UBS Group AG · SIX:UBSG
UBS — Debt Investor Presentation (March 2016)
45 slides from UBS's debt investor presentation, Mar 18, 2016
Slide 1: Fourth quarter 2015 results
Fourth quarter 2015 results Fixed income investor presentation March 18, 2016
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: 2015 – Strong results and execution
2015 – Strong results and execution Net profit attributable to UBS Group AG shareholders up 79% YoY to CHF 6.2 billion Strong financial performance – Adjusted profit before tax more than doubled YoY to CHF 5.6 billion – Adjusted return on tangible equity 13.7%, above FY15 target of around 10% – FY15
Slide 4: The world's leading wealth management franchise
The world's leading wealth management franchise UBS is the world's largest and fastest growing wealth manager1 Invested assets Operating income Profit before tax CHF trillion CHF billion CHF billion +8% CAGR +6% CAGR +11% CAGR 2.0 2.0 14.9 15.4 3.7 14.1 3.3 3.5 1.8 12.9 1.6 2.7 1.0 0.9 7.9 8.0 0.9 7
Slide 5: 2015 – Strong progress in all our businesses
2015 – Strong progress in all our businesses Improved performance in challenging market conditions Wealth Wealth Personal & Asset Investment Management Management Corporate Management Bank Americas Banking Continued progress in Strong operating Best PBT since 2010 PBT up 20%, improved Strong operati
Slide 6: Delivering attractive capital returns to our shareholders
Delivering attractive capital returns to our shareholders Dividend per share to be proposed for FY15: CHF 0.60 ordinary and CHF 0.25 special dividend Total capital return per share CHF per share 0.85 0.75 Special 0.25 dividend 0.251 • Ordinary dividend reflects strong financial performance, special
Slide 7: 4Q15 results
4Q15 results Net profit attributable to UBS Group AG shareholders of CHF 949 million Group Net profit attributable to UBS Group AG shareholders CHF 949 million, diluted EPS CHF 0.25 Adjusted return on tangible equity 11.4% Reported profit before tax (PBT) CHF 234 million, adjusted PBT CHF 754 millio
Slide 8: UBS Group AG results (consolidated)
UBS Group AG results (consolidated) CHF million, except where indicated FY14 FY15 4Q14 3Q15 4Q15 Total operating income 28,027 30,605 6,746 7,170 6,775 Total operating expenses 25,567 25,116 6,342 6,382 6,541 Profit before tax as reported 2,461 5,489 404 788 234 of which: own credit on financial lia
Slide 9: Wealth Management
Wealth Management Resilient recurring income in challenging market conditions with low levels of client activity Operating 2,031 2,004 2,106 2,024 1,943 1,897 Operating income CHF 1,897 million 1,859 1,943 1,921 income 423 542 472 479 436 589 459 366 364 Transaction-based income declined on lower
Slide 10: Wealth Management
Wealth Management NNM reflecting client deleveraging, seasonal headwinds and strategic discipline 5.8% Net new 4.9% 4.8% NNM outflows CHF 3.4 billion, driven by 4.2% money 2.7% 3.5% emerging markets and Europe, partly offset by Asia 1.2% 1.5% Pacific and Switzerland Annualized growth rate NNM wa
Slide 11: Wealth Management
Wealth Management Continued net inflows in APAC and Switzerland Europe Asia Pacific Switzerland Emerging markets of which: UHNW = Adjusted NNM1 Net new money 12.2% Annualized 7.8% 8.1% 6.5% 5.4% 5.9% 5.6% 3.6% growth rate 3.3% 2.1% 1.8% 2.8% 3.6% 3.0% 0.2% 1.3% 3.2% 1.8% 0.8% 0.2% 0.5% (0.5%) (1.7%)
Slide 12: Wealth Management Americas
Wealth Management Americas Strong operating performance with record net interest income Operating income USD 1,874 million Operating 1,851 1,865 1,898 1,919 1,924 1,901 1,947 1,931 1,874 472 464 441 448 432 425 381 376 Transaction-based income decreased on lower client income 476 250 261 276 280 2
Slide 13: Personal & Corporate Banking
Personal & Corporate Banking Best fourth-quarter PBT since 2011 958 913 979 Operating income CHF 915 million Operating 931 932 938 952 964 915 income 256 234 247 267 273 284 241 238 196 Transaction-based income declined, mainly due to the previously announced CHF 45 million fee paid for the CHF mi
Slide 14: Asset Management
Asset Management Solid performance – PBT CHF 153 million, up 12% QoQ Operating 482 451 465 489 497 511 476 502 512 Operating income CHF 512 million 27 34 68 20 23 44 income 72 47 38 Performance fees increased, mainly in Traditional Investments and in Global Real Estate CHF million 427 462 463 443
Slide 15: Investment Bank
Investment Bank PBT CHF 223 million, strong performance in FRC with revenues up 30% YoY Operating 2,657 2,344 Operating income CHF 1,721 million 2,200 2,225 income 1,843 1,969 1,919 779 2,088 CCS revenues down 8% YoY reflecting a global decline 822 1,721 768 981 710 in the market fee pool 711 736
Slide 16: Corporate Center
Corporate Center Non-core and Legacy Portfolio LRD below CHF 50 billion 4Q14 1Q15 2Q15 3Q15 4Q15 Profit before (332) (514) tax (586) (1,164) (1,174) Corporate Center total (CHF million) Corporate Center results by unit (CHF million) Services Operating income (6) (4) (41) (38) (54) Operating expens
Slide 17: Corporate Center cost reductions
Corporate Center cost reductions Continued net cost reduction progress CHF 2.1 billion CHF 2.1 billion Achieved 52% of Achieved CHF 1.1 billion net Achieved 48% year-end 2017 target cost reductions based on of year-end 2017 target December 2015 annualized 1.1 exit rate 1.0 Cumulative Improving o
Slide 18: Capital and leverage ratios
Capital and leverage ratios Strong capital position with 14.5% Basel III CET1 ratio and 5.3% Swiss SRB leverage ratio Basel III CET1 capital ratio1 Swiss SRB Leverage ratio Swiss SRB, fully applied, CHF billion Fully applied, CHF billion 14.4% 14.3% 14.5% 13.7% 10.0% 2019 requirement 5.0% 5.3% 4.6%
Slide 19: Robust liquidity profile and stable funding
Robust liquidity profile and stable funding Funding plan is regularly reviewed and adapted to changes in requirements Liquidity coverage ratio (LCR) 1 Pro-forma net stable ratio (NSFR) (CHF billion) Average 4Q15 (CHF billion) 31.12.15 High-quality liquid assets 208 Available stable funding (ASF) 426
Slide 20: Strong balance sheet
Strong balance sheet Asset funding1 31.12.15, CHF billion Due to banks (12) Cash, balances with central Short-term debt issued (21) banks and due from banks 103 Financial investments Trading portfolio liabilities (29) available-for-sale 63 Cash collateral on securities lent Cash collateral on securi
Slide 21: Diversified funding sources
Diversified funding sources Funding plan is regularly reviewed and adapted to changes in requirements Short-term debt Repos and securities lending Our business activities generate asset and liability portfolios Funding by Interbank 3% that are broadly diversified by market, product, tenor and 2% s
Slide 22: Long-term debt – contractual maturity profile
Long-term debt – contractual maturity profile Amount of long-term debt maturing by period of maturity CHF billion, 31.12.15 11.2 9.8 0.8 8.4 0.4 7.6 2.0 0.9 7.1 1.3 5.7 0.6 5.2 0.9 1.1 4.0 3.7 3.8 2.5 0.7 4.0 3.1 8.9 1.2 2.3 8.0 0.8 0.7 1.2 6.0 0.2 0.5 0.5 5.2 3.7 3.8 1.1 1.6 0.8 1.9 2.6 2.5 2.6 1.4
Slide 23: The legal structure of UBS Group
The legal structure of UBS Group UBS Group AG as our holding company meets Single Point of Entry requirements and allows for issuance of bail-in eligible debt UBS Business Solutions AG acts as the Group service company, the purpose of which is to improve resolvability of the Group by enabling us
Slide 24: New requirements under draft proposal for revised Swiss SRB
New requirements under draft proposal for revised Swiss SRB Expected to become effective end-2019, with a transitional period starting 1.7.16 TLAC Gone concern (TLAC) 5.7% Gone concern • Overall requirement mirrors the going concern requirement 14.3%requirement • To be met with bail-in instruments (
Slide 25: New requirements under draft proposal for revised Swiss SRB
New requirements under draft proposal for revised Swiss SRB We will be compliant from the inception of the new requirements UBS leverage ratio balances vs. revised Swiss SRB Meeting 2019 requirements UBS position as of 31.12.151 Phase-in leverage ratio requirements2 Gone concern requirement is subje
Slide 26: Overview of resolution strategy (FINMA)
Overview of resolution strategy (FINMA) Point of non-viability Post-Resolution Resolution Liquidation conducted by FINMA in close cooperation with foreign Refill CoCos regulators; bank management suspended Restructuring Recapitalization Management changes Conversion of low strike Cocos to common equ
Slide 27: Write down trigger levels
Write down trigger levels Loss Absorption along the CET1 / RWA ratio Common equity Tier 1 10%* Write-down Trigger DCCP GEB Article 48 BIO-FINMA provides guidance Common equity Tier 1 with respect to bail-in-able debt: i. sufficient debt needs to be converted into equity to ensure that, without doubt
Slide 28: Substantial capital cushion to a 7% trigger threshold
Substantial capital cushion to a 7% trigger threshold Swiss SRB Basel III phase in CET1 Capital Ratio Excess CET1 capital before reaching 7.0% (CHF bn) Swiss SRB Basel III phase-in CET1 capital 19.4% 19.0% 18.5% 27.4bn 15.3% 26.2bn 25.5bn 21.7bn 10.7% 14.2bn 7.0% threshold 31.12.111 31.12.12 31.12.1
Slide 29: Continued focus on execution …
Continued focus on execution … What we have delivered Management priorities ✓ Execution of the transformation of UBS Deliver our performance targets Made substantial progress ✓ in reducing costs and achieving operational efficiency Improve effectiveness and efficiency Solidified position ✓ as the wo
Slide 30: Appendix materials
Appendix A Appendix materials
Slide 31: Group and business division targets and expectations
Group and business division targets and expectations Ranges for sustainable performance over the cycle1 Net new money growth rate 3-5% Wealth Management Adjusted cost/income ratio 55-65% 10-15% annual adjusted pre-tax profit growth Business divisions and Corporate Center Net new money growth rate 2-
Slide 32: Credit Ratings – UBS Group AG and UBS AG
Credit Ratings – UBS Group AG and UBS AG Each of these ratings reflects only the view of the applicable rating agency at the time the rating was issued, and any explanation of the significance of a rating may be obtained only from the rating agency. 31
Slide 33: Credit Ratings – UBS Switzerland and UBS Limited
Credit Ratings – UBS Switzerland and UBS Limited Each of these ratings reflects only the view of the applicable rating agency at the time the rating was issued, and any explanation of the significance of a rating may be obtained only from the rating agency. 32
Slide 34: Wealth Management
Wealth Management Clear strategic priorities to drive growth and profitability Strategic agenda Progress 2016 priorities Investment engine and book 26.4% 24.4% Mandate 22.0% transformation: apply our global Leverage our industry- penetration expertise across the entire client % of invested asset
Slide 35: Wealth Management Americas
Wealth Management Americas Strong NNM USD 16.8 billion 6.8% Net new money NNM USD 16.8 billion, 6.8% annualized growth rate, with significant inflows from newly recruited 2.1% 1.9% 2.2% 1.9% Annualized 0.9% advisors, as well as CHF 4.9 billion net inflows from growth rate 0.2% advisors who have be
Slide 36: Wealth Management Americas
Wealth Management Americas Industry-leading productivity per advisor for revenue and invested assets Invested assets and FA productivity Net interest income and lending Annualized revenue per FA (USD thousand) Net interest income (USD million) Invested assets per FA (USD million) Credit loss (expens
Slide 37: Personal & Corporate Banking
Personal & Corporate Banking Continued success in Switzerland's leading franchise Operating income Operating expenses Profit before tax CHF million CHF million CHF million 3,756 3,741 3,811 +5% CAGR 2,244 2,171 2,130 1,512 1,570 1,681 FY13 FY14 FY15 FY13 FY14 FY15 FY13 FY14 FY15 Cost/income ratio Ne
Slide 38: Corporate Center cost reductions
Corporate Center cost reductions Gross savings of ~CHF 1.7 billion FY15 vs. FY13 have been partially offset by increased business demand and permanent regulatory costs Corporate Center operating expenses before allocations1 CHF billion 10.3 Litigation 1.5 provisions2 9.1 Temporary regulatory 0.2 <0.
Slide 39: Corporate Center cost reductions
Corporate Center cost reductions Examples of cost reduction activities in progress1 Improving cost efficiency by optimizing global workforce model and footprint Workforce Share of FTEs in offshore and nearshore locations Desk capacity created since 4Q14 in strategic locations & footprint % of total
Slide 40: Corporate Center – Non-core and Legacy Portfolio
Corporate Center – Non-core and Legacy Portfolio Credit and market risk RWA down ~90% since 4Q12 RWA LRD1 and RWA by category CHF billion CHF billion, 31.12.15 103 Operational risk Rates 20.6 4.3 14 Credit and market risk Credit 7.0 0.5 Securitizations 1.9 1.5 36 36 32 32 31 APS/ARS 2.8 0.9 88 19 20
Slide 41: LRD: former Swiss SRB vs. new Swiss SRB
LRD: former Swiss SRB vs. new Swiss SRB Swiss SRB rules for the calculation of LRD are fully aligned with BIS Basel III rules as of 31.12.15 Swiss SRB LRD CHF billion 946 4 (14) 936 13 (18) (13) (10) (8) (1) 898 Swiss SRB 1 2 Swiss SRB 3 4 5 6 7 Swiss SRB (former) From 3-month From (new) FX On-balan
Slide 42: Net tax benefit and deferred tax assets
Net tax benefit and deferred tax assets 4Q15 included net additional recognized deferred tax assets of CHF 794 million 4Q15 net tax benefit of CHF 715 million Tax loss DTAs1,2,3 CHF million CHF billion, 31.12.15 3Q15 4Q15 Profit before tax (as reported) 788 234 Unrecognized Recognized Net deferred t
Slide 43: Oil and gas exposures
Oil and gas exposures We are closely monitoring the sector given the potential negative effects of sustained low energy prices Oil and gas net lending exposure1 CHF billion CHF 6.1 billion CHF 6.1 billion CHF 6.1 billion Services & Supply (CHF 0.4 billion): generally serving Exploration & Production
Slide 44: Adjusted results
Adjusted results Adjusting items FY14 FY15 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 CHF million Operating income as reported (Group) 28,027 30,605 6,307 7,258 7,147 6,876 6,746 8,841 7,818 7,170 6,775 of which: Gains/(losses) on sale of subsidiaries and businesses WM 169 141 56 (28) AM 56 56 WM
Slide 45: 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