
 
(40) 
of which: Private clients with mortgages 
 
(93) 
 
(83) 
 
0 
 
(11) 
of which: Real estate financing 
 
(53) 
 
(45) 
 
(2) 
 
(6) 
of which: Large corporate clients 
 
(110) 
 
(89) 
 
(20) 
 
0 
of which: SME clients 
 
(38) 
 
(16) 
 
(16) 
 
(5) 
of which: Financial intermediaries and hedge funds 
 
(19) 
 
(19) 
 
0 
 
0 
of which: Loans to financial advisors 
 
(5) 
 
0 
 
(1) 
 
(4) 
of which: Credit cards 
 
(14) 
 
0 
 
0 
 
(14) 
of which: Other 
 
(2) 
 
0 
 
(2) 
 
0 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
349 
 
Note 20 
Expected credit loss measurement (continued) 
 
d) Maximum exposure to credit risk 
The tables below and on the following page provide the 
Group’s 
maximum 
exposure 
to 
credit 
risk 
for 
financial 
instruments 
subject 
to 
ECL 
requirements 
and 
the 
respective 
collateral 
and 
other credit enhancements mitigating credit 
risk for these classes 
of financial instruments. 
The 
maximum 
exposure 
to 
credit 
risk 
includes 
the 
carrying 
amounts 
of 
financial 
instruments 
recognized 
on 
the 
balance 
sheet 
subject 
to 
credit 
risk 
and 
the 
notional 
amounts 
for 
off-
balance 
sheet 
arrangements. 
Where 
information 
is 
available, 
collateral 
is presented 
at 
fair value. 
For other 
collateral, such 
as 
real 
estate, 
a 
reasonable 
alternative 
value 
is 
used. 
Credit 
enhancements, 
such 
as 
credit 
derivative 
contracts 
and 
guarantees, 
are 
included 
at 
their 
notional 
amounts. 
Both 
are 
capped 
at 
the 
maximum 
exposure 
to 
credit 
risk 
for 
which 
they 
serve as security. The 
“Risk management and control” 
section of 
this 
report 
describes 
management’s 
view 
of 
credit 
risk 
and 
the 
related 
exposures, 
which can 
differ in 
certain respects 
from 
the 
requirements of IFRS. 
 
Maximum exposure to credit risk 
31.12.20 
Collateral
1
Credit enhancements
1
Exposure to 
credit risk 
after collateral 
and credit 
enhancements 
USD billion 
Maximum 
exposure to 
credit risk 
Cash 
collateral 
received 
Collateralized 
by securities 
Secured by 
real estate 
Other 
collateral
2
Netting 
Credit 
derivative 
contracts 
Guarantees 
Financial assets measured at 
amortized cost on the balance sheet 
Cash and balances at central banks 
 
158.2 
 
 
 
 
 
 
 
158.2 
Loans and advances to banks
3
 
15.4 
 
0.1 
 
15.3 
Receivables from securities financing transactions 
 
74.2 
 
0.0 
 
67.1 
 
7.0 
 
 
 
 
0.0 
Cash collateral receivables on derivative instruments
4,5
 
32.7 
 
 
21.1 
 
 
 
11.6 
Loans and advances to customers
6
 
379.5 
 
25.8 
 
118.2 
 
194.6 
 
21.7 
 
 
4.4 
 
14.8 
Other financial assets measured at amortized cost 
 
27.2 
 
0.1 
 
0.2 
 
1.3 
 
 
 
25.5 
Total financial assets measured at amortized cost 
 
687.3 
 
26.0 
 
185.7 
 
194.6 
 
30.1 
 
21.1 
 
0.0 
 
4.4 
 
225.5 
Financial assets measured at fair value 
through other comprehensive income – debt 
 
8.3 
 
 
 
 
 
 
 
 
8.3 
Total maximum exposure to credit risk 
reflected on the balance sheet in scope of ECL 
 
695.6 
 
26.0 
 
185.7 
 
194.6 
 
30.1 
 
21.1 
 
0.0 
 
4.4 
 
233.7 
Guarantees
7
 
17.0 
 
0.7 
 
5.0 
 
0.2 
 
1.7 
 
 
2.5 
 
7.0 
Loan commitments
7
 
41.2 
 
0.0 
 
4.2 
 
2.1 
 
6.8 
 
 
0.4 
 
2.4 
 
25.3 
Forward starting transactions, reverse repurchase 
and securities borrowing agreements 
 
3.2 
 
 
3.2 
 
 
 
 
 
 
0.0 
Committed unconditionally revocable credit lines 
 
40.1 
 
0.1 
 
10.3 
 
6.2 
 
2.7 
 
 
 
0.0 
 
20.7 
Total maximum exposure to credit risk not 
reflected on the balance sheet, in scope of ECL 
 
101.6 
 
0.8 
 
22.7 
 
8.5 
 
11.2 
 
0.0 
 
0.4 
 
4.9 
 
53.0 
31.12.19 
Collateral
1
Credit enhancements
1
Exposure to 
credit risk 
after collateral 
and credit 
enhancements 
USD billion 
Maximum 
exposure to 
credit risk 
Cash 
collateral 
received 
Collateralized 
by securities 
Secured by 
real estate 
Other 
collateral
2
Netting 
Credit 
derivative 
contracts 
Guarantees 
Financial assets measured at 
amortized cost on the balance sheet 
Cash and balances at central banks 
 
107.1 
 
 
 
 
 
 
 
107.1 
Loans and advances to banks
3
 
12.4 
 
0.0 
 
 
12.4 
Receivables from securities financing transactions 
 
84.2 
 
77.6 
 
 
5.8 
 
 
 
 
0.8 
Cash collateral receivables on derivative instruments
4,5
 
23.3 
 
 
14.4 
 
 
 
8.9 
Loans and advances to customers
6
 
326.8 
 
18.4 
 
101.4 
 
174.7 
 
17.1 
 
 
 
1.1 
 
14.0 
Other financial assets measured at amortized cost 
 
23.0 
 
0.1 
 
0.4 
 
0.0 
 
1.3 
 
 
 
 
21.1 
Total financial assets measured at amortized cost 
 
576.8 
 
18.6 
 
179.4 
 
174.7 
 
24.3 
 
14.4 
 
0.0 
 
1.1 
 
164.4 
Financial assets measured at fair value 
through other comprehensive income – debt 
 
6.3 
 
 
 
 
 
 
 
 
6.3 
Total maximum exposure to credit risk 
reflected on the balance sheet in scope of ECL 
 
583.2 
 
18.6 
 
179.4 
 
174.7 
 
24.3 
 
14.4 
 
0.0 
 
1.1 
 
170.7 
Guarantees
7
 
18.1 
 
1.0 
 
3.0 
 
0.1 
 
1.7 
 
 
2.5 
 
9.8 
Loan commitments
7
 
27.5 
 
0.2 
 
1.9 
 
1.3 
 
5.8 
 
 
0.2 
 
0.2 
 
18.0 
Forward starting transactions, reverse repurchase 
and securities borrowing agreements 
 
1.7 
 
 
1.7 
 
 
 
 
 
 
0.0 
Committed unconditionally revocable credit lines 
 
35.1 
 
0.3 
 
8.3 
 
4.9 
 
3.6 
 
 
 
0.0 
 
17.9 
Total maximum exposure to credit risk not 
reflected on the balance sheet, in scope of ECL 
 
82.3 
 
1.5 
 
14.9 
 
6.3 
 
11.0 
 
0.0 
 
0.2 
 
2.8 
 
45.7 
1 Of which: USD 1,983 million for 31 December 2020 (31 December 2019: USD 1,720 million) relates to total credit-impaired 
financial assets measured at amortized cost and USD 154 million for 31 December 2020 
(31 December 2019: USD 27 million) to total 
off-balance sheet financial instruments and other credit lines 
for credit-impaired positions. 
2 Includes but is not limited to life insurance 
contracts, inventory, mortgage 
loans, gold and other 
commodities. 
3 Loans and advances to banks 
include amounts held with third-party 
banks on behalf of clients. 
The credit risk associated 
with these balances may 
be borne by those clients. 
4 Included within Cash 
collateral receivables 
on derivative instruments 
are margin balances 
due from exchanges 
or clearing houses. 
Some of these 
margin balances reflect 
amounts transferred on 
behalf of clients 
who retain the 
associated credit risk. 
5 The amount 
shown in the 
“Netting” column represents 
the netting potential 
not recognized on 
the balance sheet. 
Refer to Note 22 
for more information. 
6 Collateral 
arrangements generally incorporate a range of collateral, including cash, securities, 
property and other collateral. 
7 The amount shown in the “Guarantees” column includes sub-participations. 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
350 
 
Note 20 
Expected credit loss measurement (continued) 
 
e) Financial assets subject to credit risk by rating category 
The 
table 
below 
shows 
the 
credit 
quality 
and 
the 
maximum 
exposure 
to 
credit 
risk 
based 
on 
the 
Group’s 
internal 
credit 
rating system and year-end stage classification. Under IFRS 9, the 
credit 
risk 
rating 
reflects 
the 
Group
’
s 
assessment 
of 
the
 
probability 
of 
default 
of 
individual 
counterparties, 
prior 
to 
substitutions. 
The 
amounts 
presented 
are 
gross 
of 
impairment 
allowances. 
›
 
Refer to the “Risk management and control” 
section of this 
report for more details 
regarding the Group’s internal grading 
system 
 
Financial assets subject to credit risk by rating 
category 
USD million 
31.12.20 
Rating category
1
0–1 
2–3 
4–5 
6–8 
9–13 
Credit-
impaired 
(defaulted) 
Total gross 
carrying 
amount 
ECL 
allowances 
Net carrying 
amount 
(maximum 
exposure to 
credit risk) 
Financial assets measured at amortized cost 
Cash and balances at central banks 
 
156,250 
 
1,981 
 
0 
 
0 
 
0 
 
0 
 
158,231 
 
0 
 
158,231 
of which: stage 1 
 
156,250 
 
1,981 
 
0 
 
0 
 
0 
 
0 
 
158,231 
 
0 
 
158,231 
Loans and advances to banks 
 
543 
 
12,129 
 
1,344 
 
1,182 
 
260 
 
1 
 
15,460 
 
(16) 
 
15,444 
of which: stage 1 
 
543 
 
12,074 
 
1,277 
 
1,145 
 
231 
 
0 
 
15,269 
 
(9) 
 
15,260 
of which: stage 2 
 
0 
 
55 
 
67 
 
37 
 
29 
 
0 
 
189 
 
(5) 
 
184 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1 
 
1 
 
(1) 
 
0 
Receivables from securities financing transactions 
 
22,998 
 
16,009 
 
15,367 
 
17,995 
 
1,842 
 
0 
 
74,212 
 
(2) 
 
74,210 
of which: stage 1 
 
22,998 
 
16,009 
 
15,367 
 
17,995 
 
1,842 
 
0 
 
74,212 
 
(2) 
 
74,210 
Cash collateral receivables on derivative instruments 
 
8,196 
 
13,477 
 
7,733 
 
3,243 
 
88 
 
0 
 
32,737 
 
0 
 
32,737 
of which: stage 1 
 
8,196 
 
13,477 
 
7,733 
 
3,243 
 
88 
 
0 
 
32,737 
 
0 
 
32,737 
Loans and advances to customers 
 
5,813 
 
214,307 
 
67,270 
 
69,217 
 
21,038 
 
2,943 
 
380,589 
 
(1,060) 
 
379,528 
of which: stage 1 
 
5,813 
 
212,970 
 
63,000 
 
59,447 
 
15,860 
 
0 
 
357,090 
 
(142) 
 
356,948 
of which: stage 2 
 
0 
 
1,338 
 
4,269 
 
9,770 
 
5,178 
 
0 
 
20,556 
 
(215) 
 
20,341 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
2,943 
 
2,943 
 
(703) 
 
2,240 
Other financial assets measured at amortized cost 
 
15,404 
 
4,018 
 
280 
 
6,585 
 
481 
 
560 
 
27,327 
 
(133) 
 
27,194 
of which: stage 1 
 
15,404 
 
4,015 
 
269 
 
6,334 
 
389 
 
0 
 
26,410 
 
(34) 
 
26,377 
of which: stage 2 
 
0 
 
3 
 
11 
 
251 
 
91 
 
0 
 
357 
 
(9) 
 
348 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
560 
 
560 
 
(90) 
 
469 
Total financial assets measured at amortized cost 
 
209,204 
 
261,922 
 
91,993 
 
98,223 
 
23,709 
 
3,505 
 
688,556 
 
(1,211) 
 
687,345 
On-balance sheet financial instruments 
Financial assets measured at FVOCI – debt instruments 
 
3,212 
 
5,014 
 
0 
 
32 
 
0 
 
0 
 
8,258 
 
0 
 
8,258 
Total on-balance sheet financial instruments 
 
212,417 
 
266,936 
 
91,993 
 
98,255 
 
23,709 
 
3,505 
 
696,815 
 
(1,211) 
 
695,603 
 
Off-balance sheet positions subject to expected 
credit loss by rating category 
USD million 
31.12.20 
Rating category
1
0–1 
2–3 
4–5 
6–8 
9–13 
Credit-
impaired 
(defaulted) 
Total off - 
balance sheet 
exposure 
(maximum 
exposure to 
credit risk) 
ECL provisions 
Off-balance sheet financial instruments 
Guarantees 
 
3,482 
 
4,623 
 
3,522 
 
4,293 
 
991 
 
170 
 
17,081 
 
(63) 
of which: stage 1 
 
3,482 
 
4,219 
 
2,688 
 
3,558 
 
739 
 
0 
 
14,687 
 
(14) 
of which: stage 2 
 
0 
 
404 
 
834 
 
736 
 
252 
 
0 
 
2,225 
 
(15) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
170 
 
170 
 
(34) 
Irrevocable loan commitments 
 
3,018 
 
14,516 
 
8,583 
 
9,302 
 
5,850 
 
104 
 
41,372 
 
(142) 
of which: stage 1 
 
3,018 
 
13,589 
 
6,873 
 
8,739 
 
4,676 
 
0 
 
36,894 
 
(74) 
of which: stage 2 
 
0 
 
927 
 
1,711 
 
563 
 
1,174 
 
0 
 
4,374 
 
(68) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
104 
 
104 
 
0 
Forward starting reverse repurchase and securities borrowing agreements 
 
82 
 
150 
 
0 
 
3,015 
 
0 
 
0 
 
3,247 
 
0 
Total off-balance sheet financial instruments 
 
6,583 
 
19,289 
 
12,105 
 
16,610 
 
6,840 
 
273 
 
61,700 
 
(205) 
Other credit lines 
Committed unconditionally revocable credit lines 
 
574 
 
13,505 
 
5,958 
 
8,488 
 
11,501 
 
108 
 
40,134 
 
(50) 
of which: stage 1 
 
574 
 
12,940 
 
4,517 
 
6,609 
 
10,593 
 
0 
 
35,233 
 
(29) 
of which: stage 2 
 
0 
 
565 
 
1,441 
 
1,879 
 
908 
 
0 
 
4,792 
 
(21) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
108 
 
108 
 
0 
Irrevocable committed prolongation of existing loans 
 
14 
 
1,349 
 
931 
 
632 
 
357 
 
0 
 
3,282 
 
(2) 
of which: stage 1 
 
14 
 
1,349 
 
930 
 
630 
 
355 
 
0 
 
3,277 
 
(2) 
of which: stage 2 
 
0 
 
1 
 
1 
 
2 
 
1 
 
0 
 
5 
 
0 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Total other credit lines 
 
588 
 
14,854 
 
6,889 
 
9,119 
 
11,858 
 
109 
 
43,416 
 
(52) 
1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and 
control” section of this report for more information on rating categories.

 
351 
 
Note 20 
Expected credit loss measurement (continued)
Financial assets subject to credit risk by rating 
category 
USD million 
31.12.19 
Rating category
1
0–1 
2–3 
4–5 
6–8 
9–13 
Credit-
impaired 
(defaulted) 
Total gross 
carrying 
amount 
ECL 
allowances 
Net carrying 
amount 
(maximum 
exposure to 
credit risk) 
Financial assets measured at amortized cost 
Cash and balances at central banks 
 
105,195 
 
1,873 
 
0 
 
0 
 
0 
 
0 
 
107,068 
 
0 
 
107,068 
of which: stage 1 
 
105,195 
 
1,873 
 
0 
 
0 
 
0 
 
0 
 
107,068 
 
0 
 
107,068 
Loans and advances to banks 
 
309 
 
9,832 
 
1,326 
 
687 
 
298 
 
1 
 
12,454 
 
(6) 
 
12,447 
of which: stage 1 
 
309 
 
9,832 
 
1,326 
 
677 
 
228 
 
0 
 
12,371 
 
(4) 
 
12,367 
of which: stage 2 
 
0 
 
0 
 
0 
 
10 
 
71 
 
0 
 
81 
 
(1) 
 
80 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1 
 
1 
 
(1) 
 
0 
Receivables from securities financing transactions 
 
21,089 
 
16,889 
 
14,366 
 
28,815 
 
3,088 
 
0 
 
84,246 
 
(2) 
 
84,245 
of which: stage 1 
 
21,089 
 
16,889 
 
14,366 
 
28,815 
 
3,088 
 
0 
 
84,246 
 
(2) 
 
84,245 
Cash collateral receivables on derivative instruments 
 
4,899 
 
10,553 
 
5,033 
 
2,765 
 
39 
 
0 
 
23,289 
 
0 
 
23,289 
of which: stage 1 
 
4,899 
 
10,553 
 
5,033 
 
2,765 
 
39 
 
0 
 
23,289 
 
0 
 
23,289 
Loans and advances to customers 
 
1,744 
 
174,982 
 
59,240 
 
70,528 
 
18,748 
 
2,308 
 
327,550 
 
(764) 
 
326,786 
of which: stage 1 
 
1,744 
 
174,328 
 
56,957 
 
62,435 
 
14,117 
 
0 
 
309,581 
 
(82) 
 
309,499 
of which: stage 2 
 
0 
 
655 
 
2,283 
 
8,093 
 
4,631 
 
0 
 
15,661 
 
(123) 
 
15,538 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
2,308 
 
2,308 
 
(559) 
 
1,749 
Other financial assets measured at amortized cost 
 
13,031 
 
1,560 
 
390 
 
7,158 
 
312 
 
672 
 
23,123 
 
(143) 
 
22,980 
of which: stage 1 
 
13,031 
 
1,549 
 
381 
 
6,747 
 
280 
 
0 
 
21,988 
 
(35) 
 
21,953 
of which: stage 2 
 
0 
 
11 
 
9 
 
412 
 
32 
 
0 
 
463 
 
(13) 
 
451 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
672 
 
672 
 
(95) 
 
576 
Total financial assets measured at amortized cost 
 
146,267 
 
215,690 
 
80,354 
 
109,952 
 
22,485 
 
2,981 
 
577,730 
 
(915) 
 
576,815 
On-balance sheet financial instruments 
Financial assets measured at FVOCI – debt instruments 
 
5,854 
 
450 
 
0 
 
41 
 
0 
 
0 
 
6,345 
 
0 
 
6,345 
Total on-balance sheet financial instruments 
 
152,120 
 
216,139 
 
80,354 
 
109,994 
 
22,485 
 
2,981 
 
584,075 
 
(915) 
 
583,159 
 
Off-balance sheet positions subject to expected 
credit loss by rating category 
USD million 
31.12.19 
Rating category
1
0–1 
2–3 
4–5 
6–8 
9–13 
Credit-
impaired 
(defaulted) 
Total off - 
balance sheet 
exposure 
(maximum 
exposure to 
credit risk) 
ECL provisions 
Off-balance sheet financial instruments 
Guarantees 
 
857 
 
4,932 
 
6,060 
 
5,450 
 
761 
 
82 
 
18,142 
 
(42) 
of which: stage 1 
 
857 
 
4,931 
 
6,048 
 
5,218 
 
704 
 
0 
 
17,757 
 
(8) 
of which: stage 2 
 
0 
 
1 
 
12 
 
233 
 
57 
 
0 
 
304 
 
(1) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
82 
 
82 
 
(33) 
Irrevocable loan commitments 
 
2,548 
 
10,068 
 
4,862 
 
5,859 
 
4,160 
 
50 
 
27,547 
 
(35) 
of which: stage 1 
 
2,548 
 
10,068 
 
4,862 
 
5,722 
 
3,878 
 
0 
 
27,078 
 
(30) 
of which: stage 2 
 
0 
 
0 
 
0 
 
137 
 
282 
 
0 
 
419 
 
(5) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
50 
 
50 
 
0 
Forward starting reverse repurchase and securities borrowing agreements 
 
0 
 
672 
 
50 
 
936 
 
0 
 
0 
 
1,657 
 
0 
Total off-balance sheet financial instruments 
 
3,405 
 
15,672 
 
10,972 
 
12,245 
 
4,922 
 
132 
 
47,347 
 
(77) 
Other credit lines 
Committed unconditionally revocable credit lines 
 
632 
 
12,459 
 
6,231 
 
7,169 
 
8,554 
 
46 
 
35,092 
 
(34) 
of which: stage 1 
 
628 
 
12,422 
 
6,120 
 
6,789 
 
7,889 
 
0 
 
33,848 
 
(17) 
of which: stage 2 
 
4 
 
37 
 
111 
 
380 
 
665 
 
0 
 
1,197 
 
(17) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
46 
 
46 
 
0 
Irrevocable committed prolongation of existing loans 
 
25 
 
1,399 
 
870 
 
633 
 
359 
 
4 
 
3,289 
 
(3) 
of which: stage 1 
 
25 
 
1,399 
 
870 
 
633 
 
359 
 
0 
 
3,285 
 
(3) 
of which: stage 2 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
4 
 
4 
 
0 
Total other credit lines 
 
657 
 
13,858 
 
7,101 
 
7,801 
 
8,913 
 
50 
 
38,381 
 
(37) 
1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management 
and control” section of this report for more information on rating categories.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
352 
 
Note 20 
Expected credit loss measurement (continued) 
 
f) Sensitivity information 
As 
outlined 
in 
Note 
1a, 
ECL 
estimates 
involve 
significant 
uncertainties at the time they are made. 
ECL model 
The 
models 
applied 
to 
determine 
point-in-time 
PDs 
and 
LGDs 
rely 
on 
market 
and 
statistical 
data, 
which 
has 
been 
found 
to 
correlate 
well 
with 
historically 
observed 
defaults 
in 
sufficiently 
homogeneous 
segments. 
The 
risk 
sensitivities 
for 
each 
of 
the 
IFRS 9 ECL reporting segments to such factors are summarized in 
Note 9. 
Forward-looking scenarios 
Depending 
on 
the 
scenario 
selection 
and 
related 
macro-
economic 
assumptions 
for 
the 
risk 
factors, 
the 
components 
of 
the 
relevant 
weighted 
average 
ECL 
change. 
This 
is 
particularly 
relevant 
for 
interest 
rates, 
which 
can 
move 
in 
both 
directions 
under a given growth assumption (for example, low growth with 
high 
interest 
rates 
in 
a 
stagflation 
scenario, 
versus 
low 
growth 
and falling 
interest 
rates in 
a recession). 
Management generally 
look 
for 
scenario narratives 
that reflect 
the key 
risk drivers 
of a 
given credit portfolio. 
As 
forecasting 
models 
are 
complex, 
due 
to 
the 
combination 
of multiple factors, simple what-if analyses 
involving a change of 
individual 
parameters 
do 
not 
necessarily 
provide 
realistic 
information 
on 
the 
exposure 
of 
segments 
to 
changes 
in 
the 
macroeconomy. 
Portfolio-specific 
analyses 
based 
on 
their 
key 
risk 
factors 
would 
also 
not 
be 
meaningful
,
 
as 
potential 
compensatory effects 
in other 
segments would 
be ignored. 
The 
table 
below
 
indicate
s
 
some 
sensitivities 
to 
ECL
s
 
if 
a 
key 
macroeconomic 
variable 
for 
the 
forecasting 
period 
is 
amended 
across all scenarios with all other factors remaining unchanged. 
Potential effect on stage 1 and stage 2 
positions from changing key parameters as 
at 31 December 2020 
 
USD million 
Baseline 
Severe downside 
Weighted average 
Change in key parameters 
Fixed income: 10-year government bonds (absolute change) 
–0.5% 
 
(1.36) 
 
(1.84) 
 
(1.93) 
+0.5% 
 
2.10 
 
3.19 
 
3.23 
+1.00% 
 
5.69 
 
6.86 
 
7.19 
Unemployment rate (absolute change) 
–1.00% 
 
(7.40) 
 
(63.01) 
 
(27.83) 
–0.5% 
 
(3.78) 
 
(33.54) 
 
(15.67) 
+0.5% 
 
4.15 
 
36.97 
 
16.99 
+1.00% 
 
8.50 
 
75.93 
 
33.74 
Real GDP growth (relative change) 
-2.00% 
 
3.72 
 
16.14 
 
9.10 
-1.00% 
 
1.86 
 
9.84 
 
5.09 
+1.00% 
 
(1.46) 
 
(3.30) 
 
(2.36) 
+2.00% 
 
(2.97) 
 
(9.44) 
 
(5.93) 
House Price Index (relative change) 
–5.00% 
 
8.04 
 
144.34 
 
51.46 
–2.50% 
 
3.45 
 
65.80 
 
23.28 
+2.50% 
 
(2.79) 
 
(56.60) 
 
(19.09) 
+5.00% 
 
(5.16) 
 
(105.61) 
 
(35.29) 
Equity (S&P500, EuroStoxx, SMI) (relative change) 
–10.00% 
 
3.94 
 
9.66 
 
6.78 
–5.00% 
 
1.91 
 
4.29 
 
3.34 
+5.00% 
 
(8.30) 
 
(4.23) 
 
(7.27) 
+10.00% 
 
(10.14) 
 
(8.58) 
 
(10.22) 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
353 
 
Note 20 
Expected credit loss measurement (continued)
Sensitivities can be more meaningfully 
assessed in the context 
of 
coherent 
scenarios 
with 
consistently 
developed 
macroeconomic factors. 
The table on 
the previous page 
outlines 
favorable and 
unfavorable effects, 
based on 
reasonably possible 
alternative changes 
to the 
economic conditions 
for stage 1 
and 
stage 2 
positions. 
The 
ECL 
impact 
is 
calculated 
for 
material 
portfolios and disclosed for each scenario. 
The 
forecasting 
horizon 
is 
limited 
to 
three 
years, 
with 
a 
model-based 
mean 
reversion 
of 
PD 
and 
LGD 
assumed 
thereafter. 
Changes 
to 
these 
timelines 
may 
have 
an 
effect 
on 
ECLs: 
depending 
on 
the 
cycle, 
a 
longer 
or 
shorter 
forecasting 
horizon 
will
 
lead 
to 
different 
annualized 
lifetime 
PD 
and 
average 
LGD 
estimations. 
This 
is 
currently 
not 
deemed 
to 
be 
material 
for 
UBS
,
 
as 
a 
large 
proportion 
of 
loans
, 
including 
mortgages 
in 
Switzerland, 
have 
maturities 
that 
are 
within 
the 
forecasting 
horizon. 
Scenario 
weights 
ECL 
is 
sensitive 
to 
changing 
scenario 
weights, 
in 
particular 
if 
narratives and 
parameters are 
selected that 
are not 
close to 
the 
baseline scenario, highlighting the non-linearity of credit losses. 
As 
shown 
in 
the 
table 
on 
the 
bottom 
of 
this 
page, 
the 
ECL 
for 
stage 1 
and 
stage 
2 
positions 
would 
have 
been 
USD 442 
million 
(31
 
December 
2019: 
USD
 
234 
million) 
instead 
of 
USD 639 
million 
(31 December 
2019: 
USD 341 
million) 
if 
ECL 
had 
been 
determined 
solely 
on 
the 
baseline 
scenario. 
The 
weighted 
average 
ECL 
therefore 
amounts 
to 
145% 
(31 December 2019: 149%) of the baseline value. 
Stage allocation and SICR 
The 
determination 
of 
what 
constitutes 
a 
significant 
increase 
in 
credit 
risk 
(
SICR
)
 
is 
based 
on
 
management 
judgment 
as 
explained 
in 
Note 
1a. 
Changing 
the 
SICR 
trigger 
will 
have 
a 
direct 
effect 
on 
ECL
s,
 
as 
more 
or 
fewer 
positions 
would 
be 
subject to lifetime ECLs under any scenario. 
The 
relevance 
of 
the 
SICR 
trigger 
on 
overall 
ECL 
is 
demonstrated 
in 
the 
table 
below 
with 
the 
indication 
that 
the 
ECL allowances 
and provisions for 
stage 1 
and stage 
2 positions 
would have been 
USD 1,336 million if all 
non-impaired positions 
across 
the 
portfolio 
had 
been 
measured 
for 
lifetime 
ECLs 
irrespective of their 
actual SICR status. 
This amount compares 
to 
actual 
stage 
1 
and 
2 
allowances 
and 
provisions 
of 
USD 
639 
million as of 31 December 2020. 
Maturity profile 
The 
maturity 
profile 
of 
the 
assets 
is 
an 
important 
driver 
for 
changes in 
ECL due 
to transfers 
to stage 
2 and 
from stage 
2 to 
stage 
1. 
The 
current 
maturity 
profile 
of 
most 
lending 
books 
is 
relatively 
short; 
hence 
a 
movement 
to 
stage 
2 
may 
have 
a 
limited 
effect 
on 
ECLs. 
A significant 
portion 
of 
our 
lending 
to 
SMEs 
is 
documented 
under 
multi
-
purpose
 
credit 
a
greements, 
which 
allow 
for 
various 
forms 
of 
utilization 
but 
are 
unconditionally 
cancelable 
by 
UBS 
at 
any 
time.
 
The 
relevant 
maturity 
for 
drawings 
under 
such 
agreements 
with 
a 
fixed 
maturity is 
the respective 
term, or 
a maximum 
of 12 
months in 
stage 
1. 
For 
unused 
credit 
lines 
and 
all 
drawings 
that 
have 
no 
fixed 
maturity 
(e.g., 
current 
accounts), 
UBS 
generally 
applies 
a 
12-month 
maturity 
from 
the 
reporting 
date, 
given 
the 
credit 
review 
policies, 
which 
require 
either 
continuous 
monitoring 
of 
key indicators and behavioral patterns for 
smaller positions or an 
annual 
formal 
review 
for 
any 
other 
limit. 
The 
ECLs 
for 
these 
products 
is 
sensitive 
to 
shortening 
or 
extending 
the 
maturity 
assumption. 
 
Potential effect on stage 1 and stage 2 
positions from changing scenario weights 
or moving to an ECL lifetime calculation 
as at 31 December 2020 
 
Actual ECL allowances and 
provisions (as per Note 9) 
Pro forma ECL allowances and provisions, assuming application of 
100% weighting 
Pro forma ECL allowances and 
provisions, assuming all 
positions being subject to 
lifetime ECL 
Scenarios 
Weighted average 
Baseline 
Severe downside 
Weighted average 
USD million, except where indicated 
ECL 
in % of 
baseline 
ECL 
in % of 
baseline 
ECL 
in % of 
baseline 
ECL 
in % of 
baseline 
Segmentation 
Private clients with mortgages 
 
(131) 
 
244 
 
(54) 
 
100 
 
(302) 
 
562 
 
(385) 
 
717 
Real estate financing 
 
(76) 
 
138 
 
(55) 
 
100 
 
(123) 
 
224 
 
(131) 
 
237 
Large corporate clients 
 
(206) 
 
149 
 
(138) 
 
100 
 
(298) 
 
216 
 
(307) 
 
222 
SME clients 
 
(74) 
 
115 
 
(64) 
 
100 
 
(93) 
 
144 
 
(129) 
 
200 
Other segments 
 
(152) 
 
116 
 
(131) 
 
100 
 
(183) 
 
140 
 
(385) 
 
294 
Total 
 
(639) 
 
145 
 
(442) 
 
100 
 
(999) 
 
226 
 
(1,336) 
 
302 
 

 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
354 
 
Note 21 
Fair value measurement 
a) Valuation principles 
All 
financial 
and non-financial 
assets 
and 
liabilities measured 
or 
disclosed at fair value are categorized into one of three 
fair value 
hierarchy levels 
in accordance 
with IFRS. 
The fair 
value hierarchy 
is 
based 
on 
the 
transparency 
of 
inputs 
to 
the 
valuation 
of 
an 
asset 
or 
liability 
as 
of 
the 
measurement 
date. 
In 
certain 
cases, 
the 
inputs 
used 
to 
measure 
fair 
value 
may 
fall 
within 
different 
levels 
of 
the 
fair 
value 
hierarchy. 
For 
disclosure 
purposes, 
the 
level in 
the hierarchy 
within which 
an instrument 
is classified 
in 
its entirety is based on the lowest level 
input that is significant to 
the position’s fair value measurement: 
–
 
Level 1 
– 
quoted 
prices 
(unadjusted) 
in 
active 
markets 
for 
identical assets and liabilities; 
–
 
Level 2 – 
valuation techniques 
for which 
all significant 
inputs 
are, or are based on, observable market data; or 
–
 
Level 3 – valuation techniques 
for which significant inputs are 
not based on observable market data. 
Fair 
values 
are 
determined 
using 
quoted 
prices 
in 
active 
markets for 
identical assets 
or liabilities, 
where available. 
Where 
the 
market 
for 
a 
financial 
instrument 
or 
non-financial 
asset 
or 
liability 
is 
not 
active, 
fair 
value 
is 
established 
using 
a 
valuation 
technique, including 
pricing models. 
Valuation adjustments 
may 
be 
made 
to 
allow 
for 
additional 
factors, 
including 
model, 
liquidity, 
credit 
and 
funding 
risks, 
which 
are 
not 
explicitly 
captured 
within 
the 
valuation 
technique, 
but 
which 
would 
nevertheless 
be 
considered 
by 
market 
participants 
when 
establishing 
a 
price. 
The 
limitations 
inherent 
in 
a 
particular 
valuation 
technique 
are 
considered 
in 
the 
determination 
of 
the 
classification 
of 
an 
asset 
or 
liability 
within 
the 
fair 
value 
hierarchy.
 
Generally, 
the 
unit 
of 
account 
for 
a 
financial 
instrument 
is 
the 
individual 
instrument, 
and 
UBS 
applies 
valuation 
adjustments 
at 
an 
individual 
instrument 
level, 
consistent 
with 
that 
unit 
of 
account. 
However, 
if 
certain 
conditions 
are 
met, 
UBS 
may 
estimate 
the 
fair 
value 
of 
a 
portfolio 
of 
financial 
assets 
and 
liabilities 
with 
substantially 
similar and offsetting risk exposures on 
the basis of the net open 
risks. 
›
 
Refer to Note 21d for more information 
 
b) Valuation governance 
UBS’s fair value measurement and model governance framework 
includes 
numerous 
controls 
and 
other 
procedural 
safeguards 
that 
are 
intended 
to 
maximize 
the 
quality 
of 
fair 
value 
measurements 
reported 
in 
the 
financial 
statements. 
New 
products 
and 
valuation 
techniques 
must 
be 
reviewed 
and 
approved 
by key 
stakeholders from 
the risk 
and finance 
control 
functions. 
Responsibility 
for 
the 
ongoing 
measurement 
of 
financial and 
non-financial instruments 
at fair 
value resides 
with 
the business divisions. 
Fair 
value 
estimates 
are 
validated 
by 
the 
risk 
and 
finance 
control 
functions, 
which 
are 
independent 
of 
the 
business 
divisions. Independent 
price verification 
is performed 
by Finance 
through 
benchmarking 
the 
business 
divisions’ 
fair 
value 
estimates with 
observable market 
prices and 
other independent 
sources. A governance 
framework and associated 
controls are in 
place 
in 
order 
to 
monitor 
the 
quality 
of 
third-party 
pricing 
sources where used. 
For instruments where valuation models are 
used 
to determine 
fair value, 
independent valuation 
and model 
control 
groups 
within 
Finance 
and 
Risk 
Control 
evaluate 
UBS’s 
models 
on a 
regular basis, 
including valuation 
and model 
input 
parameters
,
 
as 
well 
as 
pricing. 
As 
a 
result 
of 
the 
valuation 
controls 
employed, 
valuation 
adjustments 
may 
be 
made 
to 
the 
business 
divisions’ 
estimates 
of 
fair 
value 
to 
align 
with 
independent market data and the relevant accounting standard. 
›
 
Refer to Note 21d for more information 
 
 

 
355 
 
Note 21 
Fair value measurement (continued) 
 
c) Fair value hierarchy 
The table below provides 
the fair value hierarchy 
classification of 
financial and 
non-financial assets 
and liabilities 
measured at 
fair 
value. 
The 
narrative 
that 
follows describes 
valuation 
techniques 
used 
in 
measuring 
their 
fair 
value 
of 
different 
product 
types 
(including 
significant 
valuation 
inputs 
and 
assumptions 
used), 
and 
the 
factors 
considered 
in 
determining 
their 
classification 
within the fair value hierarchy. 
 
Determination of fair values from quoted market 
prices or valuation techniques
1
31.12.20 
31.12.19 
USD million 
Level 1 
Level 2 
Level 3 
Total 
Level 1 
Level 2 
Level 3 
Total 
Financial assets measured at fair value on a recurring basis 
Financial assets at fair value held for trading 
 
107,507 
 
15,553 
 
2,337 
 
125,397 
 
113,634 
 
12,068 
 
1,812 
 
127,514 
of which: 
Equity instruments 
 
90,307 
 
1,101 
 
171 
 
91,579 
 
96,161 
 
400 
 
226 
 
96,787 
Government bills / bonds 
 
9,028 
 
2,207 
 
10 
 
11,245 
 
9,630 
 
1,770 
 
64 
 
11,464 
Investment fund units 
 
7,374 
 
1,794 
 
23 
 
9,192 
 
7,088 
 
1,729 
 
50 
 
8,867 
Corporate and municipal bonds 
 
789 
 
8,356 
 
817 
 
9,961 
 
755 
 
6,617 
 
542 
 
7,914 
Loans 
 
0 
 
1,860 
 
1,134 
 
2,995 
 
0 
 
1,180 
 
791 
 
1,971 
Asset-backed securities 
 
8 
 
236 
 
181 
 
425 
 
0 
 
372 
 
140 
 
512 
Derivative financial instruments 
 
795 
 
157,068 
 
1,754 
 
159,617 
 
356 
 
120,222 
 
1,264 
 
121,841 
of which: 
Foreign exchange contracts 
 
319 
 
68,424 
 
5 
 
68,749 
 
240 
 
52,227 
 
8 
 
52,474 
Interest rate contracts 
 
0 
 
50,353 
 
537 
 
50,890 
 
6 
 
42,288 
 
263 
 
42,558 
Equity / index contracts 
 
0 
 
33,990 
 
853 
 
34,842 
 
7 
 
22,220 
 
597 
 
22,825 
Credit derivative contracts 
 
0 
 
2,008 
 
350 
 
2,358 
 
0 
 
1,612 
 
394 
 
2,007 
Commodity contracts 
 
0 
 
2,211 
 
6 
 
2,217 
 
0 
 
1,820 
 
0 
 
1,821 
Brokerage receivables 
 
0 
 
24,659 
 
0 
 
24,659 
 
0 
 
18,007 
 
0 
 
18,007 
Financial assets at fair value not held for trading 
 
40,986 
 
35,435 
 
3,942 
 
80,364 
 
40,608 
 
39,373 
 
3,963 
 
83,944 
of which: 
Financial assets for unit-linked investment contracts 
 
20,628 
 
101 
 
2 
 
20,731 
 
27,568 
 
118 
 
0 
 
27,686 
Corporate and municipal bonds 
 
290 
 
16,957 
 
372 
 
17,619 
 
653 
 
18,732 
 
0 
 
19,385 
Government bills / bonds 
 
19,704 
 
3,593 
 
0 
 
23,297 
 
12,089 
 
3,700 
 
0 
 
15,790 
Loans 
 
0 
 
7,699 
 
862 
 
8,561 
 
0 
 
10,206 
 
1,231 
 
11,438 
Securities financing transactions 
 
0 
 
6,629 
 
122 
 
6,751 
 
0 
 
6,148 
 
147 
 
6,294 
Auction rate securities 
 
0 
 
0 
 
1,527 
 
1,527 
 
0 
 
0 
 
1,536 
 
1,536 
Investment fund units 
 
278 
 
447 
 
105 
 
831 
 
194 
 
448 
 
98 
 
740 
Equity instruments 
 
86 
 
0 
 
544 
 
631 
 
103 
 
4 
 
452 
 
559 
Other 
 
0 
 
10 
 
408 
 
418 
 
0 
 
16 
 
499 
 
515 
Financial assets measured at fair value through other comprehensive income on 
a recurring basis 
Financial assets measured at fair value through other comprehensive 
income 
 
1,144 
 
7,114 
 
0 
 
8,258 
 
1,906 
 
4,439 
 
0 
 
6,345 
of which: 
Asset-backed securities 
 
0 
 
6,624 
 
0 
 
6,624 
 
0 
 
3,955 
 
0 
 
3,955 
Government bills / bonds 
 
1,103 
 
47 
 
0 
 
1,150 
 
1,859 
 
16 
 
0 
 
1,875 
Corporate and municipal bonds 
 
40 
 
444 
 
0 
 
485 
 
47 
 
468 
 
0 
 
515 
Non-financial assets measured at fair value on a recurring basis 
Precious metals and other physical commodities 
 
6,264 
 
0 
 
0 
 
6,264 
 
4,597 
 
0 
 
0 
 
4,597 
Non-financial assets measured at fair value on a non-recurring basis 
Other non-financial assets
2
 
0 
 
1 
 
245 
 
246 
 
0 
 
0 
 
199 
 
199 
Total assets measured at fair value 
 
156,696 
 
239,831 
 
8,278 
 
404,805 
 
161,101 
 
194,110 
 
7,237 
 
362,448

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
356 
 
Note 21 
Fair value measurement (continued) 
Determination of fair values from quoted market 
prices or valuation techniques (continued)
1
31.12.20 
31.12.19 
USD million 
Level 1 
Level 2 
Level 3 
Total 
Level 1 
Level 2 
Level 3 
Total 
Financial liabilities measured at fair value on a recurring basis 
Financial liabilities at fair value held for trading 
 
26,888 
 
6,652 
 
55 
 
33,595 
 
25,791 
 
4,726 
 
75 
 
30,591 
of which: 
Equity instruments 
 
22,519 
 
425 
 
40 
 
22,985 
 
22,526 
 
149 
 
59 
 
22,734 
Corporate and municipal bonds 
 
31 
 
4,048 
 
9 
 
4,089 
 
40 
 
3,606 
 
16 
 
3,661 
Government bills / bonds 
 
3,642 
 
1,036 
 
0 
 
4,678 
 
2,820 
 
646 
 
0 
 
3,466 
Investment fund units 
 
696 
 
1,127 
 
5 
 
1,828 
 
404 
 
294 
 
0 
 
698 
Derivative financial instruments 
 
746 
 
156,884 
 
3,471 
 
161,102 
 
385 
 
118,498 
 
1,996 
 
120,880 
of which: 
Foreign exchange contracts 
 
316 
 
70,149 
 
61 
 
70,527 
 
248 
 
53,705 
 
60 
 
54,013 
Interest rate contracts 
 
0 
 
43,389 
 
527 
 
43,916 
 
7 
 
36,434 
 
130 
 
36,571 
Equity / index contracts 
 
0 
 
38,870 
 
2,306 
 
41,176 
 
3 
 
24,171 
 
1,293 
 
25,468 
Credit derivative contracts 
 
0 
 
2,403 
 
528 
 
2,931 
 
0 
 
2,448 
 
512 
 
2,960 
Commodity contracts 
 
0 
 
2,003 
 
24 
 
2,027 
 
0 
 
1,707 
 
0 
 
1,707 
Financial liabilities designated at fair value on a recurring basis 
Brokerage payables designated at fair value 
 
0 
 
38,742 
 
0 
 
38,742 
 
0 
 
37,233 
 
0 
 
37,233 
Debt issued designated at fair value 
 
0 
 
50,273 
 
10,970 
 
61,243 
 
0 
 
56,943 
 
9,866 
 
66,809 
Other financial liabilities designated at fair value 
 
0 
 
29,671 
 
716 
 
30,387 
 
0 
 
35,119 
 
822 
 
35,940 
of which: 
Financial liabilities related to unit-linked investment contracts 
 
0 
 
20,975 
 
0 
 
20,975 
 
0 
 
28,145 
 
0 
 
28,145 
Securities financing transactions 
 
0 
 
7,317 
 
0 
 
7,317 
 
0 
 
5,742 
 
0 
 
5,742 
Over-the-counter debt instruments 
 
0 
 
1,363 
 
697 
 
2,060 
 
0 
 
1,231 
 
791 
 
2,022 
Total liabilities measured at fair value 
 
27,635 
 
282,222 
 
15,212 
 
325,069 
 
26,176 
 
252,518 
 
12,759 
 
291,452 
1 Bifurcated 
embedded derivatives 
are presented 
on the 
same balance 
sheet lines 
as their 
host contracts 
and are 
not included 
in this 
table. The 
fair value 
of these 
derivatives was 
not material 
for the 
periods 
presented. 
2 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured 
at the lower of their net carrying amount or fair value less costs to sell.

 
 
 
 
 
 
 
 
 
 
 
 
357 
 
Note 21 
Fair value measurement (continued) 
Valuation techniques 
UBS 
uses 
widely 
recognized 
valuation 
techniques 
for 
determining 
the 
fair 
value 
of 
financial 
and 
non-financial 
instruments 
that 
are 
not 
actively 
traded 
and 
quoted. 
The 
most 
frequently applied valuation techniques 
include discounted value 
of 
expected 
cash 
flows, 
relative 
value 
and 
option 
pricing 
methodologies. 
Discounted 
value 
of 
expected 
cash 
flows 
is 
a 
valuation 
technique 
that 
measures 
fair 
value 
using 
estimated 
expected 
future 
cash 
flows 
from 
assets 
or 
liabilities 
and 
then 
discounts 
these 
cash 
flows 
using a 
discount 
rate 
or 
discount 
margin that 
reflects 
the
 
credit 
and
 
/
 
or 
funding 
spreads 
required 
by 
the 
market 
for 
instruments with 
similar risk 
and liquidity 
profiles to 
produce a present 
value. When using such 
valuation techniques, 
expected 
future 
cash 
flows are 
estimated 
using an 
observed or 
implied 
market 
price 
for 
the 
future 
cash 
flows 
or 
by 
using 
industry 
standard 
cash 
flow 
projection 
models. 
The 
discount 
factors 
within 
the 
calculation 
are 
generated 
using 
industry-
standard yield curve modeling techniques and models. 
Relative value models measure fair 
value based on the market 
prices 
of 
equivalent 
or 
comparable 
assets 
or 
liabilities, 
making 
adjustments 
for 
differences 
between 
the 
characteristics 
of 
the 
observed instrument and the instrument being valued. 
Option pricing models 
incorporate assumptions regarding 
the 
behavior of future 
price movements of 
an underlying referenced 
asset 
or 
assets 
to 
generate 
a 
probability-weighted 
future 
expected 
payoff 
for 
the 
option. 
The 
resulting 
probability-
weighted 
expected 
payoff 
is 
then 
discounted 
using 
discount 
factors 
generated 
from 
industry-standard 
yield 
curve 
modeling 
techniques 
and 
models. 
The 
option 
pricing 
model 
may 
be 
implemented 
using 
a 
closed-form 
analytical 
formula 
or 
other 
mathematical 
techniques 
(e.g., 
binomial 
tree 
or 
Monte 
Carlo 
simulation). 
Where available, 
valuation techniques 
use market-observable 
assumptions and inputs. 
If such data 
is not available, 
inputs may 
be derived 
by reference 
to similar 
assets in 
active markets, 
from 
recent 
prices 
for 
comparable 
transactions 
or 
from 
other 
observable 
market 
data. 
In 
such 
cases, 
the 
inputs 
selected 
are 
based 
on 
historical 
experience 
and 
practice 
for 
similar 
or 
analogous 
instruments, 
derivation 
of 
input 
levels 
based 
on 
similar products 
with observable 
price levels, 
and knowledge 
of 
current market conditions and valuation approaches. 
For 
more 
complex instruments, 
fair 
values may 
be 
estimated 
using 
a 
combination 
of 
observed 
transaction 
prices, 
consensus 
pricing services and relevant quotes. Consideration 
is given to the 
nature of the quotes (e.g., indicative or firm) and 
the relationship 
of 
recently 
evidenced 
market 
activity 
to 
the 
prices 
provided 
by 
consensus 
pricing 
services. 
UBS 
also 
uses 
internally 
developed 
models, 
which 
are 
typically 
based 
on 
valuation 
methods 
and 
techniques 
recognized 
as 
standard 
within 
the 
industry. 
Assumptions 
and 
inputs 
used 
in 
valuation 
techniques 
include 
benchmark interest 
rate curves, 
credit and funding 
spreads used 
in 
estimating discount 
rates, 
bond 
and 
equity 
prices, 
equity 
index 
prices, 
foreign 
exchange 
rates, 
levels 
of 
market 
volatility 
and 
correlation. Refer to Note 21f for more information. The discount 
curves 
used 
by 
the 
Group 
incorporate 
the 
funding 
and 
credit 
characteristics 
of the instruments 
to which they 
are applied. 
Financial instruments excluding derivatives: valuation and classification in the fair value hierarchy 
Product 
Valuation and classification in the fair value hierarchy 
Government bills 
and bonds 
Valuation 
–
 
Generally valued using prices obtained directly 
from the market. 
–
 
Instruments not priced directly using active-market data 
are valued using discounted cash 
flow valuation 
techniques that incorporate market data 
for similar government instruments. 
Fair value hierarchy 
–
 
Generally traded in active markets with prices that can be obtained directly from these markets, resulting 
in classification as Level 1, 
while the remaining positions are classified 
as Level 2 and Level 3. 
Corporate and 
municipal bonds 
Valuation 
–
 
Generally 
valued 
using 
prices 
obtained 
directly 
from 
the 
market 
for 
the 
security, 
or 
similar 
securities, 
adjusted for seniority, maturity and liquidity. 
–
 
When prices 
are not 
available, instruments are 
valued using 
discounted cash 
flow valuation 
techniques 
incorporating the credit spread of the 
issuer or similar issuers. 
–
 
For 
convertible bonds 
without directly 
comparable prices, 
issuances may 
be 
priced using 
a convertible 
bond model. 
Fair value hierarchy 
–
 
Generally classified as Level 1 or Level 2, depending 
on the depth of trading activity behind price 
sources. 
–
 
Level 3 instruments have no suitable pricing information 
available. 
Traded loans and 
loans measured at 
fair value 
Valuation 
–
 
Valued 
directly 
using 
market 
prices 
that 
reflect 
recent 
transactions 
or 
quoted 
dealer 
prices, 
where 
available. 
–
 
Where no 
market price 
data is 
available, loans 
are valued 
by relative 
value benchmarking 
using pricing 
derived from debt instruments in comparable entities or different products in the same entity, or by using 
a credit default 
swap valuation technique, 
which requires inputs 
for credit spreads, 
credit recovery rates 
and interest 
rates. Recently 
originated commercial real 
estate loans 
are measured 
using a 
securitization 
approach based on rating agency guidelines. 
Fair value hierarchy 
–
 
Instruments with suitably deep and liquid pricing 
information are classified as Level 2. 
–
 
Positions 
requiring 
the 
use 
of 
valuation 
techniques, 
or 
for 
which 
the 
price 
sources 
have 
insufficient 
trading depth, are classified as Level 3. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
358 
 
Note 21 
Fair value measurement (continued)
Product 
Valuation and classification in the fair value hierarchy 
Investment fund 
units 
Valuation 
–
 
Predominantly exchange-traded, with 
readily available quoted prices in liquid markets. 
–
 
Where market prices are not available, fair 
value may be measured using net asset 
values (NAVs). 
Fair value hierarchy 
–
 
Listed units 
are classified 
as 
Level 1, provided 
there is 
sufficient trading 
activity to 
justify active-market 
classification, while other positions are classified 
as Level 2. 
–
 
Positions for which NAVs are not available 
are classified as Level 3. 
Asset-backed 
securities (ABS) 
Valuation 
–
 
For 
liquid 
securities, 
the 
valuation 
process 
will 
use 
trade 
and 
price 
data, 
updated 
for 
movements 
in 
market 
levels 
between 
the 
time 
of 
trading 
and 
the 
time 
of 
valuation. 
Less 
liquid 
instruments 
are 
measured using discounted expected cash 
flows incorporating price data for 
instruments or indices with 
similar risk profiles. 
Fair value hierarchy 
–
 
RMBS, 
CMBS 
and 
other 
ABS 
are 
generally 
classified 
as 
Level 2. 
However, 
if 
significant 
inputs 
are 
unobservable, or if market or fundamental 
data is not available, they are classified 
as Level 3. 
Auction rate 
securities (ARS) 
Valuation 
–
 
Effective from the fourth quarter 
of 2020, ARS are valued 
utilizing a discounted cash flow methodology. 
The 
model captures 
interest rate 
risk emanating 
from the 
note 
coupon, credit 
risk attributable 
to 
the 
underlying closed-end fund investments, liquidity risk 
as a function of the level of trading volume in these 
positions, and extension risk as ARS 
are perpetual instruments that require an assumption regarding their 
maturity or issuer redemption date. 
–
 
Previously, 
ARS 
were 
valued 
using 
market 
prices 
that 
reflected 
recent 
transactions 
after 
applying 
an 
adjustment 
for 
trade 
size 
or 
quoted 
dealer 
prices, 
where 
available. 
However, 
due 
to 
significant 
deterioration in 
the volume 
and size 
of transactions 
in relevant 
ARS markets 
following the 
outbreak of 
the 
COVID-19 pandemic, 
a 
model-based approach 
provides a 
superior indication 
of orderly 
exit prices 
until such time as markets re-develop. 
Fair value hierarchy 
–
 
Granular and liquid pricing information is generally not available for 
ARS. As a result, these securities are 
classified as Level 3. 
Equity instruments 
Valuation 
–
 
Listed equity instruments are generally valued 
using prices obtained directly from the market. 
–
 
Unlisted equity holdings, 
including private equity 
positions, are initially 
marked at their 
transaction price 
and are 
revalued when 
reliable evidence 
of price 
movement becomes available 
or when 
the position 
is 
deemed to be impaired. 
Fair value hierarchy 
–
 
The majority 
of equity 
securities are actively 
traded on 
public stock 
exchanges where quoted 
prices are 
readily and regularly available, resulting in Level 
1 classification. 
Financial assets for 
unit-linked 
investment 
contracts 
Valuation 
–
 
The majority of assets are listed on exchanges 
and fair values are determined using quoted 
prices. 
Fair value hierarchy 
–
 
Most assets are classified as Level 1 if actively traded, 
or Level 2 if trading is not active. 
–
 
Instruments for which prices are not readily available 
are classified as Level 3. 
Securities financing 
transactions 
Valuation 
–
 
These instruments are valued using discounted expected cash flow techniques. The discount rate applied 
is based on funding curves that are relevant 
to the collateral eligibility terms. 
Fair value hierarchy 
–
 
Collateral funding curves for 
these instruments are generally 
observable and, as a 
result, these positions 
are classified as Level 2. 
–
 
Where the 
collateral terms 
are 
non-standard, the 
funding curve 
may 
be considered 
unobservable and 
these positions are classified as Level 3. 
Brokerage 
receivables and 
payables 
Valuation 
–
 
Fair value is determined based on the value of the 
underlying balances. 
Fair value hierarchy 
–
 
Due to their on-demand nature, these receivables 
and payables are deemed as Level 2. 
Amounts due under 
unit-linked 
investment 
contracts 
Valuation 
–
 
The 
fair 
values 
of 
investment 
contract 
liabilities 
are 
determined 
by 
reference 
to 
the 
fair 
value 
of 
the 
corresponding assets. 
Fair value hierarchy 
–
 
The 
liabilities 
themselves 
are 
not 
actively 
traded, 
but 
are 
mainly 
referenced 
to 
instruments 
that 
are 
actively traded and are therefore classified 
as Level 2. 
 

 
 
 
 
 
 
 
 
 
 
359 
 
Note 21 
Fair value measurement (continued)
Derivative instruments: valuation and classification in the 
fair value hierarchy 
The 
curves 
used 
for 
discounting 
expected 
cash 
flows 
in 
the 
valuation 
of 
collateralized 
derivatives 
reflect 
the 
funding 
terms 
associated 
with 
the 
relevant 
collateral 
arrangement 
for 
the 
instrument 
being 
valued. 
These 
collateral 
arrangements 
differ 
across 
counterparties 
with 
respect 
to 
the 
eligible 
currency 
and 
interest 
terms 
of 
the 
collateral. 
The 
majority 
of 
collateralized 
derivatives are measured 
using a discount 
curve that is based 
on 
funding 
rates 
derived 
from 
overnight 
interest 
in 
the 
cheapest 
eligible 
currency 
for 
the 
respective 
counterparty 
collateral 
agreement. 
 
Uncollateralized 
and 
partially 
collateralized 
derivatives 
are 
discounted using the LIBOR (or equivalent) curve for the currency 
of 
the 
instrument. 
As 
described 
in 
Note 
21d, 
the 
fair 
value 
of 
uncollateralized 
and 
partially 
collateralized 
derivatives 
is 
then 
adjusted by 
credit valuation 
adjustments (CVAs), 
debit valuation 
adjustments (DVAs) and 
funding valuation adjustment 
(FVAs), as 
applicable, to 
reflect an 
estimation of 
the effect 
of counterparty 
credit risk, UBS’s own credit risk, 
and funding costs and benefits. 
›
 
Refer to Note 10 for more information about 
derivative 
instruments 
 
Derivative product 
Valuation and classification in the fair value hierarchy 
Interest rate 
contracts 
Valuation 
–
 
Interest rate 
swap contracts 
are 
valued by 
estimating future 
interest cash 
flows and 
discounting those 
cash flows 
using a 
rate that 
reflects the appropriate 
funding rate 
for the 
position being 
measured. The 
yield curves used to estimate future 
index levels and discount rates are 
generated using market-standard 
yield 
curve 
models 
using 
interest 
rates 
associated 
with 
current 
market 
activity. 
The 
key 
inputs 
to 
the 
models are interest rate swap rates, forward rate agreement rates, short-term interest rate futures prices, 
basis swap spreads and inflation swap rates. 
–
 
Interest rate option 
contracts are valued using 
various market-standard option models, using 
inputs that 
include interest rate yield curves, inflation curves, 
volatilities and correlations. 
–
 
When 
the 
maturity 
of 
an 
interest rate 
swap 
or 
option 
contract exceeds 
the 
term 
for 
which 
standard 
market quotes are observable for a significant input 
parameter, the contracts are valued by extrapolation 
from 
the 
last 
observable 
point 
using 
standard 
assumptions 
or 
by 
reference 
to 
another 
observable 
comparable input parameter to represent 
a suitable proxy for that portion of the term. 
Fair value hierarchy 
–
 
The majority 
of interest 
rate swaps 
are classified 
as Level 2 
as the 
standard market 
contracts that 
form 
the inputs for yield curve models are generally 
traded in active and observable markets. 
–
 
Options 
are 
generally 
treated 
as 
Level 2 
as 
the 
calibration 
process 
enables 
the 
model 
output 
to 
be 
validated to active-market levels. 
Models calibrated in this 
way are then 
used to revalue 
the portfolio of 
both standard options and more exotic products. 
–
 
Interest rate swap 
or option contracts 
are classified as 
Level 3 when the 
terms 
exceed standard market-
observable quotes. 
–
 
Exotic 
options 
for 
which 
appropriate 
volatility 
or 
correlation 
input 
levels 
cannot 
be 
implied 
from 
observable market data are classified as Level 3. 
Credit derivative 
contracts 
Valuation 
–
 
Credit derivative 
contracts are 
valued using 
industry-standard models 
based primarily 
on 
market credit 
spreads, upfront pricing points and implied recovery rates. Where a derivative credit spread is not directly 
available, it may be derived from the price of 
the reference cash bond. 
–
 
Asset-backed credit 
derivatives are 
valued using 
a valuation 
technique similar 
to that 
of the 
underlying 
security with an adjustment to reflect 
the funding differences between cash 
and synthetic form. 
Fair value hierarchy 
–
 
Single-entity and 
portfolio 
credit derivative 
contracts are 
classified as 
Level 2 
when credit 
spreads and 
recovery 
rates 
are 
determined 
from 
actively 
traded 
observable 
market 
data. 
Where 
the 
underlying 
reference name(s) are not actively traded and the 
correlation cannot be directly mapped 
to actively traded 
tranche instruments, these contracts are classified 
as Level 3. 
–
 
Asset-backed 
credit 
derivatives 
follow 
the 
characteristics 
of 
the 
underlying 
security 
and 
are 
therefore 
distributed across Level 2 and Level 3. 
 
 

 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
360 
 
Note 21 
Fair value measurement (continued) 
Derivative product 
Valuation and classification in the fair value hierarchy 
Foreign exchange 
contracts 
Valuation 
–
 
Open spot FX contracts are valued using the FX 
spot rate observed in the market. 
–
 
Forward FX contracts are valued using the FX spot rate adjusted for forward pricing points observed from 
standard market-based sources. 
–
 
OTC FX option contracts are valued using market-standard option valuation models. The models used for 
shorter-dated 
options 
(i.e., 
maturities 
of 
five 
years 
or 
less) 
tend 
to 
be 
different 
than 
those 
used 
for 
longer-dated options 
because the 
models needed 
for longer-dated 
OTC FX 
contracts require additional 
consideration of interest rate and FX rate interdependency. 
–
 
The valuation for 
multi-dimensional FX options 
uses a 
multi-local volatility model, 
which is 
calibrated to 
the observed FX volatilities for all relevant FX 
pairs. 
Fair value hierarchy 
–
 
The 
markets 
for 
FX 
spot 
and 
FX 
forward 
pricing 
points 
are 
both 
actively 
traded 
and 
observable 
and 
therefore such FX contracts are generally classified 
as Level 2. 
–
 
A significant proportion of 
OTC FX option contracts are 
classified as Level 2 as 
inputs are derived mostly 
from standard market contracts traded in 
active and observable markets. 
–
 
OTC 
FX 
option contracts 
classified as 
Level 3 include 
multi-dimensional FX 
options and 
long-dated FX 
exotic 
option 
contracts 
where 
there 
is 
no 
active 
market 
from 
which 
to 
derive 
volatility 
or 
correlation 
inputs. 
Equity / index 
contracts 
Valuation 
–
 
Equity forward 
contracts have a 
single stock 
or index 
underlying and are 
valued using 
market-standard 
models. The key inputs to the models are 
stock prices, estimated dividend rates and equity funding rates 
(which are 
implied from 
prices of 
forward contracts 
observed in 
the market). 
Estimated cash 
flows are 
then 
discounted 
using 
market-standard 
discounted 
cash 
flow 
models 
using 
a 
rate 
that 
reflects 
the 
appropriate 
funding 
rate 
for 
that 
portion 
of 
the 
portfolio. 
When 
no 
market 
data 
is 
available 
for 
the 
instrument maturity, they are valued by extrapolation of available data, use of historical dividend data, or 
use of data for a related equity. 
–
 
Equity option contracts 
are valued using 
market-standard models that estimate 
the equity forward 
level 
as described 
for equity 
forward contracts 
and incorporate 
inputs for 
stock volatility 
and for 
correlation 
between 
stocks 
within 
a 
basket. 
The 
probability-weighted 
expected 
option 
payoff 
generated 
is 
then 
discounted 
using 
market-standard 
discounted 
cash 
flow 
models 
applying 
a 
rate 
that 
reflects 
the 
appropriate funding rate 
for that 
portion of the 
portfolio. When volatility, 
forward or 
correlation inputs 
are not available, they 
are valued using extrapolation of 
available data, historical dividend, correlation or 
volatility data, or the equivalent data for 
a related equity. 
Fair value hierarchy 
–
 
As inputs are 
derived mostly from standard 
market contracts traded in 
active and observable markets, 
a 
significant proportion of equity forward contracts 
are classified as Level 2. 
–
 
Equity option positions for which inputs are derived 
from standard market contracts traded in active and 
observable markets are 
also classified as 
Level 2. Level 3 positions are 
those for which 
volatility, forward 
or correlation inputs are not observable. 
Commodity 
contracts 
Valuation 
–
 
Commodity forward 
and swap 
contracts are 
measured using 
market-standard models 
that use 
market 
forward levels on standard instruments. 
–
 
Commodity 
option 
contracts 
are 
measured 
using 
market-standard 
option 
models 
that 
estimate 
the 
commodity forward level 
as described for 
commodity forward and 
swap contracts, incorporating 
inputs 
for 
the 
volatility 
of 
the 
underlying 
index 
or 
commodity. 
For 
commodity 
options 
on 
baskets 
of 
commodities 
or 
bespoke 
commodity indices, 
the 
valuation 
technique 
also 
incorporates 
inputs 
for 
the 
correlation between different commodities or 
commodity indices. 
Fair value hierarchy 
–
 
Individual 
commodity contracts 
are 
typically classified 
as 
Level 2, 
because 
active 
forward and 
volatility 
market data is available. 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
361 
 
Note 21 
Fair value measurement (continued) 
d) Valuation adjustments 
The 
output 
of 
a 
valuation 
technique is 
always an 
estimate 
of a 
fair value that cannot be measured with complete certainty. 
As a 
result, 
valuations 
are 
adjusted, 
where 
appropriate 
and 
when 
such 
factors 
would 
be 
considered 
by 
market 
participants 
in 
estimating 
fair value, 
to reflect 
close-out 
costs, credit 
exposure, 
model-driven 
valuation 
uncertainty, 
funding 
costs 
and 
benefits, 
trading restrictions and other factors. 
Deferred day-1 profit or loss reserves 
For 
new 
transactions 
where 
the 
valuation 
technique 
used 
to 
measure fair 
value requires 
significant inputs 
that are 
not based 
on 
observable 
market 
data, 
the 
financial 
instrument 
is 
initially 
recognized 
at 
the 
transaction 
price. 
The 
transaction 
price 
may 
differ 
from 
the fair 
value obtained 
using a 
valuation technique, 
where 
any 
such 
difference 
is 
deferred 
and 
not 
initially 
recognized in the income statement. 
Deferred 
day-1 
profit 
or 
loss 
is generally 
released 
into 
Other 
net 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through profit or loss
 
when pricing of equivalent products or the 
underlying 
parameters 
become
s
 
observable 
or 
when 
the 
transaction is closed out. 
The 
table 
below 
summarizes 
the 
changes 
in 
deferred 
day-1 
profit or loss reserves during the respective period. 
 
 
Deferred day-1 profit or loss reserves 
USD million 
2020 
2019 
2018 
Reserve balance at the beginning of the year 
 
146 
 
255 
 
338 
Profit / (loss) deferred on new transactions 
 
362 
 
171 
 
341 
(Profit) / loss recognized in the income statement 
 
(238) 
 
(278) 
 
(417) 
Foreign currency translation 
 
0 
 
(2) 
 
(6) 
Reserve balance at the end of the year 
 
269 
 
146 
 
255 
 
Own credit 
Own 
credit 
risk 
is 
reflected 
in 
the 
valuation 
of 
UBS’s 
fair 
value 
option liabilities where 
this component is considered relevant 
for 
valuation 
purposes 
by 
UBS’s 
counterparties 
and 
other 
market 
participants. 
Changes in 
the fair 
value of 
financial liabilities 
designated at 
fair 
value 
through 
profit 
or 
loss 
related 
to 
own 
credit 
are 
recognized 
in 
Other 
comprehensive 
income
 
directly 
within 
Retained 
earnings, 
with 
no 
reclassification 
to 
the 
income 
statement in future periods. 
This presentation does not 
create or 
increase 
an 
accounting 
mismatch 
in 
the 
income 
statement, 
as 
the Group does not hedge changes in own credit. 
Own 
credit 
is 
estimated 
using 
own 
credit 
adjustment 
(OCA) 
curves, 
which 
incorporate 
observable 
market 
data, 
including 
market-observed 
secondary 
prices 
for 
UBS’s 
debt, 
UBS’s 
credit 
default 
swap 
spreads 
and 
debt 
curves 
of 
peers. 
In 
the 
table 
below 
the change 
in 
unrealized own 
credit 
consists of 
changes 
in 
fair 
value 
that 
are 
attributable 
to 
the 
change 
in 
UBS’s 
credit 
spreads, 
as 
well 
as 
the 
effect 
of 
changes 
in 
fair 
values 
attributable 
to 
factors 
other 
than 
credit 
spreads, 
such 
as 
redemptions, 
effects 
from 
time 
decay 
and 
changes 
in 
interest 
and other 
market rates. 
Realized own 
credit is 
recognized when 
an 
instrument 
with 
an 
associated 
unrealized 
own 
credit 
adjustment is repurchased prior to the 
contractual maturity date. 
Life-to-date 
amounts 
reflect 
the 
cumulative 
unrealized 
change 
since initial recognition. 
›
 
Refer to Note 16 for more information about 
debt issued 
designated at fair value 
 
Own credit adjustments on financial liabilities 
designated at fair value 
Included in Other comprehensive income 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Recognized during the period: 
Realized gain / (loss) 
 
2 
 
8 
 
(3) 
Unrealized gain / (loss) 
 
(295) 
 
(408) 
 
519 
Total gain / (loss), before tax 
 
(293) 
 
(400) 
 
517 
As of 
USD million 
31.12.20 
31.12.19 
31.12.18 
Recognized on the balance sheet as of the end of the period: 
Unrealized life-to-date gain / (loss) 
 
(381) 
 
(88) 
 
320 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
362 
 
Note 21 
Fair value measurement (continued) 
Credit valuation adjustments 
In order to measure 
the fair value of 
OTC derivative instruments, 
including 
funded 
derivative 
instruments 
that 
are 
classified 
as 
Financial 
assets 
at 
fair 
value 
not 
held 
for 
trading,
 
CVAs 
are 
necessary to reflect the credit risk of the counterparty inherent in 
these 
instruments. 
This 
amount 
represents 
the 
estimated 
fair 
value 
of 
protection 
required 
to 
hedge 
the 
counterparty 
credit 
risk 
of 
such 
instruments. 
A 
CVA 
is 
determined 
for 
each 
counterparty, 
considering 
all 
exposures 
with 
that 
counterparty, 
and 
is 
dependent 
on 
the 
expected 
future 
value 
of 
exposures, 
default 
probabilities 
and 
recovery 
rates, 
applicable 
collateral 
or 
netting arrangements, 
break clauses, 
funding spreads 
and other 
contractual factors. 
Funding valuation adjustments 
FVAs 
reflect 
the 
costs 
and 
benefits 
of 
funding 
associated 
with 
uncollateralized and 
partially collateralized 
derivative receivables 
and 
payables 
and 
are 
calculated 
as 
the 
valuation 
effect 
from 
moving 
the 
discounting 
of 
the 
uncollateralized 
derivative 
cash 
flows from 
LIBOR 
to OCA 
using the 
CVA 
framework, including 
the probability of counterparty default. 
An FVA is 
also applied to 
collateralized 
derivative 
assets 
in 
cases 
where 
the 
collateral 
cannot be sold or repledged. 
Debit valuation adjustments 
A DVA 
is estimated to incorporate own 
credit in the valuation of 
derivatives 
where 
an 
FVA 
is 
not 
already 
recognized. 
The 
DVA 
calculation 
is 
effectively 
consistent 
with 
the 
CVA 
framework, 
being 
determined 
for 
each 
counterparty, 
considering 
all 
exposures 
with 
that 
counterparty 
and 
taking 
into 
account 
collateral 
netting 
agreements, 
expected 
future 
mark-to-market 
movements and UBS’s credit default spreads. 
Other valuation adjustments 
Instruments 
that 
are 
measured 
as 
part 
of 
a 
portfolio 
of 
combined 
long 
and 
short 
positions 
are 
valued 
at 
mid-market 
levels 
to 
ensure 
consistent 
valuation 
of 
the 
long- 
and 
short-
component 
risks. A 
liquidity valuation 
adjustment 
is then 
made 
to the 
overall net 
long or 
short exposure 
to move 
the fair 
value 
to bid or 
offer as appropriate, 
reflecting current 
levels of market 
liquidity. 
The 
bid–offer 
spreads 
used 
in 
the 
calculation 
of 
this 
valuation adjustment are 
obtained from market transactions 
and 
other relevant sources and are updated periodically. 
Uncertainties 
associated 
with 
the 
use 
of 
model-based 
valuations 
are 
incorporated 
into 
the 
measurement 
of 
fair 
value 
through 
the 
use 
of 
model 
reserves. 
These 
reserves 
reflect 
the 
amounts 
that 
the 
Group 
estimates 
should 
be 
deducted 
from 
valuations 
produced 
directly 
by 
models 
to 
incorporate 
uncertainties in the relevant modeling assumptions, in the 
model 
and 
market 
inputs 
used, 
or 
in 
the 
calibration 
of 
the 
model 
output 
to 
adjust 
for 
known 
model 
deficiencies. 
In 
arriving 
at 
these 
estimates, 
the 
Group 
considers 
a 
range 
of 
market 
practices, 
including 
how 
it 
believes 
market 
participants 
would 
assess 
these 
uncertainties. 
Model 
reserves 
are 
reassessed 
periodically in 
light of 
data from 
market transactions, 
consensus 
pricing services and other relevant sources. 
 
 
Valuation adjustments on financial instruments 
As of 
Life-to-date gain / (loss), USD million 
31.12.20 
31.12.19 
Credit valuation adjustments
1
 
(66) 
 
(48) 
Funding valuation adjustments
2
 
(73) 
 
(93) 
Debit valuation adjustments 
 
0 
 
1 
Other valuation adjustments 
 
(820) 
 
(566) 
of which: liquidity 
 
(340) 
 
(300) 
of which: model uncertainty 
 
(479) 
 
(266) 
1 Amounts do not include reserves against defaulted counterparties. 
2 Includes FVAs on structured financing transactions of USD 6 million as 
of 31 December 2020 and USD 43 million as of 31 December 2019. 
 
 
e) Transfers between Level 1 and Level 2 
The 
amounts 
disclosed 
in 
this 
section 
reflect 
transfers 
between 
Level 1 and 
Level 2 for instruments 
that were held 
for the entire 
reporting period. 
Assets and liabilities transferred from Level 2 to Level 1 during 
2020 
were 
not 
material. 
Assets 
and 
liabilities 
transferred 
from 
Level 1 to Level 2 during 2020 were also not material. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
363 
 
Note 21 
Fair value measurement (continued) 
 
f) Level 3 instruments: valuation techniques and inputs 
The 
table 
below 
presents 
material 
Level 3 
assets 
and 
liabilities, 
together 
with 
the 
valuation 
techniques 
used 
to 
measure 
fair 
value, 
the 
inputs 
used 
in 
a 
given 
valuation 
technique 
that 
are 
considered 
significant 
as 
of 
31
 
December 
2020 
and 
unobservable
,
 
and 
a 
range 
of 
values 
for 
th
ose 
unobservable 
inputs. 
The 
range 
of 
values represents 
the 
highest- 
and lowest-level 
inputs 
used 
in 
the 
valuation 
techniques. 
Therefore, 
the 
range 
does 
not 
reflect 
the 
level 
of 
uncertainty 
regarding 
a 
particular 
input 
or 
an 
assessment 
of 
the 
reasonableness 
of 
the 
Group’s 
estimates 
and 
assumptions, 
but 
rather 
the 
different 
underlying 
characteristics 
of 
the 
relevant 
assets 
and 
liabilities 
held 
by 
the 
Group. The 
ranges will therefore 
vary from period 
to period and 
parameter 
to 
parameter 
based 
on 
characteristics 
of 
the 
instruments 
held 
at 
each 
balance 
sheet 
date. 
Furthermore, 
the 
ranges 
of 
unobservable 
inputs 
may 
differ 
across 
other 
financial 
institutions, reflecting the 
diversity of the products 
in each firm’s 
inventory. 
 
Valuation techniques and inputs used in the fair value measurement 
of Level 3 assets and liabilities 
Fair value 
Significant 
unobservable 
input(s)
1
Range of inputs 
Assets 
Liabilities 
Valuation 
technique(s) 
31.12.20 
31.12.19 
USD billion 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
low 
high 
weighted 
average
2 
low 
high 
weighted 
average
2 
unit
1 
Financial assets and liabilities at fair value held for trading and Financial assets at fair 
value not held for trading 
Corporate and municipal 
bonds 
 
1.2 
 
0.5 
 
0.0 
 
0.0 
Relative value to 
market comparable 
Bond price equivalent 
 
1 
 
143 
 
100 
 
0 
 
143 
 
101 
points 
Discounted expected 
cash flows 
Discount margin 
 
268 
 
268 
basis 
points 
Traded loans, loans 
measured at fair value, 
loan commitments and 
guarantees 
 
2.4 
 
2.4 
 
0.0 
 
0.0 
Relative value to 
market comparable 
Loan price equivalent 
 
0 
 
101 
 
99 
 
0 
 
101 
 
99 
points 
Discounted expected 
cash flows 
Credit spread 
 
190 
 
800 
 
225 
 
530 
basis 
points 
Market comparable 
and securitization 
model 
Credit spread 
 
40 
 
1,858 
 
333 
 
45 
1,412 
 
244 
basis 
points 
Auction rate securities
3
 
1.5 
 
1.5 
Relative value to 
market comparable 
Bond price equivalent 
 
79 
 
98 
 
88 
points 
Discounted expected 
cash flows 
Credit spread 
 
100 
 
188 
 
140 
basis 
points 
Investment fund units
4
 
0.1 
 
0.1 
 
0.0 
 
0.0 
Relative value to 
market comparable 
Net asset value 
Equity instruments
4
 
0.7 
 
0.7 
 
0.0 
 
0.1 
Relative value to 
market comparable 
Price 
Debt issued designated at 
fair value
5
 
11.0 
 
9.9 
Other financial liabilities 
designated at fair value 
 
0.7 
 
0.8 
Discounted expected 
cash flows 
Funding spread 
 
42 
 
175 
 
44 
 
175 
basis 
points 
Derivative financial instruments 
Interest rate contracts 
 
0.5 
 
0.3 
 
0.5 
 
0.1 
Option model 
Volatility of interest 
rates 
 
29 
 
69 
 
15 
 
63 
basis 
points 
Credit derivative contracts 
 
0.3 
 
0.4 
 
0.5 
 
0.5 
Discounted expected 
cash flows 
Credit spreads 
 
1 
 
489 
 
1 
 
700 
basis 
points 
Bond price equivalent 
 
0 
 
100 
 
0 
 
100 
points 
Equity / index contracts 
 
0.9 
 
0.6 
 
2.3 
 
1.3 
Option model 
Equity dividend yields 
 
0 
 
13 
 
0 
 
14 
% 
Volatility of equity 
stocks, equity and 
other indices 
 
4 
 
100 
 
4 
 
105 
% 
Equity-to-FX 
correlation 
 
(34) 
 
65 
 
(45) 
 
71 
% 
Equity-to-equity 
correlation 
 
(16) 
 
100 
 
(17) 
 
98 
% 
1 The ranges of significant 
unobservable inputs are represented in 
points, percentages and basis 
points. Points are a 
percentage of par (e.g., 100 
points would be 100% of par). 
2 Weighted averages are 
provided 
for non-derivative financial instruments 
and were calculated by 
weighting inputs based on the 
fair values of the 
respective instruments. Weighted 
averages are not provided 
for inputs related to derivative 
contracts, 
as this would not be meaningful. 
3 Bond price equivalent prior to 
the fourth quarter of 2020; discounted 
cash flow model thereafter. 
4 The range of inputs 
is not disclosed as there is a dispersion 
of values given 
the diverse 
nature of 
the investments. 
5 Debt 
issued designated 
at fair 
value is 
composed primarily 
of UBS 
structured notes, 
which include 
variable 
maturity notes 
with various 
equity and 
foreign exchange 
underlying risks, rates-linked 
and credit-linked notes, 
all of which have embedded derivative 
parameters that are considered 
to be unobservable. The 
equivalent derivative instrument parameters 
are presented in the 
respective derivative financial instruments lines in this table. 
 
 

 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
364 
 
Note 21 
Fair value measurement (continued) 
Significant unobservable inputs in Level 3 positions 
This 
section 
discusses 
the 
significant 
unobservable 
inputs 
used 
in 
the 
valuation 
of 
Level 3 
instruments 
and 
assesses 
the 
potential 
effect 
that 
a 
change 
in 
each 
unobservable 
input 
in 
isolation 
may 
have 
on 
a 
fair 
value 
measurement. 
Relationships 
between 
observable and unobservable inputs have not been included in the summary below. 
 
Input 
Description 
Bond price equivalent 
–
 
Where market 
prices are 
not available 
for a 
bond, fair 
value is 
measured by comparison 
with observable 
pricing data 
from 
similar instruments. Factors considered when 
selecting comparable instruments include credit 
quality, maturity and industry of 
the issuer. Fair value may be measured either by a direct price comparison or by conversion of 
an instrument price into a yield 
(either as an outright yield or as a spread to 
LIBOR). 
–
 
For corporate and 
municipal bonds, the 
range represents the 
range of 
prices from reference 
issuances used in 
determining 
fair value. Bonds priced at 0 are distressed to the point that no recovery 
is expected, while prices significantly in excess of 100 
or 
par 
relate 
to 
inflation-linked or 
structured issuances 
that 
pay 
a 
coupon 
in 
excess 
of 
the 
market 
benchmark as 
of 
the 
measurement date. 
–
 
For credit derivatives, the bond price 
range represents the range of prices used 
for reference instruments, which are typically 
converted to an equivalent yield or credit 
spread as part of the valuation process. 
Loan price equivalent 
–
 
Where market prices 
are not available 
for a traded 
loan, fair value 
is measured by 
comparison with observable pricing 
data 
for 
similar 
instruments. 
Factors 
considered 
when 
selecting 
comparable 
instruments 
include 
industry 
segment, 
collateral 
quality, 
maturity 
and 
issuer-specific 
covenants. 
Fair 
value 
may 
be 
measured 
either 
by 
a 
direct 
price 
comparison 
or 
by 
conversion of an instrument price into a yield. The range represents the range of prices derived from reference issuances of a 
similar credit 
quality used 
to measure 
fair value 
for loans 
classified as 
Level 3. Loans 
priced at 
0 are 
distressed to 
the point 
that no recovery is expected, while a current 
price of 100 represents a loan that is expected 
to be repaid in full. 
Credit spread 
–
 
Valuation models for many 
credit derivatives require an input 
for the credit spread, 
which is a 
reflection of the credit quality 
of 
the associated 
referenced underlying. 
The 
credit spread 
of 
a 
particular security 
is 
quoted in 
relation to 
the 
yield 
on 
a 
benchmark security or reference rate, typically either US 
Treasury or LIBOR, and is generally expressed in terms of basis points. 
An increase / (decrease) in credit spread will increase 
/ (decrease) the value of credit protection offered by credit default 
swaps 
and other credit derivative products. The income statement effect from such changes depends on the nature and 
direction of 
the positions held. Credit spreads 
may be negative where the 
asset is more creditworthy than 
the benchmark against which 
the spread is 
calculated. A wider credit 
spread represents decreasing creditworthiness. The 
range represents a diverse 
set of 
underlyings, 
with 
the 
lower 
end 
of 
the 
range 
representing credits 
of 
the 
highest 
quality (e.g., 
approximating the 
risk 
of 
LIBOR) and the upper end of the range representing 
greater levels of credit risk. 
Discount margin 
–
 
The discount margin (DM) spread represents the 
discount rates applied to present value 
cash flows of an asset 
to reflect the 
market 
return 
required 
for 
uncertainty in 
the 
estimated cash 
flows. 
DM 
spreads 
are 
a 
rate 
or 
rates 
applied 
on 
top 
of 
a 
floating index (e.g., 
LIBOR) to discount 
expected cash 
flows. Generally, a 
decrease / (increase) 
in the 
DM in 
isolation would 
result in a higher / (lower) fair value. 
–
 
The 
high end 
of 
the range 
relates to 
securities that 
are 
priced 
low within 
the 
market relative 
to 
the expected 
cash 
flow 
schedule. This indicates that the market is pricing an increased 
risk of credit loss into the security that 
is greater than what is 
being captured 
by the 
expected cash 
flow generation 
process. The 
low ends 
of the 
ranges are 
typical of 
funding rates 
on 
better-quality instruments. 
Funding spread 
–
 
Structured financing transactions are valued using synthetic funding curves that best represent the assets that are pledged as 
collateral for the transactions. They are not representative 
of where UBS can fund itself on an unsecured basis, but 
provide an 
estimate of where UBS can source and deploy secured funding with counterparties for a given type of collateral. The funding 
spreads are expressed in terms of basis points over or 
under LIBOR, and if funding spreads widen, this increases the effect of 
discounting. 
–
 
A small proportion 
of structured debt 
instruments and non-structured fixed-rate 
bonds within financial 
liabilities designated 
at fair value had an exposure to funding 
spreads that was longer in duration than the 
actively traded market. 
Volatility 
–
 
Volatility 
measures the 
variability 
of 
future 
prices 
for 
a 
particular 
instrument and 
is 
generally expressed 
as 
a 
percentage, 
where 
a 
higher 
number 
reflects 
a 
more 
volatile 
instrument, 
for 
which 
future 
price 
movements are 
more 
likely 
to 
occur. 
Volatility is a key 
input into option models, where 
it is used to 
derive a probability-based distribution of future 
prices for the 
underlying instrument. The 
effect of 
volatility on 
individual positions within 
the portfolio 
is driven 
primarily by whether 
the 
option contract 
is a 
long or short 
position. In most 
cases, the 
fair value 
of an 
option increases as 
a result 
of an 
increase in 
volatility and is 
reduced by a decrease 
in volatility. Generally, volatility 
used in the 
measurement of fair value 
is derived from 
active-market option 
prices (referred 
to 
as 
implied volatility). 
A 
key 
feature of 
implied volatility 
is the 
volatility “smile” 
or 
“skew”, which represents the effect of pricing 
options of different option strikes at different 
implied volatility levels. 
–
 
Volatilities of low interest rates tend to be much higher than volatilities of high interest rates. In addition, different currencies 
may have significantly different implied volatilities. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
365 
 
Note 21 
Fair value measurement (continued) 
Input 
Description 
Correlation 
–
 
Correlation measures the interrelationship between the movements of two variables. It is expressed as a percentage between 
–100% 
and 
+100%, 
where 
+100% 
represents 
perfectly 
correlated 
variables 
(meaning 
a 
movement 
of 
one 
variable 
is 
associated with a 
movement of the 
other variable in 
the same direction) and 
–100% implies that 
the variables are 
inversely 
correlated 
(meaning 
a 
movement 
of 
one 
variable 
is 
associated 
with 
a 
movement 
of 
the 
other 
variable 
in 
the 
opposite 
direction). The effect of correlation on the measurement of fair value depends on the specific terms of the instruments being 
valued, reflecting the range of different payoff 
features within such instruments. 
–
 
Equity-to-FX correlation is important for equity options based on 
a currency other than the 
currency of the underlying stock. 
Equity-to-equity correlation is particularly important for complex options that incorporate, in some 
manner, different equities 
in the projected payoff. 
Equity dividend yields 
–
 
The derivation of 
a forward price 
for an individual 
stock or index 
is important for 
measuring fair value 
for forward or 
swap 
contracts and for measuring fair value using option pricing models. The relationship between the current stock price and 
the 
forward price is based on a combination of expected future dividend levels and 
payment timings, and, to a lesser extent, the 
relevant 
funding 
rates 
applicable 
to 
the 
stock 
in 
question. 
Dividend 
yields 
are 
generally 
expressed 
as 
an 
annualized 
percentage of the share price, with the lowest limit of 0% representing a stock that is not expected to pay any dividend. The 
dividend 
yield 
and 
timing 
represents 
the 
most 
significant 
parameter 
in 
determining 
fair 
value 
for 
instruments 
that 
are 
sensitive to an equity forward price. 
g) Level 3 instruments: sensitivity to changes in unobservable input assumptions 
The table 
below summarizes 
those financial 
assets and 
liabilities 
classified 
as 
Level 3 
for 
which 
a 
change 
in 
one 
or 
more 
of 
the 
unobservable inputs 
to reflect 
reasonably possible 
favorable and 
unfavorable 
alternative 
assumptions 
would 
change 
fair 
value 
significantly, 
and 
the estimated 
effect 
thereof. 
The 
table 
below 
does 
not 
represent 
the
 
estimated 
effect 
of 
stress 
scenarios. 
Interdependencies 
between 
Level 1, 
2 
and 
3 
parameters 
have 
not 
been 
incorporated 
in 
the 
table. 
Furthermore, 
direct 
inter-
relationships 
between 
the 
Level 3 
parameters 
discussed 
below 
are not a significant element of the valuation uncertainty. 
Sensitivity 
data 
is 
estimated 
using 
a 
number 
of 
techniques, 
including 
the 
estimation 
of 
price 
dispersion 
among 
different 
market 
participants, 
variation 
in 
modeling 
approaches 
and 
reasonably possible 
changes to assumptions 
used within 
the fair 
value 
measurement 
process. 
The 
sensitivity 
ranges 
are 
not 
always symmetrical 
around the 
fair values, 
as the 
inputs used 
in 
valuations are not always precisely in 
the middle of the favorable 
and unfavorable range. 
Sensitivity data 
is determined 
at a 
product or 
parameter level 
and 
then 
aggregated 
assuming 
no 
diversification 
benefit. 
Diversification 
would 
incorporate 
estimated 
correlations 
across 
different 
sensitivity 
results 
and, 
as 
such, 
would 
result 
in 
an 
overall 
sensitivity 
that 
would 
be 
less 
than 
the 
sum 
of 
the 
individual 
component 
sensitivities. 
However, 
the 
Group believes 
that the diversification benefit is not significant to this analysis. 
 
 
 
Sensitivity of fair value measurements to changes 
in unobservable input assumptions
1
31.12.20 
31.12.19 
USD million 
Favorable 
changes 
Unfavorable 
changes 
Favorable 
changes 
Unfavorable 
changes 
Traded loans, loans designated at fair value, loan commitments and guarantees 
 
29 
 
(28) 
 
46 
 
(21) 
Securities financing transactions 
 
40 
 
(52) 
 
11 
 
(11) 
Auction rate securities 
 
105 
 
(105) 
 
87 
 
(87) 
Asset-backed securities 
 
41 
 
(41) 
 
35 
 
(40) 
Equity instruments 
 
129 
 
(96) 
 
140 
 
(80) 
Interest rate derivative contracts, net 
 
11 
 
(16) 
 
8 
 
(17) 
Credit derivative contracts, net
2
 
10 
 
(14) 
 
31 
 
(35) 
Foreign exchange derivative contracts, net 
 
20 
 
(15) 
 
12 
 
(8) 
Equity / index derivative contracts, net 
 
318 
 
(294) 
 
183 
 
(197) 
Other 
 
91 
 
(107) 
 
47 
 
(51) 
Total 
 
794 
 
(768) 
 
600 
 
(547) 
1 Sensitivity 
of issued 
and over-the-counter 
debt instruments 
is reported 
with the 
equivalent derivative 
or securities 
financing instrument. 
2 Includes 
refinements applied 
in estimating 
valuation uncertainty, 
resulting from a move to use issuer-specific proxy credit default swap curves rather 
than generic curves. 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
366 
 
Note 21 
Fair value measurement (continued) 
h) Level 3 instruments: movements during the period 
The 
table below 
presents 
additional 
information about 
material 
movements in Level 3 assets and 
liabilities measured at fair 
value 
on a recurring basis, excluding any related hedging activity. 
Assets 
and 
liabilities 
transferred 
into 
or 
out 
of 
Level 3 
are 
presented as 
if those 
assets or 
liabilities had 
been transferred 
at 
the beginning of the year. 
 
Movements of Level 3 instruments
1
Total gains / losses 
included in 
comprehensive income 
USD billion 
Balance 
as of 
31 December 
2018 
Net gains / 
losses 
included in 
income
2
of which: 
related to 
Level 3 
instruments 
held at the 
end of the 
reporting 
period 
Purchases 
Sales 
Issuances 
Settlements 
Transfers 
into 
Level 3 
Transfers 
out of 
Level 3 
Foreign 
currency 
translation 
Balance 
as of 
31 December 
2019 
Financial assets at fair value held for 
trading 
 
2.0 
 
(0.1) 
 
0.0 
 
0.5 
 
(1.3) 
 
1.0 
 
0.0 
 
0.2 
 
(0.4) 
 
0.0 
 
1.8 
of which: 
Investment fund units 
 
0.4 
 
0.0 
 
0.0 
 
0.0 
 
(0.2) 
 
0.0 
 
0.0 
 
0.0 
 
(0.2) 
 
0.0 
 
0.0 
Corporate and municipal bonds 
 
0.7 
 
0.0 
 
0.0 
 
0.3 
 
(0.2) 
 
0.0 
 
0.0 
 
0.0 
 
(0.2) 
 
0.0 
 
0.5 
Loans 
 
0.7 
 
(0.1) 
 
0.0 
 
0.0 
 
(0.8) 
 
1.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.8 
Other 
 
0.2 
 
0.0 
 
(0.1) 
 
0.1 
 
0.0 
 
0.0 
 
0.0 
 
0.2 
 
0.0 
 
0.0 
 
0.4 
Derivative financial instruments – 
assets 
 
1.4 
 
(0.1) 
 
0.0 
 
0.0 
 
0.0 
 
0.4 
 
(0.2) 
 
0.1 
 
(0.3) 
 
0.0 
 
1.3 
of which: 
Interest rate contracts 
 
0.4 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
(0.2) 
 
0.0 
 
0.3 
Equity / index contracts 
 
0.5 
 
0.0 
 
0.1 
 
0.0 
 
0.0 
 
0.1 
 
0.0 
 
0.1 
 
(0.1) 
 
0.0 
 
0.6 
Credit derivative contracts 
 
0.5 
 
(0.1) 
 
(0.1) 
 
0.0 
 
0.0 
 
0.2 
 
(0.1) 
 
0.0 
 
(0.1) 
 
0.0 
 
0.4 
Other 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
Financial assets at fair value not held 
for trading 
 
4.4 
 
0.0 
 
0.0 
 
1.2 
 
(0.6) 
 
0.0 
 
0.0 
 
0.1 
 
(1.2) 
 
0.0 
 
4.0 
of which: 
Loans 
 
1.8 
 
0.0 
 
0.0 
 
0.7 
 
(0.1) 
 
0.0 
 
0.0 
 
0.1 
 
(1.2) 
 
0.0 
 
1.2 
Auction rate securities 
 
1.7 
 
0.0 
 
0.0 
 
0.0 
 
(0.1) 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
1.5 
Equity instruments 
 
0.5 
 
0.0 
 
0.0 
 
0.1 
 
(0.2) 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.5 
Other 
 
0.5 
 
0.0 
 
0.0 
 
0.5 
 
(0.2) 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.7 
Derivative financial instruments – 
liabilities 
 
2.2 
 
0.1 
 
0.1 
 
0.0 
 
0.0 
 
0.2 
 
(0.4) 
 
0.2 
 
(0.3) 
 
0.0 
 
2.0 
of which: 
Interest rate contracts 
 
0.2 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
(0.1) 
 
0.0 
 
0.1 
Equity / index contracts 
 
1.4 
 
0.3 
 
0.2 
 
0.0 
 
0.0 
 
0.0 
 
(0.3) 
 
0.1 
 
(0.2) 
 
0.0 
 
1.3 
Credit derivative contracts 
 
0.5 
 
(0.1) 
 
(0.1) 
 
0.0 
 
0.0 
 
0.2 
 
0.0 
 
0.0 
 
(0.1) 
 
0.0 
 
0.5 
Other 
 
0.1 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.1 
Debt issued designated at fair value 
 
11.0 
 
0.8 
 
0.7 
 
0.0 
 
0.0 
 
5.8 
 
(5.4) 
 
0.7 
 
(3.1) 
 
0.0 
 
9.9 
Other financial liabilities designated 
at fair value 
 
1.0 
 
0.2 
 
0.1 
 
0.0 
 
0.0 
 
0.3 
 
(0.7) 
 
0.0 
 
0.0 
 
0.0 
 
0.8 
1 Effective 1 January 2020, UBS has 
enhanced its disclosure of Level 3 
movements by excluding from the 
table the impacts of instruments purchased 
during the period and sold prior 
to the end of the period. 
Prior-
period comparatives have 
been restated accordingly. 
2 Net gains 
/ losses included 
in comprehensive income 
are composed of 
Net interest income, 
Other net income 
from financial instruments 
measured at fair 
value through profit or loss and Other income. 
3 Total Level 3 assets as of 31 December 2020 were USD 8.3 billion (31 
December 2019: USD 7.2 billion). Total Level 3 liabilities as of 31 December 
2020 were USD 
15.2 billion (31 December 2019: USD 12.8 billion).

 

 
Note 21 
Fair value measurement (continued) 
Total gains / losses 
included in 
comprehensive income 
Balance 
as of 
December 
2019
3
Net gains / 
losses 
included in 
income
2
of which: 
related to 
Level 3 
instruments 
held at the 
end of the 
reporting 
period 
Purchases 
Sales 
Issuances 
Settlements 
Transfers 
into 
Level 3 
Transfers 
out of 
Level 3 
Foreign 
currency 
translation 
Balance 
as of 
December 
2020
3
 
8 
 
(0.1) 
 
(0.1) 
 
8 
 
(1.4) 
 
0 
 
0 
 
3 
 
0 
 
0 
 
3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
5 
 
0 
 
0 
 
7 
 
(0.5) 
 
0 
 
0 
 
1 
 
0 
 
0 
 
8 
 
8 
 
0 
 
(0.1) 
 
0 
 
(0.7) 
 
0 
 
0 
 
1 
 
0 
 
0 
 
1 
 
4 
 
0 
 
0 
 
1 
 
(0.3) 
 
0 
 
0 
 
2 
 
0 
 
0 
 
4 
 
3 
 
3 
 
4 
 
0 
 
0 
 
7 
 
(0.5) 
 
1 
 
(0.2) 
 
1 
 
8 
 
3 
 
2 
 
2 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
5 
 
6 
 
1 
 
1 
 
0 
 
0 
 
6 
 
(0.3) 
 
0 
 
(0.1) 
 
0 
 
9 
 
4 
 
0 
 
0 
 
0 
 
0 
 
1 
 
(0.2) 
 
1 
 
0 
 
0 
 
3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1 
 
8 
 
(0.9) 
 
0 
 
0 
 
1 
 
0 
 
0 
 
9 
 
2 
 
0 
 
0 
 
3 
 
(0.7) 
 
0 
 
0 
 
0 
 
0 
 
0 
 
9 
 
5 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
5 
 
5 
 
0 
 
0 
 
1 
 
(0.1) 
 
0 
 
0 
 
0 
 
0 
 
0 
 
5 
 
7 
 
0 
 
0 
 
4 
 
(0.2) 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
3 
 
2 
 
0 
 
0 
 
2 
 
(0.9) 
 
4 
 
(0.6) 
 
1 
 
5 
 
1 
 
3 
 
3 
 
0 
 
0 
 
3 
 
(0.2) 
 
2 
 
(0.2) 
 
0 
 
5 
 
3 
 
0 
 
8 
 
0 
 
0 
 
8 
 
(0.6) 
 
1 
 
(0.2) 
 
0 
 
3 
 
5 
 
0 
 
0 
 
0 
 
0 
 
1 
 
(0.1) 
 
1 
 
(0.2) 
 
0 
 
5 
 
1 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1 
 
9 
 
2 
 
0 
 
0 
 
0 
 
6 
 
(5.7) 
 
5 
 
(1.7) 
 
2 
 
0 
 
8 
 
1 
 
1 
 
0 
 
0 
 
3 
 
(0.5) 
 
0 
 
0 
 
0 
 
7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
368 
 
Note 21 
Fair value measurement (continued) 
 
i) Maximum exposure to credit risk for financial instruments measured at fair value 
The 
tables 
below 
provide 
the 
Group’s 
maximum 
exposure 
to 
credit 
risk 
for 
financial 
instruments 
measured 
at 
fair 
value 
and 
the 
respective 
collateral 
and 
other 
credit 
enhancements 
mitigating credit risk for these classes of financial instruments. 
The 
maximum 
exposure 
to 
credit 
risk 
includes 
the 
carrying 
amounts 
of 
financial 
instruments 
recognized 
on 
the 
balance 
sheet 
subject 
to 
credit 
risk 
and 
the 
notional 
amounts 
for 
off-
balance 
sheet 
arrangements. 
Where 
information 
is 
available, 
collateral 
is presented 
at 
fair value. 
For other 
collateral, such 
as 
real 
estate, 
a 
reasonable 
alternative 
value 
is 
used. 
Credit 
enhancements, 
such 
as 
credit 
derivative 
contracts 
and 
guarantees, 
are 
included 
at 
their 
notional 
amounts. 
Both 
are 
capped 
at 
the 
maximum 
exposure 
to 
credit 
risk 
for 
which 
they 
serve as security. The 
“Risk management and control” 
section of 
this 
report 
describes 
management’s 
view 
of 
credit 
risk 
and 
the 
related 
exposures, 
which can 
differ in 
certain respects 
from 
the 
requirements of IFRS. 
 
 
Maximum exposure to credit risk 
31.12.20 
Maximum 
exposure to 
credit risk 
Collateral 
Credit enhancements 
Exposure to 
credit risk 
after collateral 
and credit 
enhancements 
USD billion 
Cash 
collateral 
received 
Collateral- 
ized by 
securities 
Secured by 
real estate 
Other 
collateral 
Netting 
Credit 
derivative 
contracts 
Guarantees 
Financial assets measured at 
fair value on the balance sheet 
Financial assets at fair value 
held for trading – debt instruments
1,2
 
24.6 
 
 
24.6 
Derivative financial instruments
3,4
 
159.6 
 
6.0 
 
138.4 
 
15.2 
Brokerage receivables 
 
24.7 
 
24.4 
 
0.3 
Financial assets at fair value not 
held for trading – debt instruments
5
 
58.2 
 
13.2 
 
45.0 
Total financial assets measured at fair value 
 
267.1 
 
0.0 
 
43.6 
 
0.0 
 
0.0 
 
138.4 
 
0.0 
 
0.0 
 
85.1 
Guarantees
6
 
0.5 
 
 
 
 
0.1 
 
 
0.3 
 
0.0 
 
31.12.19 
Maximum 
exposure to 
credit risk 
Collateral 
Credit enhancements 
Exposure to 
credit risk 
after collateral 
and credit 
enhancements 
USD billion 
Cash 
collateral 
received 
Collateral- 
ized by 
securities 
Secured by 
real estate 
Other 
collateral 
Netting 
Credit 
derivative 
contracts 
Guarantees 
Financial assets measured at 
fair value on the balance sheet 
Financial assets at fair value 
held for trading – debt instruments
1,2
 
21.9 
 
21.9 
Derivative financial instruments
3,4
 
121.8 
 
3.3 
 
107.4 
 
11.1 
Brokerage receivables 
 
18.0 
 
17.8 
 
0.2 
Financial assets at fair value not 
held for trading – debt instruments
5
 
55.0 
 
0.1 
 
16.3 
 
0.1 
 
38.6 
Total financial assets measured at fair value 
 
216.7 
 
0.1 
 
37.4 
 
0.0 
 
0.1 
 
107.4 
 
0.0 
 
0.0 
 
71.7 
Guarantees
6
 
1.0 
 
0.3 
 
0.7 
1 These positions 
are generally managed 
under the market 
risk framework. For 
the purpose of 
this disclosure, collateral 
and credit enhancements 
were not considered. 
2 Does not include 
investment fund units. 
3 Includes USD 0 million (31 December 
2019: USD 0 million) fair 
values of loan commitments 
and forward starting reverse 
repurchase agreements classified as 
derivatives. The 
full contractual committed amount 
of 
forward starting reverse repurchase 
agreements (generally highly 
collateralized) of USD 21.9 
billion (31 December 2019: 
USD 20.3 billion) and derivative 
loan commitments (generally unsecured) 
of USD 9.4 billion, 
of which USD 0.8 billion has been sub-participated 
(31 December 2019: USD 6.3 billion, of which USD 0.8 billion had been sub-participated) is presented 
in Note 10 under notional amounts. 
4 The amount shown 
in the “Netting” column represents the netting 
potential not recognized on the balance 
sheet. Refer to Note 22 for more information. 
5 Financial assets at fair value not 
held for trading collateralized by 
securities 
consisted of structured loans and reverse repurchase and securities borrowing agreements. 
6 The amount shown in the “Guarantees” column largely relates 
to sub-participations. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
369 
 
Note 21 
Fair value measurement (continued) 
 
j) Financial instruments not measured at fair value 
The table below provides the estimated fair values of financial instruments not measured at fair value. 
 
Financial instruments not measured at fair value 
31.12.20 
31.12.19 
Carrying 
amount 
Fair value 
Carrying 
amount 
Fair value 
USD billion 
Total 
Carrying 
amount 
approximates 
fair value
1
Level 1 
Level 2 
Level 3 
Total 
Total 
Carrying 
amount 
approximates 
fair value
1
Level 1 
Level 2 
Level 3 
Total 
Assets
2
Cash and balances at central banks 
 
158.2 
 
158.1 
 
0.1 
 
0.0 
 
0.0 
 
158.2 
 
107.1 
 
107.0 
 
0.1 
 
0.0 
 
0.0 
 
107.1 
Loans and advances to banks 
 
15.4 
 
14.7 
 
0.0 
 
0.6 
 
0.1 
 
15.4 
 
12.4 
 
11.8 
 
0.0 
 
0.5 
 
0.2 
 
12.4 
Receivables from securities financing 
transactions 
 
74.2 
 
64.9 
 
0.0 
 
7.6 
 
1.7 
 
74.2 
 
84.2 
 
74.0 
 
0.0 
 
8.6 
 
1.6 
 
84.2 
Cash collateral receivables on derivative 
instruments 
 
32.7 
 
32.7 
 
0.0 
 
0.0 
 
0.0 
 
32.7 
 
23.3 
 
23.3 
 
0.0 
 
0.0 
 
0.0 
 
23.3 
Loans and advances to customers 
 
379.5 
 
172.0 
 
0.0 
 
34.2 
 
174.6 
 
380.8 
 
326.8 
 
151.6 
 
0.0 
 
25.4 
 
152.2 
 
329.1 
Other financial assets measured at amortized 
cost 
 
27.2 
 
5.3 
 
9.4 
 
10.9 
 
2.3 
 
28.0 
 
23.0 
 
5.7 
 
8.4 
 
6.4 
 
2.8 
 
23.2 
Liabilities 
Amounts due to banks 
 
11.0 
 
8.5 
 
0.0 
 
2.6 
 
0.0 
 
11.0 
 
6.6 
 
5.6 
 
0.0 
 
0.9 
 
0.0 
 
6.6 
Payables from securities financing 
transactions 
 
6.3 
 
6.0 
 
0.0 
 
0.3 
 
0.0 
 
6.3 
 
7.8 
 
7.5 
 
0.0 
 
0.3 
 
0.0 
 
7.8 
Cash collateral payables on derivative 
instruments 
 
37.3 
 
37.3 
 
0.0 
 
0.0 
 
0.0 
 
37.3 
 
31.4 
 
31.4 
 
0.0 
 
0.0 
 
0.0 
 
31.4 
Customer deposits 
 
524.6 
 
519.4 
 
0.0 
 
5.3 
 
0.0 
 
524.7 
 
448.3 
 
439.1 
 
0.0 
 
9.3 
 
0.0 
 
448.4 
Debt issued measured at amortized cost 
 
139.2 
 
16.4 
 
0.0 
 
125.5 
 
0.0 
 
141.9 
 
110.5 
 
8.7 
 
0.0 
 
104.9 
 
0.0 
 
113.6 
Other financial liabilities measured at 
amortized cost
3
 
5.8 
 
5.7 
 
0.0 
 
0.0 
 
0.1 
 
5.8 
 
5.8 
 
5.7 
 
0.0 
 
0.0 
 
0.0 
 
5.7 
1 Includes certain financial instruments where the carrying amount is a reasonable 
approximation of the fair value due to the instruments’ 
short-term nature (instruments that are receivable or payable on 
demand, or 
with a remaining maturity (excluding the effects of callable features) 
of three months or less). 
2 As of 31 December 2020, USD 0 billion of Loans 
and advances to banks, USD 1 billion 
of Receivables from securities 
financing transactions, USD 163 
billion of Loans and advances 
to customers and USD 20 billion 
of Other financial assets measured 
at amortized cost were expected 
to be recovered or settled 
after 12 months. As 
of 
31 December 2019, 
USD 0 billion 
of Loans and 
advances to 
banks, USD 1 
billion of 
Receivables 
from securities 
financing transactions, 
USD 140 billion 
of Loans and 
advances to 
customers and 
USD 16 
billion of 
Other financial assets measured at amortized cost were expected to be recovered or settled after 12 months. 
3 Excludes lease liabilities. 
 
 
The fair 
values included in 
the table 
above have been 
calculated 
for 
disclosure 
purposes 
only. 
The 
valuation 
techniques 
and 
assumptions 
described 
below 
relate 
only 
to 
the 
fair 
value 
of 
UBS’s 
financial 
instruments 
not 
measured 
at 
fair 
value. 
Other 
institutions may use different 
methods and assumptions for their 
fair 
value 
estimations, 
and 
therefore 
such 
fair 
value 
disclosures 
cannot necessarily be 
compared from one 
financial institution to 
another. 
The 
following 
principles 
were 
applied 
when 
determining 
fair 
value 
estimates 
for 
financial 
instruments 
not 
measured at fair value: 
–
 
For 
financial 
instruments 
with 
remaining 
maturities 
greater 
than 
three 
months, 
the 
fair 
value 
was 
determined 
from 
quoted market prices, if available. 
–
 
Where 
quoted 
market 
prices 
were 
not 
available, 
the 
fair 
values 
were estimated 
by discounting 
contractual cash 
flows 
using current market 
interest rates or appropriate 
yield curves 
for 
instruments 
with 
similar 
credit 
risk 
and 
maturity. 
These 
estimates 
generally 
include 
adjustments 
for 
counterparty 
credit risk or UBS’s own credit. 
–
 
For short-term financial instruments with remaining maturities 
of three 
months or less, 
the carrying amount, 
which is net 
of 
credit 
loss 
allowances, 
is 
generally 
considered 
a 
reasonable 
estimate of fair value. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
370 
 
Note 22 
Offsetting financial assets and financial liabilities 
UBS 
enters 
into 
netting 
agreements 
with 
counterparties 
to 
manage the credit risks 
associated primarily with repurchase 
and 
reverse 
repurchase 
transactions, 
securities 
borrowing 
and 
lending, 
over-the-counter 
derivatives 
and 
exchange-traded 
derivatives. These 
netting agreements 
and similar 
arrangements 
generally 
enable 
the 
counterparties 
to 
set 
off 
liabilities 
against 
available assets received 
in the ordinary 
course of business 
and / 
or 
in 
the 
event 
that 
the 
counterparties 
to 
the 
transaction 
are 
unable to 
fulfill their 
contractual obligations. 
The right 
of setoff 
is a legal 
right to settle 
or otherwise eliminate 
all or a 
portion of 
an amount due by applying an amount receivable from the same 
counterparty against it, thus reducing credit exposure.
 
The 
table 
below
 
provides 
a 
summary 
of 
financial 
assets 
subject 
to 
offsetting, 
enforceable 
master 
netting 
arrangements 
and similar agreements, 
as well as 
financial collateral received to 
mitigate 
credit 
exposures 
for 
these 
financial 
assets. 
The 
gross 
financial 
assets 
of 
the 
Group 
that 
are 
subject 
to 
offsetting, 
enforceable 
netting 
arrangements 
and 
similar 
agreements 
are 
reconciled 
to 
the 
net 
amounts 
presented 
within 
the 
associated 
balance 
sheet line, 
after giving 
effect to 
financial liabilities 
with 
the 
same 
counterparties 
that 
have 
been 
offset 
on 
the 
balance 
sheet 
and 
other 
financial 
assets 
not 
subject 
to 
an 
enforceable 
netting arrangement 
or similar 
agreement, 
as well 
as other 
out-
of
-
scope 
items
.
 
Furthermore
, 
related 
amounts 
for 
financial 
liabilities 
and 
collateral 
received 
that 
are 
not 
offset 
on 
the 
balance sheet 
are shown 
so as 
to arrive 
at financial 
assets after 
consideration of netting potential. 
The 
Group 
engages 
in 
a 
variety 
of 
counterparty 
credit 
risk 
mitigation 
strategies 
in 
addition 
to 
netting 
and 
collateral 
arrangements. 
Therefore, 
the 
net 
amounts 
presented 
in 
the 
tables on 
this and on 
the next page 
do not purport 
to represent 
their actual credit risk exposure. 
 
 
Financial assets subject to offsetting, enforceable 
master netting arrangements and similar agreements 
Assets subject to netting arrangements 
Netting recognized on the balance sheet 
Netting potential not recognized on 
the balance sheet
3
Assets not 
subject to netting 
arrangements
4
Total assets 
As of 31.12.20, USD billion 
Gross assets 
before netting 
Netting with 
gross liabilities
2
Net assets 
recognized 
on the 
balance 
sheet 
Financial 
liabilities 
Collateral 
received 
Assets after 
consideration 
of 
netting 
potential 
Assets 
recognized 
on the 
balance 
sheet 
Total assets 
after 
consideration 
of netting 
potential 
Total assets 
recognized 
on the 
balance 
sheet 
Receivables from securities 
financing transactions 
 
70.3 
 
(13.4) 
 
57.0 
 
(1.7) 
 
(55.3) 
 
0.0 
 
17.3 
 
17.3 
 
74.2 
Derivative financial instruments 
 
156.9 
 
(5.0) 
 
151.9 
 
(117.2) 
 
(27.2) 
 
7.5 
 
7.7 
 
15.2 
 
159.6 
Cash collateral receivables on 
derivative instruments
1
 
31.9 
 
0.0 
 
31.9 
 
(19.6) 
 
(1.5) 
 
10.8 
 
0.8 
 
11.6 
 
32.7 
Financial assets at fair value 
not held for trading 
 
85.6 
 
(79.1) 
 
6.5 
 
(0.8) 
 
(5.8) 
 
0.0 
 
73.9 
 
73.9 
 
80.4 
of which: reverse 
repurchase agreements 
 
85.6 
 
(79.1) 
 
6.5 
 
(0.8) 
 
(5.8) 
 
0.0 
 
0.2 
 
0.2 
 
6.7 
Total assets 
 
344.8 
 
(97.5) 
 
247.3 
 
(139.3) 
 
(89.8) 
 
18.3 
 
99.7 
 
117.9 
 
346.9 
As of 31.12.19, USD billion 
Receivables from securities 
financing transactions 
 
83.2 
 
(14.0) 
 
69.2 
 
(1.2) 
 
(68.0) 
 
0.0 
 
15.0 
 
15.0 
 
84.2 
Derivative financial instruments 
 
120.2 
 
(3.4) 
 
116.8 
 
(89.3) 
 
(21.4) 
 
6.1 
 
5.0 
 
11.1 
 
121.8 
Cash collateral receivables on 
derivative instruments
1
 
26.4 
 
(4.0) 
 
22.4 
 
(13.3) 
 
(1.1) 
 
8.0 
 
0.9 
 
8.9 
 
23.3 
Financial assets at fair value 
not held for trading 
 
83.1 
 
(77.5) 
 
5.6 
 
0.0 
 
(5.6) 
 
0.0 
 
78.3 
 
78.3 
 
83.9 
of which: reverse 
repurchase agreements 
 
83.0 
 
(77.5) 
 
5.4 
 
0.0 
 
(5.4) 
 
0.0 
 
0.9 
 
0.9 
 
6.3 
Total assets 
 
313.0 
 
(98.9) 
 
214.0 
 
(103.8) 
 
(96.1) 
 
14.1 
 
99.3 
 
113.4 
 
313.3 
1 The net 
amount of Cash collateral 
receivables on derivative 
instruments recognized on 
the balance sheet includes 
certain OTC 
derivatives that are 
net settled on 
a daily basis either 
legally or in substance 
under 
IAS 32 principles and exchange-traded 
derivatives that are economically 
settled on a daily basis. 
2 The logic of 
the table results in amounts 
presented in the “Netting 
with gross liabilities” column corresponding 
directly to the amounts 
presented in the “Netting 
with gross assets” column 
in the liabilities 
table presented on the 
following page. Netting 
in this column 
for reverse repurchase agreements 
presented within the 
lines “Receivables from securities 
financing transactions” and “Financial 
assets at fair value 
not held for trading” taken 
together corresponds to the 
amounts presented for repurchase agreements 
in the “Payables 
from securities financing 
transactions” and “Other 
financial liabilities designated 
at fair value” 
lines in the 
liabilities table presented 
on the following 
page. 
3 For the 
purpose of this 
disclosure, the 
amounts of 
financial instruments 
and cash 
collateral presented 
have been 
capped so 
as not 
to exceed 
the net 
amount of 
financial assets 
presented on 
the balance 
sheet; i.e., 
over-collateralization, 
where it 
exists, 
is not 
reflected in the table. 
4 Includes assets not subject to enforceable netting arrangements and other out-of-scope items. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
371 
 
Note 22 
Offsetting financial assets and financial liabilities (continued) 
The 
table 
below 
provides 
a 
summary 
of 
financial 
liabilities 
subject 
to 
offsetting, 
enforceable 
master 
netting 
arrangements 
and similar agreements, 
as well as 
financial collateral pledged 
to 
mitigate credit 
exposures for 
these financial 
liabilities. The 
gross 
financial 
liabilities 
of 
UBS 
that 
are 
subject 
to 
offsetting, 
enforceable 
netting 
arrangements 
and 
similar 
agreements 
are 
reconciled 
to 
the 
net 
amounts 
presented 
within 
the 
associated 
balance sheet line, 
after giving effect 
to financial assets 
with the 
same counterparties 
that have been 
offset on 
the balance 
sheet 
and 
other 
financial 
liabilities 
not 
subject 
to 
an 
enforceable 
netting arrangement 
or similar 
agreement. Furthermore, 
related 
amounts for 
financial assets 
and collateral 
pledged that 
are not 
offset on the balance sheet 
are shown so as to 
arrive at financial 
liabilities after consideration of netting potential. 
 
 
Financial liabilities subject to offsetting, enforceable 
master netting arrangements and similar 
agreements 
Liabilities subject to netting arrangements 
Netting recognized on the balance sheet 
Netting potential not recognized 
on the balance sheet
3
Liabilities not 
subject 
to netting 
arrangements
4
Total liabilities 
As of 31.12.20, USD billion 
Gross 
liabilities 
before 
netting 
Netting with 
gross assets
2
Net 
liabilities 
recognized 
on the 
balance 
sheet 
Financial 
assets 
Collateral 
pledged 
Liabilities 
after 
consideration of 
netting 
potential 
Liabilities 
recognized 
on the 
balance 
sheet 
Total 
liabilities 
after 
consideration 
of netting 
potential 
Total 
liabilities 
recognized 
on the 
balance 
sheet 
Payables from securities 
financing transactions 
 
18.2 
 
(13.3) 
 
4.9 
 
(1.6) 
 
(3.3) 
 
0.0 
 
1.4 
 
1.4 
 
6.3 
Derivative financial instruments 
 
157.1 
 
(5.0) 
 
152.1 
 
(117.2) 
 
(23.9) 
 
10.9 
 
9.0 
 
19.9 
 
161.1 
Cash collateral payables on 
derivative instruments
1
 
35.6 
 
0.0 
 
35.6 
 
(19.6) 
 
(2.1) 
 
13.9 
 
1.7 
 
15.7 
 
37.3 
Other financial liabilities 
designated at fair value 
 
87.0 
 
(79.2) 
 
7.8 
 
(0.8) 
 
(6.3) 
 
0.7 
 
22.6 
 
23.3 
 
30.4 
of which: repurchase agreements 
 
86.2 
 
(79.2) 
 
7.0 
 
(0.8) 
 
(6.3) 
 
0.0 
 
0.3 
 
0.3 
 
7.3 
Total liabilities 
 
297.8 
 
(97.5) 
 
200.3 
 
(139.2) 
 
(35.5) 
 
25.6 
 
34.8 
 
60.4 
 
235.1 
As of 31.12.19, USD billion 
Payables from securities 
financing transactions 
 
19.8 
 
(14.0) 
 
5.8 
 
(0.8) 
 
(5.0) 
 
0.0 
 
2.0 
 
2.0 
 
7.8 
Derivative financial instruments 
 
118.1 
 
(3.4) 
 
114.8 
 
(89.3) 
 
(16.8) 
 
8.6 
 
6.1 
 
14.8 
 
120.9 
Cash collateral payables on 
derivative instruments
1
 
34.2 
 
(4.0) 
 
30.1 
 
(16.5) 
 
(1.7) 
 
12.0 
 
1.3 
 
13.3 
 
31.4 
Other financial liabilities 
designated at fair value 
 
83.5 
 
(77.6) 
 
5.9 
 
(0.4) 
 
(5.6) 
 
0.0 
 
30.0 
 
30.0 
 
35.9 
of which: repurchase agreements 
 
83.1 
 
(77.6) 
 
5.5 
 
(0.4) 
 
(5.2) 
 
0.0 
 
0.2 
 
0.2 
 
5.7 
Total liabilities 
 
255.6 
 
(98.9) 
 
156.6 
 
(107.0) 
 
(29.0) 
 
20.6 
 
39.4 
 
60.0 
 
196.0 
1 The 
net amount of 
Cash collateral 
payables on 
derivative instruments 
recognized on 
the balance sheet 
includes certain OTC 
derivatives that 
are net settled 
on a daily 
basis either legally 
or in substance 
under 
IAS 32 principles and exchange-traded 
derivatives that are economically 
settled on a daily basis. 
2 The logic of the 
table results in amounts presented 
in the “Netting with 
gross assets” column corresponding 
to 
the amounts presented in the “Netting with 
gross liabilities” column in the assets table 
presented on the previous page. 
Netting in this column for repurchase 
agreements presented within the lines “Payables 
from 
securities financing transactions” and “Other financial liabilities designated at fair 
value” taken together corresponds to the amounts 
presented for reverse repurchase agreements in the “Receivables from 
securities 
financing transactions” and “Financial 
assets at fair value not 
held for trading” lines in 
the assets table presented on the 
previous page. 
3 For the purpose 
of this disclosure, the 
amounts of financial instruments 
and cash collateral 
presented have been 
capped so as 
not to exceed 
the net amount 
of financial liabilities 
presented on the 
balance sheet; 
i.e., over-collateralization, 
where it exists, 
is not reflected 
in the table. 
4 Includes liabilities not subject to enforceable netting arrangements and other out-of-scope items. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
372 
 
Note 23 
Restricted and transferred financial assets 
This 
Note 
provides 
information 
about 
restricted 
financial 
assets 
(Note 
23a), 
transfers 
of 
financial 
assets 
(Note 
23b 
and 
23c) 
and 
financial assets that are received as collateral with the right to resell or repledge these assets (Note 23d). 
a) Restricted financial assets 
Restricted 
financial assets 
consist of 
assets 
pledged as 
collateral 
against an existing liability or contingent liability and other assets 
that are 
otherwise explicitly 
restricted 
such that 
they cannot 
be 
used to secure funding. 
Financial 
assets 
are 
mainly 
pledged 
as 
collateral 
in 
securities 
lending 
transactions, 
in 
repurchase 
transactions, 
against 
loans 
from 
Swiss 
mortgage 
institutions 
and 
in 
connection 
with 
the 
issuance 
of 
covered 
bonds. 
The 
Group 
generally 
enters 
into 
repurchase 
and securities 
lending 
arrangements 
under 
standard 
market 
agreements. 
For 
securities lending, 
the cash 
received as 
collateral may be more or less than the fair value of the securities 
loaned, 
depending 
on 
the 
nature 
of 
the 
transaction. 
For 
repurchase 
agreements, 
the 
fair 
value 
of 
the 
collateral 
sold 
under 
an agreement 
to 
repurchase 
is generally 
in excess 
of 
the 
cash 
borrowed. Pledged 
mortgage 
loans 
serve 
as 
collateral 
for 
existing liabilities against 
Swiss central mortgage 
institutions and 
for existing 
covered bond 
issuances of 
USD 12,456 million 
as of 
31 December 2020 (31 December 2019: USD 11,206 million). 
Other 
restricted 
financial 
assets 
include 
assets 
protected 
under 
client 
asset segregation 
rules, assets 
held by 
the Group’s 
insurance entities 
to back 
related liabilities 
to the 
policy holders, 
assets 
held 
in 
certain 
jurisdictions 
to 
comply 
with 
explicit 
minimum local 
asset maintenance 
requirements and 
assets held 
in 
consolidated 
bankruptcy 
remote 
entities, 
such 
as 
certain 
investment 
funds 
and 
other 
structured 
entities. 
The 
carrying 
amount 
of 
the 
liabilities 
associated 
with 
these 
other 
restricted 
financial assets 
is generally 
equal to 
the carrying 
amount of 
the 
assets, 
with 
the 
exception 
of 
assets 
held 
to 
comply 
with 
local 
asset 
maintenance 
requirements
,
 
for 
which 
the 
associated 
liabilities are greater. 
 
 
Restricted financial assets 
USD million 
31.12.20 
31.12.19 
Financial assets pledged as collateral 
Financial assets at fair value held for trading 
 
64,367 
 
56,415 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
47,098 
 
41,285 
Loans and advances to customers 
 
20,361 
 
18,399 
of which: mortgage loans
1
 
18,191 
 
18,399 
Financial assets at fair value not held for trading 
 
2,140 
 
188 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
2,140 
 
188 
Debt securities classified as Other financial assets measured 
at amortized cost 
 
2,506 
 
1,212 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
2,506 
 
1,212 
Financial assets measured at fair value through other comprehensive 
income 
 
149 
 
0 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
149 
 
0 
Total financial assets pledged as collateral
2
 
89,523 
 
76,215 
Other restricted financial assets 
Loans and advances to banks 
 
3,730 
 
3,131 
Financial assets at fair value held for trading 
 
741 
 
242 
Cash collateral receivables on derivative instruments 
 
3,765 
 
2,986 
Loans and advances to customers 
 
756 
 
620 
Financial assets at fair value not held for trading 
 
23,243 
 
29,676 
Financial assets measured at fair value through other comprehensive 
income 
 
0 
 
176 
Other 
 
110 
 
379 
Total other restricted financial assets 
 
32,345 
 
37,210 
Total financial assets pledged and other restricted financial assets 
 
121,868 
 
113,425 
1 All related 
to mortgage loans 
that serve as 
collateral for existing 
liabilities toward 
Swiss central 
mortgage institutions 
and for existing 
covered bond issuances. 
Of these pledged 
mortgage loans, 
approximately 
USD 2.7 billion 
for 
31 December 
2020 
(31 December 
2019: 
approximately 
USD 6.3 
billion) could 
be withdrawn 
or 
used for 
future liabilities 
or covered 
bond issuances 
without 
breaching existing 
collateral 
requirements. 
2 Does not 
include assets placed 
with central banks 
related to undrawn 
credit lines and 
for payment, clearing 
and settlement purposes 
(31 December 2020: 
USD 1.3 billion; 
31 December 2019: 
USD 0.6 billion). 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
373 
 
Note 23 
Restricted and transferred financial assets (continued)
In addition 
to restrictions 
on financial 
assets, 
UBS Group 
AG 
and 
its 
subsidiaries 
are, 
in 
certain 
cases, 
subject 
to 
regulatory 
requirements 
that 
affect 
the 
transfer 
of 
dividends 
and 
capital 
within 
the Group, 
as 
well as 
intercompany lending. 
Supervisory 
authorities 
also 
may 
require 
entities 
to 
measure 
capital 
and 
leverage 
ratios on 
a 
stressed basis, 
such 
as 
the 
Federal 
Reserve 
Board’s 
Comprehensive 
Capital 
Analysis 
and 
Review 
(CCAR) 
process, which may limit the relevant subsidiaries’ ability to make 
distributions of capital based on the results of those tests. 
Supervisory 
authorities 
generally 
have 
discretion 
to 
impose 
higher 
requirements 
or 
to 
otherwise 
limit 
the 
activities 
of 
subsidiaries. 
Non-regulated 
subsidiaries 
are 
generally 
not 
subject 
to 
such 
requirements 
and transfer 
restrictions. However, 
restrictions 
can 
also 
be 
the 
result 
of 
different 
legal, 
regulatory, 
contractual, 
entity- 
or country-specific arrangements and / or requirements. 
›
 
Refer to the “Financial and regulatory key figures 
for our 
significant regulated subsidiaries and sub-groups” section 
of this 
report for financial information about significant 
regulated 
subsidiaries of the Group 
b) Transferred financial assets that are not derecognized in their entirety 
The table below presents 
information for financial 
assets that have been 
transferred but are 
subject to continued recognition 
in full, 
as well as recognized liabilities associated with those transferred assets. 
 
Transferred financial assets subject to continued recognition in full 
USD million 
31.12.20 
31.12.19 
Carrying amount 
of transferred 
assets 
Carrying amount of 
associated liabilities 
recognized 
on balance sheet 
Carrying amount 
of transferred 
assets 
Carrying amount of 
associated liabilities 
recognized 
on balance sheet 
Financial assets at fair value held for trading that may be sold or repledged 
by counterparties 
 
47,098 
 
18,874 
 
41,285 
 
16,671 
relating to securities lending and repurchase agreements in 
exchange for cash received 
 
19,177 
 
18,874 
 
16,945 
 
16,671 
relating to securities lending agreements in exchange for securities 
received 
 
27,595 
 
0 
 
24,082 
 
0 
relating to other financial asset transfers 
 
326 
 
0 
 
258 
 
0 
Financial assets at fair value not held for trading that may be sold or repledged 
by 
counterparties 
 
2,140 
 
1,378 
 
188 
 
187 
Debt securities classified as Other financial assets measured 
at amortized cost that may be 
sold or repledged by counterparties
1
 
2,506 
 
1,963 
 
1,212 
 
690 
Financial assets measured at fair value through other comprehensive 
income that may be sold 
or repledged by counterparties 
 
149 
 
148 
 
0 
 
0 
Total financial assets transferred
1
 
51,893 
 
22,363 
 
42,685 
 
17,548 
1 Comparative information has been amended to include Debt securities classified as Other financial assets measured at amortized cost that may 
be sold or repledged by counterparties. 
 
 
Transactions 
in 
which 
financial 
assets 
are 
transferred, 
but 
continue 
to 
be 
recognized 
in 
their 
entirety 
on 
UBS’s 
balance 
sheet 
include 
securities 
lending 
and 
repurchase 
agreements, 
as 
well as 
other financial 
asset transfers. 
Repurchase and 
securities 
lending 
arrangements 
are, 
for 
the 
most 
part, 
conducted 
under 
standard 
market 
agreements 
and 
are 
und
ertaken 
with 
counterparties 
subject 
to 
UBS’s 
normal 
credit 
risk 
control 
processes. 
›
 
Refer to Note 1a item 2e for more information 
about repurchase 
and securities lending agreements 
 
As 
of 
31 
December 
2020
, 
approximately 
40%
 
of 
the 
transferred 
financial 
assets 
were 
assets 
held 
for 
trading 
transferred 
in 
exchange 
for 
cash, 
in 
which 
case 
the 
associated 
recognized 
liability 
represents 
the 
amount 
to 
be 
repaid 
to 
counterparties. 
For 
securities 
lending 
and
 
repurchase
 
agreements, 
a 
haircut 
between 
0% 
and 
15%
 
is 
generally 
applied 
to 
the 
transferred 
assets, 
which
 
results 
in 
associated 
liabilities 
having 
a 
carrying 
amount 
below 
the 
carrying 
amount 
of 
the 
transferred 
assets. 
The 
counterparties 
to 
the 
associated 
liabilities presented in the table above have full recourse to UBS. 
In 
securities 
lending 
arrangements 
entered 
into 
in 
exchange 
for 
the 
receipt 
of 
other 
securities 
as 
collateral, 
neither 
the 
securities 
received 
nor 
the 
obligation 
to 
return 
them 
are 
recognized 
on UBS’s 
balance sheet, 
as the 
risks and 
rewards of 
ownership 
are 
not 
transferred 
to 
UBS. 
In 
cases 
where 
such 
financial 
assets 
received 
are 
subsequently 
sold 
or 
repledged 
in 
another 
transaction, 
this 
is 
not 
considered 
to 
be 
a 
transfer 
of 
financial assets. 
Other 
financial 
asset 
transfers 
primarily 
include 
securities 
transferred to 
collateralize derivative 
transactions, for 
which the 
carrying 
amount 
of 
associated 
liabilities 
is 
not 
provided 
in 
the 
table above, 
because those 
replacement values are 
managed on 
a 
portfolio 
basis 
across 
counterparties 
and 
product 
types, 
and 
therefore 
there 
is 
no 
direct 
relationship 
between 
the 
specific 
collateral pledged and the associated liability. 
Transferred 
financial 
assets 
that 
are 
not 
subject 
to 
derecognition 
in 
full 
but 
remain 
on 
the 
balance 
sheet 
to 
the 
extent of 
the Group’s 
continuing involvement 
were not 
material 
as of 31 December 2020 and as of 31 December 2019. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
374 
 
Note 23 
Restricted and transferred financial assets (continued) 
 
c) Transferred financial assets that are derecognized in their entirety with continuing involvement
Continuing 
involvement 
in a 
transferred 
and fully 
derecognized 
financial 
asset 
may 
result 
from 
contractual 
provisions 
in 
the 
transfer 
agreement 
or 
from 
a 
separate 
agreement 
with 
the 
counterparty or a third 
party entered into in connection 
with the 
transfer. 
 
The 
fair 
value 
and 
carrying 
amount 
of 
UBS’s 
continuing 
involvement from transferred positions 
as of 
31 December 
2020 
and 
31 
December 
2019 
was 
not 
material. 
Life-to-date 
losses 
reported 
in 
prior 
periods 
primarily 
relate 
to 
legacy 
positions 
in 
securitization vehicles which have 
been fully 
marked down, 
with 
no remaining 
exposure to 
loss. 
d) Off-balance sheet assets received 
The table below presents assets received from third parties that can 
be sold or repledged and that are not recognized on the 
balance 
sheet, but that are held as collateral, including amounts that have been sold or repledged. 
 
Off-balance sheet assets received 
USD million 
31.12.20 
31.12.19 
Fair value of assets received that can be sold or repledged 
 
500,689 
 
475,726 
received as collateral under reverse repurchase, securities borrowing 
and lending arrangements, derivative and other transactions
1
 
487,904 
 
466,045 
received in unsecured borrowings 
 
12,785 
 
9,681 
Thereof sold or repledged
2
 
367,258 
 
350,477 
in connection with financing activities 
 
315,603 
 
305,362 
to satisfy commitments under short sale transactions 
 
33,595 
 
30,591 
in connection with derivative and other transactions
1
 
18,059 
 
14,524 
1 Includes securities received as initial margin from its clients that UBS is required to remit to central counterparties, 
brokers and deposit banks through its exchange-traded derivative 
clearing and execution services. 
2 Does not include off-balance 
sheet securities (31 December 2020: 
USD 18.9 billion; 31 December 
2019: USD 19.6 billion) placed 
with central banks related to 
undrawn credit lines and for 
payment, clearing and 
settlement purposes for which there are no associated liabilities or contingent liabilities. 
 
 

 
375 
 
Note 24 
Maturity analysis of financial liabilities 
The 
contractual 
maturities 
for 
non-derivative 
and 
non-trading 
financial 
liabilities 
as 
of 
31 December 
2020 
are 
based 
on 
the 
earliest 
date 
on 
which 
UBS 
could 
be 
contractually 
required 
to 
pay. 
The 
total 
amounts 
that 
contractually 
mature 
in 
each 
time 
band are also shown for 31 December 2019. 
Derivative positions 
and 
trading 
liabilities, 
predominantly 
made 
up 
of 
short 
sale 
transactions, are assigned to the column 
Due within 1 month,
 
as 
this 
provides 
a 
conservative 
reflection 
of 
the 
nature 
of 
these 
trading 
activities. 
The 
contractual 
maturities 
may 
extend 
over 
significantly longer periods. 
 
Maturity analysis of financial liabilities 
31.12.20 
USD billion 
Due within 
1 month 
Due between 
1 and 3 months 
Due between 
3 and 12 months 
Due between 
1 and 5 years 
Due after 
5 years 
Total 
Financial liabilities recognized on balance sheet
1
Amounts due to banks 
 
6.1 
 
2.4 
 
2.1 
 
0.5 
 
0.0 
 
11.1 
Payables from securities financing transactions 
 
5.6 
 
0.4 
 
0.3 
 
0.0 
 
0.0 
 
6.3 
Cash collateral payables on derivative instruments 
 
37.3 
 
37.3 
Customer deposits 
 
512.8 
 
6.6 
 
3.5 
 
1.8 
 
0.2 
 
524.9 
Debt issued measured at amortized cost
2
 
9.0 
 
8.3 
 
41.9 
 
53.7 
 
35.6 
 
148.5 
Other financial liabilities measured at amortized cost 
 
4.5 
 
0.1 
 
0.5 
 
2.0 
 
1.8 
 
8.9 
 
of which: lease liabilities 
 
0.1 
 
0.1 
 
0.5 
 
2.0 
 
1.8 
 
4.5 
Total financial liabilities measured at amortized cost 
 
575.3 
 
17.9 
 
48.2 
 
58.0 
 
37.7 
 
737.1 
Financial liabilities at fair value held for trading
3,4
 
33.6 
 
33.6 
Derivative financial instruments
3,5
 
161.1 
 
161.1 
Brokerage payables designated at fair value 
 
38.7 
 
38.7 
Debt issued designated at fair value
6
 
21.9 
 
16.8 
 
7.1 
 
9.2 
 
9.5 
 
64.5 
Other financial liabilities designated at fair value 
 
27.9 
 
0.6 
 
0.6 
 
0.7 
 
1.1 
 
30.9 
Total financial liabilities measured at fair value through profit or loss 
 
283.2 
 
17.4 
 
7.7 
 
9.9 
 
10.6 
 
328.8 
Total 
 
858.5 
 
35.3 
 
56.0 
 
67.9 
 
48.3 
 
1,065.9 
Guarantees, commitments and forward starting transactions 
Loan commitments
7
 
40.5 
 
0.5 
 
0.4 
 
0.0 
 
41.4 
Guarantees 
 
17.5 
 
17.5 
Forward starting transactions, reverse repurchase 
and securities borrowing agreements
7
 
3.2 
 
3.2 
Total 
 
61.3 
 
0.5 
 
0.4 
 
0.0 
 
0.0 
 
62.2 
 
31.12.19 
USD billion 
Due within 
1 month 
Due between 
1 and 3 months 
Due between 
3 and 12 months 
Due between 
1 and 5 years 
Due after 
5 years 
Total 
Financial liabilities recognized on balance sheet
1
Amounts due to banks 
 
5.4 
 
0.3 
 
0.4 
 
0.5 
 
0.0 
 
6.6 
Payables from securities financing transactions 
 
7.4 
 
0.1 
 
0.3 
 
0.0 
 
7.8 
Cash collateral payables on derivative instruments 
 
31.4 
 
31.4 
Customer deposits 
 
423.0 
 
16.1 
 
7.3 
 
2.5 
 
0.0 
 
448.9 
Debt issued measured at amortized cost
2
 
4.5 
 
5.3 
 
30.5 
 
46.3 
 
36.0 
 
122.7 
Other financial liabilities measured at amortized cost 
 
4.5 
 
0.1 
 
0.5 
 
2.0 
 
2.0 
 
9.0 
 
of which: lease liabilities 
 
0.1 
 
0.1 
 
0.5 
 
2.0 
 
2.0 
 
4.6 
Total financial liabilities measured at amortized cost 
 
476.1 
 
22.0 
 
38.9 
 
51.3 
 
38.1 
 
626.4 
Financial liabilities at fair value held for trading
3,4
 
30.6 
 
30.6 
Derivative financial instruments
3,5
 
120.9 
 
120.9 
Brokerage payables designated at fair value 
 
37.2 
 
37.2 
Debt issued designated at fair value
6
 
21.3 
 
17.4 
 
9.5 
 
12.7 
 
7.6 
 
68.5 
Other financial liabilities designated at fair value 
 
34.0 
 
0.4 
 
0.5 
 
0.4 
 
0.9 
 
36.1 
Total financial liabilities measured at fair value through profit or loss 
 
244.0 
 
17.8 
 
9.9 
 
13.1 
 
8.5 
 
293.3 
Total 
 
720.1 
 
39.9 
 
48.8 
 
64.5 
 
46.6 
 
919.8 
Guarantees, commitments and forward starting transactions 
Loan commitments
7
 
26.8 
 
0.5 
 
0.3 
 
0.0 
 
27.5 
Guarantees 
 
19.1 
 
19.1 
Forward starting transactions, reverse repurchase 
and securities borrowing agreements
7
 
1.6 
 
0.0 
 
1.7 
Total 
 
47.5 
 
0.5 
 
0.3 
 
0.0 
 
0.0 
 
48.3 
1 Except for financial liabilities 
at fair value held 
for trading and derivative 
financial instruments (see footnote 
3), the amounts presented generally 
represent undiscounted cash flows 
of future interest and 
principal 
payments. 
2 The time-bucket 
Due after 5 
years includes perpetual loss-absorbing 
additional tier 1 
capital instruments. 
3 Carrying amount 
is fair value. 
Management believes that 
this best represents 
the cash 
flows that would 
have to be 
paid if these 
positions had to 
be settled or 
closed out. 
4 Contractual 
maturities of financial 
liabilities at fair 
value held for 
trading are: USD 
32.6 billion due 
within 1 month 
(2019: 
USD 30 billion), USD 1.0 billion due between 1 
month and 1 year (2019: USD 0.6 billion) and USD 
0 billion due between 1 and 5 years (2019: USD 
0 billion). 
5 Includes USD 32 million (2019: 0 million) related to 
fair values of derivative loan commitments 
and forward starting reverse repurchase agreements 
classified as derivatives, presented 
within “Due within 1 month”. The 
full contractual committed amount of 
USD 31.3 
billion (2019: USD 26.6 billion) is presented in Note 10 under notional amounts. 
6 Future interest payments on variable-rate liabilities are 
determined by reference to the applicable interest rate prevailing 
as of the 
reporting date. 
Future principal 
payments that 
are variable 
are determined 
by reference 
to the 
conditions existing 
at the 
reporting date. 
7 Excludes 
derivative loan 
commitments and 
forward starting 
reverse 
repurchase agreements measured at fair value. 
The committed amounts of these instruments 
were previously presented in the former Note 
34 (refer to the “Consolidated financial statements” 
section of the Annual 
Report 2019 for more information). Starting with this report, they are presented in Note 10 under notional amounts and prior-period 
information in this table has been amended to ensure comparability.

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
376 
 
Note 25 
Hedge accounting 
Derivatives designated in hedge accounting relationships 
The 
Group 
applies 
hedge 
accounting 
to 
interest 
rate 
risk 
and 
foreign 
exchange risk 
including structural 
foreign 
exchange risk 
related to net investments in foreign operations. 
›
 
Refer to “Market risk” in the “Risk management 
and control” 
section of this report for more information about 
how risks arise 
and how they are managed by the Group 
Hedging instruments and hedged risk 
Interest 
rate 
swaps 
are 
designated 
in 
fair 
value 
hedges 
or 
cash 
flow 
hedges 
of 
interest 
rate 
risk 
arising 
solely 
from 
changes 
in 
benchmark 
interest 
rates. 
Fair 
value 
changes 
arising 
from 
such 
risk 
are 
usually 
the largest 
component 
of 
the 
overall 
change 
in 
the fair value of the hedged position in transaction currency. 
Cross-currency 
swaps are 
designated 
as 
fair 
value 
hedges 
of 
foreign 
exchange 
risk. 
FX 
forwards 
and 
FX 
swaps 
are 
mainly 
designated as 
hedges of 
structural foreign 
exchange risk 
related 
to 
net 
investments 
in 
foreign 
operations. 
In 
both 
cases 
the 
hedged risk 
arises solely 
from changes 
in spot 
foreign exchange 
rate. 
The notional 
of the 
designated hedging 
instruments matches 
the notional 
of the 
hedged items, 
except when 
the interest 
rate 
swaps are 
re-designated in 
cash flow 
hedges, in 
which case 
the 
hedge 
ratio 
designated 
is 
determined 
based 
on 
the 
swap 
sensitivity. 
Hedged items and hedge designation 
Fair value hedges of interest rate risk related to debt instruments 
Fair value hedges of interest 
rate risk related to debt 
instruments 
involve 
swapping 
fixed 
cash 
flows 
associated 
with 
the 
debt 
issued or 
debt securities 
held to 
floating cash 
flows by 
entering 
into interest 
rate swaps 
that receive 
fixed and 
pay floating 
cash 
flows 
or 
that 
pay 
fixed 
and 
receive 
floating 
cash 
flows, 
respectively. 
The 
variable 
future 
cash 
flows 
are 
based 
on 
the 
following 
benchmark 
rates: 
USD 
LIBOR, 
CHF 
LIBOR, 
EURIBOR, 
GBP LIBOR, AUD LIBOR, JPY LIBOR and SGD LIBOR. 
Fair 
value 
hedges 
of 
portfolio 
interest 
rate 
risk 
related 
to 
loans 
designated under IAS 39 
The 
Group 
hedges 
an 
open 
portfolio 
of 
long-term 
fixed-rate 
mortgage loans in CHF using interest 
rate swaps that pay a fixed 
rate 
of interest 
and receive 
a 
floating rate 
of 
interest. 
Both the 
hedged portfolio and the 
hedging instruments are adjusted 
on a 
monthly basis 
to reflect 
changes in 
size and 
the maturity 
profile 
of 
the 
hedged
 
portfolio. 
The 
existing 
hedge
 
relationship 
is 
discontinued 
and
 
a 
new 
one 
is 
designated. 
Changes 
in 
the 
portfolio 
are 
driven 
by 
new 
loans 
originated 
or 
existing 
loans 
repaid. 
Cash flow hedges of forecast transactions 
The 
Group 
hedges forecast 
cash flows 
on 
non-trading financial 
assets 
and 
liabilities 
that 
bear 
interest 
at 
variable 
rates 
or 
are 
expected 
to 
be 
refinanced 
or 
reinvested 
in 
the 
future, 
due 
to 
movements 
in 
future 
market 
rates. The 
amounts 
and 
timing of 
future cash flows, representing 
both principal and interest flows, 
are 
projected 
on 
the 
basis 
of 
contractual 
terms 
and 
other 
relevant 
factors, 
including 
estimates 
of 
prepayments 
and 
defaults. 
The 
aggregate 
principal 
balances 
and 
interest 
cash 
flows across all portfolios over time form the basis for 
identifying 
the non-trading 
interest rate 
risk of the 
Group, which 
is hedged 
with 
interest 
rate 
swaps, 
the 
maximum 
maturity 
of 
which 
is 
10 years. 
Cash flow 
forecasts 
and risk 
exposures 
are 
monitored 
and adjusted 
on an 
ongoing basis, 
and consequently 
additional 
hedging 
instruments 
are 
traded 
and 
designated
,
 
or 
are 
alternatively terminated resulting in a hedge discontinuance. 
Fair value hedges of foreign exchange risk related to debt 
instruments 
Debt 
instruments 
denominated 
in 
currencies 
other than 
the US 
dollar 
are 
designated 
in 
fair 
value 
hedges 
of 
spot 
foreign 
exchange 
risk, 
in 
addition 
to 
and 
separate 
from 
the 
fair 
value 
hedges 
of 
interest 
rate 
risk. 
Cross-currency 
swaps 
economically 
convert debt denominated in currencies 
other than the US dollar 
to 
US
 
dollars
. 
This 
hedge 
accounting 
program 
started 
on 
1 January 
2020, 
with 
the 
adoption 
of 
the 
hedge 
accounting 
requirements of IFRS 9, 
Financial Instruments,
 
by UBS. 
›
 
Refer to Note 1b for more information 
Hedges of net investments in foreign operations 
The Group applies 
hedge accounting for 
certain net investments 
in 
foreign 
operations, 
which 
include 
subsidiaries, 
branches 
and 
associates. Upon 
maturity of 
hedging instruments, 
typically two 
months, 
the
 
hedge
 
relationship 
is 
terminated 
and 
new 
designations 
are 
made 
to 
reflect 
any 
changes 
in 
the 
net 
investments in foreign operations. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
377 
 
Note 25 
Hedge accounting (continued)
 
Economic relationship between hedged item and hedging 
instrument 
For 
hedges 
designated 
under 
IFRS 
9, 
the economic 
relationship 
between 
the 
hedged 
item 
and 
the 
hedging 
instrument 
is 
determined based on 
a qualitative analysis 
of their critical 
terms. 
In 
cases 
where 
hedge 
designation 
takes 
place 
after 
origination 
of the hedging instrument, a quantitative analysis of the possible 
behavior of hedging derivative 
and the hedged item 
during their 
respective terms is also performed. 
For the 
fair value 
hedge of 
portfolio interest 
rate risk 
related 
to 
loans, 
designated 
under 
IAS 
39, 
hedge 
effectiveness 
is 
assessed by 
comparing changes 
in the 
fair value 
of the 
hedged 
portfolio 
of 
loans 
attributable 
to 
changes 
in 
the 
designated 
benchmark interest rate with the 
changes in the fair value of 
the 
interest rate swaps. 
Sources of hedge ineffectiveness 
In 
hedges 
of 
interest 
rate 
risk, 
hedge 
ineffectiveness 
can 
arise 
from 
mismatches 
of 
critical 
terms 
and 
/ 
or 
the 
use 
of 
different 
curves 
to 
discount 
the 
hedged 
item 
and 
instrument, 
or 
from 
entering 
into 
a 
hedge 
relationship 
after 
the 
trade 
date 
of 
the 
hedging derivative. 
In 
hedges 
of 
foreign 
exchange 
risk 
related 
to 
debt 
issued, 
hedge 
ineffectiveness 
can 
arise 
due 
to 
the 
discounting 
of 
the 
hedging 
instruments 
and 
undesignated 
risk 
components 
and 
lack 
of 
such 
discounting 
and 
risk 
components 
in 
the 
hedged 
items. 
In 
hedges 
of 
net 
investments 
in 
foreign 
operations, 
ineffectiveness is unlikely unless the hedged 
net assets fall below 
the 
designated 
hedged 
amount. 
The 
exceptions 
are 
hedges 
where 
the hedging 
currency is 
not the 
same as 
the currency 
of 
the 
foreign 
operation, 
where 
the 
currency 
basis 
may 
cause 
ineffectiveness. 
Derivatives not designated in hedge accounting relationships 
Non-hedge 
accounted 
derivatives 
are 
mandatorily 
held 
for 
trading with all fair 
value movements taken to 
Other net income 
from financial 
instruments measured 
at fair 
value through 
profit 
or 
loss
, 
even 
when 
held 
as 
an 
economic 
hedge 
or 
to 
facilitate 
client 
clearing. 
The 
one 
exception 
relates 
to 
forward 
points 
on 
certain 
short
-
 
and 
long
-
duration 
foreign 
exchange 
contracts 
acting 
as 
economic 
hedges, 
which 
are 
reported 
in 
Net 
interest 
income.
 
 
 
All hedges: designated hedging instruments 
and hedge ineffectiveness 
As of or for the year ended 
31.12.20 
Carrying amount 
USD million 
Notional 
amount 
Derivative 
financial 
assets 
Derivative 
financial 
liabilities 
Changes in 
fair value of 
hedging 
instruments
1
Changes in 
fair value of 
hedged 
items
1
Hedge ineffectiveness recognized 
in Other net income from financial 
instruments measured at fair value 
through profit or loss 
Interest rate risk 
Fair value hedges 
 
80,759 
 
12 
 
1,231 
 
(1,247) 
 
(16) 
Cash flow hedges 
 
72,732 
 
18 
 
2,213 
 
(2,012) 
 
201 
Foreign exchange risk 
Fair value hedges
2,3
 
21,555 
 
449 
 
7 
 
(1,735) 
 
1,715 
 
(20) 
Hedges of net investments in foreign operations 
 
13,775 
 
3 
 
194 
 
(937) 
 
936 
 
(2) 
As of or for the year ended 
31.12.19 
Carrying amount 
USD million 
Notional 
amount 
Derivative 
financial 
assets 
Derivative 
financial 
liabilities 
Changes in 
fair value of 
hedging 
instruments
1
Changes in 
fair value of 
hedged 
items
1
Hedge ineffectiveness recognized 
in Other net income from financial 
instruments measured at fair value 
through profit or loss 
Interest rate risk 
Fair value hedges 
 
69,750 
 
33 
 
14 
 
1,389 
 
(1,376) 
 
13 
Cash flow hedges 
 
69,443 
 
16 
 
1,639 
 
(1,571) 
 
68 
Foreign exchange risk 
Hedges of net investments in foreign operations 
 
11,992 
 
9 
 
171 
 
(142) 
 
134 
 
(8) 
1 Amounts used as the 
basis for recognizing hedge 
ineffectiveness for the period. 
2 Fair value 
hedges of foreign exchange 
risk started on 1 January 
2020. 
3 The foreign currency 
basis spread of cross-currency 
swaps designated as hedging derivatives is excluded from the hedge accounting designation and accounted for as a cost of hedg 
ing with amounts deferred in Other comprehensive income within Equity. 
 
 
 

Consolidated financial statements | UBS Group AG consolidated financial statements

378

Note 25

Hedge accounting (continued)

Fair value hedges: designated hedged items

USD million

31.12.20

31.12.19

Interest rate

risk

FX risk

Interest rate

risk

Debt issued measured at amortized cost

Carrying amount of designated debt issued

70,429

21,555

67,379

of which: accumulated amount of fair value hedge adjustment

2,401

1,099

Other financial assets measured at amortized cost – debt securities

Carrying amount of designated debt securities

3,242

of which: accumulated amount of fair value hedge adjustment

(38)

Loans and advances to customers designated in fair value hedges of portfolio interest rate risk under

IAS 39

Carrying amount of designated loans

10,374

4,494

of which: accumulated amount of fair value hedge adjustment on

the portfolio that was subject to hedge accounting

100

117

of which: accumulated amount of fair value hedge adjustment subject

to amortization attributable to the portion of the portfolio

that ceased to be part of hedge accounting

111

172

1 Amounts presented within Other financial assets measured at amortized cost and Other financial liabilities measured at amortized cost.

2 Fair value hedges of foreign exchange risk started on 1 January

2020.

Fair value hedges related to debt issued and

debt securities: profile of the timing of

the nominal amount of the hedging

instrument

31.12.20

USD billion

Due within

1 month

Due between

1 and 3 months

Due between

3 and 12 months

Due between

1 and 5 years

Due after

5 years

Total

Interest rate swaps

Cross-currency swaps

31.12.19

USD billion

Due within

1 month

Due between

1 and 3 months

Due between

3 and 12 months

Due between

1 and 5 years

Due after

5 years

Total

Interest rate swaps

1 Fair value hedges of foreign exchange risk using cross-currency swaps started on 1 January

2020.

Cash flow hedge reserve on a pre-tax basis

USD million

31.12.20

31.12.19

Amounts related to hedge relationships for which hedge

accounting continues to be applied

2,560

1,596

Amounts related to hedge relationships for which hedge

accounting is no longer applied

296

(43)

Total other comprehensive income recognized directly in equity related to cash flow hedges, on a pre-tax basis

2,856

1,553

Foreign currency translation reserve on a pre-tax basis

USD million

31.12.20

31.12.19

Amounts related to hedge relationships for which hedge

accounting continues to be applied

(559)

386

Amounts related to hedge relationships for which hedge

accounting is no longer applied

268

257

Total other comprehensive income recognized directly in equity related to hedging instruments

designated as net investment hedges, on a pre-tax

basis

(291)

643

 
 
 
 
 
 
 
 
 
 
 
379 
 
Note 25 
Hedge accounting (continued) 
 
Interest rate benchmark reform 
The Group continues to apply the relief 
provided by 
Interest Rate 
Benchmark 
Reform
 
(amendments 
to 
IFRS 9, 
IAS 39 and 
IFRS 7), 
published by the IASB in September 2019. 
The 
inter
est 
rate 
benc
hmarks 
subject 
to 
i
nterest 
r
ate 
benchmark 
reforms 
to 
which 
the 
Group’s 
hedge 
relationships 
are exposed are 
USD LIBOR, CHF LIBOR, GBP 
LIBOR, AUD LIBOR, 
JPY LIBOR, 
HKD LIBOR, SGD 
LIBOR and EONIA. 
Existing financial 
instruments designated 
in hedge 
relationships referencing 
these 
interest 
rate 
benchmarks 
will 
transition 
to 
alternative 
reference 
rates (ARRs) unless they mature before the transition takes place. 
The 
Group’s 
hedge 
relationships 
are 
also 
exposed 
to 
Euro 
Inter
-
bank 
Offered 
Rate 
(EURIBOR)
,
 
for 
which 
there 
is 
no 
uncertainty 
arising 
from
 
the
 
interest 
rate 
benchmark 
reform. 
EURIBOR 
is 
expected 
to 
continue 
to 
exist 
as 
a 
benchmark 
rate 
for the foreseeable future. 
Thus, the Group does 
not consider its 
hedges 
involving 
the 
EURIBOR 
benchmark 
interest 
rate 
to 
be 
directly affected by the interest rate benchmark reform. 
The 
Group 
established 
a 
cross-divisional, 
cross-regional 
governance structure 
and change 
program 
to address 
the scale 
and complexity of this transition. 
Apart 
from 
EURIBOR 
hedges, UBS 
applies 
the 
relief 
to 
all 
its 
fair 
value 
hedges 
of 
interest 
rate 
risk 
and 
to 
those 
cash 
flow 
hedge 
relationships 
where 
the 
hedged 
risk 
is 
LIBOR 
or 
EONIA. 
The following table provides 
details on the 
notional amount and 
carrying 
amount 
of 
the 
hedging 
instruments 
in 
those 
hedge 
relationships maturing after 31 December 
2021 or 30 June 2023 
for 
USD 
LIBOR 
hedges, 
which are 
the 
expected 
cessation 
dates 
of 
the 
applicable 
interest 
rate 
benchmarks.
 
The 
comparative 
information 
in 
the 
table 
below 
has 
been 
amended 
to 
consistently reflect this approach. 
Hedges 
of 
net 
investments 
in 
foreign 
operations 
are 
not 
affected by the amendments. 
›
 
Refer to Note 1a item 2j for more information about 
the relief 
provided by the amendments to IFRS 9, IAS 
39 and IFRS 7 related 
to interest rate benchmark reform 
 
 
Hedging instruments referencing LIBOR 
31.12.20 
31.12.19 
Carrying amount 
Carrying amount 
USD million 
Notional 
amount 
Derivative 
financial 
assets 
Derivative 
financial 
liabilities 
Notional 
amount 
Derivative 
financial 
assets 
Derivative 
financial 
liabilities 
Interest rate risk 
Fair value hedges 
 
37,146 
 
1 
 
(12) 
 
26,355 
 
1 
 
(14) 
Cash flow hedges 
 
11,179 
 
0 
 
0 
 
5,895 
 
0 
 
0 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
380 
 
Note 26 
Post-employment benefit plans 
The table 
below provides 
a breakdown 
of expenses 
related to 
pension and 
other post-employment 
benefit plans 
recognized in 
the 
income statement within 
Personnel expenses
. 
 
Income statement – expenses related to post-employment 
benefit plans 
USD million 
31.12.20 
31.12.19 
31.12.18 
Net periodic expenses for defined benefit plans 
 
502 
 
461 
 
188 
of which: related to major plans
1
 
479 
 
440 
 
186 
of which: Swiss pension plan
2
 
459 
 
417 
 
153 
of which: UK pension plan 
 
3 
 
3 
 
11 
of which: US and German pension plans 
 
18 
 
21 
 
22 
of which: related to remaining plans and other expenses
3
 
23 
 
21 
 
2 
Expenses for defined contribution plans
4
 
343 
 
326 
 
268 
of which: UK plans 
 
88 
 
82 
 
80 
of which: US plan 
 
190 
 
173 
 
127 
of which: remaining plans 
 
65 
 
71 
 
61 
Total post-employment benefit plan expenses
5
 
845 
 
787 
 
457 
1 Refer to Note 26a for more information. 
2 Changes to the Swiss pension plan announced in 2018 
resulted in a pre-tax gain of USD 241 million related to past 
service. Refer to Note 26a for more information on 
these changes. 
3 Other expenses include differences between actual and estimated performance award accruals. 
4 Refer to Note 26b for more information. 
5 Refer to Note 6. 
 
The table below provides a breakdown of amounts recognized in 
Other comprehensive income
 
for defined benefit plans. 
 
Other comprehensive income – gains / (losses) on 
defined benefit plans 
USD million 
31.12.20 
31.12.19 
31.12.18 
Major plans
1
 
(323) 
 
(135) 
 
(230) 
of which: Swiss pension plan 
 
(276) 
 
(22) 
 
(352) 
of which: UK pension plan 
 
(61) 
 
(78) 
 
130 
of which: US and German pension plans 
 
14 
 
(35) 
 
(8) 
Remaining plans 
 
(4) 
 
(10) 
 
9 
Gains / (losses) recognized in other comprehensive income, before tax 
 
(327) 
 
(146) 
 
(220) 
Tax (expense) / benefit relating to defined benefit plans recognized in other comprehensive 
income 
 
109 
 
(41) 
 
276 
Gains / (losses) recognized in other comprehensive income, net of tax
2
 
(218) 
 
(186) 
 
56 
1 Refer to Note 26a for more information. 
2 Refer to the “Statement of comprehensive income.” 
 
The table 
below provides 
a breakdown 
of the assets 
and liabilities 
recognized 
on the balance 
sheet within 
Other non-financial 
assets
 
and 
Other 
non-financial 
liabilities
 
related 
to defined 
benefit 
plans. 
 
Balance sheet – net defined benefit asset 
USD million 
31.12.20 
31.12.19 
Major plans
1
 
42 
 
9 
of which: Swiss pension plan
2
 
0 
 
0 
of which: UK pension plan 
 
0 
 
4 
of which: US and German pension plans 
 
42 
 
5 
Total net defined benefit asset 
 
42 
 
9 
1 Refer to Note 26a for more information. 
2 As of 31 December 2020 and 31 December 2019, the 
Swiss pension plan was in a surplus situation. No 
net defined benefit asset was recognized on the balance sheet 
due to the IFRS asset ceiling restriction. Refer to Note 26a for more information. 
Balance sheet – net defined benefit liability 
USD million 
31.12.20 
31.12.19 
Major plans
1
 
599 
 
527 
of which: UK pension plan 
 
13 
 
0 
of which: US and German pension plans
2
 
586 
 
527 
Remaining plans 
 
123 
 
107 
Total net defined benefit liability
3
 
722 
 
633 
1 Refer to 
Note 26a for 
more information. 
2 Of 
the total liability 
recognized as 
of 31 December 
2020, USD 
88 million 
related to 
US plans 
and USD 
498 million related 
to German plans 
(31 December 
2019: 
USD 111 million and USD 416 million, respectively). 
3 Refer to Note 19c. 
 
 

 
 
 
381 
 
Note 26 
Post-employment benefit plans (continued) 
a) Defined benefit plans 
UBS 
has 
established 
defined 
benefit 
plans 
for 
its 
employees 
in 
various 
jurisdicti
ons
 
in 
accordance 
with 
local 
regulations 
and 
practices. 
The 
major 
plans 
are 
located 
in 
Switzerland, 
the 
UK, 
the 
US 
and 
Germany. 
The 
level 
of 
benefits 
depends 
on 
the 
specific plan rules. 
For 
the 
funded 
plans, 
the 
plan 
assets 
are 
invested 
in 
a 
diversified 
portfolio 
of 
financial 
assets. 
Volatility 
arises 
in 
each 
plan’s 
net 
asset 
/ 
liability 
position 
because 
the 
fair 
value 
of 
the 
plan’s financial assets is 
not fully correlated to 
movements in the 
value 
of 
the 
plan’s 
defined 
benefit 
obligation
 
(
DBO
)
.
 
UBS
’
s 
general 
principle 
is 
to 
ensure 
that 
the 
plans 
are 
adequately 
funded 
on 
the 
basis 
of 
actuarial 
valuations. 
Local 
pension 
regulations 
are 
the 
primary 
drivers 
for 
determining 
when 
contributions are required. 
Swiss pension plan 
The 
Swiss 
pension 
plan 
covers 
employees 
of 
UBS 
AG 
and 
employees of 
companies having 
close economic 
or financial 
ties 
with 
UBS 
AG, 
and 
exceeds 
the 
minimum 
benefit 
requirements 
under 
Swiss 
pension 
law.
 
The 
Swiss
 
plan 
offers 
retirement, 
disability 
and 
survivor 
benefits 
and 
is 
governed 
by 
a 
Pension 
Foundation Board. 
The responsibilities 
of this 
board are 
defined 
by Swiss pension law and the plan rules. 
Savings 
contributions 
to 
the 
Swiss 
plan 
are 
paid 
by 
both 
employer 
and 
employee. 
Depending 
on 
the 
age 
of 
the 
employee, UBS 
pays a savings 
contribution that 
ranges between 
6.5% and 27.5% of contributory base salary and between 2.8% 
and 
9% 
of 
contributory 
variable 
compensation. 
UBS 
also 
pays 
risk 
contributions 
that 
are 
used 
to 
fund 
disability 
and 
survivor 
benefits. 
Employees 
can 
choose 
the 
level 
of 
savings 
contributions 
paid 
by 
them
,
 
which 
vary 
between 
2.5% 
and 
13.5% of 
contributory base 
salary and 
between 0% 
and 9% 
of 
contributory 
variable 
compensation, 
depending 
on 
age 
and 
choice of savings contribution category. 
The plan 
offers to 
members at 
the normal 
retirement age 
of 
65 a choice between a lifetime pension and a 
partial or full lump 
sum payment. 
Participants 
can choose 
to draw 
early retirement 
benefits 
starting 
from 
the 
age 
of 
58, 
but 
can 
also 
continue 
employment 
and 
remain 
active 
members 
of 
the 
plan 
until 
the 
age 
of 
70. 
Employees 
have 
the opportunity 
to 
make additional 
purchases of benefits to fund early retirement benefits. 
The pension 
amount payable 
to a 
participant is 
calculated by 
applying 
a 
conversion 
rate 
to 
the 
accumulated 
balance 
of 
the 
participant’s 
retirement 
savings 
account 
at 
the 
retirement 
date. 
The 
balance
 
is 
based 
on 
credited 
vested 
benefits 
transferred 
from 
previous 
employers, 
purchases 
of 
benefits, 
and 
the 
employee 
and 
employer 
contributions 
that 
have 
been 
made 
to 
the 
participant’s 
retirement 
savings 
account, 
as 
well 
as 
the 
interest 
accrued. 
The 
interest 
rate 
is 
defined 
annually 
by 
the 
Pension Foundation Board. 
Although 
the 
Swiss 
plan 
is 
based 
on 
a 
defined 
contribution 
promise 
under 
Swiss 
pension 
law, 
it 
is 
accounted 
for 
as 
a 
defined 
benefit 
plan 
under 
IFRS, 
primarily 
because 
of 
the 
obligation 
to 
accrue 
interest 
on 
the 
participants
’
 
retirement 
savings accounts and the payment of lifetime pension benefits. 
An actuarial valuation in accordance with Swiss pension law is 
performed 
regularly. 
Should 
an 
underfunded 
situation 
on 
this 
basis occur, the Pension Foundation Board is required to 
take the 
necessary measures 
to ensure 
that full 
funding can 
be expected 
to be 
restored within 
a maximum 
period of 
10 years. 
If a 
Swiss 
plan 
were 
to 
become 
significantly 
underfunded 
on 
a 
Swiss 
pension 
law 
basis, 
additional 
employer 
and 
employee 
contributions 
could 
be 
required. 
In 
this 
situation, 
the 
risk 
is 
shared 
between 
employer 
and 
employees, 
and 
the 
employer 
is 
not 
legally 
obliged 
to 
cover 
more 
than 
50% 
of 
the 
additional 
contributions required. 
As of 31 December 
2020, the Swiss 
plan 
had 
a 
technical 
funding 
ratio 
under 
Swiss 
pension 
law 
of 
132.6% (31 December 2019: 127.1%). 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
382 
 
Note 26 
Post-employment benefit plans (continued) 
The investment strategy of the Swiss plan complies with Swiss 
pension 
law, 
including 
the 
rules 
and 
regulations 
relating 
to 
diversification of 
plan assets. 
These rules, 
among others, 
specify 
restrictions 
on 
the 
composition 
of 
plan 
assets; 
e.g., 
there 
is 
a 
limit of 50% for investments in equities. The 
investment strategy 
of the Swiss 
plan is aligned 
with the defined 
risk budget set 
out 
by the Pension 
Foundation Board. The 
risk budget is 
determined 
on 
the 
basis 
of 
regularly 
performed 
asset 
and 
liability 
management 
analyses. 
In 
order 
to 
implement 
the 
risk 
budget, 
the Swiss plan may use direct investments, investment funds 
and 
derivatives. To 
mitigate foreign 
currency risk, 
a specific 
currency 
hedging 
strategy 
is 
in 
place. 
The 
Pension 
Foundation 
Board 
strives for a medium- and long-term balance between assets and 
liabilities. 
As 
of 
31 December 
2020, 
the 
Swiss 
plan 
was 
in 
a 
surplus 
situation on 
an IFRS 
measurement basis, 
as the 
fair value 
of the 
plan’s 
assets 
exceeded 
the 
DBO 
by 
USD
 
4
,
862
 
million 
(31 December 2019: a surplus of USD 3,724 
million). However, a 
surplus 
is 
only 
recognized 
on 
the 
balance 
sheet 
to 
the 
extent 
that 
it 
does not 
exceed 
the estimated 
future economic 
benefit, 
which 
equals 
the 
difference 
between 
the 
present 
value 
of 
the 
estimated 
future 
net 
service 
cost 
and 
the 
present 
value 
of 
the 
estimated 
future 
employer 
contributions. 
As 
of 
both 
31 December 
2020 
and 
31 December 
2019, 
the 
estimated 
future 
economic 
benefit 
was 
zero 
and 
hence 
no 
net 
defined 
benefit asset was recognized on the balance sheet. 
I
n 
the 
first
 
quarter 
of 
2020
, 
UBS 
adopted
 
an 
enhanced 
methodology 
for 
measuring 
the 
estimated
 
future 
economic 
benefits available 
under the 
Swiss pension 
plan, whereby 
future 
net 
service 
cost 
is 
measured 
individually 
for 
each 
future 
year, 
considering the individually 
applicable discount 
rate. In addition, 
an enhanced discount curve methodology 
was adopted, utilizing 
the 
FINMA-published 
ultimate 
forward 
rate, 
which 
represents 
the average 
long-term historical 
real rate 
plus expected 
inflation 
over 
the 
long-dated 
periods 
where 
discount 
rates 
are 
unobservable. No changes 
have been made 
to the methodology 
for measuring the defined benefit obligation. 
Changes to the Swiss pension plan 
As 
a 
result 
of 
the 
effects 
of 
continuing 
low 
and 
in 
some 
cases 
negative 
interest 
rates, 
diminished 
investment 
return 
expectations and increasing 
life expectancy, 
the pension fund 
of 
UBS in Switzerland and UBS agreed 
to measures that took effect 
from 
the 
start 
of 
2019 
to 
support 
the 
long-term 
financial 
stability 
of 
the 
Swiss 
pension 
fund. 
As 
a 
result, 
the 
conversion 
rate was lowered, the regular retirement age was increased 
from 
64 
to 
65, 
employee 
contributions 
were 
increased, 
and 
savings 
contributions 
started 
from 
age 
20 
instead 
of 
25. 
Pensions 
already in payment on 1 January 2019 were not affected. 
To mitigate the effects of 
the reduction of the conversion rate 
on 
future 
pensions, 
UBS 
committed
 
to 
pay 
an 
extraordinary 
contribution of up to CHF 720 million (USD 813 million based on 
the 
closing 
exchange 
rate 
as 
of 
31 
December 
2020) 
in 
three 
installments 
in 
2020, 
2021 and 
2022. 
In 
accordance 
with 
IFRS, 
these 
measures 
led 
to 
a 
reduction 
in 
the 
pension 
obligation 
recognized by UBS, resulting in a pre-tax gain of USD 241 million 
in 2018. 
This effect 
was recognized 
as a 
reduction in 
Personnel 
expenses
 
with 
a 
corresponding 
effect 
in 
Other 
comprehensive 
income
 
(OCI). The 
first installment 
of USD 235 
million was 
paid 
in 
2020 
and 
reduced 
OCI 
with 
no 
effect 
on 
the 
income 
statement. If 
the Swiss 
plan remains 
in an 
asset ceiling 
position, 
the 
two 
payments 
in 
2021 
and 
2022, 
adjusted 
for 
expected 
forfeitures, are expected to 
reduce OCI by USD 437 
million, with 
no effect on the income statement. 
The 
second 
installment 
of 
USD 
254 
million 
was 
paid 
in 
January 
2021 
and 
the 
regular 
employer 
contributions 
expected 
to 
be 
made 
to 
the 
Swiss 
plan 
in 
2021 
are 
estimated 
to 
be 
USD 518 million. 
UK pension plan 
The UK 
plan is 
a career 
-average revalued 
earnings scheme, 
and 
benefits increase 
automatically based 
on UK 
price inflation. 
The 
normal retirement 
age for 
participants in 
the UK plan 
is 60. 
The 
plan 
provides 
guaranteed 
lifetime 
pension 
benefits 
to 
plan 
participants upon 
retirement. Since 
2000, the 
UK plan 
has been 
closed to new entrants 
and, since 2013, plan 
participants are no 
longer 
accruing 
benefits 
for 
current 
or 
future 
service. 
Instead, 
employees participate in the UK defined contribution plan. 
The governance 
responsibility for the 
UK plan lies 
jointly with 
the Pension 
Trustee Board 
and UBS. 
The employer 
contributions 
to 
the 
pension 
fund 
reflect 
agreed
-
upon
 
deficit 
funding 
contributions, 
which 
are 
determined 
on 
the 
basis 
of 
the 
most 
recent 
actuarial 
valuation 
using 
assumptions 
agreed 
by 
the 
Pension 
Trustee 
Board 
and 
UBS. 
In 
the 
event 
of 
underfunding, 
UBS 
and 
the 
Pension 
Trustee 
Board 
must 
agree 
on 
a 
deficit 
recovery 
plan 
within 
statutory 
deadlines. 
In 
2020, 
UBS 
made 
deficit 
funding 
contributions of 
USD 46 
million 
to 
the 
UK plan. 
In 
2019, 
UBS 
made 
deficit 
funding 
contributions 
of 
USD 242 
million. 
 
 

 
 
383 
 
Note 26 
Post-employment benefit plans (continued)
The 
plan 
assets 
are 
invested 
in 
a 
diversified 
portfolio 
of 
financial assets. 
In 2020, 
the UK 
Pension Trustee 
Board entered 
into 
a 
longevity 
swap 
with 
an 
external 
insurance 
company, 
which is 
recognized as 
a plan 
asset. The 
longevity swap 
enables 
the 
UK 
pension 
plan 
to 
hedge 
the 
risk 
between 
expected 
and 
actual 
longevity, 
which 
should
 
mitigate 
volatility 
in 
the 
net 
defined benefit 
asset / 
liability. The 
longevity swap 
had nil 
value 
on 31 December 2020. 
In 2019, 
UBS and 
the Pension 
Trustee Board 
entered into 
an 
arrangement 
whereby 
a 
collateral 
pool 
was 
established 
to 
provide security for 
the pension fund. 
The value of 
the collateral 
pool 
as 
of 
31
 
December 
2020
 
was
 
USD
 
347
 
million 
(31 December 
2019: 
USD 
364 
million) 
and 
includes 
corporate 
bonds, 
government-related debt instruments 
and other 
financial 
assets. 
The 
arrangement 
provides 
the 
Pension 
Trustee 
Board 
dedicated 
access 
to 
a 
pool 
of 
assets 
in 
the 
event 
of 
UBS’s 
insolvency or not paying a required deficit funding contribution. 
In 2021, no contributions 
are expected to be 
made to the UK 
defined 
benefit 
plan, 
subject 
to 
regular 
funding 
reviews 
during 
the year. 
US pension plans 
There 
are 
two 
distinct 
major 
defined 
benefit 
plans 
in 
the 
US, 
both with a 
normal retirement age 
of 65. Since 
1998 and 2001, 
respectively, 
the 
plans 
have 
been 
closed 
to 
new 
entrants, 
who 
instead can participate in defined contribution plans. 
One of the 
defined benefit plans 
is a contribution-based 
plan 
in 
which 
each 
participant 
accrues 
a 
percentage 
of 
salary 
in 
a 
retirement 
savings 
account. 
The 
retirement 
savings 
account 
is 
credited annually 
with interest 
based 
on a 
rate that 
is linked 
to 
the 
average 
yield 
on 
one-year 
US 
government 
bonds. 
For 
the 
other defined 
benefit plan, 
retirement benefits 
accrue based 
on 
the 
career-average earnings 
of 
each 
individual 
plan 
participant. 
Former employees with vested benefits have the option to take a 
lump sum payment or a lifetime annuity. 
As 
required 
under 
applicable 
pension 
laws, 
both 
plans 
have 
fiduciaries 
who, 
together 
with 
UBS, 
are 
responsible 
for 
the 
governance of 
the plans. 
UBS regularly 
reviews the 
contribution 
strategy for 
these plans, 
considering statutory 
funding rules and 
the 
cost 
of 
any 
premiums 
that 
must 
be 
paid 
to 
the 
Pension 
Benefit Guaranty Corporation for having an underfunded plan. 
The 
plan 
assets 
for 
both 
plans 
are 
invested 
in 
a 
diversified 
portfolio 
of 
financial 
assets. 
Each 
plan’s 
fiduciaries 
are 
responsible for the 
investment decisions with respect 
to the plan 
assets. 
The 
employer 
contributions 
expected 
to 
be 
made 
to 
the 
US 
defined benefit 
plans in 2021 are estimated at USD 10 million. 
German pension plans 
There 
are 
two 
defined 
benefit plans 
in 
Germany, 
and 
both 
are 
contribution-based 
plans. 
No 
plan 
assets 
are 
set 
aside 
to 
fund 
these 
plans, 
and 
benefits 
are 
paid 
directly 
by 
UBS. 
The 
normal 
retirement 
age 
for 
the 
participants 
in 
the 
German 
plans 
is 
65. 
Within 
the 
larger 
of 
the 
two 
plans, 
each 
participant 
accrues 
a 
percentage 
of 
salary 
in 
a 
retirement 
savings
 
account. 
The 
accumulated account 
balance of 
the plan 
participant is 
credited 
on an 
annual basis 
with guaranteed 
interest at 
a rate 
of 5%. 
In 
the 
other 
plan, 
amounts 
are 
accrued 
annually 
based 
on 
employee 
elections 
related 
to 
variable 
compensation. 
For 
this 
plan, the 
accumulated account balance 
is credited 
on an annual 
basis with a guaranteed interest rate of 6% for amounts accrued 
before 
2010, 
of 
4% 
for 
amounts 
accrued 
from 
2010 
to 
2017 
and 
of 
0.9% 
for 
amounts 
accrued 
after 
2017. 
Both 
plans 
are 
subject 
to 
German 
pension 
law, 
whereby 
the 
responsibility 
to 
pay 
pension 
benefits 
when 
they 
are 
due 
resides 
entirely 
with 
UBS. A 
portion of 
the pension 
payments is 
directly 
increased in 
line with price inflation. 
The 
benefits 
expected 
to 
be 
paid 
by 
UBS 
to 
the 
participants 
of the German plans in 2021 are estimated at USD 11 million. 
Financial information by plan 
The 
tables 
on 
the 
following 
pages 
provide 
an 
analysis 
of 
the 
movement 
in the 
net asset 
/ liability 
recognized 
on the 
balance 
sheet for defined benefit plans, as well as an analysis of amounts 
recognized in net profit and in 
Other comprehensive incom
e. 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
384 
 
Note 26 
Post-employment benefit plans (continued)
Defined benefit plans 
USD million 
Swiss pension plan 
UK pension plan 
US and German 
pension plans 
Total 
2020 
2019 
2020 
2019 
2020 
2019 
2020 
2019 
Defined benefit obligation at the beginning of the year 
 
24,496 
 
22,566 
 
3,654 
 
3,192 
 
1,820 
 
1,679 
 
29,970 
 
27,437 
Current service cost 
 
447 
 
409 
 
0 
 
0 
 
6 
 
6 
 
453 
 
415 
Interest expense 
 
72 
 
200 
 
73 
 
92 
 
45 
 
59 
 
190 
 
351 
Plan participant contributions 
 
259 
 
240 
 
0 
 
0 
 
0 
 
0 
 
259 
 
240 
Remeasurements 
 
1,279 
 
1,728 
 
449 
 
361 
 
105 
 
185 
 
1,832 
 
2,275 
of which: actuarial (gains) / losses due to changes in demographic 
assumptions 
 
(164) 
 
(196) 
 
(14) 
 
(26) 
 
(34) 
 
3 
 
(212) 
 
(220) 
of which: actuarial (gains) / losses due to changes in financial 
assumptions 
 
983 
 
1,641 
 
505 
 
421 
 
134 
 
179 
 
1,621 
 
2,241 
of which: experience (gains) / losses
1
 
460 
 
284 
 
(42) 
 
(34) 
 
5 
 
4 
 
423 
 
254 
Past service cost related to plan amendments 
 
0 
 
0 
 
3 
 
0 
 
0 
 
0 
 
3 
 
0 
Benefit payments 
 
(1,153) 
 
(1,046) 
 
(148) 
 
(135) 
 
(108) 
 
(102) 
 
(1,409) 
 
(1,283) 
Other movements 
 
(4) 
 
0 
 
0 
 
0 
 
0 
 
0 
 
(4) 
 
0 
Foreign currency translation 
 
2,333 
 
399 
 
132 
 
144 
 
37 
 
(8) 
 
2,501 
 
535 
Defined benefit obligation at the end of the year 
 
27,728 
 
24,496 
 
4,162 
 
3,654 
 
1,905 
 
1,820 
 
33,795 
 
29,970 
of which: amounts owed to active members 
 
13,765 
 
11,577 
 
159 
 
164 
 
245 
 
235 
 
14,169 
 
11,976 
of which: amounts owed to deferred members 
 
0 
 
0 
 
1,879 
 
1,559 
 
743 
 
675 
 
2,622 
 
2,233 
of which: amounts owed to retirees 
 
13,963 
 
12,918 
 
2,124 
 
1,931 
 
917 
 
911 
 
17,004 
 
15,760 
Fair value of plan assets at the beginning of the year 
 
28,219 
 
25,839 
 
3,658 
 
3,032 
 
1,299 
 
1,168 
 
33,176 
 
30,039 
Return on plan assets excluding interest income 
 
1,818 
 
2,059 
 
388 
 
284 
 
118 
 
150 
 
2,324 
 
2,492 
Interest income 
 
84 
 
233 
 
73 
 
89 
 
38 
 
47 
 
196 
 
369 
Employer contributions 
 
729 
 
452 
 
46 
 
242 
 
17 
 
38 
 
792 
 
732 
Plan participant contributions 
 
259 
 
240 
 
0 
 
0 
 
0 
 
0 
 
259 
 
240 
Benefit payments 
 
(1,153) 
 
(1,046) 
 
(148) 
 
(135) 
 
(108) 
 
(102) 
 
(1,409) 
 
(1,283) 
Administration expenses, taxes and premiums paid 
 
(13) 
 
(11) 
 
0 
 
0 
 
(4) 
 
(2) 
 
(17) 
 
(13) 
Foreign currency translation 
 
2,647 
 
453 
 
132 
 
146 
 
0 
 
0 
 
2,779 
 
599 
Fair value of plan assets at the end of the year 
 
32,590 
 
28,219 
 
4,149 
 
3,658 
 
1,360 
 
1,299 
 
38,100 
 
33,176 
Asset ceiling effect at the beginning of the year 
 
3,724 
 
3,274 
 
0 
 
0 
 
0 
 
0 
 
3,724 
 
3,274 
Interest expense on asset ceiling effect 
 
12 
 
30 
 
0 
 
0 
 
0 
 
0 
 
12 
 
30 
Asset ceiling effect excluding interest expense and foreign currency 
translation on 
asset ceiling effect 
 
814 
 
353 
 
0 
 
0 
 
0 
 
0 
 
814 
 
353 
Foreign currency translation 
 
313 
 
67 
 
0 
 
0 
 
0 
 
0 
 
313 
 
67 
Asset ceiling effect at the end of the year 
 
4,862 
 
3,724 
 
0 
 
0 
 
0 
 
0 
 
4,862 
 
3,724 
Net defined benefit asset / (liability) 
 
0 
 
0 
 
(13) 
 
4 
 
(545) 
 
(521) 
 
(558) 
 
(518) 
Movement in the net asset / (liability) recognized on the balance sheet 
Net asset / (liability) recognized on the balance sheet at the beginning 
of the year 
 
0 
 
0 
 
4 
 
(160) 
 
(521) 
 
(511) 
 
(518) 
 
(671) 
Net periodic expenses recognized in net profit 
 
(459) 
 
(417) 
 
(3) 
 
(3) 
 
(18) 
 
(21) 
 
(479) 
 
(440) 
Gains / (losses) recognized in other comprehensive income 
 
(276) 
 
(22) 
 
(61) 
 
(78) 
 
14 
 
(35) 
 
(323) 
 
(135) 
Employer contributions 
 
729 
 
452 
 
46 
 
242 
 
17 
 
38 
 
792 
 
732 
Other movements 
 
4 
 
0 
 
0 
 
0 
 
0 
 
0 
 
4 
 
0 
Foreign currency translation 
 
1 
 
(13) 
 
0 
 
2 
 
(37) 
 
8 
 
(35) 
 
(3) 
Net asset / (liability) recognized on the balance sheet at the end of 
the year 
 
0 
 
0 
 
(13) 
 
4 
 
(545) 
 
(521) 
 
(558) 
 
(518) 
Funded and unfunded plans 
Defined benefit obligation from funded plans 
 
27,728 
 
24,496 
 
4,162 
 
3,654 
 
1,319 
 
1,319 
 
33,209 
 
29,469 
Defined benefit obligation from unfunded plans 
 
0 
 
0 
 
0 
 
0 
 
586 
 
501 
 
586 
 
501 
Plan assets 
 
32,590 
 
28,219 
 
4,149 
 
3,658 
 
1,360 
 
1,299 
 
38,100 
 
33,176 
Surplus / (deficit) 
 
4,862 
 
3,724 
 
(13) 
 
4 
 
(545) 
 
(521) 
 
4,304 
 
3,206 
Asset ceiling effect 
 
4,862 
 
3,724 
 
0 
 
0 
 
0 
 
0 
 
4,862 
 
3,724 
Net defined benefit asset / (liability) 
 
0 
 
0 
 
(13) 
 
4 
 
(545) 
 
(521) 
 
(558) 
 
(518)

 
385 
 
Note 26 
Post-employment benefit plans (continued) 
Analysis of amounts recognized in net profit 
USD million 
Swiss pension plan 
UK pension plan 
US and German 
pension plans 
Total 
For the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Current service cost 
 
447 
 
409 
 
0 
 
0 
 
6 
 
6 
 
453 
 
415 
Interest expense related to defined benefit obligation 
 
72 
 
200 
 
73 
 
92 
 
45 
 
59 
 
190 
 
351 
Interest income related to plan assets 
 
(84) 
 
(233) 
 
(73) 
 
(89) 
 
(38) 
 
(47) 
 
(196) 
 
(369) 
Interest expense on asset ceiling effect 
 
12 
 
30 
 
0 
 
0 
 
0 
 
0 
 
12 
 
30 
Administration expenses, taxes and premiums paid 
 
13 
 
11 
 
0 
 
0 
 
4 
 
2 
 
17 
 
13 
Past service cost related to plan amendments 
 
0 
 
0 
 
3 
 
0 
 
0 
 
0 
 
3 
 
0 
Net periodic expenses recognized in net profit 
 
459 
 
417 
 
3 
 
3 
 
18 
 
21 
 
479 
 
440 
Analysis of amounts recognized in other comprehensive income (OCI) 
USD million 
Swiss pension plan 
UK pension plan 
US and German 
pension plans 
Total 
For the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Remeasurement of defined benefit obligation 
 
(1,279) 
 
(1,728) 
 
(449) 
 
(361) 
 
(105) 
 
(185) 
 
(1,832) 
 
(2,275) 
of which: change in discount rate assumption 
 
(777) 
 
(1,887) 
 
(504) 
 
(552) 
 
(141) 
 
(166) 
 
(1,421) 
 
(2,605) 
of which: change in rate of salary increase assumption 
 
(230) 
 
3 
 
0 
 
0 
 
0 
 
0 
 
(230) 
 
3 
of which: change in rate of pension increase assumption 
 
0 
 
0 
 
(1) 
 
132 
 
1 
 
(4) 
 
0 
 
128 
of which: change in rate of interest credit on retirement savings 
assumption 
 
26 
 
243 
 
0 
 
0 
 
24 
 
18 
 
50 
 
261 
of which: change in life expectancy 
 
261 
 
0 
 
22 
 
21 
 
50 
 
4 
 
333 
 
25 
of which: change in other actuarial assumptions 
 
(99) 
 
196 
 
(8) 
 
5 
 
(34) 
 
(33) 
 
(142) 
 
168 
of which: experience gains / (losses)
1
 
(460) 
 
(284) 
 
42 
 
34 
 
(5) 
 
(4) 
 
(423) 
 
(254) 
Return on plan assets excluding interest income 
 
1,818 
 
2,059 
 
388 
 
284 
 
118 
 
150 
 
2,324 
 
2,492 
Asset ceiling effect excluding interest expense and foreign currency 
translation 
 
(814) 
 
(353) 
 
0 
 
0 
 
0 
 
0 
 
(814) 
 
(353) 
Total gains / (losses) recognized in other comprehensive income, before tax 
 
(276) 
 
(22) 
 
(61) 
 
(78) 
 
14 
 
(35) 
 
(323) 
 
(135) 
1 Experience (gains) / 
losses are a component 
of actuarial remeasurements of 
the defined benefit obligation 
that reflect the effects 
of differences between 
the previous actuarial assumptions 
and what has actually 
occurred. 
 
The table below provides information about the duration of the DBO and the timing for expected benefit payments. 
 
Swiss pension plan 
UK pension plan 
US and German pension 
plans
1
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Duration of the defined benefit obligation (in years) 
 
15.7 
 
14.9 
 
19.0 
 
20.2 
 
10.2 
 
10.1 
Maturity analysis of benefits expected to be paid 
USD million 
Benefits expected to be paid within 12 months 
 
1,293 
 
1,232 
 
114 
 
93 
 
122 
 
121 
Benefits expected to be paid between 1 and 3 years 
 
2,630 
 
2,483 
 
232 
 
209 
 
235 
 
228 
Benefits expected to be paid between 3 and 6 years 
 
3,839 
 
3,670 
 
406 
 
384 
 
346 
 
346 
Benefits expected to be paid between 6 and 11 years 
 
6,166 
 
5,761 
 
744 
 
748 
 
532 
 
548 
Benefits expected to be paid between 11 and 16 years 
 
5,646 
 
5,070 
 
758 
 
807 
 
413 
 
455 
Benefits expected to be paid in more than 16 years 
 
18,884 
 
15,517 
 
3,206 
 
3,913 
 
541 
 
721 
1 The duration of the defined benefit obligation represents a weighted average across US and 
German plans.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
386 
 
Note 26 
Post-employment benefit plans (continued) 
Actuarial assumptions 
The 
measurement 
of 
each 
plan’s 
DBO 
considers 
different 
actuarial 
assumptions. 
Changes 
in 
these 
assumptions 
lead 
to 
volatility 
in 
the 
DBO. 
The 
actuarial 
assumptions 
used 
for 
the 
defined 
benefit 
plans 
are 
based 
on 
the 
economic 
conditions 
prevailing in 
the jurisdiction 
in which 
they are 
offered. Changes 
in the defined benefit obligation are most sensitive to changes in 
the 
discount 
rate. 
The 
discount 
rate 
is 
based 
on 
the 
yield 
of 
high-quality 
corporate bonds 
quoted in 
an active 
market in 
the 
currency of the 
respective plan. A decrease 
in the discount curve 
increases 
the 
DBO 
and 
an 
increase 
in 
the 
discount 
curve 
decreases 
the 
DBO. 
UBS 
regularly 
reviews 
the 
actuarial 
assumptions 
used 
in 
calculating 
the 
DBO 
to 
determine 
their 
continuing relevance. 
›
 
Refer to Note 
1
a item 6 for a description of the accounting 
policy 
for defined benefit plans 
 
 
The tables below show the significant actuarial assumptions used in calculating the DBO at the end of the year. 
 
Significant actuarial assumptions 
Swiss pension plan 
UK pension plan 
US and German pension 
plans
1
In % 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Discount rate 
 
0.10 
 
0.29 
 
1.42 
 
2.07 
 
1.62 
 
2.58 
Rate of salary increase 
 
2.00 
 
1.50 
 
0.00 
 
0.00 
 
2.25 
 
2.37 
Rate of pension increase 
 
0.00 
 
0.00 
 
2.89 
 
2.92 
 
1.70 
 
1.80 
Rate of interest credit on retirement savings 
 
0.60 
 
0.49 
 
0.00 
 
0.00 
 
1.12 
 
2.57 
1 Represents weighted average assumptions across US and German plans. 
 
Mortality tables and life expectancies for 
major plans 
Life expectancy at age 65 for a male member currently 
aged 65 
aged 45 
Country 
Mortality table 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Switzerland 
BVG 2020 G with CMI 2019 projections
1
 
21.7 
 
21.6 
 
23.2 
 
23.1 
UK 
S3PA with CMI 2019 projections
2
 
23.4 
 
23.3 
 
24.6 
 
24.5 
USA 
Pri-2012 with MP-2020 projection scale
3
 
21.8 
 
22.8 
 
23.2 
 
24.3 
Germany 
Dr. K. Heubeck 2018 G 
 
20.8 
 
20.7 
 
23.6 
 
23.5 
Life expectancy at age 65 for a female member currently 
aged 65 
aged 45 
Country 
Mortality table 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Switzerland 
BVG 2020 G with CMI 2019 projections
1
 
23.4 
 
23.6 
 
24.9 
 
25.1 
UK 
S3PA with CMI 2019 projections
2
 
24.9 
 
25.1 
 
26.3 
 
26.4 
USA 
Pri-2012 with MP-2020 projection scale
3
 
23.2 
 
24.4 
 
24.5 
 
25.9 
Germany 
Dr. K. Heubeck 2018 G 
 
24.3 
 
24.2 
 
26.5 
 
26.4 
 
1 In 2019, BVG 2015 G with CMI 2016 projections was used. 
2 In 2019, S2PA with CMI 2018 projections was used. 
3 In 2019, 
RP-2014 WCHA with MP-2019 projection scale was used. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
387 
 
Note 26 
Post-employment benefit plans (continued) 
Sensitivity analysis of significant actuarial assumptions 
The table below presents a sensitivity analysis for each significant 
actuarial 
assumption, 
showing 
how 
the 
DBO 
would 
have 
been 
affected 
by 
changes 
in 
the 
relevant 
actuarial 
assumption 
that 
were reasonably 
possible at 
the balance 
sheet date. 
Unforeseen 
circumstances may arise, which could 
result in variations that are 
outside 
the 
range 
of 
alternatives 
deemed 
reasonably 
possible. 
Caution 
should 
be 
used 
in 
extrapolating 
the 
sensitivities 
below 
on the DBO as the sensitivities may not be linear. 
 
Sensitivity analysis of significant actuarial 
assumptions
1
Increase / (decrease) in defined benefit obligation 
Swiss pension plan 
UK pension plan 
US and German pension plans 
USD million 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Discount rate 
Increase by 50 basis points 
 
(1,793) 
 
(1,505) 
 
(370) 
 
(346) 
 
(91) 
 
(86) 
Decrease by 50 basis points 
 
2,048 
 
1,710 
 
423 
 
395 
 
99 
 
93 
Rate of salary increase 
Increase by 50 basis points 
 
117 
 
76 
–
2
–
2 
 
1 
 
1 
Decrease by 50 basis points 
 
(111) 
 
(73) 
–
2
–
2 
 
(1) 
 
(1) 
Rate of pension increase 
Increase by 50 basis points 
 
1,413 
 
1,221 
 
358 
 
331 
 
8 
 
7 
Decrease by 50 basis points 
–
3
–
3
 
(316) 
 
(299) 
 
(7) 
 
(7) 
Rate of interest credit on retirement savings 
Increase by 50 basis points 
 
236 
 
175 
–
4 
–
4 
 
9 
 
9 
Decrease by 50 basis points 
 
(188)
5 
 
(102) 
–
4 
–
4 
 
(8) 
 
(9) 
Life expectancy 
Increase in longevity by one additional year 
 
1,061 
 
886 
 
182 
 
154 
 
60 
 
51 
1 The sensitivity 
analyses are based 
on a change 
in one assumption 
while holding all 
other assumptions constant, 
so that interdependencies 
between the assumptions 
are excluded. 
2 As the 
plan is closed 
for 
future service, 
a change 
in assumption 
is not 
applicable. 
3 As 
the assumed 
rate of 
pension increase 
was 0% 
as of 
31 December 
2020 and 
as of 
31 December 
2019, a 
downward change 
in assumption 
is 
not applicable. 
4 As the UK plan does not provide interest credits on 
retirement savings, a change in assumption 
is not applicable. 
5 As of 31 December 2020, 20% of retirement savings 
were subject to a legal 
minimum rate of 1.00%. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
388 
 
Note 26 
Post-employment benefit plans (continued) 
Fair value of plan assets 
The tables 
below 
provide 
information 
about 
the composition 
and fair 
value 
of plan 
assets 
of the 
Swiss, 
the UK 
and the 
US pension 
plans. 
 
Composition and fair value of plan assets 
Swiss pension plan 
31.12.20 
31.12.19 
Fair value 
Plan asset 
allocation % 
Fair value 
Plan asset 
allocation % 
USD million 
Quoted 
in an active 
market 
Other 
Total 
Quoted 
in an active 
market 
Other 
Total 
Cash and cash equivalents 
 
219 
 
0 
 
219 
 
1 
 
159 
 
0 
 
159 
 
1 
Real estate / property 
Domestic 
 
0 
 
3,582 
 
3,582 
 
11 
 
0 
 
3,050 
 
3,050 
 
11 
Foreign 
 
0 
 
331 
 
331 
 
1 
 
0 
 
160 
 
160 
 
1 
Investment funds 
Equity 
Domestic 
 
826 
 
0 
 
826 
 
3 
 
701 
 
0 
 
701 
 
2 
Foreign 
 
6,284 
 
1,958 
 
8,242 
 
25 
 
6,091 
 
1,653 
 
7,743 
 
27 
Bonds
1
Domestic, AAA to BBB– 
 
3,721 
 
0 
 
3,721 
 
11 
 
3,238 
 
0 
 
3,238 
 
11 
Foreign, AAA to BBB– 
 
6,146 
 
0 
 
6,146 
 
19 
 
5,880 
 
0 
 
5,880 
 
21 
Foreign, below BBB– 
 
1,303 
 
0 
 
1,303 
 
4 
 
999 
 
0 
 
999 
 
4 
Other 
 
3,363 
 
3,722 
 
7,085 
 
22 
 
1,604 
 
3,956 
 
5,560 
 
20 
Other investments 
 
663 
 
473 
 
1,136 
 
3 
 
535 
 
194 
 
729 
 
3 
Total fair value of plan assets 
 
22,525 
 
10,065 
 
32,590 
 
100 
 
19,206 
 
9,014 
 
28,219 
 
100 
31.12.20 
31.12.19 
Total fair value of plan assets 
 
32,590 
 
28,219 
of which:
2
Bank accounts at UBS 
 
231 
 
159 
UBS debt instruments 
 
34 
 
7 
UBS shares 
 
24 
 
21 
Securities lent to UBS
3
 
1,416 
 
1,328 
Property occupied by UBS 
 
96 
 
88 
Derivative financial instruments, counterparty UBS
3
 
149 
 
10 
1 The bond credit 
ratings are primarily 
based on Standard & 
Poor’s credit 
ratings. Ratings 
AAA to BBB– 
and below BBB– represent 
investment grade and 
non-investment grade ratings, 
respectively. In 
cases where 
credit ratings from other 
rating agencies were used, 
these were converted to the 
equivalent rating in Standard 
& Poor’s 
rating classification. 
2 Bank accounts at UBS 
encompass accounts in the name 
of the Swiss 
pension fund. The other positions disclosed in 
the table encompass both direct investments in UBS instruments 
and indirect investments, i.e., those 
made through funds that the pension fund invests 
in. 
3 Securities 
lent 
to 
UBS 
and 
derivative 
financial 
instruments 
are 
presented 
gross 
of 
any 
collateral. 
Securities 
lent 
to 
UBS 
were 
fully 
covered 
by 
collateral 
as 
of 
31 
December 
2020 
and 
31 
December 
2019. 
Net 
of 
collateral, derivative financial instruments amounted to negative USD 17 million as of 31 December 2020 (31 
December 2019: positive USD 6 million). 
 
 

 
389 
 
Note 26 
Post-employment benefit plans (continued) 
Composition and fair value of plan assets 
(continued) 
UK pension plan 
31.12.20 
31.12.19 
Fair value 
Plan asset 
allocation % 
Fair value 
Plan asset 
allocation % 
USD million 
Quoted 
in an active 
market 
Other 
Total 
Quoted 
in an active 
market 
Other 
Total 
Cash and cash equivalents 
 
195 
 
0 
 
195 
 
5 
 
141 
 
0 
 
141 
 
4 
Bonds
1
Domestic, AAA to BBB– 
 
2,150 
 
0 
 
2,150 
 
52 
 
1,810 
 
0 
 
1,810 
 
49 
Foreign, AAA to BBB– 
 
53 
 
0 
 
53 
 
1 
 
0 
 
0 
 
0 
 
0 
Investment funds 
Equity 
Domestic 
 
34 
 
3 
 
37 
 
1 
 
33 
 
0 
 
33 
 
1 
Foreign 
 
1,077 
 
0 
 
1,077 
 
26 
 
916 
 
0 
 
916 
 
25 
Bonds
1
Domestic, AAA to BBB– 
 
919 
 
131 
 
1,050 
 
25 
 
610 
 
117 
 
727 
 
20 
Domestic, below BBB– 
 
47 
 
0 
 
47 
 
1 
 
22 
 
0 
 
22 
 
1 
Foreign, AAA to BBB– 
 
149 
 
0 
 
149 
 
4 
 
310 
 
0 
 
310 
 
8 
Foreign, below BBB– 
 
110 
 
0 
 
110 
 
3 
 
108 
 
0 
 
108 
 
3 
Real estate 
Domestic 
 
98 
 
16 
 
114 
 
3 
 
103 
 
18 
 
122 
 
3 
Foreign 
 
0 
 
37 
 
37 
 
1 
 
0 
 
19 
 
19 
 
1 
Other 
 
(86) 
 
0 
 
(86) 
 
(2) 
 
0 
 
0 
 
0 
 
0 
Insurance contracts 
 
0 
 
8 
 
8 
 
0 
 
0 
 
7 
 
7 
 
0 
Derivatives 
 
(3) 
 
0 
 
(3) 
 
0 
 
3 
 
0 
 
3 
 
0 
Asset-backed securities 
 
0 
 
6 
 
6 
 
0 
 
0 
 
6 
 
6 
 
0 
Other investments
2
 
(803) 
 
9 
 
(794) 
 
(19) 
 
(572) 
 
7 
 
(565) 
 
(15) 
Total fair value of plan assets 
 
3,940 
 
209 
 
4,149 
 
100 
 
3,483 
 
175 
 
3,658 
 
100 
1 The bond credit 
ratings are primarily 
based on Standard & 
Poor’s credit 
ratings. Ratings 
AAA to BBB– 
and below BBB– represent 
investment grade and 
non-investment grade ratings, 
respectively. In 
cases where 
credit ratings from other rating agencies were used, these were converted to the equivalent rating 
in Standard & Poor’s rating 
classification. 
2 Mainly relates to repurchase arrangements on UK treasury bonds. 
 
US pension plans 
31.12.20 
31.12.19 
Fair value 
Plan asset 
allocation % 
Fair value 
Plan asset 
allocation % 
USD million 
Quoted 
in an active 
market 
Other 
Total 
Quoted 
in an active 
market 
Other 
Total 
Cash and cash equivalents 
 
38 
 
0 
 
38 
 
3 
 
27 
 
0 
 
27 
 
2 
Bonds
1
Domestic, AAA to BBB– 
 
490 
 
0 
 
490 
 
36 
 
475 
 
0 
 
475 
 
37 
Domestic, below BBB– 
 
7 
 
0 
 
7 
 
0 
 
2 
 
0 
 
2 
 
0 
Foreign, AAA to BBB– 
 
99 
 
0 
 
99 
 
7 
 
99 
 
0 
 
99 
 
8 
Foreign, below BBB– 
 
1 
 
0 
 
1 
 
0 
 
3 
 
0 
 
3 
 
0 
Investment funds 
Equity 
Domestic 
 
210 
 
0 
 
210 
 
15 
 
208 
 
0 
 
208 
 
16 
Foreign 
 
169 
 
0 
 
169 
 
12 
 
161 
 
0 
 
161 
 
12 
Bonds
1
Domestic, AAA to BBB– 
 
195 
 
0 
 
195 
 
14 
 
176 
 
0 
 
176 
 
14 
Domestic, below BBB– 
 
34 
 
0 
 
34 
 
2 
 
28 
 
0 
 
28 
 
2 
Foreign, AAA to BBB– 
 
19 
 
0 
 
19 
 
1 
 
17 
 
0 
 
17 
 
1 
Foreign, below BBB– 
 
3 
 
0 
 
3 
 
0 
 
3 
 
0 
 
3 
 
0 
Real estate 
Domestic 
 
0 
 
14 
 
14 
 
1 
 
0 
 
13 
 
13 
 
1 
Other 
 
79 
 
0 
 
79 
 
6 
 
69 
 
0 
 
69 
 
5 
Insurance contracts 
 
0 
 
1 
 
1 
 
0 
 
0 
 
18 
 
18 
 
1 
Total fair value of plan assets 
 
1,345 
 
15 
 
1,360 
 
100 
 
1,268 
 
31 
 
1,299 
 
100 
1 The bond credit 
ratings are primarily 
based on Standard & 
Poor’s credit 
ratings. Ratings 
AAA to BBB– 
and below BBB– represent 
investment grade and 
non-investment grade ratings, 
respectively. In 
cases where 
credit ratings from other rating agencies were used, these were converted to the equivalent rating 
in Standard & Poor’s rating classification.

Consolidated financial statements | UBS Group AG consolidated financial statements

390

Note 26

Post-employment benefit plans (continued)

b) Defined contribution plans

UBS sponsors

a number

of defined

contribution plans,

with the

most significant

plans in

the US

and the

UK. UBS’s

obligation is

limited

its

contributions

made

accordance

with

the

plan,

which

may

include

direct

contributions

well

matching

contributions.

Employer

contributions

defined

contribution

plans are

recognized as

an expense,

which, for

2020, 2019

and

2018

amounted

USD

343

million,

USD

326

million

and

USD 268 million, respectively.

c) Related-party disclosure

UBS is

the principal

provider of

banking services

for the

pension

fund of

UBS in

Switzerland. In

this capacity,

UBS is

engaged to

execute

most

the

pension

fund’s

banking

activities.

These

activities

can

include,

but

are

not

limited

to,

trading,

securities

lending

and

borrowing

and

derivative

transactions.

The

non-

Swiss

UBS

pension

funds

not

have

similar

banking

relationship with UBS.

Also,

UBS

leases

certain

properties

that

are

owned

the

Swiss

pension

fund.

31 December

2020,

the

minimum

commitment

toward

the

Swiss

pension

fund

under

the

leases

was

approximately

USD 11

million

(31 December

2019:

USD 14 million).

›

Refer to the “Composition and fair value

of plan assets” table in

Note 26a

for more information about fair value of investments

in UBS instruments held by the Swiss

pension fund

The

following

amounts

have

been

received

paid

UBS

from

and

the

post-employment

benefit

plans

located

Switzerland,

the

and

the

respect

these

banking

activities and arrangements.

Related-party disclosure

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Received by UBS

Fees

Paid by UBS

Rent

Dividends, capital repayments and interest

The transaction volumes in UBS shares and UBS debt instruments and the balances of UBS shares held as of 31 December were:

Transaction volumes – UBS shares and UBS debt instruments

For the year ended

31.12.20

31.12.19

Financial instruments bought by pension funds

UBS shares (in thousands of shares)

1,758

967

UBS debt instruments (par values, USD million)

Financial instruments sold by pension funds or matured

UBS shares (in thousands of shares)

2,605

1,977

UBS debt instruments (par values, USD million)

UBS shares held by post-employment benefit

plans

31.12.20

31.12.19

Number of shares (in thousands of shares)

14,854

15,701

Fair value (USD million)

210

198

 
 
 
391 
 
Note 27 
Employee benefits: variable compensation 
 
a) Plans offered 
The 
Group 
has 
several 
share-based 
and 
other 
deferred 
compensation 
plans 
that 
align 
the 
interests 
of 
Group 
Executive 
Board (GEB) members 
and other employees with 
the interests of 
investors. 
Share 
based payment 
awards 
are granted 
in the 
form of 
notional 
shares and, where permitted, 
carry a dividend equivalent 
that may 
be paid in notional 
shares or cash 
and that vest 
on the same terms 
and conditions 
as the award. Awards are settled 
by delivering UBS 
shares at vesting, 
except in jurisdictions 
where this is not permitted 
for legal 
or tax 
reasons. 
Deferred compensation awards are 
generally forfeitable upon, 
among other circumstances, 
voluntary termination 
of employment 
with UBS. These 
compensation plans 
are 
also designed 
to 
meet 
regulatory 
requirements 
and 
include 
special 
provisions 
for 
regulated employees. 
The most significant 
deferred compensation 
plans are described 
below. 
›
 
Refer to Note 1a 
item 5 for a description of the accounting 
policy 
related to share-based and other deferred compensation 
plans 
Mandatory 
deferred 
compensation 
plans 
Equity 
Ownership 
Plan (EOP) 
The EOP 
is a 
mandatory deferred share-based 
compensation 
plan 
for 
all 
employees 
whose
 
total 
annual 
compensation exceeds 
a 
specified threshold, other 
than 
GEB 
members, Group 
Managing 
Directors (GMDs) and Group 
or 
Divisional Vice Chair role 
holders 
who 
are 
granted share-based awards under 
the 
new 
Long-Term 
Incentive 
Plan (LTIP) first granted in 2020. Awards 
generally 
vest in 
equal 
installments 
after
 
two 
and 
three 
years
 
following 
grant, 
provided that vesting 
conditions are satisfied. Awards 
granted to 
GEB members 
in 2019 
and prior 
years 
generally 
vest three, 
four and 
five years 
after 
grant. 
EOP awards granted to GEB members and GMDs in 2019 and 
prior 
years, 
as 
well 
as 
EOP 
awards 
granted 
to 
certain 
other 
employees 
will 
only 
vest 
if 
certain 
performance 
measures 
both 
for the Group and the applicable business division are met. 
In 
order 
to 
align 
deferred 
compensation 
of 
certain 
Asset 
Management 
employees 
with 
the 
performance 
of 
the 
investment 
funds 
they 
manage, 
awards 
are 
granted 
to 
such 
employees 
in 
the 
form 
of 
cash-settled 
notional 
investment 
funds. 
The 
amount 
delivered 
depends 
on 
the 
value 
of 
the 
underlying investment funds at the time of vesting. 
Certain 
awards, 
such 
as 
replacement 
awards 
issued 
outside 
the 
normal 
performance 
year 
cycle, 
may 
take 
the 
form 
of 
deferred cash under the EOP plan rules. 
Long-Term 
Incentive 
Plan 
The 
LTIP 
is 
a 
mandatory 
deferred 
share-based 
compensation 
plan 
for 
GEB 
members, 
GMDs 
and 
Group 
or 
Divisional 
Vice 
Chair role holders. 
The 
final 
number 
of 
notional 
shares 
delivered 
at 
vesting 
depends 
on 
two 
equally-weighted 
performance 
metrics: 
reported 
return 
on 
common 
equity 
tier 
1 
capital 
(RoCET1) 
and 
relative 
total 
shareholder 
return 
(rTSR), 
which 
measures 
the 
performance 
of 
the 
UBS 
share 
against 
an 
index 
consisting 
of 
Global 
Systemically 
Important 
Banks 
as 
determined 
by 
the 
Financial Stability Board. 
The 
final 
number of 
shares 
as determined 
at 
the end 
of 
the 
three-year 
performance 
period 
will 
vest 
in 
three 
equal 
installments 
in 
each 
of 
the 
three 
years 
following 
the 
performance period 
for GEB 
members, and 
cliff vest 
in the 
first 
year following the 
performance period for GMDs 
and Vice Chair 
role holders. 
Deferred 
Contingent 
Capital 
Plan (DCCP) 
The 
DCCP 
is 
a 
mandatory 
deferred 
compensation 
plan 
for 
all 
employees whose 
total annual compensation exceeds a 
specified 
threshold. 
DCCP awards take the form of notional additional tier 1 (AT1) 
capital 
instruments, 
which, 
at 
the 
discretion 
of 
UBS, 
can 
be 
settled in 
either a 
cash payment 
or a 
perpetual, marketable 
AT1 
capital instrument. DCCP 
awards vest in 
full after five years, 
and 
up to seven years for certain regulated employees, unless there is 
a trigger event. 
Awards are 
forfeited if 
a viability 
event occurs, 
i.e., if 
FINMA 
notifies 
the 
firm 
in 
writing 
that 
the 
DCCP 
awards 
must 
be 
written down 
to prevent 
an insolvency, 
bankruptcy or 
failure of 
UBS, 
or 
if 
UBS receives 
a 
commitment of 
extraordinary 
support 
from the public sector that is necessary to prevent such an event. 
DCCP 
awards 
are 
also 
written 
down 
for 
GEB 
members 
if 
the 
Group’s 
CET1 
capital 
ratio 
falls 
below 
10% 
and 
for 
all 
other 
employees 
if 
it 
falls 
below 
7%. 
As 
an 
additional 
performance 
condition, 
GEB 
members 
forfeit 
20% 
of 
their 
award 
for 
each 
loss-making year during the vesting period. 
Interest payments 
on DCCP 
awards are 
paid at 
the discretion 
of UBS. 
Where interest 
payments are 
not permitted, 
such as 
for 
certain 
regulated 
employees, 
the 
DCCP 
award 
reflects 
the 
fair 
value of the granted non-interest-bearing award. 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
392 
 
Note 27 
Employee benefits: variable compensation (continued)
Financial advisor variable compensation 
In 
line 
with 
market 
practice 
for 
US 
wealth 
management 
businesses, the 
compensation for 
US financial advisors 
in Global 
Wealth 
Management 
is 
composed 
of 
production 
payout 
and 
deferred 
compensation 
awards. 
Production 
payout 
is 
primarily 
based on compensable revenue. 
Financial advisors 
may also qualify 
for deferred compensation 
awards, which 
generally vest 
over a 
six-year period. 
The awards 
are 
based 
on 
strategic 
performance 
measures, 
including 
production, 
length 
of 
service 
with 
the 
firm 
and 
net 
new 
business. 
Production 
payout 
rates 
and 
deferred 
compensation 
awards 
may 
be 
reduced 
for, 
among 
other 
things, 
errors, 
negligence or carelessness, 
or a failure 
to comply with 
the firm’s 
rules, 
standards, 
practices 
and 
/ 
or 
policies 
and 
/ 
or 
applicable 
laws and regulations. 
Other compensation plans 
Equity Plus Plan 
The 
Equity 
Plus 
Plan 
is 
a 
voluntary 
employee 
share 
purchase 
program 
that allows 
eligible employees 
to purchase 
UBS shares 
at 
market 
price 
and 
receive 
one 
additional 
notional 
share 
for 
every 
three 
shares 
purchased, 
up 
to 
a 
maximum 
annual 
limit. 
Additional shares 
vest after a 
maximum of 
three years, 
provided 
the employee 
remains employed 
with UBS 
and has 
retained the 
purchased shares throughout the holding period. 
Role-based allowances 
Some employees may 
receive a 
role-based allowance 
in addition 
to their base salary. 
This allowance reflects the market 
value of a 
specific 
role 
and 
is 
fixed, 
non-forfeitable 
compensation. 
Unlike 
salary, 
a 
role-based 
allowance 
is 
paid 
only 
as 
long 
as 
the 
employee is in a 
specific role. Role-based allowances 
consist of a 
cash portion and, 
where applicable, a 
blocked UBS share 
award. 
The compensation expense is recognized in the year of grant. 
Discontinued deferred compensation plans 
PartnerPlus 
Through 
performance 
year 
2016, 
financial 
advisor 
strategic 
objective 
awards 
were 
partly 
granted 
under 
the 
PartnerPlus 
deferred cash plan, which included amounts awarded 
by UBS, as 
well 
as 
voluntary 
participant 
contributions. 
Company 
contributions 
and 
voluntary 
contributions 
were 
credited 
with 
interest 
in 
accordance 
with 
the 
terms 
of 
the 
plan, 
or 
upon 
election 
credited 
with 
notional 
earnings 
based 
on 
the 
performance 
of 
various 
mutual 
funds. 
Company 
contributions 
and 
interest 
on 
both 
company 
and 
voluntary 
contributions 
ratably 
vest 
in 
20% 
installments 
6 
to 
10 
years 
following 
grant 
date. 
Company 
contributions 
and 
interest 
on 
notional 
earnings 
on 
both 
company 
and 
voluntary 
contributions 
are 
forfeitable 
under certain circumstances. 
GrowthPlus 
GrowthPlus is a compensation plan for selected financial advisors 
whose 
revenue 
production 
and 
length 
of 
service 
exceeded 
defined 
thresholds 
from 
2010 
through 
2017. 
Awards 
were 
granted 
in 
2010, 
2011, 
2015 
and 
2018. 
The 
awards 
are 
cash-
based and are distributed over seven years, with the exception of 
2018 awards, which are distributed over five years. 
Share delivery obligations 
Share 
delivery 
obligations 
related 
to 
employee 
share-based 
compensation 
awards 
were 
17
2
 
million 
shares
 
as 
of 
31 December 
2020 
(31 
December 
2019: 
156 
million 
shares). 
Share 
delivery 
obligations 
are 
calculated 
on 
the 
basis 
of 
undistributed 
notional 
share 
awards, 
taking 
applicable 
performance conditions into account. 
As 
of 
31 
December 
2020
, 
UBS 
held 
157
 
million 
t
reasury 
shares 
(31 
December 
2019: 
125 
million) 
that 
were 
available 
to 
satisfy share delivery obligations. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
393 
 
Note 27 
Employee benefits: variable compensation (continued)
 
b) Effect on the income statement 
Effect 
on the 
income 
statement 
for the 
financial 
year and 
future 
periods 
The table 
below 
provides 
information 
about 
compensation 
expenses 
related to 
total variable compensation, including financial advisor 
variable compensation, 
that were 
recognized in the 
financial year 
ended 31 December 
2020, as well as expenses 
that were deferred 
and will be 
recognized 
in the income 
statement 
for 2021 and 
later. 
The majority 
of expenses 
deferred 
to 2021 
and later 
that are 
related 
to 
the 
2020
 
performance 
year 
pertain
 
to 
awards
 
granted 
in 
February 2021. 
The 
total unamortized compensation expense for 
unvested 
share-based 
awards 
granted 
up to 31 
December 
2020 will 
be recognized 
in future periods over 
a weighted average 
period of 
2.9 years. 
During 
the 
third 
quarter 
of 
2020, 
UBS 
modified 
the 
conditions for 
continued vesting of 
certain outstanding deferred 
compensation awards 
for qualifying 
employees, resulting 
in the 
recognition 
of 
USD 
314 
million 
in 
expenses 
for 
variable 
compensation – performance awards. The full year effect 
was an 
expense of approximately 
USD 240 million. 
Refer to Note 
1b for 
more information. 
 
 
Variable compensation including financial advisor variable 
compensation 
Expenses recognized in 2020 
Expenses deferred to 2021 and later
1
USD million 
Related to the 
2020 
performance 
year 
Related to prior 
performance 
years 
Total 
Related to the 
2020 
performance 
year 
Related to prior 
performance 
years 
Total 
Non-deferred cash 
 
2,167 
 
(26) 
 
2,141 
 
0 
 
0 
 
0 
Deferred compensation awards 
 
341 
 
727 
 
1,068 
 
756 
 
288 
 
1,044 
of which: Equity Ownership Plan 
 
137 
 
327 
 
463 
 
306 
 
69 
 
376 
of which: Deferred Contingent Capital Plan 
 
112 
 
351 
 
463 
 
280 
 
196 
 
476 
of which: Long-Term Incentive Plan 
 
42 
 
11 
 
54 
 
50 
 
10 
 
61 
of which: Asset Management EOP 
 
49 
 
39 
 
88 
 
120 
 
12 
 
132 
Variable compensation – performance awards 
 
2,508 
 
701 
 
3,209 
 
756 
 
288 
 
1,044 
Variable compensation – other
2
 
126 
 
94 
 
220 
 
181 
 
192 
 
374 
Total variable compensation excluding financial advisor variable compensation 
 
2,634 
 
795 
 
3,429 
 
938 
 
480 
 
1,418 
Financial advisor variable compensation 
 
3,356 
 
233 
 
3,589 
 
350 
 
602 
 
952 
of which: non-deferred cash 
 
3,154 
 
0 
 
3,154 
 
0 
 
0 
 
0 
of which: deferred share-based awards 
 
69 
 
50 
 
119 
 
79 
 
135 
 
214 
of which: deferred cash-based awards 
 
133 
 
183 
 
316 
 
271 
 
467 
 
738 
Compensation commitments with recruited financial advisors
3
 
22 
 
480 
 
502 
 
473 
 
1,682 
 
2,155 
Total FA variable compensation 
 
3,378 
 
713 
 
4,091 
 
822 
 
2,284 
 
3,106 
Total variable compensation including FA variable compensation 
 
6,012 
 
1,508 
 
7,520
4 
 
1,760 
 
2,764 
 
4,524 
1 Estimate as of 
31 December 2020. Actual 
amounts to be expensed 
in future periods may 
vary, e.g., 
due to forfeiture of 
awards. 
2 Comprised of 
replacement payments, forfeiture 
credits, severance 
payments, 
retention plan 
payments and 
interest expense 
related to 
the Deferred 
Contingent Capital 
Plan. 
3 Reflects 
expenses related 
to compensation 
commitments with 
financial advisors 
entered into 
at the 
time of 
recruitment that are 
subject to 
vesting requirements. 
Amounts reflected 
as deferred expenses 
represent the 
maximum deferred 
exposure as 
of the 
balance sheet 
date. 
4 Includes 
USD 686 
million in 
expenses 
related to share-based compensation (performance 
awards: USD 517 million; other variable 
compensation: USD 50 million; financial advisor 
compensation: USD 119 million). A 
further USD 100 million in expenses 
related to share-based 
compensation was recognized 
within other expense 
categories included in 
Note 6 (salaries: 
USD 4 million 
related to role-based 
allowances; social security: 
USD 54 million; 
other personnel 
expenses: USD 42 million related to the Equity Plus Plan). Total personnel expense related to share-based 
equity-settled compensation excluding social security was USD 691 million. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
394 
 
Note 27 
Employee benefits: variable compensation (continued) 
Variable compensation including financial advisor variable 
compensation (continued) 
Expenses recognized in 2019 
Expenses deferred to 2020 and later
1
USD million 
Related to the 
2019 
performance 
year 
Related to prior 
performance 
years 
Total 
Related to the 
2019 
performance 
year 
Related to prior 
performance 
years 
Total 
Non-deferred cash 
 
1,894 
 
(26) 
 
1,868 
 
0 
 
0 
 
0 
Deferred compensation awards 
 
299 
 
588 
 
887 
 
429 
 
608 
 
1,036 
of which: Equity Ownership Plan 
 
122 
 
300 
 
422 
 
205 
 
219 
 
424 
of which: Deferred Contingent Capital Plan 
 
113 
 
262 
 
375 
 
173 
 
365 
 
538 
of which: Long-Term Incentive Plan 
 
39 
 
0 
 
39 
 
25 
 
0 
 
25 
of which: Asset Management EOP 
 
25 
 
26 
 
51 
 
26 
 
23 
 
49 
Variable compensation – performance awards 
 
2,193 
 
562 
 
2,755 
 
429 
 
608 
 
1,036 
Variable compensation – other
2
 
159 
 
88 
 
246 
 
117 
 
232 
 
349 
Total variable compensation excluding financial advisor variable compensation 
 
2,352 
 
650 
 
3,001 
 
545 
 
840 
 
1,385 
Financial advisor variable compensation 
 
3,233 
 
268 
 
3,501 
 
197 
 
710 
 
907 
of which: non-deferred cash 
 
3,064 
 
0 
 
3,064 
 
0 
 
0 
 
0 
of which: deferred share-based awards 
 
57 
 
48 
 
106 
 
54 
 
130 
 
183 
of which: deferred cash-based awards 
 
112 
 
219 
 
331 
 
144 
 
580 
 
724 
Compensation commitments with recruited financial advisors
3
 
32 
 
510 
 
542 
 
350 
 
1,617 
 
1,967 
Total FA variable compensation 
 
3,265 
 
778 
 
4,043 
 
548 
 
2,327 
 
2,874 
Total variable compensation including FA variable compensation 
 
5,617 
 
1,428 
 
7,045
4 
 
1,093 
 
3,166 
 
4,259 
1 Estimate as of 31 December 
2019. Actual amounts expensed may 
vary, e.g., 
due to forfeiture of awards. 
2 Comprised of replacement payments, 
forfeiture credits, severance payments, 
retention plan payments 
and interest expense related to 
the Deferred Contingent Capital 
Plan. 
3 Reflects expenses related to 
compensation commitments with financial 
advisors entered into at 
the time of recruitment that 
are subject to 
vesting requirements. Amounts reflected as deferred expenses represent the maximum deferred 
exposure as of the balance sheet date. 
4 Includes USD 610 million in expenses related to share-based compensation 
(performance awards: USD 
461 million; other 
variable compensation: USD 
43 million; financial 
advisor compensation: USD 
106 million). A 
further USD 61 million 
in expenses related 
to share-based compensation 
was recognized within other expense categories included in Note 6 (salaries: USD 
10 million related to role-based allowances; social security: 
USD 25 million; other personnel expenses: USD 27 million related to the 
Equity Plus Plan). Total personnel expense related to share-based equity-settled compensation excluding 
social security was USD 619 million. 
 
Variable compensation including financial advisor variable 
compensation (continued) 
Expenses recognized in 2018 
Expenses deferred to 2019 and later
1
USD million 
Related to the 
2018 
performance 
year 
Related to prior 
performance 
years 
Total 
Related to the 
2018 
performance 
year 
Related to prior 
performance 
years 
Total 
Non-deferred cash 
 
2,089 
 
(32) 
 
2,057 
 
0 
 
0 
 
0 
Deferred compensation awards 
 
373 
 
565 
 
938 
 
585 
 
653 
 
1,238 
of which: Equity Ownership Plan 
 
217 
 
309 
 
526 
 
325 
 
244 
 
570 
of which: Deferred Contingent Capital Plan 
 
131 
 
226 
 
357 
 
238 
 
382 
 
620 
of which: Asset Management EOP 
 
25 
 
28 
 
53 
 
22 
 
26 
 
48 
of which: other performance awards 
 
0 
 
2 
 
2 
 
0 
 
1 
 
1 
Variable compensation – performance awards 
 
2,461 
 
534 
 
2,995 
 
585 
 
653 
 
1,238 
Variable compensation – other
2
 
162 
 
80 
 
243 
 
180 
 
269 
 
450 
Total variable compensation excluding financial advisor variable compensation 
 
2,624 
 
614 
 
3,238 
 
766 
 
922 
 
1,688 
Financial advisor variable compensation 
 
3,233 
 
237 
 
3,470 
 
128 
 
639 
 
767 
of which: non-deferred cash 
 
3,089 
 
0 
 
3,089 
 
0 
 
0 
 
0 
of which: deferred share-based awards 
 
51 
 
44 
 
95 
 
52 
 
131 
 
183 
of which: deferred cash-based awards 
 
93 
 
193 
 
286 
 
76 
 
507 
 
584 
Compensation commitments with recruited financial advisors
3
 
33 
 
551 
 
584 
 
357 
 
1,883 
 
2,240 
Total FA variable compensation 
 
3,266 
 
789 
 
4,054 
 
484 
 
2,522 
 
3,006 
Total variable compensation including FA variable compensation 
 
5,889 
 
1,403 
 
7,292
4 
 
1,250 
 
3,444 
 
4,694 
1 Estimate as of 31 December 
2018. Actual amounts expensed may 
vary, e.g., 
due to forfeiture of awards. 
2 Comprised of replacement payments, 
forfeiture credits, severance payments, 
retention plan payments 
and interest expense related to 
the Deferred Contingent Capital 
Plan. 
3 Reflects expenses related to 
compensation commitments with financial 
advisors entered into at 
the time of recruitment that 
are subject to 
vesting requirements. Amounts reflected as deferred expenses represent the maximum deferred 
exposure as of the balance sheet date. 
4 Includes USD 634 million in expenses related to share-based compensation 
(performance awards: USD 526 million; other variable compensation: USD 12 million; financial advisor compensation: USD 95 
million). A further USD 49 million in expenses related to share-based compensation was 
recognized within 
other expense 
categories included 
in Note 
6 (salaries: 
USD 15 
million related 
to role-based 
allowances; social 
security: USD 
8 million; 
other personnel 
expenses: USD 
26 million 
related to 
the 
Equity Plus Plan). Total personnel expense related to share-based equity-settled compensation excluding 
social security was USD 676 million. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
395 
 
Note 27 
Employee benefits: variable compensation (continued) 
 
c) Outstanding share-based compensation awards 
Share and performance share awards 
Movements in outstanding share-based awards during 2020 and 2019 are provided in the table below. 
 
Movements in outstanding share-based compensation 
awards 
Number of shares 
2020 
Weighted average 
grant date fair value 
(USD) 
Number of shares 
2019 
Weighted average 
grant date fair value 
(USD) 
Outstanding, at the beginning of the year 
 
156,064,763 
 
14 
 
146,845,027 
 
16 
Awarded during the year 
 
72,250,157 
 
11 
 
77,641,909 
 
11 
Distributed during the year 
 
(46,899,362) 
 
15 
 
(61,152,200) 
 
13 
Forfeited during the year 
 
(6,515,164) 
 
13 
 
(7,269,974) 
 
14 
Outstanding, at the end of the year 
 
174,900,395 
 
12 
 
156,064,763 
 
14 
of which: shares vested for accounting purposes 
 
118,260,527 
 
79,486,447 
 
 
The 
total 
carrying 
amount 
of 
the 
liability 
related 
to 
cash-settled 
share-based 
awards 
as 
of 
31 
December 
2020 
and 
31 December 
2019 
was USD 36 million and USD 34 million, respectively. 
d) Valuation 
UBS share awards 
UBS 
measures 
compensation 
expense 
based 
on 
the 
average 
market 
price of 
the UBS 
share 
on 
the 
grant date 
as 
quoted on 
the 
SIX 
Swiss 
Exchange, 
taking 
into 
consideration 
post-vesting 
sale 
and 
hedge 
restrictions, 
non-vesting 
conditions 
and 
market 
conditions, where 
applicable. The 
fair value 
of the 
share awards 
subject to 
post-vesting sale 
and hedge 
restrictions is 
discounted 
on the basis of 
the duration of the 
post-vesting restriction and is 
referenced to 
the cost 
of purchasing 
an at-the-money 
European 
put option 
for the term 
of the transfer 
restriction. The 
weighted 
average 
discount 
for 
share 
and 
performance 
share 
awards 
granted 
during 
2020 
was approximately 
23.8% 
(2019: 
22.6%) 
of the 
market price 
of the 
UBS share. 
The grant 
date fair 
value 
of notional 
shares without 
dividend entitlements 
also includes 
a 
deduction for 
the present 
value of 
future expected 
dividends to 
be paid between the grant date and distribution. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
396 
 
Note 28 
Interests in subsidiaries and other entities 
 
a) Interests in subsidiaries 
UBS 
defines 
its 
significant 
subsidiaries 
as 
those 
entities 
that, 
either individually or 
in aggregate, 
contribute significantly to 
the 
Group’s 
financial 
position 
or 
results 
of 
operations, 
based 
on 
a 
number 
of 
criteria, 
including 
the 
subsidiaries’ 
equity 
and 
their 
contribution to the 
Group’s total assets 
and profit or 
loss before 
tax, 
in 
accordance 
with 
the 
requirements 
set 
by 
IFRS 
12, 
Swiss 
regulations 
and 
the 
rules 
of 
the 
US 
Securities 
and 
Exchange 
Commission (SEC). 
Individually significant subsidiaries 
The 
two 
tables 
below 
list 
the 
Group’s 
individually 
significant 
subsidiaries 
as 
of 
31 
December 
2020. 
Unless 
otherwise 
stated, 
the 
subsidiaries listed 
below have 
share 
capital consisting 
solely 
of 
ordinary 
shares 
that are 
held entirely 
by the 
Group, 
and 
the 
proportion 
of 
ownership 
interest 
held 
is 
equal 
to 
the 
voting 
rights held by the Group. 
The country where the respective registered office is located is 
also the 
principal place 
of business. 
UBS AG 
operates through 
a 
global 
network 
of 
branches 
and 
a 
significant 
proportion 
of 
its 
business 
activity 
is 
conducted 
outside 
Switzerland, 
including 
in 
the UK, the US, Singapore, 
Hong Kong and other countries. 
UBS 
Europe SE 
has branches 
and offices 
in a 
number of 
EU Member 
States, including Germany, Italy, 
Luxembourg, Spain and 
Austria. 
Share capital 
is provided 
in the currency 
of the 
legally registered 
office. 
 
 
 
Individually significant subsidiaries of 
UBS Group AG as of 31 December 2020 
Company 
Registered office 
Share capital in million 
Equity interest accumulated in % 
UBS AG 
Zurich and Basel, Switzerland 
CHF 
 
385.8 
 
100.0 
UBS Business Solutions AG
1
Zurich, Switzerland 
CHF 
 
1.0 
 
100.0 
1 UBS Business Solutions AG holds subsidiaries in Poland, China and India. 
Individually significant subsidiaries 
of UBS AG as of 31 December 2020
1
Company 
Registered office 
Primary business 
Share capital in million 
Equity interest accumulated in % 
UBS Americas Holding LLC 
Wilmington, Delaware, USA 
Group Functions 
USD 
 
3,150.0
2
 
100.0 
UBS Americas Inc. 
Wilmington, Delaware, USA 
Group Functions 
USD 
 
0.0 
 
100.0 
UBS Asset Management AG 
Zurich, Switzerland 
Asset Management 
CHF 
 
43.2 
 
100.0 
UBS Bank USA 
Salt Lake City, Utah, USA 
Global Wealth Management 
USD 
 
0.0 
 
100.0 
UBS Europe SE 
Frankfurt, Germany 
Global Wealth Management 
EUR 
 
446.0 
 
100.0 
UBS Financial Services Inc. 
Wilmington, Delaware, USA 
Global Wealth Management 
USD 
 
0.0 
 
100.0 
UBS Securities LLC 
Wilmington, Delaware, USA 
Investment Bank 
USD 
 
1,283.1
3
 
100.0 
UBS Switzerland AG 
Zurich, Switzerland 
Personal & Corporate Banking 
CHF 
 
10.0 
 
100.0 
1 Includes direct 
and indirect subsidiaries 
of UBS AG. 
2 Consists of common 
share capital of 
USD 1,000 and non-voting 
preferred share capital 
of USD 3,150,000,000. 
3 Consists of common 
share capital of 
USD 100,000 and non-voting preferred share capital of USD 1,283,000,000. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
397 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
Other subsidiaries 
The table 
below lists 
other direct 
and indirect 
subsidiaries of UBS 
AG that 
are not 
individually significant 
but that 
contribute to 
the 
Group’s total 
assets and aggregated 
profit before 
tax thresholds and 
are thereby 
disclosed in accordance 
with the requirements 
set 
by the SEC. 
 
 
Other subsidiaries of UBS AG as of 31 
December 2020 
Company 
Registered office 
Primary business 
Share capital in million 
Equity interest 
accumulated in % 
UBS Asset Management (Americas) Inc. 
Wilmington, Delaware, USA 
Asset Management 
USD 
 
0.0 
 
100.0 
UBS Asset Management (Hong Kong) Limited 
Hong Kong, Hong Kong 
Asset Management 
HKD 
 
254.0 
 
100.0 
UBS Asset Management Life Ltd 
London, United Kingdom 
Asset Management 
GBP 
 
15.0 
 
100.0 
UBS Asset Management Switzerland AG 
Zurich, Switzerland 
Asset Management 
CHF 
 
0.5 
 
100.0 
UBS Asset Management (UK) Ltd 
London, United Kingdom 
Asset Management 
GBP 
 
125.0 
 
100.0 
UBS Business Solutions US LLC 
Wilmington, Delaware, USA 
Group Functions 
USD 
 
0.0 
 
100.0 
UBS Credit Corp. 
Wilmington, Delaware, USA 
Global Wealth Management 
USD 
 
0.0 
 
100.0 
UBS (France) S.A. 
Paris, France 
Global Wealth Management 
EUR 
 
133.0 
 
100.0 
UBS Fund Management (Luxembourg) S.A. 
Luxembourg, Luxembourg 
Asset Management 
EUR 
 
13.0 
 
100.0 
UBS Fund Management (Switzerland) AG 
Basel, Switzerland 
Asset Management 
CHF 
 
1.0 
 
100.0 
UBS (Monaco) S.A. 
Monte Carlo, Monaco 
Global Wealth Management 
EUR 
 
49.2 
 
100.0 
UBS Realty Investors LLC 
Boston, Massachusetts, USA 
Asset Management 
USD 
 
9.0 
 
100.0 
UBS Securities Australia Ltd 
Sydney, Australia 
Investment Bank 
AUD 
 
0.3
1
 
100.0 
UBS Securities Hong Kong Limited 
Hong Kong, Hong Kong 
Investment Bank 
HKD 
 
3,154.2 
 
100.0 
UBS Securities Japan Co., Ltd. 
Tokyo, Japan 
Investment Bank 
JPY 
 
32,100.0 
 
100.0 
UBS Securities Pte. Ltd. 
Singapore, Singapore 
Investment Bank 
SGD 
 
420.4 
 
100.0 
1 Includes a nominal amount relating to redeemable preference shares. 
 
 
Consolidated structured entities 
UBS consolidates 
a structured 
entity (an 
SE) if 
it has 
power over 
the relevant 
activities of 
the entity, 
exposure 
to variable 
returns 
and 
the 
ability 
to 
use 
its 
power 
to 
affect 
its 
returns. 
Consolidated SEs include certain 
investment funds, securitization 
vehicles 
and 
client 
investment 
vehicles. 
UBS 
has 
no 
individually 
significant subsidiaries that are SEs. 
In 
2020 
and 
2019
,
 
the 
Group 
did 
not 
enter 
into 
any 
contractual 
obligation 
that 
could 
require 
the 
Group 
to 
provide 
financial support 
to consolidated SEs. 
In addition, 
the Group did 
not provide support, 
financial or otherwise, 
to a consolidated 
SE 
when 
the 
Group 
was 
not 
contractually 
obligated 
to 
do 
so, 
nor 
d
oes
 
the 
Group 
have 
an
y
 
intention 
to 
do 
so 
in 
the 
future. 
Furthermore, 
the 
Group 
did 
not 
provide 
support, 
financial 
or 
otherwise, to a 
previously unconsolidated SE 
that resulted in 
the 
Group controlling the SE during the reporting period. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
398 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
 
b) Interests in associates and joint ventures 
As 
of 
31 
December 
2020 
and 
2019, 
no 
associate 
or 
joint 
venture was individually material to the Group. 
In addition, there 
were 
no 
significant 
restrictions 
on 
the 
ability 
of 
associates 
or 
joint 
ventures 
to 
transfer 
funds 
to 
UBS 
Group 
AG 
or 
its 
subsidiaries 
in 
the 
form 
of 
cash 
dividends 
or 
to 
repay 
loans 
or 
advances 
made. 
There 
were 
no 
quoted 
market 
prices 
for 
any 
associates or joint ventures of the Group. 
In 
the 
third 
quarter 
of 
2020, 
UBS 
completed 
the 
sale 
of 
a 
51.2% 
stake 
in 
Fondcenter 
AG 
to 
Clearstream
 
and 
deconsolidated 
the 
entity 
in 
accordance 
with 
IFRS 
10, 
Consolidated 
Financial 
Statements
. 
The 
retained 
minority 
shareholding of 
48.8% is 
accounted for 
as an 
investment in 
an 
associate
 
with 
a 
carrying 
amount 
of 
USD
 
399 
million 
as 
of 
31 December 2020. 
›
 
Refer to Note 29 for more information 
 
 
Investments in associates and joint ventures 
USD million 
2020 
2019 
Carrying amount at the beginning of the year 
 
1,051 
 
1,099 
Additions
1
 
388 
 
0 
Disposals 
 
0 
 
0 
Share of comprehensive income 
 
83 
 
25 
of which: share of net profit
2
 
84 
 
46 
of which: share of other comprehensive income
3
 
(1) 
 
(21) 
Share of changes in retained earnings 
 
(40) 
 
0 
Dividends received 
 
(33) 
 
(83) 
Impairment 
 
0 
 
(1) 
Foreign currency translation 
 
108 
 
11 
Carrying amount at the end of the year 
 
1,557 
 
1,051 
of which: associates 
 
1,513 
 
1,010 
of which: SIX Group AG, Zurich
4
 
965 
 
887 
of which: Clearstream Fund Centre AG, Zurich
1
 
399 
of which: other associates 
 
150 
 
123 
of which: joint ventures 
 
44 
 
41 
1 On 30 September 
2020, UBS completed 
the sale of 
a 51.2% stake 
in Fondcenter 
AG to Clearstream 
and deconsolidated the 
entity in accordance 
with IFRS 10, 
Consolidated Financial 
Statements. The 
retained 
minority shareholding of 48.8% is accounted 
for as an associate and increased 
the investments in associates by 
USD 385 million upon completion of 
the transaction. Refer to Note 
29 for more information. 
2 For 
2020, consists of 
USD 64 million from 
associates and USD 
19 million from 
joint ventures. 
For 2019, 
consists of USD 28 
million from associates 
and USD 18 
million from joint 
ventures. 
3 For 2020, 
consists of 
negative USD 1 million from associates. 
For 2019, consists 
of negative USD 22 million from 
associates and USD 1 million from 
joint ventures. 
4 In 2020, UBS AG’s 
equity interest amounts to 17.31%. 
UBS AG is 
represented on the Board of Directors. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
399 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
 
c) Interests in unconsolidated structured entities 
UBS 
is 
considered 
to 
sponsor 
another 
entity 
if, 
in 
addition 
to 
ongoing 
involvement 
with 
the 
entity, 
it 
had 
a 
key 
role 
in 
establishing 
that 
entity 
or 
in 
bringing 
together 
relevant 
counterparties 
for 
the 
transaction 
facilitated 
by 
the 
entity. 
During 
2020, 
the 
Group 
sponsored 
the 
creation 
of 
various 
SEs 
and 
interacted 
with 
a 
number 
of 
non-sponsored 
SEs, 
including 
securitization 
vehicles, 
client 
vehicles 
and 
certain 
investment 
funds, 
that 
UBS 
did 
not 
consolidate 
as 
of 
31 December 
2020 
because it did not control these entities. 
The 
table 
below 
presents 
the 
Group’s 
interests 
in 
and 
maximum 
exposure 
to 
loss 
from 
unconsolidated 
SEs 
as 
well 
as 
the total 
assets held 
by the 
SEs in 
which UBS 
had an 
interest as 
of 
year-end, 
except 
for 
investment 
funds 
sponsored 
by 
third 
parties, 
for 
which 
the 
carrying 
amount 
of 
UBS’s 
interest 
as 
of 
year-end has been disclosed.
 
 
 
Interests in unconsolidated structured entities 
31.12.20 
USD million, except where indicated 
Securitization 
vehicles 
Client 
vehicles 
Investment 
funds 
Total 
Maximum 
exposure to loss
1
Financial assets at fair value held for trading 
 
375 
 
131 
 
7,595 
 
8,101 
 
8,101 
Derivative financial instruments 
 
6 
 
49 
 
158 
 
213 
 
211 
Loans and advances to customers 
 
179 
 
179 
 
179 
Financial assets at fair value not held for trading 
 
35 
 
1
2 
 
172 
 
208 
 
208 
Financial assets measured at fair value through other comprehensive 
income 
 
6,624 
 
6,624 
 
6,624 
Other financial assets measured at amortized cost 
 
0
2 
 
0 
 
250 
Total assets 
 
416
3 
 
6,805 
 
8,104 
 
15,326 
Derivative financial instruments 
 
3
4 
 
11 
 
376 
 
390 
 
0 
Total liabilities 
 
3 
 
11 
 
376 
 
390 
Assets held by the unconsolidated structured entities in which UBS had 
an interest 
(USD billion) 
 
39
5 
 
136
6 
 
484
7 
31.12.19 
USD million, except where indicated 
Securitization 
vehicles 
Client 
vehicles 
Investment 
funds 
Total 
Maximum 
exposure to loss
1
Financial assets at fair value held for trading 
 
462 
 
130 
 
5,874 
 
6,466 
 
6,466 
Derivative financial instruments 
 
9 
 
9 
 
36 
 
55 
 
53 
Loans and advances to customers 
 
174 
 
174 
 
174 
Financial assets at fair value not held for trading 
 
81 
 
8
2 
 
157 
 
245 
 
997 
Financial assets measured at fair value through other comprehensive 
income 
 
3,955 
 
3,955 
 
3,955 
Other financial assets measured at amortized cost 
 
335 
 
16
2 
 
351 
 
1,372 
Total assets 
 
888
3 
 
4,118 
 
6,242 
 
11,247 
Derivative financial instruments 
 
2
4 
 
225 
 
324 
 
552 
 
1 
Total liabilities 
 
2 
 
225 
 
324 
 
552 
Assets held by the unconsolidated structured entities in which UBS had 
an interest 
(USD billion) 
 
55
5 
 
73
6 
 
413
7 
1 For 
the 
purpose 
of this 
disclosure, 
maximum 
exposure 
to 
loss amounts 
do not 
consider 
the 
risk-reducing 
effects 
of collateral 
or other 
credit 
enhancements. 
2 Represents 
the 
carrying 
amount 
of loan 
commitments. The maximum 
exposure to loss for these instruments 
is equal to the notional amount. 
3 As of 31 December 2020, 
USD 0.2 billion of the 
USD 0.4 billion (31 December 2019: USD 
0.6 billion of the 
USD 0.9 billion) 
was held 
in Group 
Functions – 
Non-core and 
Legacy Portfolio. 
4 Comprised 
of credit 
default swap 
liabilities and 
other swap 
liabilities. The 
maximum exposure 
to loss 
for credit 
default swap 
liabilities is 
equal to 
the sum 
of the 
negative carrying 
amount and 
the notional 
amount. For 
other swap 
liabilities, no 
maximum exposure 
to loss 
is reported. 
5 Represents 
the principal 
amount outstanding. 
6 Represents the 
market value 
of total 
assets. 
7 Represents 
the net 
asset value 
of the 
investment funds 
sponsored by 
UBS and 
the carrying 
amount of 
UBS’s interests 
in the 
investment funds 
not sponsored 
by UBS. 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
400 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
The 
Group 
retains 
or 
purchases 
interests 
in 
unconsolidated 
SEs 
in 
the 
form 
of 
direct 
investments, 
financing, 
guarantees, 
letters of credit, derivatives and through management contracts. 
The 
Group’s maximum 
exposure to 
loss is 
generally equal 
to 
the carrying 
amount of 
the Group’s 
interest in 
the SE, 
with the 
exception 
of 
guarantees, letters 
of 
credit and 
credit 
derivatives, 
for 
which 
the 
contract’s 
notional 
amount, 
adjusted 
for 
losses 
already incurred, 
represents the maximum 
loss that 
the Group is 
exposed to. In 
addition, the current 
fair value of 
derivative swap 
instruments with a 
positive replacement value 
only, such as 
total 
return 
swaps, 
is 
presented 
as 
the 
maximum 
exposure 
to 
loss. 
Risk 
exposure 
for 
these 
swap 
instruments 
could 
change 
over 
time with market movements. 
The 
maximum exposure 
to loss 
disclosed in 
the table 
on the 
previous 
page 
does 
not 
reflect 
the 
Group’s 
risk 
management 
activities, 
including 
effects 
from 
financial 
instruments 
that 
may 
be 
used 
to 
economically 
hedge 
the 
risks 
inherent 
in 
the 
unconsolidated 
SE 
or 
the 
risk-reducing 
effects 
of 
collateral 
or 
other credit enhancements. 
In 
2020 
and 
2019, 
the 
Group 
did 
not 
provide 
support, 
financial 
or 
otherwise, 
to 
an 
unconsolidated
 
SE 
when 
not 
contractually 
obligated 
to 
do 
so, 
nor 
does 
the 
Group 
have 
any 
intention to do so in the future. 
In 
2020 
and 
2019, 
income 
and 
expenses 
from 
interests 
in 
unconsolidated 
SEs 
primarily 
resulted 
from 
mark-to-market 
movements 
recognized 
in 
Other 
net
 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through 
profit 
of 
loss
, 
which 
have 
generally 
been 
hedged 
with 
other 
financial 
instruments, 
as 
well 
as 
fee 
and 
commission 
income 
received 
from UBS- 
sponsored funds. 
Interests in securitization vehicles 
As 
of 
31 December 
2020 
and 
31 December 
2019, 
the 
Group 
held 
interests, 
both 
retained 
and 
acquired, 
in 
various 
securitization 
vehicles, 
half
 
of 
which 
are 
held 
within 
Group 
Functions – Non-core 
and Legacy Portfolio. The 
Investment Bank 
also 
retained 
interests 
in 
securitization 
vehicles 
related 
to 
financing, underwriting, secondary market and derivative trading 
activities. 
The numbers 
outlined in 
the table 
on the previous 
page may 
differ 
from 
the 
securitization 
positions 
presented 
in 
the 
31 December 
2020 
Pillar 
3 
report 
under 
“Pillar 3 
disclosures” 
at 
ubs.com/investors,
 
for the 
following 
reasons: 
(i) exclusion 
of 
synthetic 
securitizations 
transacted 
with 
entities 
that 
are 
not 
SEs 
and 
transactions 
in 
which 
the 
Group 
did 
not 
have 
an 
interest 
because 
it 
did 
not 
absorb 
any 
risk
;
 
(ii) 
a 
different 
measurement 
basis 
in certain 
cases 
(e.g., 
IFRS 
carrying 
amount 
within 
the previous 
table 
compared 
with net 
exposure 
amount 
at 
default 
for 
Pillar
 
3 
disclosures)
;
 
and 
(iii) 
dif
ferent 
classification 
of 
vehicles 
viewed 
as 
sponsored 
by 
the 
Group 
versus sponsored 
by third parties. 
›
 
Refer to the 31 December 2020 Pillar 3 
report under “Pillar 3 
disclosures” at 
ubs.com/investors 
for more information 
Interests in client vehicles 
Client vehicles are 
established predominantly for 
clients to invest 
in specific assets or risk 
exposures. As of 31 December 2020 
and 
31
 
December 
2019, 
the 
Group 
retained 
interests 
in 
client 
vehicles 
sponsored 
by 
UBS 
and 
third 
parties 
that 
relate 
to 
financing 
and 
d
erivative 
activities
,
 
and 
to 
hedge 
structured 
product 
offerings. 
Included 
within 
these 
investments 
are 
securities guaranteed by US government agencies. 
Interests in investment funds 
Investment funds have 
a collective investment 
objective, and are 
managed by 
an investment 
manager. 
The Group 
holds interests 
in 
a 
number of 
investment 
funds, 
primarily 
resulting 
from 
seed 
investments or in order to 
hedge structured product offerings. 
In 
addition 
to 
the 
interests 
disclosed 
in 
the 
table 
on 
the 
previous 
page, 
the 
Group 
manages 
the 
assets 
of 
various 
pooled 
investment 
funds and 
receives 
fees 
that are 
based, 
in whole 
or 
part, 
on 
the 
net 
asset 
value 
of 
the 
fund 
and
 
/
 
or 
the 
performance 
of 
the 
fund. 
The 
specific 
fee 
structure 
is 
determined on the 
basis of various 
market factors and 
considers 
the 
nature 
of 
the 
fund and 
the jurisdiction 
of 
incorporation, as 
well as fee schedules negotiated with clients. These fee contracts 
represent 
an 
interest 
in 
the 
fund 
as 
they 
align 
the 
Group’s 
exposure with investors, 
providing a variable 
return that is based 
on the performance of the entity. 
Depending on the structure of 
the 
fund, 
these 
fees 
may 
be 
collected 
directly 
from 
the 
fund 
assets 
and
 
/
 
or 
from 
the 
investors. 
Any 
amounts 
due 
are 
collected 
on 
a 
regular 
basis 
and 
are 
generally 
backed 
by 
the 
assets 
of 
the 
fund. 
The 
Group 
did 
not 
have 
any 
material 
exposure to loss from these 
interests as of 31 December 2020 or 
as of 
31 December 
2019. The 
total net 
asset value 
of the 
funds 
sponsored 
by 
UBS 
are 
included 
in 
the 
table 
on 
the 
previous 
page. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
401 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
Sponsored unconsolidated structured entities in which UBS did 
not have an interest 
For several 
sponsored SEs, 
no interest 
was held 
by the 
Group at 
year-end. 
However, 
during 
the 
respective 
reporting 
period 
the 
Group transferred assets, 
provided services and held 
instruments 
that 
did 
not 
qualify 
as 
an 
interest 
in 
these 
sponsored 
SEs, 
and 
accordingly 
earned 
income 
or 
incurred 
expenses 
from 
these 
entities. 
The 
table 
below 
presents 
the 
income 
earned 
and 
expenses incurred directly 
from these entities 
during the year, 
as 
well 
as 
corresponding 
asset 
information. 
The 
table 
does 
not 
include 
income 
earned 
and 
expenses 
incurred 
from 
risk 
management 
activities, 
including 
income 
and 
expenses 
from 
financial 
instruments 
used 
to 
economically 
hedge 
instruments 
transacted with the unconsolidated SEs. 
The 
majority of 
the fee 
income arose 
from investment 
funds 
that 
are 
sponsored 
and 
administrated 
by 
the 
Group, 
but 
managed 
by 
third 
parties. 
As 
the 
Group 
does 
not 
provide 
any 
investment 
management 
services, 
UBS 
was 
not 
exposed 
to 
risk 
from 
the 
performance 
of 
these 
entities 
and 
was 
therefore 
deemed 
not 
to 
have 
an 
interest 
in 
them. 
In 
certain 
structures, 
the 
fees 
receivable 
may 
be 
collected 
directly 
from 
the 
investors 
and have therefore not been included in the table below. 
The 
Group 
also 
recorded 
other 
net 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through 
profit 
or 
loss 
from 
mark-to-market 
movements 
arising 
primarily 
from 
derivatives, 
such 
as 
interest 
rate 
and 
currency 
swaps
,
 
as 
well 
as 
credit 
derivatives, through 
which the 
Group purchases 
protection, and 
financial liabilities 
designated at 
fair value, 
which do 
not qualify 
as interests 
because the 
Group does 
not absorb 
variability from 
the 
performance 
of 
the 
entity. 
Total 
income 
reported 
does 
not 
reflect 
economic 
hedges 
or 
other 
mitigating 
effects 
from 
the 
Group’s risk management activities. 
During 2020, UBS and third parties did not transfer any assets 
into sponsored 
securitization vehicles 
created in 
the year 
(2019: 
USD
 
1 
billion 
and 
USD
 
1 
billion
,
 
respectiv
ely). 
UBS 
and 
third 
parties transferred assets, alongside deposits 
and debt issuances, 
of 
USD 0 
billion 
and 
USD 9 
billion, 
respectively, 
into 
sponsored 
client vehicles created in the year (2019: USD 0 billion and USD 1 
billion, 
respectively). 
For 
sponsored 
investment 
funds, 
transfers 
arose 
during 
the 
period 
as 
investors 
invested 
and 
redeemed 
positions, thereby 
changing the overall 
size of 
the funds, which, 
when 
combined 
with 
market 
movements, 
resulted 
in 
a 
total 
closing 
net 
asset 
value 
of 
USD 37 
billion 
(31 December 
2019: 
USD 42 billion). 
 
 
Sponsored unconsolidated structured entities 
in which UBS did not have an interest at year-end 
As of or for the year ended 
31.12.20 
USD million, except where indicated 
Securitization 
vehicles 
Client 
vehicles 
Investment 
funds 
Total 
Net interest income 
 
1 
 
12 
 
2 
 
15 
Net fee and commission income 
 
1 
 
58 
 
60 
Other net income from financial instruments measured 
at fair value through profit or loss 
 
0 
 
17 
 
(15) 
 
2 
Total income 
 
1 
 
30 
 
45 
 
76 
Asset information (USD billion) 
 
0
1 
 
9
2 
 
37
3 
As of or for the year ended 
31.12.19 
USD million, except where indicated 
Securitization 
vehicles 
Client 
vehicles 
Investment 
funds 
Total 
Net interest income 
 
(1) 
 
0 
 
(1) 
 
(2) 
Net fee and commission income 
 
13 
 
50 
 
63 
Other net income from financial instruments measured 
at fair value through profit or loss 
 
19 
 
(18) 
 
9 
 
11 
Total income 
 
19 
 
(5) 
 
58 
 
72 
Asset information (USD billion) 
 
2
1 
 
1
2 
 
42
3 
1 Represents the amount of assets transferred to the respective securitization vehicles. 
2 Represents the amount of assets transferred to the respective client vehicles. 
3 Represents the total net asset value of the 
respective investment funds. 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
402 
 
Note 29 
Changes in organization and acquisitions and disposals of subsidiaries and businesses 
Disposals of subsidiaries and businesses 
Sale of a majority stake in Fondcenter AG 
In the third quarter of 2020, UBS 
completed the sale of a 51.2% 
stake in Fondcenter 
AG to Clearstream, 
Deutsche Börse Group’s 
post-trade 
services 
provider, 
and 
deconsolidated 
the 
entity 
in 
accordance with IFRS 10, 
Consolidated Financial Statements
. The 
sale 
resulted 
in 
a 
post-tax 
gain 
of 
USD 631 
million, 
which 
was 
recognized in 
Other income
. Fondcenter AG has 
been combined 
with 
Clearstream’s 
Fund 
Desk 
business 
to 
form 
Clearstream 
Fund 
Centre. 
UBS 
retains 
a 
48.8% 
shareholding 
in 
the 
entity 
and 
accounts 
for 
this 
minority 
interest 
as 
an 
investment 
in 
an 
associate 
with 
a 
carrying 
amount 
of 
USD
 
399
 
million 
as 
of 
31 December 2020. 
Banking partnership with Banco do Brasil 
In the third quarter of 2020, UBS completed the transaction with 
Banco 
do 
Brasil, 
establishing 
a 
strategic 
investment 
banking 
partnership 
in 
Brazil 
and 
selected 
countries 
in 
South 
America. 
The partnership 
was established 
by UBS 
issuing a 
49.99% stake 
in UBS 
Brasil Serviços 
in exchange 
for exclusive 
access to 
Banco 
do Brasil’s 
corporate clients. 
This resulted 
in UBS 
recognizing an 
intangible 
asset 
of 
USD 147 
million. 
UBS 
retains 
a 
controlling 
interest 
of 
50.01% 
in 
UBS 
Brasil 
Serviços 
and 
continues 
to 
consolidate 
the 
entity. 
Upon 
completion, 
UBS 
Group’s 
equity 
attributable 
to 
non-controlling 
interests 
increased 
by 
USD 115 
million, 
with 
no 
material 
effect 
on 
UBS 
Group’s 
equity 
attributable to shareholders. 
Strategic partnership with Sumitomo Mitsui Trust Holdings 
In 
2019, 
UBS 
entered 
into 
a 
strategic 
wealth 
management 
partnership 
in 
Japan 
with 
Sumitomo 
Mitsui Trust 
Holdings, Inc. 
(SuMi 
Trust 
Holdings). 
In 
January 
2020, 
the 
first 
phase 
was 
launched, with operations 
commencing in the 
newly established 
joint venture, UBS SuMi TRUST Wealth 
Advisory, 
which is owned 
equally by 
UBS Securities 
Japan and 
SuMi Trust 
Holdings and 
is 
accounted 
for as 
an investment 
in 
a 
joint 
venture 
by 
UBS. UBS 
and SuMi 
Trust 
Holdings have 
also started 
offering each 
other’s 
products and services to their respective current clients. 
The second 
phase of the 
partnership is expected 
to launch in 
the second 
half of 
2021 with 
the establishment 
of a 
new entity 
which will be 
51% owned and controlled 
by UBS, requiring 
UBS 
to consolidate 
this entity. 
UBS does 
not expect 
a material 
effect 
on shareholders’ equity of the Group upon closing. 
Sale of wealth management business in Austria in 2021 
In December 2020, UBS signed an agreement 
to sell its domestic 
wealth management 
business in 
Austria to 
LGT. 
The agreement 
includes 
the
 
transition 
of 
employees, 
client 
relationships, 
products 
and 
services 
of 
the 
wealth 
management 
business 
of 
UBS 
Austria. 
The 
transaction 
is 
subject 
to 
customary 
closing 
conditions and is 
expected to close 
in the third 
quarter of 2021. 
UBS 
expects to 
record 
a 
pre-tax 
gain 
of approximately 
USD 0.1 
billion upon closing of the transaction. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
403 
 
Note 30 
Finance lease receivables
UBS acts as a 
lessor and leases a 
variety of assets to 
third parties 
under 
finance leases, 
such as 
industrial 
equipment 
and aircraft. 
At 
the 
end 
of 
the 
respective 
lease 
term, 
assets 
may 
be 
sold 
to 
third 
parties 
or 
further 
leased. 
Lessees 
may 
participate 
in 
any 
sales 
proceeds 
achieved. 
Lease 
payments 
cover 
the 
cost 
of 
the 
assets (net 
of their 
residual value), 
as well 
as financing 
costs. As 
of 31 December 2020, unguaranteed residual values of 
USD 185 
million (31 December 2019: USD 246 million) had been accrued. 
The 
ECL 
stage 3 
allowance 
for 
uncollectible 
minimum 
lease 
payments 
receivable 
was 
USD
 
7
 
million 
(31
 
December 
2019: 
USD 6 
million). 
No 
contingent 
rents 
were 
received 
in 
2020. 
Amounts in 
the table 
below are 
disclosed on 
a gross 
basis. The 
finance 
lease 
receivables 
in 
Note 
14a 
of 
USD 1,447 
million 
are 
presented net of expected credit loss allowances. 
 
 
 
Lease receivables 
USD million 
31.12.20 
Total minimum lease 
payments 
Unearned finance 
income 
Present value 
2021 
 
450 
 
25 
 
426 
2022–2025 
 
856 
 
31 
 
825 
Thereafter 
 
215 
 
4 
 
210 
Total 
 
1,521 
 
60 
 
1,461 
USD million 
31.12.19 
Total minimum lease 
payments 
Unearned finance 
income 
Present value 
2020 
 
448 
 
31 
 
417 
2021–2024 
 
874 
 
52 
 
822 
Thereafter 
 
221 
 
6 
 
215 
Total 
 
1,544 
 
89 
 
1,455 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
404 
 
Note
 
31 
Related parties 
 
UBS 
defines 
related 
parties 
as 
associates
 
(entities 
that
 
are 
significantly influenced 
by UBS), 
joint ventures 
(entities in 
which 
UBS 
shares 
control 
with 
another 
party), 
post
-
employment 
benefit 
plans 
for 
UBS 
employees, 
key 
management 
personnel, 
close family members of key management personnel and entities 
that are, 
directly 
or indirectly, 
controlled 
or jointly 
controlled by 
key 
management 
personnel 
or 
their 
close 
family 
members. 
Key 
management 
personnel 
is 
defined 
as 
members 
of 
the Board 
of 
Directors (BoD) and Group Executive Board (GEB). 
 
a) Remuneration of key management personnel 
The 
Chairman of 
the 
BoD 
has a 
specific 
management employment 
contract and 
receives 
pension 
benefits upon 
retirement. 
Total 
remuneration of the Chairman of the BoD and all GEB members is included in the table below. 
 
 
Remuneration of key management 
personnel 
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.18 
Base salaries and other cash payments
1
 
33 
 
32 
 
27 
Incentive awards – cash
2
 
18 
 
14 
 
15 
Annual incentive award under DCCP 
 
27 
 
21 
 
22 
Employer’s contributions to retirement benefit plans 
 
3 
 
3 
 
3 
Benefits in kind, fringe benefits (at market value) 
 
1 
 
1 
 
2 
Equity-based compensation
3
 
47 
 
37 
 
40 
Total 
 
129 
 
108 
 
109 
Total (CHF million)
4
 
121 
 
107 
 
107 
1 May include role-based allowances in line 
with market practice and regulatory requirements. 
2 The cash portion may also include 
blocked shares in line with regulatory 
requirements. 
3 Compensation expense 
is based 
on the 
share price 
on grant 
date taking 
into account 
performance conditions. 
Refer to 
Note 27 
for more 
information. For 
GEB members, 
equity-based compensation 
for 2020 
and 2019 
was 
entirely 
composed of 
LTIP 
awards and 
equity-based compensation 
for 2018 
was entirely 
composed of 
EOP awards. 
For the 
Chairman of 
the BoD 
the equity-based 
compensation for 
2020, 2019 
and 2018 
was entirely 
composed of UBS shares. 
4 Swiss franc amounts disclosed represent the respective US dollar 
amounts translated at the applicable performance award currency exchange 
rates (2020: USD / CHF 0.94; 2019: USD / 
CHF 0.99; 2018: USD / CHF 0.98). 
 
 
The independent members 
of the BoD 
do not have 
employment 
or 
service 
contracts 
with 
UBS, 
and 
thus 
are 
not 
entitled
 
to 
benefits upon termination 
of their service 
on the BoD. 
Payments 
to these 
individuals for their 
services as external 
board members 
amounted to USD 7.0 million 
(CHF 6.6 million) in 2020, 
USD 7.3 
million 
(CHF 7.3 
million) 
in 
2019 
and 
USD 7.6 
million 
(CHF 7.4 
million) in 2018. 
 
b) Equity holdings of key management personnel 
Equity holdings of key management personnel
1
31.12.20 
31.12.19 
Number of shares held by members of the BoD, GEB and parties closely linked to them
2
 
5,288,317 
 
6,887,826 
1 No options were held in 2020 and 
2019 by non-independent menbers of the BoD 
and any GEB member or any of 
its related parties. 
2 Excludes shares granted under variable 
compensation plans with forfeiture 
provisions. 
 
 
Of 
the 
share 
totals 
above, 
no 
shares 
were 
held 
by 
close 
family 
members of 
key management 
personnel on 
31 December 2020 
and 31 December 2019. No shares were 
held by entities that are 
directly 
or 
indirectly 
controlled 
or 
jointly 
controlled 
by 
key 
management 
personnel 
or 
their 
close 
family 
members 
on 
31 December 2020 and 
31 December 2019. As 
of 31 December 
2020, no 
member of 
the BoD 
or GEB 
was the 
beneficial owner 
of more than 1% of UBS Group AG’s shares. 
 
 

405

Note 31

Related parties (continued)

c) Loans, advances and mortgages to key management personnel

The

non-independent

members

the

BoD

and

GEB

members

are granted loans,

fixed advances and mortgages in

the ordinary

course

business

substantially

the

same

terms

and

conditions

that

are

available

other

employees,

including

interest

rates

and

collateral,

and

neither

involve

than

the

normal

risk

collectability

nor

contain

any

other

unfavorable

features

for

the

firm.

Independent

BoD

members

are

granted

loans

and

mortgages

the

ordinary

course

business

general market conditions.

Movements in the

loan, advances and

mortgage balances are

as follows.

Loans, advances and mortgages to key management

personnel

USD million, except where indicated

2020

2019

Balance at the beginning of the year

Additions

Reductions

(8)

(11)

Balance at the end of the year

Balance at the end of the year (CHF million)

2, 3

1 All loans are secured loans.

2 There were no unused uncommitted credit facilities as of 31

December 2020 and 31 December 2019.

3 Swiss franc amounts disclosed represent the respective US dollar

amounts

translated at the relevant year-end closing exchange rate.

d) Other related-party transactions with entities controlled by key management personnel

2020

and

2019,

UBS

did

not

enter

into

transactions

with

entities

that

are

directly

indirectly

controlled

jointly

controlled

UBS’s

key

management

personnel

their

family

members

and

31 December

2020,

31 December

2019

and

31 December

2018,

there

were

outstanding

balances related

to such

transactions. Furthermore,

in 2020

and

2019, entities

controlled by

key management

personnel did

not

sell any

goods or

provide any

services to

UBS, and

therefore did

not receive any

fees from UBS.

UBS also did

not provide services

such

entities

2020

and

2019,

and

therefore

also

received

no fees.

e) Transactions with associates and joint ventures

Loans to and outstanding receivables from associates

and joint ventures

USD million

2020

2019

Carrying amount at the beginning of the year

982

829

Additions

527

145

Reductions

(1,001)

(5)

Foreign currency translation

123

Carrying amount at the end of the year

630

982

of which: unsecured loans and receivables

621

971

Other transactions with associates and joint

ventures

As of or for the year ended

USD million

31.12.20

31.12.19

Payments to associates and joint ventures for goods and services

received

139

124

Fees received for services provided to associates and joint ventures

128

Liabilities to associates and joint ventures

101

Commitments and contingent liabilities to associates

and joint ventures

1,598

›

Refer to Note 28 for an overview of investments

in associates and joint ventures

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS Group AG consolidated financial statements 
406 
 
Note 32 
Invested assets and net new money 
Invested assets 
Invested 
assets 
consist 
of 
all 
client 
assets 
managed 
by 
or 
deposited 
with 
UBS 
for 
investment 
purposes. 
Invested 
assets 
include 
managed 
fund 
assets, 
managed 
institutional 
assets, 
discretionary 
and 
advisory 
wealth 
management 
portfolios, 
fiduciary 
deposits, 
time 
deposits, 
savings 
accounts 
and 
wealth 
management 
securities 
or 
brokerage 
accounts. 
All 
assets 
held 
for 
purely 
transactional 
purposes 
and 
custody-only 
assets, 
including corporate 
client assets held 
for cash 
management and 
transactional purposes, 
are excluded 
from invested 
assets as 
the 
Group only 
administers the 
assets and 
does not 
offer advice 
on 
how 
the 
assets 
should 
be 
invested. 
Also 
excluded 
are 
non-
bankable 
assets 
(e.g., 
art 
collections) 
and 
deposits 
from 
third-
party banks for funding or trading purposes. 
Discretionary 
assets 
are 
defined 
as 
client 
assets 
that 
UBS 
decides how to invest. Other invested assets are 
those where the 
client 
ultimately 
decides 
how 
the 
assets 
are 
invested. 
When 
a 
single 
product 
is 
created 
in 
one 
business 
division 
and 
sold 
in 
another, it is counted 
in both the business 
division that manages 
the 
investment 
and 
the 
one 
that 
distributes 
it. 
This 
results 
in 
double 
counting 
within 
UBS 
total 
invested 
assets, 
as
 
both 
business divisions 
are independently 
providing a 
service to 
their 
respective clients, and both add value and generate revenue. 
Net new money 
Net new 
money in 
a reporting 
period is 
the amount 
of invested 
assets that are entrusted 
to UBS by new and 
existing clients, less 
those 
withdrawn by 
existing 
clients and 
clients who 
terminated 
their relationship with UBS. 
Net new 
money is 
calculated using 
the direct 
method, under 
which 
inflows 
and 
outflows 
to
 
/ 
from 
invested 
assets 
are 
determined at the 
client level based on 
transactions. Interest and 
dividend income from invested 
assets are not counted as net new 
money inflows. Market and 
currency movements as well 
as fees, 
commissions and interest 
on loans charged are excluded from net 
new 
money, as 
are 
the 
effects resulting 
from any 
acquisition or 
divestment 
of 
a 
UBS 
subsidiary 
or 
business. 
Reclassifications 
between invested assets 
and custody-only assets as 
a 
result of 
a 
change in 
the service 
level delivered 
are generally 
treated as 
net 
new 
money 
flows. 
However, 
where 
the 
change 
in 
service 
level 
directly results 
from 
an 
externally imposed 
regulation or 
from 
a 
strategic 
decision 
by 
UBS 
to 
exit 
a 
market 
or 
specific 
service 
offering, 
the one-time 
net effect 
is reported 
as 
Other effects
. 
The 
Investment 
Bank 
does 
not track 
invested 
assets 
and 
net 
new 
money. 
However, 
when 
a 
client 
is 
transferred 
from 
the 
Investment Bank 
to another 
business division, 
this may 
produce 
net 
new 
money 
even 
though 
client 
assets 
were 
already 
with UBS. 
 
Invested assets and net new money 
As of or for the year ended 
USD billion 
31.12.20 
31.12.19 
Fund assets managed by UBS 
 
397 
 
358 
Discretionary assets 
 
1,459 
 
1,209 
Other invested assets 
 
2,331 
 
2,040 
Total invested assets
1
 
4,187 
 
3,607 
of which: double counts 
 
311 
 
248 
Net new money
1
 
127 
 
51 
1 Includes double counts. 
 
Development of invested assets 
USD billion 
2020 
2019 
Total invested assets at the beginning of the year
1
 
3,607 
 
3,101 
Net new money 
 
127 
 
51 
Market movements
2
 
359 
 
444 
Foreign currency translation 
 
96 
 
6 
Other effects 
 
(1) 
 
5 
of which: acquisitions / (divestments) 
 
0 
 
(1) 
Total invested assets at the end of the year
1
 
4,187 
 
3,607 
1 Includes double counts. 
2 Includes interest and dividend income. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
407 
 
Note 33 
Currency translation rates 
The 
following table 
shows the 
rates of 
the main 
currencies 
used to 
translate the 
financial information 
of UBS’s 
operations with 
a 
functional currency other than the US dollar into US dollars. 
 
Closing exchange rate 
Average rate
1
As of 
For the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.18 
1 CHF 
 
1.13 
 
1.03 
 
1.07 
 
1.01 
 
1.02 
1 EUR 
 
1.22 
 
1.12 
 
1.15 
 
1.12 
 
1.18 
1 GBP 
 
1.37 
 
1.32 
 
1.29 
 
1.28 
 
1.33 
100 JPY 
 
0.97 
 
0.92 
 
0.94 
 
0.92 
 
0.91 
1 Monthly income statement 
items of operations with 
a functional currency other than 
the US dollar are 
translated with month-end 
rates into US dollars. 
Disclosed average rates for 
a year represent an 
average of 
12 month-end 
rates, 
weighted according 
to the 
income and 
expense volumes 
of all 
operations of 
the Group 
with the 
same functional 
currency for 
each month. 
Weighted average 
rates for 
individual business 
divisions may deviate from the weighted average rates for the Group. 
 
 
Note 34 
Events after the reporting period 
Events subsequent to the publication of the unaudited fourth 
quarter 2020 report 
The 2020 results and the balance sheet 
as of 31 December 2020 
differ 
from 
those 
presented 
in 
the 
unaudited 
fourth 
quarter 
2020 report 
published on 
26 January 
2021 as 
a result 
of events 
adjusted 
for 
after 
the 
balance 
sheet 
date. 
Provisions 
for 
litigation, 
regulatory 
and 
similar 
matters 
increased, 
which 
reduced 
2020 
operating 
profit 
before 
tax 
and 
2020 
net 
profit 
attributable to shareholders 
each by USD 
72 million. As 
a result, 
basic 
earnings 
per 
share 
decreased 
by 
USD 
0.02 
and 
diluted 
earnings per share decreased by USD 0.02. 
›
 
Refer to Note 18 for more information about 
provisions for 
litigation, regulatory and similar matters 
 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
408 
 
Note 35 
Main differences between IFRS and Swiss GAAP 
The 
consolidated 
financial 
statements 
of 
UBS 
Group 
AG 
are 
prepared 
in 
accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS). 
The 
Swiss 
Financial 
Market 
Supervisory 
Authority 
(FINMA) 
requires 
financial 
groups 
that 
present 
their 
financial 
statements 
under 
IFRS 
to 
provide 
a 
narrative 
explanation 
of 
the 
main 
differences 
between 
IFRS 
and 
Swiss 
GAAP 
(the 
FINMA 
Accounting 
Ordinance, 
FINMA 
Circular 
2020/1 
"
Accounting 
–
 
banks
"
 
and 
the 
Banking 
O
rdinance). 
Included 
in 
this 
Note 
are 
the 
significant 
differences 
in 
the 
recognition 
and measurement 
between 
IFRS 
and 
the 
provisions 
of 
the 
Banking 
Ordinance 
and 
the 
guidelines 
of 
FINMA 
governing 
true 
and 
fair 
view 
financial 
statement 
reporting 
pursuant to Art. 25 through Art. 42 of the Banking Ordinance. 
1. Consolidation 
Under IFRS, 
all entities 
that are 
controlled 
by the 
holding entity 
are consolidated. 
Under 
Swiss 
GAAP, 
controlled 
entities 
that 
are 
deemed 
immaterial 
to 
the 
Group 
or 
that 
are 
held 
temporarily 
only 
are 
exempt 
from 
consolidation, 
but 
instead 
are 
recorded 
as 
participations 
accounted 
for 
under 
the 
equity 
method 
of 
accounting or 
as financial investments 
measured at the 
lower of 
cost or market value. 
2. Classification and measurement of financial assets 
Under 
IFRS, 
debt 
instruments 
are 
measured 
at 
amortized 
cost, 
fair 
value 
through 
other 
comprehensive 
income 
(FVOCI) 
or 
fair 
value through 
profit or loss 
(FVTPL), depending on 
the nature of 
the 
business 
model 
within 
which 
the 
asset 
is 
held 
and 
the 
characteristics of 
the contractual 
cash flows 
of the 
asset. 
Equity 
instruments are accounted for at FVTPL by UBS. 
Under 
Swiss 
GAAP,
 
trading 
assets 
and 
derivatives 
are 
measured at 
FVTPL in 
line with 
IFRS. However, 
non-trading debt 
instruments 
are 
generally 
measured 
at 
amortized 
cost, 
even 
when the 
assets are 
managed on 
a fair 
value basis. 
In addition, 
the 
measurement 
of 
financial 
assets 
in 
the 
form 
of 
securities 
depends 
on 
the 
nature 
of 
the 
asset: 
debt 
instruments 
that 
are 
not 
held 
to 
maturity, 
i.e., 
instruments 
which 
are 
available 
for 
sale, 
as 
well 
as 
equity 
instruments 
with 
no 
permanent 
holding 
intent, 
are 
classified 
as 
Financial 
investments
 
and 
measured 
at 
the 
lower 
of 
(amortized) 
cost 
or 
market 
value. 
Market 
value 
adjustments up to the original cost amount 
and realized gains or 
losses 
upon 
disposal 
of 
the 
investment 
are 
recorded 
in 
the 
income 
statement 
as 
Other 
income
 
from
 
ordinary 
activities. 
Equity instruments with a permanent holding intent are classified 
as participations 
in 
Non-consolidated 
investments in 
subsidiaries 
and 
other 
participations
 
and 
are 
measured 
at 
cost 
less 
impairment. 
Impairment 
losses 
are 
recorded 
in 
the 
income 
statement 
as 
Impairment 
of investments 
in non-consolidated 
subsidiaries and 
other participations.
 
Reversals of 
impairments up 
to the 
original 
cost amount 
as well 
as realized 
gains or 
losses upon 
disposal of 
the 
investment 
are 
recorded 
as 
Extraordinary 
income
 
/ 
Extraordinary expenses
 
in the income statement. 
3. Fair value option applied to financial liabilities 
Under IFRS, 
UBS applies the 
fair value option 
to certain financial 
liabilities 
not 
held 
for 
trading. 
Instruments 
for 
which 
the 
fair 
value option 
is applied 
are accounted 
for at 
FVTPL. The 
amount 
of 
change 
in 
the 
fair 
value 
that 
is 
attributable 
to 
changes 
in 
UBS’s 
own 
credit 
is 
presented 
in 
Other 
comprehensive 
income
 
directly within 
Retained earnings
. The fair value option 
is applied 
primarily 
to 
issued 
structured 
debt 
instruments
,
 
certain 
non
-
structured 
debt 
instruments, 
certain 
payables 
under 
repurchase 
agreements 
and 
cash 
collateral 
on 
securities 
lending 
agreements
,
 
amounts 
due 
under 
u
nit
-
linked 
investment 
contracts, and brokerage payables. 
Under Swiss 
GAAP, the 
fair value 
option can 
only be 
applied 
to 
structured 
debt 
instruments 
that 
consist 
of 
a 
debt 
host 
contract 
and 
one 
or 
more 
embedded 
derivatives 
that 
do 
not 
relate 
to 
own 
equity. 
Furthermore, 
unrealized 
changes 
in 
fair 
value 
attributable 
to 
changes 
in 
UBS’s 
own 
credit 
are 
not 
recognized, 
whereas 
realized 
own 
credit 
is 
recognized 
in
 
Net 
trading income
. 
 
 

 
 
409 
 
Note 35 
Main differences between IFRS and Swiss GAAP (continued) 
4. Allowances and provisions for credit losses 
Swiss 
GAAP 
permits 
the 
use 
of 
IFRS
 
for 
the 
accounting 
for
 
allowances and provisions for credit 
losses based on an expected 
credit loss 
(ECL) model. 
UBS has chosen 
to apply 
the IFRS 
9 ECL 
approach to the substantial majority of exposures in scope of the 
Swiss GAAP 
ECL 
requirements, 
including 
all 
exposures 
in 
scope 
of ECL under both Swiss GAAP and IFRS. 
In 
addition, 
for 
a 
small 
population 
of 
exposures 
in 
scope 
of 
the Swiss GAAP 
ECL requirements, which 
are not subject 
to ECL 
under 
IFRS 
due 
to 
classification 
and 
measurements 
differences, 
UBS applies 
an alternative 
approach. Where 
the Pillar 
1 internal 
ratings-based (IRB) models are applied for measurement of credit 
risk, 
ECL 
for 
such 
exposures 
is 
determined 
by 
the 
regulatory 
expected loss 
(EL), with 
an add-on 
for scaling 
up to 
the residual 
maturity of exposures 
maturing beyond the next 
12 months. For 
detailed 
information 
on 
regulatory 
EL, 
refer 
to 
the 
“
Risk 
management 
and control” 
section of 
this report. 
For exposures 
for 
which 
the 
Pillar 
1 
standardized approach 
(SA) is 
applied 
for 
the 
measurement 
of 
credit 
risk, 
ECL 
is 
determined 
using 
a 
portfolio 
approach 
that 
derives 
conservative 
probability 
of 
default (PD) and loss given default (LGD) for the entire portfolio. 
5. Hedge accounting 
Under 
IFRS, 
when 
cash 
flow 
hedge 
accounting 
is 
applied, 
the 
fair 
value 
gain or 
loss 
on 
the effective 
portion 
of 
the derivative 
designated as 
a cash 
flow hedge 
is recognized 
in equity. 
When 
fair 
value 
hedge 
accounting 
is 
applied, 
the 
fair 
value 
gains 
or 
losses 
of 
the 
derivative 
and 
the 
hedged 
item 
are 
recognized 
in 
the income statement. 
Under 
Swiss 
GAAP, 
the 
effective 
portion 
of 
the 
fair 
value 
change of the derivative instrument designated as 
a cash flow or 
as a 
fair value 
hedge is 
deferred on 
the balance 
sheet as 
Other 
assets
 
or 
Other 
liabilities
. 
The 
carrying 
amount 
of 
the 
hedged 
item designated in fair value hedges is not adjusted 
for fair value 
changes attributable to the hedged risk. 
6. Goodwill and intangible assets 
Under 
IFRS, 
goodwill acquired 
in 
a 
business combination 
is 
not 
amortized 
but tested 
annually for 
impairment. 
Intangible 
assets 
with 
an 
indefinite 
useful 
life 
are 
also 
not 
amortized 
but 
tested 
annually for impairment. 
Under 
Swiss 
GAAP, 
goodwill 
and 
intangible 
assets 
with 
indefinite useful 
lives are amortized 
over a 
period not 
exceeding 
five years, 
unless a 
longer useful 
life, which 
may not 
exceed 10 
years, 
can 
be 
justified. 
In 
addition, 
these 
assets 
are 
tested 
annually for impairment. 
7. Post-employment benefit plans 
Swiss 
GAAP 
permits 
the 
use 
of 
IFRS 
or 
Swiss 
accounting 
standards 
for 
post-employment 
benefit 
plans, 
with 
the election 
made on a plan-by-plan basis. 
UBS 
has 
elected 
to 
apply 
IFRS 
(IAS 
19) 
for 
the 
non-Swiss 
defined benefit plans in 
UBS AG standalone financial 
statements 
and Swiss 
GAAP (FER 
16) for 
the Swiss 
pension plan 
in the 
UBS 
AG 
and 
the 
UBS 
Switzerland 
AG 
standalone 
financial 
statements. The 
requirements of 
Swiss GAAP 
are better 
aligned 
with the specific nature 
of Swiss pension plans, which 
are hybrid 
in 
that 
they 
combine 
elements 
of 
defined 
contribution 
and 
defined 
benefit 
plans, 
but 
are 
treated 
as 
defined 
benefit 
plans 
under 
IFRS. 
Key 
differences 
between 
Swiss 
GAAP 
and 
IFRS 
include the treatment of dynamic 
elements, such as future salary 
increases and future interest credits on 
retirement savings, which 
are not 
considered under 
the static 
method used 
in accordance 
with Swiss 
GAAP. Also, 
the discount 
rate used 
to determine 
the 
defined 
benefit 
obligation 
in 
accordance 
with 
IFRS 
is 
based 
on 
the 
yield 
of 
high-quality 
corporate 
bonds 
of 
the 
market 
in 
the 
respective 
pension 
plan 
country. 
The 
discount 
rate 
used 
in 
accordance 
with Swiss 
GAAP 
(i.e., 
the technical 
interest rate) 
is 
determined 
by 
the 
Pension 
Foundation 
Board 
based 
on 
the 
expected returns of the Board’s investment strategy. 
 
 

 
Consolidated financial statements | UBS Group AG consolidated financial statements 
410 
 
Note 35 
Main differences between IFRS and Swiss GAAP (continued) 
For 
defined 
benefit 
plans, 
IFRS 
requires 
the 
full 
defined 
benefit 
obligation net 
of 
the plan 
assets 
to 
be recorded 
on 
the 
balance 
sheet, 
with 
changes 
resulting 
from 
remeasurements 
recognized 
directly 
in 
equity. 
However, 
for 
non-Swiss 
defined 
benefit plans 
for which 
IFRS accounting 
is elected, 
changes due 
to 
remeasurements 
are 
recognized 
in 
the 
income 
statement 
of 
UBS AG standalone under Swiss GAAP. 
Swiss 
GAAP 
requires 
that 
employer 
contributions 
to 
the 
pension 
fund 
are 
recognized 
as 
personnel 
expenses 
in 
the 
income 
statement. 
Furthermore, 
Swiss 
GAAP 
requires 
an 
assessment as 
to whether, 
based on 
the financial 
statements of 
the pension 
fund prepared 
in accordance 
with Swiss 
accounting 
standards (FER 26), an 
economic benefit to, or 
obligation of, the 
employer 
arises 
from 
the 
pension 
fund 
which 
is 
recognized 
in 
the 
balance 
sheet 
when 
conditions 
are 
met. 
Conditions 
for 
recording 
a 
pension 
asset 
or 
liability 
would 
be 
met 
if, 
for 
example, 
an 
employer 
contribution 
reserve 
is 
available 
or 
the 
employer is 
required to 
contribute to 
the reduction of 
a pension 
deficit (on an FER 26 basis). 
8. Leasing 
Under IFRS, a single lease accounting model applies that 
requires 
UBS 
to 
record 
a 
right-of-use 
(RoU) 
asset 
and 
a 
corresponding 
lease 
liability 
on 
the 
balance 
sheet 
when 
UBS 
is 
a 
lessee 
in 
a 
lease 
arrangement. 
The 
RoU 
asset 
and 
the 
lease 
liability 
are 
recognized when UBS 
acquires control of 
the physical use of 
the 
asset. The 
lease liability 
is measured 
based on 
the present 
value 
of 
the 
lease 
payments 
over 
the 
lease 
term, 
discounted 
using 
UBS’s unsecured borrowing rate. The RoU asset is recorded at an 
amount 
equal 
to 
the 
lease 
liability 
but 
is 
adjusted 
for 
rent 
prepayments, initial direct costs, any costs to refurbish the leased 
asset 
and/or 
lease 
incentives 
received. 
The 
RoU 
asset 
is 
depreciated over 
the shorter 
of the 
lease term 
or the 
useful life 
of the underlying asset. 
Under 
Swiss 
GAAP, 
leases 
that 
transfer 
substantially 
all 
the 
risks and rewards, but not necessarily 
legal title in the underlying 
assets, 
are 
classified 
as 
finance 
leases. 
All 
other 
leases 
are 
classified 
as 
operating 
leases. 
Whereas 
finance 
leases 
are 
recognized on the balance 
sheet and measured in line 
with IFRS, 
operating 
lease 
payments 
are 
recognized 
as 
General 
and 
administrative 
expenses
 
on 
a 
straight-line 
basis 
over 
the 
lease 
term, which 
commences with 
control of 
the physical 
use of 
the 
asset. 
Lease 
incentives 
are 
treated 
as 
a 
reduction 
of 
rental 
expense and 
are recognized 
on a 
consistent basis 
over the 
lease 
term. 
 
9. Netting of derivative assets and liabilities 
Under 
IFRS, 
derivative 
assets
, 
derivative 
liabilities
 
and 
related 
cash collateral 
that are 
not settled 
to market 
are 
reported 
on a 
gross 
basis 
unless 
the 
restrictive 
IFRS 
netting 
requirements 
are 
met: 
i) 
existence 
of 
master 
netting 
agreements 
and 
related 
collateral 
arrangements 
that 
are 
unconditional 
and 
legally 
enforceable, 
both 
in 
the 
normal 
course 
of 
business 
and 
in 
the 
event 
of 
default, 
bankruptcy 
or 
insolvency 
of 
UBS
 
and 
its 
counterparties; 
and 
ii) 
UBS’s 
intention 
to 
either 
settle 
on 
a 
net 
basis or to realize the asset and settle the liability simultaneously. 
Under 
Swiss 
GAAP, 
derivative assets, 
derivative liabilities 
and 
related 
cash 
collateral
 
that 
are 
not 
settled 
t
o 
market
 
are 
generally 
reported 
on 
a 
net 
basis, 
provided 
the 
master 
netting 
and 
the 
related 
collateral 
agreements 
are 
legally 
enforceable 
in 
the 
event 
of 
default, 
bankruptcy 
or 
insolvency 
of 
UBS’s 
counterparties. 
10. Negative interest 
Under IFRS, 
negative interest 
income arising 
on a 
financial asset 
does not 
meet the 
definition of 
interest 
income and, 
therefore, 
negative 
interest 
on 
financial 
assets 
and 
negative 
interest 
on 
financial 
liabilities 
are 
presented 
within 
interest 
expense 
and 
interest income, respectively. 
Under 
Swiss 
GAAP, 
negative 
interest 
on 
financial 
assets 
is 
presented 
within 
interest 
income 
and 
negative 
interest 
on 
financial liabilities is presented within interest expense. 
11. Extraordinary income and expense 
Certain 
non-recurring 
and 
non-operating 
income 
and 
expense 
items, 
such 
as 
realized 
gains 
or 
losses 
from 
the 
disposal 
of 
participations, fixed 
and intangible 
assets, as well 
as reversals 
of 
impairments 
of 
participations 
and 
fixed 
assets, 
are 
classified 
as 
extraordinary 
items 
under 
Swiss 
GAAP. 
This 
distinction 
is 
not 
available under IFRS. 
p
 
 

411

 
412 
UBS AG consolidated financial information 
This 
section 
contains 
a 
comparison 
of 
selected 
financial 
and 
capital 
information 
between 
UBS 
Group 
AG 
consolidated 
and 
UBS 
AG 
consolidated. 
Information 
for 
UBS 
AG 
consolidated 
does not differ materially 
from UBS Group AG 
on a consolidated 
basis. 
Comparison between UBS Group AG consolidated and 
UBS AG consolidated 
The 
accounting 
policies 
applied 
under 
International 
Financial 
Reporting Standards 
(IFRS) to 
both UBS 
Group AG 
and UBS 
AG 
consolidated 
financial 
statements 
are 
identical. 
However, 
there 
are certain scope and presentation differences as noted below: 
–
 
Assets, 
liabilities, 
operating 
income, 
operating 
expenses 
and 
operating profit 
before tax 
relating to 
UBS Group 
AG and 
its 
directly 
held 
subsidiaries, 
including 
UBS 
Business 
Solutions 
AG, are 
reflected 
in 
the consolidated 
financial 
statements of 
UBS 
Group 
AG 
but 
not 
of 
UBS 
AG. 
UBS 
AG’s 
assets, 
liabilities, operating income and operating expenses related to 
transactions 
with 
UBS 
Group 
AG 
and 
its 
directly 
held 
subsidiaries, 
including 
UBS 
Business 
Solutions 
AG 
and 
other 
shared 
services 
subsidiaries, are 
not 
subject to 
elimination 
in 
the 
UBS 
AG 
consolidated 
financial 
statements, 
but 
are 
eliminated 
in 
the 
UBS 
Group 
AG 
consolidated 
financial 
statements. 
UBS 
Business 
Solutions 
AG 
and 
other 
shared 
services 
subsidiaries 
of 
UBS 
Group 
AG 
charge 
other 
legal 
entities 
within 
the 
UBS 
AG 
consolidation 
scope 
for 
services 
provided, including a markup on costs incurred. 
–
 
The 
equity 
of 
U
BS 
Group 
AG 
consolidated 
was 
USD
 
1.7
 
billion 
higher 
than 
the 
equity 
of 
UBS 
AG 
consolidated 
as 
of 
31
 
December 
2020. 
This 
difference 
was
 
mainly 
driven 
by
 
higher dividends paid by UBS AG to UBS Group AG compared 
with 
the dividend 
distributions of 
UBS 
Group AG, 
as 
well as 
higher 
retained 
earnings 
in 
the 
UBS Group 
AG 
consolidated 
financial 
statements, 
largely 
related 
to 
the 
aforementioned 
markup charged by 
shared services subsidiaries 
of UBS Group 
AG 
to 
other 
legal 
entities 
in 
the 
UBS 
AG 
scope 
of 
consolidation. 
In 
addition, 
UBS 
Group 
is 
the 
grantor 
of 
the 
majority 
of 
the 
compensation 
plans 
of 
the 
Group 
and 
recognizes share 
premium for 
equity-settled awards 
granted. 
These effects were partly offset 
by treasury shares acquired as 
part 
of 
our 
share 
repurchase 
program
 
and 
those 
held 
to 
hedge 
share 
delivery 
obligations 
associated 
with 
Group 
compensation 
plans, 
as 
well 
as 
additional 
share 
premium 
recognized 
at 
the 
UBS 
AG 
consolidated 
level 
related 
to 
the 
establishment 
of 
UBS Group AG 
and 
UBS 
Business 
Solutions 
AG, a wholly owned subsidiary of UBS Group AG. 
–
 
The 
going 
concern 
capital 
of 
UBS 
Group 
AG 
consolidated 
was USD 3.6 
billion higher 
than the 
going concern 
capital of 
UBS AG 
consolidated 
as 
of 
31 December 
2020, 
reflecting 
higher 
going 
concern 
loss-absorbing 
additional 
tier 
1 
(AT1) 
capital 
of 
USD 1.9 billion 
and 
higher 
common 
equity 
tier 
1 
(CET1) capital of USD 1.7 billion. 
–
 
The CET1 capital of UBS Group AG consolidat 
ed was USD 1.7 
billion 
higher 
than 
that 
of 
UBS 
AG 
consolidated 
as 
of 
31 December 
2020. 
The 
higher 
CET1 
capital 
of 
UBS 
Group 
AG consolidated was primarily due to a higher UBS Group AG 
consolidated 
IFRS 
equity 
of 
USD 1.7 billion, 
as 
described 
above, and lower UBS Group AG accruals for future dividends 
to 
shareholders, 
as 
well as 
a 
higher 
capital deduction 
at 
the 
UBS 
AG 
consolidated 
level 
related 
to 
deferred 
tax 
assets 
on 
temporary 
differences. 
The 
aforementioned 
factors 
were 
partly 
offset 
by 
a 
capital 
reserve
 
for 
potential 
share 
repurchases 
and 
compensation-related 
regulatory 
capital 
accruals at the UBS Group AG level. 
–
 
The 
going 
concern 
loss-absorbing 
AT1 
capital 
of 
UBS 
Group 
AG consolidated 
was USD 1.9 billion higher 
than that of 
UBS 
AG 
consolidated 
as 
of 
31 December 
2020, 
reflecting 
the 
effect of deferred contingent capital plan awards. 
 
 
 

413

UBS AG consolidated key figures

As of or for the year ended

USD million, except where indicated

31.12.20

31.12.19

31.12.18

Results

Operating income

32,780

29,307

30,642

Operating expenses

25,081

24,138

25,184

Operating profit / (loss) before tax

7,699

5,169

5,458

Net profit / (loss) attributable to shareholders

6,196

3,965

4,107

Profitability and growth

Return on equity (%)

10.9

7.4

7.9

Return on tangible equity (%)

12.4

8.5

9.1

Return on common equity tier 1 capital (%)

16.6

11.3

11.9

Return on risk-weighted assets, gross (%)

11.9

11.2

12.0

Return on leverage ratio denominator, gross (%)

3.4

3.2

3.4

Cost / income ratio (%)

74.9

82.1

81.9

Net profit growth (%)

56.3

(3.4)

441.9

Resources

Total assets

1,125,327

971,927

958,066

Equity attributable to shareholders

57,754

53,722

52,224

Common equity tier 1 capital

38,181

35,233

34,562

Risk-weighted assets

286,743

257,831

262,840

Common equity tier 1 capital ratio (%)

13.3

13.7

13.1

Going concern capital ratio (%)

18.3

16.1

Total loss-absorbing capacity ratio (%)

34.2

33.9

31.3

Leverage ratio denominator

1,036,771

911,228

904,455

Leverage ratio denominator (with temporary FINMA exemption)

969,396

Common equity tier 1 leverage ratio (%)

3.68

3.87

3.82

Common equity tier 1 leverage ratio (%) (with temporary FINMA exemption)

3.94

Going concern leverage ratio (%)

5.1

5.2

4.7

Going concern leverage ratio (%) (with temporary FINMA exemption)

5.4

Total loss-absorbing capacity leverage ratio (%)

9.5

9.6

9.1

Other

Invested assets (USD billion)

4,187

3,607

3,101

Personnel (full-time equivalents)

47,546

47,005

47,643

1 Refer to the

“Accounting and

financial reporting” and

“Consolidated financial statements”

sections of this

report for information

on the restatement

of comparative information,

where applicable.

2 Refer to

the “Performance targets and capital guidance”

section of this report for more information

about our performance measurement.

3 The leverage ratio

denominators used for the return calculations relating

to the

respective periods in

2020 do not

reflect the effects

of the temporary

exemption that has

been granted

by FINMA in

connection with COVID

-19. Refer to

the “Regulatory and

legal developments” section

of this

report for more

information.

4 Based on

the Swiss

systemically relevant

bank framework

as of 1

January 2020.

Refer to the

“Capital, liquidity

and funding,

and balance sheet”

section of

this report

for more

information.

5 Refer to

the “Regulatory

and legal

developments” and

“Capital, liquidity

and funding,

and balance

sheet” sections

of this

report for

further details

about the

temporary FINMA

exemption.

6 Consists of

invested assets

for Global

Wealth

Management, Asset

Management and

Personal

& Corporate

Banking. Refer

to “Note

32 Invested

assets and

net new

money” in

the “Consolidated

financial

statements” section of this report for more information.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
414 
 
Comparison between UBS Group AG consolidated and UBS AG consolidated 
As of or for the year ended 31.12.20 
As of or for the year ended 31.12.19
1
USD million, except where indicated 
UBS Group AG 
consolidated 
UBS AG 
consolidated 
Difference 
(absolute) 
UBS Group AG 
consolidated 
UBS AG 
consolidated 
Difference 
(absolute) 
Income statement 
Operating income 
32,390 
32,780 
(390) 
28,889 
29,307 
(418) 
Operating expenses 
24,235 
25,081 
(846) 
23,312 
24,138 
(826) 
Operating profit / (loss) before tax 
8,155 
7,699 
456 
5,577 
5,169 
408 
of which: Global Wealth Management 
4,019 
3,965 
54 
3,397 
3,335 
62 
of which: Personal & Corporate Banking 
1,259 
1,261 
(2) 
1,441 
1,443 
(2) 
of which: Asset Management 
1,455 
1,454 
1 
532 
531 
1 
of which: Investment Bank 
2,482 
2,441 
41 
784 
753 
31 
of which: Group Functions 
(1,060) 
(1,423) 
362 
(577) 
(893) 
317 
Net profit / (loss) 
6,572 
6,211 
361 
4,310 
3,971 
339 
of which: net profit / (loss) attributable to shareholders 
6,557 
6,196 
361 
4,304 
3,965 
339 
of which: net profit / (loss) attributable to non-controlling interests 
15 
15 
0 
6 
6 
0 
Statement of comprehensive income 
Other comprehensive income 
1,740 
1,759 
(19) 
781 
785 
(4) 
of which: attributable to shareholders 
1,719 
1,738 
(19) 
785 
789 
(4) 
of which: attributable to non-controlling interests 
21 
21 
0 
(4) 
(4) 
0 
Total comprehensive income 
8,312 
7,970 
342 
5,091 
4,756 
335 
of which: attributable to shareholders 
8,276 
7,934 
342 
5,089 
4,754 
335 
of which: attributable to non-controlling interests 
36 
36 
0 
2 
2 
0 
Balance sheet 
Total assets 
1,125,765 
1,125,327 
438 
972,194 
971,927 
267 
Total liabilities 
1,066,000 
1,067,254 
(1,254) 
917,519 
918,031 
(512) 
Total equity 
59,765 
58,073 
1,691 
54,675 
53,896 
779 
of which: equity attributable to shareholders 
59,445 
57,754 
1,691 
54,501 
53,722 
779 
of which: equity attributable to non-controlling interests 
319 
319 
0 
174 
174 
0 
Capital information 
Common equity tier 1 capital 
39,890 
38,181 
1,709 
 
35,535 
 
35,233 
302 
Going concern capital 
56,178 
52,610 
3,567 
51,842 
 
47,191 
 
4,650 
Risk-weighted assets 
289,101 
286,743 
2,358 
 
259,208 
 
257,831 
 
1,376 
Common equity tier 1 capital ratio (%) 
13.8 
13.3 
0.5 
 
13.7 
 
13.7 
0.0 
Going concern capital ratio (%) 
19.4 
18.3 
1.1 
 
20.0 
 
18.3 
1.7 
Total loss-absorbing capacity ratio (%) 
35.2 
34.2 
1.0 
 
34.6 
 
33.9 
0.7 
Leverage ratio denominator 
1,037,150 
1,036,771 
379 
 
911,322 
 
911,228 
94 
Leverage ratio denominator (with temporary FINMA exemption)
2
944,323 
969,396 
(25,073) 
Common equity tier 1 leverage ratio (%) 
3.85 
3.68 
0.16 
 
3.90 
 
3.87 
0.03 
Common equity tier 1 leverage ratio (%) (with temporary FINMA exemption)
2
4.22 
3.94 
0.29 
Going concern leverage ratio (%) 
5.4 
5.1 
0.3 
 
5.7 
 
5.2 
0.5 
Going concern leverage ratio (%) (with temporary FINMA exemption)
2
5.9 
5.4 
0.5 
Total loss-absorbing capacity leverage ratio (%) 
9.8 
9.5 
0.3 
 
9.8 
 
9.6 
0.2 
1 Refer to the “Accounting and financial reporting” 
and “Consolidated financial statements” sections of this report for information on 
the restatement of comparative information, where applicable. 
2 Refer to the 
“Regulatory and legal developments” and “Capital, liquidity and funding, and balance sheet” sections of this report for further details about the 
temporary FINMA exemption. 
 
 

 
415 
Management’s report on internal control over financial 
reporting 
Management’s responsibility for internal control over financial 
reporting 
The 
Board 
of 
Directors 
and 
management 
of 
UBS 
AG 
are 
responsible 
for 
establishing 
and 
maintaining 
adequate 
internal 
control 
over 
financial 
reporting. 
UBS 
AG’s 
internal control 
over 
financial 
reporting 
is 
designed 
to 
provide 
reasonable 
assurance 
regarding 
the 
preparation 
and 
fair 
presentation 
of 
published 
financial 
statements 
in 
accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS) 
as 
issued 
by 
the 
International 
Accounting Standards Board (IASB). 
UBS 
AG’s 
internal 
control 
over 
financial 
reporting 
includes 
those policies and procedures that: 
–
 
pertain 
to 
the 
maintenance 
of 
records 
that, 
in 
reasonable 
detail, 
accurately 
and 
fairly 
reflect 
transactions 
and 
dispositions of assets; 
–
 
provide 
reasonable 
assurance 
that 
transactions 
are 
recorded 
as 
necessary 
to 
permit 
preparation 
and 
fair 
presentation 
of 
financial 
statements, 
and 
that 
receipts 
and 
expenditures 
of 
the 
company 
are 
being 
made 
only 
in 
accordance 
with 
authorizations of UBS AG management; and 
–
 
provide 
reasonable 
assurance 
regarding 
prevention 
or 
timely 
detection 
of 
unauthorized 
acquisition, 
use 
or 
disposition 
of 
the company’s assets that 
could have a material effect 
on the 
financial statements. 
 
Because 
of 
its 
inherent 
limitations, 
internal 
control 
over 
financial 
reporting 
may 
not 
prevent 
or 
detect 
misstatements. 
Also, 
projections 
of 
any 
evaluation 
of 
effectiveness 
to 
future 
periods 
are 
subject 
to 
the 
risk 
that 
controls 
may 
become 
inadequate because of changes in 
conditions, or that the degree 
of compliance with the policies or procedures may deteriorate. 
Management’s assessment of internal control over financial 
reporting as of 31 December 
2020
 
UBS 
AG 
management 
has 
assessed 
the 
effectiveness 
of 
UBS 
AG’s internal control 
over financial reporting 
as of 31 
December 
2020
 
based 
on 
the 
criteria 
set 
forth 
by 
the 
Committee 
of 
Sponsoring 
Organizations of 
the Treadway 
Commission (COSO) 
in 
Internal 
Control 
– 
Integrated 
Framework 
(2013 
Framework). 
Based 
on 
this 
assessment, 
management 
believes 
that, 
as 
of 
31 December 
2020, 
UBS 
AG’s 
internal 
control 
over 
financial 
reporting was effective. 
The 
effectiveness 
of 
UBS 
AG’s internal 
control 
over 
financial 
reporting as 
of 31 
December 2020 
has been 
audited by 
Ernst & 
Young 
Ltd, 
UBS AG’s 
independent 
registered public 
accounting 
firm, 
as 
stated 
in 
their 
report 
appearing 
on 
page 
416, 
which 
expresses 
an 
unqualified 
opinion 
on 
the 
effectiveness 
of 
UBS 
AG’s internal control 
over financial reporting 
as of 31 December 
2020. 
 

427

428

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
429 
UBS AG consolidated financial statements 
Primary financial statements and share information 
Audited | 
Income statement 
For the year ended 
USD million 
Note 
31.12.20 
31.12.19 
31.12.18 
Interest income from financial instruments measured at 
amortized cost and fair value through 
other comprehensive income 
 
3 
8,816
10,703
10,121
Interest expense from financial instruments measured at 
amortized cost 
 
3 
(4,333)
(7,303)
(6,494)
Net interest income from financial instruments measured 
at fair value through profit or loss 
 
3 
1,305
1,015
1,344
Net interest income 
 
3 
5,788
4,415
4,971
Other net income from financial instruments measured 
at fair value through profit or loss 
 
3 
6,930
6,833
6,953
Credit loss (expense) / release 
 
20 
(695)
(78)
(117)
Fee and commission income 
 
4 
20,982
19,156
19,632
Fee and commission expense 
 
4 
(1,775)
(1,696)
(1,703)
Net fee and commission income 
 
4 
19,207
17,460
17,930
Other income 
 
5 
1,549
677
905
Total operating income 
32,780
29,307
30,642
Personnel expenses 
 
6 
14,686
13,801
13,992
General and administrative expenses 
 
7 
8,486
8,586
10,075
Depreciation and impairment of property, equipment and software 
 
12 
1,851
1,576
1,052
Amortization and impairment of goodwill and intangible 
assets 
 
13 
57
175
65
Total operating expenses 
25,081
24,138
25,184
Operating profit / (loss) before tax 
7,699
5,169
5,458
Tax expense / (benefit) 
 
8 
1,488
1,198
1,345
Net profit / (loss) 
6,211
3,971
4,113
Net profit / (loss) attributable to non-controlling interests 
15
6
7
Net profit / (loss) attributable to shareholders 
6,196
3,965
4,107
 
 

Consolidated financial statements | UBS AG consolidated financial statements

430

Statement of comprehensive income

For the year ended

USD million

Note

31.12.20

31.12.19

31.12.18

Comprehensive income attributable to shareholders

Net profit / (loss)

6,196

3,965

4,107

Other comprehensive income that may be reclassified to the income

statement

Foreign currency translation

Foreign currency translation movements related to net assets of foreign operations, before tax

2,040

199

(701)

Effective portion of changes in fair value of hedging instruments

designated as net investment hedges, before tax

(938)

(144)

181

Foreign currency translation differences on foreign operations reclassified to the

income statement

(7)

Effective portion of changes in fair value of hedging instruments

designated as net investment hedges reclassified

the income statement

(14)

Income tax relating to foreign currency translations, including the effect of

net investment hedges

(67)

(1)

(2)

Subtotal foreign currency translation, net of tax

1,030

(515)

Financial assets measured at fair value through other comprehensive income

Net unrealized gains / (losses), before tax

223

189

(56)

Realized gains reclassified to the income statement from

equity

(40)

(33)

Realized losses reclassified to the income statement from

equity

Income tax relating to net unrealized gains / (losses)

(48)

(41)

Subtotal financial assets measured at fair value through other comprehensive

income, net of tax

136

117

(45)

Cash flow hedges of interest rate risk

Effective portion of changes in fair value of derivative instruments designated

as cash flow hedges, before tax

2,012

1,571

(42)

Net (gains) / losses reclassified to the income statement from

equity

(770)

(175)

(294)

Income tax relating to cash flow hedges

(231)

(253)

Subtotal cash flow hedges, net of tax

1,011

1,143

(269)

Cost of hedging

Change in fair value of cost of hedging, before tax

(46)

Amortization of initial cost of hedging to the income statement

Income tax relating to cost of hedging

Subtotal cost of hedging, net of tax

(13)

Total other comprehensive income that may be reclassified to the income statement, net

of tax

2,165

1,351

(829)

Other comprehensive income that will not be reclassified to the income

statement

Defined benefit plans

Gains / (losses) on defined benefit plans, before tax

(222)

(129)

(70)

Income tax relating to defined benefit plans

(41)

245

Subtotal defined benefit plans, net of tax

(134)

(170)

175

Own credit on financial liabilities designated at fair value

Gains / (losses) from own credit on financial liabilities designated

at fair value, before tax

(293)

(400)

517

Income tax relating to own credit on financial liabilities designated

at fair value

(8)

Subtotal own credit on financial liabilities designated at

fair value, net of tax

(293)

(392)

509

Total other comprehensive income that will not be reclassified to the income statement,

net of tax

(427)

(562)

684

Total other comprehensive income

1,738

789

(145)

Total comprehensive income attributable to shareholders

7,934

4,754

3,961

Table

continues on the next page.

431

Statement of comprehensive income (continued)

Table

continued from previous page.

For the year ended

USD million

Note

31.12.20

31.12.19

31.12.18

Comprehensive income attributable to non-controlling

interests

Net profit / (loss)

Other comprehensive income that will not be reclassified to the income

statement

Foreign currency translation movements, before tax

(4)

(1)

Income tax relating to foreign currency translation movements

Subtotal foreign currency translation, net of tax

(4)

(1)

Total other comprehensive income that will not be reclassified to the income statement,

net of tax

(4)

(1)

Total comprehensive income attributable to non-controlling interests

Total comprehensive income

Net profit / (loss)

6,211

3,971

4,113

Other comprehensive income

1,759

785

(147)

of which: other comprehensive income that may be reclassified

to the income statement

2,165

1,351

(829)

of which: other comprehensive income that will not be reclassified

to the income statement

(406)

(566)

682

Total comprehensive income

7,970

4,756

3,967

1 Mainly driven by the strengthening of

the Swiss franc (9%) and the

euro (9%) against the US dollar.

2 Mainly reflects an increase in net

unrealized gains on US dollar hedging derivatives

resulting from decreases

in the relevant long-term

US dollar interest rates,

partly offset by the

reclassification of net gains

on hedging instruments

from OCI to the

income statement as the

hedged forecast cash flows

affected profit or loss.

3 Mainly includes a net pre-tax

OCI loss of USD

172

million related to the Swiss

pension plan (primarily driven

by an extraordinary employer

contribution of USD

143

million that increased the

gross plan assets,

but

led to an

OCI loss as

no net pension

asset could be

recognized on the

balance sheet as

of 31 December 2020

due to the

asset ceiling) and

a net pre-tax

OCI loss of

USD

million related to

the UK pension

plan

(driven by an increase in the defined benefit obligation, mainly resulting from a lower discount rate). Refer to Note 26 for more information.

Consolidated financial statements | UBS AG consolidated financial statements

432

Balance sheet

USD million

Note

31.12.20

31.12.19

Assets

Cash and balances at central banks

158,231

107,068

Loans and advances to banks

15,344

12,379

Receivables from securities financing transactions

9, 22

74,210

84,245

Cash collateral receivables on derivative instruments

9, 22

32,737

23,289

Loans and advances to customers

380,977

327,992

Other financial assets measured at amortized cost

9, 14a

27,219

23,012

Total financial assets measured at amortized cost

688,717

577,985

Financial assets at fair value held for trading

125,492

127,695

of which: assets pledged as collateral that may be sold or repledged

by counterparties

47,098

41,285

Derivative financial instruments

10, 21, 22

159,618

121,843

Brokerage receivables

24,659

18,007

Financial assets at fair value not held for trading

80,038

83,636

Total financial assets measured at fair value through profit or loss

389,808

351,181

Financial assets measured at fair value through other comprehensive income

11, 21

8,258

6,345

Investments in associates

28b

1,557

1,051

Property, equipment and software

11,958

11,826

Goodwill and intangible assets

6,480

6,469

Deferred tax assets

9,174

9,524

Other non-financial assets

14b

9,374

7,547

Total assets

1,125,327

971,927

Liabilities

Amounts due to banks

11,050

6,570

Payables from securities financing transactions

6,321

7,778

Cash collateral payables on derivative instruments

37,313

31,416

Customer deposits

15a

527,929

450,591

Funding from UBS Group AG and its subsidiaries

15b

53,979

47,866

Debt issued measured at amortized cost

85,351

62,835

Other financial liabilities measured at amortized cost

19a

10,421

10,373

Total financial liabilities measured at amortized cost

732,364

617,429

Financial liabilities at fair value held for trading

33,595

30,591

Derivative financial instruments

10, 21, 22

161,102

120,880

Brokerage payables designated at fair value

38,742

37,233

Debt issued designated at fair value

16, 21

59,868

66,592

Other financial liabilities designated at fair value

19b, 21

31,773

36,157

Total financial liabilities measured at fair value through profit or loss

325,080

291,452

Provisions

18a

2,791

2,938

Other non-financial liabilities

19c

7,018

6,211

Total liabilities

1,067,254

918,031

Equity

Share capital

338

Share premium

24,580

24,659

Retained earnings

25,251

23,419

Other comprehensive income recognized directly in equity, net of tax

7,585

5,306

Equity attributable to shareholders

57,754

53,722

Equity attributable to non-controlling interests

319

174

Total equity

58,073

53,896

Total liabilities and equity

1,125,327

971,927

433

Statement of changes in equity

USD million

capital

premium

Retained

earnings

Balance as of 31 December 2017

338

24,633

22,189

Effect of adoption of IFRS 9

(518)

Effect of adoption of IFRS 15

(25)

Effect of retained earnings restatement

(32)

Balance as of 1 January 2018 after the adoption of IFRS 9 and IFRS 15 and

restatement of retained earnings

338

24,633

21,614

Issuance of share capital

Premium on shares issued and warrants exercised

Tax (expense) / benefit

(5)

Dividends

(3,098)

Translation effects recognized directly in retained earnings

(21)

New consolidations / (deconsolidations) and other increases

/ (decreases)

(7)

Total comprehensive income for the year

4,790

of which: net profit / (loss)

4,107

of which: other comprehensive income (OCI) that may be

reclassified to the income statement, net of tax

of which: OCI that will not be reclassified to the income

statement, net of tax – defined benefit plans

175

of which: OCI that will not be reclassified to the income

statement, net of tax – own credit

509

of which: OCI that will not be reclassified to the income

statement, net of tax – foreign currency translation

Balance as of 31 December 2018

338

24,655

23,285

Effect of adoption of IFRIC 23

(11)

Balance as of 1 January 2019 after the adoption of IFRIC 23

338

24,655

23,274

Issuance of share capital

Premium on shares issued and warrants exercised

Tax (expense) / benefit

Dividends

(3,250)

Translation effects recognized directly in retained earnings

(9)

New consolidations / (deconsolidations) and other increases

/ (decreases)

(7)

Total comprehensive income for the year

3,403

of which: net profit / (loss)

3,965

of which: other comprehensive income (OCI) that may be

reclassified to the income statement, net of tax

of which: OCI that will not be reclassified to the income

statement, net of tax – defined benefit plans

(170)

of which: OCI that will not be reclassified to the income

statement, net of tax – own credit

(392)

of which: OCI that will not be reclassified to the income

statement, net of tax – foreign currency translation

Balance as of 31 December 2019

338

24,659

23,419

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
434 
 
Other comprehensive 
income recognized 
directly in equity, 
net of tax
1
of which: 
foreign currency 
translation 
of which: 
financial assets 
at fair value through 
other comprehensive 
income 
of which: 
cash flow 
hedges 
of which: 
cost of hedging 
Total equity 
attributable to 
shareholders 
Non-controlling 
interests 
Total equity 
4,828
4,455
13
360
51,987
59
52,046
(74)
(74)
(591)
(591)
(25)
(25)
(32)
(32)
4,754
4,455
(61)
360
51,338
59
51,397
0
0
34
34
(5)
(5)
(3,098)
(10)
(3,108)
21
3
18
0
0
(7)
122
115
(829)
(515)
(45)
(269)
3,961
5
3,967
4,107
7
4,113
(829)
(515)
(45)
(269)
(829)
(829)
175
175
509
509
0
(1)
(1)
3,946
3,940
(103)
109
52,224
176
52,400
(11)
(11)
3,946
3,940
(103)
109
52,213
176
52,389
0
0
0
0
11
11
(3,250)
(8)
(3,258)
9
0
9
0
0
(7)
5
(3)
1,351
92
117
1,143
4,754
2
4,756
3,965
6
3,971
1,351
92
117
1,143
1,351
1,351
(170)
(170)
(392)
(392)
0
(4)
(4)
5,306
4,032
14
1,260
53,722
174
53,896
 
 

435

Statement of changes in equity (continued)

USD million

capital

premium

Retained

earnings

Balance as of 31 December 2019

338

24,659

23,419

Issuance of share capital

Premium on shares issued and warrants exercised

(4)

Tax (expense) / benefit

Dividends

(3,848)

Translation effects recognized directly in retained earnings

(49)

Share of changes in retained earnings of associates and

joint ventures

(40)

New consolidations / (deconsolidations) and other increases

/ (decreases)

(76)

Total comprehensive income for the year

5,769

of which: net profit / (loss)

6,196

of which: other comprehensive income (OCI) that may be

reclassified to the income statement, net of tax

of which: OCI that will not be reclassified to the income

statement, net of tax – defined benefit plans

(134)

of which: OCI that will not be reclassified to the income

statement, net of tax – own credit

(293)

of which: OCI that will not be reclassified to the income

statement, net of tax – foreign currency translation

Balance as of 31 December 2020

338

24,580

25,251

1 Excludes other

comprehensive income related

to defined benefit

plans and own

credit, which is

recorded directly in

Retained earnings.

2 Opening retained

earnings as of

1 January 2018

have been restated

reflect a reduction

of USD

million in connection

with the retrospective

recognition of a

USD

million increase in

compensation-related liabilities

and an USD

million increase in

deferred tax assets.

Refer to

Note 1b for

more information.

3 Includes

decreases related

to recharges

by UBS

Group AG for

share-based compensation

awards granted

to employees

of UBS AG

or its

subsidiaries.

4 Mainly

relates to

the

establishment of a banking partnership with Banco do Brasil. Refer to Note 29 for more information.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
436 
 
Other comprehensive 
income recognized 
directly in equity, 
net of tax
1
of which: 
foreign currency 
translation 
of which: 
financial assets 
at fair value through 
other comprehensive 
income 
of which: 
cash flow 
hedges 
of which: 
cost of hedging 
Total equity 
attributable to 
shareholders 
Non-controlling 
interests 
Total equity 
5,306
4,032
14
1,260
53,722
174
53,896
0
0
(4)
(4)
1
1
(3,848)
(6)
(3,854)
49
0
49
0
0
(40)
(40)
65
65
(12)
115
103
2,165
1,030
136
1,011
(13)
7,934
36
7,970
6,196
15
6,211
2,165
1,030
136
1,011
(13)
2,165
2,165
(134)
(134)
(293)
(293)
0
21
21
7,585
5,126
151
2,321
(13)
57,754
319
58,073
 
 

 
 
437 
 
Share information and earnings per share 
Ordinary share capital 
As 
of 
31 
December 
2020, 
UBS 
AG 
had 
3,858,408,466 
issued 
shares
 
(31 
December 
2019:
 
3,858,408,466
 
shares) 
with 
a 
nominal 
value 
of 
CHF 
0.10 
each, 
leading 
to 
a 
share 
capital 
of 
CHF 
385,
840
,
846
.
6
0.
 
The 
shares 
were 
entirely 
held 
by 
UBS Group AG. 
Conditional share capital 
As of 31 December 2020, the 
following conditional share capital 
was available to UBS AG’s Board of Directors (BoD): 
–
 
A 
maximum 
of 
CHF 38,000,000 
represented 
by 
up 
to 
380,000,000 fully paid registered shares 
with a nominal value 
of 
CHF 0.10 
each, 
to 
be 
issued 
through 
the 
voluntary 
or 
mandatory 
exercise 
of 
conversion 
rights 
and 
/ 
or 
warrants 
granted 
in 
connection 
with 
the 
issuance 
of 
bonds 
or 
similar 
financial 
instruments 
on 
national 
or 
international 
capital 
markets. 
This 
conditional 
capital 
allowance 
was 
approved 
at 
the Annual General 
Meeting of UBS 
AG on 14 
April 2010. 
The BoD has not made use of such allowance. 
Authorized share capital 
UBS 
AG 
had 
no 
authorized 
capital 
available 
to 
issue 
on 
31 December 2020. 
Earnings per share 
In 
2015, 
UBS 
AG 
shares 
were 
delisted 
from 
the 
SIX 
Swiss 
Exchange 
and 
the 
New 
York 
Stock 
Exchange. 
As 
of 
31 December 2020, 
100% of UBS 
AG’s issued shares 
were held 
by 
UBS 
Group 
AG 
and 
therefore 
were 
not 
publicly 
traded. 
Accordingly, 
earnings 
per 
share 
information 
is 
not 
provided 
for 
UBS AG. 
 
 
 

Consolidated financial statements | UBS AG consolidated financial statements

438

Statement of cash flows

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Cash flow from / (used in) operating activities

Net profit / (loss)

6,211

3,971

4,113

Non-cash items included in net profit and other adjustments:

Depreciation and impairment of property, equipment and software

1,851

1,576

1,052

Amortization and impairment of goodwill and intangible

assets

175

Credit loss expense / (release)

695

117

Share of net profits of associates / joint ventures and impairment

of associates

(84)

(45)

(528)

Deferred tax expense / (benefit)

355

460

374

Net loss / (gain) from investing activities

(698)

220

(49)

Net loss / (gain) from financing activities

3,246

6,506

(4,829)

Other net adjustments

(8,061)

862

(1,092)

Net change in operating assets and liabilities:

Loans and advances to banks / amounts due to banks

3,586

(4,336)

3,504

Securities financing transactions

9,588

8,678

(11,230)

Cash collateral on derivative instruments

(3,486)

2,842

(1,449)

Loans and advances to customers

(33,897)

(3,205)

(4,152)

Customer deposits

52,831

23,399

7,931

Financial assets and liabilities at fair value held for trading and derivative financial

instruments

11,326

(18,873)

11,093

Brokerage receivables and payables

(5,199)

(2,347)

11,432

Financial assets at fair value not held for trading, other financial assets

and liabilities

392

126

10,902

Provisions, other non-financial assets and liabilities

(1,213)

(537)

1,377

Income taxes paid, net of refunds

(919)

(741)

(888)

Net cash flow from / (used in) operating activities

36,581

18,805

27,744

Cash flow from / (used in) investing activities

Purchase of subsidiaries, associates and intangible assets

(46)

(26)

(287)

Disposal of subsidiaries, associates and intangible assets

674

114

137

Purchase of property, equipment and software

(1,573)

(1,401)

(1,473)

Disposal of property, equipment and software

364

114

Purchase of financial assets measured at fair value through other

comprehensive income

(6,290)

(3,424)

(1,999)

Disposal and redemption of financial assets measured at

fair value through other comprehensive income

4,530

3,913

1,361

Net (purchase) / redemption of debt securities measured

at amortized cost

(4,166)

(562)

(3,770)

Net cash flow from / (used in) investing activities

(6,506)

(1,374)

(5,918)

Table

continues on the next page.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
439 
 
Statement of cash flows (continued) 
Table 
continued from previous page. 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Cash flow from / (used in) financing activities 
Net short-term debt issued / (repaid) 
23,845
(17,149)
(12,245)
Distributions paid on UBS AG shares 
(3,848)
(3,250)
(3,098)
Repayment of lease liabilities 
(547)
(496)
Issuance of long-term debt, including debt issued designated 
at fair value 
72,273
59,199
54,726
Repayment of long-term debt, including debt issued designated 
at fair value 
(83,825)
(68,883)
(44,344)
Funding from UBS Group AG and its subsidiaries 
4,606
5,848
5,956
Net changes in non-controlling interests 
(6)
(8)
(31)
Net cash flow from / (used in) financing activities 
12,498
(24,738)
963
Total cash flow 
Cash and cash equivalents at the beginning of the year 
119,804
125,853
104,787
Net cash flow from / (used in) operating, investing and financing 
activities 
42,573
(7,307)
22,789
Effects of exchange rate differences on cash and cash equivalents 
11,053
1,258
(1,722)
Cash and cash equivalents at the end of the year
2
173,430
119,804
125,853
of which: cash and balances at central banks
3
158,088
106,957
108,268
of which: loans and advances to banks 
13,928
11,317
15,452
of which: money market paper
4
1,415
1,530
2,133
Additional information 
Net cash flow from / (used in) operating activities includes: 
Interest received in cash 
11,929
15,344
14,666
Interest paid in cash 
6,414
10,800
9,372
Dividends on equity investments, investment funds and associates 
received in cash
5
1,901
3,145
2,322
1 Includes cash proceeds from the sale 
of the majority stake in Fondcenter AG of 
USD 
426
 
million for the year ended 31 
December 2020. Refer to Note 29 
for more information. Also includes dividends received 
from 
associates. 
2 USD 
3,828
 
million, USD 
3,192
 
million and USD 
5,245
 
million of cash 
and cash equivalents 
(mainly reflected in 
Loans and advances 
to banks) were 
restricted as of 
31 December 2020, 31 
December 
2019 and 31 December 
2018, respectively. Refer 
to Note 23 
for more information. 
3 Includes only 
balances with an 
original maturity of 
three months 
or less. 
4 Money market paper 
is included in 
the balance 
sheet under Financial 
assets at fair 
value held for 
trading (31 December 2020: 
USD 
117
 
million; 31 December 2019: 
USD 
235
 
million; 31 December 2018: 
USD 
366
 
million), Financial assets 
measured at 
fair value 
through 
other 
comprehensive 
income 
(31 December 2020: 
USD 
178
 
million; 
31 December 2019: 
USD 
24
 
million; 
31 December 2018: 
USD 
8
 
million), 
Financial 
assets 
at 
fair 
value 
not 
held 
for 
trading 
(31 December 2020: USD 
536
 
million; 31 December 2019: 
USD 
920
 
million; 31 December 2018: 
USD 
1,556
 
million) and 
Other financial 
assets measured 
at amortized 
cost (31 December 2020: 
USD 
584
 
million; 
31 December 2019: USD 
351
 
million; 31 December 2018: USD 
204
 
million). 
5 Includes dividends received from associates reported within Net cash flow from / (used in) investing activities.
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
440 
Changes in liabilities arising from financing activities 
USD million 
Debt issued 
measured at 
amortized cost 
of which: 
short-term 
of which: 
long-term 
Debt issued 
designated at fair 
value 
Over-the-
counter (OTC) 
debt 
instruments
2
Funding from 
UBS Group 
AG and its 
subsidiaries
3
Total 
Balance as of 1 January 2019 
 
91,245 
 
39,025 
 
52,220 
 
57,031 
 
2,450 
 
41,202 
 
191,928 
Cash flows 
 
(28,355) 
 
(17,149) 
 
(11,206) 
 
1,947 
 
(425) 
 
5,848 
 
(20,985) 
Non-cash changes 
 
(55) 
 
(39) 
 
(16) 
 
7,614 
 
(3) 
 
1,033 
 
8,588 
of which: foreign currency translation 
 
(346) 
 
(39) 
 
(307) 
 
210 
 
(6) 
 
(128) 
 
(270) 
of which: fair value changes 
 
7,404 
 
3 
 
17 
 
7,424 
of which: other
1
 
291 
 
291 
 
1,144 
 
1,434 
Balance as of 31 December 2019 
 
62,835 
 
21,837 
 
40,998 
 
66,592 
 
2,022 
 
48,083 
 
179,531 
Cash flows 
 
18,722 
 
23,845 
 
(5,123) 
 
(6,423) 
 
(6) 
 
4,606 
 
16,899 
Non-cash changes 
 
3,794 
 
984 
 
2,810 
 
(301) 
 
44 
 
2,666 
 
6,203 
of which: foreign currency translation 
 
3,589 
 
984 
 
2,605 
 
1,760 
 
82 
 
1,395 
 
6,825 
of which: fair value changes 
 
(2,061) 
 
(38) 
 
152 
 
(1,946) 
of which: other
1
 
205 
 
205 
 
1,119 
 
1,324 
Balance as of 31 December 2020 
 
85,351 
 
46,666 
 
38,685 
 
59,868 
 
2,060 
 
55,354 
 
202,633 
1 Includes 
the effect 
of fair 
value hedges 
on long-term 
debt. Refer 
to Note 
1a item 
2j and 
Note 17 
for more 
information. 
2 Included 
in balance 
sheet line 
Other financial 
liabilities designated 
at fair 
value. 
3 Includes funding from UBS Group AG and its subsidiaries measured at amortized cost (refer to Note 15b) and measured at fair value 
(refer to Note 19b). 
 
 

 
441 
Notes to the UBS AG consolidated financial statements 
 
Note 1 
Summary of significant accounting policies 
The following table provides an overview of information included in this Note.
 
442 
a)
 
Significant accounting policies
 
442 
Basis of accounting
442 
1)
 
Consolidation
 
443 
2)
 
Financial instruments
 
443 
a.
 
Recognition
 
443 
b.
 
Classification, measurement and presentation
 
447 
c.
 
Loan commitments and financial guarantees
 
447 
d.
 
Interest income and expense
 
447 
e.
 
Derecognition
 
447 
f.
 
Fair value of financial instruments
 
448 
g.
 
Allowances and provisions for expected credit 
losses
 
451 
h.
 
Restructured and modified financial assets
 
451 
i.
 
Offsetting
 
452 
j.
 
Hedge accounting
 
452 
3)
 
Fee and commission income and expenses
 
453 
4)
 
Cash and cash equivalents
 
453 
5)
 
Share-based and other deferred compensation plans
 
453 
6)
 
Post-employment benefit plans
 
454 
7)
 
Income taxes
 
455 
8)
 
Investments, in associates 
 
455 
9)
 
Property, equipment and software
 
455 
10)
 
Goodwill and intangible assets
 
456 
11)
 
Provisions and contingent liabilities
 
456 
12)
 
Foreign currency translation
 
457 
13)
 
Non-controlling interests 
 
457 
14)
 
Leasing
 
458 
b)
 
Changes in accounting policies, comparability 
and other adjustments
 
459 
c)
 
International Financial Reporting Standards and 
Interpretations to be adopted in 2021 and later 
and other changes

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
442 
 
 
Note 1 
Summary of significant accounting policies (continued) 
a) Significant accounting policies 
This Note 
describes the 
significant accounting policies 
applied in 
the 
preparation 
of 
the 
consolidated 
financial 
statements 
(the 
Financial 
Statements) 
of 
UBS 
AG 
and 
its 
subsidiaries 
(UBS 
AG). 
On 25 
February 2021, the 
Financial Statements 
were authorized 
for issue by the Board of Directors. 
Basis of accounting 
The Financial Statements have been prepared in accordance with 
International 
Financial 
Reporting 
Standards 
(IFRS), 
as 
issued 
by 
the 
International 
Accounting 
Standards 
Board 
(the 
IASB), 
and 
are presented 
in US dollars (USD). 
Disclosures 
marked 
as 
audited 
in 
the 
“Risk, 
capital, 
liquidity 
and funding, 
and balance 
sheet” section 
of this 
report form 
an 
integral part of the Financial 
Statements. These disclosures relate 
to requirements 
under IFRS 7, 
Financial Instruments: 
Disclosures
, 
and 
IAS 
1, 
Presentation 
of 
Financial 
Statements
,
 
and 
are 
not 
repeated in this section. 
The 
accounting 
policies 
described 
in 
this 
Note 
have 
been 
applied 
consistently 
in 
all 
years 
presented
 
unless 
otherwise 
stated 
in 
Note 
1b. 
In 
addition, 
effective 
from 
1 
January 
2019, 
UBS AG applies IFRS 16, 
Leases,
 
which sets out the principles 
for 
the 
recognition, 
measurement, 
presentation 
and 
disclosure 
of 
leases. 
Within 
this 
Note, 
policies 
applied 
for 
periods 
that 
differ 
from 
those 
applied 
to 
the 
financial 
year 
ended 
31 
December 
2020 are identified as “Comparative policy.” 
 
Critical accounting estimates and judgments 
Preparation of these Financial 
Statements under IFRS requires 
management 
to 
apply 
judgment 
and 
make 
estimates 
and 
assumptions 
that 
affect 
reported amounts of assets, liabilities, income 
and expenses and disclosure 
of contingent 
assets and liabilities, 
and may involve 
significant 
uncertainty 
at 
the time they are made. Such estimates and assumptions 
are based on the 
best 
available information. 
UBS AG regularly reassesses such estimates and 
assumptions, which 
encompass historical experience, 
expectations of 
the 
future and other pertinent factors, to determine their continuing relevance 
based on current conditions, 
updating them 
as necessary. Changes 
in those 
estimates and 
assumptions may have 
a 
significant effect on 
the Financial 
Statements. Furthermore, 
actual results 
may 
differ significantly from 
UBS 
AG’s estimates, which could result in significant 
losses to UBS AG, 
beyond 
what was 
anticipated 
or provided 
for. 
The 
following 
areas 
contain 
estimation 
uncertainty 
or 
require 
critical 
judgment 
and 
have 
a 
significant 
effect 
on 
amounts 
recognized 
in 
the 
Financial Statements: 
–
 
expected credit loss measurement (refer to item 2g in this Note and to 
Note 20); 
–
 
fair value measurement (refer to item 2f in this Note 
and to Note 21); 
–
 
income taxes (refer to item 7 in this Note and to Note 
8); 
–
 
provisions and 
contingent liabilities (refer 
to item 
11 in 
this Note 
and 
to Note 18); 
–
 
post-employment benefit 
plans 
(refer 
to 
item 
6 
in 
this 
Note 
and 
to 
Note 26); 
–
 
goodwill (refer to item 10 in this Note and to Note 
13); and 
–
 
consolidation of structured entities (refer to 
item 1 in this Note 
and to 
Note 28). 
1) Consolidation 
The 
Financial 
Statements 
comprise 
the 
financial 
statements 
of 
UBS 
AG 
and 
its 
subsidiaries, 
presented 
as 
a 
single 
economic 
entity
;
 
intercompany 
transactions 
and 
balances 
have 
been 
eliminated. 
UBS
 
AG
 
consolidates 
all 
entities 
that 
it 
controls, 
including structured entities 
(SEs), which is 
the case when 
it has: 
(i) power over the 
relevant activities of the entity 
; 
(ii) exposure to 
an entity‘s variable returns; and (iii) the ability to use its power to 
affect its own returns. 
Consideration 
is 
given 
to 
all 
facts 
and 
circumstances 
to 
determine whether 
UBS AG 
has power 
over another 
entity, 
i.e., 
the 
current 
ability 
to 
direct 
the 
relevant 
activities 
of 
an 
entity 
when decisions about those activities need to be made. 
Subsidiaries, 
including 
SEs, 
are 
consolidated 
from 
the 
date 
when control 
is gained 
and deconsolidated 
from the 
date when 
control ceases. 
Control, or 
the lack thereof, 
is reassessed 
if facts 
and circumstances indicate that there is a change to one or more 
elements required to establish that control is present. 
Business combinations are accounted for using the acquisition 
method. The 
amount of 
non-controlling interest 
is measured 
at 
the 
non-controlling 
interest’s 
proportionate 
share 
of 
the 
acquiree’s identifiable net assets. 
›
 
Refer to Note 28
 
for more information 
 
Critical accounting estimates and judgments 
Each 
individual 
entity 
is 
assessed 
for 
consolidation 
in 
line 
with 
the 
aforementioned 
consolidation principles. 
The 
assessment 
of 
control 
can 
be complex 
and requires 
the use 
of significant judgment, 
in particular in 
determining whether 
UBS AG 
has power 
over the 
entity. 
As the 
nature 
and extent of UBS AG’s 
involvement is unique for each entity, 
there is no 
uniform consolidation 
outcome by 
entity. 
Certain entities 
within a 
class 
may 
be 
consolidated 
while 
others 
may 
not. 
When 
carrying 
out 
the 
consolidation 
assessment, 
judgment 
is 
exercised 
considering 
all 
the 
relevant facts and circumstances, including the nature and activities of the 
investee, as well as the substance of voting 
and similar rights. 
›
 
Refer to Note 28
 
for more information 
 

 
 
443 
 
Note 1 
Summary of significant accounting policies (continued) 
2) Financial instruments 
a. Recognition 
UBS 
AG 
recognizes 
financial 
instruments 
when 
it 
becomes 
a 
party to contractual provisions 
of an instrument. UBS 
AG applies 
settlement 
date 
accounting 
to all 
standard 
purchases 
and 
sales 
of non-derivative financial instruments. 
In 
transactions 
where 
UBS 
AG 
acts 
as 
a 
transferee, 
to 
the 
extent 
such
 
financial 
asset 
transfer 
does 
not 
qualify 
for 
derecognition by 
the transferor, 
UBS AG 
does not 
recognize the 
transferred instrument as its asset. 
UBS 
AG 
also 
acts 
in 
a 
fiduciary 
capacity, 
which 
results 
in 
it 
holding 
or 
placing 
assets 
on 
behalf 
of 
individuals, 
trusts, 
retirement 
benefit 
plans 
and 
other 
institutions. 
Unless 
these 
items meet the definition 
of an asset and 
the recognition criteria 
are 
satisfied, 
such
 
assets 
are 
not 
recognized 
on 
UBS
 
AG
’s 
balance 
sheet 
and 
the
 
related 
income 
is
 
excluded 
from 
the
 
Financial Statements. 
Client 
cash balances 
associated with 
derivatives 
clearing and 
execution 
services 
are 
not 
recognized 
on 
the 
balance 
sheet 
if, 
through 
contractual agreement, 
regulation 
or 
practice, 
UBS AG 
neither obtains benefits from nor controls such cash balances. 
b. Classification, measurement and presentation 
Financial assets 
All 
financial 
instruments 
are 
on 
initial 
recognition 
measured 
at 
fair value and classified as measured at 
amortized cost, fair value 
through 
other 
comprehensive 
income 
(FVOCI) 
or 
fair 
value 
through 
profit 
or 
loss 
(FVTPL)
. 
For
 
financial 
instrumen
ts 
subsequently 
measured 
at 
amortized 
cost 
or 
FVOCI, 
the 
initial 
fair value is adjusted for directly attributable transaction costs. 
Where 
the 
contractual 
terms 
of 
a 
debt 
instrument 
result 
in 
cash 
flows 
that 
are 
solely 
payments 
of 
principal 
and 
interest 
(SPPI) on 
the principal amount 
outstanding, the 
debt instrument 
is 
classified 
as 
measured at 
amortized 
cost 
if 
it 
is 
held 
within a 
business model 
that has 
an objective 
to hold 
financial assets 
to 
collect 
contractual 
cash flows, 
or 
at 
FVOCI if 
it 
is held 
within a 
business 
model 
with 
the 
objective 
being
 
achieved 
by 
both 
collecting contractual cash flows and selling financial assets. 
All 
other 
financial 
assets 
are 
measured 
at 
FVTPL, 
including 
those 
held 
for 
trading 
or 
those 
managed 
on 
a 
fair 
value 
basis, 
except 
for 
derivatives 
designated 
in 
a 
hedge 
relationship, 
in 
which 
case hedge 
accounting requirements 
apply (refer 
to item 
2j in this Note for more information). 
Business model assessment and contractual cash flow 
characteristics 
UBS
 
AG
 
determines 
the 
nature 
of 
a 
business 
model 
by 
considering 
the 
way 
financial 
assets 
are 
managed 
to 
achieve 
a 
particular business objective. 
In assessing whether 
the contractual cash 
flows are SPPI, 
UBS 
AG
 
considers 
whether 
the 
contractual 
terms 
of 
the 
financial 
asset contain a 
term that could change 
the timing or 
amount of 
contractual cash flows arising over the life of the instrument. 
Financial liabilities 
Financial liabilities measured at amortized cost 
Financial 
liabilities 
measured 
at 
amortized 
cost 
include 
Debt 
issued measured at amortized cost 
and 
Funding from UBS Group 
AG and 
its subsidiaries
, which
 
constitute obligations 
of UBS 
AG 
arising 
from 
funding 
it 
has 
received 
from 
UBS Group 
AG or 
its 
subsidiaries, 
which 
are 
not 
within 
the 
UBS 
AG’s 
scope 
of 
consolidation. The 
latter includes 
contingent capital 
instruments 
issued 
to 
UBS 
Group 
AG 
and 
its 
subsidiaries
 
contain
ing
 
contractual provisions 
under which the 
principal amounts would 
be written down or converted into equity upon either a 
specified 
common equity 
tier 1 (CET1) 
ratio breach 
or a 
determination by 
the Swiss 
Financial Market 
Supervisory Authority 
(FINMA) that 
a 
viability event 
has occurred. 
Such contractual 
provisions are 
not 
derivatives, 
as 
the 
underlying 
is 
deemed 
to 
be 
a 
non-financial 
variable specific to a party to the contract. 
Where 
there 
is 
a 
legal 
bail-in 
mechanism 
for 
write-down 
or 
conversion 
into 
equity 
(as 
is 
the 
case, 
for 
instance, 
with 
senior 
unsecured debt 
issued by 
UBS AG 
that is 
subject to 
write-down 
or 
conversion 
under 
resolution 
authority 
granted 
to 
FINMA 
under 
Swiss 
law), 
the 
amortized 
cost 
accounting 
treatment 
applied to these instruments is not affected. 
If the 
debt were 
to be written 
down or 
converted into equity 
in 
a 
future 
period, 
it 
would 
be 
partially 
or 
fully 
derecognized, 
with 
the 
difference 
between 
its 
carrying 
amount 
and 
the 
fair 
value of any equity issued recognized in the income statement. 
A 
gain 
or 
loss 
is 
recognized 
in 
Other 
income
 
when 
debt 
issued 
is 
subsequently 
repurchased 
for 
market-making 
or 
other 
activities. 
A 
subsequent 
sale 
of 
own 
bonds 
in 
the 
market 
is 
treated as a reissuance of debt. 
Financial liabilities measured at fair value through profit or loss 
UBS 
AG 
designates 
certain 
issued 
debt 
instruments 
as 
financial 
liabilities 
at 
fair 
value 
through 
profit 
or 
loss, 
on 
the 
basis 
that 
such financial instruments include embedded derivatives 
and / or 
are 
managed on 
a 
fair value 
basis (refer 
to the 
table below 
for 
more 
information), 
in 
which 
case 
bifurcation 
of 
the 
embedded 
derivative 
component 
is 
not 
required. 
Financial 
instruments 
including 
embedded 
derivatives 
arise 
predominantly 
from 
the 
issuance of certain structured debt instruments. 
Measurement and presentation 
After 
initial
 
recognition, 
UBS
 
AG
 
classifies, 
measures 
and 
presents its financial assets and 
liabilities in accordance with 
IFRS 
9, as described in the table on the following pages. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
444 
 
Note 1 
Summary of significant accounting policies (continued) 
 
Classification, measurement and presentation 
of financial assets 
Financial assets classification 
Significant items included 
Measurement and presentation 
Measured at 
amortized cost 
This classification includes: 
–
 
cash and balances at central banks; 
–
 
loans and advances to banks; 
–
 
cash collateral receivables on securities borrowed; 
–
 
receivables on reverse repurchase agreements; 
–
 
cash collateral receivables on derivative instruments; 
–
 
residential and commercial mortgages; 
–
 
corporate loans; 
–
 
secured loans, including Lombard loans, and 
unsecured loans; 
–
 
loans to financial advisors; 
and 
–
 
debt securities held as high-quality liquid 
assets 
(HQLA). 
Measured at amortized cost using the effective interest 
method less allowances for expected credit losses 
(ECL) 
(refer to items 2d and 2g in this Note for more information). 
The following items are recognized in the income 
statement: 
–
 
interest income, which is accounted for in accordance 
with item 2d 
in this Note; 
–
 
ECL and reversals; 
and 
–
 
foreign exchange translation gains and losses. 
When the financial asset at amortized cost 
is derecognized, 
the gain or loss is recognized in the income statement. 
For amounts arising from settlement of certain derivatives, 
refer to the next page. 
Measured 
at FVOCI 
Debt instruments 
measured at 
FVOCI 
This classification primarily includes debt securities 
and 
certain asset-backed securities held as HQLA. 
Measured at fair value, 
with unrealized gains and losses 
reported in 
Other comprehensive income, 
net of applicable 
income taxes, until such investments are derecognized. 
Upon derecognition, any accumulated balances in 
Other 
comprehensive income 
are reclassified to the income 
statement and reported within 
Other income. 
The following items, which are determined on the 
same 
basis as for financial assets measured at amortized 
cost, 
are 
recognized in the income statement: 
–
 
interest income, which is accounted for in accordance 
with item 2d 
in this Note; 
–
 
ECL and reversals; 
and 
–
 
foreign exchange translation gains and losses. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
445 
 
Note 1 
Summary of significant accounting policies (continued) 
 
Classification, measurement and presentation 
of financial assets 
Financial assets classification 
Significant items included 
Measurement and presentation 
Measured at 
FVTPL 
Held for 
trading 
Financial assets held for trading include: 
–
 
all derivatives with a positive replacement value, 
except 
those that are designated and effective hedging 
instruments; and 
–
 
other financial assets acquired principally for the 
purpose of selling or repurchasing in the near term, or 
that are part of a portfolio of identified financial 
instruments that are managed together and for 
which 
there is evidence of a recent actual pattern of short-
term profit taking. Included in this category are debt 
instruments (including those in the form of 
securities, 
money market paper, 
and traded corporate and bank 
loans) and equity instruments. 
Measured at fair value, 
with changes recognized in the 
income statement. 
Derivative assets (including derivatives that 
are designated 
and effective hedging instruments) are generally 
presented as 
Derivative financial instruments
, except those 
exchange-traded and OTC-cleared derivatives that 
are 
considered to be settled on a daily basis or in substance 
net settled on a daily basis, which are presented within 
Cash collateral receivables on derivative instruments.
Changes in fair value, initial transaction costs, 
dividends 
and gains and losses arising on disposal or redemption 
are 
recognized in 
Other net income from financial 
instruments measured at fair value through 
profit or loss
,
1
except interest income on instruments other than 
derivatives (refer to item 2d in this Note), interest on 
derivatives designated as hedging instruments 
in hedges 
of interest rate risk and forward points on certain short- 
and long-duration foreign exchange contracts 
acting as 
economic hedges, which are reported in 
Net interest 
income. 
Changes in the fair value of derivatives that 
are 
designated and effective hedging instruments are 
presented either in the income statement or 
Other 
comprehensive income
, depending on the type of hedge 
relationship (refer to item 2j in this Note for more 
information). 
Mandatorily 
measured at 
FVTPL – Other 
This classification includes financial assets 
mandatorily 
measured at FVTPL that are not held for trading, as 
follows: 
–
 
certain structured loans, certain commercial loans, 
receivables under reverse repurchase and cash collateral 
on securities borrowing agreements that are managed 
on a fair value basis; 
–
 
loans managed on a fair value basis, including those 
hedged with credit derivatives; 
–
 
certain debt securities held as HQLA and 
managed on a 
fair value basis; 
–
 
certain investment fund holdings and assets 
held to 
hedge delivery obligations related to cash-settled 
employee compensation plans; 
–
 
brokerage receivables, for which contractual cash flows 
do not meet the SPPI criterion because the aggregate 
balance is accounted for as a single unit of 
account, 
with interest being calculated on the individual 
components; 
–
 
auction rate securities, for which contractual cash 
flows 
do not meet the SPPI criterion because interest may 
be 
reset at rates that contain leverage; 
–
 
equity instruments; 
and 
–
 
assets held under unit-linked investment contracts. 
1
 
Effective from 1 January 2019, this line item 
includes dividends (prior to 1 January 2019, dividends 
were included within 
Net interest income
), intermediation income arising from certain client-driven 
Global Wealth 
Management and Personal & Corporate Banking financial transactions, 
foreign currency translation effects and income and expenses from exposures to precious metals. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
446 
 
Note 1 
Summary of significant accounting policies (continued) 
 
Classification, measurement and presentation 
of financial liabilities 
Financial liabilities classification 
Significant items included 
Measurement and presentation 
Measured at amortized cost 
This classification includes: 
–
 
demand and time deposits; 
–
 
retail savings / deposits; 
–
 
amounts payable under repurchase agreements; 
–
 
cash collateral on securities lent; 
–
 
non-structured fixed-rate bonds; 
–
 
subordinated debt; 
–
 
certificates of deposit and covered bonds; 
–
 
obligations against funding from UBS Group AG and 
its subsidiaries; and 
–
 
cash collateral payables on derivative instruments. 
Measured at amortized cost using the effective interest 
method. 
When the financial liability at amortized cost 
is 
derecognized, the gain or loss is recognized in the income 
statement. 
Measured at 
fair value 
through 
profit or loss 
Held for trading 
Financial liabilities held for trading include: 
–
 
all derivatives with a negative replacement value 
(including certain loan commitments), 
except those 
that are designated and effective hedging 
instruments; and 
–
 
obligations to deliver financial instruments, 
such as 
debt and equity instruments, that UBS AG has 
sold to 
third parties but does not own (short positions). 
Measurement and presentation of financial liabilities 
classified at FVTPL follow the same principles 
as for 
financial assets classified at FVTPL, except that 
the amount 
of change in the fair value of the financial liability 
designated at FVTPL that is attributable to changes 
in UBS 
AG’s own credit risk is presented in 
Other comprehensive 
income
 
directly within 
Retained earnings 
and is never 
reclassified to the income statement. 
Derivative liabilities (including derivatives that 
are 
designated and effective hedging instruments) 
are 
generally presented as 
Derivative financial instruments
, 
except those exchange-traded and OTC-cleared 
derivatives that are considered to be settled on a daily 
basis or in substance net settled on a 
daily basis, which 
are presented within 
Cash collateral payables on derivative 
instruments. 
Designated at 
FVTPL 
UBS AG designates 
at FVTPL the following financial 
liabilities: 
–
 
issued hybrid debt instruments that primarily include 
equity-linked, credit-linked and rates-linked bonds 
or 
notes; 
–
 
issued debt instruments managed on a fair 
value 
basis; 
–
 
certain payables under repurchase agreements and 
cash collateral on securities lending agreements that 
are managed in conjunction with associated reverse 
repurchase agreements and cash collateral on 
securities borrowed; 
–
 
amounts due under unit-linked investment contracts 
whose cash flows are linked to financial assets 
measured at FVTPL and eliminate an accounting 
mismatch; 
and 
–
 
brokerage payables, which arise in conjunction with 
brokerage receivables and are measured at FVTPL to 
achieve measurement consistency. 
 
 
 

 
 
447 
 
Note 1 
Summary of significant accounting policies (continued)
c. Loan commitments and financial guarantees 
Loan 
commitments 
are 
arrangements 
to 
provide 
credit 
under 
defined terms and 
conditions. Irrevocable loan 
commitments are 
classified 
as: 
(i) 
derivative 
loan 
commitments 
measured 
at 
fair 
value through profit 
or loss; (ii) loan 
commitments designated at 
fair 
value 
through 
profit 
or 
loss; 
or 
(iii) 
loan 
commitments 
not 
measured 
at 
fair 
value. 
Financial 
guarantee 
contracts 
are 
contracts 
that 
require 
UBS 
AG 
to 
make 
specified 
payments 
to 
reimburse 
the 
holder 
for 
an 
incurred 
loss 
because 
a 
specified 
debtor fails to make payments 
when due in accordance with 
the 
terms of a specified debt instrument. 
d. Interest income and expense 
Interest 
income 
and 
expense 
are 
recognized 
in 
the 
income 
statement 
based 
on 
the 
effective 
interest 
method
. 
When 
calculating 
the 
effective 
interest 
rate 
(EIR) 
for 
financial 
instruments 
(other 
than 
credit-impaired 
financial 
instruments), 
UBS 
AG 
estimates 
future 
cash flows 
considering 
all 
contractual 
terms of the instrument, 
but not expected credit 
losses, with the 
EIR applied to the gross 
carrying amount of the financial asset or 
the 
amortized 
cost 
of 
a 
financial 
liability. 
However, 
when 
a 
financial 
asset 
becomes 
credit-impaired 
after 
initial 
recognition, 
interest 
income 
is 
determined 
by 
applying 
the 
EIR 
to 
the 
amortized 
cost 
of 
the 
instrument, 
which 
represents 
the 
gross 
carrying amount adjusted for any credit loss allowance. 
Upfront 
fees, 
including 
fees 
on 
loan 
commitments 
not 
measured 
at 
fair 
value 
where 
a 
loan 
is 
expected 
to 
be 
issued, 
and direct costs 
are included within 
the initial measurement 
of a 
financial 
instrument 
measured 
at 
amortized 
cost 
or 
FVOCI 
and 
recognized over the expected 
life of the instrument 
as part of its 
EIR. 
Fees related 
to loan 
commitments where 
no loan 
is expected 
to 
be 
issued, 
as 
well 
as 
loan 
syndication 
fees 
where 
UBS 
AG 
does 
not retain 
a 
portion 
of 
the 
syndicated 
loan 
or 
where 
UBS 
AG 
does 
retain 
a 
portion 
of 
the 
syndicated 
loan 
at 
the 
same 
effective 
yield 
for 
comparable 
risk 
as 
other 
participants, 
are 
included 
in 
Net 
fee 
and 
commission 
income 
and 
either 
recognized over the life 
of the commitment or when 
syndication 
occurs. 
›
 
Refer to item 3 in this Note for more information 
 
Interest 
income 
on 
financial 
assets, 
excluding 
derivatives, 
is 
included 
in 
interest 
income
 
when 
positive 
and 
in 
i
nterest 
expense 
when 
negative. 
Similarly, 
interest 
expense 
on 
financial 
liabilities, 
excluding 
derivatives, 
is 
included 
in 
interest 
expense, 
except 
when 
interest 
rates 
are 
negative, 
in 
which 
case 
it 
is 
included in interest income. 
›
 
Refer to item 2b 
in this Note and Note 3 for more information 
e. Derecognition 
Financial assets 
UBS AG derecognizes a financial asset, or a portion of a 
financial 
asset, 
when 
the 
contractual 
rights 
to 
the 
cash 
flows 
from 
the 
financial 
asset 
expire, 
or 
UBS 
AG 
has 
either 
(i) 
transferred 
the 
contractual rights to 
receive the cash 
flows from the 
asset, or (ii) 
retained 
the contractual 
rights to 
receive the 
cash flows 
of that 
asset, 
but 
assumed 
a 
contractual 
obligation 
to 
pay 
the 
cash 
flows 
to 
one 
or 
more 
entities, 
subject 
to 
certain 
criteria. 
Transferred 
financial 
assets 
are 
derecognized 
if 
the 
purchaser 
has received substantially all the risks and rewards of the asset or 
a 
significant 
part 
of 
the 
risks 
and 
rewards 
combined 
with 
a 
practical ability to sell or pledge the asset. 
Where 
financial 
assets 
have 
been 
pledged 
as 
collateral 
or 
in 
similar 
arrangements, 
they 
are 
considered 
to 
have 
been 
transferred 
if 
the 
counterparty 
has 
received 
the 
contractual 
right
s
 
to 
the 
cash 
flows 
of 
the 
pledged 
assets, 
as 
may 
be 
evidenced 
by, 
for 
example, 
the 
counterparty’s 
right 
to 
sell 
or 
repledge the assets. 
In transfers where 
control over the 
financial 
asset is retained, UBS AG continues 
to recognize the asset to the 
extent 
of 
its 
continuing 
involvement, 
determined 
by 
the 
extent 
to which it 
is exposed to 
changes in the 
value of the 
transferred 
asset following the transfer. 
Certain over-the-counter 
(OTC) derivative 
contracts and 
most 
exchange-traded 
futures 
and 
option 
contracts 
cleared 
through 
central clearing 
counterparties and 
exchanges are 
considered to 
be settled on a daily 
basis, as the payment or 
receipt of variation 
margin on a 
daily basis represents 
legal or economic 
settlement, 
which results in derecognition of the associated derivatives. 
›
 
Refer to item 2i in this Note, Note 22 and 
Note 23 for more 
information 
Financial liabilities 
UBS 
AG derecognizes 
a 
financial liability 
from 
its 
balance sheet 
when it is extinguished; 
i.e., when the obligation specified in 
the 
contract 
is 
discharged, 
canceled 
or 
expires. 
When 
an 
existing 
financial 
liability 
is 
exchanged 
for 
a 
new 
one 
from 
the 
same 
lender 
on 
substantially 
different 
terms, 
or 
the 
terms 
of 
an 
existing liability 
are substantially 
modified, the 
original liability 
is 
derecognized and 
a new 
liability recognized 
with any 
difference 
in 
the 
respective 
carrying 
amounts 
recognized 
in 
the 
income 
statement. 
f. Fair value of financial instruments 
UBS 
AG 
accounts 
for 
a 
significant 
portion 
of 
its 
assets 
and 
liabilities at fair value. Fair 
value is the price on the measurement 
date 
that would 
be received 
for the 
sale of 
an asset 
or paid 
to 
transfer 
a 
liability 
in 
an 
orderly 
transaction 
between 
market 
participants in the principal market, or in the most advantageous 
market in the absence of a principal market. 
›
 
Refer to Note 21 for more information 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
448 
 
Note 1 
Summary of significant accounting policies (continued)
Critical accounting estimates and judgments 
The use 
of valuation techniques, modeling 
assumptions and estimates 
of 
unobservable market 
inputs in 
the fair 
valuation of 
financial instruments 
requires 
significant judgment and could affect the 
amount of gain or loss 
recorded 
for 
a 
particular 
position. 
Valuation 
techniques 
that 
rely 
more 
heavily 
on 
unobservable 
inputs
and 
sophisticated 
models
inherently 
require a 
higher level of 
judgment and may 
require adjustment to 
reflect 
factors that 
market participants 
would consider 
in estimating 
fair value, 
such as close-out costs, which are presented in Note 21d. 
UBS
AG
‘
s 
governance 
framework 
over 
fair 
value 
measurement 
is 
described in 
Note 21b, 
and UBS 
AG provides 
a sensitivity 
analysis of 
the 
estimated effects arising from changing significant unobservable inputs in 
Level 
3 
financial 
instruments 
to 
reasonably 
possible 
alternative 
assumptions within Note 21g. 
›
 
Refer to Note 21 for more information 
g. Allowances and provisions for expected credit losses 
Expected 
credit 
losses 
(ECL) 
are 
recognized 
for 
financial 
assets 
measured at amortized cost, 
financial assets measured at 
FVOCI, 
fee 
and 
lease 
receivables, 
financial 
guarantees 
and 
loan 
commitments
 
not 
measured 
at 
fair 
value
. 
ECL 
are 
also 
recognized on the undrawn 
portion of revolving revocable 
credit 
lines, which include UBS AG’s credit card limits and master credit 
facilities, and 
are referred 
to by 
UBS AG 
as “other 
credit lines.” 
Though 
these other 
credit 
lines 
are 
revocable 
at 
any 
time, 
UBS 
AG is exposed to 
credit risk because the 
borrower has the ability 
to 
draw 
down 
funds 
before 
UBS 
AG 
can 
take 
credit 
risk 
mitigation actions. 
Recognition of expected credit losses 
ECL are recognized on the following basis: 
–
 
Stage 1 instruments: Maximum 12-month 
ECL are recognized 
from initial recognition, 
reflecting the portion 
of lifetime cash 
shortfalls 
that 
would 
result 
if 
a 
default 
occurs 
in 
the 
12 
months 
after 
the 
reporting 
date, 
weighted 
by 
the 
risk 
of 
a 
default occurring. 
–
 
Stage 2 
instruments: 
Lifetime 
ECL 
are 
recognized 
if 
a 
significant increase in credit risk (SICR) is observed subsequent 
to the 
instrument’s initial 
recognition, reflecting 
lifetime cash 
shortfalls 
that 
would 
result 
from 
all 
possible 
default 
events 
over the 
expected life 
of a 
financial instrument, 
weighted by 
the 
risk 
of 
a 
default 
occurring. 
When 
an 
SICR 
is 
no 
longer 
observed, the instrument will move back to stage 1. 
–
 
Stage 3 
instruments: 
Lifetime 
ECL 
are 
always 
recognized 
for 
credit-impaired 
financial 
instruments, 
as 
determined 
by 
the 
occurrence 
of 
one 
or 
more 
loss 
events, 
by 
estimating 
expected 
cash 
flows 
based 
on 
a 
chosen 
recovery 
strategy. 
Credit-impaired exposures may include 
positions for which no 
allowance has been recognized, for example because they are 
expected to be fully recoverable through collateral held. 
–
 
Changes 
in 
lifetime
 
ECL 
since 
initial 
recognition 
are 
also 
recognized for 
assets that 
are purchased 
or originated 
credit-
impaired (POCI). POCI financial instruments include those that 
are purchased 
at a 
deep discount 
or newly 
originated with 
a 
defaulted counterparty; they 
remain a separate 
category until 
derecognition. 
All 
or 
part 
of 
a 
financial 
asset 
is 
written 
off 
if 
it 
is 
deemed 
uncollectible or forgiven. 
Write-offs reduce the 
principal amount 
of a 
claim and 
are charged 
against related 
allowances for 
credit 
losses. 
Recoveries, 
in 
part 
or 
in 
full, 
of 
amounts 
previously 
written 
off 
are 
generally 
credited 
to 
Credit 
loss 
(expense) 
/ 
release
. 
ECL 
are 
recognized 
in 
the 
income 
statement 
in 
Credit 
loss 
(expense) 
/ 
release
. 
A 
corresponding 
ECL 
allowance 
is 
reported 
as 
a 
decrease 
in 
the 
carrying 
amount 
of 
financial 
assets 
measured 
at 
amortized 
cost on 
the 
balance sheet. 
For financial 
assets 
that 
are 
FVOCI, 
the 
carrying amount 
is not 
reduced, but 
an 
accumulated 
amount 
is 
recognized 
in 
Other 
comprehensive 
income
. 
For 
off-balance 
sheet 
financial 
instruments 
and 
other 
credit lines, provisions for ECL are presented in 
Provisions. 
Default and credit impairment 
UBS 
AG 
applies 
a 
single 
definition 
of 
default 
for 
credit 
risk 
management 
purposes, 
regulatory 
reporting 
and 
ECL, 
with 
a 
counterparty 
classified 
as 
defaulted 
based 
on 
quantitative 
and 
qualitative criteria. 
›
 
Refer to ‘’Credit policies for distressed assets’’ in the ‘’Risk 
management and control’’ section of this report for more 
information 
Measurement of expected credit losses 
IFRS 
9 
ECL 
reflect 
an 
unbiased, 
probability-weighted 
estimate 
based 
on 
loss 
expectations 
resulting 
from 
default 
events. 
The 
method 
used 
to 
calculate 
ECL 
applies 
the 
following 
principal 
factors: probability 
of default 
(PD), loss 
given default 
(LGD) and 
exposure 
at default 
(EAD). Parameters 
are 
generally determined 
on an 
individual financial 
asset level. Based 
on the materiality 
of 
the 
portfolio, 
for 
credit 
card 
exposures 
and 
personal 
account 
overdrafts 
in 
Switzerland, 
a 
portfolio 
approach 
is 
applied 
that 
derives an average 
PD and LGD 
for the entire 
portfolio. PDs and 
LGDs 
used 
in 
the 
ECL 
calculation 
are 
point-in-time 
(PIT)-based 
for 
key 
portfolios 
and 
consider 
both 
current 
conditions 
and 
expected cyclical 
changes. For material 
portfolios, PDs and 
LGDs 
are determined 
for different 
scenarios, whereas 
EAD projections 
are treated as scenario independent. 
For the 
purpose of 
determining the 
ECL-relevant parameters, 
UBS AG 
leverages its 
Pillar 1 internal 
ratings-based (IRB) 
models 
that 
are 
also 
used 
in 
determining 
expected 
loss 
(EL) 
and 
risk-
weighted assets 
under the 
Basel III framework 
and Pillar 2 
stress 
loss models. 
Adjustments have 
been made 
to these 
models and 
IFRS 
9-related 
models 
have 
been 
developed 
that 
consider 
the 
complexity, 
structure 
and 
risk 
profile 
of 
relevant 
portfolios 
and 
take 
account 
of 
the 
fact 
that 
PDs 
and 
LGDs 
used 
in 
the 
ECL 
calculation 
are 
PIT-based, 
as 
opposed 
to 
the 
corresponding 
Basel III through-the-cycle 
(TTC) parameters. 
All models 
that are 
relevant 
for 
measuring 
expected 
credit 
losses 
are
 
subject 
to 
UBS’s model validation and oversight processes. 
 
 

 
 
449 
 
 
Note 1 
Summary of significant accounting policies (continued)
Probability 
of 
default: 
PD 
represents 
the 
likelihood 
of 
a 
default over 
a specified 
time period. 
A 12-month 
PD represents 
the likelihood of default 
determined for the next 12 
months and 
a 
lifetime 
PD 
represents 
the 
probability 
of 
default 
over 
the 
remaining 
lifetime 
of 
the 
instrument. 
PIT 
PDs 
are 
derived 
from 
TTC 
PDs 
and 
scenario 
forecasts. 
The 
modeling 
is 
region-, 
industry
-
 
and 
clien
t 
segment
-
specific 
and 
considers 
both 
macroeconomic 
scenario 
dependencies 
and 
client-idiosyncratic 
information. 
Exposure 
at 
default: 
EAD 
represents 
an 
estimate 
of 
the 
exposure 
to 
credit 
risk 
at 
the 
time 
of 
a 
potential 
default 
occurring, 
considering 
expected 
repayments, 
interest 
payments 
and 
accruals, 
discounted 
at 
the 
EIR. 
Future 
drawdowns 
on 
facilities are 
considered through 
a credit 
conversion factor 
(CCF) 
that is reflective of historical drawdown and default patterns and 
the characteristics of the respective portfolios. 
Loss given 
default: 
LGD represents 
an 
estimate of 
the loss 
at 
the 
time 
of 
a 
potential 
default 
occurring, 
taking 
into 
account 
expected 
future 
cash 
flows 
from 
collateral 
and 
other 
credit 
enhancements, 
or expected payouts 
from bankruptcy 
proceedings 
for unsecured claims and, where applicable, time to realization of 
collateral 
and 
the 
seniority 
of 
claims. 
The 
LGD 
is 
commonly 
expressed as 
a percentage 
of the EAD. 
Estimation of expected credit losses 
Number of scenarios and estimation of scenario weights 
The 
determination 
of 
the 
probability-weighted 
ECL 
requires 
evaluating 
a 
range 
of 
diverse 
and 
relevant 
future 
economic 
conditions, 
especially 
with 
a 
view 
to 
modeling 
the 
non-linear 
effect 
of 
assumptions 
about 
macroeconomic 
factors 
on 
the 
estimate. 
To 
accommodate 
this 
requirement, 
UBS 
AG 
uses 
different 
economic 
scenarios 
in 
the 
ECL 
calculation
.
 
Each 
scenario 
is 
represented 
by 
a 
specific 
scenario 
narrative, 
which 
is 
relevant 
considering 
the 
exposure 
of 
key 
portfolios 
to 
economic 
risks, 
and 
for 
which 
a 
set 
of 
consistent 
macroeconomic 
variables 
is 
determined. 
An econometric 
model is 
used to 
provide an 
input 
into 
the 
scenario 
weight 
assessment 
process 
giving 
a 
first 
indication of the 
probability that the 
GDP forecast used 
for each 
scenario 
would materialize, 
if historically 
observed 
deviations of 
GDP 
growth 
from 
trend 
growth 
were 
representative. 
As 
such 
historical 
analyses 
of 
GDP 
development 
do 
not 
include 
an 
assessment 
of 
the 
underlying 
economic 
or 
political 
causes, 
management 
positions 
the 
model 
output 
into 
the 
context 
of 
current 
conditions and 
future expectations 
and applies 
material 
judgment in determining the final scenario weights. 
The 
determined 
weights 
constitute 
the 
probabilities 
that 
the 
respective 
set 
of 
macroeconomic 
conditions 
will 
occur 
and 
not 
that 
the 
chosen 
particular 
narratives 
with 
the 
related 
macroeconomic variables will materialize. 
Macroeconomic and other factors 
The 
range 
of 
macroeconomic, 
market 
and 
other 
factors 
that 
is 
modeled 
as 
part 
of 
the 
scenario 
determination 
is 
wide, 
and 
historical information is 
used to support 
the identification of 
the 
key factors. 
As the 
forecast horizon 
increases, the 
availability of 
information 
decreases, 
requiring 
an 
increase 
in 
judgment. 
For 
cycle-sensitive 
PD 
and 
LGD 
determination 
purposes, 
UBS 
AG 
projects the relevant economic factors for a period 
of three years 
before 
reverting, 
over 
a 
specified 
period, 
to 
a 
cycle-neutral 
PD 
and LGD for longer-term projections. 
Factors relevant 
for ECL 
calculation vary 
by type 
of exposure. 
Regional 
and 
client-segment 
characteristics 
are 
generally 
taken 
into 
account, 
with 
specific 
focus 
on 
Switzerland 
and 
the 
US, 
considering UBS AG’s key ECL-relevant portfolios. 
For 
UBS 
AG, 
the 
following 
forward-looking 
macroeconomic 
variables represent the most relevant factors for ECL calculation: 
–
 
GDP growth rates, given 
their significant effect on 
borrowers’ 
performance; 
–
 
unemployment 
rates, given 
their significant 
effect on 
private 
clients’ ability to meet contractual obligations; 
–
 
house price indices, given their 
significant effect on mortgage 
collateral valuations; 
–
 
interest rates, 
given their 
significant effect 
on counterparties’ 
abilities to service debt; 
–
 
consumer 
price 
indices, 
given 
their 
overall 
relevance 
for 
companies’ 
performance, 
private 
clients’ 
purchasing 
power 
and economic stability; and 
–
 
equity indices, 
given that 
they are 
an important 
factor in 
our 
corporate rating tools. 
Scenario generation, review process and governance 
A 
team 
of 
economists, 
who 
are 
part 
of 
Group 
Risk 
Control, 
develop 
the 
forward-looking 
macroeconomic 
assumptions 
with 
involvement from a broad range of experts. 
The 
scenarios, their 
weight and 
the key 
macroeconomic and 
other factors 
are subject 
to a 
critical assessment by 
the Scenario 
and 
Operating 
Committees, 
which 
include 
senior 
management 
from 
Group Risk 
and 
Group Finance. 
Important 
aspects 
for 
the 
review
 
include 
whether 
there 
may 
be 
particular 
credit 
risk 
concerns 
that 
may 
not 
be 
capable 
of 
being 
addres
sed 
systematically 
and 
require 
post-model 
adjustments 
for 
stage 
allocation and ECL allowance. 
The Group Model Governance Board, 
as the highest authority 
under 
UBS
 
AG
’s 
model 
governance 
framework
,
 
ratifies 
the 
decisions taken by the Operating Committee. 
›
 
Refer to Note 20 for more information 
ECL measurement period 
The 
period 
for 
which 
lifetime 
ECL 
are 
determined 
is 
based 
on 
the 
maximum 
contractual 
period 
that 
UBS 
AG 
is 
exposed 
to 
credit 
risk, 
taking 
into 
account 
contractual 
extension, 
termination 
and 
prepayment 
options. 
For 
irrevocable 
loan 
commitments 
and 
financial
 
guarantee 
contracts, 
the 
measurement 
period 
represents 
the 
maximum 
contractual 
period for which UBS AG has an obligation to extend credit. 
 
 
 

 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
450 
 
Note 1 
Summary of significant accounting policies (continued)
Additionally, 
some 
financial 
instruments 
include 
both 
an 
on-
demand loan and 
a revocable undrawn 
commitment, where the 
contractual 
cancelation 
right 
does 
not 
limit 
UBS 
AG’s 
exposure 
to 
credit 
risk 
to 
the 
contractual notice 
period, 
as 
the client 
has 
the 
ability 
to 
draw 
down 
funds 
before 
UBS 
AG 
can 
take 
risk-
mitigating actions. In 
such cases, UBS AG 
is required to estimate 
the period 
over which 
it is 
exposed to 
credit risk. 
This applies to 
UBS
 
AG
’s
 
credit 
card 
limits, 
which 
do 
not 
have 
a 
defined 
contractual 
maturity 
date, 
are 
callable 
on 
demand 
and 
where 
the 
drawn 
and 
undrawn 
components 
are 
managed 
as 
one 
exposure. The 
exposure arising 
from UBS 
AG’s credit 
card limits 
is not 
significant and 
is managed 
at a 
portfolio level, 
with credit 
actions 
triggered 
when 
balances 
are 
past 
due. 
An 
ECL 
measurement 
period 
of 
seven 
years 
is 
applied 
for 
credit 
card 
limits, capped 
at 12 
months for 
stage 1 balances, 
as a 
proxy for 
the period that UBS AG is exposed to credit risk. 
Customary 
master 
credit 
agreements 
in 
the 
Swiss 
corporate 
market 
also 
include 
on-demand 
loans 
and 
revocable 
undrawn 
commitments. 
For 
smaller 
commercial 
facilities, 
a 
risk-based 
monitoring 
(RbM) 
approach 
is 
in 
place 
that 
highlights 
negative 
trends 
as 
risk 
events, 
at 
an 
individual 
facility 
level, 
based 
on 
a 
combination 
of 
continuously 
updated 
risk 
indicators. 
The 
risk 
events trigger additional 
credit reviews by 
a risk officer, 
enabling 
informed credit 
decisions to 
be taken. 
Larger corporate 
facilities 
are 
not 
subject 
to 
RbM, 
but 
are 
reviewed 
at 
least 
annually 
through a formal credit review. UBS AG has assessed these credit 
risk 
management 
practices 
and 
considers 
both 
the 
RbM 
approach and 
formal credit reviews 
as substantive credit 
reviews 
resulting in a 
re-origination of the 
given facility. Following 
this, a 
12-month measurement 
period from 
the reporting 
date is 
used 
for both 
types of 
facilities as 
an appropriate 
proxy of 
the period 
over 
which 
UBS 
AG 
is 
exposed 
to 
credit 
risk, 
with 
12 
months 
also used 
as a 
look-back period 
for assessing 
SICR, always 
from 
the respective reporting date. 
Significant increase in credit risk 
Financial 
instruments 
subject 
to 
ECL 
are 
monitored 
on 
an 
ongoing 
basis. 
To 
determine 
whether 
the 
recognition 
of 
a 
maximum 
12-month 
ECL 
continues 
to 
be 
appropriate, 
an 
assessment 
is made 
as 
to 
whether 
an 
SICR 
has 
occurred 
since 
initial 
recognition 
of 
the 
financial 
instrument 
, 
applying 
both 
quantitative 
and qualitative 
factors. 
Primarily, UBS 
AG assesses 
changes in 
an instrument’s 
risk of 
default 
on 
a 
quantitative 
basis 
by 
comparing 
the 
annualized 
forward-looking 
and 
scenario-weighted 
lifetime 
PD 
of 
an 
instrument determined at two different dates: 
–
 
at the reporting date; and 
–
 
at inception of the instrument. 
If, 
based 
on 
UBS 
AG’s 
quantitative 
modeling, 
an 
increase 
exceeds a set threshold, an SICR is deemed to have occurred and 
the 
instrument 
is 
transferred 
to 
stage 2 
with 
lifetime 
ECL 
recognized. 
The threshold 
applied varies 
depending on 
the original 
credit 
quality 
of 
the 
borrower, 
with 
a 
higher 
SICR 
threshold 
set 
for 
those
 
instruments 
with 
a 
low 
PD
 
at 
inception. 
The 
SICR 
assessment 
based 
on 
PD 
changes 
is 
made 
at 
an 
individual 
financial 
asset 
level. 
A 
high-level 
overview 
of 
the 
SICR 
trigger, 
which 
is a 
multiple 
of 
the annualized 
remaining 
lifetime PIT 
PD 
expre
ssed 
in 
rating 
downgrades
, 
is 
provided 
in 
the 
“SICR 
thresholds” 
table below. 
The actual 
SICR thresholds 
applied are 
defined 
on 
a 
more 
granular 
level 
by 
interpolating 
between 
the 
values shown in the table below. 
SICR thresholds 
Internal rating at origination 
of the instrument 
Rating downgrades / 
SICR trigger 
0–3 
3 
4–8 
2 
9–13 
1 
›
 
Refer to the “Risk management and control” 
section of this 
report for more details about UBS AG’s internal grading system 
 
Irrespective 
of 
the 
SICR 
assessment 
based 
on 
default 
probabilities, credit 
risk is 
generally deemed 
to have 
significantly 
increased 
for 
an 
instrument 
if 
the 
contractual 
payments
 
are 
more than 
30 days 
past due. 
For certain 
less material 
portfolios, 
specifically 
the 
Swiss 
credit 
card 
portfolio, 
the 
30-day 
past 
due 
criterion 
is 
used 
as 
the 
primary 
indicator 
of 
an 
SICR. 
Where 
instruments 
are 
transferred 
to 
stage 2 
due 
to 
the 
30-day 
past 
due criterion, 
a minimum 
period of 
six months 
is applied 
before 
a 
transfer 
back 
to 
stage 1 
can 
be 
triggered. 
For 
instruments 
in 
Personal & 
Corporate Banking 
and Global 
Wealth Management 
Region Switzerland 
that are 
between 90 
and 180 
days past 
due 
but 
have 
not 
been 
reclassified 
to 
stage 3, 
a 
one-year 
period 
is 
applied before a transfer back to stage 1 can be triggered. 
Additionally, 
based 
on 
individual 
counterparty-specific 
indicators, 
external 
market 
indicators 
of 
credit 
risk 
or 
general 
economic 
conditions, 
counterparties may 
be moved 
to a 
watch 
list, 
which 
is 
used 
as 
a 
secondary 
qualitative 
indicator 
for 
an 
SICR. 
Exception 
management 
is 
further 
applied, 
allowing 
for 
individual 
and 
collective 
adjustments 
on 
exposures 
sharing 
the 
same 
credit 
risk 
characteristics 
to 
take 
account 
of 
specific 
situations that are not otherwise fully reflected. 
In 
general, 
the 
overall 
SICR 
determination 
process 
does 
not 
apply 
to 
Lombard 
loans, 
securities 
financing 
transactions 
and 
certain 
other 
asset-based 
lending 
transactions, 
because 
of 
the 
risk 
management 
practices 
adopted, 
including 
daily 
monitoring 
processes with strict margining. If margin calls are not satisfied, a 
position 
is 
closed 
out 
and 
classified 
as 
a 
stage 3 
position. 
In 
exceptional 
cases, 
an 
individual 
adjustment 
and 
a 
transfer 
into 
stage 2 may be made to take account of specific facts. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
451 
 
Note 1 
Summary of significant accounting policies (continued) 
Credit risk 
officers are 
responsible for 
the identification 
of an 
SICR
, 
which
 
for 
accounting 
purposes 
is 
in 
some 
respects
 
different 
from 
internal 
credit 
risk 
management 
processes. 
This 
difference 
mainly 
arises 
because 
ECL 
accounting 
requirements 
are 
instrument-specific, such 
that a 
borrower 
can have 
multiple 
exposures 
allocated 
to 
different 
stages, 
and 
maturing 
loans 
in 
stage 2 will 
migrate to 
stage 1 upon 
renewal irrespective 
of the 
actual 
credit 
risk 
at 
that 
time. 
Under 
a 
risk-based 
approach, 
a 
holistic counterparty 
credit assessment 
and the 
absolute level 
of 
risk at any given date 
will determine what risk-mitigating actions 
may be warranted. 
›
 
Refer to the “Risk management and control” 
section of this 
report for more information 
 
Critical accounting estimates and judgments 
The 
calculation 
of 
ECL 
requires 
management 
to 
apply 
significant 
judgment 
and 
make 
estimates 
and 
assumptions 
that 
can 
result 
in 
significant changes to the timing and amount 
of ECL recognized. 
Determination of a significant increase in 
credit risk 
IFRS 9 does not include a definition of what constitutes an SICR, with UBS 
AG
’s 
assessment 
considering
qualitative 
and 
quantitative
criteria.
An 
IFRS
9 
O
perating 
C
ommittee 
has 
been 
established 
to 
review 
and 
challenge the SICR results. 
Scenarios, scenario weights and macroeconomic 
variables 
ECL reflect an unbiased and probability-weighted amount, which UBS AG 
determines 
by 
evaluating 
a 
range 
of 
possible 
outcomes. 
Management 
selects forward-looking 
scenarios which 
include relevant 
macroeconomic 
variables 
and 
management’s 
assumptions 
around 
future 
economic 
conditions. An 
IFRS 9 
Scenario Committee, 
in addition 
to the 
Operating 
C
ommittee, 
is 
in 
place
to 
derive
, 
review 
and 
challenge 
the 
scenario 
selection 
and 
weights 
as 
well 
as 
to 
determine 
whether 
any 
additional 
post-model adjustments are required that may significantly 
affect ECL. 
ECL measurement period 
Lifetime 
ECL 
are 
generally 
determined 
based 
upon 
the 
contractual 
maturity of the transaction, which significantly affects ECL. For credit card 
limits and 
Swiss callable 
master credit 
facilities, judgment 
is required, 
as 
UBS AG must determine the period over which it is exposed to credit risk. 
A seven-year period is applied for 
credit card limits, capped at 
12 months 
for 
stage 1 
positions, 
and 
a 
12-month 
period 
applied 
for 
master 
credit 
facilities. 
Modeling and post-model 
adjustments 
A 
number 
of 
complex 
models 
have 
been 
developed 
or 
modified 
to 
calculate 
ECL, 
with 
additional 
post-model 
adjustments 
required 
which 
may significantly affect ECL. The models are governed by UBS AG’s model 
validation controls and 
approved by the 
Group Model Governance Board 
(the 
GMGB). 
The 
post-model 
adjustments 
are 
approved 
by 
the 
IFRS 
9 
Operating Committee and endorsed by the 
GMGB. 
UBS 
AG
provides 
a 
sensitivity 
analysis
covering 
key 
macroeconomic 
variables, scenario weights 
and SICR 
trigger points 
on ECL 
measurement 
within Note 20f. 
›
 
Refer to Note 20 for more information 
h. Restructured and modified financial assets 
When payment default 
is expected or 
where default has 
already 
occurred, 
UBS 
AG 
may 
grant 
concessions 
to 
borrowers 
in 
financial 
difficulties 
that 
it 
would 
not 
consider 
in 
the 
normal 
course 
of 
its 
business, 
such 
as 
preferential 
interest 
rates, 
extension 
of 
maturity, 
modifying 
the 
schedule 
of 
repayments, 
debt 
/ 
equity 
swap, 
subordination, 
etc. 
When 
a 
concession 
or 
forbearance 
measure 
is 
granted, 
each 
case 
is 
considered 
individually 
and 
the 
exposure 
is 
generally 
classified 
as 
being 
in 
default. 
Forbearance 
classification 
will 
remain 
until 
the 
loan 
is 
collected or 
written off, 
non-preferential conditions 
superseding 
preferential conditions 
are granted 
or until 
the counterparty 
has 
recovered 
and the 
preferential conditions 
no longer 
exceed UBS 
AG’s risk tolerance. 
Modifications result in an alteration of future contractual cash 
flows and can occur 
within UBS AG’s normal 
risk tolerance or as 
part of a 
credit restructuring where 
a counterparty is 
in financial 
difficulties. 
A restructuring 
or modification of 
a financial asset 
could lead 
to a 
substantial change 
in the 
terms and 
conditions, resulting 
in 
the 
original 
financial 
asset 
being 
derecognized 
and 
a 
new 
financial 
asset 
being 
recognized. 
Where 
the 
modification 
does 
not 
result 
in 
a 
derecognition, 
any 
difference 
between 
the 
modified 
contractual 
cash 
flows 
discounted 
at 
the 
original 
EIR 
and 
the 
existing 
gross 
carrying 
amount 
of 
the 
given 
financial 
asset 
is 
recognized 
in 
the 
income 
statement 
as 
a 
modification 
gain or loss. 
i. Offsetting 
UBS AG nets financial 
assets and liabilities on 
its balance sheet if 
(i) it has the unconditional and legally enforceable right to set off 
the recognized 
amounts, both 
in the 
normal course 
of business 
and in the event 
of default, bankruptcy or 
insolvency of UBS AG 
and its counterparties, 
and (ii) it 
intends either to 
settle on a 
net 
basis or to realize the asset and settle 
the liability simultaneously. 
Netted 
positions 
include, 
for 
example, 
certain 
derivatives 
and 
repurchase 
and 
reverse 
repurchase 
transactions 
with 
various 
counterparties, exchanges and clearing houses. 
In assessing whether UBS 
AG intends to either 
settle on a net 
basis, 
or 
to 
realize 
the 
asset 
and 
settle 
the 
liability 
simultaneously, 
emphasis 
is 
placed 
on 
the 
effectiveness 
of 
operational 
settlement mechanics 
in eliminating 
substantially all 
credit 
and 
liquidity 
exposure 
between 
the 
counterparties. 
This 
condition 
precludes 
offsetting 
on 
the 
balance 
sheet 
for 
substantial 
amounts 
of 
UBS 
AG’s financial 
assets 
and 
liabilities, 
even 
though 
they 
may 
be 
subject 
to 
enforceable 
netting 
arrangements. 
For 
OTC 
derivative 
contracts, 
balance 
sheet 
offsetting is generally only permitted 
in circumstances in which a 
market 
settlement mechanism 
exists 
via an 
exchange or 
central 
clearing 
counterparty
 
t
hat 
effectively 
accomplishes 
net 
settlement 
through 
a 
daily 
exchange 
of 
collateral 
via 
a 
cash 
margining 
process. 
For 
repurchase 
arrangements 
and 
securities 
financing 
transactions, 
balance 
sheet
 
offsetting 
may 
be 
permitted 
only 
to 
the 
extent 
that 
the 
settlement 
mechanism 
eliminates, or results in 
insignificant, credit and liquidity risk, 
and 
processes 
the 
receivables 
and 
payables 
in 
a 
single 
settlement 
process or cycle. 
›
 
Refer to Note 22
 
for more information 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
452 
 
Note 1 
Summary of significant accounting policies (continued) 
j. Hedge accounting 
UBS AG 
applies hedge accounting requirements of IFRS 9, unless 
stated otherwise 
below, where the criteria for documentation 
and 
hedge 
effectiveness are 
met. 
If 
a 
hedge 
relationship no 
longer 
meets 
the 
criteria 
for 
hedge 
accounting, 
hedge 
accounting 
is 
discontinued. Voluntary 
discontinuation of 
hedge 
accounting is 
permitted under 
IAS 39 but 
not under 
IFRS 9. 
Fair value hedges of interest rate risk related to debt instruments 
The fair value change 
of the hedged item 
attributable 
to a hedged 
risk is 
reflected as 
an 
adjustment to 
the 
carrying amount of 
the 
hedged item, and recognized 
in the income statement along with 
the change 
in the fair 
value 
of the 
hedging 
instrument. 
Fair value hedges of portfolio interest rate risk related to loans 
designated under IAS 39 
The 
fair 
value 
change 
of 
the 
hedged 
item 
attributable 
to 
a 
hedged risk is reflected within 
Other financial assets measured at 
amortized 
cost 
or 
Other 
financial 
liabilities 
measured 
at 
amortized 
cost 
and 
recognized 
in 
the 
income 
statement 
along 
with the change in the fair value of the hedging instrument. 
Fair value hedges of foreign exchange risk related to debt 
instruments 
The 
fair 
value 
change 
of 
the 
hedged 
item 
attributable 
to 
a 
hedged risk 
is reflected 
in the measurement 
of the 
hedged item 
and recognized 
in the 
income statement 
along with 
the change 
in the fair value of 
the hedging instrument. The foreign 
currency 
basis 
spread 
of 
cross-currency 
swaps 
designated 
as 
hedging 
derivatives 
is 
excluded 
from 
the 
designation 
and 
accounted 
for 
as 
a 
cost 
of 
hedging 
with 
amounts 
deferred 
in 
Other 
comprehensive 
income
 
within 
Equity
. 
These 
amounts 
are 
released 
to 
the income 
statement 
over the 
term of 
the hedged 
item. 
Discontinuation of fair value hedges 
Discontinuations 
for 
reasons 
other 
than 
derecognition 
of 
the 
hedged item 
result 
in an adjustment 
to the carrying 
amount, 
which 
is amortized 
to the income 
statement 
over the 
remaining 
life of the 
hedged item 
using 
the 
effective interest 
method. If 
the 
hedged 
item 
is 
derecognized, the 
unamortized fair 
value 
adjustment or 
deferred cost of hedging 
amount is recognized 
immediately 
in the 
income statement 
as part 
of any 
derecognition 
gain or 
loss. 
Cash flow hedges of forecast transactions 
Fair value gains 
or losses associated with 
the effective portion 
of 
derivatives 
designated 
as 
cash 
flow 
hedges 
for 
cash 
flow 
repricing 
risk 
are 
recognized 
initially 
in 
Other 
comprehensive 
income 
within 
Equity
 
and reclassified to the income statement 
in 
the periods when the hedged 
forecast cash flows affect 
profit or 
loss, 
including 
discontinued 
hedges 
for 
which 
forecast 
cash 
flows are 
expected 
to occur. 
If the 
forecast 
transactions 
are 
no 
longer 
expected 
to 
occur, 
the 
deferred 
gains 
or 
losses 
are 
immediately reclassified to the income statement. 
Hedges of net investments in foreign operations 
Gains or losses on the hedging 
instrument 
relating to the effective 
portion of a hedge are recognized 
directly in 
Other comprehensive 
income
 
within 
Equity, 
while 
any 
gains 
or 
losses 
relating 
to 
the 
ineffective 
and / or undesignated 
portion (for 
example, the 
interest 
element 
of 
a 
forward 
contract) 
are 
recognized 
in 
the 
income 
statement. 
Upon 
disposal 
or 
partial 
disposal 
of 
the 
foreign 
operation, 
the 
cumulative 
value 
of 
any 
such 
gains 
or 
losses 
recognized in 
Equity
 
associated with 
the 
entity
 
is 
reclassified to 
Other income
. 
Interest Rate 
Benchmark 
Reform 
UBS 
AG 
can 
continue 
hedge 
accounting 
during 
the 
period 
of 
uncertainty 
before 
existing 
interest 
rate 
benchmarks 
are 
replaced 
with 
alternative 
risk-free 
interest 
rates. 
During 
this 
period, 
UBS 
AG 
can 
assume 
that 
the 
current 
benchmark 
rates 
will 
continue 
to 
exist, 
such 
that 
forecast 
transactions 
are 
considered 
highly 
probable 
and 
hedge 
relationships 
remain, 
with
 
little 
or
 
no 
consequential 
impact 
on 
the 
financial 
statements. 
Upon 
replacement 
of 
existing 
interest 
rate 
benchmark 
s 
by 
alternative 
risk-free 
interest 
rates 
expected 
in 
2021
 
and 
beyond
, 
UBS
 
AG
 
will 
apply
 
the
 
requirements 
of 
Amendments 
to 
IFRS 
9, 
IAS 
39, 
IFRS 
7, IFRS 
4 
and 
IFRS 
16 
(Interest 
Rate Benchmark 
Reform – Phase 
2).
 
›
 
Refer to Note 1b and Note 1c for more information 
3) Fee and commission income and expenses 
UBS 
AG 
earns fee 
income 
from 
the 
diverse 
range 
of 
services it 
provides to its 
clients. Fee income can 
be divided into two 
broad 
categories: 
fees 
earned 
from 
services 
that 
are 
provided 
over 
a 
certain 
period 
of 
time, 
such 
as 
management 
of 
clients’ 
assets, 
custody 
services 
and 
certain 
advisory 
services; 
and 
fees 
earned 
from 
point-in-time 
services, 
such 
as 
underwriting 
fees, 
deal-
contingent 
merger 
and 
acquisitions 
(M&A) 
fees 
and 
brokerage 
fees (e.g., securities 
and derivatives execution 
and clearing). UBS 
AG 
recognizes 
fees 
earned 
on 
transaction-based 
arrangements 
when 
it 
has 
fully 
provided 
the 
service 
to 
the 
customer. 
Where 
the contract requires services to be provided over time, income is 
recognized on a systematic basis over the life of the agreement. 
Consideration 
received 
is 
allocated 
to 
the 
separately 
identifiable performance 
obligations in 
a contract. 
Owing to 
the 
nature 
of 
UBS 
AG’s 
business, 
contracts 
that 
include 
multiple 
performance 
obligations 
are 
typically 
those 
that 
are 
considered 
to 
include 
a 
series 
of 
similar 
performance 
obligations 
fulfilled 
over 
time 
with 
the 
same 
pattern 
of 
transfer 
to 
the 
client, 
e.g., 
management 
of 
client 
assets 
and 
custodial 
services. 
As 
a 
consequence, 
UBS
 
AG
 
is 
not 
required 
to 
apply 
significant 
judgment 
in 
allocating 
the 
consideration 
received 
across 
the 
various performance obligations. 
 
 

 
 
453 
 
Note 1 
Summary of significant accounting policies (continued) 
Point-in-time 
services 
are 
generally 
for 
a 
fixed 
price 
or 
dependent on 
deal size, 
e.g., a 
fixed number 
of basis 
points of 
trade 
size, 
where 
the 
amount 
of 
revenue 
is 
known 
when 
the 
performance obligation is met. 
Fixed 
period-in-time 
fees 
are 
recognized 
on 
a 
straight-line 
basis 
over 
the 
performance 
period. 
Custodial 
and 
asset 
management fees 
can be 
variable through 
reference to 
the size 
of the 
customer portfolio 
and are 
generally billed 
on a 
monthly 
or quarterly 
basis once the 
customer’s portfolio size 
is known or 
known 
with 
near 
certainty. 
This 
is 
generally 
prior 
to 
UBS 
AG’s 
reporting 
dates 
and 
such 
fees 
are 
also 
recognized 
ratably 
over 
the performance period. 
UBS 
AG 
does 
not 
recognize 
performance 
fees 
related 
to 
management 
of 
clients’ 
assets 
or 
fees 
related 
to 
contingencies 
beyond UBS AG’s control until such uncertainties are resolved. 
UBS
 
AG
’s 
fees 
are 
generally 
earned 
from 
short
-
term 
contracts, 
with 
the 
majority 
either 
collected 
immediately 
or 
via 
regular 
monthly 
or 
quarterly 
amounts 
deducted 
directly 
from 
clients’ accounts. 
As a result, 
UBS AG’s contracts 
do not include 
a financing 
component or result 
in the recognition 
of significant 
receivables or prepayment assets. Furthermore, 
due to the short-
term 
nature 
of 
such contracts, 
UBS 
AG 
has 
not 
capitalized 
any 
material 
costs 
to 
obtain 
or 
fulfill 
a 
contract 
or 
generated 
any 
significant contract assets or liabilities. 
UBS 
AG 
acts 
as 
principal 
in 
the 
majority 
of 
contracts 
with 
customers, 
with 
the 
exception 
of 
derivative
s
 
execution 
and 
clearing 
services, 
resulting 
in 
fee 
and 
commission 
income 
and 
expense 
being 
presented 
gross 
on 
the 
face 
of 
the 
income 
statement. 
For 
derivatives 
execution 
and 
clearing 
services, 
UBS 
AG 
only 
records 
its 
specific 
fees in 
the 
income 
statement, 
with 
fees payable 
to other 
parties not 
recognized as 
an expense 
but 
instead 
directly 
offset 
against 
the 
associated 
income 
collected 
from the given client. 
UBS 
AG presents 
expenses primarily 
in line 
with their 
nature 
in the 
income statement, 
differentiating between 
expenses that 
are 
directly 
attributable 
to 
the 
satisfaction 
of 
specific 
performance 
obligations 
associated 
with 
the 
generation 
of 
revenues, which 
are presented 
within 
Total operating 
income
 
as 
Fee 
and 
commission 
expense
, 
and 
those 
that 
are 
related 
to 
personnel, 
general 
and 
administrative 
expenses, 
which 
are 
presented within 
Total operating expenses
. 
›
 
Refer to Note 4 for more information, including 
the 
disaggregation of revenues 
4) Cash and cash equivalents 
For the 
purpose 
of 
the statement 
of 
cash 
flows, cash 
and cash 
equivalents comprise 
balances with 
an original 
maturity of three 
months 
or 
less, 
including 
cash, 
money 
market 
paper 
and 
balances at central and other banks. 
5) Share-based and other deferred compensation plans 
UBS AG 
recognizes expenses 
for deferred 
compensation awards 
over the 
period that 
the employee 
is required 
to provide 
service 
to 
become 
entitled 
to 
the 
award. 
Where 
the 
service 
period 
is 
shortened, 
for 
example 
in 
the 
case 
of 
employees 
affected 
by 
restructuring 
programs 
or 
mutually 
agreed 
termination 
provisions, 
recognition 
of 
expense 
is 
accelerated 
to 
the 
termination date. Where no future service is required, such as for 
employees 
who 
are 
eligible 
for 
retirement 
or 
who 
have 
met 
certain 
age 
and 
length
-
of
-
service 
criteria, 
the 
services
 
are 
presumed 
to 
have 
been 
received 
and 
compensation 
expense 
is 
recognized over the performance 
year or, 
in the case of 
off-cycle 
awards, immediately on the grant date. 
Share-based compensation plans 
UBS Group 
AG is the 
grantor of and 
maintains the obligation 
to 
settle 
share-based 
compensation 
plans 
that 
are 
awarded 
to 
employees of 
UBS AG. 
As a 
consequence, UBS 
AG classifies 
the 
awards 
of 
UBS 
Group 
AG 
shares 
as 
equity-settled 
share-based 
payment 
transactions. 
UBS 
AG 
recognizes 
the 
fair 
value 
of 
awards granted to its employees by reference 
to the fair value of 
UBS Group AG’s 
equity instruments on the 
date of grant, taking 
into 
account 
the 
terms 
and 
conditions 
inherent 
in 
the 
award, 
including, where 
relevant, dividend rights, 
transfer restrictions in 
effect 
beyond 
the 
vesting 
date, 
market 
conditions, 
and 
non-
vesting condition. 
For equity-settled awards, 
the fair value 
is not 
remeasured 
unless 
the 
terms 
of 
the 
award 
are 
modified 
such 
that 
there 
is 
an 
incremental 
increase 
in 
value. 
No 
adjustments 
are 
made 
for 
modifications 
that 
result 
in 
a 
decrease 
in 
value. 
Any 
increase 
in 
fair 
value 
resulting 
from 
a 
modification 
is 
recognized as 
compensation expense, 
either over 
the remaining 
service 
period 
or, 
for 
vested awards, 
immediately. 
Expenses 
are 
recognized, on a per-tranche basis, over the service 
period based 
on 
an 
estimate 
of 
the 
number of 
instruments 
expected 
to 
vest 
and 
are 
adjusted 
to 
reflect 
the 
actual 
outcomes 
of 
service 
or 
performance conditions. 
For 
equity-settled 
awards, 
forfeiture 
events 
resulting 
from 
a 
breach of 
a non-vesting 
condition (i.e., 
one that 
does not 
relate 
to 
a 
service 
or 
performance 
condition) 
do 
not 
result 
in 
any 
adjustment to the share-based compensation expense. 
For cash-settled 
share-based awards, 
fair value 
is remeasured 
at 
each 
reportin
g 
date
,
 
so 
that 
the 
cumulative 
expense 
recognized equals the cash distributed. 
Other deferred compensation plans 
Compensation expense for other deferred 
compensation plans is 
recognized on a 
per-tranche or straight-line 
basis, depending on 
the 
nature 
of 
the 
plan. 
The 
amount 
recognized 
is 
measured 
based on 
the present 
value of 
the amount 
expected to 
be paid 
under the plan and is remeasured at each reporting 
date, so that 
the 
cumulative 
expense 
recognized 
equals 
the 
cash 
or 
the 
fair 
value of respective financial instruments distributed. 
›
 
Refer to Note 27 for more information 
6) Post-employment benefit plans 
UBS AG 
sponsors various 
post-employment benefit 
plans for 
its 
employees 
worldwide, 
which 
include 
defined 
benefit 
and 
defined contribution 
pension plans, 
and other 
post-employment 
benefits, 
such 
as 
medical 
and 
life 
insurance 
benefits 
that 
are 
payable after the completion of employment. 
›
 
Refer to Note 26 for more information 
 

 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
454 
 
Note 1 
Summary of significant accounting policies (continued) 
Defined benefit plans 
Defined 
benefit
 
plans 
specify 
an 
amount 
of 
benefit 
that 
an 
employee 
will 
receive, 
which 
usually 
depends 
on 
one 
or 
more 
factors, 
such 
as 
age, 
years 
of 
service 
and 
compensation. 
The 
defined 
benefit 
liability 
recognized 
in 
the 
balance 
sheet 
is 
the 
present value of the 
defined benefit obligation less the 
fair value 
of 
the 
plan’s 
assets 
at 
the 
balance 
sheet 
date, 
with 
changes 
resulting 
from 
remeasurements 
recorded 
immediately 
in 
Other 
comprehensive 
income
. 
If 
the 
fair 
value 
of 
the 
plan’s 
assets 
is 
higher than 
the present 
value of 
the defined 
benefit obligation, 
the recognition of the resulting net asset is limited to the present 
value of economic benefits 
available in the form of 
refunds from 
the 
plan 
or 
reductions 
in 
future 
contributions 
to 
the 
plan. 
UBS 
AG 
applies 
the 
projected 
unit 
credit 
method 
to 
determine 
the 
present 
value 
of 
its 
defined 
benefit 
obligations, 
the 
related 
current service 
cost and, 
where applicable, 
the past service 
cost. 
These amounts, 
which take into 
account the 
specific features 
of 
each 
plan, 
including 
risk 
sharing 
between 
employee 
and 
employer, 
are 
calculated 
periodically 
by 
independent 
qualified 
actuaries. 
 
Critical accounting estimates and judgments 
The net defined benefit liability or asset at the balance sheet date and the 
related personnel expense 
depend on the 
expected future benefits 
to be 
provided, 
determined 
using 
a 
number 
of 
economic 
and 
demographic 
assumptions. 
A 
range 
of 
assumptions 
could 
be 
applied, 
and 
different 
assumptions could 
significantly alter 
the defined 
benefit liability 
or asset 
and 
pension 
expense 
recognized. 
The 
most 
significant 
assumptions 
include 
life 
expectancy, 
the 
discount 
rate, 
expected 
salary 
increases, 
pension 
increases
,
and 
interest 
credits 
on
retirement 
savings 
account 
balances. Sensitivity 
analysis for 
reasonable possible 
movements in 
each 
significant 
assumption 
for 
UBS
AG
‘s 
post
-
employment 
obligations 
is 
provided within Note 26. 
›
 
Refer to Note 26
 
for more information 
Defined contribution plans 
A 
defined 
contribution 
plan 
pays 
fixed 
contributions 
into 
a 
separate entity 
from which 
post-employment and other 
benefits 
are paid. 
UBS AG 
has no 
legal or 
constructive obligation 
to pay 
further amounts if the plan does not hold sufficient assets 
to pay 
employees 
the 
benefits 
relating 
to 
employee 
service 
in 
the 
current 
and prior 
periods. Compensation 
expense is 
recognized 
when 
the 
employees 
have 
rendered 
services 
in 
exchange 
for 
contributions. 
This 
is 
generally 
in 
the 
year 
of 
contribution. 
Prepaid 
contributions 
are 
recognized 
as 
an 
asset 
to 
the 
extent 
that a cash refund or a reduction in future payments is available. 
7) Income taxes 
UBS 
AG 
is 
subject 
to 
the 
income 
tax 
laws 
of 
Switzerland 
and 
those 
of 
the 
non-Swiss 
jurisdictions 
in 
which 
UBS 
AG 
has 
business operations. 
UBS AG’s 
provision 
for income 
taxes is 
composed 
of current 
and deferred 
taxes. Current 
income taxes 
represent 
taxes to 
be 
paid or refunded for the current period or previous periods. 
Deferred 
taxes 
are 
recognized 
for 
temporary 
differences 
between 
the 
carrying 
amounts 
and 
tax 
bases 
of 
assets 
and 
liabilities 
that 
will 
result 
in 
taxable 
or 
deductible 
amounts 
in 
future 
periods 
and 
are 
measured 
using 
the 
applicable 
tax 
rates 
and laws that have been enacted or substantively enacted by 
the 
end of the 
reporting period and 
that will be 
in effect when 
such 
differences are expected to reverse. 
Deferred 
tax 
assets arise 
from a 
variety 
of 
sources, 
the most 
significant being: 
(i) tax 
losses that 
can be 
carried forward 
to be 
used against profits in future years; and (ii) temporary differences 
that 
will 
result 
in 
deductions 
against 
profits 
in 
future 
years. 
Deferred 
tax 
assets 
are 
recognized 
only 
to 
the 
extent 
it 
is 
probable 
that 
sufficient 
taxable 
profits 
will 
be 
available 
against 
which 
these 
differences 
can 
be 
used. 
When 
an 
entity 
or 
tax 
group has 
a history 
of recent losses, 
deferred tax 
assets are only 
recognized 
to 
the 
extent 
there 
are 
sufficient 
taxable 
temporary 
differences 
or 
there 
is 
convincing 
other 
evidence 
that 
sufficient 
taxable 
profit 
will 
be 
available 
against 
which 
the 
unused 
tax 
losses can be utilized. 
Deferred 
tax 
liabilities 
are 
recognized 
for 
temporary 
differences between the carrying amounts of assets and liabilities 
in 
the 
balance 
sheet 
that 
reflect 
the 
expectation 
that 
certain 
items will give rise to taxable income in future periods. 
Deferred and current tax assets and 
liabilities are offset when: 
(i) 
they arise 
in the 
same tax 
reporting 
group; (ii) 
they 
relate to 
the same tax authority; (iii) the legal right to offset exists; and (iv) 
they are intended to be settled net or realized simultaneously. 
Current 
and 
deferred 
taxes 
are 
recognized 
as 
income 
tax 
benefit 
or 
expense in 
the 
income statement, 
except for 
current 
and deferred taxes recognized in relation to: 
(i) the acquisition of 
a 
subsidiary 
(for 
which 
such amounts 
would 
affect the 
amount 
of goodwill 
arising from 
the acquisition); 
(ii) gains 
and losses 
on 
the 
sale 
of 
treasury
 
shares 
(for 
which 
the 
tax 
effects 
are 
recognized 
directly 
in 
Equity
); 
(iii) 
unrealized 
gains 
or 
losses 
on 
financial instruments 
that are 
classified at 
FVOCI; (iv) 
changes in 
fair 
value 
of 
derivative 
instruments 
designated 
as 
cash 
flow 
hedges; 
(v) 
remeasurements 
of 
defined 
benefit 
plans; 
or 
(vi) 
certain 
foreign 
currency 
translations 
of 
foreign 
operations. 
Amounts 
relating 
to 
points 
(iii) 
through 
(vi) 
are 
recognized 
in 
Other comprehensive income
 
within 
Equity
. 
UBS AG reflects the 
potential effect of uncertain 
tax positions 
for 
which 
acceptance 
by 
the 
relevant 
tax 
authority 
is 
not 
considered 
probable 
by 
adjusting 
current 
or 
deferred 
taxes, 
as 
applicable, using either the most likely amount or expected value 
methods, 
depending 
on 
which 
method 
is 
deemed
 
a 
better 
predictor 
of 
the 
basis 
on 
which 
and 
extent 
to 
which 
the 
uncertainty will be resolved. 
 

 
 
 
 
 
 
 
 
 
 
 
 
455 
 
Note 1 
Summary of significant accounting policies (continued) 
Critical accounting estimates and judgments 
Tax 
laws 
are 
complex, 
and 
judgment 
and 
interpretations 
about 
the 
application of such 
laws are required 
when accounting for 
income taxes. 
UBS AG 
considers the performance 
of its 
businesses and the 
accuracy of 
historical forecasts and other 
factors in evaluating the 
recoverability of its 
deferred tax assets, including the remaining tax loss 
carry-forward period, 
and 
its 
assessment 
of 
expected 
future 
taxable 
profits 
in 
the 
forecast 
period 
used 
for 
recognizing 
deferred 
tax 
assets. 
Estimating 
future 
profitability 
and 
business 
plan 
forecasts 
is 
inherently 
subjective 
and 
is 
particularly sensitive to future economic, 
market and other conditions. 
Forecasts 
are 
reviewed 
annually, 
but 
adjustments 
may 
be 
made 
at 
other 
times, 
if 
required. 
If 
recent 
losses 
have 
been 
incurred, 
convincing 
evidence is 
required 
to prove 
there is 
sufficient future 
profitability given 
the value 
of UBS 
AG’s deferred 
tax assets 
may be 
affected, with 
effects 
primarily recognized through the income statement. 
In 
addition, 
judgment 
is 
required 
to 
assess 
the 
expected 
value 
of 
uncertain 
tax 
positions 
and 
the 
related 
probabilities, 
including 
interpretation 
of 
tax 
laws, 
the 
resolution 
of 
any 
income 
tax-related 
appeals and litigation. 
›
 
Refer to Note 8 for more information 
8) Investments in associates 
Interests in 
entities where 
UBS AG has 
significant influence 
over 
the 
financial 
and 
operating 
policies 
of 
the 
entity 
but 
does 
not 
have 
control 
are 
classified 
as 
investments 
in 
associates 
and 
accounted for under the 
equity method of accounting. 
Typically, 
UBS AG has 
significant influence when 
it holds or 
has the ability 
to 
hold 
between 
20% 
and 
50% 
of 
a 
company’s 
voting 
rights. 
Investments in associates 
are initially recognized 
at cost, and 
the 
carrying 
amount 
is 
increased 
or 
decreased 
after 
the 
date 
of 
acquisition 
to 
recognize 
UBS 
AG’s 
share 
of 
the 
investee’s 
comprehensive income and any impairment losses. 
The 
net 
investment 
in 
an 
associate 
is 
impaired 
if 
there 
is 
objective 
evidence 
of 
a 
loss 
event 
and 
the 
carrying 
amount 
of 
the investment in the associate exceeds its recoverable amount. 
›
 
Refer to Note 28 for more information 
9) Property, equipment and software 
Property, 
equipment and software includes own-used properties, 
leasehold 
improvements, 
information 
technology 
hardware, 
externally 
purchased 
and 
internally generated 
software, 
as 
well 
as 
communication
s
 
and 
other 
similar 
equipment. 
Property, 
equipment 
and 
software 
is 
measured 
at 
cost 
less 
accumulated 
dep
reciation 
and 
impairment 
losses
 
and 
is 
reviewed 
at 
each 
reporting 
date 
for 
indication 
for 
impairment. 
Software 
development 
costs 
are 
capitalized 
only 
when 
the 
costs 
can 
be 
measured 
reliably 
and 
it 
is 
probable 
that 
future 
economic 
benefits 
will 
arise. 
Depreciation 
of 
property, 
equipment 
and 
software begins 
when they are 
available for use 
(i.e., when they 
are
 
in 
the 
location 
and 
condition 
necessary 
for 
them
 
to 
be 
capable of 
operating in 
the manner 
intended by 
management). 
Depreciation is 
calculated on 
a straight-line 
basis over 
an asset‘s 
estimated useful life. The estimated useful economic 
lives of UBS 
AG‘s property, 
equipment and software are: 
–
 
properties, excluding land: ≤ 67 years 
–
 
IT hardware and communications equipment: ≤ 7 years 
–
 
other machines and equipment: ≤ 10 years 
–
 
software: ≤ 10 years 
–
 
leased properties 
and leasehold improvements: 
the shorter of 
the 
lease 
term 
or 
the 
economic 
life 
of 
asset 
(typically 
≤ 
20 
years). 
 
Property, 
equipment 
and 
software 
are 
generally 
tested 
for 
impairment at 
the appropriate 
cash-generating unit 
(CGU) level, 
alongside goodwill and 
intangible assets as 
described in item 
10 
in this 
Note. An impairment 
charge is, however, 
only recognized 
for such assets 
if both the 
asset’s fair value 
less costs of 
disposal 
and value in use 
(if determinable) are below its 
carrying amount. 
The 
fair 
values 
of 
such 
assets, 
other 
than 
property 
that 
has 
a 
market price, are 
generally determined using 
a replacement cost 
approach 
that 
reflects 
the 
amount 
that 
would 
be 
currently 
required 
by 
a 
market participant 
to 
replace 
the 
service 
capacity 
of 
the 
asset. 
If 
such 
assets 
are 
no 
longer 
used, 
they 
are 
tested 
individually for impairment. 
›
 
Refer to Note 12 for more information 
10) Goodwill and intangible assets 
Goodwill 
represents 
the 
future 
economic 
benefits 
arising 
from 
other 
assets 
acquired 
in 
a 
business 
combination 
that 
are 
not 
individually identified and recognized. Goodwill is not 
amortized, 
but
 
is 
assessed 
for 
impairment
 
at 
the 
end 
of 
each 
reporting 
period, 
or 
when 
indicators 
of 
impairment 
exist. 
UBS 
AG 
tests 
goodwill for impairment annually, 
irrespective of whether there is 
any indication 
of impairment. 
The 
impairment 
test 
is 
performed 
for 
each 
CGU
 
to 
which 
goodwill is allocated 
by comparing 
the recoverable 
amount, based 
on its value in use, to the carrying amount of the respective 
CGU. 
An 
impairment charge 
is 
recognized in 
the 
income statement 
if 
the carrying 
amount exceeds 
the recoverable 
amount. 
Intangible 
assets 
include
 
separately 
identifiable 
intangi
ble 
items arising 
from business 
combinations and 
certain purchased 
trademarks and similar 
items. Intangible assets 
are recognized at 
cost. 
The 
cost 
of 
an 
intangible 
asset 
acquired 
in 
a 
business 
combination is its 
fair value at the 
date of acquisition. Intangible 
assets 
with 
a 
finite 
useful 
life 
are 
amortized 
using 
the 
straight-
line 
method 
over 
their 
estimated 
useful 
life, 
generally 
not 
exceeding 20 
years. In 
rare cases, 
intangible assets 
can have 
an 
indefinite 
useful 
life, 
in 
which 
case 
they 
are 
not 
amortized. 
At 
each 
reporting 
date, 
intangible 
assets 
are 
reviewed 
for 
indications of impairment. If such indications exist, the intangible 
assets 
are 
analyzed 
to 
assess 
whether 
their 
carrying 
amount 
is 
fully recoverable. An impairment loss is recognized if the carrying 
amount exceeds the recoverable amount. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
456 
 
Note 1 
Summary of significant accounting policies (continued) 
Critical accounting estimates and judgments 
UBS 
AG‘s 
methodology 
for 
goodwill 
impairment 
testing 
is 
based 
on 
a 
model that is most sensitive to the following key assumptions: (i) forecasts 
of earnings available to shareholders 
in years one to 
three; (ii) changes in 
the discount rates; and (iii) changes in the 
long-term growth rate. 
Earnings 
available 
to 
shareholders 
are 
estimated 
on 
the 
basis 
of 
forecast results, which are part of the business plan approved by the BoD. 
The 
discount 
rates 
and 
growth 
rates 
are 
determined 
using 
external 
information, as well as considering inputs from both internal and external 
analysts and the view of management. 
The 
key assumptions 
used 
to determine 
the recoverable 
amounts of 
each cash-generating unit are tested for sensitivity by applying reasonably 
possible changes to those assumptions. 
›
 
Refer to Notes 2 and 13 for more information 
11) Provisions and contingent liabilities 
Provisions 
are 
liabilities 
of 
uncertain 
timing 
or 
amount, 
and 
are 
generally 
recognized 
in 
accordance 
with 
IAS 
37, 
Provisions, 
Contingent 
Liabilities 
and 
Contingent 
Assets
, 
when: 
(i) 
UBS 
AG 
has 
a 
present 
obligation 
as 
a 
result 
of 
a 
past 
event; 
(ii) 
it 
is 
probable 
that an 
outflow of 
resources 
will be 
required to 
settle 
the obligation; 
and (iii) 
a reliable 
estimate of 
the amount 
of the 
obligation can be made. 
The 
majority 
of 
UBS
 
AG
’s 
provisions 
relate 
to 
litigation, 
regulatory 
and 
similar 
matters, 
restructuring, 
and 
employee 
benefits. 
Restructuring 
provisions 
are 
generally 
recognized 
as 
a 
consequence of 
management agreeing 
to materially 
change the 
scope 
of 
the 
business 
or 
the 
manner 
in 
which 
it 
is 
conducted, 
including 
changes 
in 
management 
structure. 
Provisions 
for 
employee 
benefits 
relate 
mainly 
to 
service 
anniversaries 
and 
sabbatical 
leave, 
and 
are 
recognized 
in 
accordance 
with 
measurement 
principles 
set 
out 
in 
item 
6
 
in 
this 
Note. 
In 
addition, 
UBS 
AG 
presents 
expected 
credit 
loss 
allowances 
within 
Provisions
 
if 
they 
relate 
to 
a 
loan 
commitment, 
financial 
guarantee contract or a revolving revocable credit line. 
IAS 37 provisions 
are measured considering 
the best estimate 
of the 
consideration required 
to settle 
the present 
obligation at 
the balance sheet date. 
When 
conditions 
required 
to 
recognize 
a 
provision 
are 
not 
met, a contingent liability is disclosed, unless the 
likelihood of an 
outflow 
of 
resources 
is 
remote. 
Contingent 
liabilities 
are 
also 
disclosed for 
possible obligations that 
arise from past 
events the 
existence 
of 
which 
will 
be 
confirmed 
only 
by 
uncertain 
future 
events not wholly within the control of UBS AG. 
 
 
 
Critical accounting estimates and judgments 
Recognition of provisions 
often involves significant judgment 
in assessing 
the 
existence 
of 
an 
obligation 
that 
results 
from
past 
events 
and 
in 
estimating 
the 
probability, 
timing 
and 
amount 
of 
any 
outflows 
of 
resources. This is 
particularly the case for 
litigation, regulatory and similar 
matters, 
which, 
due 
to 
their 
nature, 
are 
subject 
to 
many 
uncertainties, 
making their outcome 
difficult to predict. 
The 
amount 
of 
any 
provision 
recognized 
is 
sensitive 
to 
the 
assumptions used and there 
could be a 
wide range of possible 
outcomes 
for any particular matter. 
Management regularly reviews 
all the available 
information regarding 
such 
matters, 
including 
legal 
advice, 
to 
assess 
whether 
the 
recognition 
criteria for provisions have been satisfied and to determine the timing and 
amount of any potential outflows. 
›
 
Refer to Note 18 for more information 
12) Foreign currency translation 
Transactions 
denominated 
in 
a 
foreign 
currency 
are 
translated 
into 
the 
functional 
currency 
of 
the 
reporting 
entity 
at 
the 
spot 
exchange 
rate 
on 
the 
date 
of 
the 
transaction. 
At 
the 
balance 
sheet 
date, 
all 
monetary 
assets, 
including 
those 
at 
FVOCI, 
and 
monetary 
liabilities 
denominated 
in 
foreign 
currency 
are 
translated 
into
 
the 
functional 
currency 
using 
the 
closing 
exchange rate. 
Translation 
differences are 
reported in 
Other net 
income 
from 
financial 
instruments
 
m
easured 
at 
fair 
value 
through profit or loss
. 
Non-monetary items measured at historical cost are translated 
at the exchange rate on the date of the transaction. 
Upon consolidation, assets and liabilities of 
foreign operations 
are translated into US 
dollars, 
UBS AG’s presentation currency, at 
the closing exchange rate on the balance sheet date, and income 
and 
expense 
items 
and 
other 
comprehensive 
income 
are 
translated at the average 
rate for the period. The resulting 
foreign 
currency 
translation 
differences 
are 
recognized 
in 
Equity
 
and 
reclassified to 
the income 
statement when 
UBS 
AG 
disposes of, 
partially or 
in 
its entirety, 
the foreign 
operation and 
UBS 
AG no 
longer controls 
the foreign 
operation. 
Share 
capital issued, 
share premium 
and 
treasury shares 
held 
are 
translated 
at 
the 
historic 
average 
rate, 
with 
the 
difference 
between the historic average rate 
and the spot rate realized upon 
repayment of share capital or disposal of treasury shares reported 
as 
Share 
premium.
 
Cumulative 
amounts 
recogniz
ed 
in 
OCI 
in 
respect 
of 
cash 
flow 
hedges 
and 
financial 
assets 
measured 
at 
FVOCI 
are
 
translated 
at
 
the
 
closing
 
exchange 
rate 
as 
of 
the 
balance sheet dates, with 
any translation effects 
adjusted through 
Retained earnings
. 
›
 
Refer to Note 33 for more information 
 

 
 
457 
 
Note 1 
Summary of significant accounting policies (continued) 
13) Non-controlling interests 
Non-controlling interests 
If 
UBS 
AG 
has 
a
n 
obligation 
to
 
purchase 
a 
non
-
controlling 
interest subject to option or forward 
arrangements, the amounts 
allocated 
to non-controlling 
interests 
are 
reduced 
and a 
liability 
equivalent 
to 
the 
exercise 
price 
of 
the 
option
 
or 
forward
 
is 
recognized, 
with 
any 
difference 
between 
these 
two 
amounts 
recorded in 
Share premium. 
 
Net cash settlement contracts 
Contracts involving 
UBS Group 
AG shares 
that require 
net cash 
settlement, 
or 
provide 
the 
counterparty 
or 
UBS
 
AG
 
with 
a 
settlement option 
that includes 
a choice 
of settling 
net in 
cash, 
are classified as derivatives held for trading. 
14) Leasing 
UBS 
AG 
predominantly enters 
into 
lease 
contracts, or 
contracts 
that include lease 
components, 
as a lessee of real 
estate, including 
offices, retail 
branches and sales 
offices, with a small 
number of IT 
hardware 
leases. UBS 
AG 
identifies non-lease 
components of 
a 
contract 
and 
accounts 
for 
them 
separately 
from 
lease 
components. 
When 
UBS 
AG 
is 
a 
lessee 
in 
a 
lease 
arrangement, UBS 
AG 
recognizes a 
lease 
liability and 
corresponding right-of-use 
(RoU) 
asset 
at 
the 
commencement of 
the 
lease 
term 
when 
UBS 
AG 
acquires control 
of the physical 
use of the 
asset. Lease 
liabilities 
are 
presented within 
Other financial liabilities measured at amortized 
cost
 
and RoU assets 
within 
Property, equipment 
and software
. The 
lease liability is measured based on the present value of 
the lease 
payments 
over 
the 
lease 
term, 
discounted 
using 
UBS
 
AG
’s 
unsecured borrowing rate, 
given that the rate implicit in a lease is 
generally not observable. Interest expense 
on the 
lease liability is 
presented 
within 
Interest
 
expense 
from 
financial 
instruments
 
measured 
at 
amortized 
cost
. 
The 
RoU 
asset 
is 
recorded 
at 
an 
amount 
equal 
to 
the 
lease 
liability 
but 
is 
adjusted 
for 
rent 
prepayments, initial direct costs, any costs to refurbish the leased 
asset 
and
 
/
 
or 
lease 
incentives 
received. 
The 
RoU 
asset 
is
 
depreciated over 
the shorter 
of the 
lease term 
or the 
useful life 
of 
the 
underlying 
asset, 
with 
the depreciation 
presented 
within 
Depreciation 
and 
impairment 
of 
property, 
equipment 
and 
software
. 
Lease payments generally include fixed and variable 
payments 
that 
depend 
on 
an 
index 
(such 
as 
an 
inflation 
index). 
When 
a 
lease 
contains 
an extension 
or termination 
option that 
UBS AG 
considers reasonably certain 
to be exercised, 
the expected rental 
payments 
or 
costs 
of 
termination 
are 
included 
within 
the 
lease 
payments used 
to generate 
the lease 
liability. UBS 
AG does 
not 
typically enter into leases with purchase 
options or residual value 
guarantees. 
Where UBS 
AG acts 
as a 
lessor or 
sub-lessor under a 
finance 
lease, a receivable 
is recognized 
in 
Other financial 
assets measured 
at amortized cost
 
at an amount equal to the 
present value of the 
aggregate of the 
lease payments plus any 
unguaranteed residual 
value that UBS 
AG expects 
to recover 
at the end of the 
lease term. 
Initial direct costs 
are also 
included in the 
initial measurement of 
the 
lease 
receivable. 
Lease 
payments 
received 
during 
the 
lease 
term are 
allocated as 
repayments of 
the 
outstanding receivable. 
Interest income reflects a constant periodic rate of return on 
UBS 
AG’s net investment 
using the interest 
rate implicit 
in the lease (or, 
for sub-leases, the 
rate for 
the head 
lease). UBS 
AG reviews 
the 
estimated 
unguaranteed 
residual 
value 
annually, 
and 
if 
the 
estimated residual 
value 
to 
be 
realized 
is 
less 
than 
the 
amount 
assumed at lease 
inception, a loss is 
recognized for the expected 
shortfall. 
Where 
UBS 
AG 
acts 
as 
a 
lessor 
or 
sub-lessor 
in 
an 
operating lease, 
UBS 
AG 
recognizes the 
operating lease 
income 
on a straight-line 
basis over 
the lease term. 
Lease 
receivables 
are 
subject 
to 
impairment 
requirements 
as 
set 
out 
in 
item 
2g 
in 
this 
Note. 
ECL 
on 
lease 
receivables 
are 
determined 
following 
the 
general 
impairment 
model 
within 
IFRS 9, 
Financial 
Instruments
, 
without 
utilizing 
the 
simplified 
approach 
of 
always 
measuring 
impairment 
at 
the 
amount 
of 
lifetime ECL. 
 
Comparative 
policy 
| 
Policy 
applicable 
prior 
to 1 January 
2019
 
Operating 
lease rentals 
payable 
were recognized 
as an expense 
on a 
straight
-
line 
basis 
over 
the 
lease 
term, 
which 
commence
d
 
with 
control of the 
physical use of 
the property. Lease incentives were 
treated as a reduction 
of rental expense 
and were recognized 
on a 
consistent 
basis over the lease term. Operating lease 
expenses of 
USD 533 
million 
were 
presented 
within 
General 
and 
administrative 
expenses 
in 
2018. As 
at 
the date 
of 
adoption of 
IFRS 
16
,
 
UBS 
AG 
had 
USD
 
24 
million 
of 
finance 
leases 
and 
accounted 
for 
them 
consistently 
with 
the 
policy 
applied 
from 
1 January 
2019 above. 
The 
adoption 
of 
IFRS 16 
had no 
impact 
on retained earnings. 
›
 
Refer to Note 12 and 30 for more information 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
458 
 
 
Note 1 
Summary of significant accounting policies (continued) 
b) Changes in accounting policies, comparability and other adjustments
 
New or amended accounting standards 
Adoption of hedge accounting requirements of IFRS 9, Financial 
Instruments 
Effective 
from 
1 January 
2020, 
UBS 
AG 
has 
prospectively 
adopted the hedge
 
accounting requirements 
of IFRS 
9, 
Financial 
Instruments
, 
for 
all 
of 
its 
existing 
hedge 
accounting 
programs, 
except for fair 
value hedges of portfolio 
interest rate risk, which, 
as permitted 
under IFRS 
9, continue 
to be 
accounted for 
under 
IAS 39, 
Financial Instruments: Recognition and Measurement
. 
The adoption 
of these 
requirements has 
not changed 
any of 
the 
hedge 
designations 
disclosed 
in 
the 
Annual 
Report 
2019 
with 
only 
minor 
amendments 
to 
hedge 
documentation 
and 
hedge 
effectiveness 
testing 
methodologies 
required 
to 
make 
them 
compliant 
with 
IFRS 
9. 
The 
adoption 
had 
no 
financial 
effect 
on 
UBS 
AG’s 
financial 
statements. 
However, 
starting 
on 
1 January 
2020, 
UBS 
AG 
began 
to 
designate 
cross-currency 
swaps 
as 
Fair 
value 
hedges 
of 
foreign 
exchange 
risk 
related 
to 
debt 
instruments
 
and 
utilized 
the 
cost 
of 
hedging 
appro
ach 
introduced by IFRS 9. 
›
 
Refer to Note 1a item 2j for more information 
about UBS AG’s 
hedge accounting policies under IFRS 
9 and Note 25 for more 
information about Fair value hedges of 
foreign exchange risk 
related to debt instruments 
Other changes to financial reporting 
Modification of deferred compensation awards 
During 2020, 
UBS AG modified the 
terms of certain outstanding 
deferred 
compensation 
awards 
granted 
for 
performance 
years 
2015 
through 
2019 
by 
removing 
the 
requirement 
to 
provide 
future 
service 
for 
qualifying 
employees. 
These 
awards 
remain 
subject 
to 
forfeiture 
if 
certain 
non-vesting 
conditions 
are 
not 
satisfied. As a result, UBS AG recognized 
an expense of USD 342 
million 
in 
the 
third 
quarter 
of 
2020, 
of 
which 
USD 303 
million 
was 
recorded 
within 
Variable 
compensation 
–
 
performance 
awards
, USD 23 million within 
Social security
 
and USD 16 million 
within 
Other personnel 
expenses
, with 
a corresponding 
increase 
of 
USD 
342 
million 
in 
liabilities. 
The 
full 
year 
effect 
was 
an 
expense 
of 
approximately 
USD 
270 
million, 
of 
which 
USD 
240 
million is 
disclosed within 
Variable compensation 
– performance 
awards
, USD 20 million within 
Social security
 
and USD 10 million 
within 
Other 
personnel 
expenses, 
with 
a
n 
increase 
of 
approximately USD 270 million in liabilities. 
Outstanding 
deferred 
compensation 
awards 
granted 
to 
Group Executive Board members, those granted under 
the Long-
Term Incentive Plan, as well as those granted to financial advisors 
in the US, were not affected by these changes. 
Restatement of compensation-related 
liabilities 
During 
2020, UBS 
AG restated 
its balance 
sheet and 
statement 
of 
changes in 
equity as 
of 1 
January 2018 
to 
correct 
a 
USD 43 
million 
liability 
understatement 
in 
connection 
with 
a 
legacy 
Global 
Wealth 
Management 
deferred 
compensation 
plan, 
with 
the 
effects 
presented 
in 
the 
table 
below. 
The 
restatement 
resulted 
from 
a correction 
of an 
actuarial 
calculation associated 
with 
compensation-related 
liabilities. 
The 
effects 
of 
the 
understatement 
were 
not 
material 
to 
prior-year 
financial 
statements; however, 
such effects 
would have 
been material 
to 
the quarterly 
reporting period 
in which 
the understatement 
was 
identified 
and 
therefore 
prior 
years 
were 
restated. 
The 
restatement 
had 
no 
effect 
on 
Net 
profit 
/ 
(loss)
 
for 
the 
current 
period or for any comparative periods. 
 
 
31.12.19 
31.12.18 
1.1.18 
USD million 
As reported 
Effect 
Restated 
As reported 
Effect 
Restated 
As reported 
Effect 
Restated 
Balance sheet assets 
Deferred tax assets 
9,513 
11 
9,524 
10,066 
11 
10,077 
10,121 
11 
10,132 
Total assets 
971,916 
11 
971,927 
958,055 
11 
958,066 
939,528 
11 
939,539 
Balance sheet liabilities 
Other non-financial liabilities 
6,168 
43 
6,211 
6,275 
43 
6,318 
6,499 
43 
6,542 
of which: Compensation-related liabilities 
4,296 
43 
4,339 
4,645 
43 
4,688 
5,036 
43 
5,079 
of which: financial advisor compensation plans 
1,459 
43 
1,502 
1,454 
43 
1,497 
 
Not disclosed 
Total liabilities 
917,988 
43 
918,031 
905,624 
43 
905,667 
888,100 
43 
888,143 
Equity 
Retained earnings 
23,451 
(32) 
23,419 
23,317 
(32) 
23,285 
21,646 
(32) 
21,614 
Equity attributable to shareholders 
53,754 
(32) 
53,722 
52,256 
(32) 
52,224 
51,370 
(32) 
51,338 
Total equity 
53,928 
(32) 
53,896 
52,432 
(32) 
52,400 
51,429 
(32) 
51,397 
Total liabilities and equity 
971,916 
11 
971,927 
958,055 
11 
958,066 
939,528 
11 
939,539 
 
 

 
 
 
459 
 
Note 1 
Summary of significant accounting policies (continued) 
Segment reporting 
Effective 
from 
1 
January 
2020, 
UBS 
AG 
no 
longer 
discloses 
a 
detailed cost 
breakdown by 
financial statement 
line item 
within 
its 
segment 
reporting 
disclosures 
provided 
in 
Note 
2. 
The 
modified 
approach 
of 
presenting 
operating 
expenses 
for 
each 
division aligns the 
reporting with the way 
that UBS AG manages 
its 
cost 
base
. 
This 
change 
has 
no 
effect 
on
 
the 
income 
statement, or on the net profit of any business division. 
Presentation of interest income and expense from financial 
instruments measured at fair value through profit or loss 
Effective from 
1 January 2020, UBS 
AG presents interest 
income 
and interest expense 
from financial instruments 
measured at fair 
value through 
profit or loss 
on a net 
basis, in line 
with how UBS 
AG 
assesses 
and 
reports 
interest 
and 
in 
accordance 
with 
IFRS. 
This presentation change has no effect on 
Net interest income
 
or 
on 
Net 
profit 
/ 
(loss)
 
attributable 
to 
shareholders
. 
Prior 
periods 
have 
been 
aligned 
with 
this 
change 
in 
presentation. 
Further 
information 
about 
net 
interest 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through 
profit 
or 
loss 
is 
provided in Note 3. 
 
 
 
 
c) International Financial Reporting Standards and Interpretations to be adopted in 2021 and later and other changes 
Amendments to IAS 39, IFRS 9 and IFRS 7 (
Interest Rate 
Benchmark Reform – Phase 2
) 
In 
August 
2020, 
the 
IASB 
issued 
Interest 
Rate 
Benchmark 
Reform – Phase 2, 
Amendments to IFRS 9, 
IAS 39, IFRS 7, 
IFRS 4 
and IFRS 16
 
addressing a 
number of issues 
in financial reporting 
areas that arise when IBOR rates are reformed or replaced. 
The amendments provide 
a practical expedient 
which permits 
certain 
changes 
in 
the 
contractual 
cash 
flows 
of 
debt 
instruments 
attributable 
to 
the 
replacement 
of 
IBOR 
rates 
with 
alternative 
risk-free 
interest 
rates 
(RFRs) 
to 
be 
accounted 
for 
prospectively by updating the instrument’s EIR. 
In terms of 
hedge accounting, the 
amendments provide relief 
from 
discontinuing 
hedge 
relationships 
because 
of 
changes 
resulting 
from 
the 
replacement 
of 
IBOR 
rates 
and 
temporary 
relief 
from 
having 
to 
ensure 
that 
the 
designated
 
RFR
 
risk 
component 
is 
separately 
identifiable. 
Additionally, 
the 
amendments 
do 
not 
require 
remeasurement 
or 
immediate 
release 
to 
the 
income 
statement 
of 
the 
accumulated 
amounts 
resulting from IBOR hedges upon the change to RFRs. 
Furthermore, the amendments introduce 
additional disclosure 
requirements 
covering 
any 
new 
risks 
arising 
from 
the 
reforms 
and 
how 
the 
transition 
to 
alternative 
benchmark 
rates 
is 
managed. 
UBS AG will adopt these amendments on 1 January 2021 and 
does not expect a material effect on its financial statements. 
›
 
Refer to Note 25 for more information 
IFRS 17,
 
Insurance Contracts 
In 
May 
2017, 
the 
IASB 
issued 
IFRS 
17, 
Insurance 
Contracts
, 
which 
sets 
out 
the 
accounting 
requirements 
for 
contractual 
rights and 
obligations that 
arise from 
insurance contracts 
issued 
and 
reinsurance 
contracts 
held. 
IFRS 
17 
is 
effective 
from 
1 January 2023. 
UBS AG is 
assessing the standard, 
but does not 
expect it to have a material effect on its financial statements. 
Amendments to IAS 1, 
Presentation of Financial Statements
, IFRS 
Practice Statement 2, 
Making Materiality Judgements
 
and IAS 8, 
Accounting Policies, Changes in Accounting Estimates and Errors
 
In 
February 
2021, 
the 
IASB 
issued 
amendments 
to 
IAS 
1, 
Presentation of 
Financial Statements
, IFRS 
Practice Statement 
2, 
Making 
Materiality 
Judgements
 
and 
amendments 
to 
IAS 
8, 
Accounting Policies, Changes in Accounting 
Estimates and Errors
 
to 
help 
improve 
accounting 
policy 
disclosures 
and 
distinguish 
changes 
in 
accounting 
estimates 
from 
changes 
in 
accounting 
policies. 
These amendments 
are 
effective 
from 1 
January 
2023, 
with 
early 
application 
permitted. 
UBS 
AG 
is 
currently 
assessing 
the effect on its financial statements. 
Annual Improvements to IFRS Standards 2018–2020 Cycle and 
narrow-scope amendments to IFRS 3, 
Business Combinations
, 
and IAS 37, 
Provisions, Contingent Liabilities and Contingent 
Assets
 
In May 2020, the IASB issued 
several narrow-scope amendments 
to 
a 
number 
of 
standards 
as 
well 
as 
Annual 
Improvements 
to 
IFRS Standards 
2018–2020 Cycle
. These 
minor amendments 
are 
effective from 1 
January 2022. UBS AG is 
currently assessing the 
effect on its financial statements. 
 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
460 
 
Note 2a 
Segment reporting 
UBS 
AG’s 
businesses 
are 
organized 
globally 
into 
four 
business 
divisions: 
Global 
Wealth 
Management, 
Personal 
& 
Corporate 
Banking, 
Asset Management 
and the 
Investment Bank. 
All four 
business divisions 
are supported 
by Group 
Functions and 
qualify 
as 
reportable 
segments 
for 
the 
purpose 
of 
segment 
reporting. 
Together 
with 
Group 
Functions, 
the 
four 
business 
divisions 
reflect the management structure of UBS AG: 
 
–
 
Global 
Wealth 
Management
 
provides 
investment 
advice 
and solutions, 
as well 
as lending 
solutions, to 
private clients, 
in 
particular in 
the ultra 
high 
net 
worth 
and high 
net worth 
segments. 
The 
business 
is 
managed 
globally 
across 
the 
regions. 
–
 
Personal 
& 
Corporate 
Banking
 
provides 
comprehensive 
financial 
products 
and 
services 
to 
private, 
corporate 
and 
institutional 
clients, 
operating 
across 
all 
banking 
markets 
in 
Switzerland. 
–
 
Asset 
Management
 
is 
a 
large-scale 
and 
diversified 
global 
asset 
manager. 
It 
offers 
investment 
capabilities 
and 
styles 
across 
all 
major 
traditional 
and 
alternative 
asset 
classes, 
as 
well 
as 
advisory 
support 
to 
institutions, 
wholesale 
intermediaries and wealth management clients globally. 
–
 
The 
Investment 
Bank
 
provides 
a 
range 
of 
services 
to 
institutional, 
corporate 
and 
wealth 
management 
clients 
globally, 
to 
help 
them 
raise 
capital, 
grow 
their 
businesses, 
invest 
and 
manage 
risks. 
Offerings 
include 
advisory 
services, 
capital 
markets, 
cash 
and 
derivatives 
trading 
across 
equities 
and fixed income and financing. 
–
 
Group 
Functions
 
–
 
formerly 
named 
Corporate 
Center,
 
is 
made up of 
the following major 
areas: Group Services 
(which 
consists of Technology, Corporate Services, Human 
Resources, 
Operations, 
Finance, 
Legal, 
Risk 
Control, 
Research 
and 
Analytics, 
Compliance, 
Regulatory 
& 
Governance, 
Communications 
& 
Branding 
and 
UBS 
in 
Society), 
Group 
Treasury and Non-core and Legacy Portfolio. 
 
Financial 
information 
about 
the 
four 
business 
divisions 
and 
Group Functions is presented 
separately in internal management 
reports. 
UBS 
AG’s 
internal 
accounting 
policies, 
which 
include 
management 
accounting 
policies 
and 
service 
level 
agreements, 
determine 
the 
revenues 
and 
expenses 
directly 
attributable 
to 
each 
reportable 
segment. 
Transactions 
between 
the 
reportable 
segments 
are 
carried 
out 
at 
internally 
agreed 
rates 
and 
are 
reflected 
in 
the 
operating 
results 
of 
the 
reportable 
segments. 
Revenue-sharing agreements 
are used 
to allocate 
external client 
revenues 
to 
reportable 
segments 
where 
several 
reportable 
segments 
are 
involved 
in 
the 
value 
creation 
chain. 
Total 
intersegment 
revenues 
for 
UBS 
AG 
are 
immaterial, 
as 
the 
majority 
of 
the 
revenues 
are 
allocated 
across 
the 
segments 
by 
means 
of 
revenue-sharing 
agreements. 
Interest 
income 
earned 
from managing UBS 
AG’s consolidated equity 
is allocated to 
the 
reportable 
segments 
based 
on 
average 
attributed 
equity 
and 
currency 
composition. 
Assets 
and 
liabilities 
of 
the 
reportable 
segments 
are 
funded 
through 
and 
invested 
with 
Group 
Functions, and 
the net 
interest margin 
is reflected 
in the 
results 
of each reportable segment. 
Segment 
assets 
are 
based 
on 
a 
third-party 
view 
and 
do 
not 
include intercompany 
balances. This 
view is 
in line 
with internal 
reporting to the 
GEB. If one 
operating segment is 
involved in an 
external transaction together with another operating segment or 
Group Functions, 
additional criteria 
are considered 
to determine 
the 
segment 
that 
will 
report 
the 
associated 
assets. 
This 
will 
include 
a 
consideration 
of 
which 
segment’s 
business 
needs 
are 
being 
addressed 
by 
the 
transaction 
and 
which 
segment 
is 
providing the 
funding and 
/ or resources. 
Allocation of 
liabilities 
follows the same principles. 
Non-current 
assets disclosed 
for segment 
reporting 
purposes 
represent assets that are expected 
to be recovered more than 
12 
months after the reporting date, 
excluding financial instruments, 
deferred tax assets and post-employment benefits. 
Effective 
from 
1 January 
2020, 
UBS 
AG 
only 
reports 
total 
operating 
expenses 
for 
each 
business 
division 
and 
no 
longer 
discloses 
a 
detailed 
cost 
breakdown 
by 
financial 
statement 
line 
item. This 
change streamlines 
reporting, ensures 
alignment with 
how 
UBS 
AG 
manages 
its 
cost 
base 
and 
has 
no 
effect 
on 
the 
income statement, or on the net profit of any business division. 
 
 

 
461 
 
Note 2a 
Segment reporting (continued) 
Segment reporting 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
UBS AG 
For the year ended 31 December 2020 
Net interest income 
 
4,027 
 
2,049 
 
(17) 
 
284 
 
(555) 
 
5,788 
Non-interest income
1
 
13,107 
 
1,859 
 
2,993 
 
9,224 
 
504 
 
27,686 
Income 
 
17,134 
 
3,908 
 
2,975 
 
9,508 
 
(52) 
 
33,474 
Credit loss (expense) / release 
 
(88) 
 
(257) 
 
(2) 
 
(305) 
 
(42) 
 
(695) 
Total operating income 
 
17,046 
 
3,651 
 
2,974 
 
9,203 
 
(94) 
 
32,780 
Total operating expenses 
 
13,080 
 
2,390 
 
1,520 
 
6,762 
 
1,329 
 
25,081 
Operating profit / (loss) before tax 
 
3,965 
 
1,261 
 
1,454 
 
2,441 
 
(1,423) 
 
7,699 
Tax expense / (benefit) 
 
1,488 
Net profit / (loss) 
 
6,211 
Additional information 
Total assets 
 
367,714 
 
231,710 
 
28,266 
 
369,778 
 
127,858 
 
1,125,327 
Additions to non-current assets 
 
5 
 
12 
 
385 
 
150 
 
1,971 
 
2,524 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
UBS AG 
For the year ended 31 December 2019 
Net interest income 
 
3,947 
 
1,993 
 
(25) 
 
(669) 
 
(831) 
 
4,415 
Non-interest income 
 
12,426 
 
1,745 
 
1,962 
 
7,967 
 
869 
 
24,970 
Income 
 
16,373 
 
3,737 
 
1,938 
 
7,298 
 
38 
 
29,385 
Credit loss (expense) / release 
 
(20) 
 
(21) 
 
0 
 
(30) 
 
(7) 
 
(78) 
Total operating income 
 
16,353 
 
3,717 
 
1,938 
 
7,268 
 
31 
 
29,307 
Total operating expenses 
 
13,018 
 
2,274 
 
1,407 
 
6,515 
 
925 
 
24,138 
Operating profit / (loss) before tax 
 
3,335 
 
1,443 
 
531 
 
753 
 
(893) 
 
5,169 
Tax expense / (benefit) 
 
1,198 
Net profit / (loss) 
 
3,971 
Additional information 
Total assets
2
 
309,766 
 
209,512 
 
34,565 
 
316,058 
 
102,028 
 
971,927 
Additions to non-current assets 
 
68 
 
10 
 
0 
 
1 
 
4,935 
 
5,014 
USD million 
Global Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
UBS AG 
For the year ended 31 December 2018 
Net interest income 
 
4,101 
 
2,049 
 
(29) 
 
(459) 
 
(690) 
 
4,971 
Non-interest income 
 
12,700 
 
2,169 
 
1,881 
 
8,539 
 
499 
 
25,788 
Income 
 
16,801 
 
4,218 
 
1,852 
 
8,080 
 
(191) 
 
30,759 
Credit loss (expense) / release 
 
(15) 
 
(56) 
 
0 
 
(38) 
 
(8) 
 
(117) 
Total operating income 
 
16,786 
 
4,162 
 
1,852 
 
8,042 
 
(199) 
 
30,642 
Total operating expenses 
 
13,574 
 
2,363 
 
1,427 
 
6,600 
 
1,220 
 
25,184 
Operating profit / (loss) before tax 
 
3,212 
 
1,799 
 
425 
 
1,442 
 
(1,419) 
 
5,458 
Tax expense / (benefit) 
 
1,345 
Net profit / (loss) 
4,113 
Additional information 
Total assets
2
 
313,737 
 
200,767 
 
28,140 
 
302,434 
 
112,988 
 
958,066 
Additions to non-current assets 
 
196 
 
23 
 
1 
 
89 
 
1,449 
 
1,757 
1 Includes 
a USD 
631 million 
net gain 
on the 
sale of 
a majority 
stake in 
Fondcenter AG, 
of which 
USD 571 
million was 
recognized in 
Asset Management 
and USD 
60 million 
was recognized 
in Global 
Wealth 
Management. Refer to Note 29 for more information. 
2 Information has been restated where applicable. Refer to Note 1b for more information.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
462 
 
Note 2b 
Segment reporting by geographic location 
The 
operating 
regions 
shown 
in 
the 
table 
below 
correspond to 
the regional management structure of UBS AG. The 
allocation of 
operating 
income 
to 
these 
regions 
reflects, 
and 
is 
consistent 
with, 
the 
basis 
on 
which 
the 
business 
is 
managed 
and 
its 
performance is 
evaluated. These 
allocations involve 
assumptions 
and 
judgments 
that 
management 
considers 
to 
be 
reasonable, 
and 
may
 
be 
refined 
to 
reflect 
changes 
in 
estimates 
or 
management 
structure. 
The 
main 
principles 
of 
the 
allocation 
methodology 
are 
that 
client 
revenues 
are 
attributed 
to 
the 
domicile 
of 
the 
given 
client 
and 
trading 
and 
portfolio 
management 
revenues 
are 
attributed 
to 
the 
country 
where 
the 
risk 
is 
managed. 
This 
revenue 
attribution 
is 
consistent 
with 
the 
mandate 
of 
the 
regional 
Presidents. 
Certain 
revenues, 
such 
as 
those 
related 
to 
N
on
-
core 
and 
L
egacy 
P
ortfolio 
in 
Group 
Functions, 
are 
managed 
at 
a 
group 
level. 
These 
revenues 
are 
included in the 
Global
 
line. 
The geographic analysis 
of non-current assets 
is based on 
the 
location of the entity in which the given assets are recorded. 
 
For the year ended 31 December 2020 
Total operating income 
Total non-current assets 
USD billion 
Share % 
USD billion 
Share % 
Americas 
 
13.0 
 
40 
 
9.0 
 
45 
of which: USA 
 
11.7 
 
36 
 
8.4 
 
42 
Asia Pacific 
 
6.0 
 
18 
 
1.4 
 
7 
Europe, Middle East and Africa (excluding Switzerland) 
 
6.5 
 
20 
 
2.7 
 
14 
Switzerland 
 
6.9 
 
21 
 
6.9 
 
34 
Global 
 
0.5 
 
2 
 
0.0 
 
0 
Total 
 
32.8 
 
100 
 
20.0 
 
100 
For the year ended 31 December 2019 
Total operating income
1
Total non-current assets 
USD billion 
Share % 
USD billion 
Share % 
Americas 
 
12.0 
 
41 
 
8.9 
 
46 
of which: USA 
 
10.9 
 
37 
 
8.5 
 
44 
Asia Pacific 
 
4.7 
 
16 
 
1.3 
 
7 
Europe, Middle East and Africa (excluding Switzerland) 
 
5.8 
 
20 
 
2.6 
 
13 
Switzerland 
 
6.7 
 
23 
 
6.5 
 
34 
Global 
 
0.1 
 
0 
 
0.0 
 
0 
Total 
 
29.3 
 
100 
 
19.3 
 
100 
For the year ended 31 December 2018 
Total operating income
1
Total non-current assets 
USD billion 
Share % 
USD billion 
Share % 
Americas 
 
12.6 
 
41 
 
7.4 
 
46 
of which: USA 
 
11.5 
 
37 
 
7.0 
 
43 
Asia Pacific 
 
4.9 
 
16 
 
0.8 
 
5 
Europe, Middle East and Africa (excluding Switzerland) 
 
6.2 
 
20 
 
1.8 
 
11 
Switzerland 
 
7.1 
 
23 
 
6.2 
 
38 
Global 
 
(0.2) 
 
(1) 
 
0.0 
 
0 
Total 
 
30.6 
 
100 
 
16.2 
 
100 
1 Effective as 
of 1 January 
2020, the Investment 
Bank was realigned 
into two new 
business lines, 
Global Banking and 
Global Markets, 
which affects how 
the business is 
managed and therefore 
the allocation of 
operating income to the regions. The presentation of prior-year 
information reflects the new regional management structure of the Investment Bank. 

463

Income statement notes

Note 3

Net interest

income and other

net income

from financial

instruments

measured at

fair value

through profit

or loss

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Net interest income from financial instruments measured

at fair value through profit or loss

1,305

1,015

1,344

Other net income from financial instruments measured

at fair value through profit or loss

6,930

6,833

6,953

of which: net gains / (losses) from financial liabilities designated

at fair value

1,625

(8,748)

9,382

Total net income from financial instruments measured at fair value through profit or loss

8,235

7,848

8,297

Net interest income

Net interest income from financial instruments measured at amortized

cost and fair value through other comprehensive income

Interest income from loans and deposits

6,696

8,026

7,822

Interest income from securities financing transactions

862

2,005

1,567

Interest income from other financial instruments measured

at amortized cost

335

364

266

Interest income from debt instruments measured at fair

value through other comprehensive income

101

120

142

Interest income from derivative instruments designated as cash

flow hedges

822

188

324

Total interest income from financial instruments measured at amortized cost and fair

value through other comprehensive income

8,816

10,703

10,121

Interest expense on loans and deposits

2,440

4,541

3,566

Interest expense on securities financing transactions

870

1,152

1,130

Interest expense on debt issued

918

1,491

1,797

Interest expense on lease liabilities

105

118

Total interest expense from financial instruments measured at amortized cost

4,333

7,303

6,494

Total net interest income from financial instruments measured at amortized cost and fair

value through other comprehensive income

4,483

3,400

3,628

Net interest income from financial instruments measured at fair value through profit

or loss

Net interest income from financial instruments at fair value held for

trading

847

1,218

1,111

Net interest income from brokerage balances

682

339

575

Net interest income from securities financing transactions at fair

value not held for trading

116

115

Interest income from other financial instruments at fair

value not held for trading

585

914

901

Interest expense on other financial instruments designated

at fair value

(886)

(1,571)

(1,357)

Total net interest income from financial instruments measured at fair value through profit or loss

1,305

1,015

1,344

Total net interest income

5,788

4,415

4,971

1 Excludes

fair value

changes of

hedges related

to financial

liabilities designated

at fair

value and

foreign currency

translation effects

arising from

translating foreign

currency transactions

into the

respective

functional currency, both

of which are reported within

Other net income from financial

instruments measured at fair value

through profit or loss.

2019 and 2018 included a

net loss of USD 1,830

million and a net

gain of USD 2,152 million, respectively,

driven by financial liabilities related

to unit-linked investment contracts,

which are designated at fair value

through profit or loss. This

was offset by a net

gain of USD 1,830

million and a net loss of USD

2,134 million in 2019 and 2018,

respectively, related to financial

assets for unit-linked investment

contracts that are mandatorily measured

at fair value through profit

or loss not held

for trading.

2 Consists

of interest

income from

cash and

balances at

central banks,

loans and advances

to banks and

customers, and

cash collateral

receivables on

derivative instruments,

as well

as negative

interest on amounts due to banks, customer

deposits, and cash collateral payables

on derivative instruments.

3 Includes interest income on receivables

from securities financing transactions and negative

interest,

including fees, on payables from securities

financing transactions.

4 Consists of interest expense on amounts due to banks,

cash collateral payables on derivative

instruments, customer deposits, and

funding from

UBS Group AG and

its subsidiaries, as well

as negative interest on cash

and balances at central

banks, loans and advances

to banks, and cash

collateral receivables on derivative

instruments.

5 Includes interest

expense

payables

from

securities

financing

transactions

and

negative

interest,

including

fees,

receivables

from

securities

financing

transactions.

Includes

interest

expense

securities

financing

transactions designated at fair value.

Consolidated financial statements | UBS AG consolidated financial statements

464

Note 4

Net fee and commission income

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Fee and commission income

Underwriting fees

1,104

784

843

of which: equity underwriting fees

657

360

431

of which: debt underwriting fees

446

424

412

M&A and corporate finance fees

736

774

768

Brokerage fees

4,132

3,248

3,521

Investment fund fees

5,289

4,859

4,955

Portfolio management and related services

8,009

7,656

7,756

Other

1,712

1,836

1,789

Total fee and commission income

20,982

19,156

19,632

of which: recurring

13,010

12,545

12,911

of which: transaction-based

7,512

6,449

6,629

of which: performance-based

461

163

Fee and commission expense

Brokerage fees paid

274

310

316

Distribution fees paid

589

590

580

Other

911

796

807

Total fee and commission expense

1,775

1,696

1,703

Net fee and commission income

19,207

17,460

17,930

of which: net brokerage fees

3,858

2,938

3,205

1 For the

year ended 31

December 2020, reflects

third-party fee and

commission income of

USD 12,475 million

for Global Wealth

Management, USD 1,427

million for Personal

& Corporate Banking,

USD 3,129

million for Asset

Management, USD

3,901 million

for the Investment

Bank and USD

50 million for

Group Functions

(for the year

ended 31

December 2019:

USD 11,694

million for Global

Wealth Management,

USD 1,307 million for Personal & Corporate Banking, USD 2,659

million for Asset Management, USD 3,397 million for the Investment Bank

and USD 98 million for Group Functions; for the year ended 31 December

2018: USD 12,059 million for Global Wealth Management, USD

1,338 million for Personal & Corporate Banking,

USD 2,579 million for Asset Management, USD 3,557 million for

the Investment Bank and USD 100

million for Group Functions).

Note 5

Other income

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Associates, joint ventures and subsidiaries

Net gains / (losses) from acquisitions and disposals of

subsidiaries

635

(36)

(292)

Net gains / (losses) from disposals of investments in associates

Share of net profits of associates and joint ventures

529

Impairments related to associates

(1)

Total

719

283

Net gains / (losses) from disposals of financial assets measured

at fair value through other comprehensive income

Income from properties

Net gains / (losses) from properties held for sale

(19)

Income from shared services provided to UBS Group AG or its subsidiaries

422

464

478

Other

267

161

Total other income

1,549

677

905

1 Includes foreign exchange

gains / (losses) reclassified

from other comprehensive income

related to the disposal

or closure of foreign

operations.

2 Includes a USD 631

million net gain on

the sale of a

majority

stake in Fondcenter AG.

Refer to Note 29 for more information.

3 Includes a valuation gain of USD 26 million on UBS AG’s

equity ownership of SIX Group.

4 Includes a valuation gain of USD 460 million on UBS

AG’s equity ownership of

SIX Group related to the sale

of SIX Payment Services to

Worldline.

5 Includes rent received from third parties.

6 Includes net gains of USD 140

million arising from sale-and-leaseback

transactions,

primarily related

to a

property in

Geneva, partly

offset by

remeasurement losses

relating to

properties that

were reclassified

as held

for sale.

7 Includes a

USD 215 million

gain on

the sale

intellectual property rights associated with the Bloomberg Commodity Index family.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
465 
 
Note 6 
Personnel expenses 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Salaries
1
 
5,535 
 
5,183 
 
5,199 
Variable compensation – performance awards
2
 
2,953
3 
 
2,545 
 
2,794 
of which: guarantees for new hires 
 
24 
 
29 
 
43 
Variable compensation – other
2
 
201 
 
225 
 
220 
Financial advisor compensation
2,4
 
4,091 
 
4,043 
 
4,054 
Contractors 
 
138 
 
147 
 
184 
Social security 
 
704
3 
 
627 
 
629 
Post-employment benefit plans
5
 
597 
 
569 
 
363
6 
Other personnel expenses 
 
466
3 
 
461 
 
549 
Total personnel expenses 
 
14,686 
 
13,801 
 
13,992 
1 Includes role-based 
allowances. 
2 Refer to 
Note 27 
for more information. 
3 During 
2020, UBS 
AG modified 
the conditions 
for continued 
vesting of 
certain outstanding 
deferred compensation 
awards for 
qualifying employees, resulting in an expense of approximately USD 270 million, of 
which USD 240 million is disclosed within Variable compensation – performance 
awards, USD 20 million within Social security and 
USD 10 million within Other personnel expenses. 
Refer to Note 1b for more information. 
4 Financial advisor compensation consists of 
grid-based compensation based directly on compensable 
revenues generated 
by financial advisors and supplemental compensation 
calculated on the basis of financial advisor 
productivity, firm tenure, 
assets and other variables. It 
also includes expenses related to compensation commitments 
with financial 
advisors entered 
into at 
the time 
of recruitment 
that are 
subject to 
vesting requirements. 
5 Refer to 
Note 26 
for more 
information. 
6 Changes 
to the 
pension fund 
of UBS 
AG in 
Switzerland 
announced in 2018 resulted 
in a reduction in 
the pension obligation recognized 
by UBS AG. 
As a consequence, 
a pre-tax gain of 
USD 132 million was recognized 
in the income statement 
in 2018, with no 
overall 
effect on total equity. Refer to Note 26 for more information. 
 
 
 
 
Note 7 
General and administrative expenses 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Occupancy 
 
362 
 
342 
 
852 
Rent and maintenance of IT and other equipment 
 
346 
 
339 
 
326 
Communication and market data services 
 
505 
 
517 
 
520 
Administration 
 
5,499 
 
5,176 
 
5,383 
of which: shared services costs charged by UBS Group AG or its subsidiaries 
 
4,939 
 
4,621 
 
4,803 
of which: UK and German bank levies
1
 
55 
 
41 
 
58 
Marketing and public relations
2
 
225 
 
233 
 
277 
Travel and entertainment 
 
132 
 
325 
 
367 
Professional fees 
 
592 
 
782 
 
870 
Outsourcing of IT and other services 
 
522 
 
610 
 
729 
Litigation, regulatory and similar matters
3
 
197 
 
165 
 
657 
Other 
 
108 
 
97 
 
95 
Total general and administrative expenses 
 
8,486 
 
8,586 
 
10,075 
1 The UK 
bank levy expenses 
of USD 38 million (USD 
30 million for 2019 
and USD 40 million 
for 2018) included 
a credit of USD 27 
million (USD 31 million 
for 2019 and 
USD 45 million for 2018) 
related to prior 
years. 
2 Includes charitable 
donations. 
3 Reflects the 
net increase in 
provisions for litigation, 
regulatory and similar 
matters recognized in 
the income 
statement. Refer to 
Note 18 for 
more information. Also 
includes recoveries from third parties of USD 3 million in 2020 (USD 11 million in 2019 and USD 29 million in 2018). 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
466 
 
Note 8 
Income taxes 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Tax expense / (benefit) 
Swiss 
Current 
 
417 
 
336 
 
434 
Deferred 
 
107 
 
246 
 
2,326 
Total Swiss 
 
524 
 
582 
 
2,760 
Non-Swiss 
Current 
 
715 
 
402 
 
537 
Deferred 
 
248 
 
214 
 
(1,952) 
Total non-Swiss 
 
963 
 
616 
 
(1,415) 
Total income tax expense / (benefit) recognized in the income statement 
 
1,488 
 
1,198 
 
1,345 
 
 
Income tax recognized in the income statement 
Income 
tax 
expenses 
of 
USD 1,488 million 
were 
recognized 
for 
UBS 
AG 
in 
2020, 
representing 
an 
effective 
tax 
rate 
of 
19.3%. 
This 
included 
Swiss 
tax 
expenses 
of 
USD 524 
million 
and 
non-
Swiss tax expenses of USD 963 million. 
The 
Swiss 
tax 
expenses 
included 
current 
tax 
expenses 
of 
USD 417 million related to taxable profits of UBS Switzerland AG 
and 
other 
Swiss 
entities. 
They 
also 
included 
deferred 
tax 
expenses 
of 
USD
 
107
 
million, 
which 
primarily 
reflect 
the 
amortization of 
deferred tax 
assets (DTAs) 
previously recognized 
in relation to deductible temporary differences. 
The non-Swiss 
tax expenses 
included current 
tax expenses 
of 
USD 715 
million 
related 
to 
taxable 
profits 
earned 
by 
non-Swiss 
subsidiaries 
and 
branches
,
 
and
 
net 
deferred 
t
ax 
expenses 
of 
USD 248 million. Expenses 
of USD 456 
million, primarily relating 
to the 
amortization of 
DTAs previously 
recognized in 
relation to 
tax 
losses carried 
forward and 
deductible 
temporary differences 
of 
UBS 
Americas 
Inc., 
were 
partly 
offset 
by 
a 
net 
benefit 
of 
USD 208 
million in 
respect of 
the remeasurement 
of DTAs. 
This 
net 
benefit 
included 
net 
upward 
remeasurements 
of 
DTAs 
of 
USD 146 million for 
certain entities, primarily 
in connection with 
our business 
planning process, 
and USD 62 
million in 
respect of 
additional DTA recognition that resulted from the contribution of 
real 
estate 
assets 
by 
UBS 
AG 
to 
UBS 
Americas 
Inc. 
and 
UBS 
Financial Services 
Inc. in 
2020. This 
allowed the 
full recognition 
of DTAs in respect of the associated historic 
real estate costs that 
were 
previously 
capitalized 
for 
US 
tax 
purposes 
under 
the 
elections that were made in the fourth quarter of 2018. 
The 
effective 
tax 
rate 
for 
2020 
of 
19.3% 
is lower 
than 
UBS 
AG’s normal 
tax 
rate of 
around 25% 
, 
mainly as 
a 
result 
of 
the 
aforementioned 
deferred 
tax 
benefit 
of 
USD
 
208
 
million
 
in 
respect of 
the remeasurement 
of DTAs 
and also 
because no 
net 
tax 
expense 
was 
recognized 
in 
respect 
of 
the 
pre-tax 
gain 
of 
USD 631 
million 
in 
relation 
to 
the 
sale 
of 
a 
majority 
stake 
in 
Fondcenter AG. 
 
 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Operating profit / (loss) before tax 
 
7,699 
 
5,169 
 
5,458 
of which: Swiss 
 
3,042 
 
2,297 
 
1,427 
of which: non-Swiss 
 
4,657 
 
2,872 
 
4,031 
Income taxes at Swiss tax rate of 19.5% for 2020, 20.5% 
for 2019 and 21% for 2018 
 
1,501 
 
1,060 
 
1,146 
Increase / (decrease) resulting from: 
Non-Swiss tax rates differing from Swiss tax rate 
 
96 
 
72 
 
68 
Tax effects of losses not recognized 
 
144 
 
131 
 
222 
Previously unrecognized tax losses now utilized 
 
(212) 
 
(265) 
 
(25) 
Non-taxable and lower-taxed income 
 
(381) 
 
(305) 
 
(419) 
Non-deductible expenses and additional taxable income 
 
373 
 
713 
 
883 
Adjustments related to prior years – current tax 
 
(66) 
 
1 
 
114 
Adjustments related to prior years – deferred tax 
 
18 
 
(6) 
 
27 
Change in deferred tax recognition 
 
(383) 
 
(293) 
 
(802) 
Adjustments to deferred tax balances arising from changes 
in tax rates 
 
235 
 
(9) 
 
0 
Other items 
 
163 
 
99 
 
130 
Income tax expense / (benefit) 
 
1,488 
 
1,198 
 
1,345 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
467 
 
Note 8 
Income taxes (continued) 
The 
components 
of 
operating 
profit 
before 
tax, 
and 
the 
differences 
between 
income 
tax 
expense 
reflected 
in 
the 
financial 
statements and the amounts calculated at the Swiss tax rate, are provided in the table on the previous page and explained below. 
 
Component 
Description 
Non-Swiss tax rates 
differing from Swiss tax 
rate 
To the extent that UBS AG profits or losses arise outside Switzerland, the applicable local 
tax rate may differ from the Swiss 
tax rate. This item reflects, for such profits, an adjustment 
from the tax expense that would arise at the 
Swiss tax rate to the 
tax expense that would arise at the applicable local 
tax rate. Similarly, it reflects, for such losses, an adjustment from the tax 
benefit that would arise at the Swiss tax rate 
to the tax benefit that would arise at the 
applicable local tax rate. 
Tax effects of losses not 
recognized 
This item relates to tax losses of entities arising in the 
year that are not recognized as DTAs and where no tax benefit arises in 
relation to those losses. Therefore, the tax benefit calculated 
by applying the local tax rate to those losses 
as described above 
is reversed. 
Previously unrecognized 
tax losses now utilized 
This item relates to taxable profits of the year that are offset by tax losses 
of previous years for which no DTAs were previously 
recorded. Consequently, no current tax or deferred tax expense arises in relation to those taxable 
profits and the tax expense 
calculated by applying the local tax rate on 
those profits is reversed. 
Non-taxable and lower-
taxed income 
This item relates to tax deductions for the year in 
respect of permanent differences. These include deductions in 
respect of 
profits that are either not taxable or are taxable at a lower rate 
of tax than the local tax rate. They also 
include deductions 
made for tax purposes, which are not reflected in the 
accounts. 
Non-deductible expenses 
and additional taxable 
income 
This item relates to additional taxable income for the year 
in respect of permanent differences. These include income 
that is 
recognized for tax purposes by an entity but is not 
included in its profit that is reported in the financial 
statements, as well as 
expenses for the year that are non-deductible (e.g., 
client entertainment costs are not deductible 
in certain locations). 
Adjustments related to 
prior years – current tax 
This item relates to adjustments to current tax expense for 
prior years (e.g., if the tax payable for a year is 
agreed with the tax 
authorities in an amount that differs from the amount previously 
reflected in the financial statements). 
Adjustments related to 
prior years – deferred tax 
This item relates to adjustments to deferred tax positions 
recognized in prior years (e.g., if a tax loss for 
a year is fully 
recognized and the amount of the tax loss agreed with 
the tax authorities is expected to differ from the 
amount previously 
recognized as DTAs in the accounts). 
Change in deferred tax 
recognition 
This item relates to changes in DTAs, including changes in DTAs previously recognized resulting from reassessments of 
expected future taxable profits. It also includes changes 
in temporary differences in the year, for which deferred tax is not 
recognized. 
Adjustments to deferred 
tax balances arising from 
changes in tax rates 
This item relates to remeasurements of DTAs and liabilities recognized due to changes 
in tax rates. These have the effect of 
changing the future tax saving that is expected from tax 
losses or deductible tax differences and therefore the amount 
of 
DTAs recognized or, alternatively, 
changing the tax cost of additional taxable income 
from taxable temporary differences and 
therefore the deferred tax liability. 
Other items 
Other items include other differences between profits or losses 
at the local tax rate and the actual local tax 
expense or 
benefit, including movements in provisions for uncertain 
positions in relation to the current year and other items. 
 
 
Income tax recognized directly in equity 
A net 
tax 
expense of 
USD 258 million 
was recognized 
in 
Other 
comprehensive 
income
 
(2019: 
net 
expense 
of 
USD 327 
million) 
and 
a 
net 
tax 
benefit 
of 
USD
 
1
 
million 
recognized 
in 
Share 
premium 
(2019: benefit of USD 11 million). 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
468 
 
Note 8 
Income taxes (continued) 
Deferred tax assets and liabilities 
UBS 
AG 
has 
gross 
DTAs, 
valuation 
allowances 
and 
recognized 
DTAs 
related 
to 
tax 
loss 
carry-forwards 
and 
deductible 
temporary differences, 
and also 
deferred tax 
liabilities in 
respect 
of 
taxable 
temporary differences, 
as 
shown 
in 
the 
table 
below. 
The valuation 
allowances reflect 
DTAs 
that were 
not recognized 
because, as 
of the 
last remeasurement 
period, management 
did 
not 
consider 
it 
probable 
that 
there 
would 
be 
sufficient 
future 
taxable 
profits 
available
 
to 
utilize 
the 
related 
tax 
loss 
carry
-
forwards and deductible temporary differences. 
Of 
the 
recognized 
DTAs 
as 
of 
31 December 
2020, 
USD 8.8 
billion 
related 
to 
the 
US 
and 
USD 0.4 
billion 
related 
to 
other 
locations 
(as 
of 
31 December 
2019, 
USD 9.3 
billion 
related 
to 
the US and USD 0.2 billion related to other locations). 
The 
recognition of 
DTAs is 
supported by 
forecasts of 
taxable 
profits 
for 
the 
entities 
concerned. 
In 
addition, 
tax 
planning 
opportunities are 
available that 
would result 
in additional 
future 
taxable income and these would be utilized, if necessary. 
As 
of 
31 December 
2020, 
UBS 
AG 
has 
recognized 
DTAs 
of 
USD 138 million 
(31 December 2019: 
USD 75 million) 
in respect 
of entities 
that incurred 
losses in 
either the 
current or 
preceding 
year. 
Deferred 
tax 
liabilities 
are 
recognized 
in 
respect 
of 
investments 
in
 
subsidiaries, 
branches 
and 
associates, 
and 
interests in joint arrangements, except to the extent that UBS AG 
can 
control 
the timing 
of 
the reversal 
of 
the associated 
taxable 
temporary difference and it is 
probable that such will not 
reverse 
in 
the 
foreseeable 
future. 
However, 
as 
of 
31 December 
2020, 
this 
exception 
was 
not 
considered 
to 
apply 
to 
any 
taxable 
temporary differences. 
 
 
USD million 
31.12.20 
31.12.19
1
Deferred tax assets
2
Gross 
Valuation 
allowance 
Recognized 
Gross 
Valuation 
allowance 
Recognized 
Tax loss carry-forwards 
 
14,108 
 
(8,715) 
 
5,393 
 
14,826 
 
(8,861) 
 
5,965 
Temporary differences 
 
4,343 
 
(561) 
 
3,782 
 
4,169 
 
(610) 
 
3,559 
of which: related to real estate costs capitalized for US 
tax 
purposes 
 
2,268 
 
0 
 
2,268 
 
2,219 
 
0 
 
2,219 
of which: related to compensation and benefits 
 
1,112 
 
(173) 
 
939 
 
1,086 
 
(179) 
 
907 
of which: related to trading assets 
 
23 
 
(5) 
 
16 
 
99 
 
(5) 
 
93 
of which: other 
 
940 
 
(383) 
 
558 
 
765 
 
(426) 
 
340 
Total deferred tax assets 
 
18,450 
 
(9,276) 
 
9,174 
 
18,995 
 
(9,471) 
 
9,524 
Deferred tax liabilities 
Goodwill and intangible assets 
 
31 
 
29 
Cash flow hedges 
 
425 
 
156 
Other 
 
102 
 
126 
Total deferred tax liabilities 
 
558 
 
311 
1 Comparative-period information has been restated. Refer to Note 1b for more information. 
2 Less deferred tax liabilities as applicable. 
 
 
As of 
31 December 2020, 
USD 16.3 billion 
of the 
unrecognized 
tax 
losses 
carried 
forward 
related 
to 
the 
US
 
(these 
primarily 
related 
to UBS 
AG’s US 
branch), USD 13.8 
billion related 
to the 
UK 
and 
USD 5.0 
billion 
related 
to 
other 
locations 
(as 
of 
31
 
December 
201
9
, 
USD
 
17
.
8
 
billion 
related 
to 
the 
US, 
USD 14.9 billion related 
to the UK and 
USD 5.0 billion related to 
other locations). 
In 
general, 
US 
federal 
tax 
losses 
incurred 
prior 
to 
31 December 
2017 
can 
be 
carried 
forward 
for 
20 
years. 
However, US federal tax 
losses incurred after 31 
December 2017 
and 
UK 
tax 
losses 
can 
be 
carried 
forward 
indefinitely, although 
the 
utilization 
of 
such 
losses 
is 
limited 
to 
80% 
of 
the 
entity’s 
future 
year 
taxable 
profits 
for 
the 
US 
and 
generally 
to 
25% 
thereof 
for 
the 
UK. 
The 
amounts 
of 
US 
tax 
loss 
carry-forwards 
that are 
included in 
the table 
below are 
based on 
their amount 
for 
federal 
tax 
purposes 
rather 
than 
for 
state 
and 
local 
tax 
purposes. 
 
 
Unrecognized tax loss carry-forwards 
USD million 
31.12.20 
31.12.19 
Within 1 year 
 
146 
 
13 
From 2 to 5 years 
 
638 
 
609 
From 6 to 10 years 
 
13,257 
 
14,712 
From 11 to 20 years 
 
3,858 
 
4,030 
No expiry 
 
17,227 
 
18,364 
Total 
 
35,127 
 
37,728 

469

Balance sheet notes

Note 9

Financial assets at amortized cost and other positions in scope of expected credit loss measurement

The

tables

the

following

pages

provide

information

about

financial

instruments

and

certain

other

credit

lines

that

are

subject to expected credit loss (ECL) requirements

UBS AG’s ECL

disclosure

segments

“ECL

segments”

are

aggregated

portfolios

based

on shared

risk characteristics

and on

the same

similar

rating

methods

applied.

The

key

segments

are

presented in the table below.

›

Refer to Note 20 for more information about

expected credit

loss measurement

Segment

Segment description

Description of credit risk sensitivity

Business division / Group Functions

Private clients with

mortgages

Lending to private clients secured by

owner-occupied real estate and

personal account overdrafts of those

clients

Sensitive to the interest rate environment,

unemployment levels, real estate collateral

values

and other regional aspects

–

Personal & Corporate Banking

–

Global Wealth Management

Real estate financing

Rental or income-producing real estate

financing to private and corporate

clients secured by real estate

Sensitive to GDP developments, the

interest rate environment,

real estate

collateral values

and other regional

aspects

–

Personal & Corporate Banking

–

Global Wealth Management

–

Investment Bank

Large corporate clients

Lending to large corporate and multi-

national clients

Sensitive to GDP developments,

unemployment levels,

seasonality,

business cycles and collateral values

(diverse collateral,

including real estate

and other collateral types)

–

Personal & Corporate Banking

–

Investment Bank

SME clients

Lending to small and medium-sized

corporate clients

Sensitive to GDP developments,

unemployment levels,

the interest rate

environment and, to some extent,

seasonality,

business cycles and collateral

values (diverse collateral,

including real

estate and other collateral types)

–

Personal & Corporate Banking

Lombard

Loans secured by pledges of marketable

securities, guarantees and other forms

of collateral

Sensitive to the market (e.g., changes in

collateral values)

–

Global Wealth Management

Credit cards

Credit card solutions in Switzerland and

the US

Sensitive to unemployment levels

–

Personal & Corporate Banking

–

Global Wealth Management

Commodity trade

finance

Working capital financing of commodity

traders, generally extended on a self-

liquidating transactional basis

Sensitive primarily to the strength of

individual transaction structures and

collateral values (price volatility of

commodities),

as the primary source for

debt service is directly linked to the

shipments financed

–

Personal & Corporate Banking

Financial intermediaries

and hedge funds

Lending to financial institutions and

pension funds, including exposures to

broker-dealers and clearing houses

Sensitive to unemployment levels, the

quality and volatility index changes, equity

market and GDP developments,

regulatory changes and political risk

–

Personal & Corporate Banking

–

Investment Bank

›

Refer to Note 20f for more details regarding sensitivity

 
Consolidated financial statements | UBS AG consolidated financial statements 
470 
 
Note 9 
Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued)
The 
tables below 
and on 
the following 
pages provide 
ECL exposure 
and ECL 
allowance and 
provision 
information about 
financial 
instruments and certain non-financial instruments that are subject to ECL. 
 
USD million 
31.12.20 
Carrying amount
1
ECL allowances 
Financial instruments measured at amortized 
cost 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Cash and balances at central banks 
 
158,231 
 
158,231 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Loans and advances to banks 
 
15,344 
 
15,160 
 
184 
 
0 
 
(16) 
 
(9) 
 
(5) 
 
(1) 
Receivables from securities financing transactions 
 
74,210 
 
74,210 
 
0 
 
0 
 
(2) 
 
(2) 
 
0 
 
0 
Cash collateral receivables on derivative instruments 
 
32,737 
 
32,737 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Loans and advances to customers 
 
380,977 
 
358,396 
 
20,341 
 
2,240 
 
(1,060) 
 
(142) 
 
(215) 
 
(703) 
of which: Private clients with mortgages 
 
148,175 
 
138,769 
 
8,448 
 
959 
 
(166) 
 
(35) 
 
(93) 
 
(39) 
of which: Real estate financing 
 
43,429 
 
37,568 
 
5,838 
 
23 
 
(63) 
 
(15) 
 
(44) 
 
(4) 
of which: Large corporate clients 
 
15,161 
 
12,658 
 
2,029 
 
474 
 
(279) 
 
(27) 
 
(40) 
 
(212) 
of which: SME clients 
 
14,872 
 
11,990 
 
2,254 
 
628 
 
(310) 
 
(19) 
 
(23) 
 
(268) 
of which: Lombard 
 
133,850 
 
133,795 
 
0 
 
55 
 
(36) 
 
(5) 
 
0 
 
(31) 
of which: Credit cards 
 
1,558 
 
1,198 
 
330 
 
30 
 
(38) 
 
(11) 
 
(11) 
 
(16) 
of which: Commodity trade finance 
 
3,269 
 
3,214 
 
43 
 
12 
 
(106) 
 
(5) 
 
0 
 
(101) 
Other financial assets measured at amortized cost 
 
27,219 
 
26,401 
 
348 
 
469 
 
(133) 
 
(34) 
 
(9) 
 
(90) 
of which: Loans to financial advisors 
 
2,569 
 
1,982 
 
137 
 
450 
 
(108) 
 
(27) 
 
(5) 
 
(76) 
Total financial assets measured at amortized cost 
 
688,717 
 
665,135 
 
20,873 
 
2,709 
 
(1,211) 
 
(187) 
 
(229) 
 
(795) 
Financial assets measured at fair value through other comprehensive income 
 
8,258 
 
8,258 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Total on-balance sheet financial assets in scope of ECL requirements 
 
696,976 
 
673,394 
 
20,873 
 
2,709 
 
(1,211) 
 
(187) 
 
(229) 
 
(795) 
Total exposure 
ECL provisions 
Off-balance sheet (in scope of ECL) 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Guarantees 
 
17,081 
 
14,687 
 
2,225 
 
170 
 
(63) 
 
(14) 
 
(15) 
 
(34) 
of which: Large corporate clients 
 
3,710 
 
2,048 
 
1,549 
 
113 
 
(20) 
 
(4) 
 
(5) 
 
(12) 
of which: SME clients 
 
1,310 
 
936 
 
326 
 
48 
 
(13) 
 
(1) 
 
(1) 
 
(11) 
of which: Financial intermediaries and hedge funds 
 
7,637 
 
7,413 
 
224 
 
0 
 
(17) 
 
(7) 
 
(9) 
 
0 
of which: Lombard 
 
641 
 
633 
 
0 
 
8 
 
(2) 
 
0 
 
0 
 
(2) 
of which: Commodity trade finance 
 
1,441 
 
1,416 
 
25 
 
0 
 
(2) 
 
(1) 
 
0 
 
0 
Irrevocable loan commitments 
 
41,372 
 
36,894 
 
4,374 
 
104 
 
(142) 
 
(74) 
 
(68) 
 
0 
of which: Large corporate clients 
 
24,209 
 
20,195 
 
3,950 
 
64 
 
(121) 
 
(63) 
 
(58) 
 
0 
Forward starting reverse repurchase and securities borrowing agreements 
 
3,247 
 
3,247 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Committed unconditionally revocable credit lines 
 
42,077 
 
37,176 
 
4,792 
 
108 
 
(50) 
 
(29) 
 
(21) 
 
0 
of which: Real estate financing 
 
6,328 
 
5,811 
 
517 
 
0 
 
(12) 
 
(5) 
 
(7) 
 
0 
of which: Large corporate clients 
 
4,909 
 
2,783 
 
2,099 
 
27 
 
(9) 
 
(2) 
 
(7) 
 
0 
of which: SME clients 
 
5,827 
 
4,596 
 
1,169 
 
63 
 
(16) 
 
(12) 
 
(4) 
 
0 
of which: Lombard 
 
9,671 
 
9,671 
 
0 
 
0 
 
0 
 
(1) 
 
0 
 
0 
of which: Credit cards 
 
8,661 
 
8,220 
 
430 
 
11 
 
(8) 
 
(6) 
 
(2) 
 
0 
of which: Commodity trade finance 
 
242 
 
242 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Irrevocable committed prolongation of existing loans 
 
3,282 
 
3,277 
 
5 
 
0 
 
(2) 
 
(2) 
 
0 
 
0 
Total off-balance sheet financial instruments and other credit lines 
 
107,059 
 
95,281 
 
11,396 
 
382 
 
(257) 
 
(119) 
 
(104) 
 
(34) 
Total allowances and provisions 
 
(1,468) 
 
(306) 
 
(333) 
 
(829) 
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL 
allowances.

 
471 
 
Note 9 
Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued) 
USD million 
31.12.19 
Carrying amount
1
ECL allowances 
Financial instruments measured at amortized 
cost 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Cash and balances at central banks 
 
107,068 
 
107,068 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Loans and advances to banks 
 
12,379 
 
12,298 
 
80 
 
0 
 
(6) 
 
(4) 
 
(1) 
 
(1) 
Receivables from securities financing transactions 
 
84,245 
 
84,245 
 
0 
 
0 
 
(2) 
 
(2) 
 
0 
 
0 
Cash collateral receivables on derivative instruments 
 
23,289 
 
23,289 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Loans and advances to customers 
 
327,992 
 
310,705 
 
15,538 
 
1,749 
 
(764) 
 
(82) 
 
(123) 
 
(559) 
of which: Private clients with mortgages 
 
132,646 
 
124,063 
 
7,624 
 
959 
 
(110) 
 
(15) 
 
(55) 
 
(41) 
of which: Real estate financing 
 
38,481 
 
32,932 
 
5,532 
 
17 
 
(43) 
 
(5) 
 
(34) 
 
(4) 
of which: Large corporate clients 
 
9,703 
 
9,184 
 
424 
 
94 
 
(117) 
 
(15) 
 
(4) 
 
(98) 
of which: SME clients 
 
11,786 
 
9,817 
 
1,449 
 
521 
 
(303) 
 
(17) 
 
(15) 
 
(271) 
of which: Lombard 
 
112,893 
 
112,796 
 
0 
 
98 
 
(22) 
 
(4) 
 
0 
 
(18) 
of which: Credit cards 
 
1,661 
 
1,314 
 
325 
 
22 
 
(35) 
 
(8) 
 
(14) 
 
(13) 
of which: Commodity trade finance 
 
2,844 
 
2,826 
 
8 
 
10 
 
(81) 
 
(5) 
 
0 
 
(77) 
Other financial assets measured at amortized cost 
 
23,012 
 
21,985 
 
451 
 
576 
 
(143) 
 
(35) 
 
(13) 
 
(95) 
of which: Loans to financial advisors 
 
2,877 
 
2,341 
 
334 
 
202 
 
(109) 
 
(29) 
 
(11) 
 
(70) 
Total financial assets measured at amortized cost 
 
577,985 
 
559,590 
 
16,069 
 
2,326 
 
(915) 
 
(124) 
 
(137) 
 
(655) 
Financial assets measured at fair value through other comprehensive income 
 
6,345 
 
6,345 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Total on-balance sheet financial assets in scope of ECL requirements 
 
584,329 
 
565,935 
 
16,069 
 
2,326 
 
(915) 
 
(124) 
 
(137) 
 
(655) 
Total exposure 
ECL provisions 
Off-balance sheet (in scope of ECL) 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Guarantees 
 
18,142 
 
17,757 
 
304 
 
82 
 
(42) 
 
(8) 
 
(1) 
 
(33) 
of which: Large corporate clients 
 
3,687 
 
3,461 
 
203 
 
24 
 
(10) 
 
(1) 
 
0 
 
(9) 
of which: SME clients 
 
1,180 
 
1,055 
 
67 
 
58 
 
(24) 
 
0 
 
0 
 
(23) 
of which: Financial intermediaries and hedge funds 
 
7,966 
 
7,950 
 
16 
 
0 
 
(5) 
 
(4) 
 
0 
 
0 
of which: Lombard 
 
622 
 
622 
 
0 
 
0 
 
(1) 
 
0 
 
0 
 
(1) 
of which: Commodity trade finance 
 
2,334 
 
2,320 
 
13 
 
0 
 
(1) 
 
(1) 
 
0 
 
0 
Irrevocable loan commitments 
 
27,547 
 
27,078 
 
419 
 
50 
 
(35) 
 
(30) 
 
(5) 
 
0 
of which: Large corporate clients 
 
18,735 
 
18,349 
 
359 
 
27 
 
(27) 
 
(24) 
 
(3) 
 
0 
Forward starting reverse repurchase and securities borrowing agreements 
 
1,657 
 
1,657 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Committed unconditionally revocable credit lines 
 
36,979 
 
35,735 
 
1,197 
 
46 
 
(34) 
 
(17) 
 
(17) 
 
0 
of which: Real estate financing 
 
5,242 
 
4,934 
 
307 
 
0 
 
(16) 
 
(3) 
 
(13) 
 
0 
of which: Large corporate clients 
 
4,274 
 
4,188 
 
69 
 
17 
 
(1) 
 
(1) 
 
0 
 
0 
of which: SME clients 
 
4,787 
 
4,589 
 
171 
 
27 
 
(9) 
 
(8) 
 
(1) 
 
0 
of which: Lombard 
 
7,976 
 
7,975 
 
0 
 
1 
 
0 
 
0 
 
0 
 
0 
of which: Credit cards 
 
7,890 
 
7,535 
 
355 
 
0 
 
(6) 
 
(4) 
 
(2) 
 
0 
of which: Commodity trade finance 
 
344 
 
344 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Irrevocable committed prolongation of existing loans 
 
3,289 
 
3,285 
 
0 
 
4 
 
(3) 
 
(3) 
 
0 
 
0 
Total off-balance sheet financial instruments and other credit lines 
 
87,614 
 
85,513 
 
1,920 
 
182 
 
(114) 
 
(58) 
 
(23) 
 
(33) 
Total allowances and provisions 
 
(1,029) 
 
(181) 
 
(160) 
 
(688) 
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective 
ECL allowances.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
472 
 
Note 9 
Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued) 
Coverage 
ratios are 
calculated 
for 
the 
core loan 
portfolio 
by 
taking 
ECL 
allowances 
and 
provisions 
divided 
by 
the 
gross 
carrying amount of the exposures. 
Core loan exposure is defined 
as 
the 
sum 
of 
Loans 
and 
advances 
to 
customers
 
and 
Loans 
to 
financial advisors
. 
These ratios are influenced by the following key factors: 
–
 
lending 
in 
Switzerland 
includes 
government 
backed 
COVID-
19 loans; 
–
 
L
ombard 
loans 
are 
generally 
secured 
with
 
marketable 
securities 
in 
portfolios 
that 
are, 
as 
a 
rule, 
highly 
diversified, 
with 
strict 
lending 
policies 
that 
are 
intended 
to 
ensure 
that 
credit risk is minimal under most circumstances; 
–
 
mortgage loans to private clients and 
real estate financing are 
controlled 
by 
conservative
 
eligibility 
criteria
,
 
including 
low
 
loan-to-value 
ratios 
and 
strong 
debt 
service 
capabilities; 
for 
example, more than 99% of the aggregated amount of Swiss 
residential mortgage loans would continue to be fully covered 
by 
real 
estate 
collateral 
even 
if 
the 
value 
of 
that 
collateral 
decreased 
by 
20%, 
for 
a 
30% 
reduction, 
more 
than 
98% 
would be covered; 
–
 
the 
amount 
of 
u
nsecured 
retail 
lending
 
(including 
credit 
cards) is insignificant; 
–
 
contractual maturities in the loan portfolio, 
which are a factor 
in 
the 
calculation 
of 
ECLs, 
are 
generally 
short, 
with 
a 
large 
part of 
the loan 
portfolio having 
contractual maturities 
of 12 
months or less; and 
–
 
write-offs 
of ECL 
allowances against 
the gross 
loan 
balances 
when all or part of a financial asset is deemed 
uncollectible or 
forgiven, reduces 
the coverage ratios. 
 
 
 
Coverage ratios for core loan portfolio 
31.12.20 
Gross carrying amount (USD million)
ECL coverage (bps) 
On-balance sheet 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Private clients with mortgages 
 
148,341 
 
138,803 
 
8,540 
 
998 
 
11 
 
2 
 
108 
 
390 
Real estate financing 
 
43,492 
 
37,583 
 
5,883 
 
27 
 
15 
 
4 
 
75 
 
1,414 
Large corporate clients 
 
15,440 
 
12,684 
 
2,069 
 
686 
 
181 
 
21 
 
192 
 
3,089 
SME clients 
 
15,183 
 
12,010 
 
2,277 
 
896 
 
204 
 
16 
 
101 
 
2,991 
Lombard 
 
133,886 
 
133,800 
 
0 
 
86 
 
3 
 
0 
 
0 
 
3,592 
Credit cards 
 
1,596 
 
1,209 
 
342 
 
46 
 
240 
 
91 
 
333 
 
3,488 
Commodity trade finance 
 
3,375 
 
3,219 
 
43 
 
113 
 
315 
 
16 
 
2 
 
8,939 
Other loans and advances to customers 
 
20,722 
 
19,229 
 
1,402 
 
91 
 
29 
 
13 
 
25 
 
3,563 
Loans to financial advisors 
 
2,677 
 
2,009 
 
142 
 
526 
 
404 
 
135 
 
351 
 
1,446 
Total
1
 
384,714 
 
360,547 
 
20,697 
 
3,470 
 
30 
 
5 
 
106 
 
2,247 
Gross exposure (USD million) 
ECL coverage (bps) 
Off-balance sheet 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Private clients with mortgages 
 
6,285 
 
6,083 
 
198 
 
3 
 
7 
 
6 
 
16 
 
197 
Real estate financing 
 
7,056 
 
6,576 
 
481 
 
0 
 
21 
 
9 
 
185 
 
0 
Large corporate clients 
 
32,828 
 
25,026 
 
7,598 
 
205 
 
46 
 
27 
 
92 
 
565 
SME clients 
 
9,121 
 
7,239 
 
1,734 
 
148 
 
40 
 
19 
 
63 
 
779 
Lombard 
 
14,178 
 
14,170 
 
0 
 
8 
 
2 
 
1 
 
0 
 
1,941 
Credit cards 
 
8,661 
 
8,220 
 
430 
 
11 
 
9 
 
8 
 
44 
 
0 
Commodity trade finance 
 
1,683 
 
1,658 
 
25 
 
0 
 
10 
 
8 
 
15 
 
8,279 
Financial intermediaries and hedge funds 
 
7,690 
 
7,270 
 
448 
 
0 
 
26 
 
13 
 
248 
 
166 
 
Other off-balance sheet commitments 
 
16,309 
 
15,792 
 
482 
 
8 
 
12 
 
6 
 
11 
 
12,414 
Total
2
 
103,812 
 
92,034 
 
11,396 
 
382 
 
25 
 
13 
 
91 
 
894 
1 Includes Loans and 
advances to customers 
of USD 382,036 million 
and Loans to financial 
advisors of USD 2,677 
million which are 
presented on the 
balance sheet line Other 
assets measured at 
amortized cost. 
2 Excludes Forward starting reverse repurchase and securities borrowing agreements. 
 
 

 
473 
 
Note 9 
Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued) 
Coverage ratios for core loan portfolio 
31.12.19 
Gross carrying amount (USD million)
ECL coverage (bps) 
On-balance sheet 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Private clients with mortgages 
 
132,756 
 
124,077 
 
7,679 
 
1,000 
 
8 
 
1 
 
72 
 
406 
Real estate financing 
 
38,524 
 
32,937 
 
5,567 
 
21 
 
11 
 
2 
 
62 
 
1,765 
Large corporate clients 
 
9,819 
 
9,199 
 
429 
 
192 
 
119 
 
16 
 
100 
 
5,088 
SME clients 
 
12,089 
 
9,834 
 
1,464 
 
791 
 
251 
 
18 
 
104 
 
3,420 
Lombard 
 
112,915 
 
112,799 
 
0 
 
116 
 
2 
 
0 
 
0 
 
1,566 
Credit cards 
 
1,696 
 
1,322 
 
339 
 
35 
 
205 
 
60 
 
404 
 
3,718 
Commodity trade finance 
 
2,925 
 
2,831 
 
8 
 
87 
 
278 
 
17 
 
3 
 
8,844 
Other loans and advances to customers 
 
18,031 
 
17,788 
 
176 
 
67 
 
29 
 
8 
 
15 
 
5,750 
Loans to financial advisors 
 
2,987 
 
2,370 
 
344 
 
272 
 
366 
 
122 
 
305 
 
2,570 
Total
1
 
331,743 
 
313,158 
 
16,005 
 
2,580 
 
26 
 
4 
 
83 
 
2,436 
Gross exposure (USD million) 
ECL coverage (bps) 
Off-balance sheet 
Total 
Stage 1 
Stage 2 
Stage 3 
Total 
Stage 1 
Stage 2 
Stage 3 
Private clients with mortgages 
 
5,520 
 
5,466 
 
51 
 
2 
 
7 
 
6 
 
100 
 
245 
Real estate financing 
 
6,046 
 
5,715 
 
326 
 
4 
 
29 
 
9 
 
390 
 
0 
Large corporate clients 
 
26,706 
 
26,009 
 
630 
 
67 
 
14 
 
10 
 
59 
 
1,319 
SME clients 
 
6,782 
 
6,407 
 
273 
 
101 
 
53 
 
15 
 
115 
 
2,265 
Lombard 
 
9,902 
 
9,895 
 
0 
 
7 
 
1 
 
0 
 
0 
 
1,403 
Credit cards 
 
7,890 
 
7,535 
 
355 
 
0 
 
8 
 
5 
 
52 
 
0 
Commodity trade finance 
 
2,678 
 
2,664 
 
13 
 
0 
 
5 
 
5 
 
9 
 
2,713 
Financial intermediaries and hedge funds 
 
9,676 
 
9,651 
 
25 
 
0 
 
5 
 
5 
 
71 
 
83 
 
Other off-balance sheet commitments 
 
10,759 
 
10,513 
 
246 
 
0 
 
4 
 
3 
 
34 
 
22,592 
Total
2
 
85,957 
 
83,856 
 
1,920 
 
182 
 
13 
 
7 
 
120 
 
1,822 
1 Includes Loans and 
advances to customers 
of USD 328,756 million 
and Loans to financial 
advisors of USD 2,987 
million which are 
presented on the 
balance sheet line Other 
assets measured at 
amortized cost. 
2 Excludes Forward starting reverse repurchase and securities borrowing agreements.

 
Consolidated financial statements | UBS AG consolidated financial statements 
474 
 
Note 10 
Derivative instruments 
Overview 
Over-the-counter 
(OTC) 
derivative 
contracts 
are 
usually 
traded 
under 
a 
standardized 
International 
Swaps 
and 
Derivatives 
Association 
(ISDA) 
master 
agreement 
between 
UBS 
AG 
and 
its 
counterparties. Terms 
are negotiated directly with counterparties 
and 
the 
contracts 
have 
industry-standard 
settlement 
mechanisms 
prescribed 
by 
ISDA.
 
Regulators 
in 
various 
jurisdictions have begun a 
phased introduction of rules 
requiring 
the 
payment 
and 
collection 
of 
initial 
and 
variation 
margin 
on 
certain 
OTC 
derivative 
contracts, which 
may 
have 
a 
bearing 
on 
their price 
and other 
relevant 
terms. Due 
to challenges 
brought 
on 
by 
COVID-19, 
the 
International 
Organization 
of 
Securities 
Commissions 
(IOSCO) 
has 
extended 
the 
deadline 
for 
the 
completion 
of 
the 
final 
phase-in 
of 
margin 
requirements 
for 
non-centrally cleared derivatives, to 1 September 2022. 
Other 
derivative 
contracts 
are 
standardized 
in 
terms 
of 
their 
amounts 
and 
settlement 
dates, 
and 
are 
bought 
and 
sold 
on 
regulated 
exchanges. 
These 
are 
commonly 
referred 
to 
as 
exchange-traded derivatives (ETD) contracts. 
Exchanges offer the 
benefits of pricing transparency, 
standardized daily settlement of 
changes in value and, consequently, 
reduced credit risk. 
Most 
of 
UBS 
AG’s 
derivative 
transactions 
relate 
to 
sales 
and 
market-making 
activity. 
Sales 
activities 
include 
the 
structuring 
and 
marketing 
of 
derivative 
products 
to 
customers 
to 
enable 
them 
to 
take, 
transfer, 
modify 
or 
reduce 
current 
or 
expected 
risks. Market-making aims to 
directly support the facilitation 
and 
execution 
of 
client 
activity, 
and 
involves 
quoting 
bid 
and 
offer 
prices 
to 
other 
market 
participants 
with 
the 
intention 
of 
generating revenues 
based on 
spread and 
volume. UBS 
AG also 
uses various derivative instruments for hedging purposes. 
›
 
Refer to Notes 16 and 21 for more information 
about derivative 
instruments 
›
 
Refer to Note 25 for more information about 
derivatives 
designated in hedge accounting relationships 
Risks of derivative instruments 
The 
derivative 
financial 
assets 
shown 
on 
the 
balance 
sheet 
can 
be 
an 
important 
component 
of 
UBS 
AG 
’s 
credit 
exposure, 
however, the 
positive replacement 
values related 
to a 
respective 
counterparty are rarely an adequate reflection of UBS AG’s credit 
exposure in its derivatives business with that 
counterparty. This is 
generally the case because, on the one hand, replacement values 
can increase 
over time (potential 
future exposure), while, 
on the 
other hand, 
exposure may 
be mitigated 
by entering 
into master 
netting 
agreements 
and 
bilateral 
collateral 
arrangements. 
Both 
the 
exposure 
measures 
used 
internally 
by 
UBS 
AG 
to 
control 
credit 
risk 
and 
the 
capital 
requirements 
imposed 
by 
regulators 
reflect these additional factors. 
›
 
Refer to Note 22 for more information about 
derivative financial 
assets and liabilities after consideration 
of netting potential 
allowed under enforceable netting arrangements 
›
 
Refer to the “Risk management and control” 
section of this 
report for more information about the risks arising 
from 
derivative instruments 
Contingent collateral features of derivative liabilities 
Certain 
derivative 
instruments 
contain 
contingent 
collateral 
or 
termination 
features 
triggered 
upon 
a 
downgrade 
of 
the 
published 
credit 
ratings 
of 
UBS 
AG 
in 
the 
normal 
course 
of 
business. 
Based 
on 
UBS 
AG’s 
credit 
ratings 
as 
of 
31 
December 
2020, 
USD 0.0 billion, USD 0.3 billion and 
USD 0.8 billion would 
have 
been 
required 
for 
contractual 
obligations 
related 
to 
OTC 
derivatives 
in 
the 
event 
of 
a 
one-notch, 
two-notch 
and 
three-
notch 
reduction 
in 
long-term 
credit 
ratings, 
respectively. 
In 
evaluating 
UBS 
AG’s 
liquidity 
requirements, 
UBS 
AG 
considers 
additional 
collateral 
or 
termination 
payments 
that 
would 
be 
required 
in 
the 
event 
of 
a 
reduction 
in 
UBS 
AG’s 
long-term 
credit ratings, and 
a corresponding reduction 
in UBS AG’s short-
term ratings. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
475 
 
Note 10 
Derivative instruments (continued) 
Derivative instruments
 
31.12.20 
31.12.19 
USD billion 
Derivative 
financial 
assets 
Notional 
amounts 
related to 
derivative 
financial 
assets
2
Derivative 
financial 
liabilities 
Notional 
amounts 
related to 
derivative 
financial 
liabilities
2
Other 
notional 
amounts
2,3
Derivative 
financial 
assets 
Notional 
amounts 
related to 
derivative 
financial 
assets
2
Derivative 
financial 
liabilities 
Notional 
amounts 
related to 
derivative 
financial 
liabilities
2
Other 
notional 
amounts
2,3
Interest rate contracts 
 
50.9 
 
928.0 
 
43.9 
 
880.4 
 
11,291.5 
 
42.6 
 
1,020.2 
 
36.6 
 
975.2 
 
11,999.2 
of which: forward contracts (OTC)
1
 
0.0 
 
19.8 
 
0.4 
 
21.9 
 
2,602.5 
 
0.0 
 
16.3 
 
0.3 
 
19.6 
 
3,136.8 
of which: swaps (OTC) 
 
40.8 
 
407.0 
 
30.9 
 
364.8 
 
8,105.2 
 
34.3 
 
454.7 
 
26.2 
 
402.9 
 
8,086.0 
of which: options (OTC) 
 
10.1 
 
447.5 
 
12.5 
 
460.5 
 
8.1 
 
464.8 
 
10.0 
 
486.1 
of which: futures (ETD) 
 
480.6 
 
546.9 
of which: options (ETD) 
 
0.0 
 
53.6 
 
0.0 
 
33.1 
 
103.3 
 
0.0 
 
84.4 
 
0.0 
 
66.6 
 
229.5 
Credit derivative contracts 
 
2.4 
 
57.6 
 
2.9 
 
64.8 
 
2.0 
 
70.2 
 
3.0 
 
69.9 
of which: credit default swaps (OTC) 
 
2.2 
 
53.6 
 
2.6 
 
62.3 
 
1.7 
 
65.0 
 
2.2 
 
66.0 
of which: total return swaps (OTC) 
 
0.1 
 
1.9 
 
0.3 
 
2.5 
 
0.3 
 
2.0 
 
0.8 
 
3.3 
Foreign exchange contracts 
 
68.7 
 
2,951.2 
 
70.5 
 
2,820.4 
 
1.4 
 
52.5 
 
3,173.6 
 
54.0 
 
2,993.8 
 
1.2 
of which: forward contracts (OTC) 
 
27.3 
 
779.2 
 
29.0 
 
853.3 
 
22.4 
 
935.5 
 
23.4 
 
966.6 
of which: swaps (OTC) 
 
34.3 
 
1,727.3 
 
34.4 
 
1,567.3 
 
22.8 
 
1,573.2 
 
23.8 
 
1,418.5 
of which: options (OTC) 
 
7.1 
 
440.9 
 
7.1 
 
394.7 
 
7.3 
 
660.9 
 
6.8 
 
604.9 
Equity contracts 
 
34.8 
 
449.6 
 
41.2 
 
581.3 
 
91.3 
 
22.8 
 
420.3 
 
25.5 
 
534.5 
 
122.1 
of which: swaps (OTC) 
 
6.4 
 
89.4 
 
9.8 
 
108.4 
 
4.0 
 
81.3 
 
5.5 
 
96.3 
of which: options (OTC) 
 
7.0 
 
87.1 
 
10.9 
 
146.2 
 
5.0 
 
88.6 
 
6.8 
 
144.1 
of which: futures (ETD) 
 
67.9 
 
84.9 
of which: options (ETD) 
 
10.7 
 
273.1 
 
11.3 
 
326.8 
 
23.5 
 
7.2 
 
250.4 
 
7.8 
 
294.1 
 
37.2 
of which: agency transactions (ETD)
4
 
10.7 
 
9.1 
 
6.6 
 
5.4 
Commodity contracts 
 
2.2 
 
57.8 
 
2.0 
 
49.7 
 
10.1 
 
1.8 
 
56.1 
 
1.7 
 
60.0 
 
12.6 
of which: swaps (OTC) 
 
0.5 
 
17.7 
 
0.8 
 
18.0 
 
0.4 
 
13.8 
 
0.6 
 
15.1 
of which: options (OTC) 
 
1.0 
 
23.5 
 
0.7 
 
17.8 
 
1.0 
 
27.4 
 
0.4 
 
23.6 
of which: futures (ETD) 
 
9.3 
 
12.0 
of which: forward contracts (ETD) 
 
0.0 
 
8.0 
 
0.0 
 
6.3 
 
0.0 
 
5.9 
 
0.0 
 
4.9 
Loan commitments 
measured at FVTPL (OTC)
5
 
0.0 
 
10.2 
 
0.0 
 
7.1 
Unsettled purchases of non-derivative 
financial instruments
6
 
0.3 
 
18.3 
 
0.2 
 
10.0 
 
0.1 
 
16.6 
 
0.1 
 
6.9 
Unsettled sales of non-derivative 
financial instruments
6
 
0.2 
 
17.2 
 
0.3 
 
12.9 
 
0.1 
 
15.4 
 
0.1 
 
9.7 
Total derivative instruments, 
based on IFRS netting
7
 
159.6 
 
4,479.6 
 
161.1 
 
4,429.7 
 
11,394.4 
 
121.8 
 
4,772.4 
 
120.9 
 
4,657.0 
 
12,135.1 
1 Includes certain 
forward starting repurchase 
and reverse repurchase 
agreements that are 
classified as measured 
at fair value 
through profit or 
loss and are 
recognized within derivative 
instruments. The 
notional 
amounts related to these 
instruments were previously 
presented in the former 
Note 34 under Forward 
starting transactions (refer 
to the “Consolidated 
financial statements” section 
of the Annual Report 
2019 for 
more information). Starting 
with this report, 
the presentation of 
these notionals has 
been aligned with 
the fair values 
presented in this 
table and prior 
periods have been 
amended to ensure 
comparability. 
2 In 
cases where derivative 
financial instruments 
are presented on 
a net basis 
on the balance 
sheet, the respective 
notional amounts 
of the netted 
derivative financial 
instruments are still 
presented on a 
gross basis. 
3 Other notional amounts 
relate to derivatives 
that are cleared 
through either a 
central counterparty or 
an exchange. The 
fair value of 
these derivatives is 
presented on the 
balance sheet net 
of the corresponding 
cash margin under 
Cash collateral receivables 
on derivative instruments 
and Cash collateral 
payables on derivative 
instruments and was 
not material for 
all periods presented. 
4 Notional amounts 
of exchange-
traded agency 
transactions and 
OTC-cleared transactions 
entered into on 
behalf of clients 
are not disclosed 
as they 
have a significantly 
different risk profile. 
5 These 
notional amounts relate 
to derivative 
loan 
commitments that were 
previously presented in 
the former Note 34 
under loan commitments 
measured at fair 
value (refer 
to the “Consolidated 
financial statements” section 
of the Annual 
Report 2019 
for more 
information). Starting with this 
report, the presentation of 
these notionals has been 
aligned with the fair 
values of the derivative 
loan commitments presented 
in this table and 
prior periods have been 
amended to 
ensure 
comparability. 
6 
Changes 
in 
the 
fair 
value 
of 
purchased 
and 
sold 
non-derivative 
financial 
instruments 
between 
trade 
date 
and 
settlement 
date 
are 
recognized 
as 
derivative 
financial 
instruments. 
7 Derivative financial 
assets and 
liabilities are 
presented net 
on the 
balance sheet 
if UBS 
AG has 
the unconditional 
and legally 
enforceable right 
to offset 
the recognized 
amounts, both 
in the 
normal course 
of 
business and in the event of default, 
bankruptcy or insolvency of the entity 
and all of the counterparties, 
and intends either to settle on a 
net basis or to realize the asset 
and settle the liability simultaneously. 
Refer 
to Note 22 for more information on netting arrangements. 
 
On a notional amount basis, 
approximately 50% of OTC 
interest 
rate 
contracts 
held 
as 
of 
31 
December 
2020
 
(
31 
December 
2019: 
54%) mature 
within one 
year, 
30% (31 
December 2019: 
28%) 
within 
one 
to 
five 
years 
and 
20% 
(31 
December 
2019: 
18%) 
after 
five 
years. 
Notional
 
amounts
 
of 
interest 
rate 
contracts 
cleared 
through 
either 
a 
central 
counterparty 
or 
an 
exchange 
that are 
legally 
settled 
on 
a 
daily 
basis 
are 
presented 
under 
Other 
notional 
amounts
 
in 
the 
table 
above 
and 
are 
categorized 
into 
maturity 
buckets 
on 
the 
basis 
of 
contractual 
maturities of the cleared underlying derivative contracts. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
476 
 
 
Note 11 
Financial assets measured at fair value through other comprehensive income 
USD million 
31.12.20 
31.12.19 
Financial assets measured at fair value through other comprehensive income
1
Debt instruments 
Government and government agencies 
 
8,155 
 
6,162 
of which: USA 
 
7,727 
 
5,814 
Banks 
 
103 
 
178 
Corporates and other 
 
0 
 
4 
Total financial assets measured at fair value through other comprehensive income 
 
8,258 
 
6,345 
Unrealized gains, before tax 
 
204 
 
41 
Unrealized (losses), before tax 
 
(4) 
 
(25) 
Net unrealized gains / (losses), before tax 
 
200 
 
16 
Net unrealized gains / (losses), after tax 
 
151 
 
15 
1 Refer to Note 21c for more information about product type and fair value hierarchy categorization. Refer also to Note 9 and 
Note 20 for more information about expected credit loss measurement. 
 
 
 
 
Note 12 
Property, equipment and software 
At historical cost less accumulated depreciation 
USD million 
Owned 
properties 
Leased 
properties
1
Leasehold 
improve- 
ments 
IT hardware and 
communication 
equipment 
Internally 
generated 
software 
Purchased 
software 
Other 
machines 
and 
equipment 
Projects in 
progress 
2020 
2019 
Historical cost 
Balance at the beginning of the year 
 
6,988 
 
3,630 
 
2,917 
 
963 
 
5,817 
 
302 
 
768 
 
943 
 
22,329 
 
21,365 
Additions 
 
25 
 
401
2 
 
36 
 
90 
 
156 
 
24 
 
18 
 
1,239 
 
1,989 
 
1,740 
Disposals / write-offs
3
 
(315) 
 
(8) 
 
(169) 
 
(155) 
 
(133) 
 
(46) 
 
(41) 
 
0 
 
(867) 
 
(554) 
Reclassifications
4
 
(469) 
 
0 
 
208 
 
8 
 
937 
 
1 
 
30 
 
(1,305) 
 
(590) 
 
(391) 
Foreign currency translation 
 
633 
 
68 
 
84 
 
26 
 
46 
 
6 
 
31 
 
30 
 
924 
 
169 
Balance at the end of the year 
 
6,863 
 
4,091 
 
3,077 
 
931 
 
6,824 
 
287 
 
806 
 
907 
 
23,785 
 
22,329 
Accumulated depreciation 
Balance at the beginning of the year 
 
4,074 
 
481 
 
1,729 
 
710 
 
2,735 
 
233 
 
541 
 
0 
 
10,503 
 
9,623 
Depreciation 
 
152 
 
512 
 
226 
 
92 
 
703 
 
30 
 
64 
 
0 
 
1,779 
 
1,542 
Impairment
5
 
0 
 
4 
 
1 
 
0 
 
67 
 
0 
 
0 
 
0 
 
72 
 
34 
Disposals / write-offs
3
 
(199) 
 
(3) 
 
(164) 
 
(155) 
 
(126) 
 
(46) 
 
(41) 
 
0 
 
(735) 
 
(533) 
Reclassifications
4
 
(332) 
 
0 
 
6 
 
0 
 
0 
 
0 
 
0 
 
0 
 
(328) 
 
(248) 
Foreign currency translation 
 
372 
 
26 
 
69 
 
21 
 
20 
 
6 
 
22 
 
0 
 
535 
 
86 
Balance at the end of the year 
 
4,067 
 
1,019 
 
1,868 
 
668 
 
3,398 
 
222 
 
585 
 
0 
 
11,827 
 
10,503 
Net book value 
Net book value at the beginning of the 
year 
 
2,914 
 
3,149 
 
1,188 
 
254 
 
3,082 
 
69 
 
227 
 
943 
 
11,826 
 
11,742 
Net book value at the end of the year 
 
2,796 
 
3,072 
 
1,209 
 
264 
 
3,425 
 
65 
 
220 
 
907
6 
 
11,958 
 
11,826 
1 Represents right-of-use assets recognized by UBS 
AG as lessee. Includes immaterial leased 
IT equipment. The total cash outflow 
for leases during 2020 was USD 
652 million (2019: USD 614 million). 
Interest expense on lease liabilities is included 
within Interest expense from financial instruments 
measured at amortized cost and Lease 
liabilities are included within Other financial 
liabilities measured 
at amortized 
cost. Refer 
to Notes 
3 and 
19a, respectively. 
Also refer 
to Note 
1 for 
more information 
about the 
nature of 
UBS AG’s 
leasing activities. 
2 In 
2020, right-of-use 
assets included 
the 
Additions from sale-and-leaseback transactions, from 
which UBS AG recognized net gains of 
USD 140 million, included within Other income. 
Refer to Note 5. 
3 Includes write-offs of fully depreciated 
assets. 
4 The total net reclassification 
amount for the respective periods represents 
reclassifications to Properties and other 
non-current assets held for sale. 
5 Impairment charges recorded in 2020 
generally relate 
to assets 
that are 
no longer 
used for 
which the 
recoverable amount 
based on 
a value 
in use 
approach was 
determined to 
be zero. 
Includes the 
impairment of 
internally generated 
software resulting 
from a 
decision in 
the fourth 
quarter of 
2020 to 
not proceed 
with an 
internal business 
transfer from 
UBS Switzerland 
AG to 
UBS AG. 
6 Consists of 
USD 762 
million related 
to 
internally generated software, USD 81 million related to Leasehold improvements and USD 
63 million related to Owned properties. 
 
 
 

 
 
477 
 
Note 13 
Goodwill and intangible assets 
Introduction 
UBS 
AG performs 
an 
impairment 
test 
on 
its 
goodwill 
assets 
on 
an annual basis or when indicators of impairment exist. 
UBS 
AG 
considers 
Asset 
Management 
and 
the 
Investment 
Bank, 
as 
they 
are 
reported 
in 
Note 
2a, 
as 
separate 
cash-
generating 
units
 
(CGUs)
, 
as 
that 
is 
the 
level 
at 
which 
the 
performance 
of 
investments 
(and 
the 
related 
goodwill) 
is 
reviewed and 
assessed by 
management. Given 
that a 
significant 
amount 
of 
goodwill 
in 
Global 
Wealth 
Management 
relates 
to 
the PaineWebber 
acquisition in 2000, 
which mainly affected 
the 
Americas 
portion 
of 
the 
business, 
this 
goodwill 
remains 
separately monitored 
by the 
Americas, despite 
the formation 
of 
Global 
Wealth 
Management 
in 
2018. 
Accordingly, 
goodwill 
for 
Global 
Wealth 
Management 
is 
separately 
considered 
for 
impairment at the level of 
two CGUs: Americas; and Switzerland 
and International (consisting of EMEA, Asia Pacific and Global). 
The 
impairment 
test 
is 
performed 
for 
each 
CGU 
to 
which 
goodwill 
is 
allocated 
by 
comparing 
the 
recoverable 
amount, 
based 
on 
its 
value
 
in
 
use, 
wit
h 
the 
carrying 
amount 
of 
the 
respective 
CGU. 
An 
impairment 
charge 
is 
recognized 
if 
the 
carrying amount exceeds the recoverable amount. 
As 
of 
31 December 
2020, 
total 
goodwill 
recognized 
on 
the 
balance sheet 
was USD 6.2 
billion, of which 
USD 3.7 billion was 
carried 
by 
the 
Global 
Wealth 
Management 
Americas 
CGU, 
USD 1.2 
billion 
was 
carried 
by the 
Global 
Wealth 
Management 
Switzerland 
and 
International
 
CGU
,
 
and 
USD
 
1.2
 
billion 
was 
carried 
by 
Asset 
Management. 
The 
Investment 
Bank 
CGU 
had 
no 
goodwill. 
Based 
on 
the 
impairment 
testing 
methodology 
described below, 
UBS AG 
concluded that 
the goodwill 
balances 
as 
of 
31
 
December 
20
20
 
allocated 
to 
these 
CGUs
 
are 
not 
impaired. 
Methodology for goodwill impairment testing 
The 
recoverable 
amounts 
are 
determined 
using 
a 
discounted 
cash 
flow 
model, 
which 
has 
been 
adapted 
to 
use 
inputs 
that 
consider 
features 
of 
the 
banking 
business 
and 
its 
regulatory 
environment. 
The 
recoverable 
amount 
of 
a 
CGU 
is 
the 
sum 
of 
the 
discounted 
earnings 
attributable 
to 
shareholders 
from 
the 
first three forecast 
years and the terminal 
value, adjusted for the 
effect 
of the 
capital assumed 
to be 
needed over 
the next 
three 
years 
and 
to 
support 
growth 
beyond 
that 
period. 
The 
terminal 
value, 
which 
covers 
all 
periods 
beyond 
the 
third 
year, 
is 
calculated 
on 
the 
basis 
of 
the 
forecast 
of 
third-year 
profit, 
the 
discount 
rate 
and 
the 
long-term 
growth 
rate, 
as 
well 
as 
the 
implied perpetual capital growth. 
The 
carrying 
amou
nt 
for 
each 
CGU 
is 
determined 
by 
reference 
to 
the 
Group’s 
equity 
attribution 
framework. 
Within 
that framework, which 
is described in 
the “Capital, liquidity 
and 
funding, 
and 
balance 
sheet
” 
section 
of 
this 
report, 
UBS 
attributes 
equity 
to 
the 
businesses 
on 
the 
basis 
of 
their 
risk-
weighted 
assets 
and 
leverage 
ratio 
denominator 
(both 
metrics 
include 
resource 
allocations 
from 
Group 
Functions 
to 
the 
business divisions), 
their goodwill 
and their 
intangible assets, 
as 
well as attributed equity related to certain CET1 deduction items. 
The 
framework 
is 
primarily 
used 
for 
the 
purpose 
of 
measuring 
the 
performance 
of 
the 
businesses 
and 
includes 
certain 
management 
assumptions. 
Attributed 
equity 
equals 
the 
capital 
that 
a 
CGU 
requires 
to 
conduct 
its 
business 
and 
is 
currently 
considered 
a 
reasonable 
approximation 
of 
the 
carrying 
amount 
of the 
CGUs. The 
attributed equity methodology 
is aligned 
with 
the business planning process, the inputs from which 
are used in 
calculating the recoverable amounts of the respective CGU. 
›
 
Refer to the “Capital, liquidity and funding, 
and balance sheet” 
section of this report for more information about 
the equity 
attribution framework 
Assumptions 
Valuation 
parameters 
used 
within 
UBS 
AG’s 
impairment 
test 
model 
are 
linked 
to 
external 
market 
information, 
where 
applicable. 
The 
model 
used 
to 
determine 
the 
recoverable 
amount 
is 
most 
sensitive 
to 
changes 
in 
the 
forecast 
earnings 
available to shareholders in years 
one to three, to changes 
in the 
discount rates and to 
changes in the long-term growth 
rate. The 
applied 
long-term growth 
rate is 
based on 
long-term economic 
growth rates 
for different 
regions worldwide. 
Earnings available 
to 
shareholders 
are 
estimated 
on 
the 
basis 
of 
forecast 
results, 
which 
are 
part 
of 
the 
business 
plan 
approved 
by 
the 
Board 
of 
Directors. 
The discount 
rates are 
determined by 
applying a 
capital asset 
pricing 
model-based 
approach, 
as 
well 
as 
considering 
quantitative 
and 
qualitative 
inputs 
from 
both 
internal 
and 
external analysts and the 
view of management. In 
addition, they 
take 
into 
account 
regional 
differences 
in 
risk-free 
rates 
at 
the 
level 
of 
individual 
CGUs. 
Consistently, 
long-term 
growth 
rates 
are 
determined 
based 
on 
nominal 
or 
real 
GDP 
growth 
rate 
forecasts, depending on the region. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
478 
 
Note 13 
Goodwill and intangible assets (continued)
Key assumptions 
used to determine 
the recoverable 
amounts 
of eac 
h 
CGU are 
tested 
for 
sensitivity 
by applying 
a reasonably 
possible 
change 
to 
those 
assumptions. 
Forecast 
earnings 
available 
to 
shareholders 
were 
changed 
by 
20%, 
the 
discount 
rates were changed 
by 1.5 percentage 
points and the long 
-term 
growth 
rates 
were 
changed 
by 
0.75 percentage 
points. 
Under 
all 
scenarios, 
reasonably 
possible 
changes 
in 
key 
assumptions 
did not 
result in 
an impairment 
of goodwill 
or intangible 
assets 
reported 
by 
Global 
Wealth 
Management 
Americas, 
Global 
Wealth 
Management 
Switzerland 
and 
International, 
and 
Asset 
Management. 
If 
the 
estimated 
earnings 
and 
other 
assumptions 
in 
future 
periods deviate 
from the 
current outlook, 
the value 
of goodwill 
attributable 
to 
Global 
Wealth 
Management 
Americas, 
Global 
Wealth 
Management 
Switzerland 
and 
International, 
and 
Asset 
Management may 
become impaired 
in the 
future, giving 
rise to 
losses 
in 
the income 
statement. Recognition 
of any 
impairment 
of 
goodwill 
would 
reduce 
IFRS 
equity 
and 
net 
profit. 
It 
would 
not affect cash flows and, as goodwill is required to be deducted 
from 
capital 
under 
the 
Basel 
III 
capital 
framework, 
no 
effect 
would be expected on UBS AG’s capital ratios. 
 
 
Discount and growth rates 
Discount rates 
Growth rates 
In % 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Global Wealth Management Americas 
 
9.5 
 
9.5 
 
5.1 
 
4.2 
Global Wealth Management Switzerland and International 
 
8.5 
 
8.5 
 
3.7 
 
3.4 
Asset Management 
 
8.5 
 
9.0 
 
3.5 
 
3.0 
Investment Bank 
 
11.0 
 
11.0 
 
4.8 
 
4.0 
 
 
Goodwill 
Intangible assets 
USD million 
Total 
Infrastructure
1
Customer 
relationships, 
contractual 
rights and other 
Total 
2020 
2019 
Historical cost 
Balance at the beginning of the year 
 
6,272 
 
760 
 
788 
 
1,548 
 
7,820 
 
8,018 
Additions 
 
147
2 
 
147 
 
147 
 
11 
Disposals 
 
(158)
3 
 
(158) 
 
(11) 
Write-offs 
 
(35) 
 
(35) 
 
(35) 
 
(185) 
Foreign currency translation 
 
69 
 
22 
 
22 
 
91 
 
(12) 
Balance at the end of the year 
 
6,182 
 
760 
 
922 
 
1,683 
 
7,865 
 
7,820 
Accumulated amortization and impairment 
Balance at the beginning of the year 
 
730 
 
621 
 
1,351 
 
1,351 
 
1,371 
Amortization 
 
30 
 
25 
 
55 
 
55 
 
65 
Impairment
4
 
2 
 
2 
 
2 
 
0 
Disposals 
 
0 
 
(8) 
Write-offs 
 
(35) 
 
(35) 
 
(35) 
 
(75) 
Foreign currency translation 
 
11 
 
11 
 
11 
 
(2) 
Balance at the end of the year 
 
760 
 
624 
 
1,385 
 
1,385 
 
1,351 
Net book value at the end of the year 
 
6,182 
 
0 
 
298 
 
298 
 
6,480 
 
6,469 
1 Consists of the branch network intangible 
asset recognized in connection with the 
acquisition of PaineWebber 
Group, Inc. 
2 Relates to the establishment of a 
banking partnership with Banco do Brasil. 
Refer to 
Note 29 
for more 
information. 
3 Relates 
to the 
sale of 
a majority 
stake in 
Fondcenter AG. 
Refer to 
Note 29 
for more 
information. 
4 Impairment 
charges recorded 
in 2020 
relate to 
assets for 
which the 
recoverable amount was determined considering their value in use (recoverable amount of 
the impaired intangible assets in 2020 was USD 5 million). 

479

Note 13

Goodwill and intangible assets (continued)

The table below presents goodwill and intangible assets by CGU for the year ended 31 December 2020.

USD million

Global Wealth

Management

Americas

Global Wealth

Management

Switzerland and

International

Asset

Management

Investment

Bank

Group Functions

Total

Goodwill

Balance at the beginning of the year

3,719

1,198

1,354

6,272

Additions

Disposals

(158)

Foreign currency translation

Balance at the end of the year

3,724

1,233

1,226

6,182

Intangible assets

Balance at the beginning of the year

197

Additions

147

Disposals

Amortization

(36)

(12)

(4)

(55)

Impairment

(2)

Foreign currency translation

(9)

Balance at the end of the year

161

298

The table below presents estimated aggregated amortization expenses for intangible assets.

USD million

Intangible assets

Estimated, aggregated amortization expenses for:

2021

2022

2023

2024

2025

Thereafter

160

Not amortized due to indefinite useful life

Total

298

Consolidated financial statements | UBS AG consolidated financial statements

480

Note 14

Other assets

a) Other financial assets measured at amortized cost

USD million

31.12.20

31.12.19

Debt securities

18,801

14,141

of which: government bills / bonds

9,789

8,492

Loans to financial advisors

2,569

2,877

Fee-

and commission-related receivables

2,014

1,520

Finance lease receivables

1,447

1,444

Settlement and clearing accounts

614

587

Accrued interest income

592

742

Other

1,182

1,701

Total other financial assets measured at amortized cost

27,219

23,012

b) Other non-financial assets

USD million

31.12.20

31.12.19

Precious metals and other physical commodities

6,264

4,597

Bail deposit

1,418

1,293

Prepaid expenses

731

687

VAT and other tax receivables

392

436

Properties and other non-current assets held for sale

246

199

Other

323

335

Total other non-financial assets

9,374

7,547

1 Refer to item 1 in Note 18b for more information.

Note 15

Amounts due to banks, customer deposits, and funding from UBS Group AG and its subsidiaries

a) Amounts due to banks and customer deposits

USD million

31.12.20

31.12.19

Amounts due to banks

11,050

6,570

Customer deposits

527,929

450,591

of which: demand deposits

237,604

176,972

of which: retail savings / deposits

220,898

168,581

of which: time deposits

42,457

63,659

of which: fiduciary deposits

26,970

41,378

Total amounts due to banks and customer deposits

538,979

457,161

Customer

deposits

increased

USD 77

billion,

mainly

Switzerland

and

the

Americas,

which

USD 50

billion

was

Global

Wealth Management and USD 27 billion

in Personal & Corporate Banking, as

a result of clients holding

higher levels of cash, as

well

as currency effects. Demand deposits and retail savings / deposits together increased by USD 113 billion, partly offset by decreases of

USD 36 billion in time deposits and fiduciary deposits.

b) Funding from UBS Group AG and its subsidiaries

USD million

31.12.20

31.12.19

Senior unsecured debt that contributes to total loss-absorbing

capacity (TLAC)

36,611

30,105

Senior unsecured debt other than TLAC

2,939

3,389

High-trigger loss-absorbing additional tier 1 capital instruments

11,854

11,958

Low-trigger loss-absorbing additional tier 1 capital instruments

2,575

2,415

Total

53,979

47,866

1 UBS AG has also recognized funding from UBS Group AG and its subsidiaries that is designated at fair value.

Refer to Note 19b for more information.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
481 
 
Note 16 
Debt issued designated at fair value 
USD million 
31.12.20 
31.12.19 
Issued debt instruments 
Equity-linked
1
 
41,069 
 
41,722 
Rates-linked 
 
11,038 
 
16,318 
Credit-linked 
 
1,933 
 
1,916 
Fixed-rate 
 
3,604 
 
4,636 
Commodity-linked 
 
1,497 
 
1,567 
Other 
 
726 
 
432 
Total debt issued designated at fair value 
 
59,868 
 
66,592 
of which: issued by UBS AG with original maturity greater than one 
year
2
 
46,427 
 
51,031 
of which: life-to-date own credit (gain) / loss 
 
233 
 
82 
1 Includes investment fund unit-linked 
instruments issued. 
2 Issued by the legal entity 
UBS AG. Based on 
original contractual maturity without 
considering any early redemption 
features. 100% of 
the balance as 
of 31 December 2020 was unsecured (31 December 2019: more than 99% of the balance was unsecured). 
 
As 
of 
31 
December 
2020
 
and 
31 
December 
2019
, 
the 
contractual 
redemption 
amount 
at 
maturity 
of 
debt 
issued 
designated at fair 
value through profit 
or loss was not 
materially 
different from the carrying amount. 
The 
table 
below 
shows 
the 
residual 
contractual 
maturity 
of 
the carrying amount of 
debt issued designated at fair 
value, split 
between 
fixed-rate 
and 
floating-rate 
instruments 
based 
on 
the 
contractual 
terms, 
and 
does 
not 
consider 
any 
early 
redemption 
features. Interest rate ranges for future interest 
payments related 
to debt issued designated at fair value have 
not been included in 
the 
table below, 
as the 
majority of 
the debt 
instruments issued 
are 
structured 
products 
and 
therefore 
the 
future 
interest 
payments 
are 
highly 
dependent 
upon 
the 
embedded 
derivative 
and prevailing 
market conditions 
at the 
point in 
time that 
each 
interest payment is made. 
›
 
Refer to Note 24 for maturity information 
on an undiscounted 
cash flow basis 
 
 
Contractual maturity of carrying amount 
USD million 
2021 
2022 
2023 
2024 
2025 
2026–2030 
Thereafter 
Total 
31.12.20 
Total 
31.12.19 
UBS AG
1
Non-subordinated debt 
Fixed-rate 
 
4,144 
 
1,473 
 
1,112 
 
512 
 
318 
 
227 
 
1,623 
 
9,409 
 
10,368 
Floating-rate 
 
18,145 
 
8,758 
 
5,915 
 
1,727 
 
6,454 
 
6,058 
 
2,471 
 
49,528 
 
55,299 
Subtotal 
 
22,289 
 
10,231 
 
7,027 
 
2,239 
 
6,772 
 
6,286 
 
4,094 
 
58,937 
 
65,668 
Other subsidiaries
2
Non-subordinated debt 
Fixed-rate 
 
88 
 
7 
 
0 
 
0 
 
0 
 
422 
 
22 
 
539 
 
520 
Floating-rate 
 
41 
 
185 
 
126 
 
0 
 
0 
 
0 
 
39 
 
392 
 
404 
Subtotal 
 
129 
 
192 
 
126 
 
0 
 
0 
 
422 
 
61 
 
931 
 
924 
Total 
 
22,418 
 
10,423 
 
7,153 
 
2,239 
 
6,772 
 
6,708 
 
4,155 
 
59,868 
 
66,592 
1 Comprises instruments issued by the legal entity UBS AG. 
2 Comprises instruments issued by subsidiaries of UBS AG. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
482 
 
Note 17 Debt issued measured at amortized cost 
USD million 
31.12.20 
31.12.19 
Certificates of deposit 
 
15,680 
 
5,190 
Commercial paper 
 
25,472 
 
14,413 
Other short-term debt 
 
5,515 
 
2,235 
Short-term debt
1
 
46,666 
 
21,837 
Senior unsecured debt 
 
18,483 
 
22,356 
of which: issued by UBS AG with original maturity greater than one 
year
2
 
18,464 
 
22,349 
Covered bonds 
 
2,796 
 
2,633 
Subordinated debt 
 
7,744 
 
7,431 
of which: low-trigger loss-absorbing tier 2 capital instruments 
 
7,201 
 
6,892 
of which: non-Basel III-compliant tier 2 capital instruments 
 
543 
 
540 
Debt issued through the Swiss central mortgage institutions 
 
9,660 
 
8,574 
Other long-term debt 
 
3 
 
4 
Long-term debt
3
 
38,685 
 
40,998 
Total debt issued measured at amortized cost
4
 
85,351 
 
62,835 
1 Debt 
with an 
original contractual 
maturity of 
less than 
one year. 
2 Issued 
by the 
legal entity 
UBS AG. 
Based on 
original contractual 
maturity without 
considering any 
early redemption 
features. 
As of 
31 December 2020, 100% of the balance 
was unsecured (31 December 
2019: 100% of the balance 
was unsecured). 
3 Debt with an original 
maturity greater than or equal to 
one year. The 
classification of debt 
issued into short-term and long-term does not consider any early redemption features. 
4 Net of bifurcated embedded derivatives, the fair value of which 
was not material for the periods presented. 
 
 
UBS 
AG 
uses 
interest 
rate 
and 
foreign 
exchange 
derivatives 
to 
manage 
the 
risks 
inherent 
in 
certain 
debt 
instruments 
held 
at 
amortized 
cost. 
In 
some 
cases, 
UBS 
AG 
applies 
hedge 
accounting 
for 
interest 
rate risk 
as 
discussed in 
item 
2j 
in 
Note 
1a and 
Note 25. 
As a 
result 
of applying 
hedge accounting, 
the 
life-to-date 
adjustment 
to 
the 
carrying 
amount 
of 
debt 
issued 
was 
an 
increase 
of 
USD 761 
million 
as 
of 
31 
December 
2020 
and 
an 
increase 
of 
USD 574 
million 
as 
of 
31 
December 
2019, 
reflecting changes in fair value due to interest rate movements. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
483 
 
Note 17 
Debt issued measured at amortized cost (continued) 
Subordinated 
debt 
consists 
of 
unsecured 
debt 
obligations 
that 
are 
contractually 
subordinated 
in 
right 
of 
payment 
to 
all 
other 
present 
and 
future 
non-subordinated 
obligations 
of 
the 
respective 
i
ssuing 
entity. 
All 
of 
the 
subordinated 
debt 
instruments 
outstanding 
as 
of 
31 
December 
2020 
pay 
a 
fixed 
rate of interest. 
The 
table 
below 
shows 
the 
residual 
contractual 
maturity 
of 
the carrying amount of 
debt issued, split between 
fixed-rate and 
floating-rate 
based 
on 
the 
contractual 
terms, 
and 
does 
not 
consider any early redemption 
features. The effects from interest 
rate 
swaps, 
which 
are 
used 
to 
hedge 
various 
fixed-rate 
debt 
issuances 
by 
changing 
the 
repricing 
characteristics 
into 
those 
similar to 
floating-rate debt, are 
also not considered 
in the 
table 
below. 
›
 
Refer to Note 24 for maturity information 
on an undiscounted 
cash flow basis 
 
 
Contractual maturity of carrying amount 
USD million 
2021 
2022 
2023 
2024 
2025 
2026–2030 
Thereafter 
Total 
31.12.20 
Total 
31.12.19 
UBS AG
1
Non-subordinated debt 
Fixed-rate 
 
40,886 
 
5,813 
 
4,224 
 
0 
 
386 
 
0 
 
1,309 
 
52,618 
 
33,696 
Floating-rate 
 
12,007 
 
1,155 
 
1,175 
 
0 
 
962 
 
0 
 
0 
 
15,299 
 
13,119 
Subordinated debt 
Fixed-rate 
 
0 
 
2,053 
 
0 
 
2,693 
 
335 
 
2,663 
 
0 
 
7,744 
 
7,431 
Subtotal 
 
52,893 
 
9,022 
 
5,398 
 
2,693 
 
1,684 
 
2,663 
 
1,309 
 
75,661 
 
54,247 
Other subsidiaries
2
Non-subordinated debt 
Fixed-rate 
 
1,152 
 
928 
 
1,038 
 
1,106 
 
1,211 
 
3,580 
 
674 
 
9,690 
 
8,588 
Subtotal 
 
1,152 
 
928 
 
1,038 
 
1,106 
 
1,211 
 
3,580 
 
674 
 
9,690 
 
8,588 
Total 
 
54,045 
 
9,950 
 
6,437 
 
3,798 
 
2,895 
 
6,243 
 
1,983 
 
85,351 
 
62,835 
1 Comprises debt issued by the legal entity UBS AG. 
2 Comprises debt issued by subsidiaries of UBS AG. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
484 
 
Note 18 
Provisions and contingent liabilities
a) Provisions 
The table below presents an overview of total provisions. 
USD million 
31.12.20 
31.12.19 
Provisions other than provisions for expected credit losses 
 
2,534 
 
2,825 
Provisions for expected credit losses 
 
257 
 
114 
Total provisions 
 
2,791 
 
2,938 
 
 
The following table presents additional information for provisions other than provisions for expected credit losses. 
USD million 
Litigation, 
regulatory and 
similar matters
1
Restructuring 
Other
3
Total 2020 
Total 2019 
Balance at the beginning of the year 
 
2,475 
 
99 
 
251 
 
2,825 
 
3,209 
Increase in provisions recognized in the income statement 
 
233 
 
88 
 
134 
 
455 
 
376 
Release of provisions recognized in the income statement 
 
(33) 
 
(11) 
 
(44) 
 
(88) 
 
(119) 
Provisions used in conformity with designated purpose 
 
(603) 
 
(100) 
 
(51) 
 
(755) 
 
(632) 
Capitalized reinstatement costs 
 
0 
 
0 
 
11 
 
11 
 
0 
Reclassifications 
 
0 
 
(13) 
 
13 
 
0 
 
(1) 
Foreign currency translation / unwind of discount 
 
64 
 
4 
 
18 
 
86 
 
(8) 
Balance at the end of the year 
 
2,135 
 
67
2 
 
332 
 
2,534 
 
2,825 
1 Comprises provisions for losses resulting from legal, 
liability and compliance risks. 
2 Primarily consists of provisions for onerous contracts 
of USD 49 million as of 31 December 2020 (31 December 2019: 
USD 61 
million) and personnel-related restructuring 
provisions of USD 13 million 
as of 31 December 2020 
(31 December 2019: USD 33 million). 
3 Mainly includes provisions 
related to real estate, 
employee benefits and 
operational risks. 
 
 
Restructuring 
provisions 
primarily 
relate 
to 
onerous 
contracts 
and 
severance 
payments. 
Onerous 
contracts 
for 
property 
are 
recognized 
when 
UBS 
AG 
is 
committed 
to 
pay 
for 
non-lease 
components, 
such 
as 
utilities, 
service 
charges, 
taxes 
and 
maintenance, when 
a property 
is vacated 
or not 
fully recovered 
from sub-tenants. Severance-related 
provisions are used within 
a 
short 
time 
period 
but 
potential 
changes 
in 
amount 
may 
be 
triggered 
when 
natural 
staff 
attrition 
reduces 
the 
number 
of 
people 
affected 
by 
a 
restructuring 
event 
and 
therefore 
the 
estimated costs. 
Information 
about 
provisions 
and 
contingent 
liabilities 
in 
respect of 
litigation, regulatory 
and similar 
matters, as 
a class, is 
included in Note 
18b. There are 
no material contingent liabilities 
associated with the other classes of provisions. 
 
 
b) Litigation, regulatory and similar 
matters 
UBS operates in a legal 
and regulatory environment that exposes 
it 
to 
significant 
litigation 
and 
similar 
risks 
arising 
from 
disputes 
and regulatory proceedings. As a result, UBS (which for purposes 
of 
this 
Note 
may 
refer 
to 
UBS 
AG 
and/or 
one 
or 
more 
of 
its 
subsidiaries, 
as 
applicable) 
is 
involved 
in 
various 
disputes 
and 
legal proceedings, including litigation, arbitration, and regulatory 
and criminal investigations. 
Such 
matters 
are 
subject 
to 
many 
uncertainties, 
and 
the 
outcome 
and 
the 
timing 
of 
resolution 
are 
often 
difficult 
to 
predict, particularly in 
the earlier stages 
of a case. 
There are also 
situations 
where 
UBS 
may 
enter 
into 
a 
settlement 
agreement. 
This 
may 
occur 
in 
order 
to 
avoid 
the 
expense, 
management 
distraction 
or 
reputational 
implications of 
continuing to 
contest 
liability, even 
for those 
matters for 
which UBS 
believes it 
should 
be 
exonerated. 
The 
uncertainties 
inherent 
in 
all 
such 
matters 
affect the amount 
and timing of any 
potential outflows for both 
matters 
with 
respect 
to which 
provisions 
have been 
established 
and 
other 
contingent 
liabilities. 
UBS 
makes 
provisions 
for 
such 
matters brought against 
it when, in 
the opinion of 
management 
after seeking legal 
advice, it is more 
likely than not that 
UBS has 
a 
present 
legal 
or 
constructive 
obligation 
as 
a 
result 
of 
past 
events, 
it 
is 
probable 
that 
an 
outflow 
of 
resources 
will 
be 
required, and the amount can be reliably estimated. Where these 
factors are otherwise satisfied, a provision may be established for 
claims 
that 
have 
not 
yet 
been 
asserted 
against 
UBS, 
but 
are 
nevertheless 
expected 
to 
be, 
based 
on 
UBS’s 
experience 
with 
similar 
asserted 
claims. 
If 
any 
of 
those 
conditions 
is 
not 
met, 
such matters 
result in 
contingent liabilities. 
If the 
amount of 
an 
obligation 
cannot 
be 
reliably 
estimated, 
a 
liability 
exists 
that 
is 
not 
recognized 
even 
if 
an 
outflow 
of 
resources 
is 
probable. 
Accordingly, 
no 
provision 
is 
established 
even 
if 
the 
potential 
outflow 
of 
resources 
with 
respect 
to 
such 
matters 
could 
be 
significant. 
Developments 
relating 
to 
a 
matter 
that 
occur 
after 
the 
relevant 
reporting
 
period, 
but 
prior 
to 
the 
issuance 
of 
financial 
statements, which 
affect management’s 
assessment of 
the 
provision 
for 
such 
matter 
(because, 
for 
example, 
the 
developments provide 
evidence of 
conditions that 
existed at 
the 
end 
of 
the 
reporting 
period), 
are 
adjusting 
events 
after 
the 
reporting 
period 
under 
IAS 
10 
and 
must 
be 
recognized 
in 
the 
financial statements for the reporting period. 
 
 

 
 
 
 
 
 
 
 
 
 
 
485 
 
Note 18 
Provisions and contingent liabilities (continued) 
Specific litigation, 
regulatory and 
other matters 
are described 
below, including 
all such 
matters that management 
considers to 
be 
material 
and 
others 
that 
management 
believes 
to 
be 
of 
significance 
due 
to 
potential 
financial, 
reputational 
and 
other 
effects. 
The 
amount 
of 
damages 
claimed, 
the 
size 
of 
a 
transaction or other 
information is provided 
where available and 
appropriate in order to 
assist users in considering 
the magnitude 
of potential exposures. 
In 
the 
case of 
certain 
matters below, 
we state 
that we 
have 
established a 
provision, and 
for the 
other matters, 
we make 
no 
such 
statement. 
When 
we 
make 
this 
statement 
and 
we 
expect 
disclosure of the amount of a provision to 
prejudice seriously our 
position with other 
parties in the 
matter because it 
would reveal 
what 
UBS 
believes 
to 
be 
the 
probable 
and 
reliably 
estimable 
outflow, we 
do not 
disclose that 
amount. In 
some cases 
we are 
subject 
to 
confidentiality 
obligations 
that 
preclude 
such 
disclosure. 
With 
respect 
to 
the 
matters 
for 
which 
we 
do 
not 
state 
whether 
we 
have 
established 
a 
provision, 
either: 
(a) 
we 
have 
not 
established 
a 
provision, 
in 
which 
case 
the 
matter 
is 
treated as 
a contingent 
liability under 
the applicable 
accounting 
standard; 
or 
(b) 
we 
have 
established 
a 
provision 
but 
expect 
disclosure 
of 
that 
fact 
to 
prejudice 
seriously 
our 
position 
with 
other parties 
in the 
matter because 
it would 
reveal the 
fact that 
UBS believes an outflow 
of resources to be 
probable and reliably 
estimable. 
With 
respect 
to 
certain 
litigation, 
regulatory 
and 
similar 
matters for which we have established 
provisions, we are able to 
estimate 
the 
expected 
timing 
of 
outflows. 
However, 
the 
aggregate 
amount 
of 
the 
expected 
outflows 
for 
those 
matters 
for which 
we are 
able to 
estimate expected 
timing is 
immaterial 
relative 
to 
our 
current 
and 
expected 
levels 
of 
liquidity 
over 
the 
relevant time periods. 
The 
aggregate 
amount 
provisioned 
for 
litigation, 
regulatory 
and 
similar 
matters 
as 
a 
class 
is 
disclosed 
in 
the 
“Provisions” 
table 
in 
Note 
18a 
above. 
It 
is 
not 
practicable 
to 
provide 
an 
aggregate 
estimate 
of 
liability 
for 
our 
litigation, 
regulatory 
and 
similar matters as a class of contingent liabilities. Doing so would 
require UBS to provide 
speculative legal assessments as 
to claims 
and proceedings 
that involve 
unique fact 
patterns or 
novel legal 
theories, that have not yet been initiated or are at early 
stages of 
adjudication, 
or 
as 
to 
which 
alleged 
damages 
have 
not 
been 
quantified 
by 
the 
claimants. 
Although 
UBS 
therefore 
cannot 
provide a numerical estimate of the 
future losses that could arise 
from litigation, 
regulatory and 
similar matters, 
UBS believes 
that 
the 
aggregate 
amount 
of 
possible 
future 
losses 
from 
this 
class 
that 
are 
more 
than 
remote 
substantially 
exceeds 
the 
level 
of 
current provisions. 
Litigation, 
regulatory 
and 
similar 
matters 
may 
also 
result 
in 
non-monetary 
penalties 
and 
consequences. 
For 
example, 
the 
non-prosecution 
agreement 
UBS 
entered 
into 
with 
the 
US 
Department of 
Justice (DOJ), 
Criminal Division, 
Fraud Section 
in 
connection 
with 
submissions 
of 
benchmark 
interest 
rates, 
including, 
among 
others, 
the 
British 
Bankers’ 
Association 
London 
Interbank 
Offered 
Rate 
(LIBOR), 
was 
terminated 
by 
the 
DOJ 
based 
on 
its 
determination 
that 
UBS 
had 
committed 
a 
US 
crime in relation to foreign exchange matters. As a consequence, 
UBS AG pleaded guilty to one count 
of wire fraud for conduct in 
the 
LIBOR 
matter, 
paid 
a 
fine 
and 
was 
subject 
to 
probation, 
which ended in January 2020. 
A guilty plea 
to, or conviction 
of, a crime 
could have material 
consequences for UBS. Resolution of regulatory proceedings may 
require 
UBS 
to 
obtain 
waivers 
of 
regulatory 
disqualifications 
to 
maintain certain operations, may 
entitle regulatory authorities to 
limit, 
suspend 
or 
terminate 
licenses 
and 
regulatory 
authorizations, and 
may permit financial 
market utilities 
to limit, 
suspend or 
terminate UBS’s 
participation in 
such utilities. 
Failure 
to 
obtain 
such 
waivers, 
or 
any 
limitation, 
suspension 
or 
termination 
of 
licenses, 
authorizations 
or 
participations, 
could 
have material consequences for UBS. 
The 
risk 
of 
loss 
associated 
with 
litigation, 
regulatory 
and 
similar 
matters is 
a 
component 
of 
operational 
risk 
for 
purposes 
of determining capital requirements. 
Information concerning our 
capital 
requirements 
and 
the 
calculation 
of 
operational 
risk 
for 
this 
purpose 
is 
included 
in 
the 
“Capital, 
liquidity 
and 
funding, 
and balance sheet” section of this report. 
 
Provisions for litigation, regulatory and similar matters 
by business division and in Group Functions
1
USD million 
Global 
Wealth 
Manage- 
ment 
Personal & 
Corporate 
Banking 
 
Asset 
Manage- 
ment 
Investment 
Bank 
Group 
Functions 
Total 2020 
Total 2019 
Balance at the beginning of the year 
 
782 
 
113 
 
0 
 
255 
 
1,325 
 
2,475 
 
2,827 
Increase in provisions recognized in the income statement 
 
213 
 
0 
 
0 
 
19 
 
1 
 
233 
 
258 
Release of provisions recognized in the income statement 
 
(24) 
 
(6) 
 
0 
 
(1) 
 
(2) 
 
(33) 
 
(81) 
Provisions used in conformity with designated purpose 
 
(154) 
 
(1) 
 
0 
 
(52) 
 
(395) 
 
(603) 
 
(518) 
Reclassifications 
 
0 
 
0 
 
0 
 
(3) 
 
3 
 
0 
 
0 
Foreign currency translation / unwind of discount 
 
44 
 
10 
 
0 
 
10 
 
0 
 
64 
 
(12) 
Balance at the end of the year 
 
861 
 
115 
 
0 
 
227 
 
932 
 
2,135 
 
2,475 
1 Provisions, if any, for matters described in this disclosure are recorded in Global Wealth 
Management (item 3 and item 4) and Group Functions (item 2). Provisions, if any, 
for the matters described in items 1 and 6 
of this 
disclosure are 
allocated between 
Global Wealth 
Management and 
Personal & 
Corporate Banking, 
and provisions, 
if any, 
for the 
matters described 
in this 
disclosure in 
item 5 
are allocated 
between the 
Investment Bank and Group Functions. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
486 
 
Note 18 
Provisions and contingent liabilities (continued) 
1. Inquiries regarding cross-border wealth management 
businesses 
Tax 
and 
regulatory 
authorities 
in 
a 
number 
of 
countries 
have 
made 
inquiries, 
served 
requests 
for 
information 
or 
examined 
employees located 
in their 
respective jurisdictions 
relating to 
the 
cross-border 
wealth management 
services provided 
by UBS 
and 
other financial institutions. 
It is possible 
that the implementation 
of 
automatic 
tax 
information 
exchange 
and 
other 
measures 
relating to 
cross-border provision 
of financial 
services could 
give 
rise to further inquiries in 
the future. UBS has 
received disclosure 
orders 
from 
the 
Swiss 
Federal 
Tax 
Administration 
(FTA) 
to 
transfer 
information 
based 
on 
requests 
for 
international 
administrative assistance 
in tax 
matters. The 
requests 
concern a 
number 
of 
UBS 
account 
numbers 
pertaining 
to 
current 
and 
former clients and 
are based on 
data from 
2006 and 2008. 
UBS 
has 
taken 
steps 
to 
inform 
affected 
clients 
about 
the 
administrative 
assistance 
proceedings 
and 
their 
procedural 
rights, including 
the right 
to appeal. 
The requests 
are 
based on 
data 
received 
from 
the 
German 
authorities, 
who 
seized 
certain 
data 
related 
to 
UBS 
clients 
booked 
in 
Switzerland 
during 
their 
investigations 
and 
have 
apparently 
shared 
this 
data 
with 
other 
European 
countries. 
UBS 
expects 
additional 
countries 
to 
file 
similar requests. 
The Swiss 
Federal Administrative 
Court ruled 
in 2016 
that, in 
the 
administrative 
assistance 
proceedings 
related 
to 
a 
French 
bulk request, UBS has 
the right to appeal 
all final FTA client 
data 
disclosure 
orders. 
On 
30 July 
2018, 
the 
Swiss 
Federal 
Administrative 
Court 
granted 
UBS’s 
appeal 
by 
holding 
the 
French 
administrative 
assistance 
request 
inadmissible. 
The 
FTA 
filed 
a 
final 
appeal 
with 
the 
Swiss 
Federal 
Supreme 
Court. 
On 
26 July 
2019, 
the 
Supreme 
Court 
reversed 
the 
decision 
of 
the 
Federal 
Administrative 
Court. 
In 
December 
2019, 
the 
court 
released 
its 
written 
decision. 
The 
decision 
requires 
the 
FTA 
to 
obtain confirmation from 
the French authorities that 
transmitted 
data 
will 
be 
used 
only 
for 
the 
purposes 
stated 
in 
their 
request 
before transmitting 
any data. 
The stated 
purpose of 
the original 
request 
was 
to 
obtain 
information 
relating 
to 
taxes 
owed 
by 
account holders. 
Accordingly, any information 
transferred to 
the 
French authorities 
must not 
be passed 
to criminal 
authorities or 
used in connection with 
the ongoing case against 
UBS discussed 
in this 
item. In 
February 2020, 
the FTA 
ordered that 
UBS would 
not 
be 
granted 
party 
status 
in 
the 
French 
administrative 
assistance 
proceedings. 
UBS 
appealed 
this 
decision 
to 
the 
Federal 
Administrative 
Court. 
On 
15 
July, 
the 
Federal 
Administrative 
Court 
upheld 
the 
FTA’s
 
decision, 
holding 
that 
UBS 
will 
no 
longer 
have 
party 
status 
in 
these 
proceedings. 
The 
Swiss Federal Supreme Court has determined that it will not hear 
UBS’s appeal of this decision. 
Since 
2013, 
UBS 
(France) 
S.A., 
UBS 
AG 
and 
certain 
former 
employees 
have 
been 
under 
investigation 
in 
France 
for 
alleged 
complicity 
in 
unlawful 
solicitation 
of 
clients 
on 
French 
territory, 
regarding 
the laundering 
of proceeds 
of tax 
fraud, and 
banking 
and financial solicitation 
by unauthorized persons. 
In connection 
with this 
investigation, the investigating 
judges ordered 
UBS AG 
to 
provide 
bail 
(“
caution
”) 
of 
EUR 1.1 
billion 
and 
UBS 
(France) 
S.A. 
to 
post 
bail 
of 
EUR 40 
million, 
which 
was 
reduced 
on 
appeal to EUR 10 million. 
A trial in the court 
of first instance took place 
from 8 October 
2018 until 
15 November 
2018. On 
20 February 2019, 
the court 
announced 
a 
verdict 
finding 
UBS 
AG 
guilty 
of 
unlawful 
solicitation 
of 
clients 
on 
French 
territory 
and 
aggravated 
laundering 
of 
the proceeds 
of 
tax 
fraud, 
and 
UBS 
(France) S.A. 
guilty of aiding and abetting unlawful solicitation and laundering 
the proceeds 
of tax 
fraud. The 
court imposed 
fines aggregating 
EUR 3.7 
billion on 
UBS AG 
and UBS 
(France) S.A. 
and awarded 
EUR 800 
million 
of 
civil 
damages 
to 
the 
French 
state. 
UBS 
has 
appealed 
the 
decision. 
Under 
French 
law, 
the 
judgment 
is 
suspended 
while 
the 
appeal 
is 
pending. 
The 
trial 
originally 
scheduled for 2 
June 2020 has 
been rescheduled to 
8-24 March 
2021. The Court of Appeal will retry the 
case de novo as to both 
the law and the facts, and 
the fines and penalties can be greater 
than or less 
than those imposed 
by the court 
of first instance. 
A 
subsequent 
appeal 
to 
the 
Cour 
de 
Cassation, 
France’s 
highest 
court, is possible with respect to questions of law. 
UBS 
believes 
that 
based 
on 
both 
the 
law 
and 
the 
facts 
the 
judgment of 
the court 
of first 
instance should 
be reversed. 
UBS 
believes it followed its obligations under Swiss and French law as 
well 
as 
the 
European 
Savings 
Tax 
Directive. 
Even 
assuming 
liability, 
which 
it 
contests, 
UBS 
believes 
the 
penalties 
and 
damage 
amounts 
awarded 
greatly 
exceed 
the 
amounts 
that 
could be 
supported by 
the law 
and the 
facts. In 
particular, UBS 
believes 
the 
court 
incorrectly 
based 
the 
penalty 
on 
the 
total 
regularized 
assets 
rather 
than 
on 
any 
unpaid 
taxes 
on 
those 
assets 
for 
which 
a 
fraud 
has 
been 
characterized 
and 
further 
incorrectly 
awarded 
damages 
based 
on 
costs 
that 
were 
not 
proven 
by 
the 
civil 
party. 
Notwithstanding 
that 
UBS 
believes 
it 
should 
be 
acquitted, 
our 
balance 
sheet 
at 
31 December 
2020 
reflected provisions 
with respect 
to this 
matter in 
an amount 
of 
EUR 450 
million 
(USD 549 
million 
at 
31 December 
2020). 
The 
wide 
range 
of 
possible 
outcomes 
in 
this 
case 
contributes 
to 
a 
high degree of estimation uncertainty. 
The provision reflected on 
our 
balance 
sheet 
at 
31 December 
2020 
reflects 
our 
best 
estimate 
of 
possible 
financial 
implications, 
although 
it 
is 
reasonably possible that actual penalties and 
civil damages could 
exceed the provision amount. 
In 2016, 
UBS was 
notified by 
the Belgian 
investigating judge 
that 
it 
is 
under 
formal 
investigation 
(“
inculpé
”) 
regarding 
the 
laundering 
of 
proceeds 
of 
tax 
fraud, 
of 
banking 
and 
financial 
solicitation by unauthorized persons, and of serious tax fraud. 
Our balance 
sheet at 
31 December 2020 
reflected provisions 
with 
respect 
to 
matters 
described 
in 
this 
item 
1 
in 
an 
amount 
that 
UBS 
believes 
to 
be 
appropriate 
under 
the 
applicable 
accounting 
standard. As 
in the 
case of 
other matters 
for which 
we have 
established provisions, 
the future 
outflow of 
resources 
in respect 
of such 
matters cannot 
be determined 
with certainty 
based 
on 
currently 
available 
information 
and 
accordingly 
may 
ultimately prove to 
be substantially greater 
(or may be 
less) than 
the provision that we have recognized. 
 
 

 
 
487 
 
Note 18 
Provisions and contingent liabilities (continued) 
2. Claims related to sales of residential mortgage-backed 
securities and mortgages 
From 2002 through 
2007, prior to 
the crisis in 
the US residential 
loan market, UBS was 
a substantial issuer and 
underwriter of US 
residential 
mortgage-backed 
securities 
(RMBS) 
and 
was 
a 
purchaser and seller of US residential mortgages. 
In November 
2018, 
the 
DOJ 
filed 
a 
civil 
complaint 
in 
the 
District Court for the Eastern District of New York. The complaint 
seeks 
unspecified 
civil 
monetary 
penalties 
under 
the 
Financial 
Institutions 
Reform, 
Recovery 
and 
Enforcement
 
Act 
of 
1989 
related 
to 
UBS’s 
issuance, 
underwriting 
and 
sale 
of 
40 
RMBS 
transactions 
in 
2006 
and 
2007. 
UBS 
moved 
to 
dismiss 
the 
civil 
complaint 
on 
6 February 
2019. 
On 
10 December 
2019, 
the 
district court denied UBS’s motion to dismiss. 
Our balance sheet at 
31 December 2020 reflected a 
provision 
with 
respect 
to 
matters 
described 
in 
this 
item 
2 
in 
an 
amount 
that 
UBS 
believes 
to 
be 
appropriate 
under 
the 
applicable 
accounting standard. 
As in 
the case 
of other 
matters for 
which 
we have 
established provisions, 
the future 
outflow of 
resources 
in 
respect 
of 
this 
matter 
cannot 
be 
determined 
with 
certainty 
based 
on 
currently 
available 
information 
and 
accordingly 
may 
ultimately prove 
to be substantially 
greater (or may 
be less) than 
the provision that we have recognized. 
3. Madoff 
In 
relation 
to 
the 
Bernard 
L. 
Madoff 
Investment 
Securities 
LLC 
(BMIS) investment 
fraud, UBS 
AG, UBS 
(Luxembourg) S.A. 
(now 
UBS 
Europe 
SE, 
Luxembourg 
branch) 
and 
certain 
other 
UBS 
subsidiaries 
have 
been 
subject 
to 
inquiries 
by 
a 
number 
of 
regulators, 
including 
the 
Swiss 
Financial 
Market 
Supervisory 
Authority 
(FINMA) 
and 
the 
Luxembourg 
Commission 
de 
Surveillance du Secteur 
Financier. Those inquiries 
concerned two 
third-party 
funds 
established 
under 
Luxembourg 
law, 
substantially 
all 
assets 
of 
which 
were 
with 
BMIS, 
as 
well 
as 
certain 
funds 
established 
in 
offshore 
jurisdictions 
with 
either 
direct 
or 
indirect 
exposure 
to 
BMIS. 
These 
funds 
faced 
severe 
losses, 
and 
the 
Luxembourg 
funds 
are 
in 
liquidation. 
The 
documentation establishing 
both funds 
identifies UBS 
entities in 
various 
roles, 
including 
custodian, 
administrator, 
manager, 
distributor 
and 
promoter, 
and 
indicates 
that 
UBS 
employees 
serve as board members. 
In 
2009 
and 
2010, 
the 
liquidators 
of 
the 
two 
Luxembourg 
funds 
filed 
claims 
against 
UBS 
entities, 
non-UBS 
entities 
and 
certain individuals, including current 
and former UBS employees, 
seeking 
amounts 
totaling 
approximately 
EUR 2.1 
billion, 
which 
includes 
amounts 
that 
the 
funds 
may 
be 
held 
liable 
to 
pay 
the 
trustee for the liquidation of BMIS (BMIS Trustee). 
A 
large 
number 
of 
alleged 
beneficiaries 
have 
filed 
claims 
against UBS 
entities (and 
non-UBS entities) 
for purported 
losses 
relating 
to 
the 
Madoff 
fraud. 
The 
majority 
of 
these 
cases 
have 
been 
filed 
in 
Luxembourg, 
where 
decisions 
that 
the 
claims 
in 
eight 
test 
cases 
were 
inadmissible 
have 
been 
affirmed 
by 
the 
Luxembourg 
Court 
of 
Appeal, 
and 
the 
Luxembourg 
Supreme 
Court has dismissed a further appeal in one of the test cases. 
In the 
US, the 
BMIS Trustee 
filed claims 
against UBS 
entities, 
among others, in relation to the two Luxembourg funds and 
one 
of 
the 
offshore 
funds. 
The 
total 
amount 
claimed 
against 
all 
defendants 
in 
these 
actions 
was 
not 
less 
than 
USD 2 
billion. 
In 
2014, the US Supreme 
Court rejected the BMIS 
Trustee’s motion 
for 
leave 
to 
appeal 
decisions 
dismissing 
all 
claims 
except 
those 
for 
the recovery 
of 
approximately USD 125 
million of 
payments 
alleged to 
be fraudulent 
conveyances and 
preference payments. 
In 2016, the bankruptcy court dismissed 
these claims against the 
UBS 
entities. 
In 
February 
2019, 
the 
Court 
of 
Appeals 
reversed 
the dismissal of 
the BMIS Trustee’s remaining 
claims, and the US 
Supreme Court subsequently denied a 
petition seeking review of 
the Court 
of Appeals’ 
decision. The 
case has 
been remanded 
to 
the Bankruptcy Court for further proceedings. 
4. Puerto Rico 
Declines 
since 
2013 
in 
the 
market 
prices 
of 
Puerto 
Rico 
municipal 
bonds and 
of 
closed-end 
funds (funds) 
that are 
sole-
managed 
and 
co-managed 
by 
UBS 
Trust 
Company 
of 
Puerto 
Rico 
and 
distributed 
by 
UBS 
Financial 
Services 
Incorporated 
of 
Puerto 
Rico 
(UBS PR) 
led to 
multiple 
regulatory inquiries, 
which 
in 
2014 
and 
2015, 
led 
to 
settlements 
with 
the 
Office 
of 
the 
Commissioner of Financial Institutions for the Commonwealth of 
Puerto 
Rico, 
the 
US 
Securities 
and 
Exchange 
Commission 
(SEC) 
and 
the 
Financial 
Industry 
Regulatory 
Authority 
in 
relation 
to 
their examinations of UBS’s operations. 
Since 
that 
time 
UBS 
has 
received 
customer 
complaints 
and 
arbitrations with 
aggregate claimed damages 
of USD 3.4 billion, 
of 
which 
claims 
with 
aggregate 
claimed 
damages 
of 
USD 2.8 
billion 
have 
been 
resolved 
through 
settlements, 
arbitration 
or 
withdrawal of the 
claim. The claims 
have been filed 
by clients in 
Puerto Rico 
who own 
the funds 
or Puerto 
Rico municipal 
bonds 
and/or 
who used 
their 
UBS account 
assets as 
collateral for 
UBS 
non-purpose 
loans; 
customer 
complaint 
and 
arbitration 
allegations 
include 
fraud, 
misrepresentation and 
unsuitability of 
the funds and of the loans. 
A 
shareholder 
derivative 
action 
was 
filed 
in 
2014 
against 
various UBS 
entities and 
current and 
certain former 
directors of 
the funds, alleging hundreds 
of millions of US 
dollars in losses in 
the 
funds. 
In 
2015, 
defendants’ 
motion 
to 
dismiss 
was 
denied 
and a request for permission to appeal 
that ruling was denied by 
the Puerto Rico Supreme Court. 
In 2011, 
a purported 
derivative action 
was filed 
on behalf 
of 
the 
Employee 
Retirement 
System 
of 
the 
Commonwealth 
of 
Puerto Rico 
(System) against 
over 40 
defendants, including 
UBS 
PR, 
which 
was 
named 
in 
connection 
with 
its 
underwriting 
and 
consulting 
services. 
Plaintiffs 
alleged 
that 
defendants 
violated 
their 
purported 
fiduciary 
duties 
and 
contractual 
obligations 
in 
connection 
with the 
issuance and 
underwriting 
of USD 3 billion 
of 
bonds 
by 
the 
System 
in 
2008 
and 
sought 
damages 
of 
over 
USD 800 
million. 
In 
2016, 
the 
court 
granted 
the 
System’s 
request to join the action as a plaintiff, but ordered that plaintiffs 
must 
file 
an 
amended 
complaint. 
In 
2017, 
the 
court 
denied 
defendants’ motion to 
dismiss the amended 
complaint. In 2020, 
the court denied plaintiffs’ motion for summary judgment. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
488 
 
Note 18 
Provisions and contingent liabilities (continued) 
Beginning 
in 
2015, 
certain 
agencies 
and 
public 
corporations 
of 
the 
Commonwealth 
of 
Puerto 
Rico 
(Commonwealth) 
defaulted on 
certain interest 
payments on 
Puerto Rico 
bonds. In 
2016, 
US 
federal 
legislation 
created 
an 
oversight 
board 
with 
power 
to 
oversee 
Puerto 
Rico’s 
finances 
and 
to 
restructure 
its 
debt. The 
oversight board has 
imposed a stay 
on the exercise 
of 
certain 
creditors’ 
rights. 
In 
2017, 
the 
oversight 
board 
placed 
certain of the bonds into a bankruptcy-like proceeding under the 
supervision of a Federal District Judge. 
In 
May 
2019, 
the 
oversight 
board 
filed 
complaints in 
Puerto 
Rico federal 
district court 
bringing claims 
against financial, 
legal 
and 
accounting 
firms 
that 
had 
participated 
in 
Puerto 
Rico 
municipal 
bond 
offerings, 
including 
UBS, 
seeking 
a 
return 
of 
underwriting 
and 
swap 
fees 
paid 
in 
connection 
with 
those 
offerings. UBS 
estimates that 
it received 
approximately USD 125 
million in fees in the relevant offerings. 
In August 
2019, and 
February and 
November 2020, 
four US 
insurance companies that insured issues of Puerto Rico municipal 
bonds 
sued 
UBS 
and 
several 
other 
underwriters 
of 
Puerto 
Rico 
municipal 
bonds. 
The 
actions 
collectively 
seek 
recovery 
of 
an 
aggregate of 
USD 955 million 
in damages 
from the 
defendants. 
The 
plaintiffs 
in 
these 
cases 
claim 
that 
defendants
 
failed 
to 
reasonably 
investigate 
financial 
statements 
in 
the 
offering 
materials 
for 
the 
insured 
Puerto 
Rico 
bonds 
issued 
between 
2002 
and 
2007, 
which 
plaintiffs 
argue 
they 
relied 
upon 
in 
agreeing to 
insure the 
bonds notwithstanding 
that they 
had no 
contractual relationship with the underwriters. 
Our balance 
sheet at 
31 December 2020 
reflected 
provisions 
with respect 
to matters described 
in this 
item 4 in 
amounts that 
UBS believes 
to be 
appropriate under 
the applicable 
accounting 
standard. 
As 
in 
the 
case 
of 
other 
matters 
for 
which 
we 
have 
established provisions, the future 
outflow of resources 
in respect 
of 
such 
matters 
cannot 
be 
determined 
with 
certainty 
based 
on 
currently 
available 
information 
and 
accordingly 
may 
ultimately 
prove 
to 
be 
substantially 
greater 
(or 
may 
be 
less) 
than 
the 
provisions that we have recognized. 
5. Foreign exchange, LIBOR and benchmark rates, and other 
trading practices 
Foreign exchange-related 
regulatory matters:
 
Beginning in 2013, 
numerous 
authorities 
commenced 
investigations 
concerning 
possible manipulation of foreign 
exchange markets and precious 
metals 
prices. 
As 
a 
result 
of 
these 
investigations, 
UBS 
entered 
into resolutions 
with the 
UK Financial 
Conduct Authority 
(FCA), 
the US 
Commodity Futures 
Trading 
Commission (CFTC), FINMA, 
the 
Board 
of 
Governors of 
the 
Federal 
Reserve 
System 
(Federal 
Reserve Board) and the 
Connecticut Department of Banking, the 
DOJ’s Criminal 
Division and 
the European 
Commission. UBS 
has 
ongoing 
obligations 
under 
the 
Cease 
and 
Desist 
Order 
of 
the 
Federal Reserve 
Board and 
the Office 
of the 
Comptroller of 
the 
Currency 
(as 
successor 
to 
the 
Connecticut 
Department 
of 
Banking), 
and 
to 
cooperate 
with 
relevant 
authorities 
and 
to 
undertake 
certain 
remediation 
measures. 
UBS 
has 
also 
been 
granted 
conditional 
immunity 
by 
the 
Antitrust 
Division 
of 
the 
DOJ and 
by authorities 
in other 
jurisdictions in 
connection with 
potential competition law violations relating 
to foreign exchange 
and precious metals businesses. 
Investigations relating to foreign 
exchange 
matters 
by 
certain
 
authorities 
remain 
ongoing 
notwithstanding these resolutions. 
Foreign exchange-related 
civil litigation:
 
Putative class 
actions 
have 
been 
filed 
since 
2013 
in 
US 
federal 
courts 
and 
in 
other 
jurisdictions against 
UBS and 
other banks 
on behalf 
of putative 
classes of persons 
who engaged in 
foreign currency transactions 
with 
any 
of 
the 
defendant 
banks. 
UBS 
has 
resolved 
US 
federal 
court class 
actions relating 
to foreign 
currency transactions 
with 
the 
defendant 
banks 
and 
persons 
who 
transacted 
in 
foreign 
exchange futures 
contracts and options 
on such futures 
under a 
settlement agreement that provides for UBS 
to pay an aggregate 
of 
USD 141 
million 
and 
provide 
cooperation 
to 
the 
settlement 
classes. 
Certain 
class 
members 
have 
excluded 
themselves 
from 
that 
settlement
 
and 
have 
filed 
individual 
actions 
in 
US 
and 
English 
courts 
against 
UBS 
and 
other 
banks, 
alleging 
violations 
of US and European competition laws and unjust enrichment. 
In 
2015, 
a 
putative 
class 
action 
was 
filed 
in 
federal 
court 
against 
UBS 
and 
numerous 
other 
banks 
on 
behalf 
of 
persons 
and 
businesses 
in 
the 
US 
who 
directly 
purchased 
foreign 
currency 
from 
the 
defendants 
and 
alleged 
co-conspirators 
for 
their own end use. In 
March 2017, the court granted 
UBS’s (and 
the other banks’) motions to dismiss the complaint. The plaintiffs 
filed an amended complaint in August 2017. In March 2018, 
the 
court 
denied 
the 
defendants’ 
motions 
to 
dismiss 
the 
amended 
complaint. 
In 2017, two 
putative class actions 
were filed in 
federal court 
in 
New York 
against UBS 
and numerous 
other 
banks 
on behalf 
of 
persons 
and 
entities 
who 
had 
indirectly 
purchased 
foreign 
exchange instruments from 
a defendant or 
co-conspirator in the 
US, 
and 
a 
consolidated 
complaint 
was 
filed 
in 
June 
2017. 
In 
March 2018, 
the court 
dismissed the 
consolidated complaint. 
In 
October 2018, the court 
granted plaintiffs’ motion seeking 
leave 
to 
file 
an 
amended 
complaint. 
UBS 
and 
11 
other 
banks 
have 
reached 
an 
agreement 
with 
the 
plaintiffs 
to 
settle 
the 
class 
action 
for 
a 
total 
of 
USD 10 
million. 
The 
court 
approved 
the 
settlement in November 2020. 
LIBOR 
and 
other 
benchmark-related regulatory 
matters:
 
Numerous 
government 
agencies, 
including 
the 
SEC, 
the 
CFTC, 
the 
DOJ, 
the 
FCA, 
the 
UK 
Serious 
Fraud 
Office, 
the 
Monetary 
Authority 
of 
Singapore, 
the 
Hong 
Kong 
Monetary 
Authority, 
FINMA, various state attorneys general 
in the US and competition 
authorities in 
various jurisdictions, have 
conducted investigations 
regarding potential improper attempts by UBS, 
among others, to 
manipulate 
LIBOR 
and 
other 
benchmark 
rates 
at 
certain 
times. 
UBS 
reached 
settlements 
or 
otherwise 
concluded 
investigations 
relating 
to 
benchmark 
interest 
rates 
with 
the 
investigating 
authorities. UBS 
has 
ongoing obligations 
to 
cooperate with 
the 
authorities 
with 
whom 
we 
have 
reached 
resolutions 
and 
to 
undertake 
certain 
remediation 
measures 
with 
respect 
to 
benchmark 
interest 
rate 
submissions. 
UBS 
has 
been 
granted 
conditional leniency 
or 
conditional immunity 
from 
authorities in 
certain 
jurisdictions, including 
the 
Antitrust 
Division 
of 
the 
DOJ 
and 
the 
Swiss 
Competition Commission 
(WEKO), 
in 
connection 
with 
potential antitrust 
or 
competition law 
violations related 
to 
certain 
rates. 
However, 
UBS 
has 
not 
reached 
a 
final 
settlement 
with 
WEKO, 
as 
the 
Secretariat of 
WEKO 
has 
asserted 
that 
UBS 
does not qualify for 
full immunity. 
 
 
 
 

 
 
489 
 
Note 18 
Provisions and contingent liabilities (continued) 
LIBOR and 
other benchmark-related 
civil litigation:
 
A number 
of 
putative 
class 
actions 
and 
other 
actions 
are 
pending 
in 
the 
federal 
courts 
in 
New 
York 
against 
UBS 
and 
numerous 
other 
banks on behalf of parties who transacted in certain interest 
rate 
benchmark-based 
derivatives. 
Also 
pending 
in 
the 
US 
and 
in 
other jurisdictions are 
a number of 
other actions asserting 
losses 
related 
to 
various 
products 
whose 
interest 
rates 
were 
linked 
to 
LIBOR 
and 
other 
benchmarks, 
including 
adjustable 
rate 
mortgages, 
preferred 
and 
debt 
securities, 
bonds 
pledged 
as 
collateral, 
loans, 
depository 
accounts, 
investments 
and 
other 
interest-bearing 
instruments. 
The 
complaints 
allege 
manipulation, 
through 
various 
means, 
of 
certain 
benchmark 
interest 
rates, 
including 
USD LIBOR, 
Euroyen 
TIBOR, 
Yen 
LIBOR, 
EURIBOR, 
CHF LIBOR, 
GBP 
LIBOR, 
SGD 
SIBOR 
and 
SOR 
and 
Australian BBSW, 
and seek 
unspecified compensatory 
and other 
damages under varying legal theories. 
USD LIBOR class and individual actions 
in the US: 
In 2013 and 
2015, 
the 
district 
court 
in 
the 
USD LIBOR 
actions 
dismissed, 
in 
whole 
or 
in 
part, 
certain 
plaintiffs’ 
antitrust 
claims, 
federal 
racketeering 
claims, CEA 
claims, and 
state common 
law claims. 
Although 
the 
Second 
Circuit 
vacated 
the 
district 
court’s 
judgment 
dismissing 
antitrust 
claims, 
the 
district 
court 
again 
dismissed antitrust 
claims against UBS 
in 2016. 
Certain plaintiffs 
have appealed that 
decision to the 
Second Circuit. Separately, 
in 
2018, 
the 
Second 
Circuit 
reversed 
in 
part 
the 
district 
court’s 
2015 decision 
dismissing certain 
individual plaintiffs’ 
claims and 
certain 
of 
these 
actions 
are 
now 
proceeding. 
UBS 
entered 
into 
an 
agreement 
in 
2016 
with 
representatives 
of 
a 
class 
of 
bondholders 
to 
settle 
their 
USD LIBOR 
class 
action. 
The 
agreement has received final court 
approval. In 2018, the district 
court 
denied 
plaintiffs’ 
motions 
for 
class 
certification 
in 
the 
USD class actions 
for claims 
pending against 
UBS, and 
plaintiffs 
sought permission to appeal 
that ruling to the 
Second Circuit. In 
July 
2018, 
the 
Second 
Circuit 
denied 
the 
petition 
to 
appeal 
of 
the 
class 
of 
USD lenders 
and 
in 
November 
2018 
denied 
the 
petition 
of 
the 
USD exchange 
class. 
In 
December 
2019, 
UBS 
entered 
into 
an 
agreement 
with 
representatives 
of 
the 
class 
of 
USD lenders 
to 
settle 
their 
USD LIBOR 
class 
action. 
The 
agreement has 
received final 
court approval. 
In January 
2019, a 
putative 
class 
action 
was 
filed 
in 
the 
District 
Court 
for 
the 
Southern District 
of New 
York against 
UBS and 
numerous other 
banks 
on 
behalf 
of 
US 
residents 
who, 
since 
1 February 
2014, 
directly 
transacted 
with 
a 
defendant 
bank 
in 
USD LIBOR 
instruments. 
The 
complaint 
asserts 
antitrust 
claims. 
The 
defendants moved to 
dismiss the complaint 
in August 2019. 
On 
26 March 2020 the 
court granted defendants’ motion to 
dismiss 
the 
complaint 
in 
its 
entirety. 
Plaintiffs 
have 
appealed 
the 
dismissal. 
In 
August 
2020, 
an 
individual 
action 
was 
filed 
in 
the 
Northern District 
of California 
against UBS 
and numerous 
other 
banks 
alleging that 
the defendants 
conspired to 
fix the 
interest 
rate 
used 
as 
the 
basis 
for 
loans 
to 
consumers 
by 
jointly 
setting 
the 
USD 
LIBOR 
rate 
and 
monopolized 
the 
market 
for 
LIBOR-
based consumer loans and credit cards. 
Other benchmark 
class actions 
in the 
US: 
In 2014, 
2015 and 
2017, the 
court in 
one of 
the Euroyen 
TIBOR lawsuits 
dismissed 
certain 
of 
the 
plaintiffs’ 
claims, 
including 
plaintiffs’ 
federal 
antitrust 
and 
racketeering 
claims. 
In 
August 
2020, 
the 
court 
granted defendants’ 
motion for 
judgment on 
the pleadings 
and 
dismissed the lone remaining claim in the action as impermissibly 
extraterritorial. 
Plaintiffs 
have 
appealed. 
In 
2017, 
the 
court 
dismissed 
the 
other 
Yen 
LIBOR 
/ 
Euroyen 
TIBOR 
action 
in 
its 
entirety 
on 
standing 
grounds. 
In 
April 
2020, 
the 
appeals 
court 
reversed 
the 
dismissal 
and 
in 
August 
2020 
plaintiffs 
in 
that 
action 
filed 
an 
amended 
complaint. 
Defendants 
moved 
to 
dismiss 
the 
amended 
complaint 
in 
October 
2020. 
In 
2017, 
the 
court dismissed 
the CHF LIBOR 
action on 
standing grounds 
and 
failure 
to 
state 
a 
claim. 
Plaintiffs 
filed 
an 
amended 
complaint 
following 
the 
dismissal, 
and 
the 
court 
granted 
a 
renewed 
motion 
to 
dismiss in 
September 2019. 
Plaintiffs have 
appealed. 
Also 
in 
2017, 
the 
court 
in 
the 
EURIBOR 
lawsuit 
dismissed 
the 
case as 
to UBS 
and certain 
other foreign 
defendants for 
lack of 
personal 
jurisdiction. 
Plaintiffs have 
appealed. 
In October 
2018, 
the 
court 
in 
the 
SIBOR 
/ 
SOR 
action 
dismissed 
all 
but 
one 
of 
plaintiffs’ 
claims 
against 
UBS. 
Plaintiffs 
filed 
an 
amended 
complaint 
following 
the 
dismissal, 
and 
the 
courts 
granted 
a 
renewed 
motion 
to 
dismiss 
in 
July 
2019. 
Plaintiffs 
have 
appealed. 
In 
November 
2018, 
the 
court 
in 
the 
BBSW 
lawsuit 
dismissed 
the 
case 
as 
to 
UBS 
and 
certain 
other 
foreign 
defendants 
for 
lack 
of 
personal 
jurisdiction. 
Following 
that 
dismissal, 
plaintiffs 
filed 
an 
amended 
complaint 
in 
April 
2019, 
which 
UBS 
and 
other 
defendants 
named 
in 
the 
amended 
complaint 
moved to 
dismiss. In 
February 2020, 
the court 
in the 
BBSW 
action 
granted 
in 
part 
and 
denied 
in 
part 
defendants’ 
motions 
to 
dismiss 
the 
amended 
complaint. 
In 
August 
2020, 
UBS and 
other BBSW 
defendants joined 
a motion 
for judgment 
on 
the 
pleadings. 
The 
court 
dismissed 
the 
GBP 
LIBOR 
action in 
August 2019. Plaintiffs have appealed. 
Government bonds:
 
Putative class actions 
have been filed since 
2015 in US federal courts against UBS and other banks on behalf 
of persons who 
participated in markets for US 
Treasury securities 
since 2007. A consolidated complaint 
was filed in 2017 in the US 
District Court for 
the Southern District 
of New York 
alleging that 
the banks colluded with 
respect to, and manipulated 
prices of, US 
Treasury securities 
sold 
at 
auction 
and 
in 
the 
secondary market 
and 
asserting 
claims 
under 
the 
antitrust 
laws 
and 
for 
unjust 
enrichment. 
Defendants’ 
motions 
to 
dismiss 
the 
consolidated 
complaint 
are 
pending. 
Similar 
class 
actions 
have 
been 
filed 
concerning European 
government bonds 
and 
other 
government 
bonds. 
UBS 
and 
reportedly 
other 
banks 
are 
responding 
to 
investigations 
and 
requests 
for 
information 
from 
various 
authorities 
regarding 
government 
bond 
trading 
practices. 
As 
a 
result of its review to date, UBS has taken appropriate action. 
With 
respect 
to 
additional 
matters 
and 
jurisdictions 
not 
encompassed 
by 
the 
settlements 
and 
orders 
referred 
to 
above, 
our balance 
sheet at 
31 December 2020 
reflected a 
provision in 
an 
amount 
that 
UBS 
believes 
to 
be 
appropriate 
under 
the 
applicable accounting 
standard. As 
in the 
case of 
other matters 
for which 
we have 
established provisions, 
the future 
outflow of 
resources in 
respect of 
such matters 
cannot be 
determined with 
certainty 
based 
on 
currently 
available 
information 
and 
accordingly 
may 
ultimately 
prove to 
be 
substantially 
greater 
(or 
may be less) than the provision that we have recognized. 
 
 
 

Consolidated financial statements | UBS AG consolidated financial statements

490

Note 18

Provisions and contingent liabilities (continued)

6. Swiss retrocessions

The

Federal

Supreme

Court

Switzerland

ruled

2012,

test

case

against

UBS,

that

distribution

fees

paid

firm

for

distributing

third-party

and

intra-group

investment

funds

and

structured products must be

disclosed and surrendered to clients

who have

entered into

a discretionary

mandate agreement

with

the firm,

absent a

valid waiver. FINMA

issued a

supervisory note

all

Swiss

banks

response

the

Supreme

Court

decision.

UBS

has

met

the

FINMA

requirements

and

has

notified

all

potentially affected clients.

The

Supreme Court

decision has

resulted, and

may continue

to result,

in a

number of

client requests

for UBS

to disclose

and

potentially

surrender

retrocessions.

Client

requests

are

assessed

on a case-by-case basis. Considerations taken into account when

assessing these cases

include, among other

things, the existence

discretionary

mandate

and

whether

not

the

client

documentation

contained

valid

waiver

with

respect

distribution fees.

Our balance sheet at

31 December 2020 reflected a

provision

with

respect

matters

described

this

item

amount

that

UBS

believes

appropriate

under

the

applicable

accounting

standard.

The

ultimate

exposure

will

depend

client

requests

and

the

resolution

thereof,

factors

that

are

difficult

predict

and

assess.

Hence,

the

case

other

matters

for

which

have

established

provisions,

the

future

outflow

resources

respect

such

matters

cannot

determined

with

certainty

based

currently

available

information

and

accordingly

may

ultimately

prove

substantially greater

(or may

be less)

than the

provision that

have recognized.

Note 19

Other liabilities

a) Other financial liabilities measured at amortized cost

USD million

31.12.20

31.12.19

Other accrued expenses

1,508

1,697

Accrued interest expenses

1,382

1,596

Settlement and clearing accounts

1,181

1,368

Lease liabilities

3,821

3,858

Other

2,530

1,854

Total other financial liabilities measured at amortized cost

10,421

10,373

1 In 2020 UBS AG modified the conditions for continued vesting of certain outstanding deferred compensation awards for qualifying

employees. Refer to Note 1b for more information.

b) Other financial liabilities designated at fair value

USD million

31.12.20

31.12.19

Financial liabilities related to unit-linked investment contracts

20,975

28,145

Securities financing transactions

7,317

5,742

Over-the-counter debt instruments

2,060

2,022

Funding from UBS Group AG and its subsidiaries

1,375

217

Other

Total other financial liabilities designated at fair value

31,773

36,157

of which: life-to-date own credit (gain) / loss

148

c) Other non-financial liabilities

USD million

31.12.20

31.12.19

Compensation-related liabilities

4,776

4,339

of which: financial advisor compensation plans

1,497

1,502

of which: other compensation plans

2,034

1,750

of which: net defined benefit liability

711

629

of which: other compensation-related liabilities

534

458

Deferred tax liabilities

558

311

Current tax liabilities

943

780

VAT and other tax payables

470

445

Deferred income

212

134

Other

202

Total other non-financial liabilities

7,018

6,211

1 Comparative-period information has been restated. Refer to Note 1b for more information.

2 Includes liabilities for payroll taxes and untaken vacation.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
491 
Additional information 
Note 20 
Expected credit loss measurement
 
 
a) Expected credit losses in the period 
Total 
net 
credit 
loss 
expenses 
were 
USD 695 
million 
in 
2020, 
reflecting net 
credit loss 
expenses of 
USD 266 million 
related to 
stage 1 
and 
2 
positions 
and 
USD 429 
million 
net 
credit 
loss 
expenses related to credit-impaired (stage 3) positions. 
Stage 1 
and 
2 
net 
credit 
loss 
expenses 
of 
USD 266 
million 
were primarily 
driven by 
a net 
expense of 
USD 200 million 
from 
updating 
the 
forward-looking 
scenarios 
and 
their 
associated 
weightings, 
factoring 
in 
updated 
macroeconomic 
assumptions 
to 
reflect 
the 
effects 
of 
the 
COVID-19 
pandemic, 
with 
approximately half 
from the 
baseline scenario 
and half 
from the 
severe 
downside 
scenario. 
The 
main 
drivers 
included 
updated 
GDP and unemployment assumptions in Switzerland and the US, 
primarily 
impacting 
Large 
corporate 
clients
 
an
d, 
to 
a 
lesser 
extent, 
Private clients 
with mortgages
, 
Real estate financing
 
and 
SME 
clients
. 
These 
scenario 
updates 
impacted 
remeasurements 
for stage 1 and 2 positions 
without stage transfers and triggered 
exposure movements 
between stages, 
primarily from 
stage 1 to 
stage 2 as probabilities of default increased. 
In 
addition 
to 
the 
scenario 
related 
effects, 
stage 1 
and 
2 
expenses of 
USD 73 million 
arose from 
new transactions, 
net of 
releases 
from 
derecognized 
transactions, 
primarily 
from 
Large 
corporate 
clients
 
and 
SME 
clients
. 
A 
further 
USD
 
32 
million 
stage 1 and 2 net release of 
expenses resulted from a number of 
model updates, primarily impacting 
Financial intermediaries
, 
Real 
estate 
financing
 
and 
SME 
clients
. 
The 
remaining 
stage 1 
and 2 
expenses 
of 
USD 24 
million 
mainly 
reflect 
the 
effects 
of 
post-
model adjustments 
for selected 
exposures to 
Swiss 
SME clients
, 
as 
well 
as 
remeasurements 
within the 
loan 
book, mainly 
in 
the 
Investment Bank. 
The 
changes 
in 
the 
macroeconomic 
environment 
in 
the 
second half of 
2020 generally included 
more optimistic forward-
looking assumptions 
for both 
the baseline 
and severe 
downside 
scenarios 
compared 
with 
those 
applied 
in 
the 
first 
half 
of 
the 
year. 
Management applied 
a post-model 
expense adjustment 
of 
USD 117 million 
to offset 
the stage 1 
and 2 
releases that 
would 
have otherwise arisen, 
deeming them to be 
premature given the 
high 
degree 
of 
prevailing 
uncertainties 
and 
the 
wide 
range 
of 
reasonable 
possible outcomes. 
›
 
Refer to Note 20b 
for more information 
 
Stage 3 
net 
expenses 
of 
USD 429 
million 
were 
recognized 
across a 
number of 
defaulted positions. 
In the 
Investment Bank, 
stage 3 
net 
expenses 
of 
USD 217 
million 
were 
recognized, 
of 
which 
USD 81 
million 
related 
to 
an 
exposure 
to 
a 
client 
in 
the 
travel 
sector. 
In 
Personal 
& 
Corporate 
Banking, 
stage 3 
net 
expenses of 
USD 128 million 
were recognized, of 
which USD 59 
million related 
to a 
case of 
fraud at 
a commodity 
trade finance 
counterparty, which affected a number of 
lenders, including UBS 
AG. 
In 
Global 
Wealth 
Management, 
stage 3 
net 
expenses 
of 
USD 40 million were recognized, primarily across 
a small number 
of collateralized and 
securities-based lending positions. 
In Group 
Functions, 
stage 3 
expenses of 
USD 42 million 
were recognized 
from 
one 
energy-related 
exposure 
in 
the 
Non-core 
and 
Legacy 
Portfolio. 
 
 
 
 
 
Credit loss (expense) / release 
USD million 
Global 
Wealth 
Management 
Personal & 
Corporate 
Banking 
Asset 
Management 
Investment 
Bank 
Group 
Functions 
Total 
For the year ended 31.12.20 
Stages 1 and 2 
 
(48) 
 
(129) 
 
0 
 
(88) 
 
0 
 
(266) 
Stage 3 
 
(40) 
 
(128) 
 
(2) 
 
(217) 
 
(42) 
 
(429) 
Total credit loss (expense) / release 
 
(88) 
 
(257) 
 
(2) 
 
(305) 
 
(42) 
 
(695) 
For the year ended 31.12.19 
Stages 1 and 2 
 
3 
 
23 
 
0 
 
(4) 
 
0 
 
22 
Stage 3 
 
(23) 
 
(44) 
 
0 
 
(26) 
 
(7) 
 
(100) 
Total credit loss (expense) / release 
 
(20) 
 
(21) 
 
0 
 
(30) 
 
(7) 
 
(78) 
For the year ended 31.12.18 
Stages 1 and 2 
 
0 
 
0 
 
0 
 
(9) 
 
0 
 
(9) 
Stage 3 
 
(15) 
 
(56) 
 
0 
 
(29) 
 
(8) 
 
(109) 
Total credit loss (expense) / release 
 
(15) 
 
(56) 
 
0 
 
(38) 
 
(8) 
 
(117) 
 
 

 
 
Consolidated financial statements | UBS AG consolidated financial statements 
492 
 
Note 20 
Expected credit loss measurement (continued) 
 
b) Changes to ECL models, scenarios, scenario weights and key inputs 
Refer to 
Note 1a 
for information 
about the 
principles governing 
ECL models, scenarios, scenario weights and key inputs applied. 
During 
2020, 
management 
carefully 
considered 
guidance 
issued by supervisory authorities concerning the interpretation of 
key elements 
of IFRS 
9, 
Financial instruments
, in 
the context 
of 
COVID-19. 
Governance 
Comprehensive 
cross-functional and 
cross-divisional governance 
processes are 
in place and 
used to discuss 
and approve 
scenario 
updates 
and 
weights, 
to 
assess 
whether 
significant 
increases in 
credit 
risk 
resulted 
in 
stage 
transfers, 
to 
review 
model 
outputs 
and to reach conclusions regarding post-model adjustments. 
Model changes 
During 
2020, 
the 
probability 
of 
default 
(
PD
)
 
and 
loss 
given 
default 
(LGD) 
models 
applied 
to 
Financial 
intermediaries
, 
Large 
corporate 
clients
, 
Real 
estate 
financing
 
and 
SME 
clients
 
were 
revised 
to 
reflect 
updates 
to 
PD 
and 
LGD 
risk 
drivers 
and 
macroeconomic dependencies. 
The 
model 
updates 
resulted 
in 
a 
USD 32 
million 
decrease 
in 
ECL
 
allowances, 
primarily 
in 
Personal 
& 
Corporate 
Banking 
across 
Financial 
intermediaries
, 
Real 
estate 
financing
 
and 
SME 
clients
. 
Scenario and key input updates 
During 
2020, 
the 
four 
scenarios 
and 
related 
macroeconomic 
factors 
that 
were applied 
at 
the end 
of 
2019 were 
reviewed in 
light 
of 
the 
economic 
and 
political 
conditions 
and 
prevailing 
uncertainties 
through 
a 
series 
of 
governance 
meetings, 
with 
input 
from 
UBS 
AG 
risk 
and 
finance 
experts 
across 
the 
regions 
and 
business 
divisions. 
Scenario 
assumptions 
are 
benchmarked 
against 
external 
data, e.g. 
, 
from Bloomberg 
Consensus, 
Oxford 
Economics 
and 
the 
Internat
ional 
Monetary 
Fund 
World 
Economic 
Outlook 
(IMF 
WEO). 
The 
hypothetical 
scenarios, 
in 
particular the 
upside and 
mild downside 
scenarios, were 
viewed 
less 
plausible. 
Given 
the 
considerable 
uncertainties 
associated 
with 
the economic 
conditions, an 
exceptional interim 
design of 
these 
scenarios 
was 
not 
deemed 
appropriate. 
Therefore, 
management 
concluded
 
that 
the 
probability 
weights 
of 
the 
upside and the mild downside scenarios would be set to zero. 
The 
baseline scenario, 
which is 
aligned 
to the 
economic and 
mar
ket 
assumptions 
used 
for 
UBS
 
AG
’s
 
business 
planning 
purposes, 
and 
the 
severe 
downside 
scenario, 
which 
is 
the 
Group’s binding stress 
scenario, were updated 
throughout 2020 
using 
the 
most 
recent 
available 
macroeconomic 
and 
market 
information. 
The 
baseline 
scenario 
updates 
during 
the 
first 
half 
of 
2020 
assumed a deterioration of GDP in relevant markets, especially 
in 
the 
US and 
in Switzerland, 
increasing 
unemployment, including 
a 
sharp 
increase 
in 
the 
US 
to 
previously 
unseen 
levels, 
lower 
equity 
prices 
and 
higher 
market 
volatility. 
House 
prices 
were 
assumed 
to 
be 
largely 
flat 
in 
Switzerland 
over 
2020 
but 
to 
decrease 
in 
the 
US. 
Overall, 
only 
modest 
economic 
improvements were expected from 
the second half of 
2020. The 
severe 
downside 
assumptions were 
considered 
to 
be 
consistent 
with 
assumptions 
for 
COVID-19-related 
disruption 
but 
to 
a 
significantly 
more 
adverse 
degree 
than 
what 
was 
considered 
under 
the 
baseline 
scenario, 
with 
a 
full 
year 
contraction 
expected 
to 
continue 
into 
2021 
and 
only 
a 
moderate 
recovery 
starting from the end of 2021. 
Improvements 
in 
macroeconomic 
forward
-
looking 
assumptions started from the third quarter 2020, with the fourth 
quarter 2020 in particular including 
more optimistic assumptions 
for the baseline, with 
increased GDP growth forecasts 
and lower 
unemployment levels 
in the 
US and 
in Switzerland 
in particular, 
given 
improvements 
in 
economic 
activity 
as 
well 
as 
greater 
optimism 
regarding 
the 
availability 
and 
effective 
distribution 
of 
vaccines 
and 
continued 
government 
support. 
In 
addition, 
the 
assumptions 
for 
the 
severe 
downside 
scenario 
were 
made 
less 
pessimistic in the second half of 2020. 
The table 
on the 
following page 
details the 
key assumptions 
for 
the 
baseline 
and 
severe 
downside 
scenarios 
applied 
as 
of 
31 December 2020. 
The outlook 
of the 
one-year and 
three-year 
cumulative 
GDP 
growth 
rates 
in 
the 
baseline 
are 
significantly 
higher 
than 
those 
seen at 
the end 
of 
2019, 
as 
the economy 
is 
expected 
to 
recover 
from 
the 
sharp 
contractions 
seen 
in 
mid-
2020. 
However, 
GDP 
levels 
are 
expected 
to 
remain 
below 
31 December 2019 
levels until 
2022 in 
the US 
and Switzerland, 
and 
until 
2023 
in 
the 
Eurozone. 
The 
GDP 
growth 
rates 
in 
the 
severe downside 
scenario are 
also higher, 
to reflect 
the recovery 
from the 
weaker starting levels. 
Under the 
baseline scenario, US 
unemployment is expected to 
decline to 5.5% by 
the end of the 
first 
year 
and 
to 
4.5% 
by 
the 
end 
of 
the 
third 
year. 
Unemployment 
rates 
in 
the 
Eurozone 
and 
Switzerland 
are 
expected 
to 
rise 
modestly 
in 
the 
first 
year 
in
 
the 
baseline
 
scenario but 
to recover 
by the 
end of 
the third 
year. The 
severe 
downside scenario includes marked increases in unemployment. 
 
 

493

Note 20

Expected credit loss measurement (continued)

Scenario weights and post-model adjustments

consequence

the

exceptional

circumstances

and

prevailing

uncertainties

during

2020

and

31 December

2020,

the

weight

allocations

shifted

significantly

since

2019,

with

the

baseline

scenario

weighted

70%

and

the

severe

downside scenario at

30% through

the end of

the third

quarter

of 2020,

to best

reflect management’s

sentiment regarding

the

boundaries of economic

outcomes. During the

fourth quarter of

2020,

changes

the

macro-economic

environment

generally

included more

optimistic forward-looking

assumptions as

stated

above.

However,

developments

31 December

2020,

including

increase

infection

and

hospitalization

rates,

well as strict

lockdowns in many jurisdictions,

led to a

continued

high

level

uncertainty

relation

the

effects

the

pandemic

and

its

impact

the

global

economy.

These

developments

gave

rise

questions

around

whether

the

assumptions

will

play

out

forecasted.

consequence,

the

fourth

quarter

2020,

management

decreased

the

weight

placed

the

baseline

scenario

from

70%

60%

and

increased

the

weight

placed

the

severe

downside

scenario

from

30%

40%

and

applied

additionally

post

model

adjustment

of USD 117

million to

offset

the stage 1

and 2

ECL

releases

which

would

have

otherwise

arisen

from

the

scenario

update effects.

ECL scenario

Assigned weights in %

31.12.20

31.12.19

Upside

0.0

7.5

Baseline

60.0

42.5

Mild downside

0.0

35.0

Severe downside

40.0

15.0

Scenario assumptions

One year

Three years cumulative

31.12.20

Baseline

Severe downside

Baseline

Severe downside

Real GDP growth (% change)

United States

2.7

(5.9)

9.1

(3.8)

Eurozone

2.5

(8.7)

9.9

(10.3)

Switzerland

3.3

(6.6)

9.0

(5.7)

Consumer price index (% change)

United States

1.7

(1.2)

5.5

0.4

Eurozone

1.4

(1.3)

3.9

(1.7)

Switzerland

0.3

(1.8)

0.9

(1.6)

Unemployment rate (end-of-period level, %)

United States

5.5

12.1

4.5

9.9

Eurozone

9.5

14.1

8.0

16.4

Switzerland

3.8

6.1

3.2

6.8

Fixed income: 10-year government bonds (change in yields, basis points)

USD

22.0

(50.0)

46.0

(15.0)

EUR

4.0

(35.0)

21.0

(25.0)

CHF

13.0

(70.0)

31.0

(35.0)

Equity indices (% change)

S&P 500

(2.9)

(50.2)

(1.7)

(40.1)

EuroStoxx 50

3.8

(57.6)

13.5

(50.4)

SPI

(0.8)

(53.6)

5.8

(44.2)

Swiss real estate (% change)

Single-Family Homes

3.4

(17.0)

7.1

(30.0)

Other real estate (% change)

United States (S&P / Case-Shiller)

2.5

(15.3)

9.2

(28.7)

Eurozone (House Price Index)

1.1

(22.9)

7.2

(35.4)

1 2020

unemployment rate

is presented

as an

end-of-period level.

2019 unemployment

rate was

presented as

a change

in levels.

The 2020

change in

level would

have been:

One year

shock in

the baseline

scenario: United States:

-3.5%, Eurozone: 0.4%

and Switzerland: 0.4%

and for the

global crisis scenario:

United States: 3.1%,

Eurozone: 5.0% and

Switzerland: 2.6%. Three

year shock in

the baseline scenario:

United States: -4.5%, Eurozone: -1.2% and Switzerland: -0.2% and for the global crisis scenario: United States: 0.9%, Eurozone: 7.2% and Switzerland: 3.4%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
494 
 
Note 20 
Expected credit loss measurement (continued) 
Scenario assumptions 
One year 
Three years cumulative 
31.12.19 
Baseline 
Severe downside 
Baseline 
Severe downside 
Real GDP growth (% change) 
United States 
 
1.9 
 
(6.4) 
 
6.4 
 
(4.3) 
Eurozone 
 
1.0 
 
(9.1) 
 
2.8 
 
(10.8) 
Switzerland 
 
1.5 
 
(7.0) 
 
4.8 
 
(6.2) 
Consumer price index (% change) 
United States 
 
1.8 
 
(1.2) 
 
6.2 
 
0.4 
Eurozone 
 
1.3 
 
(1.3) 
 
4.3 
 
(1.7) 
Switzerland 
 
0.8 
 
(1.8) 
 
2.7 
 
(1.6) 
Unemployment rate (change, percentage points) 
United States 
 
(0.4) 
 
5.7 
 
(0.5) 
 
5.6 
Eurozone 
 
(0.1) 
 
5.6 
 
(0.2) 
 
7.9 
Switzerland 
 
0.1 
 
2.6 
 
0.3 
 
3.6 
Fixed income: 10-year government bonds (change in yields, basis points) 
USD 
 
0.2 
 
(100.0) 
 
10.1 
 
(75.0) 
EUR 
 
8.4 
 
(30.0) 
 
28.2 
 
(20.0) 
CHF 
 
9.5 
 
(70.0) 
 
30.0 
 
(35.0) 
Equity indices (% change) 
S&P 500 
 
3.5 
 
(53.0) 
 
9.5 
 
(42.9) 
EuroStoxx 50 
 
0.5 
 
(60.0) 
 
4.4 
 
(52.9) 
SPI 
 
1.4 
 
(56.2) 
 
5.3 
 
(46.8) 
Swiss real estate (% change) 
Single-Family Homes 
 
0.1 
 
(15.2) 
 
2.3 
 
(27.0) 
Other real estate (% change) 
United States (S&P / Case-Shiller) 
 
4.0 
 
(13.3) 
 
16.7 
 
(23.4) 
Eurozone (House Price Index) 
 
1.2 
 
(23.0) 
 
2.2 
 
(33.2) 
c) Development of ECL allowances and provisions 
The ECL 
allowances and 
provisions recognized 
in the 
period are 
impacted by a variety of factors, such as: 
–
 
origination of new instruments during the period; 
–
 
effect 
of 
passage 
of 
time 
as 
the 
ECLs 
on 
an 
instrument 
for 
the 
remaining 
lifetime 
decrease 
(all 
other 
factors 
remaining 
the same); 
–
 
discount 
unwind 
within ECLs 
as 
it 
is 
measured 
on 
a 
present 
value basis; 
–
 
derecognition of instruments in the period; 
–
 
change in individual asset quality of instruments; 
–
 
effect 
of 
updating 
forward-looking 
scenarios 
and 
the 
respective weights; 
–
 
movements 
from 
a 
maximum 
12-month 
ECL 
to 
the 
recognition 
of 
lifetime 
ECLs 
(and 
vice 
versa) 
following 
transfers between stages 1 and 2; 
–
 
movements 
from 
stages 1 
and 
2 
to 
stage 3 
(credit-impaired 
status) 
when 
default 
has 
become 
certain 
and 
probability 
of 
default (PD) increases to 100% (or vice versa); 
–
 
changes in models or updates to model parameters; and 
–
 
foreign 
exchange 
translations 
for 
assets 
denominated 
in 
foreign currencies and other movements. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
495 
 
Note 20 
Expected credit loss measurement (continued) 
 
The following 
table explains 
the changes 
in the 
ECL allowances 
and provisions 
for on- 
and off-balance 
sheet financial 
instruments 
and other credit lines in scope of ECL requirements between the beginning and the end of the period due to the factors listed on the 
previous page. 
 
Development of ECL allowances and 
provisions 
USD million 
Total 
Stage 1 
Stage 2 
Stage 3 
Balance as of 31 December 2019 
 
(1,029) 
 
(181) 
 
(160) 
 
(688) 
Net movement from new and derecognized transactions
1
 
(28) 
 
(90) 
 
17 
 
46 
of which: Private clients with mortgages 
 
(2)
 
(3) 
 
2 
 
0 
of which: Real estate financing 
 
(3) 
 
(5) 
 
2 
 
0 
of which: Large corporate clients 
 
(32) 
 
(29) 
 
(4) 
 
0 
of which: SME clients 
 
(16) 
 
(14) 
 
(3) 
 
0 
of which: Other 
 
26 
 
(39) 
 
20 
 
46 
 
of which: Securities financing transactions REIT 
 
32 
 
(1) 
 
15 
 
17 
 
of which: Loans to financial advisors 
 
9 
 
(1) 
 
9 
 
0 
 
of which: Lombard loans 
 
23 
 
(6) 
 
0 
 
29 
 
of which Financial intermediaries 
 
(20) 
 
(15) 
 
(5) 
 
0 
Remeasurements with stage transfers
2
 
(427) 
 
45 
 
(134) 
 
(338) 
of which: Private clients with mortgages 
 
(19) 
 
(2) 
 
(17) 
 
0 
of which: Real estate financing 
 
(6) 
 
3 
 
(9) 
 
0 
of which: Large corporate clients 
 
(224) 
 
34 
 
(83) 
 
(175) 
of which: SME clients 
 
(43) 
 
(1) 
 
(11) 
 
(31) 
of which: Other 
 
(134) 
 
11 
 
(14) 
 
(131) 
 
of which: Securities financing transactions REIT 
 
(36) 
 
0 
 
(18) 
 
(19) 
 
of which: Loans to financial advisors 
 
(12) 
 
7 
 
(7)
 
(11) 
 
of which: Lombard loans 
 
(36) 
 
0 
 
0 
 
(36) 
 
of which Commodity Trade Finance 
 
(59) 
 
0
 
0 
 
(59) 
Remeasurements without stage transfers
3
 
(271) 
 
(88) 
 
(47) 
 
(136) 
of which: Private clients with mortgages 
 
(34) 
 
(19) 
 
(8) 
 
(7) 
of which: Real estate financing 
 
(14) 
 
(4) 
 
(11) 
 
1 
of which: Large corporate clients 
 
(149) 
 
(53) 
 
(17) 
 
(79) 
of which: SME clients 
 
(13) 
 
0 
 
(7) 
 
(6) 
of which: Other 
 
(60) 
 
(11) 
 
(4) 
 
(44) 
 
of which: Loans to financial advisors 
 
(18) 
 
(12) 
 
(3) 
 
(3) 
 
of which: Lombard loans 
 
(3) 
 
6 
 
0 
 
(9) 
 
of which: Credit cards 
 
(12) 
 
0 
 
0 
 
(12) 
Model changes
4
 
32 
 
21 
 
11 
 
0 
Total ECL allowance movements with profit or loss impact
5
 
(694) 
 
(112)
 
(154)
 
(429) 
Write-offs, FX and other movements (without profit or loss impact)
6
 
254 
 
(14) 
 
(19) 
 
287 
Balance as of 31 December 2020 
 
(1,468) 
 
(306) 
 
(333) 
 
(829) 
1 Represents the 
increase and decrease 
in allowances 
and provisions resulting 
from financial instruments 
(including guarantees and 
facilities) that were 
newly originated, purchased 
or renewed and 
from the final 
derecognition of 
loans or facilities 
on their 
maturity date 
or earlier. 
2 Represents 
the remeasurement 
between 12-month 
and lifetime 
ECL due 
to stage 
transfers. 
3 Represents the 
change in 
allowances and 
provisions related to 
changes in 
model inputs 
or assumptions, 
including changes 
in forward-looking 
macroeconomic conditions, 
changes in 
the exposure 
profile, PD 
and LGD 
changes, and 
unwinding of 
the time 
value. 
4 Represents the change in the allowances 
and provisions related to changes in models 
and methodologies. 
5 Includes ECL movements from 
new and derecognized transactions, 
remeasurement changes, 
model and methodology changes. 
6 Represents the decrease 
in allowances and 
provisions resulting from 
write-offs of the ECL 
allowance against the 
gross carrying amount when 
all or part of 
a financial asset is 
deemed uncollectible or forgiven and movements in foreign exchange rates. 
 
In 
2020, 
ECL 
allowances 
and 
provisions 
increased 
by 
USD 694 
million from net credit loss expenses impacting profit or loss: 
–
 
a 
USD 28 
million 
net 
increase 
from 
new 
and 
derecognized 
transactions
 
that
 
resulted 
from 
a 
USD
 
90 
million 
stage
 
1 
increase primarily 
in 
Large corporate 
clients
 
and 
SME 
clients
, 
offset 
by 
a 
USD 63 
million 
net 
release 
from 
stage 2 
and 
3 
transactions, 
driven 
by 
transactions 
that 
were 
terminated 
before 
their 
contractual 
maturity, mainly 
in 
Lombard 
lending
 
and 
Securities 
financing 
transactions 
Real 
estate 
investment 
trusts (SFT-REITs)
; 
–
 
a USD 697 million 
net increase from 
book quality movements 
that 
resulted 
from 
a 
USD 427 
million 
net 
increase 
from 
transactions moving from 
stages 
1 and 2 
into stages 2 and 
3, 
respectively, 
of 
which 
approximately 
half 
relate
d
 
to 
Large 
corporate 
clients, 
with
 
further 
substantial 
effects 
from 
Commodity 
trade 
finance, 
SME
 
clients
, 
SFT
 
REITs
 
and 
Lombard 
loans
, 
and 
USD 271 
million 
from 
remeasurements 
without 
stage 
transfers, 
approximately 
half 
relating 
to 
Large 
corporate 
clients
, 
and 
another 
significant 
portion 
relating 
to 
real 
estate 
related 
lending, 
primarily 
due 
to 
the 
updates 
of 
macroeconomic factors; 
–
 
a USD 32 million net decrease that resulted 
from a number of 
model 
revisions, 
primarily 
impacting 
Financial 
intermediaries
, 
Real estate financing
 
and 
SME clients
, from updates to the PD 
and LGD risk drivers and macroeconomic dependencies. 
 
In 
addition 
to 
the 
movements 
impacting 
profit 
or 
loss, 
allowances 
decreased 
by 
USD 346 
million 
as 
a 
result 
of 
a 
number 
of 
write 
offs. 
A 
further 
USD 75 
million 
allowance 
increase 
resulted 
from 
foreign 
exchange 
movements, 
almost 
entirely 
due 
to 
the 
Swiss 
franc 
strengthening 
against 
the 
US 
dollar. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
496 
 
Note 20 
Expected credit loss measurement (continued) 
 
The following 
table explains 
the changes 
in the 
ECL allowances 
and provisions 
for on- 
and off-balance 
sheet financial 
instruments 
and other credit 
lines
 
in scope of ECL 
requirements between the 
beginning and the 
end of the prior 
period due to the 
factors listed 
earlier in this note. 
 
 
USD million 
Total 
Stage 1 
Stage 2 
Stage 3 
Balance as of 31 December 2018 
 
(1,054) 
 
(176) 
 
(183) 
 
(695) 
Net movement from new and derecognized transactions
1
 
(53) 
 
(66) 
 
10 
 
3 
of which: Private clients with mortgages 
 
(1)
 
(4) 
 
3 
 
0 
of which: Real estate financing 
 
(3) 
 
(5) 
 
2 
 
0 
of which: Large corporate clients 
 
(6) 
 
(14) 
 
8 
 
0 
of which: SME clients 
 
(16) 
 
(14) 
 
(2) 
 
0 
Remeasurements with stage transfers
2
 
(125) 
 
14 
 
(35) 
 
(105) 
of which: Private clients with mortgages 
 
(5) 
 
1 
 
(5) 
 
(1) 
of which: Real estate financing 
 
5 
 
4 
 
1 
 
0 
of which: Large corporate clients 
 
(45) 
 
4 
 
(11) 
 
(38) 
of which: SME clients 
 
(64) 
 
2 
 
(11) 
 
(55) 
Remeasurements without stage transfers
3
 
73 
 
31 
 
41 
 
1 
of which: Private clients with mortgages 
 
22 
 
2 
 
30 
 
(9) 
of which: Real estate financing 
 
1 
 
0 
 
0 
 
1 
of which: Large corporate clients 
 
(24) 
 
(10) 
 
0 
 
(14) 
of which: SME clients 
 
35 
 
9 
 
10 
 
17 
Model changes
4
 
26 
 
17 
 
9 
 
0 
Total ECL allowance movements with profit or loss impact
5
 
(78) 
 
(4)
 
25
 
(100) 
Write-offs, FX and other movements (without profit or loss impact)
6
 
105 
 
(1) 
 
(2) 
 
108 
Balance as of 31 December 2019 
 
(1,029) 
 
(181) 
 
(160) 
 
(688) 
1 Represents the 
increase and decrease 
in allowances 
and provisions resulting 
from financial instruments 
(including guarantees 
and facilities) that 
were newly originated, 
purchased or renewed 
and from the 
final 
derecognition of 
loans or facilities 
on their 
maturity date 
or earlier. 
2 Represents 
the remeasurement 
between 12-month 
and lifetime 
ECL due 
to stage 
transfers. 
3 Represents the 
change in 
allowances and 
provisions related to 
changes in 
model inputs 
or assumptions, 
including changes 
in forward-looking 
macroeconomic conditions, 
changes in 
the exposure 
profile, PD 
and LGD 
changes, and 
unwinding of 
the time 
value. 
4 Represents the change in 
the allowances and provisions 
related to changes in models 
and methodologies. 
5 To align to 
the table format for the 
2020 ECL allowance and 
provision movement, UBS has 
adjusted the 
2019 table 
format. Includes 
ECL movements 
from new 
and derecognized 
transactions, 
remeasurement changes, 
model and 
methodology changes. 
6 Represents the 
decrease in 
allowances 
and 
provisions resulting from write-offs of the ECL allowance against the gross carrying amount when all or part of a financial asset is deemed uncollectible 
or forgiven and movements in foreign exchange rates. 
 
 
As explained 
in Note 
1a, the 
assessment of 
an SICR 
considers a 
number 
of 
qualitative 
and 
quantitative 
factors 
to 
determine 
whether 
a 
stage 
transfer 
between 
stage 1 
and 
stage 2 
is 
required. 
The 
primary 
assessment 
considers 
changes 
in 
probability 
of 
default 
(PD) 
based 
on 
rating 
analyses 
and 
economic 
outlook. 
Additionally, 
UBS
 
AG
 
considers 
counterparties that 
have moved 
to a 
credit watch 
list and 
those 
with payments that are at least 30 days past due. 
 
Stage 2 classification by trigger 
ECL allowances / provisions as of 31 December 2020 
USD million 
Stage 2 
of which: 
PD layer 
of which: 
watch list 
of which: 
≥30 days 
past due 
On-and off-balance sheet 
 
(333) 
 
(252) 
 
(41) 
 
(40) 
of which: Private clients with mortgages 
 
(93) 
 
(83) 
 
0 
 
(11) 
of which: Real estate financing 
 
(53) 
 
(45) 
 
(2) 
 
(6) 
of which: Large corporate clients 
 
(110) 
 
(89) 
 
(20) 
 
0 
of which: SME clients 
 
(38) 
 
(16) 
 
(16) 
 
(5) 
of which: Financial intermediaries and hedge funds 
 
(19) 
 
(19) 
 
0 
 
0 
of which: Loans to financial advisors 
 
(5) 
 
0 
 
(1) 
 
(4) 
of which: Credit cards 
 
(14) 
 
0 
 
0 
 
(14) 
of which: Other 
 
(2) 
 
0 
 
(2) 
 
0 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
497 
 
Note 20 
Expected credit loss measurement (continued) 
 
d) Maximum exposure to credit risk 
The 
tables below 
and on 
the following 
page provide 
UBS AG’s 
maximum 
exposure 
to 
credit 
risk 
for 
financial 
instruments 
subject 
to 
ECL 
requirements 
and 
the 
respective 
collateral 
and 
other credit enhancements mitigating credit 
risk for these classes 
of financial instruments. 
The 
maximum 
exposure 
to 
credit 
risk 
includes 
the 
carrying 
amounts 
of 
financial 
instruments 
recognized 
on 
the 
balance 
sheet 
subject 
to 
credit 
risk 
and 
the 
notional 
amounts 
for 
off-
balance 
sheet 
arrangements. 
Where 
information 
is 
available, 
collateral 
is presented 
at 
fair value. 
For other 
collateral, such 
as 
real 
estate, 
a 
reasonable 
alternative 
value 
is 
used. 
Credit 
enhancements, 
such 
as 
credit 
derivative 
contracts 
and 
guarantees, 
are 
included 
at 
their 
notional 
amounts. 
Both 
are 
capped 
at 
the 
maximum 
exposure 
to 
credit 
risk 
for 
which 
they 
serve as security. The 
“Risk management and control” 
section of 
this 
report 
describes 
management’s 
view 
of 
credit 
risk 
and 
the 
related 
exposures, 
which can 
differ in 
certain respects 
from 
the 
requirements of IFRS. 
 
Maximum exposure to credit risk 
31.12.20 
Collateral
1
Credit enhancements
1
Exposure to 
credit risk 
after collateral 
and credit 
enhancements 
USD billion 
Maximum 
exposure to 
credit risk 
Cash 
collateral 
received 
Collateralized 
by securities 
Secured by 
real estate 
Other 
collateral
2
Netting 
Credit 
derivative 
contracts 
Guarantees 
Financial assets measured at 
amortized cost on the balance sheet 
Cash and balances at central banks 
 
158.2 
 
 
 
 
 
 
 
158.2 
Loans and advances to banks
3
 
15.3 
 
0.1 
 
 
15.2 
Receivables from securities financing transactions 
 
74.2 
 
0.0 
 
67.1 
 
7.0 
 
 
 
 
0.0 
Cash collateral receivables on derivative instruments
4, 5
 
32.7 
 
 
21.1 
 
 
 
11.6 
Loans and advances to customers
6
 
381.0 
 
27.0 
 
118.2 
 
194.6 
 
21.7 
 
 
0.0 
 
4.4 
 
15.1 
Other financial assets measured at amortized cost 
 
27.2 
 
0.1 
 
0.2 
 
0.0 
 
1.3 
 
 
 
25.5 
Total financial assets measured at amortized cost 
 
688.7 
 
27.2 
 
185.7 
 
194.6 
 
30.1 
 
21.1 
 
0.0 
 
4.4 
 
225.6 
Financial assets measured at fair value 
through other comprehensive income – debt 
 
8.3 
 
 
 
 
 
 
 
 
8.3 
Total maximum exposure to credit risk 
reflected on the balance sheet in scope of ECL 
 
697.0 
 
27.2 
 
185.7 
 
194.6 
 
30.1 
 
21.1 
 
0.0 
 
4.4 
 
233.9 
Guarantees
7
 
17.0 
 
0.7 
 
5.0 
 
0.2 
 
1.7 
 
 
2.5 
 
7.0 
Loan commitments
7
 
41.2 
 
0.0 
 
4.2 
 
2.1 
 
6.8 
 
 
0.4 
 
2.4 
 
25.3 
Forward starting transactions, reverse repurchase 
and securities borrowing agreements 
 
3.2 
 
 
3.2 
 
 
 
 
 
 
0.0 
Committed unconditionally revocable credit lines 
 
42.0 
 
0.1 
 
10.3 
 
6.2 
 
2.7 
 
 
 
0.0 
 
22.7 
Total maximum exposure to credit risk not 
reflected on the balance sheet, in scope of ECL 
 
103.5 
 
0.8 
 
22.7 
 
8.5 
 
11.2 
 
0.0 
 
0.4 
 
4.9 
 
54.9 
31.12.19 
Collateral
1
Credit enhancements
1
Exposure to 
credit risk 
after collateral 
and credit 
enhancements 
USD billion 
Maximum 
exposure to 
credit risk 
Cash 
collateral 
received 
Collateralized 
by securities 
Secured by 
real estate 
Other 
collateral
2
Netting 
Credit 
derivative 
contracts 
Guarantees 
Financial assets measured at 
amortized cost on the balance sheet 
Cash and balances at central banks 
 
107.1 
 
 
 
 
 
 
 
107.1 
Loans and advances to banks
3
 
12.4 
 
0.0 
 
 
12.3 
Receivables from securities financing transactions 
 
84.2 
 
77.6 
 
 
5.8 
 
 
 
 
0.8 
Cash collateral receivables on derivative instruments
4, 5
 
23.3 
 
 
14.4 
 
 
 
8.9 
Loans and advances to customers
6
 
328.0 
 
19.4 
 
101.4 
 
174.7 
 
17.1 
 
 
 
1.1 
 
14.3 
Other financial assets measured at amortized cost 
 
23.0 
 
0.1 
 
0.4 
 
0.0 
 
1.3 
 
 
 
 
21.2 
Total financial assets measured at amortized cost 
 
578.0 
 
19.5 
 
179.4 
 
174.7 
 
24.3 
 
14.4 
 
0.0 
 
1.1 
 
164.6 
Financial assets measured at fair value 
through other comprehensive income – debt 
 
6.3 
 
 
 
 
 
 
 
 
6.3 
Total maximum exposure to credit risk 
reflected on the balance sheet in scope of ECL 
 
584.3 
 
19.5 
 
179.4 
 
174.7 
 
24.3 
 
14.4 
 
0.0 
 
1.1 
 
171.0 
Guarantees
7
 
18.1 
 
1.0 
 
3.0 
 
0.1 
 
1.7 
 
 
2.5 
 
9.8 
Loan commitments
7
 
27.5 
 
0.2 
 
1.9 
 
1.3 
 
5.8 
 
 
0.2 
 
0.2 
 
18.0 
Forward starting transactions, reverse repurchase 
and securities borrowing agreements 
 
1.7 
 
 
1.7 
 
 
 
 
 
 
0.0 
Committed unconditionally revocable credit lines 
 
36.9 
 
0.3 
 
8.3 
 
4.9 
 
3.6 
 
 
 
0.0 
 
19.8 
Total maximum exposure to credit risk not 
reflected on the balance sheet, in scope of ECL 
 
84.2 
 
1.5 
 
14.9 
 
6.3 
 
11.0 
 
0.0 
 
0.2 
 
2.8 
 
47.6 
1 Of which: USD 1,983 million for 31 December 2020 (31 December 2019: USD 1,720 million) relates to total credit-impaired 
financial assets measured at amortized cost and USD 154 million for 31 December 2020 
(31 December 2019: USD 27 million) to total 
off-balance sheet financial instruments and other credit lines 
for credit-impaired positions. 
2 Includes but is not limited to life insurance 
contracts, inventory, mortgage 
loans, gold and other 
commodities. 
3 Loans and advances to banks 
include amounts held with third-party 
banks on behalf of clients. 
The credit risk associated 
with these balances may be 
borne by those clients. 
4 Included within Cash 
collateral receivables 
on derivative instruments 
are margin balances 
due from exchanges 
or clearing houses. 
Some of these 
margin balances reflect 
amounts transferred on 
behalf of clients 
who retain the 
associated credit risk. 
5 The amount 
shown in the 
“Netting” column represents 
the netting potential 
not recognized on 
the balance sheet. 
Refer to Note 22 
for more information. 
6 Collateral 
arrangements generally incorporate a range of collateral, including cash, securities, 
property and other collateral. 
7 The amount shown in the “Guarantees” column includes sub-participations. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
498 
 
Note 20 
Expected credit loss measurement (continued) 
 
e) Financial assets subject to credit risk by rating category 
The 
table 
below 
shows 
the 
credit 
quality 
and 
the 
maximum 
exposure 
to 
credit 
risk 
based 
on 
the 
Group’s 
internal 
credit 
rating system and year-end stage classification. Under IFRS 9, the 
credit 
risk 
rating 
reflects 
the 
Group
’
s 
assessment 
of 
the
 
probability 
of 
default 
of 
individual 
counterparties, 
prior 
to 
substitutions. 
The 
amounts 
presented 
are 
gross 
of 
impairment 
allowances. 
›
 
Refer to the “Risk management and control” 
section of this 
report for more details 
regarding the Group’s internal grading 
system 
 
Financial assets subject to credit risk by rating 
category 
USD million 
31.12.20 
Rating category
1
0–1 
2–3 
4–5 
6–8 
9–13 
Credit-
impaired 
(defaulted) 
Total gross 
carrying 
amount 
ECL 
allowances 
Net carrying 
amount 
(maximum 
exposure to 
credit risk) 
Financial assets measured at amortized cost 
Cash and balances at central banks 
 
156,250 
 
1,981 
 
0 
 
0 
 
0 
 
0 
 
158,231 
 
0 
 
158,231 
of which: stage 1 
 
156,250 
 
1,981 
 
0 
 
0 
 
0 
 
0 
 
158,231 
 
0 
 
158,231 
Loans and advances to banks 
 
543 
 
12,029 
 
1,344 
 
1,182 
 
260 
 
1 
 
15,360 
 
(16) 
 
15,344 
of which: stage 1 
 
543 
 
11,974 
 
1,277 
 
1,145 
 
231 
 
0 
 
15,170 
 
(9) 
 
15,160 
of which: stage 2 
 
0 
 
55 
 
67 
 
37 
 
29 
 
0 
 
189 
 
(5) 
 
184 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1 
 
1 
 
(1) 
 
0 
Receivables from securities financing transactions 
 
22,998 
 
16,009 
 
15,367 
 
17,995 
 
1,842 
 
0 
 
74,212 
 
(2) 
 
74,210 
of which: stage 1 
 
22,998 
 
16,009 
 
15,367 
 
17,995 
 
1,842 
 
0 
 
74,212 
 
(2) 
 
74,210 
Cash collateral receivables on derivative instruments 
 
8,196 
 
13,477 
 
7,733 
 
3,243 
 
88 
 
0 
 
32,737 
 
0 
 
32,737 
of which: stage 1 
 
8,196 
 
13,477 
 
7,733 
 
3,243 
 
88 
 
0 
 
32,737 
 
0 
 
32,737 
Loans and advances to customers 
 
5,813 
 
215,755 
 
67,270 
 
69,217 
 
21,038 
 
2,943 
 
382,036 
 
(1,060) 
 
380,977 
of which: stage 1 
 
5,813 
 
214,418 
 
63,000 
 
59,447 
 
15,860 
 
0 
 
358,538 
 
(142) 
 
358,396 
of which: stage 2 
 
0 
 
1,338 
 
4,269 
 
9,770 
 
5,178 
 
0 
 
20,556 
 
(215) 
 
20,341 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
2,943 
 
2,943 
 
(703) 
 
2,240 
Other financial assets measured at amortized cost 
 
15,404 
 
4,043 
 
280 
 
6,585 
 
481 
 
560 
 
27,352 
 
(133) 
 
27,219 
of which: stage 1 
 
15,404 
 
4,040 
 
269 
 
6,334 
 
389 
 
0 
 
26,435 
 
(34) 
 
26,401 
of which: stage 2 
 
0 
 
3 
 
11 
 
251 
 
91 
 
0 
 
357 
 
(9) 
 
348 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
560 
 
560 
 
(90) 
 
469 
Total financial assets measured at amortized cost 
 
209,204 
 
263,295 
 
91,993 
 
98,223 
 
23,709 
 
3,505 
 
689,929 
 
(1,211) 
 
688,717 
On-balance sheet financial instruments 
Financial assets measured at FVOCI – debt instruments 
 
3,212 
 
5,014 
 
0 
 
32 
 
0 
 
0 
 
8,258 
 
0 
 
8,258 
Total on balance sheet financial instruments 
 
212,417 
 
268,309 
 
91,993 
 
98,255 
 
23,709 
 
3,505 
 
698,187 
 
(1,211) 
 
696,976 
 
Off-balance sheet positions subject to expected 
credit loss by rating category 
USD million 
31.12.20 
Rating category
1
0–1 
2–3 
4–5 
6–8 
9–13 
Credit-
impaired 
(defaulted) 
Total off - 
balance sheet 
exposure 
(maximum 
exposure to 
credit risk) 
ECL provisions 
Off-balance sheet financial instruments 
Guarantees 
 
3,482 
 
4,623 
 
3,522 
 
4,293 
 
991 
 
170 
 
17,081 
 
(63) 
of which: stage 1 
 
3,482 
 
4,219 
 
2,688 
 
3,558 
 
739 
 
0 
 
14,687 
 
(14) 
of which: stage 2 
 
0 
 
404 
 
834 
 
736 
 
252 
 
0 
 
2,225 
 
(15) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
170 
 
170 
 
(34) 
Irrevocable loan commitments 
 
3,018 
 
14,516 
 
8,583 
 
9,302 
 
5,850 
 
104 
 
41,372 
 
(142) 
of which: stage 1 
 
3,018 
 
13,589 
 
6,873 
 
8,739 
 
4,676 
 
0 
 
36,894 
 
(74) 
of which: stage 2 
 
0 
 
927 
 
1,711 
 
563 
 
1,174 
 
0 
 
4,374 
 
(68) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
104 
 
104 
 
0 
Forward starting reverse repurchase and securities borrowing agreements 
 
82 
 
150 
 
0 
 
3,015 
 
0 
 
0 
 
3,247 
 
0 
Total off balance sheet financial instruments 
 
6,583 
 
19,289 
 
12,105 
 
16,610 
 
6,840 
 
273 
 
61,700 
 
(205) 
Other credit lines 
Committed unconditionally revocable credit lines 
 
574 
 
15,448 
 
5,958 
 
8,488 
 
11,501 
 
108 
 
42,077 
 
(50) 
of which: stage 1 
 
574 
 
14,883 
 
4,517 
 
6,609 
 
10,593 
 
0 
 
37,176 
 
(29) 
of which: stage 2 
 
0 
 
565 
 
1,441 
 
1,879 
 
908 
 
0 
 
4,792 
 
(21) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
108 
 
108 
 
0 
Irrevocable committed prolongation of existing loans 
 
14 
 
1,349 
 
931 
 
632 
 
357 
 
0 
 
3,282 
 
(2) 
of which: stage 1 
 
14 
 
1,349 
 
930 
 
630 
 
355 
 
0 
 
3,277 
 
(2) 
of which: stage 2 
 
0 
 
1 
 
1 
 
2 
 
1 
 
0 
 
5 
 
0 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
Total other credit lines 
 
588 
 
16,797 
 
6,889 
 
9,119 
 
11,858 
 
109 
 
45,359 
 
(52) 
1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and 
control” section of this report for more information about rating categories.

 
499 
 
Note 20 
Expected credit loss measurement (continued)
Financial assets subject to credit risk by rating 
category 
USD million 
31.12.19 
Rating category
1
0–1 
2–3 
4–5 
6–8 
9–13 
Credit-
impaired 
(defaulted) 
Total gross 
carrying 
amount 
ECL 
allowances 
Net carrying 
amount 
(maximum 
exposure to 
credit risk) 
Financial assets measured at amortized cost 
Cash and balances at central banks 
 
105,195 
 
1,873 
 
0 
 
0 
 
0 
 
0 
 
107,068 
 
0 
 
107,068 
of which: stage 1 
 
105,195 
 
1,873 
 
0 
 
0 
 
0 
 
0 
 
107,068 
 
0 
 
107,068 
Loans and advances to banks 
 
309 
 
9,764 
 
1,326 
 
687 
 
298 
 
1 
 
12,386 
 
(6) 
 
12,379 
of which: stage 1 
 
309 
 
9,764 
 
1,326 
 
677 
 
228 
 
0 
 
12,303 
 
(4) 
 
12,298 
of which: stage 2 
 
0 
 
0 
 
0 
 
10 
 
71 
 
0 
 
81 
 
(1) 
 
80 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1 
 
1 
 
(1) 
 
0 
Receivables from securities financing transactions 
 
21,089 
 
16,889 
 
14,366 
 
28,815 
 
3,088 
 
0 
 
84,246 
 
(2) 
 
84,245 
of which: stage 1 
 
21,089 
 
16,889 
 
14,366 
 
28,815 
 
3,088 
 
0 
 
84,246 
 
(2) 
 
84,245 
Cash collateral receivables on derivative instruments 
 
4,899 
 
10,553 
 
5,033 
 
2,765 
 
39 
 
0 
 
23,289 
 
0 
 
23,289 
of which: stage 1 
 
4,899 
 
10,553 
 
5,033 
 
2,765 
 
39 
 
0 
 
23,289 
 
0 
 
23,289 
Loans and advances to customers 
 
1,744 
 
176,189 
 
59,240 
 
70,528 
 
18,748 
 
2,308 
 
328,756 
 
(764) 
 
327,992 
of which: stage 1 
 
1,744 
 
175,534 
 
56,957 
 
62,435 
 
14,117 
 
0 
 
310,787 
 
(82) 
 
310,705 
of which: stage 2 
 
0 
 
655 
 
2,283 
 
8,093 
 
4,631 
 
0 
 
15,661 
 
(123) 
 
15,538 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
2,308 
 
2,308 
 
(559) 
 
1,749 
Other financial assets measured at amortized cost 
 
13,030 
 
1,592 
 
390 
 
7,158 
 
312 
 
672 
 
23,154 
 
(143) 
 
23,012 
of which: stage 1 
 
13,030 
 
1,581 
 
381 
 
6,747 
 
280 
 
0 
 
22,019 
 
(35) 
 
21,985 
of which: stage 2 
 
0 
 
11 
 
9 
 
412 
 
32 
 
0 
 
463 
 
(13) 
 
451 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
672 
 
672 
 
(95) 
 
576 
Total financial assets measured at amortized cost 
 
146,267 
 
216,860 
 
80,354 
 
109,952 
 
22,485 
 
2,981 
 
578,899 
 
(915) 
 
577,985 
On-balance sheet financial instruments 
Financial assets measured at FVOCI – debt instruments 
 
5,854 
 
450 
 
0 
 
41 
 
0 
 
0 
 
6,345 
 
0 
 
6,345 
Total on balance sheet financial instruments 
 
152,120 
 
217,309 
 
80,354 
 
109,994 
 
22,485 
 
2,981 
 
585,245 
 
(915) 
 
584,329 
 
Off-balance sheet positions subject to expected 
credit loss by rating category 
USD million 
31.12.19 
Rating category
1
0–1 
2–3 
4–5 
6–8 
9–13 
Credit-
impaired 
(defaulted) 
Total off - 
balance sheet 
exposure 
(maximum 
exposure to 
credit risk) 
ECL provisions 
Off-balance sheet financial instruments 
Guarantees 
 
857 
 
4,932 
 
6,060 
 
5,450 
 
761 
 
82 
 
18,142 
 
(42) 
of which: stage 1 
 
857 
 
4,931 
 
6,048 
 
5,218 
 
704 
 
0 
 
17,757 
 
(8) 
of which: stage 2 
 
0 
 
1 
 
12 
 
233 
 
57 
 
0 
 
304 
 
(1) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
82 
 
82 
 
(33) 
Irrevocable loan commitments 
 
2,548 
 
10,068 
 
4,862 
 
5,859 
 
4,160 
 
50 
 
27,547 
 
(35) 
of which: stage 1 
 
2,548 
 
10,068 
 
4,862 
 
5,722 
 
3,878 
 
0 
 
27,078 
 
(30) 
of which: stage 2 
 
0 
 
0 
 
0 
 
137 
 
282 
 
0 
 
419 
 
(5) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
50 
 
50 
 
0 
Forward starting reverse repurchase and securities borrowing agreements 
 
0 
 
672 
 
50 
 
936 
 
0 
 
0 
 
1,657 
 
0 
Total off balance sheet financial instruments 
 
3,405 
 
15,672 
 
10,972 
 
12,245 
 
4,922 
 
132 
 
47,347 
 
(77) 
Other credit lines 
Committed unconditionally revocable credit lines 
 
632 
 
14,346 
 
6,231 
 
7,169 
 
8,554 
 
46 
 
36,979 
 
(34) 
of which: stage 1 
 
632 
 
14,309 
 
6,120 
 
6,789 
 
7,885 
 
0 
 
35,735 
 
(17) 
of which: stage 2 
 
0 
 
37 
 
111 
 
380 
 
669 
 
0 
 
1,197 
 
(17) 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
46 
 
46 
 
0 
Irrevocable committed prolongation of existing loans 
 
25 
 
1,399 
 
870 
 
633 
 
359 
 
4 
 
3,289 
 
(3) 
of which: stage 1 
 
25 
 
1,399 
 
870 
 
633 
 
359 
 
0 
 
3,285 
 
(3) 
of which: stage 2 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
of which: stage 3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
4 
 
4 
 
0 
Total other credit lines 
 
657 
 
15,745 
 
7,101 
 
7,801 
 
8,913 
 
50 
 
40,268 
 
(37) 
1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management 
and control” section of this report for more information about rating categories.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
500 
 
Note 20 
Expected credit loss measurement (continued) 
 
f) Sensitivity information 
As 
outlined 
in 
Note 
1a, 
ECL 
estimates 
involve 
significant 
uncertainties at the time they are made. 
ECL model 
The 
models 
applied 
to 
determine 
point-in-time 
PDs 
and 
LGDs 
rely 
on 
market 
and 
statistical 
data, 
which 
has 
been 
found 
to 
correlate 
well 
with 
historically 
observed 
defaults 
in 
sufficiently 
homogeneous 
segments. 
The 
risk 
sensitivities 
for 
each 
of 
the 
IFRS 9 ECL reporting segments to such factors are summarized in 
Note 9. 
Forward-looking scenarios 
Depending 
on 
the 
scenario 
selection 
and 
related 
macro-
economic 
assumptions 
for 
the 
risk 
factors, 
the 
components 
of 
the 
relevant 
weighted 
average 
ECL 
change. 
This 
is 
particularly 
relevant 
for 
interest 
rates, 
which 
can 
move 
in 
both 
directions 
under a given growth assumption (for example, low growth with 
high 
interest 
rates 
in 
a 
stagflation 
scenario, 
versus 
low 
growth 
and falling 
interest 
rates in 
a recession). 
Management generally 
look 
for 
scenario narratives 
that reflect 
the key 
risk drivers 
of a 
given credit portfolio. 
As 
forecasting 
models 
are 
complex, 
due 
to 
the 
combination 
of multiple factors, simple what-if analyses 
involving a change of 
individual 
parameters 
do 
not 
necessarily 
provide 
realistic 
information 
on 
the 
exposure 
of 
segments 
to 
changes 
in 
the 
macroeconomy. 
Portfolio-specific 
analyses 
based 
on 
their 
key 
risk 
factors 
would 
also 
not 
be 
meaningful
,
 
as 
potential 
compensatory effects 
in other 
segments would 
be ignored. 
The 
table 
below
 
indicate
s
 
some 
sensitivities 
to 
ECL
s
 
if 
a 
key 
macroeconomic 
variable 
for 
the 
forecasting 
period 
is 
amended 
across all scenarios with all other factors remaining unchanged. 
 
Potential effect on stage 1 and stage 2 
positions from changing key parameters as 
at 31 December 2020 
 
USD million 
Baseline 
Severe downside 
Weighted average 
Change in key parameters 
Fixed income: 10-year government bonds (absolute change) 
–0.5% 
 
(1.36) 
 
(1.84) 
 
(1.93) 
+0.5% 
 
2.10 
 
3.19 
 
3.23 
+1.00% 
 
5.69 
 
6.86 
 
7.19 
Unemployment rate (absolute change) 
–1.00% 
 
(7.40) 
 
(63.01) 
 
(27.83) 
–0.5% 
 
(3.78) 
 
(33.54) 
 
(15.67) 
+0.5% 
 
4.15 
 
36.97 
 
16.99 
+1.00% 
 
8.50 
 
75.93 
 
33.74 
Real GDP growth (relative change) 
-2.00% 
 
3.72 
 
16.14 
 
9.10 
-1.00% 
 
1.86 
 
9.84 
 
5.09 
+1.00% 
 
(1.46) 
 
(3.30) 
 
(2.36) 
+2.00% 
 
(2.97) 
 
(9.44) 
 
(5.93) 
House Price Index (relative change) 
–5.00% 
 
8.04 
 
144.34 
 
51.46 
–2.50% 
 
3.45 
 
65.80 
 
23.28 
+2.50% 
 
(2.79) 
 
(56.60) 
 
(19.09) 
+5.00% 
 
(5.16) 
 
(105.61) 
 
(35.29) 
Equity (S&P500, EuroStoxx, SMI) (relative change) 
–10.00% 
 
3.94 
 
9.66 
 
6.78 
–5.00% 
 
1.91 
 
4.29 
 
3.34 
+5.00% 
 
(8.30) 
 
(4.23) 
 
(7.27) 
+10.00% 
 
(10.14) 
 
(8.58) 
 
(10.22) 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
501 
 
Note 20 
Expected credit loss measurement (continued)
Sensitivities can be more meaningfully 
assessed in the context 
of 
coherent 
scenarios 
with 
consistently 
developed 
macroeconomic factors. 
The table on 
the previous page 
outlines 
favorable and 
unfavorable effects, 
based on 
reasonably possible 
alternative changes 
to the 
economic conditions 
for stage 1 
and 
stage 2 
positions. 
The 
ECL 
impact 
is 
calculated 
for 
material 
portfolios and disclosed for each scenario. 
The 
forecasting 
horizon 
is 
limited 
to 
three 
years, 
with 
a 
model-based 
mean 
reversion 
of 
PD 
and 
LGD 
assumed 
thereafter. 
Changes 
to 
these 
timelines 
may 
have 
an 
effect 
on 
ECLs: 
depending 
on 
the 
cycle, 
a 
longer 
or 
shorter 
forecasting 
horizon 
will
 
lead 
to 
different 
annualized 
lifetime 
PD 
and 
average 
LGD 
estimations. 
This 
is 
currently 
not 
deemed 
to 
be 
material 
for 
UBS 
AG, 
as 
a 
large 
proportion 
of 
loans, 
including 
mortgages 
in 
Switzerland, 
have 
maturities 
that 
are 
within 
the 
forecasting 
horizon. 
Scenario weights 
ECL 
is 
sensitive 
to 
changing 
scenario 
weights, 
in 
particular 
if 
narratives and 
parameters are 
selected that 
are not 
close to 
the 
baseline scenario, highlighting the non-linearity of credit losses. 
As 
shown 
in 
the 
table 
on 
the 
bottom 
of 
this 
page, 
the 
ECL 
for 
stage 1 
and 
stage 
2 
positions 
would 
have 
been 
USD 442 
million 
(31
 
December 
2019: 
USD
 
234 
million) 
instead 
of 
USD 639 
million 
(31 December 
2019: 
USD 341 
million) 
if 
ECL 
had 
been 
determined 
solely
 
on 
the 
baseline 
scenario. 
The 
weighted 
average 
ECL 
therefore 
amounts 
to 
145% 
(31 December 2019: 149%) of the baseline value. 
Stage allocation and SICR 
The 
determination 
of 
what 
constitutes 
a 
significant 
increase 
in 
credit 
risk 
(
SICR
)
 
is 
based 
on
 
manageme
nt 
judgment 
as 
explained 
in 
Note 
1a. 
Changing 
the 
SICR 
trigger 
will 
have 
a 
direct 
effect 
on 
ECL
s,
 
as 
more 
or 
fewer 
positions 
would 
be 
subject to lifetime ECLs under any scenario. 
The 
relevance 
of 
the 
SICR 
trigger 
on 
overall 
ECL 
is 
demonstrated 
in 
the 
table 
below 
with 
the 
indication 
that 
the 
ECL allowances 
and provisions for 
stage 1 
and stage 
2 positions 
would have been 
USD 1,336 million if all 
non-impaired positions 
across 
the 
portfolio 
had 
been 
measured 
for 
lifetime 
ECLs 
irrespective of their 
actual SICR status. 
This amount compares 
to 
actual 
stage 
1 
and 
2 
allowances 
and 
provisions 
of 
USD 
639 
million as of 31 December 2020. 
Maturity profile 
The 
maturity 
profile 
of 
the 
assets 
is 
an 
important 
driver 
for 
changes in 
ECL due 
to transfers 
to stage 
2 and 
from stage 
2 to 
stage 
1. 
The 
current 
maturity 
profile 
of 
most 
lending 
books 
is 
relatively 
short; 
hence 
a 
movement 
to 
stage 
2 
may 
have 
a 
limited 
effect 
on 
ECLs. 
A significant 
portion 
of 
our 
lending 
to 
SMEs 
is 
documented 
under 
multi-purpose 
credit 
agreements, 
which 
allow 
for 
various 
forms 
of 
utilization 
but 
are 
unconditionally cancelable 
by UBS 
AG at 
any time. 
The relevant 
maturity 
for 
drawings 
under 
such 
agreements 
with 
a 
fixed 
maturity is 
the respective 
term, or 
a maximum 
of 12 
months in 
stage 
1. 
For 
unused 
credit 
lines 
and 
all 
drawings 
that 
have 
no 
fixed maturity 
(e.g., current 
accounts), UBS 
AG generally applies 
a 
12-month 
maturity 
from 
the 
reporting 
date, 
given 
the 
credit 
review 
policies, 
which 
require 
either 
continuous 
monitoring 
of 
key indicators and behavioral patterns for 
smaller positions or an 
annual 
formal 
review 
for 
any 
other 
limit. 
The 
ECLs 
for 
these 
products 
is 
sensitive 
to 
shortening 
or 
extending 
the 
maturity 
assumption. 
 
Potential effect on stage 1 and stage 2 
positions from changing scenario weights 
or moving to an ECL lifetime calculation 
as at 31 December 2020 
 
Actual ECL allowances and 
provisions (as per Note 9) 
Pro forma ECL allowances and provisions, assuming application of 
100% weighting 
Pro forma ECL allowances and 
provisions, assuming all 
positions being subject to 
lifetime ECL 
Scenarios 
Weighted average 
Baseline 
Severe downside 
Weighted average 
USD million, except where indicated 
ECL 
in % of 
baseline 
ECL 
in % of 
baseline 
ECL 
in % of 
baseline 
ECL 
in % of 
baseline 
Segmentation 
Private clients with mortgages 
 
(131) 
 
244 
 
(54) 
 
100 
 
(302) 
 
562 
 
(385) 
 
717 
Real estate financing 
 
(76) 
 
138 
 
(55) 
 
100 
 
(123) 
 
224 
 
(131) 
 
237 
Large corporate clients 
 
(206) 
 
149 
 
(138) 
 
100 
 
(298) 
 
216 
 
(307) 
 
222 
SME clients 
 
(74) 
 
115 
 
(64) 
 
100 
 
(93) 
 
144 
 
(129) 
 
200 
Other segments 
 
(152) 
 
116 
 
(131) 
 
100 
 
(183) 
 
140 
 
(385) 
 
294 
Total 
 
(639) 
 
145 
 
(442) 
 
100 
 
(999) 
 
226 
 
(1,336) 
 
302 
 

 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
502 
 
Note 21 
Fair value measurement 
a) Valuation principles 
All 
financial 
and non-financial 
assets 
and liabilities 
measured 
or 
disclosed at fair value are categorized into one of three 
fair value 
hierarchy levels 
in accordance 
with IFRS. 
The fair 
value hierarchy 
is 
based 
on 
the 
transparency 
of 
inputs 
to 
the 
valuation 
of 
an 
asset 
or 
liability 
as 
of 
the 
measurement 
date. 
In 
certain 
cases, 
the 
inputs 
used 
to 
measure 
fair 
value 
may 
fall 
within 
different 
levels 
of 
the 
fair 
value 
hierarchy. 
For 
disclosure 
purposes, 
the 
level in 
the hierarchy 
within which 
an instrument 
is classified 
in 
its entirety is based on the lowest level 
input that is significant to 
the position’s fair value measurement: 
–
 
Level 1 
– 
quoted 
prices 
(unadjusted) 
in 
active 
markets 
for 
identical assets and liabilities; 
–
 
Level 2 – 
valuation techniques 
for which 
all significant 
inputs 
are, or are based on, observable market data; or 
–
 
Level 3 – valuation techniques 
for which significant inputs are 
not based on observable market data. 
Fair 
values 
are 
determined 
using 
quoted 
prices 
in 
active 
markets for 
identical assets 
or liabilities, 
where available. 
Where 
the 
market 
for 
a 
financial 
instrument 
or 
non-financial 
asset 
or 
liability 
is 
not 
active, 
fair 
value 
is 
established 
using 
a 
valuation 
technique, including 
pricing models. 
Valuation adjustments 
may 
be 
made 
to 
allow 
for 
additional 
factors, 
including 
model, 
liquidity, 
credit 
and 
funding 
risks, 
which 
are 
not 
explicitly 
captured 
within 
the 
valuation 
technique, 
but 
which 
would 
nevertheless 
be 
considered 
by 
market 
participants 
when 
establishing 
a 
price. 
The 
limitations 
inherent 
in 
a 
particular 
valuation 
technique 
are 
considered 
in 
the 
determination 
of 
the 
classification 
of 
an 
asset 
or 
liability 
within 
the 
fair 
value 
hierarchy.
 
Generally, 
the 
unit 
of 
account 
for 
a 
financial 
instrument 
is 
the 
individual 
instrument, 
and 
UBS 
applies 
valuation 
adjustments 
at 
an 
individual 
instrument 
level, 
consistent 
with 
that 
unit 
of 
account. 
However, 
if 
certain 
conditions 
are 
met, 
UBS 
may 
estimate 
the 
fair 
value 
of 
a 
portfolio 
of 
financial 
assets 
and 
liabilities 
with 
substantially 
similar and offsetting risk exposures on 
the basis of the net open 
risks. 
›
 
Refer to Note 21d for more information 
 
b) Valuation governance 
UBS’s fair value measurement and model governance framework 
includes 
numerous 
controls 
and 
other 
procedural 
safeguards 
that 
are 
intended 
to 
maximize 
the 
quality 
of 
fair 
value 
measurements 
reported 
in 
the 
financial 
statements. 
New 
products 
and 
valuation 
techniques 
must 
be 
reviewed 
and 
approved 
by key 
stakeholders from 
the risk 
and finance 
control 
functions. 
Responsibility 
for 
the 
ongoing 
measurement 
of 
financial and 
non-financial instruments 
at fair 
value resides 
with 
the business divisions. 
Fair 
value 
estimates 
are 
validated 
by 
the 
risk 
and 
finance 
control 
functions, 
which 
are 
independent 
of 
the 
business 
divisions. Independent 
price verification 
is performed 
by Finance 
through 
benchmarking 
the 
business 
divisions’ 
fair 
value 
estimates with 
observable market 
prices and 
other independent 
sources. A governance 
framework and associated 
controls are in 
place 
in 
order 
to 
monitor 
the 
quality 
of 
third-party 
pricing 
sources where used. For instruments 
where valuation models are 
used 
to determine 
fair value, 
independent valuation 
and model 
control 
groups 
within 
Finance 
and 
Risk 
Control 
evaluate 
UBS’s 
models 
on a 
regular basis, 
including valuation 
and model 
input 
parameters
,
 
as 
well 
as 
pricing. 
As 
a 
result 
of 
the 
valuation 
controls 
employed, 
valuation 
adjustments 
may 
be 
made 
to 
the 
business 
divisions’ 
estimates 
of 
fair 
value 
to 
align 
with 
independent market data and the relevant accounting standard. 
›
 
Refer to Note 21d for more information 
 
 

 
503 
 
Note 21 
Fair value measurement (continued) 
 
c) Fair value hierarchy 
The table below provides 
the fair value hierarchy 
classification of 
financial and 
non-financial assets 
and liabilities 
measured at 
fair 
value. 
The 
narrative 
that 
follows describes 
valuation 
techniques 
used 
in 
measuring 
their 
fair 
value 
of 
different 
product 
types 
(including 
significant 
valuation 
inputs 
and 
assumptions 
used), 
and 
the 
factors 
considered 
in 
determining 
their 
classification 
within the fair value hierarchy. 
 
Determination of fair values from quoted market 
prices or valuation techniques
1
31.12.20 
31.12.19 
USD million 
Level 1 
Level 2 
Level 3 
Total 
Level 1 
Level 2 
Level 3 
Total 
Financial assets measured at fair value on a recurring basis 
Financial assets at fair value held for trading 
 
107,526 
 
15,630 
 
2,337 
 
125,492 
 
113,635 
 
12,248 
 
1,812 
 
127,695 
of which: 
Equity instruments 
 
90,327 
 
1,101 
 
171 
 
91,599 
 
96,162 
 
400 
 
226 
 
96,788 
Government bills / bonds 
 
9,028 
 
2,207 
 
10 
 
11,245 
 
9,630 
 
1,770 
 
64 
 
11,464 
Investment fund units 
 
7,374 
 
1,794 
 
23 
 
9,192 
 
7,088 
 
1,729 
 
50 
 
8,867 
Corporate and municipal bonds 
 
789 
 
8,432 
 
817 
 
10,038 
 
755 
 
6,796 
 
542 
 
8,093 
Loans 
 
0 
 
1,860 
 
1,134 
 
2,995 
 
0 
 
1,180 
 
791 
 
1,971 
Asset-backed securities 
 
8 
 
236 
 
181 
 
425 
 
0 
 
372 
 
140 
 
512 
Derivative financial instruments 
 
795 
 
157,069 
 
1,754 
 
159,618 
 
356 
 
120,224 
 
1,264 
 
121,843 
of which: 
Foreign exchange contracts 
 
319 
 
68,425 
 
5 
 
68,750 
 
240 
 
52,228 
 
8 
 
52,476 
Interest rate contracts 
 
0 
 
50,353 
 
537 
 
50,890 
 
6 
 
42,288 
 
263 
 
42,558 
Equity / index contracts 
 
0 
 
33,990 
 
853 
 
34,842 
 
7 
 
22,220 
 
597 
 
22,825 
Credit derivative contracts 
 
0 
 
2,008 
 
350 
 
2,358 
 
0 
 
1,612 
 
394 
 
2,007 
Commodity contracts 
 
0 
 
2,211 
 
6 
 
2,217 
 
0 
 
1,820 
 
0 
 
1,821 
Brokerage receivables 
 
0 
 
24,659 
 
0 
 
24,659 
 
0 
 
18,007 
 
0 
 
18,007 
Financial assets at fair value not held for trading 
 
40,986 
 
35,110 
 
3,942 
 
80,038 
 
40,608 
 
39,065 
 
3,962 
 
83,636 
of which: 
Financial assets for unit-linked investment contracts 
 
20,628 
 
101 
 
2 
 
20,731 
 
27,568 
 
118 
 
0 
 
27,686 
Corporate and municipal bonds 
 
290 
 
16,957 
 
372 
 
17,619 
 
653 
 
18,732 
 
0 
 
19,385 
Government bills / bonds 
 
19,704 
 
3,593 
 
0 
 
23,297 
 
12,089 
 
3,700 
 
0 
 
15,790 
Loans 
 
0 
 
7,699 
 
862 
 
8,561 
 
0 
 
10,206 
 
1,231 
 
11,438 
Securities financing transactions 
 
0 
 
6,629 
 
122 
 
6,751 
 
0 
 
6,148 
 
147 
 
6,294 
Auction rate securities 
 
0 
 
0 
 
1,527 
 
1,527 
 
0 
 
0 
 
1,536 
 
1,536 
Investment fund units 
 
278 
 
121 
 
105 
 
505 
 
194 
 
140 
 
98 
 
432 
Equity instruments 
 
86 
 
0 
 
544 
 
631 
 
103 
 
4 
 
451 
 
559 
Other 
 
0 
 
10 
 
408 
 
418 
 
0 
 
16 
 
499 
 
515 
Financial assets measured at fair value through other comprehensive income on 
a recurring basis 
Financial assets measured at fair value through other comprehensive 
income 
 
1,144 
 
7,114 
 
0 
 
8,258 
 
1,906 
 
4,439 
 
0 
 
6,345 
of which: 
Asset-backed securities 
 
0 
 
6,624 
 
0 
 
6,624 
 
0 
 
3,955 
 
0 
 
3,955 
Government bills / bonds 
 
1,103 
 
47 
 
0 
 
1,150 
 
1,859 
 
16 
 
0 
 
1,875 
Corporate and municipal bonds 
 
40 
 
444 
 
0 
 
485 
 
47 
 
468 
 
0 
 
515 
Non-financial assets measured at fair value on a recurring basis 
Precious metals and other physical commodities 
 
6,264 
 
0 
 
0 
 
6,264 
 
4,597 
 
0 
 
0 
 
4,597 
Non-financial assets measured at fair value on a non-recurring basis 
Other non-financial assets
2
 
0 
 
1 
 
245 
 
246 
 
0 
 
0 
 
199 
 
199 
Total assets measured at fair value 
 
156,716 
 
239,583 
 
8,278 
 
404,576 
 
161,102 
 
193,983 
 
7,237 
 
362,322

 
Consolidated financial statements | UBS AG consolidated financial statements 
504 
 
Note 21 
Fair value measurement (continued) 
Determination of fair values from quoted market 
prices or valuation techniques (continued)
1
31.12.20 
31.12.19 
USD million 
Level 1 
Level 2 
Level 3 
Total 
Level 1 
Level 2 
Level 3 
Total 
Financial liabilities measured at fair value on a recurring basis 
Financial liabilities at fair value held for trading 
 
26,889 
 
6,652 
 
55 
 
33,595 
 
25,791 
 
4,726 
 
75 
 
30,591 
of which: 
Equity instruments 
 
22,519 
 
425 
 
40 
 
22,985 
 
22,526 
 
149 
 
59 
 
22,734 
Corporate and municipal bonds 
 
31 
 
4,048 
 
9 
 
4,089 
 
40 
 
3,606 
 
16 
 
3,661 
Government bills / bonds 
 
3,642 
 
1,036 
 
0 
 
4,678 
 
2,820 
 
646 
 
0 
 
3,466 
Investment fund units 
 
696 
 
1,127 
 
5 
 
1,828 
 
404 
 
294 
 
0 
 
698 
Derivative financial instruments 
 
746 
 
156,884 
 
3,471 
 
161,102 
 
385 
 
118,498 
 
1,996 
 
120,880 
of which: 
Foreign exchange contracts 
 
316 
 
70,149 
 
61 
 
70,527 
 
248 
 
53,705 
 
60 
 
54,013 
Interest rate contracts 
 
0 
 
43,389 
 
527 
 
43,916 
 
7 
 
36,434 
 
130 
 
36,571 
Equity / index contracts 
 
0 
 
38,870 
 
2,306 
 
41,176 
 
3 
 
24,171 
 
1,293 
 
25,468 
Credit derivative contracts 
 
0 
 
2,403 
 
528 
 
2,931 
 
0 
 
2,448 
 
512 
 
2,960 
Commodity contracts 
 
0 
 
2,003 
 
24 
 
2,027 
 
0 
 
1,707 
 
0 
 
1,707 
Financial liabilities designated at fair value on a recurring basis 
Brokerage payables designated at fair value 
 
0 
 
38,742 
 
0 
 
38,742 
 
0 
 
37,233 
 
0 
 
37,233 
Debt issued designated at fair value 
 
0 
 
50,273 
 
9,595 
 
59,868 
 
0 
 
56,943 
 
9,649 
 
66,592 
Other financial liabilities designated at fair value 
 
0 
 
29,682 
 
2,091 
 
31,773 
 
0 
 
35,119 
 
1,039 
 
36,157 
of which: 
Financial liabilities related to unit-linked investment contracts 
 
0 
 
20,975 
 
0 
 
20,975 
 
0 
 
28,145 
 
0 
 
28,145 
Securities financing transactions 
 
0 
 
7,317 
 
0 
 
7,317 
 
0 
 
5,742 
 
0 
 
5,742 
Over-the-counter debt instruments 
 
0 
 
1,363 
 
697 
 
2,060 
 
0 
 
1,231 
 
791 
 
2,022 
Total liabilities measured at fair value 
 
27,635 
 
282,233 
 
15,212 
 
325,080 
 
26,176 
 
252,518 
 
12,759 
 
291,452 
1 Bifurcated 
embedded derivatives 
are presented 
on the 
same balance 
sheet lines 
as their 
host contracts 
and are 
not included 
in this 
table. The 
fair value 
of these 
derivatives was 
not material 
for the 
periods 
presented. 
2 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured 
at the lower of their net carrying amount or fair value less costs to sell.

 
 
 
 
 
 
 
 
 
 
 
 
 
505 
 
Note 21 
Fair value measurement (continued) 
Valuation techniques 
UBS 
uses 
widely 
recognized 
valuation 
techniques 
for 
determining 
the 
fair 
value 
of 
financial 
and 
non-financial 
instruments 
that 
are 
not 
actively 
traded 
and 
quoted. 
The 
most 
frequently applied valuation techniques 
include discounted value 
of 
expected 
cash 
flows, 
relative 
value 
and 
option 
pricing 
methodologies. 
Discounted 
value 
of 
expected 
cash 
flows 
is 
a 
valuation 
technique 
that 
measures 
fair 
value 
using 
estimated 
expected 
future 
cash 
flows 
from 
assets 
or 
liabilities 
and 
then 
discounts 
these 
cash 
flows 
using a 
discount 
rate 
or 
discount 
margin that 
reflects 
the
 
credit 
and
 
/
 
or 
funding 
spreads 
required 
by 
the 
market 
for 
instruments with 
similar risk 
and liquidity 
profiles to 
produce a present 
value. When using such 
valuation techniques, 
expected 
future 
cash 
flows are 
estimated 
using an 
observed or 
implied 
market 
price 
for 
the 
future 
cash 
flows 
or 
by 
using 
industry 
standard 
cash 
flow 
projection 
models. 
The 
discount 
factors 
within 
the 
calculation 
are 
generated 
using 
industry-
standard yield curve modeling techniques and models. 
Relative value models measure fair 
value based on the market 
prices 
of 
equivalent 
or 
comparable 
assets 
or 
liabilities, 
making 
adjustments 
for 
differences 
between 
the 
characteristics 
of 
the 
observed instrument and the instrument being valued. 
Option pricing models 
incorporate assumptions regarding 
the 
behavior of future 
price movements of 
an underlying referenced 
asset 
or 
assets 
to 
generate 
a 
probability-weighted 
future 
expected 
payoff 
for 
the 
option. 
The 
resulting 
probability-
weighted 
expected 
payoff 
is 
then 
discounted 
using 
discount 
factors 
generated 
from 
industry-standard 
yield 
curve 
modeling 
techniques 
and 
models. 
The 
option 
pricing 
model 
may 
be 
implemented 
using 
a 
closed-form 
analytical 
formula 
or 
other 
mathematical 
techniques 
(e.g., 
binomial 
tree 
or 
Monte 
Carlo 
simulation). 
Where available, 
valuation techniques 
use market-observable 
assumptions and inputs. 
If such data 
is not available, 
inputs may 
be derived 
by reference 
to similar 
assets in 
active markets, 
from 
recent 
prices 
for 
comparable 
transactions 
or 
from 
other 
observable 
market 
data. 
In 
such 
cases, 
the 
inputs 
selected 
are 
based 
on 
historical 
experience 
and 
practice 
for 
similar 
or 
analogous 
instruments, 
derivation 
of 
input 
levels 
based 
on 
similar products 
with observable 
price levels, 
and knowledge 
of 
current market conditions and valuation approaches. 
For 
more 
complex instruments, 
fair 
values may 
be 
estimated 
using 
a 
combination 
of 
observed 
transaction 
prices, 
consensus 
pricing services and relevant quotes. Consideration 
is given to the 
nature of the quotes (e.g., indicative or firm) and 
the relationship 
of 
recently 
evidenced 
market 
activity 
to 
the 
prices 
provided 
by 
consensus 
pricing 
services. 
UBS 
also 
uses 
internally 
developed 
models, 
which 
are 
typically 
based 
on 
valuation 
methods 
and 
techniques 
recognized 
as 
standard 
within 
the 
industry. 
Assumptions 
and 
inputs 
used 
in 
valuation 
techniques 
include 
benchmark interest 
rate curves, 
credit and funding 
spreads used 
in 
estimating discount 
rates, 
bond 
and 
equity 
prices, 
equity 
index 
prices, 
foreign 
exchange 
rates, 
levels 
of 
market 
volatility 
and 
correlation. Refer to Note 21f for more information. The discount 
curves 
used 
by 
UBS
 
incorporate 
the 
funding 
and 
credit 
characteristics 
of the instruments 
to which they 
are applied. 
 
Financial instruments excluding derivatives: valuation and classification in the fair value hierarchy 
 
Product 
Valuation and classification in the fair value hierarchy 
Government bills 
and bonds 
Valuation 
–
 
Generally valued using prices obtained directly 
from the market. 
–
 
Instruments not priced directly using active-market data 
are valued using discounted cash 
flow valuation 
techniques that incorporate market data 
for similar government instruments. 
Fair value hierarchy 
–
 
Generally traded in active markets with prices that can be obtained directly from these markets, resulting 
in classification as Level 1, 
while the remaining positions are classified 
as Level 2 and Level 3. 
Corporate and 
municipal bonds 
Valuation 
–
 
Generally 
valued 
using 
prices 
obtained 
directly 
from 
the 
market 
for 
the 
security, 
or 
similar 
securities, 
adjusted for seniority, maturity and liquidity. 
–
 
When prices 
are not 
available, instruments are 
valued using 
discounted cash 
flow valuation 
techniques 
incorporating the credit spread of the 
issuer or similar issuers. 
–
 
For 
convertible bonds 
without directly 
comparable prices, 
issuances may 
be 
priced using 
a convertible 
bond model. 
Fair value hierarchy 
–
 
Generally classified as Level 1 or Level 2, depending 
on the depth of trading activity behind price 
sources. 
–
 
Level 3 instruments have no suitable pricing information 
available. 
Traded loans and 
loans measured at 
fair value 
Valuation 
–
 
Valued 
directly 
using 
market 
prices 
that 
reflect 
recent 
transactions 
or 
quoted 
dealer 
prices, 
where 
available. 
–
 
Where no 
market price 
data is 
available, loans 
are valued 
by relative 
value benchmarking 
using pricing 
derived from debt instruments in comparable entities or different products in the same entity, or by using 
a credit default 
swap valuation technique, 
which requires inputs 
for credit spreads, 
credit recovery rates 
and interest 
rates. Recently 
originated commercial real 
estate loans 
are measured 
using a 
securitization 
approach based on rating agency guidelines. 
Fair value hierarchy 
–
 
Instruments with suitably deep and liquid pricing 
information are classified as Level 2. 
–
 
Positions 
requiring 
the 
use 
of 
valuation 
techniques, 
or 
for 
which 
the 
price 
sources 
have 
insufficient 
trading depth, are classified as Level 3. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
506 
 
Note 21 
Fair value measurement (continued)
Product 
Valuation and classification in the fair value hierarchy 
Investment fund 
units 
Valuation 
–
 
Predominantly exchange-traded, with 
readily available quoted prices in liquid markets. 
–
 
Where market prices are not available, fair 
value may be measured using net asset 
values (NAVs). 
Fair value hierarchy 
–
 
Listed units 
are classified 
as 
Level 1, provided 
there is 
sufficient trading 
activity to 
justify active-market 
classification, while other positions are classified 
as Level 2. 
–
 
Positions for which NAVs are not available 
are classified as Level 3. 
Asset-backed 
securities (ABS) 
Valuation 
–
 
For 
liquid 
securities, 
the 
valuation 
process 
will 
use 
trade 
and 
price 
data, 
updated 
for 
movements 
in 
market 
levels 
between 
the 
time 
of 
trading 
and 
the 
time 
of 
valuation. 
Less 
liquid 
instruments 
are 
measured using discounted expected cash 
flows incorporating price data for 
instruments or indices with 
similar risk profiles. 
Fair value hierarchy 
–
 
RMBS, 
CMBS 
and 
other 
ABS 
are 
generally 
classified 
as 
Level 2. 
However, 
if 
significant 
inputs 
are 
unobservable, or if market or fundamental 
data is not available, they are classified 
as Level 3. 
Auction rate 
securities (ARS) 
Valuation 
–
 
Effective from the fourth quarter 
of 2020, ARS are valued 
utilizing a discounted cash flow methodology. 
The 
model captures 
interest rate 
risk emanating 
from the 
note 
coupon, credit 
risk attributable 
to 
the 
underlying closed-end fund investments, liquidity risk 
as a function of the level of trading volume in these 
positions, and extension risk as ARS 
are perpetual instruments that require an assumption regarding their 
maturity or issuer redemption date. 
–
 
Previously, 
ARS 
were 
valued 
using 
market 
prices 
that 
reflected 
recent 
transactions 
after 
applying 
an 
adjustment 
for 
trade 
size 
or 
quoted 
dealer 
prices, 
where 
available. 
However, 
due 
to 
significant 
deterioration in 
the volume 
and size 
of transactions 
in relevant 
ARS markets 
following the 
outbreak of 
the 
COVID-19 pandemic, 
a 
model-based approach 
provides a 
superior indication 
of orderly 
exit prices 
until such time as markets re-develop. 
Fair value hierarchy 
–
 
Granular and liquid pricing information is generally not available for 
ARS. As a result, these securities are 
classified as Level 3. 
Equity instruments 
Valuation 
–
 
Listed equity instruments are generally valued 
using prices obtained directly from the market. 
–
 
Unlisted equity holdings, 
including private equity 
positions, are initially 
marked at their 
transaction price 
and are 
revalued when 
reliable evidence 
of price 
movement becomes available 
or when 
the position 
is 
deemed to be impaired. 
Fair value hierarchy 
–
 
The majority 
of equity 
securities are actively 
traded on 
public stock 
exchanges where quoted 
prices are 
readily and regularly available, resulting in Level 
1 classification. 
Financial assets for 
unit-linked 
investment 
contracts 
Valuation 
–
 
The majority of assets are listed on exchanges 
and fair values are determined using quoted 
prices. 
Fair value hierarchy 
–
 
Most assets are classified as Level 1 if actively traded, 
or Level 2 if trading is not active. 
–
 
Instruments for which prices are not readily available 
are classified as Level 3. 
Securities financing 
transactions 
Valuation 
–
 
These instruments are valued using discounted expected cash flow techniques. The discount rate applied 
is based on funding curves that are relevant 
to the collateral eligibility terms. 
Fair value hierarchy 
–
 
Collateral funding curves for 
these instruments are generally 
observable and, as a 
result, these positions 
are classified as Level 2. 
–
 
Where the 
collateral terms 
are 
non-standard, the 
funding curve 
may 
be considered 
unobservable and 
these positions are classified as Level 3. 
Brokerage 
receivables and 
payables 
Valuation 
–
 
Fair value is determined based on the value of 
the underlying balances. 
Fair value hierarchy 
–
 
Due to their on-demand nature, these receivables 
and payables are deemed as Level 2. 
Amounts due under 
unit-linked 
investment 
contracts 
Valuation 
–
 
The 
fair 
values 
of 
investment 
contract 
liabilities 
are 
determined 
by 
reference 
to 
the 
fair 
value 
of 
the 
corresponding assets. 
Fair value hierarchy 
–
 
The 
liabilities 
themselves 
are 
not 
actively 
traded, 
but 
are 
mainly 
referenced 
to 
instruments 
that 
are 
actively traded and are therefore classified 
as Level 2. 
 

 
 
 
 
 
 
 
 
 
 
 
507 
 
Note 21 
Fair value measurement (continued)
Derivative instruments: valuation and classification in the 
fair value hierarchy 
The 
curves 
used 
for 
discounting 
expected 
cash 
flows 
in 
the 
valuation 
of 
collateralized 
derivatives 
reflect 
the 
funding 
terms 
associated 
with 
the 
relevant 
collateral 
arrangement 
for 
the 
instrument 
being 
valued. 
These 
collateral 
arrangements 
differ 
across 
counterparties 
with 
respect 
to 
the 
eligible 
currency 
and 
interest 
terms 
of 
the 
collateral. 
The 
majority 
of 
collateralized 
derivatives are measured 
using a discount 
curve that is based 
on 
funding 
rates 
derived 
from 
overnight 
interest 
in 
the 
cheapest 
eligible 
currency 
for 
the 
respective 
counterparty 
collateral 
agreement. 
Uncollateralized 
and 
partially 
collateralized 
derivatives 
are 
discounted using the LIBOR (or equivalent) curve for the currency 
of 
the 
instrument. 
As 
described 
in 
Note 
21d, 
the 
fair 
value 
of 
uncollateralized 
and 
partially 
collateralized 
derivatives 
is 
then 
adjusted by 
credit valuation 
adjustments (CVAs), 
debit valuation 
adjustments (DVAs) and 
funding valuation adjustment 
(FVAs), as 
applicable, to 
reflect an 
estimation of 
the effect 
of counterparty 
credit risk, UBS’s own credit risk, 
and funding costs and benefits. 
›
 
Refer to Note 10 for more information about 
derivative 
instruments 
 
 
 
 
Derivative product 
Valuation and classification in the fair value hierarchy 
Interest rate 
contracts 
Valuation 
–
 
Interest rate 
swap contracts 
are 
valued by 
estimating future 
interest cash 
flows and 
discounting those 
cash flows 
using a 
rate that 
reflects the appropriate 
funding rate 
for the 
position being 
measured. The 
yield curves used to estimate future 
index levels and discount rates are 
generated using market-standard 
yield 
curve 
models 
using 
interest 
rates 
associated 
with 
current 
market 
activity. 
The 
key 
inputs 
to 
the 
models are interest rate swap rates, forward rate agreement rates, short-term interest rate futures prices, 
basis swap spreads and inflation swap rates. 
–
 
Interest rate option contracts 
are valued using various 
market-standard option models, using inputs that 
include interest rate yield curves, inflation curves, 
volatilities and correlations. 
–
 
When 
the 
maturity 
of 
an 
interest rate 
swap 
or 
option 
contract exceeds 
the 
term 
for 
which 
standard 
market quotes are observable for a significant input 
parameter, the contracts are valued by extrapolation 
from 
the 
last 
observable 
point 
using 
standard 
assumptions 
or 
by 
reference 
to 
another 
observable 
comparable input parameter to represent 
a suitable proxy for that portion of the term. 
Fair value hierarchy 
–
 
The majority 
of interest 
rate swaps 
are classified 
as Level 2 
as the 
standard market 
contracts that 
form 
the inputs for yield curve models are generally 
traded in active and observable markets. 
–
 
Options 
are 
generally 
treated 
as 
Level 2 
as 
the 
calibration 
process 
enables 
the 
model 
output 
to 
be 
validated to active-market levels. 
Models calibrated in this 
way are then 
used to revalue 
the portfolio of 
both standard options and more exotic products. 
–
 
Interest rate swap 
or option contracts 
are classified as 
Level 3 when the 
terms 
exceed standard market-
observable quotes. 
–
 
Exotic 
options 
for 
which 
appropriate 
volatility 
or 
correlation 
input 
levels 
cannot 
be 
implied 
from 
observable market data are classified as Level 3. 
Credit derivative 
contracts 
Valuation 
–
 
Credit derivative 
contracts are 
valued using 
industry-standard models 
based primarily 
on 
market credit 
spreads, upfront pricing points and implied recovery rates. Where a derivative credit spread is not directly 
available, it may be derived from the price of 
the reference cash bond. 
–
 
Asset-backed credit 
derivatives are 
valued using 
a valuation 
technique similar 
to that 
of the 
underlying 
security with an adjustment to reflect 
the funding differences between cash 
and synthetic form. 
Fair value hierarchy 
–
 
Single-entity and 
portfolio 
credit derivative 
contracts are 
classified as 
Level 2 
when credit 
spreads and 
recovery 
rates 
are 
determined 
from 
actively 
traded 
observable 
market 
data. 
Where 
the 
underlying 
reference name(s) are not actively traded and the 
correlation cannot be directly mapped to 
actively traded 
tranche instruments, these contracts are classified 
as Level 3. 
–
 
Asset-backed 
credit 
derivatives 
follow 
the 
characteristics 
of 
the 
underlying 
security 
and 
are 
therefore 
distributed across Level 2 and Level 3. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
508 
 
Note 21 
Fair value measurement (continued) 
Derivative product 
Valuation and classification in the fair value hierarchy 
Foreign exchange 
contracts 
Valuation 
–
 
Open spot FX contracts are valued using the FX 
spot rate observed in the market. 
–
 
Forward FX contracts are valued using the FX spot rate adjusted for forward pricing points observed from 
standard market-based sources. 
–
 
OTC FX option contracts are valued using market-standard option valuation models. The models used for 
shorter-dated 
options 
(i.e., 
maturities 
of 
five 
years 
or 
less) 
tend 
to 
be 
different 
than 
those 
used 
for 
longer-dated options 
because the 
models needed 
for longer-dated 
OTC FX 
contracts require 
additional 
consideration of interest rate and FX rate interdependency. 
–
 
The valuation for 
multi-dimensional FX options 
uses a 
multi-local volatility model, 
which is 
calibrated to 
the observed FX volatilities for all relevant FX 
pairs. 
Fair value hierarchy 
–
 
The 
markets 
for 
FX 
spot 
and 
FX 
forward 
pricing 
points 
are 
both 
actively 
traded 
and 
observable 
and 
therefore such FX contracts are generally classified 
as Level 2. 
–
 
A significant proportion of 
OTC FX option contracts are 
classified as Level 2 as 
inputs are derived mostly 
from standard market contracts traded in 
active and observable markets. 
–
 
OTC 
FX 
option contracts 
classified as 
Level 3 include 
multi-dimensional FX 
options and 
long-dated FX 
exotic 
option 
contracts 
where 
there 
is 
no 
active 
market 
from 
which 
to 
derive 
volatility 
or 
correlation 
inputs. 
Equity / index 
contracts 
Valuation 
–
 
Equity forward 
contracts have a 
single stock 
or index 
underlying and are 
valued using 
market-standard 
models. The key inputs to the models are 
stock prices, estimated dividend rates and equity funding rates 
(which are 
implied from 
prices of 
forward contracts 
observed in 
the market). 
Estimated cash 
flows are 
then 
discounted 
using 
market-standard 
discounted 
cash 
flow 
models 
using 
a 
rate 
that 
reflects 
the 
appropriate 
funding 
rate 
for 
that 
portion 
of 
the 
portfolio. 
When 
no 
market 
data 
is 
available 
for 
the 
instrument maturity, they are valued by extrapolation of available data, use of historical dividend data, or 
use of data for a related equity. 
–
 
Equity option contracts 
are valued using 
market-standard models that estimate 
the equity forward 
level 
as described 
for equity 
forward contracts 
and incorporate 
inputs for 
stock volatility 
and for 
correlation 
between 
stocks 
within 
a 
basket. 
The 
probability-weighted 
expected 
option 
payoff 
generated 
is 
then 
discounted 
using 
market-standard 
discounted 
cash 
flow 
models 
applying 
a 
rate 
that 
reflects 
the 
appropriate funding rate 
for that 
portion of the 
portfolio. When volatility, 
forward or 
correlation inputs 
are not available, they 
are valued using extrapolation of 
available data, historical dividend, correlation or 
volatility data, or the equivalent data for 
a related equity. 
Fair value hierarchy 
–
 
As inputs are 
derived mostly from standard 
market contracts traded in 
active and observable markets, 
a 
significant proportion of equity forward contracts 
are classified as Level 2. 
–
 
Equity option positions for which inputs are derived 
from standard market contracts traded in active and 
observable markets are 
also classified as 
Level 2. Level 3 positions are 
those for which 
volatility, forward 
or correlation inputs are not observable. 
Commodity 
contracts 
Valuation 
–
 
Commodity forward 
and swap 
contracts are 
measured using 
market-standard models 
that use 
market 
forward levels on standard instruments. 
–
 
Commodity 
option 
contracts 
are 
measured 
using 
market-standard 
option 
models 
that 
estimate 
the 
commodity forward level 
as described for 
commodity forward and 
swap contracts, incorporating 
inputs 
for 
the 
volatility 
of 
the 
underlying 
index 
or 
commodity. 
For 
commodity 
options 
on 
baskets 
of 
commodities 
or 
bespoke 
commodity indices, 
the 
valuation 
technique 
also 
incorporates 
inputs 
for 
the 
correlation between different commodities or 
commodity indices. 
Fair value hierarchy 
–
 
Individual 
commodity contracts 
are 
typically classified 
as 
Level 2, 
because 
active 
forward and 
volatility 
market data is available. 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
509 
 
Note 21 
Fair value measurement (continued) 
d) Valuation adjustments 
The 
output 
of 
a 
valuation 
technique is 
always an 
estimate 
of a 
fair value that cannot be measured with complete certainty. 
As a 
result, 
valuations 
are 
adjusted, 
where 
appropriate 
and 
when 
such 
factors 
would 
be 
considered 
by 
market 
participants 
in 
estimating 
fair value, 
to reflect 
close-out 
costs, credit 
exposure, 
model-driven 
valuation 
uncertainty, 
funding 
costs 
and 
benefits, 
trading restrictions and other factors. 
Deferred day-1 profit or loss reserves 
For 
new 
transactions 
where 
the 
valuation 
technique 
used 
to 
measure fair 
value requires 
significant inputs 
that are 
not based 
on 
observable 
market 
data, 
the 
financial 
instrument 
is 
initially 
recognized 
at 
the 
transaction 
price. 
The 
transaction 
price 
may 
differ 
from 
the fair 
value obtained 
using a 
valuation technique, 
where 
any 
such 
difference 
is 
deferred 
and 
not 
initially 
recognized in the income statement. 
Deferred 
day-1 
profit 
or 
loss 
is generally 
released 
into 
Other 
net 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through profit or loss
 
when pricing of equivalent products or the 
underlying 
parameters 
become
s
 
observable 
or 
when 
the 
transaction is closed out. 
The 
table 
below 
summarizes 
the 
changes 
in 
deferred 
day-1 
profit or loss reserves during the respective period. 
 
 
Deferred day-1 profit or loss reserves 
USD million 
2020 
2019 
2018 
Reserve balance at the beginning of the year 
 
146 
 
255 
 
338 
Profit / (loss) deferred on new transactions 
 
362 
 
171 
 
341 
(Profit) / loss recognized in the income statement 
 
(238) 
 
(278) 
 
(417) 
Foreign currency translation 
 
0 
 
(2) 
 
(6) 
Reserve balance at the end of the year 
 
269 
 
146 
 
255 
 
Own credit 
Own 
credit 
risk 
is 
reflected 
in 
the 
valuation 
of 
UBS’s 
fair 
value 
option liabilities where 
this component is considered relevant 
for 
valuation 
purposes 
by 
UBS’s 
counterparties 
and 
other 
market 
participants. 
Changes in 
the fair 
value of 
financial liabilities 
designated at 
fair 
value 
through 
profit 
or 
loss 
related 
to 
own 
credit 
are 
recognized 
in 
Other 
comprehensive 
income
 
directly 
within 
Retained 
earnings, 
with 
no 
reclassification 
to 
the 
income 
statement in future periods. 
This presentation does not 
create or 
increase 
an 
accounting 
mismatch 
in 
the 
income 
statement, 
as 
UBS does not hedge changes in own credit. 
Own 
credit 
is 
estimated 
using 
own 
credit 
adjustment 
(OCA) 
curves, 
which 
incorporate 
observable 
market 
data, 
including 
market-observed 
secondary 
prices 
for 
UBS’s 
debt, 
UBS’s 
credit 
default 
swap 
spreads 
and 
debt 
curves 
of 
peers. 
In 
the 
table 
below 
the change 
in 
unrealized own 
credit 
consists of 
changes 
in 
fair 
value 
that 
are 
attributable 
to 
the 
change 
in 
UBS’s 
credit 
spreads, 
as 
well 
as 
the 
effect 
of 
changes 
in 
fair 
values 
attributable 
to 
factors 
other 
than 
credit 
spreads, 
such 
as 
redemptions, 
effects 
from 
time 
decay 
and 
changes 
in 
interest 
and other 
market rates. 
Realized own 
credit is 
recognized when 
an 
instrument 
with 
an 
associated 
unrealized 
own 
credit 
adjustment is repurchased prior to the 
contractual maturity date. 
Life-to-date 
amounts 
reflect 
the 
cumulative 
unrealized 
change 
since initial recognition. 
›
 
Refer to Note 16 for more information about 
debt issued 
designated at fair value 
 
Own credit adjustments on financial liabilities 
designated at fair value 
Included in Other comprehensive income 
For the year ended 
USD million 
31.12.20 
31.12.19 
31.12.18 
Recognized during the period: 
Realized gain / (loss) 
 
2 
 
8 
 
(3) 
Unrealized gain / (loss) 
 
(295) 
 
(408) 
 
519 
Total gain / (loss), before tax 
 
(293) 
 
(400) 
 
517 
As of 
USD million 
31.12.20 
31.12.19 
31.12.18 
Recognized on the balance sheet as of the end of the period: 
Unrealized life-to-date gain / (loss) 
 
(381) 
 
(88) 
 
320 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
510 
 
Note 21 
Fair value measurement (continued) 
Credit valuation adjustments 
In order to measure 
the fair value of 
OTC derivative instruments, 
including 
funded 
derivative 
instruments 
that 
are 
classified 
as 
Financial 
assets 
at 
fair 
value 
not 
held 
for 
trading,
 
CVAs 
are 
necessary to reflect the credit risk of the counterparty inherent in 
these 
instruments. 
This 
amount 
represents 
the 
estimated 
fair 
value 
of 
protection 
required 
to 
hedge 
the 
counterparty 
credit 
risk 
of 
such 
instruments. 
A 
CVA 
is 
determined 
for 
each 
counterparty, 
considering 
all 
exposures 
with 
that 
counterparty, 
and 
is 
dependent 
on 
the 
expected 
future 
value 
of 
exposures, 
default 
probabilities 
and 
recovery 
rates, 
applicable 
collateral 
or 
netting arrangements, 
break clauses, 
funding spreads 
and other 
contractual factors. 
Funding valuation adjustments 
FVAs 
reflect 
the 
costs 
and 
benefits 
of 
funding 
associated 
with 
uncollateralized and 
partially collateralized 
derivative receivables 
and 
payables 
and 
are 
calculated 
as 
the 
valuation 
effect 
from 
moving 
the 
discounting 
of 
the 
uncollateralized 
derivative 
cash 
flows from 
LIBOR 
to OCA 
using the 
CVA 
framework, including 
the probability of counterparty default. 
An FVA is 
also applied to 
collateralized 
derivative 
assets 
in 
cases 
where 
the 
collateral 
cannot be sold or repledged. 
Debit valuation adjustments 
A DVA 
is estimated to incorporate own 
credit in the valuation of 
derivatives 
where 
an 
FVA 
is 
not 
already 
recognized. 
The 
DVA 
calculation 
is 
effectively 
consistent 
with 
the 
CVA 
framework, 
being 
determined 
for 
each 
counterparty, 
considering 
all 
exposures 
with 
that 
counterparty 
and 
taking 
into 
account 
collateral 
netting 
agreements, 
expected 
future 
mark-to-market 
movements and UBS’s credit default spreads. 
Other valuation adjustments 
Instruments 
that 
are 
measured 
as 
part 
of 
a 
portfolio 
of 
combined 
long 
and 
short 
positions 
are 
valued 
at 
mid-market 
levels 
to 
ensure 
consistent 
valuation 
of 
the 
long- 
and 
short-
component 
risks. A 
liquidity valuation 
adjustment 
is then 
made 
to the 
overall net 
long or 
short exposure 
to move 
the fair 
value 
to bid or 
offer as appropriate, 
reflecting current 
levels of market 
liquidity. 
The 
bid–offer 
spreads 
used 
in 
the 
calculation 
of 
this 
valuation adjustment are 
obtained from market transactions 
and 
other relevant sources and are updated periodically. 
Uncertainties 
associated 
with 
the 
use 
of 
model-based 
valuations 
are 
incorporated 
into 
the 
measurement 
of 
fair 
value 
through 
the 
use 
of 
model 
reserves. 
These 
reserves 
reflect 
the 
amounts that UBS estimates should be deducted from 
valuations 
produced 
directly 
by 
models 
to 
incorporate 
uncertainties 
in 
the 
relevant modeling 
assumptions, in 
the model 
and market 
inputs 
used, 
or 
in 
the 
calibration 
of 
the 
model 
output 
to 
adjust 
for 
known 
model 
deficiencies. 
In 
arriving 
at 
these 
estimates, 
UBS 
considers a 
range of 
market practices, 
including how 
it believes 
market 
participants 
would 
assess 
these 
uncertainties. 
Model 
reserves are 
reassessed periodically 
in light 
of data 
from market 
transactions, 
consensus 
pricing 
services 
and 
other 
relevant 
sources. 
 
 
Valuation adjustments on financial instruments 
As of 
Life-to-date gain / (loss), USD million 
31.12.20 
31.12.19 
Credit valuation adjustments
1
 
(66) 
 
(48) 
Funding valuation adjustments
2
 
(73) 
 
(93) 
Debit valuation adjustments 
 
0 
 
1 
Other valuation adjustments 
 
(820) 
 
(566) 
of which: liquidity 
 
(340) 
 
(300) 
of which: model uncertainty 
 
(479) 
 
(266) 
1 Amounts do not include reserves against defaulted counterparties. 
2 Includes FVAs on structured financing transactions of USD 6 million as 
of 31 December 2020 and USD 43 million as of 31 December 2019. 
 
 
e) Transfers between Level 1 and Level 2 
The 
amounts 
disclosed 
in 
this 
section 
reflect 
transfers 
between 
Level 1 and 
Level 2 for instruments 
that were held 
for the entire 
reporting period. 
Assets and liabilities transferred from Level 2 to Level 1 during 
2020 
were 
not 
material. 
Assets 
and 
liabilities 
transferred 
from 
Level 1 to Level 2 during 2020 were also not material. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
511 
 
Note 21 
Fair value measurement (continued) 
 
f) Level 3 instruments: valuation techniques and inputs 
The 
table 
below 
presents 
material 
Level 3 
assets 
and 
liabilities, 
together 
with 
the 
valuation 
techniques 
used 
to 
measure 
fair 
value, 
the 
inputs 
used 
in 
a 
given 
valuation 
technique 
that 
are 
considered 
significant 
as 
of 
31
 
December 
2020 
and 
unobservable
,
 
and 
a 
range 
of 
values 
for 
th
ose 
unobservable 
inputs. 
The 
range 
of 
values represents 
the 
highest- 
and lowest-level 
inputs 
used 
in 
the 
valuation 
techniques. 
Therefore, 
the 
range 
does 
not 
reflect 
the 
level 
of 
uncertainty 
regarding 
a 
particular 
input or an assessment 
of the reasonableness of 
UBS’s estimates 
and 
assumptions, 
but 
rather 
the 
different 
underlying 
characteristics 
of 
the relevant 
assets 
and liabilities 
held 
by 
UBS. 
The 
ranges 
will 
therefore 
vary 
from 
period 
to 
period 
and 
parameter 
to 
parameter 
based 
on 
characteristics 
of 
the 
instruments 
held 
at 
each 
balance 
sheet 
date. 
Furthermore, 
the 
ranges 
of 
unobservable 
inputs 
may 
differ 
across 
other 
financial 
institutions, reflecting the 
diversity of the products 
in each firm’s 
inventory. 
 
Valuation techniques and inputs used in the fair value measurement 
of Level 3 assets and liabilities 
Fair value 
Significant 
unobservable 
input(s)
1
Range of inputs 
Assets 
Liabilities 
Valuation 
technique(s) 
31.12.20 
31.12.19 
USD billion 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
low 
high 
weighted 
average
2 
low 
high 
weighted 
average
2 
unit
1 
Financial assets and liabilities at fair value held for trading and Financial assets at fair 
value not held for trading 
Corporate and municipal 
bonds 
 
1.2 
 
0.5 
 
0.0 
 
0.0 
Relative value to 
market comparable 
Bond price equivalent 
 
1 
 
143 
 
100 
 
0 
 
143 
 
101 
points 
Discounted expected 
cash flows 
Discount margin 
 
268 
 
268 
basis 
points 
Traded loans, loans 
measured at fair value, 
loan commitments and 
guarantees 
 
2.4 
 
2.4 
 
0.0 
 
0.0 
Relative value to 
market comparable 
Loan price equivalent 
 
0 
 
101 
 
99 
 
0 
 
101 
 
99 
points 
Discounted expected 
cash flows 
Credit spread 
 
190 
 
800 
 
225 
 
530 
basis 
points 
Market comparable 
and securitization 
model 
Credit spread 
 
40 
 
1,858 
 
333 
 
45 
1,412 
 
244 
basis 
points 
Auction rate securities
3
 
1.5 
 
1.5 
Relative value to 
market comparable 
Bond price equivalent 
 
79 
 
98 
 
88 
points 
Discounted expected 
cash flows 
Credit spread 
 
100 
 
188 
 
140 
basis 
points 
Investment fund units
4
 
0.1 
 
0.1 
 
0.0 
 
0.0 
Relative value to 
market comparable 
Net asset value 
Equity instruments
4
 
0.7 
 
0.7 
 
0.0 
 
0.1 
Relative value to 
market comparable 
Price 
Debt issued designated at 
fair value
5
 
9.6 
 
9.6 
Other financial liabilities 
designated at fair value 
 
2.1 
 
1.0 
Discounted expected 
cash flows 
Funding spread 
 
42 
 
175 
 
44 
 
175 
basis 
points 
Derivative financial instruments 
Interest rate contracts 
 
0.5 
 
0.3 
 
0.5 
 
0.1 
Option model 
Volatility of interest 
rates 
 
29 
 
69 
 
15 
 
63 
basis 
points 
Credit derivative contracts 
 
0.3 
 
0.4 
 
0.5 
 
0.5 
Discounted expected 
cash flows 
Credit spreads 
 
1 
 
489 
 
1 
 
700 
basis 
points 
Bond price equivalent 
 
0 
 
100 
 
0 
 
100 
points 
Equity / index contracts 
 
0.9 
 
0.6 
 
2.3 
 
1.3 
Option model 
Equity dividend yields 
 
0 
 
13 
 
0 
 
14 
% 
Volatility of equity 
stocks, equity and 
other indices 
 
4 
 
100 
 
4 
 
105 
% 
Equity-to-FX 
correlation 
 
(34) 
 
65 
 
(45) 
 
71 
% 
Equity-to-equity 
correlation 
 
(16) 
 
100 
 
(17) 
 
98 
% 
1 The ranges of significant 
unobservable inputs are represented in 
points, percentages and basis 
points. Points are a 
percentage of par (e.g., 100 
points would be 100% of par). 
2 Weighted averages are 
provided 
for non-derivative financial instruments 
and were calculated by 
weighting inputs based on the 
fair values of the 
respective instruments. Weighted 
averages are not provided 
for inputs related to derivative 
contracts, 
as this would not be meaningful. 
3 Bond price equivalent prior to 
the fourth quarter of 2020; discounted 
cash flow model thereafter. 
4 The range of inputs 
is not disclosed as there is a dispersion 
of values given 
the diverse 
nature of 
the investments. 
5 Debt 
issued designated 
at fair 
value is 
composed primarily 
of UBS 
structured notes, 
which include 
variable 
maturity notes 
with various 
equity and 
foreign exchange 
underlying risks, rates-linked 
and credit-linked notes, 
all of which have embedded derivative 
parameters that are considered 
to be unobservable. The 
equivalent derivative instrument parameters 
are presented in the 
respective derivative financial instruments lines in this table. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
512 
 
Note 21 
Fair value measurement (continued) 
Significant unobservable inputs in Level 3 positions 
This 
section 
discusses 
the 
significant 
unobservable 
inputs 
used 
in 
the 
valuation 
of 
Level 3 
instruments 
and 
assesses 
the 
potential 
effect 
that 
a 
change 
in 
each 
unobservable 
input 
in 
isolation 
may 
have 
on 
a 
fair 
value 
measurement. 
Relationships 
between 
observable and unobservable inputs have not been included in the summary below. 
 
Input 
Description 
Bond price equivalent 
–
 
Where market 
prices are 
not available 
for a 
bond, fair 
value is 
measured by comparison 
with observable 
pricing data 
from 
similar instruments. Factors considered when 
selecting comparable instruments include credit 
quality, maturity and industry of 
the issuer. Fair value may be measured either by a direct price comparison or by conversion of 
an instrument price into a yield 
(either as an outright yield or as a spread to 
LIBOR). 
–
 
For corporate and 
municipal bonds, the 
range represents the 
range of 
prices from reference 
issuances used in 
determining 
fair value. Bonds priced at 0 are distressed to the point that no 
recovery is expected, while prices significantly in excess of 
100 
or 
par 
relate 
to 
inflation-linked or 
structured issuances 
that 
pay 
a 
coupon 
in 
excess 
of 
the 
market 
benchmark as 
of 
the 
measurement date. 
–
 
For credit derivatives, the bond price range 
represents the range of prices used for 
reference instruments, which are typically 
converted to an equivalent yield or credit 
spread as part of the valuation 
process. 
Loan price equivalent 
–
 
Where market prices 
are not available 
for a traded 
loan, fair value 
is measured by 
comparison with observable pricing 
data 
for 
similar 
instruments. 
Factors 
considered 
when 
selecting 
comparable 
instruments 
include 
industry 
segment, 
collateral 
quality, 
maturity 
and 
issuer-specific 
covenants. 
Fair 
value 
may 
be 
measured 
either 
by 
a 
direct 
price 
comparison 
or 
by 
conversion of an instrument price into a yield. The range represents the range of prices derived from reference issuances of a 
similar credit 
quality used 
to measure 
fair value 
for loans 
classified as 
Level 3. Loans 
priced at 
0 are 
distressed to 
the point 
that no recovery is expected, while a current 
price of 100 represents a loan that is expected 
to be repaid in full. 
Credit spread 
–
 
Valuation models for many 
credit derivatives require an input 
for the credit spread, which 
is a reflection of 
the credit quality 
of 
the associated 
referenced underlying. 
The 
credit spread 
of 
a 
particular security 
is 
quoted in 
relation to 
the 
yield 
on 
a 
benchmark security or reference rate, typically either US 
Treasury or LIBOR, and is generally expressed in terms of basis 
points. 
An increase / (decrease) in credit spread will increase 
/ (decrease) the value of credit protection offered by credit 
default swaps 
and other credit derivative products. The income statement effect from such changes depends on the nature and 
direction of 
the positions held. Credit spreads 
may be negative where the 
asset is more creditworthy than 
the benchmark against which 
the spread is 
calculated. A wider credit 
spread represents decreasing creditworthiness. The 
range represents a diverse 
set of 
underlyings, 
with 
the 
lower 
end 
of 
the 
range 
representing credits 
of 
the 
highest 
quality (e.g., 
approximating the 
risk 
of 
LIBOR) and the upper end of the range representing 
greater levels of credit risk. 
Discount margin 
–
 
The discount margin (DM) spread represents the 
discount rates applied to present value 
cash flows of an asset 
to reflect the 
market 
return 
required 
for 
uncertainty in 
the 
estimated cash 
flows. 
DM 
spreads 
are 
a 
rate 
or 
rates 
applied 
on 
top 
of 
a 
floating index (e.g., 
LIBOR) to discount 
expected cash 
flows. Generally, a 
decrease / 
(increase) in the 
DM in 
isolation would 
result in a higher / (lower) fair value. 
–
 
The 
high end 
of 
the range 
relates to 
securities that 
are 
priced 
low within 
the 
market relative 
to 
the expected 
cash 
flow 
schedule. This indicates that the market is pricing an increased 
risk of credit loss into the security that 
is greater than what is 
being captured 
by the 
expected cash 
flow generation 
process. The 
low ends 
of the 
ranges are 
typical of 
funding rates 
on 
better-quality instruments. 
Funding spread 
–
 
Structured financing transactions are valued using synthetic funding curves that best represent the assets that are pledged as 
collateral for the transactions. They are not representative 
of where UBS can fund itself on an unsecured basis, but 
provide an 
estimate of where UBS can source and deploy secured funding with counterparties for a given type of collateral. The funding 
spreads are expressed in terms of basis points over or 
under LIBOR, and if funding spreads widen, this increases the effect of 
discounting. 
–
 
A small proportion 
of structured debt 
instruments and non-structured fixed-rate 
bonds within financial 
liabilities designated 
at fair value had an exposure to funding 
spreads that was longer in duration than the 
actively traded market. 
Volatility 
–
 
Volatility 
measures the 
variability 
of 
future 
prices 
for 
a 
particular 
instrument and 
is 
generally expressed 
as 
a 
percentage, 
where 
a 
higher 
number 
reflects 
a 
more 
volatile 
instrument, 
for 
which 
future 
price 
movements are 
more 
likely 
to 
occur. 
Volatility is a key 
input into option models, where 
it is used to 
derive a probability-based distribution of future 
prices for the 
underlying instrument. The 
effect of 
volatility on 
individual positions within 
the portfolio 
is driven 
primarily by whether 
the 
option contract 
is a 
long or short 
position. In most 
cases, the 
fair value 
of an 
option increases as 
a result 
of an 
increase in 
volatility and is 
reduced by a decrease 
in volatility. Generally, volatility 
used in the 
measurement of fair value 
is derived from 
active-market option 
prices (referred 
to 
as 
implied volatility). 
A 
key 
feature of 
implied volatility 
is the 
volatility “smile” 
or 
“skew”, which represents the effect of pricing 
options of different option strikes at different 
implied volatility levels. 
–
 
Volatilities of low interest rates tend to be much higher than volatilities of high interest rates. In addition, different currencies 
may have significantly different implied volatilities. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
513 
 
Note 21 
Fair value measurement (continued) 
Input 
Description 
Correlation 
–
 
Correlation measures the interrelationship between the movements of two variables. It is expressed as a percentage between 
–100% 
and 
+100%, 
where 
+100% 
represents 
perfectly 
correlated 
variables 
(meaning 
a 
movement 
of 
one 
variable 
is 
associated with a 
movement of the 
other variable in 
the same direction) and 
–100% implies that 
the variables are 
inversely 
correlated 
(meaning 
a 
movement 
of 
one 
variable 
is 
associated 
with 
a 
movement 
of 
the 
other 
variable 
in 
the 
opposite 
direction). The effect of correlation on the measurement of fair value depends on the specific terms of the instruments being 
valued, reflecting the range of different payoff 
features within such instruments. 
–
 
Equity-to-FX correlation is important for equity options based on 
a currency other than the 
currency of the underlying stock. 
Equity-to-equity correlation is particularly important for complex options that incorporate, in some 
manner, different equities 
in the projected payoff. 
Equity dividend yields 
–
 
The derivation of 
a forward price 
for an individual 
stock or index 
is important for 
measuring fair value 
for forward or 
swap 
contracts and for measuring fair value using option pricing models. The relationship between the current stock price and 
the 
forward price is based on a combination of expected future dividend levels and 
payment timings, and, to a lesser extent, the 
relevant 
funding 
rates 
applicable 
to 
the 
stock 
in 
question. 
Dividend 
yields 
are 
generally 
expressed 
as 
an 
annualized 
percentage of the share price, with the lowest limit of 0% representing a stock that is not expected to pay any dividend. The 
dividend 
yield 
and 
timing 
represents 
the 
most 
significant 
parameter 
in 
determining 
fair 
value 
for 
instruments 
that 
are 
sensitive to an equity forward price. 
 
g) Level 3 instruments: sensitivity to changes in unobservable input assumptions 
The table 
below summarizes 
those financial 
assets and 
liabilities 
classified 
as 
Level 3 
for 
which 
a 
change 
in 
one 
or 
more 
of 
the 
unobservable inputs 
to reflect 
reasonably possible 
favorable and 
unfavorable 
alternative 
assumptions 
would 
change 
fair 
value 
significantly, 
and 
the estimated 
effect 
thereof. 
The 
table 
below 
does 
not 
represent 
the 
estimated 
effect 
of 
stress 
scenarios. 
Interdependencies 
between 
Level 1, 
2 
and 
3 
parameters 
have 
not 
been 
incorporated 
in 
the 
table. 
Furthermore, 
direct 
inter-
relationships 
between 
the 
Level 3 
parameters 
discussed 
below 
are not a significant element of the valuation uncertainty. 
Sensitivity 
data 
is 
estimated 
using 
a 
number 
of 
techniques, 
including 
the 
estimation 
of 
price 
dispersion 
among 
different 
market 
participants, 
variation 
in 
modeling 
approaches 
and 
reasonably possible 
changes to assumptions 
used within the 
fair 
value 
measurement 
process. 
The 
sensitivity 
ranges 
are 
not 
always symmetrical 
around the 
fair values, 
as the 
inputs used 
in 
valuations are not always precisely in 
the middle of the favorable 
and unfavorable range. 
Sensitivity data 
is determined 
at a 
product or 
parameter level 
and 
then 
aggregated 
assuming 
no 
diversification 
benefit. 
Diversification 
would 
incorporate 
estimated 
correlations 
across 
different 
sensitivity 
results 
and, 
as 
such, 
would 
result 
in 
an 
overall 
sensitivity 
that 
would 
be 
less 
than 
the 
sum 
of 
the 
individual 
component 
sensitivities. 
However, 
UBS 
believes 
that 
the diversification benefit is not significant to this analysis. 
 
 
 
Sensitivity of fair value measurements to changes 
in unobservable input assumptions
1
31.12.20 
31.12.19 
USD million 
Favorable 
changes 
Unfavorable 
changes 
Favorable 
changes 
Unfavorable 
changes 
Traded loans, loans designated at fair value, loan commitments and guarantees 
 
29 
 
(28) 
 
46 
 
(21) 
Securities financing transactions 
 
40 
 
(52) 
 
11 
 
(11) 
Auction rate securities 
 
105 
 
(105) 
 
87 
 
(87) 
Asset-backed securities 
 
41 
 
(41) 
 
35 
 
(40) 
Equity instruments 
 
129 
 
(96) 
 
140 
 
(80) 
Interest rate derivative contracts, net 
 
11 
 
(16) 
 
8 
 
(17) 
Credit derivative contracts, net
2
 
10 
 
(14) 
 
31 
 
(35) 
Foreign exchange derivative contracts, net 
 
20 
 
(15) 
 
12 
 
(8) 
Equity / index derivative contracts, net 
 
318 
 
(294) 
 
183 
 
(197) 
Other 
 
91 
 
(107) 
 
47 
 
(51) 
Total 
 
794 
 
(768) 
 
600 
 
(547) 
1 Sensitivity 
of issued 
and over-the-counter 
debt instruments 
is reported 
with the 
equivalent derivative 
or securities 
financing instrument. 
2 Includes 
refinements applied 
in estimating 
valuation uncertainty, 
resulting from a move to use issuer-specific proxy credit default swap curves rather 
than generic curves. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
514 
 
Note 21 
Fair value measurement (continued) 
h) Level 3 instruments: movements during the period 
The 
table below 
presents 
additional 
information about 
material 
movements in Level 3 assets and 
liabilities measured at fair 
value 
on a recurring basis, excluding any related hedging activity. 
Assets 
and 
liabilities 
transferred 
into 
or 
out 
of 
Level 3 
are 
presented as 
if those 
assets or 
liabilities had 
been transferred 
at 
the beginning of the year. 
 
Movements of Level 3 instruments
1
Total gains / losses 
included in 
comprehensive income 
USD billion 
Balance 
as of 
31 December 
2018 
Net gains / 
losses 
included in 
income
2
of which: 
related to 
Level 3 
instruments 
held at the 
end of the 
reporting 
period 
Purchases 
Sales 
Issuances 
Settlements 
Transfers 
into 
Level 3 
Transfers 
out of 
Level 3 
Foreign 
currency 
translation 
Balance 
as of 
31 December 
2019 
Financial assets at fair value held for 
trading 
 
2.0 
 
(0.1) 
 
0.0 
 
0.5 
 
(1.3) 
 
1.0 
 
0.0 
 
0.2 
 
(0.4) 
 
0.0 
 
1.8 
of which: 
Investment fund units 
 
0.4 
 
0.0 
 
0.0 
 
0.0 
 
(0.2) 
 
0.0 
 
0.0 
 
0.0 
 
(0.2) 
 
0.0 
 
0.0 
Corporate and municipal bonds 
 
0.7 
 
0.0 
 
0.0 
 
0.3 
 
(0.2) 
 
0.0 
 
0.0 
 
0.0 
 
(0.2) 
 
0.0 
 
0.5 
Loans 
 
0.7 
 
(0.1) 
 
0.0 
 
0.0 
 
(0.8) 
 
1.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.8 
Other 
 
0.2 
 
0.0 
 
(0.1) 
 
0.1 
 
0.0 
 
0.0 
 
0.0 
 
0.2 
 
0.0 
 
0.0 
 
0.4 
Derivative financial instruments – 
assets 
 
1.4 
 
(0.1) 
 
0.0 
 
0.0 
 
0.0 
 
0.4 
 
(0.2) 
 
0.1 
 
(0.3) 
 
0.0 
 
1.3 
of which: 
Interest rate contracts 
 
0.4 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
(0.2) 
 
0.0 
 
0.3 
Equity / index contracts 
 
0.5 
 
0.0 
 
0.1 
 
0.0 
 
0.0 
 
0.1 
 
0.0 
 
0.1 
 
(0.1) 
 
0.0 
 
0.6 
Credit derivative contracts 
 
0.5 
 
(0.1) 
 
(0.1) 
 
0.0 
 
0.0 
 
0.2 
 
(0.1) 
 
0.0 
 
(0.1) 
 
0.0 
 
0.4 
Other 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
Financial assets at fair value not held 
for trading 
 
4.4 
 
0.0 
 
0.0 
 
1.2 
 
(0.6) 
 
0.0 
 
0.0 
 
0.1 
 
(1.2) 
 
0.0 
 
4.0 
of which: 
Loans 
 
1.8 
 
0.0 
 
0.0 
 
0.7 
 
(0.1) 
 
0.0 
 
0.0 
 
0.1 
 
(1.2) 
 
0.0 
 
1.2 
Auction rate securities 
 
1.7 
 
0.0 
 
0.0 
 
0.0 
 
(0.1) 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
1.5 
Equity instruments 
 
0.5 
 
0.0 
 
0.0 
 
0.1 
 
(0.2) 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.5 
Other 
 
0.5 
 
0.0 
 
0.0 
 
0.5 
 
(0.2) 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.7 
Derivative financial instruments – 
liabilities 
 
2.2 
 
0.1 
 
0.1 
 
0.0 
 
0.0 
 
0.2 
 
(0.4) 
 
0.2 
 
(0.3) 
 
0.0 
 
2.0 
of which: 
Interest rate contracts 
 
0.2 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
(0.1) 
 
0.0 
 
0.1 
Equity / index contracts 
 
1.4 
 
0.3 
 
0.2 
 
0.0 
 
0.0 
 
0.0 
 
(0.3) 
 
0.1 
 
(0.2) 
 
0.0 
 
1.3 
Credit derivative contracts 
 
0.5 
 
(0.1) 
 
(0.1) 
 
0.0 
 
0.0 
 
0.2 
 
0.0 
 
0.0 
 
(0.1) 
 
0.0 
 
0.5 
Other 
 
0.1 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.0 
 
0.1 
Debt issued designated at fair value 
 
11.0 
 
0.8 
 
0.7 
 
0.0 
 
0.0 
 
5.6 
 
(5.4) 
 
0.7 
 
(3.1) 
 
0.0 
 
9.6 
Other financial liabilities designated 
at fair value 
 
1.0 
 
0.2 
 
0.1 
 
0.0 
 
0.0 
 
0.5 
 
(0.7) 
 
0.0 
 
0.0 
 
0.0 
 
1.0 
1 Effective 1 January 2020, UBS has 
enhanced its disclosure of Level 3 
movements by excluding from the 
table the impacts of instruments purchased 
during the period and sold prior 
to the end of the period. 
Prior-
period comparatives have 
been restated accordingly. 
2 Net gains 
/ losses included 
in comprehensive income 
are composed of 
Net interest income, 
Other net income 
from financial instruments 
measured at fair 
value through profit or loss and Other income. 
3 Total Level 3 assets as of 31 December 2020 were USD 8.3 billion (31 
December 2019: USD 7.2 billion). Total Level 3 liabilities as of 31 December 
2020 were USD 
15.2 billion (31 December 2019: USD 12.8 billion).

 

 
Note 21 
Fair value measurement (continued) 
Total gains / losses 
included in 
comprehensive income 
Balance 
as of 
December 
2019
3
Net gains / 
losses 
included in 
income
2
of which: 
related to 
Level 3 
instruments 
held at the 
end of the 
reporting 
period 
Purchases 
Sales 
Issuances 
Settlements 
Transfers 
into 
Level 3 
Transfers 
out of 
Level 3 
Foreign 
currency 
translation 
Balance 
as of 
December 
2020
3
 
8 
 
(0.1) 
 
(0.1) 
 
8 
 
(1.4) 
 
0 
 
0 
 
3 
 
0 
 
0 
 
3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
5 
 
0 
 
0 
 
7 
 
(0.5) 
 
0 
 
0 
 
1 
 
0 
 
0 
 
8 
 
8 
 
0 
 
(0.1) 
 
0 
 
(0.7) 
 
0 
 
0 
 
1 
 
0 
 
0 
 
1 
 
4 
 
0 
 
0 
 
1 
 
(0.3) 
 
0 
 
0 
 
2 
 
0 
 
0 
 
4 
 
3 
 
3 
 
4 
 
0 
 
0 
 
7 
 
(0.5) 
 
1 
 
(0.2) 
 
1 
 
8 
 
3 
 
2 
 
2 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
5 
 
6 
 
1 
 
1 
 
0 
 
0 
 
6 
 
(0.3) 
 
0 
 
(0.1) 
 
0 
 
9 
 
4 
 
0 
 
0 
 
0 
 
0 
 
1 
 
(0.2) 
 
1 
 
0 
 
0 
 
3 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1 
 
8 
 
(0.9) 
 
0 
 
0 
 
1 
 
0 
 
0 
 
9 
 
2 
 
0 
 
0 
 
3 
 
(0.7) 
 
0 
 
0 
 
0 
 
0 
 
0 
 
9 
 
5 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
5 
 
5 
 
0 
 
0 
 
1 
 
(0.1) 
 
0 
 
0 
 
0 
 
0 
 
0 
 
5 
 
7 
 
0 
 
0 
 
4 
 
(0.2) 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
3 
 
2 
 
0 
 
0 
 
2 
 
(0.9) 
 
4 
 
(0.6) 
 
1 
 
5 
 
1 
 
3 
 
3 
 
0 
 
0 
 
3 
 
(0.2) 
 
2 
 
(0.2) 
 
0 
 
5 
 
3 
 
0 
 
8 
 
0 
 
0 
 
8 
 
(0.6) 
 
1 
 
(0.2) 
 
0 
 
3 
 
5 
 
0 
 
0 
 
0 
 
0 
 
1 
 
(0.1) 
 
1 
 
(0.2) 
 
0 
 
5 
 
1 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
0 
 
1 
 
6 
 
0 
 
(0.2) 
 
0 
 
0 
 
6 
 
(5.6) 
 
5 
 
(1.7) 
 
2 
 
6 
 
0 
 
2 
 
2 
 
0 
 
0 
 
4 
 
(0.6) 
 
0 
 
0 
 
0 
 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
516 
 
Note 21 
Fair value measurement (continued) 
 
i) Maximum exposure to credit risk for financial instruments measured at fair value 
The tables below provide 
UBS AG’s maximum exposure 
to credit 
risk 
for 
financial 
instruments 
measured 
at 
fair 
value 
and 
the 
respective 
collateral 
and 
other 
credit 
enhancements 
mitigating 
credit risk for these classes of financial instruments. 
The 
maximum 
exposure 
to 
credit 
risk 
includes 
the 
carrying 
amounts 
of 
financial 
instruments 
recognized 
on 
the 
balance 
sheet 
subject 
to 
credit 
risk 
and 
the 
notional 
amounts 
for 
off-
balance 
sheet 
arrangements. 
Where 
information 
is 
available, 
collateral 
is presented 
at 
fair value. 
For other 
collateral, such 
as 
real 
estate, 
a 
reasonable 
alternative 
value 
is 
used. 
Credit 
enhancements, 
such 
as 
credit 
derivative 
contracts 
and 
guarantees, 
are 
included 
at 
their 
notional 
amounts. 
Both 
are 
capped 
at 
the 
maximum 
exposure 
to 
credit 
risk 
for 
which 
they 
serve as security. The 
“Risk management and control” 
section of 
this 
report 
describes 
management’s 
view 
of 
credit 
risk 
and 
the 
related 
exposures, 
which can 
differ in 
certain respects 
from 
the 
requirements of IFRS. 
 
 
Maximum exposure to credit risk 
31.12.20 
Maximum 
exposure to 
credit risk 
Collateral 
Credit enhancements 
Exposure to 
credit risk 
after collateral 
and credit 
enhancements 
USD billion 
Cash 
collateral 
received 
Collateral- 
ized by 
securities 
Secured by 
real estate 
Other 
collateral 
Netting 
Credit 
derivative 
contracts 
Guarantees 
Financial assets measured at 
fair value on the balance sheet 
Financial assets at fair value 
held for trading – debt instruments
1,2
 
24.7 
 
 
24.7 
Derivative financial instruments
3,4
 
159.6 
 
6.0 
 
138.4 
 
 
15.2 
Brokerage receivables 
 
24.7 
 
24.4 
 
 
 
 
 
0.3 
Financial assets at fair value not 
held for trading – debt instruments
5
 
58.2 
 
13.2 
 
 
 
 
45.0 
Total financial assets measured at fair value 
 
267.2 
 
0.0 
 
43.6 
 
0.0 
 
0.0 
 
138.4 
 
0.0 
 
0.0 
 
85.2 
Guarantees
6
 
0.5 
 
 
 
 
0.1 
 
 
0.3 
 
0.0 
 
31.12.19 
Maximum 
exposure to 
credit risk 
Collateral 
Credit enhancements 
Exposure to 
credit risk 
after collateral 
and credit 
enhancements 
USD billion 
Cash 
collateral 
received 
Collateral- 
ized by 
securities 
Secured by 
real estate 
Other 
collateral 
Netting 
Credit 
derivative 
contracts 
Guarantees 
Financial assets measured at 
fair value on the balance sheet 
Financial assets at fair value 
held for trading – debt instruments
1,2
 
22.0 
 
 
 
 
22.0 
Derivative financial instruments
3,4
 
121.8 
 
3.3 
 
107.4 
 
 
 
11.1 
Brokerage receivables 
 
18.0 
 
0.0 
 
17.8 
 
 
 
 
 
0.2 
Financial assets at fair value not 
held for trading – debt instruments
5
 
55.0 
 
0.1 
 
16.3 
 
 
0.1 
 
 
 
38.6 
Total financial assets measured at fair value 
 
216.8 
 
0.1 
 
37.4 
 
0.0 
 
0.1 
 
107.4 
 
0.0 
 
0.0 
 
71.9 
Guarantees
6
 
1.0 
 
 
 
 
 
0.3 
 
0.7 
1 These positions are 
generally managed under the 
market risk framework. 
For the purpose of 
this disclosure, collateral 
and credit enhancements were 
not considered. 
2 Does not include investment 
fund units. 
3 Includes USD 0 million (31 December 2019: USD 0 
million) fair values of loan commitments and forward 
starting reverse repurchase agreements classified as derivatives. 
The full contractual committed amount 
of 
forward starting reverse repurchase agreements (generally 
highly collateralized) of USD 21.9 billion (31 
December 2019: USD 20.3 billion) and derivative 
loan commitments (generally unsecured) of USD 
9.4 billion, 
of which USD 0.8 
billion has 
been sub-participated 
(31 December 2019: 
USD 6.3 billion, 
of which 
USD 0.8 billion 
had been 
sub-participated) is 
presented in 
Note 10 
under notional 
amounts. 
4 The 
amount 
shown in the “Netting” column 
represents the netting potential 
not recognized on the balance 
sheet. Refer to Note 
22 for more information. 
5 Financial assets at fair 
value not held for 
trading collateralized by 
securities consisted of structured loans and reverse repurchase and securities borrowing agreements. 
6 The amount shown in the “Guarantees” column largely relates to sub-participations. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
517 
 
Note 21 
Fair value measurement (continued) 
 
j) Financial instruments not measured at fair value 
The table below provides the estimated fair values of financial instruments not measured at fair value. 
 
Financial instruments not measured at fair value 
31.12.20 
31.12.19 
Carrying 
amount 
Fair value 
Carrying 
amount 
Fair value 
USD billion 
Total 
Carrying 
amount 
approximates 
fair value
1
Level 1 
Level 2 
Level 3 
Total 
Total 
Carrying 
amount 
approximates 
fair value
1
Level 1 
Level 2 
Level 3 
Total 
Assets
2
Cash and balances at central banks 
 
158.2 
 
158.1 
 
0.1 
 
0.0 
 
0.0 
 
158.2 
 
107.1 
 
107.0 
 
0.1 
 
0.0 
 
0.0 
 
107.1 
Loans and advances to banks 
 
15.3 
 
14.6 
 
0.0 
 
0.6 
 
0.1 
 
15.3 
 
12.4 
 
11.7 
 
0.0 
 
0.5 
 
0.2 
 
12.4 
Receivables from securities financing 
transactions 
 
74.2 
 
64.9 
 
0.0 
 
7.6 
 
1.7 
 
74.2 
 
84.2 
 
74.0 
 
0.0 
 
8.6 
 
1.6 
 
84.2 
Cash collateral receivables on derivative 
instruments 
 
32.7 
 
32.7 
 
0.0 
 
0.0 
 
0.0 
 
32.7 
 
23.3 
 
23.3 
 
0.0 
 
0.0 
 
0.0 
 
23.3 
Loans and advances to customers 
 
381.0 
 
173.1 
 
0.0 
 
34.2 
 
174.9 
 
382.3 
 
328.0 
 
152.5 
 
0.0 
 
25.7 
 
152.2 
 
330.3 
Other financial assets measured at amortized 
cost 
 
27.2 
 
5.4 
 
9.4 
 
10.9 
 
2.3 
 
28.0 
 
23.0 
 
5.8 
 
8.4 
 
6.4 
 
2.8 
 
23.3 
Liabilities 
Amounts due to banks 
 
11.0 
 
8.5 
 
0.0 
 
2.6 
 
0.0 
 
11.1 
 
6.6 
 
5.6 
 
0.0 
 
0.9 
 
0.0 
 
6.6 
Payables from securities financing 
transactions 
 
6.3 
 
6.0 
 
0.0 
 
0.2 
 
0.0 
 
6.3 
 
7.8 
 
7.5 
 
0.0 
 
0.3 
 
0.0 
 
7.8 
Cash collateral payables on derivative 
instruments 
 
37.3 
 
37.3 
 
0.0 
 
0.0 
 
0.0 
 
37.3 
 
31.4 
 
31.4 
 
0.0 
 
0.0 
 
0.0 
 
31.4 
Customer deposits 
 
527.9 
 
521.8 
 
0.0 
 
6.2 
 
0.0 
 
528.0 
 
450.6 
 
440.5 
 
0.0 
 
10.2 
 
0.0 
 
450.7 
Funding from UBS Group AG and its 
subsidiaries 
 
54.0 
 
0.0 
 
0.0 
 
55.6 
 
0.0 
 
55.6 
 
47.9 
 
0.0 
 
0.0 
 
49.6 
 
0.0 
 
49.6 
Debt issued measured at amortized cost 
 
85.4 
 
16.4 
 
0.0 
 
70.0 
 
0.0 
 
86.3 
 
62.8 
 
8.7 
 
0.0 
 
55.5 
 
0.0 
 
64.3 
Other financial liabilities measured at 
amortized cost
3
 
6.6 
 
6.6 
 
0.0 
 
0.0 
 
0.1 
 
6.7 
 
6.5 
 
6.5 
 
0.0 
 
0.0 
 
0.0 
 
6.5 
1 Includes certain financial instruments where the carrying amount is a reasonable 
approximation of the fair value due to the instruments’ 
short-term nature (instruments that are receivable or payable on 
demand, or 
with a remaining maturity (excluding the effects of callable 
features) of three months or less). 
2 As of 31 December 2020, USD 0 billion of Loans 
and advances to banks, USD 1 billion 
of Receivables from securities 
financing transactions, USD 163 
billion of Loans and advances 
to customers and USD 20 
billion of Other financial assets 
measured at amortized cost were 
expected to be recovered 
or settled after 12 months. 
As of 
31 December 2019, 
USD 0 billion 
of Loans 
and advances 
to banks, 
USD 1 billion 
of Receivables 
from securities 
financing transactions, 
USD 140 billion 
of Loans and 
advances to 
customers and 
USD 16 billion 
of 
Other financial assets measured at amortized cost were expected to be recovered or settled after 12 months. 
3 Excludes lease liabilities. 
 
 
The fair 
values included in 
the table 
above have been 
calculated 
for 
disclosure 
purposes 
only. 
The 
valuation 
techniques 
and 
assumptions 
described 
below 
relate 
only 
to 
the 
fair 
value 
of 
UBS’s 
financial 
instruments 
not 
measured 
at 
fair 
value. 
Other 
institutions may use different 
methods and assumptions for their 
fair 
value 
estimations, 
and 
therefore 
such 
fair 
value 
disclosures 
cannot necessarily be 
compared from one 
financial institution to 
another. 
The 
following 
principles 
were 
applied 
when 
determining 
fair 
value 
estimates 
for 
financial 
instruments 
not 
measured at fair value: 
–
 
For 
financial 
instruments 
with 
remaining 
maturities 
greater 
than 
three 
months, 
the 
fair 
value 
was 
determined 
from 
quoted market prices, if available. 
–
 
Where 
quoted 
market 
prices 
were 
not 
available, 
the 
fair 
values 
were estimated 
by discounting 
contractual cash 
flows 
using current market 
interest rates or appropriate 
yield curves 
for 
instruments 
with 
similar 
credit 
risk 
and 
maturity. 
These 
estimates 
generally 
include 
adjustments 
for 
counterparty 
credit risk or UBS’s own credit. 
–
 
For short-term financial instruments with remaining maturities 
of three 
months or less, 
the carrying amount, 
which is net 
of 
credit 
loss 
allowances, 
is 
generally 
considered 
a 
reasonable 
estimate of fair value. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
518 
 
Note 22 Offsetting financial assets and financial liabilities 
UBS 
AG 
enters 
into 
netting 
agreements 
with 
counterparties 
to 
manage the credit risks 
associated primarily with repurchase 
and 
reverse 
repurchase 
transactions, 
securities 
borrowing 
and 
lending, 
over-the-counter 
derivatives 
and 
exchange-traded 
derivatives. These 
netting agreements 
and similar 
arrangements 
generally 
enable 
the 
counterparties 
to 
set 
off 
liabilities 
against 
available assets received 
in the ordinary 
course of business 
and / 
or 
in 
the 
event 
that 
the 
counterparties 
to 
the 
transaction 
are 
unable to 
fulfill their 
contractual obligations. 
The right 
of setoff 
is a legal 
right to settle 
or otherwise eliminate 
all or a 
portion of 
an amount due by applying an amount receivable from the same 
counterparty against it, thus reducing credit exposure.
 
The 
table 
below
 
provides 
a 
summary 
of 
financial 
assets 
subject 
to 
offsetting, 
enforceable 
master 
netting 
arrangements 
and similar agreements, 
as well as 
financial collateral received to 
mitigate 
credit 
exposures 
for 
these 
financial 
assets. 
The 
gross 
financial 
assets 
of 
UB
S 
AG
 
that 
are 
subject 
to 
offsetting, 
enforceable 
netting 
arrangements 
and 
similar 
agreements 
are 
reconciled 
to 
the 
net 
amounts 
presented 
within 
the 
associated 
balance 
sheet line, 
after giving 
effect to 
financial liabilities 
with 
the 
same 
counterparties 
that 
have 
been 
offset 
on 
the 
balance 
sheet 
and 
other 
financial 
assets 
not 
subject 
to 
an 
enforceable 
netting arrangement 
or similar 
agreement, 
as well 
as other 
out-
of
-
scope 
items
. 
Furthermore
, 
related 
amounts 
for 
financial 
liabilities 
and 
collateral 
received 
that 
are 
not 
offset 
on 
the 
balance sheet 
are shown 
so as 
to arrive 
at financial 
assets after 
consideration of netting potential. 
UBS 
AG 
engages 
in 
a 
variety 
of 
counterparty 
credit 
risk 
mitigation 
strategies 
in 
addition 
to 
netting 
and 
collateral 
arrangements. 
Therefore, 
the 
net 
amounts 
presented 
in 
the 
tables on 
this and on 
the next page 
do not purport 
to represent 
their actual credit risk exposure. 
 
 
Financial assets subject to offsetting, enforceable 
master netting arrangements and similar 
agreements 
Assets subject to netting arrangements 
Netting recognized on the balance sheet 
Netting potential not recognized on 
the balance sheet
3
Assets not 
subject to netting 
arrangements
4
Total assets 
As of 31.12.20, USD billion 
Gross assets 
before netting 
Netting with 
gross liabilities
2
Net assets 
recognized 
on the 
balance 
sheet 
Financial 
liabilities 
Collateral 
received 
Assets after 
consideration 
of 
netting 
potential 
Assets 
recognized 
on the 
balance 
sheet 
Total assets 
after 
consideration 
of netting 
potential 
Total assets 
recognized 
on the 
balance 
sheet 
Receivables from securities 
financing transactions 
 
70.3 
 
(13.4) 
 
57.0 
 
(1.7) 
 
(55.3) 
 
0.0 
 
17.3 
 
17.3 
 
74.2 
Derivative financial instruments 
 
156.9 
 
(5.0) 
 
151.9 
 
(117.2) 
 
(27.2) 
 
7.5 
 
7.7 
 
15.2 
 
159.6 
Cash collateral receivables on 
derivative instruments
1
 
31.9 
 
0.0 
 
31.9 
 
(19.6) 
 
(1.5) 
 
10.8 
 
0.8 
 
11.6 
 
32.7 
Financial assets at fair value 
not held for trading 
 
85.6 
 
(79.1) 
 
6.5 
 
(0.8) 
 
(5.8) 
 
0.0 
 
73.5 
 
73.5 
 
80.0 
of which: reverse 
repurchase agreements 
 
85.6 
 
(79.1) 
 
6.5 
 
(0.8) 
 
(5.8) 
 
0.0 
 
0.2 
 
0.2 
 
6.7 
Total assets 
 
344.8 
 
(97.5) 
 
247.3 
 
(139.3) 
 
(89.8) 
 
18.3 
 
99.3 
 
117.6 
 
346.6 
As of 31.12.19, USD billion 
Receivables from securities 
financing transactions 
 
83.2 
 
(14.0) 
 
69.2 
 
(1.2) 
 
(68.0) 
 
0.0 
 
15.0 
 
15.0 
 
84.2 
Derivative financial instruments 
 
120.2 
 
(3.4) 
 
116.8 
 
(89.3) 
 
(21.4) 
 
6.1 
 
5.0 
 
11.1 
 
121.8 
Cash collateral receivables on 
derivative instruments
1
 
26.4 
 
(4.0) 
 
22.4 
 
(13.3) 
 
(1.1) 
 
8.0 
 
0.9 
 
8.9 
 
23.3 
Financial assets at fair value 
not held for trading 
 
83.1 
 
(77.5) 
 
5.6 
 
0.0 
 
(5.6) 
 
0.0 
 
78.0 
 
78.0 
 
83.6 
of which: reverse 
repurchase agreements 
 
83.0 
 
(77.5) 
 
5.4 
 
0.0 
 
(5.4) 
 
0.0 
 
0.9 
 
0.9 
 
6.3 
Total assets 
 
313.0 
 
(98.9) 
 
214.0 
 
(103.8) 
 
(96.1) 
 
14.1 
 
99.0 
 
113.1 
 
313.0 
1 The net 
amount of Cash collateral 
receivables on derivative 
instruments recognized on 
the balance sheet includes 
certain OTC 
derivatives that are 
net settled on 
a daily basis either 
legally or in substance 
under 
IAS 32 principles and exchange-traded 
derivatives that are economically 
settled on a daily basis. 
2 The logic of 
the table results in amounts 
presented in the “Netting 
with gross liabilities” column corresponding 
directly to the amounts 
presented in the “Netting 
with gross assets” column 
in the liabilities 
table presented on the 
following page. Netting 
in this column 
for reverse repurchase agreements 
presented within the 
lines “Receivables from securities 
financing transactions” and “Financial 
assets at fair value 
not held for trading” taken 
together corresponds to the 
amounts presented for repurchase agreements 
in the “Payables 
from securities financing 
transactions” and “Other 
financial liabilities designated 
at fair value” 
lines in the 
liabilities table presented 
on the following 
page. 
3 For the 
purpose of this 
disclosure, the 
amounts of 
financial instruments 
and cash 
collateral presented 
have been 
capped so 
as not 
to exceed 
the net 
amount of 
financial assets 
presented on 
the balance 
sheet; i.e., 
over-collateralization, 
where it 
exists, 
is not 
reflected in the table. 
4 Includes assets not subject to enforceable netting arrangements and other out-of-scope items. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
519 
 
Note 22 Offsetting financial assets and financial liabilities (continued) 
The 
table 
below 
provides 
a 
summary 
of 
financial 
liabilities 
subject 
to 
offsetting, 
enforceable 
master 
netting 
arrangements 
and similar agreements, 
as well as 
financial collateral pledged 
to 
mitigate credit 
exposures for 
these financial 
liabilities. The 
gross 
financial 
liabilities 
of 
UBS 
AG 
that 
are 
subject 
to 
offsetting, 
enforceable 
netting 
arrangements 
and 
similar 
agreements 
are 
reconciled 
to 
the 
net 
amounts 
presented 
within 
the 
associated 
balance sheet line, 
after giving effect 
to financial assets 
with the 
same counterparties 
that have been 
offset on 
the balance 
sheet 
and 
other 
financial 
liabilities 
not 
subject 
to 
an 
enforceable 
netting arrangement 
or similar 
agreement. Furthermore, 
related 
amounts for 
financial assets 
and collateral 
pledged that 
are not 
offset on the balance sheet 
are shown so as to 
arrive at financial 
liabilities after consideration of netting potential. 
 
 
Financial liabilities subject to offsetting, enforceable 
master netting arrangements and similar 
agreements 
Liabilities subject to netting arrangements 
Netting recognized on the balance sheet 
Netting potential not recognized 
on the balance sheet
3
Liabilities not 
subject 
to netting 
arrangements
4
Total liabilities 
As of 31.12.20, USD billion 
Gross 
liabilities 
before 
netting 
Netting with 
gross assets
2
Net 
liabilities 
recognized 
on the 
balance 
sheet 
Financial 
assets 
Collateral 
pledged 
Liabilities 
after 
consideration of 
netting 
potential 
Liabilities 
recognized 
on the 
balance 
sheet 
Total 
liabilities 
after 
consideration 
of netting 
potential 
Total 
liabilities 
recognized 
on the 
balance 
sheet 
Payables from securities 
financing transactions 
 
18.2 
 
(13.3) 
 
4.9 
 
(1.6) 
 
(3.3) 
 
0.0 
 
1.4 
 
1.4 
 
6.3 
Derivative financial instruments 
 
157.1 
 
(5.0) 
 
152.1 
 
(117.2) 
 
(23.9) 
 
10.9 
 
9.0 
 
19.9 
 
161.1 
Cash collateral payables on 
derivative instruments
1
 
35.6 
 
0.0 
 
35.6 
 
(19.6) 
 
(2.1) 
 
13.9 
 
1.7 
 
15.7 
 
37.3 
Other financial liabilities 
designated at fair value 
 
87.0 
 
(79.2) 
 
7.8 
 
(0.8) 
 
(6.3) 
 
0.7 
 
24.0 
 
24.7 
 
31.8 
of which: repurchase agreements 
 
86.2 
 
(79.2) 
 
7.0 
 
(0.8) 
 
(6.3) 
 
0.0 
 
0.3 
 
0.3 
 
7.3 
Total liabilities 
 
297.8 
 
(97.5) 
 
200.3 
 
(139.2) 
 
(35.5) 
 
25.6 
 
36.2 
 
61.7 
 
236.5 
As of 31.12.19, USD billion 
Payables from securities 
financing transactions 
 
19.8 
 
(14.0) 
 
5.8 
 
(0.8) 
 
(5.0) 
 
0.0 
 
2.0 
 
2.0 
 
7.8 
Derivative financial instruments 
 
118.1 
 
(3.4) 
 
114.8 
 
(89.3) 
 
(16.8) 
 
8.6 
 
6.1 
 
14.8 
 
120.9 
Cash collateral payables on 
derivative instruments
1
 
34.2 
 
(4.0) 
 
30.1 
 
(16.5) 
 
(1.7) 
 
12.0 
 
1.3 
 
13.3 
 
31.4 
Other financial liabilities 
designated at fair value 
 
83.5 
 
(77.6) 
 
5.9 
 
(0.4) 
 
(5.6) 
 
0.0 
 
30.2 
 
30.2 
 
36.2 
of which: repurchase agreements 
 
83.1 
 
(77.6) 
 
5.5 
 
(0.4) 
 
(5.2) 
 
0.0 
 
0.2 
 
0.2 
 
5.7 
Total liabilities 
 
255.6 
 
(98.9) 
 
156.6 
 
(107.0) 
 
(29.0) 
 
20.6 
 
39.6 
 
60.2 
 
196.2 
1 The 
net amount of 
Cash collateral 
payables on 
derivative instruments 
recognized on 
the balance sheet 
includes certain OTC 
derivatives that 
are net settled 
on a daily 
basis either legally 
or in substance 
under 
IAS 32 principles and exchange-traded 
derivatives that are economically 
settled on a daily basis. 
2 The logic of the 
table results in amounts presented 
in the “Netting with 
gross assets” column corresponding 
to 
the amounts presented in the “Netting with 
gross liabilities” column in the assets table 
presented on the previous page. 
Netting in this column for repurchase 
agreements presented within the lines “Payables 
from 
securities financing transactions” and “Other financial liabilities designated at fair 
value” taken together corresponds to the amounts 
presented for reverse repurchase agreements in the “Receivables from 
securities 
financing transactions” and “Financial 
assets at fair value not 
held for trading” lines in 
the assets table presented on the 
previous page. 
3 For the purpose 
of this disclosure, the 
amounts of financial instruments 
and cash collateral 
presented have been 
capped so as 
not to exceed 
the net amount 
of financial liabilities 
presented on the 
balance sheet; 
i.e., over-collateralization, 
where it exists, 
is not reflected 
in the table. 
4 Includes liabilities not subject to enforceable netting arrangements and other out-of-scope items. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
520 
 
Note 23 Restricted and transferred financial assets 
This 
Note 
provides 
information 
about 
restricted 
financial 
assets 
(Note 
23a), 
transfers 
of 
financial 
assets 
(Note 
23b 
and 
23c) 
and 
financial assets that are received as collateral with the right to resell or repledge these assets (Note 23d). 
a) Restricted financial assets 
Restricted 
financial assets 
consist of 
assets 
pledged as 
collateral 
against an existing liability or contingent liability and other assets 
that are 
otherwise explicitly 
restricted 
such that 
they cannot 
be 
used to secure funding. 
Financial 
assets 
are 
mainly 
pledged 
as 
collateral 
in 
securities 
lending 
transactions, 
in 
repurchase 
transactions, 
against 
loans 
from 
Swiss 
mortgage 
institutions 
and 
in 
connection 
with 
the 
issuance 
of 
covered 
bonds. 
UBS 
AG
 
generally 
enters 
into 
repurchase 
and securities 
lending 
arrangements 
under 
standard 
market 
agreements. 
For 
securities lending, 
the cash 
received 
as 
collateral may be more or less than the fair value of the securities 
loaned, 
depending 
on 
the 
nature 
of 
the 
transaction. 
For 
repurchase 
agreements, 
the 
fair 
value 
of 
the 
collateral 
sold 
under 
an agreement 
to 
repurchase 
is generally 
in excess 
of 
the 
cash 
borrowed. Pledged 
mortgage 
loans 
serve 
as 
collateral 
for 
existing liabilities against 
Swiss central mortgage 
institutions and 
for existing 
covered bond 
issuances of 
USD 12,456 million 
as of 
31 December 2020 (31 December 2019: USD 11,206 million). 
Other 
restricted 
financial 
assets 
include 
assets 
protected 
under 
client 
asset 
segregation 
rules, 
assets 
held 
by 
UBS 
AG’s 
insurance entities 
to back 
related liabilities 
to the 
policy holders, 
assets 
held 
in 
certain 
jurisdictions 
to 
comply 
with 
explicit 
minimum local 
asset maintenance 
requirements and 
assets held 
in 
consolidated 
bankruptcy 
remote 
entities, 
such 
as 
certain 
investment 
funds 
and 
other 
structured 
entities. 
The 
carrying 
amount 
of 
the 
liabilities 
associated 
with 
these 
other 
restricted 
financial assets 
is generally 
equal to 
the carrying 
amount of 
the 
assets, 
with 
the 
exception 
of 
assets 
held 
to 
comply 
with 
local 
asset 
maintenance 
requirements
,
 
for 
which 
the 
associated 
liabilities are greater. 
 
 
Restricted financial assets 
USD million 
31.12.20 
31.12.19 
Financial assets pledged as collateral 
Financial assets at fair value held for trading 
 
64,418 
 
56,548 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
47,098 
 
41,285 
Loans and advances to customers 
 
20,361 
 
18,399 
of which: mortgage loans
1
 
18,191 
 
18,399 
Financial assets at fair value not held for trading 
 
2,140 
 
188 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
2,140 
 
188 
Debt securities classified as Other financial assets measured 
at amortized cost 
 
2,506 
 
1,212 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
2,506 
 
1,212 
Financial assets measured at fair value through other comprehensive 
income 
 
149 
 
0 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
149 
 
0 
Total financial assets pledged as collateral
2
 
89,574 
 
76,347 
Other restricted financial assets 
Loans and advances to banks 
 
3,730 
 
2,353 
Financial assets at fair value held for trading 
 
741 
 
242 
Cash collateral receivables on derivative instruments 
 
3,765 
 
2,986 
Loans and advances to customers 
 
756 
 
620 
Financial assets at fair value not held for trading 
 
22,917 
 
29,368 
Financial assets measured at fair value through other comprehensive 
income 
 
0 
 
176 
Other 
 
110 
 
382 
Total other restricted financial assets 
 
32,019 
 
36,126 
Total financial assets pledged and other restricted financial assets 
 
121,593 
 
112,474 
1 All related 
to mortgage loans 
that serve as 
collateral for existing 
liabilities toward 
Swiss central 
mortgage institutions 
and for existing 
covered bond issuances. 
Of these pledged 
mortgage loans, 
approximately 
USD 2.7 billion 
for 
31 December 
2020 
(31 December 
2019: 
approximately 
USD 6.3 
billion) could 
be withdrawn 
or 
used for 
future liabilities 
or covered 
bond issuances 
without 
breaching existing 
collateral 
requirements. 
2 Does not 
include assets placed 
with central banks 
related to undrawn 
credit lines and 
for payment, clearing 
and settlement purposes 
(31 December 2020: 
USD 1.3 billion; 
31 December 2019: 
USD 0.6 billion). 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
521 
 
Note 23 Restricted and transferred financial assets (continued)
In addition 
to restrictions 
on financial 
assets, UBS 
AG and 
its 
subsidiaries 
are, 
in 
certain 
cases, 
subject 
to 
regulatory 
requirements 
that 
affect 
the 
transfer 
of 
dividends 
and 
capital 
within 
UBS 
AG, 
as 
well 
as 
intercompany 
lending. 
Supervisory 
authorities 
also 
may 
require 
entities 
to 
measure 
capital 
and 
leverage 
ratios on 
a 
stressed basis, 
such 
as 
the 
Federal 
Reserve 
Board’s 
Comprehensive 
Capital 
Analysis 
and 
Review 
(CCAR) 
process, which may limit the relevant subsidiaries’ ability to make 
distributions of capital based on the results of those tests. 
Supervisory 
authorities 
generally 
have 
discretion 
to 
impose 
higher 
requirements 
or 
to 
otherwise 
limit 
the 
activities 
of 
subsidiaries. 
Non-regulated 
subsidiaries 
are 
generally 
not 
subject 
to 
such 
requirements 
and transfer 
restrictions. However, 
restrictions 
can 
also 
be 
the 
result 
of 
different 
legal, 
regulatory, 
contractual, 
entity- 
or country-specific arrangements and / or requirements. 
›
 
›
 
Refer to the “Financial and regulatory key figures 
for our 
significant regulated subsidiaries and sub-groups” section 
of this 
report for financial information about significant 
regulated 
subsidiaries of UBS AG 
b) Transferred financial assets that are not derecognized in their entirety 
The table below presents 
information for financial 
assets that have been 
transferred but are 
subject to continued recognition 
in full, 
as well as recognized liabilities associated with those transferred assets. 
 
Transferred financial assets subject to continued recognition in full 
USD million 
31.12.20 
31.12.19 
Carrying amount 
of transferred 
assets 
Carrying amount of 
associated liabilities 
recognized 
on balance sheet 
Carrying amount 
of transferred 
assets 
Carrying amount of 
associated liabilities 
recognized 
on balance sheet 
Financial assets at fair value held for trading that may be sold or repledged 
by counterparties 
 
47,098 
 
18,874 
 
41,285 
 
16,671 
relating to securities lending and repurchase agreements in 
exchange for cash received 
 
19,177 
 
18,874 
 
16,945 
 
16,671 
relating to securities lending agreements in exchange for securities 
received 
 
27,595 
 
0 
 
24,082 
 
0 
relating to other financial asset transfers 
 
326 
 
0 
 
258 
 
0 
Financial assets at fair value not held for trading that may be sold or repledged 
by 
counterparties 
 
2,140 
 
1,378 
 
188 
 
187 
Debt securities classified as Other financial assets measured 
at amortized cost that may be 
sold or repledged by counterparties
1
 
2,506 
 
1,963 
 
1,212 
 
690 
Financial assets measured at fair value through other comprehensive 
income that may be sold 
or repledged by counterparties 
 
149 
 
148 
 
0 
 
0 
Total financial assets transferred
1
 
51,893 
 
22,363 
 
42,685 
 
17,548 
1 Comparative information has been amended to include Debt securities classified as Other financial assets measured at amortized cost that may 
be sold or repledged by counterparties. 
 
 
Transactions 
in 
which 
financial 
assets 
are 
transferred, 
but 
continue to 
be recognized 
in their entirety 
on UBS AG’s 
balance 
sheet 
include 
securities 
lending 
and 
repurchase 
agreements, 
as 
well as 
other financial 
asset transfers. 
Repurchase and 
securities 
lending 
arrangements 
are, 
for 
the 
most 
part, 
conducted 
under 
standard 
market 
agreements 
and 
are 
undertaken 
with 
counterparties 
subject 
to 
UBS 
AG’s 
normal 
credit 
risk 
control 
processes. 
›
 
Refer to Note 1a item 2e for more information 
about repurchase 
and securities lending agreements 
 
As 
of 
31 
December 
2020
, 
approximately 
40%
 
of 
the 
transferred 
financial 
assets 
were 
assets 
held 
for 
trading 
transferred 
in 
exchange 
for 
cash, 
in 
which 
case 
the 
associated 
recognized 
liability 
represents 
the 
amount 
to 
be 
repaid 
to 
counterparties. 
For 
securities 
lending 
and
 
repurchase
 
agreements, 
a 
haircut 
between 
0% 
and 
15%
 
is 
generally 
applied 
to 
the 
transferred 
assets, 
which
 
results 
in 
associated 
liabilities 
having 
a 
carrying 
amount 
below 
the 
carrying 
amount 
of 
the 
transferred 
assets. 
The 
counterparties 
to 
the 
associated 
liabilities presented 
in the 
table above 
have full 
recourse to 
UBS 
AG. 
In 
securities 
lending 
arrangements 
entered 
into 
in 
exchange 
for 
the 
receipt 
of 
other 
securities 
as 
collateral, 
neither 
the 
securities 
received 
nor 
the 
obligation 
to 
return 
them 
are 
recognized on UBS 
AG’s balance sheet, 
as the risks 
and rewards 
of ownership are not transferred to UBS AG. In cases where such 
financial 
assets 
received 
are 
subsequently 
sold 
or 
repledged 
in 
another 
transaction, 
this 
is 
not 
considered 
to 
be 
a 
transfer 
of 
financial assets. 
Other 
financial 
asset 
transfers 
primarily 
include 
securities 
transferred to 
collateralize derivative 
transactions, for 
which the 
carrying 
amount 
of 
associated 
liabilities 
is 
not 
provided 
in 
the 
table above, 
because those 
replacement values are 
managed on 
a 
portfolio 
basis 
across 
counterparties 
and 
product 
types, 
and 
therefore 
there 
is 
no 
direct 
relationship 
between 
the 
specific 
collateral pledged and the associated liability. 
Transferred 
financial 
assets 
that 
are 
not 
subject 
to 
derecognition 
in 
full 
but 
remain 
on 
the 
balance 
sheet 
to 
the 
extent of UBS AG’s 
continuing involvement were not 
material as 
of 31 December 2020 and as of 31 December 2019. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
522 
 
Note 23 Restricted and transferred financial assets (continued) 
 
c) Transferred financial assets that are derecognized in their entirety with continuing involvement 
Continuing 
involvement 
in a 
transferred 
and fully 
derecognized 
financial 
asset 
may 
result 
from 
contractual 
provisions 
in 
the 
transfer 
agreement 
or 
from 
a 
separate 
agreement 
with 
the 
counterparty or a third 
party entered into in connection 
with the 
transfer. 
 
The 
fair 
value 
and 
carrying amount 
of 
UBS 
AG’s 
continuing 
involvement from transferred positions as 
of 31 
December 2020 
and 
31 
December 
2019 
was 
not 
material. 
Life-to-date 
losses 
reported 
in 
prior 
periods 
primarily 
relate 
to 
legacy 
positions 
in 
securitization vehicles which have 
been fully 
marked down, 
with 
no remaining 
exposure to 
loss. 
d) Off-balance sheet assets received 
The table below presents assets received from third parties that can 
be sold or repledged and that are not recognized on the 
balance 
sheet, but that are held as collateral, including amounts that have been sold or repledged. 
 
Off-balance sheet assets received 
USD million 
31.12.20 
31.12.19 
Fair value of assets received that can be sold or repledged 
 
500,689 
 
475,726 
received as collateral under reverse repurchase, securities borrowing 
and lending arrangements, derivative and other transactions
1
 
487,904 
 
466,045 
received in unsecured borrowings 
 
12,785 
 
9,681 
Thereof sold or repledged
2
 
367,258 
 
351,327 
in connection with financing activities 
 
315,603 
 
306,212 
to satisfy commitments under short sale transactions 
 
33,595 
 
30,591 
in connection with derivative and other transactions
1
 
18,059 
 
14,524 
1 Includes securities 
received as initial 
margin from its 
clients that UBS 
AG is required 
to remit to 
central counterparties, 
brokers and 
deposit banks through 
its exchange-traded 
derivative clearing 
and execution 
services. 
2 Does not include 
off-balance sheet securities (31 
December 2020: USD 
18.9 billion; 31 December 
2019: USD 19.6 
billion) placed with 
central banks related 
to undrawn credit 
lines and for payment, 
clearing and settlement purposes for which there are no associated liabilities or contingent 
liabilities. 
 
 

 
523 
 
Note 24 
Maturity analysis of financial liabilities
The 
contractual 
maturities 
for 
non-derivative 
and 
non-trading 
financial 
liabilities 
as 
of 
31 
December 
2020 
are 
based 
on 
the 
earliest 
date 
on 
which 
UBS 
AG 
could 
be 
contractually 
required 
to pay. 
The total amounts that contractually mature in 
each time 
band are also shown for 31 December 2019. 
Derivative positions 
and 
trading 
liabilities, 
predominantly 
made 
up 
of 
short 
sale 
transactions, are assigned to the column 
Due within 1 month,
 
as 
this 
provides 
a 
conservative 
reflection 
of 
the 
nature 
of 
these 
trading 
activities. 
The 
contractual 
maturities 
may 
extend 
over 
significantly longer periods. 
 
Maturity analysis of financial liabilities 
31.12.20 
USD billion 
Due within 
1 month 
Due between 
1 and 3 months 
Due between 
3 and 12 months 
Due between 
1 and 5 years 
Due after 
5 years 
Total 
Financial liabilities recognized on balance sheet
1
Amounts due to banks 
 
6.1 
 
2.4 
 
2.1 
 
0.5 
 
0.0 
 
11.1 
Payables from securities financing transactions 
 
5.6 
 
0.4 
 
0.3 
 
0.0 
 
0.0 
 
6.3 
Cash collateral payables on derivative instruments 
 
37.3 
 
37.3 
Customer deposits 
 
514.0 
 
7.8 
 
3.5 
 
2.8 
 
0.2 
 
528.2 
Funding from UBS Group AG and its subsidiaries
2
 
0.1 
 
0.3 
 
6.2 
 
29.1 
 
24.8 
 
60.5 
Debt issued measured at amortized cost
2
 
8.8 
 
7.8 
 
38.2 
 
24.5 
 
8.9 
 
88.2 
Other financial liabilities measured at amortized cost 
 
5.3 
 
0.1 
 
0.5 
 
2.0 
 
1.8 
 
9.6 
of which: lease liabilities 
 
0.1 
 
0.1 
 
0.5 
 
2.0 
 
1.8 
 
4.4 
Total financial liabilities measured at amortized cost 
 
577.2 
 
18.9 
 
50.7 
 
58.8 
 
35.8 
 
741.3 
Financial liabilities at fair value held for trading
3,4
 
33.6 
 
33.6 
Derivative financial instruments
3,5
 
161.1 
 
161.1 
Brokerage payables designated at fair value 
 
38.7 
 
38.7 
Debt issued designated at fair value
6
 
21.9 
 
16.8 
 
7.1 
 
9.2 
 
6.0 
 
61.0 
Other financial liabilities designated at fair value 
 
27.9 
 
0.6 
 
0.6 
 
0.7 
 
4.6 
 
34.3 
Total financial liabilities measured at fair value through profit or loss 
 
283.2 
 
17.4 
 
7.7 
 
9.8 
 
10.6 
 
328.8 
Total 
 
860.3 
 
36.3 
 
58.4 
 
68.6 
 
46.4 
 
1,070.0 
Guarantees, commitments and forward starting transactions 
Loan commitments
7
 
40.5 
 
0.5 
 
0.4 
 
0.0 
 
41.4 
Guarantees 
 
17.5 
 
17.5 
Forward starting transactions, reverse repurchase 
and securities borrowing agreements
7
 
3.2 
 
3.2 
Total 
 
61.3 
 
0.5 
 
0.4 
 
0.0 
 
0.0 
 
62.2

 
Consolidated financial statements | UBS AG consolidated financial statements 
524 
 
Note 24 
Maturity analysis of financial liabilities (continued)
31.12.19 
USD billion 
Due within 
1 month 
Due between 
1 and 3 months 
Due between 
3 and 12 months 
Due between 
1 and 5 years 
Due after 
5 years 
Total 
Financial liabilities recognized on balance sheet
1
Amounts due to banks 
 
5.4 
 
0.3 
 
0.4 
 
0.5 
 
0.0 
 
6.6 
Payables from securities financing transactions 
 
7.4 
 
0.1 
 
0.3 
 
0.0 
 
7.8 
Cash collateral payables on derivative instruments 
 
31.4 
 
31.4 
Customer deposits 
 
423.9 
 
16.5 
 
7.3 
 
3.5 
 
0.0 
 
451.2 
Funding from UBS Group AG and its subsidiaries
2
 
0.0 
 
0.2 
 
2.3 
 
29.0 
 
24.6 
 
56.2 
Debt issued measured at amortized cost
2
 
4.3 
 
4.7 
 
27.8 
 
20.7 
 
9.0 
 
66.5 
Other financial liabilities measured at amortized cost 
 
5.2 
 
0.1 
 
0.5 
 
1.9 
 
2.0 
 
9.6 
of which: lease liabilities 
 
0.1 
 
0.1 
 
0.5 
 
1.9 
 
2.0 
 
4.5 
Total financial liabilities measured at amortized cost 
 
477.6 
 
22.0 
 
38.5 
 
55.6 
 
35.6 
 
629.3 
Financial liabilities at fair value held for trading
3,4
 
30.6 
 
30.6 
Derivative financial instruments
3,5
 
120.9 
 
120.9 
Brokerage payables designated at fair value 
 
37.2 
 
37.2 
Debt issued designated at fair value
6
 
21.3 
 
17.4 
 
9.5 
 
12.7 
 
7.1 
 
68.0 
Other financial liabilities designated at fair value 
 
34.0 
 
0.4 
 
0.5 
 
0.4 
 
0.9 
 
36.1 
Total financial liabilities measured at fair value through profit or loss 
 
244.0 
 
17.8 
 
9.9 
 
13.1 
 
8.0 
 
292.9 
Total 
 
721.6 
 
39.9 
 
48.4 
 
68.7 
 
43.6 
 
922.2 
Guarantees, commitments and forward starting transactions 
Loan commitments
7
 
26.8 
 
0.5 
 
0.3 
 
0.0 
 
27.5 
Guarantees 
 
19.1 
 
19.1 
Forward starting transactions, reverse repurchase 
and securities borrowing agreements
7
 
1.6 
 
0.0 
 
1.7 
Total 
 
47.5 
 
0.5 
 
0.3 
 
0.0 
 
0.0 
 
48.3 
1 Except for financial liabilities at 
fair value held for trading 
and derivative financial instruments 
(see footnote 3), the amounts 
presented generally represent undiscounted 
cash flows of future interest 
and principal 
payments. 
2 The time-bucket 
Due after 5 years 
includes perpetual loss-absorbing 
additional tier 1 capital 
instruments. 
3 Carrying amount is 
fair value. 
Management believes that this 
best represents the 
cash 
flows that would 
have to be 
paid if these 
positions had to 
be settled or 
closed out. 
4 Contractual maturities 
of financial liabilities 
at fair value 
held for 
trading are: USD 
32.6 billion due 
within 1 month 
(2019: 
USD 30 billion), USD 1.0 billion due between 1 month and 1 year (2019: 
USD 0.6 billion) and USD 0 billion due between 1 and 
5 years (2019: USD 0 billion). 
5 Includes USD 32 million (2019: 0 million) related to 
fair values of derivative loan commitments 
and forward starting reverse repurchase agreements classified 
as derivatives, presented within “Due 
within 1 month.” The 
full contractual committed amount of USD 31.3 
billion (2019: USD 26.6 billion) is presented in Note 10 under notional amounts. 
6 Future interest payments on variable-rate liabilities are determined by 
reference to the applicable interest rate prevailing as of the 
reporting date. 
Future principal 
payments that 
are variable 
are determined 
by reference 
to the 
conditions existing 
at the 
reporting date. 
7 Excludes 
derivative loan 
commitments and 
forward starting 
reverse 
repurchase agreements measured at fair value. 
The committed amounts of these instruments were 
previously presented in the former Note 34 
(refer to the “Consolidated financial statements” section of the Annual 
Report 2019 for more information). 
Starting with this report, they are presented in Note 10 under notional amounts and prior-period 
information in this table has been amended to ensure comparability.

 
 
525 
 
Note 25 Hedge accounting 
Derivatives designated in hedge accounting relationships 
UBS 
AG
 
applies 
hedge 
accounting 
to 
interest 
rate 
risk 
and
 
foreign 
exchange risk 
including structural 
foreign 
exchange risk 
related to net investments in foreign operations. 
›
 
Refer to “Market risk” in the “Risk management 
and control” 
section of this report for more information about 
how risks arise 
and how they are managed by the UBS AG 
Hedging instruments and hedged risk 
Interest 
rate 
swaps 
are 
designated 
in 
fair 
value 
hedges 
or 
cash 
flow 
hedges 
of 
interest 
rate 
risk 
arising 
solely 
from 
changes 
in 
benchmark 
interest 
rates. 
Fair 
value 
changes 
arising 
from 
such 
risk 
are 
usually 
the largest 
component 
of 
the 
overall 
change 
in 
the fair value of the hedged position in transaction currency. 
Cross-currency 
swaps are 
designated 
as 
fair 
value 
hedges 
of 
foreign 
exchange 
risk. 
FX 
forwards 
and 
FX 
swaps 
are 
mainly 
designated as 
hedges of 
structural foreign 
exchange risk 
related 
to 
net 
investments 
in 
foreign 
operations. 
In 
both 
cases 
the 
hedged risk 
arises solely 
from changes 
in spot 
foreign exchange 
rate. 
The notional 
of the 
designated hedging 
instruments matches 
the notional 
of the 
hedged items, 
except when 
the interest 
rate 
swaps are 
re-designated in 
cash flow 
hedges, in 
which case 
the 
hedge 
ratio 
designated 
is 
determined 
based 
on 
the 
swap 
sensitivity. 
Hedged items and hedge designation 
Fair value hedges of interest rate risk related to debt instruments 
Fair value hedges of interest 
rate risk related to debt 
instruments 
involve 
swapping 
fixed 
cash 
flows 
associated 
with 
the 
debt 
issued or 
debt securities 
held to 
floating cash 
flows by 
entering 
into interest 
rate swaps 
that receive 
fixed and 
pay floating 
cash 
flows 
or 
that 
pay 
fixed 
and 
receive 
floating 
cash 
flows, 
respectively. 
The 
variable 
future 
cash 
flows 
are 
based 
on 
the 
following 
benchmark 
rates: 
USD 
LIBOR, 
CHF 
LIBOR, 
EURIBOR, 
GBP LIBOR, AUD LIBOR, JPY LIBOR and SGD LIBOR. 
Fair 
value 
hedges 
of 
portfolio 
interest 
rate 
risk 
related 
to 
loans 
designated under IAS 39 
UBS 
AG
 
hedges 
an 
open 
portfolio 
of 
long
-
term 
fixed
-
rate 
mortgage loans in CHF using interest 
rate swaps that pay a fixed 
rate 
of interest 
and receive 
a 
floating rate 
of 
interest. 
Both the 
hedged portfolio and the 
hedging instruments are adjusted 
on a 
monthly basis 
to reflect 
changes in 
size and 
the maturity 
profile 
of 
the 
hedged
 
portfolio. 
The
 
existing 
hedge
 
relationship 
is 
discontinued 
and 
a 
new 
one 
is 
designated. 
Changes 
in 
the 
portfolio 
are 
driven 
by 
new 
loans 
originated 
or 
existing 
loans 
repaid. 
Cash flow hedges of forecast transactions 
UBS 
AG 
hedges 
forecast 
cash 
flows 
on 
non-trading 
financial 
assets 
and 
liabilities 
that 
bear 
interest 
at 
variable 
rates 
or 
are 
expected 
to 
be 
refinanced 
or 
reinvested 
in 
the 
future, 
due 
to 
movements 
in 
future 
market 
rates. The 
amounts 
and 
timing of 
future cash flows, representing 
both principal and interest flows, 
are 
projected 
on 
the 
basis 
of 
contractual 
terms 
and 
other 
relevant 
factors, 
including 
estimates 
of 
prepayments 
and 
defaults. 
The 
aggregate 
principal 
balances 
and 
interest 
cash 
flows across all portfolios over time form the basis for 
identifying 
the 
non-trading 
interest 
rate 
risk 
of 
UBS 
AG, 
which 
is 
hedged 
with 
interest 
rate 
swaps, 
the 
maximum 
maturity 
of 
which 
is 
10 years. 
Cash flow 
forecasts 
and risk 
exposures 
are 
monitored 
and adjusted 
on an 
ongoing basis, 
and consequently 
additional 
hedging 
instrume
nts 
are 
traded 
and 
designated
,
 
or 
are 
alternatively terminated resulting in a hedge discontinuance. 
Fair value hedges of foreign exchange risk related to debt 
instruments 
Debt 
instruments 
denominated 
in 
currencies 
other than 
the US 
dollar 
are 
designated 
in
 
fair 
value 
hedges 
of 
spot 
foreign 
exchange 
risk, 
in 
addition 
to 
and 
separate 
from 
the 
fair 
value 
hedges 
of 
interest 
rate 
risk. 
Cross 
currency 
swaps economically 
convert debt denominated in currencies 
other than the US dollar 
to 
US
 
dollars
. 
This 
hedge 
acco
unting 
program 
started 
on 
1 January 
2020, 
with 
the 
adoption 
of 
the 
hedge 
accounting 
requirements of IFRS 9, 
Financial Instruments,
 
by UBS. 
›
 
Refer to Note 1b for more information 
Hedges of net investments in foreign operations 
UBS AG applies 
hedge accounting for 
certain net investments 
in 
foreign 
operations
,
 
which 
include 
subsidiaries, 
branches 
and 
associates. Upon 
maturity of 
hedging instruments, 
typically two 
months, 
the
 
hedge
 
relationship 
is 
terminated 
and 
new 
designations 
are 
made
 
to 
reflect 
any 
changes 
in 
the 
net 
investments in foreign operations. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
526 
 
Note 25 Hedge accounting (continued)
 
Economic relationship between hedged item and hedging 
instrument 
For 
hedges 
designated 
under 
IFRS 
9, 
the economic 
relationship 
between 
the 
hedged 
item 
and 
the 
hedging 
instrument 
is 
determined based on 
a qualitative analysis 
of their critical 
terms. 
In 
cases 
where 
hedge 
designation 
takes 
place 
after 
origination 
of the hedging instrument, a quantitative analysis of the possible 
behavior of hedging derivative 
and the hedged item 
during their 
respective terms is also performed. 
For the 
fair value 
hedge of 
portfolio interest 
rate risk 
related 
to 
loans, 
designated 
under 
IAS 
39, 
hedge 
effectiveness 
is 
assessed by 
comparing changes 
in the 
fair value 
of the 
hedged 
portfolio 
of 
loans 
attributable 
to 
changes 
in 
the 
designated 
benchmark interest rate with the 
changes in the fair value of 
the 
interest rate swaps. 
Sources of hedge ineffectiveness 
In 
hedges 
of 
interest 
rate 
risk, 
hedge 
ineffectiveness 
can 
arise 
from 
mismatches 
of 
critical 
terms 
and 
/ 
or 
the 
use 
of 
different 
curves 
to 
discount 
the 
hedged 
item 
and 
instrument, 
or 
from 
entering 
into 
a 
hedge 
relationship 
after 
the 
trade 
date 
of 
the 
hedging derivative. 
In 
hedges 
of 
foreign 
exchange 
risk 
related 
to 
debt 
issued, 
hedge 
ineffectiveness 
can 
arise 
due 
to 
the 
discounting 
of 
the 
hedging 
instruments 
and 
undesignated 
risk 
components 
and 
lack 
of 
such 
discounting 
and 
risk 
components 
in 
the 
hedged 
items. 
In 
hedges 
of 
net 
investments 
in 
foreign 
operations, 
ineffectiveness is unlikely unless the hedged 
net assets fall below 
the 
designated 
hedged 
amount. 
The 
exceptions 
are 
hedges 
where 
the hedging 
currency is 
not the 
same as 
the currency 
of 
the 
foreign 
operation, 
where 
the 
currency 
basis 
may 
cause 
ineffectiveness. 
Derivatives not designated in hedge accounting relationships 
Non-hedge 
accounted 
derivatives 
are 
mandatorily 
held 
for 
trading with all fair 
value movements taken to 
Other net income 
from financial 
instruments measured 
at fair 
value through 
profit 
or 
loss
, 
even 
when 
held 
as 
an 
economic 
hedge 
or 
to 
facilitate 
client 
clearing. 
The 
one 
exception 
relates 
to 
forward 
points 
on 
certain 
short
-
 
and 
long
-
duration 
foreign 
exchange 
contracts 
acting 
as 
economic 
hedges, 
which 
are 
reported 
in 
Net 
interest 
income.
 
 
 
All hedges: designated hedging instruments 
and hedge ineffectiveness 
As of or for the year ended 
31.12.20 
USD million 
Notional 
amount 
Carrying amount 
Changes in 
fair value of 
hedging 
instruments
1
Changes in 
fair value of 
hedged 
items
1
Hedge ineffectiveness recognized 
in Other net income from financial 
instruments measured at fair value 
through profit or loss 
Derivative 
financial 
assets 
Derivative 
financial 
liabilities 
Interest rate risk 
Fair value hedges 
 
80,759 
 
12 
 
1,231 
 
(1,247) 
 
(16) 
Cash flow hedges 
 
72,732 
 
18 
 
2,213 
 
(2,012) 
 
201 
Foreign exchange risk 
Fair value hedges
2,3
 
21,555 
 
449 
 
7 
 
(1,735) 
 
1,715 
 
(20) 
Hedges of net investments in foreign operations 
 
13,634 
 
3 
 
193 
 
(939) 
 
938 
 
(2) 
As of or for the year ended 
31.12.19 
USD million 
Notional 
amount 
Carrying amount 
Changes in 
fair value of 
hedging 
instruments
1
Changes in 
fair value of 
hedged 
items
1
Hedge ineffectiveness recognized 
in Other net income from financial 
instruments measured at fair value 
through profit or loss 
Derivative 
financial 
assets 
Derivative 
financial 
liabilities 
Interest rate risk 
Fair value hedges 
 
69,750 
 
33 
 
14 
 
1,389 
 
(1,376) 
 
13 
Cash flow hedges 
 
69,443 
 
16 
 
1,639 
 
(1,571) 
 
68 
Foreign exchange risk 
Hedges of net investments in foreign operations 
 
11,875 
 
9 
 
170 
 
(153) 
 
144 
 
(8) 
1 Amounts used as the 
basis for recognizing hedge 
ineffectiveness for the period. 
2 Fair value 
hedges of foreign exchange risk 
started on 1 January 
2020. 
3 The foreign currency 
basis spread of cross-currency 
swaps designated as hedging derivatives is excluded from the hedge accounting designation and accounted for as a cost of hedging 
with amounts deferred in Other comprehensive income within Equity. 
 
 
 

527

Note 25 Hedge accounting (continued)

Fair value hedges: designated hedged items

USD million

31.12.20

31.12.19

Interest rate

risk

FX risk

Interest rate

risk

Debt issued measured at amortized cost

Carrying amount of designated debt issued

24,247

10,889

26,120

of which: accumulated amount of fair value hedge adjustment

761

574

Funding from UBS Group AG and its subsidiaries

Carrying amount of designated debt instruments

46,182

10,666

41,258

of which: accumulated amount of fair value hedge adjustment

1,640

525

Other financial assets measured at amortized cost – debt securities

Carrying amount of designated debt securities

3,242

of which: accumulated amount of fair value hedge adjustment

(38)

Loans and advances to customers designated in fair value hedges of portfolio interest rate risk under

IAS 39

Carrying amount of designated loans

10,374

4,494

of which: accumulated amount of fair value hedge adjustment on

the portfolio that was subject to hedge accounting

100

117

of which: accumulated amount of fair value hedge adjustment subject

to amortization attributable to the portion of the portfolio

that ceased to be part of hedge accounting

111

172

1 Amounts presented within Other financial assets measured at amortized cost and Other financial liabilities measured at amortized cost.

2 Fair value hedges of foreign exchange risk started on 1 January

2020.

Fair value hedges related to debt issued and

debt securities: profile of the timing of

the nominal amount of the hedging instrument

31.12.20

USD billion

Due within

1 month

Due between

1 and 3 months

Due between

3 and 12 months

Due between

1 and 5 years

Due after

5 years

Total

Interest rate swaps

Cross-currency swaps

31.12.19

USD billion

Due within

1 month

Due between

1 and 3 months

Due between

3 and 12 months

Due between

1 and 5 years

Due after

5 years

Total

Interest rate swaps

Fair value hedges of foreign exchange risk using cross-currency swaps started on 1 January

2020.

Cash flow hedge reserve on a pre-tax basis

USD million

31.12.20

31.12.19

Amounts related to hedge relationships for which hedge

accounting continues to be applied

2,560

1,596

Amounts related to hedge relationships for which hedge

accounting is no longer applied

296

(43)

Total other comprehensive income recognized directly in equity related to cash flow hedges, on a pre-tax basis

2,856

1,554

Foreign currency translation reserve on a pre-tax basis

USD million

31.12.20

31.12.19

Amounts related to hedge relationships for which hedge

accounting continues to be applied

(569)

377

Amounts related to hedge relationships for which hedge

accounting is no longer applied

268

257

Total other comprehensive income recognized directly in equity related to hedging instruments

designated as net investment hedges, on a pre-tax

basis

(302)

634

 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
528 
 
Note 25 Hedge accounting (continued) 
 
Interest rate benchmark reform 
UBS 
AG 
continues 
to 
apply 
the 
relief 
provided 
by 
Interest 
Rate 
Benchmark 
Reform
 
(amendments 
to 
IFRS 9, 
IAS 39 and 
IFRS 7), 
published by the IASB in September 2019. 
The 
interest 
rate 
benchmarks 
subject 
to 
interest 
rate 
benchmark 
reforms 
to 
which UBS 
AG’s hedge 
relationships 
are 
exposed are USD LIBOR, CHF LIBOR, 
GBP LIBOR, AUD LIBOR, JPY 
LIBOR, 
HKD 
LIBOR, 
SGD 
LIBOR 
and 
EONIA. 
Existing 
financial 
instruments designated 
in hedge 
relationships referencing 
these 
interest 
rate 
benchmarks 
will 
transition 
to 
alternative 
reference 
rates (ARRs) unless they mature before the transition takes place. 
UBS AG’s 
hedge relationships 
are also 
exposed to 
Euro Inter-
bank Offered 
Rate (EURIBOR), 
for which 
there is 
no uncertainty 
arising 
from 
the 
interest 
rate 
benchmark 
reform. 
EURIBOR 
is 
expected 
to 
continue 
to 
exist
 
as 
a 
benchmark 
rate 
for 
the 
foreseeable 
future. 
Thus, 
UBS AG 
does 
not 
consider 
its 
hedges 
involving 
the 
EURIBOR 
benchmark 
interest 
rate 
to 
be 
directly 
affected by the interest rate benchmark reform. 
UBS 
AG 
established 
a 
cross-divisional, 
cross-regional 
governance structure 
and change 
program 
to address 
the scale 
and complexity of this transition. 
Apart from 
EURIBOR hedges, 
UBS AG 
applies the 
relief to 
all 
its fair 
value hedges 
of interest 
rate risk 
and to 
those cash 
flow 
hedge 
relationships 
where 
the 
hedged 
risk 
is 
LIBOR 
or 
EONIA. 
The following table provides 
details on the 
notional amount and 
carrying 
amount 
of 
the 
hedging 
instruments 
in 
those 
hedge 
relationships maturing after 31 December 
2021 or 30 June 2023 
for 
USD 
LIBOR 
hedges, 
which are 
the 
expected 
cessation 
dates 
of 
the 
applicable 
interest 
rate 
benchmarks. 
The 
comparative 
information 
in 
the 
table 
below 
has 
been 
amended 
to 
consistently reflect this approach. 
Hedges 
of 
net 
investments 
in 
foreign 
operations 
are 
not 
affected by the amendments. 
›
 
Refer to Note 1a item 2j for more information about 
the relief 
provided by the amendments to IFRS 9, IAS 
39 and IFRS 7 related 
to interest rate benchmark reform 
 
 
Hedging instruments referencing LIBOR 
31.12.20 
31.12.19 
Carrying amount 
Carrying amount 
USD million 
Notional 
amount 
Derivative 
financial 
assets 
Derivative 
financial 
liabilities 
Notional 
amount 
Derivative 
financial 
assets 
Derivative 
financial 
liabilities 
Interest rate risk 
Fair value hedges 
 
37,146 
 
1 
 
(12) 
 
26,355 
 
1 
 
(14) 
Cash flow hedges 
 
11,179 
 
0 
 
0 
 
5,895 
 
0 
 
0 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
529 
 
Note 26 
Post-employment benefit plans 
The table 
below provides 
a breakdown 
of expenses 
related to 
pension and 
other post-employment 
benefit plans 
recognized in 
the 
income statement within 
Personnel expenses
. 
 
Income statement – expenses related to post-employment 
benefit plans 
USD million 
31.12.20 
31.12.19 
31.12.18 
Net periodic expenses for defined benefit plans 
 
306 
 
291 
 
140 
of which: related to major plans
1
 
289 
 
271 
 
141 
of which: Swiss pension plan
2
 
269 
 
248 
 
108 
of which: UK pension plan 
 
3 
 
3 
 
11 
of which: US and German pension plans 
 
18 
 
21 
 
22 
of which: related to remaining plans and other expenses
3
 
17 
 
19 
 
(1) 
Expenses for defined contribution plans
4
 
291 
 
278 
 
223 
of which: UK plans 
 
36 
 
34 
 
35 
of which: US plan 
 
190 
 
173 
 
127 
of which: remaining plans 
 
65 
 
71 
 
61 
Total post-employment benefit plan expenses
5
 
597 
 
569 
 
363 
1 Refer to Note 26a for more information. 
2 Changes to the Swiss pension plan announced in 2018 
resulted in a pre-tax gain of USD 132 million related to past 
service. Refer to Note 26a for more information on 
these changes. 
3 Other expenses include differences between actual and estimated performance award accruals. 
4 Refer to Note 26b for more information. 
5 Refer to Note 6. 
 
The table below provides a breakdown of amounts recognized in 
Other comprehensive income
 
for defined benefit plans. 
 
Other comprehensive income – gains / (losses) on 
defined benefit plans 
USD million 
31.12.20 
31.12.19 
31.12.18 
Major plans
1
 
(219) 
 
(128) 
 
(79) 
of which: Swiss pension plan 
 
(172) 
 
(15) 
 
(201) 
of which: UK pension plan 
 
(61) 
 
(78) 
 
130 
of which: US and German pension plans 
 
14 
 
(35) 
 
(8) 
Remaining plans 
 
(3) 
 
(1) 
 
9 
Gains / (losses) recognized in other comprehensive income, before tax 
 
(222) 
 
(129) 
 
(70) 
Tax (expense) / benefit relating to defined benefit plans recognized in other comprehensive 
income 
 
88 
 
(41) 
 
245 
Gains / (losses) recognized in other comprehensive income, net of tax
2
 
(134) 
 
(170) 
 
175 
1 Refer to Note 26a for more information. 
2 Refer to the “Statement of comprehensive income.” 
 
The table 
below provides 
a breakdown 
of the assets 
and liabilities 
recognized 
on the balance 
sheet within 
Other non-financial 
assets
 
and 
Other 
non-financial 
liabilities
 
related 
to defined 
benefit 
plans. 
 
Balance sheet – net defined benefit asset 
USD million 
31.12.20 
31.12.19 
Major plans
1
 
42 
 
9 
of which: Swiss pension plan
2
 
0 
 
0 
of which: UK pension plan 
 
0 
 
4 
of which: US and German pension plans 
 
42 
 
5 
Total net defined benefit asset 
 
42 
 
9 
1 Refer to Note 26a for more information. 
2 As of 31 December 2020 and 31 December 2019, the 
Swiss pension plan was in a surplus situation. No 
net defined benefit asset was recognized on the balance sheet 
due to the IFRS asset ceiling restriction. Refer to Note 26a for more information. 
Balance sheet – net defined benefit liability 
USD million 
31.12.20 
31.12.19 
Major plans
1
 
599 
 
527 
of which: UK pension plan 
 
13 
 
0 
of which: US and German pension plans
2
 
586 
 
527 
Remaining plans 
 
112 
 
103 
Total net defined benefit liability
3
 
711 
 
629 
1 Refer to 
Note 26a for 
more information. 
2 Of 
the total liability 
recognized as 
of 31 December 
2020, USD 
88 million 
related to 
US plans 
and USD 
498 million related 
to German plans 
(31 December 
2019: 
USD 111 million and USD 416 million, respectively). 
3 Refer to Note 19c. 
 
 

 
 
Consolidated financial statements | UBS AG consolidated financial statements 
530 
 
Note 26 
Post-employment benefit plans (continued) 
a) Defined benefit plans 
UBS AG 
has established 
defined benefit 
plans for 
its employees 
in 
various jurisdictions 
in 
accordance 
with 
local 
regulations 
and 
practices. 
The 
major 
plans 
are 
located 
in 
Switzerland, 
the 
UK, 
the 
US 
and 
Germany. 
The 
level 
of 
benefits 
depends 
on 
the 
specific plan rules. 
For 
the 
funded 
plans, 
the 
plan 
assets 
are 
invested 
in 
a 
diversified 
portfolio 
of 
financial 
assets. 
Volatility 
arises 
in 
each 
plan’s 
net 
asset 
/ 
liability 
position 
because 
the 
fair 
value 
of 
the 
plan’s financial assets is 
not fully correlated to 
movements in the 
value 
of 
the 
plan’s 
defined 
benefit 
obligation 
(DBO). 
UBS 
AG’s 
general 
principle 
is 
to 
ensure 
that 
the 
plans 
are 
adequately 
funded 
on 
the 
basis 
of 
actuarial 
valuations. 
Local 
pension 
regulations 
are 
the 
primary 
drivers 
for 
determining 
when 
contributions are required. 
Swiss pension plan 
The 
Swiss 
pension 
plan 
covers 
employees 
of 
UBS 
AG 
and 
employees of 
companies having 
close economic 
or financial 
ties 
with 
UBS 
AG, 
and 
exceeds 
the 
minimum 
benefit 
requirements 
under Swiss pension law. 
In 2017, 
a significant 
number of 
employees transferred 
from 
UBS 
AG 
to 
UBS Business 
Solutions 
AG, 
which 
is a 
directly 
held 
subsidiary of 
UBS Group 
AG. There 
continues to 
be one 
pooled 
pension plan 
in Switzerland 
covering the 
employees of 
UBS AG 
and 
those 
transferred 
to 
UBS 
Business 
Solutions 
AG. 
UBS 
AG 
and UBS Business 
Solutions AG both 
are legal sponsors 
of UBS’s 
Swiss pension plan. Since the date of the employee 
transfer, UBS 
AG and 
UBS Business 
Solutions AG 
apply proportionate 
defined 
benefit 
accounting, 
i.e., 
the 
net 
pension 
cost
 
and 
the 
net 
pension 
asset 
/ 
liability 
of 
the 
Swiss 
pension 
plan 
are 
allocated 
proportionally between 
UBS AG 
and UBS 
Business Solutions 
AG 
based 
on 
the 
aggregated 
net pension 
cost and 
defined 
benefit 
obligations related to their employees. 
The 
Swiss
 
plan 
offers 
retirement, 
disability 
and 
survivor 
benefits 
and 
is 
governed 
by 
a 
Pension 
Foundation 
Board. 
The 
responsibilities 
of 
this 
board 
are 
defined 
by 
Swiss 
pension 
law 
and the plan rules. 
Savings 
c
ontributions 
to 
the 
Swiss 
plan 
are
 
paid 
by 
both
 
employer 
and 
employee. 
Depending 
on 
the 
age 
of 
the 
employee, 
UBS 
AG 
pays 
a 
savings 
contribution 
that 
ranges 
between 
6.5% 
and 
27.5% 
of 
contributory 
base 
salary 
and 
between 
2.8% and 
9% 
of 
contributory 
variable 
compensation. 
UBS 
AG 
also 
pays 
risk 
contributions 
that 
are 
used 
to 
fund 
disability 
and 
survivor 
benefits. Employees 
can 
choose 
the 
level 
of 
savings 
contributions 
paid 
by 
them
,
 
which 
vary 
between 
2.5% and 
13.5% of 
contributory base 
salary and 
between 0% 
and 
9% 
of 
contributory 
variable 
compensation, 
depending 
on 
age and choice of savings contribution category. 
The plan 
offers to 
members at 
the normal 
retirement age 
of 
65 a choice between a lifetime pension and a 
partial or full lump 
sum payment. 
Participants 
can choose 
to draw 
early retirement 
benefits 
starting 
from 
the 
age 
of 
58, 
but 
can 
also 
continue 
employment 
and 
remain 
active 
members 
of 
the 
plan 
until 
the 
age 
of 
70. 
Employees 
have 
the opportunity 
to 
make additional 
purchases of benefits to fund early retirement benefits. 
The pension 
amount payable 
to a 
participant is 
calculated by 
applying 
a 
conversion 
rate 
to 
the 
accumulated 
balance 
of 
the 
participant’s 
retirement 
savings 
account 
at 
the 
retirement 
date. 
The 
balance
 
is 
based 
on 
credited 
vested 
benefits 
transferred 
from 
previous 
employers, 
purchases 
of 
benefits, 
and 
the 
employee 
and 
employer 
contributions 
that 
have 
been 
made 
to 
the 
participant’s 
retirement 
savings 
account, 
as 
well 
as 
the 
interest 
accrued. 
The 
interest 
rate 
is 
defined 
annually 
by 
the 
Pension Foundation Board. 
Although 
the 
Swiss 
plan 
is 
based 
on 
a 
defined 
contribution 
promise 
under 
Swiss 
pension 
law, 
it 
is 
accounted 
for 
as 
a 
defined 
benefit 
plan 
under 
IFRS, 
primarily 
because 
of 
the 
obligation 
to 
accrue 
interest 
on 
the 
participants
’
 
retirement 
savings accounts and the payment of lifetime pension benefits. 
An actuarial valuation in accordance with Swiss pension law is 
performed 
regularly. 
Should 
an 
underfunded 
situation 
on 
this 
basis occur, the Pension Foundation Board is required to 
take the 
necessary measures 
to ensure 
that full 
funding can 
be expected 
to be 
restored within 
a maximum 
period of 
10 years. 
If a 
Swiss 
plan 
were 
to 
become 
significantly 
underfunded 
on 
a 
Swiss 
pension 
law 
basis, 
additional 
employer 
and 
employee 
contributions 
could 
be 
required. 
In 
this 
situation, 
the 
risk 
is 
shared 
between 
employer 
and 
employees, 
and 
the 
employer 
is 
not 
legally 
obliged 
to 
cover 
more 
than 
50% 
of 
the 
additional 
contributions required. 
As of 31 December 
2020, the Swiss 
plan 
had 
a 
technical 
funding 
ratio 
under 
Swiss 
pension 
law 
of 
132.6% (31 December 2019: 127.1%). 
 
 

 
 
531 
 
Note 26 
Post-employment benefit plans (continued) 
The investment strategy of the Swiss plan complies with Swiss 
pension 
law, 
including 
the 
rules 
and 
regulations 
relating 
to 
diversification of 
plan assets. 
These rules, 
among others, 
specify 
restrictions 
on 
the 
composition 
of 
plan 
assets; 
e.g., 
there 
is 
a 
limit of 50% for investments in equities. The 
investment strategy 
of the Swiss 
plan is aligned 
with the defined 
risk budget set 
out 
by the Pension 
Foundation Board. The 
risk budget is 
determined 
on 
the 
basis 
of 
regularly 
performed 
asset 
and 
liability 
management 
analyses. 
In 
order 
to 
implement 
the 
risk 
budget, 
the Swiss plan may use direct investments, investment funds 
and 
derivatives. To 
mitigate foreign 
currency risk, 
a specific 
currency 
hedging 
strategy 
is 
in 
place. 
The 
Pension 
Foundation 
Board 
strives for a medium- and long-term balance between assets and 
liabilities. 
As 
of 
31 December 
2020, 
the 
Swiss 
plan 
was 
in 
a 
surplus 
situation on 
an IFRS 
measurement basis, 
as the 
fair value 
of the 
plan’s 
assets 
exceeded 
the 
DBO 
by 
USD
 
2
,
739
 
million 
(31 December 2019: a surplus of USD 2,099 million). 
However, a 
surplus 
is 
only 
recognized 
on 
the 
balance 
sheet 
to 
the 
extent 
that 
it 
does not 
exceed 
the estimated 
future economic 
benefit, 
which 
equals 
the 
difference 
between 
the 
present 
value 
of 
the 
estimated 
future 
net 
service 
cost 
and 
the 
present 
value 
of 
the 
estimated 
future 
employer 
contributions. 
As 
of 
both 
31 December 
2020 
and 
31 December 
2019, 
the 
estimated 
future 
economic 
benefit 
was 
zero 
and 
hence 
no 
net 
defined 
benefit asset was recognized on the balance sheet. 
In 
the 
first 
quarter 
of 
2020, 
UBS 
AG 
adopted 
an 
enhanced 
methodology 
for 
measuring 
the 
estimated
 
future 
economic 
benefits available 
under the 
Swiss pension 
plan, whereby 
future 
net 
service 
cost 
is 
measured 
individually 
for 
each 
future 
year, 
considering the individually 
applicable discount 
rate. In addition, 
an enhanced discount curve methodology 
was adopted, utilizing 
the 
FINMA-published 
ultimate 
forward 
rate, 
which 
represents 
the average 
long-term historical 
real rate 
plus expected 
inflation 
over 
the 
long-dated 
periods 
where 
discount 
rates 
are 
unobservable. No changes 
have been made 
to the methodology 
for measuring the defined benefit obligation. 
Changes to the Swiss pension plan 
As 
a 
result 
of 
the 
effects 
of 
continuing 
low 
and 
in 
some 
cases 
negative 
interest 
rates, 
diminished 
investment 
return 
expectations and increasing 
life expectancy, 
the pension fund 
of 
UBS 
AG 
in 
Switzerland 
and 
UBS 
AG 
agreed 
to 
measures 
that 
took 
effect 
from 
the 
start 
of 
2019 
to 
support 
the 
long-term 
financial 
stability 
of 
the 
Swiss 
pension 
fund. 
As 
a 
result, 
the 
conversion 
rate 
was 
lowered, 
the 
regular 
retirement 
age 
was 
increased
 
from 
64
 
to 
65, 
employee 
contributions 
were 
increased, and savings contributions 
started from age 20 
instead 
of 25. Pensions 
already in 
payment on 1 January 
2019 were 
not 
affected. 
To mitigate the effects of 
the reduction of the conversion rate 
on future 
pensions, UBS 
AG committed 
to pay 
an extraordinary 
contribution of up to CHF 450 million (USD 508 million based on 
the 
closing 
exchange 
rate 
as 
of 
31 
December 
2020) 
in 
three 
installments 
in 
2020, 
2021 and 
2022. 
In 
accordance 
with 
IFRS, 
these 
measures 
led 
to 
a 
reduction 
in 
the 
pension 
obligation 
recognized 
by 
UBS 
AG, 
resulting 
in 
a 
pre-tax 
gain 
of 
USD 132 
million 
in 
2018. 
This 
effect 
was 
recognized 
as 
a 
reduction 
in 
Personnel 
expenses 
with 
a 
corresponding 
effect 
in 
Other 
comprehensive 
income 
(OCI). 
The 
first 
installment 
of 
USD 143 
million was paid 
in 2020 and 
reduced OCI with 
no effect on 
the 
income 
statement. 
If 
the Swiss 
plan 
remains 
in 
an 
asset 
ceiling 
position, 
the 
two 
payments 
in 
2021 
and 
2022, 
adjusted 
for 
expected 
forfeitures, 
are 
expected 
to 
reduce 
OCI 
by 
USD 262 
million, with no effect on the income statement. 
The 
second 
installment 
of 
USD 
15
2
 
million 
was 
paid 
in 
January 
2021 
and 
the 
regular 
employer 
contributions 
expected 
to 
be 
made 
to 
the 
Swiss 
plan 
in 
2021 
are 
estimated 
to 
be 
USD 292 million. 
UK pension plan 
The UK 
plan is 
a career 
-average revalued 
earnings scheme, 
and 
benefits increase 
automatically based 
on UK 
price inflation. 
The 
normal retirement 
age for 
participants in 
the UK plan 
is 60. 
The 
plan 
provides 
guaranteed 
lifetime 
pension 
benefits 
to 
plan 
participants upon 
retirement. Since 
2000, the 
UK plan 
has been 
closed to new entrants 
and, since 2013, plan 
participants are no 
longer 
accruing 
benefits 
for 
current 
or 
future 
service. 
Instead, 
employees participate in the UK defined contribution plan. 
The governance 
responsibility for the 
UK plan lies 
jointly with 
the 
Pension 
Trustee 
Board
 
and 
UBS
 
AG
. 
The 
employer 
contributions 
to 
the 
pension 
fund 
reflect 
agreed-upon 
deficit 
funding contributions, which 
are determined on 
the basis of 
the 
most recent actuarial 
valuation using assumptions 
agreed by the 
Pension 
Trustee 
Board 
and 
UBS
 
AG
. 
In 
the 
event 
of 
underfunding, 
UB
S
 
AG
 
and 
the 
Pension 
Trustee 
Board 
must 
agree 
on 
a 
deficit 
recovery 
plan 
within 
statutory 
deadlines. 
In 
2020, 
UBS 
AG 
made 
deficit 
funding 
contributions 
of 
USD 46 
million 
to 
the 
UK 
plan. 
In 
2019, 
UBS 
AG 
made 
deficit 
funding 
contributions of USD 242 million. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
532 
 
Note 26 
Post-employment benefit plans (continued)
The 
plan 
assets 
are 
invested 
in 
a 
diversified 
portfolio 
of 
financial assets. 
In 2020, 
the UK 
Pension Trustee 
Board entered 
into 
a 
longevity 
swap 
with 
an 
external 
insurance 
company, 
which is 
recognized as 
a plan 
asset. The 
longevity swap 
enables 
the 
UK 
pension 
plan 
to 
hedge 
the 
risk 
between 
expected 
and 
actual 
longevity, 
which 
should
 
mitigate 
volatility 
in 
the 
net 
defined benefit 
asset / 
liability. The 
longevity swap 
had nil 
value 
on 31 December 2020. 
In 2019, 
UBS AG and 
the Pension Trustee 
Board entered 
into 
an 
arrangement 
whereby 
a 
collateral 
pool 
was 
established 
to 
provide security for 
the pension fund. 
The value of 
the collateral 
pool 
as 
of 
31
 
December 
2020
 
was
 
USD
 
347
 
million 
(31 December 
2019: 
USD 
364 
million) 
and 
includes 
corporate 
bonds, 
government-related debt instruments 
and other 
financial 
assets. 
The 
arrangement 
provides 
the 
Pension 
Trustee 
Board 
dedicated 
access 
to 
a 
pool 
of 
assets 
in 
the 
event 
of 
UBS 
AG’s 
insolvency or not paying a required deficit funding contribution. 
In 2021, no contributions 
are expected to be 
made to the UK 
defined 
benefit 
plan, 
subject 
to 
regular 
funding 
reviews 
during 
the year. 
US pension plans 
There 
are 
two 
distinct 
major 
defined 
benefit 
plans 
in 
the 
US, 
both with a 
normal retirement age 
of 65. Since 
1998 and 2001, 
respectively, 
the 
plans 
have 
been 
closed 
to 
new 
entrants, 
who 
instead can participate in defined contribution plans. 
One of the 
defined benefit plans 
is a contribution-based 
plan 
in 
which 
each 
participant 
accrues 
a 
percentage 
of 
salary 
in 
a 
retirement 
savings 
account. 
The 
retirement 
savings 
account 
is 
credited annually 
with interest 
based 
on a 
rate that 
is linked 
to 
the 
average 
yield 
on 
one-year 
US 
government 
bonds. 
For 
the 
other defined 
benefit plan, 
retirement benefits 
accrue based 
on 
the 
career-average 
earnings 
of 
each 
individual 
plan 
participant. 
Former employees with vested benefits have the option to take a 
lump sum payment or a lifetime annuity. 
As 
required 
under 
applicable 
pension 
laws, 
both 
plans 
have 
fiduciaries 
who, 
together 
with 
UBS 
AG, 
are 
responsible 
for 
the 
governance 
of 
the 
plans. 
UBS
 
AG
 
regularly 
reviews 
the 
contribution 
strategy 
for 
these 
plans, 
considering 
statutory 
funding rules and the cost of any premiums that must 
be paid to 
the 
Pension 
Benefit 
Guaranty 
Corporation 
for 
having 
an 
underfunded plan. 
The 
plan 
assets 
for 
both 
plans 
are 
invested 
in 
a 
diversified 
portfolio 
of 
financial 
assets. 
Each 
plan’s 
fiduciaries 
are 
responsible for the 
investment decisions with respect 
to the plan 
assets. 
The 
employer 
contributions 
expected 
to 
be 
made 
to 
the 
US 
defined benefit plans in 2021 are estimated at USD 10 million. 
German pension plans 
There 
are 
two 
defined 
benefit plans 
in 
Germany, 
and 
both 
are 
contribution-based 
plans. 
No 
plan 
assets 
are 
set 
aside 
to 
fund 
these 
plans, 
and 
benefits 
are 
paid 
directly 
by 
UBS
 
AG
. 
The 
normal retirement 
age for 
the participants 
in the 
German plans 
is 
65. 
Within 
the 
larger 
of 
the 
two 
plans, 
each 
participant 
accrues 
a 
percentage 
of 
salary in 
a 
retirement 
savings 
account. 
The 
accumulated 
account 
balance 
of 
the 
plan 
participant 
is 
credited on an annual 
basis with guaranteed interest at 
a rate of 
5%. In 
the other 
plan, amounts 
are 
accrued annually 
based on 
employee 
elections 
related 
to 
variable 
compensation. 
For 
this 
plan, the 
accumulated account balance 
is credited 
on an annual 
basis with a guaranteed interest rate of 6% for amounts accrued 
before 
2010, 
of 
4% 
for 
amounts 
accrued 
from 
2010 
to 
2017 
and 
of 
0.9% 
for 
amounts 
accrued 
after 
2017. 
Both 
plans 
are 
subject 
to 
German 
pension 
law, 
whereby 
the 
responsibility 
to 
pay 
pension 
benefits 
when 
they 
are 
due 
resides 
entirely 
with 
UBS AG. A 
portion of the pension 
payments is directly 
increased 
in line with price inflation. 
The 
benefits 
expected 
to 
be 
paid 
by 
UBS
 
AG
 
to 
the 
participants 
of 
the 
German 
plans 
in 
2021
 
are 
estimated 
at 
USD 11 million. 
Financial information by plan 
The 
tables 
on 
the 
following 
pages 
provide 
an 
analysis 
of 
the 
movement 
in the 
net asset 
/ liability 
recognized 
on the 
balance 
sheet for defined benefit plans, as well as an analysis of amounts 
recognized in net profit and in 
Other comprehensive incom
e. 
 
 

 
533 
 
Note 26 
Post-employment benefit plans (continued)
Defined benefit plans 
USD million 
Swiss pension plan 
UK pension plan 
US and German 
pension plans 
Total 
2020 
2019 
2020 
2019 
2020 
2019 
2020 
2019 
Defined benefit obligation at the beginning of the year 
 
13,809 
 
13,774 
 
3,654 
 
3,192 
 
1,820 
 
1,679 
 
19,283 
 
18,645 
Current service cost 
 
262 
 
243 
 
0 
 
0 
 
6 
 
6 
 
268 
 
249 
Interest expense 
 
40 
 
122 
 
73 
 
92 
 
45 
 
59 
 
159 
 
273 
Plan participant contributions 
 
159 
 
149 
 
0 
 
0 
 
0 
 
0 
 
159 
 
149 
Remeasurements 
 
677 
 
(61) 
 
449 
 
361 
 
105 
 
185 
 
1,231 
 
485 
of which: actuarial (gains) / losses due to changes in demographic 
assumptions 
 
(53) 
 
(125) 
 
(14) 
 
(26) 
 
(34) 
 
3 
 
(101) 
 
(148) 
of which: actuarial (gains) / losses due to changes in financial 
assumptions 
 
565 
 
1,006 
 
505 
 
421 
 
134 
 
179 
 
1,204 
 
1,605 
of which: experience (gains) / losses
1,2
 
165 
 
(942) 
 
(42) 
 
(34) 
 
5 
 
4 
 
127 
 
(972) 
Past service cost related to plan amendments 
 
0 
 
0 
 
3 
 
0 
 
0 
 
0 
 
3 
 
0 
Benefit payments 
 
(641) 
 
(624) 
 
(148) 
 
(135) 
 
(108) 
 
(102) 
 
(898) 
 
(860) 
Other movements 
 
(4) 
 
0 
 
0 
 
0 
 
0 
 
0 
 
(4) 
 
0 
Foreign currency translation 
 
1,317 
 
206 
 
132 
 
144 
 
37 
 
(8) 
 
1,486 
 
342 
Defined benefit obligation at the end of the year 
 
15,619 
 
13,809 
 
4,162 
 
3,654 
 
1,905 
 
1,820 
 
21,686 
 
19,283 
of which: amounts owed to active members 
 
8,290 
 
7,073 
 
159 
 
164 
 
245 
 
235 
 
8,694 
 
7,472 
of which: amounts owed to deferred members 
 
0 
 
0 
 
1,879 
 
1,559 
 
743 
 
675 
 
2,622 
 
2,233 
of which: amounts owed to retirees 
 
7,329 
 
6,735 
 
2,124 
 
1,931 
 
917 
 
911 
 
10,370 
 
9,577 
Fair value of plan assets at the beginning of the year 
 
15,908 
 
15,772 
 
3,658 
 
3,032 
 
1,299 
 
1,168 
 
20,864 
 
19,972 
Return on plan assets excluding interest income
2
 
962 
 
(30) 
 
388 
 
284 
 
118 
 
150 
 
1,469 
 
403 
Interest income 
 
48 
 
142 
 
73 
 
89 
 
38 
 
47 
 
159 
 
278 
Employer contributions 
 
436 
 
271 
 
46 
 
242 
 
17 
 
38 
 
499 
 
550 
Plan participant contributions 
 
159 
 
149 
 
0 
 
0 
 
0 
 
0 
 
159 
 
149 
Benefit payments 
 
(641) 
 
(624) 
 
(148) 
 
(135) 
 
(108) 
 
(102) 
 
(898) 
 
(860) 
Administration expenses, taxes and premiums paid 
 
(8) 
 
(7) 
 
0 
 
0 
 
(4) 
 
(2) 
 
(11) 
 
(9) 
Foreign currency translation 
 
1,495 
 
235 
 
132 
 
146 
 
0 
 
0 
 
1,626 
 
381 
Fair value of plan assets at the end of the year 
 
18,358 
 
15,908 
 
4,149 
 
3,658 
 
1,360 
 
1,299 
 
23,867 
 
20,864 
Asset ceiling effect at the beginning of the year 
 
2,099 
 
1,998 
 
0 
 
0 
 
0 
 
0 
 
2,099 
 
1,998 
Interest expense on asset ceiling effect 
 
7 
 
18 
 
0 
 
0 
 
0 
 
0 
 
7 
 
18 
Asset ceiling effect excluding interest expense and foreign currency 
translation on 
asset ceiling effect 
 
457 
 
46 
 
0 
 
0 
 
0 
 
0 
 
457 
 
46 
Foreign currency translation 
 
176 
 
36 
 
0 
 
0 
 
0 
 
0 
 
176 
 
36 
Asset ceiling effect at the end of the year 
 
2,739 
 
2,099 
 
0 
 
0 
 
0 
 
0 
 
2,739 
 
2,099 
Net defined benefit asset / (liability) 
 
0 
 
0 
 
(13) 
 
4 
 
(545) 
 
(521) 
 
(558) 
 
(518) 
Movement in the net asset / (liability) recognized on the balance sheet 
Net asset / (liability) recognized on the balance sheet at the beginning 
of the year 
 
0 
 
0 
 
4 
 
(160) 
 
(521) 
 
(511) 
 
(518) 
 
(671) 
Net periodic expenses recognized in net profit 
 
(269) 
 
(248) 
 
(3) 
 
(3) 
 
(18) 
 
(21) 
 
(289) 
 
(271) 
Gains / (losses) recognized in other comprehensive income 
 
(172) 
 
(15) 
 
(61) 
 
(78) 
 
14 
 
(35) 
 
(219) 
 
(128) 
Employer contributions 
 
436 
 
271 
 
46 
 
242 
 
17 
 
38 
 
499 
 
550 
Other movements 
 
4 
 
0 
 
0 
 
0 
 
0 
 
0 
 
4 
 
0 
Foreign currency translation 
 
1 
 
(8) 
 
0 
 
2 
 
(37) 
 
8 
 
(35) 
 
2 
Net asset / (liability) recognized on the balance sheet at the end of 
the year 
 
0 
 
0 
 
(13) 
 
4 
 
(545) 
 
(521) 
 
(558) 
 
(518) 
Funded and unfunded plans 
Defined benefit obligation from funded plans 
 
15,619 
 
13,809 
 
4,162 
 
3,654 
 
1,319 
 
1,319 
 
21,100 
 
18,782 
Defined benefit obligation from unfunded plans 
 
0 
 
0 
 
0 
 
0 
 
586 
 
501 
 
586 
 
501 
Plan assets 
 
18,358 
 
15,908 
 
4,149 
 
3,658 
 
1,360 
 
1,299 
 
23,867 
 
20,864 
Surplus / (deficit) 
 
2,739 
 
2,099 
 
(13) 
 
4 
 
(545) 
 
(521) 
 
2,181 
 
1,582 
Asset ceiling effect 
 
2,739 
 
2,099 
 
0 
 
0 
 
0 
 
0 
 
2,739 
 
2,099 
Net defined benefit asset / (liability) 
 
0 
 
0 
 
(13) 
 
4 
 
(545) 
 
(521) 
 
(558) 
 
(518) 
1 Experience (gains) / 
losses are a component 
of actuarial remeasurements of 
the defined benefit obligation 
that reflect the effects 
of differences between 
the previous actuarial assumptions 
and what has actually 
occurred. 
2 Includes the effect from employees transferring between UBS AG and UBS Business Solutions during the period.

 
Consolidated financial statements | UBS AG consolidated financial statements 
534 
 
Note 26 
Post-employment benefit plans (continued) 
Analysis of amounts recognized in net profit 
USD million 
Swiss pension plan 
UK pension plan 
US and German 
pension plans 
Total 
For the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Current service 
cost 
 
262 
 
243 
 
0 
 
0 
 
6 
 
6 
 
268 
 
249 
Interest expense related to defined benefit obligation 
 
40 
 
122 
 
73 
 
92 
 
45 
 
59 
 
159 
 
273 
Interest income related to plan assets 
 
(48) 
 
(142) 
 
(73) 
 
(89) 
 
(38) 
 
(47) 
 
(159) 
 
(278) 
Interest expense on asset ceiling effect 
 
7 
 
18 
 
0 
 
0 
 
0 
 
0 
 
7 
 
18 
Administration expenses, taxes and premiums paid 
 
8 
 
7 
 
0 
 
0 
 
4 
 
2 
 
11 
 
9 
Past service cost related to plan amendments 
 
0 
 
0 
 
3 
 
0 
 
0 
 
0 
 
3 
 
0 
Net periodic expenses recognized in net profit 
 
269 
 
248 
 
3 
 
3 
 
18 
 
21 
 
289 
 
271 
Analysis of amounts recognized in other comprehensive income (OCI) 
USD million 
Swiss pension plan 
UK pension plan 
US and German 
pension plans 
Total 
For the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Remeasurement of defined benefit obligation 
 
(677) 
 
61 
 
(449) 
 
(361) 
 
(105) 
 
(185) 
 
(1,231) 
 
(485) 
of which: change in discount rate assumption 
 
(447) 
 
(1,156) 
 
(504) 
 
(552) 
 
(141) 
 
(166) 
 
(1,092) 
 
(1,874) 
of which: change in rate of salary increase assumption 
 
(132) 
 
2 
 
0 
 
0 
 
0 
 
0 
 
(132) 
 
2 
of which: change in rate of pension increase assumption 
 
0 
 
0 
 
(1) 
 
132 
 
1 
 
(4) 
 
0 
 
128 
of which: change in rate of interest credit on retirement savings 
assumption 
 
15 
 
149 
 
0 
 
0 
 
24 
 
18 
 
39 
 
167 
of which: change in life expectancy 
 
84 
 
0 
 
22 
 
21 
 
50 
 
4 
 
156 
 
25 
of which: change in other actuarial assumptions 
 
(33) 
 
125 
 
(8) 
 
5 
 
(34) 
 
(33) 
 
(75) 
 
97 
of which: experience gains / (losses)
1,2
 
(165) 
 
942 
 
42 
 
34 
 
(5) 
 
(4) 
 
(127) 
 
972 
Return on plan assets excluding interest income 
 
962 
 
(30) 
 
388 
 
284 
 
118 
 
150 
 
1,469 
 
403 
Asset ceiling effect excluding interest expense and foreign currency 
translation 
 
(457) 
 
(46) 
 
0 
 
0 
 
0 
 
0 
 
(457) 
 
(46) 
Total gains / (losses) recognized in other comprehensive income, before tax 
 
(172) 
 
(15) 
 
(61) 
 
(78) 
 
14 
 
(35) 
 
(219) 
 
(128) 
1 Experience (gains) / 
losses are a component 
of actuarial remeasurements of 
the defined benefit obligation 
that reflect the effects 
of differences between 
the previous actuarial assumptions 
and what has actually 
occurred. 
2 Includes the effect from employees transferring between UBS AG and UBS Business Solutions during the period. 
 
The table below provides information about the duration of the DBO and the timing for expected benefit payments. 
 
Swiss pension plan 
UK pension plan 
US and German pension 
plans
1
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Duration of the defined benefit obligation (in years) 
 
16.2 
 
15.2 
 
19.0 
 
20.2 
 
10.2 
 
10.1 
Maturity analysis of benefits expected to be paid 
USD million 
Benefits expected to be paid within 12 months 
 
710 
 
687 
 
114 
 
93 
 
122 
 
121 
Benefits expected to be paid between 1 and 3 years 
 
1,442 
 
1,383 
 
232 
 
209 
 
235 
 
228 
Benefits expected to be paid between 3 and 6 years 
 
2,100 
 
2,048 
 
406 
 
384 
 
346 
 
346 
Benefits expected to be paid between 6 and 11 years 
 
3,408 
 
3,232 
 
744 
 
748 
 
532 
 
548 
Benefits expected to be paid between 11 and 16 years 
 
3,184 
 
2,899 
 
758 
 
807 
 
413 
 
455 
Benefits expected to be paid in more than 16 years 
 
11,186 
 
9,136 
 
3,206 
 
3,913 
 
541 
 
721 
1 The duration of the defined benefit obligation represents a weighted average across US and 
German plans.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
535 
 
Note 26 
Post-employment benefit plans (continued) 
Actuarial assumptions 
The 
measurement 
of 
each 
plan’s 
DBO 
considers 
different 
actuarial 
assumptions. 
Changes 
in 
these 
assumptions 
lead 
to 
volatility 
in 
the 
DBO. 
The 
actuarial 
assumptions 
used 
for 
the 
defined 
benefit 
plans 
are 
based 
on 
the 
economic 
conditions 
prevailing in 
the jurisdiction 
in which 
they are 
offered. Changes 
in the defined benefit obligation are most sensitive to changes 
in 
the 
discount 
rate. 
The 
discount 
rate 
is 
based 
on 
the 
yield 
of 
high-quality 
corporate bonds 
quoted in 
an active 
market in 
the 
currency of the respective 
plan. A decrease in 
the discount curve 
increases 
the
 
DBO 
and 
an 
increase 
in 
the 
discount 
curve 
decreases 
the 
DBO. 
UBS
 
AG
 
regularly 
reviews 
the 
actuarial 
assumptions 
used 
in 
calculating 
the 
DBO 
to 
determine 
their 
continuing relevance. 
›
 
Refer to Note 
1
a item 6 for a description of the accounting 
policy 
for defined benefit plans 
 
 
The tables below show the significant actuarial assumptions used in calculating the DBO at the end of the year. 
 
Significant actuarial assumptions 
Swiss pension plan 
UK pension plan 
US and German pension 
plans
1
In % 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Discount rate 
 
0.10 
 
0.29 
 
1.42 
 
2.07 
 
1.62 
 
2.58 
Rate of salary increase 
 
2.00 
 
1.50 
 
0.00 
 
0.00 
 
2.25 
 
2.37 
Rate of pension increase 
 
0.00 
 
0.00 
 
2.89 
 
2.92 
 
1.70 
 
1.80 
Rate of interest credit on retirement savings 
 
0.60 
 
0.49 
 
0.00 
 
0.00 
 
1.12 
 
2.57 
1 Represents weighted average assumptions across US and German plans. 
 
Mortality tables and life expectancies for 
major plans 
Life expectancy at age 65 for a male member currently 
aged 65 
aged 45 
Country 
Mortality table 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Switzerland 
BVG 2020 G with CMI 2019 projections
1
 
21.7 
 
21.6 
 
23.2 
 
23.1 
UK 
S3PA with CMI 2019 projections
2
 
23.4 
 
23.3 
 
24.6 
 
24.5 
USA 
Pri-2012 with MP-2020 projection scale
3
 
21.8 
 
22.8 
 
23.2 
 
24.3 
Germany 
Dr. K. Heubeck 2018 G 
 
20.8 
 
20.7 
 
23.6 
 
23.5 
Life expectancy at age 65 for a female member currently 
aged 65 
aged 45 
Country 
Mortality table 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Switzerland 
BVG 2020 G with CMI 2019 projections
1
 
23.4 
 
23.6 
 
24.9 
 
25.1 
UK 
S3PA with CMI 2019 projections
2
 
24.9 
 
25.1 
 
26.3 
 
26.4 
USA 
Pri-2012 with MP-2020 projection scale
3
 
23.2 
 
24.4 
 
24.5 
 
25.9 
Germany 
Dr. K. Heubeck 2018 G 
 
24.3 
 
24.2 
 
26.5 
 
26.4 
 
1 In 2019, BVG 2015 G with CMI 2016 projections was used. 
2 In 2019, S2PA with CMI 2018 projections was used. 
3 In 2019, 
RP-2014 WCHA with MP-2019 projection scale was used. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
536 
 
Note 26 
Post-employment benefit plans (continued) 
Sensitivity analysis of significant actuarial assumptions 
The table below presents a sensitivity analysis for each significant 
actuarial 
assumption, 
showing 
how 
the 
DBO 
would 
have 
been 
affected 
by 
changes 
in 
the 
relevant 
actuarial 
assumption 
that 
were reasonably 
possible at 
the balance 
sheet date. 
Unforeseen 
circumstances may arise, which could 
result in variations that are 
outside 
the 
range 
of 
alternatives 
deemed 
reasonably 
possible. 
Caution 
should 
be 
used 
in 
extrapolating 
the 
sensitivities 
below 
on the DBO as the sensitivities may not be linear. 
 
Sensitivity analysis of significant actuarial 
assumptions
1
Increase / (decrease) in defined benefit obligation 
Swiss pension plan 
UK pension plan 
US and German pension plans 
USD million 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Discount rate 
Increase by 50 basis points 
 
(1,030) 
 
(853) 
 
(370) 
 
(346) 
 
(91) 
 
(86) 
Decrease by 50 basis points 
 
1,181 
 
972 
 
423 
 
395 
 
99 
 
93 
Rate of salary increase 
Increase by 50 basis points 
 
74 
 
49 
–
2
–
2 
 
1 
 
1 
Decrease by 50 basis points 
 
(71) 
 
(47) 
–
2
–
2 
 
(1) 
 
(1) 
Rate of pension increase 
Increase by 50 basis points 
 
793 
 
673 
 
358 
 
331 
 
8 
 
7 
Decrease by 50 basis points 
–
3
–
3
 
(316) 
 
(299) 
 
(7) 
 
(7) 
Rate of interest credit on retirement savings 
Increase by 50 basis points 
 
142 
 
107 
–
4 
–
4 
 
9 
 
9 
Decrease by 50 basis points 
 
(113)
5 
 
(62) 
–
4 
–
4 
 
(8) 
 
(9) 
Life expectancy 
Increase in longevity by one additional year 
 
566 
 
459 
 
182 
 
154 
 
60 
 
51 
1 The sensitivity 
analyses are based 
on a change 
in one assumption 
while holding all 
other assumptions constant, 
so that interdependencies 
between the assumptions 
are excluded. 
2 As the 
plan is closed 
for 
future service, 
a change 
in assumption 
is not 
applicable. 
3 As 
the assumed 
rate of 
pension increase 
was 0% 
as of 
31 December 
2020 and 
as of 
31 December 
2019, a 
downward change 
in assumption 
is 
not applicable. 
4 As the UK 
plan does not provide 
interest credits on retirement 
savings, a change 
in assumption is not 
applicable. 
5 As of 31 
December 2020, 17.7% 
of retirement savings were 
subject to a 
legal minimum rate of 1.00%. 
 
 

 
537 
 
Note 26 
Post-employment benefit plans (continued) 
Fair value of plan assets 
The tables 
below 
provide 
information 
about 
the composition 
and fair 
value 
of plan 
assets 
of the 
Swiss, 
the UK 
and the 
US pension 
plans. 
 
Composition and fair value of plan assets 
Swiss pension plan 
31.12.20 
31.12.19 
Fair value 
Plan asset 
allocation % 
Fair value 
Plan asset 
allocation % 
USD million 
Quoted 
in an active 
market 
Other 
Total 
Quoted 
in an active 
market 
Other 
Total 
Cash and cash equivalents 
 
123 
 
0 
 
123 
 
1 
 
90 
 
0 
 
90 
 
1 
Real estate / property 
Domestic 
 
0 
 
2,018 
 
2,018 
 
11 
 
0 
 
1,720 
 
1,720 
 
11 
Foreign 
 
0 
 
186 
 
186 
 
1 
 
0 
 
90 
 
90 
 
1 
Investment funds 
Equity 
Domestic 
 
465 
 
0 
 
465 
 
3 
 
395 
 
0 
 
395 
 
2 
Foreign 
 
3,540 
 
1,103 
 
4,642 
 
25 
 
3,433 
 
932 
 
4,365 
 
27 
Bonds
1
Domestic, AAA to BBB– 
 
2,096 
 
0 
 
2,096 
 
11 
 
1,825 
 
0 
 
1,825 
 
11 
Foreign, AAA to BBB– 
 
3,462 
 
0 
 
3,462 
 
19 
 
3,315 
 
0 
 
3,315 
 
21 
Foreign, below BBB– 
 
734 
 
0 
 
734 
 
4 
 
563 
 
0 
 
563 
 
4 
Other 
 
1,894 
 
2,097 
 
3,991 
 
22 
 
904 
 
2,230 
 
3,134 
 
20 
Other investments 
 
373 
 
266 
 
640 
 
3 
 
301 
 
109 
 
411 
 
3 
Total fair value of plan assets 
 
12,688 
 
5,670 
 
18,358 
 
100 
 
10,827 
 
5,081 
 
15,908 
 
100 
31.12.20 
31.12.19 
Total fair value of plan assets 
 
18,358 
 
15,908 
of which:
2
Bank accounts at UBS AG 
 
130 
 
90 
UBS AG debt instruments 
 
19 
 
4 
UBS Group AG shares 
 
13 
 
12 
Securities lent to UBS AG
3
 
796 
 
748 
Property occupied by UBS AG 
 
54 
 
50 
Derivative financial instruments, counterparty UBS AG
3
 
84 
 
6 
1 The bond credit ratings 
are primarily based on Standard 
& Poor’s credit 
ratings. Ratings AAA 
to BBB– 
and below BBB– represent investment 
grade and non-investment grade 
ratings, respectively. 
In cases where 
credit ratings from other 
rating agencies were 
used, these were converted 
to the equivalent 
rating in Standard & 
Poor’s ratin 
g 
classification. 
2 Bank accounts at 
UBS AG encompass 
accounts in the name 
of the 
Swiss pension fund. The other positions disclosed 
in the table encompass both direct investments in 
UBS AG instruments and UBS Group 
AG shares and indirect investments, i.e., 
those made through funds that the 
pension fund invests in. 
3 Securities lent to UBS AG and derivative financial instruments are presented gross of any collateral. 
Securities lent to UBS AG were fully covered by collateral as of 31 December 2020 and 
31 December 2019. Net of collateral, derivative financial instruments amounted to negative USD 9 million as of 31 December 2020 
(31 December 2019: positive USD 3 million).

 
Consolidated financial statements | UBS AG consolidated financial statements 
538 
 
Note 26 
Post-employment benefit plans (continued) 
Composition and fair value of plan assets (continued) 
UK pension plan 
31.12.20 
31.12.19 
Fair value 
Plan asset 
allocation % 
Fair value 
Plan asset 
allocation % 
USD million 
Quoted 
in an active 
market 
Other 
Total 
Quoted 
in an active 
market 
Other 
Total 
Cash and cash equivalents 
 
195 
 
0 
 
195 
 
5 
 
141 
 
0 
 
141 
 
4 
Bonds
1
Domestic, AAA to BBB– 
 
2,150 
 
0 
 
2,150 
 
52 
 
1,810 
 
0 
 
1,810 
 
49 
Foreign, AAA to BBB– 
 
53 
 
0 
 
53 
 
1 
 
0 
 
0 
 
0 
 
0 
Investment funds 
Equity 
Domestic 
 
34 
 
3 
 
37 
 
1 
 
33 
 
0 
 
33 
 
1 
Foreign 
 
1,077 
 
0 
 
1,077 
 
26 
 
916 
 
0 
 
916 
 
25 
Bonds
1
Domestic, AAA to BBB– 
 
919 
 
131 
 
1,050 
 
25 
 
610 
 
117 
 
727 
 
20 
Domestic, below BBB– 
 
47 
 
0 
 
47 
 
1 
 
22 
 
0 
 
22 
 
1 
Foreign, AAA to BBB– 
 
149 
 
0 
 
149 
 
4 
 
310 
 
0 
 
310 
 
8 
Foreign, below BBB– 
 
110 
 
0 
 
110 
 
3 
 
108 
 
0 
 
108 
 
3 
Real estate 
Domestic 
 
98 
 
16 
 
114 
 
3 
 
103 
 
18 
 
122 
 
3 
Foreign 
 
0 
 
37 
 
37 
 
1 
 
0 
 
19 
 
19 
 
1 
Other 
 
(86) 
 
0 
 
(86) 
 
(2) 
 
0 
 
0 
 
0 
 
0 
Insurance contracts 
 
0 
 
8 
 
8 
 
0 
 
0 
 
7 
 
7 
 
0 
Derivatives 
 
(3) 
 
0 
 
(3) 
 
0 
 
3 
 
0 
 
3 
 
0 
Asset-backed securities 
 
0 
 
6 
 
6 
 
0 
 
0 
 
6 
 
6 
 
0 
Other investments
2
 
(803) 
 
9 
 
(794) 
 
(19) 
 
(572) 
 
7 
 
(565) 
 
(15) 
Total fair value of plan assets 
 
3,940 
 
209 
 
4,149 
 
100 
 
3,483 
 
175 
 
3,658 
 
100 
1 The bond credit ratings 
are primarily based on Standard 
& Poor’s credit 
ratings. Ratings AAA 
to BBB– 
and below BBB– represent investment 
grade and non-investment grade 
ratings, respectively. 
In cases where 
credit ratings from other rating agencies were used, these were converted to the equivalent rating 
in Standard & Poor’s rating classification. 
2 Mainly relates to repurchase arrangements on UK treasury bonds.

 
539 
 
Note 26 
Post-employment benefit plans (continued) 
Composition and fair value of plan assets (continued) 
US pension plans 
31.12.20 
31.12.19 
Fair value 
Plan asset 
allocation % 
Fair value 
Plan asset 
allocation % 
USD million 
Quoted 
in an active 
market 
Other 
Total 
Quoted 
in an active 
market 
Other 
Total 
Cash and cash equivalents 
 
38 
 
0 
 
38 
 
3 
 
27 
 
0 
 
27 
 
2 
Bonds
1
Domestic, AAA to BBB– 
 
490 
 
0 
 
490 
 
36 
 
475 
 
0 
 
475 
 
37 
Domestic, below BBB– 
 
7 
 
0 
 
7 
 
0 
 
2 
 
0 
 
2 
 
0 
Foreign, AAA to BBB– 
 
99 
 
0 
 
99 
 
7 
 
99 
 
0 
 
99 
 
8 
Foreign, below BBB– 
 
1 
 
0 
 
1 
 
0 
 
3 
 
0 
 
3 
 
0 
Investment funds 
Equity 
Domestic 
 
210 
 
0 
 
210 
 
15 
 
208 
 
0 
 
208 
 
16 
Foreign 
 
169 
 
0 
 
169 
 
12 
 
161 
 
0 
 
161 
 
12 
Bonds
1
Domestic, AAA to BBB– 
 
195 
 
0 
 
195 
 
14 
 
176 
 
0 
 
176 
 
14 
Domestic, below BBB– 
 
34 
 
0 
 
34 
 
2 
 
28 
 
0 
 
28 
 
2 
Foreign, AAA to BBB– 
 
19 
 
0 
 
19 
 
1 
 
17 
 
0 
 
17 
 
1 
Foreign, below BBB– 
 
3 
 
0 
 
3 
 
0 
 
3 
 
0 
 
3 
 
0 
Real estate 
Domestic 
 
0 
 
14 
 
14 
 
1 
 
0 
 
13 
 
13 
 
1 
Other 
 
79 
 
0 
 
79 
 
6 
 
69 
 
0 
 
69 
 
5 
Insurance contracts 
 
0 
 
1 
 
1 
 
0 
 
0 
 
18 
 
18 
 
1 
Total fair value of plan assets 
 
1,345 
 
15 
 
1,360 
 
100 
 
1,268 
 
31 
 
1,299 
 
100 
1 The bond credit ratings 
are primarily based on Standard 
& Poor’s credit 
ratings. Ratings AAA 
to BBB– 
and below BBB– represent investment 
grade and non-investment grade 
ratings, respectively. 
In cases where 
credit ratings from other rating agencies were used, these were converted to the equivalent rating 
in Standard & Poor’s rating classification.

Consolidated financial statements | UBS AG consolidated financial statements

540

Note 26

Post-employment benefit plans (continued)

b) Defined contribution plans

UBS AG

sponsors a

number of

defined contribution

plans, with

the

most

significant

plans

the

and

the

UK.

UBS

AG’s

obligation is limited to its contributions made in accordance

with

the

plan,

which

may

include

direct

contributions

well

matching

contributions.

Employer

contributions

defined

contribution

plans

are

recognized

expense,

which,

for

2020,

2019 and

2018, amounted

to USD 291

million, USD 278

million and USD 223 million, respectively.

c) Related-party disclosure

UBS

the

principal

provider

banking

services

for

the

pension fund of UBS AG in

Switzerland. In this capacity,

UBS AG

engaged

execute

most

the

pension

fund’s

banking

activities.

These

activities

can

include,

but

are

not

limited

to,

trading,

securities

lending

and

borrowing

and

derivative

transactions. The

non-Swiss UBS

AG pension

funds do

not have

a similar banking relationship with UBS AG.

Also, UBS AG

leases certain properties

that are owned

by the

Swiss

pension

fund.

31 December

2020,

the

minimum

commitment

toward

the

Swiss

pension

fund

under

the

leases

was

approximately

USD

million

(31

December

2019:

USD 8 million).

›

Refer to the “Composition and fair value

of plan assets” table in

Note 26a

for more information about fair value of investments

in UBS AG and UBS Group AG instruments

held by the Swiss

pension fund

The

following

amounts

have

been

received

paid

UBS

from

and

the

post-employment

benefit

plans

located

Switzerland,

the

and

the

respect

these

banking

activities and arrangements.

Related-party disclosure

For the year ended

USD million

31.12.20

31.12.19

31.12.18

Received by UBS AG

Fees

Paid by UBS AG

Rent

Dividends, capital repayments and interest

The transaction

volumes in UBS

Group AG

shares and

UBS AG debt

instruments and the

balances of UBS

Group AG

shares held

of 31 December were:

Transaction volumes – UBS Group AG shares and UBS AG debt instruments

For the year ended

31.12.20

31.12.19

Financial instruments bought by pension funds

UBS Group AG shares (in thousands of shares)

1,677

929

UBS AG debt instruments (par values, USD million)

Financial instruments sold by pension funds or matured

UBS Group AG shares (in thousands of shares)

2,556

1,778

UBS AG debt instruments (par values, USD million)

UBS Group AG shares held by post-employment

benefit plans

31.12.20

31.12.19

Number of shares (in thousands of shares)

14,112

14,991

Fair value (USD million)

199

189

 
 
 
541 
 
Note 27 
Employee benefits: variable compensation 
 
a) Plans offered 
UBS 
has 
several 
share-based 
and 
other 
deferred 
compensation 
plans 
that 
align 
the 
interests 
of 
Group 
Executive 
Board 
(GEB) 
members and other employees with the interests of investors. 
Share 
based payment 
awards 
are granted 
in the 
form of 
notional 
shares and, where permitted, 
carry a dividend equivalent 
that may 
be paid in notional 
shares or cash 
and that vest 
on the same terms 
and conditions 
as the award. Awards are settled 
by delivering UBS 
shares at vesting, 
except in jurisdictions 
where this is not permitted 
for legal 
or tax 
reasons. 
Deferred compensation awards are 
generally forfeitable upon, 
among other circumstances, 
voluntary termination 
of employment 
with UBS. These 
compensation plans 
are 
also designed 
to 
meet 
regulatory 
requirements 
and 
include 
special 
provisions 
for 
regulated employees. 
The 
most 
significant deferred compensation plans 
are 
described 
below. 
For 
the 
majority 
of 
variable 
compensation 
awards 
granted 
under such 
plans to 
employees of 
UBS AG, 
the grantor 
entity is 
UBS 
Group 
AG. 
Expenses 
associated 
with 
these 
awards 
are 
charged 
by UBS 
Group AG 
to UBS 
AG. For 
the purpose 
of 
this 
Note, references to shares refer to UBS Group AG shares. 
›
 
Refer 
to Note 
1a item 
5 for 
a description 
of the 
accounting 
policy 
related 
to share-based 
and 
other 
deferred 
compensation 
plans 
Mandatory 
deferred 
compensation 
plans 
Equity 
Ownership 
Plan (EOP) 
The EOP 
is a 
mandatory deferred share-based 
compensation 
plan 
for 
all 
employees 
whose 
total 
annual 
compensation exceeds 
a 
specified threshold, other 
than 
GEB 
members, Group 
Managing 
Directors (GMDs) and Group 
or 
Divisional Vice Chair role 
holders 
who 
are 
granted share-based awards under 
the 
new 
Long-Term 
Incentive 
Plan (LTIP) first granted in 2020. Awards 
generally 
vest in 
equal 
installments after 
two 
and 
three 
years 
following 
grant, 
provided that vesting 
conditions are satisfied. Awards 
granted to 
GEB members 
in 2019 
and prior 
years 
generally 
vest three, 
four and 
five years 
after 
grant. 
EOP awards granted to GEB members and GMDs in 2019 and 
prior 
years, 
as 
well 
as 
EOP 
awards 
granted 
to 
certain 
other 
employees 
will 
only 
vest 
if 
certain 
performance 
measures 
both 
for the Group and the applicable business division are met. 
In 
order 
to 
align 
deferred 
compensation 
of 
certain 
Asset 
Management 
employees 
with 
the 
performance 
of 
the 
investment 
funds 
they 
manage, 
awards 
are 
granted 
to 
such 
employees 
in 
the 
form 
of 
cash-settled 
notional 
investment 
funds. 
The 
amount 
delivered 
depends 
on 
the 
value 
of 
the 
underlying investment funds at the time of vesting. 
Certain 
awards, 
such 
as 
replacement 
awards 
issued 
outside 
the 
normal 
performance 
year 
cycle, 
may 
take 
the 
form 
of 
deferred cash under the EOP plan rules. 
Long-Term 
Incentive 
Plan 
The 
LTIP 
is 
a 
mandatory 
deferred 
share-based 
compensation 
plan 
for 
GEB 
members, 
GMDs 
and 
Group 
or 
Divisional 
Vice 
Chair role holders. 
The 
final 
number 
of 
notional 
shares 
delivered 
at 
vesting 
depends 
on 
two 
equally-weighted 
performance 
metrics: 
reported 
return 
on 
common 
equity 
tier 
1 
capital 
(RoCET1) 
and 
relative 
total 
shareholder 
return 
(rTSR), 
which 
measures 
the 
performance 
of 
the 
UBS 
share 
against 
an 
index 
consisting 
of 
Global 
Systemically 
Important 
Banks 
as 
determined 
by 
the 
Financial Stability Board. 
The 
final 
number of 
shares 
as determined 
at 
the end 
of 
the 
three-year 
performance 
period 
will 
vest 
in 
three 
equal 
installments 
in 
each 
of 
the 
three 
years 
following 
the 
performance period 
for GEB 
members, and 
cliff vest 
in the 
first 
year following the 
performance period for GMDs 
and Vice Chair 
role holders. 
Deferred 
Contingent 
Capital 
Plan (DCCP) 
The 
DCCP 
is 
a 
mandatory 
deferred 
compensation 
plan 
for 
all 
employees whose 
total annual compensation exceeds a 
specified 
threshold. 
DCCP awards take the form of notional additional tier 1 (AT1) 
capital 
instruments, 
which, 
at 
the 
discretion 
of 
UBS, 
can 
be 
settled in 
either a 
cash payment 
or a 
perpetual, marketable 
AT1 
capital instrument. DCCP 
awards vest in 
full after five years, 
and 
up to seven years for certain regulated employees, unless there is 
a trigger event. 
Awards are 
forfeited if 
a viability 
event occurs, 
i.e., if 
FINMA 
notifies 
the 
firm 
in 
writing 
that 
the 
DCCP 
awards 
must 
be 
written down 
to prevent 
an insolvency, 
bankruptcy or 
failure of 
UBS, 
or 
if 
UBS receives 
a 
commitment of 
extraordinary 
support 
from the public sector that is necessary to prevent such an event. 
DCCP 
awards 
are 
also 
written 
down 
for 
GEB 
members 
if 
the 
Group’s 
CET1 
capital 
ratio 
falls 
below 
10% 
and 
for 
all 
other 
employees 
if 
it 
falls 
below 
7%. 
As 
an 
additional 
performance 
condition, 
GEB 
members 
forfeit 
20% 
of 
their 
award 
for 
each 
loss-making year during the vesting period. 
Interest payments 
on DCCP 
awards are 
paid at 
the discretion 
of 
UBS. 
Where 
interest 
payments 
are 
not 
permitted, 
such 
as 
for 
certain 
regulated 
employees, 
the 
DCCP 
award 
reflects 
the 
fair 
value of the granted non-interest-bearing award. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
542 
 
Note 27 
Employee benefits: variable compensation (continued)
Financial advisor variable compensation 
In 
line 
with 
market 
practice 
for 
US 
wealth 
management 
businesses, the 
compensation for 
US financial advisors 
in Global 
Wealth 
Management 
is 
composed 
of 
production 
payout 
and 
deferred 
compensation 
awards. 
Production 
payout 
is 
primarily 
based on compensable revenue. 
Financial advisors 
may also qualify 
for deferred compensation 
awards, which 
generally vest 
over a 
six-year period. 
The awards 
are 
based 
on 
strategic 
performance 
measures, 
including 
production, 
length 
of 
service 
with 
the 
firm 
and 
net 
new 
business. 
Production 
payout 
rates 
and 
deferred 
compensation 
awards 
may 
be 
reduced 
for, 
among 
other 
things, 
errors, 
negligence or carelessness, 
or a failure 
to comply with 
the firm’s 
rules, 
standards, 
practices 
and 
/ 
or 
policies 
and 
/ 
or 
applicable 
laws and regulations. 
Other compensation plans 
Equity Plus Plan 
The 
Equity 
Plus 
Plan 
is 
a 
voluntary 
employee 
share 
purchase 
program 
that allows 
eligible employees 
to purchase 
UBS shares 
at 
market 
price 
and 
receive 
one 
additional 
notional 
share 
for 
every 
three 
shares 
purchased, 
up 
to 
a 
maximum 
annual 
limit. 
Additional shares 
vest after a 
maximum of 
three years, 
provided 
the employee 
remains employed 
with UBS 
and has 
retained the 
purchased shares throughout the holding period. 
Role-based allowances 
Some employees may 
receive a 
role-based allowance 
in addition 
to their base salary. 
This allowance reflects the market 
value of a 
specific 
role 
and 
is 
fixed, 
non-forfeitable 
compensation. 
Unlike 
salary, 
a 
role-based 
allowance 
is 
paid 
only 
as 
long 
as 
the 
employee is in a 
specific role. Role-based allowances 
consist of a 
cash portion and, 
where applicable, a 
blocked UBS share 
award. 
The compensation expense is recognized in the year of grant. 
Discontinued deferred compensation plans 
PartnerPlus 
Through 
performance 
year 
2016, 
financial 
advisor 
strategic 
objective 
awards 
were 
partly 
granted 
under 
the 
PartnerPlus 
deferred cash plan, which included amounts awarded 
by UBS, as 
well 
as 
voluntary 
participant 
contributions. 
Company 
contributions 
and 
voluntary 
contributions 
were 
credited 
with 
interest 
in 
accordance 
with 
the 
terms 
of 
the 
plan, 
or 
upon 
election 
credited 
with 
notional 
earnings 
based 
on 
the 
performance 
of 
various 
mutual 
funds. 
Company 
contributions 
and 
interest 
on 
both 
company 
and 
voluntary 
contributions 
ratably 
vest 
in 
20% 
installments 
6 
to 
10 
years 
following 
grant 
date. 
Company 
contributions 
and 
interest 
on 
notional 
earnings 
on 
both 
company 
and 
voluntary 
contributions 
are 
forfeitable 
under certain circumstances. 
GrowthPlus 
GrowthPlus is a compensation plan for selected financial advisors 
whose 
revenue 
production 
and 
length 
of 
service 
exceeded 
defined 
thresholds 
from 
2010 
through 
2017. 
Awards 
were 
granted 
in 
2010, 
2011, 
2015 
and 
2018. 
The 
awards 
are 
cash-
based and are distributed over seven years, with the exception of 
2018 awards, which are distributed over five years. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
543 
 
Note 27 
Employee benefits: variable compensation (continued) 
 
b) Effect on the income statement 
Effect 
on the 
income 
statement 
for the 
financial 
year and 
future 
periods 
The table 
below 
provides 
information 
about 
compensation 
expenses 
related to 
total variable compensation, including financial advisor 
variable compensation, 
that were 
recognized in the 
financial year 
ended 31 December 
2020, as well as expenses 
that were deferred 
and will be 
recognized 
in the income 
statement 
for 2021 and 
later. 
The majority 
of expenses 
deferred 
to 2021 
and later 
that are 
related 
to 
the 
2020 
performance 
year 
pertain 
to 
awards 
granted 
in 
February 2021. 
The 
total unamortized compensation expense for 
unvested 
share-based 
awards 
granted 
up to 31 
December 
2020 will 
be recognized 
in future periods over 
a weighted average 
period of 
2.9 years. 
During 
the 
third 
quarter 
of 
2020, 
UBS 
AG 
modified 
the 
conditions for 
continued vesting of 
certain outstanding deferred 
compensation awards 
for qualifying 
employees, resulting 
in the 
recognition 
of 
USD 
303 
million 
in 
expenses 
for 
variable 
compensation – performance awards. The full year 
effect was an 
expense of approximately 
USD 240 million.
 
Refer to Note 
1b for 
more information. 
 
 
Variable compensation including financial advisor variable 
compensation 
Expenses recognized in 2020 
Expenses deferred to 2021 and later
1
USD million 
Related to the 
2020 
performance 
year 
Related to prior 
performance 
years 
Total 
Related to the 
2020 
performance 
year 
Related to prior 
performance 
years 
Total 
Non-deferred cash 
 
1,948 
 
(29) 
 
1,920 
 
0 
 
0 
 
0 
Deferred compensation awards 
 
329 
 
704 
 
1,034 
 
734 
 
277 
 
1,011 
of which: Equity Ownership Plan 
 
131 
 
315 
 
446 
 
298 
 
67 
 
365 
of which: Deferred Contingent Capital Plan 
 
108 
 
339 
 
448 
 
271 
 
189 
 
459 
of which: Long-Term Incentive Plan 
 
41 
 
11 
 
52 
 
46 
 
9 
 
55 
of which: Asset Management EOP 
 
49 
 
39 
 
88 
 
120 
 
12 
 
132 
Variable compensation – performance awards 
 
2,278 
 
675 
 
2,953 
 
734 
 
277 
 
1,011 
Variable compensation – other
2
 
109 
 
92 
 
201 
 
176 
 
189 
 
364 
Total variable compensation excluding financial advisor variable compensation 
 
2,387 
 
768 
 
3,155 
 
909 
 
465 
 
1,375 
Financial advisor variable compensation 
 
3,356 
 
233 
 
3,589 
 
350 
 
602 
 
952 
of which: non-deferred cash 
 
3,154 
 
0 
 
3,154 
 
0 
 
0 
 
0 
of which: deferred share-based awards 
 
69 
 
50 
 
119 
 
79 
 
135 
 
214 
of which: deferred cash-based awards 
 
133 
 
183 
 
316 
 
271 
 
467 
 
738 
Compensation commitments with recruited financial advisors
3
 
22 
 
480 
 
502 
 
473 
 
1,682 
 
2,155 
Total FA variable compensation 
 
3,378 
 
713 
 
4,091 
 
822 
 
2,284 
 
3,106 
Total variable compensation including FA variable compensation 
 
5,765 
 
1,481 
 
7,246
4 
 
1,732 
 
2,749 
 
4,481 
1 Estimate as of 
31 December 2020. Actual 
amounts to be expensed 
in future periods may 
vary, e.g., 
due to forfeiture of 
awards. 
2 Comprised of replacement 
payments, forfeiture credits, 
severance payments, 
retention plan 
payments and 
interest expense 
related to 
the Deferred 
Contingent Capital 
Plan. 
3 Reflects 
expenses related 
to compensation 
commitments with 
financial advisors 
entered into 
at the 
time of 
recruitment that are 
subject to 
vesting requirements. 
Amounts reflected 
as deferred expenses 
represent the 
maximum deferred 
exposure as 
of the 
balance sheet 
date. 
4 Includes 
USD 666 
million in 
expenses 
related to share-based compensation 
(performance awards: USD 
498 million; other variable 
compensation: USD 49 million; 
financial advisor compensation: 
USD 119 million). A 
further USD 88 million 
in expenses 
related to share-based 
compensation was recognized 
within other expense 
categories included in 
Note 6 (salaries: 
USD 4 million 
related to role-based 
allowances; social security: 
USD 51 million; 
other personnel 
expenses: USD 34 million related to the Equity Plus Plan). 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
544 
 
Note 27 
Employee benefits: variable compensation (continued) 
Variable compensation including financial advisor variable 
compensation (continued) 
Expenses recognized in 2019 
Expenses deferred to 2020 and later
1
USD million 
Related to the 
2019 
performance 
year 
Related to prior 
performance 
years 
Total 
Related to the 
2019 
performance 
year 
Related to prior 
performance 
years 
Total 
Non-deferred cash 
 
1,706 
 
(24) 
 
1,682 
 
0 
 
0 
 
0 
Deferred compensation awards 
 
287 
 
576 
 
863 
 
413 
 
592 
 
1,005 
of which: Equity Ownership Plan 
 
115 
 
294 
 
410 
 
198 
 
213 
 
412 
of which: Deferred Contingent Capital Plan 
 
109 
 
256 
 
365 
 
166 
 
356 
 
521 
of which: Long-Term Incentive Plan 
 
38 
 
0 
 
38 
 
23 
 
0 
 
23 
of which: Asset Management EOP 
 
25 
 
26 
 
51 
 
26 
 
23 
 
49 
Variable compensation – performance awards 
 
1,993 
 
553 
 
2,545 
 
413 
 
592 
 
1,005 
Variable compensation – other
2
 
140 
 
85 
 
225 
 
115 
 
228 
 
343 
Total variable compensation excluding financial advisor variable compensation 
 
2,133 
 
638 
 
2,770 
 
528 
 
820 
 
1,348 
Financial advisor variable compensation 
 
3,233 
 
268 
 
3,501 
 
197 
 
710 
 
907 
of which: non-deferred cash 
 
3,064 
 
0 
 
3,064 
 
0 
 
0 
 
0 
of which: deferred share-based awards 
 
57 
 
48 
 
106 
 
54 
 
130 
 
183 
of which: deferred cash-based awards 
 
112 
 
219 
 
331 
 
144 
 
580 
 
724 
Compensation commitments with recruited financial advisors
3
 
32 
 
510 
 
542 
 
350 
 
1,617 
 
1,967 
Total FA variable compensation 
 
3,265 
 
778 
 
4,043 
 
548 
 
2,327 
 
2,874 
Total variable compensation including FA variable compensation 
 
5,398 
 
1,416 
 
6,814
4 
 
1,076 
 
3,146 
 
4,222 
1 Estimate as of 31 December 
2019. Actual amounts expensed may 
vary, e.g., 
due to forfeiture of awards. 
2 Comprised of replacement payments, 
forfeiture credits, severance payments, 
retention plan payments 
and interest expense related to 
the Deferred Contingent Capital 
Plan. 
3 Reflects expenses related to 
compensation commitments with financial 
advisors entered into at 
the time of recruitment 
that are subject to 
vesting requirements. Amounts reflected as deferred expenses represent the maximum deferred 
exposure as of the balance sheet date. 
4 Includes USD 595 million in expenses related to share-based compensation 
(performance awards: USD 
448 million; other 
variable compensation: USD 
42 million; financial 
advisor compensation: USD 
106 million). A 
further USD 54 million 
in expenses related 
to share-based compensation 
was recognized within other expense categories included in Note 6 (salaries: USD 
10 million related to role-based allowances; social security: 
USD 23 million; other personnel expenses: USD 22 million related 
to the 
Equity Plus Plan). 
 
 
Variable compensation including financial advisor variable 
compensation (continued) 
Expenses recognized in 2018 
Expenses deferred to 2019 and later
1
USD million 
Related to the 
2018 
performance 
year 
Related to prior 
performance 
years 
Total 
Related to the 
2018 
performance 
year 
Related to prior 
performance 
years 
Total 
Non-deferred cash 
 
1,896 
 
(26) 
 
1,870 
 
0 
 
0 
 
0 
Deferred compensation awards 
 
360 
 
564 
 
924 
 
570 
 
638 
 
1,208 
of which: Equity Ownership Plan 
 
208 
 
299 
 
507 
 
316 
 
238 
 
554 
of which: Deferred Contingent Capital Plan 
 
126 
 
235 
 
361 
 
232 
 
373 
 
605 
of which: Asset Management EOP 
 
25 
 
28 
 
53 
 
22 
 
26 
 
48 
of which: other performance awards 
 
0 
 
2 
 
2 
 
0 
 
1 
 
1 
Variable compensation – performance awards 
 
2,256 
 
538 
 
2,794 
 
570 
 
638 
 
1,208 
Variable compensation – other
2
 
144 
 
75 
 
220 
 
178 
 
264 
 
442 
Total variable compensation excluding financial advisor variable compensation 
 
2,400 
 
613 
 
3,013 
 
748 
 
902 
 
1,650 
Financial advisor variable compensation 
 
3,233 
 
237 
 
3,470 
 
128 
 
639 
 
767 
of which: non-deferred cash 
 
3,089 
 
0 
 
3,089 
 
0 
 
0 
 
0 
of which: deferred share-based awards 
 
51 
 
44 
 
95 
 
52 
 
131 
 
183 
of which: deferred cash-based awards 
 
93 
 
193 
 
286 
 
76 
 
507 
 
584 
Compensation commitments with recruited financial advisors
3
 
33 
 
551 
 
584 
 
357 
 
1,883 
 
2,240 
Total FA variable compensation 
 
3,266 
 
789 
 
4,054 
 
484 
 
2,522 
 
3,006 
Total variable compensation including FA variable compensation 
 
5,666 
 
1,402 
 
7,068
4 
 
1,233 
 
3,424 
 
4,656 
1 Estimate as of 31 December 
2018. Actual amounts expensed may 
vary, e.g., 
due to forfeiture of awards. 
2 Comprised of replacement payments, 
forfeiture credits, severance payments, 
retention plan payments 
and interest expense related to 
the Deferred Contingent Capital 
Plan. 
3 Reflects expenses related to 
compensation commitments with financial 
advisors entered into at 
the time of recruitment that 
are subject to 
vesting requirements. Amounts reflected as deferred expenses represent the maximum deferred 
exposure as of the balance sheet date. 
4 Includes USD 612 million in expenses related to share-based compensation 
(performance awards: USD 507 million; other variable compensation: USD 10 million; financial advisor compensation: USD 95 
million). A further USD 44 million in expenses related to share-based compensation was 
recognized within 
other expense 
categories included 
in Note 
6 (salaries: 
USD 15 
million related 
to role-based 
allowances; social 
security: USD 
7 million; 
other personnel 
expenses: USD 
22 million 
related to 
the 
Equity Plus Plan). 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
545 
 
Note 27 
Employee benefits: variable compensation (continued) 
 
c) Outstanding share-based compensation awards 
Share and performance share awards 
Movements in outstanding share-based awards under the EOP during 2020 and 2019 are provided in the table below. 
The awards presented are granted by UBS AG, but are based on UBS Group AG shares. 
 
Movements in outstanding share-based compensation 
awards 
 
Number of shares 
2020 
Weighted 
average grant 
date fair 
value (USD) 
Number of shares 
2019 
Weighted 
average grant 
date fair 
value (USD) 
Outstanding, at the beginning of the year 
 
90,443 
 
14 
 
201,793 
 
15 
Awarded during the year 
 
19,229 
 
11 
 
29,092 
 
11 
Distributed during the year 
 
(55,114) 
 
14 
 
(140,441) 
 
14 
Forfeited during the year 
 
0 
 
0 
 
0 
 
0 
Outstanding, at the end of the year 
 
54,557 
 
13 
 
90,443 
 
14 
of which: shares vested for accounting purposes 
 
53,216 
 
56,492 
 
 
The 
total 
carrying 
amount 
of 
the 
liability 
related 
to 
cash-settled 
share-based 
awards 
as 
of 
31 
December 
2020 
and 
31 December 
2019 was USD 1 million. 
 
d) Valuation 
UBS share awards 
UBS 
measures 
compensation 
expense 
based 
on 
the 
average 
market 
price of 
the UBS 
share 
on 
the 
grant date 
as 
quoted on 
the 
SIX 
Swiss 
Exchange, 
taking 
into 
consideration 
post-vesting 
sale 
and 
hedge 
restrictions, 
non-vesting 
conditions 
and 
market 
conditions, where 
applicable. The 
fair value 
of the 
share awards 
subject to 
post-vesting sale 
and hedge 
restrictions is 
discounted 
on the basis of 
the duration of the 
post-vesting restriction and is 
referenced to 
the cost 
of purchasing 
an at-the-money 
European 
put option 
for the term 
of the transfer 
restriction. The 
weighted 
average 
discount 
for 
share 
and 
performance 
share 
awards 
granted 
during 
2020 
was approximately 
23.8% 
(2019: 
22.6%) 
of the 
market price 
of the 
UBS share. 
The grant 
date fair 
value 
of notional 
shares without 
dividend entitlements 
also includes 
a 
deduction for 
the present 
value of 
future expected 
dividends to 
be paid between the grant date and distribution. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
546 
 
Note 28 
Interests in subsidiaries and other entities 
 
a) Interests in subsidiaries 
UBS AG 
defines its 
significant subsidiaries 
as those 
entities that, 
either 
individually 
or 
in 
aggregate, 
contribute 
significantly 
to 
UBS AG’s financial 
position or 
results 
of operations, 
based on 
a 
number 
of 
criteria, 
including 
the 
subsidiaries’ 
equity 
and 
their 
contribution 
to 
UBS 
AG’s 
total 
assets 
and 
profit 
or 
loss 
before 
tax, 
in 
accordance 
with 
the 
requirements 
set 
by 
IFRS 
12, 
Swiss 
regulations 
and 
the 
rules 
of 
the 
US 
Securities 
and 
Exchange 
Commission (SEC). 
Individually significant subsidiaries 
The 
table 
belo
w 
list
s
 
UBS 
AG
’s 
individually 
significant 
sub
sidiaries 
as 
of 
31 
December 
2020
. 
Unless 
otherwise 
stated, the subsidiaries listed 
below have share 
capital consisting 
solely 
of 
ordinary 
shares 
that are 
held entirely 
by 
UBS 
AG, and 
the proportion 
of ownership 
interest held 
is equal 
to the 
voting 
rights held by UBS AG. 
The country where the respective registered office is located is 
also the 
principal place 
of business. 
UBS AG 
operates through 
a 
global 
network 
of 
branches 
and 
a 
significant 
proportion 
of 
its 
business 
activity 
is 
conducted 
outside 
Switzerland, 
including 
in 
the UK, the US, Singapore, 
Hong Kong and other countries. 
UBS 
Europe SE 
has branches 
and offices 
in a 
number of 
EU Member 
States, including Germany, Italy, 
Luxembourg, Spain and 
Austria. 
Share capital 
is provided 
in the currency 
of the 
legally registered 
office. 
 
 
 
Individually significant subsidiaries 
of UBS AG as of 31 December 2020
1
Company 
Registered office 
Primary business 
Share capital in million 
Equity interest accumulated in % 
UBS Americas Holding LLC 
Wilmington, Delaware, USA 
Group Functions 
USD 
 
3,150.0
2
 
100.0 
UBS Americas Inc. 
Wilmington, Delaware, USA 
Group Functions 
USD 
 
0.0 
 
100.0 
UBS Asset Management AG 
Zurich, Switzerland 
Asset Management 
CHF 
 
43.2 
 
100.0 
UBS Bank USA 
Salt Lake City, Utah, USA 
Global Wealth Management 
USD 
 
0.0 
 
100.0 
UBS Europe SE 
Frankfurt, Germany 
Global Wealth Management 
EUR 
 
446.0 
 
100.0 
UBS Financial Services Inc. 
Wilmington, Delaware, USA 
Global Wealth Management 
USD 
 
0.0 
 
100.0 
UBS Securities LLC 
Wilmington, Delaware, USA 
Investment Bank 
USD 
 
1,283.1
3
 
100.0 
UBS Switzerland AG 
Zurich, Switzerland 
Personal & Corporate Banking 
CHF 
 
10.0 
 
100.0 
1 Includes direct 
and indirect subsidiaries 
of UBS AG. 
2 Consists of common 
share capital of 
USD 1,000 and non-voting 
preferred share capital 
of USD 3,150,000,000. 
3 Consists of common 
share capital of 
USD 100,000 and non-voting preferred share capital of USD 1,283,000,000. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
547 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
Other subsidiaries 
The 
table 
below 
lists 
other 
direct 
and 
indirect 
subsidiaries 
of 
UBS 
AG 
that 
are 
not 
individually 
significant 
but 
that 
contribute 
to 
UBS AG’s total assets and aggregated profit before 
tax thresholds and are thereby disclosed in 
accordance with the requirements set 
by the SEC. 
 
 
Other subsidiaries of UBS AG as of 31 
December 2020 
Company 
Registered office 
Primary business 
Share capital in million 
Equity interest 
accumulated in % 
UBS Asset Management (Americas) Inc. 
Wilmington, Delaware, USA 
Asset Management 
USD 
 
0.0 
 
100.0 
UBS Asset Management (Hong Kong) Limited 
Hong Kong, Hong Kong 
Asset Management 
HKD 
 
254.0 
 
100.0 
UBS Asset Management Life Ltd 
London, United Kingdom 
Asset Management 
GBP 
 
15.0 
 
100.0 
UBS Asset Management Switzerland AG 
Zurich, Switzerland 
Asset Management 
CHF 
 
0.5 
 
100.0 
UBS Asset Management (UK) Ltd 
London, United Kingdom 
Asset Management 
GBP 
 
125.0 
 
100.0 
UBS Business Solutions US LLC 
Wilmington, Delaware, USA 
Group Functions 
USD 
 
0.0 
 
100.0 
UBS Credit Corp. 
Wilmington, Delaware, USA 
Global Wealth Management 
USD 
 
0.0 
 
100.0 
UBS (France) S.A. 
Paris, France 
Global Wealth Management 
EUR 
 
133.0 
 
100.0 
UBS Fund Management (Luxembourg) S.A. 
Luxembourg, Luxembourg 
Asset Management 
EUR 
 
13.0 
 
100.0 
UBS Fund Management (Switzerland) AG 
Basel, Switzerland 
Asset Management 
CHF 
 
1.0 
 
100.0 
UBS (Monaco) S.A. 
Monte Carlo, Monaco 
Global Wealth Management 
EUR 
 
49.2 
 
100.0 
UBS Realty Investors LLC 
Boston, Massachusetts, USA 
Asset Management 
USD 
 
9.0 
 
100.0 
UBS Securities Australia Ltd 
Sydney, Australia 
Investment Bank 
AUD 
 
0.3
1
 
100.0 
UBS Securities Hong Kong Limited 
Hong Kong, Hong Kong 
Investment Bank 
HKD 
 
3,154.2 
 
100.0 
UBS Securities Japan Co., Ltd. 
Tokyo, Japan 
Investment Bank 
JPY 
 
32,100.0 
 
100.0 
UBS Securities Pte. Ltd. 
Singapore, Singapore 
Investment Bank 
SGD 
 
420.4 
 
100.0 
1 Includes a nominal amount relating to redeemable preference shares. 
 
 
Consolidated structured entities 
UBS 
AG consolidates 
a 
structured 
entity (an 
SE) if 
it 
has power 
over 
the 
relevant 
activities 
of 
the 
entity, 
exposure 
to 
variable 
returns 
and 
the 
ability 
to 
use 
its 
power 
to 
affect 
its 
returns. 
Consolidated SEs include certain 
investment funds, securitization 
vehicles 
and 
client 
investment 
vehicles. 
UBS 
AG 
has 
no 
individually significant subsidiaries that are SEs. 
In 2020 and 2019, UBS AG 
did not enter into any contractual 
obligation 
that 
could 
require 
UBS 
AG
 
to 
provide 
financial 
support to consolidated SEs. In addition, UBS AG did not 
provide 
support, 
financial or 
otherwise, to 
a consolidated 
SE when 
UBS 
AG was 
not contractually 
obligated to 
do so, 
nor does 
UBS AG 
have any 
intention to 
do so 
in the 
future. Furthermore, 
UBS AG 
did 
not 
provide 
support, 
financial 
or 
otherwise, 
to 
a 
previously 
unconsolidated 
SE 
that 
resulted 
in 
UBS AG 
controlling 
the 
SE 
during the reporting period. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
548 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
 
b) Interests in associates and joint ventures 
As 
of 
31 
December 
2020 
and 
2019, 
no 
associate 
or 
joint 
venture 
was individually 
material 
to 
UBS 
AG. 
In 
addition, 
there 
were 
no 
significant 
restrictions 
on 
the 
ability 
of 
associates 
or 
joint 
ventures 
to transfer 
funds to 
UBS AG 
or its 
subsidiaries in 
the form 
of cash 
dividends or 
to repay 
loans or 
advances made. 
There 
were 
no 
quoted market 
prices 
for 
any associates 
or 
joint 
ventures of UBS AG. 
In the third 
quarter of 2020, 
UBS AG completed 
the sale of 
a 
51.2% 
stake 
in 
Fondcenter 
AG 
to 
Clearstream
 
and 
deconsolidated 
the 
entity 
in 
accordance 
with 
IFRS 
10, 
Consolidated 
Financial 
Statements
. 
The 
retained 
minority 
shareholding of 
48.8% is 
accounted for 
as an 
investment in 
an 
associate
 
with 
a 
carrying 
amount 
of 
USD
 
399 
million 
as 
of 
31 December 2020. 
›
 
Refer to Note 29 for more information 
 
 
Investments in associates and joint ventures 
USD million 
2020 
2019 
Carrying amount at the beginning of the year 
 
1,051 
 
1,099 
Additions
1
 
388 
 
0 
Disposals 
 
0 
 
0 
Share of comprehensive income 
 
83 
 
25 
of which: share of net profit
2
 
84 
 
46 
of which: share of other comprehensive income
3
 
(1) 
 
(21) 
Share of changes in retained earnings 
 
(40) 
 
0 
Dividends received 
 
(33) 
 
(83) 
Impairment 
 
0 
 
(1) 
Foreign currency translation 
 
108 
 
11 
Carrying amount at the end of the year 
 
1,557 
 
1,051 
of which: associates 
 
1,513 
 
1,010 
of which: SIX Group AG, Zurich
4
 
965 
 
887 
of which: Clearstream Fund Centre AG, Zurich
1
 
399 
of which: other associates 
 
150 
 
123 
of which: joint ventures 
 
44 
 
41 
1 On 30 September 2020, UBS AG completed 
the sale of a 51.2% stake 
in Fondcenter AG to Clearstream and 
deconsolidated the entity in accordance with IFRS 
10, Consolidated Financial Statements. The 
retained 
minority shareholding of 48.8% is accounted 
for as an associate and increased 
the investments in associates by USD 
385 million upon completion of 
the transaction. Refer to Note 
29 for more information. 
2 For 
2020, consists of 
USD 64 million from 
associates and USD 
19 million from 
joint ventures. 
For 2019, 
consists of USD 28 
million from associates 
and USD 18 
million from joint 
ventures. 
3 For 2020, 
consists of 
negative USD 1 million from associates. 
For 2019, consists 
of negative USD 22 million from 
associates and USD 1 million from 
joint ventures. 
4 In 2020, UBS AG’s 
equity interest amounts to 17.31%. 
UBS AG is 
represented on the Board of Directors. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
549 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
 
c) Interests in unconsolidated structured entities 
UBS AG is 
considered to sponsor 
another entity if, in 
addition to 
ongoing 
involvement 
with 
the 
entity, 
it 
had 
a 
key 
role 
in 
establishing 
that 
entity 
or 
in 
bringing 
together 
relevant 
counterparties 
for 
the 
transaction 
facilitated 
by 
the 
entity. 
During 2020, UBS AG 
sponsored the creation 
of various SEs and 
interacted 
with 
a 
number 
of 
non-sponsored 
SEs, 
including 
securitization 
vehicles, 
client 
vehicles 
and 
certain 
investment 
funds, that UBS AG did not consolidate as of 31 December 2020 
because it did not control these entities. 
The table below presents 
UBS AG’s interests in and maximum 
exposure 
to 
loss 
from 
unconsolidated 
SEs 
as 
well 
as 
the 
total 
assets 
held 
by 
the 
SEs 
in 
which 
UBS 
AG 
had 
an 
interest 
as 
of 
year-end, 
except 
for 
investment 
funds 
sponsored 
by 
third 
parties, for which the carrying amount of UBS AG’s interest as of 
year-end has been disclosed.
 
 
 
Interests in unconsolidated structured entities 
31.12.20 
USD million, except where indicated 
Securitization 
vehicles 
Client 
vehicles 
Investment 
funds 
Total 
Maximum 
exposure to loss
1
Financial assets at fair value held for trading 
 
375 
 
131 
 
7,595 
 
8,101 
 
8,101 
Derivative financial instruments 
 
6 
 
49 
 
158 
 
213 
 
211 
Loans and advances to customers 
 
179 
 
179 
 
179 
Financial assets at fair value not held for trading 
 
35 
 
1
2 
 
73 
 
109 
 
109 
Financial assets measured at fair value through other comprehensive 
income 
 
6,624 
 
6,624 
 
6,624 
Other financial assets measured at amortized cost 
 
0
2 
 
0 
 
250 
Total assets 
 
416
3 
 
6,805 
 
8,005 
 
15,227 
Derivative financial instruments 
 
3
4 
 
11 
 
376 
 
390 
 
0 
Total liabilities 
 
3 
 
11 
 
376 
 
390 
Assets held by the unconsolidated structured entities in which UBS had 
an interest 
(USD billion) 
 
39
5 
 
136
6 
 
484
7 
31.12.19 
USD million, except where indicated 
Securitization 
vehicles 
Client 
vehicles 
Investment 
funds 
Total 
Maximum 
exposure to loss
1
Financial assets at fair value held for trading 
 
462 
 
130 
 
5,874 
 
6,466 
 
6,466 
Derivative financial instruments 
 
9 
 
9 
 
36 
 
55 
 
53 
Loans and advances to customers 
 
174 
 
174 
 
174 
Financial assets at fair value not held for trading 
 
81 
 
8
2 
 
62 
 
151 
 
902 
Financial assets measured at fair value through other comprehensive 
income 
 
3,955 
 
3,955 
 
3,955 
Other financial assets measured at amortized cost 
 
335 
 
16
2 
 
351 
 
1,372 
Total assets 
 
888
3 
 
4,118 
 
6,147 
 
11,152 
Derivative financial instruments 
 
2
4 
 
225 
 
324 
 
552 
 
1 
Total liabilities 
 
2 
 
225 
 
324 
 
552 
Assets held by the unconsolidated structured entities in which UBS had 
an interest 
(USD billion) 
 
55
5 
 
73
6 
 
413
7 
1 For 
the 
purpose 
of this 
disclosure, 
maximum 
exposure 
to 
loss amounts 
do not 
consider 
the 
risk-reducing 
effects 
of collateral 
or other 
credit 
enhancements. 
2 Represents 
the 
carrying 
amount 
of loan 
commitments. The maximum exposure 
to loss for these instruments is equal 
to the notional amount. 
3 As of 31 December 2020, USD 0.2 
billion of the USD 0.4 billion (31 
December 2019: USD 0.6 billion of the 
USD 0.9 billion) 
was held 
in Group 
Functions – 
Non-core and 
Legacy Portfolio. 
4 Comprised 
of credit 
default swap 
liabilities and 
other swap 
liabilities. The 
maximum exposure 
to loss 
for credit 
default swap 
liabilities is 
equal to 
the sum 
of the 
negative carrying 
amount and 
the notional 
amount. For 
other swap 
liabilities, no 
maximum exposure 
to loss 
is reported. 
5 Represents 
the principal 
amount outstanding. 
6 Represents the 
market value 
of total 
assets. 
7 Represents 
the net 
asset value 
of the 
investment funds 
sponsored by 
UBS and 
the carrying 
amount of 
UBS’s interests 
in the 
investment funds 
not sponsored 
by UBS. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
550 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
UBS 
AG 
retains 
or 
purchases 
interests 
in 
unconsolidated 
SEs 
in 
the form 
of direct 
investments, financing, 
guarantees, letters 
of credit, derivatives and through management contracts. 
UBS AG’s maximum 
exposure to loss is 
generally equal to the 
carrying 
amount
 
of 
UBS 
AG
’s 
interest 
in 
the 
SE, 
with 
the 
exception 
of 
guarantees, letters 
of 
credit and 
credit 
derivatives, 
for 
which 
the 
contract’s 
notional 
amount, 
adjusted 
for 
losses 
already 
incurred, 
represents 
the 
maximum 
loss 
that 
UBS 
AG 
is 
exposed to. In 
addition, the current 
fair value of 
derivative swap 
instruments with a 
positive replacement value 
only, such as 
total 
return 
swaps, 
is 
presented 
as 
the 
maximum 
exposure 
to 
loss. 
Risk 
exposure 
for 
these 
swap 
instruments 
could 
change 
over 
time with market movements. 
The 
maximum exposure 
to loss 
disclosed in 
the table 
on the 
previous 
page 
does 
not 
reflect 
UBS 
AG’s 
risk 
management 
activities, 
including 
effects 
from 
financial 
instruments 
that 
may 
be 
used 
to 
economically 
hedge 
the 
risks 
inherent 
in 
the 
unconsolidated 
SE 
or 
the 
risk-reducing 
effects 
of 
collateral 
or 
other credit enhancements. 
In 2020 and 
2019, UBS AG 
did not provide 
support, financial 
or 
otherwise, 
to 
an 
unconsolidated 
SE 
when 
not 
contractually 
obligated to do so, nor does UBS AG have any intention to do so 
in the future. 
In 
2020 
and 
2019, 
income 
and 
expenses 
from 
interests 
in 
unconsolidated 
SEs 
primarily 
resulted 
from 
mark-to-market 
movements 
recognized 
in 
Other 
net 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through 
profit 
of 
loss
, 
which 
have 
generally 
been 
hedged 
with 
other 
financial 
instruments, 
as 
well 
as 
fee 
and 
commission 
income 
received 
from UBS- 
sponsored funds. 
Interests in securitization vehicles 
As of 
31 December 2020 
and 31 December 2019, 
UBS AG 
held 
interests, 
both 
retained 
and 
acquired, 
in 
various 
securitization 
vehicles, 
half of 
which 
are 
held within 
Group 
Functions – 
Non-
core 
and 
Legacy 
Portfolio. 
The 
Investment 
Bank 
also 
retained 
interests 
in 
securitization 
vehicles 
related 
to 
financing, 
underwriting, secondary market and derivative trading activities. 
The numbers 
outlined in 
the table 
on the previous 
page may 
differ 
from 
the 
securitization 
positions 
presented 
in 
the 
31 December 
2020 
Pillar 
3 
report 
under 
“Pillar 3 
disclosures” 
at 
ubs.com/investors,
 
for the 
following 
reasons: 
(i) exclusion 
of 
synthetic 
securitizations 
transacted 
with 
entities 
that 
are 
not 
SEs and 
transactions 
in which 
UBS AG 
did not 
have an 
interest 
because 
it did 
not absor 
b 
any risk 
; 
(ii) a 
different 
measurement 
basis 
in 
certain 
cases 
(e.g., 
IFRS 
carrying 
amount 
within 
the 
previous 
table 
compared 
with 
net 
exposure 
amount 
at 
default 
for 
Pillar
 
3 
disclosures)
;
 
and 
(iii) 
different 
classification 
of 
vehicles 
viewed 
as 
sponsored 
by 
UBS 
AG 
versus 
sponsored 
by 
third parties. 
›
 
Refer to the 31 December 2020 Pillar 3 
report under “Pillar 3 
disclosures” at 
ubs.com/investors 
for more information 
Interests in client vehicles 
Client vehicles are 
established predominantly for 
clients to invest 
in specific assets or risk 
exposures. As of 31 December 2020 
and 
31 December 2019, 
UBS AG 
retained interests 
in client 
vehicles 
sponsored by 
UBS and 
third parties 
that relate 
to financing 
and 
derivative 
activities, 
and 
to 
hedge 
structured 
product 
offerings. 
Included 
within 
these 
investments 
are 
securities 
guaranteed 
by 
US government agencies. 
Interests in investment funds 
Investment funds have 
a collective investment 
objective, and are 
managed by 
an investment 
manager. 
UBS AG 
holds interests 
in 
a 
number 
of 
investment 
funds, 
primarily 
resulting 
from 
seed 
investments or in order to 
hedge structured product offerings. 
In 
addition 
to 
the 
interests 
disclosed 
in 
the 
table 
on 
the 
previous 
page, UBS 
AG manages 
the assets of 
various pooled investment 
funds and 
receives fees 
that are 
based, in 
whole or 
part, on 
the 
net 
asset 
value 
of 
the 
fund 
and 
/ 
or 
the 
performance 
of 
the 
fund. 
The 
specific 
fee 
structure 
is 
determined 
on 
the 
basis 
of 
various market factors 
and considers the 
nature of 
the fund and 
the 
jurisdiction 
of 
incorporation
,
 
as 
well 
as 
fee 
schedules 
negotiated with clients. These fee contracts 
represent an interest 
in 
the 
fund 
as 
they 
align 
UBS 
AG’s 
exposure 
with 
investors, 
providing 
a variable 
return that 
is based 
on the 
performance of 
the 
entity. 
Depending 
on 
the 
structure 
of 
the 
fund, 
these 
fees 
may be collected 
directly from 
the fund assets 
and / or 
from the 
investors. Any amounts 
due are 
collected on a 
regular basis 
and 
are generally 
backed by 
the assets 
of the 
fund. UBS 
AG did 
not 
have 
any 
material 
exposure 
to 
loss 
from 
these 
interests 
as 
of 
31 December 
2020 
or 
as 
of 
31 
December 
2019. 
The 
total 
net 
asset 
value 
of 
the 
funds 
sponsored 
by 
UBS 
are 
included 
in 
the 
table on the previous page. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
551 
 
Note 28 
Interests in subsidiaries and other entities (continued) 
Sponsored unconsolidated structured entities in which UBS did 
not have an interest 
For 
several 
sponsored 
SEs, 
no 
interest 
was 
held 
by 
UBS 
AG 
at 
year-end. 
However, 
during 
the 
respective 
reporting 
period 
UBS 
AG 
transferred 
assets, 
provided 
services 
and 
held 
instruments 
that 
did 
not 
qualify 
as 
an 
interest 
in 
these 
sponsored 
SEs, 
and 
accordingly 
earned 
income 
or 
incurred 
expenses 
from 
these 
entities. 
The 
table 
below 
presents 
the 
income 
earned 
and 
expenses incurred directly 
from these entities 
during the year, 
as 
well 
as 
corresponding 
asset 
information. 
The 
table 
does 
not 
include 
income 
earned 
and 
expenses 
incurred 
from 
risk 
management 
activities, 
including 
income 
and 
expenses 
from 
financial 
instruments 
used 
to 
economically 
hedge 
instruments 
transacted with the unconsolidated SEs. 
The 
majority of 
the fee 
income arose 
from investment 
funds 
that are 
sponsored and 
administrated by 
UBS AG, but 
managed 
by 
third 
parties. 
As 
UBS 
AG 
does 
not 
provide 
any 
investment 
management services, UBS AG 
was not exposed to 
risk from the 
performance of 
these entities 
and was 
therefore deemed 
not to 
have an interest in them. In certain structures, the fees receivable 
may be 
collected directly 
from the 
investors and 
have therefore 
not been included in the table below. 
UBS 
AG
 
also 
recorde
d 
other 
net 
income 
from 
financial 
instruments 
measured 
at 
fair 
value 
through 
profit 
or 
loss 
from 
mark-to-market 
movements 
arising 
primarily 
from 
derivatives, 
such 
as 
interest 
rate 
and 
currency 
swaps
,
 
as 
well 
as 
credit 
derivatives, 
through 
which 
UBS 
AG 
purchases 
protection, 
and 
financial liabilities 
designated at 
fair value, 
which do 
not qualify 
as interests because UBS AG does 
not absorb variability from the 
performance of the entity. Total income reported does not reflect 
economic hedges 
or other mitigating 
effects from UBS 
AG’s risk 
management activities. 
During 
2020, 
UBS 
AG and 
third 
parties 
did 
not 
transfer 
any 
assets 
into 
sponsored 
securitization 
vehicles 
created 
in 
the 
year 
(2019: 
USD 1 
billion 
and 
USD 1 
billion, 
respectively). 
UBS 
AG 
and third 
parties transferred 
assets, alongside 
deposits and 
debt 
issuances, 
of 
USD 0 
billion 
and 
USD 9 
billion, 
respectively, 
into 
sponsored client vehicles created in 
the year (2019: USD 0 billion 
and USD 1 billion, respectively). For 
sponsored investment funds, 
transfers 
arose 
during 
the 
period 
as 
investors 
invested 
and 
redeemed 
positions, 
thereby 
changing 
the 
overall 
size 
of 
the 
funds, which, when combined with 
market movements, resulted 
in a total 
closing net asset value 
of USD 37 billion 
(31 December 
2019: USD 42 billion). 
 
 
Sponsored unconsolidated structured entities 
in which UBS did not have an interest at year-end 
As of or for the year ended 
31.12.20 
USD million, except where indicated 
Securitization 
vehicles 
Client 
vehicles 
Investment 
funds 
Total 
Net interest income 
 
1 
 
12 
 
2 
 
15 
Net fee and commission income 
 
1 
 
58 
 
60 
Other net income from financial instruments measured 
at fair value through profit or loss 
 
0 
 
17 
 
(15) 
 
2 
Total income 
 
1 
 
30 
 
45 
 
76 
Asset information (USD billion) 
 
0
1 
 
9
2 
 
37
3 
As of or for the year ended 
31.12.19 
USD million, except where indicated 
Securitization 
vehicles 
Client 
vehicles 
Investment 
funds 
Total 
Net interest income 
 
(1) 
 
0 
 
(1) 
 
(2) 
Net fee and commission income 
 
13 
 
50 
 
63 
Other net income from financial instruments measured 
at fair value through profit or loss 
 
19 
 
(18) 
 
9 
 
11 
Total income 
 
19 
 
(5) 
 
58 
 
72 
Asset information (USD billion) 
 
2
1 
 
1
2 
 
42
3 
1 Represents the amount of assets transferred to the respective securitization vehicles. 
2 Represents the amount of assets transferred to the respective client vehicles. 
3 Represents the total net asset value of the 
respective investment funds. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
552 
 
Note 29 
Changes in organization and acquisitions and disposals of subsidiaries and businesses 
Disposals of subsidiaries and businesses 
Sale of a majority stake in Fondcenter AG 
In 
the 
third 
quarter 
of 
2020, 
UBS 
AG 
completed 
the 
sale 
of 
a 
51.2% stake 
in 
Fondcenter AG 
to 
Clearstream, 
Deutsche Börse 
Group’s 
post-trade 
services 
provider, 
and 
deconsolidated 
the 
entity
 
in 
accordance 
with 
IFRS 
10, 
Consolidated 
Financial 
Statements
. 
The 
sale 
resulted 
in 
a 
post-tax 
gain 
of 
USD 631 
million, which 
was recognized 
in 
Other income
. Fondcenter 
AG 
has 
been 
combined 
with 
Clearstream’s 
Fund 
Desk 
business 
to 
form 
Clearstream 
Fund 
Centre.
 
UBS 
AG 
retains 
a 
48.8% 
shareholding in 
the entity and accounts 
for this minority 
interest 
as 
an 
investment 
in 
an 
associate 
with 
a 
carrying 
amount 
of 
USD 399 million as of 31 December 2020. 
Banking partnership with Banco do Brasil 
In the 
third quarter 
of 2020, 
UBS AG completed 
the transaction 
with Banco do Brasil, establishing a 
strategic investment banking 
partnership 
in 
Brazil 
and 
selected 
countries 
in 
South 
America. 
The 
partnership 
was 
established 
by 
UBS 
AG 
issuing 
a 
49.99% 
stake 
in 
UBS 
Brasil 
Serviços 
in 
exchange 
for 
exclusive 
access 
to 
Banco 
do 
Brasil’s 
corporate 
clients. 
This 
resulted 
in 
UBS AG 
recognizing 
an 
intangible 
asset 
of 
USD 147 
million. 
UBS AG 
retains 
a 
controlling 
interest 
of 
50.01% 
in 
UBS 
Brasil 
Serviços 
and 
continues 
to 
consolidate 
the 
entity. 
Upon 
completion, 
UBS AG’s 
equity 
attributable 
to 
non-controlling 
interests 
increased 
by 
USD 115 
million, 
with 
no 
material 
effect 
on 
UBS AG’s equity attributable to shareholders. 
Strategic partnership with Sumitomo Mitsui Trust Holdings 
In 
2019, 
UBS 
AG 
entered 
into 
a 
strategic 
wealth 
management 
partnership 
in 
Japan 
with 
Sumitomo 
Mitsui Trust 
Holdings, Inc. 
(SuMi 
Trust 
Holdings). 
In 
January 
2020, 
the 
first 
phase 
was 
launched, with operations 
commencing in the 
newly established 
joint venture, UBS SuMi TRUST Wealth 
Advisory, 
which is owned 
equally by 
UBS Securities 
Japan and 
SuMi Trust 
Holdings and 
is 
accounted 
for 
as 
an 
investment 
in 
a 
joint 
venture 
by 
UBS AG. 
UBS AG and SuMi Trust 
Holdings have also started offering 
each 
other’s products and services to their respective current clients. 
The second 
phase of the 
partnership is expected 
to launch in 
the second 
half of 
2021 with 
the establishment 
of a 
new entity 
which will 
be 51% 
owned and 
controlled by 
UBS AG, 
requiring 
UBS 
AG 
to 
consolidate 
this 
entity. 
UBS 
AG 
does 
not 
expect 
a 
material effect on shareholders’ equity upon closing. 
Sale of wealth management business in Austria in 2021 
In 
December 
2020, 
UBS 
AG 
signed 
an 
agreement 
to 
sell 
its 
domestic 
wealth 
management 
business 
in 
Austria 
to 
LGT. 
The 
agreement 
includes 
the 
transition 
of 
employees, 
client 
relationships, 
products 
and services 
of 
the 
wealth management 
business of 
UBS Austria. 
The transaction 
is subject 
to customary 
closing conditions and is expected to close in the third quarter of 
2021. UBS AG expects 
to record a 
pre-tax gain of 
approximately 
USD 0.1 billion upon closing of the transaction. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
553 
 
Note 30 
Finance lease receivables 
UBS 
AG 
acts 
as 
a 
lessor 
and 
leases 
a 
variety 
of 
assets 
to 
third 
parties 
under 
finance 
leases, 
such 
as 
industrial 
equipment 
and 
aircraft. 
At the 
end of 
the respective 
lease term, 
assets may 
be 
sold to 
third parties 
or further leased. 
Lessees may participate 
in 
any 
sales 
proceeds 
achieved. 
Lease 
payments 
cover 
the 
cost of 
the assets (net 
of their residual 
value), as well as 
financing costs. 
As 
of 
31 December 
2020, 
unguaranteed 
residual 
values 
of 
USD 185 million (31 December 2019: USD 246 million) had been 
accrued. 
The 
ECL 
stage 3 
allowance 
for 
uncollectible 
minimum 
lease 
payments 
receivable 
was 
USD
 
7
 
million 
(31
 
December 
2019: 
USD 6 
million). 
No 
contingent 
rents 
were 
received 
in 
2020. 
Amounts in 
the table 
below are 
disclosed on 
a gross 
basis. The 
finance 
lease 
receivables 
in 
Note 
14a 
of 
USD 1,447 
million 
are 
presented net of expected credit loss allowances. 
 
 
 
Lease receivables 
USD million 
31.12.20 
Total minimum lease 
payments 
Unearned finance 
income 
Present value 
2021 
 
450 
 
25 
 
426 
2022–2025 
 
856 
 
31 
 
825 
Thereafter 
 
215 
 
4 
 
210 
Total 
 
1,521 
 
60 
 
1,461 
USD million 
31.12.19 
Total minimum lease 
payments 
Unearned finance 
income 
Present value 
2020 
 
448 
 
31 
 
417 
2021–2024 
 
874 
 
52 
 
822 
Thereafter 
 
221 
 
6 
 
215 
Total 
 
1,544 
 
89 
 
1,455 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
554 
 
Note 31 
Related parties 
UBS 
AG 
defines 
related 
parties 
as 
associates 
(entities 
that 
are 
significantly influenced 
by UBS), 
joint ventures 
(entities in 
which 
UBS 
shares 
control 
with 
another 
party), 
post
-
employment 
benefit 
plans 
for 
UBS
 
AG
 
employees, 
key 
management 
personnel, close 
family members 
of key 
management personnel 
and 
entities 
that 
are, 
directly 
or 
indirectly, 
controlled 
or 
jointly 
controlled 
by 
key 
management 
personnel 
or 
their 
close 
family 
members. Key management 
personnel is defined 
as members of 
the Board of Directors (BoD) and Executive Board (EB). 
 
a) Remuneration of key management personnel 
The 
Chairman of 
the 
BoD 
has a 
specific 
management employment 
contract and 
receives 
pension 
benefits upon 
retirement. 
Total 
remuneration of the Chairman of the BoD and all EB members is included in the table below. 
 
 
Remuneration of key management 
personnel 
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.18 
Base salaries and other cash payments
1
 
31 
 
30 
 
25 
Incentive awards – cash
2
 
17 
 
13 
 
14 
Annual incentive award under DCCP 
 
26 
 
20 
 
21 
Employer’s contributions to retirement benefit plans 
 
2 
 
2 
 
3 
Benefits in kind, fringe benefits (at market value) 
 
1 
 
1 
 
2 
Equity-based compensation
3
 
45 
 
34 
 
38 
Total 
 
122 
 
101 
 
102 
Total (CHF million)
4
 
115 
 
101 
 
100 
1 May include role-based allowances in line with market practice 
and regulatory requirements. 
2 The cash portion may also include blocked 
shares in line with regulatory requirements. 
3 Compensation expense 
is based 
on the 
share price 
on grant 
date taking 
into account 
performance conditions. 
Refer to 
Note 27 
for more 
information. For 
EB members, 
equity-based compensation 
for 2020 
and 2019 
was entirely 
composed of LTIP 
awards and 
equity-based compensation 
for 2018 
was entirely 
composed of 
EOP awards. 
For the 
Chairman of the 
BoD, the 
equity-based compensation 
for 2020, 
2019 and 
2018 was 
entirely 
composed of UBS shares. 
4 Swiss franc amounts disclosed represent the 
respective US dollar amounts translated at 
the applicable performance award currency exchange 
rates (2020: USD / CHF 0.94; 
2019: USD 
/ CHF 0.99; 2018: USD / CHF 0.98) 
 
 
The independent members 
of the BoD 
do not have 
employment 
or 
service 
contracts 
with 
UBS 
AG, 
and 
thus 
are 
not 
entitled 
to 
benefits upon termination 
of their service 
on the BoD. 
Payments 
to these 
individuals for their 
services as external 
board members 
amounted to USD 7.0 million 
(CHF 6.6 million) in 2020, 
USD 7.3 
million 
(CHF 7.3 
million) 
in 
2019 
and 
USD 7.6 
million 
(CHF 7.4 
million) in 2018. 
 
b) Equity holdings of key management personnel 
Equity holdings of key management personnel
1
31.12.20 
31.12.19 
Number of shares held by members of the BoD, EB and parties closely linked to them
2
 
4,956,640 
 
6,609,848 
1 No options were held in 2020 and 
2019 by non-independent menbers of the BoD 
and any GEB member or any of 
its related parties. 
2 Excludes shares granted under variable 
compensation plans with forfeiture 
provisions. 
 
 
Of the share totals above, no shares were held by close family 
members of 
key management 
personnel on 
31 December 2020 
and 31 December 2019. No shares were 
held by entities that are 
directly 
or 
indirectly 
controlled 
or 
jointly 
controlled 
by 
key 
management 
personnel 
or 
their 
close 
family 
members 
on 
31 December 2020 and 
31 December 2019. As 
of 31 December 
2020, no member 
of the BoD or 
EB was the 
beneficial owner of 
more than 1% of UBS Group AG’s shares. 
 
 

 
 
 
 
 
 
 
 
 
 
 
555 
 
Note 31 
Related parties (continued) 
 
c) Loans, advances and mortgages to key management personnel 
The non-independent members 
of the BoD and 
EB members are 
granted 
loans, 
fixed 
advances 
and 
mortgages 
in 
the 
ordinary 
course 
of 
business 
on 
substantially 
the 
same 
terms 
and 
conditions 
that 
are 
available 
to 
other 
employees, 
including 
interest 
rates 
and 
collateral, 
and 
neither 
involve 
more 
than 
the 
normal 
risk 
of 
collectability 
nor 
contain 
any 
other 
unfavorable 
features 
for 
the 
firm. 
Independent 
BoD 
members 
are 
granted 
loans 
and 
mortgages 
in 
the 
ordinary 
course 
of 
business 
at 
general market conditions. 
Movements in the 
loan, advances and 
mortgage balances are 
as follows. 
 
 
Loans, advances and mortgages to key management 
personnel
1
USD million, except where indicated 
2020 
2019 
Balance at the beginning of the year 
 
23 
 
28 
Additions 
 
13 
 
6 
Reductions 
 
(5) 
 
(11) 
Balance at the end of the year
2
 
31 
 
23 
Balance at the end of the year (CHF million)
2, 3
 
28 
 
22 
1 All loans are secured loans. 
2 There were no unused uncommitted credit facilities as of 31 December 
2020 and 31 December 2019. 
3 Swiss franc amounts disclosed represent the respective US dollar amounts 
translated at the relevant year-end closing exchange rate. 
 
d) Other related-party transactions with entities controlled by key management personnel 
In 2020 
and 2019, 
UBS AG 
did not 
enter into 
transactions with 
entities 
that 
are 
directly 
or 
indirectly 
controlled 
or 
jointly 
controlled 
by 
UBS
 
AG
’s 
key 
mana
gement 
personnel 
or 
their
 
close 
family 
members
 
and 
as 
of 
31
 
December 
2020
, 
31
 
December 
201
9
 
and 
31
 
December 
201
8
, 
th
ere 
were 
no 
outstanding balances 
related to 
such transactions. 
Furthermore, 
in 
2020
 
and 
201
9
, 
entities 
controlled 
by 
key 
management 
personnel did 
not sell 
any goods 
or provide 
any services 
to UBS 
AG, 
and 
therefore 
did 
not 
receive 
any 
fees 
from 
UBS 
AG. 
UBS 
AG 
also 
did 
not 
provide 
services 
to 
such 
entities 
in 
2020 
and 
2019, and therefore also received no fees. 
 
 
 

Consolidated financial statements | UBS AG consolidated financial statements

556

Note 31

Related parties (continued)

e) Transactions with associates and joint ventures

Loans to and outstanding receivables from associates

and joint ventures

USD million

2020

2019

Carrying amount at the beginning of the year

982

829

Additions

527

145

Reductions

(1,001)

(5)

Foreign currency translation

123

Carrying amount at the end of the year

630

982

of which: unsecured loans and receivables

621

971

Other transactions with associates and

joint ventures

As of or for the year ended

USD million

31.12.20

31.12.19

Payments to associates and joint ventures for goods and services

received

139

124

Fees received for services provided to associates and joint ventures

128

Liabilities to associates and joint ventures

101

Commitments and contingent liabilities to associates

and joint ventures

1,598

›

Refer to Note 28 for an overview of investments

in associates and joint ventures

f) Receivables and payables from / to UBS Group AG and other subsidiaries of UBS Group AG

USD million

31.12.20

31.12.19

Receivables

Loans and advances to customers

1,470

1,255

Financial assets at fair value held for trading

180

Other financial assets measured at amortized cost

Payables

Customer deposits

3,324

2,314

Funding from UBS Group AG and its subsidiaries

53,979

47,866

Other financial liabilities measured at amortized cost

1,820

1,829

Other financial liabilities designated at fair value

1,375

217

1 Represents funding recognized from UBS Group AG and its subsidiaries that is designated at fair value.

Refer to Note 19b for more information.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
557 
 
Note 32 
Invested assets and net new money 
Invested assets 
Invested 
assets 
consist 
of 
all 
client 
assets 
managed 
by 
or 
deposited with UBS 
AG for investment 
purposes. Invested assets 
include 
managed 
fund 
assets, 
managed 
institutional 
assets, 
discretionary 
and 
advisory 
wealth 
management 
portfolios, 
fiduciary 
deposits, 
time 
deposits, 
savings 
accounts 
and 
wealth 
management 
securities 
or 
brokerage 
accounts. 
All 
assets 
held 
for 
purely 
transactional 
purposes 
and 
custody-only 
assets, 
including corporate 
client assets held 
for cash 
management and 
transactional 
purposes, 
are 
excluded 
from 
invested 
assets 
as 
UBS AG only administers the assets and does not 
offer advice on 
how 
the 
assets 
should 
be 
invested. 
Also 
excluded 
are 
non-
bankable 
assets 
(e.g., 
art 
collections) 
and 
deposits 
from 
third-
party banks for funding or trading purposes. 
Discretionary assets 
are 
defined as 
client assets 
that UBS 
AG 
decides how to invest. Other invested assets are 
those where the 
client 
ultimately 
decides 
how 
the 
assets 
are 
invested. 
When 
a 
single 
product 
is 
created 
in 
one 
business 
division 
and 
sold 
in 
another, it is counted 
in both the business 
division that manages 
the 
investment 
and 
the 
one 
that 
distributes 
it. 
This 
results 
in 
double 
counting 
within 
UBS 
AG 
total 
invested 
assets, 
as 
both 
business divisions 
are independently 
providing a 
service to 
their 
respective clients, and both add value and generate revenue. 
Net new money 
Net new 
money in 
a reporting 
period is 
the amount 
of invested 
assets that are 
entrusted to UBS 
AG by new 
and existing clients, 
less 
those 
withdrawn 
by 
existing 
clients 
and 
clients 
who 
terminated their relationship with UBS AG. 
Net new 
money is 
calculated using 
the direct 
method, under 
which 
inflows 
and 
outflows 
to
 
/ 
from 
invested 
assets 
are 
determined at the 
client level based on 
transactions. Interest and 
dividend income from invested 
assets are not counted as net new 
money inflows. Market and 
currency movements as well 
as fees, 
commissions and interest 
on loans charged are excluded from net 
new 
money, as 
are 
the 
effects resulting 
from any 
acquisition or 
divestment of 
a 
UBS 
AG 
subsidiary or 
business. Reclassifications 
between invested assets 
and custody-only assets as 
a 
result of 
a 
change in 
the service 
level delivered 
are generally 
treated as 
net 
new 
money 
flows. 
However, 
where 
the 
change 
in 
service 
level 
directly results 
from 
an 
externally imposed 
regulation or 
from 
a 
strategic decision by 
UBS AG 
to 
exit a 
market or 
specific service 
offering, 
the one-time 
net effect 
is reported 
as 
Other effects
. 
The 
Investment 
Bank 
does 
not track 
invested 
assets 
and 
net 
new 
money. 
However, 
when 
a 
client 
is 
transferred 
from 
the 
Investment Bank 
to another 
business division, 
this may 
produce 
net 
new 
money 
even 
though 
client 
assets 
were 
already 
with UBS AG. 
 
Invested assets and net new money 
As of or for the year ended 
USD billion 
31.12.20 
31.12.19 
Fund assets managed by UBS 
 
397 
 
358 
Discretionary assets 
 
1,459 
 
1,209 
Other invested assets 
 
2,331 
 
2,040 
Total invested assets
1
 
4,187 
 
3,607 
of which: double counts 
 
311 
 
248 
Net new money
1
 
127 
 
51 
1 Includes double counts. 
 
Development of invested assets 
USD billion 
2020 
2019 
Total invested assets at the beginning of the year
1
 
3,607 
 
3,101 
Net new money 
 
127 
 
51 
Market movements
2
 
359 
 
444 
Foreign currency translation 
 
96 
 
6 
Other effects 
 
(1) 
 
5 
of which: acquisitions / (divestments) 
 
0 
 
(1) 
Total invested assets at the end of the year
1
 
4,187 
 
3,607 
1 Includes double counts. 
2 Includes interest and dividend income. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
558 
 
Note 33 
Currency translation rates 
The following table shows the rates of 
the main currencies used to translate 
the financial information of UBS AG’s operations with 
a 
functional currency other than the US dollar into US dollars. 
 
Closing exchange rate 
Average rate
1
As of 
For the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.18 
1 CHF 
 
1.13 
 
1.03 
 
1.07 
 
1.01 
 
1.02 
1 EUR 
 
1.22 
 
1.12 
 
1.15 
 
1.12 
 
1.18 
1 GBP 
 
1.37 
 
1.32 
 
1.29 
 
1.28 
 
1.33 
100 JPY 
 
0.97 
 
0.92 
 
0.94 
 
0.92 
 
0.91 
1 Monthly income statement 
items of operations with 
a functional currency other than 
the US dollar are 
translated with month-end rates 
into US dollars. 
Disclosed average rates for 
a year represent an 
average of 
12 month-end rates, weighted according 
to the income and expense volumes of 
all operations of UBS AG with 
the same functional currency for each month. 
Weighted average rates for individual 
business divisions 
may deviate from the weighted average rates for UBS AG. 
 
 
 
Note 34 
Events after the reporting period 
Events subsequent to the publication of the unaudited fourth 
quarter 2020 report 
The 2020 results and the balance sheet 
as of 31 December 2020 
differ 
from 
those 
presented 
in 
the 
unaudited 
fourth 
quarter 
2020 report 
published on 
26 January 
2021 as 
a result 
of events 
adjusted 
for 
after 
the 
balance 
sheet 
date. 
Provisions 
for 
litigation, 
regulatory 
and 
similar 
matters 
increased, 
which 
reduced 
2020 
operating 
profit 
before 
tax 
and 
2020 
net 
profit 
attributable to shareholders each by USD 72 million. 
›
 
Refer to Note 18 for more information about 
provisions for 
litigation, regulatory and similar matters 
 
 
 

 
 
559 
 
Note 35 
Main differences between IFRS and Swiss GAAP 
The consolidated financial statements of UBS AG are 
prepared in 
accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS). The 
Swiss Financial Market 
Supervisory Authority 
(FINMA) 
requires 
financial 
groups 
that present 
their 
financial 
statements 
under 
IFRS 
to 
provide 
a 
narrative 
explanation 
of 
the 
main 
differences 
between 
IFRS 
and 
Swiss 
GAAP 
(the 
FINMA 
Accounting 
Ordinance, 
FINMA 
Circular 
2020/1 
"Accounting 
– 
banks" 
and 
the 
Banking 
Ordinance). 
Included 
in 
this 
Note 
are 
the 
significant 
differences 
in 
the 
recognition 
and 
measurement 
between IFRS 
and the 
provisions of 
the Banking 
Ordinance and 
the 
guidelines 
of 
FINMA 
governing 
true 
and 
fair 
view 
financial 
statement reporting 
pursuant to 
Art. 25 
through Art. 
42 of 
the 
Banking Ordinance. 
1. Consolidation 
Under IFRS, 
all entities 
that are 
controlled 
by the 
holding entity 
are consolidated. 
Under 
Swiss 
GAAP, 
controlled 
entities 
that 
are 
deemed 
immaterial to 
the UBS 
AG or 
that are 
held temporarily 
only are 
exempt 
from 
consolidation, 
but 
instead 
are 
recorded 
as 
participations 
accounted 
for 
under 
the 
equity 
method 
of 
accounting or 
as financial investments 
measured at the 
lower of 
cost or market value. 
2. Classification and measurement of financial assets 
Under 
IFRS, 
debt 
instruments 
are 
measured 
at 
amortized 
cost, 
fair 
value 
through 
other 
comprehensive 
income 
(FVOCI) 
or 
fair 
value through 
profit or loss 
(FVTPL), depending on 
the nature of 
the 
business 
model 
within 
which 
the 
asset 
is 
held 
and 
the 
characteristics of 
the contractual 
cash flows 
of the 
asset. 
Equity 
instruments are accounted for at FVTPL by UBS AG. 
Under 
Swiss 
GAAP,
 
trading 
assets 
and 
derivatives 
are 
measured at 
FVTPL in 
line with 
IFRS. However, 
non-trading debt 
instruments 
are 
generally 
measured 
at 
amortized 
cost, 
even 
when the 
assets are 
managed on 
a fair 
value basis. 
In addition, 
the 
measurement 
of 
financial 
assets 
in 
the 
form 
of 
securities 
depends 
on 
the 
nature 
of 
the 
asset: 
debt 
instruments 
that 
are 
not 
held 
to 
maturity, 
i.e., 
instruments 
which 
are 
available 
for 
sale, 
as 
well 
as 
equity 
instruments 
with 
no 
permanent 
holding 
intent, 
are 
classified 
as 
Financial 
investments
 
and 
measured 
at 
the 
lower 
of 
(amortized) 
cost 
or 
market 
value. 
Market 
value 
adjustments up to the original cost amount 
and realized gains or 
losses 
upon 
disposal 
of 
the 
investment 
are 
recorded 
in 
the 
income 
statement 
as 
Other 
income
 
from
 
ordinary 
activities. 
Equity instruments with a permanent holding intent are classified 
as participations 
in 
Non-consolidated 
investments in 
subsidiaries 
and 
other 
participations
 
and 
are 
measured 
at 
cost 
less 
impairment. 
Impairment 
losses 
are 
recorded 
in 
the 
income 
statement 
as 
Impairment 
of investments 
in non-consolidated 
subsidiaries and 
other participations.
 
Reversals of 
impairments up 
to the 
original 
cost amount 
as well 
as realized 
gains or 
losses upon 
disposal of 
the 
investment 
are 
recorded 
as 
Extraordinary 
income
 
/ 
Extraordinary expenses
 
in the income statement. 
3. Fair value option applied to financial liabilities 
Under 
IFRS, 
UBS 
AG 
applies 
the 
fair 
value 
option 
to 
certain 
financial liabilities not held for trading. Instruments for which the 
fair 
value 
option 
is 
applied 
are 
accounted 
for 
at 
FVTPL. 
The 
amount 
of 
change 
in 
the 
fair 
value 
that 
is 
attributable 
to 
changes 
in 
UBS
 
AG
’s 
own 
credit 
is 
presented 
in 
Other 
comprehensive 
income
 
directly 
within 
Retained 
earnings
. 
The 
fair 
value 
option 
is 
applied 
primarily 
to 
issued 
structured 
debt 
instruments
,
 
certain 
non
-
structured 
debt 
instruments
,
 
certain 
payables 
under 
repurchase 
agreements 
and 
cash 
collateral 
on 
securities 
lending 
agreements, 
amounts 
due 
under 
unit-linked 
investment contracts, and brokerage payables. 
Under Swiss 
GAAP, the 
fair value 
option can 
only be 
applied 
to 
structured 
debt 
instruments 
that 
consist 
of 
a 
debt 
host 
contract 
and 
one 
or 
more 
embedded 
derivatives 
that 
do 
not 
relate 
to 
own 
equity. 
Furthermore, 
unrealized 
changes 
in 
fair 
value 
attributable 
to 
changes 
in 
UBS 
AG’s 
own 
credit 
are 
not 
recognized, 
whereas 
realized 
own 
credit 
is 
recognized 
in
 
Net 
trading income
. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
560 
 
Note 35 
Main differences between IFRS and Swiss GAAP (continued) 
4. Allowances and provisions for credit losses 
Swiss 
GAAP 
permits 
the 
use 
of 
IFRS
 
for 
the 
accounting 
for
 
allowances and provisions for credit 
losses based on an expected 
credit loss 
(ECL) model. 
UBS AG 
has chosen 
to apply 
the IFRS 
9 
ECL 
approach 
to 
the substantial 
majority of 
exposures 
in scope 
of the 
Swiss GAAP 
ECL requirements 
, 
including all 
exposures 
in 
scope of ECL under both Swiss GAAP and IFRS. 
In 
addition, 
for 
a 
small 
population 
of 
exposures 
in 
scope 
of 
the Swiss GAAP 
ECL requirements, which 
are not subject 
to ECL 
under 
IFRS 
due 
to 
classification 
and 
measurements 
differences, 
UBS
 
AG
 
applies
 
an 
alternative 
approach
. 
Where 
the 
Pillar 
1 
internal ratings-based 
(IRB) models are 
applied for 
measurement 
of 
credit 
risk, 
ECL 
for 
such 
exposures 
is 
determined 
by 
the 
regulatory 
expected 
loss 
(EL), 
with 
an 
add-on 
for 
scaling 
up 
to 
the residual 
maturity of exposures 
maturing beyond 
the next 12 
months. 
For 
detailed 
information 
on 
regulatory 
EL, 
refer 
to 
the 
“
Risk 
management 
and 
control
”
 
section
 
of 
this 
report
. 
For 
exposures 
for 
which 
the 
Pillar 
1 
standardized 
approach 
(SA) 
is 
applied 
for 
the 
measurement 
of 
credit 
risk, 
ECL 
is 
determined 
using 
a 
portfolio 
approach 
that 
derives 
conservative 
probability 
of 
default 
(PD) 
and 
loss 
given 
default 
(LGD)
 
for 
the 
entire 
portfolio. 
5. Hedge accounting 
Under 
IFRS, 
when 
cash 
flow 
hedge 
accounting 
is 
applied, 
the 
fair 
value 
gain or 
loss 
on 
the effective 
portion 
of 
the derivative 
designated as 
a cash 
flow hedge 
is recognized 
in equity. 
When 
fair 
value 
hedge 
accounting 
is 
applied, 
the 
fair 
value 
gains 
or 
losses 
of 
the 
derivative 
and 
the 
hedged 
item 
are 
recognized 
in 
the income statement. 
Under 
Swiss 
GAAP, 
the 
effective 
portion 
of 
the 
fair 
value 
change of the derivative instrument designated as 
a cash flow or 
as a 
fair value 
hedge is 
deferred on 
the balance 
sheet as 
Other 
assets
 
or 
Other 
liabilities
. 
The 
carrying 
amount 
of 
the 
hedged 
item designated in fair value hedges is not 
adjusted for fair value 
changes attributable to the hedged risk. 
6. Goodwill and intangible assets 
Under 
IFRS, 
goodwill acquired 
in 
a 
business combination 
is 
not 
amortized 
but tested 
annually for 
impairment. 
Intangible 
assets 
with 
an 
indefinite 
useful 
life 
are 
also 
not 
amortized 
but 
tested 
annually for impairment. 
Under 
Swiss 
GAAP, 
goodwill 
and 
intangible 
assets 
with 
indefinite useful 
lives are amortized 
over a 
period not 
exceeding 
five years, 
unless a 
longer useful 
life, which 
may not 
exceed 10 
years, 
can 
be 
justified. 
In 
addition, 
these 
assets 
are 
tested 
annually for impairment. 
7. Post-employment benefit plans 
Swiss 
GAAP 
permits 
the 
use 
of 
IFRS 
or 
Swiss 
accounting 
standards 
for 
post-employment benefit 
plans, 
with 
the election 
made on a plan-by-plan basis. 
UBS AG 
has elected 
to apply 
IFRS (IAS 
19) for 
the non-Swiss 
defined 
benefit 
plans 
and 
Swiss 
GAAP 
(FER 
16) 
for 
the 
Swiss 
pension 
plan 
in 
its 
standalone 
financial 
statements
. 
The 
requirements of 
Swiss GAAP 
are better 
aligned with 
the specific 
nature 
of 
Swiss 
pension 
plans, 
which 
are 
hybrid 
in 
that 
they 
combine 
elements 
of 
defined 
contribution 
and 
defined 
benefit 
plans, 
but 
are 
treated 
as 
defined 
benefit 
plans 
under 
IFRS. 
Key 
differences between Swiss 
GAAP and IFRS 
include the treatment 
of dynamic 
elements, such 
as future 
salary increases 
and future 
interest 
credits on 
retirement savings, 
which are 
not 
considered 
under 
the 
static 
method 
used 
in 
accordance 
with 
Swiss 
GAAP. 
Also, 
the 
discount 
rate 
used 
to 
determine 
the 
defined 
benefit 
obligation in accordance 
with IFRS is 
based on the 
yield of high-
quality corporate 
bonds of 
the market 
in the 
respective pension 
plan 
country. 
The 
discount 
rate 
used 
in 
accordance 
with 
Swiss 
GAAP 
(i.e., 
the 
technical 
interest 
rate) 
is 
determined
 
by 
the 
Pension Foundation 
Board based 
on the 
expected returns of 
the 
Board’s investment strategy. 
 
 

 
 
561 
 
Note 35 
Main differences between IFRS and Swiss GAAP (continued) 
For 
defined 
benefit 
plans, 
IFRS 
requires 
the 
full 
defined 
benefit 
obligation net 
of 
the plan 
assets 
to 
be recorded 
on 
the 
balance 
sheet, 
with 
changes 
resulting 
from 
remeasurements 
recognized 
directly 
in 
equity. 
However, 
for 
non-Swiss 
defined 
benefit plans 
for which 
IFRS accounting 
is elected, 
changes due 
to 
remeasurements 
are 
recognized 
in 
the 
income 
statement 
of 
UBS AG standalone under Swiss GAAP. 
Swiss 
GAAP 
requires 
that 
employer 
contributions 
to 
the 
pension 
fund 
are 
recognized 
as 
personnel 
expenses 
in 
the 
income 
statement. 
Furthermore, 
Swiss 
GAAP 
requires 
an 
assessment as 
to whether, 
based on 
the financial 
statements of 
the pension 
fund prepared 
in accordance 
with Swiss 
accounting 
standards (FER 26), an 
economic benefit to, or 
obligation of, the 
employer 
arises 
from 
the 
pension 
fund 
which 
is 
recognized 
in 
the 
balance 
sheet 
when 
conditions 
are 
met. 
Conditions 
for 
recording 
a 
pension 
asset 
or 
liability 
would 
be 
met 
if, 
for 
example, 
an 
employer 
contribution 
reserve 
is 
available 
or 
the 
employer is 
required to 
contribute to 
the reduction of 
a pension 
deficit (on an FER 26 basis). 
8. Leasing 
Under IFRS, a single lease accounting model applies that 
requires 
UBS AG to record a right-of-use (RoU) asset and a corresponding 
lease liability on 
the balance sheet 
when UBS AG 
is a lessee 
in a 
lease 
arrangement. 
The 
RoU 
asset 
and 
the 
lease 
liability 
are 
recognized when UBS 
AG acquires control 
of the physical use 
of 
the 
asset. 
The 
lease 
liability 
is 
measured 
based 
on 
the 
present 
value 
of 
the 
lease 
payments 
over 
the 
lease 
term, 
discounted 
using 
UBS 
AG’s 
unsecured 
borrowing 
rate. 
The 
RoU 
asset 
is 
recorded at an amount 
equal to the lease 
liability but is adjusted 
for 
rent 
prepayments, 
initial 
direct 
costs, 
any 
costs 
to 
refurbish 
the leased 
asset and/or 
lease incentives 
received. The 
RoU asset 
is depreciated over the shorter of the lease term or the useful life 
of the underlying asset. 
Under 
Swiss 
GAAP, 
leases 
that 
transfer 
substantially 
all 
the 
risks and rewards, but not necessarily 
legal title in the underlying 
assets, 
are 
classified 
as 
finance 
leases. 
All 
other 
leases 
are 
classified 
as 
operating 
leases. 
Whereas 
finance 
leases 
are 
recognized on the balance 
sheet and measured in line 
with IFRS, 
operating 
lease 
payments 
are 
recognized 
as 
General 
and 
administrative 
expenses
 
on 
a 
straight-line 
basis 
over 
the 
lease 
term, which 
commences with 
control of 
the physical 
use of 
the 
asset. 
Lease 
incentives 
are 
treated 
as 
a 
reduction 
of 
rental 
expense and 
are recognized 
on a 
consistent basis 
over the 
lease 
term. 
 
9. Netting of derivative assets and liabilities 
Under 
IFRS, 
derivative 
assets
, 
derivative 
liabilities
 
and 
related 
cash collateral 
that are 
not settled 
to market 
are 
reported 
on a 
gross 
basis 
unless 
the 
restrictive 
IFRS 
netting 
requirements 
are 
met: 
i) 
existence 
of 
master 
netting 
agreements 
and 
related 
collateral 
arrangements 
that 
are 
unconditional 
and 
legally 
enforceable, 
both 
in 
the 
normal 
course 
of 
business 
and 
in 
the 
event 
of 
default, 
bankruptcy 
or 
insolvency 
of 
UBS 
AG 
and 
its 
counterparties; 
and 
ii) 
UBS 
AG’s 
intention 
to 
either 
settle 
on 
a 
net 
basis 
or 
to 
realize 
the 
asset 
and 
settle 
the 
liability 
simultaneously. 
Under 
Swiss 
GAAP, 
derivative assets, 
derivative liabilities 
and 
related 
cash 
collateral
 
that
 
are 
not 
settled 
to 
market
 
are 
generally 
reported 
on 
a 
net 
basis, 
provided 
the 
master 
netting 
and 
the 
related 
collateral 
agreements 
are 
legally 
enforceable 
in 
the 
event 
of 
default, 
bankruptcy 
or 
insolvency 
of 
UBS
 
AG
’s 
counterparties. 
10. Negative interest 
Under IFRS, 
negative interest 
income arising 
on a 
financial asset 
does not 
meet the 
definition of 
interest 
income and, 
therefore, 
negative 
interest 
on 
financial 
assets 
and 
negative 
interest 
on 
financial 
liabilities 
are 
presented 
within 
interest 
expense 
and 
interest income, respectively. 
Under 
Swiss 
GAAP, 
negative 
interest 
on 
financial 
assets 
is 
presented 
within 
interest 
income 
and 
negative 
interest 
on 
financial liabilities is presented within interest expense. 
11. Extraordinary income and expense 
Certain 
non-recurring 
and 
non-operating 
income 
and 
expense 
items, 
such 
as 
realized 
gains 
or 
losses 
from 
the 
disposal 
of 
participations, fixed 
and intangible 
assets, as well 
as reversals 
of 
impairments 
of 
participations 
and 
fixed 
assets, 
are 
classified 
as 
extraordinary 
items 
under 
Swiss 
GAAP. 
This 
distinction 
is 
not 
available under IFRS. 
p
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
562 
 
 
Note 36 
Supplemental guarantor information required under SEC regulations 
Joint liability of UBS Switzerland AG 
In 
2015, 
the 
Personal 
& 
Corporate 
Banking 
and 
Wealth 
Management businesses booked in Switzerland 
were transferred 
from 
UBS AG 
to UBS 
Switzerland AG 
through an 
asset transfer 
in 
accordance 
with 
the 
Swiss 
Merger 
Act. 
Under 
the 
terms 
of 
the asset transfer agreement, UBS 
Switzerland AG assumed joint 
liability 
for 
contractual 
obligations 
of 
UBS 
AG 
existing 
on 
the 
asset 
transfer 
date, 
including 
the 
full 
and 
unconditional 
guarantee of certain registered debt securities issued by UBS AG. 
To 
reflect this joint liability, 
UBS Switzerland AG is presented in a 
separate column as a subsidiary co-guarantor. 
The 
joint 
liability 
of 
UBS 
Switzerland 
AG 
for 
contractual 
obligations of 
UBS AG 
decreased in 
2020 by 
USD 7.3 
billion to 
USD 
10.1 
billion 
as 
of 
31 
December 
2020, 
mainly 
driven 
by 
contractual 
maturities 
and, 
to 
a 
lesser 
extent, 
early 
extinguishments 
of 
UBS AG 
liabilities 
which existed 
at 
the 
date 
of the asset transfer in the second quarter of 2015. 
 
Supplemental guarantor consolidated 
income statement 
USD million 
UBS AG 
(standalone)
1
UBS 
Switzerland AG 
(standalone)
1
Other 
subsidiaries
2
Elimination 
entries 
UBS AG 
(consolidated) 
For the year ended 31 December 2020 
Operating income 
Interest income from financial instruments measured at 
amortized cost and 
fair value through other comprehensive income 
 
3,386 
 
3,636 
 
2,612 
 
(818) 
 
8,816 
Interest expense from financial instruments measured at 
amortized cost 
 
(3,694) 
 
(513) 
 
(1,261) 
 
1,134 
 
(4,333) 
Net interest income from financial instruments measured 
at fair value through 
profit or loss 
 
1,103 
 
164 
 
311 
 
(273) 
 
1,305 
Net interest income 
 
794 
 
3,288 
 
1,662 
 
43 
 
5,788 
Other net income from financial instruments measured 
at fair value through 
profit or loss 
 
4,857 
 
911 
 
1,044 
 
118 
 
6,930 
Credit loss (expense) / release 
 
(352) 
 
(286) 
 
(56) 
 
0 
 
(695) 
Fee and commission income 
 
3,731 
 
4,585 
 
13,651 
 
(984) 
 
20,982 
Fee and commission expense 
 
(644) 
 
(829) 
 
(1,263) 
 
961 
 
(1,775) 
Net fee and commission income 
 
3,087 
 
3,756 
 
12,388 
 
(23) 
 
19,207 
Other income 
 
4,671 
 
233 
 
2,585 
 
(5,941) 
 
1,549 
Total operating income 
 
13,057 
 
7,902 
 
17,623 
 
(5,803) 
 
32,780 
Operating expenses 
Personnel expenses 
 
3,458 
 
2,017 
 
9,211 
 
0 
 
14,686 
General and administrative expenses 
 
3,507 
 
3,313 
 
4,147 
 
(2,481) 
 
8,486 
Depreciation and impairment of property, equipment and software 
 
1,008 
 
261 
 
698 
 
(116) 
 
1,851 
Amortization and impairment of goodwill and intangible 
assets 
 
5 
 
0 
 
52 
 
1 
 
57 
Total operating expenses 
 
7,978 
 
5,591 
 
14,108 
 
(2,596) 
 
25,081 
Operating profit / (loss) before tax 
 
5,079 
 
2,311 
 
3,515 
 
(3,207) 
 
7,699 
Tax expense / (benefit) 
 
238 
 
444 
 
912 
 
(107) 
 
1,488 
Net profit / (loss) 
 
4,840 
 
1,868 
 
2,603 
 
(3,100) 
 
6,211 
Net profit / (loss) attributable to non-controlling interests 
 
0 
 
0 
 
15 
 
0 
 
15 
Net profit / (loss) attributable to shareholders 
 
4,840 
 
1,868 
 
2,588 
 
(3,100) 
 
6,196 
1 Amounts presented for UBS 
AG standalone and UBS 
Switzerland AG standalone represent 
IFRS standalone information. Refer 
to the UBS AG 
standalone and UBS Switzerland 
AG standalone financial statements 
under “Complementary financial 
information” at 
ubs.com/investors for 
information prepared 
in accordance 
with Swiss GAAP. 
2 The 
”Other subsidiaries“ column 
includes consolidated information 
for the 
UBS 
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, 
as well as standalone information for other subsidiaries. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
563 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
statement of comprehensive income 
USD million 
UBS AG 
(standalone)
1
UBS 
Switzerland AG 
(standalone)
1
Other 
subsidiaries
2
Elimination 
entries 
UBS AG 
(consolidated) 
For the year ended 31 December 2020 
Comprehensive income attributable to shareholders 
Net profit / (loss) 
 
4,840 
 
1,868 
 
2,588 
 
(3,100) 
 
6,196 
Other comprehensive income 
Other comprehensive income that may be reclassified to the income 
statement 
Foreign currency translation, net of tax 
 
81 
 
1,228 
 
690 
 
(969) 
 
1,030 
Financial assets measured at fair value through other comprehensive 
income, net of tax 
 
0 
 
0 
 
137 
 
0 
 
136 
Cash flow hedges, net of tax 
 
902 
 
26 
 
101 
 
(18) 
 
1,011 
Cost of hedging, net of tax 
 
(13) 
 
(13) 
Total other comprehensive income that may be reclassified to the 
income statement, net of tax 
 
971 
 
1,254 
 
928 
 
(988) 
 
2,165 
Other comprehensive income that will not be reclassified to the 
income statement 
Defined benefit plans, net of tax 
 
(67) 
 
(107) 
 
40 
 
0 
 
(134) 
Own credit on financial liabilities designated at fair value, net of tax 
 
(293) 
 
(293) 
Total other comprehensive income that will not be reclassified to the 
income statement, net of tax 
 
(360) 
 
(107) 
 
40 
 
0 
 
(427) 
Total other comprehensive income 
 
611 
 
1,147 
 
968 
 
(988) 
 
1,738 
Total comprehensive income attributable to shareholders 
 
5,451 
 
3,015 
 
3,556 
 
(4,088) 
 
7,934 
Total comprehensive income attributable to non-controlling interests 
 
36 
 
36 
Total comprehensive income 
 
5,451 
 
3,015 
 
3,592 
 
(4,088) 
 
7,970 
1 Amounts presented for UBS 
AG standalone and UBS 
Switzerland AG standalone represent 
IFRS standalone information. Refer 
to the UBS AG 
standalone and UBS Switzerland 
AG standalone financial statements 
under “Complementary financial 
information” at 
ubs.com/investors for 
information prepared 
in accordance 
with Swiss GAAP. 
2 The 
”Other subsidiaries“ column 
includes consolidated information 
for the 
UBS 
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, 
as well as standalone information for other subsidiaries. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
564 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
balance sheet 
USD million 
UBS AG 
(standalone)
1
UBS 
Switzerland AG 
(standalone)
1
Other 
subsidiaries
2
Elimination 
entries 
UBS AG 
(consolidated) 
As of 31 December 2020 
Assets 
Cash and balances at central banks 
 
34,426 
 
91,638 
 
32,167 
 
158,231 
Loans and advances to banks 
 
40,171 
 
6,385 
 
19,465 
 
(50,678) 
 
15,344 
Receivables from securities financing transactions 
 
56,568 
 
4,026 
 
43,350 
 
(29,735) 
 
74,210 
Cash collateral receivables on derivative instruments 
 
32,771 
 
1,543 
 
10,093 
 
(11,671) 
 
32,737 
Loans and advances to customers 
 
99,952 
 
228,279 
 
73,513 
 
(20,767) 
 
380,977 
Other financial assets measured at amortized cost 
 
8,411 
 
8,084 
 
13,368 
 
(2,644) 
 
27,219 
Total financial assets measured at amortized cost 
 
272,299 
 
339,956 
 
191,957 
 
(115,495) 
 
688,717 
Financial assets at fair value held for trading 
 
110,812 
 
55 
 
16,260 
 
(1,634) 
 
125,492 
of which: assets pledged as collateral that 
may be sold or repledged by counterparties 
 
54,468 
 
1 
 
6,247 
 
(13,617) 
 
47,098 
Derivative financial instruments 
 
154,313 
 
6,342 
 
44,005 
 
(45,041) 
 
159,618 
Brokerage receivables 
 
16,898 
 
7,763 
 
(2) 
 
24,659 
Financial assets at fair value not held for trading 
 
46,198 
 
13,068 
 
36,444 
 
(15,672) 
 
80,038 
Total financial assets measured at fair value through profit or loss 
 
328,221 
 
19,464 
 
104,473 
 
(62,350) 
 
389,808 
Financial assets measured at fair value 
through other comprehensive income 
 
187 
 
8,072 
 
8,258 
Investments in subsidiaries and associates 
 
53,606 
 
38 
 
439 
 
(52,526) 
 
1,557 
Property, equipment and software 
 
6,999 
 
1,335 
 
3,975 
 
(350) 
 
11,958 
Goodwill and intangible assets 
 
217 
 
6,234 
 
28 
 
6,480 
Deferred tax assets 
 
840 
 
1 
 
8,334 
 
(1) 
 
9,174 
Other non-financial assets 
 
6,641 
 
2,063 
 
854 
 
(183) 
 
9,374 
Total assets 
 
669,010 
 
362,857 
 
324,337 
 
(230,878) 
 
1,125,327 
Liabilities 
Amounts due to banks 
 
41,414 
 
34,096 
 
43,066 
 
(107,527) 
 
11,050 
Payables from securities financing transactions 
 
17,247 
 
566 
 
18,407 
 
(29,899) 
 
6,321 
Cash collateral payables on derivative instruments 
 
35,875 
 
561 
 
12,495 
 
(11,618) 
 
37,313 
Customer deposits 
 
98,441 
 
293,371 
 
112,372 
 
23,745 
 
527,929 
Funding from UBS Group AG and its subsidiaries
3
 
53,979 
 
53,979 
Debt issued measured at amortized cost 
 
75,658 
 
9,687 
 
3 
 
3 
 
85,351 
Other financial liabilities measured at amortized cost 
 
5,285 
 
2,567 
 
5,745 
 
(3,175) 
 
10,421 
Total financial liabilities measured at amortized cost 
 
327,898 
 
340,848 
 
192,088 
 
(128,470) 
 
732,364 
Financial liabilities at fair value held for trading 
 
28,800 
 
335 
 
5,989 
 
(1,529) 
 
33,595 
Derivative financial instruments 
 
156,192 
 
5,593 
 
44,359 
 
(45,043) 
 
161,102 
Brokerage payables designated at fair value 
 
25,045 
 
13,704 
 
(7) 
 
38,742 
Debt issued designated at fair value 
 
58,986 
 
935 
 
(54) 
 
59,868 
Other financial liabilities designated at fair value 
 
11,255 
 
23,445 
 
(2,927) 
 
31,773 
Total financial liabilities measured at fair value through profit or loss 
 
280,279 
 
5,927 
 
88,433 
 
(49,559) 
 
325,080 
Provisions 
 
1,293 
 
301 
 
1,197 
 
2,791 
Other non-financial liabilities 
 
2,173 
 
987 
 
3,907 
 
(49) 
 
7,018 
Total liabilities 
 
611,643 
 
348,063 
 
285,625 
 
(178,078) 
 
1,067,254 
Equity attributable to shareholders 
 
57,367 
 
14,794 
 
38,393 
 
(52,800) 
 
57,754 
Equity attributable to non-controlling interests 
 
319 
 
319 
Total equity 
 
57,367 
 
14,794 
 
38,712 
 
(52,800) 
 
58,073 
Total liabilities and equity 
 
669,010 
 
362,857 
 
324,337 
 
(230,878) 
 
1,125,327 
1 Amounts presented for UBS 
AG standalone and UBS 
Switzerland AG standalone represent 
IFRS standalone information. Refer 
to the UBS AG 
standalone and UBS Switzerland 
AG standalone financial statements 
under “Complementary financial 
information” at 
ubs.com/investors for 
information prepared 
in accordance 
with Swiss GAAP. 
2 The 
”Other subsidiaries“ column 
includes consolidated information 
for the 
UBS 
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG significant sub-groups, 
as well as standalone information for other subsidiaries. 
3 Represents funding from UBS Group AG to UBS AG.

 
565 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
statement of cash flows 
USD million 
UBS AG
1
UBS 
Switzerland AG
1
Other 
 
subsidiaries
1
UBS AG 
(consolidated) 
For the year ended 31 December 2020 
Net cash flow from / (used in) operating activities 
 
(14,883) 
 
24,661 
 
26,804 
 
36,581 
Cash flow from / (used in) investing activities 
Purchase of subsidiaries, associates and intangible assets 
 
0 
 
(3) 
 
(43) 
 
(46) 
Disposal of subsidiaries, associates and intangible assets
2
 
14 
 
0 
 
660 
 
674 
Purchase of property, equipment and software 
 
(714) 
 
(162) 
 
(697) 
 
(1,573) 
Disposal of property, equipment and software 
 
361 
 
0 
 
3 
 
364 
Purchase of financial assets measured at fair value through other 
comprehensive 
income 
 
(77) 
 
0 
 
(6,213) 
 
(6,290) 
Disposal and redemption of financial assets measured at 
fair value through other 
comprehensive income 
 
79 
 
0 
 
4,451 
 
4,530 
Net (purchase) / redemption of debt securities measured 
at amortized cost 
 
(3,021) 
 
132 
 
(1,277) 
 
(4,166) 
Net cash flow from / (used in) investing activities 
 
(3,357) 
 
(33) 
 
(3,117) 
 
(6,506) 
Cash flow from / (used in) financing activities 
Net short-term debt issued / (repaid) 
 
23,828 
 
17 
 
0 
 
23,845 
Distributions paid on UBS AG shares 
 
(3,848) 
 
0 
 
0 
 
(3,848) 
Repayment of lease liabilities 
 
(290) 
 
0 
 
(257) 
 
(547) 
Issuance of long-term debt, including debt issued designated 
at fair value 
 
70,987 
 
1,057 
 
229 
 
72,273 
Repayment of long-term debt, including debt issued designated 
at fair value 
 
(82,930) 
 
(776) 
 
(118) 
 
(83,825) 
Funding from UBS Group AG and its subsidiaries
3
 
4,606 
 
0 
 
0 
 
4,606 
Net changes in non-controlling interests 
 
0 
 
0 
 
(6) 
 
(6) 
Net activity related to group internal capital transactions and dividends 
 
2,984 
 
(1,307) 
 
(1,677) 
 
0 
Net cash flow from / (used in) financing activities 
 
15,336 
 
(1,009) 
 
(1,829) 
 
12,498 
Total cash flow 
Cash and cash equivalents at the beginning of the year 
 
39,598 
 
62,551 
 
17,655 
 
119,804 
Net cash flow from / (used in) operating, investing and financing 
activities 
 
(2,905) 
 
23,619 
 
21,859 
 
42,573 
Effects of exchange rate differences on cash and cash equivalents 
 
2,706 
 
7,171 
 
1,175 
 
11,053 
Cash and cash equivalents at the end of the year
4
 
39,400 
 
93,342 
 
40,689 
 
173,430 
of which: cash and balances at central banks 
 
34,283 
 
91,638 
 
32,167 
 
158,088 
of which: loans and advances to banks 
 
4,085 
 
1,695 
 
8,148 
 
13,928 
of which: money market paper
5
 
1,032 
 
9 
 
374 
 
1,415 
1 Cash flows generally represent a third-party 
view from a UBS AG consolidated 
perspective, except for Net activity 
related to group internal capital transactions 
and dividends. 
2 
Includes cash proceeds from the 
sale of the majority 
stake in Fondcenter 
AG of USD 
426 million. Also includes 
dividends received from 
associates. 
3 Represents funding from 
UBS Group AG to 
UBS AG. 
4 Comprises balances with an 
original 
maturity of three 
months or 
less. USD 
3,828 million 
of cash 
and cash 
equivalents were 
restricted. 
5 Money market 
paper is 
included in 
the balance 
sheet under Financial 
assets at 
fair value 
held for 
trading, 
Financial assets measured at fair value through other comprehensive income, Financial assets at fair value 
not held for trading and Other financial assets measured at amortized cost.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
566 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
income statement 
USD million 
UBS AG 
(standalone)
1,2
UBS 
Switzerland AG 
(standalone)
1
Other 
subsidiaries
3
Elimination 
entries 
UBS AG 
(consolidated) 
For the year ended 31 December 2019 
Operating income 
Interest income from financial instruments measured at 
amortized cost and 
fair value through other comprehensive income 
 
4,864 
 
4,048 
 
3,719 
 
(1,928) 
 
10,703 
Interest expense from financial instruments measured at 
amortized cost 
 
(6,547) 
 
(737) 
 
(2,317) 
 
2,298 
 
(7,303) 
Net interest income from financial instruments measured 
at fair value through 
profit or loss 
 
1,177 
 
(228) 
 
394 
 
(327) 
 
1,015 
Net interest income 
 
(506) 
 
3,083 
 
1,796 
 
42 
 
4,415 
Other net income from financial instruments measured 
at fair value through 
profit or loss 
 
5,116 
 
924 
 
1,114 
 
(322) 
 
6,833 
Credit loss (expense) / release 
 
(51) 
 
7 
 
(33) 
 
0 
 
(78) 
Fee and commission income 
 
3,285 
 
4,342 
 
12,527 
 
(997) 
 
19,156 
Fee and commission expense 
 
(674) 
 
(819) 
 
(1,188) 
 
986 
 
(1,696) 
Net fee and commission income 
 
2,610
4 
 
3,523
4 
 
11,338 
 
(11) 
 
17,460 
Other income 
 
4,899 
 
259 
 
1,960 
 
(6,442) 
 
677 
Total operating income 
 
12,069 
 
7,796 
 
16,176 
 
(6,733) 
 
29,307 
Operating expenses 
Personnel expenses 
 
3,251 
 
1,936 
 
8,614 
 
0 
 
13,801 
General and administrative expenses 
 
3,467 
 
3,181 
 
4,565 
 
(2,627) 
 
8,586 
Depreciation and impairment of property, equipment and software 
 
861 
 
221 
 
602 
 
(108) 
 
1,576 
Amortization and impairment of goodwill and intangible 
assets 
 
94 
 
0 
 
170 
 
(88) 
 
175 
Total operating expenses 
 
7,672 
 
5,338 
 
13,951 
 
(2,823) 
 
24,138 
Operating profit / (loss) before tax 
 
4,396 
 
2,458 
 
2,225 
 
(3,911) 
 
5,169 
Tax expense / (benefit) 
 
175 
 
514 
 
530 
 
(21) 
 
1,198 
Net profit / (loss) 
 
4,221 
 
1,944 
 
1,695 
 
(3,890) 
 
3,971 
Net profit / (loss) attributable to non-controlling interests 
 
0 
 
0 
 
6 
 
0 
 
6 
Net profit / (loss) attributable to shareholders 
 
4,221 
 
1,944 
 
1,689 
 
(3,889) 
 
3,965 
1 Amounts presented for UBS AG 
standalone and UBS Switzerland AG 
standalone represent IFRS standalone information. 
Refer to the UBS AG 
standalone and UBS Switzerland AG 
standalone financial statements 
under “Complementary financial information” at ubs.com/investors 
for information prepared in accordance 
with Swiss GAAP. 
2 Effective from the second 
quarter of 2020, UBS AG 
accounts for its investments in 
associates under 
the equity 
method of 
accounting and 
no longer 
at cost 
less impairment. 
The new 
measurement policy 
will result 
in more 
relevant information 
regarding the 
value of 
UBS AG’s 
investments in 
associates. The 
change was applied 
retrospectively to all 
prior periods presented, 
resulting in a decrease 
in Net profit 
attributable to shareholders 
for the year ended 
31 December 2019 
of USD 61 million, almost 
entirely reflected within 
Other income. 
3 The ”Other 
subsidiaries“ column includes 
consolidated information for 
the UBS Americas 
Holding LLC, UBS 
Europe SE and 
UBS Asset Management 
AG significant sub-
groups, as well as standalone 
information for other subsidiaries. 
4 Includes the effects of the transfer 
in 2019 of beneficial ownership of a 
portion of Global Wealth Management 
international business booked in 
Switzerland from UBS 
Switzerland AG 
to UBS AG. 
Refer to “Note 
25 Changes in 
organization and other 
events affecting comparability” 
in the “UBS 
AG standalone 
financial statements” 
section of the 
UBS AG 
Standalone financial statements and regulatory information for the year ended 31 December 2019. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
567 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
statement of comprehensive income 
USD million 
UBS AG 
(standalone)
1,2
UBS 
Switzerland AG 
(standalone)
1
Other 
subsidiaries
3
Elimination 
entries 
UBS AG 
(consolidated) 
For the year ended 31 December 2019 
Comprehensive income attributable to shareholders 
Net profit / (loss) 
 
4,221 
 
1,944 
 
1,689 
 
(3,889) 
 
3,965 
Other comprehensive income 
Other comprehensive income that may be reclassified to the income 
statement 
Foreign currency translation, net of tax 
 
5 
 
150 
 
39 
 
(102) 
 
92 
Financial assets measured at fair value through other comprehensive 
income, net of tax 
 
0 
 
0 
 
117 
 
0 
 
117 
Cash flow hedges, net of tax 
 
870 
 
140 
 
147 
 
(15) 
 
1,143 
Total other comprehensive income that may be reclassified to the 
income statement, net of tax 
 
875 
 
290 
 
303 
 
(117) 
 
1,351 
Other comprehensive income that will not be reclassified to the 
income statement 
Defined benefit plans, net of tax 
 
(89) 
 
(6) 
 
(75) 
 
0 
 
(170) 
Own credit on financial liabilities designated at fair value, net of tax 
 
(392) 
 
(392) 
Total other comprehensive income that will not be reclassified to the 
income statement, net of tax 
 
(481) 
 
(6) 
 
(75) 
 
0 
 
(562) 
Total other comprehensive income 
 
394 
 
284 
 
228 
 
(117) 
 
789 
Total comprehensive income attributable to shareholders 
 
4,616 
 
2,228 
 
1,917 
 
(4,007) 
 
4,754 
Total comprehensive income attributable to non-controlling interests 
 
2 
 
2 
Total comprehensive income 
 
4,616 
 
2,228 
 
1,919 
 
(4,007) 
 
4,756 
1 Amounts presented for UBS 
AG standalone and UBS 
Switzerland AG standalone represent 
IFRS standalone information. Refer 
to the UBS AG 
standalone and UBS Switzerland 
AG standalone financial statements 
under “Complementary financial information” at 
ubs.com/investors for information 
prepared in accordance with Swiss 
GAAP. 
2 Effective from the second 
quarter of 2020, UBS AG 
accounts for its investments in 
associates under 
the equity 
method of 
accounting and 
no longer 
at cost 
less impairment. 
The new 
measurement policy 
will result 
in more 
relevant information 
regarding the 
value of 
UBS AG’s 
investments in 
associates. The change was 
applied retrospectively to all prior periods presented, resulting in 
a decrease in Total comprehensive income attributable 
to shareholders for the year ended 31 December 2019 
of USD 56 
million, reflecting a decrease of USD 61 million in 
Net profit attributable to shareholders and a USD 6 million 
increase in Total other comprehensive income 
attributable to shareholders. 
3 The ”Other subsidiaries“ 
column includes consolidated information for the significant sub-groups UBS 
Americas Holding LLC, UBS Europe SE and UBS Asset Management AG, 
as well as standalone information for other subsidiaries. 
 
 

 
Consolidated financial statements | UBS AG consolidated financial statements 
568 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
balance sheet 
USD million 
UBS AG 
(standalone)
1,2
UBS 
Switzerland AG 
(standalone)
1
Other 
subsidiaries
3
Elimination 
entries 
UBS AG 
(consolidated) 
As of 31 December 2019 
Assets 
Cash and balances at central banks 
 
36,386 
 
60,926 
 
9,756 
 
107,068 
Loans and advances to banks 
 
32,888 
 
7,992 
 
17,430 
 
(45,931) 
 
12,379 
Receivables from securities financing transactions 
 
56,946 
 
12,536 
 
42,534 
 
(27,771) 
 
84,245 
Cash collateral receivables on derivative instruments 
 
22,830 
 
990 
 
8,508 
 
(9,038) 
 
23,289 
Loans and advances to customers 
 
88,386 
 
193,543 
 
63,676 
 
(17,612) 
 
327,992 
Other financial assets measured at amortized cost 
 
5,723 
 
8,168 
 
11,448 
 
(2,327) 
 
23,012 
Total financial assets measured at amortized cost 
 
243,159 
 
284,154 
 
153,351 
 
(102,679) 
 
577,985 
Financial assets at fair value held for trading 
 
113,802 
 
53 
 
15,320 
 
(1,479) 
 
127,695 
of which: assets pledged as collateral that 
may be sold or repledged by counterparties 
 
58,599 
 
0 
 
5,386 
 
(22,701) 
 
41,285 
Derivative financial instruments 
 
118,708 
 
4,251 
 
29,782 
 
(30,899) 
 
121,843 
Brokerage receivables 
 
11,453 
 
6,556 
 
(1) 
 
18,007 
Financial assets at fair value not held for trading 
 
49,525 
 
6,701 
 
41,908 
 
(14,498) 
 
83,636 
Total financial assets measured at fair value through profit or loss 
 
293,488 
 
11,004 
 
93,565 
 
(46,877) 
 
351,181 
Financial assets measured at fair value 
through other comprehensive income 
 
176 
 
6,169 
 
6,345 
Investments in subsidiaries and associates 
 
52,140 
 
28 
 
39 
 
(51,156) 
 
1,051 
Property, equipment and software 
 
7,318 
 
1,144 
 
3,749 
 
(385) 
 
11,826 
Goodwill and intangible assets 
 
222 
 
6,212 
 
35 
 
6,469 
Deferred tax assets
4
 
618 
 
0 
 
8,906 
 
9,524 
Other non-financial assets 
 
5,060 
 
1,770 
 
857 
 
(140) 
 
7,547 
Total assets 
 
602,181 
 
298,101 
 
272,848 
 
(201,202) 
 
971,927 
Liabilities 
Amounts due to banks 
 
55,738 
 
28,240 
 
35,773 
 
(113,181) 
 
6,570 
Payables from securities financing transactions 
 
21,326 
 
565 
 
13,583 
 
(27,696) 
 
7,778 
Cash collateral payables on derivative instruments 
 
30,571 
 
98 
 
9,773 
 
(9,027) 
 
31,416 
Customer deposits 
 
85,954 
 
239,226 
 
86,550 
 
38,861 
 
450,591 
Funding from UBS Group AG and its subsidiaries
5
 
47,866 
 
47,866 
Debt issued measured at amortized cost 
 
54,317 
 
8,583 
 
5 
 
(70) 
 
62,835 
Other financial liabilities measured at amortized cost 
 
5,347 
 
2,666 
 
5,204 
 
(2,844) 
 
10,373 
Total financial liabilities measured at amortized cost 
 
301,119 
 
279,379 
 
150,888 
 
(113,956) 
 
617,429 
Financial liabilities at fair value held for trading 
 
25,292 
 
383 
 
6,233 
 
(1,317) 
 
30,591 
Derivative financial instruments 
 
117,597 
 
4,046 
 
30,089 
 
(30,852) 
 
120,880 
Brokerage payables designated at fair value 
 
25,358 
 
11,877 
 
(3) 
 
37,233 
Debt issued designated at fair value 
 
65,677 
 
952 
 
(38) 
 
66,592 
Other financial liabilities designated at fair value 
 
8,571 
 
31,031 
 
(3,445) 
 
36,157 
Total financial liabilities measured at fair value through profit or loss 
 
242,495 
 
4,429 
 
80,184 
 
(35,655) 
 
291,452 
Provisions 
 
1,101 
 
196 
 
1,641 
 
2,938 
Other non-financial liabilities
4
 
1,657 
 
931 
 
3,602 
 
21 
 
6,211 
Total liabilities 
 
546,372 
 
284,936 
 
236,314 
 
(149,591) 
 
918,031 
Equity attributable to shareholders 
 
55,808 
 
13,165 
 
36,359 
 
(51,611) 
 
53,722 
Equity attributable to non-controlling interests 
 
174 
 
174 
Total equity 
 
55,808 
 
13,165 
 
36,534 
 
(51,611) 
 
53,896 
Total liabilities and equity 
 
602,181 
 
298,101 
 
272,848 
 
(201,202) 
 
971,927 
1 Amounts presented for UBS 
AG standalone and UBS 
Switzerland AG standalone represent 
IFRS standalone information. Refer 
to the UBS AG 
standalone and UBS Switzerland 
AG standalone financial statements 
under “Complementary financial information” at 
ubs.com/investors for information 
prepared in accordance with Swiss 
GAAP. 
2 Effective from the second 
quarter of 2020, UBS AG 
accounts for its investments in 
associates under 
the equity 
method of 
accounting and 
no longer 
at cost 
less impairment. 
The new 
measurement policy 
will result 
in more 
relevant information 
regarding the 
value of 
UBS AG’s 
investments in 
associates. The change was 
applied retrospectively to all prior periods presented, resulting in 
an increase in Investments in subsidiaries and associates as of 
31 December 2019 of USD 929 million and an increase 
in 
Equity attributable to shareholders as 
of 31 December 2019 of 
USD 914 million. 
3 The ”Other subsidiaries“ 
column includes consolidated information 
for the UBS Americas Holding 
LLC, UBS Europe SE 
and UBS 
Asset Management AG significant sub-groups, as well as standalone 
information for other subsidiaries. 
4 Comparative-period information has been restated. Refer to Note 1b for more 
information. 
5 Represents 
funding from UBS Group AG to UBS AG.

 
569 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
statement of cash flows 
USD million 
UBS AG
1
UBS 
Switzerland AG
1
Other 
 
subsidiaries
1
UBS AG 
(consolidated) 
For the year ended 31 December 2019 
Net cash flow from / (used in) operating activities 
 
17,531 
 
8,882 
 
(7,608) 
 
18,805 
Cash flow from / (used in) investing activities 
Purchase of subsidiaries, associates and intangible assets 
 
(6) 
 
0 
 
(20) 
 
(26) 
Disposal of subsidiaries, associates and intangible assets
2
 
100 
 
0 
 
14 
 
114 
Purchase of property, equipment and software 
 
(628) 
 
(173) 
 
(600) 
 
(1,401) 
Disposal of property, equipment and software 
 
10 
 
0 
 
1 
 
11 
Purchase of financial assets measured at fair value through other 
comprehensive income 
 
(10) 
 
0 
 
(3,414) 
 
(3,424) 
Disposal and redemption of financial assets measured at 
fair value through other 
comprehensive income 
 
10 
 
0 
 
3,904 
 
3,913 
Net (purchase) / redemption of debt securities measured 
at amortized cost 
 
(1,045) 
 
437 
 
45 
 
(562) 
Net cash flow from / (used in) investing activities 
 
(1,569) 
 
264 
 
(70) 
 
(1,374) 
Cash flow from / (used in) financing activities 
Net short-term debt issued / (repaid) 
 
(17,150) 
 
0 
 
0 
 
(17,149) 
Distributions paid on UBS AG shares 
 
(3,250) 
 
0 
 
0 
 
(3,250) 
Repayment of lease liabilities 
 
(262) 
 
0 
 
(234) 
 
(496) 
Issuance of long-term debt, including debt issued designated 
at fair value 
 
58,437 
 
621 
 
142 
 
59,199 
Repayment of long-term debt, including debt issued designated 
at fair value 
 
(67,113) 
 
(752) 
 
(1,017) 
 
(68,883) 
Funding from UBS Group AG and its subsidiaries
3
 
5,848 
 
0 
 
0 
 
5,848 
Net changes in non-controlling interests 
 
0 
 
0 
 
(8) 
 
(8) 
Net activity related to group internal capital transactions and dividends 
 
3,569 
 
(2,055) 
 
(1,514) 
 
0 
Net cash flow from / (used in) financing activities 
 
(19,922) 
 
(2,186) 
 
(2,630) 
 
(24,738) 
Total cash flow 
Cash and cash equivalents at the beginning of the year 
 
42,895 
 
54,757 
 
28,201 
 
125,853 
Net cash flow from / (used in) operating, investing and financing 
activities 
 
(3,960) 
 
6,961 
 
(10,308) 
 
(7,307) 
Effects of exchange rate differences on cash and cash equivalents 
 
664 
 
833 
 
(239) 
 
1,258 
Cash and cash equivalents at the end of the year
4
 
39,598 
 
62,551 
 
17,655 
 
119,804 
of which: cash and balances at central banks 
 
36,275 
 
60,926 
 
9,756 
 
106,957 
of which: loans and advances to banks 
 
2,697 
 
1,127 
 
7,493 
 
11,317 
of which: money market paper
5
 
626 
 
498 
 
406 
 
1,530 
1 Cash flows 
generally represent a 
third-party view from 
a UBS AG 
consolidated perspective, 
except for Net 
activity related to 
group internal capital 
transactions and 
dividends. 
2 Includes dividends 
received from 
associates. 
3 Represents funding from UBS Group AG to UBS AG. 
4 Comprises balances with an original maturity of three months or less. 
USD 3,192 million of cash and cash equivalents were restricted. 
5 Money 
market paper is included in the balance 
sheet under Financial assets at fair value 
held for trading, Financial assets measured at 
fair value through other comprehensive income, 
Financial assets at fair value 
not held for 
trading and Other financial assets measured at amortized cost.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
570 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
income statement 
USD million 
UBS AG 
(standalone)
1,2
UBS 
Switzerland AG 
(standalone)
1
Other 
subsidiaries
3
Elimination 
entries 
UBS AG 
(consolidated) 
For the year ended 31 December 2018 
Operating income 
Interest income from financial instruments measured at 
amortized cost and 
fair value through other comprehensive income 
 
4,532 
 
4,230 
 
3,634 
 
(2,275) 
 
10,121 
Interest expense from financial instruments measured at 
amortized cost 
 
(6,109) 
 
(598) 
 
(2,192) 
 
2,405 
 
(6,494) 
Net interest income from financial instruments measured 
at fair value through 
profit or loss 
 
1,079 
 
(270) 
 
625 
 
(91) 
 
1,344 
Net interest income 
 
(497) 
 
3,363 
 
2,068 
 
38 
 
4,971 
Other net income from financial instruments measured 
at fair value through 
profit or loss 
 
5,204 
 
889 
 
970 
 
(110) 
 
6,953 
Credit loss (expense) / release 
 
(37) 
 
(52) 
 
(9) 
 
(19) 
 
(117) 
Fee and commission income 
 
2,655 
 
4,474 
 
13,159 
 
(656) 
 
19,632 
Fee and commission expense 
 
(851) 
 
(391) 
 
(1,108) 
 
648 
 
(1,703) 
Net fee and commission income 
 
1,804 
 
4,083 
 
12,050 
 
(8) 
 
17,930 
Other income 
 
5,248 
 
198 
 
2,110 
 
(6,651) 
 
905 
Total operating income 
 
11,722 
 
8,480 
 
17,189 
 
(6,749) 
 
30,642 
Operating expenses 
Personnel expenses 
 
3,592 
 
1,890 
 
8,510 
 
0 
 
13,992 
General and administrative expenses 
 
4,691 
 
3,471 
 
5,403 
 
(3,490) 
 
10,075 
Depreciation and impairment of property, equipment and software 
 
715 
 
21 
 
316 
 
0 
 
1,052 
Amortization and impairment of goodwill and intangible 
assets 
 
3 
 
0 
 
62 
 
0 
 
65 
Total operating expenses 
 
9,001 
 
5,382 
 
14,291 
 
(3,490) 
 
25,184 
Operating profit / (loss) before tax 
 
2,721 
 
3,098 
 
2,898 
 
(3,259) 
 
5,458 
Tax expense / (benefit) 
 
29 
 
670 
 
577 
 
68 
 
1,345 
Net profit / (loss) 
 
2,691 
 
2,428 
 
2,321 
 
(3,327) 
 
4,113 
Net profit / (loss) attributable to non-controlling interests 
 
0 
 
0 
 
7 
 
0 
 
7 
Net profit / (loss) attributable to shareholders 
 
2,691 
 
2,428 
 
2,314 
 
(3,327) 
 
4,107 
1 Amounts presented for UBS 
AG standalone and UBS 
Switzerland AG standalone represent 
IFRS standalone information. Refer 
to the UBS AG 
standalone and UBS Switzerland 
AG standalone financial statements 
under “Complementary financial information” at 
ubs.com/investors for information 
prepared in accordance with Swiss 
GAAP. 
2 Effective from the second 
quarter of 2020, UBS AG 
accounts for its investments in 
associates under 
the equity 
method of 
accounting and 
no longer 
at cost 
less impairment. 
The new 
measurement policy 
will result 
in more 
relevant information 
regarding the 
value of 
UBS AG’s 
investments in 
associates. The change 
was applied retrospectively to 
all prior periods presented, resulting 
in an increase in Net 
profit attributable to shareholders 
for the year ended 31 
December 2018 of USD 521 million, 
almost 
entirely reflected within 
Other income. 
3 The 
”Other subsidiaries“ column 
includes consolidated information 
for the UBS 
Americas Holding LLC, 
UBS Europe SE and 
UBS Asset Management 
AG significant 
sub-
groups, as well as standalone information for other subsidiaries. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
571 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
statement of comprehensive income 
USD million 
UBS AG 
(standalone)
1,2
UBS 
Switzerland AG 
(standalone)
1
Other 
subsidiaries
3
Elimination 
entries 
UBS AG 
(consolidated) 
For the year ended 31 December 2018 
Comprehensive income attributable to shareholders 
Net profit / (loss) 
 
2,691 
 
2,428 
 
2,314 
 
(3,327) 
 
4,107 
Other comprehensive income 
Other comprehensive income that may be reclassified to the income 
statement 
Foreign currency translation, net of tax 
 
(452) 
 
(109) 
 
215 
 
(169) 
 
(515) 
Financial assets measured at fair value through other 
comprehensive income, net of tax 
 
0 
 
0 
 
(45) 
 
0 
 
(45) 
Cash flow hedges, net of tax 
 
(277) 
 
2 
 
19 
 
(13) 
 
(269) 
Total other comprehensive income that may be reclassified to the 
income statement, net of tax 
 
(729) 
 
(107) 
 
189 
 
(182) 
 
(829) 
Other comprehensive income that will not be reclassified to the 
income statement 
Defined benefit plans, net of tax 
 
89 
 
(126) 
 
212 
 
0 
 
175 
Own credit on financial liabilities designated at fair value, net of tax 
 
509 
 
509 
Total other comprehensive income that will not be reclassified to 
the income statement, net of tax 
 
598 
 
(126) 
 
212 
 
0 
 
684 
Total other comprehensive income 
 
(131) 
 
(233) 
 
401 
 
(182) 
 
(145) 
Total comprehensive income attributable to shareholders 
 
2,560 
 
2,195 
 
2,715 
 
(3,509) 
 
3,961 
Total comprehensive income attributable to non-controlling interests 
 
5 
 
5 
Total comprehensive income 
 
2,560 
 
2,195 
 
2,721 
 
(3,509) 
 
3,967 
1 Amounts presented for UBS AG 
standalone and UBS Switzerland AG 
standalone represent IFRS standalone information. 
Refer to the UBS AG 
standalone and UBS Switzerland AG 
standalone financial statements 
under “Complementary financial information” at ubs.com/investors 
for information prepared in accordance 
with Swiss GAAP. 
2 Effective from the second 
quarter of 2020, UBS AG 
accounts for its investments in 
associates under 
the equity 
method of 
accounting and 
no longer 
at cost 
less impairment. 
The new 
measurement policy 
will result 
in more 
relevant information 
regarding the 
value of 
UBS AG’s 
investments in 
associates. The 
change was 
applied retrospectively 
to all 
prior periods 
presented, resulting 
in an 
increase in 
Total comprehensive 
income attributable 
to shareholders 
for the 
year ended 
31 December 
2018 of 
USD 438 million, reflecting an increase of USD 521 million in 
Net profit attributable to shareholders and a USD 83 
million decrease in Total other comprehensive income attributable 
to shareholders. 
3 The ”Other 
subsidiaries“ column includes consolidated information for the significant sub-groups UBS 
Americas Holding LLC, UBS Europe SE, UBS Asset Management 
AG and UBS Limited, as well as standalone information for 
other subsidiaries. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated financial statements | UBS AG consolidated financial statements 
572 
 
Note 36 
Supplemental guarantor information required under SEC regulations (continued) 
Supplemental guarantor consolidated 
statement of cash flows 
USD million 
UBS AG
2
UBS 
Switzerland AG
2
Other 
 
subsidiaries
2
UBS AG 
(consolidated) 
For the year ended 31 December 2018
1
Net cash flow from / (used in) operating activities 
 
(652) 
 
14,887 
 
13,509 
 
27,744 
Cash flow from / (used in) investing activities 
Purchase of subsidiaries, associates and intangible assets 
 
(124) 
 
(5) 
 
(158) 
 
(287) 
Disposal of subsidiaries, associates and intangible assets
3
 
97 
 
0 
 
40 
 
137 
Purchase of property, equipment and software 
 
(822) 
 
(170) 
 
(481) 
 
(1,473) 
Disposal of property, equipment and software 
 
111 
 
0 
 
3 
 
114 
Purchase of financial assets measured at fair value through other 
comprehensive 
income 
 
(170) 
 
0 
 
(1,829) 
 
(1,999) 
Disposal and redemption of financial assets measured at 
fair value through other 
comprehensive income 
 
20 
 
15 
 
1,325 
 
1,361 
Net (purchase) / redemption of debt securities measured 
at amortized cost 
 
(1,000) 
 
2,111 
 
(4,881) 
 
(3,770) 
Net cash flow from / (used in) investing activities 
 
(1,888) 
 
1,951 
 
(5,982) 
 
(5,918) 
Cash flow from / (used in) financing activities 
Net short-term debt issued / (repaid) 
 
(12,295) 
 
(3) 
 
53 
 
(12,245) 
Distributions paid on UBS AG shares 
 
(3,098) 
 
0 
 
0 
 
(3,098) 
Issuance of long-term debt, including debt issued designated 
at fair value 
 
53,294 
 
872 
 
560 
 
54,726 
Repayment of long-term debt, including debt issued designated 
at fair value 
 
(42,759) 
 
(812) 
 
(772) 
 
(44,344) 
Funding from UBS Group AG and its subsidiaries
4
 
5,956 
 
0 
 
0 
 
5,956 
Net changes in non-controlling interests 
 
0 
 
0 
 
(31) 
 
(31) 
Net activity related to group internal capital transactions and dividends 
 
3,000 
 
(2,372) 
 
(628) 
 
0 
Net cash flow from / (used in) financing activities 
 
4,098 
 
(2,315) 
 
(820) 
 
963 
Total cash flow 
Cash and cash equivalents at the beginning of the year 
 
41,570 
 
40,961 
 
22,256 
 
104,787 
Net cash flow from / (used in) operating, investing and financing 
activities 
 
1,559 
 
14,523 
 
6,707 
 
22,789 
Effects of exchange rate differences on cash and cash equivalents 
 
(234) 
 
(726) 
 
(762) 
 
(1,722) 
Cash and cash equivalents at the end of the year
5
 
42,895 
 
54,757 
 
28,201 
 
125,853 
of which: cash and balances at central banks 
 
36,248 
 
53,490 
 
18,530 
 
108,268 
of which: loans and advances to banks 
 
4,849 
 
1,249 
 
9,354 
 
15,452 
of which: money market paper
6
 
1,798 
 
18 
 
318 
 
2,133 
1 Upon adoption of IFRS 
9 on 1 January 
2018, cash flows 
from certain financial assets 
previously classified as available 
-for-sale assets have 
been reclassified from investing 
to operating activities 
as the assets are 
accounted for at fair 
value through profit 
or loss effective 1 
January 2018. Refer to 
Note 1c of the 
Annual Report 2018 for 
more information. 
2 Cash flows generally 
represent a third-party 
view from a UBS 
AG 
consolidated perspective, 
except for 
Net activity 
related to 
group internal 
capital transactions 
and dividends. 
3 Includes dividends 
received from 
associates. 
4 Represents 
funding from 
UBS Group 
Funding 
(Switzerland) AG to UBS 
AG. 
5 Comprises balances with 
an original maturity of 
three months or 
less. USD 5,245 
million of cash and 
cash equivalents were 
restricted. 
6 Money market 
paper is included in 
the 
balance sheet under Financial assets at 
fair value held for trading, 
Financial assets measured at fair 
value through other comprehensive 
income, Financial assets at 
fair value not held for 
trading and Other financial 
assets measured at amortized cost. 
p
 
 
 

 
 
573 
Standalone 
financial statements 
Table of contents 
 
574 
UBS Group AG standalone financial statements
574 
Income statement
575 
Balance sheet
576 
Statement of proposed appropriation of total profit and 
dividend distribution out of total profit and capital 
contribution reserve
577 
1 
Corporate information
578
2 
Accounting policies
581 
Income statement notes
581 
3 
Dividend income from investments in subsidiaries
581 
4 
Other operating income
581 
5 
Financial income
581 
6 
Personnel expenses
582 
7 
Other operating expenses
582 
8 
Financial expenses
583 
Balance sheet notes
583 
9 
Liquid assets
583 
10 
Marketable securities
583 
11 
Other short-term receivables
583 
12 
Accrued income and prepaid expenses
584 
13 
Investments in subsidiaries
584 
14 
Financial assets
585 
15 
Current interest-bearing liabilities
585 
16 
Accrued expenses and deferred income
586 
17 
Long-term interest-bearing liabilities
588 
18 
Compensation-related long-term liabilities
588 
19 
Share capital
588 
20 
Treasury shares
589 
Additional information
589 
21 
Assets pledged to secure own liabilities
589 
22 
Contingent liabilities
590 
23 
Significant shareholders
591 
24 
Share and option ownership of the members of the 
Board of Directors, the Group Executive Board and 
other employees
593 
25 
Related parties
594 
Report of the statutory auditor on the financial statements
 
 
 

UBS Group AG standalone financial statements

574

UBS Group AG standalone financial

statements

Audited |

Income statement

USD million

CHF million

For the year ended

Note

31.12.20

31.12.19

31.12.20

31.12.19

Dividend income from investments in subsidiaries

3,853

3,400

3,646

3,464

Other operating income

155

153

Financial income

1,836

498

1,714

491

Operating income

5,706

4,052

5,376

4,108

Personnel expenses

Other operating expenses

Amortization of intangible assets

Financial expenses

1,765

625

1,650

618

Operating expenses

1,858

732

1,735

724

Profit / (loss) before income taxes

3,848

3,320

3,641

3,384

Tax expense / (benefit)

Net profit / (loss)

3,841

3,320

3,635

3,384

 
575 
 
Balance sheet 
USD million 
CHF million 
Note 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Assets 
Liquid assets 
 
9 
 
2,198 
 
1,177 
 
1,946 
 
1,140 
Marketable securities 
 
10 
 
84 
 
83 
 
74 
 
80 
Other short-term receivables 
 
11 
 
5,555 
 
2,412 
 
4,919 
 
2,335 
Accrued income and prepaid expenses 
 
12 
 
947 
 
1,010 
 
839 
 
978 
Total current assets 
 
8,784 
 
4,682 
 
7,779 
 
4,533 
Investments in subsidiaries 
 
13 
 
41,199 
 
41,209 
 
36,483 
 
39,896 
of which: investment in UBS AG 
 
40,889 
 
40,889 
 
36,209 
 
39,586 
Financial assets 
 
14 
 
50,062 
 
47,113 
 
44,332 
 
45,612 
Other intangible assets 
 
4 
 
8 
 
3 
 
8 
Other non-current assets 
 
21 
 
15 
 
19 
 
15 
Total non-current assets 
 
91,286 
 
88,346 
 
80,837 
 
85,530 
Total assets 
 
100,071 
 
93,028 
 
88,616 
 
90,063 
of which: amounts due from subsidiaries 
 
58,340 
 
51,295 
 
51,662 
 
49,660 
Liabilities 
Current interest-bearing liabilities 
 
15 
 
3,853 
 
2,547 
 
3,412 
 
2,466 
Accrued expenses and deferred income 
 
16 
 
2,097 
 
2,102 
 
1,857 
 
2,035 
Total short-term liabilities 
 
5,950 
 
4,649 
 
5,269 
 
4,501 
Long-term interest-bearing liabilities 
 
17 
 
50,993 
 
45,989 
 
45,156 
 
44,523 
Compensation-related long-term liabilities 
 
18 
 
3,128 
 
2,938 
 
2,770 
 
2,845 
Total long-term liabilities 
 
54,120 
 
48,927 
 
47,925 
 
47,368 
Total liabilities 
 
60,071 
 
53,576 
 
53,194 
 
51,869 
of which: amounts due to subsidiaries 
 
1,268 
 
987 
 
1,123 
 
955 
Equity 
Share capital 
 
19 
 
393 
 
393 
 
386 
 
386 
General reserves 
 
27,048 
 
28,352 
 
26,506 
 
27,730 
of which: statutory capital reserve 
 
27,048 
 
28,352 
 
26,506 
 
27,730 
of which: capital contribution reserve 
 
27,048 
 
28,352 
 
26,506 
 
27,730 
Voluntary earnings reserve 
 
12,738 
 
10,682 
 
8,812 
 
9,937 
Treasury shares 
 
20 
 
(4,020) 
 
(3,297) 
 
(3,917) 
 
(3,244) 
 
of which: against capital contribution reserve 
 
(180) 
 
0 
 
(174) 
 
0 
Reserve for own shares held by subsidiaries 
 
0 
 
1 
 
0 
 
1 
Net profit / (loss) 
 
3,841 
 
3,320 
 
3,635 
 
3,384 
Equity attributable to shareholders 
 
40,000 
 
39,452 
 
35,421 
 
38,194 
Total liabilities and equity 
 
100,071 
 
93,028 
 
88,616 
 
90,063

UBS Group AG standalone financial statements

576

Statement of proposed appropriation of total profit and dividend distribution out of total profit and capital

contribution reserve

The

Board

Directors

proposes

that

the

Annual

General

Meeting

Shareholders

(AGM)

8 April

2021

approve

the

appropriation

total

profit

and

ordina

dividend

distribution

USD 0.37

(gross)

cash

per

CHF 0.10

nominal value under the terms set out below:

USD million

CHF million

For the year ended

31.12.20

Net profit for the period

3,841

3,635

Profit / (loss) carried forward

Total profit available for appropriation

3,841

3,635

Appropriation of total profit

Appropriation to voluntary earnings reserve

(3,127)

(3,004)

Dividend distribution: USD 0.37 (gross) per dividend-bearing

share, USD 0.185 of which out of total profit

(714)

(632)

Profit / (loss) carried forward

1 Dividend-bearing shares are all shares

issued except for treasury shares held by

UBS Group AG as of the

record date. The amount

of USD 714 million presented is based

on the total number of shares issued

as of

31 December 2020. If the

final total amount of the

dividend is higher / lower,

the difference will be balanced

through the appropriation to the

voluntary earnings reserve.

2 For illustrative purposes,

translated at

closing exchange rate as of 31 December 2020 (CHF / USD 1.13).

USD million

CHF million

For the year ended

31.12.20

Total statutory capital reserve: capital contribution reserve before proposed

distribution

27,048

26,506

Dividend distribution: USD 0.37 (gross) per dividend-bearing

share, USD 0.185 of which out of capital contribution reserve

(714)

(632)

Total statutory capital reserve: capital contribution reserve after proposed distribution

26,334

25,874

1 The Swiss Federal

Tax Administration’s

current position is that, of the CHF 26.5

billion capital contribution reserve available as of

31 December 2020, an amount limited to CHF 11.9

billion is available from which

dividends may be paid without a

Swiss withholding tax deduction.

2 Dividend-bearing shares are all

shares issued except for treasury shares

held by UBS Group AG

as of the record date.

The amount of USD 714

million presented is based on the total number of shares issued as of 31 December 2020.

3 For illustrative purposes, translated at closing exchange

rate as of 31 December 2020 (CHF / USD 1.13).

As set out

above, half of

the ordinary dividend

distribution of

USD 0.37 (gross)

in cash

per share

is payable

out of

total profit

and

the

other

half

payable

out

the

capital

contribution

reserve. The

portion of

the dividend

paid out

of total

profit will

be subject to a 35% Swiss withholding tax.

The

ordinary

dividend

distribution

declared

USD.

Shareholders

whose

are

held

through

SIX

SIS

will

receive

dividends

CHF,

based

published

exchange

rate

calculated

up to

five decimal

places on

the day

prior to

the ex-

dividend

date.

Shareholders

holding

through

DTC

directly

registered

the

with

Computershare

will be

paid dividends

in USD.

The total

amount of

the dividend

distribution

will

capped

CHF 2,628

million

(the

Cap).

the

extent

that

the

CHF

equivalent

the

total

dividend

distribution

would

exceed

the

Cap

the

day

the

AGM,

based

the

exchange

rate

determined

the

Board

Directors in its reasonable

opinion, the USD per share

amount of

the dividend will be

reduced on a pro

rata basis so that

the total

CHF amount does not exceed the Cap.

Provided

that

the

proposed

dividend

distribution

out

the

total profit

and the

capital contribution

reserve is

approved, the

payment

the

dividend

will

made

April

202

holders

the record

date

14 April

2021. The

will be

traded ex-dividend

as of

13 April 2021

and, accordingly,

the last day on which

the shares may be traded with

entitlement

to receive the dividend will be 12 April 2021.

 
 
577 
 
Note 1 
Corporate information 
UBS Group AG is 
incorporated and domiciled in 
Switzerland and 
its 
registered 
office 
is 
at 
Bahnhofstrasse 
45, 
CH-8001 
Zurich, 
Switzerland. 
UBS Group 
AG operates 
under Art. 
620 et 
seq. of 
the 
Swiss 
Code 
of 
Obligations 
as 
an 
Aktiengesellschaft
 
(
a 
corporation limited by shares). 
UBS 
Group 
AG 
is 
the 
ultimate 
holding 
company 
of 
the 
UBS 
Group, 
the 
grantor 
of 
the 
majority
 
of 
UBS’s 
deferred 
compensation 
plans 
and 
the 
issuer
 
of 
loss
-
absorbing
 
capital 
notes which qualify as Basel III additional tier 1 
(AT1) capital on a 
consolidated UBS 
Group basis 
and senior 
unsecured debt 
which 
contributes 
to 
the 
total 
loss-absorbing 
capacity 
(TLAC) 
of 
the 
Group. 
The proceeds from the issuances of loss-absorbing AT1 capital 
notes 
and 
TLAC-eligible 
senior 
unsecured 
debt 
instruments 
are 
on-lent to UBS AG. 
›
 
Refer to Notes 15 and 17 for more information 
about the main 
terms and conditions of the loss-absorbing 
AT1 capital notes and 
TLAC-eligible senior unsecured debt instruments 
issued 
 
Furthermore, 
UBS 
Group 
AG 
grant
s
 
D
eferred 
C
ontingent 
Capital 
Plan 
(DCCP) 
awards 
to 
UBS 
Group 
employees. 
These 
DCCP 
awards 
also 
qualify 
as 
Basel 
III 
AT1 
capital 
on 
a 
consolidated UBS Group basis. 
As of 31 December 2020, UBS Group AG
’
s distributable items 
for the purpose of AT1 capital instruments were USD 39.5 billion 
(CHF
 
35.0 
billion) 
(31
 
December
 
2019
: 
USD
 
3
9.0
 
billion 
(CHF
 
3
7.7
 
billion
)
). 
For 
this 
purpose, 
distributable 
items 
are 
defined in 
the terms 
and conditions 
of the 
relevant instruments 
as 
the aggregate 
of (i) 
net profits 
carried forward 
and 
(ii) freely 
distributable reserves, 
in each 
case, less 
any amounts 
that must 
be contributed to legal reserves under applicable law. 
 
 
 

 
UBS Group AG standalone financial statements 
578 
 
Note 2 
Accounting policies
The UBS Group AG standalone financial statements are prepared 
in accordance with the principles of 
the Swiss law on accounting 
and 
financial 
reporting 
(32nd 
title 
of 
the 
Swiss 
Code 
of 
Obligations). 
The 
functional 
currency 
of 
UBS 
Group 
AG 
is 
the 
US 
dollar. 
The 
significant 
accounting 
and 
valuation 
principles 
applied 
are 
described below. 
Presentation currencies 
As the primary 
presentation currency 
of the standalone 
financial 
statements of 
UBS Group 
AG is the 
US dollar, 
amounts in 
Swiss 
francs 
are 
additionally 
presented 
for 
each 
component 
of 
the 
financial statements. UBS Group AG applies the modified 
closing 
rate method 
for converting US 
dollar amounts into 
Swiss francs: 
assets 
and 
liabilities 
are 
translated 
at 
the 
closing 
rate, 
equity 
positions at 
historic rates 
and income 
and expense 
items at 
the 
weighted 
average 
rate 
for 
the 
period. 
All 
resulting 
currency 
translation 
effects 
are 
recognized 
separately 
in 
Voluntary 
earnings 
reserve
, 
amounting 
to 
a 
negative 
currency 
translation 
effect 
of 
CHF
 
3,867
 
million
 
as 
of 
31
 
December 
20
20
 
(31 December 2019: negative CHF 544 million). 
Foreign currency translation 
Transactions 
denominated in foreign currency 
are translated into 
US 
dollars 
at 
the 
spot 
exchange 
rate 
on 
the 
date 
of 
the 
transaction. 
At 
the 
balance 
sheet 
date, 
all 
current 
assets 
and 
short-term 
liabilities as 
well as 
Financial 
assets
 
measured 
at 
fair 
value that 
are denominated 
in a 
foreign currency 
are 
translated 
into US 
dollars using 
the closing 
exchange rate. 
For 
Other non-
current 
assets
 
and 
long-term 
liabilities, 
where 
the 
asset 
mirrors 
the 
terms 
of 
a 
corresponding 
liability 
or 
the 
asset 
and 
liability 
otherwise 
form 
an 
economic 
hedge 
relationship, 
the 
asset 
and 
liability 
are 
treated 
as 
one 
unit of 
account 
for 
foreign 
currency 
translation purposes, 
with offsetting 
unrealized foreign 
currency 
translation gains 
and losses 
based on 
the closing 
exchange rate 
presented 
net
 
in 
the 
income 
statement. 
Investments 
in 
subsidiaries
 
measured 
at 
historic cost 
are 
translated 
at 
the spot 
exchange 
rate 
on 
the 
date 
of 
the 
transaction. 
Currency 
translation 
effects 
from 
dividends 
paid 
in 
Swiss 
francs 
are 
recognized 
in 
equity. 
All 
other 
currency 
translation 
effects 
are 
recognized in the income statement. 
The 
main 
currency 
translation 
rates 
used 
by 
UBS 
Group 
AG 
are provided in Note 33 of the consolidated financial statements. 
Marketable securities 
Marketable 
securities
 
include 
investments 
i
n 
alternative 
investment vehicles 
(AIVs) with a 
short-term holding 
period. The 
holding period is deemed short term 
if the vesting of the awards 
hedged by 
the AIV 
is within 
12 months 
after the 
balance sheet 
date. 
These 
are 
equity 
instruments 
and 
are 
measured 
at 
fair 
value based on quoted market prices or 
other observable market 
prices 
as 
of 
the 
balance 
sheet 
date. 
Gains 
and 
losses 
resulting 
from 
fair value 
changes are 
recognized 
in 
Financial income
 
and 
Financial expenses,
 
respectively. 
Financial assets 
Financial 
assets
 
include 
investments 
in 
AIVs 
with 
a 
long-term 
holding 
period. 
The 
holding 
period 
is 
deemed 
long 
term 
if 
the 
vesting 
of 
the 
awards 
hedged 
by 
the 
AIV 
is 
more 
than 
12 
months 
after 
the 
balance 
sheet 
date. 
These 
are 
equity 
instruments 
and 
are 
measured 
at 
fair 
value 
based 
on 
their 
quoted market prices or other observable market prices as of the 
balance 
sheet 
date. 
Gains 
and 
losses 
resulting 
from 
fair 
value 
changes 
are 
recognized 
in 
Financial 
income
 
and 
Financial 
expenses,
 
respectively. 
Investments in 
AIVs that 
have no 
quoted market 
price or 
no 
other observable 
market price 
are recognized 
as 
Financial assets 
and 
are 
measured 
at 
their 
acquisition 
cost 
adjusted 
for 
impairment losses. 
Financial assets
 
further include loans 
granted to 
UBS AG that 
substantially mirror 
the terms of 
the perpetual 
AT1 capital notes 
and 
the TLAC-eligible 
senior unsecured 
debt instruments 
issued 
as well as fixed-term deposits 
with UBS AG with maturities 
more 
than 
12 
months 
after 
the 
balance 
sheet 
date. 
The 
loans 
and 
deposits are measured at nominal value. 
›
 
Refer to Note 14 for more information 
Derivative instruments 
UBS Group AG uses 
derivative instruments to manage exposures 
to foreign currency risks from investments in foreign subsidiaries. 
The 
derivative 
instruments 
are 
entered 
into 
with 
UBS 
AG, 
mirroring 
the 
conditions 
of 
the 
closing 
transactions 
UBS 
AG 
enters into with third parties. 
Derivative 
instruments 
are 
measured 
at 
fair 
value 
based 
on 
quoted market prices or other observable market prices as of the 
balance 
sheet 
date. 
Unrealized 
gains 
and 
losses 
are 
recognized 
on 
the balance 
sheet as 
Accrued 
income and 
prepaid 
expenses
 
and
 
Accrued 
expenses 
and 
deferred 
income
,
 
respectively
. 
Corresponding gains and losses resulting from fair value changes 
are 
recognized 
in 
Financial 
income
 
and 
Financial 
expenses,
 
respectively. 
 
 

 
 
579 
 
Note 2 
Accounting policies (continued)
Investments in subsidiaries 
Investments 
in 
subsidiaries 
are 
equity 
interests 
that 
are 
held 
to 
carry 
on 
the 
business 
of 
the 
UBS 
Group 
or 
for 
other 
strategic 
purposes. 
They 
include 
all 
subsidiaries 
directly 
held 
by 
UBS 
Group AG 
through which 
UBS conducts its 
business on a 
global 
basis. 
The 
investments 
are 
measured 
individually 
and 
carried 
at 
cost less impairment. 
›
 
Refer to Note 13 for more information 
›
 
Refer to Note 2 in the “Consolidated financial 
statements” 
section of this report for a description of 
businesses of the UBS 
Group 
Long-term interest-bearing liabilities 
Long-term 
interest-bearing 
liabilities 
include 
perpetual 
loss-
absorbing 
capital 
notes 
that 
qualify 
as 
Basel 
III 
AT1 
capital and 
TLAC-eligible senior 
unsecured debt 
instruments at 
Group level. 
They are 
measured at 
nominal value. 
Any difference 
to nominal 
value, e.g., 
premium, discount 
or external 
costs that 
are dire 
ctly 
related 
to the 
issue, is 
deferred as 
Accrued income 
and prepaid 
expenses
 
or 
Accrued 
expenses 
and 
deferred 
income
 
and 
amortized 
to 
Financial 
expenses
 
or 
Financial 
income
 
over 
the 
maturity of 
the instrument 
or until 
the first 
call date 
or optional 
redemption date, where applicable. 
›
 
Refer to Note 17 for more information 
Treasury shares 
Treasury 
shares 
acquired 
by 
UBS 
Group 
AG 
are 
recognized 
at 
acquisition 
cost 
and 
are 
presented 
as 
a 
deduction 
from 
shareholders’ equity. 
 
Policy applicable from 1 January 2020 
Upon disposal 
of treasury 
shares or 
settlement of 
related share-
based 
awards, 
any 
realized 
gain 
or 
loss 
is 
recognized 
in 
Voluntary 
earnings 
reserve
. 
Realized 
gains 
and 
losses 
from 
settlement 
of 
share-based 
awards 
represent 
the 
difference 
between 
the acquisition 
cost of 
the 
UBS 
Group 
AG 
shares 
and 
the grant date fair value 
of the share-based awards. 
For the year 
ended 31 December 2020, a net gain 
of USD 38 million (CHF 37 
million) 
from 
settlement of 
share-based 
awards 
was recognized 
in 
Voluntary 
earnings 
reserve
 
(2019 
comparative 
period: 
a 
net 
loss of USD 
191 million (CHF 
191 million) was 
recognized in 
the 
income 
statement 
under 
the 
previously 
applied 
accounting 
policy 
as 
outlined 
below). 
UBS 
deems 
the 
revised 
prospectively 
applied 
accounting 
policy 
a 
more 
reliable 
presentation 
of 
the 
related gains and losses. 
 
Policy applicable prior to 1 January 2020 
Upon disposal 
of treasury 
shares or 
settlement of 
related share-
based 
awards, 
any 
realized 
gain 
or 
loss 
is 
recognized 
through 
the 
income 
statement 
as 
Financial 
income
 
and 
Financial 
expenses
, 
respectively. 
For 
settlement 
of 
related 
share
-
based 
awards, 
the 
realized 
gains 
and 
losses 
on 
treasury 
shares 
represent 
the 
difference 
between 
the 
market 
price 
of 
the 
treasury shares at settlement and their acquisition cost. 
For 
UBS 
Group 
AG 
shares 
acquired 
by 
a 
direct 
or 
indirect 
subsidiary, 
a 
Reserve 
for 
own 
shares 
held 
by 
subsidiaries
 
is 
generally 
created 
in 
UBS 
Group 
AG’s 
equity. 
However, 
where 
UBS 
AG 
or 
UBS 
Switzerland 
AG 
acquire 
UBS 
Group 
AG 
shares 
and 
hold 
such 
in 
their 
trading 
portfolios, 
no 
Reserve 
for 
own 
shares held by subsidiaries
 
is created. 
›
 
Refer to Note 20 for more information 
Share-based and other deferred compensation plans 
Share-based compensation plans 
The 
grant 
date 
fair 
value 
of 
equity-settled 
share-based 
compensation 
awards 
granted 
to 
employees 
is 
generally 
recognized 
over 
the 
vesting 
period 
of 
the 
awards. 
Awards 
granted 
in 
the 
form 
of 
UBS 
Group 
AG 
shares 
and 
notional 
shares are 
settled by 
delivering UBS 
Group AG 
shares at 
vesting 
except in jurisdictions where 
this is not permitted 
for legal or tax 
reasons. 
They
 
are 
recognized 
as 
Compensation-related 
long-
term 
liabilities 
if 
vesting 
is 
more 
than 
12 
months 
after 
the 
balance sheet date 
or as 
Accrued expenses and 
deferred income
 
if 
vesting 
is 
within 
12 
months 
of 
the 
balance 
sheet 
date. 
The 
amount 
recognized 
is adjusted 
for 
forfeiture 
assumptions, 
such 
that 
the amount 
ultimately 
recognized 
is based 
on the 
number 
of awards that 
meet the related 
service conditions at the 
vesting 
date. 
The 
grant 
date 
fair 
value is 
based 
on 
the 
UBS 
Group 
AG 
share price 
on the 
date of grant, 
taking into 
consideration post-
vesting sale 
and hedge 
restrictions, 
dividend rights, 
non-vesting 
conditions and market conditions, where applicable. 
 
Policy applicable from 1 January 2020
 
Upon settlement of the share-based awards, 
any realized gain or 
loss 
on 
the 
treasury 
shares 
is 
recognized 
in 
Voluntary 
earnings 
reserve
. 
Realized 
gains 
and 
losses 
from 
settlement 
of 
share-
based 
awards 
represent 
the 
difference 
between 
the 
acquisition 
cost of 
the UBS 
Group AG 
shares and 
the grant 
date fair 
value 
of the share-based awards. 
 
Policy applicable prior to 1 January 2020 
Upon settlement of the share-based 
awards, any realized gain or 
loss 
is 
recognized 
in 
the 
income 
statement 
as 
Other 
operating 
income
 
and
 
Other 
operating 
expen
ses,
 
respectively. 
Realized 
gains and losses 
on share-based awards 
represent the difference 
between 
the 
market 
price 
of 
the 
UBS 
Group 
AG 
shares 
at 
settlement 
and 
the 
grant 
date 
fair 
value 
of 
the 
share-based 
awards. 
 
 
 

 
UBS Group AG standalone financial statements 
580 
 
Note 2 
Accounting policies (continued)
Other deferred compensation plans 
Deferred compensation plans that are not share-based, including 
DCCP awards and awards in 
the form of AIVs, are accounted for 
as 
cash-settled 
awards. 
The 
present 
value 
or 
fair 
value 
of 
the 
amount 
payable 
to 
employees 
that 
is 
settled 
in 
cash 
is 
recognized 
as 
a 
liability 
generally 
over 
the 
vesting 
period, 
as 
Compensation-related 
long-term 
liabilities
 
if vesting is more than 
12 
months 
after 
the 
balance 
sheet 
date 
and 
as 
Accrued 
expenses 
and 
deferred 
income
 
if 
vesting 
is 
within 
12 
months 
from 
the 
balance 
sheet 
date. 
The 
liabilities 
are 
remeasured 
at 
each 
balance 
sheet 
date 
at 
the 
present 
value 
of 
the 
corresponding DCCP 
award and 
the fair 
value of 
investments in 
AIVs. 
Gains 
and 
losses 
resulting 
from 
remeasurement 
of 
the 
liabilities 
are 
recognized 
in 
Other 
operating 
income
 
and 
Other 
operating expenses
, respectively. 
Recharge of compensation expenses 
Expenses related 
to deferred 
compensation plans 
are 
recharged 
by 
UBS 
Group 
AG 
to 
its 
subsidiaries 
employing 
the 
personnel. 
Upon recharge, 
UBS Group 
AG recognizes 
a receivable 
from 
its 
subsidiaries 
corresponding 
to 
a 
liability 
representing 
its 
obligation toward the employees. 
Dispensations in the standalone financial statements 
As UBS 
Group AG 
prepares consolidated 
financial statements 
in 
accordance 
with 
IFRS, 
UBS 
Group 
AG 
is 
exempt 
from 
various 
disclosures 
in 
the 
standalone 
financial 
statements. 
The 
dispensations include the management report and the statement 
of cash flows, as well as certain note disclosures. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
581 
Income statement notes 
Note 3 
Dividend income from investments in subsidiaries 
Dividend 
income 
from 
investments 
in 
subsidiaries 
in 
2020 
consisted 
of 
USD
 
3,
848
 
million 
(CHF
 
3,641 
million) 
received 
from 
UBS 
AG 
related 
to 
the 
2019 
financial 
year, 
which 
was 
approved by the Annual 
General Meeting of the Shareholders 
of 
UBS 
AG 
on 
27
 
April
 
20
20 
(USD 
2,
5
50 
million 
(
CHF
 
2,462 
million)
)
 
and 
the 
Extraordinary 
General 
Meeting 
of 
the 
Shareholders 
of 
UBS 
AG 
on 
1
9
 
November 
2020
 
(USD
 
1,298 
million 
(CHF 
1,179 
million)), 
and 
USD 5 
million 
(CHF 5 
million) 
net
 
liquidation 
dividend 
received 
from 
UBS 
Group 
Funding 
(Switzerland) 
AG 
in 
Liquidation 
following 
liquidation 
of 
the 
entity 
in
 
the
 
course 
of 
2020
, 
which 
was 
approved 
by 
the 
Extraordinary
 
General 
M
eeting 
of 
the 
Shareholders 
of 
UBS 
Group 
Funding 
(Switzerland) 
AG 
in 
Liquidation 
held 
on 
8 October 2020. 
In 2019, 
dividend income 
from 
investments in 
subsidiaries 
consisted 
of 
USD 3,250 
million 
(CHF 3,311 
million) 
received 
from 
UBS 
AG 
related 
to 
the 
financial 
year 
ended 
31 December 2018, which was 
approved by the 
Annual General 
Meeting 
of 
the 
Shareholders 
of 
UBS 
AG 
on 
18 April 
2019, 
USD 143 
million 
(CHF 146 
million) 
received 
from 
UBS 
Business 
Solutions 
AG 
related 
to 
the 
financial 
year 
ended 
31 December 
2018, 
which 
was 
approved 
by 
the 
Annual 
General 
Meeting 
of 
the 
Shareholders 
of 
UBS 
Business 
Solutions 
AG 
on 
17 April 
201
9
, 
and 
USD
 
6
 
million 
(CHF
 
6
 
million
)
 
received 
from 
UBS 
Group 
Funding 
(Switzerland) 
AG 
related 
to 
the 
financial 
year 
ended 
31 December 
2018, 
which was 
approved 
by 
the 
Annual 
General 
Meeting 
of 
the 
Shareholders 
of 
UBS 
Group 
Funding 
(Switzerland) AG on 8 March 2019. 
Note 4 
Other operating income 
USD million 
CHF million 
For the year ended 
For the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Gains related to equity-settled and cash-settled awards 
 
17 
 
120 
 
16 
 
119 
Commission income from guarantees issued 
 
0 
 
35 
 
0 
 
34 
Total other operating income 
 
17 
 
155 
 
16 
 
153 
Note 5 
Financial income 
USD million 
CHF million 
For the year ended 
For the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Fair value gains on investments in AIVs 
 
49 
 
45 
 
44 
 
45 
Interest income on onward lending to UBS AG
1
 
1,769 
 
421 
 
1,653 
 
414 
Interest income on other interest-bearing assets 
 
14 
 
29 
 
13 
 
28 
Other 
 
4 
 
3 
 
4 
 
3 
Total financial income 
 
1,836 
 
498 
 
1,714 
 
491 
1 In October 
2019, onward 
lending was transferred 
from UBS Group 
Funding (Switzerland) AG 
to UBS Group 
AG. Interest 
income for the 
year ended 31 
December 2019 includes 
interest for the 
period from the 
transfer date until the end of the year. 
Note 6 
Personnel expenses 
Personnel 
expenses 
include 
recharges 
from 
UBS 
AG 
and 
UBS 
Business 
Solutions 
AG 
for 
personnel-related 
costs 
for 
activities 
performed by 
the personnel 
of those 
companies for 
the benefit 
of UBS Group AG. 
UBS 
Group 
AG 
had 
no 
employees 
throughout
 
2020 
and 
2019. 
All employees 
of the 
UBS Group, 
including the 
members 
of 
the 
Group 
Executive 
Board 
(GEB) 
of 
UBS 
Group 
AG, 
were 
employed 
by 
subsidiaries 
of 
UBS 
Group 
AG. 
As 
of 
31 December 2020, the 
UBS Group employed 
71,551 personnel 
(31 December 2019: 68,601) on a full-time equivalent basis. 
 
 

UBS Group AG standalone financial statements

582

Note 7

Other operating expenses

USD million

CHF million

For the year ended

31.12.20

31.12.19

31.12.20

31.12.19

Fair value losses on AIV awards

Capital tax

Other

Total other operating expenses

Note 8

Financial expenses

USD million

CHF million

For the year ended

31.12.20

31.12.19

31.12.20

31.12.19

Treasury share losses

191

Interest expense on interest-bearing liabilities

1,756

429

1,641

422

Other

Total financial expenses

1,765

625

1,650

618

1 As of

1 January 2020,

a new accounting

policy for the

recognition of realized

gains and losses

on treasury shares

was applied.

Refer to Note

2 for more

information.

2 In October 2019,

loss-absorbing AT1

capital notes and TLAC-eligible senior

unsecured debt instruments that had

previously been issued by UBS

Group Funding (Switzerland) AG were

transferred to UBS Group AG.

Related interest expense for the

year

ended 31 December 2019 includes interest for the period from the transfer date until the end of the year.

583

Balance sheet notes

Note 9

Liquid assets

31 December

2020,

liquid

assets

comprised

USD 987

million

(CHF 874

million)

held

current

accounts

UBS Switzerland

and

UBS

and

USD 1,211

million

(CHF 1,072 million)

of time

deposits placed

with UBS

AG. As

31 December

2019,

liquid

assets

comprised

USD 794

million

(CHF 769

million)

held

current

accounts

UBS

Switzerland

AG and

UBS AG

and USD 383

million (CHF 371

million) of

time

deposits placed with UBS AG.

Note 10

Marketable securities

Marketable

securities

include

investments

in AIVs

to compensation

awards

vesting

within

12 months

after

the balance

sheet

date.

Note 11

Other short-term receivables

USD million

CHF million

31.12.20

31.12.19

31.12.20

31.12.19

Onward lending to UBS AG

4,987

1,870

4,416

1,811

Receivables from employing entities related to compensation

awards

517

482

458

466

Other

Total other short-term receivables

5,555

2,412

4,919

2,335

1 Short-term receivables from the

onward lending of the proceeds

from the issuances of TLAC

-eligible senior unsecured debt and

loss-absorbing additional tier 1 perpetual

capital notes to UBS AG.

Refer to Note 1

for more information.

Note 12

Accrued income and prepaid expenses

USD million

CHF million

31.12.20

31.12.19

31.12.20

31.12.19

Accrued interest income

754

816

668

790

Other accrued income and prepaid expenses

193

194

171

188

Total accrued income and prepaid expenses

947

1,010

839

978

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group AG standalone financial statements 
584 
 
Note 13 
Investments in subsidiaries 
Unless otherwise stated, 
the subsidiaries listed 
below have share 
capital 
consisting 
solely 
of 
ordinary 
shares, 
which 
are 
held 
by 
UBS Group AG or 
UBS AG. The proportion of ownership 
interest 
held is 
equal to 
the voting rights 
held by 
UBS Group 
AG or UBS 
AG. The country where the 
respective registered office 
is located 
is also 
the principal place 
of business. UBS 
AG operates through 
a global 
network of 
branches and 
a significant 
proportion of 
its 
business activity is 
conducted outside Switzerland 
in the UK, 
the 
US, Singapore, 
Hong Kong 
and other 
countries. UBS 
Europe 
SE 
has 
branches 
and 
offices 
in 
a 
number 
of 
EU 
Member 
States, 
including Germany, 
Italy, 
Luxembourg, Spain 
and Austria. 
Share 
capital is provided in the currency of the legally registered office. 
 
Individually significant subsidiaries 
of UBS Group AG as of 31 December 2020 
Company 
Registered office 
Share capital in million 
Equity interest accumulated in % 
UBS AG 
Zurich and Basel, Switzerland 
CHF 
 
385.8 
 
100.0 
UBS Business Solutions AG
1
Zurich, Switzerland 
CHF 
 
1.0 
 
100.0 
1 UBS Business Solutions AG holds subsidiaries in Poland, China and India. 
Individually significant subsidiaries 
of UBS AG as of 31 December 2020
1
Company 
Registered office 
Primary business 
Share capital in million 
Equity interest accumulated in % 
UBS Americas Holding LLC 
Wilmington, Delaware, USA 
Group Functions 
USD 
 
3,150.0
2
 
100.0 
UBS Americas Inc. 
Wilmington, Delaware, USA 
Group Functions 
USD 
 
0.0 
 
100.0 
UBS Asset Management AG 
Zurich, Switzerland 
Asset Management 
CHF 
 
43.2 
 
100.0 
UBS Bank USA 
Salt Lake City, Utah, USA 
Global Wealth Management 
USD 
 
0.0 
 
100.0 
UBS Europe SE 
Frankfurt, Germany 
Global Wealth Management 
EUR 
 
446.0 
 
100.0 
UBS Financial Services Inc. 
Wilmington, Delaware, USA 
Global Wealth Management 
USD 
 
0.0 
 
100.0 
UBS Securities LLC 
Wilmington, Delaware, USA 
Investment Bank 
USD 
 
1,283.1
3
 
100.0 
UBS Switzerland AG 
Zurich, Switzerland 
Personal & Corporate Banking 
CHF 
 
10.0 
 
100.0 
1 Includes direct 
and indirect subsidiaries 
of UBS AG. 
2 Consists of common 
share capital of 
USD 1,000 and non-voting 
preferred share capital 
of USD 3,150,000,000. 
3 Consists of common 
share capital of 
USD 100,000 and non-voting preferred share capital of USD 1,283,000,000. 
 
Individually 
significant subsidiaries 
of 
UBS AG 
are 
those entities 
that 
contribute significantly 
to the 
Group’s 
financial 
position or 
results 
of 
operations, 
based 
on 
a 
number 
of 
criteria, 
including 
the 
subsidiaries’ 
equity 
and 
their 
contribution 
to 
the 
Group’s 
total 
assets 
and 
profit 
or 
loss 
before 
tax, 
in 
accordance 
with 
Swiss regulations. 
›
 
Refer to Note 28 in the “Consolidated 
financial statements” 
section of this report for more information 
 
Note 14 
Financial assets 
USD million 
CHF million 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Long-term receivables from UBS AG
1
 
49,554 
 
46,644 
 
43,882 
 
45,158 
Investments in alternative investment vehicles at fair 
value related to awards vesting after 12 months 
 
248 
 
229 
 
219 
 
222 
Investments in alternative investment vehicles at cost 
less impairment 
 
2 
 
4 
 
2 
 
4 
Other 
 
258 
 
236 
 
229 
 
229 
Total financial assets 
 
50,062 
 
47,113 
 
44,332 
 
45,612 
1 Long-term receivables from UBS 
AG include the onward 
lending of the proceeds from the 
issuances of TLAC-eligible senior unsecured 
debt and loss-absorbing additional tier 
1 perpetual capital notes for 
the total 
amount of USD 48,598 million (CHF 43,035 million) as of 31 December 2020 (31 December 2019: USD 45,682 million (CHF 44,226 million)). Refer to Note 
1 for more information. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
585 
 
Note 15 
Current interest-bearing liabilities 
As 
of 
31 
December 
2020, 
current 
interest-bearing 
liabilities 
totaled USD 3,853 
million (CHF 3,412 
million) comprising 
TLAC-
eligible senior 
unsecured debt 
instruments of 
USD 2,850 million 
(CHF
 
2,524 
million) 
and 
loans 
from 
UBS 
AG 
and 
UBS 
Switzerland 
AG 
of 
USD 1,003 
million 
(CHF 889 
million). 
As 
of 
31 December 
2019, 
current 
interest-bearing 
liabilities 
totaled 
USD 2,547 
million 
(CHF 2,466 
million) 
comprising 
TLAC-eligible 
senior 
unsecured 
debt 
instruments 
of 
USD 1,800 
million 
(CHF
 
1,743 
million) 
and 
loans 
from 
UBS 
AG 
and 
UBS 
Switzerland AG of USD 747 million (CHF 723 million). 
 
 
Notes issued, overview by amount, maturity 
and coupon 
31.12.20 
31.12.19 
Carrying amount 
Carrying amount 
In million, except where indicated 
Contractual 
maturity 
First optional 
call date 
Coupon
1
in transaction 
currency 
in USD 
in CHF 
in transaction 
currency 
in USD 
in CHF 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
24.09.20 
n/a 
3M USD LIBOR + 144 bps 
 
0 
 
0 
 
0 
 
300 
 
300 
 
290 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
24.09.20 
n/a 
2.95% 
 
0 
 
0 
 
0 
 
1,500 
 
1,500 
 
1,452 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
14.04.21 
n/a 
3M USD LIBOR + 178 bps 
 
1,000 
 
1,000 
 
886 
 
0 
 
0 
 
0 
US dollar-denominated TLAC-eligible senior 
unsecured notes
2
15.04.21 
n/a 
3% 
 
1,850 
 
1,850 
 
1,638 
 
0 
 
0 
 
0 
Total notes issued 
 
2,850 
 
2,524 
 
1,800 
 
1,743 
1 For TLAC-eligible 
senior unsecured notes, 
the disclosed coupon rate 
refers to the contractual 
coupon rate applied from 
the issue date up 
to the contractual 
maturity date or, 
if applicable, to 
the first optional call 
date. 
2 Instrument was partially repurchased on 7 December 2020. 
 
 
Note 16 
Accrued expenses and deferred income 
USD million 
CHF million 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Short-term portion of compensation liabilities 
 
1,312 
 
1,268 
 
1,162 
 
1,228 
of which: Deferred Contingent Capital Plan 
 
518 
 
497 
 
458 
 
482 
of which: other deferred compensation plans 
 
794 
 
771 
 
703 
 
746 
Accrued interest expense 
 
728 
 
784 
 
644 
 
759 
Other 
 
57 
 
50 
 
51 
 
48 
Total accrued expenses and deferred income 
 
2,097 
 
2,102 
 
1,857 
 
2,035 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group AG standalone financial statements 
586 
 
Note 17 
Long-term interest-bearing liabilities 
As 
of 
31 December 
2020, 
long-term 
interest-bearing 
liabilities 
totaled 
USD
 
50,993
 
million 
(CHF
 
45
,
156
 
million) 
comprising
 
loss
-
absorbing 
AT1 
perpetual 
capital 
notes
 
and
 
TLAC
-
eligible 
senior 
uns
ecured 
debt 
instruments 
of 
USD
 
50,735 
million 
(CHF
 
44,927 
million) 
and
 
fixed
-
term 
loans 
from 
UBS 
AG 
of 
USD 258 
million 
(CHF 229 
million). 
As 
of 31 
December 
2019, 
long-term 
interest-bearing 
liabilities 
totaled 
USD 
45,989 
million 
(CHF 
44,523 
million) 
comprising 
loss-absorbing 
AT1 
perpetual 
capital 
notes 
and 
TLAC-eligible 
senior 
unsecured 
debt 
instruments 
of 
USD 
45,752 
million 
(CHF 
44,294 
million) 
and 
fixed-term 
loans 
from 
UBS 
AG 
of 
USD 
236 
million 
(CHF 
229 
million). 
 
Notes issued, overview by amount, maturity 
and coupon 
31.12.20 
31.12.19 
Carrying amount 
Carrying amount 
In million, except where indicated 
Contractual 
maturity 
First optional 
call date 
Coupon
1
in transaction 
currency 
in USD 
in CHF 
in transaction 
currency 
in USD 
in CHF 
US dollar-denominated high-trigger loss-absorbing 
additional tier 1 perpetual capital notes
2
Perpetual 
19.02.20 
7.125% 
 
0 
 
0 
 
0 
 
1,250 
 
1,250 
 
1,210 
Australian dollar-denominated TLAC-eligible 
senior unsecured notes
3
18.11.34 
18.11.20 
3.03% 
 
0 
 
0 
 
0 
 
100 
 
70 
 
68 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
14.04.21 
n/a 
3M USD LIBOR + 178 bps 
 
0 
 
0 
 
0 
 
1,000 
 
1,000 
 
968 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
15.04.21 
n/a 
3% 
 
0 
 
0 
 
0 
 
2,000 
 
2,000 
 
1,936 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
01.02.22 
n/a 
3M USD LIBOR + 153 bps 
 
500 
 
500 
 
443 
 
500 
 
500 
 
484 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
01.02.22 
n/a 
2.65% 
 
2,000 
 
2,000 
 
1,771 
 
2,000 
 
2,000 
 
1,936 
Swiss franc-denominated TLAC-eligible senior 
unsecured notes 
22.02.22 
n/a 
0.75% 
 
300 
 
339 
 
300 
 
300 
 
310 
 
300 
Euro-denominated TLAC-eligible senior 
unsecured notes 
20.09.22 
20.09.21 
3M EUR LIBOR + 70 bps 
 
1,750 
 
2,137 
 
1,892 
 
1,750 
 
1,962 
 
1,900 
Euro-denominated TLAC-eligible senior 
unsecured notes 
16.11.22 
n/a 
1.75% 
 
1,250 
 
1,526 
 
1,352 
 
1,250 
 
1,402 
 
1,357 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
23.05.23 
23.05.22 
3.491% 
 
2,000 
 
2,000 
 
1,771 
 
2,000 
 
2,000 
 
1,936 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
23.05.23 
23.05.22 
3M USD LIBOR + 122 bps 
 
1,000 
 
1,000 
 
886 
 
1,000 
 
1,000 
 
968 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
15.08.23 
15.08.22 
3M USD LIBOR + 95 bps 
 
1,250 
 
1,250 
 
1,107 
 
1,250 
 
1,250 
 
1,210 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
15.08.23 
15.08.22 
2.859% 
 
2,000 
 
2,000 
 
1,771 
 
2,000 
 
2,000 
 
1,936 
Euro-denominated TLAC-eligible senior 
unsecured notes 
04.03.24 
n/a 
2.125% 
 
750 
 
916 
 
811 
 
750 
 
841 
 
814 
Swiss franc-denominated TLAC-eligible senior 
unsecured notes 
18.05.24 
18.05.23 
0.625% 
 
400 
 
452 
 
400 
 
400 
 
413 
 
400 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
30.07.24 
30.07.23 
1.008% 
 
1,300 
 
1,300 
 
1,151 
 
0 
 
0 
 
0 
Yen-denominated TLAC-eligible senior 
unsecured notes 
08.11.24 
08.11.23 
0.719% 
 
130,000 
 
1,259 
 
1,115 
 
130,000 
 
1,196 
 
1,157 
Euro-denominated TLAC-eligible senior 
unsecured notes 
30.11.24 
30.11.23 
1.5% 
 
1,250 
 
1,526 
 
1,352 
 
1,250 
 
1,402 
 
1,357 
Swiss franc-denominated TLAC-eligible senior 
unsecured notes 
30.01.25 
30.01.24 
0.875% 
 
400 
 
452 
 
400 
 
400 
 
413 
 
400 
Euro-denominated TLAC-eligible senior 
unsecured notes 
17.04.25 
17.04.24 
1.25% 
 
1,750 
 
2,137 
 
1,892 
 
1,750 
 
1,962 
 
1,900 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
24.09.25 
n/a 
4.125% 
 
2,500 
 
2,500 
 
2,214 
 
2,500 
 
2,500 
 
2,420 
Euro-denominated TLAC-eligible senior 
unsecured notes 
29.01.26 
29.01.25 
0.25% 
 
1,500 
 
1,832 
 
1,622 
 
0 
 
0 
 
0 
Swiss franc-denominated TLAC-eligible senior 
unsecured notes 
23.02.26 
n/a 
1.25% 
 
150 
 
169 
 
150 
 
150 
 
155 
 
150 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
15.04.26 
n/a 
4.125% 
 
2,000 
 
2,000 
 
1,771 
 
2,000 
 
2,000 
 
1,936 
Euro-denominated TLAC-eligible senior 
unsecured notes 
01.09.26 
n/a 
1.25% 
 
1,250 
 
1,526 
 
1,352 
 
1,250 
 
1,402 
 
1,357 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
30.01.27 
30.01.26 
1.364% 
 
1,300 
 
1,300 
 
1,151 
 
0 
 
0 
 
0 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
587 
 
Note 17 
Long-term interest-bearing liabilities (continued) 
Notes issued, overview by amount, maturity 
and coupon (continued) 
31.12.20 
31.12.19 
Carrying amount 
Carrying amount 
In million, except where indicated 
Contractual 
maturity 
First optional 
call date 
Coupon
1
in transaction 
currency 
in USD 
in CHF 
in transaction 
currency 
in USD 
in CHF 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
23.03.28 
23.03.27 
4.253% 
 
2,000 
 
2,000 
 
1,771 
 
2,000 
 
2,000 
 
1,936 
Euro-denominated TLAC-eligible senior 
unsecured notes 
05.11.28 
05.11.27 
0.25% 
 
1,500 
 
1,832 
 
1,622 
 
0 
 
0 
 
0 
Yen-denominated TLAC-eligible senior 
unsecured notes 
09.11.28 
09.11.27 
0.973% 
 
20,000 
 
194 
 
171 
 
20,000 
 
184 
 
178 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
13.08.30 
13.08.29 
3.126% 
 
1,500 
 
1,500 
 
1,328 
 
1,500 
 
1,500 
 
1,452 
Australian dollar-denominated TLAC-eligible 
senior unsecured notes 
18.08.35 
18.08.30 
Zero coupon accreting 
(annual yield of 2.5%) 
 
36 
 
28 
 
25 
 
0 
 
0 
 
0 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
24.11.35 
24.11.23 
2.21% 
 
40 
 
40 
 
35 
 
0 
 
0 
 
0 
Australian dollar-denominated TLAC-eligible 
senior unsecured notes 
03.12.35 
03.12.23 
2.3% 
 
45 
 
35 
 
31 
 
0 
 
0 
 
0 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
04.11.49 
04.11.22 
Zero coupon accreting 
(annual yield of 3.8%) 
 
146 
 
146 
 
129 
 
141 
 
141 
 
136 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
04.03.50 
04.03.25 
Zero coupon accreting 
(annual yield of 3.6%) 
 
124 
 
124 
 
109 
 
0 
 
0 
 
0 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
14.04.50 
14.04.25 
Zero coupon accreting 
(annual yield of 4%) 
 
206 
 
206 
 
182 
 
0 
 
0 
 
0 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
22.05.50 
22.05.25 
Zero coupon accreting 
(annual yield of 3.5%) 
 
102 
 
102 
 
90 
 
0 
 
0 
 
0 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
27.05.50 
27.05.25 
Zero coupon accreting 
(annual yield of 3.5%) 
 
510 
 
510 
 
452 
 
0 
 
0 
 
0 
US dollar-denominated TLAC-eligible senior 
unsecured notes 
22.09.50 
22.09.23 
Zero coupon accreting 
(annual yield of 2.8%) 
 
55 
 
55 
 
49 
 
0 
 
0 
 
0 
US dollar-denominated high-trigger loss-absorbing 
additional tier 1 perpetual capital notes
4
Perpetual 
22.03.21 
6.875% 
 
1,500 
 
1,500 
 
1,328 
 
1,500 
 
1,500 
 
1,452 
US dollar-denominated high-trigger loss-absorbing 
additional tier 1 perpetual capital notes 
Perpetual 
10.08.21 
7.125% 
 
1,100 
 
1,100 
 
974 
 
1,100 
 
1,100 
 
1,065 
Euro-denominated low-trigger loss-absorbing 
additional tier 1 perpetual capital notes 
Perpetual 
19.02.22 
5.75% 
 
1,000 
 
1,221 
 
1,081 
 
1,000 
 
1,121 
 
1,086 
US dollar-denominated high-trigger loss-absorbing 
additional tier 1 perpetual capital notes 
Perpetual 
31.01.23 
5% 
 
2,000 
 
2,000 
 
1,771 
 
2,000 
 
2,000 
 
1,936 
Singapore dollar-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes 
Perpetual 
28.11.23 
5.875% 
 
700 
 
529 
 
469 
 
700 
 
521 
 
504 
US dollar-denominated high-trigger loss-absorbing 
additional tier 1 perpetual capital notes 
Perpetual 
31.01.24 
7% 
 
2,500 
 
2,500 
 
2,214 
 
2,500 
 
2,500 
 
2,420 
Australian dollar-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes 
Perpetual 
27.08.24 
4.375% 
 
700 
 
540 
 
478 
 
700 
 
491 
 
475 
Singapore dollar-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes 
Perpetual 
04.09.24 
4.85% 
 
750 
 
567 
 
502 
 
750 
 
558 
 
540 
US dollar-denominated low-trigger loss-absorbing 
additional tier 1 perpetual capital notes 
Perpetual 
19.02.25 
7% 
 
1,250 
 
1,250 
 
1,107 
 
1,250 
 
1,250 
 
1,210 
US dollar-denominated high-trigger loss-absorbing 
additional tier 1 perpetual capital notes 
Perpetual 
07.08.25 
6.875% 
 
1,575 
 
1,575 
 
1,395 
 
1,575 
 
1,575 
 
1,525 
Swiss franc-denominated high-trigger loss-
absorbing additional tier 1 perpetual capital notes 
Perpetual 
13.11.25 
3% 
 
275 
 
311 
 
275 
 
275 
 
284 
 
275 
US dollar-denominated high-trigger loss-absorbing 
additional tier 1 perpetual capital notes 
Perpetual 
29.07.26 
5.125% 
 
750 
 
750 
 
664 
 
0 
 
0 
 
0 
Total notes issued 
 
50,735 
 
44,927 
 
45,752 
 
44,294 
1 For TLAC-eligible 
senior unsecured notes, the 
disclosed coupon rate refers 
to the contractual coupon 
rate applied from the 
issue date up to 
the contractual maturity 
date or, 
if applicable, to 
the first optional call 
date. For the loss-absorbing 
additional tier 1 perpetual 
capital notes, the 
disclosed coupon rate 
refers to the contractual 
fixed coupon rate from 
the issue date up 
to the first optional 
call date. 
2 Instrument was 
redeemed on 19 February 2020. 
3 Instrument was redeemed on 18 November 2020. 
4 Instrument was called on 10 February 2021. 
 
 

UBS Group AG standalone financial statements

588

Note 18

Compensation-related long-term liabilities

USD million

CHF million

31.12.20

31.12.19

31.12.20

31.12.19

Long-term portion of compensation liabilities

3,128

2,938

2,770

2,845

of which: Deferred Contingent Capital Plan

1,326

1,340

1,174

1,298

of which: other deferred compensation plans

1,802

1,598

1,595

1,547

Total compensation-related long-term liabilities

3,128

2,938

2,770

2,845

Note 19

Share capital

December

2020,

the

issued

capital

consisted

3,859,055,395

(31 December

2019:

3,859,055,395)

registered

shares with a nominal value of CHF 0.10 each.

›

Refer to “UBS shares” in the “Capital, liquidity

and funding, and balance sheet” section

of this report for more information about UBS

Group AG shares

Note 20

Treasury shares

Number of registered shares

Average price in USD

Average price in CHF

Balance as of 31 December 2018

166,467,802

15.71

15.45

of which: treasury shares held by UBS Group AG

166,203,791

15.71

15.46

of which: treasury shares held by UBS AG and other subsidiaries

264,011

12.27

12.05

Acquisitions

146,876,692

11.86

11.75

Disposals

(5,999,827)

11.88

11.50

Delivery of shares to settle equity-settled awards

(64,323,371)

15.35

15.28

Balance as of 31 December 2019

243,021,296

13.57

13.35

of which: treasury shares held by UBS Group AG

242,930,084

13.57

13.35

of which: treasury shares held by UBS AG and other subsidiaries

91,212

12.65

12.75

Acquisitions

128,372,257

12.27

11.53

Disposals

(10,188,059)

11.12

9.85

Delivery of shares to settle equity-settled awards

(53,728,492)

13.40

12.85

Balance as of 31 December 2020

307,477,002

13.14

12.80

of which: treasury shares held by UBS Group AG

306,114,513

13.13

12.80

of which: treasury shares held by UBS AG and other subsidiaries

1,362,490

14.13

12.62

1 Treasury shares

held by UBS Group

AG had a carrying

value of USD 4,020

million / CHF 3,917

million as of 31

December 2020 (31 December

2019: USD 3,297 million

/ CHF 3,244 million).

Shares repurchased

under our 2018-2021 share repurchase

program are expected to be

canceled by means of a capital

reduction, whereby the capital contribution

reserve within the statutory capital

reserve is expected to be

reduced

by USD 180 million (CHF 173 million, based on purchase price). Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section

of this report for more information.

 
 
 
589 
Additional information
Note 21 
Assets pledged to secure own liabilities
As of 31 December 2020, total pledged assets of 
UBS Group AG 
amounted 
to
 
USD
 
2,623 
million 
(CHF
 
2,323 
million).
 
These 
assets 
consisted 
of 
certain 
liquid 
assets, 
marketable 
securities 
and 
financial 
assets 
and 
were 
pledged 
to 
UBS 
AG. 
As 
of 
31 December 
2019, 
total 
pledged 
assets 
of 
UBS 
Group 
AG 
amounted 
to 
USD
 
2,021
 
million 
(CHF
 
1,
957
 
million). 
The 
associated 
liabilities 
secured 
by 
these 
pledged 
assets 
were 
USD
 
1,208 
million 
(CHF
 
1,070 
million)
 
and 
USD
 
9
33
 
million 
(CHF 903 
million) 
as 
of 
31 December 
2020 
and 
31 December 
2019, 
respectively. 
 
 
Note 22 
Contingent liabilities 
UBS Group 
AG is jointly 
and severally liable 
for the 
combined value added 
tax (VAT) 
liability of 
UBS entities 
that belong to 
the VAT 
group of UBS in Switzerland. 
 
 
 
 

 
 
 
 
 
 
UBS Group AG standalone financial statements 
590 
 
Note 23 
Significant shareholders 
 
Shareholders registered in the UBS Group AG share register with 3% 
or more of the total share capital
1
% of share capital 
31.12.20 
31.12.19 
Chase Nominees Ltd., London
2
 
10.39 
 
10.94 
Nortrust Nominees Ltd., London
2
 
5.15 
 
4.90 
DTC (Cede & Co.), New York
2,3
 
4.99 
 
7.57 
1 As registration in the UBS share 
register is optional, shareholders crossing the 
threshold percentages requiring SIX notification under 
the FMIA do not necessarily 
appear in this table. 
2 Nominee companies and 
securities clearing organizations 
cannot autonomously 
decide how votin 
g 
rights are 
exercised and 
are therefore 
not obligated 
to notify 
UBS and 
SIX if 
they reach, exceed 
or fall 
below the 
threshold percentages 
requiring disclosure notification 
under the FMIA. 
Consequently, they 
do not appear 
under “Shareholders subject 
to FMIA 
disclosure notifications” below. 
3 DTC (Cede & 
Co.), New 
York, “The 
Depository Trust 
Company,” is a US securities clearing organization. 
 
 
General rules 
Under the 
Swiss Federal 
Act on 
Financial Market 
Infrastructures 
and 
Market 
Conduct 
in 
Securities 
and 
Derivatives 
Trading 
of 
19 June 
2015 
(FMIA), 
anyone 
directly 
or 
indirectly, 
or 
acting 
in 
concert with 
third parties, 
holding shares 
in a 
company listed 
in 
Switzerland or 
holding derivative 
rights related 
to shares 
in such 
a company must notify the company and the SIX Swiss Exchange 
(SIX) 
if 
the 
holding 
reaches, 
falls 
below 
or 
exceeds 
one 
of 
the 
following thresholds: 3, 
5, 10, 15, 20, 
25, 33
1
⁄
3
, 50 or 66
2
⁄
3
% of 
voting 
rights, 
regardless 
of 
whether 
or 
not 
such 
rights 
may 
be 
exercised. 
N
ominee 
companies 
that 
cannot 
autonomously 
decide how voting rights 
are exercised are 
not required to 
notify 
the 
company 
and 
SIX 
if 
they 
reach, 
exceed 
or 
fall 
below 
the 
above-mentioned thresholds. 
Pursuant 
to 
the 
Swiss 
Code 
of 
Obligations, 
UBS 
Group 
AG 
disclose
s
 
in 
its 
financial 
statements 
the 
identity 
of 
any 
shareholder with 
a holding 
of more 
than 5% 
of the 
total share 
capital of UBS Group AG. 
Shareholders subject to FMIA disclosure notifications 
According 
to 
the 
mandatory 
FMIA 
disclosure 
notifications 
filed 
with 
UBS 
Group 
AG 
and 
SIX
,
 
as 
of 
31
 
December
 
20
20
, 
the 
following entities 
held more 
than 3% 
of the 
total 
share 
capital 
of 
UBS 
Group 
AG:
 
Artisan 
Partners 
Limited 
Partnership, 
Milwaukee, 
which 
disclosed 
a 
holding 
of 
3.15% 
on 
18 
November 
2020; 
BlackRock 
Inc., 
New 
York, 
which 
disclosed 
a 
holding 
of 
4.70% 
on 
26 
May 
2020; 
and 
Norges 
Bank, 
Oslo, 
which 
disclosed 
a 
holding 
of 
3.01% 
on 
24 
July 
2019.
 
As 
registration 
in 
the 
UBS 
share 
register 
is 
optional, 
shareholders 
crossing 
the 
aforementioned 
thresholds 
requiring 
SIX 
notification 
under 
the 
FMIA 
do 
not 
necessarily 
appear 
in 
the 
table above. 
No 
new 
disclosures 
of 
significant 
shareholdings 
have 
been 
made since 31 December 2020. 
In 
accordance 
with 
the 
FMIA, 
the 
aforementioned 
holdings 
are calculated in 
relation to the 
total share capital 
of UBS Group 
AG 
reflected 
in 
its 
Articles 
of 
Association 
at 
the 
time 
of 
the 
respective disclosure notification. 
›
 
Refer to ser-ag.com/en/resources/notifications-market-
participants/significant-shareholders.html for information 
about 
disclosures under the FMIA 
Shareholders registered in the UBS Group AG share register with 
3% or more of the share capital of UBS Group AG 
As 
a 
supplement 
to 
the 
mandatory 
disclosure 
requirements 
according 
to 
the 
SIX 
Swiss 
Exchange 
Corporate 
Governance 
Directive, 
the shareholders 
(acting in 
their own 
name or 
in their 
capacity 
as 
nominees 
for 
other 
investors 
or 
beneficial 
owners) 
who were 
registered in 
the UBS share 
register with 
3% or more 
of 
the 
total 
share 
capital 
of 
UBS 
Group 
AG 
as 
of 
31 December 2020 or 
as of 
31 December 2019 are 
listed in 
the 
table above. 
Cross-shareholdings 
UBS 
Group 
AG 
has 
no 
cross
-
shareholdings 
where
 
reciprocal 
ownership would 
be in 
excess of 
5% of 
capital or 
voting rights 
with any other company. 
 
 
 

591

Note 24

Share and option ownership of the members of the Board of Directors, the Group Executive Board and other

employees

Shares awarded

For the year ended 31.12.20

For the year ended 31.12.19

Number of shares

Value of shares in

USD million

Value of shares in

CHF million

Number of shares

Value of shares in

USD million

Value of shares in

CHF million

Awarded to members of the BoD

457,362

560,889

Awarded to members of the GEB

5,192,391

4,878,908

Awarded to other UBS Group employees

67,057,766

713

632

72,763,001

812

787

Total

72,707,519

786

696

78,202,798

878

850

›

Refer to the “Compensation” section of

this report for more information about the terms

and conditions of the shares and options

awarded to the members of the Board of Directors and

the Group Executive Board

Number of shares of BoD members

Name, function

on 31 December

Number of shares held

Voting rights in %

Axel A. Weber, Chairman

2020

1,046,994

0.062

2019

938,627

0.053

David Sidwell, former Vice Chairman and Senior Independent Director

2020

2019

167,595

0.009

Jeremy Anderson, Vice Chairman and Senior Independent Director

2020

66,744

0.004

2019

31,456

0.002

William C. Dudley, member

2020

26,181

0.002

2019

0.000

Reto Francioni, member

2020

154,086

0.009

2019

125,628

0.007

Fred Hu, member

2020

42,428

0.003

2019

15,145

0.001

Mark Hughes, member

2020

4,920

0.000

2019

Nathalie Rachou, member

2020

0.000

2019

Julie G. Richardson, member

2020

88,401

0.005

2019

46,283

0.003

Isabelle Romy, former member

2020

2019

143,928

0.008

Robert W. Scully, former member

2020

2019

71,540

0.004

Beatrice Weder di Mauro, member

2020

198,578

0.012

2019

172,397

0.010

Dieter Wemmer, member

2020

88,743

0.005

2019

60,285

0.003

Jeanette Wong, member

2020

33,722

0.002

2019

0.000

Total

2020

1,750,797

0.104

2019

1,772,884

0.100

1 Includes blocked and unblocked

shares held by BoD members, including those

held by related parties. No options

were granted in 2020 and 2019.

2 At the 2020 AGM, Mark Hughes and

Nathalie Rachou were

newly elected and David Sidwell, Isabelle Romy and Robert W. Scully did not stand for re-election.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group AG standalone financial statements 
592 
 
Note 24 
Share and option ownership of the members of the Board of Directors, the Group Executive Board and other 
employees (continued) 
Share ownership / entitlements of GEB members
1
Name, function 
on 
31 December 
Number of 
unvested 
shares / at 
risk
2
Number of 
vested shares 
Total number 
of shares 
Potentially 
conferred 
voting 
rights in % 
Ralph A.J.G. Hamers, Group Chief Executive Officer 
2020 
 
14,841 
 
0 
 
14,841 
 
0.001 
2019 
- 
- 
- 
Sergio P. Ermotti, former Group Chief Executive Officer 
2020 
- 
- 
- 
- 
2019 
 
1,862,480 
 
2,150,003 
 
4,012,483 
 
0.227 
Christian Bluhm, Group Chief Risk Officer 
2020 
 
582,787 
 
218 
 
583,005 
 
0.035 
2019 
 
440,953 
 
0 
 
440,953 
 
0.025 
Markus U. Diethelm, Group General Counsel 
2020 
 
706,845 
 
617,858 
 
1,324,703 
 
0.079 
2019 
 
698,402 
 
458,426 
 
1,156,828 
 
0.065 
Kirt Gardner, Group Chief Financial Officer 
2020 
 
696,500 
 
165,223 
 
861,723 
 
0.051 
2019 
 
532,643 
 
129,807 
 
662,450 
 
0.037 
Suni Harford, President Asset Management 
2020 
 
352,329 
 
0 
 
352,329 
 
0.021 
2019 
 
63,211 
 
0 
 
63,211 
 
0.004 
Robert Karofsky, Co-President Investment Bank 
2020 
 
627,748 
 
357,621 
 
985,369 
 
0.059 
2019 
 
577,606 
 
492,476 
 
1,070,082 
 
0.061 
Sabine Keller-Busse, Group Chief Operating Officer and President UBS EMEA 
2020 
 
639,087 
 
349,834 
 
988,921 
 
0.059 
2019 
 
423,778 
 
315,922 
 
739,700 
 
0.042 
Iqbal Khan, Co-President Global Wealth Management 
2020 
 
742,546 
 
68,253 
 
810,799 
 
0.048 
2019 
 
712,342 
 
0 
 
712,342 
 
0.040 
Edmund Koh, President Asia Pacific 
2020 
 
421,930 
 
337,062 
 
758,992 
 
0.045 
2019 
 
380,340 
 
183,104 
 
563,444 
 
0.032 
Axel P. Lehmann, President Personal & Corporate Banking and President UBS Switzerland 
2020 
 
690,537 
 
331,677 
 
1,022,214 
 
0.061 
2019 
 
522,202 
 
277,978 
 
800,180 
 
0.045 
Tom Naratil, Co-President Global Wealth Management and President UBS Americas 
2020 
 
1,383,854 
 
770,780 
 
2,154,634 
 
0.128 
2019 
 
1,307,554 
 
609,477 
 
1,917,031 
 
0.108 
Piero Novelli, Co-President Investment Bank 
2020 
 
660,240 
 
408,897 
 
1,069,137 
 
0.064 
2019 
 
599,156 
 
429,652 
 
1,028,808 
 
0.058 
Markus Ronner, Group Chief Compliance and Governance Officer 
2020 
 
302,584 
 
130,097 
 
432,681 
 
0.026 
2019 
 
214,850 
 
68,097 
 
282,947 
 
0.016 
Total 
2020 
 
7,821,828 
 
3,537,520 
 
11,359,348 
 
0.675 
2019 
 
8,335,517 
 
5,114,942 
 
13,450,459 
 
0.761 
1 Includes all 
vested and unvested 
shares of GEB 
members, including 
those held by 
related parties. 
No options were 
held in 2020 
and 2019 
by any GEB 
member or any 
of its related 
parties. Refer 
to “Note 27 
Employee benefits: variable compensation” in the “Consolidated 
financial statements” section of our Annual Report 
2020 for more information. 
2 Includes shares granted under variable compensation 
plans with 
forfeiture provisions. 
LTIP 
values reflect 
the fair value 
awarded at 
grant. The 
actual number of 
shares vesting in 
the future will 
be calculated under 
the terms of 
the plans. 
Refer to “Group 
compensation” in 
the 
“Compensation” section of this report for more information about the plans. 
 
 

 
 
 
 
 
 
 
 
 
 
593 
 
Note 25 
Related parties 
Related parties are 
defined under the 
Swiss Code 
of Obligations 
as 
direct 
and 
indirect 
participants with 
voting 
rights of 
20% or 
more, 
management 
bodies 
(BoD 
and 
GEB), 
external 
auditors, 
and direct 
and indirect 
investments in 
subsidiaries. Payables 
due 
to members of the GEB and the external auditors are provided 
in 
the table 
below. 
Amounts due 
from and 
due to 
subsidiaries are 
provided on the face of the balance sheet. 
 
USD million 
CHF million 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
Payables due to the members of the GEB 
 
155 
 
178 
 
138 
 
172 
of which: Deferred Contingent Capital Plan 
 
69 
 
76 
 
62 
 
74 
of which: other deferred compensation plans 
 
86 
 
101 
 
76 
 
98 
Payables due to external auditors 
 
0 
 
0 
 
0 
 
0 
p
 
 

594

595

 
Significant 
regulated 
subsidiary and 
sub-group 
information 
 
6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant regulated subsidiary and sub-group information 
598 
Financial and regulatory key figures for our significant regulated 
subsidiaries and sub-groups 
 
UBS AG 
(standalone) 
UBS Switzerland AG 
(standalone) 
UBS Europe SE 
(consolidated)
1
UBS Americas Holding LLC 
(consolidated) 
USD million, 
except where indicated 
CHF million, 
except where indicated 
EUR million, 
except where indicated 
USD million, 
except where indicated 
As of or for the year ended 
31.12.20 
31.12.19 
31.12.20 
31.12.19 
31.12.20 
31.12.19
2
31.12.20
3
31.12.19
4
Financial information
5,6,7
Income statement 
Total operating income 
12,951 
11,975 
7,185 
7,688 
1,054 
997 
12,675 
12,169 
Total operating expenses 
8,370 
8,086 
5,590 
6,351 
878 
810 
10,842 
10,830 
Operating profit / (loss) before tax 
4,581 
3,889 
1,595 
1,337 
176 
186 
1,833 
1,339 
Net profit / (loss) 
4,539 
3,848 
1,271 
1,039 
163 
188 
975 
810 
Balance sheet 
Total assets 
509,024 
478,946 
316,829 
285,014 
48,591 
46,247 
172,385 
138,994 
Total liabilities 
456,628 
427,242 
304,194 
272,341 
43,896 
41,756 
144,103 
111,070 
Total equity 
52,396 
51,705 
12,634 
12,673 
4,696 
4,490 
28,283 
27,924 
Capital
6,7,8,9
Common equity tier 1 capital 
50,269 
49,521 
12,234 
10,895 
3,703 
3,691 
14,384 
11,896 
Additional tier 1 capital 
14,430 
11,958 
5,176 
4,711 
290 
290 
3,047 
3,048 
Tier 1 capital 
64,699 
61,479 
17,410 
15,606 
3,993 
3,981 
17,431 
14,944 
Total going concern capital 
64,699 
61,479 
17,410 
15,606 
3,993 
3,981 
Tier 2 capital 
736 
714 
Total gone concern loss-absorbing capacity 
45,520 
10,824 
10,915 
1,784
10
1,840
10
5,600
11
5,500
11
Total capital 
3,993 
3,981 
18,166 
15,658 
Total loss-absorbing capacity 
110,219 
61,479 
28,234 
26,521 
5,777 
5,821 
23,031 
20,444 
Risk-weighted assets and leverage ratio 
denominator
6,7,8,9
Risk-weighted assets 
305,575 
287,999 
107,253 
99,667 
13,175 
15,146 
63,929 
54,057 
Leverage ratio denominator 
595,017 
589,127 
335,251 
302,304 
41,376 
41,924 
154,609 
127,290 
Leverage ratio denominator (with temporary FINMA exemption)
12
595,017 
254,757 
Supplementary leverage ratio denominator
13
150,019 
Capital and leverage ratios (%)
6,7,8,9
Common equity tier 1 capital ratio 
16.5 
17.2 
11.4 
10.9 
28.1 
24.4 
22.5 
22.0 
Tier 1 capital ratio 
30.3 
26.3 
27.3 
27.6 
Going concern capital ratio 
21.2 
23.1 
16.2 
15.7 
Total capital ratio 
30.3 
26.3 
28.4 
29.0 
Total loss-absorbing capacity ratio 
26.3 
26.6 
43.8 
38.4 
36.0 
37.8 
Tier 1 leverage ratio 
9.7 
 
9.5 
11.3 
11.7 
Supplementary tier 1 leverage ratio
13
11.6 
Going concern leverage ratio 
10.9 
10.4 
5.2 
5.2 
Going concern leverage ratio (with temporary FINMA exemption)
12
10.9 
6.8 
Total loss-absorbing capacity leverage ratio 
8.4 
8.8 
14.0 
13.9 
14.9 
16.0 
Gone concern capital coverage ratio 
135.7 
Liquidity
9,14,15
High-quality liquid assets (billion) 
84 
74 
92 
67 
17 
14 
Net cash outflows (billion) 
53 
54 
62 
52 
11 
10 
Liquidity coverage ratio (%)
16,17
159 
137 
148 
130 
151 
147 
Other 
Joint and several liability between UBS AG and UBS Switzerland AG 
(billion)
18
9 
17 
1 As a result of the cross-border 
merger of UBS Limited into UBS 
Europe SE effective 1 March 2019, 
UBS Europe SE became a significant 
regulated subsidiary of UBS Group 
AG. The size, 
scope and business model 
of the merged entity is 
now materially different. 
2 Comparative figures have been 
restated to align with the 
UBS Europe SE Pillar 3 
report and other regulatory reports 
as submitted to the 
European Central Bank 
(the ECB), which reflect the ECB’s 
recommendation to EU financial institutions 
to refrain from making 
capital distributions until the ECB changes 
its guidance on dividend payments. 
3 UBS Americas Holding LLC, 
as a designated category 
III bank, has been 
subject to a simplification 
of regulatory capital rules 
since 1 April 2020. 
The revisions simplify 
the framework for 
regulatory capital deductions and 
increase risk weights 
for certain assets, 
impacting the 
CET1 capital 
ratio by 
0.3% as 
of 31 December 
2020. 
4 Refer 
to the 
"Accounting and 
financial reporting" 
and "Consolidated 
financial statements" 
sections of 
this report 
for 
information on 
the restatement 
of comparative 
information, where 
applicable. 
5 UBS AG 
and UBS Switzerland AG 
financial information 
is prepared 
in accordance 
with Swiss 
GAAP (the 
FINMA Accounting 
Ordinance, FINMA Circular 2020/1 and 
the Banking Ordinance) but does not 
represent financial statements under Swiss GAAP. 
6 UBS Europe SE financial information is 
prepared in accordance with International 
Financial Reporting 
Standards (IFRS) 
but does 
not represent 
financial statements 
under IFRS. 
Regulatory figures 
are based 
on applicable 
EU regulatory 
rules. 
7 UBS Americas 
Holding LLC 
financial information 
presented in the 
table is prepared 
in accordance with 
accounting principles generally 
accepted in the 
US (US GAAP) 
but does 
not represent financial 
statements under US 
GAAP. 
Regulatory figures are 
based on 
applicable US Basel 
III rules. 
8 For UBS AG and 
UBS Switzerland AG, 
based on applicable 
Swiss systemically relevant 
bank (SRB) framework. 
9 Refer to the 
31 December 2020 Pillar 
3 report, available 
under 
“Pillar 3 disclosures” 
at ubs.com/investors, 
for more 
information. 
10 Consists of 
positions that 
meet the 
conditions laid 
down in 
Art. 72a–b 
of the 
Capital Requirements 
Regulation (CRR) II 
with regard 
to 
contractual, structural or legal subordination. 
11 Consists of eligible long-term debt that meets the 
conditions specified in 12 CFR 252.162 of the final 
TLAC rules. Total 
loss-absorbing capacity is the sum of tier 1 
capital and eligible 
long-term debt. 
12 Refer to the 
“Regulatory and legal 
developments” and “Capital, 
liquidity and funding, 
and balance sheet” 
sections of this 
report for further 
details about the 
temporary 
FINMA exemption. 
13 UBS Americas Holding LLC, as a designated category III bank, 
has been subject to supplementary leverage ratio (SLR) reporting since 
1 April 2020. US regulatory authorities have temporarily 
eased the requirements 
for the 
SLR, allowing 
for the 
exclusion of 
US Treasury 
securities and 
deposits at 
the Federal 
Reserve Banks 
from the 
SLR denominator 
through March 
2021. This 
exclusion resulted 
in an 
increase in the SLR of 170 bps on 31 December 2020. 
14 There was no local disclosure requirement for UBS Americas Holding 
LLC as of 31 December 2020 or 31 December 2019. 
15 For UBS Europe SE, figures 
as of 31 
December 2019 are 
based on a 
ten-month average, 
rather than 
a twelve-month average, 
as data produced 
on the same 
basis is only 
available for 
the period since 
the cross-border merger. 
16 In the 
fourth quarter of 2020, the UBS AG 
liquidity coverage ratio (LCR) was 
159%, remaining above the prudential requirements 
communicated by FINMA. 
17 In the fourth quarter of 2020, 
the liquidity coverage ratio 
(LCR) of UBS Switzerland 
AG, which 
is a Swiss 
SRB, was 
148%, remaining above 
the prudential 
requirement communicated 
by FINMA in 
connection with 
the Swiss Emergency 
Plan. 
18 Refer to 
the “Capital, 
liquidity and 
funding, and 
balance sheet” 
sections of 
this report 
for more 
information about 
the joint 
and several 
liability. 
Under certain 
circumstances, 
the Swiss 
Banking Act 
and FINMA’s 
Banking Insolvency 
Ordinance authorize FINMA to modify, extinguish or convert to common equity liabilities of a bank in connection with a 
resolution or insolvency of such bank. 
 
 

 
599 
UBS Group 
AG is a 
holding company and 
conducts substantially 
all 
of 
its 
operations 
through 
UBS 
AG 
and 
subsidiaries 
thereof. 
UBS 
Group 
AG 
and 
UBS 
AG 
have 
contributed 
a 
significant 
portion 
of 
their 
respective 
capital 
to, 
and 
provide 
substantial 
liquidity 
to
, 
such
 
subsidiaries. 
Many 
of 
these 
subsidiaries 
are 
subject 
to 
regulations 
requiring 
compliance 
with 
minimum 
capital, 
liquidity 
and 
similar 
requirements. 
The 
table 
in 
this 
section 
summarize
s
 
the 
regulatory
 
capital 
components 
and 
capital 
ratios 
of 
our 
significant 
regulated 
subsidiaries 
and 
sub-
groups 
determined 
under 
the 
regulatory
 
framework 
of 
each 
subsidiary’s or sub-group’s home jurisdiction. 
›
 
Refer to “Capital and capital ratios of 
our significant regulated 
subsidiaries” in the “Capital, liquidity and 
funding, and balance 
sheet” section of this report for more information 
›
 
Refer to “Note 23 Restricted and transferred 
financial assets” in 
the “Consolidated financial statements” 
section of this report for 
more information.
 
 
 
Supervisory 
authorities 
generally 
have 
discretion 
to 
impose 
higher 
requirements 
or 
to 
otherwise 
limit 
the 
activities 
of 
subsidiaries. 
Supervisory 
authorities 
also 
may 
require 
entities 
to 
measure capital 
and leverage 
ratios on 
a stressed 
basis and 
may 
limit 
the ability 
of 
an entity 
to engage 
in new 
activities 
or take 
capital actions based on the results of those tests. 
In 
June 2020, 
the 
Federal Reserve 
Board 
released 
the results 
of 
its 
annual 
Dodd–Frank 
Act 
Stress 
Tests 
(DFAST) 
and 
Comprehensive 
Capital 
Analysis 
and
 
Review 
(CCAR). 
UBS’s 
intermediate 
holding 
company,
 
UBS 
Americas 
Holding 
LLC, 
exceeded 
minimum 
capital 
requirements 
under 
the 
severely 
adverse scenario and the Federal Reserve 
Board did not object to 
its capital plan. 
As a result, 
UBS Americas Holding 
will no longer 
be subject to the qualitative assessment component of CCAR. 
›
 
Refer to the “Regulatory and legal developments” 
section of this 
report for more information about the results of the annual 
Comprehensive Capital Analysis and Review 
 
Standalone 
regulatory 
information 
for 
UBS 
AG 
and 
UBS 
Switzerland 
AG, 
as 
well 
as 
consolidated 
regulatory 
information 
for UBS Europe 
SE and UBS 
Americas Holding LLC 
is provided in 
the 
31 December 2020 
Pillar 
3 
report, 
available 
under 
“Pillar 
3 
disclosures” at 
ubs.com/investors
.
 
Standalone financial statements for UBS 
Group AG 
as 
well as 
standalone 
financial 
statements 
and 
regulatory 
information 
for 
UBS
 
AG
 
and
 
UBS
 
Switzerland AG 
are 
available 
under 
“Holding 
company 
and significant 
regulatory 
subsidiaries 
and sub-groups” 
at 
ubs.com/investors.
 
 
 

Additional

regulatory

information

 
 
602 
Table of contents
 
603 
UBS Group AG consolidated supplemental 
disclosures required under SEC regulations
603 
A – Introduction
604 
B – Selected financial data
604 
Key figures
606 
Income statement data
606 
Cash dividends received from investments in subsidiaries
607 
Balance sheet data
608 
C – Information about the company
608 
Property, plant and equipment
609 
D – Information required by industry guide 3
609 
Selected statistical information
610 
Average balances and interest rates
613 
Analysis of changes in interest income and expense
615 
Deposits
616 
Short-term borrowings
616 
Investments in debt instruments
619 
Loans and advances to banks and customers by industry 
(gross)
621 
Loans and advances to banks and customers – mortgages 
(gross)
621 
Loans and advances to banks and customers – maturity 
profile (gross)
622 
Non-performing loans
623 
Cross-border outstandings
624 
Summary of movements in expected credit loss 
allowances and provisions
625 
Allocation of the expected credit loss allowances and 
provisions
 
626 
UBS AG consolidated supplemental disclosures 
required under SEC regulations
626 
A – Introduction
627 
B – Selected financial data
627 
Key figures
629 
Income statement data
629 
Dividends received from investments in subsidiaries and 
associates
630 
Balance sheet data
631 
C – Information about the company
631 
Property, plant and equipment
632 
D – Information required by industry guide 3
632 
Selected statistical information
633 
Average balances and interest rates
636 
Analysis of changes in interest income and expense
638 
Deposits
639 
Short-term borrowings
639 
Investments in debt instruments
642 
Loans and advances to banks and customers by industry 
(gross)
644 
Loans and advances to banks and customers – mortgages 
(gross)
644 
Loans and advances to banks and customers – maturity 
profile (gross)
645 
Non-performing loans
646 
Cross-border outstandings
647 
Summary of movements in expected credit loss 
allowances and provisions
648 
Allocation of the expected credit loss allowances and 
provisions
 

 
603 
UBS Group AG consolidated supplemental 
disclosures required under SEC regulations 
A – Introduction 
The 
following 
pages 
contain 
supplemental 
UBS 
Group 
AG 
disclosures 
that are 
required 
under SEC 
regulations. UBS 
Group 
AG’s 
consolidated 
financial 
statements 
have 
been 
prepared 
in 
accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS) as issued 
by the International Accounting 
Standards Board 
(IASB) 
and 
are 
denominated 
in 
US 
dollars 
(USD), 
which 
is 
also 
the 
functional 
currency 
of: 
UBS 
Group 
AG; 
UBS 
AG’s 
Head 
Office; UBS AG, London Branch; and UBS’s US-based operations. 
 
 

 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
604 
B – Selected financial data 
 
Key figures 
USD million, except where indicated 
31.12.20 
31.12.19
1
31.12.18
1
31.12.17 
31.12.16 
Group results 
Operating income 
 
32,390 
 
28,889 
 
30,213 
 
29,622 
 
28,729 
Operating expenses 
 
24,235 
 
23,312 
 
24,222 
 
24,272 
 
24,519 
Operating profit / (loss) from continuing operations before tax 
 
8,155 
 
5,577 
 
5,991 
 
5,351 
 
4,209 
Net profit / (loss) attributable to shareholders 
 
6,557 
 
4,304 
 
4,516 
 
969 
 
3,348 
Diluted earnings per share (USD)
2
 
1.77 
 
1.14 
 
1.18 
 
0.25 
 
0.88 
Profitability and growth
3
Return on equity (%) 
 
11.3 
 
7.9 
 
8.6 
 
1.8 
 
6.1 
Return on tangible equity (%) 
 
12.8 
 
9.0 
 
9.8 
 
2.0 
 
6.9 
Return on common equity tier 1 capital (%) 
 
17.4 
 
12.4 
 
13.1 
 
3.0 
 
10.9 
Return on risk-weighted assets, gross (%) 
 
11.7 
 
11.0 
 
11.8 
 
12.6 
 
13.1 
Return on leverage ratio denominator, gross (%) 
 
3.4 
 
3.2 
 
3.3 
 
3.3 
 
3.2 
Cost / income ratio (%) 
 
73.3 
 
80.5 
 
79.9 
 
81.6 
 
85.2 
Effective tax rate (%) 
 
19.4 
 
22.7 
 
24.5 
 
80.5 
 
18.5 
Net profit growth (%) 
 
52.3 
 
(4.7) 
 
366.0 
 
(71.1) 
 
(48.3) 
Resources
3
Total assets 
 
1,125,765 
 
972,194 
 
958,500 
 
939,279 
 
918,906 
Equity attributable to shareholders 
 
59,445 
 
54,501 
 
52,896 
 
52,495 
 
52,916 
Common equity tier 1 capital
4
 
39,890 
 
35,535 
 
34,073 
 
33,516 
 
30,156 
Risk-weighted assets
4
 
289,101 
 
259,208 
 
263,747 
 
243,636 
 
218,785 
Common equity tier 1 capital ratio (%)
5
 
13.8 
 
13.7 
 
12.9 
 
13.8 
 
13.8 
Going concern capital ratio (%)
4
 
19.4 
 
20.0 
 
17.5 
 
17.6 
 
17.9 
Total loss-absorbing capacity ratio (%)
4
 
35.2 
 
34.6 
 
31.7 
 
33.0 
 
31.1 
Leverage ratio denominator
4
 
1,037,150 
 
911,322 
 
904,595 
 
909,032 
 
855,255 
Common equity tier 1 leverage ratio (%)
5
 
3.85 
 
3.90 
 
3.77 
 
3.69 
 
3.53 
Going concern leverage ratio (%)
4
 
5.4 
 
5.7 
 
5.1 
 
4.7 
 
4.6 
Total loss-absorbing capacity leverage ratio (%)
4
 
9.8 
 
9.8 
 
9.3 
 
8.8 
 
7.9 
Average equity / average assets ratio (%)
6
 
4.9 
 
5.1 
 
5.0 
 
5.4 
 
5.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
605 
 
Key figures (continued) 
USD million, except where indicated 
31.12.20 
31.12.19
1
31.12.18
1
31.12.17 
31.12.16 
Other 
Invested assets (USD billion)
7
 
4,187 
 
3,607 
 
3,101 
 
3,262 
 
2,761 
Personnel (full-time equivalents) 
 
71,551 
 
68,601 
 
66,888 
 
61,253 
 
59,387 
Americas 
 
21,394 
 
21,036 
 
21,309 
 
20,770 
 
20,522 
of which: USA 
 
20,528 
 
20,232 
 
20,495 
 
19,944 
 
19,695 
Asia Pacific 
 
15,353 
 
13,956 
 
12,119 
 
8,959 
 
7,539 
Europe, Middle East and Africa (excluding Switzerland) 
 
13,899 
 
12,918 
 
12,620 
 
11,097 
 
10,746 
of which: UK 
 
6,069 
 
5,704 
 
5,782 
 
5,274 
 
5,206 
of which: rest of Europe (excluding Switzerland) 
 
7,652 
 
7,048 
 
6,670 
 
5,662 
 
5,373 
of which: Middle East and Africa 
 
178 
 
166 
 
168 
 
161 
 
167 
Switzerland 
 
20,904 
 
20,691 
 
20,840 
 
20,427 
 
20,581 
Market capitalization
8
 
50,013 
 
45,661 
 
45,907 
 
68,477 
 
58,177 
Total book value per share (USD)
8
 
16.74 
 
15.07 
 
14.34 
 
14.11 
 
14.25 
Tangible book value per share (USD)
8
 
14.91 
 
13.28 
 
12.54 
 
12.34 
 
12.52 
Registered ordinary shares (number)
8
 
3,859,055,395 
 
3,859,055,395 
 
3,855,634,749 
 
3,853,096,603 
 
3,850,766,389 
Treasury shares (number)
8
 
307,477,002 
 
243,021,296 
 
166,467,802 
 
132,301,550 
 
138,441,772 
1 Refer to 
the “Accounting 
and financial reporting” 
and “Consolidated financial 
statements” sections of 
this report for 
information on the 
restatement of comparative 
information, where applicable. 
2 Refer to 
“Share information and earnings per share” in the “Consolidated 
financial statements” section of this report for more 
information. 
3 Refer to the “Performance targets and capital 
guidance” section of this report 
for more 
information about 
our performance 
targets. 
4 Based 
on the 
Swiss systemically 
relevant bank 
(SRB) framework 
as of 
1 January 
2020 and 
the fully 
applied Basel 
III framework. 
Refer to 
the “Capital, 
liquidity and funding, 
and balance sheet” 
section of 
the report for 
the respective 
period for 
more information. 
5 Based 
on the 
Swiss SRB 
framework as 
of 1 January 
2020. Refer 
to the “Capital, 
liquidity and 
funding, and 
balance sheet” 
section of 
this report 
for more 
information. 
6 Calculated 
as average 
equity divided 
by average 
assets. 
7 Consists 
of invested 
assets for 
Global Wealth 
Management, 
Asset 
Management and Personal 
& Corporate Banking. Refer 
to “Note 32 Invested assets 
and net new money” 
in the “Consolidated financial 
statements” section of this 
report for more information. 
8 Refer to “UBS 
shares” 
in the “Capital, liquidity and funding, and balance sheet” section of this report for more information. 
 
 

 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
606 
 
Income statement data 
For the year ended 
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Net interest income 
 
5,862 
 
4,501 
 
5,048 
 
6,070 
 
6,206 
Other net income from financial instruments measured 
at fair value through profit or loss 
 
6,960 
 
6,842 
 
6,960 
 
5,637 
 
5,291 
Credit loss (expense) / release 
 
(694) 
 
(78) 
 
(118) 
 
(131) 
 
(38) 
Fee and commission income 
 
20,961 
 
19,110 
 
19,598 
 
19,362 
 
18,374 
Fee and commission expense 
 
(1,775) 
 
(1,696) 
 
(1,703) 
 
(1,840) 
 
(1,781) 
Net fee and commission income 
 
19,186 
 
17,413 
 
17,895 
 
17,522 
 
16,593 
Other income 
 
1,076 
 
212 
 
428 
 
524 
 
677 
Total operating income 
 
32,390 
 
28,889 
 
30,213 
 
29,622 
 
28,729 
Total operating expenses 
 
24,235 
 
23,312 
 
24,222 
 
24,272 
 
24,519 
Operating profit / (loss) before tax 
 
8,155 
 
5,577 
 
5,991 
 
5,351 
 
4,209 
Tax expense / (benefit) 
 
1,583 
 
1,267 
 
1,468 
 
4,305 
 
777 
Net profit / (loss) 
 
6,572 
 
4,310 
 
4,522 
 
1,046 
 
3,432 
Net profit / (loss) attributable to non-controlling interests 
 
15 
 
6 
 
7 
 
77 
 
84 
Net profit / (loss) attributable to shareholders 
 
6,557 
 
4,304 
 
4,516 
 
969 
 
3,348 
Cost / income ratio (%) 
 
73.3 
 
80.5 
 
79.9 
 
81.6 
 
85.2 
Per share data 
Basic earnings per share (USD)
1
 
1.83 
 
1.17 
 
1.21 
 
0.26 
 
0.90 
Diluted earnings per share (USD)
1
 
1.77 
 
1.14 
 
1.18 
 
0.25 
 
0.88 
Ordinary cash dividends declared per share (CHF)
2,3
 
0.69 
 
0.70 
 
0.65 
 
0.60 
Ordinary cash dividends declared per share (USD)
2,3
 
0.37 
 
0.73 
 
0.69 
 
0.65 
 
0.61 
Dividend payout ratio (%) 
 
21 
 
64 
 
60
4 
 
260 
 
69 
Rates of return (%) 
Return on equity attributable to shareholders 
 
11.3 
 
7.9 
 
8.6 
 
1.8 
 
6.1 
Return on average equity 
 
11.4 
 
7.9 
 
8.6 
 
1.8 
 
6.1 
Return on average assets 
 
0.6 
 
0.4 
 
0.4 
 
0.1 
 
0.3 
1 Refer to 
“Share information and 
earnings per share” 
in the “Consolidated 
financial statements” 
section of 
this report for 
more information. 
2 Dividends and 
/ or distributions 
out of the 
capital contribution 
reserve are normally 
approved and 
paid in the 
year subsequent 
to the reporting 
period. 
3 Refer to 
“Statement of proposed 
appropriation of 
total profit 
and dividend distribution 
out of total 
profit and 
capital 
contribution reserve” in the “Standalone financial statements” 
section of this report for more information. 
4 The dividend payout ratio for the 
year ended 31 December 2018 was calculated based 
on the dividend 
per share in Swiss francs translated to US dollars using the closing exchange rate as of 31 December 
2018. 
 
Cash dividends received from investments in subsidiaries 
In 2020, 
UBS Group 
AG received 
cash dividends 
of USD 3,853 
million (2019: 
USD 3,400 million; 
2018: USD 3,180 
million) from 
its 
subsidiaries. Dividends 
disclosed have 
been translated 
to US 
dollars from 
the functional 
currency of 
the entity 
paying the 
dividend, 
using the closing exchange rate of the month the dividend was received.

 
607 
 
Balance sheet data 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Assets 
Cash and balances at central banks 
 
158,231 
 
107,068 
 
108,370 
 
90,045 
 
105,883 
Loans and advances to banks 
 
15,444 
 
12,447 
 
16,868 
 
14,094 
 
12,926 
Receivables from securities financing transactions 
 
74,210 
 
84,245 
 
95,349 
 
91,951 
 
79,936 
Cash collateral receivables on derivative instruments 
 
32,737 
 
23,289 
 
23,602 
 
24,040 
 
26,198 
Loans and advances to customers 
 
379,528 
 
326,786 
 
320,352 
 
326,746 
 
300,010 
Other financial assets measured at amortized cost 
 
27,194 
 
22,980 
 
22,563 
 
37,815 
 
27,115 
Total financial assets measured at amortized cost 
 
687,345 
 
576,815 
 
587,104 
 
584,691 
 
552,068 
Financial assets at fair value held for trading 
 
125,397 
 
127,514 
 
104,370 
 
129,407 
 
90,416 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
47,098 
 
41,285 
 
32,121 
 
36,277 
 
29,731 
Derivative financial instruments 
 
159,617 
 
121,841 
 
126,210 
 
121,285 
 
155,642 
Brokerage receivables 
 
24,659 
 
18,007 
 
16,840 
Financial assets at fair value not held for trading 
 
80,364 
 
83,944 
 
82,690 
 
60,457 
 
64,210 
Total financial assets measured at fair value through profit or loss 
 
390,037 
 
351,307 
 
330,110 
 
311,148 
 
310,269 
Financial assets measured at fair value through other comprehensive income 
 
8,258 
 
6,345 
 
6,667 
 
8,889 
 
15,402 
Investments in associates 
 
1,557 
 
1,051 
 
1,099 
 
1,045 
 
947 
Property, equipment and software 
 
13,109 
 
12,804 
 
9,348 
 
9,057 
 
8,186 
Goodwill and intangible assets 
 
6,480 
 
6,469 
 
6,647 
 
6,563 
 
6,442 
Deferred tax assets 
 
9,212 
 
9,548
1 
 
10,116
1 
 
10,056 
 
13,158 
Other non-financial assets 
 
9,768 
 
7,856 
 
7,410 
 
7,830 
 
12,434 
Total assets 
 
1,125,765 
 
972,194 
 
958,500 
 
939,279 
 
918,906 
Liabilities 
Amounts due to banks 
 
11,050 
 
6,570 
 
10,962 
 
7,728 
 
10,459 
Payables from securities financing transactions 
 
6,321 
 
7,778 
 
10,296 
 
17,485 
 
9,266 
Cash collateral payables on derivative instruments 
 
37,312 
 
31,415 
 
28,906 
 
31,029 
 
34,852 
Customer deposits 
 
524,605 
 
448,284 
 
419,838 
 
419,577 
 
416,267 
Debt issued measured at amortized cost 
 
139,232 
 
110,497 
 
132,271 
 
143,160 
 
101,837 
Other financial liabilities measured at amortized cost 
 
9,729 
 
9,712 
 
6,885 
 
37,276 
 
37,729 
Total financial liabilities measured at amortized cost 
 
728,250 
 
614,256 
 
609,158 
 
656,255 
 
610,410 
Financial liabilities at fair value held for trading 
 
33,595 
 
30,591 
 
28,943 
 
31,251 
 
22,425 
Derivative financial instruments 
 
161,102 
 
120,880 
 
125,723 
 
119,137 
 
151,121 
Brokerage payables designated at fair value 
 
38,742 
 
37,233 
 
38,420 
Debt issued designated at fair value 
 
61,243 
 
66,809 
 
57,031 
 
50,782 
 
49,057 
Other financial liabilities designated at fair value 
 
30,387 
 
35,940 
 
33,594 
 
16,643 
 
14,122 
Total financial liabilities measured at fair value through profit or loss 
 
325,069 
 
291,452 
 
283,711 
 
217,813 
 
236,725 
Provisions 
 
2,828 
 
2,974 
 
3,494 
 
3,214 
 
4,101 
Other non-financial liabilities 
 
9,854 
 
8,837
1 
 
9,065
1 
 
9,443 
 
14,083 
Total liabilities 
 
1,066,000 
 
917,519 
 
905,429 
 
886,725 
 
865,320 
Equity attributable to shareholders 
 
59,445 
 
54,501
1 
 
52,896
1 
 
52,495 
 
52,916 
Equity attributable to non-controlling interests 
 
319 
 
174 
 
176 
 
59 
 
670 
Total equity 
 
59,765 
 
54,675 
 
53,071 
 
52,554 
 
53,586 
Total liabilities and equity 
 
1,125,765 
 
972,194 
 
958,500 
 
939,279 
 
918,906 
1 Comparative-period information has been restated. Refer to Note 1b in the “Consolidated financial statements” section of this 
report for more information.

 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
608 
C – Information about the company 
Property, plant and equipment 
As of 31 December 2020, UBS operated about 
802 business and 
banking locations worldwide, of which approximately 
34% were 
in Switzerland, 44% in the Americas, 
12% in the rest of Europe, 
Middle East and 
Africa, and 10% in 
Asia Pacific. Of the 
business 
and banking 
locations in Switzerland, 
29% were 
owned directly 
by 
UBS, 
with 
the 
remainder, 
along 
with 
most 
of 
UBS’s 
offices 
outside Switzerland, 
being held 
under commercial 
leases. These 
premises are 
subject to 
continuous maintenance 
and upgrading 
and 
are 
considered 
suitable 
and 
adequate 
for 
current
 
and 
anticipated operations. 
 
 

 
 
609 
D – Information required by industry guide 3 
Selected statistical information 
The 
following 
tables 
set 
forth 
select
 
statistical 
information 
regarding 
the 
Group’s 
banking 
operations 
extracted 
from 
its 
financial 
statements. 
Unless 
otherwise 
indicated, 
average 
balances for 
the years 
ended 31 
December 2020, 
31 December 
2019 and 31 
December 2018 are 
calculated from monthly 
data. 
The 
distinction 
between 
domestic 
(Swiss) 
and 
foreign 
(non-
Swiss) is generally 
based on the booking 
location. For loans, 
this 
method 
is 
not 
significantly 
different 
from 
an 
analysis 
based 
on 
the domicile of the borrower. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
610 
 
Average balances and interest rates 
The following table sets forth average interest-earning assets and average interest-bearing liabilities, along with the average yield, for 
2020, 2019 and 2018. Refer to “Note 
3 Net interest income and other 
net income from financial instruments measured 
at fair value 
through profit 
or loss” in the 
“Consolidated financial statements” section 
of this report 
for more information 
about interest income 
and interest expense. 
 
For the year ended 
31.12.20 
31.12.19 
31.12.18 
USD million, except where indicated 
Average 
balance 
Interest 
income 
Average 
yield (%) 
Average 
balance 
Interest 
income 
Average 
yield (%) 
Average 
balance 
Interest 
income 
Average 
yield (%) 
Assets 
Balances at central banks 
Domestic 
 
90,234 
 
(112) 
 
(0.1) 
 
70,639 
 
(208) 
 
(0.3) 
 
66,278 
 
(168) 
 
(0.3) 
Foreign 
 
51,611 
 
7 
 
0.0 
 
34,017 
 
194 
 
0.6 
 
35,088 
 
191 
 
0.5 
Loans and advances to banks 
Domestic 
 
2,930 
 
43 
 
1.5 
 
2,574 
 
29 
 
1.1 
 
2,700 
 
25 
 
0.9 
Foreign 
 
12,089 
 
31 
 
0.3 
 
12,071 
 
15 
 
0.1 
 
12,365 
 
11 
 
0.1 
Receivables from securities financing transactions
1
Domestic 
 
4,746 
 
8 
 
0.2 
 
7,550 
 
(11) 
 
(0.1) 
 
8,989 
 
(42) 
 
(0.5) 
Foreign 
 
92,098 
 
551 
 
0.6 
 
99,269 
 
1,654 
 
1.7 
 
93,615 
 
1,237 
 
1.3 
Loans and advances to customers 
Domestic 
 
210,971 
 
3,014 
 
1.4 
 
189,438 
 
3,280 
 
1.7 
 
190,854 
 
3,249 
 
1.7 
Foreign 
 
138,515 
 
3,139 
 
2.3 
 
131,046 
 
3,930 
 
3.0 
 
133,463 
 
3,792 
 
2.8 
Financial assets at fair value
1,2
Domestic 
 
12,455 
 
40 
 
0.3 
 
9,311 
 
72 
 
0.8 
 
12,399 
 
53 
 
0.4 
Foreign 
 
192,251 
 
1,826 
 
0.9 
 
191,373 
 
3,484 
 
1.8 
 
175,426 
 
3,557 
 
2.0 
of which: taxable 
 
192,243 
 
1,826 
 
0.9 
 
191,373 
 
3,484 
 
1.8 
 
175,426 
 
3,557 
 
2.0 
of which: non-taxable 
 
7 
 
0 
 
4.0 
Other interest-earning assets 
Domestic 
 
8,064 
 
136 
 
1.7 
 
7,258 
 
151 
 
2.1 
 
8,972 
 
211 
 
2.4 
Foreign 
 
45,442 
 
386 
 
0.8 
 
35,471 
 
637 
 
1.8 
 
31,863 
 
454 
 
1.4 
Total interest-earning assets 
 
861,406 
 
9,068 
 
1.1 
 
790,017 
 
13,226 
 
1.7 
 
772,013 
 
12,569 
 
1.6 
Net interest income on swaps 
 
1,134 
 
711 
 
632 
Interest income on off-balance sheet securities and other 
 
386 
 
429 
 
492 
Interest income and average interest-earning assets 
 
861,406 
 
10,588
3
 
1.2 
 
790,017 
 
14,366
3
 
1.8 
 
772,013 
 
13,692
3 
 
1.8 
Non-interest-earning assets 
Derivative financial instruments 
 
161,800 
 
126,654 
 
129,286 
Fixed assets 
 
12,928 
 
12,360 
 
9,216 
Other 
 
135,401 
 
143,654
4 
 
139,039
4 
Total average assets 
 
1,171,535 
 
1,072,685 
 
1,049,555 
1 Reverse repurchase agreements are 
presented on a gross basis 
and therefore, for the 
purpose of this disclosure, 
do not reflect the 
effect of netting permitted under 
IFRS. 
2 Includes financial assets at 
fair value 
held for 
trading, financial 
assets at 
fair value 
not held 
for trading, 
financial assets 
at fair 
value through 
other comprehensive 
income and 
brokerage 
receivables. 
3 For 
the purpose 
of this 
disclosure, negative 
interest income 
on assets 
is presented 
as a 
reduction to 
interest income, 
while in 
the consolidated 
income statement 
negative interest 
income on 
assets is 
presented as 
interest expense. 
Refer to 
Note 3 
in the 
“Consolidated financial statements” section 
of this report for 
more information. 
4 Comparative-period 
information has been restated. 
Refer to Note 1b 
in the “Consolidated financial 
statements” section of this 
report for more information. 
 
 

 
611 
 
Average balances and interest rates (continued) 
For the year ended 
31.12.20 
31.12.19 
31.12.18 
USD million, except where indicated 
Average 
balance 
Interest 
expense 
Average 
interest 
rate (%) 
Average 
balance 
Interest 
expense 
Average 
interest 
rate (%) 
Average 
balance 
Interest 
expense 
Average 
interest 
rate (%) 
Liabilities and equity 
Amount due to banks 
Domestic 
 
8,097 
 
(9) 
 
(0.1) 
 
6,012 
 
(5) 
 
(0.1) 
 
7,477 
 
20 
 
0.3 
Foreign 
 
3,169 
 
26 
 
0.8 
 
2,697 
 
21 
 
0.8 
 
2,763 
 
15 
 
0.5 
Payables from securities financing transactions
1
Domestic 
 
3,888 
 
6 
 
0.2 
 
3,238 
 
18 
 
0.6 
 
3,626 
 
5 
 
0.1 
Foreign 
 
18,793 
 
174 
 
0.9 
 
17,218 
 
353 
 
2.1 
 
26,111 
 
341 
 
1.3 
Customer deposits 
Domestic 
 
263,619 
 
(173) 
 
(0.1) 
 
243,484 
 
(41) 
 
0.0 
 
247,619 
 
(27) 
 
0.0 
of which: demand deposits 
 
137,599 
 
(166) 
 
(0.1) 
 
123,833 
 
(74) 
 
(0.1) 
 
128,395 
 
(51) 
 
0.0 
of which: savings deposits 
 
121,793 
 
3 
 
0.0 
 
112,810 
 
16 
 
0.0 
 
110,560 
 
26 
 
0.0 
of which: time deposits 
 
4,227 
 
(9) 
 
(0.2) 
 
6,842 
 
18 
 
0.3 
 
8,664 
 
(2) 
 
0.0 
Foreign 
 
214,785 
 
552 
 
0.3 
 
185,097 
 
1,784 
 
1.0 
 
165,406 
 
1,214 
 
0.7 
Short-term debt issued measured at amortized cost 
Domestic 
 
140 
 
0 
 
(0.3) 
 
113 
 
0 
 
0.0 
 
126 
 
1 
 
0.8 
Foreign 
 
34,087 
 
267 
 
0.8 
 
28,780 
 
468 
 
1.6 
 
47,655 
 
604 
 
1.3 
Long-term debt issued measured at amortized cost 
Domestic 
 
64,899 
 
1,988 
 
3.1 
 
58,802 
 
2,043 
 
3.5 
 
52,702 
 
1,827 
 
3.5 
Foreign 
 
27,100 
 
581 
 
2.1 
 
34,903 
 
824 
 
2.4 
 
41,279 
 
1,012 
 
2.5 
Financial liabilities at fair value (excluding debt issued 
designated at fair value)
1,2
Domestic 
 
700 
 
2 
 
0.3 
 
902 
 
0 
 
0.0 
 
697 
 
7 
 
1.0 
Foreign 
 
145,398 
 
324 
 
0.2 
 
143,216 
 
1,834 
 
1.3 
 
120,894 
 
1,595 
 
1.3 
Debt issued designated at fair value 
Domestic 
 
4,376 
 
35 
 
0.8 
 
2,337 
 
43 
 
1.8 
 
2,568 
 
13 
 
0.5 
Foreign 
 
56,442 
 
801 
 
1.4 
 
63,182 
 
1,450 
 
2.3 
 
54,446 
 
1,270 
 
2.3 
Other interest-bearing liabilities 
Domestic 
 
3,333 
 
(6) 
 
(0.2) 
 
2,384 
 
15 
 
0.6 
 
1,285 
 
4 
 
0.3 
Foreign 
 
38,606 
 
191 
 
0.5 
 
32,850 
 
470 
 
1.4 
 
29,806 
 
259 
 
0.9 
Total interest-bearing liabilities 
 
887,433 
 
4,759 
 
0.5 
 
825,216 
 
9,277 
 
1.1 
 
804,462 
 
8,161 
 
1.0 
Swap interest on hedged debt issued and other swaps 
 
(608) 
 
(63) 
 
(176) 
Interest expense on off-balance sheet securities and other 
 
576 
 
651 
 
659 
Interest expense and average interest-bearing liabilities 
 
887,433 
 
4,726
3
 
0.5 
 
825,216 
 
9,865
3 
 
1.2 
 
804,462 
 
8,645
3 
 
1.1 
Non-interest-bearing liabilities 
Derivative financial instruments 
 
161,086 
 
124,593 
 
127,760 
Other 
 
65,302 
 
68,448
4 
 
64,844
4 
Total liabilities 
 
1,113,820 
 
1,018,256 
 
997,067 
Total equity 
 
57,715 
 
54,429
4 
 
52,488
4 
Total average liabilities and equity 
 
1,171,535 
 
1,072,685 
 
1,049,555 
Net interest income 
 
5,862 
 
4,501 
 
5,048 
Net yield on interest-earning assets 
 
0.7 
 
0.6 
 
0.7 
1 Repurchase agreements are presented 
on a gross basis and 
therefore, for the purpose 
of this disclosure, do 
not reflect the effect 
of netting permitted under IFRS. 
2 Includes financial liabilities at 
fair value held 
for trading, other financial liabilities designated at fair value and brokerage 
payables designated at fair value. 
3 For the purpose of this disclosure, 
negative interest expense on liabilities is presented as a reduction 
to interest expense, 
while in 
the consolidated 
income statement 
negative interest 
income on 
liabilities is 
presented as 
interest income. 
Refer to 
Note 3 
in the “Consolidated 
financial statements” 
section of 
this 
report for more information. 
4 Comparative-period information has been restated. Refer to Note 1b in the “Consolidated financial statements” section of 
this report for more information.

 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
612 
 
Average balances and interest rates (continued) 
The 
percentage 
of 
total 
average 
interest-earning 
assets 
attributable to foreign 
activities was 62% 
for 2020 (2019: 64%; 
2018: 
62%). 
The 
percentage 
of 
total 
average 
interest-bearing 
liabilities 
attributable 
to 
foreign 
activities 
was 
61% 
for 
2020 
(2019: 
62%; 2018: 
61%). All assets 
and liabilities 
are translated 
into US dollars 
at uniform month-end 
rates. Interest income 
and 
expense are translated at monthly average rates. 
Average 
rates 
earned 
and 
paid 
on 
assets 
and 
liabilities 
can 
change 
from period 
to period 
based 
on the 
changes in 
interest 
rates in general, but are also 
affected by changes in the currency 
mix 
included 
in 
the 
assets 
and 
liabilities. 
Tax-exempt 
income 
is 
not 
recorded 
on 
a 
tax-equivalent 
basis. 
For 
all 
three 
years 
presented, 
tax-exempt 
income 
is 
considered 
to 
be 
insignificant 
and the effect from such income is therefore negligible. 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
613 
 
Analysis of changes in interest income and expense 
The 
following 
tables 
provide 
informat
ion
 
by 
categories 
of 
interest
-
earning 
assets 
a
nd 
interest
-
bearing 
liabilities 
on
 
the 
changes 
in 
interest 
income 
and 
expense 
due 
to 
changes 
in 
volume and interest rates 
for the year ended 31 
December 2020 
compared with 
the year 
ended 31 
December 2019, 
and for 
the 
year 
ended 
31 
December 
2019 
compared 
with 
the 
year 
ended 
31 
December 
2018. 
Volume 
and 
rate 
variances 
have 
been 
calculated 
on 
movements 
in 
average 
balances 
and 
changes 
in 
interest 
rates. 
Changes 
due 
to 
a 
combination 
of 
volume 
and 
rates have been allocated proportionally. 
 
2020 compared with 2019 
2019 compared with 2018 
Increase / (decrease) 
due to changes in
1 
Increase / (decrease) 
due to changes in 
USD million 
Average 
volume 
Average 
interest rate 
Net 
change 
Average 
volume 
Average 
interest rate 
Net 
change 
Interest income from interest-earning assets 
Balances at central banks 
Domestic 
 
(59) 
 
155 
 
96 
 
(13) 
 
(27) 
 
(40) 
Foreign 
 
106 
 
(293) 
 
(187) 
 
(5) 
 
8 
 
3 
Loans and advances to banks 
Domestic 
 
4 
 
10 
 
14 
 
(1) 
 
4 
 
3 
Foreign 
 
0 
 
16 
 
16 
 
0 
 
5 
 
5 
Receivables from securities financing transactions 
Domestic 
 
3 
 
16 
 
19 
 
7 
 
24 
 
31 
Foreign 
 
(122) 
 
(981) 
 
(1,103) 
 
74 
 
343 
 
417 
Loans and advances to customers 
Domestic 
 
366 
 
(632) 
 
(266) 
 
(24) 
 
55 
 
31 
Foreign 
 
224 
 
(1,015) 
 
(791) 
 
(68) 
 
206 
 
138 
Financial assets at fair value 
Domestic 
 
25 
 
(57) 
 
(32) 
 
(12) 
 
31 
 
19 
Foreign 
 
16 
 
(1,674) 
 
(1,658) 
 
319 
 
(393) 
 
(74) 
of which: taxable 
 
16 
 
(1,674) 
 
(1,658) 
 
319 
 
(393) 
 
(74) 
of which: non-taxable 
 
0 
 
0 
 
0 
Other interest-earning assets 
Domestic 
 
17 
 
(32) 
 
(15) 
 
(41) 
 
(19) 
 
(60) 
Foreign 
 
179 
 
(430) 
 
(251) 
 
51 
 
132 
 
183 
Interest income 
Domestic 
 
356 
 
(540) 
 
(184) 
 
(84) 
 
68 
 
(16) 
Foreign 
 
403 
 
(4,377) 
 
(3,974) 
 
371 
 
302 
 
673 
Total interest income from interest-earning assets 
 
759 
 
(4,917) 
 
(4,158) 
 
287 
 
370 
 
657 
Net interest income on swaps 
 
423 
 
79 
Interest income on off-balance sheet securities and other 
 
(43) 
 
(63) 
Total interest income 
 
(3,778) 
 
673 
1 In 2020 there was a significant strengthening of the Swiss franc (9%) and the euro (9%) against the US dollar. 
This effect is included within the variances disclosed in this table. 
 
 

 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
614 
 
Analysis of changes in interest income and expense (continued) 
2020 compared with 2019 
2019 compared with 2018 
Increase / (decrease) 
due to changes in
1 
Increase / (decrease) 
due to changes in 
USD million 
Average 
volume 
Average 
interest rate 
Net 
change 
Average 
volume 
Average 
interest rate 
Net 
change 
Interest expense on interest-bearing liabilities 
Amount due to banks 
Domestic 
 
(2) 
 
(2) 
 
(4) 
 
(4) 
 
(21) 
 
(25) 
Foreign 
 
4 
 
1 
 
5 
 
0 
 
5 
 
5 
Payables from securities financing transactions 
Domestic 
 
4 
 
(16) 
 
(12) 
 
0 
 
13 
 
13 
Foreign 
 
33 
 
(211) 
 
(178) 
 
(116) 
 
128 
 
12 
Customer deposits 
Domestic 
 
(22) 
 
(110) 
 
(132) 
 
0 
 
(13) 
 
(13) 
of which: demand deposits 
 
(14) 
 
(78) 
 
(92) 
 
0 
 
(23) 
 
(23) 
of which: savings deposits 
 
0 
 
(13) 
 
(13) 
 
0 
 
(11) 
 
(11) 
of which: time deposits 
 
(8) 
 
(19) 
 
(27) 
 
0 
 
20 
 
20 
Foreign 
 
297 
 
(1,530) 
 
(1,233) 
 
138 
 
433 
 
571 
Short-term debt issued measured at amortized cost 
Domestic 
 
0 
 
0 
 
0 
 
0 
 
(1) 
 
(1) 
Foreign 
 
85 
 
(287) 
 
(202) 
 
(245) 
 
109 
 
(136) 
Long-term debt issued measured at amortized cost 
Domestic 
 
3 
 
(59) 
 
(56) 
 
214 
 
2 
 
216 
Foreign 
 
(187) 
 
(56) 
 
(243) 
 
(159) 
 
(30) 
 
(189) 
Financial liabilities at fair value (excluding debt issued designated 
at fair value) 
Domestic 
 
0 
 
2 
 
2 
 
2 
 
(9) 
 
(7) 
Foreign 
 
28 
 
(1,538) 
 
(1,510) 
 
290 
 
(52) 
 
238 
Debt issued designated at fair value 
Domestic 
 
37 
 
(44) 
 
(7) 
 
(1) 
 
31 
 
30 
Foreign 
 
(155) 
 
(494) 
 
(649) 
 
201 
 
(21) 
 
180 
Other interest-bearing liabilities 
Domestic 
 
6 
 
(27) 
 
(21) 
 
7 
 
4 
 
11 
Foreign 
 
81 
 
(359) 
 
(278) 
 
116 
 
94 
 
210 
Interest expense 
Domestic 
 
26 
 
(257) 
 
(231) 
 
218 
 
6 
 
224 
Foreign 
 
186 
 
(4,473) 
 
(4,287) 
 
225 
 
667 
 
892 
Total interest expense on interest-bearing liabilities 
 
212 
 
(4,731) 
 
(4,518) 
 
443 
 
673 
 
1,116 
Swap interest on hedged debt issued and other swaps 
 
(545) 
 
113 
Interest expense on off-balance sheet securities and other 
 
(75) 
 
(9) 
Total interest expense 
 
(5,139) 
 
1,220 
1 In 2020 there was a significant strengthening of the Swiss franc (9%) and the euro (9%) against the US dollar. 
This effect is included within the variances disclosed in this table.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
615 
 
Deposits 
The following 
table analyzes average 
deposits and average 
rates 
on 
each 
deposit 
category 
for 
the 
years 
ended 
31 
December 
2020, 
2019 and 2018. The geographic allocation is based on the 
location 
of 
the 
office 
or 
branch 
where 
the 
deposit 
is 
made. 
Deposits 
by 
foreign 
deposi
tors 
in 
domestic 
offices 
were 
USD
 
76
,
167 
million 
as 
of 
31 
December 
2020
 
(31 
December 
2019: 
USD 54,251 
million; 
31 
December 
2018: 
USD 63,174 
million). 
 
31.12.20 
31.12.19 
31.12.18 
USD million, except where indicated 
Average 
deposits 
Average 
rate (%) 
Average 
deposits 
Average 
rate (%) 
Average 
deposits 
Average 
rate (%) 
Banks 
Domestic offices 
Demand deposits 
 
4,360 
 
(0.7) 
 
4,045 
 
(0.6) 
 
4,155 
 
(0.5) 
Time deposits 
 
3,737 
 
0.6 
 
1,966 
 
0.9 
 
3,323 
 
1.2 
Total domestic offices 
 
8,097 
 
(0.1) 
 
6,012 
 
(0.1) 
 
7,477 
 
0.3 
Foreign offices 
Interest-bearing deposits 
 
3,169 
 
0.8 
 
2,697 
 
0.8 
 
2,763 
 
0.5 
Total due to banks
1
 
11,266 
 
0.1 
 
8,709 
 
0.2 
 
10,240 
 
0.3 
Customer accounts 
Domestic offices 
Demand deposits 
 
137,599 
 
(0.1) 
 
123,833 
 
(0.1) 
 
128,395 
 
0.0 
Savings deposits 
 
121,793 
 
0.0 
 
112,810 
 
0.0 
 
110,560 
 
0.0 
Time deposits 
 
4,227 
 
(0.2) 
 
6,842 
 
0.3 
 
8,664 
 
0.0 
Total domestic offices 
 
263,619 
 
(0.1) 
 
243,484 
 
0.0 
 
247,619 
 
0.0 
Foreign offices 
Demand deposits 
 
64,957 
 
0.0 
 
53,981 
 
0.2 
 
55,846 
 
0.2 
Time and savings deposits 
 
149,829 
 
0.4 
 
131,117 
 
1.3 
 
109,560 
 
1.0 
Total foreign offices 
 
214,785 
 
0.3 
 
185,097 
 
1.0 
 
165,406 
 
0.7 
Total customer deposits 
 
478,404 
 
0.1 
 
428,582 
 
0.4 
 
413,025 
 
0.3 
1 Due to banks is considered to represent short-term borrowings to 
the extent that the total Due to banks exceeds total Due from 
banks, without differentiating between domestic and 
foreign offices. The remainder 
of total Due to banks is considered to represent deposits for the purpose of this disclosure. 
 
As of 31 December 2020, the maturity of time deposits was as follows: 
 
USD million 
Domestic 
Foreign 
Within 3 months 
 
5,719 
 
58,985 
3 to 6 months 
 
252 
 
2,275 
6 to 12 months 
 
1,665 
 
1,309 
1 to 5 years 
 
272 
 
1,814 
Over 5 years 
 
12 
 
202 
Total time deposits 
 
7,919 
 
64,585 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
616 
 
Short-term borrowings 
The table below presents 
the period-end, average and maximum month 
-end outstanding amounts for short-term borrowings, 
along 
with average 
and period-end 
interest 
rates. Short-term 
borrowings are 
comprised of 
short-term debt 
and repurchase 
agreements. 
There were no short-term balances within amounts due to banks for the periods presented. 
 
Short-term debt
1
Repurchase agreements
2
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.18 
31.12.20 
31.12.19 
31.12.18 
Period-end balance 
 
46,666 
 
21,837 
 
39,025 
 
104,912 
 
103,880 
 
108,584 
Average balance 
 
34,227 
 
28,893 
 
47,782 
 
116,834 
 
114,581 
 
96,338 
Maximum month-end balance 
 
46,666 
 
39,180 
 
57,860 
 
128,376 
 
133,289 
 
115,395 
Average interest rate during the period (%) 
 
0.8 
 
1.6 
 
1.3 
 
0.2 
 
1.2 
 
1.0 
Average interest rate at period end (%) 
 
0.4 
 
1.4 
 
1.9 
 
(0.1) 
 
1.0 
 
1.5 
1 
Short-term 
debt 
is 
comprised 
of 
certificates 
of 
deposit, 
commercial 
paper, 
acceptances 
and 
promissory 
notes, 
and 
other 
money 
market 
paper 
reported 
within 
Debt 
issued 
measured 
at 
amortized 
cost. 
2 Repurchase agreements are presented on a gross basis and therefore, for the purpose of this disclosure, 
do not reflect the effect of netting permitted under IFRS. 
 
Investments in debt instruments 
The table below 
presents the carrying 
amount and yield 
of debt instruments 
(presented within Financial 
assets at fair 
value not held 
for 
trading, 
Financial 
assets 
measured 
at 
fair 
value 
through 
other 
comprehensive 
income 
and 
Other 
financial 
assets 
measured 
at 
amortized cost on the balance sheet) by contractual maturity bucket. The maturity information presented does not consider any early 
redemption features and debt instruments without fixed maturities 
are not included. 
Within 1 year 
1 up to 5 years 
5 to 10 years 
Over 10 years 
Total 
carrying 
amount 
USD million, except percentages 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Financial assets at fair value not held for 
trading 
Swiss national government and agencies 
 
436 
 
(0.56) 
 
469 
 
(0.21) 
 
905 
US Treasury and agencies 
 
6,962 
 
1.31 
 
2,909 
 
1.46 
 
122 
 
0.92 
 
9,992 
Other foreign governments and official 
institutions 
 
18,032 
 
0.61 
 
4,251 
 
1.14 
 
601 
 
1.77 
 
3,642 
 
2.24 
 
26,526 
Corporate debt securities 
 
2,662 
 
0.62 
 
4,134 
 
0.56 
 
999 
 
0.26 
 
1,486 
 
0.95 
 
9,281 
Mortgage-backed securities 
 
35 
 
0.95 
 
35 
Subtotal as of 31 December 2020 
 
27,656 
 
11,730 
 
2,068 
 
5,285 
 
46,739 
Financial assets measured at fair value through 
other comprehensive income 
Swiss national government and agencies 
 
0 
US Treasury and agencies 
 
254 
 
1.68 
 
356 
 
2.46 
 
110 
 
2.36 
 
384 
 
1.54 
 
1,103 
Other foreign governments and official 
institutions 
 
326 
 
1.72 
 
102 
 
2.60 
 
428 
Corporate debt securities 
 
49 
 
3.41 
 
55 
 
2.42 
 
104 
Mortgage-backed securities 
 
0 
 
1.87 
 
843 
 
1.35 
 
5,780 
 
1.00 
 
6,624 
Subtotal as of 31 December 2020 
 
629 
 
512 
 
953 
 
6,164 
 
8,258 
Debt securities measured at amortized cost 
Swiss national government and agencies 
 
138 
(0.60) 
25 
 
(0.33) 
163 
US Treasury and agencies 
 
511 
 
1.81 
 
4,501 
 
2.01 
 
2,586 
 
2.31 
 
7,598 
Other foreign governments and official 
institutions 
 
812 
 
1.03 
 
2,729 
 
0.72 
 
362 
 
0.49 
 
3,903 
Corporate debt securities 
 
1,117 
 
1.09 
 
2,819 
 
0.47 
 
789 
 
0.06 
 
4,724 
Mortgage-backed securities 
 
2,414 
 
2.74 
 
2,414 
Subtotal as of 31 December 2020 
 
2,577 
 
10,074 
 
3,736 
 
2,414 
 
18,801 
Total as of 31 December 2020
1
 
30,862 
 
22,316 
 
6,757 
 
13,863 
 
73,798 
 
 

 
617 
 
Investments in debt instruments (continued) 
Within 1 year 
1 up to 5 years 
5 to 10 years 
Over 10 years 
Total 
carrying 
amount 
USD million, except percentages 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Financial assets at fair value not held for 
trading 
Swiss national government and agencies 
 
57 
 
(0.73) 
 
11 
 
0.23 
 
68 
US Treasury and agencies 
 
1,990 
 
1.92 
 
7,236 
 
1.89 
 
106 
 
4.44 
 
9,332 
Other foreign governments and official 
institutions 
 
9,154 
 
0.86 
 
6,761 
 
1.67 
 
127 
 
1.85 
 
5,074 
 
2.48 
 
21,116 
Corporate debt securities 
 
4,765 
 
0.91 
 
5,039 
 
1.27 
 
35 
 
0.15 
 
1,430 
 
3.79 
 
11,269 
Mortgage-backed securities 
 
81 
 
3.12 
 
81 
Subtotal as of 31 December 2019 
 
15,909 
 
19,093 
 
173 
 
6,691 
 
41,867 
 
Financial assets measured at fair value through 
other comprehensive income 
Swiss national government and agencies 
 
0 
US Treasury and agencies 
 
718 
 
1.10 
 
353 
 
1.12 
 
483 
 
2.15 
 
305 
 
1.44 
 
1,859 
Other foreign governments and official 
institutions 
 
283 
 
2.01 
 
66 
 
3.31 
 
349 
Corporate debt securities 
 
54 
 
4.03 
 
128 
 
3.33 
 
182 
Mortgage-backed securities 
 
1,074 
 
1.12 
 
2,881 
 
1.70 
 
3,955 
Subtotal as of 31 December 2019 
 
1,054 
 
547 
 
1,557 
 
3,185 
 
6,345 
 
Debt securities measured at amortized cost 
Swiss national government and agencies 
 
1 
 
3.92 
 
1 
US Treasury and agencies 
 
747 
 
1.95 
 
3,815 
 
2.02 
 
3,493 
 
2.31 
 
8,055 
Other foreign governments and official 
institutions 
 
903 
 
1.63 
 
475 
 
2.13 
 
1,378 
Corporate debt securities 
 
702 
 
0.96 
 
1,259 
 
1.65 
 
143 
 
(0.49) 
 
2,104 
Mortgage-backed securities 
 
2,603 
 
3.04 
 
2,603 
Subtotal as of 31 December 2019 
 
2,352 
 
5,550 
 
3,636 
 
2,603 
 
14,141 
Total as of 31 December 2019
1
 
19,315 
 
25,191 
 
5,367 
 
12,480 
 
62,352

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
618 
 
Investments in debt instruments (continued) 
Within 1 year 
1 up to 5 years 
5 to 10 years 
Over 10 years 
Total 
carrying 
amount 
USD million, except percentages 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Financial assets at fair value not held for 
trading 
Swiss national government and agencies 
 
203 
 
(0.80) 
 
73 
 
(0.54) 
 
13 
 
0.14 
 
290 
US Treasury and agencies 
 
7,725 
 
2.15 
 
3,444 
 
1.93 
 
87 
 
2.13 
 
140 
 
2.34 
 
11,396 
Other foreign governments and official 
institutions 
 
15,534 
 
0.83 
 
4,747 
 
1.56 
 
40 
 
0.24 
 
20,321 
Corporate debt securities 
 
3,765 
 
0.93 
 
3,749 
 
1.02 
 
1,092 
 
1.35 
 
5,354 
 
2.98 
 
13,960 
Mortgage-backed securities 
 
87 
 
1.97 
 
87 
Subtotal as of 31 December 2018 
 
27,227 
 
12,013 
 
1,233 
 
5,581 
 
46,053 
Financial assets measured at fair value through 
other comprehensive income 
Swiss national government and agencies 
 
0 
US Treasury and agencies 
 
734 
 
1.22 
 
1,237 
 
1.31 
 
249 
 
2.46 
 
2,220 
Other foreign governments and official 
institutions 
 
317 
 
3.15 
 
45 
 
3.79 
 
362 
Corporate debt securities 
 
26 
 
4.02 
 
127 
 
3.62 
 
153 
Mortgage-backed securities 
 
1,356 
 
1.52 
 
2,575 
 
2.47 
 
3,931 
Subtotal as of 31 December 2018 
 
1,077 
 
1,409 
 
1,605 
 
2,575 
 
6,667 
Debt securities measured at amortized cost 
Swiss national government and agencies 
 
1 
 
4.00 
 
1 
US Treasury and agencies 
 
1,334 
 
1.16 
 
2,846 
 
1.83 
 
4,152 
 
2.13 
 
8,332 
Other foreign governments and official 
institutions 
 
573 
 
1.38 
 
685 
 
1.92 
 
1,258 
Corporate debt securities 
 
220 
 
1.11 
 
892 
 
1.63 
 
1,112 
Mortgage-backed securities 
 
2,859 
 
3.09 
 
2,859 
Subtotal as of 31 December 2018 
 
2,127 
 
4,424 
 
4,152 
 
2,859 
 
13,562 
Total as of 31 December 2018
1
 
30,432 
 
17,846 
 
6,990 
 
11,015 
 
66,282 
1 Includes investments 
in debt instruments 
as of 31 
December 2020 issued 
by the US 
government and government 
agencies of USD 
32,884 million (31 
December 2019: USD 
31,316 million; 31 
December 2018: 
USD 34,285 
million), 
the 
German 
government 
of 
USD 
9,386 
million 
(31 
December 
2019: 
USD 
7,774 
million; 
31 
December 
2018: 
USD 
9,026 
million), 
and 
the 
Japanese 
government 
of 
USD 
5,980 
million 
(31 December 2019: USD 2,298 million; 31 December 2018: USD 5,588 million). 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
619 
 
Loans and advances to banks and customers by industry (gross) 
The Group’s lending portfolio is widely diversified 
across industry 
sectors. An amount of 
USD 227 billion (57% of 
the total) relates 
to 
loans 
to 
thousands 
of 
private 
households, 
predominantly 
in 
Switzerland, which 
are in 
most instances 
secured by 
mortgages, 
financial 
collateral 
or 
other 
assets. 
Exposure 
to 
banks 
and 
financial 
institutions 
amounted 
to 
USD 96 
billion 
(24% 
of 
the 
total). 
Exposure 
to 
banks 
includes 
money 
market 
deposits 
with 
highly 
rated 
institutions. 
Excluding 
banks 
and 
financial 
institutions, 
the 
largest 
industry 
sector 
exposure 
as 
of 
31 
December 
2020 
was 
to 
Services, 
amounting 
to 
USD 26 
billion 
(6% 
of 
the 
total). 
For 
further 
discussion 
of 
the 
loan 
portfolio, 
refer 
to 
the 
“Risk 
management 
and 
control” 
section 
of 
this 
report. 
The industry 
categories presented in 
the tables below 
and on 
the following page 
are consistent with 
the classification of 
loans 
for reporting to the 
Swiss Financial Market Supervisory Authority 
(FINMA) and 
the Swiss 
National Bank. 
Loans that 
are presented 
within 
the 
balance 
sheet 
reporting 
lines 
Financial 
assets 
at 
fair 
value held 
for trading 
and Financial 
assets at 
fair value 
not held 
for 
trading 
are 
excluded 
from 
the 
tables 
below
 
and 
on 
the 
following page. 
 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Domestic 
Banks 
 
289 
 
92 
 
265 
 
723 
 
764 
Chemicals 
 
667 
 
346 
 
442 
 
437 
 
257 
Construction 
 
1,939 
 
1,414 
 
1,273 
 
1,467 
 
1,453 
Electricity, gas and water supply 
 
171 
 
197 
 
193 
 
213 
 
197 
Financial services 
 
9,115 
 
7,246 
 
6,754 
 
5,265 
 
5,050 
Food and beverages 
 
313 
 
242 
 
251 
 
447 
 
216 
Hotels and restaurants 
 
1,725 
 
1,369 
 
1,478 
 
1,537 
 
1,528 
Manufacturing 
 
2,176 
 
1,897 
 
1,916 
 
2,331 
 
1,965 
Mining 
 
13 
 
14 
 
11 
 
15 
 
19 
Private households 
 
147,815 
 
131,280 
 
127,761 
 
127,585 
 
121,582 
Public authorities 
 
743 
 
704 
 
888 
 
1,053 
 
1,340 
Real estate and rentals 
 
16,356 
 
13,642 
 
12,212 
 
12,736 
 
12,581 
Retail and wholesale 
 
5,256 
 
4,153 
 
4,278 
 
4,122 
 
3,938 
Services 
 
5,935 
 
4,992 
 
4,810 
 
5,051 
 
5,307 
Transport, storage and communication 
 
1,612 
 
1,392 
 
1,891 
 
1,871 
 
1,886 
Other 
 
1,065 
 
816 
 
730 
 
750 
 
696 
Total domestic 
 
195,190 
 
169,795 
 
165,153 
 
165,601 
 
158,778 
Foreign 
Banks 
 
15,171 
 
12,361 
 
16,610 
 
13,374 
 
12,165 
Chemicals 
 
87 
 
87 
 
158 
 
61 
 
138 
Construction 
 
805 
 
1,004 
 
746 
 
838 
 
540 
Electricity, gas and water supply 
 
837 
 
758 
 
587 
 
691 
 
576 
Financial services 
 
71,836 
 
58,969 
 
57,217 
 
60,247 
 
49,385 
Food and beverages 
 
953 
 
55 
 
48 
 
59 
 
67 
Hotels and restaurants 
 
418 
 
297 
 
340 
 
1,494 
 
168 
Manufacturing 
 
845 
 
1,163 
 
1,570 
 
1,867 
 
1,684 
Mining 
 
565 
 
693 
 
640 
 
1,037 
 
989 
Private households 
 
79,510 
 
70,462 
 
68,887 
 
69,246 
 
61,504 
Public authorities 
 
190 
 
388 
 
1,487 
 
2,264 
 
2,506 
Real estate and rentals 
 
3,673 
 
2,308 
 
2,886 
 
3,213 
 
2,030 
Retail and wholesale 
 
3,485 
 
2,544 
 
2,717 
 
2,657 
 
2,184 
Services 
 
19,634 
 
16,133 
 
16,279 
 
17,173 
 
19,158 
Transport, storage and communication 
 
2,069 
 
2,331 
 
2,149 
 
2,215 
 
2,398 
Other 
 
779 
 
655 
 
528 
 
566 
 
214 
Total foreign 
 
200,859 
 
170,208 
 
172,847 
 
177,002 
 
155,707 
Total gross 
 
396,049 
 
340,003 
 
338,000 
 
342,604 
 
314,485 
 
 

 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 

 
Loans and advances to banks and customers by industry (gross) (continued) 
The 
table 
below 
presents 
the percentage 
of 
loans 
and 
advances 
to 
banks 
and 
customers 
in 
each 
industry 
sector 
and 
geographic 
location in relation to total loans and advances to banks and customers. 
 
In % 
12.20 
12.19 
12.18 
12.17 
12.16 
Domestic 
Banks 
 
1 
 
0 
 
1 
 
2 
 
2 
Chemicals 
 
2 
 
1 
 
1 
 
1 
 
1 
Construction 
 
5 
 
4 
 
4 
 
4 
 
5 
Electricity, gas and water supply 
 
0 
 
1 
 
1 
 
1 
 
1 
Financial services 
 
3 
 
1 
 
0 
 
5 
 
6 
Food and beverages 
 
1 
 
1 
 
1 
 
1 
 
1 
Hotels and restaurants 
 
4 
 
4 
 
4 
 
4 
 
5 
Manufacturing 
 
5 
 
6 
 
6 
 
7 
 
6 
Private households 
 
3 
 
6 
 
8 
 
2 
 
7 
Public authorities 
 
2 
 
2 
 
3 
 
3 
 
4 
Real estate and rentals 
 
1 
 
0 
 
6 
 
7 
 
0 
Retail and wholesale 
 
3 
 
2 
 
3 
 
2 
 
3 
Services 
 
5 
 
5 
 
4 
 
5 
 
7 
Transport, storage and communication 
 
4 
 
4 
 
6 
 
5 
 
6 
Other 
 
3 
 
2 
 
2 
 
2 
 
2 
Total domestic 
 
3 
 
9 
 
9 
 
3 
 
5 
Foreign 
Banks 
 
8 
 
6 
 
9 
 
9 
 
9 
Construction 
 
2 
 
3 
 
2 
 
2 
 
2 
Electricity, gas and water supply 
 
2 
 
2 
 
2 
 
2 
 
2 
Financial services 
 
1 
 
3 
 
9 
 
6 
 
7 
Food and beverages 
 
2 
 
0 
 
0 
 
0 
 
0 
Hotels and restaurants 
 
1 
 
1 
 
1 
 
4 
 
1 
Manufacturing 
 
2 
 
3 
 
5 
 
5 
 
5 
Mining 
 
1 
 
2 
 
2 
 
3 
 
3 
Private households 
 
1 
 
7 
 
4 
 
2 
 
6 
Public authorities 
 
0 
 
1 
 
4 
 
7 
 
8 
Real estate and rentals 
 
9 
 
7 
 
9 
 
9 
 
6 
Retail and wholesale 
 
9 
 
7 
 
8 
 
8 
 
7 
Services 
 
0 
 
7 
 
8 
 
0 
 
1 
Transport, storage and communication 
 
5 
 
7 
 
6 
 
6 
 
8 
Other 
 
2 
 
2 
 
2 
 
2 
 
1 
Total foreign 
 
7 
 
1 
 
1 
 
7 
 
5 
Total gross 
 
0 
 
0 
 
0 
 
0 
 
0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
621 
 
Loans and advances to banks and customers – mortgages (gross) 
The 
table 
below 
provides 
more 
information 
about 
the 
Group’s 
mortgage 
portfolio 
by 
client 
domicile 
and 
type 
of 
mortgage. 
Mortgages are included in the industry categories in the tables on the previous pages. 
 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Mortgages 
Domestic 
 
169,227 
 
150,284 
 
145,464 
 
145,276 
 
139,558 
Foreign 
 
30,786 
 
27,970 
 
24,771 
 
22,092 
 
19,573 
Total gross mortgages 
 
200,013 
 
178,254 
 
170,235 
 
167,367 
 
159,130 
Mortgages 
Residential 
 
176,884 
 
158,333 
 
150,999 
 
148,167 
 
139,711 
Commercial 
 
23,128 
 
19,922 
 
19,236 
 
19,201 
 
19,419 
Total gross mortgages 
 
200,013 
 
178,254 
 
170,235 
 
167,367 
 
159,130 
 
Loans and advances to banks and customers – maturity profile (gross) 
The table 
below provides 
the maturity 
profile of 
loans and 
advances to 
banks and 
customers. 
The maturity 
information presented 
does not consider any early redemption features. 
 
USD million 
Within 1 year 
1 to 5 years 
Over 5 years 
Total 
Domestic 
Banks 
 
288 
 
0 
 
0 
 
289 
Mortgages 
 
58,965 
 
71,496 
 
38,765 
 
169,227 
Other loans 
 
14,085 
 
9,323 
 
2,266 
 
25,675 
Total domestic 
 
73,339 
 
80,820 
 
41,031 
 
195,190 
Foreign 
Banks 
 
14,993 
 
156 
 
23 
 
15,171 
Mortgages 
 
4,733 
 
6,125 
 
19,928 
 
30,786 
Other loans 
 
139,619 
 
14,136 
 
1,146 
 
154,901 
Total foreign 
 
159,345 
 
20,417 
 
21,097 
 
200,859 
Total gross 
 
232,684 
 
101,237 
 
62,128 
 
396,049 
 
As 
of 
31 
December 
2020, 
total 
loans 
and 
advances 
to 
banks 
and 
customers 
granted 
at 
fixed 
and 
floating 
interest 
rates 
were 
as 
follows: 
 
USD million 
Within 1 year 
1 to 5 years 
Over 5 years 
Total 
Fixed-rate loans 
 
139,333 
 
73,099 
 
46,600 
 
259,031 
Adjustable or floating-rate loans 
 
93,351 
 
28,138 
 
15,528 
 
137,017 
Total 
 
232,684 
 
101,237 
 
62,128 
 
396,049 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
622 
 
Non-performing loans 
A claim is considered as non-performing when: (i) it is 
more than 
90 
days 
past 
due; 
(ii) 
it 
is 
subject 
to 
restructuring 
proceedings, 
where 
preferential 
conditions 
concerning 
interest 
rates, 
subordination, 
tenor, 
etc. 
have 
been 
granted 
in 
order 
to 
avoid 
default 
of 
the
 
counterparty 
(forbearance); 
or
 
(iii) 
the 
counterparty 
is 
subject 
to 
bankruptcy 
/ 
enforced 
liquidation 
proceedings 
in 
any 
form, even 
if 
there 
is 
sufficient 
collateral to 
cover the 
due payment, or 
there is other 
evidence that payment 
obligations will not be fully met without recourse to collateral. 
Refer 
to 
“Credit 
policies 
for 
distressed 
assets” 
in 
the 
“Risk 
manag
ement 
and 
control” 
section 
of 
this 
report 
for 
comprehensive 
information 
about 
UBS’s 
distressed 
asset 
definitions, of which non-performing is 
a component. Also, refer 
to 
Note 
1
 
and 
Note 
20
 
in 
the 
“
C
onsolidated 
financial 
statements” 
section 
of 
this 
report 
for 
more 
information 
about 
the 
various 
risk 
factors 
that 
are 
considered 
to 
be 
indicative 
of 
credit impairment. 
The 
table 
below 
provides 
the 
Group’s 
non-performing 
loans 
and advances to banks and customers. 
 
 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Non-performing loans and advances to banks and customers: 
Domestic 
 
1,782 
 
1,471 
 
1,548 
 
1,374 
 
1,497 
Foreign 
 
1,395 
 
994 
 
871 
 
776 
 
859 
Total non-performing loans and advances to banks and customers 
 
3,176 
 
2,466 
 
2,419 
 
2,150 
 
2,357 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Gross interest income not collected on non-performing loans and 
advances to banks and customers:
1
Domestic 
 
11 
 
12 
 
12 
 
8 
 
5 
Foreign 
 
9 
 
14 
 
36 
 
25 
 
22 
Interest income included in Net profit for non-performing loans and advances 
to banks and customers: 
Domestic 
 
18 
 
20 
 
20 
 
32 
 
36 
Foreign 
 
10 
 
21 
 
15 
 
6 
 
10 
1 For credit-impaired financial 
assets, interest income is 
determined by applying the effective 
interest rate (EIR) to the 
amortized cost of the instrument, 
which represents the gross carrying 
amount adjusted for any 
loss allowance. 
 
 
Forbearance (credit restructuring)
 
Under 
imminent 
payment 
default 
or 
where 
default 
has 
already 
occurred, 
UBS 
may 
grant 
concessions 
to 
borrowers 
in 
financial 
difficulties 
that 
it 
would 
otherwise 
not 
consider 
in 
the 
normal 
course 
of 
its 
business, 
such 
as 
preferential 
interest 
rates, 
extension 
of 
maturity, 
modifying 
the 
schedule 
of 
repayments, 
debt 
/ 
equity 
swap, 
subordination, 
etc. 
When 
a 
forbearance 
measure takes place, each case is considered individually 
and the 
exposure 
is 
generally 
classified 
as
 
default
ed
. 
Forbear
ance 
classification will remain until 
the loan is collected 
or written off, 
non-preferential 
conditions 
are 
granted 
that 
supersede 
the 
preferential 
conditions 
or 
until 
the 
counterparty 
has 
recovered 
and 
the 
preferential 
conditions 
no 
longer 
exceed 
UBS’s
 
risk 
tolerance. 
Contractual
 
adjustments 
when 
there 
is 
no 
evidence 
of 
imminent 
payment 
default, 
or 
where 
changes 
to 
terms 
and 
conditions 
are 
within 
UBS’s
 
usual 
risk 
appetite, 
are 
not 
considered to be forborne. 
Gross 
interest 
income 
not 
collected 
that 
relates 
to 
restructured 
non-performing 
loans 
and 
advances 
to 
banks 
and 
customers was not 
material to the 
results of operations in 
2020, 
2019, 2018, 2017 or 2016. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
623 
 
Cross-border outstandings 
Cross-border outstandings consist of balances with central banks 
and other financial institutions, loans and advances to banks and 
customers and 
receivables from 
securities financing 
transactions 
with 
counterparties 
domiciled 
outside 
Switzerland. 
Guarantees 
and commitments are provided separately in the table below. 
The 
following 
tables 
list 
those 
countries 
for 
which 
cross-
border 
outstandings exceeded 
0.75% of 
total IFRS 
assets at 
31 
December 
2020, 
2019 
and 
2018. 
As 
of 
31 
December 
2020, 
there 
were 
no 
outstandings 
that exceeded 
0.75% 
of 
total 
IFRS 
assets 
in 
any 
country 
currently 
facing 
debt 
restructuring 
or 
liquidity problems that the Group expects would materially affect 
the country’s ability 
to service its 
obligations. Aggregate country 
risk exposures 
are monitored 
and reported 
on an ongoing 
basis. 
The 
internal 
risk 
view 
is 
not 
directly 
comparable 
to 
the 
cross-
border 
outstandings 
in 
the 
table 
below 
due 
to 
different 
approaches to 
netting, differing 
trade populations 
and differing 
approach 
to 
allocation 
of 
exposures 
to 
countries. 
For 
more 
information 
about 
the 
country 
framework 
within 
risk 
control, 
refer 
to 
the 
“Risk
 
management 
and 
control” 
section 
of 
this 
report. 
 
31.12.20 
USD million, except where indicated 
Banks 
Private sector 
Public sector 
Total 
outstandings 
% of total assets 
Guarantees and 
commitments
1,2
USA 
 
12,798 
 
106,734 
 
33,764 
 
153,296 
 
13.6 
 
17,922 
UK 
 
3,420 
 
42,403 
 
4,851 
 
50,674 
 
4.5 
 
3,168 
Japan 
 
8,409 
 
3,655 
 
5,081 
 
17,146 
 
1.5 
 
36 
Germany 
 
1,085 
 
4,889 
 
11,626 
 
17,600 
 
1.6 
 
920 
Hong Kong 
 
565 
 
18,054 
 
247 
 
18,866 
 
1.7 
 
1,541 
France 
 
390 
 
10,453 
 
672 
 
11,514 
 
1.0 
 
3,765 
Singapore 
 
202 
 
5,722 
 
2,831 
 
8,755 
 
0.8 
 
454 
31.12.19 
USD million, except where indicated 
Banks 
Private sector 
Public sector 
Total 
outstandings 
% of total assets 
Guarantees and 
commitments
1,2
USA 
 
14,615 
 
102,070 
 
11,501 
 
128,187 
 
13.2 
 
14,230 
UK 
 
1,828 
 
47,405 
 
4,095 
 
53,328 
 
5.5 
 
2,604 
Japan 
 
5,109 
 
2,855 
 
8,283 
 
16,247 
 
1.7 
 
20 
Germany 
 
595 
 
3,235 
 
6,374 
 
10,203 
 
1.0 
 
617 
Hong Kong 
 
490 
 
19,186 
 
117 
 
19,793 
 
2.0 
 
491 
France 
 
1,964 
 
6,747 
 
719 
 
9,430 
 
1.0 
 
1,390 
31.12.18 
USD million, except where indicated 
Banks 
Private sector 
Public sector 
Total 
outstandings 
% of total assets 
Guarantees and 
commitments
1,2
USA 
 
20,298 
 
95,274 
 
16,135 
 
131,707 
 
13.7 
 
17,269 
UK 
 
2,459 
 
50,280 
 
2,839 
 
55,578 
 
5.8 
 
3,739 
Japan 
 
13,863 
 
2,726 
 
6,135 
 
22,724 
 
2.4 
 
56 
Germany 
 
1,082 
 
5,182 
 
13,405 
 
19,669 
 
2.1 
 
845 
Hong Kong 
 
1,148 
 
15,388 
 
125 
 
16,661 
 
1.7 
 
590 
France 
 
 
2,404 
 
5,503 
 
393 
 
8,299 
 
0.9 
 
1,663 
1 Includes irrevocable forward starting transactions (reverse 
repurchase agreements and securities borrowing agreements). 
2 Starting with the fourth quarter of 2020, the notional 
values associated with derivative 
loan commitments, 
as well 
as forward 
starting repurchase 
and reverse 
repurchase agreements, 
measured at 
fair value 
through profit 
or loss 
are presented 
together with 
notional values 
related to 
derivative 
instruments. The presentation of prior periods has been aligned to ensure comparability. 
The fair values of these instruments continue to be presented within derivative 
instruments. 
 
 

 
UBS Group AG consolidated supplemental disclosures required under SEC regulations 
624 
 
Summary of movements in expected credit loss allowances and provisions
The following table provides 
more information about the 
movements in ECL allowances 
and provisions. 
Refer to “Credit risk” 
in the 
“Risk management and control” section of this report for more information. 
 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17
1
31.12.16
1
Balance at beginning of year 
1,029
2
1,054
2
 
1,146
2
 
642 
 
726 
Domestic 
Write-offs 
Banks 
 
0 
 
(1) 
 
0 
 
0 
 
0 
Construction 
 
(2) 
 
(4) 
 
(9) 
 
(5) 
 
(1) 
Electricity, gas and water supply 
 
0 
 
(2) 
 
(1) 
 
0 
 
0 
Financial services 
 
(36) 
 
(1) 
 
(4) 
 
(3) 
 
(3) 
Hotels and restaurants 
 
(6) 
 
(7) 
 
0 
 
0 
 
0 
Manufacturing 
 
(19) 
 
(5) 
 
(3) 
 
(2) 
 
(7) 
Private households 
 
(19) 
 
(15) 
 
(22) 
 
(18) 
 
(20) 
Real estate and rentals 
 
0 
 
(2) 
 
0 
 
0 
 
0 
Retail and wholesale 
 
(3) 
 
(4) 
 
(3) 
 
(11) 
 
(10) 
Services 
 
(2) 
 
(3) 
 
(4) 
 
(11) 
 
(3) 
Transport, storage and communications 
 
0 
 
0 
 
(4) 
 
(3) 
 
(4) 
Total gross domestic write-offs 
 
(88) 
 
(44) 
 
(51) 
 
(53) 
 
(49) 
Foreign 
Write-offs 
Banks 
 
0 
 
(1) 
 
0 
 
0 
 
0 
Construction 
 
0 
 
0 
 
0 
 
(1) 
 
0 
Financial services 
 
(23) 
 
(4) 
 
(4) 
 
(24) 
 
(4) 
Manufacturing 
 
(10) 
 
(25) 
 
(78) 
 
0 
 
(21) 
Mining 
 
(143) 
 
(1) 
 
(5) 
 
(17) 
 
(24) 
Private households 
 
(15) 
 
(6) 
 
(6) 
 
(22) 
 
(8) 
Real estate and rentals 
 
(15) 
 
(2) 
 
0 
 
0 
 
0 
Retail and wholesale 
 
(51) 
 
(10) 
 
(1) 
 
0 
 
0 
Services 
 
(4) 
 
(10) 
 
(10) 
 
(4) 
 
(16) 
Transport, storage and communications 
 
(8) 
 
(2) 
 
(36) 
 
0 
 
(20) 
Other 
 
0 
 
(37) 
 
(18) 
 
0 
 
0 
Total gross foreign write-offs 
 
(267) 
 
(98) 
 
(158) 
 
(68) 
 
(94) 
Total usage of ECL provisions 
 
0 
 
0 
 
0 
 
0 
 
0 
Total write-offs / usage of ECL provisions 
 
(356) 
 
(142) 
 
(210) 
 
(121) 
 
(143) 
Recoveries 
Domestic 
 
9 
 
9 
 
9 
 
19 
 
11 
Foreign 
 
0 
 
3 
 
0 
 
1 
 
11 
Total recoveries 
 
9 
 
13 
 
9 
 
20 
 
22 
Total net write-offs / usage of ECL provisions 
 
(346) 
 
(130) 
 
(201) 
 
(101) 
 
(121) 
Increase / (decrease) in ECL allowances and provisions recognized 
in the income statement 
 
694 
 
78 
 
118 
 
128 
 
31 
Increase / (decrease) in ECL collective allowances recognized in 
the income statement 
 
0 
 
0 
 
0 
 
3 
 
7 
Foreign currency translation 
 
75 
 
8 
 
(9) 
 
21 
 
(12) 
Other 
 
17 
 
19 
 
0 
 
38 
 
12 
Balance at end of year
3
 
1,468 
 
1,029 
 
1,054 
 
731 
 
642 
1 Information is presented under IAS 39 requirements. 
2 Includes stage 1 and stage 2 expected credit losses and 
additional stage 3 expected credit losses. 
Refer to “Note 1a Significant accounting policies” in the 
“Consolidated financial statements” section of this report for more information about IFRS 9. 
3 Includes ECL allowances for receivables from securities financing transactions.

 

 
Allocation of the expected credit loss allowances and provisions
The following table provides a breakdown of ECL allowances and provisions by industry sector and geographic location. 
 
USD million 
12.20 
12.19 
12.18 
12.17
1
12.16
1
Domestic 
Banks 
 

 

 

 

 

Chemicals 
 

 

 

 

 

Construction 
 

 

 

 

 

Electricity, gas and water supply 
 

 

 

 

 

Financial services 
 

 

 

 

 

Food and beverages 
 

 

 

 

 

Hotels and restaurants 
 

 

 

 

 

Manufacturing 
 

 

 

 

 

Private households 
 

 

 

 

 

Public authorities 
 

 

 

 

 

Real estate and rentals 
 

 

 

 

 

Retail and wholesale 
 

 

 

 

 

Services 
 

 

 

 

 

Transport, storage and communication 
 

 

 

 

 

Other 
 

 

 

 

 

Total domestic ECL-specific allowances 
 

 

 

 

 

Foreign 
Banks 
 

 

 

 

 

Chemicals 
 

 

 

 

 

Construction 
 

 

 

 

 

Electricity, gas and water supply 
 

 

 

 

 

Financial services 
 

 

 

 

 

Hotels and restaurants 
 

 

 

 

 

Manufacturing 
 

 

 

 

 

Mining 
 

 

 

 

 

Private households 
 

 

 

 

 

Public authorities 
 

 

 

 

 

Real estate and rentals 
 

 

 

 

 

Retail and wholesale 
 

 

 

 

 

Services 
 

 

 

 

 

Transport, storage and communication 
 

 

 

 

 

Other 
 

 

 

 

 

Total foreign ECL-specific allowances 
 

 

 

 

 

ECL collective allowances 
 

 

 

 

 

ECL provisions 
 

 

 

 

 

Total ECL allowances and provisions 
 
1,468 
 
1,029 
 
1,054 
 

 

Information is presented under IAS 39 requirements.

UBS AG consolidated supplemental disclosures required under SEC regulations 
626 
UBS AG consolidated supplemental 
disclosures required under SEC regulations 
A 
–
 
Introduction 
The 
following 
pages 
contain 
supplemental 
UBS 
AG 
disclosures 
that are 
required under 
SEC regulations. 
UBS AG’s 
consolidated 
financial 
statements 
have 
been 
prepared 
in 
accordance 
with 
International 
Financial 
Reporting 
Standards 
(IFRS) 
as 
issued 
by 
the 
International 
Accounting 
Standards 
Board 
(IASB) 
and 
are 
denominated 
in 
US 
dollars 
(USD), 
which 
is 
also 
the 
functional 
currency 
of: 
UBS 
AG’s 
Head 
Office; 
UBS 
AG, 
London 
Branch; 
and UBS AG’s US-based operations. 
 
 
 
 

 
627 
B – Selected financial data 
 
Key figures 
USD million, except where indicated 
31.12.20 
31.12.19
1
31.12.18
1
31.12.17 
31.12.16 
Results 
Operating income 
 
32,780 
 
29,307 
 
30,642 
 
30,044 
 
28,831 
Operating expenses 
 
25,081 
 
24,138 
 
25,184 
 
24,969 
 
24,643 
Operating profit / (loss) from continuing operations before tax 
 
7,699 
 
5,169 
 
5,458 
 
5,076 
 
4,188 
Net profit / (loss) attributable to shareholders 
 
6,196 
 
3,965 
 
4,107 
 
758 
 
3,351 
Profitability and growth
2
Return on equity (%) 
 
10.9 
 
7.4 
 
7.9 
 
1.4 
 
6.0 
Return on tangible equity (%) 
 
12.4 
 
8.5 
 
9.1 
 
1.6 
 
6.9 
Return on common equity tier 1 capital (%) 
 
16.6 
 
11.3 
 
11.9 
 
2.3 
 
10.2 
Return on risk-weighted assets, gross (%) 
 
11.9 
 
11.2 
 
12.0 
 
12.8 
 
13.1 
Return on leverage ratio denominator, gross (%) 
 
3.4 
 
3.2 
 
3.4 
 
3.4 
 
3.2 
Cost / income ratio (%) 
 
74.9 
 
82.1 
 
81.9 
 
82.7 
 
85.4 
Net profit growth (%) 
 
56.3 
 
(3.4) 
 
441.9 
 
(77.4) 
 
(48.5) 
Resources
2
Total assets 
 
1,125,327 
 
971,927 
 
958,066 
 
940,020 
 
919,236 
Equity attributable to shareholders 
 
57,754 
 
53,722 
 
52,224 
 
51,987 
 
52,957 
Common equity tier 1 capital
3
 
38,181 
 
35,233 
 
34,562 
 
34,100 
 
31,879 
Risk-weighted assets
3
 
286,743 
 
257,831 
 
262,840 
 
242,725 
 
219,330 
Common equity tier 1 capital ratio (%)
4
 
13.3 
 
13.7 
 
13.1 
 
14.0 
 
14.5 
Going concern capital ratio (%)
3
 
18.3 
 
18.3 
 
16.1 
 
15.6 
 
16.3 
Total loss-absorbing capacity ratio (%)
3
 
34.2 
 
33.9 
 
31.3 
 
31.4 
 
29.6 
Leverage ratio denominator
3
 
1,036,771 
 
911,228 
 
904,455 
 
910,133 
 
855,718 
Common equity tier 1 leverage ratio (%)
4
 
3.68 
 
3.87 
 
3.82 
 
3.75 
 
3.73 
Going concern leverage ratio (%)
3
 
5.1 
 
5.2 
 
4.7 
 
4.2 
 
4.2 
Total loss-absorbing capacity leverage ratio (%)
3
 
9.5 
 
9.6 
 
9.1 
 
8.4 
 
7.6 
Average equity / average assets ratio (%)
5
 
4.8 
 
4.9 
 
4.9 
 
5.3 
 
5.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS AG consolidated supplemental disclosures required under SEC regulations 
628 
Key figures (continued) 
USD million, except where indicated 
31.12.20 
31.12.19
1
31.12.18
1
31.12.17 
31.12.16 
Other 
Invested assets (USD billion)
6
 
4,187 
 
3,607 
 
3,101 
 
3,262 
 
2,761 
Personnel (full-time equivalents) 
 
47,546 
 
47,005 
 
47,643 
 
46,009 
 
56,208 
Americas 
 
21,394 
 
21,036 
 
21,309 
 
20,770 
 
20,522 
of which: USA 
 
20,528 
 
20,232 
 
20,495 
 
19,944 
 
19,695 
Asia Pacific 
 
8,049 
 
7,958 
 
7,987 
 
6,891 
 
6,633 
Europe, Middle East and Africa (excluding Switzerland)
7
 
5,797 
 
5,546 
 
5,669 
 
5,404 
 
8,473 
of which: UK
7
 
2,596 
 
2,392 
 
2,508 
 
2,428 
 
5,206 
of which: rest of Europe (excluding Switzerland) 
 
3,024 
 
2,988 
 
2,992 
 
2,814 
 
3,100 
of which: Middle East and Africa 
 
177 
 
166 
 
168 
 
161 
 
167 
Switzerland
7
 
12,307 
 
12,465 
 
12,678 
 
12,943 
 
20,581 
Registered ordinary shares (number) 
 
3,858,408,466 
 
3,858,408,466 
 
3,858,408,466 
 
3,858,408,466 
 
3,858,408,466 
Treasury shares (number) 
 
0 
 
0 
 
0 
 
0 
 
0 
1 Refer to the “Accounting and financial reporting” 
and “Consolidated financial statements” sections of this report for information on 
the restatement of comparative information, where applicable. 
2 Refer to the 
“Performance targets 
and capital guidance” 
section of this 
report for more 
information about our 
performance measurement. 
3 Based on 
the Swiss systemically 
relevant bank 
(SRB) framework 
as of 1 
January 
2020 and 
the fully applied 
Basel III framework. 
Refer to the 
“Capital, liquidity and 
funding, and 
balance sheet” section 
of the report 
for the respective 
period for more 
information. 
4 Based on 
the Swiss SRB 
framework as of 1 January 2020. Refer to the “Capital, liquidity and funding, 
and balance sheet” section of this report for more information. 
5 Calculated as average equity divided by average assets. 
6 Consists 
of invested assets for Global Wealth Management, Asset Management and Personal 
& Corporate Banking. Refer to “Note 32 Invested assets and net new money” in the 
“Consolidated financial statements” section 
of this report for more information. 
7 Personnel (full-time equivalents) as of 31 December 
2019, 31 December 2018 and 31 December 2017 have been amended 
compared with our Annual Report 2019, resulting 
in an increase 
of 3,312 
in full time 
equivalents for 
Switzerland and a 
corresponding decrease of 
3,312 full 
time equivalents 
for the UK 
as of 31 
December 2019, an 
increase of 3,273 
in full time 
equivalents for 
Switzerland and a corresponding decrease of 3,273 
full time equivalents 
for the UK as of 31 December 2018 
and an increase of 2,845 in full time 
equivalents for Switzerland and a corresponding decrease 
of 2,845 
full time equivalents for the UK as of 31 December 2017. 
 
 

 
629 
 
Income statement data 
For the year ended 
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Net interest income 
 
5,788 
 
4,415 
 
4,971 
 
6,021 
 
6,175 
Other net income from financial instruments measured 
at fair value through profit or loss 
 
6,930 
 
6,833 
 
6,953 
 
5,640 
 
5,286 
Credit loss (expense) / release 
 
(695) 
 
(78) 
 
(117) 
 
(131) 
 
(38) 
Fee and commission income 
 
20,982 
 
19,156 
 
19,632 
 
19,390 
 
18,425 
Fee and commission expense 
 
(1,775) 
 
(1,696) 
 
(1,703) 
 
(1,840) 
 
(1,781) 
Net fee and commission income 
 
19,207 
 
17,460 
 
17,930 
 
17,550 
 
16,644 
Other income 
 
1,549 
 
677 
 
905 
 
965 
 
763 
Total operating income 
 
32,780 
 
29,307 
 
30,642 
 
30,044 
 
28,831 
Total operating expenses 
 
25,081 
 
24,138 
 
25,184 
 
24,969 
 
24,643 
Operating profit / (loss) before tax 
 
7,699 
 
5,169 
 
5,458 
 
5,076 
 
4,188 
Tax expense / (benefit) 
 
1,488 
 
1,198 
 
1,345 
 
4,242 
 
753 
Net profit / (loss) 
 
6,211 
 
3,971 
 
4,113 
 
834 
 
3,435 
Net profit / (loss) attributable to preferred noteholders 
 
73 
 
80 
Net profit / (loss) attributable to non-controlling interests 
 
15 
 
6 
 
7 
 
4 
 
4 
Net profit / (loss) attributable to shareholders 
 
6,196 
 
3,965 
 
4,107 
 
758 
 
3,351 
Cost / income ratio (%) 
 
74.9 
 
82.1 
 
81.9 
 
82.7 
 
85.4 
Rates of return (%) 
Return on equity attributable to shareholders 
 
10.9 
 
7.4 
 
7.9 
 
1.4 
 
6.0 
Return on average equity 
 
11.0 
 
7.5 
 
8.0 
 
1.4 
 
6.1 
Return on average assets 
 
0.5 
 
0.4 
 
0.4 
 
0.1 
 
0.3 
 
Dividends received from investments in subsidiaries and associates 
In 2020, 
UBS AG 
received dividends 
of USD 
3,214 million (2019: 
USD 3,508 
million; 2018: 
USD 3,683 
million) from 
its subsidiaries 
and associates. Dividends disclosed have been translated to US dollars from the functional currency of the entity paying the dividend, 
using the closing exchange rate of the month the dividend was received.

 
UBS AG consolidated supplemental disclosures required under SEC regulations 
630 
 
Balance sheet data 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Assets 
Cash and balances at central banks 
 
158,231 
 
107,068 
 
108,370 
 
90,045 
 
105,883 
Loans and advances to banks 
 
15,344 
 
12,379 
 
16,642 
 
14,047 
 
12,896 
Receivables from securities financing transactions 
 
74,210 
 
84,245 
 
95,349 
 
91,951 
 
79,936 
Cash collateral receivables on derivative instruments 
 
32,737 
 
23,289 
 
23,603 
 
24,040 
 
26,198 
Loans and advances to customers 
 
380,977 
 
327,992 
 
321,482 
 
328,952 
 
300,678 
Other financial assets measured at amortized cost 
 
27,219 
 
23,012 
 
22,637 
 
37,890 
 
27,130 
Total financial assets measured at amortized cost 
 
688,717 
 
577,985 
 
588,084 
 
586,925 
 
552,721 
Financial assets at fair value held for trading 
 
125,492 
 
127,695 
 
104,513 
 
129,509 
 
90,501 
of which: assets pledged as collateral that may be sold or repledged 
by counterparties 
 
47,098 
 
41,285 
 
32,121 
 
36,277 
 
29,731 
Derivative financial instruments 
 
159,618 
 
121,843 
 
126,212 
 
121,286 
 
155,642 
Brokerage receivables 
 
24,659 
 
18,007 
 
16,840 
Financial assets at fair value not held for trading 
 
80,038 
 
83,636 
 
82,387 
 
60,070 
 
63,888 
Total financial assets measured at fair value through profit or loss 
 
389,808 
 
351,181 
 
329,953 
 
310,865 
 
310,031 
Financial assets measured at fair value through other comprehensive income 
 
8,258 
 
6,345 
 
6,667 
 
8,889 
 
15,402 
Investments in associates 
 
1,557 
 
1,051 
 
1,099 
 
1,045 
 
947 
Property, equipment and software 
 
11,958 
 
11,826 
 
8,479 
 
8,191 
 
8,152 
Goodwill and intangible assets 
 
6,480 
 
6,469 
 
6,647 
 
6,563 
 
6,442 
Deferred tax assets 
 
9,174 
 
9,524
1 
 
10,077
1 
 
9,993 
 
13,147 
Other non-financial assets 
 
9,374 
 
7,547 
 
7,062 
 
7,548 
 
12,395 
Total assets 
 
1,125,327 
 
971,927 
 
958,066 
 
940,020 
 
919,236 
Liabilities 
Amounts due to banks 
 
11,050 
 
6,570 
 
10,962 
 
7,728 
 
10,459 
Payables from securities financing transactions 
 
6,321 
 
7,778 
 
10,296 
 
17,485 
 
9,266 
Cash collateral payables on derivative instruments 
 
37,313 
 
31,416 
 
28,906 
 
31,029 
 
34,852 
Customer deposits 
 
527,929 
 
450,591 
 
421,986 
 
423,058 
 
418,129 
Funding from UBS Group AG and its subsidiaries 
 
53,979 
 
47,866 
 
41,202 
 
35,648 
 
24,201 
Debt issued measured at amortized cost 
 
85,351 
 
62,835 
 
91,245 
 
107,458 
 
77,617 
Other financial liabilities measured at amortized cost 
 
10,421 
 
10,373 
 
7,576 
 
38,092 
 
38,361 
Total financial liabilities measured at amortized cost 
 
732,364 
 
617,429 
 
612,174 
 
660,498 
 
612,884 
Financial liabilities at fair value held for trading 
 
33,595 
 
30,591 
 
28,949 
 
31,251 
 
22,426 
Derivative financial instruments 
 
161,102 
 
120,880 
 
125,723 
 
119,138 
 
151,121 
Brokerage payables designated at fair value 
 
38,742 
 
37,233 
 
38,420 
Debt issued designated at fair value 
 
59,868 
 
66,592 
 
57,031 
 
50,782 
 
49,057 
Other financial liabilities designated at fair value 
 
31,773 
 
36,157 
 
33,594 
 
16,643 
 
14,122 
Total financial liabilities measured at fair value through profit or loss 
 
325,080 
 
291,452 
 
283,717 
 
217,814 
 
236,727 
Provisions 
 
2,791 
 
2,938 
 
3,457 
 
3,164 
 
4,097 
Other non-financial liabilities 
 
7,018 
 
6,211
1 
 
6,318
1 
 
6,499 
 
11,902 
Total liabilities 
 
1,067,254 
 
918,031 
 
905,667 
 
887,974 
 
865,610 
Equity attributable to shareholders 
 
57,754 
 
53,722
1 
 
52,224
1 
 
51,987 
 
52,957 
Preferred noteholders 
 
631 
Equity attributable to non-controlling interests 
 
319 
 
174 
 
176 
 
59 
 
39 
Total equity 
 
58,073 
 
53,896 
 
52,400 
 
52,046 
 
53,627 
Total liabilities and equity 
 
1,125,327 
 
971,927 
 
958,066 
 
940,020 
 
919,236 
1 Comparative-period information has been restated. Refer to Note 1b in the “Consolidated financial statements” section of this 
report for more information.

 
 
631 
C – Information about the company 
Property, plant and equipment 
As of 31 
December 2020, UBS AG 
operated about 771 
business 
and banking 
locations worldwide, 
of which 
approximately 33% 
were 
in 
Switzerland, 
46% 
in 
the 
Americas, 
12% 
in 
the 
rest 
of 
Europe, 
Middle East 
and Africa, 
and 
9% in 
Asia Pacific. 
Of the 
business 
and 
banking 
locations 
in 
Switzerland, 
26% 
were 
owned directly by UBS 
AG, with the remainder, 
along with most 
of 
UBS 
AG’s 
offices 
outside 
Switzerland, 
being 
held 
under 
commercial 
leases. 
These 
premises 
are 
subject 
to 
continuous 
maintenance 
and 
upgrading 
and 
are 
considered 
suitable 
and 
adequate for current and anticipated operations. 
 
 

 
UBS AG consolidated supplemental disclosures required under SEC regulations 
632 
D – Information required by industry guide 3 
Selected statistical information 
The 
following 
tables 
set 
forth 
select 
statistical 
information 
regarding 
UBS 
AG’s 
banking 
operations 
extracted 
from 
its 
financial 
statements. 
Unless 
otherwise 
indicated, 
average 
balances for 
the years 
ended 31 
December 2020, 
31 December 
2019 and 31 
December 2018 are 
calculated from monthly 
data. 
The 
distinction 
between 
domestic 
(Swiss) 
and 
foreign 
(non-
Swiss) is generally 
based on the booking 
location. For loans, 
this 
method 
is 
not 
significantly 
different 
from 
an 
analysis 
based 
on 
the domicile of the borrower. 
 
 

 
633 
 
Average balances and interest rates 
The following table sets forth average interest-earning assets and average interest-bearing liabilities, along with the average yield, for 
2020, 
2019 and 
2018. Refer 
to “Note 
3 Net interest income and other net income from financial instruments measured at fair value 
through profit or loss” 
in the “Consolidated 
financial statements” section 
of this report 
for more 
information about interest 
income 
and interest expense. 
 
For the year ended 
31.12.20 
31.12.19 
31.12.18 
USD million, except where indicated 
Average 
balance 
Interest 
income 
Average 
yield (%) 
Average 
balance 
Interest 
income 
Average 
yield (%) 
Average 
balance 
Interest 
income 
Average 
yield (%) 
Assets 
Balances at central banks 
Domestic 
 
90,234 
 
(112) 
 
(0.1) 
 
70,639 
 
(208) 
 
(0.3) 
 
66,278 
 
(168) 
 
(0.3) 
Foreign 
 
51,611 
 
7 
 
0.0 
 
34,017 
 
194 
 
0.6 
 
35,088 
 
191 
 
0.5 
Loans and advances to banks 
Domestic 
 
2,930 
 
43 
 
1.5 
 
2,574 
 
29 
 
1.1 
 
2,700 
 
25 
 
0.9 
Foreign 
 
12,001 
 
31 
 
0.3 
 
11,853 
 
15 
 
0.1 
 
12,293 
 
11 
 
0.1 
Receivables from securities financing transactions
1
Domestic 
 
4,746 
 
8 
 
0.2 
 
7,550 
 
(11) 
 
(0.1) 
 
8,989 
 
(42) 
 
(0.5) 
Foreign 
 
92,098 
 
551 
 
0.6 
 
99,269 
 
1,654 
 
1.7 
 
93,615 
 
1,237 
 
1.3 
Loans and advances to customers 
Domestic 
 
212,383 
 
3,020 
 
1.4 
 
190,898 
 
3,300 
 
1.7 
 
193,030 
 
3,268 
 
1.7 
Foreign 
 
138,485 
 
3,136 
 
2.3 
 
131,020 
 
3,926 
 
3.0 
 
133,451 
 
3,789 
 
2.8 
Financial assets at fair value
1,2
Domestic 
 
12,459 
 
40 
 
0.3 
 
9,317 
 
72 
 
0.8 
 
12,400 
 
53 
 
0.4 
Foreign 
 
192,381 
 
1,826 
 
0.9 
 
191,500 
 
3,484 
 
1.8 
 
175,581 
 
3,557 
 
2.0 
of which: taxable 
 
192,374 
 
1,826 
 
0.9 
 
191,500 
 
3,484 
 
1.8 
 
175,581 
 
3,557 
 
2.0 
of which: non-taxable 
 
7 
 
0 
 
4.0 
Other interest-earning assets 
Domestic 
 
8,064 
 
136 
 
1.7 
 
7,258 
 
151 
 
2.1 
 
8,972 
 
211 
 
2.4 
Foreign 
 
45,443 
 
386 
 
0.8 
 
35,471 
 
637 
 
1.8 
 
31,864 
 
454 
 
1.4 
Total interest-earning assets 
 
862,835 
 
9,071 
 
1.1 
 
791,366 
 
13,242 
 
1.7 
 
774,260 
 
12,585 
 
1.6 
Net interest income on swaps 
 
1,140 
 
716 
 
637 
Interest income on off-balance sheet securities and other 
 
386 
 
429 
 
492 
Interest income and average interest-earning assets 
 
862,835 
 
10,597
3
 
1.2 
 
791,366 
 
14,386
3 
 
1.8 
 
774,260 
 
13,714
3 
 
1.8 
Non-interest-earning assets 
Derivative financial instruments 
 
161,799 
 
126,654 
 
129,288 
Fixed assets 
 
11,898 
 
11,411 
 
8,337 
Other 
 
134,831 
 
142,750
4 
 
138,371
4 
Total average assets 
 
1,171,363 
 
1,072,181 
 
1,050,256 
1 Reverse repurchase agreements are presented 
on a gross basis and therefore, 
for the purpose of this disclosure, 
do not reflect the effect 
of netting permitted under IFRS. 
2 Includes financial assets at fair 
value 
held for trading, 
financial 
assets at 
fair value 
not held 
for trading, 
financial assets 
at fair 
value through 
other comprehensive 
income and 
brokerage 
receivables. 
3 For 
the purpose 
of this 
disclosure, negative 
interest income on 
assets is presented 
as a reduction 
to interest income, 
while in 
the consolidated 
income statement 
negative interest 
income on assets 
is presented as 
interest expense. 
Refer to 
Note 3 
in the 
“Consolidated financial statements” section 
of this report for 
more information. 
4 Comparative-period information has 
been restated. Refer to Note 
1b in the “Consolidated 
financial statements” section of 
this 
report for more information.

 
UBS AG consolidated supplemental disclosures required under SEC regulations 
634 
 
Average balances and interest rates (continued) 
For the year ended 
31.12.20 
31.12.19 
31.12.18 
USD million, except where indicated 
Average 
balance 
Interest 
expense 
Average 
interest 
rate (%) 
Average 
balance 
Interest 
expense 
Average 
interest 
rate (%) 
Average 
balance 
Interest 
expense 
Average 
interest 
rate (%) 
Liabilities and equity 
Amount due to banks 
Domestic 
 
8,097 
 
(9) 
 
(0.1) 
 
6,012 
 
(5) 
 
(0.1) 
 
7,477 
 
20 
 
0.3 
Foreign 
 
3,169 
 
26 
 
0.8 
 
2,697 
 
21 
 
0.8 
 
2,763 
 
15 
 
0.5 
Payables from securities financing transactions
1
Domestic 
 
3,888 
 
6 
 
0.2 
 
3,238 
 
18 
 
0.6 
 
3,626 
 
5 
 
0.1 
Foreign 
 
18,793 
 
174 
 
0.9 
 
17,218 
 
353 
 
2.1 
 
26,111 
 
341 
 
1.3 
Customer deposits and Funding from UBS Group AG and its 
subsidiaries 
Domestic 
 
317,619 
 
1,580 
 
0.5 
 
291,554 
 
1,864 
 
0.6 
 
290,056 
 
1,555 
 
0.5 
of which: demand deposits 
 
138,949 
 
(164) 
 
(0.1) 
 
125,127 
 
(66) 
 
(0.1) 
 
130,674 
 
(39) 
 
0.0 
of which: savings deposits 
 
121,793 
 
3 
 
0.0 
 
112,810 
 
16 
 
0.0 
 
110,560 
 
26 
 
0.0 
of which: time deposits 
 
56,878 
 
1,741 
 
3.1 
 
53,617 
 
1,914 
 
3.6 
 
48,822 
 
1,567 
 
3.2 
Foreign 
 
214,783 
 
551 
 
0.3 
 
185,093 
 
1,784 
 
1.0 
 
165,405 
 
1,214 
 
0.7 
Short-term debt issued measured at amortized cost 
Domestic 
 
140 
 
0 
 
(0.3) 
 
113 
 
0 
 
0.0 
 
126 
 
1 
 
0.8 
Foreign 
 
34,087 
 
267 
 
0.8 
 
28,780 
 
468 
 
1.6 
 
47,655 
 
604 
 
1.3 
Long-term debt issued measured at amortized cost 
Domestic 
 
14,054 
 
323 
 
2.3 
 
13,483 
 
336 
 
2.5 
 
14,143 
 
374 
 
2.6 
Foreign 
 
27,100 
 
581 
 
2.1 
 
34,903 
 
824 
 
2.4 
 
41,279 
 
1,012 
 
2.5 
Financial liabilities at fair value (excluding debt issued 
designated at fair value)
1,2
Domestic 
 
701 
 
2 
 
0.3 
 
903 
 
0 
 
0.0 
 
697 
 
7 
 
1.0 
Foreign 
 
146,306 
 
354 
 
0.2 
 
143,246 
 
1,835 
 
1.3 
 
120,894 
 
1,595 
 
1.3 
Debt issued designated at fair value 
Domestic 
 
3,469 
 
6 
 
0.2 
 
2,307 
 
42 
 
1.8 
 
2,568 
 
13 
 
0.5 
Foreign 
 
56,442 
 
801 
 
1.4 
 
63,182 
 
1,450 
 
2.3 
 
54,446 
 
1,270 
 
2.3 
Other interest-bearing liabilities 
Domestic 
 
3,333 
 
(6) 
 
(0.2) 
 
2,381 
 
15 
 
0.6 
 
1,285 
 
4 
 
0.3 
Foreign 
 
38,516 
 
187 
 
0.5 
 
32,768 
 
465 
 
1.4 
 
29,806 
 
259 
 
0.9 
Total interest-bearing liabilities 
 
890,498 
 
4,841 
 
0.5 
 
827,878 
 
9,470 
 
1.1 
 
808,338 
 
8,290 
 
1.0 
Swap interest on hedged debt instruments and other swaps 
 
(608) 
 
(149) 
 
(206) 
Interest expense on off-balance sheet securities and other 
 
576 
 
651 
 
659 
Interest expense and average interest-bearing liabilities 
 
890,498 
 
4,809
3
 
0.5 
 
827,878 
 
9,971
3
 
1.2 
 
808,338 
 
8,743
3 
 
1.1 
Non-interest-bearing liabilities 
Derivative financial instruments 
 
161,087 
 
124,593 
 
127,762 
Other 
 
63,380 
 
66,520
4 
 
62,698
4 
Total liabilities 
 
1,114,966 
 
1,018,991 
 
998,798 
Total equity 
 
56,397 
 
53,189
4 
 
51,458
4 
Total average liabilities and equity 
 
1,171,363 
 
1,072,181 
 
1,050,256 
Net interest income 
 
5,788 
 
4,415 
 
4,971 
Net yield on interest-earning assets 
 
0.7 
 
0.6 
 
0.6 
1 Repurchase agreements are presented 
on a gross basis and therefore, 
for the purpose of this disclosure, 
do not reflect the effect of 
netting permitted under IFRS. 
2 Includes financial liabilities at 
fair value held 
for trading, 
other financial 
liabilities designated 
at fair 
value and 
brokerage 
payables designated 
at fair 
value. 
3 For 
the purpose 
of this 
disclosure, negative 
interest expense 
on liabilities 
is presented 
as a 
reduction to interest expense, while in the consolidated income statement negative interest income on liabilities is presented as 
interest income. Refer to Note 3 in the “Consolidated financial statements” section of 
this report for more information. 
4 Comparative-period information has been restated. Refer to Note 1b in the “Consolidated financial statements” section 
of this report for more information.

 
 
635 
 
Average balances and interest rates (continued) 
The 
percentage 
of 
total 
average 
interest-earning 
assets 
attributable to foreign 
activities was 62% 
for 2020 (2019: 64%; 
2018: 
62%). 
The 
percentage 
of 
total 
average 
interest-bearing 
liabilities 
attributable 
to 
foreign 
activities 
was 
61% 
for 
2020 
(2019: 
61%; 2018: 
60%). All assets 
and liabilities 
are translated 
into US dollars 
at uniform month-end 
rates. Interest income 
and 
expense are translated at monthly average rates. 
Average 
rates 
earned 
and 
paid 
on 
assets 
and 
liabilities 
can 
change 
from period 
to period 
based 
on the 
changes in 
interest 
rates in general, but are also 
affected by changes in the currency 
mix 
included 
in 
the 
assets 
and 
liabilities. 
Tax-exempt 
income 
is 
not 
recorded 
on 
a 
tax-equivalent 
basis. 
For 
all 
three 
years 
presented, 
tax-exempt 
income 
is 
considered 
to 
be 
insignificant 
and the effect from such income is therefore negligible. 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS AG consolidated supplemental disclosures required under SEC regulations 
636 
 
Analysis of changes in interest income and expense 
The 
following 
tables
 
provide 
information
 
by 
categories 
of 
interest
-
earning 
assets 
and 
interest
-
bearing 
liabilities
 
on 
the 
changes 
in 
interest 
income 
and 
expense 
due 
to 
changes 
in 
volume and interest rates 
for the year ended 31 
December 2020 
compared with 
the year 
ended 31 
December 2019, 
and for 
the 
year 
ended 
31 
December 
2019 
compared 
with 
the 
year 
ended 
31 
December 
2018. 
Volume 
and 
rate 
variances 
have 
been 
calculated 
on 
movements 
in 
average 
balances 
and 
changes 
in 
interest 
rates. 
Changes 
due 
to 
a 
combination 
of 
volume 
and 
rates have been allocated proportionally. 
 
2020 compared with 2019 
2019 compared with 2018 
Increase / (decrease) 
due to changes in
1
Increase / (decrease) 
due to changes in 
USD million 
Average 
volume 
Average 
interest rate 
Net 
change 
Average 
volume 
Average 
interest rate 
Net 
change 
Interest income from interest-earning assets 
Balances at central banks 
Domestic 
 
(59) 
 
155 
 
96 
 
(13) 
 
(27) 
 
(40) 
Foreign 
 
106 
 
(293) 
 
(187) 
 
(5) 
 
8 
 
3 
Loans and advances to banks 
Domestic 
 
4 
 
10 
 
14 
 
(1) 
 
4 
 
3 
Foreign 
 
0 
 
16 
 
16 
 
0 
 
5 
 
5 
Receivables from securities financing transactions 
Domestic 
 
3 
 
16 
 
19 
 
7 
 
24 
 
31 
Foreign 
 
(122) 
 
(981) 
 
(1,103) 
 
74 
 
343 
 
417 
Loans and advances to customers 
Domestic 
 
365 
 
(645) 
 
(280) 
 
(36) 
 
68 
 
32 
Foreign 
 
224 
 
(1,014) 
 
(790) 
 
(68) 
 
205 
 
137 
Financial assets at fair value 
Domestic 
 
25 
 
(57) 
 
(32) 
 
(12) 
 
31 
 
19 
Foreign 
 
16 
 
(1,674) 
 
(1,658) 
 
318 
 
(392) 
 
(74) 
of which: taxable 
 
16 
 
(1,674) 
 
(1,658) 
 
318 
 
(392) 
 
(74) 
of which: non-taxable 
 
0 
 
0 
 
0 
Other interest-earning assets 
Domestic 
 
17 
 
(32) 
 
(15) 
 
(41) 
 
(19) 
 
(60) 
Foreign 
 
179 
 
(430) 
 
(251) 
 
51 
 
132 
 
183 
Interest income 
Domestic 
 
355 
 
(553) 
 
(198) 
 
(96) 
 
82 
 
(14) 
Foreign 
 
403 
 
(4,376) 
 
(3,973) 
 
370 
 
301 
 
671 
Total interest income from interest-earning assets 
 
758 
 
(4,929) 
 
(4,171) 
 
274 
 
383 
 
657 
Net interest income on swaps 
 
424 
 
78 
Interest income on off-balance sheet securities and other 
 
(43) 
 
(63) 
Total interest income 
 
(3,789) 
 
672 
1 In 2020 there was a significant strengthening of the Swiss franc (9%) and the euro (9%) against the US dollar. 
This effect is included within the variances disclosed in this table. 
 
 

 
637 
 
Analysis of changes in interest income and expense (continued) 
2020 compared with 2019 
2019 compared with 2018 
Increase / (decrease) 
due to changes in
1
Increase / (decrease) 
due to changes in 
USD million 
Average 
volume 
Average 
interest rate 
Net 
change 
Average 
volume 
Average 
interest rate 
Net 
change 
Interest expense on interest-bearing liabilities 
Amount due to banks 
Domestic 
 
(2) 
 
(3) 
 
(5) 
 
(4) 
 
(20) 
 
(24) 
Foreign 
 
4 
 
1 
 
5 
 
0 
 
5 
 
5 
Payables from securities financing transactions 
Domestic 
 
4 
 
(16) 
 
(12) 
 
0 
 
13 
 
13 
Foreign 
 
33 
 
(211) 
 
(178) 
 
(116) 
 
128 
 
12 
Customer deposits and Funding from UBS Group AG and its subsidiaries 
Domestic 
 
(22) 
 
(262) 
 
(284) 
 
153 
 
156 
 
309 
of which: demand deposits 
 
(14) 
 
(84) 
 
(98) 
 
0 
 
(27) 
 
(27) 
of which: savings deposits 
 
0 
 
(13) 
 
(13) 
 
0 
 
(11) 
 
(11) 
of which: time deposits 
 
(8) 
 
(165) 
 
(173) 
 
153 
 
193 
 
346 
Foreign 
 
297 
 
(1,530) 
 
(1,233) 
 
138 
 
433 
 
571 
Short-term debt issued measured at amortized cost 
Domestic 
 
0 
 
0 
 
0 
 
0 
 
(1) 
 
(1) 
Foreign 
 
85 
 
(287) 
 
(202) 
 
(245) 
 
109 
 
(136) 
Long-term debt issued measured at amortized cost 
Domestic 
 
14 
 
(27) 
 
(13) 
 
(17) 
 
(21) 
 
(38) 
Foreign 
 
(187) 
 
(56) 
 
(243) 
 
(159) 
 
(30) 
 
(189) 
Financial liabilities at fair value (excluding debt issued designated 
at fair value) 
Domestic 
 
0 
 
2 
 
2 
 
2 
 
(9) 
 
(7) 
Foreign 
 
40 
 
(1,521) 
 
(1,481) 
 
291 
 
(51) 
 
240 
Debt issued designated at fair value 
Domestic 
 
21 
 
(57) 
 
(36) 
 
(1) 
 
30 
 
29 
Foreign 
 
(155) 
 
(494) 
 
(649) 
 
201 
 
(21) 
 
180 
Other interest-bearing liabilities 
Domestic 
 
6 
 
(27) 
 
(21) 
 
7 
 
4 
 
11 
Foreign 
 
80 
 
(358) 
 
(278) 
 
112 
 
94 
 
206 
Interest expense 
Domestic 
 
21 
 
(390) 
 
(369) 
 
140 
 
152 
 
292 
Foreign 
 
197 
 
(4,456) 
 
(4,259) 
 
222 
 
667 
 
889 
Total interest expense on interest-bearing liabilities 
 
218 
 
(4,846) 
 
(4,628) 
 
362 
 
818 
 
1,180 
Swap interest on hedged debt instruments and other swaps 
 
(459) 
 
57 
Interest expense on off-balance sheet securities and other 
 
(75) 
 
(9) 
Total interest expense 
 
(5,162) 
 
1,228 
1 In 2020 there was a significant strengthening of the Swiss franc (9%) and the euro (9%) against the US dollar. 
This effect is included within the variances disclosed in this table.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS AG consolidated supplemental disclosures required under SEC regulations 
638 
 
Deposits 
The following 
table analyzes average 
deposits and average 
rates 
on 
each 
deposit 
category 
for 
the 
years 
ended 
31 
December 
2020, 
2019 and 2018. The geographic allocation is based on the 
location 
of 
the 
office 
or 
branch 
where 
the 
deposit 
is 
made. 
Deposits 
by 
foreign 
depositors 
in 
domestic 
offices 
were 
USD
 
76
,
200
 
million
 
as 
of 
31 
December 
2020
 
(
31 
December 
2019
: 
USD
 
54
,
262 
million
; 
31 
December 
2018
: 
USD
 
63
,
184 
million). 
 
31.12.20 
31.12.19 
31.12.18 
USD million, except where indicated 
Average 
deposits 
Average 
rate (%) 
Average 
deposits 
Average 
rate (%) 
Average 
deposits 
Average 
rate (%) 
Banks 
Domestic offices 
Demand deposits 
 
4,360 
 
(0.7) 
 
4,045 
 
(0.6) 
 
4,155 
 
(0.5) 
Time deposits 
 
3,737 
 
0.6 
 
1,966 
 
0.9 
 
3,323 
 
1.2 
Total domestic offices 
 
8,097 
 
(0.1) 
 
6,012 
 
(0.1) 
 
7,477 
 
0.3 
Foreign offices 
Interest-bearing deposits 
 
3,169 
 
0.8 
 
2,697 
 
0.8 
 
2,763 
 
0.5 
Total due to banks
1
 
11,266 
 
0.1 
 
8,709 
 
0.2 
 
10,240 
 
0.3 
Customer accounts 
Domestic offices 
Demand deposits 
 
138,949 
 
(0.1) 
 
125,127 
 
(0.1) 
 
130,674 
 
0.0 
Savings deposits 
 
121,793 
 
0.0 
 
112,810 
 
0.0 
 
110,560 
 
0.0 
Time deposits 
 
56,878 
 
3.1 
 
53,617 
 
3.6 
 
48,822 
 
3.2 
Total domestic offices 
 
317,619 
 
0.5 
 
291,554 
 
0.6 
 
290,056 
 
0.5 
Foreign offices 
Demand deposits 
 
64,955 
 
0.0 
 
53,976 
 
0.2 
 
55,846 
 
0.2 
Time and savings deposits 
 
149,829 
 
0.4 
 
131,117 
 
1.3 
 
109,560 
 
1.0 
Total foreign offices 
 
214,783 
 
0.3 
 
185,093 
 
1.0 
 
165,406 
 
0.7 
Total customer deposits 
 
532,402 
 
0.4 
 
476,647 
 
0.8 
 
455,461 
 
0.6 
1 Due to banks is considered to represent short-term borrowings to 
the extent that the total Due to banks exceeds total Due from 
banks, without differentiating between domestic and 
foreign offices. The remainder 
of total Due to banks is considered to represent deposits for the purpose of this disclosure. 
 
As of 31 December 2020, the maturity of time deposits was as follows: 
 
USD million 
Domestic 
Foreign 
Within 3 months 
 
6,930 
 
58,985 
3 to 6 months 
 
252 
 
2,275 
6 to 12 months 
 
1,665 
 
1,309 
1 to 5 years 
 
1,228 
 
1,814 
Over 5 years 
 
12 
 
202 
Total time deposits 
 
10,086 
 
64,585 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
639 
 
Short-term borrowings 
The table below presents 
the period-end, average and maximum month 
-end outstanding amounts for short-term borrowings, 
along 
with average 
and period-end 
interest 
rates. Short-term 
borrowings are 
comprised of 
short-term debt 
and repurchase 
agreements. 
There were no short-term balances within amounts due to banks for the periods presented. 
 
Short-term debt
1
Repurchase agreements
2
USD million, except where indicated 
31.12.20 
31.12.19 
31.12.18 
31.12.20 
31.12.19 
31.12.18 
Period-end balance 
 
46,666 
 
21,837 
 
39,025 
 
104,912 
 
103,880 
 
108,584 
Average balance 
 
34,227 
 
28,893 
 
47,782 
 
116,834 
 
114,581 
 
96,338 
Maximum month-end balance 
 
46,666 
 
39,180 
 
57,860 
 
128,376 
 
133,289 
 
115,395 
Average interest rate during the period (%) 
 
0.8 
 
1.6 
 
1.3 
 
0.2 
 
1.2 
 
1.0 
Average interest rate at period end (%) 
 
0.4 
 
1.4 
 
1.9 
 
(0.1) 
 
1.0 
 
1.5 
1 
Short-term 
debt 
is 
comprised 
of 
certificates 
of 
deposit, 
commercial 
paper, 
acceptances 
and 
promissory 
notes, 
and 
other 
money 
market 
paper 
reported 
within 
Debt 
issued 
measured 
at 
amortized 
cost. 
2 Repurchase agreements are presented on a gross basis and therefore, for the purpose of this disclosure, 
do not reflect the effect of netting permitted under IFRS. 
 
Investments in debt instruments 
The table below 
presents the carrying 
amount and yield 
of debt instruments 
(presented within Financial 
assets at fair 
value not held 
for 
trading, 
Financial 
assets 
measured 
at 
fair 
value 
through 
other 
comprehensive 
income 
and 
Other 
financial 
assets 
measured 
at 
amortized cost on the balance sheet) by contractual maturity bucket. The maturity information presented does not consider any early 
redemption features and debt instruments without fixed maturities are not included. 
 
Within 1 year 
1 up to 5 years 
5 to 10 years 
Over 10 years 
Total 
carrying 
amount 
USD million, except percentages 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Financial assets at fair value not held for 
trading 
Swiss national government and agencies 
 
436 
 
(0.56) 
 
469 
 
(0.21) 
 
905 
US Treasury and agencies 
 
6,962 
 
1.31 
 
2,909 
 
1.46 
 
122 
 
0.92 
 
9,992 
Other foreign governments and official 
institutions 
 
18,032 
 
0.61 
 
4,251 
 
1.14 
 
601 
 
1.77 
 
3,642 
 
2.24 
 
26,526 
Corporate debt securities 
 
2,662 
 
0.62 
 
4,134 
 
0.56 
 
999 
 
0.26 
 
1,486 
 
0.95 
 
9,281 
Mortgage-backed securities 
 
35 
 
0.95 
 
35 
Subtotal as of 31 December 2020 
 
27,656 
 
11,730 
 
2,068 
 
5,285 
 
46,739 
Financial assets measured at fair value through 
other comprehensive income 
Swiss national government and agencies 
 
0 
US Treasury and agencies 
 
254 
 
1.68 
 
356 
 
2.46 
 
110 
 
2.36 
 
384 
 
1.54 
 
1,103 
Other foreign governments and official 
institutions 
 
326 
 
1.72 
 
102 
 
2.60 
 
428 
Corporate debt securities 
 
49 
 
3.41 
 
55 
 
2.42 
 
104 
Mortgage-backed securities 
 
0 
 
1.87 
 
843 
 
1.35 
 
5,780 
 
1.00 
 
6,624 
Subtotal as of 31 December 2020 
 
629 
 
512 
 
953 
 
6,164 
 
8,258 
Debt securities measured at amortized cost 
Swiss national government and agencies 
 
138 
(0.60) 
25 
 
(0.33) 
163 
US Treasury and agencies 
 
511 
 
1.81 
 
4,501 
 
2.01 
 
2,586 
 
2.31 
 
7,598 
Other foreign governments and official 
institutions 
 
812 
 
1.03 
 
2,729 
 
0.72 
 
362 
 
0.49 
 
3,903 
Corporate debt securities 
 
1,117 
 
1.09 
 
2,819 
 
0.47 
 
789 
 
0.06 
 
4,724 
Mortgage-backed securities 
 
2,414 
 
2.74 
 
2,414 
Subtotal as of 31 December 2020 
 
2,577 
 
10,074 
 
3,736 
 
2,414 
 
18,801 
Total as of 31 December 2020
1
 
30,862 
 
22,316 
 
6,757 
 
13,863 
 
73,798 
 
 

 
UBS AG consolidated supplemental disclosures required under SEC regulations 
640 
 
Investments in debt instruments (continued) 
Within 1 year 
1 up to 5 years 
5 to 10 years 
Over 10 years 
Total 
carrying 
amount 
USD million, except percentages 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Financial assets at fair value not held for 
trading 
Swiss national government and agencies 
 
57 
 
(0.73) 
 
11 
 
0.23 
 
68 
US Treasury and agencies 
 
1,990 
 
1.92 
 
7,236 
 
1.89 
 
106 
 
4.44 
 
9,332 
Other foreign governments and official 
institutions 
 
9,154 
 
0.86 
 
6,761 
 
1.67 
 
127 
 
1.85 
 
5,074 
 
2.48 
 
21,116 
Corporate debt securities 
 
4,765 
 
0.91 
 
5,039 
 
1.27 
 
35 
 
0.15 
 
1,430 
 
3.79 
 
11,269 
Mortgage-backed securities 
 
81 
 
3.12 
 
81 
Subtotal as of 31 December 2019 
 
15,909 
 
19,093 
 
173 
 
6,691 
 
41,867 
 
Financial assets measured at fair value through 
other comprehensive income 
Swiss national government and agencies 
 
0 
US Treasury and agencies 
 
718 
 
1.10 
 
353 
 
1.12 
 
483 
 
2.15 
 
305 
 
1.44 
 
1,859 
Other foreign governments and official 
institutions 
 
283 
 
2.01 
 
66 
 
3.31 
 
349 
Corporate debt securities 
 
54 
 
4.03 
 
128 
 
3.33 
 
182 
Mortgage-backed securities 
 
1,074 
 
1.12 
 
2,881 
 
1.70 
 
3,955 
Subtotal as of 31 December 2019 
 
1,054 
 
547 
 
1,557 
 
3,185 
 
6,345 
 
Debt securities measured at amortized cost 
Swiss national government and agencies 
 
1 
 
3.92 
 
1 
US Treasury and agencies 
 
747 
 
1.95 
 
3,815 
 
2.02 
 
3,493 
 
2.31 
 
8,055 
Other foreign governments and official 
institutions 
 
903 
 
1.63 
 
475 
 
2.13 
 
1,378 
Corporate debt securities 
 
702 
 
0.96 
 
1,259 
 
1.65 
 
143 
 
(0.49) 
 
2,104 
Mortgage-backed securities 
 
2,603 
 
3.04 
 
2,603 
Subtotal as of 31 December 2019 
 
2,352 
 
5,550 
 
3,636 
 
2,603 
 
14,141 
Total as of 31 December 2019
1
 
19,315 
 
25,191 
 
5,367 
 
12,480 
 
62,352

 
641 
 
Investments in debt instruments (continued) 
Within 1 year 
1 up to 5 years 
5 to 10 years 
Over 10 years 
Total 
carrying 
amount 
USD million, except percentages 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Carrying 
amount 
Yield (%) 
Financial assets at fair value not held for 
trading 
Swiss national government and agencies 
 
203 
 
(0.80) 
 
73 
 
(0.54) 
 
13 
 
0.14 
 
290 
US Treasury and agencies 
 
7,725 
 
2.15 
 
3,444 
 
1.93 
 
87 
 
2.13 
 
140 
 
2.34 
 
11,396 
Other foreign governments and official 
institutions 
 
15,534 
 
0.83 
 
4,747 
 
1.56 
 
40 
 
0.24 
 
20,321 
Corporate debt securities 
 
3,765 
 
0.93 
 
3,749 
 
1.02 
 
1,092 
 
1.35 
 
5,354 
 
2.98 
 
13,960 
Mortgage-backed securities 
 
87 
 
1.97 
 
87 
Subtotal as of 31 December 2018 
 
27,227 
 
12,013 
 
1,233 
 
5,581 
 
46,053 
Financial assets measured at fair value through 
other comprehensive income 
Swiss national government and agencies 
 
0 
US Treasury and agencies 
 
734 
 
1.22 
 
1,237 
 
1.31 
 
249 
 
2.46 
 
2,220 
Other foreign governments and official 
institutions 
 
317 
 
3.15 
 
45 
 
3.79 
 
362 
Corporate debt securities 
 
26 
 
4.02 
 
127 
 
3.62 
 
153 
Mortgage-backed securities 
 
1,356 
 
1.52 
 
2,575 
 
2.47 
 
3,931 
Subtotal as of 31 December 2018 
 
1,077 
 
1,409 
 
1,605 
 
2,575 
 
6,667 
Debt securities measured at amortized cost 
Swiss national government and agencies 
 
1 
 
4.00 
 
1 
US Treasury and agencies 
 
1,334 
 
1.16 
 
2,846 
 
1.83 
 
4,152 
 
2.13 
 
8,332 
Other foreign governments and official 
institutions 
 
573 
 
1.38 
 
685 
 
1.92 
 
1,258 
Corporate debt securities 
 
220 
 
1.11 
 
892 
 
1.63 
 
1,112 
Mortgage-backed securities 
 
2,859 
 
3.09 
 
2,859 
Subtotal as of 31 December 2018 
 
2,127 
 
4,424 
 
4,152 
 
2,859 
 
13,562 
Total as of 31 December 2018
1
 
30,432 
 
17,846 
 
6,990 
 
11,015 
 
66,282 
1 Includes investments 
in debt instruments 
as of 31 
December 2020 issued 
by the US 
government and government 
agencies of USD 
32,884 million (31 
December 2019: USD 
31,316 million; 31 
December 2018: 
USD 34,285 
million), 
the 
German 
government 
of 
USD 
9,386 
million 
(31 
December 
2019: 
USD 
7,774 
million; 
31 
December 
2018: 
USD 
9,026 
million), 
and 
the 
Japanese 
government 
of 
USD 
5,980 
million 
(31 December 2019: USD 2,298 million; 31 December 2018: USD 5,588 million).

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS AG consolidated supplemental disclosures required under SEC regulations 
642 
 
Loans and advances to banks and customers by industry (gross) 
UBS 
AG’s 
lending 
portfolio 
is 
widely 
diversified 
across 
industry 
sectors. An amount of 
USD 227 billion (57% of 
the total) relates 
to 
loans 
to 
thousands 
of 
private 
households, 
predominantly 
in 
Switzerland, which 
are in 
most instances 
secured by 
mortgages, 
financial 
collateral 
or 
other 
assets. 
Exposure 
to 
banks 
and 
financial 
institutions 
amounted 
to 
USD 98 
billion 
(25% 
of 
the 
total). 
Exposure 
to 
banks 
includes 
money 
market 
deposits 
with 
highly 
rated 
institutions. 
Excluding 
banks 
and 
financial 
institutions, 
the 
largest 
industry 
sector 
exposure 
as 
of 
31 
December 
2020 
was 
to 
Services, 
amounting 
to 
USD 26 
billion 
(6% 
of 
the 
total). 
For 
further 
discussion 
of 
the 
loan 
portfolio, 
refer 
to 
the 
“Risk 
management 
and 
control” 
section 
of 
this 
report. 
The industry 
categories presented in 
the tables below 
and on 
the following page 
are consistent with 
the classification of 
loans 
for reporting to the 
Swiss Financial Market Supervisory Authority 
(FINMA) and 
the Swiss 
National Bank. 
Loans that 
are presented 
within 
the 
balance 
sheet 
reporting 
lines 
Financial 
assets 
at 
fair 
value held 
for trading 
and Financial 
assets at 
fair value 
not held 
for 
trading 
are 
excluded 
from 
the 
tables 
below 
and 
on 
the 
following page. 
 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Domestic 
Banks 
 
289 
 
92 
 
265 
 
723 
 
764 
Chemicals 
 
667 
 
346 
 
442 
 
437 
 
257 
Construction 
 
1,939 
 
1,414 
 
1,273 
 
1,467 
 
1,453 
Electricity, gas and water supply 
 
171 
 
197 
 
193 
 
213 
 
197 
Financial services 
 
10,411 
 
8,331 
 
7,744 
 
7,343 
 
5,619 
Food and beverages 
 
313 
 
242 
 
251 
 
447 
 
216 
Hotels and restaurants 
 
1,725 
 
1,369 
 
1,478 
 
1,537 
 
1,528 
Manufacturing 
 
2,176 
 
1,897 
 
1,916 
 
2,331 
 
1,965 
Mining 
 
13 
 
14 
 
11 
 
15 
 
19 
Private households 
 
147,815 
 
131,280 
 
127,761 
 
127,585 
 
121,582 
Public authorities 
 
743 
 
704 
 
888 
 
1,053 
 
1,340 
Real estate and rentals 
 
16,356 
 
13,642 
 
12,212 
 
12,736 
 
12,581 
Retail and wholesale 
 
5,256 
 
4,153 
 
4,278 
 
4,122 
 
3,938 
Services 
 
5,935 
 
4,992 
 
4,810 
 
5,051 
 
5,307 
Transport, storage and communication 
 
1,612 
 
1,392 
 
1,891 
 
1,871 
 
1,886 
Other 
 
1,065 
 
816 
 
730 
 
750 
 
696 
Total domestic 
 
196,485 
 
170,880 
 
166,143 
 
167,680 
 
159,347 
Foreign 
Banks 
 
15,071 
 
12,292 
 
16,384 
 
13,327 
 
12,134 
Chemicals 
 
87 
 
87 
 
158 
 
61 
 
138 
Construction 
 
805 
 
1,004 
 
746 
 
838 
 
540 
Electricity, gas and water supply 
 
837 
 
758 
 
587 
 
691 
 
576 
Financial services 
 
72,011 
 
59,139 
 
57,388 
 
60,377 
 
49,486 
Food and beverages 
 
953 
 
55 
 
48 
 
59 
 
67 
Hotels and restaurants 
 
418 
 
297 
 
340 
 
1,494 
 
168 
Manufacturing 
 
845 
 
1,163 
 
1,570 
 
1,867 
 
1,684 
Mining 
 
565 
 
693 
 
640 
 
1,037 
 
989 
Private households 
 
79,510 
 
70,462 
 
68,887 
 
69,246 
 
61,504 
Public authorities 
 
190 
 
388 
 
1,487 
 
2,264 
 
2,506 
Real estate and rentals 
 
3,673 
 
2,308 
 
2,886 
 
3,213 
 
2,030 
Retail and wholesale 
 
3,485 
 
2,544 
 
2,717 
 
2,657 
 
2,184 
Services 
 
19,613 
 
16,085 
 
16,248 
 
17,171 
 
19,157 
Transport, storage and communication 
 
2,069 
 
2,331 
 
2,149 
 
2,215 
 
2,398 
Other 
 
779 
 
655 
 
528 
 
566 
 
214 
Total foreign 
 
200,912 
 
170,261 
 
172,761 
 
177,083 
 
155,776 
Total gross 
 
397,397 
 
341,141 
 
338,904 
 
344,763 
 
315,122 
 
 

 

 
Loans and advances to banks and customers by industry (gross) (continued) 
The 
table 
below 
presents 
the percentage 
of 
loans 
and 
advances 
to 
banks 
and 
customers 
in 
each 
industry 
sector 
and 
geographic 
location in relation to total loans and advances to banks and customers. 
 
In % 
12.20 
12.19 
12.18 
12.17 
12.16 
Domestic 
Banks 
 
1 
 
0 
 
1 
 
2 
 
2 
Chemicals 
 
2 
 
1 
 
1 
 
1 
 
1 
Construction 
 
5 
 
4 
 
4 
 
4 
 
5 
Electricity, gas and water supply 
 
0 
 
1 
 
1 
 
1 
 
1 
Financial services 
 
6 
 
4 
 
3 
 
1 
 
8 
Food and beverages 
 
1 
 
1 
 
1 
 
1 
 
1 
Hotels and restaurants 
 
4 
 
4 
 
4 
 
4 
 
5 
Manufacturing 
 
5 
 
6 
 
6 
 
7 
 
6 
Private households 
 
2 
 
5 
 
7 
 
0 
 
6 
Public authorities 
 
2 
 
2 
 
3 
 
3 
 
4 
Real estate and rentals 
 
1 
 
0 
 
6 
 
7 
 
0 
Retail and wholesale 
 
3 
 
2 
 
3 
 
2 
 
2 
Services 
 
5 
 
5 
 
4 
 
5 
 
7 
Transport, storage and communication 
 
4 
 
4 
 
6 
 
5 
 
6 
Other 
 
3 
 
2 
 
2 
 
2 
 
2 
Total domestic 
 
4 
 
1 
 
0 
 
6 
 
6 
Foreign 
Banks 
 
8 
 
6 
 
8 
 
9 
 
9 
Construction 
 
2 
 
3 
 
2 
 
2 
 
2 
Electricity, gas and water supply 
 
2 
 
2 
 
2 
 
2 
 
2 
Financial services 
 
1 
 
3 
 
9 
 
5 
 
7 
Food and beverages 
 
2 
 
0 
 
0 
 
0 
 
0 
Hotels and restaurants 
 
1 
 
1 
 
1 
 
4 
 
1 
Manufacturing 
 
2 
 
3 
 
5 
 
5 
 
5 
Mining 
 
1 
 
2 
 
2 
 
3 
 
3 
Private households 
 
0 
 
7 
 
3 
 
1 
 
5 
Public authorities 
 
0 
 
1 
 
4 
 
7 
 
8 
Real estate and rentals 
 
9 
 
7 
 
9 
 
9 
 
6 
Retail and wholesale 
 
9 
 
7 
 
8 
 
8 
 
7 
Services 
 
9 
 
7 
 
8 
 
0 
 
1 
Transport, storage and communication 
 
5 
 
7 
 
6 
 
6 
 
8 
Other 
 
2 
 
2 
 
2 
 
2 
 
1 
Total foreign 
 
6 
 
9 
 
0 
 
4 
 
4 
Total gross 
 
0 
 
0 
 
0 
 
0 
 
0

 
UBS AG consolidated supplemental disclosures required under SEC regulations 
644 
 
Loans and advances to banks and customers – mortgages (gross) 
The table below provides more 
information about UBS AG’s mortgage portfolio 
by client domicile and type of mortgage. 
Mortgages 
are included in the industry categories in the tables on the previous pages. 
 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Mortgages 
Domestic 
 
169,227 
 
150,284 
 
145,464 
 
145,276 
 
139,558 
Foreign 
 
30,786 
 
27,970 
 
24,771 
 
22,092 
 
19,573 
Total gross mortgages 
 
200,013 
 
178,254 
 
170,235 
 
167,367 
 
159,130 
Mortgages 
Residential 
 
176,884 
 
158,333 
 
150,999 
 
148,167 
 
139,711 
Commercial 
 
23,128 
 
19,922 
 
19,236 
 
19,201 
 
19,419 
Total gross mortgages 
 
200,013 
 
178,254 
 
170,235 
 
167,367 
 
159,130 
 
Loans and advances to banks and customers – maturity profile (gross) 
The table 
below provides 
the maturity 
profile of 
loans and 
advances to 
banks and 
customers. The 
maturity information 
presented 
does not consider any early redemption features. 
 
USD million 
Within 1 year 
1 to 5 years 
Over 5 years 
Total 
Domestic 
Banks 
 
288 
 
0 
 
0 
 
289 
Mortgages 
 
58,965 
 
71,496 
 
38,765 
 
169,227 
Other loans 
 
15,122 
 
9,530 
 
2,318 
 
26,970 
Total domestic 
 
74,376 
 
81,026 
 
41,083 
 
196,485 
Foreign 
Banks 
 
14,893 
 
156 
 
23 
 
15,071 
Mortgages 
 
4,733 
 
6,125 
 
19,928 
 
30,786 
Other loans 
 
139,772 
 
14,136 
 
1,146 
 
155,055 
Total foreign 
 
159,398 
 
20,417 
 
21,097 
 
200,912 
Total gross 
 
233,774 
 
101,443 
 
62,180 
 
397,397 
 
As 
of 
31 
December 
2020, 
total 
loans 
and 
advances 
to 
banks 
and 
customers 
granted 
at 
fixed 
and 
floating 
interest 
rates 
were 
as 
follows: 
 
USD million 
Within 1 year 
1 to 5 years 
Over 5 years 
Total 
Fixed-rate loans 
 
139,286 
 
73,205 
 
46,626 
 
259,117 
Adjustable or floating-rate loans 
 
94,488 
 
28,239 
 
15,553 
 
138,280 
Total 
 
233,774 
 
101,443 
 
62,180 
 
397,397

 
 
 
 
 
 
 
 
 
 
 
 
 
 
645 
 
Non-performing loans 
A claim is considered as non-performing when: (i) it is 
more than 
90 
days 
past 
due; 
(ii) 
it 
is 
subject 
to 
restructuring 
proceedings, 
where 
preferential 
conditions 
concerning 
interest 
rates, 
subordination, 
tenor, 
etc. 
have 
been 
granted 
in 
order 
to 
avoid 
default 
of 
the
 
counterparty 
(forbearance); 
or
 
(i
ii) 
the 
counterparty 
is 
subject 
to 
bankruptcy 
/ 
enforced 
liquidation 
proceedings 
in 
any 
form, even 
if 
there 
is 
sufficient 
collateral to 
cover the 
due payment, or 
there is other 
evidence that payment 
obligations will not be fully met without recourse to collateral. 
Refer 
to 
“Credit 
policies 
for 
distressed 
assets” 
in 
the 
“Risk 
management 
and 
c
ontrol” 
section 
of 
this 
report
 
for 
comprehensive 
information 
about
 
UBS
 
AG’s 
distressed 
asset
 
definitions, of which non-performing is 
a component. Also, refer 
to 
Note 
1 
and 
Note 
20
 
in 
the 
“
C
onsolidated 
financial 
statements” 
section 
of 
this 
report 
for 
more 
information 
about 
the 
various 
risk 
factors 
that 
are 
considered 
to 
be 
indicative 
of 
credit impairment. 
The 
table below provides UBS AG’s non-performing loans and 
advances to banks and customers. 
 
 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Non-performing loans and advances to banks and customers: 
Domestic 
 
1,782 
 
1,471 
 
1,548 
 
1,374 
 
1,497 
Foreign 
 
1,395 
 
994 
 
871 
 
776 
 
859 
Total non-performing loans and advances to banks and customers 
 
3,176 
 
2,466 
 
2,419 
 
2,150 
 
2,357 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17 
31.12.16 
Gross interest income not collected on non-performing loans and advances to banks 
and customers:
1
Domestic 
 
11 
 
12 
 
12 
 
8 
 
5 
Foreign 
 
9 
 
14 
 
36 
 
25 
 
22 
Interest income included in Net profit for non-performing loans and advances 
to banks and customers: 
Domestic 
 
18 
 
20 
 
20 
 
32 
 
36 
Foreign 
 
10 
 
21 
 
15 
 
6 
 
10 
1 For credit-impaired financial 
assets, interest income is 
determined by applying the effective 
interest rate (EIR) to the 
amortized cost of the instrument, 
which represents the gross carrying 
amount adjusted for any 
loss allowance. 
 
Forbearance (credit restructuring) 
Under 
imminent 
payment 
default 
or 
where 
default 
has 
already 
occurred, 
UBS 
AG
 
may 
grant 
concessions 
to 
borrowers 
i
n 
financial 
difficulties 
that it 
would 
otherwise 
not 
consider 
in 
the 
normal course 
of its 
business, such 
as preferential 
interest rates, 
extension 
of 
maturity, 
modifying 
the 
schedule 
of 
repayments, 
debt 
/ 
equity 
swap, 
subordination, 
etc. 
When 
a 
forbearance 
measure takes place, each case is considered individually 
and the 
exposure 
is 
generally 
classified 
as
 
default
ed
. 
Forbearance 
classification will remain until 
the loan is collected 
or written off, 
non-preferential 
conditions 
are 
granted 
that 
supersede 
the 
preferential 
conditions 
or 
until 
the 
counterparty 
has 
recovered 
and 
the preferential 
conditions no 
longer exceed 
UBS AG’s 
risk 
tolerance. 
Contractual 
adjustments 
when 
there 
is 
no 
evidence 
of 
imminent 
payment 
default, 
or 
where 
changes 
to 
terms 
and 
conditions 
are 
within 
UBS 
AG’s
 
usual 
risk 
appetite, 
are 
not 
considered to be forborne. 
Gross 
interest 
income 
not 
collected 
that 
relates 
to 
restructured 
non-performing 
loans 
and 
advances 
to 
banks 
and 
customers was not 
material to the 
results of operations in 
2020, 
2019, 2018, 2017 or 2016. 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS AG consolidated supplemental disclosures required under SEC regulations 
646 
 
Cross-border outstandings 
Cross-border outstandings consist of balances with central banks 
and other financial institutions, loans and advances to banks and 
customers and 
receivables from 
securities financing 
transactions 
with 
counterparties 
domiciled 
outside 
Switzerland. 
Guarantees 
and commitments are provided separately in the table below. 
The 
following 
tables 
list 
those 
countries 
for 
which 
cross-
border 
outstandings exceeded 
0.75% of 
total IFRS 
assets at 
31 
December 
2020, 
2019 
and 
2018. 
As 
of 
31 
December 
2020, 
there 
were 
no 
outstandings 
that exceeded 
0.75% 
of 
total 
IFRS 
assets 
in 
any 
country 
currently 
facing 
debt 
restructuring
 
or 
liquidity 
problems 
that 
UBS 
AG 
expects 
would 
materially 
affect 
the country’s ability 
to service its 
obligations. Aggregate country 
risk exposures 
are monitored 
and reported 
on an ongoing 
basis. 
The 
internal 
risk 
view 
is 
not 
directly 
comparable 
to 
the 
cross-
border 
outstandings 
in 
the 
table 
below 
due 
to 
different 
approaches to 
netting, differing 
trade populations 
and differing 
approach 
to 
allocation 
of 
exposures 
to 
countries. 
For 
more 
information 
about 
the 
country 
framework 
within 
risk 
control, 
refer 
to 
the 
“Risk 
management 
and 
control” 
section 
of 
this 
report. 
 
31.12.20 
USD million, except where indicated 
Banks 
Private sector 
Public sector 
Total 
outstandings 
% of total assets 
Guarantees and 
commitments
1,2
USA 
 
12,798 
 
106,734 
 
33,764 
 
153,296 
 
13.6 
 
17,922 
UK 
 
3,407 
 
42,382 
 
4,851 
 
50,640 
 
4.5 
 
3,168 
Japan 
 
8,409 
 
3,655 
 
5,081 
 
17,146 
 
1.5 
 
36 
Germany 
 
1,085 
 
4,889 
 
11,626 
 
17,600 
 
1.6 
 
920 
Hong Kong 
 
514 
 
18,054 
 
247 
 
18,815 
 
1.7 
 
1,541 
France 
 
390 
 
10,453 
 
672 
 
11,514 
 
1.0 
 
3,765 
Singapore 
 
202 
 
5,722 
 
2,831 
 
8,755 
 
0.8 
 
454 
31.12.19 
USD million, except where indicated 
Banks 
Private sector 
Public sector 
Total 
outstandings 
% of total assets 
Guarantees and 
commitments
1,2
USA 
 
14,615 
 
102,070 
 
11,501 
 
128,187 
 
13.2 
 
14,230 
UK 
 
1,828 
 
47,357 
 
4,095 
 
53,280 
 
5.5 
 
2,604 
Japan 
 
5,109 
 
2,855 
 
8,283 
 
16,247 
 
1.7 
 
20 
Germany 
 
595 
 
3,235 
 
6,374 
 
10,203 
 
1.0 
 
617 
Hong Kong 
 
469 
 
19,186 
 
117 
 
19,771 
 
2.0 
 
491 
France 
 
1,964 
 
6,747 
 
719 
 
9,430 
 
1.0 
 
1,390 
31.12.18 
USD million, except where indicated 
Banks 
Private sector 
Public sector 
Total 
outstandings 
% of total assets 
Guarantees and 
commitments
1,2
USA 
 
20,142 
 
95,274 
 
16,135 
 
131,551 
 
13.7 
 
17,269 
UK 
 
2,455 
 
50,248 
 
2,839 
 
55,543 
 
5.8 
 
3,739 
Japan 
 
13,863 
 
2,726 
 
6,135 
 
22,724 
 
2.4 
 
56 
Germany 
 
1,082 
 
5,182 
 
13,405 
 
19,669 
 
2.1 
 
845 
Hong Kong 
 
1,132 
 
15,388 
 
125 
 
16,645 
 
1.7 
 
590 
France 
 
 
2,404 
 
5,503 
 
393 
 
8,299 
 
0.9 
 
1,663 
1 Includes irrevocable forward starting transactions (reverse repurchase 
agreements and securities borrowing agreements). 
2 Starting with the fourth quarter of 2020, the notional values associated 
with derivative 
loan commitments, 
as well 
as forward 
starting repurchase 
and reverse 
repurchase agreements, 
measured at 
fair value 
through profit 
or loss 
are presented 
together with 
notional values 
related to 
derivative 
instruments. The presentation of prior periods has been aligned to ensure comparability. 
The fair values of these instruments continue to be presented within 
derivative instruments. 
 
 

 
647 
 
Summary of movements in expected credit loss allowances and provisions
The following table provides 
more information about the 
movements in ECL allowances 
and provisions. Refer to 
“Credit risk” in the 
“Risk management and control” section of this report for more information. 
 
USD million 
31.12.20 
31.12.19 
31.12.18 
31.12.17
1
31.12.16
1
Balance at beginning of year 
1,029
2
1,054
2
 
1,146
2
 
642 
 
726 
Domestic 
Write-offs 
Banks 
 
0 
 
(1) 
 
0 
 
0 
 
0 
Construction 
 
(2) 
 
(4) 
 
(9) 
 
(5) 
 
(1) 
Electricity, gas and water supply 
 
0 
 
(2) 
 
(1) 
 
0 
 
0 
Financial services 
 
(36) 
 
(1) 
 
(4) 
 
(3) 
 
(3) 
Hotels and restaurants 
 
(6) 
 
(7) 
 
0 
 
0 
 
0 
Manufacturing 
 
(19) 
 
(5) 
 
(3) 
 
(2) 
 
(7) 
Private households 
 
(19) 
 
(15) 
 
(22) 
 
(18) 
 
(20) 
Real estate and rentals 
 
0 
 
(2) 
 
0 
 
0 
 
0 
Retail and wholesale 
 
(3) 
 
(4) 
 
(3) 
 
(11) 
 
(10) 
Services 
 
(2) 
 
(3) 
 
(4) 
 
(11) 
 
(3) 
Transport, storage and communications 
 
0 
 
0 
 
(4) 
 
(3) 
 
(4) 
Total gross domestic write-offs 
 
(88) 
 
(44) 
 
(51) 
 
(53) 
 
(49) 
Foreign 
Write-offs 
Banks 
 
0 
 
(1) 
 
0 
 
0 
 
0 
Construction 
 
0 
 
0 
 
0 
 
(1) 
 
0 
Financial services 
 
(23) 
 
(4) 
 
(4) 
 
(24) 
 
(4) 
Manufacturing 
 
(10) 
 
(25) 
 
(78) 
 
0 
 
(21) 
Mining 
 
(143) 
 
(1) 
 
(5) 
 
(17) 
 
(24) 
Private households 
 
(15) 
 
(6) 
 
(6) 
 
(22) 
 
(8) 
Real estate and rentals 
 
(15) 
 
(2) 
 
0 
 
0 
 
0 
Retail and wholesale 
 
(51) 
 
(10) 
 
(1) 
 
0 
 
0 
Services 
 
(4) 
 
(10) 
 
(10) 
 
(4) 
 
(16) 
Transport, storage and communications 
 
(8) 
 
(2) 
 
(36) 
 
0 
 
(20) 
Other 
 
0 
 
(37) 
 
(18) 
 
0 
 
0 
Total gross foreign write-offs 
 
(267) 
 
(98) 
 
(158) 
 
(68) 
 
(94) 
Total usage of ECL provisions 
 
0 
 
0 
 
0 
 
0 
 
0 
Total write-offs / usage of ECL provisions 
 
(356) 
 
(142) 
 
(210) 
 
(121) 
 
(143) 
Recoveries 
Domestic 
 
9 
 
9 
 
9 
 
19 
 
11 
Foreign 
 
0 
 
3 
 
0 
 
1 
 
11 
Total recoveries 
 
9 
 
13 
 
9 
 
20 
 
22 
Total net write-offs / usage of ECL provisions 
 
(346) 
 
(130) 
 
(201) 
 
(101) 
 
(121) 
Increase / (decrease) in ECL allowances and provisions recognized 
in the income statement 
 
694 
 
78 
 
118 
 
128 
 
31 
Increase / (decrease) in ECL collective allowances recognized in 
the income statement 
 
0 
 
0 
 
0 
 
3 
 
7 
Foreign currency translation 
 
75 
 
8 
 
(9) 
 
21 
 
(12) 
Other 
 
17 
 
19 
 
0 
 
38 
 
12 
Balance at end of year
3
 
1,468 
 
1,029 
 
1,054 
 
731 
 
642 
1 Information is presented under IAS 39 requirements. 
2 Includes stage 1 and stage 2 expected credit losses and 
additional stage 3 expected credit losses. 
Refer to “Note 1a Significant accounting policies” in the 
“Consolidated financial statements” section 
of this report for more information about IFRS 9. 
3 Includes ECL allowances for receivables from securities financing transactions.

 
UBS AG consolidated supplemental disclosures required under SEC regulations 

 
Allocation of the expected credit loss allowances and provisions
The following table provides a breakdown of ECL allowances and provisions by industry sector and geographic location. 
 
USD million 
12.20 
12.19 
12.18 
12.17
1
12.16
1
Domestic 
Banks 
 

 

 

 

 

Chemicals 
 

 

 

 

 

Construction 
 

 

 

 

 

Electricity, gas and water supply 
 

 

 

 

 

Financial services 
 

 

 

 

 

Food and beverages 
 

 

 

 

 

Hotels and restaurants 
 

 

 

 

 

Manufacturing 
 

 

 

 

 

Private households 
 

 

 

 

 

Public authorities 
 

 

 

 

 

Real estate and rentals 
 

 

 

 

 

Retail and wholesale 
 

 

 

 

 

Services 
 

 

 

 

 

Transport, storage and communication 
 

 

 

 

 

Other 
 

 

 

 

 

Total domestic ECL-specific allowances 
 

 

 

 

 

Foreign 
Banks 
 

 

 

 

 

Chemicals 
 

 

 

 

 

Construction 
 

 

 

 

 

Electricity, gas and water supply 
 

 

 

 

 

Financial services 
 

 

 

 

 

Hotels and restaurants 
 

 

 

 

 

Manufacturing 
 

 

 

 

 

Mining 
 

 

 

 

 

Private households 
 

 

 

 

 

Public authorities 
 

 

 

 

 

Real estate and rentals 
 

 

 

 

 

Retail and wholesale 
 

 

 

 

 

Services 
 

 

 

 

 

Transport, storage and communication 
 

 

 

 

 

Other 
 

 

 

 

 

Total foreign ECL-specific allowances 
 

 

 

 

 

ECL collective allowances 
 

 

 

 

 

ECL provisions 
 

 

 

 

 

Total ECL allowances and provisions 
 
1,468 
 
1,029 
 
1,054 
 

 

Information is presented under IAS 39 requirements.

649

Alternative performance measures

An alternative performance

measure (an

APM) is a

financial measure

of historical or

future financial

performance, financial position

cash

flows

other

than

financial

measure

defined

specified

the

applicable

recognized

accounting

standards

other

applicable regulations. We

report a number of APMs

in the discussion of the

financial and operating performance of

the Group,

our

business divisions and our

Group Functions. We

use APMs to provide

a more complete picture

of our operating performance and

reflect

management’s

view

the

fundamental

drivers

our

business

results.

definition

each

APM,

the

method

used

calculate it and the

information content are

presented in the

table below.

Our APMs may qualify

as non-GAAP measures

as defined

by US Securities and Exchange Commission (SEC) regulations.

APM label

Calculation

Information content

Invested assets (USD and CHF)

– GWM, P&C, AM

Calculated as the sum of managed fund

assets,

managed institutional assets, discretionary and

advisory

wealth management portfolios, fiduciary deposits,

time

deposits, savings accounts,

and wealth management

securities or brokerage accounts.

This measure provides information about

the volume

of client assets managed by or deposited with

UBS for

investment purposes.

Client assets (USD and CHF)

– GWM, P&C

Calculated as the sum of invested assets

and other

assets held purely for transactional purposes or

custody

only.

This measure provides information about the volume

of client assets managed by or deposited with

UBS for

investment purposes,

including other assets held

purely for transactional purposes or custody only.

Recurring income (USD)

– GWM

Calculated as the total of net interest income

and

recurring net fee income.

This measure provides information about the amount

of recurring net interest and fee income.

Recurring net fee income

(USD and CHF)

– GWM, P&C

Calculated as the total of fees for services provided

an ongoing basis, such as portfolio management

fees,

asset-based investment fund fees and custody

fees,

which are generated on client assets, and

administrative fees for accounts (as well as

credit card

fees for GWM).

This measure provides information about the amount

of recurring net fee income.

Transaction-based income

(USD and CHF)

– GWM, P&C

Calculated as the total of the non-recurring portion

net fee and commission income, mainly composed

brokerage and transaction-based investment fund fees,

as well as fees for payment and foreign exchange

transactions (and credit card fees for P&C),

together

with other net income from financial instruments

measured at fair value through profit or loss.

This measure provides information about the amount

of the non-recurring portion of net fee and

commission income.

Cost / income ratio (%)

Calculated as operating expenses divided by

operating

income before credit loss expense or release.

This measure provides information about the

efficiency of the business by comparing operating

expenses with gross income.

Gross margin on invested assets (bps)

– GWM, AM

Calculated as operating income before credit loss

expense or release (annualized as applicable) divided

average invested assets.

This measure provides information about the

operating income before credit loss expense or release

of the business in relation to invested assets.

Net interest margin (bps)

– P&C

Calculated as net interest income (annualized

applicable) divided by average loans.

This measure provides information about the

profitability of the business by calculating the

difference between the price charged for lending and

the cost of funding, relative to loan value.

Net margin on invested assets (bps)

– GWM, AM

Calculated as operating profit before tax (annualized

applicable) divided by average invested

assets.

This measure provides information about the

operating profit before tax of the business in relation

to invested assets.

Business volume for Personal

Banking (CHF)

– P&C

Calculated as the sum of client assets and loans.

This measure provides information about the volume

of client assets and loans.

Net new business volume for Personal

Banking (CHF)

– P&C

Calculated as the sum of net inflows and outflows

client assets and loans during a specific period

(annualized as applicable).

This measure provides information about the business

volume as a result of net new business volume flows

during a specific period.

Net new business volume growth for

Personal Banking (%)

– P&C

Calculated as the sum of net inflows and outflows

client assets and loans during a specific period

(annualized as applicable) divided by total business

volume / client assets at the beginning of the

period.

This measure provides information about the growth

of the business volume as a result of net new business

volume flows during a specific period.

Appendix

650

APM label

Calculation

Information content

Net profit growth (%)

Calculated as the change in net profit attributable

shareholders from continuing operations between

current and comparison periods divided by net profit

attributable to shareholders from continuing

operations of the comparison period.

This measure provides information about profit

growth in comparison with the prior period.

Pre-tax profit growth (%)

Calculated as the change in net profit before tax

attributable to shareholders from continuing

operations between current and comparison periods

divided by net profit before tax attributable to

shareholders from continuing operations of the

comparison period.

This measure provides information about pre-tax

profit growth in comparison with the prior period.

Recurring income as a percentage of

income (%)

– GWM

Calculated as net interest income and recurring net

fee income divided by operating income

before credit

loss expense or release.

This measure provides information about the

proportion of recurring income in operating income.

Return on

common equity

tier 1

capital (%)

Calculated as annualized net profit attributable to

shareholders divided by average common equity

tier 1

capital.

This measure provides information about the

profitability of the business in relation to common

equity tier 1 capital.

Return on equity (%)

Calculated as annualized net profit attributable to

shareholders divided by average equity attributable

shareholders.

This measure provides information about the

profitability of the business in relation to equity.

Return on attributed equity (%)

Calculated as annualized business division operating

profit before tax divided by average attributed equity.

This measure provides information about the

profitability of the business divisions in relation to

attributed equity.

Return on leverage ratio denominator,

gross (%)

Calculated as annualized operating income

before

credit loss expense or release divided by average

leverage ratio denominator.

This measure provides information about the revenues

of the business in relation to leverage ratio

denominator.

Return on risk-weighted

assets, gross (%)

Calculated as annualized operating income

before

credit loss expense or release divided by average risk-

weighted assets.

This measure provides information about the revenues

of the business in relation to risk-weighted assets.

Return on tangible equity (%)

Calculated as annualized net profit attributable to

shareholders divided by average equity attributable

shareholders less average goodwill and intangible

assets.

This measure provides information about the

profitability of the business in relation to tangible

equity.

Total book value per share

(USD and CHF

)

Calculated as equity attributable to shareholders

divided by the number of shares outstanding.

This measure provides information about net assets

on a per-share basis.

Tangible book value per share

(USD and CHF

)

Calculated as equity attributable to shareholders less

goodwill and intangible assets divided by the

number

of shares outstanding.

This measure provides information about tangible net

assets on a per-share basis.

Loan penetration (%)

– GWM

Calculated as loans divided by invested

assets.

This measure provides information about the loan

volume in relation to invested assets.

Mandate penetration (%)

– GWM

Calculated as mandate volume divided by invested

assets.

This measure provides information about mandate

volume in relation to invested assets.

Net new mandates (USD)

– GWM

Calculated as the sum of the net amount of

mandate

inflows and outflows during a specific period.

This measure provides information about the

development of assets related to mandates during

specific period as a result of net new mandate

flows

and excludes movements due to market performance,

foreign exchange translation, dividends, interest and

fees.

Net new money (USD)

– GWM, AM

Calculated as the sum of the net amount of inflows

and outflows of invested assets (as defined

in UBS

policy) recorded during a specific period.

This measure provides information about the

development of invested assets during a

specific

period as a result of net new money flows and

excludes movements due to market performance,

foreign exchange translation, dividends, interest and

fees.

Impaired loan portfolio as a percentage

of total loan portfolio, gross (%)

– GWM, P&C

Calculated as impaired loan portfolio divided by

total

gross loan portfolio.

This measure provides information about the

proportion of impaired loan portfolio in the total gross

loan portfolio.

Secured loan portfolio as a percentage

of total loan portfolio, gross (%)

– P&C

Calculated as secured loan portfolio divided by

total

gross loan portfolio.

This measure provides information about the

proportion of secured loan portfolio in the total gross

loan portfolio.

651

APM label

Calculation

Information content

Active Digital Banking clients in

Personal Banking (%)

– P&C

Calculated as the number of clients (within the

meaning of numbers of unique business relationships

operated by Personal Banking), excluding persons

under the age of 15, clients who do not have

private account, clients domiciled

outside Switzerland,

and clients who have defaulted on loans or

credit

facilities,

who have logged on at least once within

the

past month divided by the total number of clients

(within the aforementioned meaning).

This measure provides information about the

proportion of active Digital Banking clients in the total

number of UBS clients (within the aforementioned

meaning)

who are serviced by Personal Banking.

Active Digital Banking clients in

Corporate & Institutional Clients (%)

– P&C

Calculated as the number of clients (within the

meaning of numbers of unique business relationships

or legal entities operated by Corporate & Institutional

Clients), excluding clients that do not have

account, mono-product clients and clients that

have

defaulted on loans or credit facilities,

which have

logged on at least once within the past

month divided

by the total number of clients (within the

aforementioned meaning).

This measure provides information about the

proportion of active Digital Banking clients in the total

number of UBS clients (within the aforementioned

meaning)

which are serviced by Corporate &

Institutional Clients.

Mobile Banking log-in share in Personal

Banking (%)

– P&C

Calculated as the number of Mobile Banking

app

log-ins divided by total log-ins via E-Banking

and the

Mobile Banking app in Personal Banking.

This measure provides information about the

proportion of Mobile Banking app log-ins in the total

number of log-ins via E-Banking and the

Mobile

Banking app in Personal Banking.

Total book value per share and tangible book value per share in Swiss francs are calculated based

on a translation of equity under our US dollar presentation currency.

 
Appendix 
652 
 
Abbreviations frequently used in our financial reports 
 
A 
ABS
 
asset
-
backed securities
 
AGM
 
Annual G
eneral 
M
eeting
 
of 
shareholders 
A
-
IRB
 
advanced internal 
 
ratings-based 
AIV
 
alternative investment 
vehicle 
ALCO
 
Asset and Liability 
Committee 
AMA
 
advanced measurement 
approach 
AML 
 
anti
-
money laundering
 
AoA
 
Articles of Association
 
APM
 
alternative performance 
measure 
ARR
 
alternative reference rate
 
ARS
 
auction rate securities
 
ASF 
 
available stable funding
 
AT1
 
additional tier 1
 
AuM 
 
assets under 
management
 
 
B 
BCBS
 
Basel Committee on 
 
Banking Supervision 
BIS
 
Bank for International 
Settlements 
BoD
 
Board of Directors
 
 
C 
CAO 
 
Capital Adequacy 
Ordinance 
CCAR
 
Comprehensive Capital 
Analysis and Review 
CCF
 
credit conversion factor
 
CCP
 
central counterparty
 
CCR
 
counterparty credit risk
 
CCRC
 
Corporate Culture and 
Responsibility Committee 
CCyB
 
countercyclical buffer
 
 
 
 
CDO
 
collateralized debt 
 
obligation 
CDS
 
credit default swap
 
CEA
 
Commodity Exchange Act
 
CEM
 
current exposure method
 
CEO
 
Chief Executive Officer
 
CET1
 
common equity tier 1
 
CFO
 
Chief Financial Officer
 
CFTC
 
US Commodity Futures 
Trading Commission 
C
GU
 
c
ash
-
generating unit
 
CHF
 
Swiss franc
 
CIC
 
Corporate & Institutional 
Clients 
CIO
 
Chief Investment Office
 
CLS 
 
C
ontinuous 
Linked 
Settlement 
CMBS
 
commercial mortgage
-
backed security 
C&ORC 
 
Compliance & Operational 
Risk Control 
CRD IV
 
EU Capital Requirements 
Directive of 2013 
CRM
 
credit risk mitigation (credit 
risk) or comprehensive risk 
measure (market risk) 
CST
 
combined stress test
 
CVA
 
credit valua
tion adjustment
 
 
D 
DBO
 
defined benefit obligation
 
DCCP
 
Deferred Contingent 
Capital Plan 
DJSI
 
Dow Jones Sustainability 
Indices 
DM
 
discount margin
 
DOJ
 
US Department of Justice
 
DTA
 
deferred tax asset
 
DVA
 
debit valuation adjustment
 
 
E 
EAD
 
exposure at defaul
t
 
EB
 
Executive Board
 
EBA
 
European Banking Authority
 
EC
 
European Commission
 
ECB
 
European Central Bank
 
ECL
 
expected credit loss
 
EGM
 
Extraordinary General 
Meeting of shareholders 
EIR
 
effective interest rate
 
EL
 
expected loss
 
EMEA
 
Europe, Middle East and 
Africa 
EOP
 
Equity Ownership Plan
 
EPE
 
expected positive exposure
 
EPS
 
earnings per share
 
ESG 
 
environmental, social and 
governance 
ETD
 
exchange
-
traded derivative
s
 
ETF
 
exchange
-
traded fund
 
EU
 
European Union
 
EUR
 
euro
 
EURIBOR
 
Euro Interbank Offered Rate
 
ESR
 
e
nvironmental and social 
risk 
EVE
 
economic value of equity
 
EY
 
Ernst & Young Ltd
 
 
F 
FA
 
financial advisor
 
FCA
 
UK Financial Conduct 
 
Authority 
FCT
 
foreign currency translation
 
FINMA
 
Swiss Financial Market 
Supervisory Authority 
FMIA
 
Swiss Financial Market 
Infrastructure Act 
 

 
 
653 
 
Abbreviations frequently used in our financial reports (continued) 
 
FSB
 
Financial Stability Board
 
FTA
 
Swiss Federal Tax 
Administration 
FVA
 
funding valuation 
adjustment 
FVOCI
 
fair value through other 
comprehensive income 
FVTPL
 
fair value through profit or 
loss 
FX
 
foreign exchange
 
 
G 
GAAP
 
generally accepted 
 
accounting principles 
GCRG
 
Group Compliance, 
Regulatory & Governance 
GBP
 
pound sterling
 
GDP
 
gross domestic product
 
GEB
 
Group Executive Board
 
GHG
 
greenhouse gas
 
GIA
 
Group Internal Audit
 
GMD
 
Group Managing Director
 
GRI
 
Global Reporting Initiative
 
GSE
 
government 
sponsored 
entities 
G
-
SIB
 
global systemically 
important bank 
 
H 
HQLA
 
high-quality liquid assets 
HR 
 
human resources
 
 
I 
IAS
 
International Accounting 
Standards 
IASB
 
International Accounting 
Standards Board 
IBOR 
 
interbank offered rate
 
IFRIC
 
International Fina
ncial 
Reporting Interpretations 
Committee 
IFRS
 
International Financial 
Reporting Standards 
IHC
 
 
intermediate holding 
company 
IMA
 
internal models approach
 
IMM
 
internal model method
 
IRB
 
internal ratings
-
based
 
IRC
 
incremental risk charge
 
IRRBB
 
interest rate risk in the 
banking book 
ISDA
 
International Swaps and 
Derivatives Association 
 
K 
KRT
 
Key Risk Taker
 
 
L 
LAS
 
liquidity
-
adjusted stress
 
LCR
 
liquidity coverage ratio
 
LGD
 
loss given default
 
LIBOR
 
London Interbank Offered 
Rate 
LLC
 
limited 
liability company
 
LoD
 
lines of defense
 
LRD
 
leverage ratio denominator
 
LTIP
 
Long
-
Term Incentive Plan
 
LTV
 
loan
-
to
-
value
 
 
M 
M&A
 
mergers and acquisitions
 
MiFID II
 
Markets in Financial 
Instruments Directive II 
MRT
 
Material Risk Taker
 
 
N 
NAV
 
net asset value
 
NII
 
net interest income
 
NSFR
 
net stable funding ratio
 
NYSE 
 
New York Stock Exchange
 
 
O 
OCA
 
own credit adjustment
 
OCI
 
other comprehensive 
income 
ORF
 
operational risk framework
 
OTC
 
over
-
the
-
counter
 
 
P 
PD
 
probability of default
 
 
PIT
 
point in time
 
P&L
 
profit or loss
 
POCI 
 
purchased or originated 
credit-impaired 
PRA
 
UK Prudential Regulation 
Authority 
PRV
 
positive replacement value
 
 
R 
RBA
 
role
-
based allowance
 
RBC
 
risk
-
based capital
 
RbM
 
risk
-
based monitoring
 
REIT
 
r
eal estate investment trust
 
RMBS
 
resident
ial mortgage
-
backed securities 
RniV
 
risks not in VaR
 
RoAE
 
return on attributed equity
 
RoCET1 
 
return on CET1 capital
 
RoTE
 
return on tangible equity
 
RoU
 
right
-
of
-
use
 
rTSR
 
r
elative total shareholder 
return 
RV
 
replacement value
 
RW
 
risk weight
 
RWA
 
risk
-
weighte
d assets
 
 
 
 
 

 
Appendix 
654 
 
Abbreviations frequently used in our financial reports (continued) 
 
S 
SA
 
standardized approach
 
SA
-
CCR
 
standardized approach for 
counterparty credit risk 
SAR
 
stock appreciation right
 
or 
Special Administrative 
Region 
SBC 
 
Swiss Bank Corporation
 
SDG 
 
Sustainable Development 
Goal 
SE
 
structured entity
 
SEC
 
US Securities and Exc
hange 
Commission 
SEEOP
 
Senior Executive Equity 
Ownership Plan 
SFT
 
securities financing 
transaction 
SI
 
sustainable investing
 
or
 
sustainable 
investments
 
SICR
 
significant increase in credit 
risk 
SIX 
 
SIX Swiss Exchange
 
SME
 
small and medium
-
sized 
entities 
SMF
 
Senior Management 
Function 
SNB
 
Swiss National Bank
 
SPPI
 
solely payments of principal 
and interest 
SRB
 
systemically relevant bank
 
SRM
 
specific risk measure
 
SVaR
 
stressed value
-
at
-
risk
 
T 
TBTF
 
too big to fail
 
TCFD
 
Task 
Force on Climate
-
related Financial Disclosures 
TLAC
 
total loss
-
absorbing capacity
 
U 
UoM
 
units of measure 
 
USD
 
US dollar
 
V 
VaR
 
value
-
at
-
risk
 
VAT
 
value added tax
 
This is a 
general list of 
the abbreviations 
frequently used 
in our financial 
reporting. Not all 
of the listed 
abbreviations may 
appear in 
this particular report.

 
655 
Information sources 
Reporting publications 
Annual publications
 
Annual Report (SAP No. 80531):
 
Published in English, this single-
volume 
report 
provides 
descriptions of: 
our 
Group strategy 
and 
performance; 
the 
strategy 
and 
performance 
of 
the 
business 
divisions 
and 
Group 
Functions; 
risk, 
capital 
and 
funding, 
and 
balance 
sheet 
management; 
corporate 
governance, 
corporate 
responsibility 
and 
our 
compensation 
framework, 
including 
information about 
compensation for 
the Board 
of Directors 
and 
the Group 
Executive Board 
members; and 
financial information, 
including the financial statements. 
Geschäftsbericht 
(SAP 
No. 
80531):
 
This 
publication 
provides 
a 
translation 
into 
German 
of 
selected 
sections 
of 
our
 
Annual 
Report. 
Annual 
Review 
(SAP 
No. 
80530):
 
This 
booklet 
contains 
key 
information 
about 
our 
strategy 
and 
performance, 
with 
a 
focus 
on 
corporate 
responsibility 
at 
UBS. 
It 
is 
published 
in 
English, 
German, French and Italian. 
Compensation Report (SAP No. 82307):
 
This report discusses our 
compensation 
framework 
and 
provides 
information 
about 
compensation 
for 
the 
Board 
of 
Directors 
and 
the 
Group 
Executive Board members. It is available in English and German. 
 
Quarterly publications
 
The quarterly financial report provides 
an update on our strategy 
and 
performance 
for 
the 
respective 
quarter. 
It 
is 
available 
in 
English. 
 
How to order publications
 
The 
annual 
and 
quarterly 
publications 
are 
available 
in 
.pdf 
format at 
ubs.com/investors
, under “Financial 
information,” and 
printed 
copies 
can 
be 
requested 
from 
UBS 
free 
of 
charge. 
For 
annual 
publications, 
refer 
to 
the 
“Investor 
services” 
section 
at 
ubs.com/investors
. 
Alternatively, they 
can be ordered 
by quoting 
the SAP number and the language preference, 
where applicable, 
from 
UBS 
AG, 
F4UK–AUL, 
P.O. 
Box, 
CH-8098 
Zurich, 
Switzerland. 
 
Other information 
Website
 
The 
“Investor 
Relations” 
website 
at 
ubs.com/investors
 
provides 
the 
following 
information 
about 
UBS: 
news 
releases; 
financial 
information, 
including 
results-related 
filings 
with 
the 
US 
Securities and 
Exchange 
Commission (the 
SEC); 
information for 
shareholders, 
including 
UBS 
share 
price 
charts, 
as 
well 
as 
data 
and 
dividend 
information, 
and 
for 
bondholders; 
the 
UBS 
corporate 
calendar; 
and 
presentations 
by 
management 
for 
investors and financial 
analysts. Information is 
available online in 
English, with some information also available in German. 
 
Results presentations
 
Our 
quarterly 
results 
presentations 
are 
webcast 
live. 
Playbacks 
of 
most 
presentations 
can 
be 
download
ed
 
from 
ubs.com/presentations
. 
 
Messaging 
service
 
Email alerts to news 
about UBS can be subscribed 
for under “UBS 
News 
Alert” 
at 
ubs.com/global/en/investor-relations/contact/ 
investor-services.html
. 
Messages 
are 
sent 
in 
English, 
German, 
French or 
Italian, with an 
option to 
select theme preferences 
for 
such alerts. 
 
Form 20-F 
and other 
submissions to 
the US 
Securities and 
Exchange Commission 
We file periodic reports and submit other 
information about UBS 
to 
the 
US 
Securities 
and 
Exchange 
Commission 
(the 
SEC). 
Principal among 
these filings 
is the 
annual report 
on Form 
20-F, 
filed 
pursuant 
to 
the 
US 
Securities 
Exchange 
Act 
of 
1934. 
The 
filing 
of 
Form 
20-F 
is 
structured 
as 
a 
wrap-around 
document. 
Most 
sections 
of 
the 
filing 
can 
be 
satisfied 
by 
referring 
to 
the 
combined UBS 
Group AG 
and UBS 
AG annual 
report. However, 
there 
is a 
small 
amount 
of 
additional 
information in 
Form 20-F 
that 
is 
not 
presented 
elsewhere 
and 
is 
particularly 
targeted 
at 
readers
 
in 
the 
US. 
Readers 
are 
encouraged 
to 
refer 
to 
this 
additional 
disclosure. 
Any 
document 
that 
we 
file 
with 
the 
SEC 
is available 
on 
the 
SEC’s 
website: 
sec.gov
. 
Refer 
to 
ubs.com/investors
 
for more information. 
 

 
Appendix 
656 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cautionary Statement Regarding Forward-Looking Statements |
 
This report contains statements that constitute “forward-looking statements,” including 
but 
not 
limited 
to 
management’s 
outlook for 
UBS’s 
financial 
performance 
and 
statements 
relating 
to 
the 
anticipated effect 
of 
transactions and 
strategic 
initiatives on 
UBS’s business 
and future 
development. While 
these forward-looking 
statements represent 
UBS’s judgments 
and expectations 
concerning the 
matters described, 
a number 
of risks, 
uncertainties 
and other 
important factors could 
cause actual 
developments and 
results to 
differ materially 
from UBS’s 
expectations. The outbreak of COVID-19 and the measures taken in response to the 
pandemic have had and may continue to have a significant adverse effect 
on global economic 
activity, 
and an adverse 
effect on 
the credit 
profile of some 
of our clients 
and other market 
participants, 
which has resulted 
in and may 
continue 
to 
increase 
credit 
loss 
expense 
and 
credit 
impairments. In 
addition, 
we 
face 
heightened operational 
risks 
due 
to 
remote 
working arrangements, 
including risks 
to supervisory and 
surveillance controls, as 
well as 
increased fraud and 
data security risks. 
The unprecedented scale 
of the 
measures taken 
to 
respond 
to 
the pandemic 
as 
well as 
the 
uncertainty surrounding 
vaccine supply, 
distribution, and 
efficacy against 
mutated virus 
strains 
create significantly 
greater uncertainty about 
forward-looking statements in addition 
to the factors 
that generally affect 
our businesses, which 
include, but are 
not limited to: 
(i) 
the degree 
to which 
UBS is 
successful in 
the ongoing 
execution of 
its strategic 
plans, including 
its cost 
reduction and 
efficiency initiatives 
and its 
ability to 
manage its levels of risk-weighted assets (RWA) and leverage ratio denominator (LRD), liquidity coverage ratio and other financial 
resources, including changes 
in 
RWA 
assets 
and 
liabilities 
arising 
from 
higher 
market 
volatility 
and 
other 
changes 
related 
to 
the 
COVID-19 
pandemic; (ii) 
the 
degree 
to 
which 
UBS 
is 
successful in implementing changes to its businesses 
to meet changing market, regulatory and other 
conditions; (iii) the continuing low or negative interest 
rate 
environment in Switzerland and 
other jurisdictions; (iv) 
developments (including as a 
result of the 
COVID-19 pandemic) in the 
macroeconomic climate and 
in 
the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, 
credit spreads, and currency exchange rates, 
and the 
effects of 
economic conditions, market 
developments, and geopolitical 
tensions, 
and changes 
to national 
trade policies 
on the 
financial position 
or 
creditworthiness of UBS’s 
clients and counterparties as 
well as on 
client sentiment 
and levels of 
activity; (v) changes in 
the availability of 
capital and funding, 
including any 
changes in 
UBS’s credit 
spreads and 
ratings, as 
well as 
availability and 
cost of 
funding to 
meet requirements 
for debt 
eligible for 
total loss-
absorbing capacity (TLAC); (vi) changes in or the implementation of financial legislation 
and regulation in Switzerland, the US, the UK, the European Union and 
other financial centers that 
have imposed, or resulted 
in, or may do 
so in the 
future, more stringent or 
entity-specific capital, TLAC, leverage ratio, 
net stable 
funding ratio, 
liquidity and 
funding requirements, 
heightened operational resilience 
requirements, incremental 
tax requirements, 
additional levies, 
limitations 
on permitted activities, constraints on remuneration, constraints on transfers of capital and liquidity and sharing of operational costs across the Group or other 
measures, and the effect these will or would have on UBS’s business activities; 
(vii) the degree to which UBS is successful in implementing further 
changes to its 
legal structure to 
improve its resolvability 
and meet related 
regulatory requirements and 
the potential need to 
make further changes to 
the legal structure 
or 
booking model of UBS Group in response to legal and regulatory 
requirements, proposals in Switzerland and other jurisdictions 
for mandatory structural reform 
of banks 
or systemically important 
institutions or to 
other external developments, and 
the extent 
to which such 
changes will have 
the intended effects; 
(viii) 
UBS’s ability to 
maintain and improve 
its systems and controls 
for the detection and 
prevention of money laundering 
and compliance with sanctions 
to meet 
evolving regulatory 
requirements and 
expectations, in 
particular in 
the US; 
(ix) the 
uncertainty arising 
from the 
UK’s exit 
from the 
EU; (x) 
changes in 
UBS’s 
competitive position, including whether differences 
in regulatory capital and 
other requirements among the 
major financial centers will 
adversely affect UBS’s 
ability to 
compete in certain 
lines of business; 
(xi) 
changes in the 
standards of conduct 
applicable to our 
businesses that may 
result from 
new regulations 
or 
new enforcement 
of existing standards, 
including measures to 
impose new and 
enhanced duties when 
interacting with customers 
and in 
the execution and 
handling of customer transactions; (xii) the liability to which UBS may be exposed, or possible constraints or sanctions that regulatory authorities might impose 
on UBS, due to litigation, 
contractual claims and regulatory investigations, including the potential 
for disqualification from certain businesses, potentially large 
fines or monetary 
penalties, or the 
loss of licenses 
or privileges as 
a result of 
regulatory or other 
governmental sanctions, as well 
as the effect 
that litigation, 
regulatory and similar matters 
have on the operational 
risk component of our 
RWA as well 
as the amount of 
capital available for return 
to shareholders; (xiii) 
the effects on 
UBS’s cross-border banking 
business of tax 
or regulatory developments and 
of possible changes 
in UBS’s policies 
and practices relating 
to this 
business; (xiv) UBS’s ability to retain 
and attract the employees necessary to 
generate revenues and to manage, support and 
control its businesses, which may 
be affected 
by competitive factors; 
(xv) changes in accounting 
or tax standards 
or policies, and 
determinations or interpretations affecting 
the recognition of 
gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters; (xvi) 
UBS’s ability to implement new technologies and business 
methods, including digital services and technologies, 
and ability to successfully compete with both existing and new 
financial service providers, some of which 
may not be regulated to the same extent; (xvii) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement 
and 
modeling, and 
of financial 
models generally; 
(xviii) the 
occurrence of 
operational failures, 
such as 
fraud, misconduct, 
unauthorized trading, 
financial crime, 
cyberattacks and systems failures, the risk of which is increased while COVID-19 control measures require large portions of the staff of both UBS and its service 
providers to work remotely; 
(xix) 
restrictions on the ability of UBS Group AG to make payments or distributions, including due to restrictions on the ability of its 
subsidiaries to make loans or distributions, directly or indirectly, 
or, in 
the case of financial difficulties, due to the 
exercise by FINMA or the regulators of 
UBS’s 
operations in other 
countries of their 
broad statutory powers 
in relation to 
protective measures, restructuring 
and liquidation proceedings; 
(xx) the degree 
to 
which changes in 
regulation, capital or legal 
structure, financial results 
or other factors may 
affect UBS’s ability 
to maintain its 
stated capital return objective; 
and (xxi) 
the effect that these or other factors or unanticipated events may have on our reputation and 
the additional consequences that this may have on our 
business and performance. The sequence in which the factors above are presented is not indicative 
of their likelihood of occurrence or the potential magnitude 
of their consequences. Our business and financial performance could be 
affected by other factors identified in our past and future filings and reports, including 
those filed 
with the 
SEC. More 
detailed information about 
those factors 
is set 
forth in 
documents furnished by 
UBS and 
filings made 
by UBS 
with the 
SEC, 
including UBS’s Annual Report on Form 20-F for the year ended 31 December 2020. 
UBS is not under any obligation to (and expressly disclaims any obligation 
to) update or alter its forward-looking statements, 
whether as a result of new information, future events, 
or otherwise. 
Rounding |
 
Numbers presented throughout this report may not add up 
precisely to the totals provided in the tables and text. 
Percentages and percent changes 
are calculated on the basis 
of unrounded figures. Information about absolute changes 
between reporting periods, which is provided 
in text and which can 
be 
derived from figures displayed in the tables, is calculated 
on a rounded basis. 
Tables 
|
 
Within tables, blank fields 
generally indicate that the 
field is not 
applicable or not meaningful, 
or that information is 
not available as 
of the relevant 
date or for the relevant period. Zero values generally indicate 
that the respective figure is zero on an actual or rounded basis. Percentage 
changes are presented 
as a mathematical calculation of the change 
between periods. 
 

 
UBS Group AG 
P.O. Box, CH-8098 Zurich 
 
UBS AG 
P.O. Box, CH-8098 Zurich 
P.O. Box, CH-4002 Basel 
 
ubs.com