Ubs Group Ag · SIX:UBSG
Ubs — Q4 2020 Earnings Presentation
36 slides from Ubs's earnings presentation, Jan 26, 2021
Slide 1: Full year and fourth quarter 2020 results
Full year and fourth quarter 2020 results January 26, 2021
Slide 2: Important information
Important information Forward Looking Statements: This presentation contains statements that constitute “forward-looking statements,” including but not limited to performance targets, expectations and ambitions, as well as management’s outlook for UBS’s financial performance and statements relating
Slide 3: Agenda
Agenda 1 Ralph Hamers, Group CEO › FY20 highlights › First impressions › Focus areas 2 Kirt Gardner, Group CFO › FY20 and 4Q20 financial performance › Divisional results › Capital returns 3 Q&A 2
Slide 4: Key messages
Key messages › Clients continued to place their trust in UBS during a challenging year, as we helped them navigate uncertainty through advice and solutions › Record invested assets across our asset and wealth management businesses at 4.1trn; FY20 net profit 6.6bn, highest in a decade with every regi
Slide 5: In 2020 we stayed focused on supporting our clients
In 2020 we stayed focused on supporting our clients… AM P&C GWM GWM IB GWM+IB invested assets net new business loans transaction-based income GFO income volume growth1 income 1,092bn 6.9% 213bn 3.6bn 9.5bn 903bn 179bn 3.1bn 7.3bn 4.7% 80bn 7bn 26bn +17% +30% +25% net new money, net new loans2, net n
Slide 6: Further integrated sustainability in our client offering
…and further integrated sustainability in our client offering Sustainable investments recommended A pivotal year for sustainability Maintained strong position in key as the preferred solution for GWM in Asset Management ESG rankings clients investing globally 100% SI multi-asset mandate Sustainabili
Slide 7: Through our commitment to clients, we have extended our scale
Through our commitment to clients, we have been able to extend our scale… 3.0trn 1.1trn GWM invested assets AM invested assets #1 #1 bank in private bank UHNW services1 in APAC2 Investing in our platforms to build on our scale advantage #1 #1 to benefit our clients bank in Family Office Switzerland3
Slide 8: …and deliver on all our targets in 2020
…and deliver on all our targets in 2020 Return on CET1 capital 17.6% Target: 12-15% Return on tangible equity 12.9% Cost/income ratio 73.0% Target: 75-78% Net profit attributable to shareholders USD 6.6bn Group Diluted earnings per share USD 1.79 CET1 capital ratio 13.8% Guidance: ~13% CET1 leverage
Slide 9: We have an opportunity to drive consistently higher returns
We have an opportunity to drive consistently higher returns 17.6% Return on CET1 capital1 13.1% 12.4% Industry-leading capital efficiency… …but driving revenue growth and cost efficiency necessary to deliver leading shareholder returns 2018 2019 2020 Return on tangible equity 9.8% 9.0% 12.9% Numbers
Slide 10: My first impressions of UBS are…
My first impressions of UBS are… Outstanding A powerful Market leading Talent client franchise brand thought leadership at all levels Global diversification Operational Balance sheet Leader in and reach resilience for all seasons sustainability 9
Slide 11: Change is coming at us with ever increasing pace
Change is coming at us with ever increasing pace Economic cycle Unprecedented monetary stimulus Shifting client priorities Digital-led recovery Range of recovery scenarios Low and negative rates challenge Shift to private markets and Pandemic has accelerated digital remains wide investment paradigms
Slide 12: Focus areas to deliver on UBS's future
Focus areas to deliver on UBS's future Grow our client franchise › Conducting thorough firm-wide reviews to be fit for the future and capture growth opportunities Strengthen high-performance culture › Enhancing accountability, reviewing metrics and targets Operate ever more efficiently to deliver le
Slide 13: FY20: Driving positive operating leverage
FY20: Driving positive operating leverage Profit before tax +58% m excl. CLE FY20 +47% 6,629m 1.79 +14% (616) +4% net profit diluted EPS (851) 8,226 +54% +57% 4,117 17.6% 8.1bn 5,577 return on CET1 capital CET1 capital generated1 31.12.20 13.8% 3.85% CET1 capital ratio CET1 leverage ratio2 FY19 Inco
Slide 14: Executing our cost strategy
Executing our cost strategy Operating expenses 24.2 23.3 23.3 0.4 0.0 0.5 FY19 Costs excl. Variable compensation1 FX FY20 variable compensation Numbers in USDbn unless otherwise indicated; 1 Including Financial Advisor compensation, as well as 359m from the acceleration of expenses in relation to ou
Slide 15: 4Q20 net profit USD 1.7bn; 17.5% RoCET1
4Q20 net profit USD 1.7bn; 17.5% RoCET1 +127% Profit before tax excl. CLE m +122% 4Q20 +16% (1%) 2,057 1,708m 0.46 (58) 64 net profit diluted EPS +137% +138% 1,123 17.5% 2.6bn return on CET1 capital CET1 capital generated1 928 31.12.20 13.8% 3.85% CET1 capital ratio CET1 leverage ratio2 4Q19 Income
Slide 16: Global Wealth Management
Global Wealth Management +22% 1,218 PBT +22% reflecting lending and mandate growth, greater advisor 1,057 936 Profit 766 880 productivity and 1% lower expenses; PBT +35% excl. 75m fee from before tax P&C in 4Q191; FY20 PBT +20% Operating income +3%; +5% excl. 4Q19 fee from P&C1, with all 4,547 regio
Slide 17: Global Wealth Management
Global Wealth Management Recurring net fee income Net interest income Transaction-based income Invested Loans 2,635 2,339 2,590 2,754 3,016 179 185 189 201 213 assets bn bn Deposits 296 311 315 321 348 +5% bn 2,354 2,434 2,341 2,468 2,128 +2% (2%) 993 1,031 1,023 962 1,011 1,113 789 824 863 776 4Q19
Slide 18: Personal & Corporate Banking (CHF)
Personal & Corporate Banking (CHF) +4% Profit PBT flat excl. CLE; FY20 PBT excl. CLE 1,417m, (3%) primarily driven 306 322 305 318 before tax 229 by lower credit card fees and FX transactions, reflecting lower travel and leisure-related spend 871 850 868 790 896 Operating income +3%; higher transact
Slide 19: Supporting the Swiss economy
Supporting the Swiss economy Providing funding Facilitating access Supporting communities Corporate and institutional clients Digital services Contributing to relief efforts 2.7bn +5ppts › Matching employee donations for Swiss Red Cross via Optimus Foundation net new loans in addition to government-
Slide 20: Asset Management
Asset Management +123% 739 PBT 401m, driven by 40% higher revenues and flat expenses; Profit 401 571 FY20 PBT 884m, +66% excl. gain from Fondcenter sale before tax 180 157 157 169 Gain from Fondcenter sale Operating income +40% 1,162 › Performance fees +167%, mainly driven by increases in our 774 He
Slide 21: Asset Management
Asset Management Net management fees Performance fees APAC m m +10% +185% #1 Foreign manager of 70bn China 1,778 1,950 455 inbound AuM in Greater China1 invested assets2 2020 31.12.20 160 Sustainable Investing FY19 FY20 FY19 FY20 #2 fastest growing 32bn NNM in SI-focused SI-focused manager3 invested
Slide 22: Investment Bank
Investment Bank RoAE 16.8% 4Q20 and 19.7% FY20; FY20 PBT 2.5bn, +217% with Profit 709 632 612 529 operating income +27% and costs +4% before tax Global Markets revenues +21% (22) › Execution & Platform 428m, +25% driven by cash equities 2,449 › Derivatives & Solutions 660m, +40% driven by equity der
Slide 23: Investment Bank
Investment Bank Revenues / VaR1 RoAE2 1Q20 2Q20 3Q20 4Q20 FY20 250 28.8% 200 21.4% 19.7% 18.7% 17.9% 150 15.1% 100 50 n/a UBS Peer A Peer B Peer C Peer D Peer E Peer A Peer B UBS Peer D Peer E Peer C VaR1 m UBS 1Q20 2Q20 3Q20 4Q20 FY20 250 RWA, bn 103 98 92 94 94 200 LRD, bn 297 303 313 316 316 150
Slide 24: IFRS 9 credit loss (expense) / release
IFRS 9 credit loss (expense) / release Credit loss (expense) / release m 4Q20 FY20 Stage 1 & 2 Stage 3 Total Stage 1 & 2 Stage 3 Total GWM 8 (1) 7 GWM (48) (40) (88) P&C 7 15 22 P&C (129) (128) (257) AM 0 0 0 AM 0 (2) (2) IB 18 (108) (91) IB (88) (217) (305) GF 0 (4) (5) GF 0 (42) (42) Total 33 (99)
Slide 25: Capital and leverage ratios
Capital and leverage ratios Total loss-absorbing 101.8 35.2% capacity (TLAC) Requirements RWA LRD bn Gone concern 9.82% loss-absorbing 45.5 15.8% capacity TLAC 24.1% 8.5% 4.39% AT1 16.3 5.6% Going concern 14.0% 4.9% 1.57%1 Going CET1 9.7% 3.4% concern capital CET1 40.0 13.8% Guidance: ~13% Guidance:
Slide 26: Committed to delivering attractive capital returns
Committed to delivering attractive capital returns Returns to shareholders1 Capital reserve for share buybacks Ordinary dividend 3.7 2020 dividend and buybacks Special dividend 3.4 › USD 0.37 ordinary dividend per share to be proposed Share buybacks 3.3 for the financial year 20202 3.2 2.9 0.8 › CHF
Slide 27: Appendix
Appendix 3 UBS
Slide 28: Group results
Group results FY19 FY20 4Q19 1Q20 2Q20 3Q20 4Q20 Total operating income 28,889 32,390 7,052 7,934 7,403 8,935 8,117 of which: credit loss (expense) / release (78) (694) (8) (268) (272) (89) (66) Total operating expenses 23,312 24,163 6,124 5,926 5,821 6,357 6,060 Operating profit / (loss) before tax
Slide 29: 4Q20 call-out items
4Q20 call-out items GWM P&C AM IB GF Group Total operating income 4,277 992 774 2,011 63 8,117 of which: valuation gain on auction rate securities 134 134 Total operating expenses1 3,341 640 372 1,482 225 6,060 of which: impairment of internally generated software 67 67 Operating profit / (loss) bef
Slide 30: FY20 call-out items
FY20 call-out items GWM P&C AM IB GF Group Total operating income 17,045 3,651 2,974 9,214 (494) 32,390 of which: call-out items 70 37 571 215 198 1,092 of which: net gain from the sale of a majority stake in Fondcenter AG 60 571 631 of which: gain on the sale of intellectual property rights 215 215
Slide 31: Global Wealth Management
Global Wealth Management Americas Switzerland EMEA APAC +7% 1,365 +10% +89% 1,274 +11% 1,024 1,061 Profit before tax 930 m 578 642 560 FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20 Cost/income ratio 84% 62% 71% 61% (1ppt) (2ppts) (2ppts) (14ppts) Invested assets 1,568bn 273bn 612bn 560bn +12% +20% +11% +2
Slide 32: Revenue and expense currency mix
Revenue and expense currency mix Operating income Operating expenses % % Other 10 12 12 Other 7 7 11 17 16 GBP 4 GBP 8 9 9 EUR 12 EUR 6 7 11 12 9 CHF 23 5 CHF 20 USD USD 7 25 36 23 88 102 72 70 59 61 60 47 50 43 11 GWM P&C1 AM2 IB Group2 GWM P&C AM IB Group FY20; 1 Includes negative operating income
Slide 33: RWA and LRD
RWA and LRD Risk-weighted assets Leverage ratio denominator By currency %, as of 31.12.20 of which: +4.7bn of which: +24.4bn due to FX due to FX +6.0bn +42.8bn 289.1 1,037.1 289.1 1,037.1 283.1 994.4 31.3 Off-balance 31.9 8% 115.3 sheet items 13% Other 3% 75.8 Operational risk 118.8 Securities 4% 77
Slide 34: Quarterly results by region
Quarterly results by region Americas Asia Pacific EMEA Switzerland Global Total 4Q19 4Q20 4Q19 4Q20 4Q19 4Q20 4Q19 4Q20 4Q19 4Q20 4Q19 4Q20 Operating GWM 2.3 2.4 0.5 0.6 0.9 0.9 0.4 0.4 0.1 0.0 4.2 4.3 income P&C - - - - - - 0.9 1.0 - - 0.9 1.0 AM 0.1 0.2 0.1 0.2 0.1 0.2 0.2 0.2 - (0.0) 0.6 0.8 IB 0
Slide 35: FY results by region
FY results by region Americas Asia Pacific EMEA Switzerland Global Total FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20 Operating GWM 9.1 9.0 2.2 2.7 3.4 3.6 1.6 1.7 0.1 0.0 16.4 17.0 income P&C - - - - - - 3.7 3.7 - - 3.7 3.7 AM 0.5 0.7 0.4 0.5 0.4 0.5 0.6 0.7 (0.0) 0.6 1.9 3.0 IB 2.5
Slide 36: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This presentation contains statements that constitute “forward-looking statements,” including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strate