Slide 1: Fourth quarter 2013 results
Fourth quarter 2013 results February 4, 2014
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: 2013: A year of strong execution and noteworthy achievements
2013: A year of strong execution and noteworthy achievements Excellent progress in transforming UBS – Best WM/WMA combined adjusted pre-tax profit since the financial crisis, strong NNM – R&C delivered stable adjusted pre-tax profit, maintained its market-leading position with robust growth – Strong
Slide 4: Successfully executing our strategy
Successfully executing our strategy Financial strength is the foundation of our success Basel III CET1 ratio Basel III RWA Balance sheet fully applied fully applied, CHF billion and leverage ratio CHF billion 4.7% ~3.6% 12.8% 13.0% ~258 225 <225 ~9.8% 1,260 1,010 203 +300 bps (13%) (20%) 31.12.12 31
Slide 5: Increased profits and well diversified business mix
Increased profits and well diversified business mix Wealth Management and Retail & Corporate Wealth Management Americas Largest and fastest growing large-scale Leading universal bank in Switzerland with stable wealth manager in the world1 pre-tax profit contribution Net new money Pre-tax profit Busi
Slide 6: Firmly committed to returning capital to shareholders
Firmly committed to returning capital to shareholders Our strategy supports an attractive capital returns program Progressive capital returns Future dividend policy • 67% increase in dividend to be proposed for 2013 • After achieving fully applied CET1 ratio of 13%1 to CHF 0.25 per share Dividend pe
Slide 7: 4Q13 results
4Q13 results Group Net profit attributable to UBS shareholders CHF 917 million, diluted EPS CHF 0.24, RoE 7.7%1 – Net tax benefit of CHF 470 million including a DTA write-up of CHF 589 million Profit before tax (PBT) CHF 449 million, adjusted PBT CHF 755 million Basel III CET1 ratio (fully applied)
Slide 8: Group results
Group results CHF million FY12 FY13 4Q12 3Q13 4Q13 Total operating income 25,423 27,732 6,208 6,261 6,307 Total operating expenses 27,216 24,461 8,044 5,906 5,858 Profit before tax as reported (1,794) 3,272 (1,837) 356 449 Own credit on financial liabilities designated at fair value (2,202) (283) (4
Slide 9: Wealth Management
Wealth Management Highest recurring fees since 3Q10 and strongest 4Q NNM since 2007 Operating income and profit before tax Operating income up 1% CHF million Recurring income1 up 1% to CHF 1,430 million on higher asset base and from positive effects of 4Q12 1Q13 2Q13 3Q13 4Q13 pricing adjustments,
Slide 10: Wealth Management—by business area
Wealth Management—by business area1 Europe Asia Pacific Switzerland Emerging Markets o/w UHNW Net new money 15.4 growth rate, % 13.3 11.2 11.2 11.3 11.8 9.3 9.5 8.3 8.4 6.7 6.4 4.6 5.5 5.2 2.4 2.1 1.8 1.3 0.8 0.1 0.3 (1.6) (1.1) (5.5) Gross margin 96 98 98 92 92 95 95 90 92 bps 90 86 86 89 91 85 89
Slide 11: Wealth Management—Gross margin trends
Wealth Management—Gross margin trends Stable gross margin on increased recurring fees 1,747 1,926 1,952 1,837 1,859 Income (CHF million) Wealth Gross margin (bps) 85 91 90 85 85 Management Recurring income share1 76% 71% 74% 77% 77% 4Q12 1Q13 2Q13 3Q13 4Q13 Invested assets (CHF billion) 821 870 862
Slide 12: Wealth Management Americas (USD)
Wealth Management Americas (USD) USD 1 trillion IA, USD 1 billion PBT in FY13, FA productivity > USD 1 million1 Operating income and profit before tax Operating income up 6% USD million Recurring income increased 3% and transaction- based revenues up 10% on improved client activity 4Q12 1Q13 2Q13
Slide 13: Retail & Corporate
Retail & Corporate Solid operating performance; improved net interest margin and NNBV growth Operating income and profit before tax Operating income down 3% CHF million Interest income up 2%, more than offset by slightly higher credit loss expenses and lower 4Q12 1Q13 2Q13 3Q13 4Q13 other income 9
Slide 14: Global Asset Management
Global Asset Management Adjusted pre-tax profit up 10% on higher performance fees Operating income and profit before tax Operating income up 8% CHF million Performance fees up by CHF 43 million to CHF 72 million, mainly in O'Connor 4Q12 1Q13 2Q13 3Q13 4Q13 and A&Q 517 Net management fees broadly f
Slide 15: Investment Bank
Investment Bank Strong performance, adjusted return on attributed equity (RoaE) of 20% Operating income and profit before tax Operating income up 9% CHF million 40% increase in CCS with strong performance across all business areas and regions 4Q12 1Q13 2Q13 3Q13 4Q13 Robust ICS performance with
Slide 16: Corporate Client Solutions (CCS)
Corporate Client Solutions (CCS) Strong performance, increased income across all business areas and regions Operating income Comparison in USD terms (4Q13 vs. 3Q13) CHF USD Advisory +79% CHF million USD million Improved advisory fees in APAC and EMEA; +40% +43% best quarter in 2013 with participat
Slide 17: Investor Client Services (ICS)
Investor Client Services (ICS) Robust performance, best 4Q in all equities businesses since 2010 Operating income Comparison in USD terms (4Q13 vs. 3Q13) CHF USD Equities (2%) CHF million USD million Higher revenues in cash on improved client (4%) (2%) trading; #1 in cash equities globally1 1,920
Slide 18: Corporate Center—Core Functions
Corporate Center—Core Functions Reported pre-tax loss of CHF 565 million Operating income and profit before tax CHF million 4Q12 1Q13 2Q13 3Q13 4Q13 Operating income negative Treasury income 149 (217) (124) (219) (343) CHF 365 million mainly due to Own credit gain/(loss) (414) (181) 138 (147) (94) T
Slide 19: Retained Treasury income in Corporate Center—Core Functions
Retained Treasury income in Corporate Center—Core Functions Accounting asymmetry has a significant impact on Treasury results, while retained funding costs are expected to decline in the medium term Group Treasury CHF million 4Q13 FY13 Gross results (excluding accounting driven adjustments) 206 664
Slide 20: Corporate Center—Non-core and Legacy Portfolio
Corporate Center—Non-core and Legacy Portfolio Decreased losses on lower litigation provisions Operating income and profit before tax CHF million 4Q12 1Q13 2Q13 3Q13 4Q13 Adjusted operating income Non-core 31 231 (57) (120) (104) negative CHF 130 million of which: Debit valuation adjustments (188) 3
Slide 21: Corporate Center—Non-core
Corporate Center—Non-core1 RWA down 49% YoY, IFRS assets down 52% YoY RWA OTC positions – natural decay of RWA2 (49%) 64.5 Original estimate at 30.9.12 59.0 Actual at 31.12.13 and updated 10.4 estimate for future dates 7.8 47.6 8.5 38.7 32.6 29.3 28.6 8.1 Operational risk 29% ~37 9.5 ~32 CHF billion
Slide 22: Corporate Center—Legacy Portfolio
Corporate Center—Legacy Portfolio1 CHF 2.5 billion increase to CET1 capital post exercise of SNB StabFund option RWA (19%) 38.0 CDO6 35.9 2.6 3.8 RLN7 4.2 30.0 29.9 30.9 5.1 1.0 Monolines 7.5 7.5 13.3 1.6 Real estate assets 34.2 ARS & APS8 CHF billion 31.7 22.4 2.0 22.4 3.1 Muni swaps and options 17
Slide 23: Adjusted operating expenses
Adjusted operating expenses Run-rate gross cost reductions of CHF 2.2 billion achieved Adjusted operating expenses 0.3 (0.4) 0.5 25.5 (2.2) 1.4 Increase in 23.3 0.4 WMA FA Business division IT software 0.4 23.7 compensation2 variable compensation capitalization4 Litigation, FX movements, (basis for
Slide 24: Implementing long-term efficiency measures
Implementing long-term efficiency measures We expect our cost reduction programs to yield tangible results through 2016 84 implementable initiatives at various project stages Status Examples • Workforce optimization in several functions Completed • Outsourcing of IT legacy systems Evaluated 200+ ini
Slide 25: Variable compensation expenses
Variable compensation expenses1 2009 performance award pool 2010 4.7 performance award pool 4.3 IFRS expense flat YoY 2013 performance 2012 award pool 2013 2011 IFRS expense 3.2 IFRS expense performance award pool 2012 3.0 3.0 performance DCCP4 2.7 award pool 0.5 Amortization 2.5 0.96 of prior year
Slide 26: Deferred compensation
Deferred compensation (13)% Expected amortization Annual of prior year awards1 Amortized awards granted 0.8 ~0.7 0.9 Unrecognized Forfeited Unrecognized awards to be awards to be amortized2 0.2 amortized1,2 1.7 ~0.5 Including awards 1.6 to be granted in CHF billion 1Q14 for the performance ~0.2 year
Slide 27: RWA (fully applied)
RWA (fully applied) 44% RWA reduction since 30.9.11 SNB StabFund1 ~400 Legacy Portfolio (until 4Q12) ~21 Non-core (from 1Q13) and Legacy Portfolio Incremental operational risk RWA2 Investment Bank allocated to each ~80 business division WM/WMA/R&C/Global AM/Corporate Center – Core Functions ~301 +22
Slide 28: Basel III capital
Basel III capital Swiss SRB Basel III (phase-in1) Swiss SRB Basel III (fully applied1) CHF billion CHF billion 1.3% 2.1% 0.4% 18.5% 17.5% ~15.3% 2.1% 0.4% ~13.6% 12.8% 13.0% 11.9% 11.5% ~10.0% ~9.3% ~9.8% ~6.2% 30.9.11 30.9.12 31.12.12 30.9.13 31.12.13 30.9.11 30.9.12 31.12.12 30.9.13 31.12.13 2013
Slide 29: Leverage ratio
Leverage ratio Swiss SRB Basel III leverage ratio (phase-in) 4.7% at quarter-end1 Swiss SRB Basel III leverage ratio CHF billion CHF (CHF billion; billion, 31.12.13) 31.12.13 4.7% Phase in CET1 + loss absorbing capital 47.8 = = 4.7% 4.2% Total IFRS assets +/- adjustments 1,028 3.9% 3.8% ~3.6%2 ~3.4%
Slide 30: RWA vs. leverage ratio denominator
RWA vs. leverage ratio denominator The leverage ratio constrains our Swiss and deposit-taking businesses Swiss SRB leverage ratio denominator (LRD) and RWA for selected businesses (illustrative example)1 31.12.13 Low LRD / high RWA ratio Non-core RWA RWA = main constraint [to be exited] IB ICS Equit
Slide 31: UBS—An unrivaled franchise with compelling growth prospects
UBS—An unrivaled franchise with compelling growth prospects Wealth management businesses Retail & Corporate • Largest and fastest growing large-scale wealth manager in • Leading Universal Bank in Switzerland with strong momentum the world1; leading HNW and UHNW franchise with unrivaled • "Best Bank
Slide 32: Appendix
Appendix 3% UBS
Slide 33: Wealth Management Americas—Lending balances
Wealth Management Americas—Lending balances1 Net interest income2 Credit loss (expense)/recovery USD million USD million 258 269 221 228 229 231 214 213 212 (5) 0 (1) 2 (16) 0 0 (21) (9) 37.6 39.1 36.8 34.1 34.5 31.2 32.3 5.2 5.9 6.4 29.7 29.8 3.8 4.4 2.8 3.3 3.6 3.2 3.1 2.0 2.4 3.6 3.6 3.4 1.3 2.1
Slide 34: 2013 operating expenses
2013 operating expenses1 27.2 2.6 24.5 0.8 Adjustment items 22.5 (see slide 41 for additional information) 0.4 24.6 23.7 Contractors, social security, pension and other 22.1 2.6 post-employment benefit plans and other 2.5 personnel expenses 2.5 2.2 WMA financial advisors compensation2 0.6 2.5 2.0 1.
Slide 35: Deferred tax assets on net operating losses
Deferred tax assets on net operating losses Amount of tax losses which have not been recognized remains significant 31.12.13 Unrecognized DTA on net operating losses (NOL)1 Recognized DTA on net operating losses (NOL) 22.6 17.0 CHF billion 2.0 4.1 0.8 6.3 2.1 2.8 0.1 US Switzerland UK RoW Total Un
Slide 36: Leverage ratios (phase-in)
Leverage ratios (phase-in) Our leverage ratios should improve materially as we reduce our balance sheet Simple leverage ratio1 FINMA leverage ratio (until 4Q12)2 Swiss SRB3 leverage ratio, phase-in (from 1Q13) 6.3% Funded assets4 6.1% expected 6.4% 6.5% 5.6% 5.6% 6.2% direction 5.5% based on 5.9% 5.
Slide 37: Our balance sheet, funding and liquidity positions are strong
Our balance sheet, funding and liquidity positions are strong Our balance sheet structure has many characteristics of a AA-rated bank Funding by product1 Strong and significantly reduced balance sheet Due to banks – Funded assets2 down >60% from peak in 2007 Short-term debt issued – Phase-in Swiss
Slide 38: Breakdown of changes in Group RWA (fully applied)
Breakdown of changes in Group RWA (fully applied) 21 (1) (14) • Incremental operational risk • CHF 6.1 billion lower derivatives RWA (counterparty credit RWA (CHF 22.5 billion)1 risk / CVA charge) through hedging, trade compressions • Removal of Stressed VaR and reduced exposures 225 219 CHF billion
Slide 39: Changes in funded assets
Changes in funded assets1 16 0 1 (9) (3) (4) (2) (2) 742 739 CHF billion 30.9.13 Non-core Legacy Core IB WM WMA R&C Global 31.12.13 Portfolio Functions AM Corporate Center FX movements contributed approximately CHF 7 billion to the decrease in funded assets1, primarily from USD and Yen depreciatio
Slide 40: Balance sheet
Balance sheet Total assets CHF 1,010 billion or CHF 739 billion excluding PRV and OTC margin 31.12.13 311 3 to be exited 241 247 31 72 185 6 307 216 160 162 CHF billion 25 17 10 1 7 14 Investment Other Corporate Center Corporate Center Corporate Center Bank business divisions Core Functions Non-core
Slide 41: Adjusted results
Adjusted results1 Adjustment items Business division / Corporate Center 4Q12 3Q13 4Q13 FY12 FY13 CHF million Operating income as reported (Group) 6,208 6,261 6,307 25,423 27,732 Own credit on financial liabilities designated at FV Corporate Center - Core Functions 414 147 94 2,202 283 Gains on sales
Slide 42: Important information related to numbers shown in this presentation
Important information related to numbers shown in this presentation Use of adjusted numbers Unless otherwise indicated, “adjusted” figures exclude the adjustment items listed on slide 40, to the extent applicable, on a Group and business division level. Refer to pages 12-13 of the 4Q13 financial rep