Slide 1: Full year and fourth quarter 2018 results
Full year and fourth quarter 2018 results January 22, 2019
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: 4Q18 net profit +33% to USD 696m
4Q18 net profit +33%1 to USD 696m Stable PBT as 4% lower costs offset lower revenues +33% +2% 845 862 (62) (70) +252 696 (7) (182) +82 522 +79 Change in adjusted operating income (242) Net Reported GWM P&C AM IB CC Net effect of Change in Reported Net profit1 PBT all income reported PBT profit 4Q17
Slide 4: FY18 net profit +25% to USD 4.9bn
FY18 net profit +25%1 to USD 4.9bn Diversified business model delivered strong profit growth in variable conditions +19% 6,373 +9% excluding Worldline; Americas +18%, GWM +12% 3,990 APAC +11%, UHNW +32% +22% (1%) excluding Worldline, 4.2% net new business P&C +21% CHF 1,953 volume growth, highest on
Slide 5: Delivering positive operating leverage
Delivering positive operating leverage 3% positive operating leverage, 1bn increase in net profit1 +25% 2% higher 4,897 +159 (33) operating income +272 +590 1% lower 3,908 operating expenses 969 +2,939 Net profit Net impact from Net profit Operating Operating Litigation Tax Net profit FY17 US corpor
Slide 6: FY18 capital generation of 4.4bn
FY18 capital generation of 4.4bn Highly capital-generative business model Strong capital generation Strong capital position 4,395 Tier 1 17.7% 762 Repurchased48m shares AT1 4.6% Accrued dividend at 2,648 CHF 0.70 per share CET1 13.1% 5.2% 1.3% Increased CET1 capital 985 3.8% by 1.0bn FY18 Capital ra
Slide 7: CHF 0.70 dividend per share proposed, up 8%
CHF 0.70 dividend per share proposed, up 8% Targeting buy-back of up to USD 1bn in 2019 Share buy-back (CHF) Special dividend (CHF) 2018 dividend and total return Ordinary dividend (CHF) › CHF 0.70 ordinary dividend per share proposed for the financial year 2018 › Dividend payout ratio 54% › Total p
Slide 8: Uniquely positioned with leading franchises
Uniquely positioned with leading franchises Working in partnership to grow and deliver attractive returns Cumulative PBT contribution1 2014-2018 IB 20% Global Wealth Management Personal & Corporate Banking Asset gathering 51% GWM World's leading and only truly global Cornerstone of Swiss universal b
Slide 9: Delivered profits in a variety of market conditions
Delivered profits in a variety of market conditions 19bn cumulative net profits while absorbing legacy and regulatory costs, and investing for growth Adjusted PBT 5.9 CAGR +3% 6.7 6.4 6.4 19bn cumulative net ex-litigation CAGR +20% profits 2014-2018 CAGR +23% 3.1 5.4bn cumulative litigation Adjusted
Slide 10: Balancing revenue, cost and capital efficiency
Balancing revenue, cost and capital efficiency Focused on sustainable performance 50% Higher RoTE Business mix and geographic 60% footprint drive comparatively high capital efficiency and structurally higher cost/income ratio Cost/income, 3Q18 LTM Cost efficiency 70% UBS1 80% Peers2 Avg. European pe
Slide 11: Addressing market beta headwinds
Addressing market beta headwinds Taking actions to mitigate headwinds while remaining committed to our alpha initiatives Cost Personnel costs directly linked Pacing discretionary investments 1 efficiency to revenues without compromising strategy Tactical cost management Lower beta contribution Lower
Slide 12: Continued execution momentum
Continued execution momentum 2018 highlights Further upside Generated 4.4bn of capital Continued improvement in cost efficiency and capital optimization Repurchased CHF 750m of shares, exceeding target by CHF 200m Met capital requirements one year ahead of implementation Invested assets and banking
Slide 13: UBS Group AG results (consolidated)
UBS Group AG results (consolidated) FY17 FY18 4Q17 1Q18 2Q18 3Q18 4Q18 Total operating income 29,622 30,213 7,207 8,168 7,644 7,428 6,972 Total operating expenses 24,272 23,840 6,362 6,069 5,938 5,724 6,110 Profit before tax as reported 5,351 6,373 845 2,100 1,706 1,704 862 of which: adjusting items
Slide 14: Global Wealth Management
Global Wealth Management Adjusted PBT excluding litigation down 14% in a challenging market environment Profit before tax (22%) m 988 1,196 1,095 1,022 769 Adjusted PBT excluding litigation 912m (2%) Operating income m 4,127 4,450 4,201 4,124 4,065 Higher recurring fees more than offset by lower tra
Slide 15: Global Wealth Management
Global Wealth Management Operating income resilient despite drop in transaction-based revenues Recurring revenues % of income 82 84 85 +0% Increase in deposit revenues mostly offset by higher funding costs Net interest income 1,070 1,063 1,075 4Q18 included a 20m benefit from currency change +3% FY
Slide 16: Recurring net fee income
Recurring net fee income 1Q19 starting on a lower recurring fee asset base 2,421 2,412 Recurring net 2,375 (1%) fee income m 2,377 2,316 Invested 2,438 2,403 2,415 2,393 assets 2,260 (7%) End of period 1,612 1,615 1,595 1,612 1,501 Mandate volumes by region End of period (8%) 4Q18 Primary billing ba
Slide 17: Global Wealth Management
Global Wealth Management YoY PBT growth in the Americas Americas APAC EMEA Switzerland o/w Global UHNW1 +5% (39%) (52%) (8%) (2%) (28%) excl. litigation Profit before tax m 342 359 304 174 146 176 162 179 175 106 Cost/income 85 84 67 79 66 82 57 59 73 75 % (5%) (7%) (8%) (4%) (3%) Invested assets bn
Slide 18: FY18 net new money
FY18 net new money We remain confident in our ability to deliver on our net new money growth target FY18 net new money FY18 growth rate Planned actions › Grow Latin America client assets with booking center agnostic coverage model Americas (4.1) (0.3%) › Execute on US GFO and UHNW opportunity › Furt
Slide 19: Personal & Corporate Banking (CHF)
Personal & Corporate Banking (CHF) Solid quarter; consistently contributing to group results with good volume growth momentum (13%) PBT decreased on lower transaction-based revenues and 428 393 422 higher credit losses partly offset by slightly lower costs with 378 373 Profit continued investments i
Slide 20: Asset Management
Asset Management Strong quarter with 15% profit growth driven by cost actions; 32bn FY18 NNM including MM +15% First quarter with no impact from disposals; 128 131 134 117 114 PBT up despite lower invested assets and lower revenues Profit before tax Operating expenses (7%), driven by cost actions ta
Slide 21: Investment Bank
Investment Bank FY18 return on attributed equity 18% despite very challenging fourth quarter (84%) 670 PBT down in a very challenging market environment 611 Profit 519 before tax 168 26 Expenses (3%) on lower compensation Cost/income ratio 86% 72% 72% 74% 97% CCS (29%) driven by APAC and Americas an
Slide 22: Corporate Center
Corporate Center Corporate Center loss improved by 188m YoY Services higher funding costs for Group ALM improved spreads, Non-core and Legacy Portfolio balance sheet assets, most of which increased funding allocations, lower litigation expenses will be allocated out from 1Q19 partly offset by costs
Slide 23: Corporate Center – Services
Corporate Center – Services Reduction in restructuring supporting investments in technology and net saves to the Group Reported operating expenses before allocations (2%) +25 o/w (12) (189) +238 9,224 restructuring o/w (246) o/w (270) restructuring (247) restructuring 9,051 (122) 8,929 FY17 Group Ri
Slide 24: Changes to deferred tax assets methodology
Changes to deferred tax assets methodology Full recognition of US DTAs in the IHC tax group1 improves earnings predictability Deferred tax assets balance Profit before tax Effective tax rate of ~25% expected for FY19, of which ~14% cash tax and CET1 relevant 10.1 9.8 › Recognized DTAs for the US IHC
Slide 25: Balance sheet assets
Balance sheet assets Strong balance sheet reflecting high asset quality and low risk profile; level 3 assets <1% of total 958 Other Cash at central banks, HQLA and a › Mainly posted derivatives collateral other Group ALM liquidity buffers › Includes loans to FAs and reverse repos 226 Reverse repurch
Slide 26: Leveraged finance
Leveraged finance Client-centric, capital-light and high velocity business model Primary markets (underwriting and lending, CCS) Secondary markets (trading, FRC) Underwriting 6% <1% Leveraged finance % of IB revenues FY18 Resource usage 31.12.18 2% of IB RWA 1% of IB LRD 2% of IB RWA 1% of IB LRD Ve
Slide 27: Capital and leverage ratios
Capital and leverage ratios Meeting 2020 capital requirements Total loss-absorbing capacity (TLAC) 84.1 31.9% 1.1.20 requirements RWA LRD TLAC including 2018 rebate1,2 26.3% 9.3% 9.2% Gone concern loss-absorbing 37.5 14.2% capacity 4.1% AT1 12.2 Going concern2 14.3% 4.6% 5.0% 1.3% CET12 10.0% 3.5% G
Slide 28: Key messages
Key messages Winning strategy and business model Addressing opportunities for further improvement Taking actions to address adverse market environment while retaining strategic integrity Managing UBS for long-term value creation Executing with discipline to deliver sustainable growth and attractive
Slide 29: Appendix
Appendix %% UBS
Slide 30: Equity market indices
Equity market indices Emerging Markets1 China1 Hong Kong1 1.3 3.6 34 1.2 32 3.2 30 1.1 (17%) (25%) 28 (14%) 2.8 1.0 26 0.9 2.4 24 Dec-17 Dec-18 Dec-17 Dec-18 Dec-17 Dec-18 (17%) (10%) (8%) (25%) (12%) (12%) (14%) (11%) (7%) 12M2 6M2 3M2 Europe1 Switzerland1 United States1 3.8 9.6 3.0 3.6 9.2 2.8 3.4
Slide 31: FY18 Global Wealth Management
FY18 Global Wealth Management Adjusted Reported (2%) +12% Profit before tax m 4,159 4,082 3,571 3,990 +3% +4% Operating income m 16,287 16,840 16,287 16,941 (6%) (6%) Invested assets bn 2,403 2,260 2,403 2,260 (4%) (4%) Mandate volume bn 791 759 791 759 +1% +1% Loans bn 173 175 173 175 +1.3ppts (1.7
Slide 32: FY18 Global Wealth Management
FY18 Global Wealth Management Americas APAC EMEA Switzerland o/w Global UHNW1 +11% (5%) (14%) (2%) +18% (7%) excl. litigation Profit before tax m 1,385 1,539 1,216 1,051 892 852 718 705 735 866 Cost/income 84 83 61 64 66 71 55 57 73 70 % (5%) (7%) (8%) (4%) (3%) Invested assets bn 1,263 1,200 545 50
Slide 33: GWM invested assets composition
GWM invested assets composition Invested assets 31.12.18 Other1 Other GBP 9% 11% 2% Equities CHF Cash & MM 8% instruments2 31% 13% By asset class EUR 11% By currency 15% Bonds 70% USD 30% Mutual funds o/w: 9% Equity funds 8% Fixed Income funds 3% Money Market funds 11% Other3 funds 1 Mainly alternat
Slide 34: Workforce management
Workforce management Insourcing roles drives improved efficiency and effectiveness UBS Group1 4Q18 vs. 4Q17 Corporate Center – Services1, 2 4Q18 vs. 4Q17 Headcount, end of period Headcount, end of period 85,423 85,280 (143) 18,392 (5,778) 24,170 47,250 46,476 (774) 21,627 16,112 (5,515) 66,888 +5,63
Slide 35: Swiss SRB leverage ratio requirements
Swiss SRB leverage ratio requirements UBS leverage ratio balance 1.1.20 requirement 9.2% TLAC including 2018 rebate Gone concern 5.0% requirement subject to a rebate of up to 2.0 percentage points TLAC-eligible senior unsecured debt 3.32% (30.0bn) based on improved resolvability Non-Basel III-compli
Slide 36: 4Q18 Reported and adjusted performance
4Q18 Reported and adjusted performance 1 Adjusted results are non-GAAP financial measures as defined by SEC regulations; 2 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity conver
Slide 37: FY18 Reported and adjusted performance
FY18 Reported and adjusted performance 1 Adjusted results are non-GAAP financial measures as defined by SEC regulations; 2 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity conver
Slide 38: Regional performance – 4Q18
Regional performance – 4Q18 Americas Asia Pacific EMEA Switzerland Global Total 4Q17 4Q18 4Q17 4Q18 4Q17 4Q18 4Q17 4Q18 4Q17 4Q18 4Q17 4Q18 GWM 2.3 2.3 0.5 0.5 0.9 0.9 0.4 0.4 0.0 0.0 4.1 4.1 P&C - - - - - - 1.0 0.9 - - 1.0 0.9 Operating AM 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 (0.0) (0.0) 0.5 0.5 income
Slide 39: Regional performance – FY18
Regional performance – FY18 Americas Asia Pacific EMEA Switzerland Global Total FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 GWM 8.8 9.2 2.3 2.4 3.6 3.6 1.6 1.6 0.0 (0.0) 16.3 16.8 P&C - - - - - - 3.9 3.9 - - 3.9 3.9 Operating AM 0.5 0.5 0.4 0.4 0.4 0.3 0.7 0.7 (0.1) (0.1) 1.9 1.9 inc
Slide 40: Performance targets and ambitions 2019 – 2021
Performance targets and ambitions 2019 – 2021 Capital/resource Current performance Annual targets Ambitions guidelines FY18 Pro-forma1 FY19 FY19-21 FY21 FY19-21 Reported return on CET1 capital 14% ~15% ~17% Adjusted cost/income ratio 78% ~77% ~72% Group CET1 capital ratio 13% ~13% CET1 leverage rati
Slide 41: 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