Ubs Group Ag · SIX:UBSG
Ubs — Debt Investor Presentation (August 2023)
44 slides from Ubs's debt investor presentation, Aug 31, 2023
Slide 1: Second quarter 2023 Fixed Income investor presentation
Second quarter 2023 Fixed Income investor presentation This document should be read in conjunction with our 2Q23 report and earnings presentation, available on ubs.com/investors 31 August 2023 This presentation has been updated on 11.9.23
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: Update on strategy and Credit Suisse acquisition
Table of content Update on strategy 2Q23 performance Group balance and Credit Suisse and financial sheet acquisition overview Highlights Highlights Slides 3-11 Slides 12-20 Slides 21-33 2
Slide 4: Key messages
Key messages Our strategy is unchanged and is accelerated by the acquisition of Credit Suisse We remain focused on serving our clients with an enhanced client proposition, and we see positive momentum in our core businesses We are driving value creation through the integration and taking action to b
Slide 5: Our strategy is unchanged and is accelerated by the acquisition of Credit Suisse
Our strategy is unchanged and is accelerated by the acquisition of Credit Suisse − Reinforced position as the only truly global wealth manager and leading universal bank Outstanding in Switzerland client franchises − Portfolio of leading franchises in Asset Management and the Investment Bank − Acqui
Slide 6: Enhancing client franchises and increasing scale
Enhancing client franchises and increasing scale Global Wealth Personal & Asset Investment Management Corporate Banking Management Bank Reinforcing our position as a Enhancing expertise and global Increasing scale with improved Strengthening our Investment leading and the only truly global reach wit
Slide 7: Integration of Credit Suisse (Schweiz) is the best path forward
Integration of Credit Suisse (Schweiz) is the best path forward Credit Suisse (Schweiz) would struggle as a Full integration offers most benefits standalone entity even in a focused spin-off scenario Clients Workforce Best-in-class, Highly attractive employee 1 Sub-scale, low profitability complemen
Slide 8: Stabilized flows, with 8bn of combined wealth management NNM/NNA
Stabilized flows, with 8bn of combined wealth management NNM/NNA with positive contribution from Credit Suisse quarter-to-date Wealth management Wealth management Swiss businesses Net new money / net new assets, USD bn Net new deposits, USD bn Net new deposits, CHF bn 4Q22 1Q23 2Q23 4Q22 1Q23 2Q23 4
Slide 9: Non-strategic assets and businesses to be exited through Non-core and Legacy
Non-strategic assets and businesses to be exited through Non-core and Legacy Non-core and Legacy composition Non-core and Legacy composition by instrument type by source 2Q23, USD bn 2Q23, USD bn − Positions and businesses not aligned with our strategy and policies, including a large portion of Cred
Slide 10: Non-core and Legacy rundown to drive lower costs and efficient capital release
Non-core and Legacy rundown to drive lower costs and efficient capital release Natural run-off profile1 Rundown approach RWA excluding operational risk, pro forma, USD bn Natural run-off profile to be accelerated with active unwinds when economically accretive Reduce operating costs Efficient releas
Slide 11: Executing on plans to achieve greater than 10bn gross cost reductions
Executing on plans to achieve greater than 10bn gross cost reductions by year-end 2026 Non-core and Legacy and Credit Suisse Investment Bank restructuring Large majority of Credit Suisse IB costs and all Costs to decline substantially as businesses, assets and positions are exited costs within exist
Slide 12: Working towards ~15% RoCET1
Working towards ~15% RoCET1 Underlying1 return on CET1 capital Illustrative ~15% ~14% underlying1 RoCET1 CET1 capital ratio 2026 exit rate over medium-term2 >10bn <70% gross cost saves by underlying1 cost/income end-2026 vs. FY22 ratio, 2026 exit rate Capital returns Committed to existing progressiv
Slide 13: 2Q23 performance and financial overview
2Q23 performance and financial overview Highlights 12
Slide 14: UBS Group 2Q23 results
UBS Group 2Q23 results Results include one month of results from Credit Suisse business divisions and Corporate Center 2Q23 profits m 1 2Q23 UBS business divisions and Group Functions (IFRS); refer to slides 22 and 34 for details; 2 June 2023 (IFRS); Credit Suisse AG and its consolidated subsidiarie
Slide 15: Negative goodwill and overview of purchase price allocation adjustments
Negative goodwill and overview of purchase price allocation adjustments Negative goodwill Purchase price allocation (PPA) adjustments bn bn 1 Includes 135m related to settlement of pre-existing relationships with Credit Suisse; 2 Reflects the accretion from post-PPA fair value back to the pre-PPA US
Slide 16: Our balance sheet for all seasons remains the foundation of our success
Our balance sheet for all seasons remains the foundation of our success RWA 557bn 15
Slide 17: Prudent management of liquidity and funding
Prudent management of liquidity and funding Liquidity and funding Fully repaid higher cost SNB facilities 175% 118% LCR NSFR Strong deposit base and flows enabled full repayment of PLB and ELA+ in 3Q − ~550m funding costs in 2Q from PLB and ELA+, ~100m in 3Q We will continue to execute on our issuan
Slide 18: 2Q23 UBS business divisions and Group Functions (IFRS) – excl. Credit Suisse
Excluding Credit Suisse 2Q23 UBS business divisions and Group Functions (IFRS) – excl. Credit Suisse Profit / (loss) before tax m 1 848m gain in Asset Management in 2Q22 related to the sale of our shareholding in the Mitsubishi Corp.-UBS Realty Inc. joint venture 17
Slide 19: 2Q23 Credit Suisse AG reported pre-tax loss of (8.9bn)
2Q23 Credit Suisse AG reported pre-tax loss of (8.9bn), (4.3bn) excluding acquisition-related effects; (2.1bn) adjusted loss (CHF, US GAAP) Credit Suisse AG 2Q23 reported to adjusted pre-tax income / (loss) reconciliation CHF m Refer to Credit Suisse AG 2Q23 release for reconciliation from adjusted
Slide 20: Credit Suisse adjusted 2Q23 results (CHF, US GAAP)
Credit Suisse adjusted 2Q23 results (CHF, US GAAP) 2Q23 Corporate Credit Suisse WM SB AM IB CRU Center sub-group1 Adjusted − Significant revenue attrition net revenues QoQ, mostly in the Investment CHF m Bank with core divisions more 802 925 251 220 (55) (453) 1,690 resilient ∆% QoQ (10%) (5%) +34%
Slide 21: Expecting underlying PBT to be positive in 2H23, around break-even in 3Q23
Expecting underlying PBT to be positive in 2H23, around break-even in 3Q23 2Q23 underlying PBT Pro forma, USD bn Outlook Taking immediate action to drive underlying1 profitability Other considerations Not to scale A >3bn annualized (>750m quarterly) saves by year-end from actions to date and identif
Slide 22: Group balance sheet
Group balance sheet 36 UBS
Slide 23: Capital and leverage ratios
Capital and leverage ratios Recent FINMA rulings − Increases to LRD and Swiss market share add-ons to be phased in starting beginning-2026; phase in path to be determined − 5bn net of tax PPA interest-rate related and own credit adjustments subject to transitional CET1 capital treatment until 30.6.2
Slide 24: Legal structure and capital position
Legal structure and capital position Legal entity structure as of 31 August 2023 UBS Group AG consolidated We are finalizing our plans towards our target legal entity structure, with a single parent bank Target structure UBS Group AG and Credit Suisse’s significant legal entities 100% merged or inte
Slide 25: CET1 capital and RWA walk
CET1 capital and RWA walk CET1 capital Risk weighted assets USD bn USD bn 1 Includes foreign currency translation effects of +0.4bn, before tax, negative 0.5bn dividend accruals for the current year, negative 0.1bn amortization of transitional CET1 PPA adjustments and 24 movements related to other i
Slide 26: Funding overview
Funding overview Group funding bn 2Q23 − +30bn QoQ, largely reflecting 29bn 87bn negative goodwill in connection with shareholder equity Credit Suisse acquisition − Of which short-term 140bn, 455bn including 71bn SNB funding debt − Of which long-term: 315bn − Of which UBS sub-group: 515bn, Coverage
Slide 27: Capital markets issuances and redemptions
Capital markets issuances and redemptions Issuances and redemptions Upcoming maturities and first calls2 USD bn USD bn 2022 1H231 We are committed to managing our funding resources prudently We expect to continue the execution of our funding plans in the coming weeks We expect to initiate a new cove
Slide 28: Wholesale funding diversification
Wholesale funding diversification Group funding 2Q23, bn As of quarter-end 27
Slide 29: Liquidity
Liquidity Liquidity coverage ratio1 Well diversified liquidity pool, and diligent liquidity management quarterly averages including daily stress testing Average high-quality liquid assets1, bn Average high-quality liquid assets1, 228 253 249 240 239 230 257 2Q23 Pre-haircut as and as of end-2Q23 Pre
Slide 30: Deposits
Deposits Stabilization trend to continue into 3Q23 Quarter to date, 28.8.23 − 2Q23 total net new deposits of 23bn of which 18bn from Credit Suisse Wealth Management 8bn 10bn 4bn − Deposit flow stabilization supported the repayment UBS+CS wealth management net UBS+CS wealth management net new deposit
Slide 31: High-quality loan portfolio
High-quality loan portfolio Loans and advances to customers On-balance sheet, 2Q23 Mortgages: 348bn, average LTV ~52% Lombard: 169bn, average LTV ~47% › Fully collateralized, with daily monitoring of margin requirements Corporates: 62bn › 26bn large corporates › 36bn Swiss SMEs Other: 73bn › 9.6bn s
Slide 32: Credit loss expense / (release) and credit impaired exposures
Credit loss expense / (release) and credit impaired exposures Credit loss expense / (release) ECL coverage ratio for core loan portfolio (stage 3)2 m On balance sheet 2Q22 3Q22 4Q22 1Q23 2Q23 GWM (3) 7 3 15 5 P&C 35 (15) (4) 16 10 IB (28) 4 8 7 1 Credit Suisse 724 Other1 2 0 0 0 0 Total 7 (3) 7 38 7
Slide 33: Credit ratings peer comparison (operating company)
Credit ratings peer comparison Long-term senior unsecured debt – operating company, as of 11.9.23 MOODY’S S&P FITCH Baa2 Baa1 A3 A2 A1 Aa3 Aa2 Aa1 BBB- BBB BBB+ A- A A+ AA- AA BBB- BBB BBB+ A- A A+ AA- AA Barclays BNP BoA Citi CS DB GS HSBC JPM MS SocGen UBS [No arrow] Review for downgrade Outlook n
Slide 34: Credit ratings peer comparison (holding company)
Credit ratings peer comparison Long-term senior unsecured debt – holding company, as of 11.9.23 MOODY’S S&P FITCH Ba1 Baa3 Baa2 Baa1 A3 A2 A1 Aa3 BB+ BBB- BBB BBB+ A- A A+ AA- BB+ BBB- BBB BBB+ A- A A+ AA- Barclays BNP1 BoA Citi DB1 GS HSBC JPM MS SocGen1 UBS2 [No arrow] Review for downgrade Outlook
Slide 35: Appendix
Appendix 34
Slide 36: Balance sheet
Balance sheet O/w Credit Suisse O/w Credit Suisse assets: 598bn liabilities: 503bn For the quarter-end 2Q23 1. Cash and balances at central banks a) Short-term borrowings4 2. Lending1 b) Securities financing transactions 3. Securities financing transactions at amortized cost at amortized cost c) Cus
Slide 37: 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 38: UBS Group structure
UBS Group structure We expected to merge Credit Suisse AG into UBS AG in 2024 As of 31 August 2023 ✓ ✓ ✓ ✓ ✓ ✓ ✓ Issuing entities 1 Other non-US subsidiaries are generally held either directly by UBS AG or indirectly through UBS Switzerland AG or UBS Asset Management AG; 2 Of which 98% held by Credi
Slide 39: Year-to-date issuances
Year-to-date issuances 1H23 issuances Notional Coupon Issuance Call/ ISIN Instrument Currency (bn) rate (%) date Maturity CH1236363391 TLAC EUR 1.000 4.375 4.1.23 11.1.30 US902613AU26 TLAC USD 1.750 5.711 12.1.23 12.1.26 US902613AV09 TLAC USD 2.250 5.959 12.1.23 12.1.33 1 CH1255915006 TLAC EUR 1.500
Slide 40: Year-to-date redemptions
Year-to-date redemptions 1H23 redemptions Notional Coupon Call/ ISIN Instrument Currency (bn) rate (bps) Maturity CH0400441280 AT1 USD 2.000 5.000 31.1.23 AU3FN0041034 OpCo AUD 0.525 3mBBSW+90bps 8.3.23 AU3CB0251197 OpCo AUD 0.275 3.250 8.3.23 XS2149270477 OpCo EUR 2.000 0.750 21.3.23 CH0365501516 T
Slide 41: UBS liquidity framework
UBS liquidity framework Liquidity coverage ratio Net stable funding ratio Group Treasury proposes the liquidity and funding strategy 100% 100% BCBS REQUIREMENT BCBS REQUIREMENT Regulatory Group Asset and Liability Committee (ALCO) approves the liquidity and funding strategy on behalf Governance mini
Slide 42: Main UBS rated entities
Main UBS rated entities MOODY’S S&P FITCH UBS Group AG 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 Securities LLC A+/St
Slide 43: Our reporting
Our reporting ubs.com/investors Other quick links › Quarterly reporting › Bondholder information › Capital instruments › Benchmark bonds › Green bonds › Digital bonds › Ratings Link Link Link Link Link 42
Slide 44: 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