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ADDENDUM DATED 24 NOVEMBER 2017

If you are in any doubt about any of the contents of this addendum, you should obtain independentprofessional advice.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited (the “StockExchange”) and Hong Kong Securities Clearing Company Limited (“HKSCC”) take no responsibilityfor the contents of this addendum, make no representation as to its accuracy or completeness andexpressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance uponthe whole or any part of the contents of this addendum.

Addendum to the Base Listing Document dated 31 March 2017relating to Non-collateralised Structured Products

to be issued by

UBS AG(incorporated with limited liability in Switzerland)

acting through its London Branch

SponsorUBS SECURITIES ASIA LIMITED

This addendum, for which we accept full responsibility, includes particulars given in compliance withthe Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the“Listing Rules”) for the purpose of giving further information with regard to us. You must read thisaddendum in conjunction with our base listing document dated 31 March 2017 (our “Base ListingDocument”).

We, having made all reasonable enquiries, confirm that to the best of our knowledge and belief theinformation contained in this addendum is accurate and complete in all material respects and notmisleading or deceptive, and there are no other matters the omission of which would make anystatement in this addendum misleading.

The Structured Products involve derivatives. Investors should not invest in the StructuredProducts unless they fully understand and are willing to assume the risks associated with them.

Investors are warned that the price of the Structured Products may fall in value as rapidly asit may rise and holders may sustain a total loss of their investment. Prospective purchasersshould therefore ensure that they understand the nature of the Structured Products andcarefully study the risk factors set out in our Base Listing Document and the relevant launchannouncement and supplemental listing document and, where necessary, seek professionaladvice, before they invest in the Structured Products.

The Structured Products constitute our general unsecured contractual obligations and of noother person and will rank equally among themselves and with all our other unsecuredobligations (save for those obligations preferred by law) upon liquidation. If you purchase theStructured Products, you are relying upon our creditworthiness, and have no rights under theStructured Products against (a) the company which has issued the underlying securities; (b) thetrustee or the manager of the underlying unit trust; or (c) the index compiler of any underlyingindex. If we become insolvent or default on our obligations under the Structured Products, youmay not be able to recover all or even part of the amount due under the Structured Products (ifany).

IMPORTANT INFORMATION

What is this addendum about?

This addendum contains supplemental general information on us, our unaudited third quarter 2017financial information for the quarter period ended 30 September 2017 and the risk management andcontrol applicable to UBS Group AG (our holding company), UBS AG and our subsidiaries (together,“UBS Group”) extracted from UBS Group AG’s third quarter 2017 financial report. This addendumis a supplement to our Base Listing Document.

What documents should you read before investing in the Structured Products?

You must read this addendum together with our Base Listing Document (including any otheraddendum to our Base Listing Document to be issued by us from time to time) and the relevant launchannouncement and supplemental listing document (including any addendum to such launchannouncement and supplemental listing document to be issued by us from time to time) (together, the“Listing Documents”) before investing in any Structured Product.

Where can you inspect the relevant documents?

Copies of this addendum, our Base Listing Document and the relevant launch announcement andsupplemental listing document and other documents set out in the relevant launch announcement andsupplemental listing document may be inspected during usual business hours on any weekday(Saturdays, Sundays and holidays excepted) at the offices of UBS Securities Asia Limited.

本增編、我們的基礎上市文件連同相關發行公佈及補充上市文件及於相關發行公佈及補充上市文件內所列的其他文件，可於平日(星期六、日及假期除外)的一般辦公時間於瑞銀証券亞洲有限公司(UBS Securities Asia Limited) 辦事處查閱。

Are we subject to any litigation?

Save as disclosed in the Listing Documents, we and our subsidiaries are not aware of any litigationor claims of material importance pending or threatened against us or them.

Has our financial position changed since last financial year-end?

There has been no material adverse change in our financial or trading position since 31 December2016.

What are our credit ratings?

Our long term debt ratings are:

Rating agency Rating as of the date of this addendum

Moody’s Deutschland GmbH A1 (stable outlook)

Standard & Poor’s Credit Market

Services Europe Limited A+ (stable outlook)

Rating agencies usually receive a fee from the companies that they rate. When evaluating ourcreditworthiness, you should not solely rely on our credit ratings because:

• a credit rating is not a recommendation to buy, sell or hold the Structured Products;

• ratings of companies may involve difficult-to-quantify factors such as market competition, thesuccess or failure of new products and markets and managerial competence;

• a high credit rating is not necessarily indicative of low risk. Our credit ratings as of the date ofthis addendum are for reference only. Any downgrading of our credit ratings could result in areduction in the value of the Structured Products;

• a credit rating is not an indication of the liquidity or volatility of the Structured Products; and

• a credit rating may be downgraded if our credit quality declines.

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The Structured Products are not rated.

Our credit ratings are subject to change or withdrawal at any time within each rating agency’s sole

discretion. You should conduct your own research using publicly available sources to obtain the latest

information with respect to our ratings from time to time.

How can you get further information about us or the Structured Products?

You may visit http://warrants.ubs.com/en/home_e.cgi to obtain further information about us and/or

the Structured Products.

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TABLE OF CONTENTS

Page

INFORMATION IN RELATION TO US. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

THE UNAUDITED FINANCIAL INFORMATION OF UBS AG

FOR THE QUARTERLY PERIOD ENDED 30 SEPTEMBER 2017 - EXTRACTED

FROM UBS AG’S THIRD QUARTER 2017 FINANCIAL REPORT . . . . . . . . . . . . . . . . . . 23

RISK MANAGEMENT AND CONTROL - EXTRACTED

FROM UBS GROUP AG’S THIRD QUARTER 2017 FINANCIAL REPORT . . . . . . . . . . . 30

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INFORMATION IN RELATION TO US

(1) Updated “Information in relation to us”

The following pages under this section shall replace the information in the section headed

“Information in relation to us” on pages 14 to 17 of our Base Listing Document in its entirety.

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1. Overview

UBS AG with its subsidiaries (together, “UBS AG consolidated”, or “UBS AG Group”; togetherwith UBS Group AG, which is the holding company of UBS AG, and its subsidiaries, “UBSGroup”, “Group”, “UBS” or “UBS Group AG consolidated”) provides financial advice andsolutions to private, institutional and corporate clients worldwide, as well as private clients inSwitzerland. The operational structure of the Group is comprised of the Corporate Center andfive business divisions: Wealth Management, Wealth Management Americas, Personal &Corporate Banking, Asset Management and the Investment Bank. UBS’s strategy is centered onits wealth management businesses and its universal bank in Switzerland, which are enhanced byAsset Management and the Investment Bank.

2. Corporate Information

The legal and commercial name of the company is UBS AG.

The company was incorporated under the name SBC AG on 28 February 1978 for an unlimitedduration and entered in the Commercial Register of Canton Basel-City on that day. On 8December 1997, the company changed its name to UBS AG. The company in its present form wascreated on 29 June 1998 by the merger of Union Bank of Switzerland (founded 1862) and SwissBank Corporation (founded 1872). UBS AG is entered in the Commercial Registers of CantonZurich and Canton Basel-City. The registration number is CHE-101.329.561.

UBS AG is incorporated and domiciled in Switzerland and operates under the Swiss Code ofObligations as an Aktiengesellschaft, a corporation limited by shares.

According to article 2 of the articles of association of UBS AG dated 4 May 2016, the purposeof UBS AG is the operation of a bank. Its scope of operations extends to all types of banking,financial, advisory, trading and service activities in Switzerland and abroad. UBS AG mayestablish branches and representative offices as well as banks, finance companies and otherenterprises of any kind in Switzerland and abroad, hold equity interests in these companies, andconduct their management. UBS AG is authorized to acquire, mortgage and sell real estate andbuilding rights in Switzerland and abroad. UBS AG may borrow and invest money on the capitalmarkets. UBS AG is part of the group of companies controlled by the group parent company UBSGroup AG. It may promote the interests of the group parent company or other group companies.It may provide loans, guarantees and other kinds of financing and security for group companies.

The addresses and telephone numbers of UBS AG’s two registered offices and principal placesof business are: Bahnhofstrasse 45, CH-8001 Zurich, Switzerland, telephone +41 44 234 1111;and Aeschenvorstadt 1, CH-4051 Basel, Switzerland, telephone +41 61 288 5050.

3. Business Overview

3.1. Organizational Structure of UBS AG

UBS AG is a Swiss bank and the parent company of the UBS AG Group. It is 100% owned byUBS Group AG, which is the holding company of the UBS Group. UBS operates as a group withfive business divisions (Wealth Management, Wealth Management Americas, Personal &Corporate Banking, Asset Management and the Investment Bank) and a Corporate Center.

Since 2014, UBS has undertaken a series of measures to improve the resolvability of the Groupin response to too big to fail requirements in Switzerland and other countries in which the Groupoperates.

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In December 2014, UBS Group AG completed an exchange offer for the shares of UBS AG andbecame the holding company of the UBS Group. During 2015, UBS Group AG completed a courtprocedure under the Swiss Stock Exchange and Securities Trading Act resulting in thecancellation of the shares of the remaining minority shareholders of UBS AG. As a result, UBSGroup AG owns 100% of the outstanding shares of UBS AG.

In June 2015, UBS AG transferred its Personal & Corporate Banking and Wealth Managementbusinesses booked in Switzerland to UBS Switzerland AG, a banking subsidiary of UBS AG inSwitzerland. Also in 2015, UBS implemented a more self-sufficient business and operatingmodel for UBS Limited, UBS’s investment banking subsidiary in the UK, and established UBSBusiness Solutions AG as a direct subsidiary of UBS Group AG to act as the Group servicecompany. The purpose of the service company structure is to improve the resolvability of theGroup by enabling UBS to maintain operational continuity of critical services should a recoveryor resolution event occur.

In the second half of 2015, UBS transferred the ownership of the majority of its existing servicesubsidiaries outside the US to UBS Business Solutions AG. As of 1 January 2017, UBScompleted the transfer of the shared service employees in the US to the US service company,UBS Business Solutions US LLC, a subsidiary of UBS AG. In the second quarter of 2017, UBStransferred shared services functions in Switzerland from UBS AG to UBS Business SolutionsAG. UBS expects to complete the transfer of shared services functions in the UK in the fourthquarter of 2017.

As of 1 July 2016, UBS Americas Holding LLC was designated as intermediate holding companyfor UBS’s US subsidiaries as required under the enhanced prudential standards regulationspursuant to the Dodd-Frank Act. UBS Americas Holding LLC holds all of UBS’s US subsidiariesand is subject to US capital requirements, governance requirements and other prudentialregulation.

In addition, UBS transferred the majority of the operating subsidiaries of Asset Management toUBS Asset Management AG during 2016. Furthermore, UBS merged its Wealth Managementsubsidiaries in Italy, Luxembourg (including its branches in Austria, Denmark and Sweden), theNetherlands and Spain into UBS Deutschland AG, which was renamed to UBS Europe SE, toestablish UBS’s new European legal entity which is headquartered in Frankfurt, Germany.

UBS continues to consider further changes to the Group’s legal structure in response toregulatory requirements and other external developments, including the anticipated exit of theUnited Kingdom from the European Union. Such changes may include the transfer of operatingsubsidiaries of UBS AG to become direct subsidiaries of UBS Group AG, further consolidationof operating subsidiaries in the EU and adjustments to the booking entity or location of productsand services. These structural changes are being discussed on an ongoing basis with the SwissFinancial Market Supervisory Authority FINMA (“FINMA”) and other regulatory authoritiesand remain subject to a number of uncertainties that may affect their feasibility, scope or timing.

UBS Group AG’s interests in subsidiaries and other entities as of 31 December 2016, includinginterests in significant subsidiaries, are discussed in “Note 28 Interests in subsidiaries and otherentities” to the UBS Group AG’s consolidated financial statements included in the UBS GroupAG and UBS AG Annual Report 2016 published on 10 March 2017 (“Annual Report 2016”).

UBS AG’s interests in subsidiaries and other entities as of 31 December 2016, including interestsin significant subsidiaries, are discussed in “Note 28 Interests in subsidiaries and other entities”to the UBS AG’s consolidated financial statements included in the Annual Report 2016.

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3.2. Recent Developments

Regulatory and legal developments

Postponed implementation of NSFR and revision of LCR in Switzerland

In September 2017, the Swiss Federal Department of Finance informed banks that the net stablefunding ratio (NSFR) requirements will not be finalized in 2017. Taking internationaldevelopments into account, the Swiss Federal Council is expected to decide on next steps at theend of 2018.

UBS expects that proposed changes to liquidity coverage ratio (LCR) requirements will takeeffect on 1 January 2018, subject to approval by the Swiss Federal Council; however, the finalversion of the changes has not yet been published.

Increase in gone concern requirement rebate

Under the Swiss SRB framework, banks are eligible for a rebate of up to 2% of the leverage ratiodenominator (“LRD”)-based gone concern capital requirement if they take actions that facilitaterecovery and resolvability beyond the minimum requirement. FINMA has communicated itsannual assessment and has increased UBS’s rebate to approximately one-third of the maximumbased on actions UBS completed in 2016 to improve resolvability. The rebate will be phased inuntil 1 January 2020. As UBS completes additional measures to improve the resolvability of theGroup, it expects to qualify for a larger rebate and therefore aims to operate with a gone concernratio of less than 4% of the LRD on completion of the phase-in period.

Refer to “Regulatory and legal developments” in the UBS Group AG third quarter 2017 report,published on 27 October 2017, (“UBS Group Third Quarter 2017 Report”) for information onfurther recent regulatory and legal developments.

3.3. Trend Information

As indicated in the UBS Group Third Quarter 2017 Report, UBS expects the global economicrecovery to strengthen further, but geopolitical tensions and macroeconomic uncertainty stillpose risks to client sentiment. In particular, high asset prices, uncertainty over central bankbalance sheet and interest rate policies, seasonality factors and the persistence of low volatilitymay continue to affect overall client activity. Low and negative interest rates, particularly inSwitzerland and the eurozone, put pressure on net interest margins, which may be partly offsetby the effect of a further normalization of US monetary policy. Implementing Switzerland’s newbank capital standards and further changes to national and international regulatory frameworksfor banks will result in increased capital requirements, funding and operating costs. UBS is wellpositioned to mitigate these challenges and benefit from further improvements in marketconditions.

Refer to “Current market climate and industry trends” and “Risk factors” in the “Operatingenvironment and strategy” section of the Annual Report 2016 for more information.

4. Board of Directors (“BoD”)

The BoD is the most senior body of UBS AG. The BoD consists of at least five and no more thantwelve members. All the members of the BoD are elected individually by the Annual GeneralMeeting of Shareholders (“AGM”) for a term of office of one year, which expires after thecompletion of the next AGM. Shareholders also elect the Chairman upon proposal of the BoD.

The BoD meets as often as business requires, and at least six times a year.

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4.1. Members of the Board of Directors

Member Title

Term of

office Current principal positions outside UBS AG

Axel A. Weber Chairman 2018 Chairman of the Board of Directors of UBSGroup AG; board member of the Swiss BankersAssociation; member of the Board of Trustees ofAvenir Suisse; Advisory Board member of the“Beirat Zukunft Finanzplatz”; board member ofthe Swiss Finance Council; Chairman of theboard of the Institute of International Finance;President of the International MonetaryConference; member of the European FinancialServices Round Table; member of the EuropeanBanking Group; member of the MonetaryEconomics and International Advisory Panel,Monetary Authority of Singapore; member ofthe Group of Thirty, Washington, D.C.;Chairman of the DIW Berlin Board of Trustees;Advisory Board member of the Department ofEconomics at the University of Zurich; memberof the Trilateral Commission.

Michel Demaré IndependentVice Chairman

2018 Independent Vice-Chairman of the Board ofDirectors of UBS Group AG; Vice Chairman ofthe board of Syngenta; board member ofLouis-Dreyfus Commodities Holdings BV; ViceChairman of the Supervisory Board of IMD,Lausanne; Chairman of the Syngenta Foundationfor Sustainable Agriculture; Advisory Boardmember of the Department of Banking andFinance at the University of Zurich.

David Sidwell Member 2018 Senior Independent Director of the Board ofDirectors of UBS Group AG; Senior Advisor atOliver Wyman, New York; board member ofChubb Limited; board member of GAVIAlliance; Chairman of the Board of VillageCare, New York; Director of the NationalCouncil on Aging, Washington D.C.

Reto Francioni Member 2018 Member of the Board of Directors of UBS GroupAG; professor at the University of Basel; boardmember of Coca-Cola HBC AG; Chairman ofthe board of Swiss International Air Lines AG;board member of Francioni AG; board memberof MedTech Innovation Partners AG.

Ann F.Godbehere

Member 2018 Member of the Board of Directors of UBS GroupAG; board member of Rio Tinto plc (chairmanof the audit committee); board member of RioTinto Limited (chairman of the auditcommittee); board member of British AmericanTobacco plc.

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Member Title

Term of


William G.Parrett

Member 2018 Member of the Board of Directors of UBS GroupAG; board member of the Eastman KodakCompany (chairman of the audit and financecommittee); board member of the BlackstoneGroup LP (chairman of the audit committee andchairman of the conflicts committee); boardmember of Thermo Fisher Scientific Inc.(chairman of the audit committee); Chairman ofthe Board of Conduent Inc; member of theCommittee on Capital Markets Regulation;member of the Carnegie Hall Board of Trustees;Past Chairman of the board of the United StatesCouncil for International Business; PastChairman of United Way Worldwide.

Julie G.Richardson

Member 2018 Member of the Board of Directors of UBS GroupAG; board member of The Hartford FinancialServices Group, Inc. (chairman of the auditcommittee); board member of Yext (chairman ofthe audit committee); board member of ArconicInc.; board member of Vereit, Inc. (chairman ofthe compensation committee).

Isabelle Romy Member 2018 Member of the Board of Directors of UBS GroupAG; partner and board member at Froriep LegalAG, Zurich; associate professor at theUniversity of Fribourg and at the FederalInstitute of Technology, Lausanne; vicechairman of the Sanction Commission of SIXSwiss Exchange; member of the FundraisingCommittee of the Swiss National Committee forUNICEF; Supervisory Board member of theCAS program Financial Regulation of theUniversity of Bern and University of Geneva.

Robert W.Scully

Member 2018 Member of the Board of Directors of UBS GroupAG; board member of Chubb Limited; boardmember of Zoetis Inc.; board member of KKR &Co LP; board member of the Dean’s Advisors ofHarvard Business School.

Beatrice Wederdi Mauro

Member 2018 Member of the Board of Directors of UBS GroupAG; distinguished fellow at INSEAD inSingapore (on leave from the University ofMainz); Supervisory Board member of RobertBosch GmbH; board member of BombardierInc.; member of the ETH Zurich FoundationBoard of Trustees; Economic Advisory Boardmember of Fraport AG; Advisory Board memberof Deloitte Germany; Deputy Chairman of theUniversity Council of the University of Mainz.

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Member Title

Term of


Dieter Wemmer Member 2018 Member of the Board of Directors of UBS GroupAG; CFO at Allianz SE; Administrative Boardmember of Allianz Asset Management AG andAllianz Investment Management SE, bothAllianz Group mandates; member of the CFOForum; member of the Systemic Risk WorkingGroup of the European Central Bank and theBank for International Settlements; Chairman ofthe Economic & Finance Committee ofInsurance Europe; member of the Berlin Centerof Corporate Governance.

5. Litigation, Regulatory and Similar Matters

UBS operates in a legal and regulatory environment that exposes it to significant litigation andsimilar risks arising from disputes and regulatory proceedings. As a result, UBS (which forpurposes of this section may refer to UBS AG and / or one or more of its subsidiaries, asapplicable) 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 areoften difficult to predict, particularly in the earlier stages of a case. There are also situationswhere UBS 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 forthose matters for which UBS believes it should be exonerated. The uncertainties inherent in allsuch matters affect the amount and timing of any potential outflows for both matters with respectto which provisions have been established and other contingent liabilities. UBS makesprovisions for such matters brought against it when, in the opinion of management after seekinglegal advice, it is more likely than not that UBS has a present legal or constructive obligationas a result of past events, it is probable that an outflow of resources will be required, and theamount can be reliably estimated. Where these factors are otherwise satisfied, a provision maybe established for claims that have not yet been asserted against UBS, but are neverthelessexpected to be, based on UBS’s experience with similar asserted claims. If any of thoseconditions is not met, such matters result in contingent liabilities. If the amount of an obligationcannot be reliably estimated, a liability exists that is not recognized even if an outflow ofresources is probable. Accordingly, no provision is established even if the potential outflow ofresources with respect to such matters could be significant.

Specific litigation, regulatory and other matters are described below, including all such mattersthat management considers to be material and others that management believes to be ofsignificance due to potential financial, reputational and other effects. The amount of damagesclaimed, the size of a transaction or other information is provided where available andappropriate in order to assist users in considering the magnitude of potential exposures.

In the case of certain matters below, UBS states that it has established a provision, and for theother matters, it makes no such statement. When UBS makes this statement and it expectsdisclosure of the amount of a provision to prejudice seriously its position with other parties inthe matter because it would reveal what UBS believes to be the probable and reliably estimableoutflow, UBS does not disclose that amount. In some cases UBS is subject to confidentialityobligations that preclude such disclosure. With respect to the matters for which UBS does notstate whether it has established a provision, either (a) it has not established a provision, in which

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case the matter is treated as a contingent liability under the applicable accounting standard, or

(b) it has established a provision but expects disclosure of that fact to prejudice seriously its

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 UBS has established

provisions, UBS is able to estimate the expected timing of outflows. However, the aggregate

amount of the expected outflows for those matters for which it is able to estimate expected

timing is immaterial relative to its 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 “Note 13a Provisions” to the UBS AG’s interim consolidated financial statements

included in the UBS AG third quarter 2017 report, published on 1 November 2017. It is not

practicable to provide an aggregate estimate of liability for UBS’s 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 it 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 (“NPA”) described in item E of this

section, which UBS entered into with the US Department of Justice (“DOJ”), Criminal Division,

Fraud Section in connection with UBS’s 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 (“FX”) matters. As a consequence, UBS AG pleaded guilty to one count of

wire fraud for conduct in the LIBOR matter, paid a US dollar (“USD”) 203 million fine and is

subject to a three-year term of probation. A guilty plea to, or conviction of, a crime (including

as a result of termination of the NPA) 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 UBS’s capital requirements. Information

concerning UBS’s capital requirements and the calculation of operational risk for this purpose

is included in the “Capital management” section of the UBS Group Third Quarter 2017 Report.

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Provisions for litigation, regulatory and similar matters by business division and CorporateCenter unit 1

CHF million

WealthManage- ment

WealthManagement

Americas

Personal &Corporate

BankingAsset

Manage- mentInvest-ment

BankCC —

Services

CC —Group

ALM

CC —Non-core and

LegacyPortfolio UBS

Balance as of 31 December2016 292 425 78 5 616 259 0 1,585 3,261

Balance as of 30 June 2017 249 361 77 5 391 253 0 1,110 2,446

Increase in provisions

recognized in the income

statement 20 10 0 0 2 248 0 31 310

Release of provisions

recognized in the income

statement 0 (3) 0 (5)2 (47) (1) 0 (7) (63)

Provisions used in conformity

with designated purpose (1) (46) 0 0 (5) (259) 0 (1) (313)

Foreign currency translation /

unwind of discount 11 3 1 0 3 1 0 11 30

Balance as of 30 September2017 279 325 78 0 344 241 0 1,144 2,410

1 Provisions, if any, for the matters described in this section are recorded in Wealth Management (item C), WealthManagement Americas (item D), the Investment Bank (item H), Corporate Center — Services (item G) andCorporate Center — Non-core and Legacy Portfolio (item B). Provisions, if any, for the matters described in itemsA and F of this section are allocated between Wealth Management and Personal & Corporate Banking, andprovisions, if any, for the matters described in this section in item E are allocated between the Investment Bank,Corporate Center — Services and Corporate Center — Non-core and Legacy Portfolio.

2 In the third quarter of 2017, a release of CHF 5 million was recognized in Provisions for litigation, regulatoryand similar matters, with a corresponding increase in Other provisions.

A. Inquiries regarding cross-border wealth management businesses

Tax and regulatory authorities in a number of countries have made inquiries, served requests forinformation or examined employees located in their respective jurisdictions relating to thecross-border wealth management services provided by UBS and other financial institutions. It ispossible that implementation of automatic tax information exchange and other measures relatingto 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”) totransfer 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 clientsand are based on data from 2006 and 2008. UBS has taken steps to inform affected clients aboutthe administrative assistance proceedings and their procedural rights, including the right toappeal. The requests are based on data received from the German authorities, who seized certaindata related to UBS clients booked in Switzerland during their investigations and haveapparently shared this data with other European countries. UBS expects additional countries tofile similar requests.

The Swiss Federal Administrative Court ruled in 2016 that in the administrative assistanceproceedings related to a French bulk request, UBS has the right to appeal all final FTA clientdata disclosure orders.

Since 2013, UBS (France) S.A. and UBS AG and certain former employees have been underinvestigation in France for alleged complicity in having illicitly solicited clients on Frenchterritory and regarding the laundering of proceeds of tax fraud and of banking and financialsolicitation by unauthorized persons. In connection with this investigation, the investigatingjudges ordered UBS AG to provide bail of Euro (“EUR”) 1.1 billion and UBS (France) S.A. topost bail of EUR 40 million, which was reduced on appeal to EUR 10 million.

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In February 2016, the investigating judges notified UBS AG and UBS (France) S.A. that theyhave closed their investigation. In July 2016, UBS AG and UBS (France) S.A. received theNational Financial Prosecutor’s recommendation. In March 2017, the investigating judges issuedthe trial order that charges UBS AG and UBS (France) S.A., as well as various formeremployees, with illicit solicitation of clients on French territory and with participation in thelaundering of the proceeds of tax fraud, and which transfers the case to court. The trial schedulehas not yet been announced.

In 2016, UBS was notified by the Belgian investigating judge that it is under formalinvestigation regarding the laundering of proceeds of tax fraud and of banking, financialsolicitation by unauthorized persons and serious tax fraud.

In 2015, UBS received inquiries from the US Attorney’s Office for the Eastern District of NewYork and from the US Securities and Exchange Commission (“SEC”), which are investigatingpotential sales to US persons of bearer bonds and other unregistered securities in possibleviolation of the Tax Equity and Fiscal Responsibility Act of 1982 and the registrationrequirements of the US securities laws. UBS is cooperating with the authorities in theseinvestigations.

UBS has, and reportedly numerous other financial institutions have, received inquiries fromauthorities concerning accounts relating to the Fédération Internationale de Football Associationand other constituent soccer associations and related persons and entities. UBS is cooperatingwith authorities in these inquiries.

UBS’s balance sheet at 30 September 2017 reflected provisions with respect to matters describedin this item A in an amount that UBS believes to be appropriate under the applicable accountingstandard. As in the case of other matters for which UBS has established provisions, the futureoutflow of resources in respect of such matters cannot be determined with certainty based oncurrently available information and accordingly may ultimately prove to be substantially greater(or may be less) than the provision that UBS has recognized.

B. 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 asubstantial issuer and underwriter of US residential mortgage-backed securities (“RMBS”) andwas a purchaser and seller of US residential mortgages. A subsidiary of UBS, UBS Real EstateSecurities Inc. (“UBS RESI”), acquired pools of residential mortgage loans from originators and(through an affiliate) deposited them into securitization trusts. In this manner, from 2004through 2007, UBS RESI sponsored approximately USD 80 billion in RMBS, based on theoriginal principal balances of the securities issued.

UBS RESI also sold pools of loans acquired from originators to third-party purchasers. Thesewhole loan sales during the period 2004 through 2007 totaled approximately USD 19 billion inoriginal principal balance.

UBS was not a significant originator of US residential loans. A branch of UBS originatedapproximately USD 1.5 billion in US residential mortgage loans during the period in which itwas active from 2006 to 2008, and securitized less than half of these loans.

Lawsuits related to contractual representations and warranties concerning mortgages andRMBS: When UBS acted as an RMBS sponsor or mortgage seller, it generally made certainrepresentations relating to the characteristics of the underlying loans. In the event of a materialbreach of these representations, UBS was in certain circumstances contractually obligated torepurchase the loans to which the representations related or to indemnify certain parties againstlosses.

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In 2012, certain RMBS trusts filed an action (“Trustee Suit”) in the US District Court for theSouthern District of New York (“SDNY”) seeking to enforce UBS RESI’s obligation torepurchase loans in the collateral pools for three RMBS securitizations with an original principalbalance of approximately USD 2 billion. Approximately 9,000 loans were at issue in a benchtrial in the SDNY in 2016, following which the court issued an order ruling on numerous legaland factual issues and applying those rulings to 20 exemplar loans. The court further ordered thata lead master be appointed to apply the court’s rulings to the loans that remain at issue followingthe trial. In October 2017, UBS and certain holders of the RMBS in the Trustee Suit entered intoan agreement under which UBS has agreed to pay an aggregate of USD 543 million into therelevant RMBS trusts, plus certain attorneys’ fees. A portion of these settlement costs will beborne by other parties that indemnified UBS. The agreement is subject to the trustee for theRMBS trusts becoming a party thereto. The security holders who are parties to the settlementagreement have requested that the trustee conduct a vote of security holders to approve or rejectthe settlement, and each of these security holders has agreed to vote its securities in favor of thesettlement. Giving effect to this settlement, UBS considers claims relating to substantially allloan repurchase demands to be resolved, and believes that new demands to repurchase USresidential mortgage loans are time-barred under a decision rendered by the New York Court ofAppeals.

Mortgage-related regulatory matters: In 2014, UBS received a subpoena from the US Attorney’sOffice for the Eastern District of New York issued pursuant to the Financial Institutions Reform,Recovery and Enforcement Act of 1989 (“FIRREA”), which seeks documents and informationrelated to UBS’s RMBS business from 2005 through 2007. In 2015, the Eastern District of NewYork identified a number of transactions that are the focus of their inquiry, and has subsequentlyprovided a revised list of transactions. UBS has provided and continues to provide information.UBS continues to respond to the FIRREA subpoena and to subpoenas from the New York StateAttorney General and other state attorneys general relating to its RMBS business. In addition,UBS has also been responding to inquiries from both the Special Inspector General for theTroubled Asset Relief Program (who is working in conjunction with the US Attorney’s Office forConnecticut and the DOJ) and the SEC relating to trading practices in connection with purchasesand sales of mortgage-backed securities in the secondary market from 2009 through 2014. UBSis cooperating with the authorities in these matters.

UBS’s balance sheet at 30 September 2017 reflected a provision with respect to mattersdescribed in this item B in an amount that UBS believes to be appropriate under the applicableaccounting standard. As in the case of other matters for which UBS has established provisions,the future outflow of resources in respect of this matter cannot be determined with certaintybased on currently available information and accordingly may ultimately prove to besubstantially greater (or may be less) than the provision that UBS has recognized.

C. 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 otherUBS subsidiaries have been subject to inquiries by a number of regulators, including FINMA andthe Luxembourg Commission de Surveillance du Secteur Financier. Those inquiries concernedtwo third-party funds established under Luxembourg law, substantially all assets of which werewith BMIS, as well as certain funds established in offshore jurisdictions with either direct orindirect exposure to BMIS. These funds now face severe losses, and the Luxembourg funds arein liquidation. The last reported net asset value of the two Luxembourg funds before revelationof the Madoff scheme was approximately USD 1.7 billion in the aggregate although that figurelikely includes fictitious profit reported by BMIS. The documentation establishing both fundsidentifies UBS entities in various roles, including custodian, administrator, manager, distributor

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and promoter, and indicates that UBS employees serve as board members. UBS Europe SE,Luxembourg branch, and certain other UBS subsidiaries are responding to inquiries byLuxembourg investigating authorities, without, however, being named as parties in thoseinvestigations.

In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims on behalf of thefunds against UBS entities, non-UBS entities and certain individuals, including current andformer UBS employees. The amounts claimed are approximately EUR 890 million and EUR 305million, respectively. The liquidators have filed supplementary claims for amounts that the fundsmay possibly be held liable to pay the trustee for the liquidation of BMIS (“BMIS Trustee”).These amounts claimed by the liquidator are approximately EUR 564 million and EUR 370million, respectively.

In addition, a large number of alleged beneficiaries have filed claims against UBS entities (andnon-UBS entities) for purported losses relating to the Madoff scheme. The majority of thesecases are pending in Luxembourg, where appeals were filed by the claimants against the 2010decisions of the court in which the claims in a number of test cases were held to be inadmissible.The Luxembourg Court of Appeal has found in favor of UBS and dismissed all of these test caseappeals, confirming that the claims are inadmissible. The Luxembourg Supreme Court has alsodismissed a further appeal brought by the claimant in one of the test cases.

In the US, the BMIS Trustee filed claims in 2010 against UBS entities, among others, in relationto the two Luxembourg funds and one of the offshore funds. The total amount claimed againstall defendants in these actions was not less than USD 2 billion. The SDNY dismissed all of theBMIS Trustee’s claims other than claims for recovery of fraudulent conveyances and preferencepayments that were allegedly transferred to UBS on the ground that the BMIS Trustee lacksstanding to bring such claims. The SDNY decision was affirmed on appeal and is now final. In2016, the bankruptcy court issued an opinion dismissing the remaining claims for recovery oftransfers of fraudulent conveyances and preference payments on the ground that the USBankruptcy Code does not apply to transfers that occurred outside the US. The BMIS Trustee hasappealed that ruling. In 2014, several claims, including a purported class action, were filed inthe US by BMIS customers against UBS entities, asserting claims similar to the ones made bythe BMIS Trustee, seeking unspecified damages. One claim was voluntarily withdrawn by theplaintiff. In 2015, the SDNY dismissed the two remaining claims on the basis that the New Yorkcourts did not have jurisdiction to hear the claims against the UBS entities. The plaintiff in oneof those claims has appealed the dismissal.

In Germany, certain clients of UBS are exposed to Madoff-managed positions throughthird-party funds and funds administered by UBS entities in Germany. A small number of claimshave been filed with respect to such funds. In 2015, a court of appeal ordered UBS to pay EUR49 million, plus interest of approximately EUR 15.3 million.

D. 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 anddistributed by UBS Financial Services Incorporated of Puerto Rico (“UBS PR”) have led tomultiple regulatory inquiries, as well as customer complaints and arbitrations with aggregateclaimed damages of USD 2.2 billion, of which claims with aggregate claimed damages of USD1.2 billion have been resolved through settlements, arbitration or withdrawal of the claim. Theclaims are filed by 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; customercomplaint and arbitration allegations include fraud, misrepresentation and unsuitability of thefunds and of the loans. A shareholder derivative action was filed in 2014 against various UBSentities and current and certain former directors of the funds, alleging hundreds of millions ofUS dollars in losses in the funds. In 2015, defendants’ motion to dismiss was denied.

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Defendants’ requests for permission to appeal that ruling were denied by the Puerto Rico Courtof Appeals and the Puerto Rico Supreme Court. In 2014, a federal class action complaint alsowas filed against various UBS entities, certain members of UBS PR senior management and theco-manager of certain of the funds, seeking damages for investor losses in the funds during theperiod from May 2008 through May 2014. In 2016, defendants’ motion to dismiss was grantedin part and denied in part. In 2015, a class action was filed in Puerto Rico state court againstUBS PR seeking equitable relief in the form of a stay of any effort by UBS PR to collect onnon-purpose loans it acquired from UBS Bank USA in December 2013 based on plaintiffs’allegation that the loans are not valid. The trial court denied defendant’s motion to dismiss theaction based on a forum selection clause in the loan agreements. The Puerto Rico Supreme Courtreversed that decision and remanded the case back to the trial court for reconsideration.

In 2014, UBS reached a settlement with the Office of the Commissioner of Financial Institutionsfor the Commonwealth of Puerto Rico (“OCFI”) in connection with OCFI’s examination ofUBS’s operations from January 2006 through September 2013, pursuant to which UBS is payingup to an aggregate of USD 7.7 million in investor education contributions and restitution.

In 2015, the SEC and the Financial Industry Regulatory Authority (“FINRA”) announcedsettlements with UBS PR of their separate investigations stemming from the 2013 market events.Without admitting or denying the findings in either matter, UBS PR agreed in the SEC settlementto pay USD 15 million and USD 18.5 million in the FINRA matter. UBS also understands thatthe DOJ is conducting a criminal inquiry into the impermissible reinvestment of non-purposeloan proceeds. UBS is cooperating with the authorities in this inquiry.

In 2011, a purported derivative action was filed on behalf of the Employee Retirement Systemof 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 allegedthat defendants violated their purported fiduciary duties and contractual obligations inconnection with the issuance and underwriting of USD 3 billion of bonds by the System in 2008and sought damages of over USD 800 million. In December 2016, the court granted the System’srequest to join the action as a plaintiff, but ordered that plaintiffs must file an amendedcomplaint. In March 2017, the court denied defendants’ motion to dismiss the amendedcomplaint.

Also, in 2013, an SEC Administrative Law Judge dismissed a case brought by the SEC againsttwo UBS executives, finding no violations. The charges had stemmed from the SEC’sinvestigation of UBS’s sale of closed-end funds in 2008 and 2009, which UBS settled in 2012.Beginning in 2012, two federal class action complaints, which were subsequently consolidated,were filed against various UBS entities, certain of the funds and certain members of UBS PRsenior management, seeking damages for investor losses in the funds during the period fromJanuary 2008 through May 2012 based on allegations similar to those in the SEC action. In 2016,the court denied plaintiffs’ motion for class certification. In March 2017, the US Court ofAppeals for the First Circuit denied plaintiffs’ petition seeking permission to bring aninterlocutory appeal challenging the denial of their motion for class certification.

In 2015, certain agencies and public corporations of the Commonwealth of Puerto Rico(“Commonwealth”) defaulted on certain interest payments, in 2016, the Commonwealthdefaulted on payments on its general obligation debt (“GO Bonds”), and in 2017 theCommonwealth defaulted on payments on its debt backed by the Commonwealth’s Sales and UseTax (“COFINA Bonds”) as well as on bonds issued by the Commonwealth’s EmployeeRetirement System (“ERS Bonds”). The funds hold significant amounts of both COFINA andERS Bonds and the defaults on interest payments are expected to adversely affect dividends fromthe funds. Executive orders of the Governor that have diverted funds to pay for essential servicesinstead of debt payments and stayed any action to enforce creditors’ rights on the Puerto Ricobonds continue to be in effect. In 2016, US federal legislation created an oversight board with

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power to oversee Puerto Rico’s finances and to restructure its debt. The oversight board isauthorized to impose, and has imposed, a stay on exercise of creditors’ rights. In May and June2017, the oversight board placed the GO, COFINA and ERS Bonds, among others, into abankruptcy-like proceeding under the supervision of a Federal District Judge as authorized bythe oversight board’s enabling statute. These events, further defaults, any further legislativeaction to create a legal means of restructuring Commonwealth obligations or to imposeadditional oversight on the Commonwealth’s finances, or any restructuring of theCommonwealth’s obligations may increase the number of claims against UBS concerning PuertoRico securities, as well as potential damages sought.

UBS’s balance sheet at 30 September 2017 reflected provisions with respect to matters describedin this item D in amounts that UBS believes to be appropriate under the applicable accountingstandard. As in the case of other matters for which UBS has established provisions, the futureoutflow of resources in respect of such matters cannot be determined with certainty based oncurrently available information and accordingly may ultimately prove to be substantially greater(or may be less) than the provisions that UBS has recognized.

E. Foreign exchange, LIBOR and benchmark rates, and other trading practices

Foreign exchange-related regulatory matters: Following an initial media report in 2013 ofwidespread irregularities in the foreign exchange markets, UBS immediately commenced aninternal review of its foreign exchange business, which includes UBS’s precious metals andrelated structured products businesses. Numerous authorities commenced investigationsconcerning possible manipulation of foreign exchange markets and precious metals prices. In2014 and 2015, UBS reached settlements with the UK Financial Conduct Authority (“FCA”) andthe US Commodity Futures Trading Commission (“CFTC”) in connection with their foreignexchange investigations, FINMA issued an order concluding its formal proceedings relating toUBS’s foreign exchange and precious metals businesses, and the Board of Governors of theFederal Reserve System and the Connecticut Department of Banking issued a Cease and DesistOrder and assessed monetary penalties to UBS AG. In addition, the DOJ’s Criminal Division(“Criminal Division”) terminated the December 2012 Non-Prosecution Agreement (“NPA”)with UBS AG related to UBS’s submissions of benchmark interest rates and UBS AG pleadedguilty to one count of wire fraud, paid a fine and is subject to probation through January 2020.UBS has ongoing obligations to cooperate with these authorities and to undertake certainremediation. UBS has also been granted conditional immunity by the Antitrust Division of theDOJ (“Antitrust Division”) and by authorities in other jurisdictions in connection with potentialcompetition law violations relating to foreign exchange and precious metals businesses. Referto Note 20b in the “Consolidated financial statements” section of the Annual Report 2016 formore information on regulatory actions related to foreign exchange and precious metals andgrants of conditional immunity or leniency. Investigations relating to foreign exchange andprecious metals matters by numerous authorities, including the CFTC, remain ongoingnotwithstanding these resolutions.

Foreign exchange-related civil litigation: Putative class actions have been filed since 2013 in USfederal courts and in other jurisdictions against UBS and other banks on behalf of putativeclasses of persons who engaged in foreign currency transactions with any of the defendant banks.They allege collusion by the defendants and assert claims under the antitrust laws and for unjustenrichment. In 2015, additional putative class actions were filed in federal court in New Yorkagainst UBS and other banks on behalf of a putative class of persons who entered into or heldany foreign exchange futures contracts and options on foreign exchange futures contracts sinceJanuary 2003. The complaints assert claims under the Commodity Exchange Act (“CEA”) andthe US antitrust laws. In 2015, a consolidated complaint was filed on behalf of both putativeclasses of persons covered by the US federal court class actions described above. UBS has

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entered into a settlement agreement that would resolve all of these US federal court classactions. The agreement, which has been preliminarily approved by the court and is subject tofinal court approval, requires, among other things, that UBS pay an aggregate of USD 141million and provide cooperation to the settlement classes.

A putative class action has been filed in federal court in New York against UBS and other bankson behalf of participants, beneficiaries and named fiduciaries of plans qualified under theEmployee Retirement Income Security Act of 1974 (“ERISA”) for whom a defendant bankprovided foreign currency exchange transactional services, exercised discretionary authority ordiscretionary control over management of such ERISA plan, or authorized or permitted theexecution of any foreign currency exchange transactional services involving such plan’s assets.The complaint asserts claims under ERISA. The parties filed a stipulation to dismiss the casewith prejudice. The plaintiffs have appealed the dismissal. The appeals court heard oralargument in June 2017.

In 2015, a putative class action was filed in federal court against UBS and numerous other bankson behalf of a putative class of persons and businesses in the US who directly purchased foreigncurrency from the defendants and their co-conspirators for their own end use. That action hasbeen transferred to federal court in New York. In March 2017, the court granted UBS’s (and theother banks’) motions to dismiss the complaint. The plaintiffs filed an amended complaint inAugust 2017.

In 2016, a putative class action was filed in federal court in New York against UBS andnumerous other banks on behalf of a putative class of persons and entities who had indirectlypurchased FX instruments from a defendant or co-conspirator in the US. The complaint assertsclaims under federal and state antitrust laws. In response to defendants’ motion to dismiss,plaintiffs agreed to dismiss their complaint. In April and June 2017, two new putative classactions were filed in federal court in New York against UBS and numerous other banks on behalfof different proposed classes of indirect purchasers of currency, and a consolidated complaintwas filed in June 2017.

In 2015, UBS was added to putative class actions pending against other banks in federal courtin New York and other jurisdictions on behalf of putative classes of persons who had bought orsold physical precious metals and various precious metal products and derivatives. Thecomplaints in these lawsuits assert claims under the antitrust laws and the CEA, and otherclaims. In October 2016, the court in New York granted UBS’s motions to dismiss the putativeclass actions relating to gold and silver. Plaintiffs in those cases sought to amend theircomplaints to add new allegations about UBS, which the court granted. The plaintiffs filed theiramended complaints in June 2017. In March 2017, the court in New York granted UBS’s motionto dismiss the platinum and palladium action. In May 2017, plaintiffs in the platinum andpalladium action filed an amended complaint that did not allege claims against UBS.

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 MonetaryAuthority of Singapore, the Hong Kong Monetary Authority, FINMA, various state attorneysgeneral in the US and competition authorities in various jurisdictions have conducted or arecontinuing to conduct investigations regarding potential improper attempts by UBS, amongothers, to manipulate LIBOR and other benchmark rates at certain times. In 2012, UBS reachedsettlements relating to benchmark interest rates with the FSA, the CFTC and the CriminalDivision of the DOJ, and FINMA issued an order in its proceedings with respect to UBS relatingto benchmark interest rates. In addition, UBS entered into settlements with the EuropeanCommission and with the Swiss Competition Commission (“WEKO”) regarding its investigationof bid-ask spreads in connection with Swiss franc interest rate derivatives. UBS has ongoingobligations to cooperate with the authorities with whom UBS has reached resolutions and toundertake certain remediation with respect to benchmark interest rate submissions. UBS has

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been granted conditional leniency or conditional immunity from authorities in certainjurisdictions, including the Antitrust Division of the DOJ and WEKO, in connection withpotential antitrust or competition law violations related to certain rates. However, UBS has notreached a final settlement with WEKO as the Secretariat of WEKO has asserted that UBS doesnot qualify for full immunity. Refer to Note 20b in the “Consolidated financial statements”section of the Annual Report 2016 for more information on regulatory actions relating tobenchmark rates and grants of conditional immunity or leniency. Investigations by certaingovernmental authorities remain ongoing notwithstanding these resolutions.

LIBOR and other benchmark-related civil litigation: A number of putative class actions andother actions are pending in the federal courts in New York against UBS and numerous otherbanks on behalf of parties who transacted in certain interest rate benchmark-based derivatives.Also pending in the US and in other jurisdictions are actions asserting losses related to variousproducts whose interest rates were linked to LIBOR and other benchmarks, including adjustablerate mortgages, preferred and debt securities, bonds pledged as collateral, loans, depositoryaccounts, investments and other interest-bearing instruments. All of the complaints allegemanipulation, through various means, of various benchmark interest rates, including USDLIBOR, Euroyen TIBOR, Yen LIBOR, EURIBOR, CHF LIBOR, GBP LIBOR, USD and SGDSIBOR and SOR, Australian BBSW and USD ISDAFIX, and seek unspecified compensatory andother damages under varying legal theories.

In 2013, the US district court in the USD LIBOR action dismissed the federal antitrust andracketeering claims of certain USD LIBOR plaintiffs and a portion of their claims brought underthe CEA and state common law. Certain plaintiffs appealed the decision to the Second Circuit,which, in 2016, vacated the district court’s ruling finding no antitrust injury and remanded thecase back to the district court for a further determination on whether plaintiffs have antitruststanding. In December 2016, the district court again dismissed plaintiffs’ antitrust claims, thistime for lack of personal jurisdiction over UBS and other foreign banks. In 2014, the court inone of the Euroyen TIBOR lawsuits dismissed certain of the plaintiff ’s claims, including federalantitrust claims. In 2015, the same court dismissed plaintiff ’s federal racketeering claims andaffirmed its previous dismissal of plaintiff ’s antitrust claims. In 2017, the court also dismissedthe other Yen LIBOR / Euroyen TIBOR action in its entirety on standing grounds, as did thecourt in the CHF LIBOR action. Also in 2017, the courts in the EURIBOR and the SIBOR andSOR lawsuits dismissed the cases as to UBS and certain other foreign defendants for lack ofpersonal jurisdiction. UBS and other defendants in other lawsuits including those related to GBPLIBOR and Australian BBSW have filed motions to dismiss. In 2016, UBS entered into anagreement with representatives of a class of bondholders to settle their USD LIBOR class action.The agreement has received preliminary court approval and remains subject to final approval.Since 2014, putative class actions have been filed in federal court in New York and New Jerseyagainst UBS and other financial institutions, among others, on behalf of parties who entered intointerest rate derivative transactions linked to ISDAFIX. The complaints, which have since beenconsolidated into an amended complaint, allege that the defendants conspired to manipulateISDAFIX rates from January 2006 through June 2013, in violation of US antitrust laws andcertain state laws, and seek unspecified compensatory damages, including treble damages. On 12July 2017, the court overseeing the ISDAFIX class action preliminarily approved a settlementagreement between UBS AG and the plaintiffs, whereby UBS AG agreed to pay USD 14 millionto settle the case in its entirety.

Government bonds: Putative class actions have been filed in US federal courts against UBS andother banks on behalf of persons who participated in markets for US Treasury securities since2007. The complaints generally allege that the banks colluded with respect to, and manipulatedprices of, US Treasury securities sold at auction. They assert claims under the antitrust laws andthe CEA and for unjust enrichment. The cases have been consolidated in the SDNY. Following

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filing of these complaints, UBS and reportedly other banks are responding to investigations andrequests for information from various authorities regarding US Treasury securities and othergovernment bond trading practices. As a result of its review to date, UBS has taken appropriateaction.

With respect to additional matters and jurisdictions not encompassed by the settlements andorder referred to above, UBS’s balance sheet at 30 September 2017 reflected a provision in anamount that UBS believes to be appropriate under the applicable accounting standard. As in thecase of other matters for which UBS has established provisions, the future outflow of resourcesin respect of such matters cannot be determined with certainty based on currently availableinformation and accordingly may ultimately prove to be substantially greater (or may be less)than the provision that UBS has recognized.

F. Swiss retrocessions

The Federal Supreme Court of Switzerland ruled in 2012, in a test case against UBS, thatdistribution fees paid to a firm for distributing third-party and intra-group investment funds andstructured products must be disclosed and surrendered to clients who have entered into adiscretionary mandate agreement with the firm, absent a valid waiver.

FINMA has issued a supervisory note to all Swiss banks in response to the Supreme Courtdecision. 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 clientrequests for UBS to disclose and potentially surrender retrocessions. Client requests are assessedon a case-by-case basis. Considerations taken into account when assessing these cases include,among other things, the existence of a discretionary mandate and whether or not the clientdocumentation contained a valid waiver with respect to distribution fees.

UBS’s balance sheet at 30 September 2017 reflected a provision with respect to mattersdescribed in this item F in an amount that UBS believes to be appropriate under the applicableaccounting standard. The ultimate exposure will depend on client requests and the resolutionthereof, factors that are difficult to predict and assess. Hence, as in the case of other matters forwhich UBS has established provisions, the future outflow of resources in respect of such matterscannot be determined with certainty based on currently available information and accordinglymay ultimately prove to be substantially greater (or may be less) than the provision that UBS hasrecognized.

G. Banco UBS Pactual tax indemnity

Pursuant to the 2009 sale of Banco UBS Pactual S.A. (“Pactual”) by UBS to BTG Investments,LP (“BTG”), BTG has submitted contractual indemnification claims. The claims pertainprincipally to several tax assessments issued by the Brazilian tax authorities against Pactualrelating to the period from December 2006 through March 2009, when UBS owned Pactual.These assessments are being challenged in administrative and judicial proceedings. In August2017, UBS and BTG agreed to resolve the largest indemnification claim (UBS’s portion of whichwas approximately Brazilian Real (“BRL”) 2 billion) relating to a tax assessment that haddisallowed goodwill amortization deductions. In connection with this resolution, UBS paid CHF245 million to BTG, which then submitted the underlying tax assessment for resolution in aBrazilian tax amnesty program. Of the remaining BRL 732 million in indemnification claims,administrative courts have ruled in favor of BTG in respect of BRL 455 million of assessmentsrelated to profit-sharing plans, with the remainder of the assessments pending at various levelsof the administrative or judicial court system.

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H. Investigation of UBS’s role in initial public offerings in Hong Kong

The Hong Kong Securities and Futures Commission (“SFC”) has been conducting investigations

into UBS’s role as a sponsor of certain initial public offerings listed on the Hong Kong Stock

Exchange. In 2016, the SFC informed UBS that it intends to commence action against UBS and

certain UBS employees with respect to sponsorship work in those offerings, which could result

in financial ramifications for UBS, including fines and obligations to pay investor compensation,

and suspension of UBS’s ability to provide corporate finance advisory services in Hong Kong

for a period of time.

In January 2017, a writ was filed by the SFC with Hong Kong’s High Court in which UBS was

named as one of six defendants from whom the SFC was seeking investor compensation in an

unspecified amount for losses incurred by certain shareholders of China Forestry Holdings

Company Limited, for whom UBS acted as a sponsor in connection with their 2009 listing

application. In August 2017, the SFC filed an amended writ that did not name UBS and some

of the other defendants, thereby discontinuing this action against UBS.

Except as otherwise disclosed in this document (including in the documents incorporated by

reference herein), there are no court, arbitral or administrative proceedings (including any such

proceedings which are pending or threatened, of which UBS AG is aware), which are of material

importance to UBS AG’s assets and liabilities or profits and losses.

5.1. Material Contracts

No material contracts have been entered into outside of the ordinary course of UBS AG’s or UBS

AG Group’s business, which could result in any member of the UBS AG Group being under an

obligation or entitlement that is material to UBS AG’s ability to meet its obligations to the

investors in relation to the issued securities.

5.2. Significant Changes in the Financial or Trading Position; Material Adverse Change inProspects

Except as otherwise indicated in this document (including the documents incorporated herein by

reference), no material changes have occurred in UBS AG’s assets and liabilities, financial

position or profits and losses since 30 September 2017.

There has been no material adverse change in the prospects of UBS AG or UBS AG Group since

31 December 2016.

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THE UNAUDITED FINANCIAL INFORMATION OFUBS AG FOR THE QUARTERLY PERIOD ENDED 30 SEPTEMBER 2017

- EXTRACTED FROM UBS AG’S THIRD QUARTER2017 FINANCIAL REPORT

The information set out below in this section has been extracted without adjustment from the

unaudited third quarter 2017 financial report of UBS AG for the quarterly period ended 30 September

2017 released on 1 November 2017. The page numbers of the third quarter 2017 financial report

appear on the bottom left or right hand side of the pages in this addendum.

The third quarter 2017 financial report is available for inspection at the office of the Sponsor specified

on the back page. You may also visit our website at

https://www.ubs.com/global/en/about_ubs/investor_relations/quarterly_reporting/2017.html to access such

report.

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15

UBS AG interim consolidatedfinancial statements (unaudited)

Income statementFor the quarter ended % change from Year-to-date

CHF million Note 330.9.17 30.6.17 30.9.16 2Q17 3Q16 30.9.17 30.9.16

Interest income 33,611 3,590 3,305 1 9 10,593 10,258

Interest expense ((1,881) (2,186) (1,538) (14) 22 (5,771) (5,626)

Net interest income 11,729 1,404 1,767 23 (2) 4,822 4,633

Credit loss (expense) / recovery 77 (46) (4) (39) (13)

Net interest income after credit loss expense 11,736 1,358 1,763 28 (2) 4,783 4,619

Net fee and commission income 3 44,252 4,296 4,075 (1) 4 12,920 12,283

Net trading income 11,090 1,459 1,099 (25) (1) 3,990 4,001

Other income 4 2200 285 113 (30) 77 544 401

Total operating income 77,279 7,398 7,049 (2) 3 22,237 21,303

Personnel expenses 5 33,598 3,611 3,907 0 (8) 11,253 11,759

General and administrative expenses 6 22,282 2,111 1,985 8 15 5,993 5,423

Depreciation and impairment of property, equipment and software 2221 220 246 0 (10) 694 727

Amortization and impairment of intangible assets 116 16 23 0 (30) 53 70

Total operating expenses 66,117 5,957 6,161 3 (1) 17,993 17,979

Operating profit / (loss) before tax 11,161 1,441 888 (19) 31 4,244 3,324

Tax expense / (benefit) 7 2256 317 41 (19) 524 937 675

Net profit / (loss) 9905 1,124 847 (19) 7 3,307 2,649

Net profit / (loss) attributable to preferred noteholders 00 0 0 46 78

Net profit / (loss) attributable to non-controlling interests 22 1 1 100 100 3 3

NNet profit / (loss) attributable to shareholders 9904 1,123 846 (20) 7 3,257 2,568

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UBS AG interim consolidated financial statements (unaudited)

16

Statement of comprehensive income

For the quarter ended Year-to-date

CHF million 330.9.17 30.6.17 30.9.16 30.9.17 30.9.16

Comprehensive income attributable to shareholders

NNet profit / (loss) 9904 1,123 846 3,257 2,568

OOther comprehensive income that may be reclassified to the income statement

FForeign currency translation

Foreign currency translation movements, before tax 3375 (992) (172) (990) (814)

Foreign exchange amounts reclassified to the income statement from equity 22 21 4 27 153

Income tax relating to foreign currency translation movements 2226 1 107 229 110

Subtotal foreign currency translation, net of tax 6602 (969) (61) (735) (552)

FFinancial assets available for sale

Net unrealized gains / (losses) on financial assets available for sale, before tax 557 10 6 110 375

Impairment charges reclassified to the income statement from equity 00 (1) 1 13 4

Realized gains reclassified to the income statement from equity ((13) (135) (18) (156) (273)

Realized losses reclassified to the income statement from equity 22 5 0 9 19

Income tax relating to net unrealized gains / (losses) on financial assets available for sale ((22) 6 (9) (24) (53)

Subtotal financial assets available for sale, net of tax 224 (115) (21) (47) 72

CCash flow hedges

Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax 660 165 (175) 195 1,270

Net (gains) / losses reclassified to the income statement from equity ((209) (211) (235) (640) (812)

Income tax relating to cash flow hedges 330 11 84 93 (90)

Subtotal cash flow hedges, net of tax ((118) (35) (326) (351) 367

TTotal other comprehensive income that may be reclassified to the income statement, net of tax 5508 (1,119) (408) (1,133) (113)

OOther comprehensive income that will not be reclassified to the income statement

DDefined benefit plans

Gains / (losses) on defined benefit plans, before tax 1135 115 (186) 299 (575)

Income tax relating to defined benefit plans ((7) 0 (23) (4) (16)

Subtotal defined benefit plans, net of tax 1128 115 (209) 295 (590)

OOwn credit on financial liabilities designated at fair value

Gains / (losses) from own credit on financial liabilities designated at fair value, before tax ((36) (72) (30) (288) (135)

Income tax relating to own credit on financial liabilities designated at fair value 00 (1) 4 (1) 5

Subtotal own credit on financial liabilities designated at fair value, net of tax ((36) (73) (25) (290) (130)

TTotal other comprehensive income that will not be reclassified to the income statement, net of tax 992 42 (235) 5 (720)

TTotal other comprehensive income 6600 (1,077) (643) (1,128) (833)

TTotal comprehensive income attributable to shareholders 11,504 46 203 2,129 1,735

− 25 −

17

Statement of comprehensive income (continued)For the quarter ended Year-to-date

CHF million 330.9.17 30.6.17 30.9.16 30.9.17 30.9.16

Comprehensive income attributable to preferred noteholders

NNet profit / (loss) 00 0 0 46 78


Foreign currency translation movements, before tax 330 16 4 44 283


Subtotal foreign currency translation, net of tax 330 16 4 44 283

TTotal other comprehensive income that will not be reclassified to the income statement, net of tax 330 16 4 44 283

TTotal comprehensive income attributable to preferred noteholders 330 16 4 90 361

Comprehensive income attributable to non-controlling interests

NNet profit / (loss) 22 1 1 3 3


Foreign currency translation movements, before tax 00 (2) 1 (1) 1


Subtotal foreign currency translation, net of tax 00 (2) 1 (1) 1

TTotal other comprehensive income that will not be reclassified to the income statement, net of tax 00 (2) 1 (1) 1

TTotal comprehensive income attributable to non-controlling interests 11 (2) 3 2 4

Total comprehensive income

NNet profit / (loss) 9905 1,124 847 3,307 2,649

OOther comprehensive income 6630 (1,064) (638) (1,085) (549)

of which: other comprehensive income that may be reclassified to the income statement 5508 (1,119) (408) (1,133) (113)

of which: other comprehensive income that will not be reclassified to the income statement 1121 55 (229) 48 (437)

TTotal comprehensive income 11,535 60 210 2,221 2,100

− 26 −

UBS AG interim consolidated financial statements (unaudited)

18

Balance sheet% change from

CHF million Note 330.9.17 30.6.17 31.12.16 30.6.17 31.12.16

Assets

Cash and balances with central banks 994,563 100,071 107,767 (6) (12)

Due from banks 115,017 14,390 13,125 4 14

Cash collateral on securities borrowed 116,614 15,081 15,111 10 10

Reverse repurchase agreements 887,889 75,324 66,246 17 33

Trading portfolio assets 8 1114,424 107,738 96,661 6 18

of which: assets pledged as collateral which may be sold or repledged by counterparties 333,418 32,679 30,260 2 10

Positive replacement values 8, 9 1119,462 121,910 158,411 (2) (25)

Cash collateral receivables on derivative instruments 9 224,928 22,687 26,664 10 (7)

Loans 3316,658 310,366 307,004 2 3

Financial assets designated at fair value 8 550,374 51,436 65,024 (2) (23)

Financial assets available for sale 8 113,043 14,114 15,676 (8) (17)

Financial assets held to maturity 99,005 8,710 9,289 3 (3)

Investments in associates 9987 972 963 2 2

Property, equipment and software 77,931 7,716 8,297 3 (4)

Goodwill and intangible assets 66,388 6,226 6,556 3 (3)

Deferred tax assets 112,603 12,303 13,144 2 (4)

Other assets 10 224,665 22,717 25,412 9 (3)

TTotal assets 9914,551 891,763 935,353 3 (2)

− 27 −

19

Balance sheet (continued)% change from

CHF million Note 330.9.17 30.6.17 31.12.16 30.6.17 31.12.16

Liabilities

Due to banks 110,639 11,598 10,645 (8) 0

Cash collateral on securities lent 22,435 2,538 2,818 (4) (14)

Repurchase agreements 117,535 11,286 6,612 55 165

Trading portfolio liabilities 8 330,622 25,321 22,825 21 34

Negative replacement values 8, 9 1115,457 119,027 153,810 (3) (25)

Cash collateral payables on derivative instruments 9 331,899 31,520 35,472 1 (10)

Due to customers 4439,590 438,309 450,199 0 (2)

Financial liabilities designated at fair value 8, 11 556,585 54,215 55,017 4 3

Debt issued 12 998,861 90,757 78,998 9 25

Provisions 13 33,098 3,167 4,169 (2) (26)

Other liabilities 10 553,839 51,596 60,443 4 (11)

TTotal liabilities 8860,562 839,335 881,009 3 (2)

Equity

Share capital 3386 386 386 0 0

Share premium 226,960 26,953 29,505 0 (9)

Retained earnings 331,527 30,532 28,265 3 12

Other comprehensive income recognized directly in equity, net of tax ((5,627) (6,136) (4,494) (8) 25

EEquity attributable to shareholders 553,246 51,735 53,662 3 (1)

Equity attributable to preferred noteholders 6687 657 642 5 7

Equity attributable to non-controlling interests 556 37 40 51 40

TTotal equity 553,989 52,428 54,343 3 (1)

TTotal liabilities and equity 9914,551 891,763 935,353 3 (2)

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

24

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

Note 1 Basis of accounting

The consolidated financial statements (the Financial Statements) of UBS AG and its subsidiaries (together “UBS AG”) are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and are presented in Swiss francs (CHF), which is also the functional currency of UBS AG’s Head Office and its Swiss-based operations. 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 AG consolidated annual Financial Statements for the period ended 31 December 2016, except for the changes described in “Note 1 Basis of accounting” in the “Consolidated financial statements” section of the first quarter 2017 report. These interim Financial Statements are unaudited and should be read in conjunction with UBS AG’s audited consolidated Financial Statements included in the Annual Report 2016. In the opinion of management, all necessary adjustments were made for a fair presentation of UBS AG’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 such 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 on areas of estimation uncertainty considered to require critical judgment, refer to “Note 1a Significant accounting policies” in the “Consolidated financial statements” section of the Annual Report 2016.

IFRS 9, Financial Instruments

UBS AG will adopt IFRS 9, Financial Instruments on 1 January 2018. UBS AG has made significant progress during 2017 in developing an appropriate expected credit loss (ECL) methodology and related reporting processes for all in-scope financial and non-financial instruments, including loans, financial

guarantees and loan commitments. In addition, the changes driven by the IFRS 9 classification and measurement requirements have been confirmed. In the fourth quarter of 2017, UBS AG will finalize the definition and implementation of residual risk methodology approaches and governance frameworks, and complete various parallel runs.

UBS AG continues to believe that the impact on its equity and regulatory capital on adoption of IFRS 9 will not be material based on its current expectations of the macroeconomic environment and of the composition of its portfolio as of 1 January 2018.

On 1 January 2018, UBS AG will also early adopt the Amendment to IFRS 9: Prepayment Features with Negative Compensation issued in October 2017, allowing UBS AG to continue to apply amortized cost accounting for Swiss private mortgages and corporate loans that provide for two-way compensation if a prepayment occurs.

UBS AG will not adopt the optional IFRS 9 hedge accounting requirements pending completion of the IASB’s project on macro hedge accounting strategies.

IFRS 15, Revenue from Contracts with Customers

UBS AG will adopt IFRS 15, Revenue from Contracts with Customers on 1 January 2018. IFRS 15 will not have a material impact on its financial statements. However, the timing of recognition of certain performance-based fees and the presentation in the income statement of certain revenues and expenses will change.

IAS 28, Investments in Associates and Joint Ventures

In October 2017, the IASB issued an amendment to IAS 28, Investments in Associates and Joint Ventures that clarified that entities must apply IFRS 9 in accounting for long-term interests in an associate or joint venture to which the equity method of accounting is not applied. The amendment is mandatorily effective for accounting periods beginning on or after 1 January 2019. However, earlier application is available with the adoption of IFRS 9, Financial Instruments on 1 January 2018. UBS AG intends to early adopt this amendment, which is not expected to have a significant effect on its financial statements.

− 29 −

RISK MANAGEMENT AND CONTROL - EXTRACTED FROMUBS GROUP AG’S THIRD QUARTER 2017 FINANCIAL REPORT

The information set out below in this section has been extracted without adjustment from the third

quarter 2017 financial report of UBS Group AG. The page numbers of the third quarter 2017 financial

report appear on the bottom left or right hand side of the pages in this addendum.

The third quarter 2017 financial report is available for inspection at the office of the Sponsor specified

on the back page. You may also visit our website at

https://www.ubs.com/global/en/about_ubs/investor_relations/quarterly_reporting/2017.html to access such

report.

− 30 −

51

Risk management and control

This section provides information on key developments during the reporting period and should be read in conjunction with the “Risk management and control” section of our Annual Report 2016.

Credit risk

Overall credit risk exposures were broadly unchanged during the third quarter of 2017. We recorded a net credit loss recovery of CHF 7 million.

We are completing our assessment of the impact of recent natural disasters in the US and the Caribbean region on our portfolios and currently do not expect to incur material losses.

We continue to manage our Swiss lending portfolios prudently and remain watchful for any signs of deterioration in the Swiss economy that could impact some of our counterparties.

Within the Investment Bank, our loan underwriting business continued to see a steady flow of transactions. These were predominantly sub-investment grade and distribution remained sound. Loan underwriting exposures are classified as held for trading, with fair values reflecting the market conditions at the end of the quarter. We also continue to actively monitor our exposures to the energy sector.

Market risk

We continued to manage market risks at generally low levels. Average 1-day, 95% confidence level, management value-at-risk decreased slightly to CHF 11 million from CHF 12 million.

As of 30 September 2017, the interest rate sensitivity of our banking book to a +1 basis point parallel shift in yield curves was negative CHF 2.5 million compared with negative CHF 2.9 million as of 30 June 2017. The reduction in negative interest rate sensitivity was primarily due to enhanced modeling of risk sensitivities of auction rate and auction preferred securities. A portion of the fair value change resulting from the banking book interest rate sensitivity would impact other comprehensive income (OCI). The interest rate sensitivity to a +1 basis point parallel shift in yield curves of financial assets and derivatives in the banking book valued through OCI was negative CHF 22 million as of 30 September 2017. This OCI sensitivity was predominantly attributable to cash flow hedges denominated in US dollars and, to a lesser extent, in euros and Swiss francs. These cash flow hedges are not recognized for the purposes of calculating regulatory capital.

→ Refer to “Sensitivity to interest rate movements” in the “Group

performance” section of this report for more information on the

impact of rising interest rates on equity, capital and net interest

income

Country risk

We remain watchful of developments in Europe, including the Catalonian referendum and political shifts in a number of countries. Our direct exposure to peripheral European countries remained limited, although we continue to have significant country risk exposure to major EU economies, including the UK, Germany and France.

Our direct exposure to the Caribbean region was not significant and our direct exposure to Puerto Rico was CHF 23 million as of 30 September 2017.

→ Refer to the “Risk management and control” section of our

Annual Report 2016 for more information

Operational risk

The pervasive consequential risk themes that continue to challenge UBS and the financial industry are operational resilience, conduct and culture, and financial crime. Cyber security is at the forefront of operational resilience, and we continue to invest in preemptive and detective measures to defend against evolving and highly sophisticated attacks.

We have set our cyber security objectives in line with prevailing international standards and our investment priorities focus on behavioral change, readiness to address a cyberattack, data protection, and application and infrastructure security.

Given the profile of our wealth management businesses as well as heightened regulatory expectations, maintaining effective programs for prevention and detection of money laundering and for sanctions compliance is a high priority for us. We are investing to improve our detection and monitoring capabilities, including in automation of our processes.

Binding stress scenario

We have developed a new Severe Eurozone Crisis scenario to be used as the binding stress scenario in our combined stress test framework for 2018. In line with the currently binding Global Deflation scenario, this retains a eurozone crisis at its core, but with greater severity through the inclusion of an additional sovereign debt restructuring as a consequence of the ensuing crisis. A China hard landing remains a feature of the scenario, while the assumption of more severe negative rates in major developed countries has been removed. Forecast losses under the new scenario are not expected to differ materially from losses calculated under the Global Deflation scenario.

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Risk management and control

52

Key risk metrics

Banking and traded products exposure by business division and Corporate Center unit330.9.17

CHF millionWWealth

Management

WWealthManagement

Americas

PPersonal &Corporate

BankingAAsset

ManagementIInvestment

BankCCC –

Services

CCC – Group

ALM

CCC – Non-core

and Legacy Portfolio GGroup

BBanking productsGross exposure¹ ² ³ ⁴ 1116,430 555,629 1152,888 5500 449,952 4480 1104,697 1146 4480,723

of which: loans (on-balance sheet) 1110,516 551,466 1133,090 55 111,958 223 77,297 1118 3314,473of which: guarantees and loan commitments (off-balance sheet) 44,402 11,040 118,302 00 227,533 1105 22 227 551,410

Total impaired exposure, gross 558 223 9934 00 1130 00 00 445 11,189of which: impaired loan exposure, gross 558 223 7730 00 1103 445 9958

Total allowances and provisions for credit losses 330 225 4492 00 552 00 00 220 6619TTraded products¹ ⁵Gross exposure 77,000 11,981 11,570 00 33,525 444,076

of which: over-the-counter derivatives 55,885 332 11,504 00 12,142 119,563of which: securities financing transactions 00 2255 00 00 16,175 116,430of which: exchange-traded derivatives 11,115 11,694 666 00 55,209 88,084

30.6.17

CHF millionWealth

Management

WealthManagement

Americas

Personal &Corporate

BankingAsset

ManagementInvestment

BankCC –

Services

CC – Group

ALM

CC – Non-core

and Legacy Portfolio Group

BBanking productsGross exposure¹ ² ³ ⁴ 111,497 54,742 152,178 455 55,744 914 108,980 609 485,120

of which: loans (on-balance sheet) 106,656 50,857 132,792 1 12,516 68 6,219 121 309,229of which: guarantees and loan commitments (off-balance sheet) 3,509 1,037 17,515 0 32,982 104 4 489 55,639

Total impaired exposure, gross 60 23 928 0 113 0 0 42 1,166of which: impaired loan exposure, gross 60 23 718 0 97 42 940

Total allowances and provisions for credit losses 32 25 495 0 52 0 0 26 630TTraded products¹ ⁵Gross exposure 6,477 1,997 1,462 0 37,377 47,313

of which: over-the-counter derivatives 5,370 38 1,347 0 14,988 21,743of which: securities financing transactions 0 241 0 0 16,635 16,876of which: exchange-traded derivatives 1,107 1,718 115 0 5,753 8,694

1 Internal management view of credit risk, which differs in certain respects from IFRS. 2 Excludes reclassified securities and similar acquired securities held by Corporate Center – Non-core and Legacy Portfolio. 3 Excludes loans designated at fair value. 4 As of 30 September 2017, loan exposures reported under IFRS for the Investment Bank and Corporate Center – Non-core and Legacy Portfolio were CHF 10,264 million (30 June 2017: CHF 9,861 million) and CHF 2,443 million (30 June 2017: CHF 2,401 million), respectively. For all other business divisions and Corporate Center units, IFRS loans exposure was the same as the internal management view. 5 As counterparty risk for traded products is managed at counterparty level, no further split between exposures in the Investment Bank, Corporate Center – Non-core and Legacy Portfolio and Corporate Center – Group ALM is provided.

Wealth Management, Wealth Management Americas and Personal & Corporate Banking loan portfolios, grossWealth Management Wealth Management Americas Personal & Corporate Banking

CHF million 30.9.17 30.6.17 30.9.17 30.6.17 30.9.17 30.6.17Secured by residential property 34,323 33,323 10,880 10,334 95,873 95,679

Secured by commercial / industrial property 2,017 2,004 0 0 17,280 17,413

Secured by cash 13,805 13,141 4,321 4,499 1,485 1,775

Secured by securities 52,755 50,928 35,302 34,978 1,831 2,035

Secured by guarantees and other collateral 7,166 6,772 682 694 6,325 6,115

Unsecured loans 451 488 280 352 10,297 9,774

Total loans, gross 110,516 106,656 51,466 50,857 133,090 132,792Total loans, net of allowances 110,487 106,625 51,440 50,831 132,646 132,345

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53

Management value-at-risk (1-day, 95% confidence, 5 years of historical data) by business division andCorporate Center unit and general market risk type¹

AAverage by risk type

CHF million Min. Max. Period end Average EquityInterest

ratesCredit

spreadsForeign

exchange CommoditiesWealth Management 0 0 0 0 0 0 0 0 0

Wealth Management Americas 0 1 1 1 0 1 1 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 4 17 7 10 6 6 5 2 2

CC – Services 0 0 0 0 0 0 0 0 0

CC – Group ALM 3 7 4 5 0 5 2 1 0

CC – Non-core and Legacy Portfolio 3 3 3 3 1 2 2 0 0

Diversification effect² ³ (7) (7) (1) (6) (4) (1) 0

Total as of 30.9.17 5 18 7 11 6 8 5 2 2

Total as of 30.6.17 8 15 12 12 6 10 6 2 21 Statistics at individual levels may not be summed to deduce the corresponding aggregate figures. The minima and maxima for each level may occur on different days, and likewise, the VaR for each business line or risk type, being driven by the extreme loss tail of the corresponding distribution of simulated profits and losses for that business line or risk type, may well be driven by different days in the historical time series, rendering invalid the simple summation of figures to arrive at the aggregate total. 2 Difference between the sum of the standalone VaR for the business divisions and Corporate Center units and the VaR for the Group as a whole. 3 As the minimum and maximum occur on different days for different business divisions and Corporate Center units, it is not meaningful to calculate a portfolio diversification effect.

Interest rate sensitivity – banking book¹CHF million –200 bps –100 bps +1 bp +100 bps +200 bps

CHF (33.1) (33.1) 1.2 113.2 222.5

EUR (139.7) (83.0) 0.0 2.2 4.8

GBP (75.8) (68.3) 0.0 (9.2) (32.9)

USD 567.6 258.3 (3.8) (380.2) (783.8)

Other 0.4 (1.1) 0.1 8.2 16.7

Total effect on fair value of interest rate-sensitive banking book positions as of 30.9.17 319.4 72.8 (2.5) (265.8) (572.7)

Total effect on fair value of interest rate-sensitive banking book positions as of 30.6.17 305.6 105.3 (2.9) (302.8) (624.8)1 In the prevailing negative interest rate environment for the Swiss franc in particular, and to a lesser extent for the euro, interest rates for Wealth Management and Personal & Corporate Banking client transactions are generally floored at non-negative levels. Accordingly, for the purposes of this disclosure table, downward moves of 100 / 200 basis points are floored to ensure that the resulting shocked interest rates do not turn negative. The flooring results in non-linear sensitivity behavior.

Exposures to eurozone countries rated lower than AAA / Aaa by at least one major rating agency CHF million 30.9.17 30.6.17

Banking products Traded productsTrading

inventory Total TotalBeforehedges

Net ofhedges¹

Beforehedges

Net ofhedges

Net long per issuer

Net ofhedges¹

Net ofhedges¹

Austria 31 31 129 19 1,319 1,480 1,370 2,107 1,980Belgium 88 88 90 90 415 593 593 504 504Finland 62 28 53 53 315 429 395 671 638France 694 659 1,076 983 5,012 6,782 6,654 4,656 4,435Greece 2 2 0 0 32 34 34 4 4Ireland² 152 152 1,476 1,476 158 1,787 1,787 1,382 1,382Italy 1,197 852 209 170 83 1,489 1,105 1,971 1,641Portugal 25 25 6 6 5 37 37 76 76Spain 574 442 35 35 397 1,006 874 5,009 4,883Other³ 411 411 1 1 32 443 443 445 4451 Not deducted from the “Net of hedges” exposures are total allowances and provisions for credit losses of CHF 48 million (of which: Malta CHF 35 million, Ireland CHF 6 million and France CHF 4 million). 2 The majority of the Ireland exposure relates to funds and foreign bank subsidiaries. 3 Represents aggregate exposures to Andorra, Cyprus, Estonia, Latvia, Lithuania, Malta, Monaco, Montenegro, San Marino, Slovakia and Slovenia.

− 33 −

PARTIES

HEAD OFFICE OF THE ISSUER

UBS AG

Bahnhofstrasse 45CH-8001 Zurich

Switzerlandand

Aeschenvorstadt 1CH-4051 Basel

Switzerland

OFFICE OF THE ISSUER

UBS AG, London Branch

5 BroadgateLondon

EC2M 2QSUnited Kingdom

PLACE OF BUSINESS OF THE ISSUER IN HONG KONG

52nd FloorTwo International Finance Centre

8 Finance StreetCentral

Hong Kong

SPONSOR

UBS Securities Asia Limited



Hong Kong

LEGAL ADVISORS AS TO HONG KONG LAW

King & Wood Mallesons

13th FloorGloucester Tower

The Landmark15 Queen’s Road Central

CentralHong Kong

AUDITORS

Ernst & Young Ltd

Aeschengraben 9P.O. Box 2149 CH-4002 Basel

Switzerland

LIQUIDITY PROVIDER

UBS Securities Hong Kong Limited



Hong Kong

Printed by ProTop Financial Press Limited

170915-02

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