Slide 1: Second quarter 2014 results
Second quarter 2014 results July 29, 2014
Slide 2: 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
Slide 3: 2Q14 highlights
2Q14 highlights Group Net profit attributable to UBS shareholders CHF 792 million1, diluted EPS CHF 0.21 Profit before tax (PBT) CHF 1,218 million, adjusted PBT CHF 1,191 million including CHF 254 million provisions for litigation, regulatory and similar matters Largest global wealth manager2 with c
Slide 4: Executing our strategy to further unlock UBS's potential
Executing our strategy to further unlock UBS's potential Capital-efficient profit growth Remain disciplined on strategy execution while enhancing capabilities and profitability Further reduce Corporate Center costs and improve front office efficiency Pursue growth strategy across all segments
Slide 5: Group results
Group results CHF million 2Q13 1Q14 2Q14 Total operating income 7,389 7,258 7,147 Total operating expenses 6,369 5,865 5,929 Profit before tax as reported 1,020 1,393 1,218 Own credit on financial liabilities designated at fair value 138 88 72 Gains on sales of real estate 19 23 1 Gain on disposals
Slide 6: Creating a Group holding company
Creating a Group holding company Share exchange offer expected to be launched in the third quarter of 20141 Indicative timetable of principal events2 Cooling-off period Initial acceptance period3 Additional acceptance period3 T+1 T+10 T+11 T+31 T+32 T+35 T+37 T+45 T+46 T+49 T+51 T=0 Publication of P
Slide 7: Wealth Management
Wealth Management Solid performance excluding litigation; strong net new money Operating income and profit before tax Operating income down 1% CHF million Recurring income up 3% to CHF 1,440 million on higher recurring net fee income and higher net interest income 2Q13 1Q14 2Q14 Transaction-base
Slide 8: Wealth Management—revenue by source
Wealth Management—revenue by source Revenues impacted by low volumes partly offset by mandate growth 2Q13 3Q13 4Q13 1Q14 2Q14 1,952 1,837 1,859 1,943 1,919 Income (CHF million) Gross margin (bps) Wealth 90 85 85 87 84 Recurring income as a % of income Management 73% 77% 77% 72% 75% Gross margin comp
Slide 9: Wealth Management—by region
Wealth Management—by region1 Europe Asia Pacific Switzerland Emerging Markets o/w UHNW Net new 16.0 13.3 11.0 11.3 money 9.2 8.7 9.5 9.1 growth rate 2.4 0.1 6.7 4.6 5.5 5.3 5.2 8.4 7.1 2.1 0.8 1.8 0.3 0.8 % (1.6) (2.5) (0.7) 9.3 9.6 8.9 8.5 Net new 7.0 7.4 money 5.0 5.1 3.6 4.4 3.8 CHF billion 2.4 3
Slide 10: Wealth Management Americas (USD)
Wealth Management Americas (USD) Strong performance excluding litigation; invested assets >USD 1 trillion Operating income and profit before tax Operating income up 2% USD million Record recurring income: Net interest income increased 4% to USD 261 million on continued growth in lending 2Q13 1Q14
Slide 11: Wealth Management Americas—FA productivity and lending (USD)
Wealth Management Americas—FA productivity and lending (USD) Record invested assets and revenue per FA Invested assets and FA productivity Net interest income and lending balances1 Revenue per FA (annualized, thousand) Net interest income2 (million) Invested assets per FA (million) Credit loss (expe
Slide 12: Retail & Corporate
Retail & Corporate Strong performance excluding litigation; net interest margin up 5 bps Operating income and profit before tax Operating income up 1% CHF million Income increased mainly on higher interest income as well as increased transaction-based income, offsetting 2Q13 1Q14 2Q14 a decline in
Slide 13: Global Asset Management
Global Asset Management NNM excluding money market flows remained strong at CHF 11.6 billion Operating income and profit before tax Operating income up 3% CHF million Net management fees up by CHF 23 million mainly in traditional investments and global real estate, partially due to strong first qu
Slide 14: Investment Bank
Investment Bank Solid performance with strong contribution from CCS and resilient FRC1 Adjusted operating income and profit before tax2 Adjusted operating income up 3% CHF million CCS: Strong performance with income up 28% to CHF 986 million, increasing across all regions with 2Q13 1Q14 2Q14 parti
Slide 15: Corporate Center—Core Functions
Corporate Center—Core Functions Profit before tax of CHF 25 million Operating income and profit before tax CHF million 2Q13 3Q13 4Q13 1Q14 2Q14 Operating income CHF 23 million Treasury income remaining in CC-CF (124) (219) (343) (46) (55) Net treasury income remaining in Own credit gain/(loss) 138
Slide 16: Corporate Center—Non-core and Legacy Portfolio
Corporate Center—Non-core and Legacy Portfolio Profit before tax of negative CHF 412 million Operating income and profit before tax CHF million 2Q13 3Q13 4Q13 1Q14 2Q14 Operating income Non-core (57) (120) (104) 17 (151) negative CHF 167 million of which: Debit valuation adjustments (21) (47) (68) (
Slide 17: Corporate Center—Non-core and Legacy Portfolio
Corporate Center—Non-core and Legacy Portfolio1 RWA excluding operational risk down 21% QoQ; LRD down 10% Non-core and Legacy Portfolio RWA Non-core and Legacy Portfolio Swiss SRB LRD2 CHF billion CHF billion Legacy Portfolio ~293 Non-core 102.5 ~38 Operational 14.2 risk3 134 121 ~255 23 22 112 99 L
Slide 18: Daily trading revenue distribution
Daily trading revenue distribution IB and Non-core and Legacy Portfolio revenues1,2 Investor Client Services (ICS) revenues1 RWA in CHF billion Number of days with negative trading revenues (CHF 5 million buckets) Non-core and Legacy Portfolio RWA 2Q14 (number of days) excluding operational risk 60
Slide 19: Corporate Center cost reductions
Corporate Center cost reductions Approximately CHF 0.3 billion of net cost reductions achieved in 1H14 Core Functions: Non-core and Legacy Portfolio: CHF 1.0 billion net cost reduction target by 20151,2,3,4 CHF 0.4 billion net cost reduction target by 20152 Adjusted operating expenses before allocat
Slide 20: Swiss SRB capital and leverage ratios
Swiss SRB capital and leverage ratios Fully applied CET1 capital ratio of 13.5% and leverage ratio of 4.2% Swiss SRB RWA and capital ratios Swiss SRB LRD and leverage ratio CHF billion CHF billion Total capital ratio (fully applied) Leverage ratio (phase-in) 18.1% CET1 capital ratio (fully applied)1
Slide 21: 2Q14 highlights
2Q14 highlights Group Net profit attributable to UBS shareholders CHF 792 million1, diluted EPS CHF 0.21 Profit before tax (PBT) CHF 1,218 million, adjusted PBT CHF 1,191 million including CHF 254 million provisions for litigation, regulatory and similar matters Largest global wealth manager2 with c
Slide 22: Appendix
Appendix 3k UBS
Slide 23: Regional and business division performance
Regional and business division performance1 CHF billion Corporate Center Americas Asia Pacific EMEA² Switzerland Total and global³ 1Q14 2Q14 1Q14 2Q14 1Q14 2Q14 1Q14 2Q14 1Q14 2Q14 1Q14 2Q14 WM 0.1 0.1 0.5 0.4 1.0 1.0 0.4 0.4 0.0 0.0 1.9 1.9 WMA 1.7 1.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 1.7 R&C 0.
Slide 24: Regional and business division performance
Regional and business division performance All business divisions were profitable in each region in 2Q14 Europe, Middle East, and Africa1: CHF 0.3 billion 2Q14 PBT1, CHF billion 0.1 0.0 1.1 Americas: CHF 0.4 billion 0.2 2Q14 PBT1, CHF billion 0.0 0.1 Switzerland: CHF 0.6 billion Asia Pacific: CHF 0.
Slide 25: Corporate Client Solutions (CCS)
Corporate Client Solutions (CCS) Strong performance with income up across all regions Adjusted income Comparison in USD terms (2Q14 vs. 1Q14) CHF million USD million Advisory +8% +28% +28% Solid contribution from all regions with strong 1,110 growth in APAC 986 133 Increased participation in M&A
Slide 26: Investor Client Services (ICS)
Investor Client Services (ICS) Resilient performance with no negative revenue trading days Adjusted income1 Comparison in USD terms (2Q14 vs. 1Q14) CHF million USD million Equities (12%) Revenues declined in derivatives and cash, (11%) (11%) reflecting weaker client activity and subdued volatility
Slide 27: Retained Treasury income in Corporate Center—Core Functions
Retained Treasury income in Corporate Center—Core Functions We continue to expect retained funding costs to decline in the mid-term Treasury income retained in Corporate Center – Core Functions CHF million FY13 1Q14 2Q14 Gross results (excluding accounting driven adjustments) 664 137 174 Costs of th
Slide 28: Our balance sheet, funding and liquidity positions are strong
Our balance sheet, funding and liquidity positions are strong Our balance sheet structure has many characteristics of a AA-rated bank Funding by product1 Due to banks Short term debt issued Repurchase agreements Cash collateral payables on derivative instruments Securities lending Prime brokerage pa
Slide 29: Breakdown of changes in Group RWA
Breakdown of changes in Group RWA By type By business division CHF billion CHF billion 227 31.3.14 227 31.3.14 Non-core and Legacy Portfolio2: • Non-core: CHF 2.4 billion reduction in market risk RWA primarily due the exit of the majority of the correlation portfolio (8) • Non-core: CHF 2.4 billion
Slide 30: Corporate Center adjusted operating expenses before service allocation
Corporate Center adjusted operating expenses before service allocation Core Functions adjusted operating expenses before service allocation to business divisions and Non-core and Legacy Portfolio CC - Core Functions - adjusted expenses before service allocation 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 6M13 6M1
Slide 31: Adjusted results
Adjusted results Adjusting items Business division / Corporate Center 2Q13 1Q14 2Q14 FY13 CHF million Operating income as reported (Group) 7,389 7,258 7,147 27,732 Of which: Own credit on financial liabilities designated at Fair Value Corporate Center - Core Functions 138 88 72 (283) Gains on sales
Slide 32: Important information related to numbers shown in this presentation
Important information related to numbers shown in this presentation Use of adjusted numbers Unless otherwise indicated, “adjusted” figures exclude the adjustment items listed on the previous slide, to the extent applicable, on a Group and business division level. Adjusted results are a non-GAAP fina