Slide 1: Second quarter 2018 results
Second quarter 2018 results July 24, 2018
Slide 2: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This presentations 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 strat
Slide 3: 2Q18 net profit +9% to CHF 1.3bn
2Q18 net profit1 +9% to CHF 1.3bn CHF / USD Strong quarter driven by GWM and the IB +12% +10% 1.7 +18% GWM +16% P&C +3% AM (8%) +26% IB +24% 2Q18 reported PBT 2Q17 reported PBT Returns Growth Capital strength and discipline 16.7% adjusted RoTE Net profit1 +9% Passed CCAR / DFAST excl. DTAs to 1,284m
Slide 4: 1H18 net profit +15% to CHF 2.8bn
1H18 net profit1 +15% to CHF 2.8bn CHF / USD Strong momentum across our businesses +14% +17% 3.7 +19% GWM: 10-year highs in recurring net fee income, NII, invested +22% assets, mandate penetration and loans +2% P&C: Strong growth in recurring revenues offset interest headwinds; investing in digital
Slide 5: Generated 3bn in capital in 1H18
Generated 3bn in capital in 1H18 Strongest 1H CET1 capital generation1 since the implementation of Basel III Strong capital generation Strong capital position Repurchased 35m shares 550 in 2Q18 Dividend accrual in ~1,300 line with stated policy 13.4% 1,146 1.1bn increase in CET1 capital 3.75% 1H18 C
Slide 6: Uniquely positioned with leading franchises
Uniquely positioned with leading franchises Unique combination of growth and attractive returns Global Wealth Personal & Corporate Asset Investment Management Banking Management Bank World's leading and At the core of the Diversified and well Excellence in areas of only truly global leading
Slide 7: Diversified by business and by region
Diversified by business and by region CHF / USD Well positioned in the largest and fastest-growing markets PBT contribution1 PBT 1H18 Investment Bank Global Wealth Management Asset Americas 1,342 gathering 1,129 +19% / +22% Personal & Corporate Banking Asset Management Switzerland Americas Asia Paci
Slide 8: Delivering high quality revenue growth
Delivering high quality revenue growth Underpinned by disciplined resource management and risk control Business division operating income 43% 57% 48% 52% 15.6 12.8 6.7 Transaction- driven 6.1 revenues1 +2.2bn 5% CAGR 8.9 Recurring 6.7 revenues2 1H12 1H13 1H14 1H15 1H16 1H17 1H18 Rated Aa3/A+/AA- <0.
Slide 9: Substantial costs to fulfill regulatory requirements
Substantial costs to fulfill regulatory requirements Approaching peak funding and regulatory costs Total loss-absorbing capacity TBTF1-related funding costs Regulatory costs Swiss SRB as of 1.1.20 +52 +1.4 81 1.6 Gone concern +0.7 37 loss-absorbing capacity Temporary 11 AT1 29 1.2 Tier 2 4 34 CET1 P
Slide 10: Maximizing returns
Maximizing returns UBS is highly capital-efficient; focused on costs to maximize returns 30% 40% Higher RoTE 50% Business mix and geographic Cost/income, FY17 footprint drive comparatively high Cost efficiency 60% capital efficiency and structurally higher cost/income ratio 70% 80% Further improveme
Slide 11: Driving down the Group cost/income ratio
Driving down the Group cost/income ratio Permanent focus on cost efficiency Group cost/income ratio Illustrative Efficient revenue growth 78% Continued cost optimization +5 ppts Optimize regulatory costs Investments Regulatory costs Liquidity incl. technology ~1.4bn p.a. <75% management optimization
Slide 12: Global Wealth Management
Global Wealth Management Tangible growth levers, investing in options for the future Global initiatives Products Mandates Lending and US opportunity Increase mandate banking products Capture growth in penetration Continued growth the largest wealth pool globally China onshore Close gaps in US person
Slide 13: Targeting 10% PBT growth in Asset Management
Targeting 10% PBT growth in Asset Management Profitable organic growth strategy with six clear priorities Sustainable and impact investing Active and • Doubled sustainability-focused invested assets alternative since 2016 investments Passive and alternative • #1 provider of sustainability ETFs in Eu
Slide 14: Leader in Swiss digital banking
Leader in Swiss digital banking Strong business growth supported by continuous innovation in best-in-class digital offering Higher satisfaction ~80% higher >60% lower levels among active average revenues attrition for active4 digital clients1,2,3 for active4 digital digital clients2,3 clients2,3 Acc
Slide 15: Transforming to a digital Investment Bank
Transforming to a digital Investment Bank We have a proven track record on innovation, with a tradition of excellence UBS Neo >6m Award-winning multi-channel platform built on the latest web 26 Awards received since 2013 60+ Applications available Research and sales articles were read on UBS Neo in
Slide 16: Unlocking our full potential
Unlocking our full potential Growing • 1H18 net profit1 +15% YoY, RoTE2 >17% today • ~3bn capital accretion in 1H18 and growing capital returns • GWM – Deliver a truly global UHNW offering Capturing • GWM – Serve US persons wherever they are future growth • GWM / IB – Accelerate GFO growth • GWM / I
Slide 17: Save the date – Investor Update, October 25, 2018
Save the date – Investor Update, October 25, 2018 5 Broadgate, London 16
Slide 18: UBS Group AG results (consolidated)
UBS Group AG results (consolidated) 2Q17 1Q18 2Q18 Total operating income 7,269 7,698 7,554 Total operating expenses 5,767 5,725 5,875 Profit before tax as reported 1,502 1,973 1,679 of which: adjusting items (173) 97 (129) of which: net restructuring expenses treated as an adjusting item (258) (128
Slide 19: Global Wealth Management
Global Wealth Management CHF / USD Best second quarter and first half PBT for a decade; 2Q reported PBT +18% YoY +7% Profit before tax +5% 1,013 1,126 1,084 Sustainable profit growth m Operating income +5% 4,195 +3% Ten-year highs in NII and recurring net fee income 3,959 4,157 m +10% Invested asset
Slide 20: Global Wealth Management
Global Wealth Management CHF / USD Highest net interest and recurring net fee income for a decade Recurring revenues 80 79 83 % of income +10% / +8% Net interest income 1,081 10 year record 986 1,018 +9% / +7% Recurring net fee income 10 year record 2,283 2,350 2,164 (10%) / (11%) Challenging market
Slide 21: Global Wealth Management
Global Wealth Management CHF / USD Net interest income highest in 10 years on loan growth and higher USD net interest margin Net interest income Volume m End of period, bn 2Q17 986 +11% / +8% NII increase driven by volume Loans ~55 176 158 growth, primarily in APAC and UHNW +2% / (1%) NII increase d
Slide 22: Global Wealth Management
Global Wealth Management CHF / USD Steady growth in mandates driving 10-year record recurring net fee income Mandate volume Recurring net fee income End of period, bn m +13% +8% +10% +10% 791 4,633 4,188 4,292 697 Record mandate 4,123 617 penetration 583 33.3% 1H15 1H16 1H17 1H18 1H15 1H16 1H17 1H18
Slide 23: Global Wealth Management
Global Wealth Management CHF / USD Strong profit growth in the Americas and UHNW; fastest revenue growth in APAC Americas APAC EMEA Switzerland o/w Global UHNW1 +16% +15% +4% +3% (3%) +30% Profit before tax m 335 389 298 308 213 223 179 173 183 237 Cost/income 84 83 61 63 66 66 54 57 72 68 % +10% +6
Slide 24: Personal & Corporate Banking
Personal & Corporate Banking Strong business momentum and management actions offset interest rate pressure 436 428 393 379 378 Profit Highest recurring net fee income since 2008 before tax driven by higher volumes for bundled products and investment funds Cost/income ratio 58% 55% 57% 58% 58% Stable
Slide 25: Asset Management
Asset Management Solid performance on ten-year high in invested assets; cost actions to support PBT growth 153 133 126 Profit 116 108 Solid performance 1% growth in PBT excl. fund before tax administration disposal in 4Q17 Cost/income ratio 72% 69% 75% 76% 72% Strongest net new run rate fees since 4
Slide 26: Investment Bank
Investment Bank CHF / USD Excellent PBT growth; strong Equities and FRC with disciplined resource management +44% +42% 629 605 44% PBT growth driven by 13% revenue increase Profit and strong operating leverage 419 before tax 352 168 Cost/income ratio improved 6 ppts on continued cost discipline; bes
Slide 27: Corporate Center
Corporate Center CC – Services Costs before allocations 1,912 2,047 2,044 Technology 933 955 801 and risk control Services 154m higher costs in technology and risk control; Other 1,111 1,114 other costs (2%) 1,089 costs CC – Group Asset and Liability Management Total risk management net income after
Slide 28: Workforce management
Workforce management Insourcing roles drives improved efficiency and effectiveness UBS Group 2Q18 vs. 3Q17 Corporate Center – Services1 2Q18 vs. 3Q17 Headcount, end of period Headcount, end of period 87,146 86,564 86,179 (967) 26,350 24,027 22,495 (3,855) 48,892 48,072 47,906 (986) 23,749 21,506 20,
Slide 29: Capital and leverage ratios
Capital and leverage ratios Strong capital position Loss-absorbing capacity Capital ratio Leverage ratio bn % % Total loss- 81.5 1.1.20 1.1.20 absorbing 32.3 Capital ratio Leverage ratio capacity (TLAC) 31.2 requirements requirements 73.8 TLAC requirement with 2017 rebate1,2 26.6% 9.3% 36.5 9.03 Gon
Slide 30: Appendix
Appendix %% UBS
Slide 31: Corporate Center – Group ALM
Corporate Center – Group ALM Structural risk management net income after allocations improved QoQ 2Q17 1Q18 2Q18 YoY QoQ Operating income (72) (204) (169) (97) +34 o/w business division-aligned risk management 166 130 119 (47) (10) Fully allocated o/w capital investment and issuance (27) (69) (101)
Slide 32: Swiss SRB leverage ratio requirements
Swiss SRB leverage ratio requirements UBS leverage ratio balance¹ 1.1.20 requirements % % TLAC-eligible debt 3.30% (29.8bn) UBS Group AG TLAC bonds2 2.0 5% gone concern requirement subject to a rebate of up to 2.0 percentage points based on improved resolvability 3.30 – FINMA granted a rebate on
Slide 33: Reported and adjusted performance
Reported and adjusted performance 1 Adjusted results are non-GAAP financial measures as defined by SEC regulations; 2 Comparative figures in this table may differ from those originally published in quarterly and annual reports due to adjustments following organizational changes, restatements due to
Slide 34: Regional performance
Regional performance Americas Asia Pacific EMEA Switzerland Global Total 2Q17 2Q18 2Q17 2Q18 2Q17 2Q18 2Q17 2Q18 2Q17 2Q18 2Q17 2Q18 GWM 2.2 2.3 0.5 0.6 0.9 0.9 0.4 0.4 0.0 0.0 4.0 4.2 P&C - - - - - - 0.9 0.9 - - 0.9 0.9 Operating AM 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 (0.0) (0.0) 0.5 0.5 income IB 0.7
Slide 35: 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 65-75% 10-15% PBT growth3 Management 2-4% NNM growth
Slide 36: Important information related to this presentation
Important information related to this presentation Use of adjusted numbers Adjusted results are a non-GAAP financial measure as defined by SEC regulations. Refer to pages 8-10 of the 2Q18 report which is available in the section "Quarterly reporting" at www.ubs.com/investors for an overview of adjus