UBS Group AG - Audit Report / Information 2019

6-K 1 6k1q19ubsbaseIIIpillar3.htm 6k1q19ubsbaselIIIpillar3

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

Date: April 25, 2019

UBS Group AG

Commission File Number: 1-36764

UBS AG

Commission File Number: 1-15060

(Registrants' Name)

Bahnhofstrasse 45, Zurich, Switzerland and Aeschenvorstadt 1, Basel, Switzerland

(Address of principal executive offices)

Indicate by check mark whether the registrants file or will file annual reports under cover of Form 20‑F or Form 40-F.

Form 20-F x Form 40-F o

This Form 6-K consists of the Basel III Pillar 3 UBS Group AG First Quarter 2019 Report, which appears immediately following this page.

31 March 2019 Pillar 3 report

UBS Group and significant regulated subsidiaries and sub-groups

Table of contents
Introduction and basis for preparation
UBS Group AG consolidated
6	Section
1	Key metrics
8	Section
2	Risk-weighted assets
12	Section
3	Going and gone concern
requirements and eligible capital
14	Section
4	Leverage ratio
17	Section
5	Liquidity coverage ratio
UBS AG consolidated
20	Section
1	Key metrics
Significant regulated subsidiaries
and sub-groups
22	Section
1	Introduction
22	Section
2	UBS AG standalone
26	Section
3	UBS Switzerland AG standalone
32	Section
4	UBS Europe SE consolidated
33	Section
5	UBS Americas Holding LLC
consolidated

Contacts

Switchboards

For all general inquiries www.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

UBS’s Investor Relations team supports institutional, professional and retail investors from our offices in Zurich, New York and Krakow.

UBS Group AG, Investor Relations P.O. Box, CH-8098 Zurich, Switzerland

www.ubs.com/investors

Zurich +41-44-234 4100 New York +1-212-882 5734

Media Relations

UBS’s Media Relations team supports global media and journalists from our offices in Zurich, London, New York and Hong Kong.

www.ubs.com/media

Zurich +41-44-234 8500 [email protected]

London +44-20-7567 4714 [email protected]

New York +1-212-882 5857 [email protected]

Hong Kong +852-2971 8200 [email protected]

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

[email protected]

+41-44-235 6652

Shareholder Services

UBS’s Shareholder Services team, a unit of the Group Company Secretary Office, is responsible for the registration of UBS Group AG registered shares.

UBS Group AG, Shareholder Services P.O. Box, CH-8098 Zurich, Switzerland

[email protected]

+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: https://www-us.computershare.com/ investor/Contact

Shareholder website: www.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

Imprint

Publisher: UBS Group AG, Zurich, Switzerland | www.ubs.com Language: English

Introduction and basis for preparation

Introduction and basis for preparation

Scope and location of Basel III Pillar 3 disclosures

The Basel III capital adequacy framework consists of three complementary pillars. Pillar 1 provides a framework for measuring minimum capital requirements for the credit, market, operational and non-counterparty-related risks faced by banks. Pillar 2 addresses the principles of the supervisory review process, emphasizing the need for a qualitative approach to supervising banks. Pillar 3 requires banks to publish a range of disclosures, mainly covering risk, capital, leverage, liquidity and remuneration.

This report provides Pillar 3 disclosures for UBS Group AG and UBS AG on a consolidated basis, as well as prudential key figures and regulatory information for our significant regulated subsidiaries and sub-groups. These Pillar 3 disclosures are supplemented by specific additional requirements of the Swiss Financial Market Supervisory Authority (FINMA) and voluntary disclosures on our part.

As UBS is considered a systemically relevant bank (SRB) under Swiss banking law, UBS Group AG and UBS AG are required to comply with regulations based on the Basel III framework as applicable to Swiss SRBs on a consolidated basis. Capital and other regulatory information as of 31 March 2019 for UBS Group AG consolidated is provided in the “Capital management” section of our first quarter 2019 report under “Quarterly reporting” at www.ubs.com/investors .

Capital and other regulatory information as of 31 March 2019 for UBS AG consolidated is provided in the UBS AG first quarter 2019 report, which will be available as of 30 April 2019 under “Quarterly reporting” at www.ubs.com/investors , and, additionally, in the “KM1: Key metrics“ table for UBS AG consolidated on page 20 in this report.

Following the combined UK business transfer and cross-border merger of UBS Limited into UBS Europe SE, which became legally effective on 1 March 2019, UBS Europe SE is subject to direct supervision by the European Central Bank and is considered a significant regulated subsidiary. Therefore we include the regulatory information of UBS Europe SE consolidated in this report for the first time, and no longer include UBS Limited standalone information.

In addition, we are also required to disclose certain regulatory information for UBS AG standalone, UBS Switzerland AG standalone and UBS Americas Holding LLC consolidated. This information is provided in the “Significant regulated subsidiaries and sub-groups” sections of this report.

Local regulators may also require publication of Pillar 3 information at a subsidiary or sub-group level. Where applicable, these local disclosures are provided under “Holding company and significant regulated subsidiaries and sub-groups” at www.ubs.com/investors .

Significant BCBS and FINMA capital adequacy, liquidity and funding, and related disclosure requirements for the first quarter of 2019

This Pillar 3 report has been prepared in accordance with FINMA Pillar 3 disclosure requirements (FINMA circular 2016 / 01 “Disclosure – banks”) issued on 16 July 2018, the underlying Basel Committee on Banking Supervision (BCBS) guidance “Revised Pillar 3 disclosure requirements” issued in January 2015, the “Frequently asked questions on the revised Pillar 3 disclosure requirements” issued in August 2016, the “Pillar 3 disclosure requirements – consolidated and enhanced framework” issued in March 2017 and the subsequent “Technical Amendment – Pillar 3 disclosure requirements – regulatory treatment of accounting provisions” issued in August 2018.

The legal entities UBS AG and UBS Switzerland AG are subject to standalone capital adequacy, liquidity and funding, and disclosure requirements defined by FINMA. This information is provided in the “Significant regulated subsidiaries and sub-groups” section of this report.

Changes to Pillar 1 requirements

As of 1 January 2019, we became subject to the revised capital adequacy ordinance (CAO) and the banking ordinance (BO), with no material effect on UBS as the changes were largely previously implemented by too big to fail-related decrees.

Changes to Pillar 3 disclosure requirements

The “KM2: Key metrics – TLAC requirements (at resolution group level)” table is published for the first time effective as of 31 March 2019, in line with BCBS and FINMA requirements. The table is only to be provided for UBS Group AG, the ultimate parent entity of the defined UBS resolution group, to which, in case of resolution, resolution tools (e.g., a bail-in) are expected to be applied.

Significant BCBS and FINMA consultation papers relating to Pillar 3

Leverage ratio treatment of client cleared derivatives

The BCBS consultation on the leverage ratio treatment of client cleared derivatives was closed in January 2019, seeking feedback as to whether or not the leverage ratio treatment of client cleared derivatives under the Basel III finalization of the capital framework issued in December 2017 should be amended to allow cash and non-cash initial margin received from a client to offset the potential future exposure or to align existing treatment with the standardized approach for measuring counterparty credit risk exposures. The final standards have not yet been announced.

Revisions to leverage ratio disclosure requirements

In response to particular concerns regarding “window-dressing” (i.e., engaging in temporary reductions in market activity to effect artificial reductions in leverage ratio requirements), BCBS issued a consultation paper in December 2018 on mandating the additional disclosure of leverage ratio exposure amounts of securities financing transactions, derivative replacement costs and central bank reserves, all to be calculated using daily averages over the reporting quarter. The consultation period ended in March 2019 and final standards are awaited.

Revised gone concern capital requirements in Switzerland

In April 2019, the Swiss Federal Department of Finance issued a revised Capital Adequacy Ordinance for consultation. Among other items, the proposal introduces gone concern capital requirements for Swiss-based legal entities of global systemically important banks. Under the proposal, UBS AG would be subject to a gone concern capital requirement on its third-party exposure on a standalone basis, as well as to an additional gone concern capital buffer requirement on its consolidated exposure. UBS Switzerland AG would continue to be required to maintain gone concern capital. These gone concern requirements would become effective on 1 January 2020 and the buffer would be phased in in full between 1 January 2021 and 1 January 2024.

The proposal also caps the maximum gone concern rebate relevant for UBS Group AG consolidated and UBS AG at 1.25% of total exposure, compared with a maximum rebate level of 2.0% under the current regime.

Finally, the eligibility of bail-in bonds with a remaining maturity between one and two years would increase, from 50% under the current regime to 100% effective 1 January 2020; however, their share in total gone concern capital would be capped at 20%.

Based on our initial assessment, we would expect that when fully phased in on 1 January 2024, UBS would be required to maintain a gone concern leverage ratio of around 100 basis points higher than otherwise needed to meet the Group requirements.

® Refer to the “Capital management” section of our Annual Report 2018 for information on the current capital requirements

Format, frequency and comparability of Pillar 3 disclosures

FINMA has specified the reporting frequency for each disclosure. We generally provide quantitative comparative information for all disclosures as of 31 December 2018. For more information on disclosure frequency, refer to our 31 December 2018 Pillar 3 report – UBS Group and significant regulated subsidiaries and sub-groups under “Pillar 3 disclosures” at www.ubs.com/investors .

UBS Group AG consolidated

Section 1 Key metrics

Key metrics of the first quarter of 2019

The KM1 and KM2 tables below are based on Basel Committee on Banking Supervision (BCBS) Basel III phase-in rules. The KM2 table includes a reference to the total loss-absorbing capacity (TLAC) term sheet, published by the Financial Stability Board (FSB). This term sheet is available on the FSB website, at http://www.fsb.org/2015/11/total-loss-absorbing-capacity-tlac-principles-and-term-sheet .

During the first quarter of 2019, our common equity tier 1 (CET1) capital increased by USD 0.5 billion to USD 34.7 billion, primarily as a result of higher operating profit before tax, partly offset by accruals for capital returns to shareholders. Tier 1 capital increased by USD 3.2 billion due to the issuance of a USD 2.5 billion high-trigger additional tier 1 capital instrument and the aforementioned CET1 capital increase.

The TLAC available as of 31 March 2019 includes CET1 capital, additional tier 1 and tier 2 capital instruments eligible under the TLAC framework, and non-regulatory capital elements of TLAC. Under the Swiss systemically relevant bank (SRB) framework including transitional arrangements, TLAC excludes 45% of the gross unrealized gains on debt instruments measured at fair value through other comprehensive income, which is measured for regulatory capital at the lower of cost or market value. This amount was negligible as of 31 March 2019 but included as available TLAC in the KM2 table.

A senior unsecured debt instrument denominated in Swiss francs, the equivalent of USD 0.4 billion, was issued during the quarter, and qualifies as non-regulatory capital elements of TLAC.

Risk-weighted assets (RWA) increased by USD 3.8 billion to USD 267.6 billion, mainly due to increases of USD 5.4 billion in credit risk RWA, USD 2.8 billion in operational risk RWA and USD 2.5 billion in counterparty credit risk RWA, partly offset by a decrease of USD 7.0 billion in market risk RWA. Leverage ratio exposure increased by USD 6 billion to USD 911 billion, mainly driven by on-balance sheet exposures (excluding derivative exposures and securities financing transactions).

KM1: Key metrics
USD million, except where
indicated
		31.3.19	31.12.18	30.9.18	30.6.18	31.3.18
Available capital (amounts) 1
1	Common equity tier 1 (CET1)	34,658	34,119	34,816	34,116	34,774
1a	Fully loaded ECL accounting model	34,613	34,071	34,816	34,116	34,774
2	Tier 1	49,436	46,279	45,972	45,353	46,180
2a	Fully loaded ECL accounting model Tier 1	49,391	46,231	45,972	45,353	46,180
3	Total capital	56,148	52,981	52,637	52,450	54,972
3a	Fully loaded ECL accounting model total capital	56,103	52,933	52,637	52,450	54,972
Risk-weighted assets
(amounts)
4	Total risk-weighted assets (RWA)	267,556	263,747	257,041	254,603	266,169
4a	Total risk-weighted assets (pre-floor)	267,556	263,747	257,041	254,603	266,169
Risk-based capital ratios as
a percentage of RWA 1
5	Common equity tier 1 ratio (%)	12.95	12.94	13.55	13.40	13.06
5a	Fully loaded ECL accounting model Common Equity Tier 1 (%)	12.94	12.92	13.55	13.40	13.06
6	Tier 1 ratio (%)	18.48	17.55	17.89	17.81	17.35
6a	Fully loaded ECL accounting model Tier 1 ratio (%)	18.46	17.53	17.89	17.81	17.35
7	Total capital ratio (%)	20.99	20.09	20.48	20.60	20.65
7a	Fully loaded ECL accounting model total capital ratio (%)	20.97	20.07	20.48	20.60	20.65
Additional CET1 buffer
requirements as a percentage of RWA
8	Capital conservation buffer requirement (2.5% from 2019) (%)	2.50	1.88	1.88	1.88	1.88
9	Countercyclical buffer requirement (%)	0.10	0.08	0.05	0.06	0.03
9a	Additional countercyclical buffer for Swiss mortgage loans (%)	0.21	0.21	0.21	0.20	0.19
10	Bank G-SIB and/or D-SIB additional requirements (%)	1.00	0.75	0.75	0.75	0.75
11	Total of bank CET1 specific buffer requirements (%)	3.60	2.71	2.68	2.68	2.65
12	CET1 available after meeting the bank’s minimum capital requirements
(%) 1	8.45	8.44	9.05	8.90	8.56
Basel III leverage ratio
13	Total Basel III leverage ratio exposure measure	910,993	904,598	915,066	910,383	925,651
14	Basel III leverage ratio (%) 1	5.43	5.12	5.02	4.98	4.99
14a	Fully loaded ECL accounting model Basel III leverage ratio (%) 1	5.42	5.11	5.02	4.98	4.99
Liquidity coverage ratio
15	Total HQLA	186,038	173,389	176,594	183,202	192,864
16	Total net cash outflow	121,521	127,352	130,750	127,324	141,910
17	LCR ratio (%)	153	136	135	144	136
1 Based on BCBS Basel III phase-in rules.

KM2: Key metrics – TLAC requirements (at resolution group level) 1
USD million, except where indicated
		31.3.19	31.12.18	30.9.18	30.6.18	31.3.18
1	Total loss-absorbing capacity (TLAC) available	87,477	83,740	81,711	82,211	83,079
1a	Fully loaded ECL accounting model TLAC available	87,433	83,692	81,711	82,211	83,079
2	Total RWA at the level of the resolution group	267,556	263,747	257,041	254,603	266,169
3	TLAC as a percentage of RWA (%)	32.69	31.75	31.79	32.29	31.21
3a	Fully loaded ECL accounting model TLAC as a percentage of fully
loaded ECL accounting model RWA (%)	32.68	31.73	31.79	32.29	31.21
4	Leverage ratio exposure measure at the level of the resolution
group	910,993	904,598	915,066	910,383	925,651
5	TLAC as a percentage of leverage ratio exposure measure (%)	9.60	9.26	8.93	9.03	8.98
5a	Fully loaded ECL accounting model TLAC as a percentage of fully
loaded ECL accounting model Leverage exposure measure (%)	9.60	9.25	8.93	9.03	8.98
6a	Does the subordination exemption in the antepenultimate
paragraph of Section 11 of the FSB TLAC Term Sheet apply?	No
6b	Does the subordination exemption in the penultimate paragraph of
Section 11 of the FSB TLAC Term Sheet apply?	No
6c	If the capped subordination exemption applies, the amount of
funding issued that ranks pari passu with excluded liabilities and that is
recognized as external TLAC, divided by funding issued that ranks pari passu
with excluded liabilities and that would be recognized as external TLAC if no
cap was applied (%)	N/A – Refer to our response to 6b.
1 Resolution group level is defined as the UBS Group AG
consolidated level.

UBS Group AG consolidated

Section 2 Risk-weighted assets

Our approach to measuring risk exposure and risk-weighted assets

Depending on the intended purpose, the measurement of risk exposure that we apply may differ. Exposures may be measured for financial accounting purposes under International Financial Reporting Standards (IFRS), for deriving our regulatory capital requirement or for internal risk management and control purposes. Our Pillar 3 disclosures are generally based on measures of risk exposure used to derive the regulatory capital required under Pillar 1. Our RWA are calculated according to the BCBS Basel III framework, as implemented by the Swiss Capital Adequacy Ordinance issued by the Swiss Federal Council and by the associated circulars issued by the Swiss Financial Market Supervisory Authority (FINMA).

For information on the measurement of risk exposures and RWA, refer to pages 9–12 of the 31 December 2018 Pillar 3 report – UBS Group and significant regulated subsidiaries and sub-groups under “Pillar 3 disclosures” at www.ubs.com/investors .

RWA development in the first quarter of 2019

The “OV1: Overview of RWA” table on the next page provides an overview of RWA and the related minimum capital requirements by risk type.

During the first quarter of 2019, RWA increased by USD 3.8 billion to USD 267.6 billion, mainly due to increases of USD 5.4 billion in credit risk RWA, USD 2.8 billion in operational risk RWA and USD 2.5 billion in counterparty credit risk RWA, partly offset by a decrease of USD 7.0 billion in market risk RWA.

Credit risk RWA from exposures under standardized approach increased by USD 3.0 billion, mainly driven by a USD 3.5 billion increase from the adoption of IFRS 16, Leases .

Operational risk RWA increased by USD 2.8 billion to USD 80.3 billion as of 31 March 2019, as model inputs in the advanced measurement approach (AMA) model were updated during the quarter to reflect developments related to litigation on the cross-border matter.

The flow tables on the subsequent pages provide further detail on the movements in credit risk RWA from exposures under the advanced internal ratings-based approach as well as in counterparty credit risk and market risk RWA in the first quarter of 2019. More information on capital management and RWA, including detail on movements in RWA during the first quarter of 2019, is provided on pages 52–53 of our first quarter 2019 report under “Quarterly reporting” at www.ubs.com/investors .

OV1: Overview of RWA — USD million		RWA		Minimum capital requirements 1
		31.3.19	31.12.18	31.3.19
1	Credit risk (excluding
counterparty credit risk)	118,419	112,991	9,474
2	of which: standardized
approach (SA) 2	28,971	25,972	2,318
3	of which: foundation
internal ratings-based (F-IRB) approach
4	of which: supervisory
slotting approach
5	of which: advanced internal
ratings-based (A-IRB) approach	89,448	87,019	7,156
6	Counterparty credit risk 3	36,793	34,282	2,943
7	of which: SA for
counterparty credit risk (SA-CCR) 4	5,183	5,415	415
8	of which: internal model
method (IMM)	19,371	17,624	1,550
8a	of which: value-at-risk
(VaR)	5,889	5,036	471
9	of which: other CCR	6,351	6,207	508
10	Credit valuation adjustment
(CVA)	2,631	2,816	210
11	Equity positions under the
simple risk weight approach 5	3,960	3,658	317
12	Equity investments in funds
– look-through approach 6
13	Equity investments in funds
– mandate-based approach 6
14	Equity investments in funds
– fall-back approach 6
15	Settlement risk	384	375	31
16	Securitization exposures in
banking book	703	709	56
17	of which securitization
internal ratings-based approach (SEC-IRBA)
18	of which securitization
external ratings-based approach (SEC-ERBA) including internal assessment
approach (IAA)	696	701	56
19	of which securitization
standardized approach (SEC-SA)	7	8	1
20	Market Risk	12,985	19,992	1,039
21	of which: standardized
approach (SA)	643	452	51
22	of which: internal model
approaches (IMM)	12,343	19,541	987
23	Capital charge for switch
between trading book and banking book
24	Operational risk	80,345	77,558	6,428
25	Amounts below thresholds for
deduction (250% risk weight) 7	11,335	11,365	907
26	Floor adjustment 8	0	0	0
27	Total	267,556	263,747	21,404
1 Calculated based on 8% of RWA. 2 Includes non-counterparty-related
risk not subject to the threshold deduction treatment (31 March 2019: RWA USD
12,779 million; 31 December 2018: RWA USD 9,514 million).
Non-counterparty-related risk (31 March 2019: RWA USD 8,747
million; 31 December 2018: RWA USD 8,782 million), which is subject
to the threshold treatment, is reported in line 25 “Amounts below
thresholds for deduction (250% risk weight).” 3 Excludes settlement risk,
which is separately reported in line 15 “Settlement risk.” Includes RWA with
central counterparties. New regulation for the calculation of RWA for
exposure to central counterparties will be implemented by 1 January 2020. The
split between the subcomponents of counterparty credit risk refers to the
calculation of the exposure measure. 4 Calculated in accordance with the
current exposure method (CEM), until SA-CCR is implemented by 1 January
2020. 5 Includes investments in funds. Items subject to threshold
deduction treatments that do not exceed their respective threshold are risk weighted
at 250% (31 March 2019: RWA USD 2,588 million; 31 December 2018: RWA USD
2,583 million) and are separately included in line 25 “Amounts below
thresholds for deduction (250% risk weight).” 6 New regulation for the
calculation of RWA for investments in funds will be implemented by
1 January 2020. 7 Includes items subject to threshold deduction
treatments that do not exceed their respective threshold and risk weighted at
250%. Items subject to threshold deduction treatments are significant investments
in common shares of non-consolidated financial institutions (banks, insurance
and other financial entities) and deferred tax assets arising from temporary
differences, both of which are measured against their respective
threshold. 8 No floor effect, as 80% of our Basel I RWA including the RWA
equivalent of the Basel I capital deductions do not exceed our Basel III RWA
including the RWA equivalent of the Basel III capital deductions. For the
status of the finalization of the Basel III capital framework, refer to the
“Regulatory and legal developments” section of our Annual Report 2018,
available under “Annual reporting” at www.ubs.com/investors, which outlines
how the proposed floor calculation would differ in significant aspects from
the current approach.

UBS Group AG consolidated

The “CR8: RWA flow statements of credit risk exposures under IRB” and “CCR7: RWA flow statements of CCR exposures under internal model method (IMM) and value-at-risk (VaR)” tables below provide a breakdown of the credit risk and counterparty credit risk (CCR) RWA movements in the first quarter of 2019 across BCBS-defined movement categories. These categories are described on page 45 of our 31 December 2018 Pillar 3 report – UBS Group and significant regulated subsidiaries and sub-groups, which is available under “Pillar 3 disclosures” at www.ubs.com/investors .

Credit risk RWA development in the first quarter of 2019

Credit risk RWA under the advanced internal ratings-based (A-IRB) approach increased by USD 2.4 billion to USD 89.4 billion as of 31 March 2019.

As presented in the “CR8: RWA flow statements of credit risk exposures under IRB” table below, RWA increased by USD 3.2 billion disclosed in “asset size,” primarily due to increases in traded loans and exposures in real estate financing within the Investment Bank’s Corporate Client Solutions business. The increase of USD 0.4 billion from model updates relates to the continued phasing-in of RWA increases related to probability of default (PD) and loss given default (LGD) changes from the implementation of revised models for Swiss residential mortgages.

| CR8: RWA flow statements of
credit risk exposures under IRB — USD million | | RWA |
| --- | --- | --- |
| 1 | RWA as of 31.12.18 | 87,019 |
| 2 | Asset size | 3,212 |
| 3 | Asset quality | (70) |
| 4 | Model updates | 430 |
| 5 | Methodology and policy | (102) |
| 5a | of which: regulatory add-ons | 0 |
| 6 | Acquisitions and disposals | 0 |
| 7 | Foreign exchange movements | (667) |
| 8 | Other | (374) |
| 9 | RWA as of 31.3.19 | 89,448 |

Counterparty credit risk RWA development in the first quarter of 2019

CCR RWA under the internal model method (IMM) and value-at-risk (VaR) increased by USD 2.6 billion during the first quarter of 2019. Derivative exposures within the Investment Bank’s Foreign Exchange, Rates and Credit business and securities financing transactions in Corporate Center were the main drivers of the increase in asset size as presented in the table below. The increase from methodology and policy updates was predominantly driven by a regulatory add-on of USD 0.6 billion for certain portfolios awaiting the development of a formalized rating tool.

| CCR7: RWA flow statements of
CCR exposures under internal model method (IMM) and value-at-risk (VaR) | | Derivatives | SFTs | Total |
| --- | --- | --- | --- | --- |
| USD million | | Subject to IMM | Subject to VaR | |
| 1 | RWA as of 31.12.18 | 17,624 | 5,036 | 22,660 |
| 2 | Asset size | 1,147 | 900 | 2,047 |
| 3 | Credit quality of counterparties | 15 | (189) | (174) |
| 4 | Model updates | 0 | 0 | 0 |
| 5 | Methodology and policy | 621 | 150 | 771 |
| 5a | of which: regulatory add-ons | 450 | 150 | 600 |
| 6 | Acquisitions and disposals | 0 | 0 | 0 |
| 7 | Foreign exchange movements | (36) | (8) | (44) |
| 8 | Other | 0 | 0 | 0 |
| 9 | RWA as of 31.3.19 | 19,371 | 5,889 | 25,260 |

Market risk RWA development in the first quarter of 2019

The four main components that contribute to market risk RWA are Value-at-risk (VaR), stressed value-at-risk (SVaR), incremental risk charge (IRC) and comprehensive risk measure (CRM). VaR and SVaR components include the RWA charge for risks-not-in-VaR.

The “MR2: RWA flow statements of market risk exposures under an internal models approach” table below provides a breakdown of the market risk RWA movement in the first quarter of 2019 across these components, according to BCBS-defined movement categories. These categories are described on page 81 of our 31 December 2018 Pillar 3 report – UBS Group and significant regulated subsidiaries and sub-groups, which is available under “Pillar 3 disclosures” at www.ubs.com/investors .

Market risk RWA decreased by USD 7.2 billion in the first quarter of 2019, driven by asset size and other movements resulting from lower average regulatory, stressed VaR and incremental risk charge (IRC) levels observed in the Investment Bank. This decrease was driven by the Equities business due to a reduction in market volatility as well as a decrease in client activity along with an overall reduction in credit exposure in the FRC business.

The VaR multiplier remained unchanged, at 3.0, compared with the fourth quarter of 2018.

| MR2: RWA flow statements of
market risk exposures under an internal models approach 1 — USD million | | VaR | Stressed VaR | IRC | CRM | Total RWA |
| --- | --- | --- | --- | --- | --- | --- |
| 1 | RWA as of 31.12.18 | 5,085 | 12,149 | 2,299 | 7 | 19,541 |
| 1a | Regulatory adjustment | (2,167) | (8,470) | (1,059) | (7) | (11,702) |
| 1b | RWA at previous quarter-end (end of day) | 2,918 | 3,680 | 1,240 | 0 | 7,838 |
| 2 | Movement in risk levels | (1,771) | (831) | (26) | 0 | (2,628) |
| 3 | Model updates / changes | (12) | 41 | 0 | 0 | 29 |
| 4 | Methodology and policy | 0 | 0 | 0 | 0 | 0 |
| 5 | Acquisitions and disposals | 0 | 0 | 0 | 0 | 0 |
| 6 | Foreign exchange movements | 0 | 0 | 0 | 0 | 0 |
| 7 | Other | (205) | (495) | 0 | 0 | (700) |
| 8a | RWA at the end of the reporting period (end of day) | 929 | 2,395 | 1,214 | 0 | 4,539 |
| 8b | Regulatory adjustment | 2,298 | 5,506 | 0 | 0 | 7,804 |
| 8c | RWA as of 31.3.19 | 3,227 | 7,901 | 1,214 | 0 | 12,343 |
| 1 Components that describe movements in RWA are presented in
italic. | | | | | | |

UBS Group AG consolidated

Section 3 Going and gone concern requirements and eligible capital

The table below provides details on the Swiss SRB going and gone concern requirements as required by FINMA. More information on capital management is provided on pages 46–55 of our first quarter 2019 report, available under “Quarterly reporting” at www.ubs.com/investors .

| Swiss SRB going and gone
concern requirements and information 1 | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| As of 31.3.19 | Swiss SRB, including transitional arrangements | | | | Swiss SRB as of 1.1.20 | | | |
| USD million, except where
indicated | RWA | | LRD | | RWA | | LRD | |
| Required loss-absorbing
capacity | in % | | in % | | in % | | in % | |
| Common equity tier 1 capital | 9.99 | 26,730 | 3.20 | 29,152 | 10.31 | 27,586 | 3.50 | 31,885 |
| of which: minimum capital | 4.90 | 13,110 | 1.70 | 15,487 | 4.50 | 12,040 | 1.50 | 13,665 |
| of which: buffer capital | 4.78 | 12,789 | 1.50 | 13,665 | 5.50 | 14,716 | 2.00 | 18,220 |
| of which: countercyclical
buffer 2 | 0.31 | 831 | | | 0.31 | 831 | | |
| Maximum additional tier 1
capital | 3.90 | 10,435 | 1.30 | 11,843 | 4.30 | 11,505 | 1.50 | 13,665 |
| of which: high-trigger
loss-absorbing additional tier 1 minimum capital | 3.10 | 8,294 | 1.30 | 11,843 | 3.50 | 9,364 | 1.50 | 13,665 |
| of which: high-trigger
loss-absorbing additional tier 1 buffer capital | 0.80 | 2,140 | | | 0.80 | 2,140 | | |
| Total going concern capital | 13.89 | 37,165 | 4.50 | 40,995 | 14.61 3 | 39,091 | 5.00 3 | 45,550 |
| Base gone concern loss-absorbing capacity, including applicable add-ons
and rebate/reduction | 9.74 4 | 26,071 | 3.36 4 | 30,609 | 10.74 5 | 28,742 | 3.83 5 | 34,865 |
| Total gone concern
loss-absorbing capacity | 9.74 | 26,071 | 3.36 | 30,609 | 10.74 | 28,742 | 3.83 | 34,865 |
| Total loss-absorbing
capacity | 23.63 | 63,236 | 7.86 | 71,604 | 25.35 | 67,834 | 8.83 | 80,415 |
| Eligible loss-absorbing
capacity | | | | | | | | |
| Common equity tier 1 capital | 12.95 | 34,658 | 3.80 | 34,658 | 12.95 | 34,658 | 3.80 | 34,658 |
| High-trigger loss-absorbing
additional tier 1 capital 6,7 | 7.77 | 20,790 | 2.28 | 20,790 | 5.52 | 14,778 | 1.62 | 14,778 |
| of which: high-trigger
loss-absorbing additional tier 1 capital | 4.63 | 12,397 | 1.36 | 12,397 | 4.63 | 12,397 | 1.36 | 12,397 |
| of which: low-trigger
loss-absorbing additional tier 1 capital | 0.89 | 2,381 | 0.26 | 2,381 | 0.89 | 2,381 | 0.26 | 2,381 |
| of which: low-trigger
loss-absorbing tier 2 capital | 2.25 | 6,012 | 0.66 | 6,012 | | | | |
| Total going concern capital | 20.72 | 55,448 | 6.09 | 55,448 | 18.48 | 49,436 | 5.43 | 49,436 |
| Gone concern loss-absorbing
capacity | 11.97 | 32,020 | 3.51 | 32,020 | 14.21 | 38,032 | 4.17 | 38,032 |
| of which: TLAC-eligible
senior unsecured debt | 11.42 | 30,548 | 3.35 | 30,548 | 11.42 | 30,548 | 3.35 | 30,548 |
| Total gone concern
loss-absorbing capacity | 11.97 | 32,020 | 3.51 | 32,020 | 14.21 | 38,032 | 4.17 | 38,032 |
| Total loss-absorbing
capacity | 32.69 | 87,468 | 9.60 | 87,468 | 32.69 | 87,468 | 9.60 | 87,468 |
| Risk-weighted assets /
leverage ratio denominator | | | | | | | | |
| Risk-weighted assets | | 267,556 | | | | 267,556 | | |
| Leverage ratio denominator | | | | 910,993 | | | | 910,993 |
| 1 This table includes a rebate equal to 40% of the maximum
rebate on the gone concern requirements, which was granted by FINMA and will
be phased in until 1 January 2020 plus an additional reduction of 1.27% for
the RWA requirement and 0.37% for the LRD requirement, respectively under
Swiss SRB as of 1.1.20 rules, for the usage of low-trigger tier 2 capital
instruments to fulfill gone concern requirements. 2 Going concern
capital ratio requirements include countercyclical buffer requirements of 0.31%.
3 Includes applicable add-ons of 1.44% for RWA and 0.5% for leverage ratio
denominator (LRD). 4 Includes applicable add-ons of 1.08% for RWA and
0.38% for LRD and applicable rebate of 1.86% for RWA and 0.64% for LRD. 5
Includes applicable add-ons of 1.44% for RWA and 0.5% for LRD and applicable
rebate/reduction of 3.56% for RWA and 1.17% for LRD. 6 Includes
outstanding low-trigger loss-absorbing additional tier 1 (AT1) capital
instruments, which are available under the transitional rules of the Swiss
SRB framework to meet the going concern 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. 7 Includes outstanding low-trigger loss-absorbing tier
2 capital instruments, which are available under the transitional rules of
the Swiss SRB framework to meet the going concern requirements until the
earlier of (i) their maturity or first call date or (ii) 31 December 2019,
and to meet gone concern requirements thereafter. Outstanding low-trigger
loss-absorbing tier 2 capital instruments are subject to amortization
starting five years prior to their maturity, with the amortized portion
qualifying as gone concern loss-absorbing capacity. Instruments available to
meet gone concern requirements are eligible until one year before maturity,
with a haircut of 50% applied in the last year of eligibility. | | | | | | | | |

Explanation of the difference between the IFRS and regulatory scope of consolidation

The scope of consolidation for the purpose of calculating Group regulatory capital is generally the same as the consolidation scope under International Financial Reporting Standards (IFRS) and includes subsidiaries that are directly or indirectly controlled by UBS Group AG and active in banking and finance. However, subsidiaries consolidated under IFRS whose business is outside the banking and finance sector are excluded from the regulatory scope of consolidation.

The key difference between the IFRS and regulatory capital scope of consolidation as of 31 March 2019 relates to investments in insurance, real estate and commercial companies, as well as investment vehicles that are consolidated under IFRS, but not for regulatory capital purposes, where they are subject to risk-weighting.

The table below provides a list of the most significant entities that were included in the IFRS scope of consolidation, but not in the regulatory capital scope of consolidation. As of 31 March 2019 , entities consolidated under either the IFRS or the regulatory scope of consolidation did not report any significant capital deficiencies.

In the banking book, certain equity investments are consolidated neither under IFRS nor under the regulatory scope. As of 31 March 2019, these investments mainly consisted of infrastructure holdings and joint operations (e.g., settlement and clearing institutions, and stock and financial futures exchanges) and included our participation in the SIX Group. These investments were risk-weighted based on applicable threshold rules.

More information on the legal structure of the UBS Group and on the IFRS scope of consolidation is provided on pages 12–13 and 328–329, respectively, of our Annual Report 2018, available under “Annual reporting” at www.ubs.com/investors .

| Main legal entities
consolidated under IFRS but not included in the regulatory scope of
consolidation | | | |
| --- | --- | --- | --- |
| | 31.3.19 | | |
| USD million | Total assets 1 | Total equity 1 | Purpose |
| UBS Asset Management Life Ltd | 24,602 | 42 | Life Insurance |
| A&Q Alpha Select Hedge Fund Limited | 304 | 303 2 | Investment vehicle for multiple investors |
| A&Q Alternative Solution Limited | 249 | 243 2 | Investment vehicle for multiple investors |
| A&Q Alternative Solution Master Limited | 247 | 247 2 | Investment vehicle for multiple investors |
| UBS Life Insurance Company USA | 164 | 43 | Life insurance |
| 1 Total assets and total equity on a standalone basis. 2
Represents the net asset value of issued fund units. These fund units are
subject to liability treatment in the consolidated financial statements in
accordance with IFRS. | | | |

UBS Group AG consolidated

Section 4 Leverage ratio

BCBS Basel III leverage ratio

The Basel Committee on Banking Supervision (BCBS) leverage ratio is calculated by dividing the period-end tier 1 capital by the period-end leverage ratio denominator (LRD). The LRD consists of IFRS on-balance sheet assets and off-balance sheet items. Derivative exposures are adjusted for a number of items, including replacement value and eligible cash variation margin netting, the current exposure method add-on and net notional amounts for written credit derivatives. The LRD also includes an additional charge for counterparty credit risk related to securities financing transactions.

The “Reconciliation of IFRS total assets to BCBS Basel III total on-balance sheet exposures excluding derivatives and securities financing transactions” table below shows the difference between total IFRS assets per IFRS consolidation scope and the BCBS total on-balance sheet exposures, which are the starting point for calculating the BCBS LRD, as shown in the “LR2: BCBS Basel III leverage ratio common disclosure” table on the next page. The difference is due to the application of the regulatory scope of consolidation for the purpose of the BCBS calculation. In addition, carrying values for derivative financial instruments and securities financing transactions are deducted from IFRS total assets. They are measured differently under BCBS leverage ratio rules and are therefore added back in separate exposure line items in the “LR2: BCBS Basel III leverage ratio common disclosure” table on the next page.

As of 31 March 2019, our BCBS Basel III leverage ratio was 5.4% and the BCBS Basel III LRD was USD 911 billion.

Difference between the Swiss SRB and BCBS leverage ratio

The LRD is the same under Swiss SRB and BCBS rules. However, there is a difference in the capital numerator between the two frameworks. Under BCBS rules, only common equity tier 1 and additional tier 1 capital are included in the numerator. Under Swiss SRB we are required to meet going as well as gone concern leverage ratio requirements. Therefore, depending on the requirement, the numerator includes tier 1 capital instruments, tier 2 capital instruments and / or total loss-absorbing capacity (TLAC)-eligible senior unsecured debt.

| Reconciliation of IFRS total
assets to BCBS Basel III total on-balance sheet exposures excluding
derivatives and securities financing transactions — USD million | 31.3.19 | 31.12.18 |
| --- | --- | --- |
| On-balance sheet exposures | | |
| IFRS total assets | 956,580 | 958,351 |
| Adjustment for investments in banking, financial, insurance or
commercial entities that are consolidated for accounting purposes but outside
the scope of regulatory consolidation | (25,074) | (22,277) |
| Adjustment for investments in banking, financial, insurance or
commercial entities that are outside the scope of consolidation for
accounting purposes but consolidated for regulatory purposes | 0 | 0 |
| Adjustment for fiduciary assets recognized on the balance sheet
pursuant to the operative accounting framework but excluded from the leverage
ratio exposure measure | 0 | 0 |
| Less carrying value of derivative financial instruments in IFRS
total assets 1 | (136,335) | (149,821) |
| Less carrying value of securities financing transactions in IFRS
total assets 2 | (124,070) | (123,154) |
| Adjustments to accounting values | 0 | 0 |
| On-balance sheet items
excluding derivatives and securities financing transactions, but including
collateral | 671,101 | 663,099 |
| Asset amounts deducted in determining BCBS Basel III tier 1
capital | (13,588) | (13,831) |
| Total on-balance sheet
exposures (excluding derivatives and securities financing transactions) | 657,514 | 649,268 |
| 1 Consists of derivative financial instruments and cash
collateral receivables on derivative instruments in accordance with the
regulatory scope of consolidation. 2 Consists of receivables from
securities financing transactions, margin loans, prime brokerage receivables
and financial assets at fair value not held for trading related to securities
financing transactions in accordance with the regulatory scope of
consolidation. | | |

| LR2: BCBS Basel III leverage ratio common disclosure — USD million, except where
indicated | | 31.3.19 | 31.12.18 |
| --- | --- | --- | --- |
| | On-balance sheet exposures | | |
| 1 | On-balance sheet items excluding derivatives and SFTs, but
including collateral | 671,101 | 663,099 |
| 2 | (Asset amounts deducted in determining Basel III tier 1 capital) | (13,588) | (13,831) |
| 3 | Total on-balance sheet
exposures (excluding derivatives and SFTs) | 657,514 | 649,268 |
| | Derivative exposures | | |
| 4 | Replacement cost associated with all derivatives transactions
(i.e., net of eligible cash variation margin) | 40,032 | 43,007 |
| 5 | Add-on amounts for PFE associated with all derivatives
transactions | 86,524 | 85,503 |
| 6 | Gross-up for derivatives collateral provided where deducted from
the balance sheet assets pursuant to the operative accounting framework | 0 | 0 |
| 7 | (Deductions of receivables assets for cash variation margin
provided in derivatives transactions) | (13,012) | (13,717) |
| 8 | (Exempted CCP leg of client-cleared trade exposures) | (20,126) | (21,556) |
| 9 | Adjusted effective notional amount of all written credit
derivatives 1 | 74,842 | 76,901 |
| 10 | (Adjusted effective notional offsets and add-on deductions for
written credit derivatives) 2 | (73,213) | (74,771) |
| 11 | Total derivative exposures | 95,046 | 95,366 |
| | Securities financing
transaction exposures | | |
| 12 | Gross SFT assets (with no recognition of netting), after
adjusting for sale accounting transactions | 213,202 | 213,710 |
| 13 | (Netted amounts of cash payables and cash receivables of gross
SFT assets) | (89,132) | (90,555) |
| 14 | CCR exposure for SFT assets | 8,075 | 7,774 |
| 15 | Agent transaction exposures | 0 | 0 |
| 16 | Total securities financing
transaction exposures | 132,145 | 130,928 |
| | Other off-balance sheet
exposures | | |
| 17 | Off-balance sheet exposure at gross notional amount | 78,673 | 88,075 |
| 18 | (Adjustments for conversion to credit equivalent amounts) | (52,385) | (59,039) |
| 19 | Total off-balance sheet items | 26,287 | 29,035 |
| | Total exposures (leverage
ratio denominator) | 910,993 | 904,598 |
| | Capital and total exposures
(leverage ratio denominator) | | |
| 20 | Tier 1 capital | 49,436 | 46,279 |
| 21 | Total exposures (leverage ratio denominator) | 910,993 | 904,598 |
| | Leverage ratio | | |
| 22 | Basel III leverage ratio
(%) | 5.4 | 5.1 |
| 1 Includes protection sold, including agency transactions. 2
Protection sold can be offset with protection bought on the same underlying
reference entity, provided that the conditions according to the Basel III
leverage ratio framework and disclosure requirements are met. | | | |

UBS Group AG consolidated

LRD increased by USD 6 billion during the first quarter of 2019, mainly driven by an increase in on-balance sheet exposures (excluding derivatives exposures and securities financing transactions (SFTs)) due to a USD 3.5 billion increase from the adoption of IFRS 16, Leases , and USD 8 billion of asset size and other increases, partly offset by a decrease of USD 4 billion due to currency effects.

| LR1: BCBS Basel III leverage
ratio summary comparison — USD million | | 31.3.19 | 31.12.18 |
| --- | --- | --- | --- |
| 1 | Total consolidated assets as per published financial statements | 956,580 | 958,351 |
| 2 | Adjustment for investments in banking, financial, insurance or
commercial entities that are consolidated for accounting purposes but outside
the scope of regulatory consolidation 1 | (38,661) | (36,108) |
| 3 | Adjustment for fiduciary assets recognized on the balance sheet
pursuant to the operative accounting framework but excluded from the leverage
ratio exposure measure | 0 | 0 |
| 4 | Adjustments for derivative financial instruments | (41,289) | (54,454) |
| 5 | Adjustment for securities financing transactions (i.e., repos
and similar secured lending) | 8,075 | 7,774 |
| 6 | Adjustment for off-balance sheet items (i.e., conversion to
credit equivalent amounts of off-balance sheet exposures) | 26,287 | 29,035 |
| 7 | Other adjustments | 0 | 0 |
| 8 | Leverage ratio exposure
(leverage ratio denominator) | 910,993 | 904,598 |
| 1 This item includes assets that are deducted from tier 1
capital. | | | |

BCBS Basel III leverage ratio
USD million, except where
indicated
	31.3.19	31.12.18	30.9.18	30.6.18	31.3.18
Total tier 1 capital	49,436	46,279	45,972	45,353	46,180
BCBS total exposures (leverage ratio denominator)	910,993	904,598	915,066	910,383	925,651
BCBS Basel III leverage ratio (%)	5.4	5.1	5.0	5.0	5.0

Section 5 Liquidity coverage ratio

LIQ1 – Liquidity risk management

We monitor the LCR in all significant currencies in order to manage any currency mismatch between HQLA and the net expected cash outflows in times of stress.

| LIQ1 – Liquidity risk
management — Pillar 3 disclosure
requirement | Quarterly Rerport | Disclosure | | First quarter 2019 report |
| --- | --- | --- | --- | --- |
| Concentration of funding sources | Treasury management | – | Funding by product and currency | 45 |

High-quality liquid assets

High-quality liquid assets (HQLA) must be easily and immediately convertible into cash at little or no loss of value, especially during a period of stress. HQLA are assets that are of low risk and are unencumbered. Other characteristics of HQLA are ease and certainty of valuation, low correlation with risky assets, listing on a developed and recognized exchange, an active and sizeable market, and low volatility. Based on these characteristics, HQLA are categorized as Level 1 (primarily central bank reserves and government bonds) or Level 2 (primarily US and European agency bonds as well as non-financial corporate covered bonds). Level 2 assets are subject to regulatory haircuts and caps.

High-quality liquid assets
	Average 1Q19 1			Average 4Q18 1
USD billion	Level 1 weighted liquidity value 2	Level 2 weighted liquidity value 2	Total weighted liquidity value 2	Level 1 weighted liquidity value 2	Level 2 weighted liquidity value 2	Total weighted liquidity value 2
Cash balances 3	115	0	115	96	0	96
Securities (on- and off-balance sheet)	58	13	71	65	12	78
Total high-quality liquid
assets 4	173	13	186	161	12	173
1 Calculated based on an average of 63 data points in the first
quarter of 2019 and 64 data points in the fourth quarter of 2018. 2
Calculated after the application of haircuts. 3 Includes cash and balances
with central banks and other eligible balances as prescribed by FINMA. 4
Calculated in accordance with FINMA requirements.

UBS Group AG consolidated

Liquidity coverage ratio

In the first quarter of 2019, the UBS Group liquidity coverage ratio (LCR) increased by 17 percentage points to 153%, remaining above the 110% Group LCR minimum communicated by the Swiss Financial Market Supervisory Authority (FINMA). The LCR increase was primarily driven by additional HQLA relating to higher average cash balances, reflecting higher deposit volumes and reduced funding consumption by the business divisions, as well as lower net cash outflows, mainly from secured financing transactions, driven by additional inflows from excess cash investments and lower outflows from client activity.

Liquidity coverage ratio
		Average 1Q19 1		Average 4Q18 1
USD billion, except where
indicated		Unweighted value	Weighted value 2	Unweighted value	Weighted value 2
High-quality liquid assets
1	High-quality liquid assets	188	186	176	173
Cash outflows
2	Retail deposits and deposits from small business customers	238	27	234	26
3	of which: stable deposits	34	1	35	1
4	of which: less stable
deposits	204	26	199	25
5	Unsecured wholesale funding	183	103	182	102
6	of which: operational
deposits (all counterparties)	42	10	42	10
7	of which: non-operational
deposits (all counterparties)	130	82	129	80
8	of which: unsecured debt	11	11	12	12
9	Secured wholesale funding		73		76
10	Additional requirements:	72	24	76	24
11	of which: outflows related
to derivatives and other transactions	38	16	40	16
12	of which: outflows related
to loss of funding on debt products 3	0	0	1	1
13	of which: committed credit
and liquidity facilities	33	7	35	7
14	Other contractual funding obligations	14	13	14	12
15	Other contingent funding obligations	251	6	247	5
16	Total cash outflows		246		246
Cash inflows
17	Secured lending	296	84	295	79
18	Inflows from fully performing exposures	66	29	66	29
19	Other cash inflows	11	11	10	10
20	Total cash inflows	374	124	370	119
			Average 1Q19 1		Average 4Q18 1
USD billion, except where
indicated			Total adjusted value 4		Total adjusted value 4
Liquidity coverage ratio
21	High-quality liquid assets		186		173
22	Net cash outflows		122		127
23	Liquidity coverage ratio (%)		153		136
1 Calculated based on an average of 63 data points in the first
quarter of 2019 and 64 data points in the fourth quarter of 2018. 2
Calculated after the application of inflow and outflow rates. 3 Includes
outflows related to loss of funding on asset-backed securities, covered
bonds, other structured financing instruments, asset-backed commercial
papers, structured entities (conduits), securities investment vehicles and
other such financing facilities. 4 Calculated after the application of
haircuts and inflow and outflow rates as well as, where applicable, caps on
Level 2 assets and cash inflows.

UBS AG consolidated

Section 1 Key metrics

Information on the Swiss SRB capital framework and on the Swiss SRB going and gone concern requirements is provided in the UBS Group AG and UBS AG Annual Report 2018 which is available under “Annual reporting” at www.ubs.com/investors . UBS AG consolidated capital and other regulatory information is provided in the UBS AG first quarter 2019 financial report, which will be available as of 30 April 2019 under “Quarterly reporting” at www.ubs.com/investors .

The table below is based on BCBS Basel III phase-in rules. During the first quarter of 2019, common equity tier 1 (CET1) increased by USD 0.3 billion to USD 34.9 billion, primarily as a result of operating profit before tax, partly offset by accruals for capital returns to shareholders. Risk-weighted assets (RWA) increased by USD 3.7 billion to USD 266.6 billion, driven by increases of USD 4.8 billion in credit and counterparty credit risk, USD 3.1 billion in non-counterparty risk and USD 2.8 billion in operational risk, partly offset by a decrease in market risk RWA of USD 7.0 billion. Leverage ratio exposure increased by USD 7 billion to USD 911 billion, mainly driven by on-balance sheet exposures (excluding derivative exposures and securities financing transactions).

KM1: Key metrics
USD million, except where
indicated
		31.3.19	31.12.18	30.9.18	30.6.18	31.3.18
Available capital (amounts) 1
1	Common equity tier 1 (CET1)	34,933	34,608	35,046	33,983	35,060
1a	Fully loaded ECL accounting model	34,897	34,572	35,046	33,983	35,060
2	Tier 1	47,748	44,791	44,576	43,562	44,763
2a	Fully loaded ECL accounting model Tier 1	47,712	44,755	44,576	43,562	44,763
3	Total capital	54,460	51,494	51,241	50,659	52,061
3a	Fully loaded ECL accounting model total capital	54,424	51,458	51,241	50,659	52,061
Risk-weighted assets
(amounts)
4	Total risk-weighted assets (RWA)	266,581	262,840	256,206	253,872	266,202
4a	Total risk-weighted assets (pre-floor)	266,581	262,840	256,206	253,872	266,202
Risk-based capital ratios as
a percentage of RWA 1
5	Common equity tier 1 ratio (%)	13.10	13.17	13.68	13.39	13.17
5a	Fully loaded ECL accounting model Common Equity Tier 1 (%)	13.09	13.15	13.68	13.39	13.17
6	Tier 1 ratio (%)	17.91	17.04	17.40	17.16	16.82
6a	Fully loaded ECL accounting model Tier 1 ratio (%)	17.90	17.03	17.40	17.16	16.82
7	Total capital ratio (%)	20.43	19.59	20.00	19.95	19.56
7a	Fully loaded ECL accounting model total capital ratio (%)	20.42	19.58	20.00	19.95	19.56
Additional CET1 buffer
requirements as a percentage of RWA
8	Capital conservation buffer requirement (2.5% from 2019) (%)	2.50	1.88	1.88	1.88	1.88
9	Countercyclical buffer requirement (%)	0.10	0.08	0.05	0.06	0.03
9a	Additional countercyclical buffer for Swiss mortgage loans (%)	0.21	0.21	0.21	0.20	0.19
10	Bank G-SIB and/or D-SIB additional requirements (%) 2
11	Total of bank CET1 specific buffer requirements (%)	2.60	1.95	1.93	1.93	1.90
12	CET1 available after meeting the bank’s minimum capital
requirements (%) 1	8.60	8.67	9.18	8.89	8.67
Basel III leverage ratio
13	Total Basel III leverage ratio exposure measure	911,410	904,458	915,977	911,451	926,917
14	Basel III leverage ratio (%) 1	5.24	4.95	4.87	4.78	4.83
14a	Fully loaded ECL accounting model Basel III leverage ratio (%) 1	5.23	4.95	4.87	4.78	4.83
1 Based on BCBS Basel III phase-in rules. 2 Swiss SRB going
concern requirements and information for UBS AG consolidated is provided in
the “Capital management” section of UBS AG first quarter 2019 report
available under “Quarterly reporting” at www.ubs.com/investors.

Significant regulated subsidiaries and sub-groups

Section 1 Introduction

The sections below include capital and other regulatory information for UBS AG standalone, UBS Switzerland AG standalone, UBS Europe SE consolidated and UBS Americas Holding LLC consolidated.

C apital information in this section is based on Pillar 1 capital requirements. Entities may be subject to significant additional Pillar 2 requirements, which represent additional amounts of capital considered necessary and agreed with regulators based on the risk profile of the entities.

Section 2 UBS AG standalone

Key metrics of the first quarter of 2019

The table below is based on BCBS Basel III phase-in rules. During the first quarter of 2019, common equity tier 1 (CET1) capital remained stable. RWA increased by USD 7.8 billion to USD 300.7 billion, mainly resulting from the gradual increase of risk weights for Swiss and foreign-domiciled subsidiaries according to FINMA decree. Leverage ratio exposure increased by USD 16 billion to USD 617 billion, mainly due to an increase in on-balance sheet exposures (excluding derivative exposures and securities financing transactions).

KM1: Key metrics
USD million, except where
indicated
		31.3.19	31.12.18	30.9.18	30.6.18	31.3.18
Available capital (amounts) 1
1	Common equity tier 1 (CET1)	49,024	49,411	49,810	49,583	49,833
1a	Fully loaded ECL accounting model	49,021	49,411	49,810	49,583	49,833
2	Tier 1	61,839	59,595	59,341	59,161	59,537
2a	Fully loaded ECL accounting model Tier 1	61,836	59,595	59,341	59,161	59,537
3	Total capital	68,542	66,295	66,005	66,258	68,329
3a	Fully loaded ECL accounting model total capital	68,539	66,295	66,005	66,258	68,329
Risk-weighted assets
(amounts)
4	Total risk-weighted assets (RWA)	300,734	292,888	288,045	286,457	302,296
4a	Total risk-weighted assets (pre-floor)	300,734	292,888	288,045	286,457	302,296
Risk-based capital ratios as
a percentage of RWA 1
5	Common equity tier 1 ratio (%)	16.30	16.87	17.29	17.31	16.48
5a	Fully loaded ECL accounting model Common Equity Tier 1 (%)	16.30	16.87	17.29	17.31	16.48
6	Tier 1 ratio (%)	20.56	20.35	20.60	20.65	19.69
6a	Fully loaded ECL accounting model Tier 1 ratio (%)	20.56	20.35	20.60	20.65	19.69
7	Total capital ratio (%)	22.79	22.63	22.91	23.13	22.60
7a	Fully loaded ECL accounting model total capital ratio (%)	22.79	22.63	22.91	23.13	22.60
Additional CET1 buffer
requirements as a percentage of RWA
8	Capital conservation buffer requirement (2.5% from 2019) (%)	2.50	1.88	1.88	1.88	1.88
9	Countercyclical buffer requirement (%)	0.09	0.07	0.05	0.08	0.04
9a	Additional countercyclical buffer for Swiss mortgage loans (%)	0.00	0.00	0.00	0.00	0.00
10	Bank G-SIB and/or D-SIB additional requirements (%) 2
11	Total of bank CET1 specific buffer requirements (%)	2.59	1.95	1.92	1.96	1.91
12	CET1 available after meeting the bank’s minimum capital
requirements (%) 1	11.80	12.37	12.79	12.81	11.98
Basel III leverage ratio
13	Total Basel III leverage ratio exposure measure	617,329	601,013	619,741	620,074	620,353
14	Basel III leverage ratio (%) 1	10.02	9.92	9.58	9.54	9.60
14a	Fully loaded ECL accounting model Basel III leverage ratio (%) 1	10.02	9.92	9.58	9.54	9.60
Liquidity coverage ratio
15	Total HQLA	86,690	76,456	81,214	83,473	89,631
16	Total net cash outflow	51,434	55,032	59,450	60,786	70,367
17	LCR ratio (%)	169	139	137	137	127
1 Based on BCBS Basel III phase-in rules. 2 Swiss SRB going
concern requirements and information for UBS AG standalone is provided in the
following pages in this section.

Swiss SRB going concern requirements and information

Under Swiss systemically relevant bank (SRB) regulations, article 125 “Reliefs for financial groups and individual institutions” of the Capital Adequacy Ordinance stipulates that the Swiss Financial Market Supervisory Authority (FINMA) may grant, under certain conditions, capital relief to individual institutions to ensure that an individual institution’s compliance with the capital requirements does not lead to a de facto overcapitalization of the group of which it is a part.

FINMA granted relief concerning the regulatory capital requirements of UBS AG on a standalone basis by means of decrees issued on 20 December 2013 and 20 October 2017, the latter effective as of 1 July 2017 and partly replacing the former.

More information is provided in “ Section 2 UBS AG standalone ” of the 31 December 2018 Pillar 3 report – UBS Group and significant regulated subsidiaries and sub-groups under “ Pillar 3 disclosures ” at www.ubs.com/investors .

| Swiss SRB going concern
requirements and information | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| As of 31.3.19 | Swiss SRB, including transitional arrangements | | | | Swiss SRB after transition | | | |
| USD million, except where
indicated | RWA | | LRD | | RWA | | LRD | |
| Required going concern
capital | in % 1 | | in % 1 | | in % | | in % | |
| Common equity tier 1 capital | 10.09 | 30,336 | 3.50 | 21,607 | 10.09 | 38,598 | 3.50 | 21,607 |
| of which: minimum capital | 4.50 | 13,533 | 1.50 | 9,260 | 4.50 | 17,219 | 1.50 | 9,260 |
| of which: buffer capital | 5.50 | 16,540 | 2.00 | 12,347 | 5.50 | 21,045 | 2.00 | 12,347 |
| of which: countercyclical
buffer 2 | 0.09 | 263 | | | 0.09 | 335 | | |
| Maximum additional tier 1
capital | 4.30 | 12,932 | 1.50 | 9,260 | 4.30 | 16,453 | 1.50 | 9,260 |
| of which: high-trigger
loss-absorbing additional tier 1 minimum capital | 3.50 | 10,526 | 1.50 | 9,260 | 3.50 | 13,392 | 1.50 | 9,260 |
| of which: high-trigger
loss-absorbing additional tier 1 buffer capital | 0.80 | 2,406 | | | 0.80 | 3,061 | | |
| Total going concern capital | 14.39 3 | 43,268 | 5.00 3 | 30,866 | 14.39 3 | 55,051 | 5.00 3 | 30,866 |
| Eligible going concern
capital | | | | | | | | |
| Common equity tier 1 capital | 16.30 | 49,024 | 7.94 | 49,024 | 12.81 | 49,024 | 7.94 | 49,024 |
| High-trigger loss-absorbing
additional tier 1 capital 4 | 5.47 | 16,447 | 2.66 | 16,447 | 2.73 | 10,435 | 1.69 | 10,435 |
| of which: high-trigger
loss-absorbing additional tier 1 capital | 3.47 | 10,435 | 1.69 | 10,435 | 2.73 | 10,435 | 1.69 | 10,435 |
| of which: low-trigger
loss-absorbing tier 2 capital | 2.00 | 6,012 | 0.97 | 6,012 | | | | |
| Total going concern capital | 21.77 | 65,472 | 10.61 | 65,472 | 15.54 | 59,460 | 9.63 | 59,460 |
| Risk-weighted assets /
leverage ratio denominator | | | | | | | | |
| Risk-weighted assets | | 300,734 | | | | 382,634 | | |
| Leverage ratio denominator | | | | 617,329 | | | | 617,329 |
| 1 By FINMA decree, requirements exceed those based on the
transitional arrangements of the Swiss Capital Adequacy Ordinance, i.e., a
total going concern capital ratio requirement of 13.58% plus the effect of
countercyclical buffer (CCB) requirements of 0.09%, of which 9.68% plus the
effect of CCB requirements of 0.09% must be satisfied with CET1 capital, and
a total going concern leverage ratio requirement of 4.5%, of which 3.2% must
be satisfied with CET1 capital. 2 Going concern capital ratio requirements
as of 31 March 2019 include CCB requirements of 0.09%. 3 Includes
applicable add-ons of 1.44% for RWA and 0.5% for LRD. 4 Includes
outstanding low-trigger loss-absorbing tier 2 capital instruments, which are
available under the transitional rules of the Swiss SRB framework to meet the
going concern requirements until the earlier of (i) their maturity or first
call date or (ii) 31 December 2019. Outstanding low-trigger loss-absorbing
tier 2 capital instruments are subject to amortization starting five years
prior to their maturity. | | | | | | | | |

Significant regulated subsidiaries and sub-groups

Swiss SRB going concern information	Swiss SRB, including transitional arrangements		Swiss SRB after transition
USD million, except where
indicated	31.3.19	31.12.18 1	31.3.19	31.12.18
Going concern capital
Common equity tier 1 capital	49,024	49,411	49,024	49,411
High-trigger loss-absorbing additional tier 1 capital	10,435	7,805	10,435	7,805
Total loss-absorbing
additional tier 1 capital	10,435	7,805	10,435	7,805
Total tier 1 capital	59,460	57,217	59,460	57,217
Low-trigger loss-absorbing tier 2 capital 1	6,012	6,008
Total tier 2 capital	6,012	6,008
Total going concern capital	65,472	63,225	59,460	57,217
Risk-weighted assets /
leverage ratio denominator
Risk-weighted assets	300,734	292,888	382,634	383,578
of which: direct and
indirect investments in Swiss-domiciled subsidiaries 2	32,558	31,711	39,705	39,639
of which: direct and indirect
investments in foreign-domiciled subsidiaries 2	91,366	82,762	166,119	165,525
Leverage ratio denominator	617,329	601,013	617,329	601,013
				#NAME?
Capital ratios (%)
Total going concern capital ratio	21.8	21.6	15.5	14.9
of which: CET1 capital ratio	16.3	16.9	12.8	12.9
Leverage ratios (%)
Total going concern leverage ratio	10.6	10.5	9.6	9.5
of which: CET1 leverage
ratio	7.9	8.2	7.9	8.2
1 Outstanding low-trigger loss-absorbing tier 2 capital
instruments qualify as going concern capital until the earlier of (i) their
maturity or first call date or (ii) 31 December 2019, and are subject to
amortization starting five years prior to their maturity. 2 Carrying
value for direct and indirect investments including holding of regulatory
capital instruments in Swiss-domiciled subsidiaries (31 March 2019: USD
15,882 million; 31 December 2018: USD 15,856 million), and for direct
and indirect investments including holding of regulatory capital instruments
in foreign-domiciled subsidiaries (31 March 2019: USD 41,530 million;
31 December 2018: USD 41,381 million), is risk weighted at 205% and 220%
respectively as of 31 March 2019 whereas both were risk weighted at 200%
until 31 December 2018. Risk weights will gradually increase by 5% per year
for Swiss-domiciled investments and 20% per year for foreign-domiciled
investments until the fully applied risk weights of 250% and 400%,
respectively, are applied.

Leverage ratio information

| Swiss SRB leverage ratio
denominator — USD billion | 31.3.19 | 31.12.18 |
| --- | --- | --- |
| Leverage ratio denominator | | |
| Swiss GAAP total assets | 498.4 | 480.0 |
| Difference between Swiss GAAP and IFRS total assets | 110.8 | 118.6 |
| Less: derivative exposures and SFTs 1 | (225.4) | (236.7) |
| On-balance sheet exposures
(excluding derivative exposures and SFTs) | 383.8 | 361.9 |
| Derivative exposures | 98.8 | 99.3 |
| Securities financing transactions | 111.1 | 114.2 |
| Off-balance sheet items | 24.2 | 26.1 |
| Items deducted from Swiss SRB tier 1 capital | (0.5) | (0.5) |
| Total exposures (leverage
ratio denominator) | 617.3 | 601.0 |
| 1 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 in this table. | | |

| BCBS Basel III leverage ratio — USD million, except where
indicated | 31.03.19 | 31.12.18 | 30.9.18 | 30.6.18 |
| --- | --- | --- | --- | --- |
| Total tier 1 capital | 61,839 | 59,595 | 59,341 | 59,161 |
| Total exposures (leverage ratio denominator) | 617,329 | 601,013 | 619,741 | 620,074 |
| BCBS Basel III leverage ratio (%) | 10.0 | 9.9 | 9.6 | 9.5 |

Liquidity coverage ratio

UBS AG is required to maintain a minimum liquidity coverage ratio of 105% as communicated by FINMA.

Liquidity coverage ratio
	Weighted value 1
USD billion, except where
indicated	Average 1Q19 2	Average 4Q18 2
High-quality liquid assets	87	76
Total net cash outflows	51	55
of which: cash outflows	171	169
of which: cash inflows	119	114
Liquidity coverage ratio (%)	169	139
1 Calculated after the application of haircuts and inflow and
outflow rates. 2 Calculated based on an average of 63 data points in the
first quarter of 2019 and 64 data points in the fourth quarter of 2018.

Significant regulated subsidiaries and sub-groups

Section 3 UBS Switzerland AG standalone

Key metrics of the first quarter of 2019

The table below is based on BCBS Basel III phase-in rules. During the first quarter of 2019, CET1 capital increased by CHF 0.2 billion to CHF 10.5 billion, primarily driven by the recognition of IFRS 9 expected credit losses on third-party exposures effective from 1 January 2019. RWA remained stable, but leverage ratio exposure increased by CHF 4 billion to CHF 311 billion due to an increase in receivables from securities financing transactions.

KM1: Key metrics
CHF million, except where
indicated
		31.3.19	31.12.18	30.9.18	30.6.18	31.3.18
Available capital (amounts) 1
1	Common equity tier 1 (CET1)	10,463	10,225	10,165	10,072	10,118
1a	Fully loaded ECL accounting model	10,457	10,225	10,165	10,072	10,118
2	Tier 1	14,712	14,468	13,165	13,072	13,118
2a	Fully loaded ECL accounting model Tier 1	14,706	14,468	13,165	13,072	13,118
3	Total capital	14,712	14,468	13,165	13,072	13,118
3a	Fully loaded ECL accounting model total capital	14,706	14,468	13,165	13,072	13,118
Risk-weighted assets
(amounts)
4	Total risk-weighted assets (RWA)	96,067	95,646	95,541	94,887	94,311
4a	Total risk-weighted assets (pre-floor)	90,068	91,457	88,299	88,357	83,890
Risk-based capital ratios as
a percentage of RWA 1
5	Common equity tier 1 ratio (%)	10.89	10.69	10.64	10.61	10.73
5a	Fully loaded ECL accounting model Common Equity Tier 1 (%)	10.89	10.69	10.64	10.61	10.73
6	Tier 1 ratio (%)	15.31	15.13	13.78	13.78	13.91
6a	Fully loaded ECL accounting model Tier 1 ratio (%)	15.31	15.13	13.78	13.78	13.91
7	Total capital ratio (%)	15.31	15.13	13.78	13.78	13.91
7a	Fully loaded ECL accounting model total capital ratio (%)	15.31	15.13	13.78	13.78	13.91
Additional CET1 buffer
requirements as a percentage of RWA 2
8	Capital conservation buffer requirement (2.5% from 2019) (%)	2.50	1.88	1.88	1.88	1.88
9	Countercyclical buffer requirement (%)	0.01	0.01	0.00	0.00	0.00
9a	Additional countercyclical buffer for Swiss mortgage loans (%)	0.58	0.56	0.56	0.54	0.52
10	Bank G-SIB and/or D-SIB additional requirements (%) 3
11	Total of bank CET1 specific buffer requirements (%)	2.51	1.88	1.88	1.88	1.88
12	CET1 available after meeting the bank’s minimum capital
requirements (%) 1	6.39	6.19	6.14	6.11	6.23
Basel III leverage ratio
13	Total Basel III leverage ratio exposure measure	310,545	306,487	303,257	304,046	301,968
14	Basel III leverage ratio (%) 1	4.74	4.72	4.34	4.30	4.34
14a	Fully loaded ECL accounting model Basel III leverage ratio (%) 1	4.74	4.72	4.34	4.30	4.34
Liquidity coverage ratio
15	Total HQLA	71,392	67,427	66,174	68,620	69,024
16	Total net cash outflow	51,945	52,846	53,130	53,731	54,782
17	LCR ratio (%)	137	128	125	128	126
1 Based on BCBS Basel III phase-in rules. 2 As Annex 8 of
Swiss Capital Adequacy Ordinance (CAO) does not apply to the systemically
relevant banks, UBS can abstain from disclosing the information required in
lines 12a-12e. In the event of a waiver, UBS nevertheless provides
information about the Swiss sector-specific countercyclical buffer in row 9a
pursuant to Art. 44 CAO. 3 Swiss SRB going concern requirements and
information for UBS Switzerland AG is provided on the next page.

Swiss SRB going and gone concern requirements and information

UBS Switzerland AG is considered a systemically relevant bank (SRB) under Swiss banking law and is subject to capital regulations on a standalone basis . As of 31 March 2019, the transitional going concern capital and leverage ratio requirements for UBS Switzerland AG standalone were 14.17% and 4.5%, respectively. The gone concern requirements under transitional arrangements were 9.74% for the RWA-based requirement and 3.36% for the LRD-based requirement.

| Swiss SRB going and gone
concern requirements and information 1 | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| As of 31.3.19 | Swiss SRB, including transitional arrangements | | | | Swiss SRB as of 1.1.20 | | | |
| CHF million, except where
indicated | RWA | | LRD | | RWA | | LRD | |
| Required loss-absorbing
capacity | in % 2 | | in % | | in % | | in % | |
| Common equity tier 1 capital | 10.27 | 9,865 | 3.20 | 9,937 | 10.59 | 10,173 | 3.50 | 10,869 |
| of which: minimum capital | 4.90 | 4,707 | 1.70 | 5,279 | 4.50 | 4,323 | 1.50 | 4,658 |
| of which: buffer capital | 4.78 | 4,592 | 1.50 | 4,658 | 5.50 | 5,284 | 2.00 | 6,211 |
| of which: countercyclical
buffer 3 | 0.59 | 566 | | | 0.59 | 566 | | |
| Maximum additional tier 1
capital | 3.90 | 3,747 | 1.30 | 4,037 | 4.30 | 4,131 | 1.50 | 4,658 |
| of which: high-trigger
loss-absorbing additional tier 1 minimum capital | 3.10 | 2,978 | 1.30 | 4,037 | 3.50 | 3,362 | 1.50 | 4,658 |
| of which: high-trigger
loss-absorbing additional tier 1 buffer capital | 0.80 | 769 | | | 0.80 | 769 | | |
| Total going concern capital | 14.17 | 13,612 | 4.50 | 13,975 | 14.89 4 | 14,304 | 5.00 4 | 15,527 |
| Base gone concern loss-absorbing capacity, including applicable
add-ons and rebate | 9.74 5 | 9,361 | 3.36 5 | 10,434 | 12.01 6 | 11,540 | 4.20 6 | 13,043 |
| Total gone concern loss-absorbing
capacity | 9.74 | 9,361 | 3.36 | 10,434 | 12.01 | 11,540 | 4.20 | 13,043 |
| Total loss-absorbing
capacity | 23.91 | 22,972 | 7.86 | 24,409 | 26.90 | 25,843 | 9.20 | 28,570 |
| Eligible loss-absorbing
capacity | | | | | | | | |
| Common equity tier 1 capital | 10.89 | 10,463 | 3.37 | 10,463 | 10.89 | 10,463 | 3.37 | 10,463 |
| High-trigger loss-absorbing
additional tier 1 capital | 4.42 | 4,248 | 1.37 | 4,248 | 4.42 | 4,248 | 1.37 | 4,248 |
| of which: high-trigger
loss-absorbing additional tier 1 capital | 4.42 | 4,248 | 1.37 | 4,248 | 4.42 | 4,248 | 1.37 | 4,248 |
| Total going concern capital | 15.31 | 14,712 | 4.74 | 14,712 | 15.31 | 14,712 | 4.74 | 14,712 |
| Gone concern loss-absorbing
capacity | 11.39 | 10,945 | 3.52 | 10,945 | 11.39 | 10,945 | 3.52 | 10,945 |
| of which: TLAC-eligible debt | 11.39 | 10,945 | 3.52 | 10,945 | 11.39 | 10,945 | 3.52 | 10,945 |
| Total gone concern
loss-absorbing capacity | 11.39 | 10,945 | 3.52 | 10,945 | 11.39 | 10,945 | 3.52 | 10,945 |
| Total loss-absorbing
capacity | 26.71 | 25,657 | 8.26 | 25,657 | 26.71 | 25,657 | 8.26 | 25,657 |
| Risk-weighted assets /
leverage ratio denominator | | | | | | | | |
| Risk-weighted assets | | 96,067 | | | | 96,067 | | |
| Leverage ratio denominator | | | | 310,545 | | | | 310,545 |
| 1 This table includes a rebate equal to 40% of the maximum
rebate on the gone concern requirements, which was granted by FINMA and will
be phased in until 1 January 2020. Refer to the “Capital management” section
of our Annual Report 2018 for more information. 2 The total loss-absorbing
capacity ratio requirement of 23.91% is the current requirement based on the
transitional rules of the Swiss Capital Adequacy Ordinance including the
aforementioned rebate on the gone concern requirements. In addition, FINMA
has defined a total capital ratio requirement, which is the sum of 14.4% and
the effect of countercyclical buffer (CCB) requirements of 0.59%, of which
10% plus the effect of CCB requirements must be satisfied with CET1 capital.
These FINMA requirements will be effective until they are exceeded by the
Swiss SRB requirements based on the transitional rules. 3 Going concern
capital ratio requirements include CCB requirements of 0.59%. 4 Includes
applicable add-ons of 1.44% for RWA and 0.5% for LRD. 5 Includes
applicable add-ons of 1.08% for RWA and 0.38% for LRD and a rebate of 1.86%
for RWA and 0.64% for LRD. 6 Includes applicable add-ons of 1.44% for RWA
and 0.5% for LRD and a rebate of 2.29% for RWA and 0.8% for LRD. | | | | | | | | |

Significant regulated subsidiaries and sub-groups

Swiss SRB loss-absorbing capacity

| Swiss SRB going and gone
concern information | Swiss SRB, including transitional arrangements | | Swiss SRB as of 1.1.20 | |
| --- | --- | --- | --- | --- |
| CHF million, except where
indicated | 31.3.19 | 31.12.18 | 31.3.19 | 31.12.18 |
| Going concern capital | | | | |
| Common equity tier 1 capital | 10,463 | 10,225 | 10,463 | 10,225 |
| High-trigger loss-absorbing additional tier 1 capital | 4,248 | 4,243 | 4,248 | 4,243 |
| Total tier 1 capital | 14,712 | 14,468 | 14,712 | 14,468 |
| Total going concern capital | 14,712 | 14,468 | 14,712 | 14,468 |
| Gone concern loss-absorbing
capacity | | | | |
| TLAC-eligible debt | 10,945 | 10,932 | 10,945 | 10,932 |
| Total gone concern
loss-absorbing capacity | 10,945 | 10,932 | 10,945 | 10,932 |
| Total loss-absorbing capacity | | | | |
| Total loss-absorbing
capacity | 25,657 | 25,400 | 25,657 | 25,400 |
| Risk-weighted assets /
leverage ratio denominator | | | | |
| Risk-weighted assets | 96,067 | 95,646 | 96,067 | 95,646 |
| Leverage ratio denominator | 310,545 | 306,487 | 310,545 | 306,487 |
| Capital and loss-absorbing
capacity ratios (%) | | | | |
| Going concern capital ratio | 15.3 | 15.1 | 15.3 | 15.1 |
| of which: common equity tier
1 capital ratio | 10.9 | 10.7 | 10.9 | 10.7 |
| Gone concern loss-absorbing capacity ratio | 11.4 | 11.4 | 11.4 | 11.4 |
| Total loss-absorbing capacity ratio | 26.7 | 26.6 | 26.7 | 26.6 |
| Leverage ratios (%) | | | | |
| Going concern leverage ratio | 4.7 | 4.7 | 4.7 | 4.7 |
| of which: common equity tier
1 leverage ratio | 3.4 | 3.3 | 3.4 | 3.3 |
| Gone concern leverage ratio | 3.5 | 3.6 | 3.5 | 3.6 |
| Total loss-absorbing capacity leverage ratio | 8.3 | 8.3 | 8.3 | 8.3 |

Leverage ratio information

| Swiss SRB leverage ratio
denominator — CHF billion | 31.3.19 | 31.12.18 |
| --- | --- | --- |
| Leverage ratio denominator | | |
| Swiss GAAP total assets | 295.8 | 293.0 |
| Difference between Swiss GAAP and IFRS total assets | 2.8 | 1.8 |
| Less: derivative exposures and SFTs 1 | (36.6) | (32.5) |
| On-balance sheet exposures
(excluding derivative exposures and SFTs) | 262.1 | 262.3 |
| Derivative exposures | 4.1 | 3.7 |
| Securities financing transactions | 32.4 | 28.5 |
| Off-balance sheet items | 12.2 | 12.4 |
| Items deducted from Swiss SRB tier 1 capital | (0.2) | (0.5) |
| Total exposures (leverage ratio
denominator) | 310.5 | 306.5 |
| 1 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 in this table. | | |

| BCBS Basel III leverage ratio — CHF million, except where
indicated | 31.03.19 | 31.12.18 | 30.9.18 | 30.6.18 |
| --- | --- | --- | --- | --- |
| Total tier 1 capital | 14,712 | 14,468 | 13,165 | 13,072 |
| Total exposures (leverage ratio denominator) | 310,545 | 306,487 | 303,257 | 304,046 |
| BCBS Basel III leverage ratio (%) | 4.7 | 4.7 | 4.3 | 4.3 |

Liquidity coverage ratio

UBS Switzerland AG, as a Swiss SRB, is required to maintain a minimum liquidity coverage ratio of 100%.

Liquidity coverage ratio
	Weighted value 1
CHF billion, except where
indicated	Average 1Q19 2	Average 4Q18 2
High-quality liquid assets	71	67
Total net cash outflows	52	53
of which: cash outflows	86	86
of which: cash inflows	34	34
Liquidity coverage ratio (%)	137	128
1 Calculated after the application of haircuts and inflow and
outflow rates. 2 Calculated based on an average of 63 data points in the
first quarter of 2019 and 64 data points in the fourth quarter of 2018.

Significant regulated subsidiaries and sub-groups

Capital instruments

| Capital instruments of UBS
Switzerland AG – key features | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Presented according to issuance date. | | | | | | | |
| | | Share capital | Additional tier 1 capital | | | | |
| 1 | Issuer | UBS Switzerland AG, Switzerland | UBS Switzerland AG, Switzerland | UBS Switzerland AG, Switzerland | UBS Switzerland AG, Switzerland | UBS Switzerland AG, Switzerland | UBS Switzerland AG, Switzerland |
| 1a | Instrument number | 1 | 2 | 3 | 4 | 5 | 6 |
| 2 | Unique identifier (e.g., CUSIP, ISIN or Bloomberg identifier for
private placement) | n/a | n/a | n/a | n/a | n/a | n/a |
| 3 | Governing law(s) of the instrument | Swiss | Swiss | Swiss | Swiss | Swiss | Swiss |
| 3a | Means by which enforceability requirement of Section 13 of the
TLAC Term Sheet is achieved (for other TLAC-eligible instruments governed by
foreign law) | n/a | n/a | n/a | n/a | n/a | n/a |
| | Regulatory treatment | | | | | | |
| 4 | Transitional Basel III rules 1 | CET1 – Going concern capital | Additional tier 1 capital | | | | |
| 5 | Post-transitional Basel III rules 2 | CET1 – Going concern capital | Additional tier 1 capital | | | | |
| 6 | Eligible at solo/group/group and solo | UBS Switzerland AG consolidated and standalone | UBS Switzerland AG consolidated and standalone | | | | |
| 7 | Instrument type (types to be specified by each jurisdiction) | Ordinary shares | Loan 4 | Loan 4 | Loan 4 | Loan | Loan |
| 8 | Amount recognized in regulatory capital (currency in millions,
as of most recent reporting date) 1 | CHF 10.0 | CHF 1,500 | CHF 500 | CHF 1,000 | CHF 825 | USD 425 |
| 9 | Par value of instrument | CHF 10.0 | CHF 1,500 | CHF 500 | CHF 1,000 | CHF 825 | USD 425 |
| 10 | Accounting classification 3 | Equity attributable to UBS Switzerland AG shareholders | Due to banks held at amortized cost | | | | |
| 11 | Original date of issuance | – | 1 April 2015 | 11 March 2016 | 18 December 2017 | 12 December 2018 | 12 December 2018 |
| 12 | Perpetual or dated | – | Perpetual | | | | |
| 13 | Original maturity date | – | – | | | | |
| 14 | Issuer call subject to prior supervisory approval | – | Yes | | | | |
| 15 | Optional call date, contingent call dates and redemption amount | – | First optional repayment date: 1 April 2020 | First optional repayment date: 11 March 2021 | First optional repayment date: 18 December 2022 | First optional repayment date: 12 December 2023 | First optional repayment date: 12 December 2023 |
| | | | Repayable at any time after the first optional repayment date. Repayment subject to FINMA approval. Optional repayment amount:
principal amount, together with any accrued and unpaid interest thereon | | | | |
| 16 | Subsequent call dates, if applicable | – | Early repayment possible due to a tax or regulatory event.
Repayment due to tax event subject to FINMA approval. Repayment amount: principal amount, together with accrued and
unpaid interest | | | | |

| Capital instruments of UBS Switzerland AG – key features
(continued) | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | Coupons | | | | | | |
| 17 | Fixed or floating dividend/coupon | – | Floating | | | | |
| 18 | Coupon rate and any related index | – | 6-month CHF Libor + 370 bps per annum semiannually | 3-month CHF Libor + 459 bps per annum quarterly | 3-month CHF Libor + 250 bps per annum quarterly | 3-month CHF Libor + 489 bps per annum quarterly | 3-month USD Libor + 547 bps per annum quarterly |
| 19 | Existence of a dividend stopper | – | No | | | | |
| 20 | Fully discretionary, partially discretionary or mandatory | Fully discretionary | Fully discretionary | | | | |
| 21 | Existence of step-up or other incentive to redeem | – | No | | | | |
| 22 | Non-cumulative or cumulative | Non-cumulative | Non-cumulative | | | | |
| 23 | Convertible or non-convertible | – | Non-convertible | | | | |
| 24 | If convertible, conversion trigger(s) | – | – | | | | |
| 25 | If convertible, fully or partially | – | – | | | | |
| 26 | If convertible, conversion rate | – | – | | | | |
| 27 | If convertible, mandatory or optional conversion | – | – | | | | |
| 28 | If convertible, specify instrument type convertible into | – | – | | | | |
| 29 | If convertible, specify issuer of instrument it converts into | – | – | | | | |
| 30 | Write-down feature | – | Yes | | | | |
| 31 | If writedown, write-down trigger(s) | – | Trigger: CET1 ratio is less than 7% | | | | |
| | | | FINMA determines a write-down necessary to ensure UBS
Switzerland AG’s viability; or UBS Switzerland AG receives a commitment of
governmental support that FINMA determines necessary to ensure UBS
Switzerland AG‘s viability. Subject to applicable conditions | | | | |
| 32 | If write-down, fully or partially | – | Fully | | | | |
| 33 | If write-down, permanent or temporary | – | Permanent | | | | |
| 34 | If temporary write-down, description of writeup mechanism | – | – | | | | |
| 34a | Type of subordination | Statutory | Contractual | | | | |
| 35 | Position in subordination hierarchy in liquidation (specify
instrument type immediately senior to instrument in the insolvency creditor hierarchy of the
legal entity concerned). | Unless otherwise stated in the Articles of Association, once
debts are paid back, the assets of the liquidated company are divided between
the shareholders pro rata based on their contributions and considering the
preferences attached to certain categories of shares (article 745, Swiss
Code of Obligations) | Subject to any obligations that are mandatorily preferred by
law, all obligations of UBS Switzerland AG that are unsubordinated or that
are subordinated and do not rank junior, such as all classes of share
capital, or at par, such as tier 1 instruments | | | | |
| 36 | Non-compliant transitioned features | – | – | | | | |
| 37 | If yes, specify non-compliant features | – | – | | | | |
| 1 Based on Swiss SRB phase-in (including transitional
arrangement) requirements. 2 Based on Swiss SRB requirements applicable as
of 1 January 2020. 3 As applied in UBS Switzerland AG‘s financial
statements under Swiss GAAP. 4 Loans granted by UBS AG, Switzerland. | | | | | | | |

Significant regulated subsidiaries and sub-groups

Section 4 UBS Europe SE consolidated

The previously announced combined UK business transfer and cross-border merger of UBS Limited into UBS Europe SE became legally effective on 1 March 2019 and has been operationally implemented. Following the merger, UBS Europe SE is subject to direct supervision by the European Central Bank. UBS Europe SE is now considered a significant regulated subsidiary of UBS Group AG by FINMA. Consequently, we provide these key metrics.

The table below includes the required information on the regulatory capital components and capital ratios, as well as leverage ratio, of UBS Europe SE consolidated based on the Pillar 1 capital requirements. Entities may also be subject to significant Pillar 2 requirements, which represent additional amounts of capital considered necessary and agreed with regulators based on the risk profile of the entities.

KM1: Key metrics 1,2,3
EUR million, except where
indicated
		31.3.19
Available capital (amounts)
1	Common equity tier 1 (CET1)	3,568
2	Tier 1	3,858
3	Total capital	3,858
Risk-weighted assets
(amounts)
4	Total risk-weighted assets (RWA)	14,432
Risk-based capital ratios as
a percentage of RWA
5	Common equity tier 1 ratio (%)	24.7
6	Tier 1 ratio (%)	26.7
7	Total capital ratio (%)	26.7
Additional CET1 buffer
requirements as a percentage of RWA
8	Capital conservation buffer requirement (2.5% from 2019) (%)	2.5
9	Countercyclical buffer requirement (%)	0.2
10	Bank G-SIB and/or D-SIB additional requirements (%)
11	Total of bank CET1 specific buffer requirements (%)	2.7
12	CET1 available after meeting the bank’s minimum capital
requirements (%)	17.5
Basel III leverage ratio
13	Total Basel III leverage ratio exposure measure	51,060
14	Basel III leverage ratio (%) 4	7.6
Liquidity coverage ratio 5
15	Total HQLA	14,770
16	Total net cash outflow	6,895
17	LCR ratio (%)	214
1 Based on applicable EU Basel III rules. 2 As a result of
the cross-border merger of UBS Limited into UBS Europe SE effective 1 March
2019, UBS Europe SE has become a significant regulated subsidiary of UBS
Group AG. The size, scope and business model of the merged entity is now
materially different. Comparatives for December 2018 have not been provided
in the table because data produced on the same basis is not available. For
more information on the cross-border merger of UBS Limited into UBS Europe
SE, refer to the “Recent developments” section of the UBS Group first quarter
2019 report. 3 There is no local disclosure requirement for the net stable
funding ratio as at 31 March 2019. 4 On the basis of tier 1 capital. 5
March month-end reporting date values rather than an average calculation are
disclosed as the size, scope and business model of UBS Europe SE have
significantly changed as a result of the cross-border merger with UBS
Limited.

Section 5 UBS Americas Holding LLC consolidated

The table below includes required information on the regulatory capital components and capital ratios, as well as leverage ratio, of UBS Americas Holding LLC consolidated based on the Pillar 1 capital requirements (i.e., US Basel III standardized rules).

During the first quarter of 2019, common equity tier 1 (CET1) increased by USD 0.3 billion to USD 12.0 billion, mainly as a result of an operating profit before tax of USD 0.3 billion. Risk-weighted assets (RWA) increased by USD 1.3 billion to USD 55.3 billion, mainly driven by an increase from the adoption of ASC 842, Leases , in the first quarter of 2019. Leverage ratio exposure, calculated on an average basis, increased by USD 2 billion to USD 125 billion. The increase was mainly due to a USD 2 billion increase in deferred tax assets (DTAs), resulting from a change in DTA recognition methodology in the fourth quarter of 2018, and a USD 1 billion increase from the adoption of ASC 842, Leases . These increases were partly offset by decreases in other asset classes.

Entities may also be subject to significant Pillar 2 requirements, which represent additional amounts of capital considered necessary and agreed with regulators based on the risk profile of the entities.

KM1: Key metrics 1,2
USD million, except where
indicated
		31.03.19	31.12.18 3	30.9.18 4	30.6.18 4	31.3.18 4
Available capital (amounts)
1	Common equity tier 1 (CET1)	12,028	11,746	11,068	10,693	10,188
2	Tier 1	14,170	13,887	13,209	12,834	12,329
3	Total capital	14,882	14,601	13,925	13,555	13,048
Risk-weighted assets
(amounts)
4	Total risk-weighted assets (RWA)	55,313	54,063	54,488	52,991	52,541
Risk-based capital ratios as
a percentage of RWA
5	Common equity tier 1 ratio (%)	21.7	21.7	20.3	20.2	19.4
6	Tier 1 ratio (%)	25.6	25.7	24.2	24.2	23.5
7	Total capital ratio (%)	26.9	27.0	25.6	25.6	24.8
Additional CET1 buffer
requirements as a percentage of RWA
8	Capital conservation buffer requirement (2.5% from 2019) (%)	2.5	1.9	1.9	1.9	1.9
9	Countercyclical buffer requirement (%) 5
10	Bank G-SIB and / or D-SIB additional requirements (%) 6
11	Total of bank CET1 specific buffer requirements (%)	2.5	1.9	1.9	1.9	1.9
12	CET1 available after meeting the bank’s minimum capital
requirements (%) 7	14.7	15.3	13.9	13.8	13.0
Basel III leverage ratio
13	Total Basel III leverage ratio exposure measure	124,981	122,829	124,982	129,375	132,764
14	Basel III leverage ratio (%) 8	11.3	11.3	10.6	9.9	9.3
1 For UBS Americas Holding LLC based on applicable US Basel III
rules. 2 There is no local disclosure requirement for liquidity coverage
ratio or net stable funding ratio for UBS Americas Holding LLC as of
31 March 2019. 3 Figures as of or for the quarter ended 31
December 2018 have been adjusted for consistency with the full-year audited
financial statements and / or local regulatory reporting, which were
finalized after the publication of the UBS Group AG Annual Report 2018 and
the 31 December 2018 Pillar 3 report on 15 March 2019. 4 Figures as
of 30 September 2018, 30 June 2018 and 31 March 2018 have been
adjusted for consistency with the local regulatory reporting of the
entity. 5 Not applicable as the countercyclical buffer requirement applies
only to banking organizations subject to the advanced approaches capital
rules. 6 Not applicable as requirements have not been proposed. 7
Capital surplus measures excess to minimum regulatory requirements. As such,
it overstates actual excess capital capacity as it is not measured against
additional capital that local regulators expect is positioned within UBS
Americas Holding LLC in order to resource stressed risk loss exposures
arising from the activities that UBS conducts in UBS Americas Holding LLC.
8 On the basis of tier 1 capital.

Appendix

Abbreviations frequently used in our financial reports

ABS asset-backed security

AEI automatic exchange of information

AGM annual general meeting of shareholders

A-IRB advanced internal ratings-based

AI artificial intelligence

AIV alternative investment vehicle

ALCO Asset and Liability Management Committee

AMA advanced measurement approach

AML anti-money laundering

AoA Articles of Association of UBS Group AG

ASF available stable funding

ASFA advanced supervisory formula approach

AT1 additional tier 1

AuM assets under management

BCBS Basel Committee on Banking Supervision

BD business division

BEAT base erosion and anti-abuse tax

BIS Bank for International Settlements

BoD Board of Directors

BSC Business Solutions Center

BVG Swiss occupational pension plan

CAO Capital Adequacy Ordinance

CC Corporate Center

CCAR Comprehensive Capital Analysis and Review

CCB countercyclical buffer

CCF credit conversion factor

CCP central counterparty

CCR counterparty credit risk

CCRC Corporate Culture and Responsibility Committee

CDO collateralized debt obligation

CDR constant default rate

CDS credit default swap

CEA Commodity Exchange Act

CECL current expected credit loss

CEM current exposure method

CEO Chief Executive Officer

CET1 common equity tier 1

CFO Chief Financial Officer

CFTC US Commodity Futures Trading Commission

CHF Swiss franc

CIC Corporate Institutional Clients

CIO Chief Investment Office

CLN credit-linked note

CLO collateralized loan obligation

CLS continuous linked settlement

CMBS commercial mortgage-backed security

C&ORC Compliance & Operational Risk Control

CRD IV EU Capital Requirements Directive of 2013

CSO Client Strategy Office

CVA credit valuation adjustment

DBO defined benefit obligation

DCCP Deferred Contingent Capital Plan

DJSI Dow Jones Sustainability Indices

DOJ US Department of Justice

DOL US Department of Labor

D-SIB domestic systemically important bank

DTA deferred tax asset

DVA debit valuation adjustment

EAD exposure at default

EBA European Banking Authority

EC European Commission

ECB European Central Bank

ECL expected credit loss(es)

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

ERISA Employee Retirement Income Security Act of 1974

ESG environmental, social and governance

ESMA European Securities and Markets Authority

ESR environmental and social risk

ETD exchange-traded derivative

ETF exchange-traded fund

EU European Union

EUR euro

EURIBOR Euro Interbank Offered Rate

FCA UK Financial Conduct Authority

FCT foreign currency translation

FINMA Swiss Financial Market Supervisory Authority

FINRA US Financial Industry Regulatory Authority

FMIA Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading

Abbreviations frequently used in our financial reports (continued)

FRA forward rate agreement

FSB Financial Stability Board

FTA Swiss Federal Tax Administration

FTD first to default

FTP funds transfer pricing

FVA funding valuation adjustment

FVOCI fair value through other comprehensive income

FVTPL fair value through profit or loss

FX foreign exchange

GAAP generally accepted accounting principles

GBP British pound

GEB Group Executive Board

GFA Group Franchise Awards

GHG greenhouse gas

GIA Group Internal Audit

GIIPS Greece, Italy, Ireland, Portugal and Spain

GMD Group Managing Director

GRI Global Reporting Initiative

Group ALM Group Asset and Liability Management

G-SIB global systemically important bank

HQLA high-quality liquid assets

HR human resources

IAA internal assessment approach

IAS International Accounting Standards

IASB International Accounting Standards Board

IBOR interbank offered rates

IFRIC International Financial Reporting Interpretations Committee

IFRS International Financial Reporting Standards

IHC intermediate holding companies

IMA internal models approach

IMM internal model method

IPS Investment Platforms and Solutions

IRB internal ratings-based

IRC incremental risk charge

ISDA International Swaps and Derivatives Association

KRT Key Risk Taker

LAC loss-absorbing capacity

LAS liquidity-adjusted stress

LCR liquidity coverage ratio

LGD loss given default

LIBOR London Interbank Offered Rate

LLC limited liability company

LRD leverage ratio denominator

LTV loan-to-value

MiFID II Markets in Financial Instruments Directive II

MiFIR Markets in Financial Instruments associated Regulation

MRT Material Risk Taker

MTN medium-term note

NAV net asset value

NII net interest income

NRV negative replacement value

NSFR net stable funding ratio

NYSE New York Stock Exchange

OCA own credit adjustment

OCI other comprehensive income

OECD Organisation for Economic Co-operation and Development

OIS overnight index swap

OTC over-the-counter

PD probability of default

PFE potential future exposure

PIT point in time

P&L profit or loss

POCI purchased or originated credit-impaired

PRA UK Prudential Regulation Authority

PRV positive replacement value

QRRE qualifying revolving retail exposures

RBA Role-based allowances

RBC risk-based capital

RLN reference-linked note

RMBS residential mortgage-backed securities

RniV risks not in VaR

RoAE return on attributed equity

RoCET1 return on CET1

RoE return on equity

RoTE return on tangible equity

RV replacement value

RW risk weight

RWA risk-weighted assets

Appendix

Abbreviations frequently used in our financial reports (continued)

SA standardized approach

SA-CCR standardized approach for counterparty credit risk

SAR stock appreciation right

SBC Swiss Bank Corporation

SCCL single-counterparty credit limit

SDGs Sustainable Development Goals

SE structured entity

SEC US Securities and Exchange Commission

SEEOP Senior Executive Equity Ownership Plan

SFTs securities financing transactions

SI sustainable investing

SICR significant increase in credit risk

SIX SIX Swiss Exchange

SMA standardized measurement approach

SME small and medium-sized enterprises

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

TBTF too big to fail

TCJA US Tax Cuts and Jobs Act

TLAC total loss-absorbing capacity

TRS total return swap

TTC through the cycle

UoM units of measure

USD US dollar

US IHC US intermediate holding company

VaR value-at-risk

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.

Cautionary Statement | This report and the information contained herein are provided solely for information purposes, and are not to be construed as solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investment decision relating to securities of or relating to UBS Group AG, UBS AG or their affiliates should be made on the basis of this report. Refer to UBS’s first quarter 2019 report and its Annual Report 2018, available at www.ubs.com/investors , for additional information.

Rounding | Numbers presented throughout this report may not add up precisely to the totals provided in the tables and text. Percentages, percent changes, and adjusted results are calculated on the basis of unrounded figures. Information on absolute changes between reporting periods, which is provided in text and that 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.com

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

UBS Group AG

By: _/s/ David Kelly_______

Name: David Kelly

Title: Managing Director

By: _/s/ Ella Campi _____

Name: Ella Campi

Title: Executive Director

UBS AG

By: _/s/ David Kelly_______

Name: David Kelly

Title: Managing Director

By: _/s/ Ella Campi _____

Name: Ella Campi

Title: Executive Director

Date: April 25, 2019

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