UBS Group AG - Regulatory Filings 2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____

FORM6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

Date: July 20, 2021

UBS Group AG

Commission File Number: 1-36764

UBS AG

Commission File Number: 1-15060

(Registrants' Name)

Bahnhofstrasse 45, Zurich, Switzerland 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-FForm 40-F

This Form 6-K consists of the Second Quarter 2021 Report of UBS Group AG, which appears immediately following this page.

Our financial results

Secondquarter 2021report

Corporate calendar UBS Group AG

Publication of thethirdquarter 2021 report:Tuesday, 26 October 2021 Publication of thefourthquarter 2021 report:Tuesday,1February2022

Corporate calendar UBS AG

Publication of thesecond quarter 2021report:Friday, 23 July2021

Publication dates of future quarterly and annual reports and results are made available as
part of the corporate calendar of UBS AG at ubs.com/investors

1.UBS

Group

Contacts

4Recent developments

SwitchboardsOffice of the Group Company Secretary
For all general inquiriesThe Group Company Secretary receives6Group performance
ubs.com/contactinquiries on compensation and related
issues addressed to members of the2.UBS business divisions and
Zurich +41-44-234 1111Board of Directors.
London +44-207-567 8000Group Functions
New York +1-212-821 3000UBS Group AG, Office of the Group
Hong Kong +852-2971 8888Company Secretary14Global Wealth Management
Singapore +65-6495 8000P.O. Box, CH-8098 Zurich, Switzerland
17Personal & Corporate Banking
Investor Relations[email protected]20Asset Management
Institutional, professional and retail
investors are supported by UBS’s Investor+41-44-235 665222Investment Bank
Relations team.Shareholder Services25Group Functions
UBS Group AG, Investor RelationsUBS’s Shareholder Services team, a unit26Selected financial information of our
P.O. Box, CH-8098 Zurich, Switzerlandof the Group Company Secretary’s office,is responsible for the registration of UBSbusiness divisions and Group Functions
ubs.com/investorsGroup AG registered shares.
Zurich +41-44-234 4100UBS Group AG, Shareholder Services3.Risk, capital, liquidity and funding,
New York +1-212-882 5734P.O. Box, CH-8098 Zurich, Switzerlandand balance sheet

Media Relations[email protected]
Global media and journalists are supported29Risk management and control
by UBS’s Media Relations team.+41-44-235 665235Capital management
ubs.com/mediaUS Transfer Agent46Liquidity and funding management
For global registered share-related
Zurich +41-44-234 8500inquiries in the US.47Balance sheet and off-balance sheet
[email protected]50Share information and earnings per share
Computershare Trust Company NA
London +44-20-7567 4714P.O. Box 505000
[email protected], KY 40233-5000, USA4.Consolidated

New York +1-212-882 5858Shareholder online inquiries:financial statements
[email protected]/
Hong Kong +852-2971 8200investor/Contact53UBS Group AG interim consolidated
[email protected] website:financial statements (unaudited)
computershare.com/investor95UBS AG interim consolidated financial
Calls from the USinformation (unaudited)
+1-866-305-9566
Calls from outside the US5.Significant regulated subsidiary and
+1-781-575-2623
TDD for hearing impairedsub-group information
+1-800-231-5469
TDD for foreign shareholders+1-201-680-6610100Financial and regulatory key figures for
our significant regulated subsidiaries and

Imprintsub-groups

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

© UBS 2021. The key symbol and UBS are among the registered and unregistered102Alternative performance measures
trademarks of UBS. All rights reserved.
105Abbreviations frequently used in

our financial reports

107Information sources
108Cautionary statement

Second quarter 2021 report

Our key figures| | | | As of or for the quarter ended | | | | As of or year-to-date | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| USD million, except where indicated | | | 30.6.21 | 31.3.21 | 31.12.20 | 30.6.20 | 30.6.21 | 30.6.20 |
| Group results | | | | | | | | |
| Operating income | | | 8,976 | 8,705 | 8,117 | 7,403 | 17,681 | 15,337 |
| Operating expenses | | | 6,384 | 6,407 | 6,132 | 5,821 | 12,790 | 11,747 |
| Operating profit / (loss) before tax | | | 2,593 | 2,298 | 1,985 | 1,582 | 4,891 | 3,591 |
| Net profit / (loss) attributable to shareholders | | | 2,006 | 1,824 | 1,636 | 1,232 | 3,830 | 2,827 |
| Diluted earnings per share (USD) | 1 | | 0.55 | 0.49 | 0.44 | 0.33 | 1.04 | 0.76 |
| Profitability and growth | 2 | | | | | | | |
| Return on equity (%) | | | 13.7 | 12.4 | 11.0 | 8.6 | 13.1 | 9.9 |
| Return on tangible equity (%) | | | 15.4 | 14.0 | 12.4 | 9.7 | 14.7 | 11.2 |
| Return on common equity tier 1 capital (%) | | | 19.3 | 18.2 | 16.8 | 13.2 | 18.8 | 15.4 |
| Return on risk-weighted assets, gross (%) | | | 12.2 | 12.0 | 11.4 | 10.7 | 12.1 | 11.4 |
| Return on leverage ratio denominator, gross (%) | | 3 | 3.4 | 3.3 | 3.2 | 3.2 | 3.4 | 3.3 |
| Cost / income ratio (%) | | | 71.8 | 73.8 | 74.9 | 75.8 | 72.8 | 74.0 |
| Effective tax rate (%) | | | 22.4 | 20.5 | 17.2 | 21.9 | 21.5 | 21.1 |
| Net profit growth (%) | | | 62.8 | 14.3 | 126.7 | (11.5) | 35.5 | 11.6 |
| Resources2 | | | | | | | | |
| Total assets | | | 1,086,519 | 1,107,712 | 1,125,765 | 1,063,849 | 1,086,519 | 1,063,849 |
| Equity attributable to shareholders | | | 58,765 | 58,026 | 59,445 | 57,003 | 58,765 | 57,003 |
| Common equity tier 1 capital | 4 | | 42,583 | 40,426 | 39,890 | 38,114 | 42,583 | 38,114 |
| Risk-weighted assets | 4 | | 293,277 | 287,828 | 289,101 | 286,436 | 293,277 | 286,436 |
| Common equity tier 1 capital ratio (%) | | 4 | 14.5 | 14.0 | 13.8 | 13.3 | 14.5 | 13.3 |
| Going concern capital ratio (%) | 4 | | 20.2 | 19.6 | 19.4 | 18.7 | 20.2 | 18.7 |
| Total loss-absorbing capacity ratio (%) | | 4 | 35.6 | 35.0 | 35.2 | 32.7 | 35.6 | 32.7 |
| Leverage ratio denominator | 3,4 | | 1,039,939 | 1,038,225 | 1,037,150 | 974,359 | 1,039,939 | 974,359 |
| Common equity tier 1 leverage ratio (%) | | 3,4 | 4.09 | 3.89 | 3.85 | 3.91 | 4.09 | 3.91 |
| Going concern leverage ratio (%) | 3,4 | | 5.7 | 5.4 | 5.4 | 5.5 | 5.7 | 5.5 |
| Total loss-absorbing capacity leverage ratio (%) | | 4 | 10.0 | 9.7 | 9.8 | 9.6 | 10.0 | 9.6 |
| Liquidity coverage ratio (%) | 5 | | 156 | 151 | 152 | 155 | 156 | 155 |
| Other | | | | | | | | |
| Invested assets (USD billion) | 6 | | 4,485 | 4,306 | 4,187 | 3,588 | 4,485 | 3,588 |
| Personnel (full-time equivalents) | | | 71,304 | 71,779 | 71,551 | 69,931 | 71,304 | 69,931 |
| Market capitalization | 1 | | 53,218 | 54,536 | 50,013 | 41,303 | 53,218 | 41,303 |
| Total book value per share (USD) | 1 | | 16.90 | 16.47 | 16.74 | 15.89 | 16.90 | 15.89 |
| Total book value per share (CHF) | 1 | | 15.64 | 15.57 | 14.82 | 15.05 | 15.64 | 15.05 |
| Tangible book value per share (USD) | | 1 | 15.05 | 14.65 | 14.91 | 14.10 | 15.05 | 14.10 |
| Tangible book value per share (CHF) | | 1 | 13.92 | 13.85 | 13.21 | 13.36 | 13.92 | 13.36 |

1 Refer to the “Share information and earnings per share” section of this report for more information. 2 Refer to the “Performance targets and capital guidance” section of our Annual Report 2020 for more information about our performance targets. 3 Leverage ratio denominators and leverage ratios for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 4 Based on the Swiss systemically relevant bank framework as of 1 January 2020. Refer to the “Capital management” section of this report for more information. 5 Refer to the “Liquidity and funding management” section of this report for more information. 6 Consists of invested assets for Global Wealth Management, Asset Management and Personal & Corporate Banking. Refer to “Note 32 Invested assets and net new money” in the “Consolidated financial statements” section of our Annual Report 2020 for more information.

Alternative performance measures

An alternative performance measure (an APM) is a financial measure of historical or future financial performance, financial position or cash flows other than a financial measure defined or specified in the applicable recognized accounting standards or in other applicable regulations. We report a number of APMs in the discussion of the financial and operating performance of the Group, our business divisions and our Group Functions. We use APMs to provide a more complete picture of our operating performance and to reflect management’s view of the fundamental drivers of our business results. A definition of each APM, the method used to calculate it and the information content are presented under “Alternative performance measures” in the appendix to this report.
Our APMs may qualify as non-GAAP measures as defined by US Securities and Exchange Commission (SEC) regulations.

UBS Group

Management report

Terms used in this report, unless the context requires otherwise

“UBS,” “UBS Group,” “UBS Group AG consolidated,” “Group,”UBS Group AG and its consolidated subsidiaries “the Group,” “we,” “us” and “our” “UBS AG consolidated”UBS AG and its consolidated subsidiaries “UBS Group AG” and “UBS Group AG standalone”UBS Group AG on a standalone basis “UBS AG” and “UBS AG standalone”UBS AG on a standalone basis “UBS Switzerland AG” and “UBS Switzerland AG standalone”UBS Switzerland AG on a standalone basis “UBS Europe SE consolidated”UBS Europe SE and its consolidated subsidiaries “UBS Americas Holding LLC” andUBS Americas Holding LLC and its consolidated subsidiaries “UBS Americas Holding LLC consolidated”

Recent developments

Our response to COVID-19counterproposal in April 2021. The counterproposal consists of a non-financial reporting obligation covering environmental, social Whilevaccination campaigns are progressingandmanyand governance topics based on the EU Non-Financial Reporting economies are recovering, localized outbreaks, the spread ofDirective and also includes new due diligence requirements in new variants of COVID-19, and uneven vaccination rates arethe areas of child labor and conflict minerals. The ordinance will causing uncertainty around a sustainable recovery.apply to firms that are headquartered in Switzerland and are We monitor country- and location-specific developments, asconsidered large public-interest companies with more than 500 well as the gradual lifting of lockdowns and similar measuresemployees. Given UBS’s existing due diligence and reporting imposed to control the pandemic, and are adapting our plans forprocedures, the impact is expected to be limited. The RBI the return of employees to our offices accordingly, whilecounterproposal will be subject to parliamentary discussion in continuing to prioritize the health and safety of our employeesSwitzerland.
and clients.
Following earlier donations to various COVID-19-related aidSwiss stamp duty and withholding tax projects that support communities across regions in which weIn June 2021, the Swiss Parliament approved an extension of the operate, we committed a further USD 1.5 million to support acurrentwithholding tax exemption fortotal loss-absorbing range of relief programs in India in the second quarter of 2021,capacity instruments, including additional tier 1, from 2021 until with the first tranche focusing on the delivery of oxygen andthe end of 2026. It also decided to abolish the stamp duty on other medical supplies to those most in need. Additionally, wetheissuanceofequitycapital. Thedecisionsofthe Swiss have provided support to employees in India in the event ofParliament are still subject to an optional referendum.
significant medical expenditures and helped ensure their well-The Swiss Federal Council also adopted a dispatch on the being through varioustele-healthcare,emergency-andWithholding Tax Act reform, which, if also passed by the Swiss community-support measures.Parliament, would maintain the withholding tax on interest paid Theprogram established by the Swiss Federal Council inon bank depositsofnatural persons with tax domicile in March 2020 to support small and medium-sized entities (SMEs)Switzerland,abolish the withholding tax on bond interest by granting loans closed on 31July2020. Outstandingpayments and discontinue the turnover stamp duty on domestic commitments under the program amounted to CHF 2.6 billionbonds.

on 30 June 2021, with a total amount drawn of CHF 1.7 billion.
Planned privatization of PostFinance AG Regulatory and legal developmentsIn June 2021, the Swiss Federal Council submitted to the Swiss Parliament a dispatch on the privatization of PostFinance AG, a Swiss Federal Council report on systemically important banksSwisssystemically important bank.If the revision passes the In June 2021, the Swiss Federal Council issued the results of itslegislative process, which is expected to start later this year, bi-annual review of the Swiss too-big-to-fail regulatoryreform could further intensify competition in the Swiss mortgage framework. The report concludes that no fundamental changesmarket.
to the framework are needed. Potential areas for adjustment identified include the further tightening of the liquidityThe Institutional Framework Agreement with the EU requirements forsystemically importantbanksand theIn May 2021, the Swiss Federal Council terminated negotiations alignment of incentive systems to support a bank’s resolvability.on the Institutional Framework Agreement (the IFA) between Further detailsonpotentialchanges to the regulatorySwitzerland and the EU due to substantial differences of opinion framework are expected by the end of 2021.with regard to key aspects of the agreement. The IFA would have formed a mutually agreed basis to consolidate and further The Swiss Responsible Business Initiative counterproposaldevelop Switzerland’s bilateral market access approach with the After the Responsible Business Initiative (the RBI) was rejected inEU. As a result, the EU is unlikely to be ready to conclude new the November 2020 public vote, the Swiss Federal Office ofmarket access agreements with Switzerland in the near future.
Justice issued a consultation on the implementation of the RBI

Federal Reserve Board stress test resultsIn July 2021, the European Commission (the EC) adopted In June 2021, the Federal Reserve Board (the FRB) released theregulations prescribing the content, methodology and results of the 2021 Dodd–Frank Act Stress Test (DFAST), which ispresentation of climate-related disclosures that are required complementary to the Federal Reserve’s Comprehensive Capitalunder Art. 8 of the EU Taxonomy Regulation. As part of their Adequacy Review (CCAR) process. UBS’s intermediate holdingnon-financial reporting, credit institutions will be required to company, UBS Americas Holding LLC, exceeded minimumdisclose a green asset ratio covering the banking book and capital requirements under the severely adverse scenario. Thecertain trading portfolios, as well as other key performance FRB also lifted the temporary limitations on capital distributionsindicators (KPIs), including the proportion of green taxonomyimposed during the pandemic. As a result, UBS Americasaligned off-balance sheet exposures and fees and commission Holding LLC is permitted to make capital distributions as long asincome. Starting with the annual reporting for 2021, taxonomyit maintains compliance with its total capital requirements,eligible assets are required to be disclosed; the remaining set of including its stress capital buffer.KPIs is to be fully phased in for our annual reporting for 2025.
These disclosure requirements will apply to UBS AG and UBS Registration under the US security-based swaps regulationsEurope SE.
UBS AG will be required to register as a security-based swapThe TCFD has commenced a consultation with respect to dealer with the US Securities and Exchange Commission (themore concrete and detailed guidance on climate -related metrics, SEC) by 1 November 2021. UBS AG has made a substitutedtargets and transition plans, as well as with respect to a related compliance application that would permit it to comply withtechnical supplement, aiming to improve existing guidance and comparable provisions of Swiss law instead of the correspondingto increase comparability across financial disclosures. The TCFD SEC regulations. FINMA has entered into negotiations with theaims to finalize the guidance in the second half of 2021.
SEC to agree a memorandum of understanding, which is aWe published our Net Zero statement in April 2021, which condition to SEC approval of substituted compliance and tooutlines our ambitions around climate and sustainability covering permanent registration. A failure to obtain substitutedour company, our clients, our communities and our employees.
compliance may require UBS to restructure its operations andWe also announced the appointment of Suni Harford as UBS would likely result in substantial costs to implement additionalGroup Executive Board sponsor, a position that she has taken on SEC requirements.in addition to her role as President Asset Management, to lead our sustainability-related efforts, building on more than two OECD corporate tax reformdecades of our endeavors in this field. In June 2021, we issued In June 2021, the G7agreed to continuetowork on theour inaugural green bonds, with aeuro and aSwiss franc Organisation for Economic Co-operation and Development (theoffering.
OECD) blueprint for the international tax reform, which was›Refer toubs.com/sustainabilityfor more information subsequently endorsed by the G20 at their July 2021 meeting.
Specific details concerning the OECD blueprint will be developedOther developments and released in advance of the OECD meeting in October 2021.
UBS is monitoring the developments closely and will be in aSale of our remaining investment in Clearstream Fund Centre position to evaluate the potential impact on UBS once a detailedOn 1 June 2021, we sold our remaining minority investment in framework has been released.Clearstream Fund Centre to Deutsche Börse AG for CHF 390 million. The transaction follows the sale of a majority investment Environmental, social and governance (ESG) matters andand successful transfer of control of Fondcenter AG to Deutsche climate-related risksBörse AG in September 2020. The sale of our remaining 48.8% In May 2021, FINMA published the revised Circular 2016/01investment resulted in a post-tax gain of USD 37 million in Asset “Disclosure – banks,” which will require disclosure of climate-Management, with no associated net tax expense. The increase related financial risk information for Swiss systemically importantin UBS’s common equity tier 1 (CET1) capital of USD 412 million banks, including UBS. The disclosure requirements are based onwas significantly greater than the gain in IFRS equity, due to the the recommendations of the Financial Stability Board (the FSB)effect of goodwill associated with the investment, which had Task Force on Climate-related Financial Disclosures (the TCFD)been deducted from CET1 capital. Long-term commercial and cover governance, strategy and risk management, as well ascooperation arrangements remain in place for the provision of quantitative information regarding climate-related financial risks.services by Clearstream to UBS, including jointly servicing banks Therequirements will be applicable for our2021annualand insurance companies.
reporting.

Group performance

Group performance| Income statement | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | For the quarter ended | | % change from | | Year-to-date | | |
| USD million | 30.6.2131.3.21 | 30.6.20 | 1Q21 | 2Q20 | 30.6.21 | 30.6.20 | |
| Net interest income | 1,628 | 1,6131,392 | | 1 | 173,241 | 2,722 | |
| Other net income from financial instruments measured at fair value through profit or loss | 1,479 | 1,3091,932 | | 13(23) | 2,787 | 3,738 | |
| Credit loss (expense) / release | 80 | 28(272) | | 180 | 108 | (540) | |
| Fee and commission income | 6,041 | 6,1694,729 | | (2) | 2812,210 | 10,207 | |
| Fee and commission expense | (484) | (478)(419) | | 1 | 16(962) | (875) | |
| Net fee and commission income | 5,557 | 5,6914,311 | | (2) | 2911,248 | 9,332 | |
| Other income | 233 | 64 | 41 | 267471 | 297 | 84 | |
| Total operating income | 8,976 | 8,7057,403 | | 3 | 2117,681 | 15,337 | |
| Personnel expenses | 4,772 | 4,8014,283 | | (1) | 119,573 | 8,604 | |
| General and administrative expenses | 1,103 | 1,0891,063 | | 1 | 42,192 | 2,196 | |
| Depreciation and impairment of property, equipment and software | 500 | 508 | 458 | (2) | 91,009 | 914 | |
| Amortization and impairment of goodwill and intangible assets | 9 | 8 | 17 | 4(48) | | 1732 | |
| Total operating expenses | 6,384 | 6,4075,821 | | 0 | 1012,790 | 11,747 | |
| Operating profit / (loss) before tax | 2,593 | 2,2981,582 | | 13 | 644,891 | 3,591 | |
| Tax expense / (benefit) | 581 | 471 | 347 | 23 | 681,053 | 757 | |
| Net profit / (loss) | 2,012 | 1,8271,236 | | 10 | 633,838 | 2,833 | |
| Net profit / (loss) attributable to non-controlling interests | 6 | 3 | 3 | 81 | 70 | 9 | 6 |
| Net profit / (loss) attributable to shareholders | 2,006 | 1,8241,232 | | 10 | 633,830 | 2,827 | |

Comprehensive income
Total comprehensive income	2,602(339)	209		2,263	4,405
Total comprehensive income attributable to non-controlling interests	20	(9)	4	355	10	3
Total comprehensive income attributable to shareholders	2,582(330)	205		2,252	4,402

Results: 2Q21 vs 2Q20TheInvestment Bank decreased byUSD199 million to USD1,297 million,mainlyreflectingUSD131millionlower Profit before tax increased by USD 1,011 million, or 64%, toincome in the Derivatives & Solutions business, compared with USD2,593million,reflectinghigheroperating income, partlystrong revenues in the second quarter of 2020, when the Foreign offset by an increase in operating expenses. Operating incomeExchange, Rates and Creditbusinessesbenefited fromhigher increased by USD 1,573 million, or 21%, to USD 8,976 million,client activity levels driven by the COVID-19 pandemic. This was mainly reflectingUSD1,246millionhighernet fee andpartly offset by higher revenues in Equity Derivatives. In addition, commission income.Net credit loss releaseswereUSD80an USD 87 million loss was incurred from the exit of remaining million,compared withnetcredit loss expenses ofUSD272exposures relating to the default of a client of our prime millionin the prior-year quarter. In addition,other incomebrokerage business in the first quarter of 2021.
increased by USD 192 million. These effects were partly offset byGroup Functions changed by USD 88 million, from negative a USD 218 million decrease in net interest income and other netUSD 70 million to negative USD 158 million. This was mainly due income from financial instruments measured at fair valueto the Group Treasury result of negative USD 92 million, compared through profit or loss. Operating expenses increased by USD 563with negative USD 46 million in the prior-year quarter, mainly due million, or10%, toUSD6,384million,mainlyreflectingtonetnegativeeffects related to accountingasymmetries, USD 489 million higher personnel expenses.including hedge accounting ineffectiveness, partly offset by lower negativeincome related to centralized Group Treasury risk Operating income: 2Q21 vs 2Q20management.In addition,Non-core and Legacy Portfolio decreased by USD 32 million, mainly due to valuation losses of Total operating income increased by USD 1,573 million, or 21%,USD 25 million on auction rate securities.
to USD 8,976 million.›Refer to “Note 3 Net interest income” in the “Consolidated

financial statements” section of this report for more information Net interest income and other net income from financialabout net interest income instruments measured at fair value through profit or loss

Total combined net interest income and other net income from financial instruments measured at fair value through profit or loss decreased by USD 218 million to USD 3,106 million, mainly driven by the Investment Bank and Group Functions.| Net interest income and other net income from financial instruments measured at fair value through profit or loss | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | For the quarter ended | | % change from | | Year-to-date | |
| USD million | | 30.6.2131.3.21 | 30.6.20 | | 1Q212Q20 | 30.6.21 | 30.6.20 |
| Net interest income from financial instruments measured at amortized cost and fair valuethrough other comprehensive income | | 1,270 | 1,2641,041 | | 0 | 222,535 | 2,110 |
| Net interest income from financial instruments measured at fair value through profit or loss | | 357 | 349 | 351 | 2 | 2706 | 612 |
| Other net income from financial instruments measured at fair value through profit or loss | | 1,479 | 1,3091,932 | | 13 | (23)2,787 | 3,738 |
| Total | | 3,106 | 2,9223,324 | | 6 | (7)6,028 | 6,461 |
| Global Wealth Management | | 1,321 | 1,3001,291 | | 2 | 22,622 | 2,622 |
| of which: net interest income | | 1,026 | 9971,023 | | 3 | 02,023 | 2,054 |
| of which: transaction-based income from foreign exchange and other intermediaryactivity | | 295 | 303 | 269 | (3) | 10598 | 569 |
| Personal & Corporate Banking1 | | 643 | 605 | 608 | 6 | 61,247 | 1,217 |
| of which: net interest income | | 526 | 513 | 517 | 3 | 21,039 | 1,029 |
| of which: transaction-based income from foreign exchange and other intermediaryactivity | | 117 | 92 | 91 | 27 | 28208 | 188 |
| Asset Management1 | | 4 | (7) | (3) | | | (3)(6) |
| Investment Bank | 2 | 1,297 | 1,0841,496 | | 20 | (13)2,381 | 3,106 |
| Global Banking | | 157 | 143 | 158 | 9 | (1)300 | 270 |
| Global Markets | | 1,140 | 9411,338 | | 21 | (15)2,081 | 2,836 |
| Group Functions | | (158) | (60) | (70) | 165 | 127(218) | (479) |

Group performance

Net fee and commission incomeOther income Net fee and commission income increased by USD 1,246 millionOther incomewasUSD233million, compared withUSD41 to USD 5,557 million.million, mainly reflecting gains ofUSD101 millionfrom Fees for portfolio management and related services increasedproperties held for sale, largely driven by the sale of a property byUSD613million toUSD2,426million,largelydriven byinBasel, and income ofUSD45millionrelated to a legacy Global WealthManagement,mainlyreflectingthe effect ofbankruptcy claim. In addition, a gain of USD 37 million was higher average fee-generating assets.recognized on the sale of UBS’s remaining minority investment M&A and corporate finance fees increased by USD 213in Clearstream Fund Centre to Deutsche Börse AG.
million to USD 330 million, primarily reflecting higher revenues›Refer to the “Recent developments” section of this report for from M&A transactions in our Global Banking business in themore information about the sale of our remaining investment in Investment Bank, due to an increase in the size and number ofClearstream Fund Centre transactions closed in the second quarter of 2021.
Investment fund fees increased byUSD208 million toCredit loss expense / release USD1,405 million, driven by Asset Managementand GlobalTotal net credit loss releases were USD 80 million, compared Wealth Management.Higher management fees in Assetwith net credit loss expenses of USD 272 million in the prior-year Managementreflecteda higher average invested asset base,quarter, reflecting netreleasesofUSD88million related to partly offset by lower performance-based fees. The increase instage1 and 2 positions and netexpensesofUSD8million Global Wealth Managementmainly reflectedhigher averagerelated to credit-impaired (stage 3) positions. The USD 88 million fee-generating assets.stage 1 and 2 net release included the partial release of a post- Underwriting fees increased by USD 130 million to USD 387model adjustment of USD 91 million (representing one-third of million,driven byhigher equity underwritingrevenues fromthe USD 273 million scenario-driven model output effects from public offerings in the Investment Bank.the third quarter of 2020 to the second quarter of 2021), due to ›Refer to “Note 4 Net fee and commission income” in thethe continued positive trend in macroeconomic scenario input “Consolidated financial statements” section of this report fordata.
more information›Refer to “Note 7 Expected credit loss measurement” in the

“Consolidated financial statements” section of this report for

more information| Credit loss (expense) / release | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | WealthGlobal | Personal &Corporate | Asset | Investment | Group | |
| USD million | Management | Banking | Management | Bank | Functions | Total |
| For the quarter ended 30.6.21 | | | | | | |
| Stages 1 and 2 | 13 | 51 | 0 | 24 | (1) | 88 |
| Stage 3 | 0 | (5) | 0 | (3) | 0 | (8) |
| Total credit loss (expense) / release | 14 | 46 | 0 | 21 | (1) | 80 |

For the quarter ended 31.3.21
Stages 1 and 2	4	16	5	26
Stage 3	(2)	8	(4)	3
Total credit loss (expense) / release	3	23	2	28

For the quarter ended 30.6.20
Stages 1 and 2	(45)	(100)	(56)	0	(202)
Stage 3	(19)	(10)	(22)	(20)	(70)
Total credit loss (expense) / release	(64)	(110)	(78)	(20)	(272)

	WealthGlobal	Personal &Corporate	Asset	Investment	Group
USD million	Management	Banking	Management	Bank	Functions	Total
Year-to-date 30.6.21
Stages 1 and 2	18	67	0	30	(1)	114
Stage 3	(1)	2	0	(7)	0	(6)
Total credit loss (expense) / release	16	69	0	23	(1)	108

Year-to-date 30.6.20
Stages 1 and 2	(57)	(116)	(118)	0	(291)
Stage 3	(61)	(71)	(82)	(35)	(249)
Total credit loss (expense) / release	(117)	(187)	(200)	(35)	(540)

Operating expenses: 2Q21 vs 2Q20expenses, partly offset by lower consulting fees and other general and administrative expenses.
Operating expenses increased by USD 563 million, or 10%, toWe believe that the industry continues to operate in an USD 6,384 million.environment in which expenses associated with litigation, regulatory and similar matters will remain elevated for the Personnel expensesforeseeable future and we continue to be exposed to a number Personnel expenses increased by USD 489 million to USD 4,772of significant claims and regulatory matters. The outcome of million, including net restructuring expenses of USD 89 million,many of these matters, the timing of a resolution, and the compared with USD 21 million in the prior-year quarter. Totalpotential effects of resolutions on our future business, financial restructuring expenses this quarter are net of curtailment gainsresults or financial condition are extremely difficult to predict.
of USD 59 million, which represent a reduction in the defined›Refer to “Note 6 General and administrative expenses” in the benefit obligation related to the Swiss pension plan resulting“Consolidated financial statements” section of this report for from a decrease in headcount following restructuring activities.more information Expenses for salaries and variable compensation increased by›Refer to “Note 14 Provisions and contingent liabilities” in the USD249million,primarily driven by higher restructuring“Consolidated financial statements” section of this report and to expenses and foreign currency translation effects. Financial

the “Regulatory and legal developments” and “Risk factors” advisor compensation increased by USD 242 million, as a resultsections of our Annual Report 2020 for more information about of higher compensable revenues.litigation, regulatory and similar matters

›Refer to “Note 5 Personnel expenses” in the “Consolidated
financial statements” section of this report for more informationDepreciation, amortization and impairment Depreciation and impairment of property, equipment and General and administrative expensessoftware increased by USD 42 million to USD 500 million, mainly Generalandadministrative expensesincreased byUSD40related to internally developed software.
million to USD 1,103 million, driven by higher net expenses for litigation, regulatory and similar matters,and increased IT| Operating expenses | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | For the quarter ended | | % change from | | Year-to-date | | |
| USD million | | 30.6.2131.3.21 | 30.6.20 | | 1Q212Q20 | 30.6.21 | 30.6.20 | |
| Personnel expenses | | 4,772 | 4,8014,283 | | (1) | 119,573 | 8,604 | |
| of which: salaries and variable compensation | | 2,945 | 2,8712,696 | | 3 | 95,816 | 5,258 | |
| of which: financial advisor compensation | 1 | 1,183 | 1,170 | 941 | 1 | 262,353 | 2,035 | |
| of which: other personnel expenses | 2 | 644 | 759 | 645 | (15) | 01,403 | 1,311 | |
| General and administrative expenses | | 1,103 | 1,0891,063 | | 1 | 42,192 | 2,196 | |
| of which: net expenses for litigation, regulatory and similar matters | | 63 | 9 | 2 | 626 | | 72 | 8 |
| of which: other general and administrative expenses | | 1,039 | 1,0801,061 | | (4) | (2)2,120 | 2,188 | |
| Depreciation and impairment of property, equipment and software | | 500 | 508 | 458 | (2) | 91,009 | 914 | |
| Amortization and impairment of goodwill and intangible assets | | 9 | 8 | 17 | 4 | (48) | 1732 | |
| Total operating expenses | | 6,384 | 6,4075,821 | | 0 | 1012,790 | 11,747 | |

Tax: 2Q21 vs 2Q20amortization of deferred tax assets previously recognized in relation to tax losses carried forward and deductible temporary We recognized income tax expenses of USD 581 million for thedifferences of UBS Americas Inc.
second quarter of 2021, representing an effective tax rate ofWe expect a tax rate of around 25% for the second half of 22.4%, compared with USD 347 million for the second quarter2021, excluding any potential effects from the reassessment of of 2020 and an effective tax rate of 21.9%. Current taxdeferred tax assets in connection with our business planning expenses wereUSD362 million, compared withUSD343process and any potential US corporate tax rate changes or million, and related to taxable profits of UBS Switzerland AG andother jurisdictional statutory tax rate changes that could be other entities.Deferred tax expenses wereUSD219 million,enacted during the year.
compared with USD 4 million, and primarily related to the

Group performance

Total comprehensive income attributable to shareholdersKey figures and personnel

In the second quarter of 2021, total comprehensive incomeBelow we provide an overview of selected key figures of the attributable to shareholders waspositiveUSD2,582million,Group. For further information about key figures related to reflecting net profitofUSD2,006million and othercapital management, refer to the “Capital management” comprehensive income (OCI), net of tax, of positive USD 576section of this report.
million.
Foreign currency translationOCIwaspositiveUSD255Cost / income ratio: 2Q21 vs 2Q20 million, mainly resulting from the strengthening of the SwissThe cost / income ratio was 71.8%, compared with 75.8%, franc (2%) against the US dollar.reflecting an increase in income, partly offset by an increase in OCI related to cash flow hedges waspositiveUSD222expenses. The cost / income ratio is measured based on income million, mainly reflecting an increase in unrealized gains on USbefore credit loss expenses or releases.
dollar hedging derivatives resulting fromdecreasesin the relevant US dollar long-term interest rates.Common equity tier 1 capital: 2Q21 vs 1Q21 OCI related to own credit on financial liabilities designated atDuring the second quarter of 2021, our common equity tier 1 fair value waspositiveUSD118million,primarily due to a(CET1) capital increased by USD 2.2 billion to USD 42.6 billion, widening of our own credit spreads.mainly reflecting operating profit before tax of USD 2.6 billion, a Defined benefit plan OCI was negative USD 17 million in theUSD 0.4 billion lower deduction of goodwill resulting from the second quarter of 2021, mainly related to our Swiss pensionsale of our remaining minority investment in Clearstream Fund plan,which recorded negative net pre-tax OCIofUSD58Centre, positive foreign currency translation effects of USD 0.3 million. This was primarily driven by a pension plan curtailmentbillion and USD 0.2 billion higher eligible deferred tax assets on of USD 59 million that reduced the defined benefit obligationtemporary differences, partly offset by compensation - and own against profit or loss but led to an offsetting OCI loss as no netshare-related capital components of USD 0.4 billion, current tax pension asset could be recognized on the balance sheet as ofexpenses of USD 0.4 billion, and accruals for capital returns to 30 June 2021 due to the asset ceiling. Net pre-tax OCI related toshareholders of USD 0.3 billion. Our share repurchases in the our non-Swiss pension plans was positive USD 37 million.second quarter of 2021 did not affect our CET1 capital position, ›Refer to “Statement of comprehensive income” in theas there was an equivalent reduction in the capital reserve for “Consolidated financial statements” section of this report forpotential share repurchases.

more information ›Refer to “Note 8 Fair value measurement” in the “ConsolidatedReturn on CET1 capital: 2Q21 vs 2Q20 The annualized return on CET1 capital (RoCET1) was 19.3%,

financial statements” section of this report for more information compared with 13.2%, driven by an increase in net profit

about own credit on financial liabilities designated at fair value ›Refer to “Note 26 Post-employment benefit plans” in theattributable to shareholders, partly offset by higher average CET1 capital.

“Consolidated financial statements” section of our Annual

Report 2020 for more information about OCI related to defined Risk-weighted assets: 2Q21 vs 1Q21

benefit plans Risk-weighted assets (RWA)increased byUSD5.4 billion to Sensitivity to interest rate movementsUSD 293.3 billion, driven by increases from model updates of USD 2.6 billion, currency effects of USD 1.8 billion, methodology As of 30 June 2021, we estimate that a parallel shift in yieldand policy changes of USD 1.0 billion, and regulatory add-ons of curves by +100 basis points could lead to a combined increase inUSD 0.3 billion, partly offset by a reduction from asset size and annual net interest income of approximately USD 1.5 billion inother movements of USD 0.2 billion.

Global Wealth Management and Personal & Corporate Banking.
A parallel shift in yield curves by –100 basis points could lead to a combined reduction in annual net interest income of approximately USD 0.2 billion.
These estimates are based on a hypothetical scenario of an immediate change in interest rates, equal across all currencies and relative to implied forward rates as of 30 June 2021 applied to our banking book. These estimates further assume no change to balance sheet size and structure, constant foreign exchange rates and no specific management action.

›Refer to the “Risk management and control” section of this report

for information about interest rate risk in the banking book

Common equity tier 1 capital ratio: 2Q21 vs 1Q21Going concern leverage ratio: 2Q21 vs 1Q21 Our CET1 capital ratioincreased 0.5percentage points toOur going concern leverage ratio increased from 5.4% to 5.7% 14.5%, reflecting an increase in CET1 capital of USD 2.2 billion,in the second quarter of 2021, reflecting an increase in going partly offset by a USD 5.4 billion increase in RWA.concern capital of USD 2.9 billion, partly offset by a USD 2 billion increase in LRD.
Leverage ratio denominator: 2Q21 vs 1Q21 The leverage ratio denominator (LRD) increased by USD 2 billionPersonnel: 2Q21 vs 1Q21 to USD 1,040 billion. The increase was driven by currency effectsWe employed 71,304 personnel (full-time equivalents) as of of USD 9 billion, partly offset by a decrease in asset size and30 June 2021, a net decrease of 475 compared with 31 March other movements of USD 7 billion.2021. This was mainly driven by attrition and restructuring effects,partly offset by the ongoing insourcing of certain Common equity tier 1 leverage ratio: 2Q21 vs 1Q21activities from third-party vendors to our Business Solutions Our CET1 leverage ratio increased from 3.89% to 4.09%, dueCenters.
to the aforementioned increase in CET1 capital, partly offset by a USD 2 billion increase in LRD.| Return on equity and CET1 capital | | | | | |
| --- | --- | --- | --- | --- | --- |
| | As of or for the quarter ended | | | Year-to-date | |
| USD million, except where indicated | 30.6.2131.3.21 | 30.6.20 | 30.6.21 | 30.6.20 | |
| Net profit | | | | | |
| Net profit / (loss) attributable to shareholders | 2,006 | 1,8241,232 | 3,830 | 2,827 | |
| Equity | | | | | |
| Equity attributable to shareholders | 58,76558,026 | 57,003 | 58,765 | 57,003 | |
| Less: goodwill and intangible assets | 6,452 | 6,4276,414 | 6,452 | 6,414 | |
| Tangible equity attributable to shareholders | 52,31351,599 | 50,588 | 52,313 | 50,588 | |
| Less: other CET1 deductions | 9,73011,173 | 12,474 | 9,730 | 12,474 | |
| CET1 capital | 42,58340,426 | 38,114 | 42,583 | 38,114 | |
| Returns | | | | | |
| Return on equity (%) | 13.7 | 12.4 | 8.6 | 13.1 | 9.9 |
| Return on tangible equity (%) | 15.4 | 14.0 | 9.7 | 14.711.2 | |
| Return on CET1 capital (%) | 19.3 | 18.2 | 13.2 | 18.815.4 | |

Results: 6M21 vs 6M20Wealth Management, mainly reflecting the effects of a higher average invested asset base and higher average fee-generating Profit before tax increased by USD 1,300 million, or 36%, toassets, respectively.Underwritingfees increased by USD 324 USD 4,891 million.million, driven by higher equityunderwritingrevenuesfrom Operating income increased by USD 2,344 million, or 15%,public offerings in the Investment Bank. M&A and corporate to USD 17,681 million, driven by higher net fee andcommissionfinance fees increased by USD 233 million, primarily reflecting income and other income, as well as net credit loss releases inhigher revenues from M&A transactions in our Global Banking this period compared with net credit loss expenses in the prior-business in the Investment Bank, due to an increase in the size year period. This was partly offset bya decrease in net interestand number of transactions closed in the period. Net brokerage income and other net incomefrom financial instrumentsfees increased by USD 198 million, reflecting higher levels of measured at fair value through profitor loss.client activity in Global Wealth Management and in the Cash Net fee and commission income increased byUSD 1,916Equities business of the InvestmentBank.
million to USD 11,248 million. Fees for portfolio managementNet credit loss releases were USD 108 million, compared with and related serviceswereUSD838millionhigher, mainlynet credit loss expenses of USD 540 million in the prior-year reflecting the effect of higher average fee-generating assets inperiod.
Global WealthManagement. Investment fund fees increased by USD350million,driven by Asset Managementand Global

Group performance

Total combined net interest income and other net incomeDepreciation and impairment of property, equipment and from financialinstruments measured at fair value through profitsoftware increased byUSD95million,mainly related to or lossdecreased byUSD433million toUSD6,028million.internally developed software.
IncomewasUSD725millionlowerin the Investment Bank, mainly reflecting a loss of USD 861 million on a default by aOutlook client of our prime brokeragebusiness.Execution Services reflected lower revenues from foreign exchange products, partlyInvestor sentiment remained positive in the second quarter of offset by higher revenues in the Derivatives & Solutions business.2021, helped by the continued rebound in economic activity and These decreases in income were partly offset by a USD 261greater optimism regarding further recovery, which was millionincrease in Group Functions. Non-core and Legacysupported by mass COVID-19 vaccination campaigns around the Portfolio recognized valuation gains ofUSD36million onglobe and the gradual lifting of lockdowns and similar measures auction rate securities, compared with valuation losses ofimposed to control the pandemic. Significant fiscal stimulus, USD 143 million in the prior-year period. The Group Treasurynotably in the US, along with continued accommodative result was negative USD 151 million, compared with negativemonetary policy and strong economic data, contributed to USD261million,reflectinglower negative income related togenerally more positive views on the timing and extent of a centralized Group Treasury risk management, partly offset by netsustainable economic recovery.
negative effects related to accounting asymmetries, includingHowever, economic, social, and geopolitical tensions remain, hedge accounting ineffectiveness.raising questions around the sustainability and shape of the Other income was USD 297 million, compared with USD 84recovery. Continued localized outbreaks of COVID-19 infections million, mainly driven by USD 100 million of gains on propertiesand the spread of new variants, along with uneven vaccination held for sale and income of USD 45 million related to a legacyrates, add to these existing concerns. The severity and duration bankruptcy claim. In addition, a gain of USD 37 million wasof the effects of the pandemic in certain economic sectors also recognized on the sale of UBS’s remaining minority investmentremain uncertain. The potential for rising inflation that could in Clearstream Fund Centre and a valuation gain of USD 37lead to more restrictive monetary policy has become an million was recognized in relation to UBS’s equity ownership ofadditional concern for the market.
SIX Group.Our clients value strength and expert guidance, particularly in Operating expenses increased by USD 1,043 million, or 9%,these uncertain times, and we remain focused on supporting toUSD12,790million, driven byUSD969millionhigherthem with advice and solutions. We expect our revenues in the personnel expenses, including net restructuring expenses ofthird quarter of 2021 to be influenced by seasonal factors, such USD 89 million compared with USD 106 million in the prior-yearas lower client activity levels compared with the second quarter period. Expenses for salaries and variable compensationof 2021. Higher asset prices should have a positive effect on increased byUSD558million, primarily drivenbyhigherrecurring fee income in our asset gathering businesses. However, expenses for variable compensation and foreign currencythe continued uncertainty about the environment and economic translation effects. Financial advisor compensation increased byrecovery could affect both asset prices and client activity levels.
USD 318 million as a result of higher compensable revenues.

UBS business

divisions

and Group

Functions

Management report

Global Wealth Management

Global Wealth Management1 As of or for the quarter ended% change fromYear-to-date USD million, except where indicated30.6.2131.3.2130.6.201Q212Q2030.6.2130.6.20| Results | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Net interest income | | 1,026 | 9971,023 | 3 | 02,023 | 2,054 |
| Recurring net fee income | 2 | 2,7742,629 | 2,128 | 5 | 305,403 | 4,562 |
| Transaction-based income | 3 | 9531,183 | 824 | (19) | 162,136 | 1,937 |
| Other income | | 8 | 3732 | (79)(76) | 44 | 53 |
| Income | | 4,7604,845 | 4,006 | (2) | 199,606 | 8,606 |
| Credit loss (expense) / release | | 14 | 3(64) | 370 | 16 | (117) |
| Total operating income | | 4,7744,848 | 3,942 | (2) | 219,622 | 8,489 |
| Total operating expenses | | 3,4793,439 | 3,062 | 1 | 146,918 | 6,391 |
| Business division operating profit / (loss) before tax | | 1,2941,409 | 880 | (8) | 472,704 | 2,098 |

Performance measures and other information
Financial advisor variable compensation		4,5		1,0651,048	813	231	2,112	1,777
Compensation commitments with recruited financial advisors			4,6	118	123128	(4)(8)	241	258
Pre-tax profit growth (%)				47.115.7	0.7		28.9	20.8
Cost / income ratio (%)				73.171.0	76.4		72.0	74.3
Average attributed equity (USD billion)	7			18.518.3	16.7	111	18.4	16.6
Return on attributed equity (%)	7			27.930.8	21.1		29.3	25.3
Risk-weighted assets (USD billion)	7			92.088.2	82.8	411	92.0	82.8
Leverage ratio denominator (USD billion)		7,8		379.2380.6	330.7	015	379.2	330.7
Goodwill and intangible assets (USD billion)				5.1	5.15.1	0	05.1	5.1
Net new fee-generating assets (USD billion)				25.036.2	12.2		61.2	17.7
Fee-generating assets (USD billion)				1,4161,328	1,104	728	1,416	1,104
Fee-generating asset margin (bps)	9			82.386.0	86.8		84.1	88.6
Invested assets (USD billion)				3,2303,108	2,590	425	3,230	2,590
Client assets (USD billion)	10			3,6583,530	2,881	427	3,658	2,881
Loans, gross (USD billion)	11			228.1219.4	188.6	421	228.1	188.6
Customer deposits (USD billion)	11			344.2336.7	314.8	2	9344.2	314.8
Recruitment loans to financial advisors	4			1,8211,867	1,930	(2)(6)	1,821	1,930
Other loans to financial advisors	4			594	607743	(2)(20)	594	743
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)			12,13	0.3	0.30.5		0.3	0.5
Advisors (full-time equivalents)				9,4809,582	9,786	(1)(3)	9,480	9,786

1 Comparatives may differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Recurring net fee income consists of fees for services provided on an ongoing basis, such as portfolio management fees, asset-based investment fund fees and custody fees, which are generated on client assets, as well as credit card fees and administrative fees for accounts. 3 Transaction-based income consists of the non-recurring portion of net fee and commission income, mainly composed of brokerage and transaction-based investment fund fees, as well as fees for payment and foreign exchange transactions, together with other net income from financial instruments measured at fair value through profit or loss. 4 Relates to licensed professionals with the ability to provide investment advice to clients in the Americas. 5 Financial advisor variable compensation consists of formulaic compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, new assets and other variables.
6 Compensation commitments with recruited financial advisors represent expenses related to compensation commitments granted to financial advisors at the time of recruitment that are subject to vesting requirements. 7 Refer to the “Capital management” section of this report for more information. 8 The leverage ratio denominator calculated as of the respective date in 2020 does not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID -19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 9 Calculated as revenues from fee-generating assets (a portion of which is included in recurring fee income and a portion of which is included in transaction-based income, annualized as applicable) divided by average fee-generating assets for the relevant mandate fee billing period. For the US, fees have been billed on daily balances since the fourth quarter of 2020 and average feegenerating assets are calculated as the average of the monthly average balances. Prior to the fourth quarter of 2020, billing was based on prior quarter-end balances, and the average fee-generating assets were thus the prior quarter-end balance. For balances outside of the US, billing is based on prior month -end balances and average fee-generating assets were thus the average of the prior month -end balances.
10 Client assets are composed of invested assets and other assets held purely for transactional purposes or custody only. 11 Loans and Customer deposits in this table include customer brokerage receivables and payables, respectively, which are presented in a separate reporting line on the balance sheet. 12 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures. 13 Excludes loans to financial advisors.

Results: 2Q21 vs 2Q20Loans: 2Q21 vs 1Q21

Profit before tax increased by USD 414 million, or 47%, toLoans increased by USD 8.7 billion, or 4%, to USD 228.1 billion, USD 1,294 million, reflecting higher operating income, partlydriven by net new loans of USD 7.3 billion and USD 1.3 billion offset by higher operating expenses.from foreign exchange translation. Net new loans were largely driven by an increase in Lombard loans. Loan penetration was Operating incomestable at 7.1%.
Total operating income increased by USD 832 million, or 21%,›Refer to the “Risk management and control” section of this to USD 4,774 million, mainly driven by higher recurring net feereport for more information

and transaction-based income, as well as net credit loss releases compared with net credit loss expenses in the second quarter ofResults: 6M21 vs 6M20 2020.
Net interest income increased by USD 3 million to USD 1,026Profit before tax increased by USD 606 million, or 29%, to million, resulting from higher loan revenues on higher loanUSD 2,704 million, reflecting higher operating income, partly volumes and margins that compensated for lower depositoffset by higher operating expenses.
revenues,which weremainlytheresult of lower US dollarTotal operating income increased by USD 1,133 million, or interest rates.13%, to USD 9,622 million, mainly driven by higher recurring Recurring net fee income increased by USD 646 million, ornet fee and transaction-based income, as well as net credit loss 30%, to USD 2,774 million, primarily driven by higher averagereleases compared with net credit loss expenses in the first half fee-generating assets, reflecting positive market performance,of 2020.
and higher net new fee-generating assets.Net interest income decreased by USD 31 million to Transaction-based income increased by USD 129 million, orUSD 2,023 million, mostly due to lower deposit revenues, driven 16%, to USD 953 million, driven by continued high levels ofby a decrease in margins, mainly as a result of lower US dollar client activity in a constructive market environment.interest rates, and despite higher deposit volumes. This was Net credit loss releases were USD 14 million, compared withlargely offset by higher loan revenues from higher loan volumes net expenses of USD 64 million, with net credit loss releasesand margins.
primarily related to stage 1 and 2 positions.Recurring net fee income increased by USD 841 million to USD 5,403 million, primarily driven by higher average fee- Operating expensesgenerating assets, reflecting positive market performance, and Total operating expenses increased by USD 417 million, or 14%,higher net new fee-generating assets.
to USD 3,479 million. The increase was mostly driven by higherTransaction-based income increased by USD 199 million to financial advisor variable compensation, reflecting an increase inUSD 2,136 million, reflecting higher levels of client activity.
compensable revenues, as well as higher restructuring expenses.Net credit loss releases were USD 16 million, compared with net expenses of USD 117 million, with net credit loss releases Fee-generating assets: 2Q21 vs 1Q21primarily related to stage 1 and 2 positions.
Total operating expenses increased by USD 527 million, or Fee-generating assets increased by USD 88 billion, or 7%, to8%, to USD 6,918 million, mostly driven by higher financial USD 1,416 billion, driven by net positive effects from marketadvisor variable compensation and higher technology expenses.
performance and foreign currency translation of USD 63.2These effects were partly offset by lower expenses for billion,as well as net new fee-generating asset inflows ofprofessional fees, travel and marketing.
USD 25.0 billion, which included net inflows in all regions.

Global Wealth Management

Regional breakdown of performance measures| As of or for the quarter ended 30.6.21USD billion, except where indicated | | Americas | Switzerland | EMEA | Asia Pacific | Global WealthManagement |
| --- | --- | --- | --- | --- | --- | --- |
| | | 1 | | 2 | | 3 |
| Total operating income (USD million) | | 2,615 | 471 | 974 | 711 | 4,774 |
| Total operating expenses (USD million) | | 2,110 | 267 | 666 | 428 | 3,479 |
| Operating profit / (loss) before tax (USD million) | | 505 | 204 | 308 | 283 | 1,294 |
| Cost / income ratio (%) | | 80.9 | 57.5 | 68.5 | 60.2 | 73.1 |
| Loans, gross | | 83.14 | 41.8 | 49.2 | 53.0 | 228.1 |
| Net new loans | | 5.3 | 0.7 | 1.1 | 0.2 | 7.3 |
| Loan penetration (%) | 5 | 4.8 | 14.4 | 7.8 | 9.1 | 7.1 |
| Fee-generating assets | | 845 | 123 | 329 | 119 | 1,416 |
| Net new fee-generating assets | | 13.5 | 2.8 | 4.9 | 3.8 | 25.0 |
| Invested assets | | 1,722 | 290 | 632 | 583 | 3,230 |
| Advisors (full-time equivalents) | | 6,274 | 690 | 1,537 | 892 | 9,480 |

1 Including the following business units: United States and Canada; and Latin America. 2 Including the following business units: Europe; Central and Eastern Europe, Greece and Israel; and Middle East and Africa.
3 Including minor functions, which are not included in the four regions individually presented in this table, with USD 3 million of total operating income, USD 8 million of total operating expenses, USD 5 million of operating loss before tax, USD 0.9 billion of loans, USD 0.1 billion of net new loan inflows, USD 1 billion of fee-generating assets, USD 0.1 billion of net new fee-generating asset outflows, USD 3 billion of invested assets and 88 advisors in the second quarter of 2021. 4 Loans include customer brokerage receivables, which are presented in a separate rep orting line on the balance sheet. 5 Loans, gross as a percentage of invested assets.

Regional comments 2Q21 vs 2Q20, except where indicatedEMEA Profit before tax increased by USD 41 million to USD 308 million.
AmericasOperating income increased by USD 115 million, or 13%, to Profit before tax increased by USD 278 million to USD 505USD974million, mainly driven by recurring net fee and million. Operating income increased by USD598million, ortransaction-based income. The cost / income ratio decreased 30%, to USD 2,615 million, mainly driven by higher recurringfrom 68.7% to 68.5%. Loans increased 3% compared with the net fee and transaction-based income. The cost / income ratiofirst quarter of 2021, to USD 49 billion, largely reflecting decreased from 86.5% to 80.9%. Loans increased 7%USD 1.1 billion of net new loans and foreign currency effects.
compared with the first quarter of 2021, to USD 83 billion,Fee-generating assets increased 6% sequentially to USD 329 reflecting USD 5.3 billion of net new loans, which were mostlybillion, mainly driven by net effects from positive market Lombard loans. Fee-generating assets increased 7% sequentiallyperformance and foreign currency effects of USD 13.7 billion, as to USD845 billion, mainly driven bypositive marketwell as net new fee-generating assets of USD 4.9 billion.
performance of USD 38.1 billion and net new fee-generating assets of USD 13.5 billion.Asia Pacific Profit before tax increased by USD 50 million to USD 283 million.
SwitzerlandOperating income increased by USD53 million, or8%,to Profit before tax increased by USD 55 million to USD 204 million.USD 711 million, mainly driven by recurring net fee and Operating income increased by USD75million, or19%,totransaction-based income. The cost / income ratio decreased USD 471 million, mainly driven by higher recurring net fee andfrom 64.6% to 60.2%. Loans increased 1% sequentially to transaction-based income, as well as net credit loss releasesUSD 53 billion, driven by net new loans of USD 0.2 billion. Feecompared with net credit loss expenses in the second quarter ofgenerating assets increased 6% sequentially to USD 119 billion, 2020. The cost / income ratio decreased from 61.0% to 57.5%.mainly driven by USD 3.8 billion of net new fee-generating Loans increased 3% sequentially to USD 42 billion, largelyassets, as well as net effects from positive market performance reflecting USD 0.7 billion of net new loans and foreign currencyand foreign currency effects of USD 3.3 billion.

effects. Fee-generating assets increased 10% sequentially to USD 123 billion, mainly driven by net effects from positive market performance and foreign currency translation effects of USD8.0 billion, as well asnet new fee-generating assets of USD 2.8 billion.

Personal & Corporate Banking

Personal & Corporate Banking – in Swiss francs1 As of or for the quarter ended% change fromYear-to-date CHF million, except where indicated30.6.2131.3.2130.6.201Q212Q2030.6.2130.6.20| Results | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Net interest income | | 480 | 470496 | 2(3) | 950 | 989 |
| Recurring net fee income | 2 | 187 | 182159 | 318 | 369 | 329 |
| Transaction-based income | 3 | 288 | 239227 | 2027 | 527 | 491 |
| Other income | | 40 | 3812 | 5227 | 78 | 31 |
| Income | | 995 | 929894 | 711 | 1,924 | 1,840 |
| Credit loss (expense) / release | | 42 | 22(104) | 93 | 64 | (179) |
| Total operating income | | 1,037 | 950790 | 931 | 1,987 | 1,661 |
| Total operating expenses | | 581 | 593561 | (2) | 41,174 | 1,110 |
| Business division operating profit / (loss) before tax | | 456 | 358229 | 28100 | 814 | 551 |

Performance measures and other information
Average attributed equity (CHF billion)	4			8.4	8.38.4	1	08.3	8.4
Return on attributed equity (%)	4			21.817.3	10.9		19.6	13.1
Pre-tax profit growth (%)				99.511.0	(41.3)		47.7	(28.9)
Cost / income ratio (%)				58.463.8	62.8		61.0	60.3
Net interest margin (bps)				139	137148		138	148
Risk-weighted assets (CHF billion)	4			66.364.7	65.5	2	166.3	65.5
Leverage ratio denominator (CHF billion)		4,5		220.8224.8	213.7	(2)	3220.8	213.7
Business volume for Personal Banking (CHF billion)				183	182173	0	6183	173
Net new business volume for Personal Banking (CHF billion)				0.6	3.43.8		3.9	7.0
Net new business volume growth for Personal Banking (%)			6	1.2	7.69.2		4.4	8.4
Active Digital Banking clients in Personal Banking (%)		7		69.869.4	65.6		69.6	65.1
Active Digital Banking clients in Corporate & Institutional Clients (%)			8	79.179.3	77.5		79.2	77.6
Mobile Banking log-in share in Personal Banking (%)		9		72.670.2	66.6		71.4	65.6
Client assets (CHF billion)	10			742	727666	211	742	666
Loans, gross (CHF billion)				138.6138.1	135.8	0	2138.6	135.8
Customer deposits (CHF billion)				159.7162.5	155.2	(2)	3159.7	155.2
Secured loan portfolio as a percentage of total loan portfolio, gross (%)				92.692.6	91.7		92.6	91.7
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)			11	1.0	1.11.1		1.0	1.1

after the reporting period. 2 Recurring net fee income consists of fees for services provided on an ongoing basis, such as portfolio management fees, asset-based investment fund fees and custody fees, which are generated on client assets, as well as administrative fees for accounts. 3 Transaction-based income consists of the non-recurring portion of net fee and commission income, mainly composed of brokerage and transaction-based investment fund fees, and credit card fees, as well as fees for payment and foreign exchange transactions, together with other net income from financial instruments measured at fair value through profit or loss. 4 Refer to the “Capital management” section of this report for more information. 5 The leverage ratio denominator calculated as of the respective date in 2020 does not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 6 Calculated as net new business volume for the period (annualized as applicable) divided by business volume at the beginning of the period. 7 “Clients” refers to the number of unique business relationships operated by Personal Banking and “active” means at least one log-in within the past month (log-in time stamp is allocated to all business relationship numbers in a digital banking contract). Excluded are persons under the age of 15, clients who do not have a private account, clients domiciled outside Switzerland, and clients who have defaulted on loans or credit facilities. In the second quarter of 2021, 86.7% of clients of Personal Banking were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least once in the course of their relationship with UBS).
8 “Clients” refers to the number of unique business relationships or legal entities operated by Corporate & Institutional Clients and “active” means at least one log-in within the past month (log-in time stamp is allocated to all business relationship numbers or per legal entity in a digital banking contract). Excluded are clients that do not have an account, mono-product clients and clients that have defaulted on loans or credit facilities. 9 Mobile Banking app log-ins as a percentage of total log-ins via E-Banking and Mobile Banking app in Personal Banking (if a digital banking contract is linked to multiple business relationships, the log-in is attributed to the business relationship with the most banking products in use). 10 Client assets are composed of invested assets and other assets held purely for transactional purposes or custody only.
Net new money is not measured for Personal & Corporate Banking. 11 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.

Personal & Corporate Banking

Results:2Q21 vs 2Q20Results: 6M21 vs 6M20

Profit before tax increased by CHF 227 million, or 100%, toProfit before tax increased by CHF263million, or 48%, to CHF 456 million, reflecting net credit loss releases comparedCHF814million, reflectingnetcredit loss releases compared with net credit loss expenses in the second quarter of 2020, aswith net credit loss expenses in the first half of 2020, as well as well as higher income, partly offset by higher operatinghigher income, partly offset by higher operating expenses.
expenses.Total operating income increased by CHF326million, or 20%, to CHF 1,987 million, predominantly reflecting net credit Operating incomeloss releases compared with net credit loss expenses in the first Total operating income increased by CHF 247 million, or 31%,half of 2020.
to CHF 1,037 million, predominantly reflecting net credit lossNet interest income decreased by CHF 39 million to CHF 950 releases compared with net credit loss expenses in the secondmillion, mainly driven by lower deposit revenues, reflecting a quarter of 2020 and higher transaction-based income.decrease in margins, mostly as a result of lower US dollar Net interest income decreased by CHF 16 million to CHF 480interest rates.
million, mainly driven by lower deposit revenues, reflecting aRecurring net fee income increased by CHF40million to decrease in margins,mostly as a result of lower US dollarCHF 369 million, primarily reflecting higher custody, mandate interest rates.and investment fund fees.
Recurring net fee incomeincreased by CHF28million toTransaction-based income increased by CHF36million to CHF 187 million, primarily reflecting higher custody, mandateCHF 527 million, mainly driven by higher revenues from credit and investment fund fees.card and foreign exchange transactions, reflecting a gradual Transaction-based income increased by CHF 61 million toincrease in spending on travel and leisure by clients following CHF 288 million, mainly driven by higher revenues from creditthe easing of COVID-19-related restrictions in certain countries card and foreign exchange transactions, reflecting a gradualin the second quarter of 2021.
increase in spending on travel and leisure by clients following theOther income increased by CHF 47 million to CHF 78 million, easing of COVID-19-related restrictions in certain countries.mostly driven by the aforementioned gain of CHF 26 million Other income increased by CHF 28 million to CHF 40 million,from the sale of several small properties, as well as a valuation mostly driven by a gain of CHF 26 million from the sale ofgain of CHF 26 million on our equity ownership of SIX Group in several small properties across Switzerland.the first quarter of 2021.
Net credit loss releases for the second quarter of 2021 wereNet credit loss releases were CHF 64 million, compared with CHF 42 million, compared with net expenses of CHF 104 million,net expenses of CHF 179 million, with net credit loss releases with net credit loss releases primarily related to stage 1 and 2primarily related to stage 1 and 2 positions.
positions.Total operating expenses increased by CHF 64 million, or 6%, to CHF 1,174 million, largely driven by increased investments in Operating expensestechnology, as well as real estate expenses due to accelerated Total operating expenses increased by CHF 20 million, or 4%, todepreciation resulting from the closure of 44 branches in the CHF 581 million, largely driven by higher variable compensationfirst quarter of 2021. There was also an increase in variable and increased investments in technology, partly offset by lowercompensation.
real estateexpenses for our branch networkfollowing the branch closures over the last twelve months.

Personal & Corporate Banking – in US dollars1 As of or for the quarter ended% change fromYear-to-date USD million, except where indicated30.6.2131.3.2130.6.201Q212Q2030.6.2130.6.20| Results | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Net interest income | | 526 | 513517 | 3 | 21,039 | 1,029 |
| Recurring net fee income | 2 | 205 | 198166 | 323 | 403 | 342 |
| Transaction-based income | 3 | 315 | 261237 | 2133 | 576 | 511 |
| Other income | | 44 | 4113 | 7241 | 85 | 32 |
| Income | | 1,0891,013 | 933 | 717 | 2,102 | 1,914 |
| Credit loss (expense) / release | | 46 | 23(110) | 95 | 69 | (187) |
| Total operating income | | 1,1351,037 | 823 | 938 | 2,171 | 1,727 |
| Total operating expenses | | 636 | 647586 | (2) | 91,284 | 1,155 |
| Business division operating profit / (loss) before tax | | 498 | 389238 | 28110 | 888 | 572 |

Performance measures and other information
Average attributed equity (USD billion)	4			9.1	9.18.7	05	9.1	8.7
Return on attributed equity (%)	4			21.817.1	10.9		19.513.1
Pre-tax profit growth (%)				109.816.5	(39.1)		55.2(26.4)
Cost / income ratio (%)				58.463.9	62.8		61.160.3
Net interest margin (bps)				142	137147		140	148
Risk-weighted assets (USD billion)	4			71.768.4	69.2	54	71.769.2
Leverage ratio denominator (USD billion)		4,5		238.7237.8	225.6	06	238.7225.6
Business volume for Personal Banking (USD billion)				198	193183	39	198	183
Net new business volume for Personal Banking (USD billion)				0.6	3.74.0		4.3	7.3
Net new business volume growth for Personal Banking (%)			6	1.3	7.49.2		4.3	8.4
Active Digital Banking clients in Personal Banking (%)		7		69.869.4	65.6		69.665.1
Active Digital Banking clients in Corporate & Institutional Clients (%)			8	79.179.3	77.5		79.277.6
Mobile Banking log-in share in Personal Banking (%)		9		72.670.2	66.6		71.465.6
Client assets (USD billion)	10			802	769704	414	802	704
Loans, gross (USD billion)				149.8146.0	143.4	34	149.8143.4
Customer deposits (USD billion)				172.6171.9	163.9	05	172.6163.9
Secured loan portfolio as a percentage of total loan portfolio, gross (%)				92.692.6	91.7		92.691.7
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)			11	1.0	1.11.1		1.0	1.1

Asset Management

Asset Management1

As of or for the quarter ended% change fromYear-to-date USD million, except where indicated30.6.2131.3.2130.6.201Q212Q2030.6.2130.6.20| Results | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Net management fees | 2 | 588545 | 449 | 8 | 311,133 | 926 |
| Performance fees | | 4092 | 75 | (56)(46) | 133 | 112 |
| Net gain from disposal of an associate | | 37 | | | 37 | |
| Credit loss (expense) / release | | 0 | 00 | | | 00 |
| Total operating income | | 666637 | 524 | 4 | 271,303 | 1,038 |
| Total operating expenses | | 410410 | 367 | 0 | 12820 | 724 |
| Business division operating profit / (loss) before tax | | 255227 | 157 | 12 | 62482 | 314 |

Performance measures and other information
Average attributed equity (USD billion)	3	2.12.2	1.9	(6)12	2.21.8
Return on attributed equity (%)	3	49.040.8	33.7		44.734.1
Pre-tax profit growth (%)		62.044.7	26.7		53.438.1
Cost / income ratio (%)		61.764.4	70.0		63.069.7
Risk-weighted assets (USD billion)	3	7.98.0	5.9	(1)33	7.95.9
Leverage ratio denominator (USD billion)	3,4	6.05.4	6.7	9(11)	6.06.7
Goodwill and intangible assets (USD billion)		1.21.2	1.3	0(9)	1.21.3
Net margin on invested assets (bps)	5	9	87	824	9	7
Gross margin on invested assets (bps)		23	2324	1(3)	23	24

Information by business line / asset class
Net new money (USD billion)
Equities	(2.4)	6.45.1	4.020.1
Fixed Income	(1.3)13.5	14.0	12.232.6
of which: money market	(6.7)	4.310.4	(2.4)20.3
Multi-asset & Solutions	3.7	3.70.3	7.5	0.3
Hedge Fund Businesses	1.5	2.0(0.6)	3.5(2.8)
Real Estate & Private Markets	0.6	0.60.4	1.2	1.7
Total net new money	2.126.2	19.2	28.351.9
of which: net new money excluding money market	8.821.9	8.8	30.731.6

Invested assets (USD billion)
Equities	559	526372	650	559	372
Fixed Income	280	279287	0(2)	280	287
of which: money market	94	101123	(7)(24)	94	123
Multi-asset & Solutions	187	175141	732	187	141
Hedge Fund Businesses	53	5040	533	53	40
Real Estate & Private Markets	95	9288	4	895	88
Total invested assets	1,1741,121	928	526	1,174	928
of which: passive strategies	501	469363	738	501	363

Information by region
Invested assets (USD billion)
Americas	277	267239	416	277	239
Asia Pacific	189	185158	220	189	158
Europe, Middle East and Africa (excluding Switzerland)	320	305223	544	320	223
Switzerland	388	364309	725	388	309
Total invested assets	1,1741,121	928	526	1,174	928

Information by channel
Invested assets (USD billion)
Third-party institutional	686	656549	525	686	549
Third-party wholesale	141	133100	641	141	100
UBS’s wealth management businesses	346	332279	424	346	279
Total invested assets	1,1741,121	928	526	1,174	928

Results: 2Q21 vs 2Q20Invested assets: 2Q21 vs 1Q21

Profit before tax increased by USD 98 million, or 62%, toInvested assets increased by USD 53 billion to USD 1,174 billion,

USD 255 million, reflecting continued growth in invested assetsreflecting positive market performance of USD 43 billion, foreign

and positive operating leverage. This included a post-tax gain ofcurrency translation effects of USD 7 billion, and net new money

USD 37 million related to the sale of our remaining minorityinflows of USD 2 billion.

investment in Clearstream Fund Centre (previously FondcenterExcluding money market flows, net new money inflows were

AG) to Deutsche Börse AG.USD 9 billion.

›

Refer to the “Recent developments” section of this report for

Results: 6M21 vs 6M20

more information about the sale of our remaining investment in

Clearstream Fund Centre Profit before tax increased by USD 168 million, or 53%, to

Operating incomeUSD 482 million, reflecting continued growth in invested assets
Total operating income increased by USD 142 million, or 27%,and positive operating leverage. This includedthe
to USD 666 million. This included the aforementioned gain ofaforementioned gain of USD 37 million related to the sale of our
USD 37 million.remaining minority investment in Clearstream Fund Centre
Net management fees increased by USD 139 million, or 31%,(previously Fondcenter AG) to Deutsche Börse AG.
to USD 588 million, on a higher average invested asset base,Total operating income increased by USD 265 million, or
reflecting a combination of a constructive market backdrop,25%, to USD 1,303 million. This included the aforementioned
continued strong net new money generation, and positivegain of USD 37 million.
currency translation effects.Net management fees increased by USD 207 million, or 22%,
Performance fees decreased by USD 35 million to USD 40to USD 1,133 million, on a higher average invested asset base,
million, mainly in our Hedge Fund Businesses, partly offset byreflecting a combination of a constructive market backdrop,
higher performance fees in our Equities business.continued strong net new money generation, and positive
currency translation effects.

Operating expensesPerformance fees increased by USD 21 million to USD 133
Total operating expenses increased by USD 43 million, or 12%,million, mainly in our Hedge Fund Businesses, partly offset by
to USD 410 million, predominantly driven by personnellower performance fees in our Equities business.
expenses, reflecting higher compensable revenues.Total operatingexpenses increased by USD96million, or
13%, to USD820 million,primarily driven by personnel

expenses, reflecting higher variable compensation.

Investment Bank

Investment Bank1,2 As of or for the quarter ended% change fromYear-to-date USD million, except where indicated30.6.2131.3.2130.6.201Q212Q2030.6.2130.6.20| Results | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Advisory | | 300 | 22393 | 35223 | 523 | 292 |
| Capital Markets | | 581 | 565432 | 3 | 351,147 | 766 |
| Global Banking | | 881 | 788525 | 12 | 681,670 | 1,058 |
| Execution Services | 3 | 443 | 555422 | (20) | 5998 | 1,012 |
| Derivatives & Solutions | | 7731,246 | 948 | (38)(18) | 2,020 | 1,932 |
| Financing | | 352(319) | 452 | (22) | 33 | 916 |
| Global Markets | | 1,5671,483 | 1,821 | 6(14) | 3,051 | 3,859 |
| of which: Equities | | 1,194 | 920974 | 30 | 232,114 | 2,122 |
| of which: Foreign Exchange, Rates and Credit | | 373 | 563847 | (34)(56) | 937 | 1,737 |
| Income | | 2,4492,271 | 2,346 | 8 | 44,720 | 4,917 |
| Credit loss (expense) / release | | 21 | 2(78) | 992 | 23 | (200) |
| Total operating income | | 2,4702,273 | 2,268 | 9 | 94,743 | 4,718 |
| Total operating expenses | | 1,8021,862 | 1,656 | (3) | 93,663 | 3,396 |
| Business division operating profit / (loss) before tax | | 668 | 412612 | 62 | 91,080 | 1,321 |

Performance measures and other information
Pre-tax profit growth (%)			9.1(41.9)	43.5		(18.2)	108.3
Average attributed equity (USD billion)	4		13.013.0	12.6	0	313.0	12.5
Return on attributed equity (%)	4		20.612.7	19.4		16.7	21.1
Cost / income ratio (%)			73.682.0	70.6		77.6	69.1
Risk-weighted assets (USD billion)	4		92.395.0	97.8	(3)(6)	92.3	97.8
Return on risk-weighted assets, gross (%)			10.5	9.69.4		10.0	10.2
Leverage ratio denominator (USD billion)	4,5		324.9329.7	303.4	(1)	7324.9	303.4
Return on leverage ratio denominator, gross (%)		5	3.0	2.83.1		2.9	3.3
Goodwill and intangible assets (USD billion)			0.2	0.10.0	11	0.2	0.0
Average VaR (1-day, 95% confidence, 5 years of historical data)			11	1113	5(16)	11	13

1 Comparative figures in this table have been restated to reflect the new structure of the Investment Bank, split into Global Banking and Global Markets. Global Banking has two product verticals: Capital Markets and Advisory. Global Markets combines Equities and Foreign Exchange, Rates and Credit (FRC), with three product verticals: Execution Services, Derivatives & Solutions, and Financing. 2 Comparatives may additionally differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 3 Execution & Platform, which was disclosed in previous periods, has been renamed Execution Services. 4 Refer to the “Capital management” section of this report for more information.
5 The leverage ratio denominators calculated as of the respective dates in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.

Results: 2Q21 vs 2Q20Equitie s Global Markets Equities revenues increased by USD 220 million, Profit beforetax increased by USD56million, or9%, toor 23%, to USD 1,194 million, mostly driven by increases in USD668million, driven by higher operating income, partlyequity derivatives and cash equities products, partly offset by a offset by higher operating expenses.decrease in Financing revenues.

Operating incomeForeign Exchange, Rates and Credit Total operating income increased by USD 202 million, or 9%, toGlobal Markets Foreign Exchange, Rates and Credit revenues USD 2,470 million, reflecting higher revenues in Global Bankingdecreased by USD474million, or 56%, to USD373million, and net credit loss releases, offset by lower revenues in Globalcompared with strong revenues in the second quarter of 2020.
Markets.Spread compression and lower foreign exchange volatility adversely impacted Foreign Exchange revenues in the second Global Bankingquarter of 2021.
Global Banking revenues increased by USD 356 million, or 68%, to USD881million, driven by Advisory and Capital MarketCredit loss expense / release revenues, which outperformed the global fee pool in all regions,Net credit loss releases were USD 21 million, compared with net most notably in Mergers & Acquisitions.expenses of USD 78 million, with net credit loss releases Advisory revenues increased by USD 207 million, or 223%, toprimarily related to stage 1 and 2 positions.
USD300million, due to higher revenues fromM&A transactions, compared with a 71% increase in the global feeOperating expenses pool.Total operating expenses increased by USD 146 million, or 9%, Capital Markets revenues increased by USD 149 million, orto USD1,802million. The increase was driven by foreign 35%, to USD 581 million, primarily reflecting a USD 131 million,currency translation effects, higher expenses for provisions for or 87%, increase in Equity Capital Markets revenues, comparedlitigation, regulatoryand similar matters,andrestructuring with an increase in the global fee pool of 8%, driven by higherexpenses.
levels of Equity Capital Markets issuances, with elevated levels of IPO and follow-on activity.Risk-weighted assets and leverage ratio denominator:

2Q21 vs 1Q21 Global Markets Global Markets revenues decreased by USD 254 million, or 14%,Risk-weighted assets to USD1,567million, drivenby lower revenues in ForeignTotal risk-weighted assets (RWA) decreased by USD 3 billion, or Exchange, Rates and Credit and a loss incurred in our Financing3%, to USD 92 billion.
business resulting from the default of a client in the first quarter›Refer to the “Capital management” section of this report for of 2021. This was partly offset by higher revenues in equitymore information derivatives and cash equities products.
Execution Services revenues increased by USD 21 million, orLeverage ratio denominator 5%, to USD 443 million. Higher cash equities revenues wereThe leverage ratio denominator decreased by USD 5 billion, or partly offset by lower revenues from foreign exchange products1%, to USD 325 billion, reflecting a USD 9 billion decrease in that are traded over electronic platforms, as spreads tightened.derivative and securities financing transaction exposures, partly Derivatives & Solutions revenues decreased by USD 175offset by a USD 5 billion increase in on-balance sheet exposures.
million, or 18%, to USD773million,compared withstrong›Refer to the “Capital management” section of this report for revenues in the second quarter of 2020. This was partly offset bymore information

higher revenues in Equity Derivatives.
Financing revenues decreased by USD 100 million, or 22%, to USD 352 million, driven by an USD 87 million loss resulting from the exit of remaining exposures relating to the default of a client of our prime brokerage business in the first quarter of 2021.

Investment Bank

Results: 6M21 vs 6M20Derivatives & Solutions revenues increased by USD 88 million, or 5%, to USD 2,020 million, reflecting a constructive market Profit before tax decreased by USD241million, or 18%, toenvironment for equity derivatives products. This increase was USD1,080million,primarilydriven by a loss related to thepartly offset by a decrease in revenues from foreign exchange, default of a client, reported within Financing in Global Markets,rates and credit products, reflecting strong revenues in the first and higher operating expenses. This was partly offset byhalf of 2020.
increased operating income in Global Banking and Derivatives &Financing revenues decreased by USD 883 million, or 96%, to Solutions within Global Markets.USD 33 million, predominantly due to an USD 861 million loss ›Refer to the “Group performance” section of our first quarteron the default of a client of our prime brokerage business.
2021 report for more information about the loss in the prime›Refer to the “Group performance” section of our first quarter brokerage business2021 report for more information about the loss in the prime

brokerage business Total operating income increased by USD 25 million, or 1%, to USD4,743million, reflecting higher revenues in GlobalGlobal Markets Equities revenues were stable at USD 2,114 Banking and net credit loss releases, offset by lower revenues inmillion. Equity derivatives and cash equities products revenues Global Markets.increased, while Financing revenues included the Global Banking revenues increased by USD 612 million, oraforementioned loss in our prime brokerage business.
58%, to USD 1,670 million, reflecting higher revenues in CapitalGlobal Markets Foreign Exchange, Rates and Credit revenues Markets and Advisory, which outperformed the global fee pool,decreased by USD800million, or 46%, to USD937million, most notably in Mergers &Acquisitions and Equity Capitalcompared with strong revenues in the first half of 2020.
Markets.Net credit loss releases were USD 23 million, compared with Advisory revenues increased by USD 231 million, or 79%, tonet expenses of USD 200 million, with net credit loss releases USD523million, largelydue to higher revenues fromM&Aprimarily related to stage 1 and 2 positions.
transactions, compared with a 46% increase in the global feeTotal operating expenses increased by USD 267 million, or pool.8%, to USD 3,663 million, largely driven by foreign currency Capital Markets revenues increased by USD 381 million, ortranslation effects, higher expenses for provisions for litigation, 50%, to USD 1,147 million, mainly reflecting a USD 314 million,regulatory and similar matters, and higher personnel expenses.

or 123%, increase in Equity Capital Markets revenues, compared with an increase in the global fee pool of 111%, driven by elevated levels of IPO activity.
Global Markets revenues decreased by USD 808 million, or 21%, to USD 3,051 million, driven by lower revenues in our Financing business, partly offset by higher revenues in equity derivatives and cash equities products.
Execution Services revenues decreased by USD 14 million, or 1%, to USD 998 million, mainly driven by higher client activity levels in cash equities, more than offset by lower revenues from foreign exchange products that are traded over electronic platforms.

Group Functions

Group Functions1 As of or for the quarter ended% change fromYear-to-date USD million, except where indicated30.6.2131.3.2130.6.201Q212Q2030.6.2130.6.20| Results | | | | | |
| --- | --- | --- | --- | --- | --- |
| Total operating income | (68)(90) | (155) | (24)(56) | (158)(635) | |
| Total operating expenses | 56 | 49151 | 14(63) | 105 | 80 |
| Operating profit / (loss) before tax | (124)(139) | (305) | (11)(59) | (263)(715) | |
| of which: Group Treasury | (125)(104) | (192) | 20(35) | (229)(323) | |
| of which: Non-core and Legacy Portfolio | (24) | 5(69) | (66) | (19)(289) | |
| of which: Group Services | 25(39) | (44) | | (14)(103) | |

Additional information
Risk-weighted assets (USD billion)	2	29.428.3	30.8	4(4)	29.430.8
Leverage ratio denominator (USD billion)	2,3	91.284.7	108.0	8(16)	91.2108.0

Results: 2Q21 vs 2Q20Group Services The Group Services result was positive USD 25 million, compared Group Functions recorded a loss before tax of USD 124 million,with negative USD44 million,mainlydue toagain ona compared with a loss of USD 305 million.property held for sale.

Group TreasuryResults: 6M21 vs 6M20 The Group Treasury result was negative USD 125 million, compared with negative USD 192 million.Group Functions recorded a loss before tax of USD 263 million, This included income related to centralized Group Treasurycompared with a loss of USD 715 million.
risk management of negative USD 33 million, compared withThe Group Treasury result was negative USD 229 million, negative USD 120 million in the second quarter of 2020, whichcompared with negative USD 323 million. This included income included additional liquidity costs related to COVID-19 marketrelated to centralized Group Treasury risk management of stress.negative USD35 million,compared with negative USD196 Income from accounting asymmetries, including hedgemillionin the first half of 2020,which includedadditional accounting ineffectiveness,was net negative USD84million,liquidity costs related to COVID-19 market stress. Income from compared with net positive income of USD 48 million.accounting asymmetries, including hedge accounting Operating expenses decreased by USD 112 million to USD 7ineffectiveness,was net negative USD174 million, compared million, mainly due to the reversal in the second quarter of 2020with net negative income of USD102 million.Operating of a previously booked reduction in variable compensation.expenses decreased by USD 4 million to USD 20 million.
The Non-core and Legacy Portfolio resultwasnegative Non-core and Legacy PortfolioUSD 19 million, compared with negative USD 289 million. This The Non-core and Legacy Portfolio result was negative USD 24result was mainly due to valuation gains of USD 36 million on million, compared with negative USD 69 million, and includedour USD 1.6 billion portfolio of ARS, compared with valuation income of USD 45 million related to a legacy bankruptcy claim.losses of USD143 million in the same period last year.In This was partly offset by valuation losses of USD 25 million onaddition, the first half of 2021includedincomeof USD45 our USD 1.6 billion portfolio of auction rate securities (ARS). Ourmillion related to a legacy bankruptcy claim. The first half of remaining exposures to ARS were all rated investment grade as2020 included a credit loss expense of USD 35 million on an of 30 June 2021.energy-related exposure.
The second quarter of 2020 included net credit loss expensesThe Group Services result was negative USD 14 million, of USD 20 million.compared with negative USD 103 million, mainly due to a gain on a property held for sale and lower funding costs related to deferred tax assets.

Selected financial information of our business divisions and Group Functions

Selected financial information of our

business divisions and Group Functions| | | For the quarter ended 30.6.21 | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Global Wealth | Personal &Corporate | Manage-AssetInvestment | | Group | |
| USD million | Management | Banking | ment | BankFunctions | | Total |
| Operating income | 4,774 | 1,135 | 666 | 2,470 | (68)8,976 | |

Operating expenses		3,479	636410	1,802	566,384
of which: net restructuring expenses	2	43	5	633	290

Operating profit / (loss) before tax1,294498255668(124)2,593| | | For the quarter ended 31.3.21 | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Global Wealth | Personal &Corporate | Manage-AssetInvestment | | Group | |
| USD million | Management | Banking | ment | BankFunctions | | Total |
| Operating income | 4,848 | 1,037 | 637 | 2,273 | (90)8,705 | |

Operating expenses3,4396474101,862496,407

Operating profit / (loss) before tax1,409389227412(139)2,298| | | For the quarter ended 30.6.20 | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Global Wealth | Personal &Corporate | Manage-AssetInvestment | | Group | |
| USD million | Management | Banking | ment | BankFunctions | | Total |
| Operating income | 3,942 | 823 | 524 | 2,268 | (155)7,403 | |

Operating expenses	3,062	586367	1,656	151	5,821
of which: net restructuring expenses	11	4	1	5	021

Operating profit / (loss) before tax880238157612(305)1,582
1 The “of which” components of operating income and operating expenses disclosed in this table are items that are not recurring or necessarily representative of the underlying business performance for the reporting period specified. 2 Includes curtailment gains of USD 59 million, which represent a reduction in the defined benefit obligation related to the Swiss pension plan resulting from a decrease in headcount following restructuring activities.

Risk, capital,

liquidity and

funding, and

balance sheet

Management report

Table of contents

29Risk management and control
29Credit risk
32Market risk
33Country risk
33Operational risk

35Capital management
36Swiss SRB requirements and information
37Total loss-absorbing capacity
41Risk-weighted assets
43Leverage ratio denominator
45Equity attribution and return on attributed equity

46Liquidity and funding management
46Strategy, objectives and governance
46Liquidity coverage ratio
46Net stable funding ratio

47Balance sheet and off-balance sheet
47Strategy, objectives and governance
47Balance sheet assets
47Balance sheet liabilities
48Equity
49Off-balance sheet

50Share information and earnings per share

Risk management and control

This section provides information about key developmentsCredit risk during the reporting period and should be read in conjunction with the “Risk management and control” section of our AnnualCredit loss expense / release Report 2020. While vaccination campaigns are progressing andTotal net credit loss releases were USD 80 million, reflecting net many economies are recovering, localized outbreaks, the spreadreleases of USD 88 million related to stage 1 and 2 positions and of new variants of COVID-19, and uneven vaccination rates arenetexpensesofUSD8million related tocredit-impaired causing uncertainty around a sustainable recovery.(stage 3) positions. The USD 88 million stage 1 and 2 net release The related effects on credit, market, country and operationalincluded the partial release of a post-model adjustment of risk in the second quarter of 2021 are reflected in the followingUSD 91 million (representing one-third of the USD 273 million sections.scenario-driven model output effects from the third quarter of ›Refer to the “Recent developments” section of this report for2020 to the second quarter of 2021), due to the continued more information about our response to COVID-19positive trend in macroeconomic scenario input data.

›

Refer to “Note 7 Expected credit loss measurement” in the

“Consolidated financial statements” section of this report for

more information about credit loss expense / release

›Refer to “Note 1 Summary of significant accounting policies,”

“Note 9 Financial assets at amortized cost and other positions in

scope of expected credit loss measurement” and “Note 20

Expected credit loss measurement” in the “Consolidated

financial statements” section of our Annual Report 2020 for

more information about the scenario updates| Credit loss (expense) / release | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | WealthGlobal | Personal &Corporate | Asset | Investment | Group | |
| USD million | Management | Banking | Management | Bank | Functions | Total |
| For the quarter ended 30.6.21 | | | | | | |
| Stages 1 and 2 | 13 | 51 | 0 | 24 | (1) | 88 |
| Stage 3 | 0 | (5) | 0 | (3) | 0 | (8) |
| Total credit loss (expense) / release | 14 | 46 | 0 | 21 | (1) | 80 |

For the quarter ended 31.3.21
Stages 1 and 2	4	16	5	26
Stage 3	(2)	8	(4)	3
Total credit loss (expense) / release	3	23	2	28

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

Overall banking products exposuresSwiss mortgage portfolio Overall banking products exposure increased by USD 13 billion,Of our USD 163 billion total Swiss real estate portfolio, USD 148 to USD 650 billion as of 30 June 2021.billionrelated toresidential real estate,USD6billion to The credit-impaired gross exposure decreased marginally bycommercial retail and office real estate, and USD 8 billion to USD 135 million to USD 3,318 million , mainly in Global Wealthindustrial and other real estate.
Management.The residential portfolio consists of USD 123 billion for single- In Personal & Corporate Banking, loans and advances tofamily houses and apartments (average loan-to-value (LTV) ratio customers increased by USD 3.8 billion, mainly driven by theof 53%) and USD 25 billion in residential income-producing real effects of the US dollar depreciating against the Swiss franc on aestate (average LTV of 52%). We are also carefully monitoring mostly Swiss franc-denominated portfolio.InGlobal Wealththe level of risk in our Swiss commercial retail and office real Management, the USD 8.7 billion increase in loans and advancesestate portfolio (average LTV of 46%) and its resilience to the to customers was mainly driven by higher volumes of Lombardeconomic impact of COVID-19.
loans and mortgages on residential real estate in the US and›Refer to the “Risk management and control” section of our Switzerland.In the Investment Bank, loans and advances toAnnual Report 2020 for more information about our Swiss customers increased by USD 1.0 billion.mortgage portfolio In aggregate, exposure related to traded products decreased by USD 2.5 billion during the second quarter of 2021, mainlyExposure to the Swiss economy and Swiss corporates due tolowerlevels of market volatility impacting existingWithin Personal & Corporate Banking, certain industry sectors portfolios in the Investment Bank.continue to exhibit higher risk due to COVID-19 and the associated containment measures.Industrieswithanegative Committed credit facilitiesoutlook include tourism and media,as well as,to a lesser We did not observe an increase in drawing of committed creditdegree,culture, sports and education.Ourexposuretothe facilities by clients in the second quarter of 2021. We managetourismsector (including hotels, restaurants and transport)
our credit risk on the aggregate of drawn and committedtotaledUSD2.0billionas of30June2021, withhotels undrawn credit facilities and model full drawing of committedaccounting forUSD1.0billionofthisexposure.Our other facilities in our stress testing framework.exposures included USD 1.0 billion to the culture, sports and education sector, and USD 0.1 billion to the media sector. Apart Loan underwritingfrom a few large counterparties, our exposureswithinthese In the Investment Bank, new loan underwriting activity andsectors are highly diversified across Switzerland.
distributions continued to be robust during the second quarter of 2021. As of30June2021, mandated loan underwriting commitments totaledUSD3.6billion on a notional basis

(compared with USD 4.5 billion as of 31 March 2021). As of 30 June 2021, USD 0.9 billion of commitments had not yet been distributed as originally planned.
Loan underwriting exposures are held for trading, with fair values reflecting the market conditions at the end of the quarter.
Credit hedges are in place to help protect against fair value movements in the portfolio.

Banking and traded products exposure in our business divisions and Group Functions

30.6.21| | | Global Wealth | Personal &Corporate | Asset | Investment | Group | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| USD million | | Management | Banking | Management | Bank | Functions | Total |
| Banking products | 1 | | | | | | |
| Gross exposure | | 315,902 | 219,372 | 3,329 | 60,923 | 50,531 | 650,057 |
| of which: loans and advances to customers (on-balance sheet) | | 223,082 | 149,806 | 1 | 13,809 | 4,378 | 391,076 |
| of which: guarantees and loan commitments (off-balance sheet) | | 10,382 | 26,984 | 0 | 15,053 | 2,789 | 55,208 |
| Traded products | 2,3 | | | | | | |
| Gross exposure | | 11,516 | 732 | 0 | 41,762 | | 54,009 |
| of which: over-the-counter derivatives | | 8,435 | 706 | 0 | 12,506 | | 21,647 |
| of which: securities financing transactions | | 0 | 0 | 0 | 22,198 | | 22,198 |
| of which: exchange-traded derivatives | | 3,081 | 25 | 0 | 7,058 | | 10,164 |
| Other credit lines, gross | 4 | 11,269 | 24,350 | 0 | 3,147 | 30 | 38,796 |

Total credit-impaired exposure, gross (stage 3)	1,002	1,875	0	441	03,318
Total allowances and provisions for expected credit losses (stages 1 to 3)	288	734	1	266	41,294
of which: stage 1	92	117	0	64	4	277
of which: stage 2	46	149	0	38	0	233
of which: stage 3 (allowances and provisions for credit-impaired exposures)	150	469	1	164	0	784

31.3.21| | | Global Wealth | Personal &Corporate | Asset | Investment | Group | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| USD million | | Management | Banking | Management | Bank | Functions | Total |
| Banking products | 1 | | | | | | |
| Gross exposure | | 312,061 | 216,848 | 3,033 | 58,459 | 46,637 | 637,037 |
| of which: loans and advances to customers (on-balance sheet) | | 214,417 | 146,027 | 1 | 12,799 | 4,547 | 377,791 |
| of which: guarantees and loan commitments (off-balance sheet) | | 9,787 | 26,969 | 0 | 15,747 | 3,128 | 55,630 |
| Traded products | 2,3 | | | | | | |
| Gross exposure | | 11,746 | 812 | 0 | 43,944 | | 56,502 |
| of which: over-the-counter derivatives | | 8,956 | 795 | 0 | 14,413 | | 24,164 |
| of which: securities financing transactions | | 0 | 0 | 0 | 21,273 | | 21,273 |
| of which: exchange-traded derivatives | | 2,790 | 17 | 0 | 8,258 | | 11,065 |
| Other credit lines, gross | 4 | 11,322 | 23,925 | 0 | 4,148 | 29 | 39,424 |

Total credit-impaired exposure, gross (stage 3)	1,105	1,899	0	443	73,453
Total allowances and provisions for expected credit losses (stages 1 to 3)	304	769	1	295	91,378
of which: stage 1	99	125	0	74	3	301
of which: stage 2	51	186	0	53	0	290
of which: stage 3 (allowances and provisions for credit-impaired exposures)	153	458	1	169	6	787

Global Wealth Management and Personal & Corporate Banking loans and advances to customers, gross| | | Global Wealth Management | | Personal & Corporate Banking | |
| --- | --- | --- | --- | --- | --- |
| USD million | | 30.6.21 | 31.3.21 | 30.6.21 | 31.3.21 |
| Secured by residential property | | 61,895 | 59,114 | 108,167 | 105,205 |
| Secured by commercial / industrial property | 1 | 3,483 | 3,243 | 19,042 | 18,694 |
| Secured by cash | | 22,358 | 22,155 | 2,625 | 2,594 |
| Secured by securities | | 117,802 | 112,359 | 1,899 | 1,783 |
| Secured by guarantees and other collateral | | 15,266 | 15,564 | 7,017 | 7,011 |
| Unsecured loans and advances to customers | | 2,277 | 1,980 | 11,056 | 10,739 |
| Total loans and advances to customers, gross | | 223,082 | 214,417 | 149,806 | 146,027 |
| Allowances | | (173) | (186) | (601) | (616) |
| Total loans and advances to customers, net of allowances | | 222,908 | 214,231 | 149,205 | 145,411 |

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

Market riskThere weretwo new Group VaR negative backtesting exceptions at the beginning of the second quarter of 2021, We continued to maintain generally low levels of managementbringing the total number of negative backtesting exceptions value-at-risk (VaR). Average management VaR (1-day, 95%within the most recent 250-business-day window to 3.The confidence level) was unchanged, at USD 12 million, comparedSwiss Financial Market Supervisory Authority (FINMA)VaR with the first quarter of 2021.multiplier derived from backtesting exceptions for market risk risk-weighted assets remained unchanged compared with the prior quarter, at 3.0.

Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of our business divisions and

Group Functions by general market risk type1| | | | | | | | Average by risk type | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| USD million | | Min. | Max.Period end | Average | Equity | Interestrates | spreads | Creditexchange | ForeignCommodities | |
| Global Wealth Management | | 1 | 2 | 1 | 1 | 0 | 1 | 2 | 0 | 0 |
| Personal & Corporate Banking | | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Asset Management | | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Investment Bank | | 3 | 32 | 10 | 11 | 9 | 8 | 6 | 3 | 3 |
| Group Functions | | 5 | 8 | 6 | 6 | 0 | 4 | 4 | 1 | 0 |
| Diversification effect | 2,3 | | | (6) | (6) | 0 | (5) | (5) | (1) | 0 |
| Total as of 30.6.21 | | 4 | 32 | 10 | 12 | 9 | 9 | 7 | 3 | 3 |
| Total as of 31.3.21 | | 4 | 36 | 36 | 12 | 8 | 9 | 8 | 3 | 3 |

As of 30 June 2021, the interest rate sensitivity of our bankingtier 1 capital as of 30 June 2021 would have been a reduction of
book to a +1-basis-point parallel shift in yield curves was1.8%, or USD 1.0 billion, arising from the part of our banking
negative USD 31.3 million, compared with negative USD 31.4book that is measured at fair value through profit or loss and
millionas of31March2021.The reported interest ratefrom the financial assets measured at fair value through other
sensitivity excludes AT1 capital instruments, as per FINMA Pillar 3comprehensive income. This scenario would, however, have a
disclosure requirements , with a sensitivity of USD 5.3 million perpositive effect on net interest income.
basis point, and our equity, goodwill and real estate, with a›Refer to “Interest rate risk in the banking book” in the “Market
modeled sensitivity of USD 22.2 million per basis point, of whichrisk” section of our Annual Report 2020 for more information
USD 5.5 million and USD 15.9 million are attributable to theabout the management of interest rate risk in the banking book
Swiss franc and the US dollar portfolios, respectively.›Refer to “Sensitivity to interest rate movements” in the “Group
The most adverse of the six FINMA interest rate scenarios wasperformance” section of this report for more information about
the “Parallel up” scenario, which resulted in a change in thethe effects of increases in interest rates on the equity, capital
economic value of equity ofnegativeUSD6.3 billion,and net interest income of Global Wealth Management and
representing a pro forma reduction of 10.7% of tier 1 capital,Personal & Corporate Banking
which is well below the regulatory outlier test of 15% of tier 1
capital. The immediate effect of the “Parallel up” scenario on

Interest rate risk – banking book| USD million | +1 bpParallel up | 1Parallel down | 1Steepener | 2Flattener | 3Short-term up | 4Short-term down | 5 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| CHF | (5.2)(737.1) | | 828.6(338.8) | 195.6 | | (99.1) | 103.6 |
| EUR | (1.3)(245.7) | | 282.7 | (56.8) | 16.8 | (58.2) | 61.8 |
| GBP | 0.1 | 28.7 | (26.8) | (23.3) | 28.3 | 38.3 | (30.2) |
| USD | (24.6)(5,256.2) | | 4,486.4(1,076.9) | (170.4) | (2,059.8) | | 2,314.5 |
| Other | (0.4) | (97.6) | (43.7) | (2.4)(40.4) | | (69.4) | (26.3) |
| Total effect on economic value of equity as per Pillar 3 requirement as of 30.6.21 | (31.3)(6,307.9) | | 5,527.2(1,498.3) | | 29.9(2,248.3) | | 2,423.5 |
| Additional tier 1 (AT1) capital instruments | 5.31,011.2 | (1,104.3) | | 20.0201.6 | | 600.3 | (626.0) |
| Total including AT1 capital instruments as of 30.6.21 | (26.0)(5,296.8) | | 4,423.0(1,478.3) | 231.4 | (1,648.0) | | 1,797.4 |
| Total effect on economic value of equity as per Pillar 3 requirement as of 31.3.21 | (31.4)(6,179.0) | | 5,607.0(1,616.6) | 204.5 | (2,129.3) | | 2,304.7 |
| Total including AT1 capital instruments as of 31.3.21 | (26.2)(5,183.2) | | 4,518.4(1,594.4) | 399.3 | (1,542.0) | | 1,692.1 |

Country riskWe remain watchful of developments in Europe and political changes in a number of countries. Our direct exposure to The COVID-19pandemic,and its impact on growth,peripheral European countries is limited, although we have employment, debt dynamics and supply chains,remainsansignificant country risk exposure to the major European important driver of country risk, and we expect this to be theeconomies, including the UK, Germany and France.
case for at least the near future.We continue to monitor potential trade policy disputes, as While vaccination campaigns are progressing and manywell as economic and political developments, notably in Hong economies are recovering, localized outbreaks, the spread ofKong.
new variants of COVID-19, and uneven vaccination rates areA number of emerging markets are facing economic, political causing uncertainty around a sustainable recovery.and market pressures, particularly in light of challenges related Concerns have grown about a resurgence in global inflation,to the COVID-19 pandemic. Our exposure to emerging market but key central banks expect recent price spikes (such as in thecountries is well diversified.
US and the Eurozone) to betransitory.We expectmeasures›Refer to the “Risk management and control” section of our taken by governments and central banks that are intended toAnnual Report 2020 for more information support their economies to give rise to increased sovereign risk.| Exposures to Eurozone countries rated lower than AAA / Aaa by at least one major rating agency | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| USD million | | | 30.6.21 | | | | | 31.3.21 | |
| | | | | inventory | Trading | | | | |
| | Banking products, gross | 1 | Traded products | | | Total | | Total | |
| | hedgesBefore | hedgesNet of | hedgesBefore | hedgesNet ofper issuerNet long | | | hedgesNet of | | hedgesNet of |
| France | 1,473 | 1,470 | 1,725 | 1,599 | 4,526 | 7,724 | 7,595 | 8,507 | 8,381 |
| Austria | 198 | 197 | 298 | 298 | 746 | 1,242 | 1,241 | 1,097 | 1,096 |
| Italy | 834 | 798 | 295 | 295 | 49 | 1,178 | 1,142 | 1,513 | 1,475 |
| Monaco2 | 1,040 | 1,040 | 21 | 21 | 12 | 1,073 | 1,073 | 899 | 898 |
| Ireland | 516 | 487 | 46 | 46 | 152 | 714 | 685 | 712 | 684 |
| Spain | 415 | 322 | 112 | 112 | 204 | 731 | 638 | 758 | 664 |
| Belgium | 145 | 145 | 160 | 160 | 28 | 333 | 333 | 401 | 401 |
| Finland | 6 | 6 | 67 | 67 | 151 | 224 | 224 | 305 | 305 |
| Portugal | 43 | 43 | 9 | 9 | 10 | 62 | 62 | 51 | 51 |
| Cyprus | 28 | 13 | 0 | 0 | 20 | 48 | 33 | 46 | 21 |
| Other3 | 18 | 13 | 20 | 20 | 20 | 58 | 53 | 39 | 36 |
| Total | 4,716 | 4,533 | 2,753 | 2,626 | 5,919 | 13,38813,079 | | 14,32814,013 | |

Operational riskIncreases in the sophistication of cyberattacks and related frauds are being seen worldwide. To date, our security controls, Operational resilience, conduct and financial crime remain theregular communications to help employees to stay alert to cyber key non-financial risk themes for UBS and the financial servicesthreats while working remotely, and enhanced monitoring of industry. Operational resilience also continues to be a focus areacyber threats have been effective, with cybersecurity incidents for regulators globally, with a particular emphasis on measuresthat occurred during the second quarter of 2021 not having had taken to respond to the ongoing COVID-19 pandemic.any significant residual risk impact.
Our global program to enhance our current operationalUBS maintains its focus on innovation and digitalization to resilience capabilities is in progressandincludes addressingcreate value for our clients. As part ofthe resulting continuously developing regulatory requirements in this regard.transformation, we focus on timely changes to frameworks, The existing resilience built into our operations and theincluding consideration of new or revised controls, working effectiveness of our business continuity management andpractices and oversight, with the aim of mitigating any new risks operational risk procedures (including those which apply tointroduced.
third-party service providers) have been critical in handling theAchieving fair outcomes for our clients, upholding market ongoing COVID-19 pandemic and have enabled us to continueintegrity and cultivating the highest standards of employee to serve our clients without material impact. We haveconduct are of critical importance to the firm. As such, maintained stable operations while complying withmanagement of conduct risks is an integral part of our risk governmental requirements regarding containment that haveframework. We continue to focus on effectively embedding the been imposed in many of our principal locations, and we remainconduct risk framework across our activities, enhancing focused on the safety and well-being of our staff, with amanagement information, and maintaining momentum on particular focus on countries severely impacted by COVID-19fostering a strong culture.
outbreaks.

›Refer to the “Recent developments” section of this report for

more information

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

Remote working arrangements can also lead to increasedgeopolitical volatility makes the sanctions landscape more conduct risk, inherent risk of fraudulent activities, potentialcomplex, and new risks emerge, such as virtual currencies and increases in the number of suspicious transactions, and increasedrelated activities or investments.
information security risks (in particular regarding clientThe Office of the Comptroller of the Currency issued a Cease identifying data and unpublished price-sensitive information).and Desist Order against the firm in May 2018 related to our US Our increased monitoring and supervision remain in place forbranch know-your-customer (KYC) and anti-money-laundering remote working, including programs to educate clients and(AML) programs. In response, we initiated an extensive program employees on fraud risk, where our protocols for interaction tofor the purpose of ensuring sustainable remediation of USmitigate this risk have been updated. We are staying abreast ofrelevant Bank Secrecy Act / AML issues across all US legal emerging trends in order to deploy further mitigating activity asentities. We introduced significant improvements to the necessary.framework in 2019 and 2020, and are continuing to implement In addition to the effects of COVID-19, financial crime (e.g.,these improvements, which we believe will yield the planned money laundering, terrorist financing, sanctions violations, fraud,enhancements to our AML controls.
bribery and corruption) continues to present a major risk, asWe continue to focus on strategic enhancements for AML / technological innovation and geopolitical developments increaseKYC and sanctions programs on a global scale to cope with the complexity of doing business and heightened regulatoryevolving risk profiles and regulatory expectations, including the attention continues.exploration of new technologies and more sophisticated rules- An effective financial crime prevention program remainsbased monitoring, using self-learning systems to identify essential for UBS. Money laundering and financial fraudpotentially suspicious transactions and behavior.
techniques are becoming increasingly sophisticated, while

Capital management

The disclosures in this section are provided for UBS Group AG onconsolidated and UBS Americas Holding LLC consolidated) as of a consolidated basis and focus on key developments during the30 June 2021 and will be available as of 20 August 2021 under reporting period and information in accordance with the Basel III“Pillar 3 disclosures” atubs.com/investors.
framework, as applicable to Swiss systemically relevant banksCapital and other regulatory information for UBS AG (SRBs). They should be read in conjunction with “Capitalconsolidated in accordance with the Basel III framework, as management”in the “Capital, liquidity and funding, andapplicable to Swiss SRBs, will be provided in the UBS AG second balance sheet”section of our Annual Report2020, whichquarter 2021 report, which will be available as of 23 July 2021 provides more information about our capital managementunder “Quarterly reporting” atubs.com/investors.
objectives, planning and activities, as well as the Swiss SRB totalUBS Group AG is a holding company and conducts loss-absorbing capacity framework.substantially allof itsoperations through UBSAG and Additional regulatory disclosures for UBS Group AG on asubsidiaries thereof. UBS Group AG and UBS AG have consolidated basis will be provided in our 30 June 2021 Pillar 3contributed a significant portion of their respective capital to, report. The Pillar 3 report will also include information relating toand provide substantial liquidity to, such subsidiaries. Many of our significant regulated subsidiaries and sub-groups (UBS AGthese subsidiaries are subject to regulations requiring compliance standalone, UBS Switzerland AG standalone, UBS Europe SEwith minimum capital, liquidity and similar requirements.

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

Swiss SRB requirements and information

We are subject to the going and gone concern requirements ofThe aforementioned requirements are also applicable to the Swiss Capital Adequacy Ordinance (the CAO) that includeUBSAG consolidated. UBSSwitzerlandAGand UBSAG are the too-big-to-fail provisions applicable to Swiss SRBs.subject to going and gone concern requirements on a Information about the Swiss SRB capital framework, and aboutstandalone basis, as detailed in our 30 June 2021 Pillar 3 report, Swiss SRB going and gone concern requirements, is providedwhich will be available as of 20 August 2021 under “Pillar 3 under“Capital management”in the “Capital, liquidity anddisclosures” atubs.com/investors.
funding, and balance sheet” section of our Annual Report 2020.The table below provides the risk-weighted assets (RWA)- and leverage ratio denominator (LRD)-based requirements and information as of 30 June 2021.| Swiss SRB going and gone concern requirements and information | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| As of 30.6.21 | | | RWA | | LRD | |
| USD million, except where indicated | | | in % | | in % | |
| Required going concern capital | | | | | | |
| Total going concern capital | | | 13.961 | 40,943 | 4.881 | 50,697 |
| Common equity tier 1 capital | | | 9.66 | 28,332 | 3.382 | 35,098 |
| of which: minimum capital | | | 4.50 | 13,197 | 1.50 | 15,599 |
| of which: buffer capital | | | 5.14 | 15,074 | 1.88 | 19,499 |
| of which: countercyclical buffer | | | 0.02 | 61 | | |
| Maximum additional tier 1 capital | | | 4.30 | 12,611 | 1.50 | 15,599 |
| of which: additional tier 1 capital | | | 3.50 | 10,265 | 1.50 | 15,599 |
| of which: additional tier 1 buffer capital | | | 0.80 | 2,346 | | |
| Eligible going concern capital | | | | | | |
| Total going concern capital | | | 20.18 | 59,188 | 5.69 | 59,188 |
| Common equity tier 1 capital | | | 14.52 | 42,583 | 4.09 | 42,583 |
| Total loss-absorbing additional tier 1 capital | | | 5.66 | 16,605 | 1.60 | 16,605 |
| of which: high-trigger loss-absorbing additional tier 1 capital | | 3 | 4.81 | 14,096 | 1.36 | 14,096 |
| of which: low-trigger loss-absorbing additional tier 1 capital | | | 0.86 | 2,509 | 0.24 | 2,509 |
| Required gone concern capital | | | | | | |
| Total gone concern loss-absorbing capacity | 4 | | 10.60 | 31,101 | 3.76 | 39,092 |
| of which: base requirement | 5 | | 12.86 | 37,715 | 4.50 | 46,797 |
| of which: additional requirement for market share and LRD | | | 1.08 | 3,167 | 0.38 | 3,900 |
| of which: applicable reduction on requirements | | | (3.34) | (9,782) | (1.12)(11,605) | |
| of which: rebate granted (equivalent to 47.5% of maximum rebate) | | 6 | (2.54) | (7,439) | (0.89) | (9,262) |
| of which: reduction for usage of low-trigger tier 2 capital instruments | | | (0.80) | (2,343) | (0.23) | (2,343) |
| Eligible gone concern capital | | | | | | |
| Total gone concern loss-absorbing capacity | | | 15.38 | 45,110 | 4.34 | 45,110 |
| Total tier 2 capital | | | 1.78 | 5,232 | 0.50 | 5,232 |
| of which: low-trigger loss-absorbing tier 2 capital | | | 1.60 | 4,686 | 0.45 | 4,686 |
| of which: non-Basel III-compliant tier 2 capital | | | 0.19 | 547 | 0.05 | 547 |
| TLAC-eligible senior unsecured debt | | | 13.60 | 39,878 | 3.83 | 39,878 |
| Total loss-absorbing capacity | | | | | | |
| Required total loss-absorbing capacity | | | 24.57 | 72,044 | 8.63 | 89,789 |
| Eligible total loss-absorbing capacity | | | 35.56104,298 | | 10.03104,298 | |
| Risk-weighted assets / leverage ratio denominator | | | | | | |
| Risk-weighted assets | | | 293,277 | | | |
| Leverage ratio denominator | | | | | 1,039,939 | |

a 0.25% LRD add-on requirement and a 0.125% market share add-on requirement based on our Swiss credit business. 3 Includes outstanding low-trigger loss-absorbing additional tier 1 (AT1) capital instruments, which are available under the Swiss SRB framework to meet the going concern requirements until their first call date. As of their first call date, these instruments are eligible to meet the gone concern requirements.
4 A maximum of 25% of the gone concern requirements can be met with instruments that have a remaining maturity of between one and two years. Once at least 75% of the minimum gone concern requirement has been met with instruments that have a remaining maturity of greater than two years, all instruments that have a remaining maturity of between one and two years remain eligible to be included in the total gone concern capital. 5 The gone concern requirement after the application of the rebate for resolvability measures and the reduction for the use of higher quality capital instruments is floored at 8.6% and 3% for the RWA- and LRD-based requirements, respectively. This means that the combined reduction may not exceed 5.34 percentage points for the RWA-based requirement of 13.94% and 1.875 percentage points for the LRD-based requirement of 4.875%. 6 Based on the actions we completed up to December 2020 to improve resolvability, FINMA granted an increase of rebate on the gone concern requirement from 47.5% to 55.0% of the maximum rebate, effective from 1 July 2021.

Total loss-absorbing capacity

The table below provides Swiss SRB going and gone concern information based on the Swiss SRB framework and requirements that are discussed under “Capital management” in the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020.

Swiss SRB going and gone concern information

USD million, except where indicated30.6.2131.3.2131.12.20| Eligible going concern capital | | | |
| --- | --- | --- | --- |
| Total going concern capital | 59,188 | 56,288 | 56,178 |
| Total tier 1 capital | 59,188 | 56,288 | 56,178 |
| Common equity tier 1 capital | 42,583 | 40,426 | 39,890 |
| Total loss-absorbing additional tier 1 capital | 16,605 | 15,862 | 16,288 |
| of which: high-trigger loss-absorbing additional tier 1 capital | 14,096 | 13,361 | 13,711 |
| of which: low-trigger loss-absorbing additional tier 1 capital | 2,509 | 2,501 | 2,577 |

Eligible gone concern capital
Total gone concern loss-absorbing capacity	45,110	44,381	45,545
Total tier 2 capital	5,232	5,253	7,744
of which: low-trigger loss-absorbing tier 2 capital	4,686	4,709	7,201
of which: non-Basel III-compliant tier 2 capital	547	544	543
TLAC-eligible senior unsecured debt	39,878	39,129	37,801

Total loss-absorbing capacity Total loss-absorbing capacity104,298100,669101,722| Risk-weighted assets / leverage ratio denominator | | | |
| --- | --- | --- | --- |
| Risk-weighted assets | 293,277 | 287,828 | 289,101 |
| Leverage ratio denominator | 1,039,939 | 1,038,225 | 1,037,1501 |

Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio	20.2	19.6	19.4
of which: common equity tier 1 capital ratio	14.5	14.0	13.8
Gone concern loss-absorbing capacity ratio	15.4	15.4	15.8
Total loss-absorbing capacity ratio	35.6	35.0	35.2

Leverage ratios (%)
Going concern leverage ratio	5.7	5.4	5.4
of which: common equity tier 1 leverage ratio	4.09	3.89	3.85
Gone concern leverage ratio	4.3	4.3	4.4
Total loss-absorbing capacity leverage ratio	10.0	9.7	9.8

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

Total loss-absorbing capacity and movementGone concern loss-absorbing capacity and movement Our total gone concern loss-absorbing capacity increased by Our total loss-absorbing capacity (TLAC) increased by USD 3.6USD0.7billion to USD45.1billion, mainlyreflectingthe billion to USD 104.3 billion in the second quarter of 2021.issuance of USD 265 million of TLAC-eligible senior unsecured debt, as well as effects from interest rate risk hedges and foreign Going concern capital and movementcurrency translation.
During the second quarter of 2021, our going concern capital›Refer to “Bondholder information” atubs.com/investorsfor increased by USD 2.9 billion to USD 59.2 billion. Our commonmore information about the eligibility of capital and senior equity tier1 (CET1) capital increasedby USD2.2billion tounsecured debt instruments and about key features and terms USD 42.6 billion, mainly reflecting operating profit before tax ofand conditions of capital instruments USD 2.6 billion, a USD 0.4 billion lower deduction of goodwill resulting from the sale of our remaining minority investment inLoss-absorbing capacity and leverage ratios Clearstream Fund Centre, positive foreign currency translationOur CET1 capital ratio increased 0.5 percentage points to effectsof USD0.3 billionand USD0.2 billion highereligible14.5%, reflecting an increase in CET1 capital of USD 2.2 billion, deferred tax assets on temporary differences, partly offset bypartly offset by a USD 5.4 billion increase in RWA.
compensation-and own share-related capital components ofOur CET1 leverage ratio increased from 3.89% to 4.09%, USD0.4 billion,current tax expenses of USD0.4 billionanddue to the aforementioned increase in CET1 capital, partly offset accruals for capital returns to shareholders of USD 0.3 billion.by a USD 2 billion increase in LRD.
Our share repurchases in the second quarter of 2021 did notOur gone concern loss-absorbing capacity ratio was stable at affect our CET1 capital position, as there was an equivalent15.4%, as the aforementioned increase in gone concern lossreduction in the capital reserve for potential share repurchases.absorbing capacity was offset by the aforementioned increase of Our additional tier 1 (AT1) capital increased by USD 0.7 billionRWA.
to USD 16.6 billion, mainly reflecting the issuance of an AT1Our gone concern leverage ratio was stable at 4.3%, as the instrument with a nominal value of USD 750 million. On 6 Julyaforementioned increase in gone concern loss-absorbing 2021,we announced that we will redeeman AT1 capitalcapacity was offset by the aforementioned increase of LRD.
instrument on 10August2021(ISIN CH0331455318 witha

nominal amount of USD 1.1 billion, issued on 10 August 2016).
This instrument remained eligible as AT1 capital as of 30 June 2021.| Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital | | | | |
| --- | --- | --- | --- | --- |
| USD million | | 30.6.21 | 31.3.21 | 31.12.20 |
| Total IFRS equity | | 59,050 | 58,333 | 59,765 |
| Equity attributable to non-controlling interests | | (284) | (307) | (319) |
| Defined benefit plans, net of tax | | (144) | (104) | (41) |
| Deferred tax assets recognized for tax loss carry-forwards | | (5,183) | (5,582) | (5,617) |
| Deferred tax assets on temporary differences, excess over threshold | | | | (5) |
| Goodwill, net of tax | 1 | (5,883) | (6,243) | (6,319) |
| Intangible assets, net of tax | | (200) | (265) | (296) |
| Compensation-related components (not recognized in net profit) | | (1,680) | (1,420) | (1,349) |
| Expected losses on advanced internal ratings-based portfolio less provisions | | (463) | (342) | (330) |
| Unrealized (gains) / losses from cash flow hedges, net of tax | | (1,365) | (1,138) | (2,321) |
| Own credit related to gains / losses on financial liabilities measured at fair value that existed at the balance sheet date | | 279 | 401 | 382 |
| Own credit related to gains / losses on derivative financial instruments that existed at the balance sheet date | | (50) | (48) | (45) |
| Unrealized gains related to debt instruments at fair value through OCI, net of tax | | (89) | (96) | (152) |
| Prudential valuation adjustments | | (146) | (152) | (150) |
| Accruals for dividends to shareholders for 2020 | | | (1,314) | (1,314) |
| Capital reserve for potential share repurchases | | (587) | (949) | (2,000) |
| Other2 | | (670) | (349) | 0 |
| Total common equity tier 1 capital | | 42,583 | 40,426 | 39,890 |

Swiss SRB total loss-absorbing capacity movement

USD million| Going concern capital | | Swiss SRB |
| --- | --- | --- |
| Common equity tier 1 capital as of 31.3.21 | | 40,426 |
| Operating profit before tax | | 2,593 |
| Current tax (expense) / benefit | | (362) |
| Foreign currency translation effects | | 259 |
| Share repurchase program | 1 | (361) |
| Capital reserve for potential share repurchases | | 361 |
| Compensation- and own share-related capital components | | (373) |
| Other2 | | 40 |
| Common equity tier 1 capital as of 30.6.21 | | 42,583 |
| Loss-absorbing additional tier 1 capital as of 31.3.21 | | 15,862 |
| Issuance of a high-trigger loss-absorbing additional tier 1 capital instrument | | 750 |
| Interest rate risk hedge, foreign currency translation and other effects | | (7) |
| Loss-absorbing additional tier 1 capital as of 30.6.21 | | 16,605 |
| Total going concern capital as of 31.3.21 | | 56,288 |
| Total going concern capital as of 30.6.21 | | 59,188 |

Gone concern loss-absorbing capacity Tier 2 capital as of 31.3.215,253 Interest rate risk hedge, foreign currency translation and other effects(20)
Tier 2 capital as of 30.6.215,232 TLAC-eligible senior unsecured debt as of 31.3.2139,129 Issuance of TLAC-eligible senior unsecured debt instruments265 Interest rate risk hedge, foreign currency translation and other effects484 TLAC-eligible senior unsecured debt as of 30.6.2139,878 Total gone concern loss-absorbing capacity as of 31.3.2144,381 Total gone concern loss-absorbing capacity as of 30.6.2145,110

Total loss-absorbing capacity Total loss-absorbing capacity as of 31.3.21100,669 Total loss-absorbing capacity as of 30.6.21104,298 1 Includes share purchases of USD 300 million after the publication of our first quarter 2021 report (from 28 April 2021 to 30 June 2021). 2 Includes movements related to accruals for dividends for the current year and other items.

Risk, capital, liquidity and funding, and balance sheet | Capital management| | | | | | | result of the risks associated with the matters described in | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Risk-weighted assets | | | | | | “Note14 | Provisions and contingent liabilities” in the |
| We estimate that a 10% depreciation of the US dollar against | | | | | | “Consolidated financial statements” section of this report. We | |
| other currencies would have increased our RWA by USD 13 | | | | | | have used for this purpose the advanced measurement approach | |
| billion and our CET1 capital by USD 1.3 billion as of 30 June | | | | | | (AMA) methodology that we apply when determining the capital | |
| 2021(31 | March20 | 21: USD | 12billion and USD | | 1.3billion, | requirements associated with operational risks, based on a | |
| respectively) and decreased our CET1 capital ratio 16 basis | | | | | | 99.9% confidence level over a 12-month horizon. The | |
| points (31 | March | 2021:15 | basis points). Conversely, we | | | methodology takes into consideration UBS and industry | |
| estimate that a 10% appreciation of the US dollar against | | | | | | experience for the AMA operational risk categories to which | |
| other currencies would have decreased our RWA by USD 11 | | | | | | those matters correspond, as well as the external environment | |
| billion and our CET1 capital by USD | | | | 1.2billion ( | 31March | affecting risks of these types, in isolation from other areas. On | |
| 2021: USD | 11billion and USD | | 1.2billion, respectively) and | | | this standalone basis, we estimate the maximum loss in capital | |
| increased our CET1 capital ratio 16 basis points (31 March | | | | | | that we could incur over a 12-month period as a result of our | |
| 2021: 15 basis points). | | | | | | risks associated with these operational risk categories at USD 4.0 | |
| | | | | | | billion as of 30 June 2021. This estimate is not related to and | |
| Leverage ratio denominator | | | | | | does not take into account any provisions recognized for any of | |
| We estimate that a 10% depreciation of the US dollar against | | | | | | these matters and does not constitute a subjective assessment of | |
| other currencies would have increased our LRD by USD 63 billion | | | | | | our actual exposure in any of these matters. | |
| as of30 | June2021 | (31March | 2021 | : USD63 | billion)and | ›Refer to “Operational risk” in the “Risk management and | |
| decreased our Swiss SRB going concern leverage ratio 17 basis | | | | | | control” section of our Annual Report 2020 for more information | |
| points (31 | March | 2021:16 | basis points) | . Conversely, we | | ›Refer to “Note 14 Provisions and contingent liabilities” in the | |
| estimate that a 10% appreciation of the US dollar against other | | | | | | “Consolidated financial statements” section of this report for | |
| currencies would have | | decreased | our LRD by USD | | 57billion | more information | |
| (31 March 2021: USD 57 billion) and increased our Swiss SRB | | | | | | | |

going concern leverage ratio 17 basis points (31 March 2021:
16 basis points) .
The aforementioned sensitivities do not consider foreign currency translation effects related to defined benefit plans other than those related to the currency translation of the net equity of foreign operations.

›Refer to “Active management of sensitivity to currency

movements” under “Capital management” in the “Capital,

liquidity and funding, and balance sheet” section of our Annual

Report 2020 for more information

Risk-weighted assets

During the second quarter of 2021, RWA increased by USD 5.4 billion to USD 293.3 billion, driven by increases from model updates of USD 2.6 billion, currency effects of USD 1.8 billion, methodology and policy changes of USD 1.0 billion, and regulatory add-ons of USD 0.3 billion, partly offset by a reduction from asset size and other movements of USD 0.2 billion.| Movement in risk-weighted assets by key driver | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | RWA as of | CurrencyMethodologyand policy | | updates /Model | Regulatory | Asset size | RWA as of |
| USD billion | | 31.3.21 | effects | changes | changes | add-ons | and other1 | 30.6.21 |
| Credit and counterparty credit risk | 2 | 178.9 | 1.7 | 1.0 | 2.5 | 0.3 | 2.0 | 186.4 |
| Non-counterparty-related risk | 3 | 22.8 | 0.1 | | | | 0.4 | 23.3 |
| Market risk | | 10.4 | | | 0.1 | 0.0 | (2.6) | 7.8 |
| Operational risk | | 75.8 | | | | | | 75.8 |
| Total | | 287.8 | 1.8 | 1.0 | 2.6 | 0.3 | (0.2) | 293.3 |

Credit and counterparty credit riskWe currently expect that further methodology changes and model updates will increase credit and counterparty credit risk Credit and counterparty credit risk RWA increased by USD 7.5RWA by around USD 3 billion in the third quarter of 2021 and billion to USD 186.4 billion as of 30 June 2021. The increasean additional amount of around USD 3 billion in the fourth included USD 1.7 billion of currency effects.quarter of 2021. The extent and timing of RWA changes may Asset size and other movements resulted in a USD 2.0 billionvary as methodology changes and model updates are completed increase in RWA.and receive regulatory approval. In addition, changes in the –GlobalWealthManagement RWA increased by USD2.3composition of the relevant portfolios and other market factors billion,mainly drivenbyincreasesinLombardand otherwill affect RWA.
loans.›Refer to the “Risk management and control” section of this –Personal & Corporate Banking RWA increased by USD 0.6report and our 30 June 2021 Pillar 3 report, which will be billion,mainlydriven byincreasesinloans and loanavailable as of 20 August 2021 under “Pillar 3 disclosures” at commitments to corporate clients and loans secured byubs.com/investors, for more information income-producing real estate.›Refer to “Credit risk models” in the “Risk management and –Investment Bank RWA decreased by USD 1.0 billion, mainlycontrol” section of our Annual Report 2020 for more information driven by a decrease in derivatives.
–Group Functions RWA increased by USD 0.2 billion.Market risk –Asset Management RWA decreased by USD 0.1 billion.

Market risk RWA decreased by USD 2.5 billion to USD 7.8 billion
Changes to credit ratings and loss given default(LGD),in the second quarter of 2021, driven primarily by lower average
excluding model updates, did not result in an increase in RWAvalue-at-risk (VaR)levelsinthe Investment Bank’sGlobal
during the second quarter of 2021.Markets business. Ongoing discussions regarding our regulatory
Model updates resulted in an RWA increase of USD 2.5VaR model with FINMA, which started prior to the COVID-19
billion, primarily due to USD 0.9 billion from updates to the LGDpandemic, may lead to VaR model updates that would likely
model for mortgages in Switzerland, the USD 0.7 billion phase-result in an increase in market risk RWA in the second half of
in impact of an RWA increase related to a new model for2021.
structured margin loans and sophisticated lending, and the›Refer to the “Risk management and control” section of this
USD 0.5 billion phase-in impact of new probability of default

report and our 30 June 2021 Pillar 3 report, which will be (PD) and LGD models for the mortgage portfolio in the US.

available as of 20 August 2021 under “Pillar 3 disclosures” at RWA increased by USD 1.0 billion due to methodology and

ubs.com/investors,for more information policy changes,primarily due tothe application of the›Refer to ”Market risk” in the “Risk management and control”
standardized approach to covered bonds.

section of our Annual Report 2020 for more information The second quarter of 2021 also included an RWA increase of
USD 0.3 billion from regulatory add-ons, mainly for credit cardOperational risk
exposures in Switzerland.

Operational risk RWA were USD 75.8 billion as of 30 June 2021, unchanged from 31 March 2021.

›

Refer to “Operational risk” in the “Risk management and

control” section of our Annual Report 2020 for information

about the advanced measurement approach model

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

Risk-weighted assets by business division and Group Functions| | | Global Wealth | Personal &Corporate | Manage-Asset | Investment | Group | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| USD billion | | Management | Banking | ment | Bank | Functions | RWA |
| | | | | 30.6.21 | | | |
| Credit and counterparty credit risk | 1 | 51.9 | 62.4 | 4.0 | 60.0 | 8.1 | 186.4 |
| Non-counterparty-related risk | 2 | 6.2 | 2.1 | 0.6 | 3.4 | 10.9 | 23.3 |
| Market risk | | 1.1 | 0.0 | 0.0 | 5.7 | 1.0 | 7.8 |
| Operational risk | | 32.8 | 7.2 | 3.3 | 23.2 | 9.3 | 75.8 |
| Total | | 92.0 | 71.7 | 7.9 | 92.3 | 29.4 | 293.3 |

				31.3.21
Credit and counterparty credit risk	1	47.9	59.2	4.0	60.7	7.0	178.9
Non-counterparty-related risk	2	6.2	2.0	0.6	3.4	10.6	22.8
Market risk		1.3	0.0	0.0	7.7	1.3	10.4
Operational risk		32.8	7.2	3.3	23.2	9.3	75.8
Total		88.2	68.4	8.0	95.0	28.3	287.8

			30.6.21 vs 31.3.21
Credit and counterparty credit risk	1	4.0	3.2	(0.1)	(0.7)	1.0	7.5
Non-counterparty-related risk	2	0.1	0.0	0.0	0.0	0.3	0.5
Market risk		(0.3)	0.0	0.0	(2.0)	(0.3)	(2.5)
Operational risk		0.0	0.0	0.0	0.0	0.0	0.0
Total		3.8	3.2	0.0	(2.6)	1.1	5.4
31 March 2021: USD 12.9 billion).

Leverage ratio denominator

During the second quarter of 202 1, LRD increased by USD 2 billion to USD 1,040 billion. The increase was driven by currency effects of USD 9 billion, partly offset by a decrease in asset size and other movements of USD 7 billion.| Movement in leverage ratio denominator by key driver | | | | | |
| --- | --- | --- | --- | --- | --- |
| USD billion | | LRD as of31.3.21 | Currencyeffects | Asset size andother | LRD as of30.6.21 |
| On-balance sheet exposures (excluding derivative exposures and SFTs) | 1 | 790.2 | 7.7 | 3.6 | 801.5 |
| Derivative exposures | | 106.2 | 0.4 | (8.8) | 97.7 |
| Securities financing transactions | | 123.2 | 0.4 | (2.1) | 121.5 |
| Off-balance sheet items | | 31.2 | 0.3 | (0.3) | 31.1 |
| Deduction items | | (12.6) | 0.0 | 0.7 | (12.0) |
| Total | | 1,038.2 | 8.7 | (7.0) | 1,039.9 |

The LRD movements described below exclude currency effects.Securities financing transactions (SFTs) decreased by USD 2 On-balance sheetexposuresincreased byUSD4billion,billion, mainly reflecting lower brokerage receivables, trade rollmainly driven by higher lending assets largely in Global Wealthoffs and a reduction in collateral sourcing requirements, partly Management, partly offset by lower high-quality liquid assetoffset by excess cash re-investment.
(HQLA) securities.›Refer to the “Balance sheet and off-balance sheet” section of Derivative exposuresdecreased byUSD9billion, mainlythis report for more information about balance sheet driven by foreign exchange contracts, as a result of roll-offs, andmovements

lower collateral placed with counterparties and exchanges, as well as an increase in the exemption of exposures to qualifying exchanges.

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

Leverage ratio denominator by business division and Group Functions| | | Global Wealth | Personal &Corporate | Asset | Investment | Group | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| USD billion | | Management | Banking | Management | Bank | Functions | Total |
| | | | | 30.6.21 | | | |
| Total IFRS assets | | 375.1 | 222.0 | 29.5 | 343.9 | 116.1 | 1,086.5 |
| Difference in scope of consolidation | 1 | (0.1) | 0.0 | (22.3) | 0.0 | 0.1 | (22.3) |
| Less: derivative exposures and SFTs | 2 | (29.3) | (15.1) | (0.7) | (162.7) | (54.9) | (262.7) |
| On-balance sheet exposures | | 345.6 | 206.9 | 6.5 | 181.3 | 61.3 | 801.5 |
| Derivative exposures | | 6.7 | 2.5 | 0.0 | 82.4 | 6.1 | 97.7 |
| Securities financing transactions | | 25.4 | 13.4 | 0.7 | 53.5 | 28.5 | 121.5 |
| Off-balance sheet items | | 6.8 | 16.0 | 0.0 | 8.0 | 0.3 | 31.1 |
| Items deducted from Swiss SRB tier 1 capital | | (5.3) | (0.2) | (1.3) | (0.2) | (5.0) | (12.0) |
| Total | | 379.2 | 238.7 | 6.0 | 324.9 | 91.2 | 1,039.9 |

				31.3.21
Total IFRS assets		377.0	221.4	28.6	370.8	109.9	1,107.7
Difference in scope of consolidation	1	(0.2)	0.0	(21.5)	0.0	0.1	(21.5)
Less: derivative exposures and SFTs	2	(29.7)	(15.1)	(0.6)	(194.5)	(56.1)	(295.9)
On-balance sheet exposures		347.2	206.3	6.5	176.3	53.9	790.2
Derivative exposures		6.7	3.2	0.0	89.7	6.6	106.2
Securities financing transactions		25.6	12.6	0.6	55.6	28.9	123.2
Off-balance sheet items		6.4	15.8	0.0	8.3	0.7	31.2
Items deducted from Swiss SRB tier 1 capital		(5.3)	(0.1)	(1.6)	(0.2)	(5.4)	(12.6)
Total		380.6	237.8	5.4	329.7	84.7	1,038.2

			30.6.21 vs 31.3.21
Total IFRS assets		(1.9)	0.6	0.9	(27.0)	6.2	(21.2)
Difference in scope of consolidation	1	0.0	0.0	(0.8)	0.0	0.0	(0.7)
Less: derivative exposures and SFTs	2	0.3	0.0	(0.2)	31.8	1.2	33.2
On-balance sheet exposures		(1.6)	0.6	0.0	4.9	7.4	11.3
Derivative exposures		0.0	(0.7)	0.0	(7.3)	(0.6)	(8.5)
Securities financing transactions		(0.2)	0.8	0.2	(2.1)	(0.4)	(1.7)
Off-balance sheet items		0.4	0.2	0.0	(0.3)	(0.4)	(0.1)
Items deducted from Swiss SRB tier 1 capital		(0.1)	0.0	0.4	0.0	0.4	0.7
Total		(1.4)	0.9	0.5	(4.7)	6.4	1.7

Equity attribution and return on attributed equity

Under our equity attribution framework, tangible equity isWe attribute all remaining Basel III capital deduction items to
attributed based on a weighting of 50% each for average risk-Group Functions. These items include deferred tax assets (DTAs)
weighted assets (RWA) and average leverage ratio denominatorrecognized for tax loss carry-forwards, DTAs on temporary
(LRD), which both include resource allocations from Groupdifferences in excess of the threshold, accruals for shareholder Functions to the business divisions (the BDs). Average RWA andreturns, and unrealized gains from cash flow hedges.
LRD are converted tocommon equity tier1 (CET1)capital›Refer to the “Capital, liquidity and funding, and balance sheet”
equivalentsusingcapital ratios of 12.5% and 3.75%,section of our Annual Report 2020 for more information about respectively. If the attributed tangible equity calculated underthe equity attribution framework the weighted-driver approach is less than the CET1 capital›Refer to the “Balance sheet and off-balance sheet” section of
equivalent of risk-based capital (RBC) for any BD, the CET1this report for more information about movements in equity capital equivalent of RBC is used as a floor for that BD.attributable to shareholders

In addition to tangible equity, we allocate equity to the BDs to support goodwill and intangible assets.
Furthermore, we allocate to the BDs attributed equity related to certain CET1 deduction items, such as compensation-related components and expected losses on the advanced internal ratings-based portfolio, less general provisions.| Average attributed equity | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | For the quarter ended | | | Year-to-date | |
| USD billion | | | 30.6.21 | 31.3.21 | 30.6.20 | 30.6.21 | 30.6.20 |
| Global Wealth Management | | | 18.5 | 18.3 | 16.7 | 18.4 | 16.6 |
| Personal & Corporate Banking | | | 9.1 | 9.1 | 8.7 | 9.1 | 8.7 |
| Asset Management | | | 2.1 | 2.2 | 1.9 | 2.2 | 1.8 |
| Investment Bank | | | 13.0 | 13.0 | 12.6 | 13.0 | 12.5 |
| Group Functions | | | 15.7 | 16.1 | 17.6 | 15.9 | 17.2 |
| of which: deferred tax assets | 1 | | 6.1 | 6.3 | 6.8 | 6.2 | 6.9 |
| of which: related to retained RWA and LRD | | 2,3 | 3.1 | 3.3 | 3.9 | 3.2 | 3.3 |
| of which: accruals for shareholder returns and others | | 4 | 6.4 | 6.5 | 6.9 | 6.5 | 6.9 |
| Average equity attributed to business divisions and Group Functions | | | 58.4 | 58.7 | 57.5 | 58.6 | 56.8 |

1 Includes average attributed equity related to the Basel III capital deduction items for deferred tax assets (deferred tax assets recognized for tax loss carry-forwards and deferred tax assets on temporary differences, excess over threshold), as well as retained RWA and LRD related to deferred tax assets. 2 Excludes average attributed equity related to retained RWA and LRD related to deferred tax assets. 3 The temporary exemption that applied from 25 March 2020 until 1 January 2021 and that was granted by FINMA in connection with COVID-19 was not applied when calculating average attributed equity for the respective periods in 2020. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 4 Attributed equity related to others primarily includes remaining Basel III capital deduction items, such as unrealized gains from cash flow hedges.| Return on attributed equity | 1 | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | | For the quarter ended | | | Year-to-date | |
| USD billion | | 30.6.21 | 31.3.21 | 30.6.20 | 30.6.21 | 30.6.20 |
| Global Wealth Management | | 27.9 | 30.8 | 21.1 | 29.3 | 25.3 |
| Personal & Corporate Banking | | 21.8 | 17.1 | 10.9 | 19.5 | 13.1 |
| Asset Management | | 49.0 | 40.8 | 33.7 | 44.7 | 34.1 |
| Investment Bank | | 20.6 | 12.7 | 19.4 | 16.7 | 21.1 |
| 1 Return on attributed equity for Group Functions is not shown, as it is not meaningful. | | | | | | |

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

Liquidity and funding management

Strategy, objectives and governance

This section provides liquidity and funding management information and should be read in conjunction with “Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020, which provides more information about the Group’s strategy, objectives and governance in connection with liquidity and funding management.| Liquidity coverage ratio | | | | |
| --- | --- | --- | --- | --- |
| USD billion, except where indicated | | Average 2Q21 | 1Average 1Q21 | 1 |
| High-quality liquid assets | | 232 | | 221 |
| Net cash outflows | | 149 | | 146 |
| Liquidity coverage ratio (%) | 2 | 156 | | 151 |

Liquidity coverage ratioNet stable funding ratio

The UBS Group quarterly average liquidity coverage ratio (LCR)As of 30 June 2021, our estimated pro forma net stable funding increased 5 percentage points to 156%, remaining above theratio (NSFR) was 115%, an increase of 1 percentage point prudential requirement communicated by the Swiss Financialcompared with 31 March 2021. This reflected an USD 8 billion Market Supervisory Authority (FINMA). The average LCR increaseincrease in available stable funding, predominantly driven by was driven by an USD 11 billion increase in average high-qualitydebt issued and customer deposits. Required stable funding liquid assets (HQLA) to USD 232 billion, driven by higher averageincreased by USD 3 billion, mainly driven by Lombard loans and cash balances,due to adecrease in assets subject to localresidential mortgages, partly offset by a decrease in net transfer restrictions,lowerfunding consumption by thederivative assets.
Investment Bank and net deposit growth. Average total net cashThe Swiss NSFR regulation was finalized in the fourth quarter outflows increased by USD 3 billion to USD 149 billion, mainlyof 2020 with the release of the revised FINMA Circular 2015/2 due to decreases in inflows from secured financing transactions.“Liquidity risks – banks.” Our pro forma NSFR disclosure is based ›on the final regulation, which became effective on 1 July 2021.

Refer to our 30 June 2021 Pillar 3 report, which will be available from 20 August 2021 under “Pillar 3 disclosures” at›Refer to “Liquidity and funding management” in the “Capital, ubs.com/investors, for more information about the liquidityliquidity and funding, and balance sheet” section of our Annual coverage ratioReport 2020 for more information about the LCR and the NSFR| Pro forma net stable funding ratio | | |
| --- | --- | --- |
| USD billion, except where indicated | 30.6.21 | 31.3.21 |
| Available stable funding | 556 | 548 |
| Required stable funding | 482 | 479 |
| Pro forma net stable funding ratio (%) | 115 | 114 |

Balance sheet and off-balance sheet

Strategy, objectives and governanceamortized cost and fair value decreased by USD 5 billion, mainly driven by disposals and maturities in the high-quality liquid asset This section provides balance sheetand off-balance sheet(HQLA) portfolio.Brokerage receivables decreased by USD1 information and should be read in conjunction with “Balance sheetbillion,with growthin lending more than offsetbya and off-balance sheet” in the “Capital, liquidity and funding, andcorresponding increase in netting effects.
balance sheet” section of our Annual Report 2020, which providesThese decreases were partly offset by an USD11billion more information about the Group’s balance sheet and off-balanceincrease in Lending assets, largely reflecting a USD 9 billion sheet positions.increase in Global Wealth Management, mainly driven by higher Balances disclosed in this report represent quarter-endLombard and mortgage lending in the Americas, and a USD 4 positions, unless indicated otherwise. Intra-quarter balancesbillion increase in Personal & Corporate Banking, mainly due to fluctuate in the ordinary course of business and may differ fromcurrency effects and higher mortgage lending. Trading portfolio quarter-end positions.

assets increased by USD 2 billion, mainly due to higher inventory levels held in the Investment Bank to hedge client positions.
Balance sheet assets (30 June 2021 vs 31 March 2021)Cash and balances at central banks increased by USD 2 billion,
mainly driven by currency effects, with net funding consumption Total assets decreased by USD 21 billion to USD 1,087 billion as ofacross the business divisions remainingbroadly unchanged.
30June 2021, despite anincreasefrom currency effects ofSecurities financing transactions at amortized cost increased by approximately USD 9 billion.USD 1 billion, driven by re-investment of excess cash by Group Derivatives and cash collateral receivables on derivativeTreasury, partly offset by lower collateral requirements.
instruments decreased by USD32 billion,mainly in our›Refer to the “Consolidated financial statements” section of this Derivatives & Solutions business in the Investment Bank,

report for more information predominantlyreflectingnetroll-offsofforeign exchange contracts during the quarter. Other financial assets measured at| Assets | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | As of | % change from | |
| USD billion | | | 30.6.21 | 31.3.21 | 31.3.21 |
| Cash and balances at central banks | | | 160.7 | 158.9 | 1 |
| Lending1 | | | 406.6 | 395.2 | 3 |
| Securities financing transactions at amortized cost | | | 83.5 | 82.4 | 1 |
| Trading portfolio | 2 | | 122.5 | 120.6 | 2 |
| Derivatives and cash collateral receivables on derivative instruments | | | 151.4 | 183.3 | (17) |
| Brokerage receivables | | | 23.0 | 24.2 | (5) |
| Other financial assets measured at amortized cost and fair value | | 3 | 78.3 | 82.9 | (6) |
| Non-financial assets and financial assets for unit-linked investment contracts | | | 60.5 | 60.2 | 1 |
| Total assets | | | 1,086.5 | 1,107.7 | (2) |

Balance sheet liabilities (30 June 2021 vs 31 March 2021)These decreases were partly offset by anUSD8 billion increase in debt issued designated at fair value and long-term Total liabilities decreased by USD 22 billion to USD 1,027 billiondebt issued measured at amortized cost. This reflected net new as of 30 June 2021, despite an increase from currency effects ofissuances, as well as market-driven movements ondebt approximately USD 7 billion.measured at fair value in our Derivatives & Solutions business in Derivatives and cash collateral payables on derivativethe Investment Bank.Customer deposits increasedbyUSD8 instruments decreased by USD 29 billion, largely in line with thebillion, largely reflecting currency effects, as well as higher levels aforementioned movement on the asset side.Brokerageof cash held by clients, in Global Wealth Management Americas payables decreased by USD 6 billion, mainly in the Financingand APAC, partly offset by client-driven decreases in Personal & businessofthe Investment Bank, with growthin lendingCorporate Banking. Other financial liabilities at amortized cost increasing netting effects. Trading portfolio liabilities decreasedand fair valueincreased by USD2billion,mainlyin Group by USD4 billion, driven by the Investment Bank,mainlyTreasury due to lower netting on securities financing transactions reflecting a reduction in short positions after the end of themeasured at fair value following maturities on the asset side.
European dividend season. Short-term borrowings decreased byNon-financial liabilities and financial liabilities related to unit- USD 3 billion, mainly driven by net maturities of certificates oflinked investment contracts increased by USD 2 billion, mainly deposit and commercial papers in Group Treasury, partly offsetreflecting an increase in compensation-related liabilities.
by higher amounts due to banks in the Investment Bank.

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

The “Liabilities by product and currency” table in this sectionThese increases were partly offset by distributions to
provides more information about our funding sources.shareholders of USD1,301 million, reflectinga dividend ›Refer to “Bondholder information” atubs.com/investorsforpayment of USD 0.37 per share. In addition, net treasury share
more information about capital and senior debt instrumentsactivity decreased equity by USD 687 million. This was largely ›Refer to the “Consolidated financial statements” section of thisdue to repurchases of USD 361 million of shares under our
report for more information2021–2024 share repurchase program and the purchase of

USD 325 million of shares from the market to hedge future
Equity (30 June 2021 vs 31 March 2021)share delivery obligations related to employee share-based compensation awards.
Equity attributable to shareholders increased by USD 739 millionIn the second quarter of 2021, we canceled 156,632,400 to USD 58,765 million as of 30 June 2021, from USD 58,026shares purchased under our 2018–2021 share repurchase million as of 31 March 2021.program, as approved by shareholders at the 2021 Annual The increase of USD 739 million was mainly driven by totalGeneral Meeting. The cancelation of shares resulted in comprehensive income attributable to shareholders of positivereclassifications within equity but had no net effect on our total USD 2,582 million, reflecting net profit of USD 2,006 million andequity attributable to shareholders.
positive other comprehensive income (OCI) of USD 576 million.›Refer to the “Consolidated financial statements” and “Group OCI mainly included positive OCI related to foreign currencyperformance” sections of this report for more information translation of USD 255 million, positive cash flow hedge OCI of›Refer to the “Share information and earnings per share” section USD222millionandpositiveOCI related to own credit ofof this report for more information about the share repurchase USD 118 million. In addition, amortization of deferred share-programs based compensation awards increased equity by USD 180 million.| Liabilities and equity | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | | | | As of | % change from | |
| USD billion | | | | 30.6.21 | 31.3.21 | 31.3.21 |
| Short-term borrowings | 1 | | | 57.3 | 60.0 | (4) |
| Securities financing transactions at amortized cost | | | | 6.0 | 6.7 | (10) |
| Customer deposits | | | | 513.3 | 505.4 | 2 |
| Debt issued designated at fair value and long-term debt issued measured at amortized cost | | | 2 | 172.3 | 163.8 | 5 |
| Trading portfolio | 3 | | | 33.3 | 37.1 | (10) |
| Derivatives and cash collateral payables on derivative instruments | | | | 153.9 | 182.6 | (16) |
| Brokerage payables | | | | 39.1 | 45.6 | (14) |
| Other financial liabilities measured at amortized cost and fair value | | 4 | | 18.6 | 16.8 | 11 |
| Non-financial liabilities and financial liabilities related to unit-linked investment contracts | | | | 33.6 | 31.5 | 7 |
| Total liabilities | | | | 1,027.5 | 1,049.4 | (2) |
| Share capital | | | | 0.3 | 0.3 | (5) |
| Share premium | | | | 15.5 | 16.2 | (4) |
| Treasury shares | | | | (3.3) | (4.6) | (28) |
| Retained earnings | | | | 40.1 | 40.5 | (1) |
| Other comprehensive income | 5 | | | 6.1 | 5.6 | 9 |
| Total equity attributable to shareholders | | | | 58.8 | 58.0 | 1 |
| Equity attributable to non-controlling interests | | | | 0.3 | 0.3 | (7) |
| Total equity | | | | 59.0 | 58.3 | 1 |
| Total liabilities and equity | | | | 1,086.5 | 1,107.7 | (2) |

Liabilities by product and currency
		USD billion				As a percentage of total liabilities
		All currencies		All currencies		USD	CHF		EUR	Other
		30.6.21	31.3.21	30.6.2131.3.21	30.6.21	31.3.21	30.6.2131.3.21	30.6.21	31.3.21	30.6.2131.3.21
Short-term borrowings		57.3	60.0	5.6	5.7	3.02.8	0.6	0.5	0.81.0	1.3	1.4
of which: due to banks		14.6	12.6	1.4	1.2	0.40.4	0.5	0.5	0.10.1	0.4	0.3
of which: short-term debt issued		142.7	47.4	4.2	4.5	2.62.5	0.0	0.0	0.70.9	0.9	1.1
Securities financing transactions atamortized cost			6.06.7	0.6	0.6	0.50.5	0.0	0.0	0.00.0	0.0	0.1
Customer deposits		513.3	505.4	50.0	48.221.2	19.9	18.8	19.0	5.35.1	4.6	4.2
of which: demand deposits		244.2	232.1	23.8	22.1	8.57.4	7.0	7.0	4.54.2	3.8	3.5
of which: retail savings / deposits		220.7	219.2	21.5	20.9	9.48.9	11.6	11.4	0.50.5	0.0	0.0
of which: time deposits		32.9	36.1	3.2	3.4	2.22.5	0.2	0.2	0.00.1	0.8	0.7
of which: fiduciary deposits		15.5	18.0	1.5	1.7	1.11.0	0.1	0.4	0.20.3	0.1	0.1
Debt issued designated at fair valueand long-term debt issued measured
at amortized cost	2	172.3	163.8	16.8	15.6	9.58.4	1.7	1.6	3.93.9	1.7	1.6
Trading portfolio		33.3	37.1	3.2	3.5	1.41.5	0.1	0.1	0.80.8	0.9	1.2
Derivatives and cash collateralpayables on derivative instruments		153.9	182.6	15.0	17.412.2	14.2	0.2	0.3	1.61.8	1.0	1.1
Brokerage payables		39.1	45.6	3.8	4.3	2.83.3	0.0	0.0	0.20.3	0.7	0.7
Other financial liabilities measured atamortized cost and fair value		18.6	16.8	1.8	1.6	1.00.8	0.2	0.2	0.30.3	0.3	0.3
Non-financial liabilities and financialliabilities related to unit-linked
investment contracts		33.6	31.5	3.3	3.0	0.50.5	0.2	0.1	0.20.1	2.4	2.2
Total liabilities		1,027.5	1,049.4	100.0100.0	52.2	52.0	21.9	21.913.1	13.2	12.9	12.9

Off-balance sheet (30 June 2021 vs 31 March 2021)

Guarantees, loan commitments, committed unconditionally revocable credit lines and forward starting repurchase agreements were broadly unchanged as of 30 June 2021 compared with 31 March 2021. Forward starting reverse repurchase agreements increased by USD 2 billion, primarily in Group Treasury, reflecting fluctuations in business division activity in short-dated securities financing transactions.| Off-balance sheet | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | As of | % change from | |
| USD billion | | | 30.6.21 | 31.3.21 | 31.3.21 |
| Guarantees1,2 | | | 15.6 | 15.5 | 1 |
| Loan commitments | 1,3 | | 37.8 | 38.1 | (1) |
| Committed unconditionally revocable credit lines | | | 38.8 | 39.4 | (2) |
| Forward starting reverse repurchase agreements | | 3 | 8.2 | 6.0 | 38 |
| Forward starting repurchase agreements | | 3 | 1.8 | 2.1 | (14) |
| report for more information. | | | | | |

Risk, capital, liquidity and funding, and balance sheet | Share information and earnings per share

Share information and earnings per share

UBS Group AG shares are listed on the SIX Swiss Exchange (SIX).Treasury shares held decreased by 110 million shares in the They are also listed on the New York Stock Exchange (the NYSE)secondquarter of 2021. This largely reflectedthe as global registered shares. Each share has a nominal value ofaforementioned cancelation of 157 million shares, partly offset CHF 0.10 per share. Shares issued decreased by 157 million inbyrepurchases of26.8million shares under our 2021–2024 the second quarter of 2021, as the 156,632,400 shares acquiredshare repurchase program and the purchase of 20 million shares under the 2018–2021 share repurchase program were canceledfrom the market to hedge future share delivery obligations by means of a capital reduction, as approved by shareholders atrelated to employee share-based compensation awards.
the 2021 Annual General Meeting.Shares acquired underour 2021–2024programtotaled We held 226 million shares as of 30 June 2021, of which 14383 million as of 30 June 2021 for a total acquisition cost of million shares are primarily held to hedge our share deliveryCHF 1,192 million (USD 1,300 million). Under this program, we obligations related to employee share-based compensation andintend to repurchase USD 0.6 billion of shares during the third participation plans. The remaining83million shares werequarter of 2021.
acquired under our 2021–2024 share repurchase program for›Refer to the “Return on equity and CET1 capital” table in the cancelation purposes.“Group performance” section of this report for more information

about equity attributable to shareholders and tangible equity

attributable to shareholders

As of or for the quarter endedAs of or year-to-date 30.6.2131.3.2130.6.2030.6.2130.6.20| Basic and diluted earnings (USD million) | | | | | |
| --- | --- | --- | --- | --- | --- |
| Net profit / (loss) attributable to shareholders for basic EPS | 2,006 | 1,824 | 1,232 | 3,830 | 2,827 |
| Less: (profit) / loss on own equity derivative contracts | (1) | (1) | 0 | (2) | 0 |
| Net profit / (loss) attributable to shareholders for diluted EPS | 2,005 | 1,823 | 1,232 | 3,828 | 2,827 |

Weighted average shares outstanding
Weighted average shares outstanding for basic EPS	1	3,502,478,236	3,538,422,488	3,584,522,015	3,520,450,363	3,588,187,534
Effect of dilutive potential shares resulting from notional employee shares, in-the-money options and warrants outstanding		138,873,741	150,824,304	106,543,728	144,776,805	110,717,626
Weighted average shares outstanding for diluted EPS	2	3,641,351,977	3,689,246,792	3,691,065,743	3,665,227,168	3,698,905,160

Earnings per share
Basic earnings per share (USD)		0.57	0.52	0.34	1.09	0.79
Basic earnings per share (CHF)	3	0.52	0.47	0.33	0.99	0.76
Diluted earnings per share (USD)		0.55	0.49	0.33	1.04	0.76
Diluted earnings per share (CHF)	3	0.50	0.45	0.32	0.95	0.74

Shares outstanding and potentially dilutive instruments
Shares issued			3,702,422,995	3,859,055,395	3,859,055,395	3,702,422,995	3,859,055,395
Treasury shares	4		225,877,281	335,907,722	271,876,346	225,877,281	271,876,346
of which: related to share repurchase program 2018–2021				156,632,400	148,975,800		148,975,800
of which: related to share repurchase program 2021–2024			83,090,525	56,269,500		83,090,525
Shares outstanding			3,476,545,714	3,523,147,673	3,587,179,049	3,476,545,714	3,587,179,049
Potentially dilutive instruments		5	10,459,279	11,605,954	27,456,453	12,229,370	26,911,953

Other key figures
Total book value per share (USD)		16.90	16.47	15.89	16.90	15.89
Tangible book value per share (USD)		15.05	14.65	14.10	15.05	14.10
Share price (USD)	6	15.31	15.48	11.51	15.31	11.51
Market capitalization (USD million)		53,218	54,536	41,303	53,218	41,303

multiplied by a time-weighted factor for the period outstanding. As a result, balances are affected by the timing of acquisitions and issuances during the period. 2 The weighted average number of shares for notional employee awards with performance conditions reflects all potentially dilutive shares that are expected to vest under the terms of the awards. 3 Basic and diluted earnings per share in Swiss francs are calculated based on a translation of net profit / (loss) under our US dollar presentation currency. 4 Based on a settlement date view. 5 Reflects potential shares that could dilute basic earnings per share in the future, but were not dilutive for the periods presented. It mainly includes equity derivative contracts. 6 Represents the share price as listed on the SIX Swiss Exchange, translated to US dollars using the closing exchange rate as of the respective date.

Ticker symbols UBS Group AGSecurity identification codes

ISINCH0244767585 Trading exchangeSIX / NYSEBloombergReutersValoren24 476 758 SIX Swiss ExchangeUBSGUBSG SWUBSG.SCUSIPCINS H42097 10 7 New York Stock ExchangeUBSUBS UNUBS.N

Consolidated

financial

statements

Unaudited

Table of contents

UBS Group AG interim consolidated financial

statements (unaudited)

53Income statement
54Statement of comprehensive income
56Balance sheet
58Statement of changes in equity
60Statement of cash flows

621Basis of accounting and other financial reporting effects 642Segment reporting 653Net interest income 654Net fee and commission income 665Personnel expenses 666General and administrative expenses 667Expected credit loss measurement 728Fair value measurement 819Derivative instruments 8210Other assets and liabilities 8311Debt issued designated at fair value 8412Debt issued measured at amortized cost 8513Interest rate benchmark reform 8814Provisions and contingent liabilities 9415Currency translation rates

UBS AG interim consolidated financial information

(unaudited)

95Comparison between UBS Group AG consolidated and
UBS AG consolidated

UBS Group AG interim consolidated

financial statements (unaudited)| | For the quarter ended | | | Year-to-date | |
| --- | --- | --- | --- | --- | --- |
| USD million | Note30.6.21 | 31.3.21 | 30.6.2030.6.21 | 30.6.20 | |
| Interest income from financial instruments measured at amortized cost and fair value throughother comprehensive income | 32,106 | 2,097 | 2,133 | 4,2034,588 | |
| Interest expense from financial instruments measured at amortized cost | 3( 836 ) | ( 833 ) | ( 1,092 )( 1,669 ) | ( 2,478 ) | |
| Net interest income from financial instruments measured at fair value through profit or loss | 3357 | 349 | 351 | 706612 | |
| Net interest income | 31,628 | 1,613 | 1,392 | 3,2412,722 | |
| Other net income from financial instruments measured at fair value through profit or loss | 1,479 | 1,309 | 1,932 | 2,7873,738 | |
| Credit loss (expense) / release | 7 | 8028 | ( 272 ) | 108( 540 ) | |
| Fee and commission income | 46,041 | 6,169 | 4,72912,210 | 10,207 | |
| Fee and commission expense | 4( 484 ) | ( 478 ) | ( 419 ) | ( 962 )( 875 ) | |
| Net fee and commission income | 45,557 | 5,691 | 4,31111,248 | 9,332 | |
| Other income | 233 | 64 | 41 | 297 | 84 |
| Total operating income | 8,976 | 8,705 | 7,40317,681 | 15,337 | |
| Personnel expenses | 54,772 | 4,801 | 4,283 | 9,5738,604 | |
| General and administrative expenses | 61,103 | 1,089 | 1,063 | 2,1922,196 | |
| Depreciation and impairment of property, equipment and software | 500 | 508 | 458 | 1,009914 | |
| Amortization and impairment of goodwill and intangible assets | | 98 | 17 | 17 | 32 |
| Total operating expenses | 6,384 | 6,407 | 5,82112,790 | 11,747 | |
| Operating profit / (loss) before tax | 2,593 | 2,298 | 1,582 | 4,8913,591 | |
| Tax expense / (benefit) | 581 | 471 | 347 | 1,053757 | |
| Net profit / (loss) | 2,012 | 1,827 | 1,236 | 3,8382,833 | |
| Net profit / (loss) attributable to non-controlling interests | | 63 | 3 | 9 | 6 |
| Net profit / (loss) attributable to shareholders | 2,006 | 1,824 | 1,232 | 3,8302,827 | |

Earnings per share (USD)
Basic	0.570.52	0.341.09	0.79
Diluted	0.550.49	0.331.04	0.76

UBS Group AG interim consolidated financial statements (unaudited)

Statement of comprehensive income

For the quarter endedYear-to-date USD million30.6.2131.3.2130.6.2030.6.2130.6.20| Comprehensive income attributable to shareholders | 1 | | | |
| --- | --- | --- | --- | --- |
| Net profit / (loss) | | 2,0061,824 | 1,2323,830 | 2,827 |

Other comprehensive income that may be reclassified to the income statement
Foreign currency translation
Foreign currency translation movements related to net assets of foreign operations, before tax	463( 1,463 )	458	( 999 )	178
Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax	( 202 )	708( 197 )	506	( 54 )
Foreign currency translation differences on foreign operations reclassified to the income statement	( 10 )	1	0( 9 )	0
Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified tothe income statement	8	0	28	( 7 )
Income tax relating to foreign currency translations, including the impact of net investment hedges	( 4 )	10( 2 )	6	( 2 )
Subtotal foreign currency translation, net of tax	255( 744 )	261	( 489 )	116
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax	21( 131 )	19	( 110 )	226
Realized gains reclassified to the income statement from equity	( 3 )	( 8 )( 15 )	( 11 )	( 24 )
Realized losses reclassified to the income statement from equity	0	2	02	0
Income tax relating to net unrealized gains / (losses)	( 4 )	35( 3 )	31	( 54 )
Subtotal financial assets measured at fair value through other comprehensive income, net of tax	14( 102 )		1( 88 )	149
Cash flow hedges of interest rate risk
Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax	542( 1,172 )	291	( 630 )	2,244
Net (gains) / losses reclassified to the income statement from equity	( 268 )( 254 )	( 171 )	( 522 )	( 274 )
Income tax relating to cash flow hedges	( 51 )	266( 25 )	215	( 370 )
Subtotal cash flow hedges, net of tax	222( 1,160 )	95	( 937 )	1,600
Cost of hedging
Change in fair value of cost of hedging, before tax	( 24 )( 13 )	( 18 )	( 37 )	( 12 )
Amortization of initial cost of hedging to the income statement	7	7	514	7
Income tax relating to cost of hedging	0	0	00	0
Subtotal cost of hedging, net of tax	( 16 )	( 6 )( 13 )	( 23 )	( 4 )
Total other comprehensive income that may be reclassified to the income statement, net of tax	475( 2,012 )	345	( 1,537 )	1,860

Defined benefit plans
Gains / (losses) on defined benefit plans, before tax	( 21 )( 136 )	( 420 )	( 157 )( 410 )
Income tax relating to defined benefit plans	4	23( 80 )	27	63
Subtotal defined benefit plans, net of tax	( 17 )( 113 )	( 500 )	( 130 )( 347 )
Own credit on financial liabilities designated at fair value
Gains / (losses) from own credit on financial liabilities designated at fair value, before tax	118( 29 )	( 1,095 )	89	62
Income tax relating to own credit on financial liabilities designated at fair value	0	0223	0	0
Subtotal own credit on financial liabilities designated at fair value, net of tax	118( 29 )	( 872 )	89	62
Total other comprehensive income that will not be reclassified to the income statement, net of tax	102( 142 )	( 1,372 )	( 40 )( 286 )

Total other comprehensive income	576( 2,154 )	( 1,027 )( 1,577 )	1,575
Total comprehensive income attributable to shareholders	2,582( 330 )	205	2,2524,402

Statement of comprehensive income (continued) For the quarter endedYear-to-date USD million30.6.2131.3.2130.6.2030.6.2130.6.20| Comprehensive income attributable to non-controlling interests | | | |
| --- | --- | --- | --- |
| Net profit / (loss) | 63 | 39 | 6 |

Other comprehensive income that will not be reclassified to the income statement
Foreign currency translation movements, before tax	14( 12 )	12	( 4 )
Income tax relating to foreign currency translation movements	00	00	0
Subtotal foreign currency translation, net of tax	14( 12 )	12	( 4 )
Total other comprehensive income that will not be reclassified to the income statement, net of tax	14( 12 )	12	( 4 )
Total comprehensive income attributable to non-controlling interests	20( 9 )	410	3

Total comprehensive income
Net profit / (loss)	2,0121,827	1,236	3,8382,833
Other comprehensive income	591( 2,166 )	( 1,026 )( 1,576 )	1,571
of which: other comprehensive income that may be reclassified to the income statement	475( 2,012 )	345( 1,537 )	1,860
of which: other comprehensive income that will not be reclassified to the income statement	116( 155 )	( 1,371 )	( 39 )( 289 )
Total comprehensive income	2,602( 339 )	209	2,2634,404
1 Refer to the “Group performance” section of this report for more information.

UBS Group AG interim consolidated financial statements (unaudited)

Balance sheet USD millionNote30.6.2131.3.2131.12.20| Assets | | | | |
| --- | --- | --- | --- | --- |
| Cash and balances at central banks | | 160,672 | 158,914 | 158,231 |
| Loans and advances to banks | | 16,500 | 18,448 | 15,444 |
| Receivables from securities financing transactions | | 83,494 | 82,384 | 74,210 |
| Cash collateral receivables on derivative instruments | 9 | 29,785 | 35,046 | 32,737 |
| Loans and advances to customers | 7 | 390,126 | 376,798 | 379,528 |
| Other financial assets measured at amortized cost | 10 | 27,143 | 26,770 | 27,194 |
| Total financial assets measured at amortized cost | | 707,720 | 698,361 | 687,345 |
| Financial assets at fair value held for trading | 8 | 122,482 | 120,576 | 125,397 |
| of which: assets pledged as collateral that may be sold or repledged by counterparties | | 44,333 | 48,385 | 47,098 |
| Derivative financial instruments | 8, 9 | 121,622 | 148,282 | 159,617 |
| Brokerage receivables | 8 | 23,010 | 24,201 | 24,659 |
| Financial assets at fair value not held for trading | 8 | 65,393 | 69,187 | 80,364 |
| Total financial assets measured at fair value through profit or loss | | 332,507 | 362,246 | 390,037 |
| Financial assets measured at fair value through other comprehensive income | 8 | 7,775 | 8,100 | 8,258 |
| Investments in associates | | 1,198 | 1,542 | 1,557 |
| Property, equipment and software | | 12,895 | 12,716 | 13,109 |
| Goodwill and intangible assets | | 6,452 | 6,427 | 6,480 |
| Deferred tax assets | | 8,988 | 9,195 | 9,212 |
| Other non-financial assets | 10 | 8,982 | 9,125 | 9,768 |
| Total assets | | 1,086,519 | 1,107,712 | 1,125,765 |

Balance sheet (continued) USD millionNote30.6.2131.3.2131.12.20| Liabilities | | | | |
| --- | --- | --- | --- | --- |
| Amounts due to banks | | 14,615 | 12,564 | 11,050 |
| Payables from securities financing transactions | | 5,972 | 6,651 | 6,321 |
| Cash collateral payables on derivative instruments | 9 | 32,193 | 36,571 | 37,312 |
| Customer deposits | | 513,290 | 505,448 | 524,605 |
| Debt issued measured at amortized cost | 12 | 139,911 | 144,682 | 139,232 |
| Other financial liabilities measured at amortized cost | 10 | 10,189 | 9,257 | 9,729 |
| Total financial liabilities measured at amortized cost | | 716,169 | 715,174 | 728,250 |
| Financial liabilities at fair value held for trading | 8 | 33,348 | 37,062 | 33,595 |
| Derivative financial instruments | 8, 9 | 121,686 | 146,036 | 161,102 |
| Brokerage payables designated at fair value | 8 | 39,129 | 45,600 | 38,742 |
| Debt issued designated at fair value | 8, 11 | 75,065 | 66,535 | 61,243 |
| Other financial liabilities designated at fair value | 8, 10 | 30,642 | 28,855 | 30,387 |
| Total financial liabilities measured at fair value through profit or loss | | 299,869 | 324,088 | 325,069 |
| Provisions | 14 | 2,855 | 2,726 | 2,828 |
| Other non-financial liabilities | 10 | 8,576 | 7,391 | 9,854 |
| Total liabilities | | 1,027,469 | 1,049,379 | 1,066,000 |

Equity
Share capital	322	338	338
Share premium	15,531	16,217	16,753
Treasury shares	( 3,322 )	( 4,623 )	( 4,068 )
Retained earnings	40,143	40,482	38,776
Other comprehensive income recognized directly in equity, net of tax	6,091	5,612	7,647
Equity attributable to shareholders	58,765	58,026	59,445
Equity attributable to non-controlling interests	284	307	319
Total equity	59,050	58,333	59,765
Total liabilities and equity	1,086,519	1,107,712	1,125,765

UBS Group AG interim consolidated financial statements (unaudited)

Statement of changes in equity| USD million | capitalShare | premiumShare | Treasuryshares | Retainedearnings |
| --- | --- | --- | --- | --- |
| Balance as of 1 January 2020 | 338 | 18,064 | ( 3,326 ) | 34,122 |
| Acquisition of treasury shares | | | ( 1,008 )2 | |
| Delivery of treasury shares under share-based compensation plans | | ( 602 ) | 655 | |
| Other disposal of treasury shares | | ( 8 ) | 872 | |
| Share-based compensation expensed in the income statement | | 313 | | |
| Tax (expense) / benefit | | 13 | | |
| Dividends | | ( 654 )3 | | ( 654 )3 |
| Translation effects recognized directly in retained earnings | | | | ( 11 ) |
| Share of changes in retained earnings of associates and joint ventures | | | | ( 40 ) |
| New consolidations / (deconsolidations) and other increases / (decreases) | | 0 | | |
| Total comprehensive income for the period | | | | 2,542 |
| of which: net profit / (loss) | | | | 2,827 |
| of which: OCI that may be reclassified to the income statement, net of tax | | | | |
| of which: OCI that will not be reclassified to the income statement, net of tax – defined benefit plans | | | | ( 347 ) |
| of which: OCI that will not be reclassified to the income statement, net of tax – own credit | | | | 62 |
| Balance as of 30 June 2020 | 338 | 17,125 | ( 3,592 ) | 35,959 |

Balance as of 1 January 2021		338	16,753	( 4,068 )	38,776
Acquisition of treasury shares				( 2,057 )2
Delivery of treasury shares under share-based compensation plans			( 654 )	727
Other disposal of treasury shares			4	322
Cancelation of treasury shares related to the 2018–2021 share repurchase program	4	( 16 )	( 236 )	2,044	( 1,792 )
Share-based compensation expensed in the income statement			346
Tax (expense) / benefit			8
Dividends			( 651 )3		( 651 )3
Translation effects recognized directly in retained earnings					19
Share of changes in retained earnings of associates and joint ventures					2
New consolidations / (deconsolidations) and other increases / (decreases)			( 39 )
Total comprehensive income for the period					3,789
of which: net profit / (loss)					3,830
of which: OCI that may be reclassified to the income statement, net of tax
of which: OCI that will not be reclassified to the income statement, net of tax – defined benefit plans					( 130 )
of which: OCI that will not be reclassified to the income statement, net of tax – own credit					89

of which: OCI that will not be reclassified to the income statement, net of tax – foreign currency translation
Balance as of 30 June 202132215,531( 3,322 )40,143
1 Excludes other comprehensive income related to defined benefit plans and own credit that is recorded directly in Retained earnings. 2 Includes treasury shares acquired and disposed of by the Investment Bank in its capacity as a market maker with regard to UBS shares and related derivatives, and to hedge certain issued structured debt instruments. These acquisitions and disposals are reported based on the sum of the net monthly movements. 3 Reflects the payment of an ordinary cash dividend of USD0.37per dividend-bearing share in April 2021 (first half of 2020: USD0.365per dividend-bearing share paid in May 2020; a second tranche of the 2020 dividend of USD0.365per dividend-bearing share was paid in November 2020). From 2020 onward, Swiss tax law effective 1 January 2020 requires Switzerland-domiciled companies with shares listed on a Swiss stock exchange pay no more than50% of dividends from capital contribution reserves, with the remainder required to be paid from retained earnings. 4 Reflects the cancelation of 156,632,400shares purchased under our 2018–2021 share repurchase program as approved by shareholders at the 2021 Annual General Meeting. For shares repurchased from 2020 onward, Swiss tax law effective 1 January 2020 requires Switzerland-domiciled companies with shares listed on a Swiss stock exchange to reduce capital contribution reserves by at least50% of the total capital reduction amount exceeding the nominal value upon cancelation of the shares.

Other comprehensiveincome recognized		of which:	financial assetsof which:				Total equity
directly in equity,net of tax		foreign currencytranslation	measured at fair valuethrough OCI	cash flow hedges	of which:	cost of hedgingof which:	attributable toshareholders	Non-controllinginterests	Total equity
	5,303	4,028		14	1,260		54,501	174		54,675
							( 1,008 )			( 1,008 )
							52			52
							79			79
							313			313
							13			13
							( 1,308 )	( 4 )		( 1,312 )
	11			0	11		0			0
							( 40 )			( 40 )
							0		0	0
	1,860	116		149	1,600	( 4 )	4,402		3	4,404
							2,827		6	2,833
	1,860	116		149	1,600	( 4 )	1,860			1,860
							( 347 )			( 347 )
							62			62
							0	( 4 )		( 4 )
	7,173	4,144		163	2,871	( 4 )	57,003	173		57,175

7,647	5,188	151	2,321	( 13 )	59,445	319	59,765
					( 2,057 )		( 2,057 )
					73		73
					36		36
					0		0
					346		346
					8		8
					( 1,301 )	( 4 )	( 1,305 )
( 19 )		0	( 19 )	0	0		0
					2		2
					( 39 )	( 42 )	( 81 )
( 1,537 )	( 489 )	( 88 )	( 937 )	( 23 )	2,252	10	2,263
					3,830	9	3,838
( 1,537 )	( 489 )	( 88 )	( 937 )	( 23 )	( 1,537 )		( 1,537 )
					( 130 )		( 130 )
					89		89
					0	2	2
6,091	4,699	63	1,365	( 36 )	58,765	284	59,050

UBS Group AG interim consolidated financial statements (unaudited)

Statement of cash flows Year-to-date USD million30.6.2130.6.20| Cash flow from / (used in) operating activities | | |
| --- | --- | --- |
| Net profit / (loss) | 3,838 | 2,833 |
| Non-cash items included in net profit and other adjustments: | | |
| Depreciation and impairment of property, equipment and software | 1,009 | 914 |
| Amortization and impairment of goodwill and intangible assets | 17 | 32 |
| Credit loss expense / (release) | ( 108 ) | 540 |
| Share of net profits of associates / joint ventures and impairment of associates | ( 74 ) | ( 29 ) |
| Deferred tax expense / (benefit) | 285 | 192 |
| Net loss / (gain) from investing activities | ( 239 ) | 241 |
| Net loss / (gain) from financing activities | 2,070 | ( 7,048 ) |
| Other net adjustments | 4,747 | ( 579 ) |
| Net change in operating assets and liabilities: | | |
| Loans and advances to banks / amounts due to banks | 3,872 | 5,585 |
| Securities financing transactions | ( 10,249 ) | 3,167 |
| Cash collateral on derivative instruments | ( 2,179 ) | ( 2,046 ) |
| Loans and advances to customers | ( 19,882 ) | ( 14,222 ) |
| Customer deposits | ( 298 ) | 20,429 |
| Financial assets and liabilities at fair value held for trading and derivative financial instruments | ( 1,225 ) | 38,734 |
| Brokerage receivables and payables | 2,047 | 1,140 |
| Financial assets at fair value not held for trading, other financial assets and liabilities | 14,533 | ( 7,168 ) |
| Provisions, other non-financial assets and liabilities | 87 | ( 1,531 ) |
| Income taxes paid, net of refunds | ( 386 ) | ( 403 ) |
| Net cash flow from / (used in) operating activities | ( 2,136 ) | 40,781 |

Cash flow from / (used in) investing activities
Purchase of subsidiaries, associates and intangible assets		( 1 )	( 1 )
Disposal of subsidiaries, associates and intangible assets	1	437	14
Purchase of property, equipment and software		( 896 )	( 831 )
Disposal of property, equipment and software		264	6
Purchase of financial assets measured at fair value through other comprehensive income		( 1,950 )	( 4,132 )
Disposal and redemption of financial assets measured at fair value through other comprehensive income		2,324	1,944
Net (purchase) / redemption of debt securities measured at amortized cost		116	( 4,817 )
Net cash flow from / (used in) investing activities		295	( 7,817 )

Statement of cash flows (continued) Year-to-date USD million30.6.2130.6.20| Cash flow from / (used in) financing activities | | |
| --- | --- | --- |
| Net short-term debt issued / (repaid) | ( 3,877 ) | 14,912 |
| Net movements in treasury shares and own equity derivative activity | ( 1,967 ) | ( 882 ) |
| Distributions paid on UBS shares | ( 1,301 ) | ( 1,308 ) |
| Repayment of lease liabilities | ( 284 ) | ( 273 ) |
| Issuance of debt designated at fair value and long-term debt measured at amortized cost | 63,501 | 46,059 |
| Repayment of debt designated at fair value and long-term debt measured at amortized cost | ( 45,274 ) | ( 46,137 ) |
| Net changes in non-controlling interests | ( 4 ) | ( 4 ) |
| Net cash flow from / (used in) financing activities | 10,795 | 12,368 |

Total cash flow
Cash and cash equivalents at the beginning of the period		173,531	119,873
Net cash flow from / (used in) operating, investing and financing activities		8,954	45,332
Effects of exchange rate differences on cash and cash equivalents		( 5,390 )	1,563
Cash and cash equivalents at the end of the period	2	177,095	166,768
of which: cash and balances at central banks	3	160,541	149,430
of which: loans and advances to banks		15,125	14,428
of which: money market paper		1,428	2,911

Additional information Net cash flow from / (used in) operating activities includes:
Interest received in cash5,4696,365 Interest paid in cash2,6594,200 Dividends on equity investments, investment funds and associates received in cash1,2631,104 1 Includes cash proceeds from the sale of UBS’s minority investment in Clearstream Fund Centre for the period ended 30 June 2021, and dividends received from associates in both periods. Refer to the “Recent developments” section of this report for more information. 2 USD3,432million and USD5,393million of cash and cash equivalents (mainly reflected in Loans and advances to banks) were restricted as of 30 June 2021 and 30 June 2020, respectively. Refer to “Note 23 Restricted and transferred financial assets” in the “Consolidated financial statements” section of the Annual Report 2020 for more information. 3 Includes only balances with an original maturity of three months or less.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Notes to the UBS Group AG interim

consolidated financial statements (unaudited)

Note 1 Basis of accounting and other financial reporting effects

Basis of preparationAmendments to IFRS 9, IAS 39 and IFRS 7 (Interest Rate Benchmark Reform – Phase 2)

The consolidated financial statements (the financial statements) of UBS Group AG and its subsidiaries (together, “UBS” or the “Group”) are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (the IASB), and are presented in US dollars (USD). These interim financial statements are prepared in accordance with IAS 34, Interim Financial Reporting . In preparing these interim financial statements, the same accounting policies and methods of computation have been applied as in the UBS Group AG consolidated annual financial statements for the period ended 31 December 2020, except for the changes described in this Note. These interim financial statements are unaudited and should be read in conjunction with UBS Group AG’s audited consolidated financial statements included in the Annual Report 2020, and the “Management report” sections of this report. In the opinion of management, all necessary adjustments were made for a fair presentation of the Group’s financial position, results of operations and cash flows. Preparation of these interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities. These estimates and assumptions are based on the best available information. Actual results in the future could differ from such estimates and differences may be material to the financial statements. Revisions to estimates, based on regular reviews, are recognized in the period in which they occur. For more information about areas of estimation uncertainty that are considered to require critical judgment, refer to “Note 1a Significant accounting policies” in the “Consolidated financial statements” section of the Annual Report 2020 .
On 1 January 2021, UBS adopted Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 , addressing a number of issues in financial reporting areas that arise when interbank offered rates ( IBOR s) are reformed or replaced. The amendments provide a practical expedient which permits certain changes in the contractual cash flows of debt instruments attributable to the repl acement of IBOR s with alternative reference rates (ARRs) to be accounted for prospectively by updating the instrument’s effective interest rate (EIR) , provided ( i ) the change is necessary as a direct consequence of IBOR reform and (ii) the new basis for determining the contractual cash flows is economically equivalent to the previous basis. UBS adopted the amendments, which provide a practical expedient with no material effect on the Group’s financial statements.

Note 1 Basis of accounting and other financial reporting effects (continued)

Furthermore, the amendments provide various hedge accounting reliefs, with the following expected to benefit UBS. – Risk components The amendments permit UBS to designate an alternative benchmark rate as a non-contractually specified risk component, even if it is not separately identifiable at the date when it is designated, provided UBS can reasonably expect that it will meet the requirements within 24 months of the first designation and the risk component is reliably measurable. As of 30 June 2021, the alternative benchmark rates that UBS has designated as the hedged risk in fair value hedges of interest rate risk related to debt instruments and cash flow hedges of forecast transactions were the Secured Overnight Financing Rate ( SOFR ) , the Swiss Average Rate Overnight (SARON) and the Sterling Overnight Index Average ( SONIA). The designated notionals were USD 11 b illio n , USD 1.1 billion and USD 0.7 billion, respectively. – Hedge designation Following amendments to the hedge documentation to reflect the change in designation relating to IBOR reform, UBS will continue its hedge relationships provided the other hedge accounting criteria and requirements of the p hase 2 amendment are met. As of 30 June 2021, no such changes have been made. – Amounts accumulated in the cash flow hedge reserve Upon changing the hedge designation as set out above, the accumulated amounts in the cash flow hedge reserve are assumed to be based on the alternative benchmark rate. Fordiscontinued hedging relationships, when the interest rate benchmark on which the hedged future cash flows were based is changed as required by IBOR reform, the amount accumulated in the cash flow hedge reserve is also assumed to be based on the alternative benchmark rate for the purpose of assessing whether the hedged future cash flows are still expected to occur. As of 3 0 June 2021, no such changes have been made. – Retrospective effectiveness assessment as applied to hedges designated under IAS 39 U pon the end of the p hase 1 relief for effectiveness assessment UBS may elect to reset to zero the cumulative fair value changes of the hedged item and hedging instrument for the purpose of assessing the retrospective effectiveness of a hedging relationship. As of 30 June 2021, no such election has been made. › Refer to “Note 25 Hedge accounting” in the “Consolidated financial statements” section of the Annual Report 2020 for details about phase 1 accounting reliefs The amendments also introduced additional disclosure requirements regarding the Group’s management of the transition to alternative benchmark rates, its progress at the reporting date and the risks to which it is exposed arising from financial instruments because of the transition.

›Refer to Note 13 for more information

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 2 Segment reporting

UBS’s businesses are organized globally into four business divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management and the Investment Bank. All four business divisions are supported by Group Functions and qualify as reportable segments for the purpose of segment reporting. Together with Group Functions they reflect the management structure of the Group. › Refer to “Note 2 Segment reporting” in the “Consolidated financial statements” section of the Annual Report 2020 for more information about the Group’s reporting segments

USD million Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank Group Functions UBS For the six months ended 30 June 2021 Net interest income 2,023 1,039 ( 7 ) 244 ( 58 ) 3,241 Non-interest income 7,583 1,063 1,310 4,476 ( 99 ) 14,333 Income 9,606 2,102 1,303 4,720 ( 158 ) 17,574 Credit loss (expense) / release 16 69 0 23 ( 1 ) 108 Total operating income 9,622 2,171 1,303 4,743 ( 158 ) 17,681 Total operating expenses 6,918 1,284 820 3,663 105 12,790 Operating profit / (loss) before tax 2,704 888 482 1,080 ( 263 ) 4,891 Tax expense / (benefit) 1,053 Net profit / (loss) 3,838 As of 30 June 2021 Total assets 375,076 221,958 29,468 343,886 116,130 1,086,519 USD million Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank Group Functions UBS For the six months ended 30 June 2020 Net interest income 2,054 1,029 ( 9 ) 3 ( 354 ) 2,722 Non-interest income 6,553 886 1,048 4,914 ( 246 ) 13,155 Income 8,606 1,914 1,038 4,917 ( 600 ) 15,877 Credit loss (expense) / release ( 117 ) ( 187 ) 0 ( 200 ) ( 35 ) ( 540 ) Total operating income 8,489 1,727 1,038 4,718 ( 635 ) 15,337 Total operating expenses 6,391 1,155 724 3,396 80 11,747 Operating profit / (loss) before tax 2,098 572 314 1,321 ( 715 ) 3,591 Tax expense / (benefit) 757 Net profit / (loss) 2,833 As of 31 December 2020 Total assets 367,714 231,657 28,589 369,683 128,122 1,125,765

Note 3 Net interest income For the quarter ended Year-to-date USD million 30.6.21 31.3.21 30.6.20 30.6.21 30.6.20 Net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income Interest income from loans and deposits 1 1,612 1,584 1,632 3,197 3,500 Interest income from securities financing transactions 2 126 135 202 261 569 Interest income from other financial instruments measured at amortized cost 68 73 87 141 176 Interest income from debt instruments measured at fair value through other comprehensive income 16 35 35 51 52 Interest income from derivative instruments designated as cash flow hedges 284 268 178 553 290 Total interest income from financial instruments measured at amortized cost and fair value through other comprehensive income 2,106 2,097 2,133 4,203 4,588 Interest expense on loans and deposits 3 136 137 244 273 707 Interest expense on securities financing transactions 4 293 258 224 551 443 Interest expense on debt issued 381 411 596 792 1,272 Interest expense on lease liabilities 26 27 27 53 56 Total interest expense from financial instruments measured at amortized cost 836 833 1,092 1,669 2,478 Total net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income 1,270 1,264 1,041 2,535 2,110 Net interest income from financial instruments measured at fair value through profit or loss Net interest income from financial instruments at fair value held for trading 193 200 242 393 442 Net interest income from brokerage balances 216 197 182 412 318 Net interest income from securities financing transactions at fair value not held for trading 5 12 12 18 24 51 Interest income from other financial instruments at fair value not held for trading 75 96 153 170 355 Interest expense on other financial instruments designated at fair value ( 138 ) ( 155 ) ( 244 ) ( 294 ) ( 555 ) Total net interest income from financial instruments measured at fair value through profit or loss 357 349 351 706 612 Total net interest income 1,628 1,613 1,392 3,241 2,722 1 Consists of interest income from cash and balances at central banks, loans and advances to banks and customers, and cash collateral receivables on derivative instruments, as well as negative interest on amounts due to banks, customer deposits, and cash collateral payables on derivative instruments. 2 Includes interest income on receivables from securities financing transactions and negative interest, including fees, on payables from securities financing transactions. 3 Consists of interest expense on amounts due to banks, cash collateral payables on derivative instruments, and customer deposits, as well as negative interest on cash and balances at central banks, loans and advances to banks, and cash collateral receivables on derivative instruments. 4 Includes interest expense on payables from securities financing transactions and negative interest, including fees, on receivables from securities financing transactions. 5 Includes interest expense on securities financing transactions designated at fair value.

Note 4 Net fee and commission income For the quarter ended Year-to-date USD million 30.6.21 31.3.21 30.6.20 30.6.21 30.6.20 Fee and commission income Underwriting fees 387 392 257 780 456 of which: equity underwriting fees 262 275 123 537 230 of which: debt underwriting fees 126 117 133 243 227 M&A and corporate finance fees 330 238 117 568 335 Brokerage fees 1,037 1,358 959 2,395 2,204 Investment fund fees 1,405 1,436 1,197 2,842 2,492 Portfolio management and related services 2,426 2,284 1,813 4,710 3,872 Other 455 461 387 916 848 Total fee and commission income 1 6,041 6,169 4,729 12,210 10,207 of which: recurring 3,823 3,620 2,980 7,443 6,320 of which: transaction-based 2,176 2,454 1,674 4,631 3,773 of which: performance-based 42 94 75 136 114 Fee and commission expense Brokerage fees paid 74 68 63 142 149 Distribution fees paid 153 132 144 285 300 Other 258 277 212 535 426 Total fee and commission expense 484 478 419 962 875 Net fee and commission income 5,557 5,691 4,311 11,248 9,332 of which: net brokerage fees 963 1,290 896 2,253 2,055 1 Reflects third-party fee and commission income for the second quarter of 2021 of USD 3,585 million for Global Wealth Management (first quarter of 2021: USD 3,673 million; second quarter of 2020: USD 2,809 million), USD 399 million for Personal & Corporate Banking (first quarter of 2021: USD 389 million; second quarter of 2020: USD 313 million), USD 805 million for Asset Management (first quarter of 2021: USD 815 million; second quarter of 2020: USD 700 million), USD 1,243 million for the Investment Bank (first quarter of 2021: USD 1,278 million; second quarter of 2020: USD 872 million) and USD 9 million for Group Functions (first quarter of 2021: USD 15 million; second quarter of 2020: USD 36 million).

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 5 Personnel expenses For the quarter ended Year-to-date USD million 30.6.21 31.3.21 30.6.20 30.6.21 30.6.20 Salaries and variable compensation 2,945 2,871 2,696 5,816 5,258 Financial advisor compensation 1 1,183 1,170 941 2,353 2,035 Contractors 98 98 91 196 176 Social security 241 268 228 508 439 Post-employment benefit plans 173 2 265 202 439 438 Other personnel expenses 132 128 123 260 258 Total personnel expenses 4,772 4,801 4,283 9,573 8,604 1 Financial advisor compensation consists of grid-based compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, assets and other variables. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 2 Includes curtailment gains of USD 59 million, which represent a reduction in the defined benefit obligation related to the Swiss pension plan resulting from a decrease in headcount following restructuring activities.

Note 6 General and administrative expenses For the quarter ended Year-to-date USD million 30.6.21 31.3.21 30.6.20 30.6.21 30.6.20 Outsourcing costs 206 201 207 407 422 IT expenses 256 266 220 522 452 Consulting, legal and audit fees 130 99 156 229 310 Real estate and logistics costs 151 152 163 302 323 Market data services 105 102 101 206 199 Marketing & communication 52 42 36 94 76 Travel and entertainment 13 9 11 21 60 Litigation, regulatory & similar matters 1 63 9 2 72 8 Other 2 126 210 167 337 346 of which: UK and German bank levies ( 11 ) 41 3 30 17 Total general and administrative expenses 1,103 1,089 1,063 2,192 2,196 1 Reflects the net increase in / (release of) provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 14 for more information. 2 Includes charitable donations.

Note 7 Expected credit loss measurement

a) Credit loss expense/ release Total net credit loss releases were USD 80 million in the second quarter of 2021, reflecting an USD 88 million net release of credit losses related to stage 1 and 2 positions and USD 8 million of net credit loss expenses related to credit-impaired (stage 3) positions. The USD 88 million stage 1 and 2 net release included the partial release of a post-model adjustment of USD 91 million (representing one-third of the USD 273 million scenario-drivenmodel output effects from the third quarter of 2020 to the second quarter of 2021), due to the continued positive trend in macroeconomic scenario input data. Stage 3 net credit loss expenses were USD 8 million, including USD 3 million net expenses in the Investment Bank and USD 5 million net expenses in Personal & Corporate Banking, across various corporate lending positions.

Credit loss (expense) / release USD million Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank Group Functions Total For the quarter ended 30.6.21 Stages 1 and 2 13 51 0 24 ( 1 ) 88 Stage 3 0 ( 5 ) 0 ( 3 ) 0 ( 8 ) Total credit loss (expense) / release 14 46 0 21 ( 1 ) 80

Note 7 Expected credit loss measurement (continued)

b) Changes to ECL models, scenarios, scenario weights and key inputs Scenarios The expected credit loss (ECL) scenarios, along with the related macroeconomic factors, were updated and reviewed in light of the economic and political conditions prevailing for the second quarter of 2021 through a series of governance meetings, with input and feedback from UBS risk and finance experts across the business divisions and regions. Effective from the second quarter of 2021, management has included an upside scenario and a mild downside scenario in the ECL calculation similar to the approach applied before the COVID-19 pandemic, as uncertainty regarding future economic developments and the related effects on models further d ecline and post - model adjustment levels decrease. The upside scenario assumes that positive developments regarding COVID-19 enable economic activity to rebound more quickly than expected, supported by significant improvements in business and consumer activity. Structural changes from the lockdown period and accelerated technology uptake increase productivity and help to keep growth buoyant beyond the initial rebound in activity. Underlying macroeconomic conditions improve, and asset values increase substantially. The mild downside scenario assumes a shift in sentiment caused by higher-than-expected inflation and the Federal Reserve’s intention to begin tapering its quantitative easing program. Long - term interest rates rise sharply and equities decline as market volatility ensues. Economic activity slows across the globe, causing a mild recession. The baseline and severe downside scenarios included slightly more optimistic assumptions compared with those applied in the first quarter of 2021, reflecting improvements in economic activity, greater optimism regarding the availability and effective distribution of COVID-19 vaccines, and continued governmentsupport. The baseline scenario assumptions on a calendar-year basis are included in the table below. Scenario weights and post-model adjustments Management applied the following scenario weightings effective from the second quarter of 2021: upside at 5 %, baseline at 55 %, mild downside at 10 % and severe downside at 30 %. This compared with a baseline scenario weighting of 60 % and a severe downside scenario weighting of 40 % applied in the first quarter of 2021. The incorporation of the two new scenarios and the applied weightings did not have a material effect on allowances and provisions. In addition, more than one year after the exceptional circumstances of the COVID-19 pandemic began, management has released one-third (USD 91 million) of the USD 273 million post-model adjustment for scenario-driven model output effects into profit or loss in the second quarter of 2021, following a portfolio level review, which supported partial overlay releases, particularly in real estate and large corporate segments. This decision was made following a continued positive trend in macroeconomic scenario input data (from the third quarter of 2020 to the second quarter of 2021), as well as positive vaccination developments and gradual lifting of lockdowns in many economies. Two-thirds of the post-model adjustment for scenario - driven model output effects ( USD 183 m illion ) w as retained, given the heightened level of uncertainty that remains with regard to the ultimate effects of the crisis. This recognizes that new challenges are frequently arising in the context of the pandemic, for example, the spread of new variants of COVID-19, inflationary pressure from supply chain disruption and surging demand, and the risk of potential tail effects as government and central bank support winds down.

Baseline Key parameters 2020 2021 2022 Real GDP growth (annual percentage change) United States ( 3.6 ) 6.9 5.9 Eurozone ( 7.4 ) 4.3 5.3 Switzerland ( 4.5 ) 3.3 3.0 Unemployment rate (%, annual average) United States 8.1 5.4 4.4 Eurozone 8.5 8.6 8.1 Switzerland 3.2 3.3 3.1 Real estate (annual percentage change, Q4) United States 3.4 6.5 2.9 Eurozone ( 0.3 ) 2.9 1.0 Switzerland 4.0 5.0 1.0

Economic scenarios and weights applied ECL scenario Assigned weights in % 30.6.21 31.3.21 31.3.20 Upside 5.0 0.0 0.0 Baseline 55.0 60.0 70.0 Mild downside 10.0 0.0 0.0 Severe downside 30.0 40.0 30.0

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 7 Expected credit loss measurement (continued)

c) ECL-relevant balance sheet and off-balance sheet positions including ECL allowances and provisions

The tables below and on the following pages provide information about financial instruments and certain non- financial instruments that are subject to ECL requirements. For amortized-cost instruments, the carrying amount represents the maximum exposure to credit risk, taking into account the allowance for credit losses. Financial assets measured at fair value through other comprehensive income (FVOCI) are also subject to ECL; however, unlike amortized-cost instruments, the allowance for credit losses for FVOCI instruments does notreduce the carrying amount of these financial assets. Instead, the carrying amount of financial assets measured at FVOCI represents the maximum exposure to credit risk. In addition to on-balance sheet financial assets, certain off- balance sheet and other credit lines are also subject to ECL. The maximum exposure to credit risk for off-balance sheet financial instruments is calculated based on the maximum contractual amounts.

USD million 30.6.21 Carrying amount¹ / Total exposure ECL allowances / provisions Financial instruments measured at amortized cost Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Cash and balances at central banks 160,672 160,672 0 0 0 0 0 0 Loans and advances to banks 16,500 16,457 42 0 ( 8 ) ( 6 ) ( 1 ) ( 1 ) Receivables from securities financing transactions 83,494 83,494 0 0 ( 3 ) ( 3 ) 0 0 Cash collateral receivables on derivative instruments 29,785 29,785 0 0 0 0 0 0 Loans and advances to customers 390,126 369,810 18,403 1,913 ( 950 ) ( 124 ) ( 156 ) ( 670 ) of which: Private clients with mortgages 147,827 137,851 9,140 836 ( 139 ) ( 26 ) ( 76 ) ( 37 ) of which: Real estate financing 42,627 37,950 4,663 14 ( 49 ) ( 17 ) ( 32 ) 0 of which: Large corporate clients 14,294 12,671 1,229 395 ( 246 ) ( 20 ) ( 19 ) ( 207 ) of which: SME clients 14,116 11,753 1,814 549 ( 291 ) ( 20 ) ( 19 ) ( 253 ) of which: Lombard 146,167 146,135 0 32 ( 35 ) ( 6 ) 0 ( 29 ) of which: Credit cards 1,611 1,255 327 28 ( 34 ) ( 9 ) ( 9 ) ( 16 ) of which: Commodity trade finance 3,399 3,345 38 16 ( 103 ) ( 5 ) 0 ( 98 ) Other financial assets measured at amortized cost 27,143 26,398 436 309 ( 124 ) ( 30 ) ( 9 ) ( 86 ) of which: Loans to financial advisors 2,415 1,924 197 295 ( 103 ) ( 23 ) ( 6 ) ( 74 ) Total financial assets measured at amortized cost 707,720 686,616 18,882 2,222 ( 1,085 ) ( 163 ) ( 166 ) ( 757 ) Financial assets measured at fair value through other comprehensive income 7,775 7,775 0 0 0 0 0 0 Total on-balance sheet financial assets in scope of ECL requirements 715,496 694,392 18,882 2,222 ( 1,085 ) ( 163 ) ( 166 ) ( 757 ) Off-balance sheet (in scope of ECL) Guarantees 17,457 15,719 1,580 158 ( 52 ) ( 15 ) ( 9 ) ( 27 ) of which: Large corporate clients 3,142 1,995 1,035 112 ( 13 ) ( 3 ) ( 3 ) ( 7 ) of which: SME clients 1,269 1,002 222 46 ( 13 ) ( 1 ) ( 1 ) ( 12 ) of which: Financial intermediaries and hedge funds 7,465 7,257 208 0 ( 16 ) ( 10 ) ( 5 ) 0 of which: Lombard 2,166 2,166 0 0 ( 1 ) 0 0 ( 1 ) of which: Commodity trade finance 2,372 2,342 30 0 ( 2 ) ( 1 ) 0 ( 1 ) Irrevocable loan commitments 37,751 34,505 3,064 181 ( 118 ) ( 69 ) ( 49 ) 0 of which: Large corporate clients 22,464 19,621 2,718 125 ( 103 ) ( 61 ) ( 42 ) 0 Forward starting reverse repurchase and securities borrowing agreements 8,253 8,253 0 0 0 0 0 0 Committed unconditionally revocable credit lines 38,796 35,201 3,526 68 ( 36 ) ( 28 ) ( 8 ) 0 of which: Real estate financing 6,542 6,135 407 0 ( 5 ) ( 4 ) ( 1 ) 0 of which: Large corporate clients 4,383 2,924 1,434 25 ( 7 ) ( 4 ) ( 3 ) 0 of which: SME clients 5,173 4,498 643 32 ( 14 ) ( 12 ) ( 2 ) 0 of which: Lombard 8,632 8,632 0 0 0 0 0 0 of which: Credit cards 9,298 8,825 464 9 ( 6 ) ( 5 ) ( 2 ) 0 of which: Commodity trade finance 251 251 0 0 0 0 0 0 Irrevocable committed prolongation of existing loans 5,281 5,260 20 1 ( 3 ) ( 2 ) ( 1 ) 0 Total off-balance sheet financial instruments and other credit lines 107,537 98,938 8,191 408 ( 209 ) ( 114 ) ( 67 ) ( 27 ) Total allowances and provisions ( 1,294 ) ( 277 ) ( 233 ) ( 784 ) 1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.

Note 7 Expected credit loss measurement (continued)

USD million 31.3.21 Carrying amount¹ / Total exposure ECL allowances / provisions Financial instruments measured at amortized cost Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Cash and balances at central banks 158,914 158,914 0 0 0 0 0 0 Loans and advances to banks 18,448 18,387 61 0 ( 12 ) ( 8 ) ( 3 ) ( 1 ) Receivables from securities financing transactions 82,384 82,385 0 0 ( 3 ) ( 3 ) 0 0 Cash collateral receivables on derivative instruments 35,046 35,046 0 0 0 0 0 0 Loans and advances to customers 376,798 355,787 18,995 2,016 ( 993 ) ( 138 ) ( 184 ) ( 671 ) of which: Private clients with mortgages 142,611 132,636 9,118 857 ( 158 ) ( 37 ) ( 86 ) ( 35 ) of which: Real estate financing 41,092 36,099 4,979 15 ( 56 ) ( 15 ) ( 41 ) 0 of which: Large corporate clients 13,305 11,155 1,673 477 ( 271 ) ( 28 ) ( 28 ) ( 216 ) of which: SME clients 14,034 11,620 1,886 527 ( 283 ) ( 19 ) ( 19 ) ( 246 ) of which: Lombard 141,139 141,112 0 27 ( 34 ) ( 5 ) 0 ( 30 ) of which: Credit cards 1,392 1,063 301 28 ( 33 ) ( 9 ) ( 8 ) ( 16 ) of which: Commodity trade finance 3,695 3,663 16 15 ( 101 ) ( 5 ) 0 ( 96 ) Other financial assets measured at amortized cost 26,770 26,036 314 420 ( 125 ) ( 32 ) ( 7 ) ( 86 ) of which: Loans to financial advisors 2,473 1,961 107 405 ( 104 ) ( 26 ) ( 4 ) ( 75 ) Total financial assets measured at amortized cost 698,361 676,554 19,371 2,436 ( 1,133 ) ( 180 ) ( 195 ) ( 758 ) Financial assets measured at fair value through other comprehensive income 8,100 8,100 0 0 0 0 0 0 Total on-balance sheet financial assets in scope of ECL requirements 706,460 684,654 19,371 2,436 ( 1,133 ) ( 180 ) ( 195 ) ( 758 ) Off-balance sheet (in scope of ECL) Guarantees 17,493 15,377 1,952 164 ( 59 ) ( 15 ) ( 15 ) ( 29 ) of which: Large corporate clients 3,425 2,025 1,281 119 ( 17 ) ( 3 ) ( 5 ) ( 9 ) of which: SME clients 1,243 936 262 45 ( 12 ) 0 ( 1 ) ( 11 ) of which: Financial intermediaries and hedge funds 7,579 7,304 275 0 ( 18 ) ( 9 ) ( 9 ) 0 of which: Lombard 2,136 2,136 0 0 ( 2 ) 0 0 ( 1 ) of which: Commodity trade finance 2,057 2,031 26 0 ( 4 ) ( 1 ) 0 ( 3 ) Irrevocable loan commitments 38,137 34,312 3,730 95 ( 138 ) ( 75 ) ( 63 ) 0 of which: Large corporate clients 22,943 19,600 3,278 65 ( 121 ) ( 68 ) ( 54 ) 0 Forward starting reverse repurchase and securities borrowing agreements 5,988 5,988 0 0 0 0 0 0 Committed unconditionally revocable credit lines 39,424 35,311 4,023 89 ( 45 ) ( 27 ) ( 18 ) 0 of which: Real estate financing 7,227 6,786 432 9 ( 11 ) ( 5 ) ( 6 ) 0 of which: Large corporate clients 4,429 2,713 1,690 25 ( 9 ) ( 3 ) ( 6 ) 0 of which: SME clients 5,036 4,120 878 39 ( 14 ) ( 11 ) ( 3 ) 0 of which: Lombard 8,566 8,566 0 0 ( 1 ) ( 1 ) 0 0 of which: Credit cards 9,175 8,695 469 11 ( 6 ) ( 5 ) ( 1 ) 0 of which: Commodity trade finance 322 322 0 0 0 0 0 0 Irrevocable committed prolongation of existing loans 5,824 5,785 34 5 ( 3 ) ( 3 ) 0 0 Total off-balance sheet financial instruments and other credit lines 106,865 96,773 9,738 354 ( 245 ) ( 121 ) ( 95 ) ( 29 ) Total allowances and provisions ( 1,378 ) ( 301 ) ( 290 ) ( 787 ) 1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 7 Expected credit loss measurement (continued)

USD million 31.12.20 Carrying amount¹ / Total exposure ECL allowances / provisions Financial instruments measured at amortized cost Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Cash and balances at central banks 158,231 158,231 0 0 0 0 0 0 Loans and advances to banks 15,444 15,260 184 0 ( 16 ) ( 9 ) ( 5 ) ( 1 ) Receivables from securities financing transactions 74,210 74,210 0 0 ( 2 ) ( 2 ) 0 0 Cash collateral receivables on derivative instruments 32,737 32,737 0 0 0 0 0 0 Loans and advances to customers 379,528 356,948 20,341 2,240 ( 1,060 ) ( 142 ) ( 215 ) ( 703 ) of which: Private clients with mortgages 148,175 138,769 8,448 959 ( 166 ) ( 35 ) ( 93 ) ( 39 ) of which: Real estate financing 43,429 37,568 5,838 23 ( 63 ) ( 15 ) ( 44 ) ( 4 ) of which: Large corporate clients 15,161 12,658 2,029 474 ( 279 ) ( 27 ) ( 40 ) ( 212 ) of which: SME clients 14,872 11,990 2,254 628 ( 310 ) ( 19 ) ( 23 ) ( 268 ) of which: Lombard 133,850 133,795 0 55 ( 36 ) ( 5 ) 0 ( 31 ) of which: Credit cards 1,558 1,198 330 30 ( 38 ) ( 11 ) ( 11 ) ( 16 ) of which: Commodity trade finance 3,269 3,214 43 12 ( 106 ) ( 5 ) 0 ( 101 ) Other financial assets measured at amortized cost 27,194 26,377 348 469 ( 133 ) ( 34 ) ( 9 ) ( 90 ) of which: Loans to financial advisors 2,569 1,982 137 450 ( 108 ) ( 27 ) ( 5 ) ( 76 ) Total financial assets measured at amortized cost 687,345 663,763 20,873 2,709 ( 1,211 ) ( 187 ) ( 229 ) ( 795 ) Financial assets measured at fair value through other comprehensive income 8,258 8,258 0 0 0 0 0 0 Total on-balance sheet financial assets in scope of ECL requirements 695,603 672,021 20,873 2,709 ( 1,211 ) ( 187 ) ( 229 ) ( 795 ) Off-balance sheet (in scope of ECL) Guarantees 17,081 14,687 2,225 170 ( 63 ) ( 14 ) ( 15 ) ( 34 ) of which: Large corporate clients 3,710 2,048 1,549 113 ( 20 ) ( 4 ) ( 5 ) ( 12 ) of which: SME clients 1,310 936 326 48 ( 13 ) ( 1 ) ( 1 ) ( 11 ) of which: Financial intermediaries and hedge funds 7,637 7,413 224 0 ( 17 ) ( 7 ) ( 9 ) 0 of which: Lombard 641 633 0 8 ( 2 ) 0 0 ( 2 ) of which: Commodity trade finance 1,441 1,416 25 0 ( 2 ) ( 1 ) 0 0 Irrevocable loan commitments 41,372 36,894 4,374 104 ( 142 ) ( 74 ) ( 68 ) 0 of which: Large corporate clients 24,209 20,195 3,950 64 ( 121 ) ( 63 ) ( 58 ) 0 Forward starting reverse repurchase and securities borrowing agreements 3,247 3,247 0 0 0 0 0 0 Committed unconditionally revocable credit lines 40,134 35,233 4,792 108 ( 50 ) ( 29 ) ( 21 ) 0 of which: Real estate financing 6,328 5,811 517 0 ( 12 ) ( 5 ) ( 7 ) 0 of which: Large corporate clients 4,909 2,783 2,099 27 ( 9 ) ( 2 ) ( 7 ) 0 of which: SME clients 5,827 4,596 1,169 63 ( 16 ) ( 12 ) ( 4 ) 0 of which: Lombard 9,671 9,671 0 0 0 ( 1 ) 0 0 of which: Credit cards 8,661 8,220 430 11 ( 8 ) ( 6 ) ( 2 ) 0 of which: Commodity trade finance 242 242 0 0 0 0 0 0 Irrevocable committed prolongation of existing loans 3,282 3,277 5 0 ( 2 ) ( 2 ) 0 0 Total off-balance sheet financial instruments and other credit lines 105,116 93,337 11,396 382 ( 257 ) ( 119 ) ( 104 ) ( 34 ) Total allowances and provisions ( 1,468 ) ( 306 ) ( 333 ) ( 829 ) 1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.

Note 7 Expected credit loss measurement (continued)

The table below provides information about the ECL gross exposure and the ECL coverage ratio for our core loan portfolios (i.e., Loans and advances to customers and Loans to financial advisors ) and relevant off-balance sheet exposures. Cash and balances at central banks , Loans and advances to banks , Receivables from securities financing transactions , Cash collateral receivables on derivative instruments and Financial assetsmeasured at fair value through other comprehensive income are not included in the table below, due to their lower sensitivity to ECL. ECL coverage ratios are calculated by taking ECL allowances and provisions divided by the gross carrying amount of the exposures

Coverage ratios for core loan portfolio 30.6.21 Gross carrying amount (USD million) ECL coverage (bps) On-balance sheet Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Private clients with mortgages 147,966 137,877 9,216 874 9 2 82 427 Real estate financing 42,677 37,967 4,696 14 12 4 69 101 Large corporate clients 14,540 12,691 1,247 602 169 16 151 3,446 SME clients 14,407 11,772 1,833 802 202 17 102 3,152 Lombard 146,202 146,141 0 61 2 0 0 4,698 Credit cards 1,644 1,264 336 44 205 72 261 3,608 Commodity trade finance 3,503 3,350 38 114 295 15 2 8,605 Other loans and advances to customers 20,137 18,871 1,193 73 26 11 13 4,051 Loans to financial advisors 2,518 1,946 202 369 408 116 290 2,016 Total 1 393,594 371,880 18,762 2,952 27 4 86 2,521 Gross exposure (USD million) ECL coverage (bps) Off-balance sheet Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Private clients with mortgages 8,063 7,809 251 3 4 4 7 349 Real estate financing 8,048 7,596 452 0 9 7 49 0 Large corporate clients 29,990 24,540 5,187 262 41 27 91 278 SME clients 8,273 7,099 1,040 134 43 20 91 878 Lombard 14,736 14,735 0 0 1 0 0 0 Credit cards 9,298 8,825 464 9 7 5 33 0 Commodity trade finance 2,623 2,593 30 0 8 5 50 0 Financial intermediaries and hedge funds 10,576 10,110 466 0 17 12 120 0 Other off-balance sheet commitments 7,678 7,377 301 0 17 8 21 0 Total 2 99,284 90,685 8,191 408 21 13 82 671 1 Includes Loans and advances to customers of USD 391,076 million and Loans to financial advisors of USD 2,518 million, which are presented on the balance sheet line Other assets measured at amortized cost. 2 Excludes Forward starting reverse repurchase and securities borrowing agreements.

Coverage ratios for core loan portfolio 31.3.21 Gross carrying amount (USD million) ECL coverage (bps) On-balance sheet Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Private clients with mortgages 142,770 132,673 9,204 893 11 3 93 396 Real estate financing 41,148 36,113 5,020 15 14 4 81 78 Large corporate clients 13,577 11,184 1,701 692 200 25 162 3,114 SME clients 14,317 11,639 1,905 773 198 16 98 3,179 Lombard 141,173 141,117 0 56 2 0 0 5,260 Credit cards 1,425 1,073 309 44 233 88 266 3,555 Commodity trade finance 3,796 3,668 16 111 267 14 2 8,620 Other loans and advances to customers 19,585 18,458 1,024 103 28 11 26 3,211 Loans to financial advisors 2,578 1,987 111 480 405 131 337 1,558 Total 1 380,369 357,911 19,290 3,167 29 5 97 2,355 Gross exposure (USD million) ECL coverage (bps) Off-balance sheet Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Private clients with mortgages 7,455 7,226 217 13 6 5 16 111 Real estate financing 8,513 8,049 455 9 17 7 192 53 Large corporate clients 30,796 24,339 6,249 209 48 31 102 422 SME clients 8,101 6,626 1,367 108 41 20 70 973 Lombard 14,603 14,603 0 0 2 1 0 0 Credit cards 9,175 8,695 469 11 7 6 30 0 Commodity trade finance 2,379 2,352 26 0 18 5 28 0 Financial intermediaries and hedge funds 11,090 10,468 622 0 19 10 169 0 Other off-balance sheet commitments 8,764 8,428 332 4 14 7 23 0 Total 2 100,877 90,785 9,738 354 24 13 98 831 1 Includes Loans and advances to customers of USD 377,791 million and Loans to financial advisors of USD 2,578 million, which are presented on the balance sheet line Other assets measured at amortized cost. 2 Excludes Forward starting reverse repurchase and securities borrowing agreements.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 7 Expected credit loss measurement (continued)

Coverage ratios for core loan portfolio 31.12.20 Gross carrying amount (USD million) ECL coverage (bps) On-balance sheet Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Private clients with mortgages 148,341 138,803 8,540 998 11 2 108 390 Real estate financing 43,492 37,583 5,883 27 15 4 75 1,414 Large corporate clients 15,440 12,684 2,069 686 181 21 192 3,089 SME clients 15,183 12,010 2,277 896 204 16 101 2,991 Lombard 133,886 133,800 0 86 3 0 0 3,592 Credit cards 1,596 1,209 342 46 240 91 333 3,488 Commodity trade finance 3,375 3,219 43 113 315 16 2 8,939 Other loans and advances to customers 19,274 17,781 1,402 91 31 14 25 3,563 Loans to financial advisors 2,677 2,009 142 526 404 135 351 1,446 Total 1 383,266 359,099 20,697 3,470 30 5 106 2,247 Gross exposure (USD million) ECL coverage (bps) Off-balance sheet Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Private clients with mortgages 6,285 6,083 198 3 7 6 16 197 Real estate financing 7,056 6,576 481 0 21 9 185 0 Large corporate clients 32,828 25,026 7,598 205 46 27 92 565 SME clients 9,121 7,239 1,734 148 40 19 63 779 Lombard 14,178 14,170 0 8 2 1 0 1,941 Credit cards 8,661 8,220 430 11 9 8 44 0 Commodity trade finance 1,683 1,658 25 0 10 8 15 0 Financial intermediaries and hedge funds 7,690 7,242 448 0 26 13 248 166 Other off-balance sheet commitments 14,366 13,876 482 8 13 7 11 0 Total 2 101,869 90,090 11,396 382 25 13 91 894 1 Includes Loans and advances to customers of USD 380,589 million and Loans to financial advisors of USD 2,677 million, which are presented on the balance sheet line Other assets measured at amortized cost. 2 Excludes Forward starting reverse repurchase and securities borrowing agreements.

Note 8 Fair value measurement

This Note provides fair value measurement information for both financial and non-financial instruments and should be read in conjunction with “Note 21 Fair value measurement” in the “Consolidated financial statements” section of the Annual Report 2020, which provides more information about valuation principles, valuation governance, fair value hierarchy classification, valuation adjustments, valuation techniques and inputs, sensitivity of fair value measurements, and methods applied to calculate fair values for financial instruments not measured at fair value. › Refer to the “Balance sheet and off-balance sheet” section of this report for more information about quarter-on-quarter balance sheet movementsAll financial and non-financial assets and liabilities measured or disclosed at fair value are categorized into one of three fair value hierarchy levels. In certain cases, the inputs used to measure fair value may fall within different levels of the fair value hierarchy. For disclosure purposes, the level in the hierarchy within which the instrument is classified in its entirety is based on the lowest-level input that is significant to the position’s fair value measurement: – Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities; – Level 2 – valuation techniques for which all significant inputs are, or are based on, observable market data; or – Level 3 – valuation techniques for which significant inputs are not based on observable market data.

Note 8 Fair value measurement (continued)

a) Fair value hierarchy

The fair value hierarchy classification of financial and non-financial assets and liabilities measured at fair value is summarized in the table below.

Determination of fair values from quoted market prices or valuation techniques 1 30.6.21 31.3.21 31.12.20 USD million Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets measured at fair value on a recurring basis Financial assets at fair value held for trading 103,684 16,675 2,123 122,482 101,898 16,499 2,179 120,576 107,507 15,553 2,337 125,397 of which: Equity instruments 86,722 1,336 128 88,186 85,242 736 137 86,115 90,307 1,101 171 91,579 Government bills / bonds 8,123 1,776 10 9,910 8,384 1,890 10 10,284 9,028 2,207 10 11,245 Investment fund units 8,048 1,707 18 9,773 7,400 1,602 31 9,033 7,374 1,794 23 9,192 Corporate and municipal bonds 784 8,417 821 10,022 865 9,795 783 11,443 789 8,356 817 9,961 Loans 0 3,115 1,000 4,114 0 2,234 1,052 3,285 0 1,860 1,134 2,995 Asset-backed securities 7 323 147 478 6 242 166 415 8 236 181 425 Derivative financial instruments 795 119,348 1,479 121,622 1,141 145,508 1,633 148,282 795 157,068 1,754 159,617 of which: Foreign exchange contracts 296 49,154 6 49,456 459 70,221 12 70,692 319 68,424 5 68,749 Interest rate contracts 0 38,104 342 38,446 0 39,529 391 39,920 0 50,353 537 50,890 Equity / index contracts 1 28,383 801 29,185 0 31,369 820 32,189 0 33,990 853 34,842 Credit derivative contracts 0 1,739 303 2,043 0 1,914 395 2,309 0 2,008 350 2,358 Commodity contracts 0 1,832 24 1,856 0 2,187 14 2,201 0 2,211 6 2,217 Brokerage receivables 0 23,010 0 23,010 0 24,201 0 24,201 0 24,659 0 24,659 Financial assets at fair value not held for trading 29,125 31,809 4,459 65,393 31,596 33,385 4,206 69,187 40,986 35,435 3,942 80,364 of which: Financial assets for unit-linked investment contracts 21,974 9 8 21,991 21,162 0 3 21,166 20,628 101 2 20,731 Corporate and municipal bonds 88 16,009 333 16,430 98 15,114 334 15,547 290 16,957 372 17,619 Government bills / bonds 6,640 3,331 0 9,971 9,985 3,970 0 13,956 19,704 3,593 0 23,297 Loans 0 5,626 1,087 6,712 0 6,900 1,093 7,993 0 7,699 862 8,561 Securities financing transactions 0 6,203 201 6,404 0 6,811 119 6,930 0 6,629 122 6,751 Auction rate securities 0 0 1,563 1,563 0 0 1,587 1,587 0 0 1,527 1,527 Investment fund units 317 613 120 1,051 263 589 99 951 278 447 105 831 Equity instruments 105 18 594 717 86 0 530 616 86 0 544 631 Other 0 0 554 554 0 0 441 441 0 10 408 418 Financial assets measured at fair value through other comprehensive income on a recurring basis Financial assets measured at fair value through other comprehensive income 2,165 5,611 0 7,775 2,154 5,946 0 8,100 1,144 7,114 0 8,258 of which: Asset-backed securities 0 5,200 0 5,200 0 5,480 0 5,480 0 6,624 0 6,624 Government bills / bonds 2,121 44 0 2,165 2,115 43 0 2,159 1,103 47 0 1,150 Corporate and municipal bonds 44 367 0 411 38 423 0 461 40 444 0 485 Non-financial assets measured at fair value on a recurring basis Precious metals and other physical commodities 5,470 0 0 5,470 5,709 0 0 5,709 6,264 0 0 6,264 Non-financial assets measured at fair value on a non-recurring basis Other non-financial assets 2 0 1 67 68 0 1 247 248 0 1 245 246 Total assets measured at fair value 141,238 196,453 8,129 345,820 142,498 225,540 8,266 376,304 156,696 239,831 8,278 404,805

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 8 Fair value measurement (continued)

Determination of fair values from quoted market prices or valuation techniques (continued) 1 30.6.21 31.3.21 31.12.20 USD million Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial liabilities measured at fair value on a recurring basis Financial liabilities at fair value held for trading 27,038 6,216 94 33,348 30,887 6,114 61 37,062 26,888 6,652 55 33,595 of which: Equity instruments 20,826 387 75 21,288 26,190 151 50 26,392 22,519 425 40 22,985 Corporate and municipal bonds 37 4,592 13 4,642 32 4,718 7 4,757 31 4,048 9 4,089 Government bills / bonds 5,727 620 0 6,347 4,168 807 0 4,975 3,642 1,036 0 4,678 Investment fund units 442 581 6 1,028 492 397 3 891 696 1,127 5 1,828 Derivative financial instruments 754 117,983 2,950 121,686 1,404 141,518 3,114 146,036 746 156,884 3,471 161,102 of which: Foreign exchange contracts 280 47,048 59 47,387 541 67,043 54 67,638 316 70,149 61 70,527 Interest rate contracts 0 32,177 526 32,703 0 33,501 546 34,046 0 43,389 527 43,916 Equity / index contracts 9 34,431 1,902 36,342 0 36,614 2,070 38,684 0 38,870 2,306 41,176 Credit derivative contracts 0 2,000 392 2,392 0 2,139 369 2,508 0 2,403 528 2,931 Commodity contracts 0 2,034 51 2,085 0 1,907 59 1,966 0 2,003 24 2,027 Financial liabilities designated at fair value on a recurring basis Brokerage payables designated at fair value 0 39,129 0 39,129 0 45,600 0 45,600 0 38,742 0 38,742 Debt issued designated at fair value 0 60,321 14,744 75,065 0 53,900 12,635 66,535 0 50,273 10,970 61,243 Other financial liabilities designated at fair value 0 30,032 610 30,642 0 28,310 545 28,855 0 29,671 716 30,387 of which: Financial liabilities related to unit-linked investment contracts 0 22,217 0 22,217 0 21,357 0 21,357 0 20,975 0 20,975 Securities financing transactions 0 6,181 3 6,184 0 5,651 0 5,651 0 7,317 0 7,317 Over-the-counter debt instruments 0 1,550 592 2,142 0 1,261 526 1,787 0 1,363 697 2,060 Total liabilities measured at fair value 27,791 253,679 18,398 299,869 32,291 275,442 16,355 324,088 27,635 282,222 15,212 325,069 1 Bifurcated embedded derivatives are presented on the same balance sheet lines as their host contracts and are not included in this table. The fair value of these derivatives was not material for the periods presented. 2 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured at the lower of their net carrying amount or fair value less costs to sell.

b) Valuation adjustments and other items

The table below summarizes the valuation adjustment reserves recognized on the balance sheet. Details about each category are provided further below.

Valuation adjustment reserves on the balance sheet As of Life-to-date gain / (loss), USD million 30.6.21 31.3.21 31.12.20 Deferred day-1 profit or loss reserves 405 387 269 Own credit adjustments on financial liabilities designated at fair value ( 278 ) ( 400 ) ( 381 ) CVAs, FVAs, DVAs and other valuation adjustments ( 956 ) ( 977 ) ( 959 )

Deferred day-1 profit or loss reservesDeferred day-1 profit or loss is generally released into Other net income from financial instruments measur ed at fair value through profit or loss when pricing of equivalent products or the underlying parameters become observable or when the transaction is closed out.
The table below summarizes the changes in deferred day-1 profit or loss reserves during the relevant period.

Deferred day-1 profit or loss reserves For the quarter ended Year-to-date USD million 30.6.21 31.3.21 30.6.20 30.6.21 30.6.20 Reserve balance at the beginning of the period 387 269 194 269 146 Profit / (loss) deferred on new transactions 97 181 121 278 239 (Profit) / loss recognized in the income statement ( 79 ) ( 63 ) ( 72 ) ( 142 ) ( 141 ) Foreign currency translation 0 ( 1 ) 0 ( 1 ) ( 1 ) Reserve balance at the end of the period 405 387 243 405 243

Note 8 Fair value measurement (continued)

Own credit The valuation of financial liabilities designated at fair value requires consideration of the own credit component of fair value. Own credit risk is reflected in the valuation of UBS’s fair value option liabilities where this component is considered relevant for valuation purposes by UBS’s counterparties and other market participants. However, own credit risk is not reflected in the valuation of UBS’s liabilities that are fully collateralized or for other obligations for which it is established market practice to not include an own credit component.A description of UBS’s methodology to estimate own credit and the related accounting principles is included in “Note 21 Fair value measurement” in the “Consolidated financial statements” section of the Annual Report 2020. In the second quarter of 2021, other comprehensive income related to own credit on financial liabilities designated at fair value was positive USD 118 million, primarily due to a widening of UBS’s credit spreads.

Own credit adjustments on financial liabilities designated at fair value Included in Other comprehensive income For the quarter ended Year-to-date USD million 30.6.21 31.3.21 30.6.20 30.6.21 30.6.20 Recognized during the period: Realized gain / (loss) ( 5 ) ( 6 ) 8 ( 11 ) 9 Unrealized gain / (loss) 123 ( 23 ) ( 1,103 ) 100 53 Total gain / (loss), before tax 118 ( 29 ) ( 1,095 ) 89 62 As of USD million 30.6.21 31.3.21 30.6.20 Recognized on the balance sheet as of the end of the period: Unrealized life-to-date gain / (loss) ( 278 ) ( 400 ) ( 31 )

Credit, funding, debit and other valuation adjustmentsIn the second quarter of 2021, other valuation adjustments for liquidity decreased, primarily due to lower observed levels of risk across portfolios during the quarter.
A description of UBS’s methodology for estimat ing credit valuation adjustment s (CVA s ), funding valuation adjustments (FVAs), debit valuation adjustments (DVAs) and other valuation adjustments is included in “Note 21 Fair value measurement” in the “Consolidated financial statements” section of the Annual Report 2020.

Valuation adjustments on financial instruments As of Life-to-date gain / (loss), USD million 30.6.21 31.3.21 31.12.20 Credit valuation adjustments 1 ( 51 ) ( 53 ) ( 66 ) Funding valuation adjustments ( 58 ) ( 58 ) ( 73 ) Debit valuation adjustments 1 1 0 Other valuation adjustments ( 848 ) ( 867 ) ( 820 ) of which: liquidity ( 327 ) ( 356 ) ( 340 ) of which: model uncertainty ( 521 ) ( 511 ) ( 479 ) 1 Amounts do not include reserves against defaulted counterparties.

c) Transfers between Level 1 and Level 2

During the first six months of 2021, assets and liabilities transferred from Level 2 to Level 1, or from Level 1 to Level 2, that were held for the entire reporting period, were not material.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 8 Fair value measurement (continued)

d) Level 3 instruments: valuation techniques and inputs

The table below presents material Level 3 assets and liabilities, together with the valuation techniques used to measure fair value, the inputs used in a given valuation technique that are considered significant as of 30 June 2021 and unobservable, and a range of values for those unobservable inputs. The range of values represents the highest- and lowest-level inputs used in the valuation techniques. Therefore the range does not reflect the level of uncertainty regarding a particular input or an assessment of the reasonableness of the Group´s estimates and assumptions, but rather the different underlying characteristics of the relevant assets and liabilities held by the Group. The ranges will therefore vary from period to period and parameter to parameter based on characteristics of the instruments held at eachbalance sheet date. Further more , the ranges of unobservable inputs may differ across other financial institutions, reflecting the diversity of the products in each firm’s inventory. The significant unobservable inputs disclosed in the table below are consistent with those included in “Note 21 Fair value measurement” in the “Consolidated financial statements” section of the Annual Report 2020. A description of the potential effect that a change in each unobservable input in isolation may have on a fair value measurement, including information to facilitate an understanding of factors that give rise to the input ranges shown, is also provided in “Note 21 Fair value measurement” in the “Consolidated financial statements” section of the Annual Report 2020.

Valuation techniques and inputs used in the fair value measurement of Level 3 assets and liabilities Fair value Significant unobservable input(s) 1 Range of inputs Assets Liabilities Valuation technique(s) 30.6.21 31.12.20 USD billion 30.6.21 31.12.20 30.6.21 31.12.20 low high weighted average 2 low high weighted average 2 unit 1 Financial assets and liabilities at fair value held for trading and Financial assets at fair value not held for trading Corporate and municipal bonds 1.2 1.2 0.0 0.0 Relative value to market comparable Bond price equivalent 15 143 100 1 143 100 points Discounted expected cash flows Discount margin 358 358 268 268 basis points Traded loans, loans measured at fair value, loan commitments and guarantees 2.6 2.4 0.0 0.0 Relative value to market comparable Loan price equivalent 1 101 99 0 101 99 points Discounted expected cash flows Credit spread 180 800 190 800 basis points Market comparable and securitization model Credit spread 28 1,558 228 40 1,858 333 basis points Auction rate securities 1.6 1.5 Discounted expected cash flows Credit spread 115 222 162 100 188 140 basis points Investment fund units 3 0.1 0.1 0.0 0.0 Relative value to market comparable Net asset value Equity instruments 3 0.7 0.7 0.1 0.0 Relative value to market comparable Price Debt issued designated at fair value 4 14.7 11.0 Other financial liabilities designated at fair value 0.6 0.7 Discounted expected cash flows Funding spread 35 175 42 175 basis points Derivative financial instruments Interest rate contracts 0.3 0.5 0.5 0.5 Option model Volatility of interest rates 49 73 29 69 basis points Credit derivative contracts 0.3 0.3 0.4 0.5 Discounted expected cash flows Credit spreads 2 496 1 489 basis points Bond price equivalent 3 102 0 100 points Equity / index contracts 0.8 0.9 1.9 2.3 Option model Equity dividend yields 0 11 0 13 % Volatility of equity stocks, equity and other indices 4 99 4 100 % Equity-to-FX correlation ( 30 ) 70 ( 34 ) 65 % Equity-to-equity correlation ( 25 ) 99 ( 16 ) 100 % 1 The ranges of significant unobservable inputs are represented in points, percentages and basis points. Points are a percentage of par (e.g., 100 points would be 100% of par). 2 Weighted averages are provided for non-derivative financial instruments and were calculated by weighting inputs based on the fair values of the respective instruments. Weighted averages are not provided for inputs related to derivative contracts, as this would not be meaningful. 3 The range of inputs is not disclosed, as there is a dispersion of values given the diverse nature of the investments. 4 Debt issued designated at fair value is composed primarily of UBS structured notes, which include variable maturity notes with various equity and foreign exchange underlying risks, rates -linked and credit-linked notes, all of which have embedded derivative parameters that are considered to be unobservable. The equivalent derivative instrument parameters are presented in the respective derivative financial instruments lines in this table.

Note 8 Fair value measurement (continued)

e) Level 3 instruments: sensitivity to changes in unobservable input assumptions

The table below summarizes those financial assets and liabilities classified as Level 3 for which a change in one or more of the unobservable inputs to reflect reasonably possible alternative assumptions would change fair value significantly, and the estimated effect thereof. The table presents the favorable and unfavorable effects for each class of financial assets and liabilities for which the potential change in fair value is considered significant. The sensitivity of fair value measurements for debt issued designated at fair value and over-the-counter debt instruments designated at fair value is reported together with the equivalent derivative or securities financing instrument.The sensitivity data shown below presents an estimation of valuation uncertainty based on reasonably possible alternative values for Level 3 inputs at the balance sheet date and does not represent the estimated effect of stress scenarios. Typically, these financial assets and liabilities are sensitive to a combination of inputs from Levels 1–3. Although well-defined interdepend- encies may exist between Levels 1–2 and Level 3 parameters (e.g., between interest rates, which are generally Level 1 or Level 2, and prepayments, which are generally Level 3), these have not been incorporated in the table. Furthermore, direct interrelationships between the Level 3 parameters are not a significant element of the valuation uncertainty.

Sensitivity of fair value measurements to changes in unobservable input assumptions 30.6.21 31.3.21 31.12.20 USD million Favorable changes Unfavorable changes Favorable changes Unfavorable changes Favorable changes Unfavorable changes Traded loans, loans designated at fair value, loan commitments and guarantees 22 ( 13 ) 26 ( 21 ) 29 ( 28 ) Securities financing transactions 69 ( 68 ) 71 ( 51 ) 40 ( 52 ) Auction rate securities 114 ( 114 ) 88 ( 88 ) 105 ( 105 ) Asset-backed securities 48 ( 34 ) 50 ( 40 ) 41 ( 41 ) Equity instruments 150 ( 120 ) 127 ( 99 ) 129 ( 96 ) Interest rate derivative contracts, net 25 ( 14 ) 38 ( 23 ) 11 ( 16 ) Credit derivative contracts, net 8 ( 10 ) 10 ( 10 ) 10 ( 14 ) Foreign exchange derivative contracts, net 15 ( 9 ) 17 ( 11 ) 20 ( 15 ) Equity / index derivative contracts, net 344 ( 324 ) 358 ( 344 ) 318 ( 294 ) Other 58 ( 77 ) 77 ( 92 ) 91 ( 107 ) Total 852 ( 782 ) 861 ( 779 ) 794 ( 768 )

f) Level 3 instruments: movements during the period

Significant changes in Level 3 instruments The table on the following pages presents additional information about material Level 3 assets and liabilities measured at fair value on a recurring basis. Level 3 assets and liabilities may be hedged with instruments classified as Level 1 or Level 2 in the fair value hierarchy and, as a result, realized and unrealized gains and losses included in the table may not include the effect of related hedging activity. Furthermore, the realized andunrealized gains and losses presented in the table are not limited solely to those arising from Level 3 inputs, as valuations are generally derived from both observable and unobservable parameters. Assets and liabilities transferred into or out of Level 3 are presented as if those assets or liabilities had been transferred at the beginning of the year.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 8 Fair value measurement (continued)

Movements of Level 3 instruments Total gains / losses included in comprehensive income USD billion Balance as of 31 December 2019 Net gains / losses included in income 1 of which: related to Level 3 instruments held at the end of the reporting period Purchases Sales Issuances Settlements Transfers into Level 3 Transfers out of Level 3 Foreign currency translation Balance as of 30 June 2020 Financial assets at fair value held for trading 1.8 ( 0.1 ) 0.0 0.3 ( 1.0 ) 1.4 0.0 0.3 0.0 0.0 2.7 of which: Investment fund units 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Corporate and municipal bonds 0.5 0.0 0.0 0.2 ( 0.2 ) 0.0 0.0 0.2 0.0 0.0 0.8 Loans 0.8 ( 0.1 ) 0.0 0.0 ( 0.6 ) 1.4 0.0 0.0 0.0 0.0 1.6 Other 0.4 0.0 0.0 0.0 ( 0.2 ) 0.0 0.0 0.1 0.0 0.0 0.3 Derivative financial instruments – assets 1.3 0.3 0.4 0.0 0.0 0.5 ( 0.5 ) 0.0 ( 0.1 ) 0.0 1.5 of which: Interest rate contracts 0.3 0.2 0.2 0.0 0.0 0.0 ( 0.2 ) 0.0 0.0 0.0 0.3 Equity / index contracts 0.6 0.0 0.1 0.0 0.0 0.5 ( 0.2 ) 0.0 ( 0.1 ) 0.0 0.8 Credit derivative contracts 0.4 0.1 0.1 0.0 0.0 0.0 ( 0.2 ) 0.0 0.0 0.0 0.4 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Financial assets at fair value not held for trading 4.0 ( 0.1 ) ( 0.1 ) 0.5 ( 0.6 ) 0.0 0.0 0.1 0.0 0.0 3.7 of which: Loans 1.2 0.0 0.0 0.4 ( 0.5 ) 0.0 0.0 0.0 0.0 0.0 1.0 Auction rate securities 1.5 ( 0.1 ) ( 0.1 ) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4 Equity instruments 0.5 0.0 0.0 0.1 0.0 0.0 0.0 0.1 0.0 0.0 0.5 Other 0.7 0.0 0.0 0.1 ( 0.1 ) 0.0 0.0 0.0 0.0 0.0 0.8 Derivative financial instruments – liabilities 2.0 1.2 1.1 0.0 0.0 0.5 ( 0.8 ) 0.6 ( 0.3 ) 0.0 3.3 of which: Interest rate contracts 0.1 0.7 0.7 0.0 0.0 0.0 ( 0.3 ) 0.3 0.0 0.0 0.8 Equity / index contracts 1.3 0.2 0.2 0.0 0.0 0.5 ( 0.4 ) 0.0 ( 0.2 ) 0.0 1.4 Credit derivative contracts 0.5 0.3 0.3 0.0 0.0 0.1 ( 0.1 ) 0.3 ( 0.1 ) 0.0 0.9 Other 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 Debt issued designated at fair value 9.9 0.2 0.3 0.0 0.0 3.9 ( 3.5 ) 0.4 ( 1.0 ) 0.0 9.7 Other financial liabilities designated at fair value 0.8 0.0 0.0 0.0 0.0 0.6 ( 0.3 ) 0.0 0.0 0.0 1.1 1 Net gains / losses included in comprehensive income are composed of Net interest income, Other net income from financial instruments measured at fair value through profit or loss and Other income. 2 Total Level 3 assets as of 30 June 2021 were USD 8.1 billion (31 December 2020: USD 8.3 billion). Total Level 3 liabilities as of 30 June 2021 were USD 18.4 billion (31 December 2020: USD 15.2 billion).

Note 8 Fair value measurement (continued)

Total gains / losses included in comprehensive income Balance as of 31 December 2020 2 Net gains / losses included in income 1 of which: related to Level 3 instruments held at the end of the reporting period Purchases Sales Issuances Settlements Transfers into Level 3 Transfers out of Level 3 Foreign currency translation Balance as of 30 June 2021 2 2.3 0.0 0.0 0.3 ( 0.8 ) 0.4 0.0 0.2 ( 0.2 ) 0.0 2.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.1 ( 0.1 ) 0.0 0.0 0.0 ( 0.1 ) 0.0 0.8 1.1 0.0 0.0 0.1 ( 0.5 ) 0.4 0.0 0.0 ( 0.2 ) 0.0 1.0 0.4 ( 0.1 ) ( 0.1 ) 0.0 ( 0.2 ) 0.0 0.0 0.1 0.0 0.0 0.3 1.8 ( 0.2 ) ( 0.1 ) 0.0 0.0 0.5 ( 0.4 ) 0.0 ( 0.1 ) 0.0 1.5 0.5 ( 0.1 ) ( 0.1 ) 0.0 0.0 0.0 ( 0.1 ) 0.0 0.0 0.0 0.3 0.9 0.1 0.1 0.0 0.0 0.3 ( 0.4 ) 0.0 ( 0.1 ) 0.0 0.8 0.3 ( 0.1 ) ( 0.1 ) 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.9 0.1 0.1 0.7 ( 0.3 ) 0.0 0.0 0.1 0.0 0.0 4.5 0.9 0.0 0.0 0.4 ( 0.1 ) 0.0 0.0 0.0 0.0 0.0 1.1 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 0.5 0.1 0.1 0.1 ( 0.1 ) 0.0 0.0 0.0 0.0 0.0 0.6 1.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 1.2 3.5 0.2 0.0 0.0 0.0 0.7 ( 1.2 ) 0.0 ( 0.2 ) 0.0 2.9 0.5 ( 0.1 ) ( 0.1 ) 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.5 2.3 0.4 0.2 0.0 0.0 0.5 ( 1.1 ) 0.0 ( 0.2 ) 0.0 1.9 0.5 ( 0.2 ) ( 0.2 ) 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.4 0.1 0.1 0.0 0.0 0.0 0.0 ( 0.1 ) 0.0 0.0 0.0 0.1 11.0 0.3 0.2 0.0 0.0 7.2 ( 2.9 ) 0.2 ( 0.8 ) ( 0.2 ) 14.7 0.7 0.0 0.0 0.0 0.0 0.1 ( 0.2 ) 0.0 0.0 0.0 0.6

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 8 Fair value measurement (continued)

g) Financial instruments not measured at fair value

The table below reflects the estimated fair values of financial instruments not measured at fair value.

Financial instruments not measured at fair value 30.6.21 31.3.21 31.12.20 USD billion Carrying amount Fair value Carrying amount Fair value Carrying amount Fair value Assets Cash and balances at central banks 160.7 160.7 158.9 158.9 158.2 158.2 Loans and advances to banks 16.5 16.5 18.4 18.4 15.4 15.4 Receivables from securities financing transactions 83.5 83.5 82.4 82.4 74.2 74.2 Cash collateral receivables on derivative instruments 29.8 29.8 35.0 35.0 32.7 32.7 Loans and advances to customers 390.1 389.8 376.8 376.8 379.5 380.8 Other financial assets measured at amortized cost 27.1 27.6 26.8 27.3 27.2 28.0 Liabilities Amounts due to banks 14.6 14.6 12.6 12.6 11.0 11.0 Payables from securities financing transactions 6.0 6.0 6.7 6.7 6.3 6.3 Cash collateral payables on derivative instruments 32.2 32.2 36.6 36.6 37.3 37.3 Customer deposits 513.3 513.3 505.4 505.5 524.6 524.7 Debt issued measured at amortized cost 139.9 142.4 144.7 147.0 139.2 141.9 Other financial liabilities measured at amortized cost 1 6.4 6.4 5.5 5.6 5.8 5.8 1 Excludes lease liabilities.

The fair values included in the table above have been calculated for disclosure purposes only. The valuation techniques and assumptions relate only to UBS’s financial instruments not otherwise measured at fair value. Other institutions may usedifferent methods and assumptions for their fair value estimation, and therefore such fair value disclosures cannot necessarily be compared from one financial institution to another

Note 9 Derivative instruments

a) Derivative instruments

As of 30.6.21, USD billion Derivative financial assets Notional values related to derivative financial assets 1 Derivative financial liabilities Notional values related to derivative financial liabilities 1 Other notional values 2 Derivative financial instruments Interest rate contracts 38.4 995 32.7 912 9,918 Credit derivative contracts 2.0 54 2.4 54 0 Foreign exchange contracts 49.5 3,074 47.4 2,869 2 Equity / index contracts 29.2 458 36.3 615 90 Commodity contracts 1.9 59 2.1 58 15 Loan commitments measured at FVTPL 0.0 1 0.0 11 Unsettled purchases of non-derivative financial instruments 3 0.3 29 0.3 26 Unsettled sales of non-derivative financial instruments 3 0.3 39 0.4 23 Total derivative financial instruments, based on IFRS netting 4 121.6 4,708 121.7 4,569 10,024 Further netting potential not recognized on the balance sheet 5 ( 107.5 ) ( 106.8 ) of which: netting of recognized financial liabilities / assets ( 86.8 ) ( 86.8 ) of which: netting with collateral received / pledged ( 20.6 ) ( 20.0 ) Total derivative financial instruments, after consideration of further netting potential 14.2 14.9 As of 31.3.21, USD billion Derivative financial instruments Interest rate contracts 39.9 991 34.0 901 11,707 Credit derivative contracts 2.3 65 2.5 62 0 Foreign exchange contracts 70.7 3,283 67.6 3,066 2 Equity / index contracts 32.2 468 38.7 599 97 Commodity contracts 2.2 62 2.0 54 12 Loan commitments measured at FVTPL 0.0 1 0.0 9 Unsettled purchases of non-derivative financial instruments 3 0.6 26 0.3 32 Unsettled sales of non-derivative financial instruments 3 0.4 41 0.8 21 Total derivative financial instruments, based on IFRS netting 4 148.3 4,937 146.0 4,745 11,817 Further netting potential not recognized on the balance sheet 5 ( 130.1 ) ( 127.5 ) of which: netting of recognized financial liabilities / assets ( 105.1 ) ( 105.1 ) of which: netting with collateral received / pledged ( 25.0 ) ( 22.5 ) Total derivative financial instruments, after consideration of further netting potential 18.2 18.5 As of 31.12.20, USD billion Derivative financial instruments Interest rate contracts 50.9 928 43.9 880 11,292 Credit derivative contracts 2.4 58 2.9 65 0 Foreign exchange contracts 68.7 2,951 70.5 2,820 1 Equity / index contracts 34.8 450 41.2 581 91 Commodity contracts 2.2 58 2.0 50 10 Loan commitments measured at FVTPL 0.0 10 Unsettled purchases of non-derivative financial instruments 3 0.3 18 0.2 10 Unsettled sales of non-derivative financial instruments 3 0.2 17 0.3 13 Total derivative financial instruments, based on IFRS netting 4 159.6 4,479 161.1 4,430 11,394 Further netting potential not recognized on the balance sheet 5 ( 144.4 ) ( 141.2 ) of which: netting of recognized financial liabilities / assets ( 117.2 ) ( 117.2 ) of which: netting with collateral received / pledged ( 27.2 ) ( 23.9 ) Total derivative financial instruments, after consideration of further netting potential 15.2 19.9 1 In cases where derivative financial instruments are presented on a net basis on the balance sheet, the respective notional values of the netted derivative financial instruments are still presented on a gross basis. Notional amounts of exchange-traded agency transactions and OTC -cleared transactions entered into on behalf of clients are not disclosed, as they have a significantly different risk profile. 2 Other notional values relate to derivatives that are cleared through either a central counterparty or an exchange. The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on derivative instruments and Cash collateral payables on derivative instruments and was not material for all periods presented. 3 Changes in the fair value of purchased and sold non- derivative financial instruments between trade date and settlement date are recognized as derivative financial instruments. 4 Financial assets and liabilities are presented net on the balance sheet if UBS has the unconditional and legally enforceable right to offset the recognized amounts, both in the normal course of business and in the event of default, bankruptcy or insolvency of UBS or its counterparties, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 5 Reflects the netting potential in accordance with enforceable master netting and similar arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 22 Offsetting financial assets and financi al liabilities” in the “Consolidated financial statements” section of the Annual Report 2020 for more information.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 9 Derivative instruments (continued)

b) Cash collateral on derivative instruments

USD billion Receivables 30.6.21 Payables 30.6.21 Receivables 31.3.21 Payables 31.3.21 Receivables 31.12.20 Payables 31.12.20 Cash collateral on derivative instruments, based on IFRS netting 1 29.8 32.2 35.0 36.6 32.7 37.3 Further netting potential not recognized on the balance sheet 2 ( 18.3 ) ( 16.9 ) ( 21.1 ) ( 20.7 ) ( 21.1 ) ( 21.6 ) of which: netting of recognized financial liabilities / assets ( 15.9 ) ( 14.4 ) ( 18.2 ) ( 18.3 ) ( 19.6 ) ( 19.6 ) of which: netting with collateral received / pledged ( 2.4 ) ( 2.5 ) ( 2.9 ) ( 2.3 ) ( 1.5 ) ( 2.1 ) Cash collateral on derivative instruments, after consideration of further netting potential 11.5 15.3 14.0 15.9 11.6 15.7 1 Financial assets and liabilities are presented net on the balance sheet if UBS has the unconditional and legally enforceable right to offset the recognized amounts, both in the normal course of business and in the event of default, bankruptcy or insolvency of UBS or its counterparties, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 2 Reflects the netting potential in accordance with enforceable master netting and similar arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 22 Offsetting financial assets and financial liabilities” in the “Consolidated financial statements” section of the Annual Report 2020 for more information.

Note 10 Other assets and liabilities

a) Other financial assets measured at amortized cost USD million 30.6.21 31.3.21 31.12.20 Debt securities 18,484 18,533 18,801 of which: government bills / bonds 9,531 9,664 9,789 Loans to financial advisors 2,415 2,473 2,569 Fee- and commission-related receivables 1,982 2,073 2,014 Finance lease receivables 1,363 1,344 1,447 Settlement and clearing accounts 1,228 567 614 Accrued interest income 532 521 591 Other 1,139 1,260 1,158 Total other financial assets measured at amortized cost 27,143 26,770 27,194

b) Other non-financial assets USD million 30.6.21 31.3.21 31.12.20 Precious metals and other physical commodities 5,470 5,709 6,264 Bail deposit 1 1,382 1,364 1,418 Prepaid expenses 1,083 1,065 1,081 VAT and other tax receivables 435 363 433 Properties and other non-current assets held for sale 68 248 246 Other 545 375 326 Total other non-financial assets 8,982 9,125 9,768 1 Refer to item 1 in Note 14b for more information.

c) Other financial liabilities measured at amortized cost USD million 30.6.21 31.3.21 31.12.20 Other accrued expenses 1,758 1,756 1,696 Accrued interest expenses 1,015 932 1,355 Settlement and clearing accounts 2,176 1,288 1,199 Lease liabilities 3,754 3,767 3,927 Other 1,487 1,513 1,553 Total other financial liabilities measured at amortized cost 10,189 9,257 9,729

Note 10 Other assets and liabilities (continued)

d) Other financial liabilities designated at fair value USD million 30.6.21 31.3.21 31.12.20 Financial liabilities related to unit-linked investment contracts 22,217 21,357 20,975 Securities financing transactions 6,184 5,651 7,317 Over-the-counter debt instruments 2,142 1,787 2,060 Other 99 61 35 Total other financial liabilities designated at fair value 30,642 28,855 30,387 of which: life-to-date own credit (gain) / loss ( 39 ) ( 23 ) ( 36 )

e) Other non-financial liabilities USD million 30.6.21 31.3.21 31.12.20 Compensation-related liabilities 5,959 4,938 7,468 of which: Deferred Contingent Capital Plan 1,500 1,420 1,858 of which: financial advisor compensation plans 1,314 1,203 1,500 of which: other compensation plans 1,830 1,125 2,740 of which: net defined benefit liability 666 654 722 of which: other compensation-related liabilities 1 650 536 648 Deferred tax liabilities 392 329 564 Current tax liabilities 1,250 1,122 1,009 VAT and other tax payables 597 667 523 Deferred income 262 225 228 Other 116 111 61 Total other non-financial liabilities 8,576 7,391 9,854 1 Includes liabilities for payroll taxes and untaken vacation.

Note 11 Debt issued designated at fair value

USD million 30.6.21 31.3.21 31.12.20 Issued debt instruments Equity-linked 1 49,157 44,615 41,069 Rates-linked 16,397 12,668 11,038 Credit-linked 1,826 1,804 1,933 Fixed-rate 2,883 3,343 3,604 Commodity-linked 1,961 1,564 1,497 Other 2,841 2,540 2,101 of which: debt that contributes to total loss-absorbing capacity 2,112 1,676 1,190 Total debt issued designated at fair value 75,065 66,535 61,243 of which: issued by UBS AG with original maturity greater than one year 2 51,830 47,348 46,427 of which: life-to-date own credit (gain) / loss 317 424 418 1 Includes investment fund unit-linked instruments issued. 2 Based on original contractual maturity without considering any early redemption features. As of 30 June 2021, more than 99 % of the balance was unsecured (31 March 2021: 100 %; 31 December 2020: 100 %).

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 12 Debt issued measured at amortized cost

USD million 30.6.21 31.3.21 31.12.20 Certificates of deposit 12,193 14,723 15,680 Commercial paper 25,304 26,591 25,472 Other short-term debt 5,219 6,080 5,515 Short-term debt 1 42,716 47,394 46,666 Senior unsecured debt that contributes to total loss-absorbing capacity (TLAC) 37,765 37,453 36,611 Senior unsecured debt other than TLAC 28,945 28,990 21,340 of which: issued by UBS AG with original maturity greater than one year 2 26,109 23,309 18,464 Covered bonds 1,449 2,606 2,796 Subordinated debt 20,072 19,327 22,157 of which: high-trigger loss-absorbing additional tier 1 capital instruments 12,330 11,573 11,837 of which: low-trigger loss-absorbing additional tier 1 capital instruments 2,509 2,501 2,577 of which: low-trigger loss-absorbing tier 2 capital instruments 4,686 4,709 7,201 of which: non-Basel III-compliant tier 2 capital instruments 547 544 543 Debt issued through the Swiss central mortgage institutions 8,963 8,911 9,660 Other long-term debt 0 2 3 Long-term debt 3 97,195 97,288 92,566 Total debt issued measured at amortized cost 4 139,911 144,682 139,232 1 Debt with an original contractual maturity of less than one year. 2 Based on original contractual maturity without considering any early redemption features. As of 30 June 2021, 100 % of the balance was unsecured (31 March 2021: 100 %; 31 December 2020: 100 %). 3 Debt with an original contractual maturity greater than or equal to one year. The classification of debt issued into short-term and long-term does not consider any early redemption features. 4 Net of bifurcated embedded derivatives, the fair value of which was not material for the periods presented.

Note 13 Interest rate benchmark reform

Background A market-wide reform of major interest rate benchmarks is being undertaken globally, with the Financial Conduct Authority (the FCA) announcing in March 2021 that the publication of London Interbank Offered Rates (LIBORs) will cease for all non- US dollar LIBORs, as well as for one-week and two-month USD LIBOR, after 31 December 2021. Publication of the remaining USD LIBOR tenors will cease immediately after 30 June 2023. The majority of UBS’s Interbank Offered Rate (IBOR) exposure is to CHF LIBOR and USD LIBOR. The alternative reference rate ( ARR ) for CHF LIBOR is the Swiss Average Rate Overnight (SARON). Th e ARR for USD LIBOR is the Secured Overnight Financing Rate (SOFR); in addition, there are recommended ARRs for GBP LIBOR, JPY LIBOR and EUR LIBOR. For certain products in the US, UBS is considering the use of credit-sensitive rates as an alternative to SOFR. As of 30 June 2021, transition uncertainty with respect to significant interest rate benchmarks remains, with the exception of the Euro Interbank O ffered Rate ( Euribor ). The reform of Euribor is now complete and consisted of a change in the underlying calculation method. The transition to ARRs includes a number of active steps that will also benefit from the support of associated regulatory activities. There may be some contracts, known as “tough legacy contracts,” that cannot be practically transitioned or amended from IBORs to ARRs . The FCA continues to consult market participants about requiring the ICE Benchmark Administration to continue publishing certain LIBOR settings (i.e., one-, three- and six-month settings for the GBP, JPY and USD LIBORs) on a “synthetic” basis, which are not representative of the underlying financial markets, for a certain duration after 3 1 December 2021. However, these synthetic LIBORs will not be available for use in new contracts, given that they are non-representative, and are instead intended to help reduce disruption where resolution has not been agreed for certain tough legacy contracts. Furthermore, in February 2021, the EU Benchmarks Regulation was amended to enable the European Commission to designate a statutory replacement rate for tough legacy LIBOR contracts that are governed by the laws of EU Member States and remain outstanding after LIBOR cessation. On 6 April 2021, New York State LIBOR legislation was enacted with the intention of minimizing legal uncertainty and adverse economic effects associated with USD LIBOR transition for tough legacy contracts governed by New York law. For USD LIBOR contracts not governed by New York law, a bill has been introduced in Congress with similar objectives.In October 2020, the International Swaps and Derivatives Association (ISDA) released the IBOR Fallbacks Supplement and IBOR Fallbacks Protocol, amending ISDA standard definitions for interest-rate derivatives to incorporate fallbacks for derivatives linked to certain IBORs. The changes came into effect on 25 January 2021 and, from that date, all newly cleared and non- cleared derivatives between adhering parties that reference ISDA standard definitions now include these fallbacks. UBS adhered to the protocol in November 2020. UBS is focused on transitioning existing contracts via bi-lateral and multi-lateral agreements, leveraging industry solutions (e.g., the use of fallback provisions) and through third-party actions (clearing houses, agents , etc . ). Furthermore, in line with regulatory guidance UBS has implemented a framework to limit entry into new contracts referencing IBORs. Governance over the transition to alternative benchmark rates UBS has established a global cross-divisional, cross-functional governance structure and change program to address the scale and complexity of the transition. This global program is sponsored by the Group CFO and led by senior representatives from the business divisions and UBS’s control and support functions. The program includes governance and execution structures within each business division, together with cross- divisional teams from each control and support function. Progress is overseen centrally via a monthly operating committee and a monthly steering committee, as well as quarterly updates to the joint Audit and Risk committees. Risks A core part of UBS’s change program is the identification, management and monitoring of the risks associated with IBOR reform and transition. These risks include, but are not limited to, the following: – economic risks to UBS and its clients, through the repricing of existing contracts, reduced transparency and / or liquidity of pricing information, market uncertainty or disruption; – accounting risks, where the transition affects the accounting treatment, including hedge accounting and consequential income statement volatility; – valuation risks arising from the variation between benchmarks that will cease and ARRs, affecting the risk profile of financial instruments; – operational risks arising from changes to UBS’s front-to-back processes and systems to accommodate the transition, as well as the revision of operational controls related to the reform; and – legal and conduct risks relating to UBS’s engagement with clients and market counterparties around new benchmark products and amendments required for existing contracts referencing benchmarks that will cease.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 13 Interest rate benchmark reform (continued)

In some cases, contracts may contain provisions intended to provide a fallback interest rate in the event of a brief unavailability of the relevant IBOR. These provisions may not be effective or may produce arbitrary results in the event of a permanent cessation of the relevant IBOR. While efforts to transition outstanding transactions from IBORs to ARRs have made substantial progress, including through industry-wide protocols, such as the ISDA IBOR Fallbacks Supplement and IBOR Fallbacks Protocol, there are still substantial volumes of transactions that require modification to effectively transition to ARRs. UBS remains confident that it has the transparency, oversight and operational preparedness to progress with the IBOR transition consistent with market timelines. UBS does not expect changes to its risk management approach and strategy as a result of interest rate benchmark reform. Progress made during 2020 and the first half of 2021 Approaches to transition vary by product type. During 2020, UBS transitioned most of its CHF LIBOR-linked deposits to SARON and launched SARON - based mortgages and corporate loans based on all major ARRs in the Swiss market, as well as SOFR- based mortgages in the US market. By the end of the second quarter of 2021, UBS ha d successfully transitioned its GBP LIBOR- and EUR LIBOR-based private and commercial real estate mortgages in the UK and Monaco to the Sterling Overnight Index Average ( SONIA ) and Euribor , respectively. UBS has detailed plans in place to deliver the required changes for all other IBOR exposures, predominantly during 2021. Financial instruments yet to transition to alternative benchmarks The amounts included in the table below relate to financial instrument contracts across UBS’s business divisions where UBS has material exposures subject to IBOR reform that have not yet transitioned to ARRs, and that:contractually reference an interest rate benchmark that will transition to an alternative benchmark; and – have a contractual maturity date (including open-ended contracts) after the agreed cessation dates. Contracts where penalty terms reference IBORs , or where exposure to an IBOR is not the primary purpose of the contract, have not been included, as these contracts do not have a material impact on the transition process. In addition, contracts that have been changed to incorporate ARR-based interest rates before the relevant cessation date have been excluded from the table below, because UBS expects no further transition work to implement the reform. In line with information provided to management and external parties monitoring UBS’s transition progress, the table below includes the following financial metrics for instruments subject to interest rate benchmark reform: – gross carrying value / exposure for non-derivative financial instruments; and – total trade count for derivative financial instruments. The exposure s included in the table below represent the maximum IBOR exposure, with the actual IBOR exposure being dependent upon client preferences and investment decisions. Overall, the effort required to transition is affected by multiple factors, including whether negotiations need to take place with multiple stakeholders (as is the case for syndicated loans or certain listed securities), market readiness – such as liquidity in ARR equivalent products – and a client’s technical readiness to handle ARR market conventions. As significant IBOR exposures transition to ARRs during 2021, the values and trade count disclosed are expected to decrease.–

30.6.21 LIBOR benchmark rates 1 Measure CHF USD GBP EUR 2 JPY XCCY Carrying value of non-derivative financial instruments Total non-derivative financial assets USD million 31,423 77,502 1,829 6,587 3,070 3,796 3 Total non-derivative financial liabilities USD million 2,029 9,834 566 1,919 1,060 0 Trade count of derivative financial instruments Total derivative financial instruments Trade count 9,519 42,566 12,513 9,626 4,247 5,948 4 Off-balance sheet exposures Total irrevocable loan commitments USD million 1 4,433 0 0 0 15,767 5 31.3.21 LIBOR benchmark rates 1 Measure CHF USD GBP EUR 2 JPY XCCY Carrying value of non-derivative financial instruments Total non-derivative financial assets USD million 36,046 72,185 5,399 8,253 3,060 4,469 3 Total non-derivative financial liabilities USD million 2,612 13,142 1,429 2,252 1,460 0 Trade count of derivative financial instruments Total derivative financial instruments Trade count 9,749 40,080 13,006 9,613 3,961 5,206 4 Off-balance sheet exposures Total irrevocable loan commitments USD million 106 4,656 167 0 0 15,188 5 1 Contracts have been disclosed without regard to early termination rights. Instead, it is assumed that such contracts will transition away from IBORs without such rights being exercised. 2 Includes primarily EUR LIBOR positions. 3 Includes loans related to revolving multi-currency credit lines. 4 Includes cross-currency swaps where either leg or both legs are indexed to an IBOR. 5 Includes loan commitments that can be drawn in different currencies at the client‘s discretion.

Note 13 Interest rate benchmark reform (continued)

Non-derivative instruments UBS’s significant non-derivative IBOR exposures primarily relate to brokerage receivable and payable balances, corporate and private loans, and mortgages, linked to CHF and USD LIBORs. In March 2021, following the FCA announcement regarding the cessation timelines for IBORs, UBS started a centralized communication initiative for private mortgages linked to CHF LIBOR, with the objective of transitioning these exposures either through the activation of existing fallbacks or the amendment of contractual terms, where such fallbacks do not exist. During the second quarter of 2021, mortgages that were linked to CHF LIBOR have been reduced by approximately USD 2 billion and the remaining USD 3 billion of mortgages linked to GBP LIBOR as of 31 March 2021 have successfully transitioned . US mortgages linked to USD LIBOR are planned to transition to SOFR from 2022–2023. US securities-based lending increased by approximately USD 4 billion in the second quarter of 2021, with agreements expected to switch to an alternative benchmark from the fourth quarter of 2021. UBS is also proactively discussing transition mechanisms with many of its brokerage and corporate clients in order to transition their exposures throughout 2021 from CHF LIBOR, EUR LIBOR and GBP LIBOR. During the second quarter of 2021, the gross carrying amount of IBOR-indexed non-derivative financial assets and liabilities r elated to brokerage accounts , predominantly linked to GBP and USD LIBOR, was reduced by approximately USD 8 billion in aggregate as a result of successful transitions. For certain non-derivative financial assets and financial liabilities, in particular bonds issued by third parties, UBS is dependent on the participation and engagement of others in effecting the transition from IBORs. UBS is actively monitoring such exposures and is in discussions with clients. As presented in the table on the previous page, UBS had approximately USD 16 billion (31 March 2021, USD 15 billion) of irrevocable commitments as of 30 June 2021 that can be drawn down in different currencies with IBOR-based interest rates, primarily USD LIBOR and Euribor, and that expire after the relevant benchmark cessation dates . Related drawn - down amounts under these commitments were USD 4 billion (31 March 2021, USD 4 billion).In addition, UBS had approximately USD 10 billion (31 March 2021 , USD 16 billion ) of committed revocable credit lines outstanding that allow clients to draw down a number of IBOR- linked products. UBS is in discussions with impacted clients, with plans in place to have all contracts amended by the relevant cessation dates. Derivative instruments UBS holds derivatives for trading and hedging purposes, including those designated in hedge accounting relationships. A significant number of interest rate and cross-currency swaps have floating legs that reference various benchmarks that will cease. The majority of derivatives are transacted with clearing houses where UBS is dependent upon industry - wide compression activities to reduce exposure and clearing house actions to convert any remaining derivatives nearer the cessation dates. London Clearing House (LCH), which is the clearing house for a significant number of UBS’s IRS derivatives, has confirmed that a standardized transition will be undertaken in December 2021 to transition IBOR-based derivatives to respective ARRs. UBS expects derivative volumes to fluctuate in line with business activity until such clearing house actions are taken. For derivatives not transacted with clearing houses, as previously noted, UBS adhered to the ISDA IBOR Fallback Protocol in November 2020, although its preferred approach, in line with regulatory expectations, is to actively switch to ARRs before the relevant cessation dates or to bilaterally compress where feasible. UBS has begun a series of outreach activities to understand counterparties’ intentions regarding whether they seek to adhere to the protocol or will actively switch. In order to minimize the operational risk of converting high volumes of transactions at the time of cessation, UBS is making progress with its preparations to convert derivative instruments in bulk to ARR equivalents.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 14 Provisions and contingent liabilities

a) Provisions

The table below presents an overview of total provisions.
USD million 30.6.21 31.3.21 31.12.20 Provisions other than provisions for expected credit losses 2,646 2,481 2,571 Provisions for expected credit losses 209 245 257 Total provisions 2,855 2,726 2,828

The following table presents additional information for provisions other than provisions for expected credit losses.
USD million Litigation, regulatory and similar matters 1 Restructuring 2 Other 3 Total Balance as of 31 December 2020 2,135 72 363 2,571 Balance as of 31 March 2021 2,072 61 348 2,481 Increase in provisions recognized in the income statement 87 147 33 267 Release of provisions recognized in the income statement ( 24 ) ( 6 ) ( 4 ) ( 34 ) Provisions used in conformity with designated purpose ( 27 ) ( 23 ) ( 31 ) ( 82 ) Capitalized reinstatement costs 0 0 ( 1 ) ( 1 ) Reclassifications 0 1 ( 1 ) 0 Foreign currency translation / unwind of discount 11 ( 2 ) 5 13 Balance as of 30 June 2021 2,119 179 348 2,646 1 Comprises provisions for losses resulting from legal, liability and compliance risks. 2 Includes personnel-related restructuring provisions of USD 135 million as of 30 June 2021 (31 March 2021: USD 12 million; 31 December 2020: USD 18 million) and provisions for onerous contracts of USD 40 million as of 30 June 2021 (31 March 2021: USD 44 million; 31 December 2020: USD 49 million). 3 Mainly includes provisions related to real estate, employee benefits and operational risks.

Restructuring provisions primarily relate to personnel - related provisions and onerous contracts. Personnel-related restructuring provisions are used within a short time period but potential changes in amount may be triggered when natural staff attrition reduces the number of people affected by a restructuring event and therefore the estimated costs. Onerous contracts for property are recognized when UBS is committed to pay fornon-lease components, such as utilities, service charges, taxes and maintenance, when a property is vacated or not fully recovered from sub-tenants. Information about provisions and contingent liabilities in respect of litigation, regulatory and similar matters, as a class, is included in Note 14b. There are no material contingent liabilities associated with the other classes of provisions.

b) Litigation, regulatory and similar matters

The Group operates in a legal and regulatory environment that exposes it to significant litigation and similar risks arising from disputes and regulatory proceedings. As a result, UBS (which for purposes of this Note may refer to UBS Group AG and/or one or more of its subsidiaries, as applicable) is involved in various disputes and legal proceedings, including litigation, arbitration, and regulatory and criminal investigations. Such matters are subject to many uncertainties, and the outcome and the timing of resolution are often difficult to predict, particularly in the earlier stages of a case. There are also situations where the Group may enter into a settlement agreement. This may occur in order to avoid the expense, management distraction or reputational implications of continuing to contest liability, even for those matters for which the Group believes it should be exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows for both matters with respect to which provisions have been established and other contingent liabilities. The Group makes provisions for such matters brought against it when, in the opinion of management after seeking legal advice, it is more likely than not that the Group has a present legal orconstructive obligation as a result of past events, it is probable that an outflow of resources will be required, and the amount can be reliably estimated. Where these factors are otherwise satisfied, a provision may be established for claims that have not yet been asserted against the Group, but are nevertheless expected to be, based on the Group’s experience with similar asserted claims. If any of those conditions is not met, such matters result in contingent liabilities. If the amount of an obligation cannot be reliably estimated, a liability exists that is not recognized even if an outflow of resources is probable. Accordingly, no provision is established even if the potential outflow of resources with respect to such matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but prior to the issuance of financial statements, which affect management’s assessment of the provision for such matter (because, for example, the developments provide evidence of conditions that existed at the end of the reporting period), are adjusting events after the reporting period under IAS 10 and must be recognized in the financial statements for the reporting period.

Note 14 Provisions and contingent liabilities (continued)

Specific litigation, regulatory and other matters are described below, including all such matters that management considers to be material and others that management believes to be of significance due to potential financial, reputational and other effects. The amount of damages claimed, the size of a transaction or other information is provided where available and appropriate in order to assist users in considering the magnitude of potential exposures. In the case of certain matters below, we state that we have established a provision, and for the other matters, we make no such statement. When we make this statement and we expect disclosure of the amount of a provision to prejudice seriously our position with other parties in the matter because it would reveal what UBS believes to be the probable and reliably estimable outflow, we do not disclose that amount. In some cases we are subject to confidentiality obligations that preclude such disclosure. With respect to the matters for which we do not state whether we have established a provision, either: (a) we have not established a provision, in which case the matter is treated as a contingent liability under the applicable accounting standard; or (b) we have established a provision but expect disclosure of that fact to prejudice seriously our position with other parties in the matter because it would reveal the fact that UBS believes an outflow of resources to be probable and reliably estimable. With respect to certain litigation, regulatory and similar matters for which we have established provisions, we are able to estimate the expected timing of outflows. However, the aggregate amount of the expected outflows for those matters for which we are able to estimate expected timing is immaterial relative to our current and expected levels of liquidity over the relevant time periods.The aggregate amount provisioned for litigation, regulatory and similar matters as a class is disclosed in the “Provisions” table in Note 14a above. It is not practicable to provide an aggregate estimate of liability for our litigation, regulatory and similar matters as a class of contingent liabilities. Doing so would require UBS to provide speculative legal assessments as to claims and proceedings that involve unique fact patterns or novel legal theories, that have not yet been initiated or are at early stages of adjudication, or as to which alleged damages have not been quantified by the claimants. Although UBS therefore cannot provide a numerical estimate of the future losses that could arise from litigation, regulatory and similar matters, UBS believes that the aggregate amount of possible future losses from this class that are more than remote substantially exceeds the level of current provisions. Litigation, regulatory and similar matters may also result in non-monetary penalties and consequences. For example, the non-prosecution agreement UBS entered into with the US Department of Justice (DOJ), Criminal Division, Fraud Section in connection with submissions of benchmark interest rates, including, among others, the British Bankers’ Association London Interbank Offered Rate (LIBOR), was terminated by the DOJ based on its determination that UBS had committed a US crime in relation to foreign exchange matters. As a consequence, UBS AG pleaded guilty to one count of wire fraud for conduct in the LIBOR matter, paid a fine and was subject to probation, which ended in January 2020. A guilty plea to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory authorities to limit, suspend or terminate licenses and regulatory authorizations, and may permit financial market utilities to limit, suspend or terminate UBS’s participation in such utilities. Failure to obtain such waivers, or any limitation, suspension or termination of licenses, authorizations or participations, could have material consequences for UBS. The risk of loss associated with litigation, regulatory and similar matters is a component of operational risk for purposes of determining capital requirements. Information concerning our capital requirements and the calculation of operational risk for this purpose is included in the “Capital management” section of this report.

Provisions for litigation, regulatory and similar matters by business division and in Group Functions 1 USD million Global Wealth Manage- ment Personal & Corporate Banking Asset Manage- ment Investment Bank Group Functions Total Balance as of 31 December 2020 861 115 0 227 932 2,135 Balance as of 31 March 2021 810 109 1 217 935 2,072 Increase in provisions recognized in the income statement 20 0 0 66 1 87 Release of provisions recognized in the income statement ( 11 ) ( 11 ) 0 ( 2 ) 0 ( 24 ) Provisions used in conformity with designated purpose ( 27 ) 0 0 0 0 ( 27 ) Foreign currency translation / unwind of discount 8 2 0 1 0 11 Balance as of 30 June 2021 800 100 1 282 936 2,119 1 Provisions, if any, for matters described in this Note are recorded in Global Wealth Management (item 3 and item 4) and Group Functions (item 2). Provisions, if any, for the matters described in items 1 and 6 of this Note are allocated between Global Wealth Management and Personal & Corporate Banking, and provisions, if any, for the matters described in this Note in item 5 are allocated between the Investment Bank and Group Functions.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 14 Provisions and contingent liabilities (continued)

Inquiries regarding cross-border wealth management businesses Tax and regulatory authorities in a number of countries have made inquiries, served requests for information or examined employees located in their respective jurisdictions relating to the cross-border wealth management services provided by UBS and other financial institutions. It is possible that the implementation of automatic tax information exchange and other measures relating to cross-border provision of financial services could give rise to further inquiries in the future. UBS has received disclosure orders from the Swiss Federal Tax Administration (FTA) to transfer information based on requests for international administrative assistance in tax matters. The requests concern a number of UBS account numbers pertaining to current and former clients and are based on data from 2006 and 2008. UBS has taken steps to inform affected clients about the administrative assistance proceedings and their procedural rights, including the right to appeal. The requests are based on data received from the German authorities, who seized certain data related to UBS clients booked in Switzerland during their investigations and have apparently shared this data with other European countries. UBS expects additional countries to file similar requests. Since 2013, UBS (France) S.A., UBS AG and certain former employees have been under investigation in France for alleged complicity in unlawful solicitation of clients on French territory, regarding the laundering of proceeds of tax fraud, and banking and financial solicitation by unauthorized persons. In connection with this investigation, the investigating judges ordered UBS AG to provide bail (“ caution ”) of EUR 1.1 billion and UBS (France) S.A. to post bail of EUR 40 million, which was reduced on appeal to EUR 10 million. A trial in the court of first instance took place from 8 October 2018 until 15 November 2018. On 20 February 2019, the court announced a verdict finding UBS AG guilty of unlawful solicitation of clients on French territory and aggravated laundering of the proceeds of tax fraud, and UBS (France) S.A. guilty of aiding and abetting unlawful solicitation and laundering the proceeds of tax fraud. The court imposed fines aggregating EUR 3.7 billion on UBS AG and UBS (France) S.A. and awarded EUR 800 million of civil damages to the French state. UBS has appealed the decision. Under French law, the judgment is suspended while the appeal is pending. The trial in the Court ofAppeal took place between 8-24 March 2021. At the conclusion of the trial, the prosecutor asserted that the maximum penalty was EUR 2.2 billion and requested the court to award a penalty of at least EUR 2 billion. The French state asked for civil damages of EUR 1 billion. The judgment on the merits of the case is currently set for 27 September 2021. A subsequent appeal to the Cour de Cassation, France’s highest court, is possible with respect to questions of law. UBS believes that based on both the law and the facts the judgment of the court of first instance should be reversed. UBS believes it followed its obligations under Swiss and French law as well as the European Savings Tax Directive. Even assuming liability, which it contests, UBS believes the penalties and damage amounts awarded greatly exceed the amounts that could be supported by the law and the facts. In particular, UBS believes the court incorrectly based the penalty on the total regularized assets rather than on any unpaid taxes on those assets for which a fraud has been characterized and further incorrectly awarded damages based on costs that were not proven by the civil party. Notwithstanding that UBS believes it should be acquitted, our balance sheet at 30 June 2021 reflected provisions with respect to this matter in an amount of EUR 450 million (USD 534 million at 30 June 2021). The wide range of possible outcomes in this case contributes to a high degree of estimation uncertainty. The provision reflected on our balance sheet at 30 June 2021 reflects our best estimate of possible financial implications, although it is reasonably possible that actual penalties and civil damages could exceed the provision amount. In 2016, UBS was notified by the Belgian investigating judge that it is under formal investigation (“ inculpé ”) regarding the laundering of proceeds of tax fraud, of banking and financial solicitation by unauthorized persons, and of serious tax fraud. Our balance sheet at 30 June 2021 reflected provisions with respect to matters described in this item 1 in an amount that UBS believes to be appropriate under the applicable accounting standard. As in the case of other matters for which we have established provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that we have recognized.

Note 14 Provisions and contingent liabilities (continued)

Claims related to sales of residential mortgage-backed securities and mortgages From 2002 through 2007, prior to the crisis in the US residential loan market, UBS was a substantial issuer and underwriter of US residential mortgage-backed securities (RMBS) and was a purchaser and seller of US residential mortgages. In November 2018, the DOJ filed a civil complaint in the District Court for the Eastern District of New York. The complaint seeks unspecified civil monetary penalties under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 related to UBS’s issuance, underwriting and sale of 40 RMBS transactions in 2006 and 2007. UBS moved to dismiss the civil complaint on 6 February 2019. On 10 December 2019, the district court denied UBS’s motion to dismiss. Our balance sheet at 30 June 2021 reflected a provision with respect to matters described in this item 2 in an amount that UBS believes to be appropriate under the applicable accounting standard. As in the case of other matters for which we have established provisions, the future outflow of resources in respect of this matter cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that we have recognized. 3. Madoff In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg) S.A. (now UBS Europe SE, Luxembourg branch) and certain other UBS subsidiaries have been subject to inquiries by a number of regulators, including the Swiss Financial Market Supervisory Authority (FINMA) and the Luxembourg Commission de Surveillance du Secteur Financier. Those inquiries concerned two third-party funds established under Luxembourg law, substantially all assets of which were with BMIS, as well as certain funds established in offshore jurisdictions with either direct or indirect exposure to BMIS. These funds faced severe losses, and the Luxembourg funds are in liquidation. The documentation establishing both funds identifies UBS entities in various roles, including custodian, administrator, manager, distributor and promoter, and indicates that UBS employees serve as board members. In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims against UBS entities, non-UBS entities and certain individuals, including current and former UBS employees, seeking amounts totaling approximately EUR 2.1 billion, which includes amounts that the funds may be held liable to pay the trustee for the liquidation of BMIS (BMIS Trustee). A large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS entities) for purported losses relating to the Madoff fraud. The majority of these cases have been filed in Luxembourg, where decisions that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and the Luxembourg Supreme Court has dismissed a further appeal in one of the test cases.In the US, the BMIS Trustee filed claims against UBS entities, among others, in relation to the two Luxembourg funds and one of the offshore funds. The total amount claimed against all defendants in these actions was not less than USD 2 billion. In 2014, the US Supreme Court rejected the BMIS Trustee’s motion for leave to appeal decisions dismissing all claims except those for the recovery of approximately USD 125 million of payments alleged to be fraudulent conveyances and preference payments. In 2016, the bankruptcy court dismissed these claims against the UBS entities. In February 2019, the Court of Appeals reversed the dismissal of the BMIS Trustee’s remaining claims, and the US Supreme Court subsequently denied a petition seeking review of the Court of Appeals’ decision. The case has been remanded to the Bankruptcy Court for further proceedings. 4. Puerto Rico Declines since 2013 in the market prices of Puerto Rico municipal bonds and of closed-end funds (funds) that are sole- managed and co-managed by UBS Trust Company of Puerto Rico and distributed by UBS Financial Services Incorporated of Puerto Rico (UBS PR) led to multiple regulatory inquiries, which in 2014 and 2015, led to settlements with the Office of the Commissioner of Financial Institutions for the Commonwealth of Puerto Rico, the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority. Since then UBS clients in Puerto Rico who own the funds or Puerto Rico municipal bonds and/or who used their UBS account assets as collateral for UBS non-purpose loans filed customer complaints and arbitration demands. Allegations include fraud, misrepresentation and unsuitability of the funds and of the loans seeking aggregate damages of USD 3.4 billion, of which USD 2.9 billion have been resolved through settlements, arbitration or withdrawal of claims. A shareholder derivative action was filed in 2014 against various UBS entities and current and certain former directors of the funds, alleging hundreds of millions of US dollars in losses in the funds. In 2015, defendants’ motion to dismiss was denied. In 2011, a purported derivative action was filed on behalf of the Employee Retirement System of the Commonwealth of Puerto Rico (System) against over 40 defendants, including UBS PR, which was named in connection with its underwriting and consulting services. Plaintiffs alleged that defendants violated their purported fiduciary duties and contractual obligations in connection with the issuance and underwriting of USD 3 billion of bonds by the System in 2008 and sought damages of over USD 800 million. In 2016, the court granted the System’s request to join the action as a plaintiff. In 2017, the court denied defendants’ motion to dismiss the complaint. In 2020, the court denied plaintiffs’ motion for summary judgment.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 14 Provisions and contingent liabilities (continued)

Beginning in 2015, certain agencies and public corporations of the Commonwealth of Puerto Rico (Commonwealth) defaulted on certain interest payments on Puerto Rico bonds. In 2016, US federal legislation created an oversight board with power to oversee Puerto Rico’s finances and to restructure its debt. The oversight board has imposed a stay on the exercise of certain creditors’ rights. In 2017, the oversight board placed certain of the bonds into a bankruptcy-like proceeding under the supervision of a Federal District Judge. In May 2019, the oversight board filed complaints in Puerto Rico federal district court bringing claims against financial, legal and accounting firms that had participated in Puerto Rico municipal bond offerings, including UBS, seeking a return of underwriting and swap fees paid in connection with those offerings. UBS estimates that it received approximately USD 125 million in fees in the relevant offerings. In August 2019, and February and November 2020, four US insurance companies that insured issues of Puerto Rico municipal bonds sued UBS and several other underwriters of Puerto Rico municipal bonds in three separate cases. The actions collectively seek recovery of an aggregate of USD 955 million in damages from the defendants. The plaintiffs in these cases claim that defendants failed to reasonably investigate financial statements in the offering materials for the insured Puerto Rico bonds issued between 2002 and 2007, which plaintiffs argue they relied upon in agreeing to insure the bonds notwithstanding that they had no contractual relationship with the underwriters. In June 2021 the court in the first of the three cases denied defendants’ motion to dismiss; defendants are seeking leave to appeal that decision. In July 2021, the court in another of these cases granted defendants’ motion to dismiss. A motion to dismiss is pending in the remaining case. Our balance sheet at 30 June 2021 reflected provisions with respect to matters described in this item 4 in amounts that UBS believes to be appropriate under the applicable accounting standard. As in the case of other matters for which we have established provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provisions that we have recognized. 5. Foreign exchange, LIBOR and benchmark rates, and other trading practices Foreign exchange-related regulatory matters: Beginning in 2013, numerous authorities commenced investigations concerning possible manipulation of foreign exchange markets and precious metals prices. As a result of these investigations, UBS entered into resolutions with the UK Financial Conduct Authority (FCA), the US Commodity Futures Trading Commission (CFTC), FINMA, the Board of Governors of the Federal Reserve System (Federal Reserve Board) and the Connecticut Department of Banking, the DOJ’s Criminal Division and the European Commission. UBS has ongoing obligations under the Cease and Desist Order of the Federal Reserve Board and the Office of the Comptroller of theCurrency (as successor to the Connecticut Department of Banking), and to cooperate with relevant authorities and to undertake certain remediation measures. UBS has also been granted conditional immunity by the Antitrust Division of the DOJ and by authorities in other jurisdictions in connection with potential competition law violations relating to foreign exchange and precious metals businesses. Investigations relating to foreign exchange matters by certain authorities remain ongoing notwithstanding these resolutions. Foreign exchange-related civil litigation: Putative class actions have been filed since 2013 in US federal courts and in other jurisdictions against UBS and other banks on behalf of putative classes of persons who engaged in foreign currency transactions with any of the defendant banks. UBS has resolved US federal court class actions relating to foreign currency transactions with the defendant banks and persons who transacted in foreign exchange futures contracts and options on such futures under a settlement agreement that provides for UBS to pay an aggregate of USD 141 million and provide cooperation to the settlement classes. Certain class members have excluded themselves from that settlement and have filed individual actions in US and English courts against UBS and other banks, alleging violations of US and European competition laws and unjust enrichment. In 2015, a putative class action was filed in federal court against UBS and numerous other banks on behalf of persons and businesses in the US who directly purchased foreign currency from the defendants and alleged co-conspirators for their own end use. In March 2017, the court granted UBS’s (and the other banks’) motions to dismiss the complaint. The plaintiffs filed an amended complaint in August 2017. In March 2018, the court denied the defendants’ motions to dismiss the amended complaint. LIBOR and other benchmark-related regulatory matters: Numerous government agencies, including the SEC, the CFTC, the DOJ, the FCA, the UK Serious Fraud Office, the Monetary Authority of Singapore, the Hong Kong Monetary Authority, FINMA, various state attorneys general in the US and competition authorities in various jurisdictions, have conducted investigations regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at certain times. UBS reached settlements or otherwise concluded investigations relating to benchmark interest rates with the investigating authorities. UBS has ongoing obligations to cooperate with the authorities with whom we have reached resolutions and to undertake certain remediation measures with respect to benchmark interest rate submissions. UBS has been granted conditional leniency or conditional immunity from authorities in certain jurisdictions, including the Antitrust Division of the DOJ and the Swiss Competition Commission (WEKO), in connection with potential antitrust or competition law violations related to certain rates. However, UBS has not reached a final settlement with WEKO, as the Secretariat of WEKO has asserted that UBS does not qualify for full immunity.

Note 14 Provisions and contingent liabilities (continued)

LIBOR and other benchmark-related civil litigation: A number of putative class actions and other actions are pending in the federal courts in New York against UBS and numerous other banks on behalf of parties who transacted in certain interest rate benchmark-based derivatives. Also pending in the US and in other jurisdictions are a number of other actions asserting losses related to various products whose interest rates were linked to LIBOR and other benchmarks, including adjustable rate mortgages, preferred and debt securities, bonds pledged as collateral, loans, depository accounts, investments and other interest-bearing instruments. The complaints allege manipulation, through various means, of certain benchmark interest rates, including USD LIBOR, Euroyen TIBOR, Yen LIBOR, EURIBOR, CHF LIBOR, GBP LIBOR, SGD SIBOR and SOR and Australian BBSW, and seek unspecified compensatory and other damages under varying legal theories. USD LIBOR class and individual actions in the US: In 2013 and 2015, the district court in the USD LIBOR actions dismissed, in whole or in part, certain plaintiffs’ antitrust claims, federal racketeering claims, CEA claims, and state common law claims. Although the Second Circuit vacated the district court’s judgment dismissing antitrust claims, the district court again dismissed antitrust claims against UBS in 2016. Certain plaintiffs have appealed that decision to the Second Circuit. Separately, in 2018, the Second Circuit reversed in part the district court’s 2015 decision dismissing certain individual plaintiffs’ claims and certain of these actions are now proceeding. UBS entered into an agreement in 2016 with representatives of a class of bondholders to settle their USD LIBOR class action. The agreement has received final court approval. In 2018, the district court denied plaintiffs’ motions for class certification in the USD class actions for claims pending against UBS, and plaintiffs sought permission to appeal that ruling to the Second Circuit. In July 2018, the Second Circuit denied the petition to appeal of the class of USD lenders and in November 2018 denied the petition of the USD exchange class. In December 2019, UBS entered into an agreement with representatives of the class of USD lenders to settle their USD LIBOR class action. The agreement has received final court approval. In January 2019, a putative class action was filed in the District Court for the Southern District of New York against UBS and numerous other banks on behalf of US residents who, since 1 February 2014, directly transacted with a defendant bank in USD LIBOR instruments. The complaint asserts antitrust claims. The defendants moved to dismiss the complaint in August 2019. On 26 March 2020 the court granted defendants’ motion to dismiss the complaint in its entirety. Plaintiffs have appealed the dismissal. In August 2020, an individual action was filed in the Northern District of California against UBS and numerous other banks alleging that the defendants conspired to fix the interest rate used as the basis for loans to consumers by jointly setting the USD LIBOR rate and monopolized the market for LIBOR- based consumer loans and credit cards. Other benchmark class actions in the US: In 2014, 2015 and 2017, the court in one of the Euroyen TIBOR lawsuits dismissed certain of the plaintiffs’ claims, including plaintiffs’ federal antitrust and racketeering claims. In August 2020, the court granted defendants’ motion for judgment on the pleadings and dismissed the lone remaining claim in the action as impermissiblyextraterritorial. Plaintiffs have appealed. In 2017, the court dismissed the other Yen LIBOR / Euroyen TIBOR action in its entirety on standing grounds. In April 2020, the appeals court reversed the dismissal and in August 2020 plaintiffs in that action filed an amended complaint. Defendants moved to dismiss the amended complaint in October 2020. In 2017, the court dismissed the CHF LIBOR action on standing grounds and failure to state a claim. Plaintiffs filed an amended complaint following the dismissal, and the court granted a renewed motion to dismiss in September 2019. Plaintiffs have appealed. Also in 2017, the court in the EURIBOR lawsuit dismissed the case as to UBS and certain other foreign defendants for lack of personal jurisdiction. Plaintiffs have appealed. In October 2018, the court in the SIBOR / SOR action dismissed all but one of plaintiffs’ claims against UBS. Plaintiffs filed an amended complaint following the dismissal, and the court granted a renewed motion to dismiss in July 2019. Plaintiffs appealed. In March 2021, the Second Circuit reversed the dismissal. In November 2018, the court in the BBSW lawsuit dismissed the case as to UBS and certain other foreign defendants for lack of personal jurisdiction. Following that dismissal, plaintiffs filed an amended complaint in April 2019, which UBS and other defendants named in the amended complaint moved to dismiss. In February 2020, the court in the BBSW action granted in part and denied in part defendants’ motions to dismiss the amended complaint. In August 2020, UBS and other BBSW defendants joined a motion for judgment on the pleadings. The court dismissed the GBP LIBOR action in August 2019. Plaintiffs have appealed. Government bonds: Putative class actions have been filed since 2015 in US federal courts against UBS and other banks on behalf of persons who participated in markets for US Treasury securities since 2007. A consolidated complaint was filed in 2017 in the US District Court for the Southern District of New York alleging that the banks colluded with respect to, and manipulated prices of, US Treasury securities sold at auction and in the secondary market and asserting claims under the antitrust laws and for unjust enrichment. Defendants’ motions to dismiss the consolidated complaint was granted on 31 March 2021. Plaintiffs filed an amended complaint, which defendants moved to dismiss in June 2021. Similar class actions have been filed concerning European government bonds and other government bonds. In May 2021, the European Commission issued a decision finding that UBS and six other banks breached European Union antitrust rules in 2007-2011 relating to European government bonds. The European Commission fined UBS EUR 172 million. UBS is appealing the amount of the fine. With respect to additional matters and jurisdictions not encompassed by the settlements and orders referred to above, our balance sheet at 30 June 2021 reflected a provision in an amount that UBS believes to be appropriate under the applicable accounting standard. As in the case of other matters for which we have established provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that we have recognized.

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Note 14 Provisions and contingent liabilities (continued)

Swiss retrocessions The Federal Supreme Court of Switzerland ruled in 2012, in a test case against UBS, that distribution fees paid to a firm for distributing third-party and intra-group investment funds and structured products must be disclosed and surrendered to clients who have entered into a discretionary mandate agreement with the firm, absent a valid waiver. FINMA issued a supervisory note to all Swiss banks in response to the Supreme Court decision. UBS has met the FINMA requirements and has notified all potentially affected clients. The Supreme Court decision has resulted, and may continue to result, in a number of client requests for UBS to disclose and potentially surrender retrocessions. Client requests are assessed on a case-by-case basis. Considerations taken into account when assessing these cases include, among other things, the existenceof a discretionary mandate and whether or not the client documentation contained a valid waiver with respect to distribution fees. Our balance sheet at 30 June 2021 reflected a provision with respect to matters described in this item 6 in an amount that UBS believes to be appropriate under the applicable accounting standard. The ultimate exposure will depend on client requests and the resolution thereof, factors that are difficult to predict and assess. Hence, as in the case of other matters for which we have established provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that we have recognized.

Note 15 Currency translation rates

The following table shows the rates of the main currencies used to translate the financial information of UBS’s operations with a functional currency other than the US dollar into US dollars.

Closing exchange rate Average rate 1 As of For the quarter ended Year-to-date 30.6.21 31.3.21 31.12.20 30.6.20 30.6.21 31.3.21 30.6.20 30.6.21 30.6.20 1 CHF 1.08 1.06 1.13 1.06 1.10 1.09 1.04 1.09 1.04 1 EUR 1.19 1.17 1.22 1.12 1.20 1.20 1.11 1.20 1.11 1 GBP 1.38 1.38 1.37 1.24 1.39 1.38 1.24 1.39 1.26 100 JPY 0.90 0.90 0.97 0.93 0.91 0.93 0.93 0.92 0.93 1 Monthly income statement items of operations with a functional currency other than the US dollar are translated into US dollars using month-end rates. Disclosed average rates for a quarter represent an average of three month-end rates, weighted according to the income and expense volumes of all operations of the Group with the same functional currency for each month. Weighted average rates for individual business divisions may deviate from the weighted average rates for the Group.

UBS AG interim consolidated financial

information (unaudited)

This section contains a comparison of selected financial andcharged by shared services subsidiaries of UBS Group AG to capital information between UBS Group AG consolidated andother legal entities in the UBS AG scope of consolidation. In UBS AG consolidated. Refer to the UBS AG second quarter 2021addition, UBS Group AG is the grantor of the majority of the report, which will be availableas of23July 2021undercompensation plans of the Group and recognizes share “Quarterly reporting” atubs.com/investors, forthe interimpremium for equity-settled awards granted. These effects consolidated financial statements of UBS AG.were partly offset by treasury shares acquired and canceled as part of our share repurchase programs and those held to Comparison between UBS Group AG consolidated andhedge share delivery obligations associated with Group UBS AG consolidatedcompensation plans, as well as additional share premium recognized at the UBS AG consolidated level related to the The accounting policies applied under International Financialestablishment of UBS Group AG and UBS Business Solutions Reporting Standards (IFRS) to both the UBS Group AG and theAG, a wholly owned subsidiary of UBS Group AG.
UBS AG consolidated financial statements are identical.–The going concern capital of UBS Group AG consolidated However, there are certain scope and presentation differences aswas USD 3.8 billion higher than the going concern capital of noted below.UBS AG consolidated as of 30 June 2021, reflecting higher –Assets, liabilities, operating income, operating expenses andcommon equity tier 1 (CET1) capital of USD 2.4 billion and operating profit before tax relating to UBS Group AG and itsgoing concern loss-absorbing additional tier 1 (AT1) capital of directly held subsidiaries, including UBS Business SolutionsUSD 1.4 billion.
AG, are reflected in the consolidated financial statements of–The CET1 capital of UBS Group AG consolidated was USD 2.4 UBS Group AG but not in those of UBS AG. UBS AG’s assets,billion higher than that of UBS AG consolidated as of 30 June liabilities, operating income and operating expenses related to2021. The higher CET1 capital of UBS Group AG consolidated transactions with UBS Group AG and its directly heldwas primarily due to higher UBS Group AG consolidated IFRS subsidiaries, including UBS Business Solutions AG and otherequity of USD 3.4 billion, as described above, and lower UBS shared services subsidiaries, are not subject to elimination inGroup AG accruals for future capital returns to shareholders, the consolidated financial statementsofUBSAG, but arepartly offset bycompensation-related regulatory capital eliminated in the consolidated financial statements of UBSaccruals and a capital reserve for potential share repurchases Group AG. UBS Business Solutions AG and other sharedat the UBS Group AG level.
services subsidiaries of UBS GroupAGcharge other legal–The going concern loss-absorbing AT1 capital of UBS Group entities within the UBS AG consolidation scope for servicesAG consolidated was USD1.4billionhigherthan that of provided, including a markup on costs incurred.UBS AG consolidated as of 30 June 2021, mainly reflecting –The equity of UBS Group AG consolidated was USD 3.4deferred contingent capital plan awards granted at the Group billion higher than the equity of UBS AG consolidated as oflevel to eligible employees for the performance years 2016 to 30 June 2021. This difference was mainly driven by higher2020, partly offset by two loss-absorbing AT1 capital dividends paid by UBS AG to UBS Group AG compared withinstruments on-lent by UBS Group AG to UBS AG.
the dividend distributions of UBS Group AG, as well as higher retained earnings in the consolidated financial statements of UBS Group AG, largely related to the aforementioned markup

Notes to the UBS Group AG interim consolidated financial statements (unaudited)

Comparison between UBS Group AG consolidated and UBS AG consolidated As of or for the quarter ended 30.6.21 UBS Group AGUBS AGDifference USD million, except where indicatedconsolidatedconsolidated(absolute)| Income statement | | | |
| --- | --- | --- | --- |
| Operating income | 8,976 | 9,071 | (94) |
| Operating expenses | 6,384 | 6,589 | (206) |
| Operating profit / (loss) before tax | 2,593 | 2,481 | 111 |
| of which: Global Wealth Management | 1,294 | 1,273 | 21 |
| of which: Personal & Corporate Banking | 498 | 496 | 2 |
| of which: Asset Management | 255 | 254 | 1 |
| of which: Investment Bank | 668 | 655 | 14 |
| of which: Group Functions | (124) | (197) | 73 |
| Net profit / (loss) | 2,012 | 1,919 | 93 |
| of which: net profit / (loss) attributable to shareholders | 2,006 | 1,913 | 93 |
| of which: net profit / (loss) attributable to non-controlling interests | 6 | 6 | 0 |

Statement of comprehensive income
Other comprehensive income	591	592	(1)
of which: attributable to shareholders	576	578	(1)
of which: attributable to non-controlling interests	14	14	0
Total comprehensive income	2,602	2,510	92
of which: attributable to shareholders	2,582	2,491	92
of which: attributable to non-controlling interests	20	20	0

Balance sheet
Total assets	1,086,519	1,085,861	658
Total liabilities	1,027,469	1,030,216	(2,746)
Total equity	59,050	55,645	3,405
of which: equity attributable to shareholders	58,765	55,361	3,405
of which: equity attributable to non-controlling interests	284	284	0

Capital information
Common equity tier 1 capital		42,583	40,190	2,393
Going concern capital		59,188	55,398	3,790
Risk-weighted assets		293,277	290,470	2,807
Common equity tier 1 capital ratio (%)		14.5	13.8	0.7
Going concern capital ratio (%)		20.2	19.1	1.1
Total loss-absorbing capacity ratio (%)		35.6	34.6	1.0
Leverage ratio denominator	1	1,039,939	1,039,375	564
Common equity tier 1 leverage ratio (%)	1	4.09	3.87	0.23
Going concern leverage ratio (%)	1	5.7	5.3	0.4
Total loss-absorbing capacity leverage ratio (%)		10.0	9.7	0.4

As of or for the quarter ended 31.3.21As of or for the quarter ended 31.12.20 UBS Group AGUBS AGDifferenceUBS Group AGUBS AGDifference consolidatedconsolidated(absolute)consolidatedconsolidated(absolute)| 8,705 | 8,836 | (130) | 8,117 | 8,220 | (103) |
| --- | --- | --- | --- | --- | --- |
| 6,407 | 6,684 | (277) | 6,132 | 6,324 | (192) |
| 2,298 | 2,151 | 147 | 1,985 | 1,896 | 89 |
| 1,409 | 1,391 | 18 | 864 | 855 | 9 |
| 389 | 390 | 0 | 353 | 353 | (1) |
| 227 | 227 | 0 | 401 | 401 | 0 |
| 412 | 394 | 17 | 529 | 528 | 1 |
| (139) | (251) | 112 | (161) | (241) | 79 |
| 1,827 | 1,713 | 114 | 1,645 | 1,572 | 73 |
| 1,824 | 1,710 | 114 | 1,636 | 1,563 | 73 |
| 3 | 3 | 0 | 9 | 9 | 0 |

(2,166)	(2,032)	(135)	83	54	29
(2,154)	(2,019)	(135)	65	36	29
(12)	(12)	0	18	18	0
(339)	(319)	(21)	1,728	1,626	102
(330)	(309)	(21)	1,701	1,599	102
(9)	(9)	0	27	27	0

1,107,712	1,109,234	(1,522)	1,125,765	1,125,327	438
1,049,379	1,051,481	(2,102)	1,066,000	1,067,254	(1,254)
58,333	57,753	580	59,765	58,073	1,691
58,026	57,446	580	59,445	57,754	1,691
307	307	0	319	319	0

40,426	38,826	1,600	39,890	38,181	1,709
56,288	53,255	3,033	56,178	52,610	3,567
287,828	285,119	2,710	289,101	286,743	2,358
14.0	13.6	0.4	13.8	13.3	0.5
19.6	18.7	0.9	19.4	18.3	1.1
35.0	34.2	0.7	35.2	34.2	1.0
1,038,225	1,039,736	(1,511)	1,037,150	1,036,771	379
3.89	3.73	0.16	3.85	3.68	0.16
5.4	5.1	0.3	5.4	5.1	0.3
9.7	9.4	0.3	9.8	9.5	0.3

Significant

regulated

subsidiary and

sub-group

information

Unaudited

Financial and regulatory key figures for our significant regulated

subsidiaries and sub-groups| | | (standalone)UBS AG | UBS Switzerland AG | (standalone) | UBS Europe SE(consolidated) | | UBS Americas Holding LLC(consolidated) | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| All values in millions, except where indicated | | USD | | CHF | | EUR | | USD |
| Financial and regulatory requirements | | Swiss SRB rulesSwiss GAAP | | Swiss SRB rulesSwiss GAAP | EU regulatory rules | IFRS | US Basel III rulesUS GAAP | |
| As of or for the quarter ended | | 30.6.21 | 31.3.2130.6.21 | 31.3.21 | 30.6.21 | 31.3.21 | 130.6.21 | 31.3.21 |
| Financial information | 2 | | | | | | | |
| Income statement | | | | | | | | |
| Total operating income | | 4,473 | 2,811 | 2,1352,089 | 277 | 260 | 3,423 | 3,721 |
| Total operating expenses | | 2,030 | 2,143 | 1,3521,489 | 205 | 233 | 2,930 | 2,905 |
| Operating profit / (loss) before tax | | 2,443 | 669 | 783 | 600 | 7227 | 493 | 816 |
| Net profit / (loss) | | 2,479 | 566 | 636 | 484 | 5011 | 299 | 716 |
| Balance sheet | | | | | | | | |
| Total assets | | 511,973517,606 | 323,291 | 325,921 | 47,426 | 49,246 | 183,777 | 182,786 |
| Total liabilities | | 461,071464,645 | 309,886 | 312,802 | 42,675 | 44,540 | 155,939 | 154,419 |
| Total equity | | 50,902 | 52,96213,405 | 13,119 | 4,751 | 4,706 | 27,838 | 28,367 |

Capital3
Common equity tier 1 capital	51,279	50,22312,312	12,417	3,9213,721	14,477	14,716
Additional tier 1 capital	15,208	14,429	5,3935,402	290	2903,047	3,047
Tier 1 capital	66,487	64,65217,705	17,819	4,2114,011	17,523	17,763
Total going concern capital	66,487	64,65217,705	17,819	4,2114,011
Tier 2 capital						620	736
Total capital				4,2114,011	18,143	18,498
Total gone concern loss-absorbing capacity	45,091	44,36510,868	10,890	2,1792,184	6,300	6,300
Total loss-absorbing capacity	111,578109,017	28,572	28,709	6,3906,195	23,823	24,063

Risk-weighted assets and leverage ratio denominator		3
Risk-weighted assets		319,195	317,824109,602	110,194	13,17114,022	69,139	69,481
Leverage ratio denominator		606,536	611,022341,991	344,925	49,79743,620	170,985	169,386
Supplementary leverage ratio denominator	4					195,617	159,587

Capital and leverage ratios (%)	3
Common equity tier 1 capital ratio		16.1	15.811.2	11.3	29.826.5		20.9	21.2
Tier 1 capital ratio					32.028.6		25.3	25.6
Going concern capital ratio		20.8	20.316.2	16.2
Total capital ratio					32.028.6		26.2	26.6
Total loss-absorbing capacity ratio			26.1	26.1	48.544.2		34.5	34.6
Tier 1 leverage ratio					8.5	9.2	10.2	10.5
Supplementary tier 1 leverage ratio	4						9.0	11.1
Going concern leverage ratio		11.0	10.6	5.25.2
Total loss-absorbing capacity leverage ratio				8.48.3	12.814.2		13.9	14.2
Gone concern capital coverage ratio		120.6118.1

Liquidity3
High-quality liquid assets (billion)		89	8298	96	1717	29,029
Net cash outflows (billion)		51	4865	66	1111	17,509
Liquidity coverage ratio (%)	5,6	176172	150	146161	157	166

Net stable funding ratio	3
Total available stable funding		15,756
Total required stable funding		9,465
Net stable funding ratio (%)		1677

Other Joint and several liability between UBS AG and UBS Switzerland AG (billion)879 1 Comparative figures have been restated to align with the regulatory reports as submitted to the European Central Bank (the ECB). 2 The financial information disclosed does not represent interim financial

statements under the respective GAAP / IFRS. 3 Refer to the 30 June 2021 Pillar 3 report, which will be available as of 20 August 2021 under “Pillar 3 disclosures” at ubs.com/investors, for more information.
4 US regulatory authorities temporarily eased the requirements for the supplementary leverage ratio (SLR), permitting the exclusion of US Treasury securities and deposits at the Federal Reserve Banks from the SLR denominator through March 2021. This exclusion resulted in an increase in the SLR of 187 bps on 31 March 2021. 5 In the second quarter of 2021, the UBS AG liquidity coverage ratio (LCR) was 176%, remaining above the prudential requirements communicated by FINMA. 6 In the second quarter of 2021, the LCR of UBS Switzerland AG, which is a Swiss SRB, was 150%, remaining above the prudential requirement communicated by FINMA in connection with the Swiss Emergency Plan. 7 The local disclosure requirement for the net stable funding ratio of UBS Europe SE came into force in June 2021. 8 Refer to the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020 for more information about the joint and several liability. Under certain circumstances, the Swiss Banking Act and FINMA’s Banking Insolvency Ordinance authorize FINMA to modify, extinguish or convert to common equity liabilities of a bank in connection with a resolution or insolvency of such bank.

100

UBS Group AG is a holding company and conducts substantiallyminimum capital requirements under the severelyadverse all of its operations through UBS AG and subsidiaries thereof.scenario. The FRB also lifted the temporary limitations on capital UBS Group AG and UBS AG have contributed a significantdistributions imposed during the pandemic. As a result, UBS portion of their respective capital to, and provide substantialAmericas Holding LLC is permitted to make capital distributions liquidity to, such subsidiaries. Many of these subsidiaries areas long as it maintains compliance with its total capital subject to regulations requiringcompliance with minimumrequirements, including its stress capital buffer.
capital, liquidity and similar requirements. The tables in thisStandalone financial information for UBS AG, UBS Group AG section summarize the regulatory capital components andand UBS Switzerland AG will be available as of 23 July 2021 capital ratios of our significant regulated subsidiaries and sub-under “Complementary financial information” at groups determined under the regulatory framework of eachubs.com/investors.
subsidiary’s or sub-group’s home jurisdiction.Standalone regulatory information for UBS AG and Supervisory authorities generally have discretion to imposeUBS Switzerland AG, as well as consolidated regulatory higher requirements or to otherwise limit the activities ofinformation for UBS Europe SE and UBS Americas Holding LLC, subsidiaries. Supervisory authorities also may require entities tois provided in the 30 June 2021 Pillar 3 report, which will be measure capital and leverage ratios on a stressed basis and mayavailable as of 20 August 2021 under “Pillar 3 disclosures” at limit the ability of an entity to engage in new activities or takeubs.com/investors.
capital actions based on the results of those tests.Selected financial and regulatory information for UBS AG In June 2021, the Federal Reserve Board (the FRB) releasedconsolidated is included in the key figures table below. Refer the results of the 2021 Dodd–Frank Act Stress Test (DFAST),also to the UBS AG second quarter 2021 report, which will be which is complementary to the Federal Reserve’s Comprehensiveavailable as of23July2021under “Quarterly reporting” at Capital Adequacy Review (CCAR) process. UBS’s intermediateubs.com/investors.
holding company, UBS Americas Holding LLC, exceeded| UBS AG consolidated key figures | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | As of or for the quarter ended | | | | As of or year-to-date | |
| USD million, except where indicated | | | 30.6.21 | 31.3.21 | 31.12.20 | 30.6.20 | 30.6.21 | 30.6.20 |
| Results | | | | | | | | |
| Operating income | | | 9,071 | 8,836 | 8,220 | 7,512 | 17,906 | 15,521 |
| Operating expenses | | | 6,589 | 6,684 | 6,324 | 5,987 | 13,274 | 12,197 |
| Operating profit / (loss) before tax | | | 2,481 | 2,151 | 1,896 | 1,525 | 4,632 | 3,324 |
| Net profit / (loss) attributable to shareholders | | | 1,913 | 1,710 | 1,563 | 1,194 | 3,623 | 2,615 |
| Profitability and growth | 1 | | | | | | | |
| Return on equity (%) | | | 13.6 | 11.9 | 10.9 | 8.4 | 12.7 | 9.3 |
| Return on tangible equity (%) | | | 15.3 | 13.4 | 12.2 | 9.5 | 14.3 | 10.5 |
| Return on common equity tier 1 capital (%) | | | 19.4 | 17.8 | 16.3 | 13.0 | 18.6 | 14.4 |
| Return on risk-weighted assets, gross (%) | | | 12.5 | 12.3 | 11.7 | 10.9 | 12.4 | 11.6 |
| Return on leverage ratio denominator, gross (%) | | 2 | 3.5 | 3.4 | 3.3 | 3.2 | 3.4 | 3.4 |
| Cost / income ratio (%) | | | 73.3 | 75.9 | 76.3 | 76.9 | 74.6 | 75.9 |
| Net profit growth (%) | | | 60.3 | 20.3 | 151.3 | (8.7) | 38.5 | 10.1 |
| Resources1 | | | | | | | | |
| Total assets | | | 1,085,861 | 1,109,234 | 1,125,327 | 1,063,446 | 1,085,861 | 1,063,446 |
| Equity attributable to shareholders | | | 55,361 | 57,446 | 57,754 | 55,384 | 55,361 | 55,384 |
| Common equity tier 1 capital | 3 | | 40,190 | 38,826 | 38,181 | 37,403 | 40,190 | 37,403 |
| Risk-weighted assets | 3 | | 290,470 | 285,119 | 286,743 | 284,798 | 290,470 | 284,798 |
| Common equity tier 1 capital ratio (%) | | 3 | 13.8 | 13.6 | 13.3 | 13.1 | 13.8 | 13.1 |
| Going concern capital ratio (%) | 3 | | 19.1 | 18.7 | 18.3 | 17.9 | 19.1 | 17.9 |
| Total loss-absorbing capacity ratio (%) | | 3 | 34.6 | 34.2 | 34.2 | 31.9 | 34.6 | 31.9 |
| Leverage ratio denominator | 2,3 | | 1,039,375 | 1,039,736 | 1,036,771 | 974,135 | 1,039,375 | 974,135 |
| Common equity tier 1 leverage ratio (%) | | 2,3 | 3.87 | 3.73 | 3.68 | 3.84 | 3.87 | 3.84 |
| Going concern leverage ratio (%) | 2,3 | | 5.3 | 5.1 | 5.1 | 5.2 | 5.3 | 5.2 |
| Total loss-absorbing capacity leverage ratio (%) | | 3 | 9.7 | 9.4 | 9.5 | 9.3 | 9.7 | 9.3 |
| Other | | | | | | | | |
| Invested assets (USD billion) | 4 | | 4,485 | 4,306 | 4,187 | 3,588 | 4,485 | 3,588 |
| Personnel (full-time equivalents) | | | 47,227 | 47,592 | 47,546 | 47,120 | 47,227 | 47,120 |

1 Refer to the “Performance targets and capital guidance” section of our Annual Report 2020 for more information about our performance measurement. 2 Leverage ratio denominators and leverage ratios for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 3 Based on the Swiss systemically relevant bank framework as of 1 January 2020. Refer to the “Capital management” section of this report for more information. 4 Consists of invested assets for Global Wealth Management, Asset Management and Personal & Corporate Banking. Refer to “Note 32 Invested assets and net new money” in the “Consolidated financial statements” section of our Annual Report 2020 for more information.

101

Appendix

Alternative performance measures

Alternative performance measures

An alternative performance measure (an APM) is a financial measure of historical or future financial performance, financial position

or cash flows other than a financial measure defined or specified in the applicable recognized accounting standards or in other

applicable regulations. We report a number of APMs in the discussion of the financial and operating performance of the Group, our

business divisions and our Group Functions. We use APMs to provide a more complete picture of our operating performance and to

reflect management’s view of the fundamental drivers of our business results. A definition of each APM, the method used to

calculate it and the information content are presented in the table below. Our APMs may qualify as non-GAAP measures as defined

by US Securities and Exchange Commission (SEC) regulations.

APM labelCalculationInformation content

Invested assets (USD and CHF)Calculated as the sum of managed fund assets,This measure provides information about the volume – GWM, P&C, AMmanaged institutional assets, discretionary and advisoryof client assets managed by or deposited with UBS for wealth management portfolios, fiduciary deposits, timeinvestment purposes.
deposits, savings accounts, and wealth management securities or brokerage accounts.

Client assets (USD and CHF)Calculated as the sum of invested assets and otherThis measure provides information about the volume – GWM, P&Cassets held purely for transactional purposes or custodyof client assets managed by or deposited with UBS for only.investment purposes, including other assets held purely for transactional purposes or custody only.

Recurring net fee incomeCalculated as the total of fees for services provided onThis measure provides information about the amount (USD and CHF)an ongoing basis, such as portfolio management fees,of recurring net fee income.
– GWM, P&Casset-based investment fund fees and custody fees, which are generated on client assets, and administrative fees for accounts (as well as credit card fees for GWM).

Transaction-based incomeCalculated as the total of the non-recurring portion ofThis measure provides information about the amount (USD and CHF)net fee and commission income, mainly composed ofof the non-recurring portion of net fee and – GWM, P&Cbrokerage and transaction-based investment fund fees,commission income.
as well as fees for payment and foreign exchange transactions (and credit card fees for P&C), together with other net income from financial instruments measured at fair value through profit or loss.

Cost / income ratio (%)Calculated as operating expenses divided by operatingThis measure provides information about the income before credit loss expense or release.efficiency of the business by comparing operating expenses with gross income.

Gross margin on invested assets (bps)Calculated as operating income before credit lossThis measure provides information about the – AMexpense or release (annualized as applicable) divided byoperating income before credit loss expense or release average invested assets.of the business in relation to invested assets.

Net interest margin (bps)Calculated as net interest income (annualized asThis measure provides information about the – P&Capplicable) divided by average loans.profitability of the business by calculating the difference between the price charged for lending and the cost of funding, relative to loan value.

Net margin on invested assets (bps)Calculated as operating profit before tax (annualized asThis measure provides information about the – AMapplicable) divided by average invested assets.operating profit before tax of the business in relation to invested assets.

Business volume for PersonalCalculated as the sum of client assets and loans.This measure provides information about the volume Banking (CHF and USD)of client assets and loans.

– P&C

Net new business volume for PersonalCalculated as the sum of net inflows and outflows ofThis measure provides information about the business Banking (CHF and USD)client assets and loans during a specific periodvolume as a result of net new business volume flows – P&C(annualized as applicable).during a specific period.

Net new business volume growth forCalculated as the sum of net inflows and outflows ofThis measure provides information about the growth Personal Banking (%)client assets and loans during a specific periodof the business volume as a result of net new business – P&C(annualized as applicable) divided by total businessvolume flows during a specific period.
volume / client assets at the beginning of the period.

102

APM labelCalculationInformation content

Net profit growth (%)Calculated as the change in net profit attributable toThis measure provides information about profit shareholders from continuing operations betweengrowth in comparison with the prior period.
current and comparison periods divided by net profit attributable to shareholders from continuing operations of the comparison period.

Pre-tax profit growth (%)Calculated as the change in net profit before taxThis measure provides information about pre-tax attributable to shareholders from continuingprofit growth in comparison with the prior period.
operations between current and comparison periods divided by net profit before tax attributable to shareholders from continuing operations of the comparison period.

Return on common equity tier 1Calculated as annualized net profit attributable toThis measure provides information about the capital (%)shareholders divided by average common equity tier 1profitability of the business in relation to common capital.equity tier 1 capital.

Return on equity (%)Calculated as annualized net profit attributable toThis measure provides information about the shareholders divided by average equity attributable toprofitability of the business in relation to equity.
shareholders.

Return on attributed equity (%)Calculated as annualized business division operatingThis measure provides information about the profit before tax divided by average attributed equity.profitability of the business divisions in relation to attributed equity.

Return on leverage ratio denominator,Calculated as annualized operating income beforeThis measure provides information about the revenues gross (%)credit loss expense or release divided by averageof the business in relation to leverage ratio leverage ratio denominator.denominator.

Return on risk-weightedCalculated as annualized operating income beforeThis measure provides information about the revenues assets, gross (%)credit loss expense or release divided by average risk-of the business in relation to risk-weighted assets.
weighted assets.

Return on tangible equity (%)Calculated as annualized net profit attributable toThis measure provides information about the shareholders divided by average equity attributable toprofitability of the business in relation to tangible shareholders less average goodwill and intangibleequity.
assets.

Total book value per shareCalculated as equity attributable to shareholdersThis measure provides information about net assets (USD and CHF1)divided by the number of shares outstanding.on a per-share basis.

Tangible book value per shareCalculated as equity attributable to shareholders lessThis measure provides information about tangible net (USD and CHF1)goodwill and intangible assets divided by the numberassets on a per-share basis.
of shares outstanding.

Loan penetration (%)Calculated as loans divided by invested assets.This measure provides information about the loan – GWMvolume in relation to invested assets.

Net new money (USD)Calculated as the sum of the net amount of inflowsThis measure provides information about the – AMand outflows of invested assets (as defined in UBSdevelopment of invested assets during a specific policy) recorded during a specific period.period as a result of net new money flows and excludes movements due to market performance, foreign exchange translation, dividends, interest and fees.

Impaired loan portfolio as a percentageCalculated as impaired loan portfolio divided by totalThis measure provides information about the of total loan portfolio, gross (%)gross loan portfolio.proportion of impaired loan portfolio in the total gross – GWM, P&Cloan portfolio.

Secured loan portfolio as a percentageCalculated as secured loan portfolio divided by totalThis measure provides information about the of total loan portfolio, gross (%)gross loan portfolio.proportion of secured loan portfolio in the total gross – P&Cloan portfolio.

Active Digital Banking clients inCalculated as the number of clients (within theThis measure provides information about the Personal Banking (%)meaning of numbers of unique business relationshipsproportion of active Digital Banking clients in the total – P&Coperated by Personal Banking), excluding personsnumber of UBS clients (within the aforementioned under the age of 15, clients who do not have ameaning) who are serviced by Personal Banking.

private account, clients domiciled outside Switzerland, and clients who have defaulted on loans or credit facilities, who have logged on at least once within the past month divided by the total number of clients (within the aforementioned meaning).

103

Appendix

APM labelCalculationInformation content

Active Digital Banking clients inCalculated as the number of clients (within theThis measure provides information about the Corporate & Institutional Clients (%)meaning of numbers of unique business relationshipsproportion of active Digital Banking clients in the total – P&Cor legal entities operated by Corporate & Institutionalnumber of UBS clients (within the aforementioned Clients), excluding clients that do not have anmeaning) which are serviced by Corporate & account, mono-product clients and clients that haveInstitutional Clients.
defaulted on loans or credit facilities, which have logged on at least once within the past month divided by the total number of clients (within the aforementioned meaning).

Mobile Banking log-in share in PersonalCalculated as the number of Mobile Banking appThis measure provides information about the Banking (%)log-ins divided by total log-ins via E-Banking and theproportion of Mobile Banking app log-ins in the total – P&CMobile Banking app in Personal Banking.number of log-ins via E-Banking and the Mobile Banking app in Personal Banking.

Fee-generating assets (USD)Calculated as the sum of discretionary and non-This measure provides information about the volume – GWMdiscretionary wealth management portfoliosof invested assets that create a revenue stream, (mandate volume) and assets where generatedwhether as a result of the nature of the contractual revenues are predominantly of a recurring nature, i.e.,relationship with clients or through the fee structure mainly investment and mutual funds, including hedgeof the asset. An increase in the level of fee-generating funds and private markets, where we have aassets results in an increase in the associated revenue distribution agreement.stream.

Net new fee-generating assets (USD)Calculated as the sum of the net amount of fee-This measure provides information about the – GWMgenerating assets inflows and outflows, includingdevelopment of fee-generating assets during a dividend and interest inflows into mandates andspecific period as a result of net flows and excludes outflows from mandate fees paid by clients, during amovements due to market performance and foreign specific period.exchange translation.

Fee-generating asset margin (bps)Calculated as revenues from fee-generating assets (aThis measure provides information about the revenues – GWMportion of which is included in recurring fee incomefrom fee-generating assets in relation to their average and a portion of which is included in transaction-volume during the relevant mandate fee billing based income, annualized as applicable) divided byperiod.
average fee-generating assets for the relevant mandate fee billing period.

1Total book value per share and tangible book value per share in Swiss francs are calculated based on a translation of equity under our US dollar presentation currency.

104

Abbreviations frequently used in our financial reports

ACEMcurrent exposure methodEPSearnings per share ABSasset-backed securitiesCEOChief Executive OfficerESGenvironmental, social and AEIautomatic exchange ofCET1common equity tier 1governance informationCFOChief Financial OfficerETDexchange-traded derivatives AGMAnnual GeneralMeeting ofCFTCUS Commodity FuturesETFexchange-traded fund shareholdersTrading CommissionEUEuropean Union A-IRBadvanced internalCHFSwiss francEUReuro ratings-basedCICCorporate & InstitutionalEuriborEuro Interbank Offered Rate AIValternative investmentClientsEVEeconomic value of equity vehicleCIOChief Investment OfficeEYErnst & Young (Ltd)
ALCOAsset and LiabilityCLSContinuousLinked CommitteeSettlementF AMAadvanced measurementCMBScommercial mortgage-FAfinancial advisor approachbacked securityFCAUK Financial Conduct AMLanti-money launderingC&ORCCompliance &OperationalAuthority AoAArticles of AssociationRisk ControlFCTforeign currency translation APACAsia PacificCRD IVEU Capital RequirementsFINMASwiss Financial Market APMalternative performanceDirective of 2013Supervisory Authority measureCRMcredit risk mitigation (creditFMIASwissFinancial Market ARRalternative reference raterisk) or comprehensive riskInfrastructure Act ARSauction rate securitiesmeasure (market risk)FSBFinancial Stability Board ASFavailable stable fundingCRRCapital RequirementsFTASwissFederal Tax AT1additional tier 1RegulationAdministration AuMassets under managementCSTcombined stress testFVAfunding valuation CVAcredit valuation adjustmentadjustment BFVOCIfair value through other BCBSBasel Committee onDcomprehensive income Banking SupervisionDBOdefined benefit obligationFVTPLfair value through profit or BEATbase erosion and anti-abuseDCCPDeferred Contingentloss taxCapital PlanFXforeign exchange BISBank forInternationalDJSIDow Jones Sustainability SettlementsIndicesG BoDBoard of DirectorsDMdiscount marginGAAPgenerally accepted BVGSwiss occupationalDOJUS Department of Justiceaccounting principles pension planD-SIBdomestic systemicallyGBPpound sterling important bankGDPgross domestic product CDTAdeferred tax assetGEBGroup Executive Board CAOCapital AdequacyDVAdebit valuation adjustmentGIAGroup Internal Audit OrdinanceGIIPSGreece, Italy, Ireland, CCARComprehensive CapitalEPortugal and Spain Analysis and ReviewEADexposure at defaultGMDGroup Managing Director CCFcredit conversion factorEBExecutive BoardGRIGlobal Reporting Initiative CCPcentral counterpartyEBAEuropean Banking AuthorityGSEgovernment sponsored CCRcounterparty credit riskECEuropean Commissionentities CCRCCorporate Culture andECBEuropean Central BankG-SIBglobal systemically Responsibility CommitteeECLexpected credit lossimportant bank CCyBcountercyclical bufferEIReffective interest rate CDOcollateralized debtELexpected lossH obligationEMEAEurope, Middle East andHQLAhigh-quality liquid assets CDScredit default swapAfricaHRhuman resources CEACommodity Exchange ActEOPEquity Ownership Plan EPEexpected positive exposure

105

Appendix

Abbreviations frequently used in our financial reports (continued)

INIInet interest incomeSARstock appreciation right or IAAinternal assessmentNRVnegative replacement valueSpecial Administrative approachNSFRnet stable funding ratioRegion IASInternational AccountingNYSENew York Stock ExchangeSBCSwiss Bank Corporation StandardsSDGSustainableDevelopment IASBInternational AccountingOGoal Standards BoardOCAown credit adjustmentSEstructured entity IBORInterbank Offered RateOCIother comprehensiveSECUS Securities and Exchange IFRICInternationalFinancialincomeCommission Reporting InterpretationsOTCover-the-counterSEEOPSenior Executive Equity CommitteeOwnership Plan IFRSInternational FinancialPSFTsecurities financing Reporting StandardsPDprobability of defaulttransaction IHCintermediate holdingPFEpotential futureexposureSIsustainable investing companyPITpoint in timeSICRsignificant increase in credit IMAinternal models approachP&Lprofit or lossrisk IMMinternal model methodPOCIpurchased or originatedSIXSIX Swiss Exchange IRBinternal ratings-basedcredit-impairedSMEsmall and medium-sized IRCincremental risk chargePRAUK Prudential Regulationentity IRRBBinterest rateriskin theAuthoritySMFSenior Management banking bookPRVpositive replacement valueFunction ISDAInternational Swaps andSNBSwiss National Bank Derivatives AssociationQSPPIsolely payments of principal QCCPqualifying centraland interest KcounterpartySRBsystemically relevant bank KRTKey Risk TakerQRREqualifying revolving retailSRMspecific risk measure exposuresSVaRstressed value-at-risk

L LASliquidity-adjusted stressRT LCRliquidity coverage ratioRBArole-based allowancesTBTFtoo big to fail LGDloss given defaultRBCrisk-based capitalTCJAUS Tax Cuts and Jobs Act LIBORLondon Interbank OfferedRbMrisk-based monitoringTLACtotal loss-absorbing capacity RateRMBSresidential mortgage-TTCthrough-the-cycle LLClimited liability companybacked securities LRDleverage ratio denominatorRniVrisks not in VaRU LTIPLong-Term Incentive PlanRoAEreturn on attributed equityUBS RESIUBS Real Estate Securities LTVloan-to-valueRoCET1return on CET1 capitalInc.
RoTEreturn on tangible equityUoMunits of measure MRoUright-of-useUSDUS dollar M&Amergers and acquisitionsRVreplacement value MiFID IIMarkets in FinancialRWrisk weightV Instruments Directive IIRWArisk-weighted assetsVaRvalue-at-risk MRTMaterial Risk TakerVATvalue added tax

S NSAstandardized approachW NAVnet asset valueSA-CCRstandardized approach forWEKOSwiss Competition NCLNon-core and Legacycounterparty credit riskCommission Portfolio

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.

106

Information sources

Reporting publicationsOther information

Annual publicationsWebsite Annual Report (SAP No. 80531):Published in English, this single-The “Investor Relations” website atubs.com/investorsprovides volume report provides descriptions of: our Group strategy andthe following information about UBS: news releases; financial performance; the strategy and performance of the businessinformation, including results-related filings with the US divisions andGroup Functions; risk, treasury and capitalSecurities and Exchange Commission; information for management; corporate governance, corporate responsibilityshareholders, including UBS share price charts, as well as data and our compensation framework, including information aboutand dividend information, and for bondholders; the UBS compensation for the Board of Directors and the Groupcorporate calendar; and presentations by management for Executive Board members; and financial information, includinginvestors and financial analysts. Information is available online in the financial statements.English, with some information also available in German.
Geschäftsbericht (SAP No. 80531):This publication provides a German translation of selected sections of our Annual Report.Results presentations Annual Review (SAP No. 80530):This booklet contains keyOur quarterly results presentations are webcast live. Recordings information about our strategy and performance, with a focusof most presentations can be downloadedfrom on corporate responsibility at UBS. It is published in English,ubs.com/presentations.
German, French and Italian.
Compensation Report (SAP No. 82307):This report discusses ourMessaging service compensationframework and provides information aboutEmail alerts to news about UBS can be subscribed for under “UBS compensation for the Board of Directors and the GroupNews Alert” atubs.com/global/en/investor-relations/contact/ Executive Board members. It is available in English and German.investor-services.html. Messages are sent in English, German,

French or Italian, with an option to select theme preferences for Quarterly publicationssuch alerts.
The quarterly financial report provides an update on our strategy and performance for the respective quarter. It is available inForm 20-F and other submissions to the US Securities and English.Exchange Commission We file periodic reports and submit other information about UBS How to order publicationsto the US Securities and Exchange Commission (the SEC).
The annual and quarterly publications are available in .pdfPrincipal among these filings is the annual report on Form 20-F, format atubs.com/investors, under “Financial information,” andfiled pursuant to the US Securities Exchange Act of 1934. The printed copies can be requested from UBS free of charge. Forfiling of Form 20-F is structured as a wrap-around document.
annual publications, refer to the “Investor services” section atMost sections of the filing can be satisfied by referring to the ubs.com/investors.Alternatively, they can be ordered by quotingcombined UBS Group AG and UBS AG annual report. However, the SAP number and the language preference, where applicable,there is a small amount of additional information in Form 20-F from UBS AG, F4UK–AUL, P.O. Box, CH-8098 Zurich,that is not presented elsewhere and is particularly targeted at Switzerland.readers in the US. Readers are encouraged to refer to this additional disclosure. Any document that we file with the SEC is available on the SEC’s website:sec.gov. Refer to ubs.com/investorsfor more information.

107

Appendix

Cautionary Statement Regarding Forward-Looking Statements |This report contains statements that constitute “forward-looking statements,” including but not limited to management’s outlook for UBS’s financial performance, statements relating to the anticipated effect of transactions and strategic initiatives

on UBS’s business and future development and goals or intentions to achieve climate, sustainability and other social objectives. While these forward-looking statements represent UBS’s judgments, expectations and objectives concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. The outbreak of COVID-19 and the measures taken in response to the pandemic have had and may continue to have a significant adverse effect on global economic activity, and an adverse effect on the credit profile of some of our clients and other market participants, which has resulted in and may continue to increase credit loss expense and credit impairments. In addition, we face heightened operational risks due to remote working arrangements, including risks to supervisory and surveillance controls, as well as increased fraud and data security risks. The unprecedented scale of the measures taken to respond to the pandemic as well as the uncertainty surrounding vaccine supply, distribution, and efficacy against mutated virus strains create significantly greater uncertainty about forward-looking statements. Factors that may affect our performance and ability to achieve our plans, outlook and other objectives also include, but are not limited to: (i) the degree to which UBS is successful in the ongoing execution of its strategic plans, including its cost reduction and efficiency initiatives and its ability to manage its levels of riskweighted assets (RWA) and leverage ratio denominator (LRD), liquidity coverage ratio and other financial resources, including changes in RWA assets and liabilities arising from higher market volatility; (ii) the degree to which UBS is successful in implementing changes to its businesses to meet changing market, regulatory and other conditions; (iii) the continuing low or negative interest rate environment in Switzerland and other jurisdictions; (iv) developments (including as a result of the COVID-19 pandemic) in the macroeconomic climate and in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, and currency exchange rates, and the effects of economic conditions, market developments, and geopolitical tensions, and changes to national trade policies on the financial position or creditworthiness of UBS’s clients and counterparties as well as on client sentiment and levels of activity; (v) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings, as well as availability and cost of funding to meet requirements for debt eligible for total loss-absorbing capacity (TLAC); (vi) changes in or the implementation of financial legislation and regulation in Switzerland, the US, the UK, the European Union and other financial centers that have imposed, or resulted in, or may do so in the future, more stringent or entity-specific capital, TLAC, leverage ratio, net stable funding ratio, liquidity and funding requirements, heightened operational resilience requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration, constraints on transfers of capital and liquidity and sharing of operational costs across the Group or other measures, and the effect these will or would have on UBS’s business activities; (vii) UBS’s ability to successfully implement resolvability and related regulatory requirements and the potential need to make further changes to the legal structure or booking model of UBS Group in response to legal and regulatory requirements, proposals in Switzerland and other jurisdictions for mandatory structural reform of banks or systemically important institutions or to other external developments; (viii) UBS’s ability to maintain and improve its systems and controls for the detection and prevention of money laundering and compliance with sanctions to meet evolving regulatory requirements and expectations, in particular in the US; (ix) the uncertainty arising from the UK’s exit from the EU; (x) changes in UBS’s competitive position, including whether differences in regulatory capital and other requirements among the major financial centers will adversely affect UBS’s ability to compete in certain lines of business; (xi) changes in the standards of conduct applicable to our businesses that may result from new regulations or new enforcement of existing standards, including measures to impose new and enhanced duties when interacting with customers and in the execution and handling of customer transactions; (xii) the liability to which UBS may be exposed, or possible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claims and regulatory investigations, including the potential for disqualification from certain businesses, potentially large fines or monetary penalties, or the loss of licenses or privileges as a result of regulatory or other governmental sanctions, as well as the effect that litigation, regulatory and similar matters have on the operational risk component of our RWA as well as the amount of capital available for return to shareholders; (xiii) the effects on UBS’s cross-border banking business of tax or regulatory developments and of possible changes in UBS’s policies and practices relating to this business; (xiv) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses, which may be affected by competitive factors;
(xv) changes in accounting or tax standards or policies, and determinations or interpretations affecting the recognition of gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters; (xvi) UBS’s ability to implement new technologies and business methods, including digital services and technologies, and ability to successfully compete with both existing and new financial service providers, some of which may not be regulated to the same extent; (xvii) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (xviii) the occurrence of operational failures, such as fraud, misconduct, unauthorized trading, financial crime, cyberattacks and systems failures, the risk of which is increased while COVID-19 control measures require large portions of the staff of both UBS and its service providers to work remotely; (xix) restrictions on the ability of UBS Group AG to make payments or distributions, including due to restrictions on the ability of its subsidiaries to make loans or distributions, directly or indirectly, or, in the case of financial difficulties, due to the exercise by FINMA or the regulators of UBS’s operations in other countries of their broad statutory powers in relation to protective measures, restructuring and liquidation proceedings; (xx) the degree to which changes in regulation, capital or legal structure, financial results or other factors may affect UBS’s ability to maintain its stated capital return objective; (xxi) uncertainty over the scope of actions that may be required by UBS, governments and others to achieve goals relating to climate, environmental and social matters as well as the evolving nature of underlying science and industry and governmental standards; and (xxii) the effect that these or other factors or unanticipated events may have on our reputation and the additional consequences that this may have on our business and performance. The sequence in which the factors above are presented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. Our business and financial performance could be affected by other factors identified in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the year ended 31 December 2020 and UBS’s First Quarter 2021 Report on Form 6K. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.

Rounding |Numbers presented throughout this report may not add up precisely to the totals provided in the tables and text. Percentages and percent changes disclosed in text and tables are calculated on the basis of unrounded figures. Absolute changes between reporting periods disclosed in the text, which can be derived from numbers presented in related tables, are calculated on a rounded basis.

Tables |Within tables, blank fields generally indicate non-applicability or that presentation of any content would not be 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. Values that are zero on a rounded basis can be either negative or positive on an actual basis.

108

UBS Group AG P.O. Box CH-8098 Zurich

ubs.com

This Form 6-K is hereby incorporated by reference into (1) each of the registration statements of UBS AG on Form F-3 (Registration Number 333-253432), and of UBS Group AG on Form S-8 (Registration Numbers 333-200634; 333-200635; 333-200641; 333-200665; 333-215254; 333- 215255; 333-228653; 333-230312; and 333-249143), and into each prospectus outstanding under any of the foregoing registration statements, (2) any outstanding offering circular or similar document issued or authorized by UBS AG that incorporates by reference any Form 6-K’s of UBS AG that are incorporated into its registration statements filed with the SEC, and (3) the base prospectus of Corporate Asset Backed Corporation (“CABCO”) dated June 23, 2004 (Registration Number 333- 111572), the Form 8-K of CABCO filed and dated June 23, 2004 (SEC File Number 001-13444), and the Prospectus Supplements relating to the CABCO Series 2004-101 Trust dated May 10, 2004 and May 17, 2004 (Registration Number 033-91744 and 033-91744-05).

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/ Ralph Hamers __ Name: Ralph Hamers Title: Group Chief Executive Officer

By: _/s/ Kirt Gardner______ Name: Kirt Gardner Title: Group Chief Financial Officer

By: _/s/ Christopher Castello _____ Name: Christopher Castello Title: Group Controller and Chief Accounting Officer

UBS AG

By: /s/ Ralph Hamers ____ Name: Ralph Hamers Title: President of the Executive Board

By: /s/ Kirt Gardner _____ Name: Kirt Gardner Title: Chief Financial Officer

By: /s/ Christopher Castello _____ Name:Christopher Castello Title:Controller and Chief Accounting Officer

Date: July 20, 2021

AI assistant

UBS Group AG Regulatory Filings 2021

998_ffr_2021-07-20_b00aad66-c80a-4e2a-bd8e-1b730500dad5.zip

AI assistant

UBS Group AG — Regulatory Filings 2021

998_ffr_2021-07-20_b00aad66-c80a-4e2a-bd8e-1b730500dad5.zip

More from UBS Group AG

UBS Group AG Regulatory Filings 2021