Press Release

Following Swiss parliamentary approval of the US-Swiss Government Agreement, UBS expects to achieve a comprehensive resolution of all outstanding matters with the US government related to the US cross-border business by October 2010.

Commenting on UBS's second quarter 2010 results, Group CEO Oswald J. Grübel said: "This was a good result in volatile market conditions, and demonstrates the progress we are making as we move towards our mid-term targets. Our Investment Bank has improved its competitive positioning, and profits in Wealth Management & Swiss Bank are stable. Our portfolio of businesses is increasingly able to generate competitive returns in a variety of market conditions, and our risk management framework has proven robust. I remain confident in our future and I firmly believe that we have the right strategy in place."

Second quarter 2010 net profit of CHF 2,005 million

UBS reports a second quarter net profit attributable to UBS shareholders of CHF 2,005 million compared with CHF 2,202 million in first quarter 2010.

Wealth Management & Swiss Bank's pre-tax profit of CHF 1,131 million in the second quarter was broadly stable compared with CHF 1,161 million in the first quarter. Wealth Management's pre-tax profit of CHF 658 million was 5% lower than in the first quarter, reflecting broadly stable revenues and slightly higher operating expenses. The gross margin increased to 95 basis points per annum, up 2 basis points from the first quarter.

The invested asset base declined 2% quarter-on-quarter in average terms, mostly reflecting the effects of lower market values. Expenses increased 2%, partly due to the UK Bank Payroll Tax as well as the full effect of annual salary increases. Retail & Corporate's pre-tax result was CHF 473 million, up 2% on the first quarter. Increased credit-related fee income more than offset lower brokerage and sales commissions. Costs continued to be tightly managed and the cost / income ratio for Retail & Corporate remained stable at 52.1%.

Wealth Management Americas recorded a pre-tax loss of CHF 67 million compared with a pre-tax profit of CHF 15 million in the first quarter. However, excluding restructuring charges of CHF 146 million principally related to a rationalization of the property portfolio, the pre-tax profit improved to CHF 79 million compared with CHF 36 million in the first quarter, primarily due to higher fee income and transactional revenues.

Global Asset Management's pre-tax profit was CHF 117 million in the second quarter compared with CHF 137 million in the first quarter. Revenues were stable with higher management fees offsetting declining performance fees in a volatile market. Costs increased 5%, in part due to higher charges from the amortization of compensation awards related to the prior year.

The Investment Bank recorded a pre-tax profit of CHF 1,314 million compared with CHF 1,190 million in the first quarter. Equities revenues were up 9% compared with the first quarter at CHF 1,365 million, demonstrating the strength of our largest flow business in unstable markets. Revenues in the fixed income, currencies and commodities trading business declined to CHF 1,703 million due to defensive positioning of the books in the quarter and lower client activity, with declines in credit and emerging markets offsetting gains in our foreign exchange business, which benefited from higher market volatility and stronger client flows. Revenues for the investment banking department decreased to CHF 478 million in the context of a contraction of the global investment banking fee pool compared with the first quarter. The Investment Bank’s revenues include a CHF 595 million own credit gain on financial liabilities designated at fair value. Costs were CHF 2,788 million, up 3% on the previous quarter, but included a CHF 228 million charge relating to the UK Bank Payroll Tax. Excluding this tax, costs fell on reduced accruals for variable compensation.

Treasury activities and other corporate items generated a pre-tax profit of CHF 119 million in the second quarter compared with CHF 306 million in the first quarter.

Net profit attributable to minority interests of CHF 298 million includes the recognition of a dividend obligation for preferred securities in second quarter 2010, compared with CHF 6 million in first quarter 2010.

Second quarter 2010 results include a tax charge of CHF 311 million compared with CHF 603 million in the previous quarter.

Date: 27.07.2010

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