Slide 1: 2019 full year and fourth quarter results
2019 full year and fourth quarter results Investor update January 21, 2020
Slide 2: Important information
Important information Forward Looking Statements: This presentation contains statements that constitute “forward-looking statements,” including but not limited to performance targets, expectations and ambitions, as well as management’s outlook for UBS’s financial performance and statements relating
Slide 3: Agenda
Agenda 1 Sergio P. Ermotti, CEO › 2019 highlights › Strategic priorities › 2020-2022 targets 2 Kirt Gardner, CFO › 4Q19 results › Segment performance › Capital position 3 Q&A 2
Slide 4: 2019 highlights
2019 highlights Delivered solid performance › Net profit 4.3bn, adjusted PBT 6.0bn, diluted EPS 1.14 in mixed market conditions › RoCET112.4% on increasing CET1 capital › 49bn NNM across GWM and AM › Record invested assets GWM 2.6trn; AM 0.9trn › 26bn of net mandate sales; 9bn invested assets in 100
Slide 5: 2019 macro context
2019 macro context Interest rates Equity markets 31.12.19, YoY S&P 500 (75bps) (80bps) (45bps) 3,400 3,231 Fed Funds 10-year 10-year 3,200 target rate Treasury yield Bund yield 3,000 2,800 2,600 2,400 0 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Geopolitical uncertainty Volatility Global econo
Slide 6: Delivering competitive returns
Delivering competitive returns Balancing growth, cost and capital efficiency to deliver attractive returns on deployable equity Return on CET1 capital FY19 3Q19 LTM1 12.4% 11.2% JPM BoA MS Citi UBS GS BNPP HSBC CS Barclays CET1 as % of 100% 97% 101% 93% 74%4 101% 95% 87% 93% 89% tangible equity2 201
Slide 7: Integrated business model at the core of our strategy
Integrated business model at the core of our strategy Our Delivering as clients one firm Holistic wealth management Wealth in need of investment Entrepreneurs Research and differentiated content Wealthy individuals Best-in-class execution in secondary markets Global Family Office clients Corporate f
Slide 8: 2020-2022 priorities
2020-2022 priorities I Elevate our world leading Global Wealth Management franchise to drive higher margins and 10-15% PBT growth p.a. II Improve returns in the Investment Bank by further optimizing resources and collaboration III Capitalize on our differentiated client offering in Asset Drive highe
Slide 9: Global Wealth Management: well positioned for further growth
Global Wealth Management Well positioned for further growth World-leading #1 Private Banking 2.6trn invested assets 30% RoATE 31.12.19 FY19 wealth manager Services Overall1 In 2019 we have… 2,635 2,260 …attracted >45bn of net new money Invested assets (bn) from UHNW clients 179 175 …grown loans Loan
Slide 10: GWM – Evolving market-leading services to respond to client needs
GWM – Evolving market-leading services to respond to client needs Uniquely positioned to provide solutions that matter to our clients Changing clients needs Digital everything ~70% of investors prefer hybrid models over a traditional advice model Search for yield USD ~800bn new capital flowed into >
Slide 11: GWM – Elevate our franchise to new heights
GWM – Elevate our franchise to new heights Taking Global Wealth Management into the next decade Our priorities 1 Tailored client coverage Expand GFO further leveraging 1 Get closer to clients 2 IB/AM integration Accelerate decision making Align UHNW to regional and time to market business units Empo
Slide 12: GWM – Driving profitable growth
GWM – Driving profitable growth Aiming for higher pre-tax margins; maintain 10-15% PBT1 growth target 2020-2022 Pre-tax margin Pre-tax profit bn 21.3% 3.5 3.3 20.1% FY18 FY19 Ambition FY18 FY19 Target Numbers in USD and adjusted unless otherwise indicated; 1 Reported 11
Slide 13: IB – Improve returns by further optimizing resources
IB – Improve returns by further optimizing resources In 2020 we expect returns of around 11% with further improvements through 2022 Our priorities Profitable growth and strong returns #1 Global Equity Research House, › Maintain a capital-light strategy with best-in-class revenues / RWA for the 3rd y
Slide 14: IB – Collaborating with GWM
IB – Collaborating with GWM Leveraging our institutional capabilities for GWM clients Global Family Office Financing Global Capital Markets Revenues, illustrative Loan volumes +15% CAGR1 20bn p.a. GWM loan growth ambition IB GWM IB product product GWM 179 experts experts Year 0 Year 3 31.12.19 Illus
Slide 15: AM – Capitalize on our differentiated client offering
AM – Capitalize on our differentiated client offering for further growth, performance and scale Expand our offering and capabilities in areas where we have a leading position Our priorities growth in top-quartile 36% Lipper-ranked funds1 Capitalize on our strengths in fast-growing areas › Extend lea
Slide 16: AM – Collaborating with GWM
AM – Collaborating with GWM Bringing a more competitive offering to our clients First in the industry to reduce management fees for SMAs to zero Market for SMAs1 and UMAs2 SMA pricing 13% CAGR3 Expecting multi-billion inflows in 2020 2013 2018 Previously Going forward Management fee Advisory fee Num
Slide 17: P&C – Grow profits through digital initiatives, services and efficiency
P&C – Grow profits through digital initiatives, services and efficiency Growing non-interest income and improving efficiency to deliver steady profit growth #1 75% digital penetration amongst of Personal Banking clients +5% 18% large Swiss Banks, 2018 are paperless FY19 YoY PBT growth1 Return on >1k
Slide 18: Driving down our cost base while investing for the future
Driving down our cost base while investing for the future Funding growth and adapting our operating model to meet new regulatory requirements Operating expenses (0.9bn) Investments 24.2 0.4 0.3 23.3 Saves 0.5 0.1 0.1 FY18 FY19 (2.7bn) Investments 26.0 1.5 0.3 23.3 Saves 0.9 0.6 0.6 FY15 Cost saves n
Slide 19: Driving efficiency to fund growth and enhance returns
Driving efficiency to fund growth and enhance returns Expect to keep total costs flat in 2020, excluding variable compensation and litigation Our priorities Cost/income ratio Processes and › Process re-engineering and platforms automation › Consolidating platforms across 79.5% 78.9% business divisio
Slide 20: Creating scale through partnerships
Creating scale through partnerships Realizing the benefits of our partnerships while exploring selected new opportunities Fondcenter Clearstream partnership Broadridge GWM platform utility, US Top 2 B2B fund distribution 1.4trn platform globally Invested assets in Sumitomo Mitsui GWM Americas Trust
Slide 21: 6% CAGR in TBVPS + dividends since 2011
6% CAGR in TBVPS + dividends since 2011 Generated 28bn of CET1 capital since 2011, of which >2/3 returned to shareholders Capital generation TBVPS + cumulative cash dividend per share bn 6% 10.5 Cumulative litigation CAGR Cumulative Cumulative capital returns 4.2 cash dividends 19.1 to shareholders1
Slide 22: Continuing to deliver attractive capital returns
Continuing to deliver attractive capital returns Pacing growth in dividends to free up capacity for incremental buybacks 2019 2020-2022 80% total payout ratio1 Maintaining an attractive capital return profile Capital return policy 2020 buy-back USD 0.73 ordinary dividend per share › Increase dividen
Slide 23: 2020-2022 targets and guidance
2020-2022 targets and guidance Group 12-15% return on CET1 capital (RoCET1) returns Cost Positive operating leverage and 75-78% cost/income ratio efficiency Growth 10-15% PBT growth in GWM Capital Up to 1/3 of Group RWA and LRD in IB allocation Capital ~13% CET1 capital ratio guidance ~3.7% CET1 lev
Slide 24: 2020-2022 priorities
2020-2022 priorities I Elevate our world leading Global Wealth Management franchise to drive higher margins and 10-15% PBT growth p.a. II Improve returns in the Investment Bank by further optimizing resources and collaboration III Capitalize on our differentiated client offering in Asset Drive highe
Slide 25: 4Q19 net profit USD 722m
4Q19 net profit USD 722m Best 4Q adjusted PBT since 2010 +30% 1,316 7 104 1,212 298 1,011 533 478 4Q18 Litigation 4Q18 Operating Operating expenses 4Q19 Litigation 4Q19 PBT PBT excl. litigation income excl. litigation PBT excl. litigation PBT 928m 0.19 8.2% 82.8% Reported PBT Diluted EPS Reported Ro
Slide 26: Global Wealth Management
Global Wealth Management Positive momentum across transactions, invested assets and loans 808 834 Profit before tax PBT +3% excl. litigation, (6%) excl. litigation and 75m m 873 886 919 787 302 fee from P&C1 Excl. litigation Operating income Operating income +1% excl. fee from P&C1, with double- m 4
Slide 27: Global Wealth Management
Global Wealth Management Revenues +3%; 4Q19 invested asset growth to benefit 1Q20 Recurring net fee income Net interest income Transaction-based income +5% 2,635 2,432 2,486 2,502 Invested 2,260 assets, bn 2,374 2,315 2,371 2,354 2,218 1,028 1,009 966 979 993 765 764 741 789 627 4Q18 1Q19 2Q19 3Q19
Slide 28: Personal & Corporate Banking (CHF)
Personal & Corporate Banking (CHF) Strong 4Q and FY PBT growth; record FY NNBV +2% 389 391 PBT +2%, or +11% excl. 73m fee paid to GWM1 in 4Q19 and 360 41m of litigation expenses in 4Q18, on strong operating leverage Profit 303 309 before tax FY19 PBT +5%1 excl. litigation Cost/income ratio 66% 59% 5
Slide 29: Asset Management
Asset Management Exceptionally strong results; fifth consecutive quarter of YoY PBT growth; best FY since 2015 +48% 187 Profit 126 109 135 135 PBT +48% on higher performance fees and net before tax management fees; FY19 PBT +17% Positive operating leverage with costs up 7% on 18% Cost/income ratio 7
Slide 30: Investment Bank
Investment Bank Revenues +11%, costs (3%) and resource usage down QoQ 440 Profit before tax 221 203 198 RoAE of 6.4% on 12.3bn average attributed equity (5) Operating expenses (3%), or (7%) excluding litigation, on lower Cost/income ratio 99% 86% 79% 88% 88% personnel expenses; 4Q19 UK bank levy 46m
Slide 31: Cost efficiency
Cost efficiency Funding investments with saves to keep total costs flat in 2020 24,222 23,312 Illustrative ~stable fixed cost base 2018 2019 Gross Investments and Performance- Litigation2 Projected operating operating cost saves regulatory costs based 2020 expenses expenses compensation1 operating e
Slide 32: Capital and leverage ratios
Capital and leverage ratios Total loss-absorbing 89.6 34.6% capacity (TLAC) 1.1.20 requirements1,2 RWA LRD Gone concern 9.8% TLAC including 2019 loss-absorbing 37.8 14.6% rebate and Tier 2- capacity related reduction2 24.3% 8.6% 4.1% AT1 16.3 6.3% Going concern 13.9% 4.9% 1.8% Going CET13 9.6% 3.4%
Slide 33: Appendix
Appendix UBS
Slide 34: UBS at a glance
UBS at a glance Outstanding client franchises Managing for growth and Balance sheet strength efficiency for all seasons › Clients are at the center of › Investing for growth while › Maintaining a balance sheet for everything we do remaining disciplined on costs all seasons to support a durable › Uni
Slide 35: UBS Group AG results (consolidated)
UBS Group AG results (consolidated) FY18 FY19 4Q18 1Q19 2Q19 3Q19 4Q19 Total operating income 30,213 28,889 6,972 7,218 7,532 7,088 7,052 Total operating expenses 24,222 23,312 6,492 5,672 5,773 5,743 6,124 Profit before tax as reported 5,991 5,577 481 1,546 1,759 1,345 928 of which: adjusting items
Slide 36: GWM regional timeseries
GWM regional timeseries FY18 FY19 4Q18 1Q19 2Q19 3Q19 4Q19 Americas Operating income 9,138 9,058 2,304 2,170 2,272 2,322 2,294 Operating expenses 7,798 7,760 2,019 1,838 1,904 1,980 2,039 Profit before tax 1,340 1,297 284 333 367 342 255 Cost/income ratio 85% 85% 88% 85% 84% 85% 88% Invested assets
Slide 37: Global Wealth Management
Global Wealth Management 4Q19 FY19 Profit before tax Cost/income Invested assets Net new money Net new money Net new money m ratio bn bn bn annualized growth Americas 255 88% 1,403 (9.0) (17.4) (1.4%) APAC 79 85% 450 3.1 31.4 8.8% EMEA 234 73% 552 (0.0) 10.5 2.1% Switzerland 138 65% 228 1.3 7.5 3.7%
Slide 38: Invested assets composition
Invested assets composition Global Wealth Management Asset Management % % 2,635bn 903bn Hedge Fund Other1 11 9 Other Businesses, 11 Other 14 2 GBP Real Estate & Private Markets 7 GBP 8 CHF Multi Assets & 17 Mutual funds 30 10 EUR Solutions 24 CHF Cash & MM Fixed Income 28 12 instruments2 14 EUR Bond
Slide 39: Corporate Center
Corporate Center 4Q18 1Q19 2Q19 3Q19 4Q19 (17) › PBT of (189m) excluding (47m) from accounting asymmetries, (34m) from hedge accounting ineffectiveness (65) and 3m of litigation expenses Profit › Expecting quarterly Corporate Center PBT of ~(200m) before tax excluding accounting asymmetries, hedge a
Slide 40: Swiss SRB leverage ratio requirements
Swiss SRB leverage ratio requirements UBS leverage ratio balance 1.1.20 requirements1 9.84% 4.14% gone concern 8.58% TLAC including 2019 rebate and Tier 2-related reduction TLAC-eligible senior unsecured debt 3.33% (30.3bn) Gone concern 4.9% requirement subject to a rebate of up to 1.9 percentage po
Slide 41: 4Q19 reported and adjusted performance
4Q19 reported and adjusted performance 1 Adjusted results are non-GAAP financial measures as defined by SEC regulations; 2 Prior-year comparative figures in this table have been restated for the changes in Corporate Center cost and resource allocation to the business divisions and the changes in the
Slide 42: FY19 reported and adjusted performance
FY19 reported and adjusted performance 1 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 2 Prior-year comparative figures in this table have been restated for the changes in Corporate Center cost and resource allocation to the business divisions and the changes in the
Slide 43: Regional performance – 4Q19
Regional performance – 4Q19 Americas Asia Pacific EMEA Switzerland Global Total 4Q18 4Q19 4Q18 4Q19 4Q18 4Q19 4Q18 4Q19 4Q18 4Q19 4Q18 4Q19 GWM 2.3 2.3 0.5 0.5 0.8 0.9 0.4 0.4 0.0 0.1 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) - 0.5 0.6 income IB 0
Slide 44: Regional performance – FY19
Regional performance – FY19 Americas Asia Pacific EMEA Switzerland Global Total FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 GWM 9.1 9.1 2.4 2.2 3.6 3.4 1.6 1.6 (0.0) 0.1 16.7 16.4 P&C - - - - - - 3.8 3.7 - - 3.8 3.7 Operating AM 0.5 0.5 0.4 0.4 0.3 0.4 0.7 0.6 (0.1) (0.0) 1.9 1.9 inc
Slide 45: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This report 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 strategic in