Slide 1: Third quarter 2011 results
Third quarter 2011 results Third quarter 2011 results October 25, 2011
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 CHF 1.0 billion net profit in a very challenging quarter for both the industry and the bank Positive net new money in our wealth management businesses Our FX business in the Investment Bank performed well The implementation of our cost reduction program is on track We remain vigil
Slide 4: Market environment
Market environment YoY1 USD / CHF 20% FX rates EUR / CHF 13% CDS spreads GBP / CHF 17% 1.9 500 QoQ1 1.7 USD / CHF 5% EUR / CHF 7% 400 GBP / CHF 7% 1.5 300 1.3 200 1.1 0.9 100 0.7 0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 USD USD/ /CHF CHF EUR EUR // CHF CHF
Slide 5: Group revenues and net profit
Group revenues and net profit Eight consecutive quarters of net profit Group revenue and cost / income ratio 107% 115% 106% 84% 88% 81% 84% 70% 71% 73% 77% Cost / income ratio Group revenue 9.0 9.2 8.3 (CHF billion) 6.7 7.1 7.2 6.4 5.8 5.8 6.1 5.0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q
Slide 6: 3Q11 results
3Q11 results Gains on own credit and the sale of the strategic investment portfolio more than offset losses from the unauthorized trading incident and restructuring charges Sale of Unauthorized Restructuring Own strategic (CHF million) trading 3Q11 incident charges credit investment 3Q11 as reported
Slide 7: Impact of currency movements on UBS results
Impact of currency movements on UBS results The strengthening of the Swiss franc over the last year has significantly affected our revenues and profits Effect on reported results Sensitivity to currency movements on reported results in Swiss francs QoQ1 YoY1 Revenues ~80% of invested assets in non-C
Slide 8: 3Q11 operating expenses
3Q11 operating expenses Expenses were reduced significantly Operating expenses (adjusted)1 Personnel costs excluding restructuring charges decreased 6,179 6,210 6,124 by CHF 420 million 5,991 5,844 792 661 5,521 – Lower salary costs and reduced 714 798 779 (9%) variable compensation 702 5,045 659
Slide 9: Cost reduction program – update
Cost reduction program – update The implementation of our cost reduction program is on track Staff reductions Restructuring charges Largest share of staff reductions in the (~3,500 FTE) (~CHF 550 million) Investment Bank 10% 5% Approximately 45% of staff reductions 10% related to the Corporate C
Slide 10: 3Q11 tax
3Q11 tax Net tax benefit of CHF 40 million, mainly as a result of the recognition of additional deferred tax assets Tax expense / (benefit) 11 (131) 184 (413) (CHF million) 309 A B C D E (40) A Swiss deferred tax expenses with respect to the amortization of previously recognized DTA B Tax charge rel
Slide 11: Our global wealth management business is unrivaled
Our global wealth management business is unrivaled Continued progress despite market uncertainty Invested assets 30.9.11 CHF 1,371 billion UBS WM Americas 651 720 UBS Wealth Management WM + WMA 9M10 9M11 Pre-tax profit1 Total profits up despite challenging markets (CHF million) 1,989 2,258 Net new
Slide 12: Wealth Management
Wealth Management Positive net new money for the fifth consecutive quarter Operating income and pre-tax profit Revenues included CHF 433 million of 2,178 gains on the sale of the strategic 1,867 1 investment portfolio and were affected 1,759 1,745 by seasonally lower client activity and adverse ma
Slide 13: Wealth Management – operating income
Wealth Management – operating income Revenues benefited from gains on the sale of the strategic investment portfolio 827 786 787 791 768 748 720 Invested assets (CHF billion) 2,178 1,904 1,891 1,928 1,867 1,759 1,803 1,745 1 170 178 182 209 145 154 2 322 313 335 272 252 298 283 165 2 991 982 912 895
Slide 14: Wealth Management – gross margin
Wealth Management – gross margin1 Stable gross margin Gain on the sale of strategic investment portfolio Trading / Interest Fees 120 other 93 95 98 97 97 89 92 Adjusted for 2 bps (4) bps 2 bps reclassification3 (bps) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 972 3Q11 Pricing Lending Ongoing pricing realization
Slide 15: Wealth Management – invested assets and NNM by region
Wealth Management – invested assets and NNM by region1 30.9.11 invested assets 3Q11 NNM 9M11 NNM CHF 720 billion CHF 3.8 billion CHF 20.5 billion Europe2 273 (0.9) (3.4) Asia Pacific 154 1.8 8.9 Switzerland1,3 158 (0.6) 6.7 Emerging 135 3.5 8.3 markets4 o/w UHNW 292 4.2 16.3 1 Invested assets and ne
Slide 16: Wealth Management Americas
Wealth Management Americas Continued to build on a successful track record Operating income and pre-tax profit Reported revenues increased 1% – USD revenues grew 2% on higher net 1,338 1,284 1,294 interest and trading income – Realized gains on available-for-sale portfolio of CHF 31 million in 3Q1
Slide 17: Wealth Management Americas – operating income (USD)
Wealth Management Americas – operating income (USD) Increased net interest and trading income YoY +16% QoQ +2% 1,511 1,540 1,422 1,448 1,350 1,325 119 129 1,285 131 127 135 145 142 380 350 386 400 349 322 334 782 782 687 669 712 728 644 (USD million) 155 165 169 185 177 198 237 1Q10 2Q10 3Q10 4Q10 1
Slide 18: Wealth Management Americas – FA productivity (USD)
Wealth Management Americas – FA productivity (USD) Continuing to execute our focused strategy Achieved #1 position #1 in invested assets in revenue per FA vs. US peers per FA vs. US peers Revenue per FA, annualized Invested assets per FA 884 895 112 113 838 855 109 104 103 793 782 99 736 95 (USD tho
Slide 19: Investment Bank
Investment Bank Unauthorized trading incident and restructuring charges contributed to a loss Operating income excluding own credit1 Pre-tax profit and unauthorized trading incident2 CHF USD3 As reported Excluding own credit1, unauthorized trading (32%) (18%) incident2 and restructuring charges 3,09
Slide 20: Equities revenues (vs. 3Q10)
Equities revenues (vs. 3Q10)1 Resilient performances in cash and prime services in highly volatile markets CHF USD2 YoY comparison in USD terms2 (30%) (16%) Cash, (5%) 1,240 – Stable market share 31 – Similar levels of commission revenues 1,054 26 – Weaker trading revenues in difficult 333 904 895
Slide 21: FICC revenues (vs. 3Q10)
FICC revenues (vs. 3Q10) Strong performance in Macro CHF USD1 YoY comparison in USD terms1 (23%) (7%) Macro, +176% – FX: revenues more than doubled on high volatility and good client flows 1,353 – Rates: improved revenues, particularly in 79 derivatives and short-term interest rates 1,150 166 869
Slide 22: Investment banking revenues (vs. 3Q10)
Investment banking revenues (vs. 3Q10) Combined advisory and capital market revenues up 4% in USD terms CHF USD1 YoY comparison in USD terms1 422 410 215 418 482 256 Advisory, +9% (14%) +4% – Market share gains on subdued market activity 714 583 607 577 599 Equities capital markets, +61% 249 503
Slide 23: Global Asset Management
Global Asset Management CHF 79 million pre-tax profit Lower operating income Operating income and pre-tax profit – Decrease in net management fees driven by currency and market valuations 473 – Lower performance fees 444 399 Operating expenses decreased CHF 16 million despite CHF 12 million (CHF
Slide 24: Retail & Corporate
Retail & Corporate Progress in cost control contributed to stable pre-tax result1 Operating income and pre-tax profit Operating income included: 1,218 – Gains on the sale of the strategic investment portfolio contributed CHF 289 966 974 9292 683 million – Credit loss expenses of CHF 81 million 446
Slide 25: Retail & Corporate – loans, deposits and net interest margin
Retail & Corporate Continued positive trend in deposits Loans and deposits Net interest margin1 2.04% 138 1.97% 137 136 135 135 136 135 136 136 137 1.83% 135 1.80% 2.00% 1.69%1.75% 1.84% 1.79% 1.75% 1.74% 683 701 117 117 668 116 628 617 604 609 592 590 595 112 575 109 106 106 99 100 97 95 (CHF billi
Slide 26: Retail & Corporate – loan portfolio
Retail & Corporate – loan portfolio Well diversified across regions and counterparties in Switzerland; 88% of loans granted on a secured basis Secured by Loans, gross (30.9.11) Secured by commercial / residential property 100% = CHF 137 billion industrial property > 99% of loans with LTV1 > 98%
Slide 27: Corporate Center
Corporate Center Pre-tax loss of CHF 160 million CHF 209 million loss from the revaluation of UBS’s option to acquire the SNB StabFund’s equity – Option fair value CHF 1.7 billion (USD 1.9 billion) on 30.9.11 Revaluation of UBS’s option to acquire the SNB StabFund’s equity: contribution to UBS res
Slide 28: Capital position
Capital position Basel 2 tier 1 capital ratio increased to 18.4%, stable risk-weighted assets Basel 2 tier 1 capital increased to Basel 2 17.8% 17.9% 18.1% 18.4% CHF 38.1 billion 16.7% 16.0% 16.4% 16.1% 16.3% Basel 2 risk-weighted assets 15.4% 15.3% 15.6% increased slightly to CHF 207 billion 14
Slide 29: Balance sheet development
Balance sheet development Stable funded balance sheet as reduction in trading assets was offset by higher balances at central banks 2,275 Assets 428 2,015 Total excl. PRVs 160 CHF 910 billion 854 1,341 1,447 1,317 1,291 1,237 Positive RVs 774 146 422 401 359 537 Other assets 1 335 (CHF billion) 312
Slide 30: Significant reduction in our risk exposures
Significant reduction in our risk exposures Student loan auction rate securities 19.6 19.4 inventory + buyback commitment 18.7 18.1 16.2 Rated BB- or above Rated below BB- Basel 3 RWAs CHF billion 11.3 10.9 9.8 9.7 9.5 7.1 1.3 (USD billion) 5.7 1.5 16.6 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2
Slide 31: Exposures to selected European countries not rated AAA / Aaa
Exposures to selected European countries not rated AAA / Aaa1 The majority of our net exposures relates to traded products and tradable assets 30.9.11 Sovereigns2 Banks Other Total (CHF million) Gross Net3 Gross Net 3 Gross Net 3 Gross Net3 Italy 4,087 826 687 678 1,756 1,299 6,531 2,802 Belgium 404
Slide 32: IFRS equity attributable to UBS shareholders
IFRS equity attributable to UBS shareholders Significant increase in book and tangible book value Equity attributable to UBS shareholders 1 4,554 371 (218) 394 (84) 1,486 178 1,410 1,018 51,817 CHF 30.6.11 30.9.11 Change Book value per share 12.54 13.85 +10% 47,263 (CHF million) Tangible book value
Slide 33: Key messages
Key messages CHF 1.0 billion net profit in a very challenging quarter for both the industry and the bank Positive net new money in our wealth management businesses Our FX business in the Investment Bank performed well The implementation of our cost reduction program is on track We remain vigil
Slide 34: Appendix
Appendix 3% UBS
Slide 35: Invested assets
Invested assets Wealth Management Retail & Corporate 4 17 (49) (CHF billion) (CHF billion) 748 (4%) 720 (3%) 0 134 (0) (4) 130 30.6.11 NNM Market FX / Other 30.9.11 30.6.11 NNM Market FX / Other 30.9.11 Wealth Management Americas Global Asset Management 4 48 21 (51) (3) (30) (CHF billion) (CHF billi
Slide 36: Core tier 1 capital and RWAs (Basel 2)
Core tier 1 capital and RWAs (Basel 2) Core tier 1 capital1 1.0 1.1 0.4 (1.8) 33.8 (CHF billion) 33.1 2 30.6.11 Net profit attributable Own credit DTA and share-related FX and other 30.9.11 to shareholders components Risk-weighted assets 2.4 0.1 5.9 (7.1) (0.2) 206.2 207.3 (CHF billion) 3 3 3 3 30.6
Slide 37: Capital position – Basel 2.5
Capital position – Basel 2.5 Pro-forma Basel 2.5 tier 1 ratio of 13.2% on 30.9.11 Basel 2.5 RWAs of CHF 284 billion for the Group Basel 2 Basel 2.5 (CHF billion) Change RWAs RWAs Wealth Management & Swiss Bank 42 42 0 Wealth Management Americas 24 26 1 Global Asset Management 4 4 0 Investment Bank
Slide 38: Asset funding – September 2011
Asset funding – 30 September 2011 Assets Liabilities and equity Cash, balances with central Due to banks 38 banks and due from banks Money market 105 paper issued 64 Financial investments AFS 42 Cash collateral on securities CHF 99 lent and repurchase Cash collateral on securities billion agreements
Slide 39: Funding sources by currency – September 2011
Funding sources by currency – 30 September 2011 Customer deposits represent a significant source of funding in all major currencies (CHF billion) 54 10 2 0 3 107 42% USD1 46 22% CHF1 21 CHF 326 billion CHF 168 billion 9 56 55 132 9 10 25 6 5 49 23% EUR1 14% other1 15 45 CHF 178 billion 31 CHF 109 bi