Revenues affected by unusually low levels of client activity; management responded by reducing costs Results include a CHF 825 million net tax credit and an own credit charge of CHF 387 million; profit before tax of CHF 818 million
Third quarter net profit of CHF 1,664 million; Year-to-date net profit attributable to shareholders of CHF 5,871 million; annualized return on equity of 17.6% in the first nine months of 2010

The Investment Bank's results reflect reduced flows in equities, mainly in cash and derivatives. Fixed income, currencies and commodities revenues declined quarter on quarter mainly on below average client activity in foreign exchange and rates businesses

Global Asset Management profits stable despite lower management fees as a result of the strengthening of the Swiss franc, partly offset by reduced personnel expenses

Wealth Management revenues decreased on lower client activity and the strengthening of the Swiss franc against major currencies

Costs were tightly controlled and declined CHF 731 million compared with the second quarter, mostly reflecting reduced personnel expenses as well as currency effects


Invested asset base stable; Inflows of net new money
Invested assets were CHF 2,180 billion, unchanged from the prior quarter, as positive market performance was offset by currency movements

Inflows of CHF 0.9 billion net new money for Wealth Management & Swiss Bank compared with outflows of CHF 5.5 billion in the previous quarter

Net new money inflows of CHF 0.3 billion for Wealth Management Americas compared with outflows of CHF 2.6 billion in the second quarter


Further improvements to capital ratios; stable balance sheet and risk-weighted assets
Improved quarter-end BIS tier 1 capital ratio was 16.7% compared with 16.4% on 30 June 2010; core tier 1 capital ratio increased to 14.2% from 13.0% over the same time period

Balance sheet stable and risk-weighted assets broadly flat


Commenting on UBS's third quarter 2010 results, Group CEO Oswald J. Grübel said: "The third quarter was unusual in that there were very low levels of client activity as well as a strengthening of the Swiss franc against most major currencies. This had an impact across all of our businesses. However, we are optimistic that an uptick in the fourth quarter will benefit all of our business divisions. We remain confident about our future and believe that we are on track to achieve our medium-term goals".

Third quarter 2010 net profit of CHF 1,664 million
UBS reports a third quarter net profit attributable to UBS shareholders of CHF 1,664 million compared with CHF 2,005 million in the second quarter. Group results include a net tax credit of CHF 825 million.

Wealth Management's revenues declined 7% to CHF 1,759 million compared with CHF 1,891 million in the second quarter. Revenues were affected by unusually low client activity, a decline in fee income on a lower average invested asset base and the effects of adverse currency movements. Consequently, the gross margin on invested assets decreased 6 basis points to 89 basis points. Costs increased slightly mainly due to higher general and administrative expenses, including a lease termination provision as well as increased costs associated with sponsoring and branding campaigns related to the global re-launch of the UBS brand. The pre-tax profit was CHF 492 million compared with CHF 658 million in the second quarter.

Retail & Corporate's revenues declined slightly to CHF 966 million compared with CHF 995 million in the previous quarter, due to tighter interest rate margins and lower brokerage income. Costs continued to be tightly managed and were little changed from the prior quarter. Pre-tax profit was CHF 446 million compared with CHF 473 million in the second quarter.

Wealth Management Americas' revenues declined 10%, mainly due to currency effects as well as lower income resulting from lower managed account fees. Operating expenses decreased 11% to CHF 1,384 million. Pre-tax result was negative CHF 47 million compared with a loss of CHF 67 million in the second quarter. The third quarter result included a provision of CHF 78 million due to an unexpected result in an arbitration matter, while the second quarter included restructuring charges of CHF 146 million. Gross margin on invested assets decreased 7 basis points to 77 basis points due to the 10% decline in revenues, while average invested assets decreased 2%.

Global Asset Management's pre-tax profit was CHF 114 million compared with CHF 117 million in the second quarter. Revenues were CHF 473 million compared with CHF 522 million in the second quarter, as management fees declined due to lower average invested assets, as well as lower fees in global real estate. Expenses decreased 11%, partly due to the strengthening of the Swiss franc and lower personnel expenses.

The Investment Bank recorded a pre-tax loss of CHF 406 million compared with a pre-tax profit of CHF 1,314 million in the second quarter. Lower revenues, particularly in the securities businesses, reflect subdued client activity levels and low market volumes. The result also included an own credit loss on financial liabilities designated at fair value of CHF 387 million, compared with a gain of CHF 595 million in the prior quarter. Excluding the impact of own credit, revenues decreased 36%. Revenues in the fixed income, currencies and commodities business were CHF 869 million compared with CHF 1,703 million in the second quarter. The credit business delivered good results, reporting revenues of CHF 587 million, up 27% and reflecting a strong performance in new issues of structured products as well as increased trading volumes. This was more than offset by weaker results in our foreign exchange and rates businesses due to lower volumes. Emerging markets revenues increased to CHF 117 million from CHF 73 million with gains recorded across all regions, especially in Europe and Asia Pacific. Equities revenues were CHF 904 million compared with CHF 1,365 million in the second quarter, reflecting subdued investor demand, most notably in cash and derivatives. Costs were CHF 2,248 million, down 19% from the previous quarter, mostly due to lower personnel expenses. We remain confident that we are taking the right steps to deliver on our medium-term goals.

Treasury activities and other corporate items generated a pre-tax profit of CHF 219 million in the third quarter compared with CHF 119 million in the second quarter. The profit was driven by an increase in the valuation of our option to acquire the equity of the SNB StabFund.

Net loss attributable to minority interests was CHF 21 million compared with a profit of CHF 298 million in the second quarter. The third quarter includes a reversal of accrued dividends on called preferred securities, whereas the previous quarter included the recognition of a dividend obligation for preferred securities.

Outlook:
Following the unusually low client activity levels seen in the third quarter, we are optimistic that an uptick in the fourth quarter will benefit all of our business divisions. We therefore expect some improvement in transaction-based revenue in our wealth management businesses and in the flow businesses of the Investment Bank. We also expect our wealth management units' return on invested assets to improve to some degree over the fourth quarter and expect our investment banking business to benefit from an increase in corporate transactions before year-end. We believe that we are on track to achieve our medium-term targets, and will provide an update on our progress at our Investor Day on 16 November 2010.