Ubs Group Ag · SIX:UBSG
Ubs — Q2 2023 Earnings Presentation
41 slides from Ubs's earnings presentation, Aug 31, 2023
Slide 1: Second quarter 2023 Financial results
Second quarter 2023 Financial results 31 August 2023
Slide 2: Important information
Important information 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, statements relating to the anticipated effect of transactions and strategic initiat
Slide 3: Agenda
Agenda Update on strategy 2Q23 performance Q&A and Credit Suisse and financial overview integration Sergio P. Ermotti, Group CEO Todd Tuckner, Group CFO 2
Slide 4: Our strategy is unchanged and is accelerated by the acquisition of Credit Suisse
Our strategy is unchanged and is accelerated by the acquisition of Credit Suisse − Reinforced position as the only truly global wealth manager and leading universal bank Outstanding in Switzerland client franchises − Portfolio of leading franchises in Asset Management and the Investment Bank − Acqui
Slide 5: Enhancing client franchises and increasing scale
Enhancing client franchises and increasing scale Global Wealth Personal & Asset Investment Management Corporate Banking Management Bank Reinforcing our position as a Enhancing expertise and global Increasing scale with improved Strengthening our Investment leading and the only truly global reach wit
Slide 6: Improving our business mix, with unchanged capital allocation discipline
Improving our business mix, with unchanged capital allocation discipline RWA % Before 2012 restructuring Pre-acquisition of Credit Suisse Post-acquisition of Credit Suisse 3Q121 1Q23 2Q23, pro forma2 IB guidance IB guidance max 33% max 25% IB WM, AM, P&C and GF 1 Excluding Legacy Portfolio; 2 Pro fo
Slide 7: Update on integration
Update on integration 3% UBS
Slide 8: Diligent approach to identify and assess strategic options for Credit Suisse (Schweiz)
Diligent approach to identify and assess strategic options for Credit Suisse (Schweiz) Starting point Detailed assessment Prioritization 7 scenarios evaluated ranging from IPO, full or partial spin-offs, 4 factors considered in evaluation of all scenarios: 2 potential options identified, and assesse
Slide 9: Integration of Credit Suisse (Schweiz) is the best path forward
Integration of Credit Suisse (Schweiz) is the best path forward Credit Suisse (Schweiz) would struggle as a Full integration offers most benefits standalone entity even in a focused spin-off scenario Clients Workforce Best-in-class, Highly attractive employee 1 Sub-scale, low profitability complemen
Slide 10: Unwavering commitment to our clients, employees and the Swiss economy
Unwavering commitment to our clients, employees and the Swiss economy Client promise Employee promise Community promise Continued premium service with focus on Committed to fair treatment Contributing to the strength and stability client satisfaction of all employees of the Swiss financial system Ca
Slide 11: Stabilized flows, with 8bn of combined wealth management NNM/NNA
Stabilized flows, with 8bn of combined wealth management NNM/NNA with positive contribution from Credit Suisse quarter-to-date Wealth management Wealth management Swiss businesses Net new money / net new assets, USD bn Net new deposits, USD bn Net new deposits, CHF bn 28 16 14 9 7 10 1 3 5 5 4 4 (0)
Slide 12: Non-strategic assets and businesses to be exited through Non-core and Legacy
Non-strategic assets and businesses to be exited through Non-core and Legacy Non-core and Legacy composition Non-core and Legacy composition by instrument type by source 2Q23, USD bn 2Q23, USD bn 55 224 55 224 UBS NCL 3 6 − Positions and businesses not aligned with our strategy Equities 5 22 10 Asse
Slide 13: Non-core and Legacy rundown to drive lower costs and efficient capital release
Non-core and Legacy rundown to drive lower costs and efficient capital release Natural run-off profile1 Rundown approach RWA excluding operational risk, pro forma, USD bn Natural run-off profile to be accelerated with active unwinds when economically accretive 55 51 ~50% decrease in RWA from natural
Slide 14: Executing on plans to achieve greater than 10bn gross cost reductions
Executing on plans to achieve greater than 10bn gross cost reductions by year-end 2026 Non-core and Legacy and Credit Suisse Investment Bank restructuring Large majority of Credit Suisse IB costs and all Costs to decline substantially as businesses, assets and positions are exited costs within exist
Slide 15: We aim to substantially complete integration for the Group by year-end 2026
We aim to substantially complete integration for the Group by year-end 2026 Legal close June 2023 End-2023 End-2026 Key milestones and priorities Strategic ✓ Made decision on Credit Suisse (Schweiz) Business − Deliver substantial wind-down clarity transformation of Non-core and Legacy ✓ Largely defi
Slide 16: Working towards ~15% RoCET1
Working towards ~15% RoCET1 Underlying1 return on CET1 capital Illustrative ~15% ~15% ~14% underlying1 RoCET1 CET1 capital ratio 2026 exit rate over medium-term2 >10bn <70% gross cost saves by underlying1 cost/income end-2026 vs. FY22 ratio, 2026 exit rate Capital returns Committed to existing progr
Slide 17: 2Q23 performance and financial overview
2Q23 performance and financial overview Todd Tuckner, Group CFO 16
Slide 18: UBS Group 2Q23 results
UBS Group 2Q23 results Results include one month of results from Credit Suisse business divisions and Corporate Center 2Q23 profits m 29,239 Required for 238bn of 28,875 acquired RWA and restructuring • o/w: UBS sub-group 2.0bn1 • o/w: Credit Suisse sub-group (0.8bn)2 830 1,144 (28,925) Net profit P
Slide 19: Negative goodwill and overview of purchase price allocation adjustments
Negative goodwill and overview of purchase price allocation adjustments Negative goodwill Purchase price allocation (PPA) adjustments bn bn 57.6 See chart on the • (12.4bn) accrual accounted, expected Required for 238bn right for PPA to pull to par if held to maturity2 of acquired RWA and adjustment
Slide 20: The acquisition strengthens the foundation of the combined bank
The acquisition strengthens the foundation of the combined bank Tangible book value per share CET1 capital ratio Invested assets USD USD trn +49% +32% 24.6 14.4% 5.5 13.9% 4.2 16.5 1Q23 2Q23 1Q23 2Q23 1Q23 2Q23 19
Slide 21: Our balance sheet for all seasons remains the foundation of our success
Our balance sheet for all seasons remains the foundation of our success Total loss- absorbing 196bn 35.2% 11.68% capacity (TLAC) Gone concern 103bn loss-absorbing 18.5% 6.12% TLAC: 8.81% TLAC: 25.6% capacity Going concern capital 93bn 16.8% 5.56% 0.78% 13bn AT1 2.3% CET1 capital 80bn 14.4% 4.78% Goi
Slide 22: Prudent management of liquidity and funding
Prudent management of liquidity and funding Liquidity and funding Fully repaid higher cost SNB facilities Drawn SNB liquidity facilities1 175% 118% CHF bn LCR NSFR 120 Strong deposit base and flows enabled full repayment of PLB and ELA+ in 3Q PLB2 70 − ~550m funding costs in 2Q from PLB and ELA+, 10
Slide 23: 2Q23 UBS business divisions and Group Functions (IFRS) – excl. Credit Suisse
Excluding Credit Suisse 2Q23 UBS business divisions and Group Functions (IFRS) – excl. Credit Suisse Profit / (loss) before tax m ∆% YoY (4%) +65% (91%) (66%) +53% (42%) n/a (24%) (19%) excl. (14%) excl. +12% excl. gains on sale1 gains on sale1 gains on sale1 456 1,979 1,523 1,110 681 90 139 (495) G
Slide 24: UBS business divisions: Global Wealth Management
Excluding Credit Suisse UBS business divisions: Global Wealth Management Total revenues m USD m, except where indicated 2Q23 1Q23 2Q22 QoQ YoY PBT 1,110m, (4%) YoY +1% Total revenues +1% as higher NII was partly offset Total revenues 4,736 4,792 4,677 (1%) +1% by lower recurring net fee and transact
Slide 25: UBS business divisions: Personal & Corporate Banking (CHF)
Excluding Credit Suisse UBS business divisions: Personal & Corporate Banking (CHF) Total revenues, m CHF m, except where indicated 2Q23 1Q23 2Q22 QoQ YoY PBT 612m, +54% YoY +24% Total revenues 1,263 1,180 1,018 +7% +24% 1,263 Total revenues +24% reflecting increases in all Net interest income 731 65
Slide 26: UBS business divisions: Asset Management
Excluding Credit Suisse UBS business divisions: Asset Management Total revenues m USD m, except where indicated 2Q23 1Q23 2Q22 QoQ YoY PBT 90m (5%) excl. gains on sale1 Total revenues 499 502 1,372 (1%) (64%) Total revenues (64%) YoY, (5%) excl. gains (64%) Net management fees 492 479 515 +3% (5%) o
Slide 27: UBS business divisions: Investment Bank
Excluding Credit Suisse UBS business divisions: Investment Bank Total revenues m USD m, except where indicated 2Q23 1Q23 2Q22 QoQ YoY PBT 139m Global Markets revenues (11%) YoY (10%) Total revenues 1,892 2,349 2,094 (19%) (10%) ₋ Execution Services (10%) driven by lower Cash 2,094 Global Banking 371
Slide 28: 2Q23 Credit Suisse AG reported pre-tax loss of (8.9bn)
2Q23 Credit Suisse AG reported pre-tax loss of (8.9bn), (4.3bn) excluding acquisition-related effects; (2.1bn) adjusted loss (CHF, US GAAP) Credit Suisse AG 2Q23 reported to adjusted pre-tax income / (loss) reconciliation CHF m Acquisition-related effects 1,345 112 (330) (2,085) PPA adjustments 1,04
Slide 29: Credit Suisse adjusted 2Q23 results (CHF, US GAAP)
Credit Suisse adjusted 2Q23 results (CHF, US GAAP) 2Q23 Corporate Credit Suisse WM SB AM IB CRU Center sub-group1 Adjusted − Significant revenue attrition net revenues QoQ, mostly in the Investment CHF m Bank with core divisions more 802 925 251 220 (55) (453) 1,690 resilient ∆% QoQ (10%) (5%) +34%
Slide 30: Expecting underlying PBT to be positive in 2H23, around break-even in 3Q23
Expecting underlying PBT to be positive in 2H23, around break-even in 3Q23 2Q23 underlying PBT Pro forma, USD bn Outlook Taking immediate action to drive underlying1 profitability Other considerations 2.0 Not to scale C +/- A >3bn B annualized (>750m quarterly) A saves by year-end from actions to da
Slide 31: Closing remarks
Closing remarks Sergio P. Ermotti, Group CEO 30
Slide 32: Key messages
Key messages Our strategy is unchanged and is accelerated by the acquisition of Credit Suisse We remain focused on serving our clients with an enhanced client proposition, and we see positive momentum in our core businesses We are driving value creation through the integration and taking action to b
Slide 33: Appendix
Appendix 32
Slide 34: UBS Group results
UBS Group results USD m, except where indicated 2Q23 1Q23 4Q22 3Q22 2Q22 Total revenues 9,540 8,744 8,029 8,236 8,917 Negative goodwill 28,925 Credit loss expenses / (releases) 740 38 7 (3) 7 Total operating expenses 8,486 7,210 6,085 5,916 6,295 Operating profit / (loss) before tax 29,239 1,495 1,9
Slide 35: UBS Group AG 2Q23 results excluding negative goodwill, integration-related expenses and acquisition costs
UBS Group AG 2Q23 results excluding negative goodwill, integration-related expenses and acquisition costs (IFRS) UBS Group AG 2Q23 UBS June 2023 Credit USD m, except where indicated 2Q23 sub-group1 Suisse sub-group2 Operating profit / (loss) before tax 29,239 1,523 (1,209)3 o/w: Negative goodwill 28
Slide 36: CET1 capital and RWA walk
CET1 capital and RWA walk CET1 capital Risk weighted assets USD bn USD bn +80% +73% 5.0 0.3 80.3 64.0 1.4 556.6 31.1 (0.4) (0.3) 6.9 8.5 154.1 Credit Suisse 237.7 321.7 44.6 318.5 1Q23 Acquired Transitional PBT ex. Current tax Other1 2Q23 1Q23 Credit and Non- Market Operational Currency 2Q23 CS CET1
Slide 37: Lower negative goodwill vs. F-4 driven by 5M23 Credit Suisse operating losses
Lower negative goodwill vs. F-4 driven by 5M23 Credit Suisse operating losses and higher PPA marks on loans and loan commitments Pro forma negative goodwill estimated Negative goodwill included in 28.9bn negative goodwill; 5.9bn in the SEC registration statement on Form F-4 2Q23 results below F-4 es
Slide 38: Non-core and Legacy composition
Non-core and Legacy composition Non-core and Legacy 2Q23, USD bn 55 224 − Equities includes electronic trading, index and single stock, equity swaps, convertibles, share-backed lending Equities 5 22 positions Macro 8 32 − Macro includes interest rate swaps, cross currency swaps, options, swaptions 2
Slide 39: Alignment of Credit Suisse AuM to UBS invested assets
Alignment of Credit Suisse AuM to UBS invested assets Credit Suisse AuM to UBS invested assets USD bn, except where indicated 149 1,357 194 AM 436 1,220 UBS policies permit (466) (15) the recognition of invested assets when 421 independent services SB 585 are provided by more than one business 119 d
Slide 40: UBS Group structure (as of 31.8.23)
UBS Group structure (as of 31.8.23) 1 Other non-US subsidiaries are generally held either directly by UBS AG or indirectly through UBS Switzerland AG or UBS Asset Management AG; 2 Of which 98% held by Credit Suisse AG and 2% held by 39 UBS Group AG; 3 Of which 99% directly held by UBS Americas Inc.
Slide 41: Cautionary statement regarding forward-looking statements
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, statements rela