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UBS AG (88JC)

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Thursday 09 March, 2000

UBS AG

Final Results

UBS AG
9 March 2000


UBS: Net profit CHF 6.3 billion

UBS reports a Group pre-tax profit of CHF 8,169 million for the 1999 financial
year. After a tax expense of CHF 1,815 million and minority interests, net
profit is CHF 6,300 million. This represents basic earnings per share of CHF
31.91 and a return on equity of 21.2% before goodwill amortization. Earnings per
share were CHF 30.28 and return on equity 20.1% after goodwill amortization.
Group assets under management grew 11% over the year to CHF 1,744 billion. An
increase in the dividend from CHF 10 to CHF 11 per share will be proposed to the
General Meeting of Shareholders.

Zurich/Basel, 9 March 2000 - UBS is pleased to report a good result in 1999 with
a net profit after tax and minority interests of CHF 6,300 million. Despite a
number of significant one-off events which make like-for-like comparisons
complex, the year-on-year net profit increase is substantial. Group assets under
management grew 11%, developing particularly well in the fourth quarter. Total
operating income was up 28% to CHF 28,621 million, while operating expenses rose
12% to CHF 20,452 million. The cost-income ratio before goodwill amortization
showed an improvement from 77.0% to 68.0% and from 78.4% to 69.1% after goodwill
amortization.

UBS business structure

Group CEO Marcel Ospel states: '1999 not only saw solid financial performance,
the swift and successful completion of the merger and further growth in our
businesses. We also made significant progress in implementing our business model
as a global integrated investment services firm. The regrouping of our wealth
management businesses announced in February this year will enable us to unlock
our tremendous long-term growth potential'.

UBS now consists of three business groups: UBS Switzerland, UBS Asset
Management and UBS Warburg.
*  UBS Switzerland includes the Private and Corporate Clients business,
   private banking in Switzerland and international cross-border private        
  banking.
*  UBS Warburg combines traditional investment banking, the private equity      
  business, onshore services for international private clients and the 
   e-services initiative.
*  UBS Asset Management comprises institutional asset management, UBS mutual    
  funds and Global Asset Management.
UBS is convinced that it has the ideal set of businesses with leading market
positions to take advantage of the sweeping global trends increasing personal
wealth. The new business structure additionally gives it the agility to respond
quickly to evolving client demands and new technological challenges.

e-commerce
UBS perceives technology to be the key enabler of business growth and is
therefore investing heavily in technology to provide an ever greater array of
value-added products and services to a broader client base.

With its successful 24h Banking solution, UBS Switzerland offers comprehensive
services and investment products for private clients as part of a modern,
multi-channel strategy. As recently announced, UBS provides its online financial
information system UBS Quotes on its own WAP homepage and via the WAP portal of
Swisscom. UBS Warburg is focused on developing and delivering leading client
connectivity capabilities. It is also improving its existing infrastructure with
new technologies, leading the industry in transforming to an electronic basis.
From the IBOL (investment Banking On-Line) homepage, UBS Warburg's clients can
access all content electronically and link to the division's execution
capabilities across all product areas. Through its agreement with Vodafone
AirTouch, UBS Warburg will enhance the delivery of its research products to its
existing clients and will be able to access an even
broader audience.

The Group's commitment to new technology will be further demonstrated in 2000
through the launch of its pan-European 'e-services' personal investment
business, expected in the Autumn. While the existing Internet initiatives in the
divisions are aimed at Internet-enabling current businesses, developing specific
products and expanding the client franchise in their own target segments,
e-services is committed to build a new business addressing a completely new
market. It will follow a 'clicks and mortar' approach, with the Internet as the
key channel supported by investment centers in target markets. It will also be
supported by customer service call centers in Edinburgh and Maastricht for
financial and technical advice. UBS will invest about CHF 250 million in the
e-services initiative alone in the year 2000.

Planned listing on the New York Stock Exchange
2000 should also be the year in which UBS stock trades for the first time on the
New York Stock Exchange. This move will give UBS the strategic flexibility to
take advantage of potential expansion opportunities in the United States.

Divisional results

UBS Private Banking 
UBS Private Banking reported a pre-tax profit of CHF 2,652 million in 1999. In
the previous year, on a comparable basis - i.e. adjusted for the disposal of
subsidiaries - pre-tax profit was CHF 3,135 million. The 1999 result, which did
not fully match the high standards expected, is mainly due to lower levels of
client transaction activity and the substantial investments made, particularly
in expanding onshore private banking outside Switzerland. Integrating the two
pre-merger private banking franchises was a major challenge and an important
factor in the delay in establishing a positive trend in net new money.

Assets under management increased 20% to CHF 731 billion. The CHF 124 billion
increase includes modest growth in net new money. Over two thirds of the
increase was performance-driven. The remainder, amounting to CHF 28 billion, was
contributed by the acquisition of the international private banking operations
of Bank of America and the integration of Global Asset Management.

New business initiatives launched in private banking in 1999 included the
formation of dedicated advisory teams such as the Global Executives Group, the
Sports and Entertainment Advisory Group, the Corporate Advisory Group and the
Real Estate Advisory Group. This represents ongoing efforts to harness UBS
capabilities across the Group to create tailor-made solutions for clients'
entire wealth positions. Initial experience has been very encouraging.

UBS Warburg
UBS Warburg had an excellent year, reconfirming its position as one of the top
five global investment banks in primary and secondary markets and as the leading
European investment bank. It reported a pre-tax profit of CHF 2,484 million. The
Equities business was exceptionally strong. Further growth in market share has
enabled UBS Warburg to establish itself as one of the leading global equity
houses in both cash and derivatives markets. A stronger client focus in the
Fixed Income business resulted in improved revenues and profitability. Treasury
Products was negatively impacted by lower levels of activity and narrowing
margins in foreign exchange. Corporate Finance benefited from an exceptionally
strong performance in M&A revenues. UBS Warburg had a leading role in some of
the largest deals announced last year, including  Sprint/MCI WorldCom and
Vodafone/Mannesmann.

Personnel costs were significantly higher in 1999 due primarily to
performance-related compensation tied directly to the strong divisional results
for the year. While UBS Warburg remains committed to investment in leading-edge
technology and top quality talent to grow its client franchise, potential
savings in non-personnel costs have been identified in a number of areas.

UBS Private and Corporate Clients
UBS Private and Corporate Clients reported very satisfying results with a
pre-tax profit of CHF 1,162 million (+28%). Total operating income was up 5% to
CHF 6,143 million, primarily due to higher margins on interest-related business.
The improved quality of the loan portfolio additionally resulted in lower
expected credit loss expenses. Total operating expenses remained stable at CHF
4,981 million.

Assets under management increased slightly to CHF 439 billion. This figure also
includes assets held in transaction accounts for other banks which are naturally
volatile and are not a core focus. Other assets managed by the division grew by
CHF 28 billion or 7%, mainly as a result of performance.

With the integration successfully completed in mid-1999, UBS Private and
Corporate Clients is concentrating fully on growing its business franchise.
Under its modern multichannel distribution strategy, UBS has significantly
expanded its 24h Banking service. By year-end 1999, over 450,000 clients had
signed 24h Banking agreements. Approximately 30% of all payment orders and 11%
of all stock-exchange orders are now placed via the Internet.

UBS Asset Management
UBS Asset Management achieved a pre-tax profit of CHF 333 million. Results were
impacted by client attrition in Europe related to the merger, and by performance
issues in certain mandate types. There was also an increase in non-cash charges
associated with the buyout of the former joint venture with Long Term Credit
Bank of Japan. At the end of 1999, total assets managed by the division stood at
CHF 574 billion. The 8% increase over year-end 1998 was driven by investment
performance and the acquisition of Allegis Realty Investors LLC and was achieved
despite a fall of CHF 50 billion in net new money.

UBS Asset Management launched a series of initiatives during the year to broaden
its global investment capabilities and expand market share in growth areas in
Europe and Asia/Pacific. The common global investment management and research
platform resulting from the integration of Brinson Partners and Phillips & Drew
reflects the new, more client-centric business model. While price/value
management remains the fundamental philosophy, UBS Asset Management will expand
its existing growth-equities capabilities.

UBS Capital
UBS Capital, which specializes in private equity investment, posted a pre-tax
profit of CHF 156 million. The decrease in income compared with 1998 is within
expectations and is due to the lower rate of optimal divestment opportunities in
line with the ageing of the portfolio. Costs still remain comfortably low. The
equity portfolio had a book value of CHF 3.0 billion compared to CHF 1.8 billion
at year-end 1998. The market value rose from CHF 2.7 billion (at the end of
1998) to CHF 4.2 billion. This equates to current unrealized gains of CHF 1.2
billion. Value creation in 1999 was CHF 0.6 billion, including realized gains of
CHF 315 million and an increase in unrealized gains of CHF 295 million.

UBS Capital expects higher divestment activity in 2000 and a further
strengthening of its position through a portfolio diversified both by region and
by sector.

Results from the Group financial accounts

Total operating income increased 28% to CHF 28,621 million compared with 1998.
This includes an aggregate pre-tax gain of CHF 1,800 million relating to
divestments.

Net interest income decreased to CHF 6,356 million (-4.6%), reflecting the
revenue impact resulting from the sale of banking subsidiaries, the reduction of
the international loan portfolio and lower returns on invested equity. Higher
margins in the domestic loan portfolio resulting from more consistently applied
risk-adjusted pricing made a positive contribution. Credit loss expense was CHF
956 million in 1999 compared with CHF 951 million in the prior year when a
significant portion of credit losses were charged against previously established
provisions. 
The quality of the loan portfolio reflects the better economic climate in
Switzerland and Asia. Non-performing loans stood at CHF 13.1 billion at year-end
1999, down from CHF 16.1 billion at the end of 1998.

Net fee and commission income at CHF 12,607 million remained stable
year-on-year. Growth of CHF 137 million in investment fund fees was attributable
to higher volumes and to pricing adjustments associated with the integration of
the two pre-merger product platforms. Custodian fees made excellent progress,
and brokerage fees were also stronger period-on-period, driven mainly by high
volumes in the UK, US and Asia. Underwriting and corporate finance fees were up,
reflecting a robust performance in mergers & acquisitions. Credit-related fees
and commissions decreased in line with reduced emerging market exposures and the
sale of the international Global Trade Finance operations.

Net trading income was CHF 7,468 million in 1999, up from CHF 1,750 million in
1998 when it was negatively impacted by a number of events. Revenues from equity
products, driven by higher client transaction volumes, were especially strong.
Fixed-income trading revenues were also very robust across all major products.
Income from foreign exchange and banknote trading was down, in part due to lower
volumes and volatility in the currency markets. 
Income from the disposal of associates and subsidiaries was CHF 1,821 million,
mainly reflecting the pre-tax gain from the sale of the stake in Swiss
Life/Rentenanstalt. Other income increased 18% in 1999 to CHF 1,325 million. The
main contributors were the CHF 200 million pre-tax gain from the disposal of the
Global Trade Finance operations outside Switzerland and the CHF 395 million
first-time consolidation of Klinik Hirslanden.

Total operating expense were up 12% to CHF 20,452 million. This figure reflects
a onetime pre-tax credit of CHF 456 million in connection with excess pension
fund employer pre-payments, recorded in 1999 in accordance with International
Accounting Standards. It also includes an additional pre-tax restructuring
charge of CHF 300 million primarily due to revised estimates of the cost of
lease breaks and real-estate disposals, and an additional pre-tax provision of
CHF 154 million relating to the settlement reached regarding dormant accounts
and World War ll-related claims. During the fourth quarter of 1999, as part of
an ongoing review, it became clear that the level of contributions from Swiss
industry was not forthcoming as expected.

Personnel expenses rose 28% to CHF 12,577 million, the increase being chiefly
attributable to higher performance-related compensation based on the good
results in 1999. Headcount within the Group rose by 1,047 to 49,058 in 1999,
mainly due to the expansion of onshore private banking operations outside
Switzerland and the integration of Global Asset Management.

General and administrative expenses decreased 9% to CHF 6,018 million. Excluding
provisions for the class-action settlement in the United States (1999: CHF 154
million; 1998: CHF 842 million), the additional restructuring provision (CHF 300
million) and the impact of the first-time consolidation of Klinik Hirslanden,
general and administrative expenses fell 6%, reflecting stringent cost reduction
programs throughout the Group. Depreciation and amortization rose 2% to CHF
1,857 million.

Status of restructuring provision 
Of the CHF 7 billion merger-related restructuring provision booked in 1997, a
total of CHF 5,871 million has been utilized since the beginning of 1998. CHF
1,844 million of this amount was drawn in 1999 to cover costs relating to IT
integration, premises and personnel. An additional provision of CHF 300 million
was created in 1999, equivalent to 4% of the original amount.

Treasury shares 
On 12 March 1999, UBS announced its intention of investing part of its
unallocated capital in its own stocks to cover employee share plans and
acquisitions in the future. At 31 December, it held 7,830,110 of its own shares
(3.6% of the total outstanding). This share buyback program was subsequently
replaced with a new program allowing for cancellation of stock. On 17 January
2000, a second trading line was opened for this purpose. As of 23 February 2000,
the program had resulted in the repurchase of 2,776,665 shares, equivalent to
1.3% of UBS's market capitalization.

Outlook

As a global integrated investment services firm, UBS has the strategic focus,
mix of businesses and leading market share to position itself successfully.
Driven by continued good conditions in the securities markets, the first two
months of 2000 are positive and provide a promising start for the year as a
whole.

UBS

Attachments: Tables


UBS Group Financial Highlights

CHF million (except where indicated)
For the year ended                              31.12.1999   31.12.1998

Income statement key figures
Operating income                                    28 621    22 328
Operating expenses                                  20 452    18 258
Operating profit before tax                          8 169     4 070
Net profit/(loss)                                    6 300     3 030

Per share data (CHF)
Basic earnings per share                             30.28     14.31
Basic earnings per share before goodwill(1)          31.91     15.92
Diluted earnings per share                           30.12     14.23
Diluted earnings per share before goodwill(1)        31.75     15.84
Dividends proposed                                   11.00     10.00

Ratios (%)
Return on shareholders' equity (2)                    20.1      10.3
Return on shareholders' equity before goodwill (1,2)  21.2      11.4
Cost/income ratio (3)                                 69.1      78.4
Cost/income ratio before goodwill (1,3)               68.0      77.0

As of                                            31.12.1999  31.12.1998
Balance-sheet key figures
Total assets                                       981 573   944 116
Shareholders' equity                                34 835    32 395
Market capitalization                               92 642    90 720
BIS capital ratios %
Tier 1                                                10.6       9.3
Total BIS                                             14.5      13.3
Assets under management (CHF bn)
Total assets under management                        1 744     1 572

Headcount (4)
Total headcount                                     49 058    48 011
thereof: Switzerland                                32 747    32 706
    Rest of world                                   16 311    15 305

Long-term ratings
Moody's, New York                                      Aa1       Aa1
Fitch/IBCA, London                                     AAA       AAA
Standard & Poor's, New York                            AA+       AA+
BankWatch, New York                                     AA        AA

(1) The amortization of goodwill and other purchased intangible assets are
    excluded from the calculation.
(2) Net profit/average shareholders' equity excluding dividends.
(3) Operating expenses/operating income before credit loss expenses of CHF
    956 million in 1999 and CHF 951 million in 1998.
(4) The Group headcount of 49,058 as of 31 December 1999 does not include
    the Klinik Hirslanden headcount of 1,853.

UBS Segment Reporting by Business
                                                 UBS Private 
CHF million   UBS Private        UBS Warburg     & Corporate
                Banking                            Clients

For the  31.12.99 31.12.98  31.12.99 31.12.98  31.12.99  31.12.98
year
ended                                         
Revenues    6 011    7 223   12 909     6 987    7 193      7 025
Credit(1)     (24)     (26)    (330)     (500)  (1 050)    (1 170)
loss
expenses
Total       5 987    7 197   12 579     6 487    6 143      5 855
operating 
income                
Personnel   1 694    1 458    6 861     4 333    3 363      3 238
expenses       
General     1 467    1 277    2 448     2 483    1 061      1 025
and
administrative 
expenses          
Deprec- (2)   138      111      652       535      555        680
iation
Goodwill(3)    36       15      134       157        2          4
amortization 
Total       3 335    2 861   10 095     7 508    4 981      4 947
operating 
expenses
Segment     2 652    4 336    2 484    (1 021)   1 162        908
performance
before tax      
Tax expense
Net profit 
before minority
interests
Minority 
interests
Net profit

Cost/(4)       55       46       77      105       69         70
income 
ratios (%)
before 
goodwill 
amortization  
after          55       46       78      107       69         70
goodwill 
amortization          
Regulatory  1 800    1 500   10 050   13 300    8 550      8 250
equity used 
(avg) 
Assets(5)     731    607          0        0      439        434
under
management 
(bn)       


CHF million   UBS Asset        UBS Capital     Corporate Center
              Management                            

For the  31.12.99 31.12.98  31.12.99 31.12.98  31.12.99  31.12.98
year
ended                                         
Revenues    1 096    1 163      315       585    2 053        296
Credit(1)       0        0        0         0      448        745
loss
expenses
Total       1 096    1 163      315       585    2 501      1 041
operating 
income                
Personnel     444      454      105       121      110        212
expenses       
General       177      154       47        35      818      1 643   
and
administrative 
expenses          
Deprec-(2)     29       29        2         0      141        128 
iation
Goodwill(3)   113       78        5         1       50         87        
amortization 
Total         763      715      159       157    1 119      2 070  
operating 
expenses
Segment       333      448      156       428    1 382     (1 029)
performance
before tax      
Tax expense
Net profit 
before minority
interests
Minority 
interests
Net profit
Cost/ (4)      59       55       49        27      n/a        n/a
income 
ratios (%)
before 
goodwill 
amortization  
after          70       61       50        27      n/a        n/a
goodwill 
amortization          
Regulatory    160      100      340       250    7 850      6 350
equity used 
(avg) 
Assets        574      531        0         0        0          0     
under
management 
(bn) (5)      


CHF million         UBS Group

For the         31.12.99 31.12.98 
year
ended                                         
Revenues        29 577    23 279
Credit(1)         (956)     (951)
loss
expenses
Total           28 621    22 328
operating 
income                
Personnel       12 577     9 816 
expenses       
General          6 018     6 617
and
administrative 
expenses          
Deprec-  (2)     1 517     1 483
iation
Goodwill  (3)      340       342
amortization 
Total           20 452    18 258
operating 
expenses
Segment          8 169     4 070
performance
before tax      
Tax expense      1 815     1 045
Net profit       6 354     3 025
before minority
interests
Minority           (54)        5
interests
Net profit       6 300     3 030  
Cost/  (4)          68        77
income 
ratios (%)
before 
goodwill 
amortization  
after               69        78
goodwill 
amortization          
Regulatory      28 750    29 750    
equity used 
(avg) 
Assets  (5)      1 744     1 572
under
management 
(bn)       


(1)  In order to show the relevant divisional performance over time, adjusted
expected loss figures rather than the net credit loss expenses are reported for
all business divisions.  The statistically derived adjusted expected losses
reflect the inherent counterparty and country risks in the respective
portfolios.  The difference between the statistically derived adjusted expected
loss figures to the net credit loss expenses for financial reporting purposes is
reported in the Corporate Center. The divisional breakdown of the net credit
loss expense for financial reporting purposes of CHF 956 million as of 31
December 1999 is as follows: UBS Private Banking CHF 11 million, UBS Warburg CHF
(20) million, UBS Private and Corporate Clients CHF 974 million, Corporate
Center CHF (9) million.
    
(2) The 1998 figures have been restated due to a refinement of the allocation
methodology for depreciation.

(3) The amortization of goodwill includes other purchased intangible assets

(4) Operating expenses/revenues before credit loss expenses. (UBS Private
Banking 1998 excluding gain from divestment of Banca della Svizzera Italiana).

(5) UBS Asset Management December 1999: institutional assets CHF 376 billion,
non-institutional assets CHF 198 billion.

                      

UBS Group Income Statement

CHF million except per share data
For the year ended                      31.12.1999    31.12.1998   Change    %

Operating income

Interest income                           18 323         22 835   (4 512)  (20)
Interest expense                         (11 967)       (16 173)   4 206   (26)
Net interest income                        6 356          6 662     (306)   (5)
Credit loss expense                         (956)          (951)      (5)    1
Net interest income after credit 
 loss expense                              5 400          5 711     (311)   (5)
Net fee and commission income             12 607         12 626      (19)   (0)
Net trading income                         7 468          1 750    5 718   327
Net gains from disposal of associates 
 and subsidiaries                          1 821          1 119      702    63
Other income                               1 325          1 122      203    18
Total operating income                    28 621         22 328    6 293    28

Operating expenses
Personnel                                 12 577          9 816    2 761    28
General and administrative                 6 018          6 617     (599)   (9)
Depreciation and amortization              1 857          1 825       32     2
Total operating expenses                  20 452         18 258    2 194    12

Operating profit before tax and 
 minority interests                        8 169          4 070    4 099   101
Tax expense                                1 815          1 045      770    74
Net profit before minority interests       6 354          3 025    3 329   110
Minority interests                           (54)             5      (59)    -
Net profit                                 6 300          3 030    3 270   108
Basic earnings per share (CHF)             30.28          14.31    15.97   112
Basic earnings per share (CHF) 
 before goodwill (1)                       31.91          15.92    15.99   100
Diluted earnings per share (CHF)           30.12          14.23    15.89   112
Diluted earnings per share (CHF) 
 before goodwill (1)                       31.75          15.84    15.91   100

(1) The amortization of goodwill and other purchased intangible assets are      
   excluded from this calculation.


UBS Group Balance Sheet
CHF million                             31.12.1999    31.12.1998   Change   %

Assets
Cash and balances with central banks       5 073         3 267     1 806    55
Money market paper                        69 717        18 390    51 327   279
Due from banks                            29 907        68 495   (38 588)  (56)
Cash collateral on securities borrowed   113 162        91 695    21 467    23
Reverse repurchase agreements            144 796       141 285     3 511     2
Trading portfolio assets                 217 001       162 588    54 413    33
Positive replacement values              130 500       169 936   (39 436)  (23)
Loans, net of allowance for 
 credit losses                           234 858       247 926   (13 068)   (5)
Financial investments                      7 039         6 914       125     2
Accrued income and prepaid expenses        5 167         6 627    (1 460)  (22)
Investments in associates                  1 102         2 805    (1 703)  (61)
Property and equipment                     8 701         9 886    (1 185)  (12)
Intangible assets and goodwill             3 543         2 210     1 333    60
Other assets                              11 007        12 092    (1 085)   (9)

Total assets                             981 573       944 116    37 457     4

Total subordinated assets                    600           496       104    21

Liabilities
Money market paper issued                 64 655        51 527    13 128    25
Due to banks                              76 365        85 716    (9 351)  (11)
Cash collateral on securities lent        12 832        19 171    (6 339)  (33)
Repurchase agreements                    209 236       137 617    71 619    52
Trading portfolio liabilities             54 586        47 033     7 553    16
Negative replacement values              161 922       205 080   (43 158)  (21)
Due to customers                         279 960       274 850     5 110     2
Accrued expenses and deferred income      12 040        11 232       808     7
Long-term debt                            56 332        50 783     5 549    11
Other liabilities                         18 376        27 722    (9 346)  (34)
Total liabilities                        946 304       910 731    35 573     4
Minority interests                           434           990      (556)  (56)


Shareholders' equity
Share capital                              4 309         4 300         9     0
Share premium account                     13 929        13 740       189     1
Foreign currency translation                (442)         (456)       14    (3)
Retained earnings                         20 501        16 293     4 208    26
Treasury shares                           (3 462)       (1 482)   (1 980)  134

Total shareholders' equity                34 835        32 395     2 440     8
Total liabilities, minority interests and
shareholders' equity                     981 573       944 116    37 457     4

Total subordinated liabilities            14 801        13 652     1 149     8