Ubs Group Ag · SIX:UBSG
Ubs — UBS AG (Amna, Amnd, Amtr, Amub, BDCX, BDCZ, Cefd, DJCB, Esus, Fedl, HDLB, Ifed, Iwdl, Iwfl, Iwml, Mlpb) — Q2 2010 Earnings Presentation
38 slides from Ubs's earnings presentation, Jul 27, 2010
Slide 1: Second Quarter 2010 Results
Second Quarter 2010 Results July 27, 2010
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: 2Q10 highlights
2Q10 highlights Pre-tax profit CHF 2.6 billion Net profit attributable to shareholders CHF 2.0 billion Diluted EPS CHF 0.52 Return on equity 19.5%1 Net new money improved in all business divisions Wealth Management & Swiss Bank's CHF 1.1 billion pre-tax profit consistent with 1Q10 Tier 1 capital rat
Slide 4: Net profit attributable to UBS shareholders
Net profit attributable to UBS shareholders 1 Own credit on financial liabilities designated at fair value through profit or loss 2,005 2,202 (164) 842 (246) (503) (124) (292) 292 1Q10 Own credit1 Credit loss (expense) / recovery Operating income excl. own credit and CLE Personnel expenses Non- pers
Slide 5: 2Q10 - performance by business division
2Q10 - performance by business division 1 Treasury activities and other corporate items 2 Own credit on financial liabilities designated at fair value through profit or loss
Slide 6: Group pre-tax profit
Group pre-tax profit1 (CHF million) 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 1 Pre-tax profit from continuing operations (1,558) (1,323) (593) 912 2,810 2,614
Slide 7: Operating expenses - 2Q10 versus 1Q10
4,500 4,411 4,645 1,680 1,926 242 119 1,799 1Q10 adjusted1 2Q10 adjusted1 2Q10 as reported Personnel expenses Non-personnel expenses 119 (89) Operating expenses - 2Q10 versus 1Q10 Accruals for variable compensation decreased on lower revenues 2Q10 expenses include: CHF 242 million for the UK Bank Pa
Slide 8: WM&SB revenues stable
WM&SB revenues stable 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 (1%) 0% 3% 2Q10 vs 1Q10 2Q10 (CHF million) 1,407 1,368 1,324 1,325 1,200 1,186 1,063 1,085 1,013 1,042 2,071 1,935 1,811 1,452 1,300 1,228 1,251 1,261 1,302 1,303 731 656 577 631 596 523 500 519 540 536 4,201 3,975 3,692 3,153 2,892
Slide 9: Wealth Management
1,923 1,904 1,891 542 696 658 (CHF million) Wealth Management Stable revenues with higher gross margins Increased risk aversion by clients reflected in asset allocation and lower trading activity Costs up 2% due to UK Bank Payroll Tax and higher salary costs 2Q09 1Q10 2Q10 Resilient profitability an
Slide 10: Wealth Management - gross margins
Wealth Management - gross margins1 (bps p.a.) 1 Operating income before credit loss (expense) or recovery (annualized) / average invested assets. Gross margin excludes negative valuation adjustments on a property fund of CHF 17 million in 2Q10, CHF 28 million in 1Q10, CHF 88 million in 4Q09, CHF 31
Slide 11: Wealth Management - net new money and invested assets
Wealth Management - net new money and invested assets Continued net inflows in Asia Pacific region Positive NNM from UHNW clients for second consecutive quarter Outflows related to client advisor attrition had a diminishing impact Most of the net outflows continued to be in the cross-border segment
Slide 12: Wealth Management - client advisors and invested assets
Wealth Management - client advisors and invested assets Client advisor attrition slowing, continued to actively hire in 2Q10 1,084 1,095 1,035 833 810 833 847 825 827 786 >1,000 5,647 5,648 5,618 5,435 5,066 4,744 4,286 4,138 4,112 4,700 4,493 191 192 194 184 153 160 176 189 192 200 1Q08 2Q08 3Q08 4
Slide 13: Retail & Corporate
Retail & Corporate 2Q09 1Q10 2Q10 (CHF million) Stable performance quarter-on-quarter Operating expenses and C/I ratio Credit loss (expense) / recovery Return on attributed equity1 1 Annualized year-to-date Increase in revenues and resilient business volumes with continued low levels of credit loss
Slide 14: Retail & Corporate - Stable lending portfolio
138 137 138 141 140 138 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Retail & Corporate Stable lending portfolio (CHF billion) Lending portfolio, gross 80 120 140 Unsecured loans Lending to banks Secured by securities Secured by commercial / industrial property Secured by residential property 70% 14% 11% 2% 4%
Slide 15: Wealth Management Americas
Wealth Management Americas Pre-tax profitability improved to CHF 79 million excluding restructuring charges, from CHF 36 million in 1Q10 Higher managed account fees and net interest income drove 9% increase in revenues 2Q10 restructuring charges of CHF 146 million, primarily real estate-related NNM
Slide 16: Global Asset Management
Global Asset Management Higher management fees offset lower performance fees Costs affected by higher amortization charges for compensation awards granted in prior periods Positive NNM inflows of CHF 3.4 billion driven by CHF 10.9 billion from third parties Net inflows from third parties were partly
Slide 17: Investment Bank - pre-tax profit
Investment Bank - pre-tax profit (CHF million) 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 (3,162) (1,846) (1,370) 297 1,190 1,314
Slide 18: Investment Bank - pre-tax profit
Investment Bank - pre-tax profit Well positioned and risk managed during market turbulence Equities and FX performed above 1Q10 levels FICC and IBD impacted by adverse market conditions Own credit gains of CHF 595 million in 2Q10 vs CHF 247 million loss in 1Q101 Higher profits in challenging markets
Slide 19: Equities revenues
Equities revenues Cash: our largest flow business delivered revenues consistent with 1Q10 Derivatives: increased revenues despite volatile trading conditions and reduced liquidity, partly as a result of effective risk management Prime services: revenues increased 28% Prime brokerage up 42% due to st
Slide 20: FICC revenues
FICC revenues Macro: higher FX revenues driven by high market volatility were offset by lower revenues in Rates due to de-risking and lower client demand Credit: revenues down from a strong first quarter as the Eurozone crisis drove overall de-risking, decreased liquidity, and a decline in client ac
Slide 21: Investment banking revenues
Investment banking revenues Capital markets: Equities: revenues down 21% mainly due to slowdown in May, stable market share FICC: revenues decreased primarily due to market volatility, market fee pool down 41% from 1Q10 Advisory: revenues down 26% from the first quarter1 Global fee pool down 15% on
Slide 22: Risk update
Risk update Average VaR down 8%, total RWAs down 2% to CHF 205 billion on 30.6.10 One backtesting exception on 10 May 2010 (our first since 2Q09); extreme market moves following the ECB's financial aid package announcement More cautious approach to risk-taking in 2Q10 in light of volatile markets Im
Slide 23: Capital position
Capital position Tier 1 capital ratio increased to 16.4% Core tier 1 capital ratio improved to 13.0% Risk-weighted assets down CHF 4 billion to CHF 205 billion FINMA leverage ratio 4.1% USD 1.5 billion hybrid tier 1 instrument callable in October 2010 (subject to FINMA approval) CHF 1.0 billion rese
Slide 24: Funding
Customer deposits of CHF 414 billion Contributing 43% of total liabilities excluding negative replacement values Coverage ratio of customer deposits to loans at 138% Total outstanding long-term debt1 stood at CHF 184 billion Contributing 19% of total liabilities excluding negative replacement values
Slide 25: UBS
26 UBS
Slide 26: Appendix
Appendix
Slide 27: Wealth Management Americas - medium term targets
Wealth Management Americas - medium term targets 1Q10 ex- provisions annualized Asset performance Yield curve impact Cost initiatives Revenue initiatives Strategic execution risk Medium-term target 144 > 1,000 ~250 ~325 ~250 ~(625) ~725 (CHF million)
Slide 28: Wealth Management Americas - medium term targets
Wealth Management Americas - medium term targets 4,517 ~161,000 2009 Pre-tax profit / FA (CHF) Medium-term target Medium-term target 32 >1,000 2009 Profit before tax (CHF million) 99 ~80-85 2009 Medium-term target Cost/income ratio (%) 97.4 ~120 2009 Invested assets / FA (CHF million) Medium-term ta
Slide 29: Pre-tax profit - business divisions
Pre-tax profit - business divisions 1Q10 vs 2Q10 1H09 vs 1H10 (CHF million) (CHF million) 1 Treasury activities and other corporate items 1,161 15 137 1,190 306 1,131 (67) 117 1,314 119 WM&SB WMA Global AM IB CC1 1Q10 2Q10 2,009 (256) 24 351 2,293 (52) 254 2,504 425 (5,008) 1H09 1H10
Slide 30: Headcount
Headcount Headcount reduced by a further 417 during 2Q10 Overall headcount expected to remain broadly stable in 2010 179 63,876 (67) 8 (211) (326) 64,293 Mar 10 WM&SB WMA Global AM IB CC Jun 10 (FTE) (417)
Slide 31: Invested assets
Invested assets Wealth Management Wealth Management Americas Global Asset Management Retail & Corporate 18 (3) 693 714 (36) Mar 10 NNM Market FX / Other Jun 10 (CHF billion) (3%) (5) (15) 827 (21) 786 Mar 10 NNM Market FX / Other Jun 10 (CHF billion) (5%) (0) (1) 136 (3) 131 Mar 10 NNM Market FX / O
Slide 32: Regulatory capital
Regulatory capital Tier 1 capital BIS RWA Tier 1 ratio Total capital Total ratio CHF billion 31.3.10 Net P&L attributable to shareholders FX & other Own credit (not eligible for capital) Tier 1 hybrid reserve1 Tier 1 deductions RWA reduction Tier 2 deductions 30.6.10 33.4 2.0 0.1 (0.6) (1.0) (0.2) 3
Slide 33: Call of USD 1.5 billion hybrid tier 1 instrument
Call of USD 1.5 billion hybrid tier 1 instrument1 1 USD 1.5 billion hybrid tier 1 instrument callable in October 2010 (subject to FINMA approval) 2 Calculations based on CHF/USD exchange rate of 1.08 30.6.10 before reserve 2Q10 reserve 30.6.10 as reported Redemption impact 30.6.10 post call pro form
Slide 34: Asset funding - 30 June 2010
Assets Liabilities and equity Cash, balances with central banks and due from banks 110 Loans 299 Trading portfolio assets 224 Cash collateral on securities borrowed and reverse repurchase agreements 199 Other assets (incl. net RVs) 57 Due to banks 82 Customer deposits 414 Demand deposits 192 Fiducia
Slide 35: Balance sheet development: 2Q07 - 2Q10
Balance sheet development: 2Q07 - 2Q10 Assets 1 Including financial liabilities designated at fair value 2 Percentages based on total balance sheet size excluding negative replacement values 44% 408 2Q07 4Q08 4Q09 Positive RVs Other assets Trading portfolio Collateral trading Lending Negative RVs Ba
Slide 36: Exposure to monoline insurers, by rating
Exposure1 to monoline insurers, by rating USD billion Credit protection on US sub-prime RMBS CDOs2 of which: from monolines rated investment grade (BBB and above) of which: from monolines rated sub-investment grade (BB and below) Total 30.6.10 12.0 3.3 1.6 1.7 Notional amount3 Fair value of CDSs4 pr
Slide 37: Student loan auction rate securities
Student loan auction rate securities USD million US student loan auction rate securities Carrying value as of 31.3.10 9,275 1 Includes USD 4.9 billion (CHF 5.2 billion) at carrying value of student loan ARS that were reclassified to "Loans and receivables" from "Held for trading" in fourth quarter 2
Slide 38: Reclassified assets
Reclassified assets 30.6.10, CHF billion Monoline protected assets US student loan and municipal auction rate securities US reference linked notes CMBS/CRE (excl. interest-only strips) Leveraged finance 6.0 5.6 0.8 0.8 0.5 0.9 Ratio of carrying to notional value 88% 88% 84% 83% 78% 82% Carrying valu