Ubs Group Ag · SIX:UBSG
Ubs — Debt Investor Presentation (February 2024)
42 slides from Ubs's debt investor presentation, Feb 6, 2024
Slide 1: Fourth quarter 2023 Fixed Income investor presentation
Fourth quarter 2023 Fixed Income investor presentation This document should be read in conjunction with our 4Q23 report and earnings presentation, available on ubs.com/investors 6 February 2024
Slide 2: Important information
Important information 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, statements relating to the anticipated effect of transactions and strategic initiat
Slide 3: Table of contents
Table of contents February 6 4Q23 financial Group balance investor update performance sheet Highlights Highlights Slides 3-12 Slides 13-17 Slides 18-27 2
Slide 4: Delivering on our priorities while creating long-term sustainable value
Delivering on our priorities while creating long-term sustainable value Stabilizing, restructuring Restructuring, integrating Capturing sustainable growth and planning and optimizing and long-term value creation (2023) (2024 – 2026) P Franchise stabilization, 77bn 100bn client win-back and Net new d
Slide 5: Restructuring and delivering on integration milestones by end-2026
Restructuring and delivering on integration milestones by end-2026 Illustrative key milestone timeline (examples) Work Ongoing Completion date Merge UBS AG and CS AG Merge Swiss bank entities1 Key legal entity transactions Establish single US IHC GWM Singapore, HK, Lux GWM Switzerland and GWM client
Slide 6: GWM – Ambition to surpass 5trn of invested assets over next five years
GWM – Ambition to surpass 5trn of invested assets over next five years Invested assets trillion Ambitions Progress on win-back strategy Capture growth and realizing benefits ~100bn counterbalanced by NNA per annum through 2025 as we outflows from optimize for greater capital efficiency, balance shee
Slide 7: P&C – #1 bank in Switzerland with unparalleled reach and strong returns
P&C – #1 bank in Switzerland with unparalleled reach and strong returns Total revenues3 PBT3 Ambition >90% 2H23 2H23 of large Swiss corporations served1 >1/3 of Swiss Households served2 <50% Underlying cost / income ratio Medium-term priorities by 2026 exit rate Clients Integration Productivity and
Slide 8: AM – Improved positioning across key asset classes and growth markets
AM – Improved positioning across key asset classes and growth markets Invested assets Asset class split trillion % of invested assets excl. associates Ambition 18% in Credit alternatives Suisse vs. 13% pre-acquisition <70% Underlying cost / income ratio Medium-term priorities by 2026 exit rate Clien
Slide 9: IB – Enhancing client offering while maintaining capital discipline
IB – Enhancing client offering while maintaining capital discipline Revenue mix by region Revenue mix by business Ambition 2022 2026 2022 2026 ~15% Underlying RoAE, through the cycle Medium-term priorities Clients Integration Productivity and efficiency − Strengthening our capabilities and − Global
Slide 10: Non-core and Legacy – driving lower costs and efficient capital release
Non-core and Legacy – driving lower costs and efficient capital release Clear mandate Unwind expected to be substantially complete by year-end 2026 Underlying operating expenses Ambitions bn Reduce costs PBT: ~(1.0bn) Release capital Total RWA bn Protect our customer franchise Forward looking figure
Slide 11: Revenue plans reflect enhanced capabilities and improved productivity
Revenue plans reflect enhanced capabilities and improved productivity Underlying revenue bridge to 2026 exit rate (illustrative) bn Forward looking figures based on constant FX rates; 1 FY22 baseline is pro forma combined, Credit Suisse FY22 baseline based on adjusted view with further adjustment to
Slide 12: ~13bn of cumulative gross cost saves to be achieved by year-end 2026
~13bn of cumulative gross cost saves to be achieved by year-end 2026 Cumulative gross cost reductions1 Cumulative integration-related expenses % of total saves, exit rates % of total cumulative integration related expenses Forward looking figures based on constant FX rates; 1 Underlying versus FY22
Slide 13: Rebuilding profitability while restructuring for sustainable growth
Rebuilding profitability while restructuring for sustainable growth Group underlying return on CET1 capital Illustrative 12
Slide 14: 4Q23 financial performance
4Q23 financial performance Highlights 13
Slide 15: Stabilized Credit Suisse franchise and delivered on 2023 financial priorities
Stabilized Credit Suisse franchise and delivered on 2023 financial priorities Franchise Funding cost Cost base Balance sheet Capital stabilization and efficiencies right-sizing optimization strength client win-back 77bn ~550m ~4bn (12bn) 14.5% Net new assets1,2, Gross funding cost Annualized exit ra
Slide 16: 4Q23 underlying PBT of 0.6bn
4Q23 underlying PBT of 0.6bn Profits 4Q23 m Underlying (751m) 592m PBT PBT, underlying (1.4%) 4.7% RoCET1 RoCET1, underlying FY23 29.9bn 4.0bn PBT PBT, underlying 29.0bn 0.1bn Net profit Net profit, excluding negative goodwill 15
Slide 17: 4Q23 underlying total revenues 10.4bn, down 3% QoQ
4Q23 underlying total revenues 10.4bn, down 3% QoQ Total revenues m 944m Pull to par and other PPA effects not reflected in underlying in 4Q1 ~700m Pull to par and other PPA effects expected in 1Q241,2 (508m) Losses related to investment in SIX Group in 4Q23 1 Does not include accretion of PPA adjus
Slide 18: 4Q23 underlying operating expenses 9.7bn, up 1% QoQ
4Q23 underlying operating expenses 9.7bn, up 1% QoQ Operating expenses m 17k Headcount reduction vs. Dec-22 pro forma2 ~1bn Includes 60m charge related to the FDIC special Integration-related expenses assessment, higher litigation expected in 1Q24 and marketing costs 135m in UK Bank Levy and US FDIC
Slide 19: Group balance sheet
Group balance sheet 3 UBS
Slide 20: Balance sheet for all seasons remains the foundation of our success
Balance sheet for all seasons remains the foundation of our success 36.6% 11.8% Prudent capital and liquidity management 31.12.23 HoldCo 200bn 216% TLAC: 25.64% TLAC LCR1 TLAC: 8.80% AT1 Going concern: 14.92% Going concern: 5.05% CET1 CET1 capital CET1 leverage 124% 124% CET1: 10.62% CET1: 3.55% rat
Slide 21: RWA expected to decrease by ~35bn due to optimization and NCL unwind
RWA expected to decrease by ~35bn due to optimization and NCL unwind RWA outlook to 2026 bn Basel III finalization Expected 1.1.25; total estimated day-1 Core businesses impact of ~25bn not reflecting mitigating and Group Items actions and based on static balance sheet1 ~14bn related to migrating CS
Slide 22: Funding overview
Funding overview Group funding bn 4Q23 87bn − +2bn QoQ, mainly driven by OCI (cash flow hedge and related to FX translation) shareholder equity − Of which short-term 110bn, including 437bn CHF 38bn SNB funding debt − Of which long-term: 328bn − +58.9bn, including currency effects of 792bn USD 32.4bn
Slide 23: Strong capital position at Group and pro forma combined parent bank level
Strong capital position at Group and pro forma combined parent bank level UBS Group AG capital development 2023-2026 UBS AG (standalone) pro forma post-merger bn, illustrative Capital ratios expected to remain above CET1 ratio to remain ~14% while requirements, even without benefit of regulatory tot
Slide 24: Capital markets issuances and redemptions
Capital markets issuances and redemptions Issuances and redemptions Upcoming maturities and first calls2 During 4Q23 and YTD24 we issued: USD bn USD bn • USD 3.5bn AT1, our first following the CS merger, with strong investor demand 20231 • AUD 2bn OpCo in continued diversification • USD 4bn & EUR 1.
Slide 25: Long-term wholesale funding diversification
Long-term wholesale funding diversification Group funding 4Q23 As of quarter-end, does not include UBS AG / CS AG structured notes. Redemptions reflect instruments maturing on their next call date for illustrative purposes only. UBS makes no representation on its intention to call the instruments 24
Slide 26: Liquidity
Liquidity Liquidity coverage ratio1,2 quarterly averages Average high-quality liquid assets1, bn • Balancing efficiency with resiliency and safety • Meeting the more stringent Swiss liquidity requirements that took effect on Jan 1, 2024 • Continue to focus on deposit win-back with emphasis on stabil
Slide 27: Deposits
4Q23 data will be included following the publishing of the 2023 Annual Deposits Report on March 28, 2024 A well diversified deposit base Composition as of 3Q23 26
Slide 28: High-quality loan portfolio
4Q23 data will be included following the publishing of the 2023 Annual High-quality loan portfolio Report on March 28, 2024 Loans and advances to customers On-balance sheet, 3Q23 Mortgages1: 340bn, average LTV ~50% Lombard: 159bn › Fully collateralized, with daily monitoring of margin requirements C
Slide 29: Appendix
Appendix 28
Slide 30: Credit ratings peer comparison (operating company)
Credit ratings peer comparison Long-term senior unsecured debt – operating company, as of as of 1.2.24 [No arrow] Review for downgrade Outlook negative Outlook stable Outlook positive Review for upgrade Source: Moody’s, S&P and Fitch’s websites; Operating companies: JPMorgan Chase Bank, N.A.; Bank o
Slide 31: Credit ratings peer comparison (holding company)
Credit ratings peer comparison Long-term senior unsecured debt – holding company, as of 1.2.24 [No arrow] Review for downgrade Outlook negative Outlook stable Outlook positive Review for upgrade Source: Moody’s, S&P and Fitch’s websites; Holding companies: JPMorgan Chase & Co.; Bank of America Corpo
Slide 32: Legal structure and capital position
Legal structure and capital position Legal entity structure as of 31 December 2023 UBS Group AG consolidated We are progressing with our plans towards our target legal entity structure, with a single parent bank and Target structure UBS Group AG Credit Suisse’s significant legal entities merged or i
Slide 33: Balance sheet
Balance sheet For the quarter-end 4Q23 1. Cash and balances at central banks a) Short-term borrowings2,3 2. Loans and advances to customers b) Securities financing transactions 3. Securities financing transactions at amortized cost at amortized cost c) Customer deposits 4. Trading assets d) Debt iss
Slide 34: CET1 capital, RWA and LRD
CET1 capital, RWA and LRD CET1 capital Risk weighted assets bn bn Leverage ratio denominator bn 318.5 1 Includes 1.5bn deferred tax assets recognized for temporary differences, negative 0.8bn from dividend accruals for the current year, negative 0.6bn compensation and own share-related capital 33 co
Slide 35: Capital requirements and eligibility criteria
Capital requirements and eligibility criteria Group consolidated requirements Grandfathering rules Going concern RWA LRD Gone concern RWA LRD Any going concern-eligible capital above the Minimum capital 4.50% 1.50% Base requirement 9.65% 3.38% minimum requirement can be counted towards equal to 75%
Slide 36: Credit loss expense / (release) and credit impaired exposures
Credit loss expense / (release) and credit impaired exposures Credit loss expense / (release) m 4Q22 1Q23 2Q23 3Q231 4Q23 GWM 3 15 136 2 (7) P&C (4) 16 234 168 83 IB 8 7 132 4 48 NCL 119 59 15 Other2 0 0 3 6 (3) Total 7 38 623 239 136 1 Certain prior-period figures as of or for the quarter ended 30
Slide 37: Select planned legal entity changes (simplified)
Select planned legal entity changes (simplified) UBS Group AG CS AG Merge parent banks UBS AG UBS Switzerland Switzerland CS (Schweiz) AG Merge Swiss bank entities AG CS Bank (Europe) CS Deutschland CS Luxembourg Establish single IPU EU IPU S.A. AG S.A. CS (Italy) S.p.A structure UBS Europe SE Credi
Slide 38: 2023 issuances
2023 issuances ISIN Instrument Currency Notional (bn) Coupon Rate (%) Issuance Date Call/Maturity US22550L2L41 CS OpCo USD 1.250 7.950% 09.01.23 09.01.25 US22550L2M24 CS OpCo USD 2.500 7.500% 09.01.23 15.02.28 XS2575155671 CS OpCo GBP 0.500 7.750% 10.01.23 10.03.26 CH1236363391 TLAC EUR 1.000 4.375%
Slide 39: 2023 redemptions
2023 redemptions ISIN Instrument Currency Notional (bn) Coupon Rate (%) Call/Maturity CH0400441280 AT1 USD 2.000 5.000% 31.01.23 CH0406415270 TLAC AUD 0.125 3.500% 08.03.23 CH0406415288 TLAC AUD 0.175 3mBBSW + 125bps 08.03.23 AU3FN0041034 OpCo AUD 0.525 3mBBSW + 90bps 08.03.23 AU3CB0251197 OpCo AUD
Slide 40: UBS Liquidity & Funding (Risk Management) Framework
UBS Liquidity & Funding (Risk Management) Framework Liquidity coverage ratio Net stable funding ratio Group Treasury • Proposes the liquidity and funding (L&F) strategy • Maintains the UBS L&F risk management framework, 100% 100% together with the 2nd line of defence, including the BCBS REQUIREMENT
Slide 41: Main UBS rated entities
Main UBS rated entities MOODY’S S&P FITCH UBS Group AG A3/Positive A-/Negative A/Stable UBS AG Aa3/Negative A+/Stable A+/ Stable UBS Switzerland AG A+/Stable A+/ Stable UBS Europe SE Aa3/Negative A+/Stable A+/ Stable UBS Americas Holding LLC A-/Negative UBS Bank USA A+/Stable A+/ Stable UBS Securiti
Slide 42: Cautionary statement regarding Forward looking statements
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, statements rela
UBS Group — Debt Investor Presentation (February 2024) on 6ix