Slide 1: Fourth quarter 2011 results
Fourth quarter 2011 results Fourth quarter 2011 results February 7, 2012
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: FY11 results: Maintained industry-leading capital ratios
FY11 results Maintained industry-leading capital ratios Basel 2.5 tier 1 capital ratio • Significantly improved and industry-leading capital ratios +~330 Capital, bps • Sound funding and liquidity positions 16.0 liquidity and ~12.7 funding • Year-end Basel 2 tier 1 capital ratio of 19.7%, Basel 2.5
Slide 4: FY11 results: WM, WMA and R&C delivered a 29% increase in pre-tax profit
FY11 results WM, WMA and R&C delivered a 29% increase in pre-tax profit Net new money • Significantly increased net new money Net new 42 money and • WM businesses added CHF 50 billion more than prior year invested • Global AM attracted ~CHF 12 billion of third party inflows assets (14) • Stable inve
Slide 5: 4Q11 results: Net profit of CHF 0.4 billion in a challenging quarter
4Q11 results Net profit of CHF 0.4 billion in a challenging quarter • CHF 0.6 billion pre-tax profit • Positive net new money in our wealth management businesses • Resilient performance in Retail & Corporate • Our Rates businesses in the Investment Bank performed well, solid performance in FX YoY Si
Slide 6: Market environment
Market environment1 Equity trading volumes2 YoY Equity market performance ~5-10% QoQ ~15-20% 1.1.10 = 100 1.1.10 = 100 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 NYSE SMI FTSE 100 SPI S&P 500 FTSE 100 MSCI World 1 YoY USD / CHF 6% FX rates EUR / CHF 7% CD
Slide 7: Risk-weighted assets—Basel 3
Risk-weighted assets—Basel 31 Swift execution on risk-weighted asset reduction • CHF (145) billion net reduction of IB RWAs • CHF 15 billion RWA growth in other businesses ~4002 ~21 ~380 ~20 Group ~340 SNB StabFund3 ~290 ~270 ~804 Legacy: CHF ~18 billion reduction ~62 • CHF 11 billion of reduction d
Slide 8: Transfer of legacy positions to Corporate Center
Transfer of legacy positions to Corporate Center Legacy positions will be reported as a separate segment within the Corporate Center from 1Q12 The unit will include the Investment Bank’s legacy portfolio and our option to buy the equity of the SNB Stabfund Legacy assets, Basel 3 pro-forma RWAs1
Slide 9: 4Q11 results
4Q11 results (CHF million) WM WMA R&C Global AM IB CC Group Income 1,672 1,329 941 463 1,798 (152) 6,051 Credit loss (expense) / recovery 1 (5) (13) 3 (14) Own credit (71) (71) Total operating income 1,673 1,325 928 463 1,730 (152) 5,967 Personnel expenses 749 975 414 242 1,084 39 3,503 Non-personne
Slide 10: Our wealth management businesses are unrivaled
Our wealth management businesses are unrivaled Invested assets 31.12.11 CHF 1,459 billion UBS WM Americas 651 709 720 7 750 UBS Wealth Management WM + WMA FY10 FY11 Pre-tax profit1 2,409 2,839 (CHF million) Invested assets Our footprint: (CHF billion) 1,457 1,459 ~550 offices Net new money (CHF bill
Slide 11: Wealth Management
Wealth Management Continued NNM inflows and increased invested assets Operating income Subdued client sentiment led to lower and pre-tax profit 2,178 activity in line with lower market 1,928 1,867 1 volumes 1,745 1,673 Lower interest income following the sale 748 750 791 of the SIPF3 in 3Q11 888
Slide 12: Wealth Management—gross margin
Wealth Management—gross margin1 Continued progress on FY basis with softer 4Q11 margin Gain on the sale of strategic investment portfolio 120 2 98 97 97 SIPF Interest Trading / 93 95 92 95 Fees other 89 91 (2) 1 (4) (1) Transaction-based fees down significantly on lower client activity ~1bp of margi
Slide 13: Wealth Management Americas
Wealth Management Americas Maintained #1 vs. US peers in invested assets per FA, revenue per FA and NNM per FA Operating income and pre-tax profit Reported revenues increased 2% – USD revenues decreased 5% on lower asset- 1,347 1,294 1,325 1,284 based fees and lower transactional revenues – Realiz
Slide 14: Wealth Management Americas—lending balances (USD)
Wealth Management Americas—lending balances (USD) Prudently managed growth in lending balances driving net interest income 1 237 Net interest income 218 213 198 185 177 24.7 25.5 165 169 23.5 2.0 155 1.7 21.4 1.4 20.3 4.3 18.9 19.4 1.1 3.7 4.3 18.5 0.8 0.4 0.6 2.7 3.0 0.9 1.0 0.2 0.9 2.4 2.6 2.8 0.8
Slide 15: Investment Bank
Investment Bank Performance improved on a weak 3Q11 Operating income excluding own credit1 Pre-tax profit and cost / income ratio and unauthorized trading incident2 Cost / income ratio excluding own credit1, unauthorized trading incident2 and CHF USD3 restructuring charges (33%) (29%) Cost / income
Slide 16: Investment Bank—Equities revenues
Investment Bank—Equities revenues Lower volumes and reduced client activity impacted revenues YoY comparison in USD terms1,2 CHF USD1 Cash, (33%) (26%) (21%) – Lower volumes led to reduced commissions in all regions 945 974 – Solid trading performance in APAC was +12% +3% offset by weaker revenues
Slide 17: Investment Bank—FICC revenues
Investment Bank—FICC revenues Strong performance in Macro; Credit and Emerging Markets up QoQ YoY comparison in USD terms1 CHF USD1 Macro, +131% – Rates: strong performance in both short- (13%) (8%) term and long-term rates +21% +12% – FX: solid revenues helped by currency 895 volatility 814 102 9
Slide 18: Investment Bank—IBD revenues
Investment Bank—IBD revenues Advisory outperformed with revenues up despite lower global fee pool YoY comparison in USD terms1 CHF USD1 Advisory, +3% 910 215 280 938 256 308 – Revenues up despite 19% decrease in (49%) (45%) global fee pool 1,021 1,052 Equities capital markets, (72%) – Participat
Slide 19: Global Asset Management
Global Asset Management Improved pre-tax profit on higher management and performance fees Operating income and pre-tax profit Operating income increased 16% – Increase in net management fees driven by 496 currency, market valuations and the 444 463 399 acquisition of the ING Investment Management
Slide 20: Retail & Corporate
Retail & Corporate Resilient underlying performance Operating income and pre-tax profit Lower credit loss expenses offset lower 1,218 revenues – Interest income was down following the 965 974 929 1 928 sale of the SIPF3 in 3Q11 and the continued low interest rate environment 683 – Trading income d
Slide 21: Retail & Corporate: deposits and net interest margin
Retail & Corporate Continued positive trend in deposits; net interest margin reflects sale of strategic investment portfolio in 3Q11 Loans and deposits Net interest margin1 (KPI) 136 136 136 137 1.83% 135 135 135 135 1.80% 1.69% 1.67% 1.79% 1.75% 1.74% 1.75% 604 609 592 617 590 595 575 567 117 117 1
Slide 22: 4Q11 operating expenses
4Q11 operating expenses Lower expenses on lower restructuring charges, partly offset by currency effects and UK Bank Levy Increase in non-personnel Operating expenses expenses mainly due to UK Bank Levy (CHF 109 million), 6,571 6,200 higher professional fees and 6,110 5,840 5,928 currency effects
Slide 23: FY11 operating expenses
FY11 operating expenses Costs down CHF 2.1 billion YoY, driven by lower personnel expenses 24.5 Significant non-recurring items 22.4 2.1 WMA financial advisor compensation1 2.0 22.2 Contractors, other personnel expenses, pension and other (2.1) post-employment benefit plans, social security2 2.7 20.
Slide 24: Bonus pool
Bonus pool 2011 bonus pool down 40% YoY1 Bonus pool down 40% YoY 2010 2010 IFRS 2011 60 expense 2011 4,082 IFRS 2010 PVTR expense and Amortization bonus others2 of prior year 3,407 1,574 awards pool Amortization 4,245 1,471 54 of prior year awards Awards for 2011 PVTR 1,6014 2010 and 707 performance
Slide 25: Amortization of deferred compensation
Amortization of deferred compensation We expect a CHF 0.5 billion reduction in the awards to be amortized in 2012 (CHF 1.1 billion) vs. 2011 (CHF 1.6 billion)1 Amortized Special Annual plan awards 1.6 awards 0.3 granted Unrecognized awards to be to be granted in 2012 Unrecognized amortized2 Forfeite
Slide 26: Tax expense
Tax expense 4Q11 net tax expense of CHF 189 million, FY11 effective tax rate of 17.5% 4Q11 tax expense / (benefit) 61 (117) 99 41 (CHF million) CHF 56 million 189 105 4Q11 tax A B C D E expense A Other net tax expenses in respect of 4Q11 taxable profits B Tax charge relating to re-measurement of the
Slide 27: Exposures to Eurozone countries rated lower than AAA / Aaa
Exposures to Eurozone countries rated lower than AAA / Aaa1 Our exposures are comparatively low and we continue to manage them carefully 31.12.11 Sovereigns2 Local governments Banks Other3 Total Before Net of Before Net of Before Net of Before Net of Before Net of (CHF million) hedges4 hedges hedges
Slide 28: Regulatory capital ratios
Regulatory capital ratios We are ahead of our plan; Basel 2.5 tier 1 capital ratio increased to 16.0% Basel 2.5 Basel 3 Basel 3 phased-in scenario1,2 2019 rules fully applied1 Hybrid tier 1 capital 16.0%4 Common equity Core tier 1 capital 1 Goodwill / intangible assets3 1.9% 2 Capital deduction item
Slide 29: 4Q11 results
4Q11 results Net profit of CHF 0.4 billion in a challenging quarter • CHF 0.6 billion pre-tax profit • Positive net new money in our wealth management businesses • Resilient performance in Retail & Corporate • Our Rates businesses in the Investment Bank performed well, solid performance in FX YoY Si
Slide 30: Appendix
Appendix 3% UBS
Slide 31: Target capital structure
Target capital structure A non-dilutive structure is our preferred form of loss-absorbing capital Swiss Target regulation capital (1.1.19) structure Low-trigger Loss-absorbing capital 6% capital 6% High-trigger or common equity capital 3% 13% Common equity 10% (Regulatory capital capital as % of RWA
Slide 32: Core tier 1 capital and RWAs (Basel 2.5)
Core tier 1 capital and RWAs (Basel 2.5) Core tier 1 capital1 0.1 0.3 0.2 0.4 34.1 (CHF billion) 33.2 2 30.9.11 Net profit attributable Own credit Share-related FX and other 31.12.11 to shareholders components Risk-weighted assets 0.1 (2.7) (54.7) 4.9 283.8 9.5 (CHF billion) 241.0 3 3 3 3 30.9.11 Cr
Slide 33: Basel 2 capital ratios
Basel 2 capital ratios Hybrid tier 1 capital Tier 1 ratio (%) 19.7% Core tier 1 capital Core tier 1 ratio (%) 18.1% 18.4% 17.8% 17.9% 17.5% 16.4% 16.7% 16.0% 16.1% 16.3% 15.4% 15.3% 15.6% 14.2% 13.0% 12.5% 11.9% 39.1 37.4 38.1 35.3 36.4 33.7 34.8 4.4 33.4 4.3 4.3 31.8 4.6 5.2 4.9 7.2 7.0 7.2 33.1 33
Slide 34: Asset funding—31 December 2011
Asset funding—31 December 2011 Liabilities and equity Assets Cash, balances with central Due to banks 30 banks and due from banks 64 Money market paper issued 71 Financial investments AFS 53 CHF 162 Cash collateral on securities lent billion and repurchase agreements 111 collateral Cash collateral o
Slide 35: Balance sheet development
Balance sheet development 2,275 2,015 Assets Total excl. PRVs CHF 933 billion 428 160 854 1,447 1,419 Positive RVs 1,341 1,317 1,291 1,237 1 774 Other assets1 146 422 401 359 537 487 335 Trading portfolio (CHF billion) 312 192 167 157 154 135 138 584 232 229 236 223 206 182 Collateral trading 348 18
Slide 36: Diversified funding with a long-term funding surplus
Diversified funding with a long-term funding surplus Customer deposits are a stable source of funding Assets Liabilities & equity 31.12.11 Equity Surplus stable funding comfortably exceeds Other projected requirements under stress scenario5 assets1 Other liabilities CHF 6 billion net new deposit
Slide 37: Our liquidity position is strong
Our liquidity position is strong We continue to have substantial excess liquidity 23% of our funded balance sheet assets We continue to be compliant with are in the form of available liquidity1 FINMA’s liquidity regime Funded balance sheet (31.12.11) FINMA’s liquidity requirements are broadly Liab
Slide 38: Funding sources by currency—31 December 2011
Funding sources by currency—31 December 2011 Customer deposits represent a significant source of funding in all major currencies 362 87 113 20 45% USD1 20% CHF1 CHF 366 billion CHF 164 billion 49 58 133 52 7 15 12 8 8 4 21% EUR1 49 14% other1 14 47 CHF 172 billion 35 CHF 114 billion 58 14 (CHF billi
Slide 39: IFRS equity attributable to UBS shareholders (4Q11)
IFRS equity attributable to UBS shareholders (4Q11) 1 1,734 379 285 80 (49) 693 (4) (43) 393 53,551 CHF 30.9.11 31.12.11 Change 51,817 Book value per share 13.85 14.29 +3% (CHF million) Tangible book value per share 11.34 11.70 +3% 30.9.11 Net profit Foreign Financial Cash flow Treasury Deferred Emp
Slide 40: IFRS equity attributable to UBS shareholders (FY11)
IFRS equity attributable to UBS shareholders (FY11) 1 6,731 1,537 293 36 (505) (63) 495 706 4,233 53,551 CHF 31.12.10 31.12.11 Change Book value per share 12.35 14.29 +16% (CHF million) 46,820 Tangible book value per share 9.76 11.70 +20% 31.12.10 Net profit Foreign Financial Cash flow Treasury Defe
Slide 41: Invested assets
Invested assets Wealth Management Retail & Corporate 3 18 9 4% 3% 720 750 (CHF billion) (CHF billion) 1 2 0 130 134 30.9.11 NNM Market FX / Other 31.12.11 30.9.11 NNM Market FX / Other 31.12.11 Wealth Management Americas Global Asset Management 2 30 26 0 12 40 (CHF billion) 10% (CHF billion) 651 9%
Slide 42: Wealth Management—operating income
Wealth Management—operating income Lower transaction-based revenues and lower interest income led to decrease in revenues Invested assets 827 786 787 791 768 (CHF billion) 748 750 720 2,178 1,904 1,891 1,928 1,867 1,759 1,803 1,7451 170 178 198 2 233 2 1,673 145 154 232 2 322 313 298 319 2 259 2 216
Slide 43: Wealth Management—invested assets and NNM by region
Wealth Management—invested assets and NNM by region1 Continued NNM inflows in Asia Pacific, emerging markets and UHNW 31.12.11 invested assets 4Q11 NNM FY11 NNM CHF 750 billion CHF 3.1 billion CHF 23.5 billion Europe2 280 0.7 (4.0) Asia Pacific 167 2.8 11.8 Switzerland1,3 161 (1.8) 5.0 Emerging 142
Slide 44: Wealth Management Americas—operating income (USD)
Wealth Management Americas—operating income (USD) Full-year USD operating income increased 12% YoY +2% QoQ (5%) 1,511 1,540 1,422 1,448 1,456 1,350 1,325 119 129 1,285 131 127 135 135 145 142 380 350 386 400 332 349 322 334 782 782 751 687 669 712 728 644 (USD million) 1 155 165 169 185 177 198 237
Slide 45: Wealth Management Americas—FA productivity (USD)
Wealth Management Americas—FA productivity (USD) Continuing to execute our focused strategy #1 position in revenue #1 in invested assets per FA vs. US peers per FA vs. US peers Revenue per FA, annualized Invested assets per FA 884 895 113 112 838 855 842 109 108 104 103 793 782 99 736 95 (USD thousa
Slide 46: Corporate Center
Corporate Center Pre-tax loss of CHF 273 million CHF 129 million loss from the revaluation of UBS’s option to acquire the SNB StabFund’s equity – Option fair value CHF 1.6 billion (USD 1.7 billion) on 31.12.11 Revaluation of UBS’s option to acquire the SNB StabFund’s equity: contribution to UBS re
Slide 47: Restructuring charges
Restructuring charges Restructuring charges1 4Q11 FY11 (CHF million) Pers. Non-pers. Total Pers. Non-pers. Total Wealth Management (1) (2) (3) 64 18 82 Wealth Management Americas 0 (1) 0 5 5 10 Retail & Corporate 9 0 8 29 3 32 Global Asset Management 13 1 14 19 7 26 Investment Bank (10) (2) (13) 143
Slide 48: Risk exposures
Risk exposures Student loan auction rate securities Carrying value Carrying value Basel 3 RWAs (USD billion) (USD billion) (CHF billion) 20.2 18.1 18.0 (69%) 9.8 9.7 9.5 (USD billion) 7.1 7.1 7.4 5.7 5.7 4Q08 4Q09 4Q10 1Q11 2Q11 3Q11 4Q11 3Q11 4Q11 3Q11 4Q11 SL ARS buyback commitment (par value) Rat
Slide 49: Headcount
Headcount 4Q11 (1,101) (340) (39) (63) (35) (622) (2) 65,921 64,820 30.9.11 31.12.11 Wealth Global Wealth Retail & Investment Corporate Management Asset Management Corporate Bank Center Americas Management FY11 203 241 396 80 269 (123) (659) 64,617 64,820 31.12.10 31.12.11 48
Slide 50: Enhancements to reporting—effective 1Q12
Enhancements to reporting—effective 1Q12 Wealth Management and Retail & Corporate will become separate business divisions Legacy portfolio to be reported in the Corporate Center Refinement of client assets and invested assets disclosures for Retail & Corporate Disclosure of net new business volume m