Ubs Group Ag · SIX:UBSG
Ubs — UBS AG (Amna, Amnd, Amtr, Amub, BDCX, BDCZ, Cefd, DJCB, Esus, Fedl, HDLB, Ifed, Iwdl, Iwfl, Iwml, Mlpb) — Q3 2011 Earnings Presentation
39 slides from Ubs's earnings presentation, Oct 25, 2011
Slide 1: Third quarter 2011 results
Third quarter 2011 results October 25, 2011 Third quarter 2011 results
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 FX rates Equity market performance 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 1.1.10 = 100 YoY1 USD / CHF ? 20% EUR / CHF ? 13% GBP / CHF ? 17% 3Q11 CDS spreads Volatility SMI SPX FTSE 100 MSCI World 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 QoQ1 USD / CHF ? 5% EUR
Slide 5: Group revenues and net profit
Group revenues and net profit Eight consecutive quarters of net profit Group revenue and cost / income ratio Net profit attributable to shareholders Group revenue Cost / income ratio (CHF billion) (CHF billion)
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 1 Total loss of CHF 1,951 million (USD 2,229 million) due to unauthorized trading activity (CHF 1,849 million P&L and CHF 102 m
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 Wealth Management Americas Global Asset Management Wealth Management Investment Bank Capital
Slide 8: 3Q11 operating expenses
3Q11 operating expenses Expenses were reduced significantly Personnel costs excluding restructuring charges decreased by CHF 420 million Lower salary costs and reduced variable compensation Majority of variable compensation costs related to the amortization of prior years' awards Non-personnel costs
Slide 9: Cost reduction program - update
Cost reduction program - update The implementation of our cost reduction program is on track Restructuring charges (~CHF 550 million) 30% 10% 5% 55% Staff reductions (~3,500 FTE) Investment Bank WM&SB Global AM WMA 45% 10% 10% 35% Largest share of staff reductions in the Investment Bank Approximatel
Slide 10: 3Q11 tax
3Q11 tax Swiss deferred tax expenses with respect to the amortization of previously recognized DTA Tax charge relating to re-measurement of the value of Swiss DTA Other current net tax expenses in respect of 3Q11 taxable profits Tax benefit arising from the unauthorized trading incident Tax benefits
Slide 11: Our global wealth management business is unrivaled
Our global wealth management business is unrivaled Continued progress despite market uncertainty Net new money (CHF billion) Pre-tax profit1 (CHF million) Advisors Total profits up despite challenging markets 9M10 9M11 NNM inflows in UHNW, Asia Pacific, emerging markets and the US Improved retention
Slide 12: Wealth Management
(CHF million) Wealth Management Operating income and pre-tax profit Positive net new money for the fifth consecutive quarter Net new money Revenues included CHF 433 million of gains on the sale of the strategic investment portfolio and were affected 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 Interest Recurring fees Trading Other income (CHF million) Invested assets (CHF billion) Transaction-based fees Credit loss (expense) / recovery 1 Adjusted for the gain on the sale of
Slide 14: Wealth Management - gross margin
Wealth Management - gross margin1 (bps) 1 Operating income before credit loss (expense) or recovery (annualized) / average invested assets; gross margin excludes valuation adjustments on a property fund of CHF 27 million in 3Q11, CHF 17 million in 2Q10 and CHF 28 million in 1Q10 2 Adjusted for gain
Slide 15: Wealth Management - invested assets and NNM by region
4 Wealth Management - invested assets and NNM by region1 30.9.11 invested assets CHF 720 billion 1 Invested assets and net new money based on client domicile. Invested assets and net new money for "Swiss wealth management" and "International wealth management" as shown in UBS's quarterly report are
Slide 16: Wealth Management Americas
Wealth Management Americas Reported revenues increased 1% USD revenues grew 2% on higher net interest and trading income Realized gains on available-for-sale portfolio of CHF 31 million in 3Q11 compared with CHF 25 million in 2Q11 Cost / income ratio stable at 89% CHF 13 million net restructuring co
Slide 17: Wealth Management Americas - operating income (USD)
Wealth Management Americas - operating income (USD) Increased net interest and trading income YoY +16% Interest Recurring fees Trading Other income Transaction-based fees Credit loss (expense) / recovery (USD million) QoQ +2%
Slide 18: Wealth Management Americas - FA productivity (USD)
Wealth Management Americas - FA productivity (USD) Continuing to execute our focused strategy Invested assets per FA Achieved #1 position in revenue per FA vs. US peers #1 in invested assets per FA vs. US peers Revenue per FA, annualized (USD thousand) (USD million)
Slide 19: Investment Bank
Investment Bank Unauthorized trading incident and restructuring charges contributed to a loss 1 Own credit on financial liabilities designated at fair value (CHF 1,765 million gain in 3Q11) 2 Unauthorized trading incident in 3Q11 (CHF 1,849 million negative revenues) 3 USD revenues based on CHF reve
Slide 20: Equities revenues (vs. 3Q10)
Equities revenues (vs. 3Q10)1 YoY comparison in USD terms2 Cash, (5%) Stable market share Similar levels of commission revenues Weaker trading revenues in difficult environment Derivatives, (55%) Trading losses in volatile market conditions Prime services, +12% Improvement across most product lines
Slide 21: FICC revenues (vs. 3Q10)
FICC revenues (vs. 3Q10) YoY comparison in USD terms1 Macro, +176% FX: revenues more than doubled on high volatility and good client flows Rates: improved revenues, particularly in derivatives and short-term interest rates Credit, (N/M) Mark-to-market losses on trading positions in difficult environ
Slide 22: Investment banking revenues (vs. 3Q10)
Investment banking revenues (vs. 3Q10) YoY comparison in USD terms1 Advisory, +9% Market share gains on subdued market activity Equities capital markets, +61% Market share gains Fixed income capital markets, (19%) Reduced revenues in leveraged finance Other, (N/M) Increased risk management charges r
Slide 23: Global Asset Management
Global Asset Management Lower operating income Decrease in net management fees driven by currency and market valuations Lower performance fees Operating expenses decreased CHF 16 million despite CHF 12 million restructuring charges Personnel costs reduced by CHF 18 million Non-personnel expenses sta
Slide 24: Retail & Corporate
Retail & Corporate (CHF million) Progress in cost control contributed to stable pre-tax result1 Operating income included: Gains on the sale of the strategic investment portfolio contributed CHF 289 million Credit loss expenses of CHF 81 million including a CHF 73 million collective loan loss provis
Slide 25: Retail & Corporate - deposits
Retail & Corporate Continued positive trend in deposits Growth in client deposits; maintained discipline on deposit interest rates Deposits exceed loans by CHF 70 billion for WM&SB overall Structural pressure on net interest margin remains (low interest rate environment, competitive pricing pressure
Slide 26: Retail & Corporate - loan portfolio
Loans, gross (30.9.11) 100% = CHF 137 billion Well diversified across regions and counterparties in Switzerland; 88% of loans granted on a secured basis ? > 99% of loans with LTV1 lower or equal to 80% ? Average LTV1 of 60% ? 99% covered by Swiss properties ? > 98% of loans with LTV1 below or equal
Slide 27: Corporate Center
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 CHF 78 million gain from the sale of property in Switzerland Treasury income after allocations to the business divisions was CHF 35 million Op
Slide 28: Capital position
Capital position Basel 2 tier 1 capital increased to CHF 38.1 billion Basel 2 risk-weighted assets increased slightly to CHF 207 billion RWAs would have decreased without the unauthorized trading incident Unauthorized trading incident resulted in CHF 11.4 billion increase in market risk RWAs; this e
Slide 29: Balance sheet development
Balance sheet development 1 Including cash collateral on derivative transactions 2 Including financial liabilities designated at fair value 3 Percentages based on total balance sheet size excluding negative replacement values (CHF billion) Total excl. PRVs CHF 910 billion Assets Liabilities and equi
Slide 30: Significant reduction in our risk exposures
Significant reduction in our risk exposures 1.5 5.7 Rated below BB- Rated BB- or above Basel 3 RWAs CHF billion 16.6 1.3 (USD billion) Student loan auction rate securities inventory + buyback commitment Exposure to monoline insurers1 SL ARS buyback commitment (par value) SL ARS inventory (carrying v
Slide 31: Exposures to selected European countries not rated AAA / Aaa
Exposures to selected European countries not rated AAA / Aaa1 1 Refer to pages 44-45 of UBS's 3Q11 report for more information 2 Includes central governments, agencies and central banks 3 Net of credit protection bought 4 The majority of the Ireland exposures relates to funds and foreign bank subsid
Slide 32: IFRS equity attributable to UBS shareholders
IFRS equity attributable to UBS shareholders 30.6.11 Foreign currency translation (OCI)2 30.9.11 Deferred tax effect on equity items (share premium) Cash flow hedges (OCI)2 Net profit Employee share and share option plans (share premium) Financial investments available-for- sale (OCI)2 (CHF million)
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 UBS
Slide 35: Invested assets
Invested assets Wealth Management Wealth Management Americas Global Asset Management Retail & Corporate
Slide 36: Core tier 1 capital and RWAs (Basel 2)
Core tier 1 capital and RWAs (Basel 2) 1 30.9.11 includes IFRS deferred tax assets on net operating losses of CHF 8,191 million; 30.9.11 deferred pension expenses CHF 3,279 million 2 Includes changes in deduction items 3 Adjusted for FX effect Core tier 1 capital1 Risk-weighted assets 3 3 3 3 (CHF b
Slide 37: Capital position - Basel 2.5
Capital position - Basel 2.5 Basel 2.5 RWAs of CHF 284 billion for the Group Basel 2.5 tier 1 capital of CHF 37.5 billion Tier 1 deduction of CHF 0.6 billion due to additional deduction for low-rated securitization exposures Pro-forma Basel 2.5 tier 1 ratio of 13.2% on 30.9.11 VaR (4) Stressed VaR 3
Slide 38: Asset funding - 30 September 2011
125% coverage CHF 66 billion surplus CHF 99 billion collateral surplus Asset funding - 30 September 2011 Assets Liabilities and equity Cash, balances with central banks and due from banks 105 Loans 266 Trading portfolio assets 206 Cash collateral on securities borrowed and reverse repurchase agreeme
Slide 39: Funding sources by currency - September 2011
Funding sources by currency - 30 September 2011 42% USD1 CHF 326 billion 23% EUR1 CHF 178 billion 22% CHF1 CHF 168 billion 14% other1 CHF 109 billion 1 In % of total funding on the balance sheet (CHF 781 billion) comprising repurchase agreements, securities lending against cash collateral received,