Net profit attributable to UBS shareholders of CHF 3,147 million, up 47% from a year earlier
-Attributable profit from continuing operations of CHF 3,088 million in second quarter, up 49% from a year earlier
-Financial businesses contributed CHF 3,032 million to attributable profit, up 51% from the same period a year earlier (from continuing operations) – just 0.5% short of the record achieved in first quarter 2006
-Diluted EPS of CHF 1.48 in second quarter 2006 was up 51% or CHF 0.50 from CHF 0.98 a year earlier. Annualized ROE reached 29.6% in first half 2006
-Overall new money was healthy at CHF 36.3 billion in second quarter, with CHF 31.2 billion inflow from wealth management businesses worldwide
In first half 2006, attributable profit from financial businesses was CHF 6,080 million, up 34% from CHF 4,538 million in the same period a year earlier

UBS reports net profit attributable to its shareholders ("attributable profit") of CHF 3,147 million in second quarter 2006, up from CHF 2,147 million in the same period a year earlier.

Financial businesses contributed CHF 3,032 million to attributable net profit, up 51% from a year earlier (from continuing operations). The result was close to the all-time record set in first quarter 2006. In first half 2006, attributable profit from the financial businesses was CHF 6,080 million, up from CHF 4,538 million in the same period a year earlier.

UBS's industrial holdings, which now comprise only the private equity portfolio, contributed CHF 115 million, or 3.7%, to UBS's second quarter attributable profit.

"Our performance was strong – and achieved despite the market reversal in the middle of May. Recurring income continued to benefit from the high levels of invested assets. Underwriting fees were at a record. Corporate finance and brokerage fees rose, as did revenues from trading activities," said Clive Standish, Chief Financial Officer.

Total operating income from the financial businesses rose to CHF 12,057 million in second quarter 2006, up 33% from the same period a year earlier. Asset-based revenues, such as fees from investment funds or portfolio management, continued to benefit from the high levels of invested assets. Underwriting fees were at a record on growth in equity underwriting across the globe. In investment banking, UBS did especially well in Asia, including acting as joint global coordinator and bookrunner in the initial public offering of the Bank of China. Corporate finance fees were up from the same period a year earlier in the brisk merger and acquisition environment. Brokerage fees from institutional and private clients rose, with activity being especially vigorous at the beginning of the quarter. Revenues from trading activities rose in all products. In equities, the rise was led by derivatives and the expansion of prime brokerage. Fixed income saw increases in mortgage-backed securities and derivatives. Foreign exchange trading revenues also rose. Net income from interest margin products rose due to growing margin lending volumes in the wealth management businesses.

Overall performance was further helped by gains on the disposal of financial investments held in the Investment Bank.

Total financial businesses operating expenses rose 25% to CHF 8,017 million. The increase is due to higher personnel expenses and general and administrative costs as UBS continued to expand its business in all key markets. Personnel expenses, reflecting continued hiring, rose on higher salary expenses and increased performance-related accruals. General and administrative expenses increased with higher professional fees, increases in IT and other outsourcing, travel and entertainment, occupancy, marketing and public relations expenses. The same period a year earlier saw general and administrative expenses reduced by the release of provisions. Overall performance was further helped by another quarter of credit loss recoveries.

The number of personnel in the financial businesses was 71,882 on 30 June 2006, up 2,313 from 69,569 on 31 December 2005, with staff levels increasing across most businesses. In the Americas, personnel levels rose by 3% to 27,874 compared with the end of 2005, in Asia Pacific they were up 18% at 6,388 and in Europe they gained 6% to 11,716. In Switzerland, staff numbers fell by 0.5% to 25,904 because of the transfer of UBS facility management activities to Edelweiss in first quarter. Excluding the impact of Edelweiss, Swiss staff numbers rose by 525 or 2%.

BIS Tier 1 ratio, risk-weighted assets
The BIS Tier 1 ratio was 12.2% on 30 June 2006, down from 12.9% on 31 March 2006. Risk-weighted assets stood at CHF 315.9 billion, up CHF 4.1 billion from 31 March 2006. Off-balance sheet positions rose, mainly due to undrawn credit facilities provided to corporate clients in the Investment Bank's syndicated finance business.

BIS Tier 1 capital on 30 June 2006 stood at CHF 38.4 billion, down from CHF 40.3 billion on 31 March 2006. It was driven by the announced acquisitions of Banco Pactual, Piper Jaffray and ABN Amro’s global futures and options business, which reduced Tier 1 capital by CHF 3.9 billion and the Tier 1 ratio by 1.2 percentage points. Dividend accruals, currency impacts and share repurchases further reduced BIS Tier 1 capital. These effects were largely offset by strong quarterly net profit. UBS also issued USD 1,000 million in trust preferred stock in May, more than offsetting redemptions of USD 300 million made later in the quarter.

Outlook
The more difficult trading conditions that developed towards the end of the second quarter have continued. Growing geopolitical concerns, combined with worries about the pace of future economic growth, inflation and the implications for monetary policy and interest rates, continue to affect investor activity and invested asset levels. This could indicate a return to a more normal seasonal pattern for financial firms, where a strong start to the year is followed by softening performance in the second half.

On the other hand, corporate sector balance sheets and profits remain robust, merger and acquisition activity strong, and the secular growth drivers for the wealth and asset management industry remain intact. The deal pipeline of the Investment Bank remains healthy.

"When market conditions become more difficult, the trust that clients have in our advice becomes especially important. We believe this will be another year of strong results," said Peter Wuffli, Chief Executive Officer.