Report of Foreign Issuer (6-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

Date: April 23, 2018

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.

This Form 6-K consists of the First Quarter 2018 Report of UBS Group AG, which appears immediately following this page.

Our financial results

First quarter 2018  report 

1.	UBS Group
4	Recent developments
6	Group performance
2.	UBS business divisions and Corporate Center
18	Global Wealth Management
21	Personal & Corporate Banking
24	Asset Management
27	Investment Bank
30	Corporate Center
3.	Risk, treasury and capital management
41	Risk management and control
46	Balance sheet, liquidity and funding management
51	Capital management
4.	Consolidated financial statements
67	UBS Group AG interim consolidated financial statements (unaudited)
134	UBS AG interim consolidated financial information (unaudited)
5.	Significant regulated subsidiary and sub-group information
138	Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups
	Appendix
140	Abbreviations frequently used in our financial reports
142	Information sources
143	Cautionary statement

Annual General Meeting 2018:                                           Thursday, 3 May 2018
Publication of the second quarter 2018 report:                     Tuesday, 24 July 2018
Publication of the third quarter 2018 report:                         Tuesday, 23 October 2018
Publication of the fourth quarter 2018 report:                      Monday, 21 January 2019

Publication of the first quarter 2018 report:                          Friday, 27 April 2018

*Publication dates of further quarterly and annual reports and results will be made available as part of the corporate calendar of UBS AG at www.ubs.com/investors

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The Group Company Secretary receives
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sh-company-secretary@ubs.com

Hotline +41-44-235 6652
Fax +41-44-235 8220

Shareholder Services

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

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

sh-shareholder-services@ubs.com

Hotline +41-44-235 6652
Fax +41-44-235 8220

US Transfer Agent

For global registered share-related
inquiries in the US.

Computershare Trust Company NA
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Publisher: UBS Group AG, Zurich, Switzerland | www.ubs.com
Language: English

© UBS 2018. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

UBS Group

Management report

Terms used in this report, unless the context requires otherwise

“UBS,” “UBS Group,” “UBS Group AG consolidated,”                                  UBS Group AG and its consolidated subsidiaries
 “Group,” “the Group,” “we,” “us” and “our”                                             

Recent developments

Key financial reporting and accounting changes

IFRS 9, Financial Instruments

Effective 1 January 2018, we adopted IFRS 9, Financial Instruments , which replaces IAS 39 , Financial Instruments: Recognition and Measurement and substantially changes the classification, measurement and impairment of financial assets, income statement and balance sheet presentation and disclosure of financial instruments and other arrangements in scope. As permitted by IFRS 9, we elected not to restate prior-period information.

The adoption of IFRS 9 has resulted in a CHF 0.6 billion reduction in our IFRS consolidated equity, net of tax, as well as a CHF 0.3 billion reduction in our common equity tier 1 capital as of 1 January 2018 with no material effect on our capital ratios.

®    Refer to “Note 1 Basis of accounting” in the “Consolidated financial statements” section of this report and to “IFRS 9, Financial Instruments ” in the “Significant accounting and financial reporting changes in 2018” section of our Annual Report 2017 for more information

IFRS 15, Revenue from Contracts with Customers

Effective 1 January 2018, we adopted IFRS 15, Revenue from Contracts with Customers , which replaces IAS 18, Revenue,  and establishes principles for revenue recognition that apply to all contracts with customers except those relating to financial instruments, leases and insurance contracts and requires an entity to recognize revenue as performance obligations are satisfied. As permitted by IFRS 15, we elected not to restate prior-period information. The adoption of IFRS 15 has resulted in a reduction in our IFRS consolidated equity of CHF 24 million, net of tax.

®    Refer to “Note 1 Basis of accounting” in the “Consolidated financial statements” section of this report and to “IFRS 15, Revenue from Contracts with Customers ” in the “Significant accounting and financial reporting changes in 2018” section of our Annual Report 2017 for more information

Regulatory and legal developments

Swiss Federal Council consults on amendments to the Capital Adequacy Ordinance

In February 2018, the Swiss Federal Council issued a consultation on amendments to the Capital Adequacy Ordinance. Domestic systemically important banks (D-SIBs) would be subject to gone concern requirements, conceptually similar to those in effect for global systematically important banks (G-SIBs). These requirements would be limited to 40% of the going concern requirements for D-SIBs and could be fully met by state guarantees or similar mechanisms. The consultation also:

–    introduces a new capital treatment, applicable for all banks, whereby the current capital deduction for investments in subsidiaries would be replaced with a risk-weighting approach. This proposed change incorporates requirements that we have been applying since 1 July 2017, as required by a FINMA decree.

–    specifies going and gone concern requirements at a single-entity level that would result in new, as yet undetermined gone concern requirements for UBS AG standalone.

The consultation closes on 30 May 2018 and requirements are expected to enter into force on 1 January 2019.

®    Refer to the third quarter 2017 Pillar 3 report – UBS Group and significant regulated subsidiaries and sub-groups under “Pillar 3 disclosures” at www.ubs.com/investors  for more information on the FINMA decree

Swiss Federal Council proposes tax law amendments related to loss-absorbing instruments

In February 2018, the Swiss Federal Council proposed amendments to Swiss tax law that, if enacted, would reduce the additional tax burden on debt issuances by bank top holding companies. The proposed changes would permit systemically important banks, such as UBS, to issue debt directly from their holding companies, as is contemplated under the international capital framework and the Swiss Capital Adequacy Ordinance, without incurring significant corporate tax disadvantages, as is the case today. As a next step, the proposal will be subject to debate in the Swiss Parliament.

Swiss Federal Council adopts bill on Tax Proposal 17

In March 2018, the Swiss Federal Council adopted a revised bill on corporate tax reform, known as Tax Proposal 17 (TP17). TP17 aims to reform the corporate tax system in Switzerland in response to international developments by abolishing preferential corporate tax regimes at the cantonal level and suggests measures to maintain the competitiveness of Switzerland in the tax field. Key elements include the introduction of a tax incentive on revenues from patents in accordance with OECD standards, additional deductions for research and development expenditure, an increase in the taxation of dividends from qualified participations and optional reliefs on the capital tax. Furthermore, TP17 would increase the cantonal share of the direct federal tax income from 17.0% to 21.2%. This increase is intended to permit cantons to reduce cantonal corporate income tax rates. TP17 is expected to affect our tax liability in Switzerland, although the ultimate effect cannot be determined until the legislation is enacted and contemplated changes are implemented by the cantons. TP17 may also affect the competitiveness of Switzerland as a business location.

Duties to customers in the US

In April 2018, the US Securities and Exchange Commission (SEC) proposed a new regulation and interpretation intended to enhance and clarify the duties of brokers and investment advisers to retail customers. The proposals would require broker- dealers and investment advisers to provide a new relationship summary to customers describing the relationship with the customer, the services offered, standards of conduct, fees and costs, conflicts of interest and disciplinary information. The new regulation would apply to broker-dealers and would require they act in a customer’s best interest when making an investment or investment strategy recommendation to a retail investor. The proposed interpretation clarifies certain obligations of investment advisers relating to acting in the best interest of clients, obtaining best execution of transactions, providing ongoing advice and monitoring, and disclosing and mitigating conflicts of interest. The proposed requirements, if adopted, would apply to a large portion of Global Wealth Management’s business in the US.

The proposals overlap with the US Department of Labor’s (DOL) fiduciary rule, which applies to retirement accounts, and which was being phased in through 2019. The DOL fiduciary rule was invalidated by a US court of appeals in March 2018, although the DOL has the right to appeal the decision through the end of April.

Results: 1Q18 vs 1Q17

Profit before tax increased by CHF 283 million or 17% to CHF 1,973 million, reflecting higher operating income and lower operating expenses. Operating income increased by CHF 166 million or 2%, mainly reflecting CHF 120 million higher net fee and commission income. Operating expenses decreased by CHF 117 million or 2%, primarily due to CHF 82 million lower general and administrative expenses and a CHF 46 million decrease in personnel expenses.

In addition to reporting our results in accordance with International Financial Reporting Standards (IFRS), we report adjusted results that exclude items that management believes are not representative of the underlying performance of our businesses. Such adjusted results are non-GAAP financial measures as defined by US Securities and Exchange Commission (SEC) regulations. Following the completion of our CHF 2.1 billion cost reduction program at the end of 2017, which we refer to as our “legacy cost programs” in this report, we will no longer adjust our reported results for expenses relating to any new restructuring initiatives, unless the related restructuring expenses are material to the business in which the restructuring occurs. We will, however, continue to adjust for any residual restructuring expenses incurred in connection with our legacy cost programs over the course of 2018 and 2019. We currently expect restructuring costs in connection with our legacy cost programs of approximately CHF 0.5 billion for the full year 2018 and under CHF 0.2 billion in 2019.

For the purpose of determining adjusted results for the first quarter of 2018, we excluded a gain related to changes to our Swiss pension plan of CHF 225 million and net restructuring expenses related to legacy cost programs of CHF 128 million. For the first quarter of 2017, we excluded net restructuring expenses of CHF 244 million.

On this adjusted basis, profit before tax for the first quarter of 2018 decreased by CHF 58 million or 3% to CHF 1,876 million, driven by CHF 224 million or 4% higher operating expenses, partly offset by CHF 166 million or 2% higher operating income. In US dollar terms, adjusted profit before tax increased 3%.

®    Refer to “Note 5 Personnel expenses” in the “Consolidated financial statements” section of this report for more information on changes to our Swiss pension plan

Operating income: 1Q18 vs 1Q17

Total operating income increased by CHF 166 million or 2% to CHF 7,698 million, mainly reflecting CHF 120 million higher net fee and commission income and a CHF 74 million increase in net interest income and other net income from fair value changes on financial instruments, partly offset by CHF 25 million higher credit loss expenses.

Net interest income and other net income from fair value changes on financial instruments

Total combined net interest income and other net income from fair value changes on financial instruments increased by CHF 74 million to CHF 3,210 million, mainly driven by increases in the Investment Bank and Global Wealth Management, partly offset by a decrease in Corporate Center.

Global Wealth Management

In Global Wealth Management, net interest income increased by CHF 50 million to CHF 1,018 million, primarily due to an increase in net interest margin as well as an increase in lending revenues. This was partly offset by lower treasury-related income from Corporate Center – Group Asset and Liability Management (Group ALM), mainly reflecting lower banking book interest income.

Transaction-based income from foreign exchange and other intermediary activity was broadly unchanged at CHF 277 million.

Personal & Corporate Banking

In Personal & Corporate Banking, net interest income decreased by CHF 7 million to CHF 507 million, mainly due to lower treasury-related income from Corporate Center – Group ALM, which was partly offset by higher deposit revenues.

Transaction-based income from foreign exchange and other intermediary activity increased by CHF 18 million to CHF 102 million, mainly due to higher net income from foreign exchange transactions.

Investment Bank

In the Investment Bank, net interest income and other net income from fair value changes on financial instruments increased by CHF 236 million, mainly due to a CHF 147 million increase in Corporate Client Solutions, primarily in Equity Capital Markets, driven by higher revenues from private transactions, and Debt Capital Markets. In addition, net interest income and other net income from fair value changes on financial instruments was CHF 89 million higher in Investor Client Services, reflecting higher revenues in Equities, mainly in Derivatives driven by increased client activity and stronger trading performance as market volatility increased. This was partly offset by a decrease in Foreign Exchange, Rates and Credit, compared with a strong prior-year quarter, as growth in derivatives and a steady performance in foreign exchange were offset by lower activity and less favorable market conditions across rates and credit flow products .  

Corporate Center

In Corporate Center, net interest income and other net income from fair value changes on financial instruments decreased by CHF 218 million, mainly reflecting a CHF 269 million decrease in Group ALM, primarily due to a reduction in revenues from the management of the Group’s high-quality liquid assets due to market-driven unfavorable spread developments and higher net interest expense in Group ALM’s portfolio of internal funding. This was partly offset by a CHF 56 million increase in Non-core and Legacy Portfolio, primarily due to valuation gains on financial assets measured at fair value through profit or loss. The first quarter of 2018 included valuation gains on auction rate securities, which were measured at amortized cost prior to 1 January 2018 and which are now measured at fair value through profit or loss effective 1 January 2018 upon adoption of IFRS 9.

Net fee and commission income

Net fee and commission income was CHF 4,473 million compared with CHF 4,353 million.

Investment fund fees and fees for portfolio management and related services increased by CHF 190 million to CHF 3,044 million, mainly in Global Wealth Management, predominantly driven by higher average invested assets and an increase in mandate penetration. These factors were partly offset by the effects of cross-border outflows in 2017.

Underwriting fees decreased by CHF 54 million to CHF 224 million, largely due to lower equity underwriting fees in the Investment Bank.

®    Refer to “Note 3 Net fee and commission income” in the “Consolidated financial statements” section of this report for more information

Other income

Other income was broadly unchanged at CHF 40 million compared with CHF 43 million.

®    Refer to “Note 4 Other income” in the “Consolidated financial statements” section of this report for more information

Credit loss expense / recovery

We have adopted IFRS 9, Financial Instruments effective 1 January 2018. IFRS 9 introduces a forward-looking expected credit loss (ECL) approach, which is intended to result in an earlier recognition of credit losses based on an ECL impairment approach compared with the incurred-loss impairment approach for financial instruments under IAS 39, Financial Instruments: Recognition and Measurement and the loss-provisioning approach for financial guarantees and loan commitments under IAS 37, Provisions, Contingent Liabilities and Contingent Assets . 

Total net credit loss expenses were CHF 25 million in the first quarter of 2018, reflecting net losses of CHF 15 million related to credit-impaired (stage 3) positions and stage 1 and 2 net expected credit losses of CHF 10 million, mainly in the Investment Bank and Personal & Corporate Banking.

®    Refer to “Note 1 Basis of accounting” in the “Consolidated financial statements” section of this report for more information on the adoption of IFRS 9

®    Refer to “Note 9 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information on credit loss expense / recovery

Operating expenses: 1Q18 vs 1Q17

Total operating expenses decreased by CHF 117 million to CHF 5,725 million. Excluding net restructuring expenses related to legacy cost programs of CHF 128 million compared with CHF 244 million and a gain related to changes to our Swiss pension plan of CHF 225 million, adjusted total operating expenses increased by CHF 224 million to CHF 5,822 million.

Personnel expenses

Personnel expenses decreased by CHF 46 million to CHF 4,014 million, mainly due to the aforementioned gain of CHF 225 million in our Swiss pension plan, partly offset by CHF 142 million higher expenses for variable compensation and salaries. On an adjusted basis, personnel expenses increased by CHF 231 million to CHF 4,175 million, primarily reflecting higher expenses for variable compensation, mainly in the Investment Bank as a result of improved performance, as well as higher staffing levels and annual salary increases effective 1 March 2018.

®    Refer to “Note 5 Personnel expenses” in the “Consolidated financial statements” section of this report for more information

General and administrative expenses

General and administrative expenses decreased by CHF 82 million to CHF 1,424 million on a reported basis and by CHF 22 million to CHF 1,360 million on an adjusted basis. The decrease in adjusted expenses was primarily due to CHF 44 million lower net expenses for litigation, regulatory and similar matters. The first quarter of 2017 included a credit of CHF 25 million related to the 2016 UK bank levy.

We believe that the industry continues to operate in an environment in which expenses associated with litigation, regulatory and similar matters will remain elevated for the foreseeable future and we continue to be exposed to a number of significant claims and regulatory matters. The outcome of many of these matters, the timing of a resolution, and the potential effects of resolutions on our future business, financial results or financial condition are extremely difficult to predict.

®    Refer to “Note 6 General and administrative expenses” in the “Consolidated financial statements” section of this report for more information

®    Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report and to “Material legal and regulatory risks arise in the conduct of our business” in the “Risk factors” section of our Annual Report 2017 for more information on litigation, regulatory and similar matters

Depreciation, impairment and amortization

Depreciation and impairment of property, equipment and software was CHF 272 million compared with CHF 255 million, mainly resulting from higher amortization expenses for internally generated capitalized software. This increase in amortization expenses was driven by newly developed software that has been placed in service over the last twelve months.

Restructuring expenses

Total restructuring expenses were CHF 155 million in the first quarter of 2018 (first quarter of 2017: CHF 244 million), of which CHF 91 million related to personnel expenses and CHF 64 million to general and administrative expenses. Of the total restructuring expenses in the first quarter of 2018, CHF 128 million (first quarter of 2017: CHF 244 million) related to our legacy cost programs and were excluded in determining adjusted results.

Tax: 1Q18 vs 1Q17

We recognized an income tax expense of CHF 457 million for the first quarter of 2018 compared with an income tax expense of CHF 375 million for the first quarter of 2017.

Deferred tax expenses were CHF 257 million compared with CHF 131 million and mainly related to the amortization of deferred tax assets (DTAs) previously recognized in relation to tax losses carried forward and deductible temporary differences to reflect their offset against profits for the quarter.

The current tax expense was CHF 200 million compared with CHF 244 million and related to taxable profits of UBS Switzerland AG and other legal entities in UBS Group. This includes an expense of CHF 13 million in respect of the US base erosion and anti-abuse tax (BEAT), which was introduced as part of the Tax Cuts and Jobs Act (TCJA) enacted in December 2017 and targets US businesses benefiting from deductible payments made to non-US related parties. We are considering certain planning options to mitigate the effects of BEAT and are awaiting guidance from the US Department of the Treasury on key aspects of the new tax law.

The enactment of the TCJA, which also included a reduction in the US federal corporate tax rate to 21% from 35%, coupled with the narrowing of the window between the end of our seven-year profit forecast period and the expiry of our US tax losses carried forward, may lead us, in the near term, to review our approach to the remeasurement of our US DTAs and the timing for recognizing deferred tax in our income statement.

We currently forecast a full-year tax rate for 2018 of approximately 25%, including the effects of BEAT, but excluding the effect of any remeasurement of DTAs and any change in the manner in which we remeasure DTAs. Insofar as our structural tax rate in recent years reflected only US state and local tax expenses on US earnings, the reduction in the US federal corporate tax rate to 21% beginning in 2018 is expected to have a minimal effect on the overall Group tax rate going forward, even once we begin to recognize deferred US federal corporate taxes in future years.

®    Refer to “Note 7 Income taxes” in the “Consolidated financial statements” section of this report for more information

®    Refer to “Regulatory and legal developments” section of our Annual Report 2017 for more information on BEAT

Total comprehensive income attributable to shareholders: 1Q18 vs 1Q17

Total comprehensive income attributable to shareholders was CHF 695 million compared with CHF 620 million. Net profit attributable to shareholders was CHF 1,514 million compared with CHF 1,269 million and other comprehensive income (OCI) attributable to shareholders was negative CHF 820 million compared with negative CHF 649 million.

In the first quarter of 2018, OCI related to cash flow hedges was negative CHF 454 million, mainly reflecting a decrease in unrealized gains on hedging derivatives resulting from increases in long-term interest rates. In the first quarter of 2017, OCI related to cash flow hedges was negative CHF 198 million.

Foreign currency translation OCI was negative CHF 384 million in the first quarter of 2018, primarily resulting from the weakening of the US dollar against the Swiss franc. OCI related to foreign currency translation in the same quarter last year was negative CHF 365 million.

Defined benefit plan OCI was negative CHF 100 million compared with positive CHF 51 million. We recorded net pre-tax OCI losses of CHF 244 million related to our Swiss pension plan, primarily due to OCI losses of CHF 356 million from the return on plan assets and as the aforementioned gain of CHF 225 million recognized in the income statement related to changes to our Swiss pension plan was offset by a corresponding OCI loss to reflect the effect of the IFRS asset ceiling. These losses were partly offset by an OCI gain of CHF 314 million due to the remeasurement of the defined benefit obligation, primarily resulting from an increase in the applicable discount rate. Net pre-tax OCI gains related to non-Swiss pension plans amounted to CHF 101 million, mainly driven by the UK defined benefit plans.

OCI associated with financial assets measured at fair value through OCI was negative CHF 51 million compared with positive CHF 43 million and mainly reflected net unrealized losses following increases in the respective long-term interest rates.

OCI related to own credit on financial liabilities designated at fair value was positive CHF 170 million compared with negative CHF 181 million and mainly reflected a widening of credit spreads in the first quarter of 2018.

®    Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for more information

®    Refer to “Note 26 Pension and other post-employment benefit plans” in the “Consolidated financial statements” section of our Annual Report 2017 for more information on other comprehensive income related to defined benefit plans

Sensitivity to interest rate movements

As of 31 March 2018, we estimate that a parallel shift in yield curves by +100 basis points could lead to a combined increase in annual net interest income of approximately CHF 0.6 billion in Global Wealth Management and Personal & Corporate Banking. Of this increase, approximately CHF 0.2 billion would result from changes in US dollar interest rates, compared with an estimated CHF 0.4 billion as of the end of 2017. The estimated decrease in US dollar interest rate sensitivity was driven by lower US dollar equity available for investment following the net DTA write-down in the fourth quarter of 2017 as well as an adjustment in the risk profile of our wealth management business in the Americas in response to a change in its deposit pricing strategy at the end of 2017.

The immediate effect on shareholders’ equity of such a shift in yield curves would be a decrease of approximately CHF 1.9 billion recognized in OCI, of which approximately CHF 1.4 billion would result from changes in US dollar interest rates. Since the majority of this effect on shareholders’ equity is related to cash flow hedge OCI, which is not recognized for the purposes of calculating regulatory capital, the immediate effect on regulatory capital would be an increase of approximately CHF 0.05 billion, primarily related to the estimated effect on pension fund assets and liabilities.

The aforementioned estimates are based on an immediate increase in interest rates, equal across all currencies and relative to implied forward rates applied to our banking book and financial assets available for sale. These estimates further assume no change to balance sheet size and structure, constant foreign exchange rates and no specific management action.

Key figures and personnel

Return on tangible equity: 1Q18 vs 1Q17

The annualized return on tangible equity (RoTE) was 13.6% compared with 10.9%. The annualized adjusted RoTE excluding deferred tax expense / benefit and DTAs was 17.8% compared with 17.4%.

Cost / income ratio: 1Q18 vs 1Q17

The cost / income ratio was 74.1% compared with 77.6%. On an adjusted basis, the cost / income ratio was 75.4% compared with 74.3%.

Common equity tier 1 capital ratio: 1Q18 vs 4Q17

Our common equity tier 1 (CET1) capital ratio decreased 0.7 percentage points to 13.1%, reflecting a CHF 16.3 billion increase in risk-weighted assets (RWA), partly offset by an increase in CET1 capital of CHF 0.5 billion.

®    Refer to the “Capital management” section of this report for more information

Risk-weighted assets: 1Q18 vs 4Q17

During the first quarter of 2018, RWA increased by CHF 16.3 billion to CHF 253.8 billion, driven by asset size and other movements of CHF 11.7 billion, a net increase of CHF 5.0 billion related to model updates and regulatory add-ons, as well as methodology and policy changes of CHF 0.7 billion related to the transition effect of IFRS 9, partly offset by currency effects of CHF 1.1 billion.

®    Refer to the “Capital management” section of this report for more information

Common equity tier 1 leverage ratio: 1Q18 vs 4Q17

Our CET1 leverage ratio increased from 3.69% to 3.76% in the first quarter of 2018, reflecting the increase in CET1 capital and a decrease in the leverage ratio denominator (LRD).

®    Refer to the “Capital management” section of this report for more information

Going concern leverage ratio: 1Q18 vs 4Q17

Our going concern leverage ratio increased 0.3 percentage points to 5.0% as of 31 March 2018, reflecting an increase of CHF 2 billion in going concern capital and a decrease of CHF 4 billion in LRD.

®    Refer to the “Capital management” section of this report for more information

Leverage ratio denominator: 1Q18 vs 4Q17

During the first quarter of 2018, the LRD decreased by CHF 4 billion to CHF 882 billion. This decrease was primarily driven by currency effects of CHF 6 billion and incremental netting and collateral mitigation of CHF 1 billion, partly offset by asset size and other movements of CHF 4 billion, mainly in on-balance sheet exposures (excluding derivative exposures and securities financing transactions (SFTs)) and derivative exposures, partly offset by SFTs.

®    Refer to the “Capital management” section of this report for more information

Net new money and invested assets

Management’s discussion and analysis of net new money and invested assets is provided in the “UBS business divisions and Corporate Center” section of this report.

Personnel: 1Q18 vs 4Q17

We employed 62,537 personnel as of 31 March 2018, a net increase of 1,284 compared with 31 December 2017. Corporate Center – Services personnel increased by 943, primarily due to higher staffing levels related to continued insourcing of certain activities from third-party vendors to our Business Solutions Centers. Global Wealth Management personnel increased by 206, mainly reflecting business growth and strategic and regulatory initiatives, partly offset by a lower number of financial advisors.

Outlook

We remain confident that global economic growth prospects will continue to provide a supportive backdrop to markets, even though geopolitical tensions and the rise of protectionism remain a threat to investor confidence.

All of UBS’s businesses are affected by economic growth expectations, interest rates, equity market levels and foreign exchange rates. While higher compared with last year’s historic lows, market volatility remains muted overall, which is usually less conducive to client activity. Due to seasonal factors, second quarter transaction-based income in our Investment Bank and Global Wealth Management businesses is also typically lower than in the first quarter.

In the second quarter, funding costs related to long-term debt and capital instruments issued to comply with regulatory funding and liquidity requirements will be higher compared with the same period in 2017.

We continue to expect US dollar interest rates to rise gradually and the US economy to further improve, both of which will likely be supportive of US dollar net interest income. Momentum in our businesses is good, and we expect our results in the second quarter to provide further evidence of the strengths of our diversified business model as well as our progress towards achieving our strategic and financial targets.

UBS business
divisions
and Corporate
Center

  Management report