Ubs Group Ag · SIX:UBSG
Ubs — UBS AG (Amna, Amnd, Amtr, Amub, BDCX, BDCZ, Cefd, DJCB, Esus, Fedl, HDLB, Ifed, Iwdl, Iwfl, Iwml, Mlpb) — Investor Day (November 2009)
156 slides from Ubs's investor day presentation, Nov 17, 2009
Slide 1: Investment Bank Investor Day - November 17, 2009
Investment Bank Investor Day - November 17, 2009 Alex Wilmot-Sitwell and Carsten Kengeter, Co-CEOs UBS Investment Bank
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: Key messages
Key messages Resized, more stable and re-organized around strengths Client-centric business model based on flow and advice Rebuild selected businesses, enhance strengths and increase integration Achievable medium-term goals
Slide 4: Resized, de-risked and more stable
Resized, de-risked and more stable Risk-weighted assets Assets1 Operating costs Personnel Balance sheet control Operating cost control (51%) (36%) (30%) 1 Total assets excludes CHF 149 billion in 1Q08 and CHF 42 billion in 3Q09 of Group-related items (44%) 1,173 580 1,742 1,077 1Q08 3Q09 Assets ex-P
Slide 5: Franchise strengths and key hires
Advisory Top 4 globally 6.5% market share in 20094 ECM Top 3 global firm in 20095 Cash Equities Top 3 globally 11% market share3 FX #2 globally 15% market share2 Franchise strengths Attracting talent to the IB ... 1 Excludes Non Officers 2 Based on 2009 Euromoney poll results 3 Based on UBS manageme
Slide 6: CHF 2.5 billion - normalized 9M09 profitability
CHF 2.5 billion - normalized 9M09 profitability1 On a normalized basis, the underlying IB business is profitable Able to generate sustainable returns with less volatility 1 Normalization details: Losses on residual risk positions based on previous disclosure. CLE adjustments based on 2004-2009 avera
Slide 7: Key market challenges
Key market challenges Talent retention and acquisition Regulatory changes Growth in an uncertain economic environment Competitors building aggressively Tighter margins in flow and liquid products going forward .... the Investment Bank is now well positioned While market challenges persist... New BIS
Slide 8: Rigorous, disciplined risk management and control
Rigorous, disciplined risk management and control Strengthened management and control framework ... Improved limit framework (portfolio, stress) Risk methodology enhancements: stress testing / VaR Integrated risk control organization and change in risk culture Improved risk and financial reporting A
Slide 9: Key messages
Key messages Resized, more stable and re-organized around strengths Client-centric business model based on flow and advice Rebuild selected businesses, enhance strengths and increase integration Achievable medium-term goals
Slide 10: A differentiated business model
A differentiated business model ... Large-scale proprietary risk-taker Client-centric business based on flow and advice Provider of integrated IB/WM/AM client solutions Infrastructure / execution excellence with disciplined risk controls Sustainably profitable in all chosen markets and products Mark
Slide 11: Balance sheet efficiency and turnover
Balance sheet efficiency and turnover Improving return on balance sheet assets through increased velocity Historical evolution of asset utilization: normalized revenues / assets Assets ex-PRVs Indexed RoA (normalized revenues1 / average assets ex-PRVs and ex-residual risk positions, 2005 = 100) 1 20
Slide 12: IB strategy - simple but effective
IB strategy - simple but effective Sustainable profits Enhance workbench with UBS partner divisions High Enhance traditional IB strengths Target Leveraging our strengths and building selected areas Refocus and grow select products and regions
Slide 13: Key messages
Key messages Resized, more stable and re-organized around strengths Client-centric business model based on flow and advice Rebuild selected businesses, enhance strengths and increase integration Achievable medium-term goals
Slide 14: Restructured FICC
FICC permanent personnel1 FICC assets ex-PRVs1 (36%) (64%) Restructured FICC Restructured, refocused and delivering better performance with fewer resources FICC excluding P&L from residual risk assets1 (CHF billion) 1 Excludes residual risk positions and the assets and personnel related to them 2 Re
Slide 15: FICC - achievable strategy
FICC - achievable strategy Focused on sustainable, scalable and high quality earnings... Expand bespoke product offering Leverage WM flow across products Enhance current direct execution platforms to broader products set Across products Enhance workbench with UBS partner divisions Agency and flow-ba
Slide 16: Growing the Macro business
Where we stand Growing the Macro business Timeline: Next 12 months Broaden flow-based activities Enhance WM&SB internalization Expand trading capabilities and automated execution Expand US Rates franchise Integrate execution platforms between Rates & FX What we are progressing and by when Market-lea
Slide 17: Rebuilding the Credit business
Rebuilding the Credit business Increasing talent and refocused client coverage ... Re-build Credit trading bench Add & rebuild selected product capabilities Re-establish client coverage Credit revenues in 2009 running higher than pre-crisis run rate Lean staff structure Existing platforms ready to b
Slide 18: Focus on select Emerging Markets
Focus on select Emerging Markets Leverage the existing EM platform and global footprint... Rebuild and enhance LatAm presence Enhance presence in China Expand product range in India Further enhance platform in Russia Aligned IB approach Strong Wealth Management / IB onshore presence and brand to be
Slide 19: Equities - leverage market position
Equities - leverage market position Traditionally strong franchise to be further enhanced... Derivatives Cash Equities Enhance workbench with UBS partner divisions Optimize current direct execution platforms to broaden product set Leverage WM flow including for derivatives Derivatives ETD Prime brok
Slide 20: IBD - leverage existing strengths
IBD - leverage existing strengths Lead UBS Group marketer Cross referrals GCM distribution Enhance workbench with UBS partner divisions Leverage existing senior IBD relationships Increase cross-product awareness / education Innovative and quick-to-market solutions Footprint ECM2 Advisory Enhance tra
Slide 21: Key messages
Key messages Resized, more stable and re-organized around strengths Client-centric business model based on flow and advice Rebuild selected businesses, enhance strengths and increase integration Achievable medium-term goals
Slide 22: Double our normalized profits in the medium term
Double our normalized profits in the medium term Only moderate revenue increase required to achieve target profitability (CHF billion) FICC Equities IBD Op. costs & CLE Based on normalized 9M09 annualized 9.6 3.3 FICC Equities IBD 12.9 FICC Equities IBD ~20.0 Op. costs & CLE Medium-term expectations
Slide 23: Key messages
Key messages Resized, more stable and re-organized around strengths Client-centric business model based on flow and advice Rebuild selected businesses, enhance strengths and increase integration Achievable medium-term goals
Slide 24: Disclaimer
Disclaimer This presentation and the information contained herein is provided solely for information purposes, and is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investm
Slide 25: Regional Strategy: Asia Pacific
Regional Strategy: Asia Pacific Chi-Won Yoon, Chairman and CEO Asia Pacific Investor Day - November 17, 2009
Slide 26: 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 27: Key messages
Key messages UBS possesses the strongest combination of IB and WM businesses in Asia Pacific and we will take advantage of the region's many growth opportunities UBS in APAC is reinforcing areas of strength and investing selectively UBS in APAC is targeting revenues in medium-term of CHF 8.5 billion
Slide 28: The UBS advantage in Asia Pacific
The UBS advantage in Asia Pacific Note: The date of establishment of offices includes UBS and predecessor firms. Headcount excludes ISC and UBS Hana Asset Management India Thailand Indonesia New Zealand Korea Philippines Japan Singapore Taiwan Australia Hong Kong Malaysia China Since 1990 Since 1989
Slide 29: The UBS advantage in Asia Pacific: accolades
The UBS advantage in Asia Pacific Accolades for our leading franchise Wealth Management Best Private Bank in Asia Asiamoney 2005 - 2009 Euromoney 2004 - 2008 Finance Asia 2002 - 2007 Equities Best Combined Research and Sales in Asia Top two ranking, Asiamoney Brokers Poll 2002 - 2009 Equity Derivati
Slide 30: The UBS advantage in Asia Pacific: market share
The UBS advantage in Asia Pacific Source: Dealogic Core IB ranking, as at 2 October 2009. 2 Asia is ex-Japan and ex-ANZ, 3 Japan rankings include foreign firms only and are based on UBS internal estimates IBD #1 #2 #1 Market share (%), 2009 #5 8.4% 2.5% 17.2% 7.4% Source: Exchanges, as at 30 Septemb
Slide 31: UBS strategic priorities - Investment Bank
UBS strategic priorities - Investment Bank How we plan to out-grow the market Extend lead Capture growth opportunities Increase market share Build-out Equities and FICC in China Grow FICC in India Leverage cross-border strengths and domestic expertise in Japan Promote cross-business integration Domi
Slide 32: UBS strategic priorities - Wealth Management
UBS strategic priorities - Wealth Management How we plan to out-grow the market Expand in select markets Focus on UHNW clients Improve return on assets Grow in Hong Kong and Singapore Continue China investment for long- term return Accelerate Japan build-out Increase client penetration Expand produc
Slide 33: UBS strategic priorities - Global Asset Management
UBS strategic priorities - Global Asset Management How we plan to out-grow the market Increase AuM in established markets Capture growth in emerging markets Strengthen partnership with WM Capitalise Build institutional and wholesale business in Korea with our JV partner Capitalize on strategic posit
Slide 34: UBS strategic priorities: integration
UBS strategic priorities Integration benefits Integration priorities Supported by strong regional management Enables coordinated growth Satisfies demand for integrated offerings Generates significant cross-divisional revenue One firm Clients Businesses Products Clients Improve service for UHNW clien
Slide 35: Our goal
Our goal Note: The above chart shows gross revenue data based on internal management reporting which differs from information provided in quarterly and annual reporting materials. Revenues exclude changes on own credit for financial liabilities designated at fair value and losses from residual risk
Slide 36: Disclaimer
Disclaimer This presentation and the information contained herein is provided solely for information purposes, and is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investm
Slide 37: Global Asset Management
Global Asset Management John Fraser, Chairman and CEO Global Asset Management Investor Day - November 17, 2009
Slide 38: 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 39: Key messages
Key messages Global AM is a large-scale asset manager with well diversified businesses across regions, capabilities and distribution channels Going forward, we will monetize our strong investment performance by expanding our third-party business, further strengthening our Wealth Management cooperati
Slide 40: Global AM as a diversified asset manager
Global AM as a diversified asset manager 2002 2009 Highly dependent on Value Equities Distribution mainly via WM Completing diversification Lessons from the 1990s Global AM must not be overly reliant on any ONE asset class or any ONE investment style or any ONE distribution channel Determined effort
Slide 41: Balanced set of capabilities
Balanced set of capabilities Invested assets of CHF 583 billion 30 September 2009 Traditional Non-traditional Sources: Global AM, iMoneyNet, InvestHedge, Companies' Accounts, Pensions & Investments Note: Alternatives include Alternative and Quantitative Investments, Infrastructure and Private Equity
Slide 42: Global AM businesses operating as boutiques
Global AM businesses operating as boutiques Equities Fixed Income Alternative & Quantitative Investments Global Real Estate Global Investment Solutions Fund Services Infrastructure and Private Equity Core/Value Global Country & regional Emerging markets Specialist Long/Short HALO Growth Investors Gl
Slide 43: Global AM's profitability
Global AM's profitability Notes: On 1 January 2008 UBS adopted the amended International Financial Reporting Standards 2. The historical performance figures from 2003 to 2007 have been restated from the previously published version as a result. 1 Excluding the restructuring costs of Dillon Read Capi
Slide 44: Key messages
Key messages Global AM is a large-scale asset manager with well diversified businesses across regions, capabilities and distribution channels Going forward, we will monetize our strong investment performance by expanding our third-party business, further strengthening our Wealth Management cooperati
Slide 45: Monetize strong investment performance
Monetize strong investment performance Global AM strategy Grow third-party institutional and wholesale business... Capitalize on already established emerging market positions ....while participating in Wealth Management's return to growth A B C D
Slide 46: Improved performance in key strategies
Improved performance in key strategies Performance against benchmark + - - Below benchmark Above benchmark Notes: Performance is shown on a gross basis versus primary benchmark 1 Hedged in CHF Annualized Annualized Annualized Annualized 3 months 1 year 3 years 5 years 3 months 1 year 3 years 5 years
Slide 47: Net new money through non-Wealth Management channels
CHF billion Net new money Net new money through non-Wealth Management channels CHF million Selected recent inflows July 2009 Middle Eastern Sovereign (Asia ex Japan) 534 US hedge fund (cash and liquidity) 1,429 Japanese bank (credit funds) 510 Aug 2009 424 Middle Eastern Sovereign (Asia ex Japan) 21
Slide 48: Expanding the third-party business
Expanding the third-party business Third-party institutional Third-party wholesale Global AM has institutional expertise and significant assets under management The majority of clients are pension funds and financial institutions Current situation Focus on execution, monitoring and accountability to
Slide 49: Strengthening the partnership with Wealth Management
Strengthening the partnership with Wealth Management Provide best-in- market products to WM Better service WM clients Global AM products are successfully distributed through WM's advisory and discretionary distribution channels Regular reviews and exchanges between product management teams Current s
Slide 50: Capitalizing on emerging market opportunities
Capitalizing on emerging market opportunities Current situation Growth strategy China UBS SDIC joint venture, established in 2005 to capture mutual fund flows UBS Securities is an in- house distribution channel Capitalize on strong strategic positioning Develop products that utilize Global AM's dive
Slide 51: Key messages
Key messages Global AM is a large-scale asset manager with well diversified businesses across regions, capabilities and distribution channels Going forward, we will monetize our strong investment performance by expanding our third-party business, further strengthening our Wealth Management cooperati
Slide 52: Delivering profit from revenue
Delivering profit from revenue Targeting a cost/income ratio of 50-60% through a highly leveraged model... Target cost/income ratio of 50-60% 20081 9M092 Industry margin pressure Outflows Head- count control Third- party asset growth Perfor- mance fees Key drivers Note: Future cost/income ratio show
Slide 53: Global AM's medium-term financial goals
Global AM's medium-term financial goals Additional key financial considerations Proportion of third-party business to increase in the medium-term NNM expected to turn positive in 2010 and grow steadily Medium-term cost/income ratio goal of 50-60% 2.1 >3.0 9M09 annualized1 Medium-term target 0.5 1.3
Slide 54: Disclaimer
Disclaimer This presentation and the information contained herein is provided solely for information purposes, and is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investm
Slide 55: Group Strategy and Transformation
Group Strategy and Transformation Investor Day - November 17, 2009 Ulrich Korner, Group Chief Operating Officer and CEO Corporate Center
Slide 56: 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 57: UBS is going through a major transformation
UBS is going through a major transformation change Stabilize UBS Step-up performance & reposition UBS Grow profitably UBS today Focus of today: stabilization of UBS and strategic direction going forward
Slide 58: Key messages
Key messages UBS is financially stable, strong and secure UBS is excellently positioned to take advantage of the changing market environment UBS will transform the way it operates and step-up performance to deliver higher returns
Slide 59: We have stabilized the bank's financial condition
We have stabilized the bank's financial condition Tier 1 ratio: increased from 11.0% in 4Q08 to 15.0% in 3Q09 Leverage ratio (FINMA): improved from 2.5% in 4Q08 to 3.5% in 3Q09 Balance sheet size (IFRS): reduced by 27% over the past 9 months Risk profile: reduced RWAs by 30% over the past 9 months A
Slide 60: Cost reduction program on track
Cost reduction - program on track to reach CHF 3.5 - 4 billion target in annual equivalent run-rate by 2010 ~0.5 Cost run-rate excluding significant non-recurring items and variable personnel expenses ~3.0 Total (CHF billion) Estimated cost savings 2010 Estimated cost savings 2009 Total estimated co
Slide 61: Key messages
Key messages 1. UBS is financially stable, strong and secure UBS is excellently positioned to take advantage of the changing market environment UBS will transform the way it operates and step-up performance to deliver higher returns
Slide 62: New paradigm in the banking industry
New paradigm in the banking industry Capital / risk Growth Regulation Clients Returns From... To... Excessive market liquidity and high risk-taking Scarce capital and reduced risk tolerance Stricter capital and liquidity requirements and closer international coordination Secular growth of wealth and
Slide 63: Leading Wealth Management franchise
Leading Wealth Management franchise Unique combination of asset gathering and investment banking with a global footprint Leader in APAC and leading wealth manager in other growth markets (MEA, CEE, LatAm) UBS is strongly positioned to deliver on the new key success factors Strong earnings in capital
Slide 64: Leading wealth manager with highest quality of assets
#1 in advising UHNW clients with ~5% market share globally ~70% of AuM from UHNW/HNW in Wealth Management Americas 1 Includes WM&SB and WMA 2 Company reports, UBS analysis Leading wealth manager with highest quality of assets #1 wealth manager by AuM outside the US (by client domicile)2 #1 in CH #1
Slide 65: Unique combination of asset gathering and investment banking
Unique combination of asset gathering and investment banking with a global footprint 2 APAC 9% UBS today has CHF 2.3 trillion in AuM and is a truly global asset gatherer (WM&AM)... .... in combination with investment banking 1 WM: by client domicile; AM: by client servicing location 2 Excluding Corp
Slide 66: Flow/fee business dominating UBS revenue mix
Flow/fee business dominating UBS revenue mix Flow/fee business: ~90% of UBS revenue with top positions... ....very stable and resilient over time 3 Investment funds (CH) Mandates (WM) Res. mortgages (SB) FX Cash EQ US Wealth Mgmt. #1 #1 #1 #2 #3 #4 Examples and market positioning 0 2 4 6 8 4Q08 1Q09
Slide 67: Leading positions in growth regions
Leading cross- border wealth manager Top tier IB in Russia "Best UHNW CEE"1 "Best Private Banking Service Overall"1 Leading position in both WM and AM Leader in M&A advisory Over 40 years presence in the region "Best Private Banking Service Overall"1 Leader in APAC and leading wealth manager in othe
Slide 68: UBS positioned to capture high growth revenue pools
0 1425 0 650 125 775 275 50 325 500 100 600 CHF 3,200 billion CHF 2,925 billion 2009 global revenue pools 2012 global revenue pools 5.4% 7.0% 2.0% Cumulative growth 2009-12 325 Global revenue pool, CHF billion UBS strongly positioned to capture high growth revenue pools UBS active in 26% of global r
Slide 69: Key messages
Key messages UBS is financially stable, strong and secure UBS is excellently positioned to take advantage of the changing market environment UBS will transform the way it operates and step-up performance to deliver higher returns
Slide 70: UBS aspiration - leading client-focused global bank
UBS aspiration - leading client-focused global bank Economically profitable in every segment, market and business we operate ! The #1 bank in Switzerland ! The #1 global bank for HNW/UHNW clients ! A top-tier bank in every growth region ! A leading client-focused investment bank !
Slide 71: New UBS - key strategic thrusts
New UBS - key strategic thrusts New UBS: Leading client- focused global bank Re-focusing business portfolio to fully capitalize on the strengths Transforming the way we operate to free up the full potential Businesses Geographies Reputation Integration Execution Institutionalize three strategic guid
Slide 72: New UBS - refocusing business portfolio
New UBS - refocusing business portfolio Businesses Geographies Clients .... Build on our strong WM franchise Transform our cross-border business model Increase/strengthen onshore footprint and focus on efficiency and execution .... Transform our Investment Bank into an integrated and client-focused
Slide 73: New UBS - transforming the way we operate
New UBS - transforming the way we operate Reputation Integration Execution .... Put the clients at the center of everything we do .... Treat reputation and people as our most valuable assets .... Build a strong performance-oriented culture .... Deliver the best of all of UBS to our clients .... Ensu
Slide 74: New UBS - integration as a major underlying driver
Wealth Management Investment Bank Global Asset Management New UBS - integration as a major underlying driver Silo-business culture Common business goals and holistic group portfolio view From.... "One brand" as the main integrating factor To... Integration as the key underlying force of the new UBS
Slide 75: Measures already in place to transform
New UBS - several measures already in place to transform the way we operate Introduced risk-adjusted performance measurement for business segments Aligned compensation with longer-term economic profitability Enhance performance monitoring at all levels Strengthened UHNW client service with new centr
Slide 76: Significant PbT improvement targeted in the medium term
Significant PbT improvement targeted in the medium term... .... with smaller and higher quality balance sheet than in the past Significant PbT improvement target in the medium term, with a smaller and higher quality balance sheet 9M09 Medium- term goal for full year (3.5)1 ~15 C/I ratio ~110% 65-70%
Slide 77: Way forward - executing on UBS transformation
Stabilize UBS Step-up performance & reposition UBS Grow profitably UBS today New UBS strategic direction is the basis for future growth Way forward - executing on UBS transformation
Slide 78: Disclaimer
Disclaimer This presentation and the information contained herein is provided solely for information purposes, and is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investm
Slide 79: Risk and Finance Investor Day
Risk and Finance Investor Day - November 17, 2009 Philip Lofts, Group Chief Risk Officer John Cryan, Group Chief Financial Officer
Slide 80: 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 81: Risk management and control
SECTION 1 Risk management and control
Slide 82: Key messages
Key messages Clear improvements made in how we represent, measure and manage risk Reduction in the risk profile UBS risk management and control - a new paradigm
Slide 83: Key risk improvements
Key risk improvements With a significantly reorganized risk control function in place from June 2008... VaR Firm-wide risk aggregation and stress framework VaR enhancements delivered Reduction in backtesting exceptions Adopted 1 day 95% VaR ....we have been able to make considerable enhancements to
Slide 84: Risk management and control framework
Risk management and control framework Overhauled and clarified GOVERNANCE SCARCE RESOURCES RISK CULTURE INTEGRATED CONTROL Risk management and control framework
Slide 85: Key messages
Key messages Clear improvements made in how we represent, measure and manage risk Reduction in the risk profile UBS risk management and control - a new paradigm
Slide 86: Firm-wide risk profile: RWA reduction
Firm-wide risk profile: RWA reduction Significant reduction in RWAs in 2009, but RWAs expected to increase mainly due to regulatory changes Total RWA (30%) (CHF billion) 222 195 172 143 28 28 22 16 7 8 8 7 45 46 46 45 4Q08 1Q09 2Q09 3Q09 Credit risk Market risk Non-counterparty related risk Operatio
Slide 87: Trading profile: IB VaR reduction
Trading profile: IB VaR reduction Significant reduction in IB 1 day 95% management VaR in 2009 Total VaR (23%) (CHF million) (80) (75) (70) (65) (60) (55) (50) (45) (40) Jan Feb Mar Apr May Jun Jul Aug Sept
Slide 88: Lending profile: credit loss expense reduction
Lending profile: credit loss expense reduction Significant reduction in UBS Group CLE in 2009 Total CLE (90%) (USD million) 127 118 208 63 1,202 447 57 93 981 570 123 70 4Q08 1Q09 2Q09 3Q09 Reclassified securities Reclassified leveraged finance Other credit loss expense 1,135 388 226 2,310
Slide 89: Risk concentrations: continued reduction
Risk concentrations: continued reduction 30.9.09 31.12.08 Monolines Average CVA as percentage of RV of CDS (%) 53 54 Fair value of CDS after CVA (USD billion) 2.6 5.3 Fair value of underlying monoline NBT assets 31.12.08, USD 9.2 billion 30.9.09, USD 8.8 billion Significant improvement in the compos
Slide 90: Risk concentrations: continued risk reduction
Risk concentrations: continued risk reduction UBS continues to work with issuers to restructure SL ARS programs. UBS's inventory of SL ARS and its repurchase commitment reduced by USD 1.5 billion in aggregate in 2009 On a combined basis almost 80% of the SL ARS are backed by FFELP guaranteed collate
Slide 91: Key messages
Key messages Clear improvements made in how we represent, measure and manage risk Reduction in the risk profile UBS risk management and control - a new paradigm
Slide 92: Risk framework of UBS - a new paradigm
Risk framework of UBS - a new paradigm Risk management and control framework GOVERNANCE SCARCE RESOURCES RISK CULTURE INTEGRATED CONTROL GOVERNANCE BoD Risk Committee Tone from the top Business strategy & planning Clear accountability INTEGRATED CONTROL Enterprise-wide risk aggregation across risk t
Slide 93: Risk framework of UBS - key components
Risk framework of UBS - a new paradigm Our key components Executing the renewal plan means we now have an enterprise-wide and fit-for-purpose risk framework Think the unthinkable...focus on low probability tail events A holistic and integrated view of risk is essential Risk-conscious front office cu
Slide 94: Risk profile of UBS - a new paradigm
Risk profile of UBS - a new paradigm Disciplined risk-taking IB lending risk: originate, distribute and avoid concentrated take and hold Swiss domestic lending: focus on residential, commercial and corporate Lombard lending: collateralized by marketable securities IB trading risk and limit framework
Slide 95: Finance
SECTION 2 Finance SUBS
Slide 96: Key messages
Key messages 1. Stable financial condition 2. Higher capital level driven by regulatory changes 3. Focus on capital generation through retained earnings
Slide 97: Total assets development
Total assets development (27%) 2,542 2,015 1,476 387 442 408 216 348 775 261 321 958 111 50 66 501 854 335 Lending Collateral trading Trading portfolio Other assets Positive replacement values 4Q08 3Q09 2Q07 (CHF billion) Broadly stable Reduce Medium-term outlook Dynamic Dynamic Increase ~1,000 bill
Slide 98: Derivative instruments
Derivative instruments 375 254 197 93 222 115 60 37 501 854 4Q08 3Q09 Interest rates Credit derivative s Foreign exchange Other (CHF billion) (32%) (53%) (48%) (38%) (41%) Positive replacement values 369 241 185 82 227 121 71 43 487 852 4Q08 3Q09 Negative replacement values (CHF billion)
Slide 99: Derivative instruments: notional amounts and RWA
Derivative instruments Notional amounts Risk-weighted assets 36,571 35,645 3,654 2,641 6,557 6,025 827 901 45,669 47,151 4Q08 3Q09 Interest rates Credit derivative s Foreign exchange Other (CHF billion) (8%) (3%) (28%) (3%) ~40 ~80 4Q08 3Q09 (CHF billion) (50%) (65%) (29%) (53%) 9% (59%)
Slide 100: UBS asset funding - Sept 2009
UBS asset funding - 30 Sept 2009 (CHF billion) Assets Cash & banks Loans Trading assets Collateral trading Other assets (incl. net RVs) 75 312 261 216 125 Due to banks Deposits Long-term debt1 Trading liabilities Money market Total equity Other Coll. trading 86 421 192 67 53 86 39 47 Liabilities and
Slide 101: Diversified funding sources
Diversified funding sources Funding by product type1,2 Funding by currency1 1 Percentages based on total funding defined as balance sheet liabilities excl. negative RVs, trading shorts, equity, other liabilities: amounting to CHF 905 billion of funding as of end 3Q09 2 Long-term debt includes financ
Slide 102: FINMA adjusted assets development
FINMA adjusted assets development 166 162 654 456 1,476 2,015 FINMA adjusted assets CH loans Other Netting of RVs Total average assets1 Deductions: 1 Average of the month-end values for the three months in the calculation period (CHF billion) (34%) 899 1,352 4Q08 3Q09 Medium-term outlook ~ 1,000 bil
Slide 103: IFRS equity to tier 1 capital reconciliation
IFRS equity to tier 1 capital reconciliation - 30 Sept 2009 1 Represents different treatment of interest expense 2 Includes cash flow hedges (1.6 billion) and AFS (0.4 billion) 47.3 0.5 (1.3) (2.0) (0.5) (11.0) (1.3) 31.6 IFRS total equity MCNs1 Own credit OCI2 Treasury shares and minorities Goodwil
Slide 104: Key messages
Key messages 1. Stable financial condition 2. Higher capital level driven by regulatory changes 3. Focus on capital generation through retained earnings
Slide 105: Regulatory headwinds
Regulatory headwinds New regulation Increased excess capital requirements to 100% of the minimum FINMA leverage ratio - minima set at 3%, but expected to be well above it in normal times Continuation of Basel I floor beyond 2009 Compensation regulations A deposit insurance fund to be created FINMA l
Slide 106: Key messages
Key messages 1. Stable financial condition 2. Higher capital level driven by regulatory changes 3. Focus on capital generation through retained earnings
Slide 107: Tier 1 capital - outlook
Tier 1 capital - outlook We expect the regulators to require a higher level and better quality of capital, but it is not yet known which proposals will be adopted and what the terms will be We expect to satisfy additional capital requirements through retained earnings. Our dividend policy over the n
Slide 108: Principles of equity attribution
Principles of equity attribution Step 1: capitalize goodwill and intangible assets with equity on 1-for-1 basis Step 2: allocate additional equity based on three drivers on weighted-average basis Risk-Based Capital - capitalize with equity on 1-for-1 basis RWA - capitalize with a notional 14.5% BIS
Slide 109: Equity attribution framework - 3Q09 calculation
Equity attribution framework - 3Q09 calculation Adjusted assets RWA Risk-based capital WM&SB WM A Gl. AM IB CC Group 2.9 1.1 0.6 22.7 0.6 27.8 6.2 2.7 0.7 18.6 0.8 29.0 2.3 1.2 0.7 20.3 0.2 24.7 Tangible equity total 4.4 1.9 0.7 20.0 0.6 27.6 Goodwill & intangibles 1.8 4.5 1.8 3.9 - - 12.0 Total (fo
Slide 110: Disclaimer
Disclaimer This presentation and the information contained herein is provided solely for information purposes, and is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investm
Slide 111: Wealth Management & Swiss Bank
Wealth Management & Swiss Bank Investor Day - November 17, 2009 Jurg Zeltner, CEO Wealth Management Franco Morra, CEO UBS Switzerland
Slide 112: 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 113: Wealth Management of UBS
SECTION 1 Wealth Management of UBS
Slide 114: Key messages
Key messages 1. Wealth Management undergoing stabilization and repositioning 2. Wealth Management is a strong franchise and well positioned to capture future growth 3. Optimized strong cross-border/onshore footprint by focusing on growth markets and Ultra High Net Worth clients 4. Successful strateg
Slide 115: Financial results and issues tackled
Financial results and issues tackled WM&SB financial results Improvements Increase efficiency Target costs down by CHF ~900 million (11%) for 2010 versus 2008 (thereof CHF ~450 million in 2009) Risk management US exit and DPA on track, stepped-up capabilities to serve US clients via SEC registered e
Slide 116: WM&SB net outflows well below worst levels in 2008
.. WM&SB net outflows well below worst levels in 2008 UBS 5yr CDS spreads in bps 3Q09 1Q08 3Q09 2Q09 1Q09 4Q08 3Q08 2Q08 1Q08 NNM in CHF billion (16.7) (16.5) (23.4) (60.4) (36.8) (10.4) 0.5 (80) (60) (40) (20) 0 20 0 100 200 300 400 Counterparty and reputation concerns Diversification Deleveraging
Slide 117: Adjusted client advisor capacity
Adjusted client advisor capacity Client advisor capacity Had to adjust capacity as asset base and revenues have decreased significantly since peak We increased client advisor efficiency1 by 25 percent We expect a lag-effect because departed client advisors will work intensively for our competitors i
Slide 118: Key messages
Key messages 1. Wealth Management undergoing stabilization and repositioning 2. Wealth Management is a strong franchise and well positioned to capture future growth 3. Optimized strong cross-border/onshore footprint by focusing on growth markets and Ultra High Net Worth clients 4. Successful strateg
Slide 119: World-leading franchise
d World-leading franchise Invested assets 3Q09 Total CHF 1,676 billion Wealth Management Americas CHF 694 billion Retail & Corp CHF 136 billion Wealth Management CHF 846 billion Strong global footprint and presence Most attractive client franchise Broad product capabilities Early mover into onshore
Slide 120: Balanced business mix
d Balanced business mix 3Q09 Attractive balance of onshore and cross-border business The largest pan-European onshore wealth manager Strong presence in APAC and emerging markets More than one-third of total assets in UHNW UBS position Europe 435 1 UBS invested assets Total CHF 846 billion of which c
Slide 121: Strong position in attractive cross-border centers
Strong position in attractive cross-border centers CAGR 09-12 1 Excluding North America Source: UBS estimates based on market research and public data 7.3 6.7 Other Hong Kong, Singapore Europe (e.g. UK, Germany, Luxembourg) 2% 6% 2009 2012 3% Market trends There is a persistent client need for cross
Slide 122: Way ahead in onshore build-out
Way ahead in onshore build-out Market trends Onshore business represents vast majority of global wealth management assets Onshore assets are expected to grow more than twice as fast as cross-border assets Our position Strong position in most onshore markets Market position in top 5: Switzerland, Ger
Slide 123: Key messages
Key messages 1. Wealth Management undergoing stabilization and repositioning 2. Wealth Management is a strong franchise and well positioned to capture future growth 3. Optimized strong cross-border/onshore footprint by focusing on growth markets and Ultra High Net Worth clients 4. Successful strateg
Slide 124: Cornerstones of Wealth Management strategy
Cornerstones of Wealth Management strategy Transform the cross-border business based on market potential and regulatory environment Continue to grow in Switzerland, Hong Kong, Singapore and the UK, focusing on emerging markets Protect business and manage for profit Increase and strengthen geographic
Slide 125: Transform and expand our cross-border business
Transform and expand our cross-border business Manage Europe for profitability by further transforming international business in Switzerland with a differentiated approach reallocate people according to market opportunities Focus on APAC to further strengthen our position by strengthening and expand
Slide 126: Expand onshore position and manage for profitability
Expand onshore position and manage for profitability Manage Europe for profitability by focusing efforts on the largest markets Germany and UK with largest profit opportunities managing profitable growth in other markets, while compensating for cross-border losses with strong onshore presence Regain
Slide 127: New approach: Clients first
New ... Clients first Differentiated strategy, tailored towards market potential and client needs Selective expansion driven by profit potential and strategic fit Focus on revenue and profitability in addition to net new money UHNW with full profit and loss responsibility and direct access to Invest
Slide 128: Clients benefit from the integrated approach
Clients benefit from the integrated approach Wealth Management Investment Bank Global Asset Management Examples Topics Front-end Revenue synergies Back-end Cost synergies Integrated client coverage Product innovation Use of WM distribution channel Joint UHNW coverage Liquidity events (IPO, M&A) Equi
Slide 129: Key messages
Key messages 1. Wealth Management undergoing stabilization and repositioning 2. Wealth Management is a strong franchise and well positioned to capture future growth 3. Optimized strong cross-border/onshore footprint by focusing on growth markets and Ultra High Net Worth clients 4. Successful strateg
Slide 130: Very attractive economics in the years to come
5 Very attractive economics in the years to come Operating income CHF billion 10.0 9M09 annualized1 7.7 Medium- term target Profit before tax CHF billion 4.6 9M09 annualized1,2 2.8 Medium- term target 9M09 Medium-term target Invested assets CHF billion 849 >1,000 Gross margin bps 89 >100 Net new mon
Slide 131: Rebuild gross margin
Rebuild gross margin Our strategy to increase onshore and UHNW share dilutes our gross margin 89 Gross margin all WM clients 3-5 Portfolio shift effect 84-86 New baseline Adjusted pricing grids and enforced pricing Pricing Recovered investment performance, new products and increased penetration Mand
Slide 132: Expand market share
3 Expand market share 3Q09 Medium-term target Invested assets (CHF billion) Growth rates (x-times market CAGR) thereof UHNW 300 ~430 Europe 435 ~470 APAC 161 ~ 250 Switzerland 141 ~170 Emerging markets 109 ~150 Client advisors ~530 480 2,100 ~2,000 900 ~1,200 ~910 940 ~550 520 1.1x 1.5x 1.4x 2.7x 1.
Slide 133: Key takeaways
Key takeaways 4. Highly attractive pre-tax profit margin target of above 45% 3. Positive net new money growth will take time 1. Strong and leading business globally 2. Well positioned in key growth areas with an integrated firm approach
Slide 134: UBS Switzerland - Focus on Retail & Corporate Banking
SECTION 2 UBS Switzerland - Focus on Retail & Corporate Banking
Slide 135: Key messages
Key messages UBS as the number one franchise in Switzerland is very well positioned to capitalize on its integrated bank capabilities In Retail & Corporate we have a clear strategy to regain market share In Retail, we expect to grow through tailored life-cycle offerings and sales force effectiveness
Slide 136: UBS Switzerland
UBS Switzerland Retail Corporate WM CH Global AM CH IB CH Swiss Bank Every third household Every second corporation Every third wealthy individual No. 1 Investment Bank No. 1 in mutual funds & inst. asset mgmt One integrated management team Stronger focus on sales effectiveness & execution Continuou
Slide 137: Fully integrating the five businesses is a top priority
Fully integrating the five businesses is a top priority UBS Switzerland Drive revenue growth through cross- divisional client coverage Corporate Accelerate referrals across all businesses Systematically develop clients from Retail to Wealth Management WM CH Retail Client IB CH Global AM CH
Slide 138: Key messages
Key messages UBS as the number one franchise in Switzerland is very well positioned to capitalize on its integrated bank capabilities In Retail & Corporate we have a clear strategy to regain market share In Retail, we expect to grow through tailored life-cycle offerings and sales force effectiveness
Slide 139: Strong footprint in Retail
Strong footprint Every third household Almost 1/3 of credit card turnover Every fourth CHF invested in a mutual fund Every fifth mortgage Every sixth CHF in a client account / deposit 300 branches Reaching 80% of population Strong client base Stabilized business volume1 In Retail, strong footprint a
Slide 140: Regain market share with target client groups
Regain market share with target client groups Target clients Main advisory needs UBS offering Students Young professionals Families Pre-retirees UBS Comfort UBS Family UBS Young Professional UBS Campus Savings plan Easy & flexible access to account & payments Savings plan Easy & flexible access to a
Slide 141: Significant cross-selling opportunity along life-cycle
Significant cross-selling opportunity along life-cycle Cross-selling opportunity 1 Product penetration for cross-selling products only Product penetration in % of all clients (accounts)1 Savings Acc. Private Acc. Maestro E-Banking Credit Card Custody Fisca Mortgage Fund Acc. Revenue Pool 68 44 32 20
Slide 142: Drive branch productivity through sales force effectiveness
Drive branch productivity through sales force effectiveness High variance in productivity across branches Catchment area Branch contribution ~9x Adapt frontline capacity to reach benchmark levels (Indexed) Headcount reduction 2007 2008 3Q09 FC 4Q09 FC 1Q10 Revenue Pool 100 97 90 86 84 (16%) Systemat
Slide 143: In Corporate, strong client access and stabilized business
In Corporate, strong client access and stabilized business Stabilized business volume1 2007 2008 3Q09 BV 100 90 102 Corporate1 (Indexed) Strong client base Corporates in Swiss market UBS client share Total: ~45% Total: 299,000 285,000 Large corporates SMEs 14,000 >90% ~60% ~44% Top 1,000 Corporate 1
Slide 144: Cross-selling of integrated bank capabilities
Cross-selling of integrated bank capabilities 1 Difference in net revenues per client between clients with 1-3 products and clients with 4 or more products SMEs Large corporates Institutional clients x3.3 x8.0 x9.4 Cross-selling opportunity Revenue leverage1 UBS SME inte- grated offering Cross-divis
Slide 145: Diligent management of the WM&SB lending portfolio
Diligent management of the WM&SB lending portfolio Focus on single family home segment in Switzerland Well diversified book WM&SB lending portfolio1 Residential mortgages More than 40% with supplementary collateral Well diversified book, e.g. SME share above 40% >50% of unsecured lending with invest
Slide 146: Key messages
Key messages UBS as the number one franchise in Switzerland is very well positioned to capitalize on its integrated bank capabilities In Retail & Corporate we have a clear strategy to regain market share In Retail, we expect to grow through tailored life-cycle offerings and sales force effectiveness
Slide 147: PbT target increase of CHF 0.5 billion in Retail & Corporate
PbT target increase of CHF 0.5 billion in Retail & Corporate Operating income Profit before tax 3.8 4.3 9M09 annualized1 1.4 1.9 9M09 annualized1,2 C/I 60 C/I 54 Medium-term target Medium-term target 1 Annualized figures do not constitute estimates of the actual full-year results. Pro forma / prelim
Slide 148: Wrap-up: WM&SB medium-term targets
Wrap-up: WM&SB medium-term targets Operating income Profit before tax 11.5 14.3 4.2 6.5 C/I 63 C/I 54 7.7 10.0 3.8 4.3 2.8 4.6 1.4 1.9 Retail & Corporate Wealth Management 9M09 annualized1 Medium-term target Medium-term target 9M09 annualized1,2 1 Annualized figures do not constitute estimates of th
Slide 149: Disclaimer
Disclaimer This presentation and the information contained herein is provided solely for information purposes, and is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investm
Slide 150: Wealth Management Americas
Wealth Management Americas Robert McCann, CEO Wealth Management Americas Investor Day - November 17, 2009
Slide 151: 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 152: US wealth management landscape
US wealth management landscape Advantages Challenges Major US competitors WM US Scale economics Referrals from retail banking Higher AUM Everything to everyone Lack focus Pressure to fill seats Extensive infrastructure Product-centric culture Large enough to be relevant Correct size to be agile Clie
Slide 153: WMA returns to profitability
WMA returns to profitability WMA profit before tax 1Q09 2Q094 3Q09 Profit before tax (CHF million) (35) (221) 110 Cost / income ratio (%) 102.6 116.2 92.1 Net new money WMUS1 (CHF billion) 22.1 (0.3) (4.2) Invested assets (CHF billion) 673 695 694 Net new money (CHF billion) 16.2 (5.8) (9.9) FY2008
Slide 154: Priorities to execute WMA strategy
Priorities to execute WMA strategy Priority Description Target advisors Improve retention, develop productivity and selectively recruit Target clients Advisor-focused platform Cost efficiency Improve execution Focus on growth of target clients (HNW and UHNW) and develop solutions to fulfill WM needs
Slide 155: Medium-term targets of focus strategy
Medium-term targets of focus strategy Cost / income ratio Profit before tax 1 Excluding restructuring costs and goodwill impairment charge related to the sale of UBS Pactual 2 Annualized figures do not constitute estimates of the actual full-year results (CHF million) 37 >1,000 9M09 annualized1,2 Me
Slide 156: Disclaimer
Disclaimer This presentation and the information contained herein is provided solely for information purposes, and is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investm