Slide 1: Full year and fourth quarter 2017 results
Full year and fourth quarter 2017 results January 22, 2018
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: 2017 reported PBT up 32% to 5.4 billion
2017 reported PBT up 32% to 5.4 billion Strong pre-tax profit growth Strong performance +32% Reported PBT 5,409m, +32% YoY 5.4 Adjusted PBT 6,335m, +19% YoY +16% Strong capital position 3.6 CET1 capital ratio 13.8% WMA CET1 leverage ratio 3.7% (10)% Total loss-absorbing capacity 78bn +24% 1.6 +28% 1
Slide 4: Delivered 2.1bn net cost reductions since 2013
Delivered 2.1bn net cost reductions since 2013 3.9bn gross savings offset 1.8bn investments for growth and regulatory costs 3.9 Business 0.7 divisions Cost reduction examples: Non-core Business divisions: WM simplification, WMA and Legacy 0.5 (2.1bn) recruitment strategy, IB delayering Portfolio
Slide 5: Delivering positive operating leverage
Delivering positive operating leverage Net profit up 26% excluding net DTA write-down 2% lower operating expenses 3% higher 516 4921 operating income 56 747 2,865 4,030 3,204 1,165 Net profit Operating Operating Litigation Tax Net profit Net impact from Net profit 2016 income expenses excl. and NCI
Slide 6: Global Wealth Management – excellent 2017 results
Global Wealth Management – excellent 2017 results +14% Profit before tax bn 3.6 4.1 Profit growth driven by US, APAC and UHNW +12% 2.1 2.3 Invested assets Total and UHNW, 33% mandates1, up 160bps YoY end of period, trn 0.9 1.1 +5% Recurring revenues Recurring revenues increased on higher invested bn
Slide 7: Global Wealth Management – geographic footprint
Global Wealth Management – geographic footprint UBS is the only bank with leading positions across all regions Global1 Asia Pacific2 United States3 Western Europe4 Switzerland4 Emerging markets4,5 1 Scorpio Partnership Global Private Banking Benchmark 2017, by invested assets; 2 Asian Private Banker
Slide 8: Management priorities – Group
Management priorities – Group Drive profitable growth in Global Wealth Management Maintain focused leadership and grow profits in Asset Management, Investment Bank and Personal & Corporate Enhance diversification by capturing superior growth in APAC and the Americas, leverage our EMEA capabilities a
Slide 9: Management priorities – business divisions
Management priorities – business divisions Unify UHNW to better deliver the firm to clients seeking a more global, sophisticated and institutional offering Enhance delivery of banking products and services for HNW clients and utilization of global product suite Global Wealth Leverage technolog
Slide 10: Investing to win in the digital age
Investing to win in the digital age Enhancing and differentiating our business while accelerating efficiency and effectiveness Strategic priorities Key investment areas Ultimate Client Experience • Enhancing advisor productivity by improving platforms GWM • Enabling premium digital client interactio
Slide 11: RWA and LRD outlook
RWA and LRD outlook We consider LRD to be our binding capital constraint until the end of 2020 2018-2020 Basel III finalization from 1.1.22 ~20 ~280 ~201,2 RWA trajectory (illustrative) 237 Based on the Basel III international standards bn published by the BCBS in December 2017, implementation of
Slide 12: Our capital returns policy 2018-2020
Our capital returns policy 2018-2020 Attractive and flexible capital returns policy Target to grow the dividend per share at mid-to-high single digit percent per annum Return excess capital after dividend accruals, likely in the form of buy-backs, after considering our outlook 11
Slide 13: CHF 0.65 dividend per share proposed, up 8%
CHF 0.65 dividend per share proposed, up 8% Initiating 3 year buy-back program of up to CHF 2bn, targeting up to CHF 550m in 2018 Ordinary dividend Share Special dividend 0.152 0.25 buy-back Share buy-back 0.25 0.651 Illustrative 0.60 0.60 0.50 0.25 0.15 0.10 2011 2012 2013 2014 2015 2016 2017 2018
Slide 14: Performance targets and capital guidance 2018-2020
Performance targets and capital guidance 2018-2020 Cost/income ratio1 Profitability & growth1 Capital & resource guidance Group <75% ~15% RoTE2 excl. DTAs ~13% fully applied CET1 capital ratio ~3.7% fully applied CET1 leverage ratio Global Wealth Management 65-75% 10-15% PBT growth3 2-4% NNM growth
Slide 15: UBS Group AG results (consolidated)
UBS Group AG results (consolidated) CHFm, except where indicated FY16 FY17 4Q16 1Q17 2Q17 3Q17 4Q17 Total operating income 28,320 29,067 7,055 7,532 7,269 7,145 7,122 Total operating expenses 24,230 23,658 6,308 5,842 5,767 5,924 6,125 Profit before tax as reported 4,090 5,409 746 1,690 1,502 1,221
Slide 16: Global WM
Global WM PBT up 18% on positive operating leverage, strong invested asset and loan growth 4% positive operating leverage m Operating income +6% 133 (1) 1,025 (68) 59 31 Costs +2% 871 4Q16 PBT Transaction- Net interest Recurring net Other income / Costs 4Q17 PBT based income income fee income CLE Ef
Slide 17: Personal & Corporate Banking
Personal & Corporate Banking Best fourth quarter PBT since the crisis; highest FY NNBV growth since FY03 Net interest 161 159 157 157 154 margin bps PBT up 8%, concluding a strong year despite ongoing 395 437 436 428 headwinds from negative interest rates Profit 379 before tax m Transaction-base
Slide 18: Asset Management
Asset Management Very strong net new money; invested assets up 18% YoY 156 153 123 133 116 Profit before tax Net management fees down 6%, driven by the sale of fund m administration servicing units and a positive effect of fee true- 499 494 ups in 4Q16 450 479 469 31 26 36 38 27 Operating 468 443
Slide 19: Investment Bank
Investment Bank Full year PBT stable and RoAE 16% in a challenging environment 558 Profit 419 PBT reflected a challenging environment and higher CLE before 344 352 tax 168 m CCS down 9%, ECM and DCM growth offset by lower 1,936 2,098 1,919 Advisory 1,800 1,697 708 718 732 ICS down 8% Operating 7
Slide 20: Corporate Center
Corporate Center Profit before tax 4Q16 1Q17 2Q17 3Q17 4Q17 (234) (269) (479) (515) (764) Corporate Center total (m) Corporate Center results by unit (m) Services Operating income (59) (18) (20) (70) (46) Operating expenses 216 189 117 322 (114) o/w before allocations 2,028 1,983 1,912 2,122 2,072 2
Slide 21: Streamlining the Corporate Center
Streamlining the Corporate Center Significant improvement in Corporate Center performance PBT excl. litigation1 Litigation expense1 (1,295) (1,515) (1,971) Corporate Center PBT m (2,865) (1,495) (2,101) (2,606) (2,933) 2014 2015 2016 2017 Numbers in CHFm and adjusted unless otherwise indicated; refe
Slide 22: FY17 tax expense
FY17 tax expense Net profit reflects the enactment of the US Tax Cuts and Jobs Act (TCJA) 5,409 (1,575) 272 (2,865) 1,165 (76) Profit Tax expense related to Ordinary annual Net DTA write-down Non-controlling Net before tax FY17 taxable profits DTA revaluation related to TCJA interests profit US fe
Slide 23: Capital and leverage ratios (fully applied)
Capital and leverage ratios (fully applied) FY17 CET1 capital accretion 2.1bn in addition to dividend accruals Loss-absorbing capacity Capital ratio1 Leverage ratio bn % % Total loss- 1.1.20 78.5 1.1.20 absorbing 33.0% Capital ratio Leverage ratio capacity (TLAC) requirements requirements 31.1% 69.2
Slide 24: Summary
Summary Strong FY17 profits and >2bn CET1 capital accretion in 2017, CHF 0.65 dividend per share, up 8% Initiating a 3 year share buy-back program of up to CHF 2bn, targeting up to CHF 550m in 2018 Attractive and flexible capital returns policy Strategically investing in technology Numbers in CHF un
Slide 25: Appendix
Appendix &%% UBS
Slide 26: Global Wealth Management
Global Wealth Management Strong PBT growth on 4% operating leverage 20 19 19 18 Net margin 17 bps PBT up 18% as operating income increased by 6% and 1,050 1,013 1,041 1,025 expenses increased by 2% 871 Profit before tax m 3,847 3,979 3,959 3,967 4,068 720 Operating income up 6% on higher recurri
Slide 27: Global WM – regional performance
Global WM – regional performance Americas1 Asia Pacific Switzerland Europe Emerging markets 6,822 advisors 1,037 advisors 743 advisors 1,265 advisors 651 advisors 7% 166 51% 17% Invested 402 9% assets 1,195 31.12.17, 204 bn 16% 373 Profit contribution 33% 21% 16% 16% 14% FY2 37 36 38 38 41 35 36 36
Slide 28: Wealth Management
Wealth Management Solid end to a very strong year; 8% operating leverage 29 27 26 Net margin 21 23 bps PBT up 25%, driven by strong revenue momentum and lower 727 691 701 Profit 5731 640 litigation expenses before 511 tax m 1,782 1,929 1,882 1,915 1,899 Operating income up 7%, with strong progre
Slide 29: Wealth Management Americas (USD)
Wealth Management Americas (USD) Record quarter to end a record year 13 12 11 12 13 Net margin bps PBT up 9% on record revenues 358 351 390 324 330 Profit before tax m 2,200 2,049 2,053 2,132 2,126 372 396 390 348 383 Operating income up 7%, driven by recurring revenue lines Operating 429 4321 4
Slide 30: Net tax expense and deferred tax assets (DTAs)
Net tax expense and deferred tax assets (DTAs) Net tax expense Tax loss DTAs1,2 m bn, 31.12.17 4Q17 FY17 US UK CH Other Total Net deferred tax expense/(benefit) Recognized 5.6 0.0 0.0 0.1 5.7 5.7 (98) (272) with respect to net additional DTAs Unrecognized 7.9 2.3 0.0 1.2 11.2 11.1 of which: US (115)
Slide 31: Net cost reduction
Net cost reduction Cost base and net cost reductions bn 0.9bn1 1.2bn 1 23.9 1.1 22.5 0.7 0.9 0.3 5.8 6.3 3 0.8 0.2 0.1 (0.2) (0.1) (2.1) 10.3 9.1 1.5 2 0.2 0.7 0.6 16.3 15.0 15.0 8.6 7.8 FY13 FY15 FY15 FX Gross Increased Increased FY17 FX Incremental Dec-17 savings business permanent net cost annual
Slide 32: Swiss SRB leverage ratio requirements
Swiss SRB leverage ratio requirements UBS leverage ratio balance1 Requirements Meeting 1.1.20 requirements TLAC-eligible debt • 3.15% (27.9bn) existing UBS Group AG TLAC bonds2 2.0% • 14.6bn long-term debt maturing before 1.1.20 not counted in total loss absorbing capacity6 which may be replaced upo
Slide 33: Net interest income
Net interest income Continued upward trajectory for NII based on implied forwards Incremental NII based on 31.12.17 implied forwards1 LIBOR and EURIBOR implied forwards2 bn, assuming static balance sheet, constant FX rates and no management action As of 31.12.17, % 2018 2019 2020 2.5 vs. 2017 vs. 20
Slide 34: CHF strengthening
Earnings – illustration of FX translation impact Illustrative foreign currency translation impact on consensus Group PBT Group indicative currency distribution FX translation impact vs. FY18 consensus PBT of 7.5 billion2,3,4 as % of total for 20181 CHFbn, adjusted excluding litigation, change relati
Slide 35: Share buy-back program
Share buy-back program • Up to a maximum of CHF 2bn purchase value of UBS Group AG ordinary shares with up to CHF 550m Value in 2018¹ • We will publish a formal announcement and commence the buy-back program following approval by the Swiss Takeover Board • Commencement is expected around March 2018
Slide 36: Regional performance – 4Q17
Regional performance – 4Q17 bn Americas Asia Pacific EMEA Switzerland Global Total 4Q16 4Q17 4Q16 4Q17 4Q16 4Q17 4Q16 4Q17 4Q16 4Q17 4Q16 4Q17 WM 0.1 0.1 0.5 0.5 0.8 0.9 0.4 0.4 (0.0) 0.0 1.8 1.9 WMA 2.1 2.2 - - - - - - - - 2.1 2.2 P&C - - - - - - 0.9 1.0 - - 0.9 1.0 Operating AM 0.1 0.1 0.1 0.1 0.1
Slide 37: Regional performance – FY17
Regional performance – FY17 bn Americas Asia Pacific EMEA Switzerland Global Total 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 WM 0.4 0.3 2.0 2.2 3.4 3.5 1.5 1.6 (0.0) 0.0 7.3 7.6 WMA 7.8 8.3 - - - - - - - - 7.8 8.3 P&C - - - - - - 3.9 3.8 - - 3.9 3.8 Operating AM 0.5 0.5 0.4 0.4 0.4
Slide 38: Adjusted results
Adjusted results Adjusting items FY16 FY17 4Q16 1Q17 2Q17 3Q17 4Q17 m Operating income as reported (Group) 28,320 29,067 7,055 7,532 7,269 7,145 7,122 of which: WM 21 WMA 10 10 Gains on sale of financial assets available for sale P&C 102 IB 78 136 78 107 29 WM (23) Gains/(losses) on sales of subsidi
Slide 39: Important information related to this presentation
Important information related to this presentation Use of adjusted numbers Unless otherwise indicated, “adjusted” figures exclude the adjustment items listed on the previous slide, to the extent applicable, on a Group and business division level. Adjusted results are a non-GAAP financial measure as