Slide 1: Fourth quarter 2012 results
Fourth quarter 2012 results February 5, 2013
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: 2012: Significant progress in executing our strategy
2012: Significant progress in executing our strategy…… Capital – exceeded our capital and RWA reduction targets Costs – CHF 1.4 billion net savings achieved since 1H11 Operational risk – substantial progress in our risk remediation programs Solid progress across business divisions Enhanced
Slide 4: Exceeded our capital and RWA targets, on track on costs
Exceeded our capital and RWA targets, on track on costs Phase-in Basel III CET1 ratio up ~460 bps Basel III RWA reduced by ~32% fully applied phase-in ~380 ~15.3% (32%) +460bps ~258 ~10.7% (CHF billion) +310bps ~9.8% ~6.7% 31.12.11 31.12.12 31.12.11 31.12.12 Funded assets down CHF 89 billion Cost sa
Slide 5: Solid progress in our unrivaled wealth management businesses
Solid progress in our unrivaled wealth management businesses Combined adjusted pre-tax profit increased to CHF 2.9 billion Best Global Wealth Manager Combined net new money Combined invested assets (WM + WMA) (WM + WMA) 46.9 35.6 1,459 +9% 1,593 (CHF billion) (CHF billion) (18.2) 31.12.11 31.12.12 2
Slide 6: Retail & Corporate—Strong momentum, winning back market share
Retail & Corporate—Strong momentum, winning back market share Resilient performance with CHF 1.5 billion adjusted pre-tax profit in 2012 The leading 4.9% net new business universal bank in Switzerland volume growth in 2012 Highest net new client assets from retail 4.9% 140bps customers since 2001
Slide 7: Progress in Global Asset Management and the Investment Bank
Progress in Global Asset Management and the Investment Bank Global Asset Management Investment Bank Stronger performance fees Maintaining client focus and good cost control while reshaping our business Adjusted pre-tax profit Basel III RWA 544 ~212 +19% (38%) 456 (CHF million) (CHF billion) ~131 ~64
Slide 8: Delivering sustainable performance
Delivering sustainable performance Rewards structures aligned with our strategy and the interests of shareholders Designed to reward sustainable performance with clear link to financial targets Longer vesting periods Introduction of high trigger loss absorbing capital compensation program – Ba
Slide 9: 4Q12—Key messages
4Q12—Key messages CHF 1.2 billion adjusted pre-tax loss including CHF 2.1 billion litigation expenses Net loss attributable to shareholders of CHF 1.9 billion and diluted EPS of (0.50) Further increased industry leading capital position, reduced risk and balance sheet Basel III RWA of ~CHF 258 b
Slide 10: Market environment
Market environment1 Equity trading volumes2 Equity market performance 1.1.11 = 100 1.1.11 = 100 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 NYSE SMI FTSE 100 SMI S&P 500 FTSE 100 MSCI World FX rates CDS spreads YoY:3 QoQ:3 1.7 USD / CHF 2% USD / CHF 3% 600 EUR
Slide 11: 4Q12 results
4Q12 results (CHF million) WM WMA IB Global AM R&C CC Group Income 1,747 1,629 1,684 492 953 155 6,660 Credit loss (expense) / recovery 1 (15) (2) (20) 11 (24) Own credit gain / (loss) (414) (414) Total operating income 1,748 1,614 1,682 492 933 (248) 6,222 Personnel expenses 864 1,084 1,389 236 354
Slide 12: Wealth Management
Wealth Management Accelerated NNM inflows in APAC and Emerging Markets Operating income and pre-tax profit Operating income declined slightly – Net interest income decreased on lower 1,789 deposit margins especially in EUR and USD 1,769 1,734 1,748 – Client activity decreased compared to 3Q12 923
Slide 13: Wealth Management—Operating income and gross margin
Wealth Management—Operating income and gross margin Operating income down 2% with average invested assets up more than 2% Invested assets (CHF billion) 816 821 750 772 783 Trading and transaction- based revenues: less volatile markets and 1,769 1,734 1,789 1,748 lower activity levels, 1,673 194 18
Slide 14: Wealth Management—by business area
Wealth Management—by business area1 Europe Asia Pacific Switzerland Emerging Markets o/w UHNW Net new money 11.9 12.3 11.2 growth rate (%) 9.3 8.3 7.6 8.1 6.3 7.2 6.4 5.7 4.0 4.5 3.1 2.9 0.7 (0.2) (1.1) (1.1) (5.5) Gross margin 105 (bps) 100 102 101 100 95 96 92 90 88 91 85 81 76 72 74 53 53 54 49 1
Slide 15: Wealth Management Americas (USD)
Wealth Management Americas (USD) Record full year 2012 adjusted pre-tax profit of USD 872 million; strong 4Q12 Operating income and pre-tax profit Operating income increased 7%, recurring revenues up due to changes in 1,746 accounting estimates, higher asset base 1,568 1,587 1,631 and higher inter
Slide 16: Investment Bank
Investment Bank Driving the Group strategy by exceeding Basel III RWA reduction target Operating income CHF USD Basel III RWA ~CHF 131 billion, down ~CHF 31 billion (26%) (24%) – Core Investment Bank CHF 64 billion, below CHF 70 billion target 3,194 2,903 Strong performance in IBD; lower 436 rev
Slide 17: Investment Bank highlights
Investment Bank highlights1 IBD Revenues overall up 19% with increases in advisory and capital markets 479 436 403 397 253 206 257 305 Advisory revenues up QoQ; participated in 3 of the top 10 global transactions 221 183 212 Equity capital markets ranked #1 in APAC and increased market share QoQ
Slide 18: Investment Bank—Indicative pro-forma results under new structure
Investment Bank—Indicative pro-forma results under new structure1 From 1Q13, Non-core and Treasury results will be reported in Corporate Center 2012 2012 adjusted operating income pre-tax profit CHF 8.6 billion CHF 0.5 billion Treasury activities Treasury ~0.3 The Investment Bank managed short ter
Slide 19: Global Asset Management
Global Asset Management Adjusted pre-tax profit up 30% to CHF 164 million Operating income and pre-tax profit Operating income up 5% 478 492 – Higher management fees, mainly in Global 468 446 Real Estate (GRE) – Performance fees up 14% to CHF 49 million, mainly in A&Q and GRE 169 149 164 (CHF mill
Slide 20: Retail & Corporate
Retail & Corporate We continue to win back market share in our home market Operating income and pre-tax profit Stable operating income 936 927 932 933 – Higher net interest margin (up 3bps) and 671 corporate finance activity offset by increased credit loss expenses 391 399 395 395 395 361 362 Ad
Slide 21: Corporate Center—Core Functions
Corporate Center—Core Functions CHF 1,874 million pre-tax loss reflects litigation provisions related to the LIBOR matter Pre-tax profit Operating income of negative CHF 271 million 1Q12 2Q12 3Q12 4Q12 – CHF 414 million loss on own credit (19) (74) – CHF 112 million gain on the sale of Swiss (CHF
Slide 22: Corporate Center—Legacy Portfolio
Corporate Center—Legacy Portfolio CHF 501 million pre-tax loss on higher litigation provisions Pre-tax profit Operating income CHF 23 million (CHF million) 1Q12 2Q12 3Q12 4Q12 – CHF 91 million gain on the revaluation of SNB 89 StabFund option1 – CHF 11 million of credit loss expense recovery (62)
Slide 23: Adjusted operating expenses
Adjusted operating expenses CHF 1.4 billion net cost savings since the announcement of our cost reduction program 2.2 0.5 24.6 23.3 (1.4) 25,509 (CHF billion) 1H11 Changes in Estimated Net cost FY12 adjusted litigation and impact of savings2 adjusted annualized1 regulatory currency provisions moves
Slide 24: Variable compensation expenses
Variable compensation expenses (42%)1 (7%)1 2010 2011 performance IFRS expense award pool 3.5 2012 ~4.3 IFRS expense 3.0 Amortization of prior year awards Amortization 2011 of prior year performance 1.74 2012 awards award pool 0.9 performance 0.8 1.34 award pool 2.7 Awards for 2.5 2011 Awards for Aw
Slide 25: Deferred compensation
Deferred compensation 31% reduction in awards to be amortized over future periods (31%) Amortized Expected amortization of Annual awards prior year granted awards in 2013 1.3 Unrecognized awards to be 0.6 amortized2 0.8 Forfeited Unrecognized 2.2 awards to be 0.2 amortized1,2 Including awards 1.5 (C
Slide 26: Basel III—Risk-weighted assets
Basel III—Risk-weighted assets ~CHF 43 billion reduction in Basel III RWA in 4Q12 • Sales and reduced exposures contributed ~400 ~84% of RWA reduction in the Investment 35% reduction ~21 ~380 Bank and the Legacy Portfolio since 30.9.11 ~20 ~350 ~80 ~21 Legacy Portfolio: down ~CHF 11 billion QoQ ~6
Slide 27: Basel III—Risk-weighted assets targets
Basel III—Risk-weighted assets We are targeting Group RWA of less than CHF 200 billion by 2017 ~CHF 67 billion Basel III RWA from Investment Bank non-core transferred to the Corporate Center ~258 ~258 <250 ~38 ~38 CC – Legacy Portfolio <225 ~105 <200 Investment Bank non- ~85 core transferred to ~5
Slide 28: Basel III—Capital ratios
Basel III—Capital ratios Targeting a 13% fully-applied CET1 ratio in 2014 Low trigger loss-absorbing capital High trigger loss-absorbing capital1 Common equity Basel III Basel III ~ phase-in fully applied ~1.4% ~0.2% ~15.3% ~13.6% ~13.1% 13.0% ~11.8% ~1.4% ~0.2% 11.5% ~10.7% ~10.0% ~9.8% ~9.3% ~8.8%
Slide 29: Decrease in funded assets in 4Q12
CHF 76 billion decrease in funded assets in 4Q121 Basel III Liquidity Coverage Ratio and Net Stable Funding Ratio >100% CHF 76 billion reduction in funded assets Of which < CHF 200 billion Investment Bank 917 pro-forma post transfer of non-core 82 841 113 78 Other assets 88 Cash, balances with centr
Slide 30: Hybrid tier 1 instruments
Hybrid tier 1 instruments We intend to call the EUR 995 million instrument with first call date 11.4.13 Hybrid tier 1 instruments outstanding as of 5 February 2013 Expected future attribution of profits to “preferred noteholders” interests:3 – No material attribution of profits in 1Q13 – ~CHF 200
Slide 31: Tender offers to repurchase up to ~CHF 5 billion of outstanding debt
Tender offers to repurchase up to ~CHF 5 billion of outstanding debt Our progress with balance sheet reduction enables us to launch these offers We have generated capacity within our liquidity and funding position to be able to execute a tender which will reduce our net interest costs Cash tender of
Slide 32: UBS—Consistently executing on our strategy in 2012
UBS—Consistently executing on our strategy in 2012 Highest capital ratios in our peer group Continued deleveraging and even stronger liquidity and funding Resilient performances across our businesses Successfully transforming our Investment Bank 50% increase in capital returns to our share
Slide 33: Appendix
Appendix 3 UBS
Slide 34: 2012 results
2012 results (CHF million) WM WMA IB Global AM R&C CC Group Income 7,040 6,110 8,564 1,884 3,756 409 27,763 Credit loss (expense) / recovery 1 (14) 34 (27) (112) (118) Own credit gain / (loss) (2,202) (2,202) Total operating income 7,041 6,097 8,598 1,884 3,728 (1,905) 25,443 Personnel expenses 2,86
Slide 35: Basel 2.5—Capital ratios
Basel 2.5—Capital ratios Hybrid tier 1 capital Tier 1 ratio (%) 20.2% 21.3% Core tier 1 capital Core tier 1 ratio (%) 18.7% 19.2% 15.9% 19.0% 13.2% 13.2% 18.1% ~12.7% 12.6% 16.7% 17.2% 14.1% 11.0% 11.7% 11.7% ~9.1% 41.2 42.4 41.0 38.4 39.6 36.7 37.5 4.3 4.3 4.3 ~34.3 35.2 4.3 4.3 4.3 4.4 4.9 4.6 35.
Slide 36: Basel III—Common equity tier capital
Basel III—Common equity tier 1 capital Phase-in Basel III CET1 capital – QoQ change 0.4 (1.9) 0.0 0.0 (CHF billion) 41.5 40.0 30.9.12 Net profit attributable Own credit 1 IAS 19R Other 31.12.12 to shareholders Fully applied Basel III CET1 capital – QoQ change 0.4 (CHF billion) (1.9) (0.9) (0.4) 28.0
Slide 37: Balance sheet (31.12.12)—pro-forma post transfers from IB to CC
Balance sheet (31.12.12)—pro-forma post transfers from IB to CC Total assets CHF 1,259 billion or CHF 841 billion excluding PRVs 400 327 4 258 2371 332 65 323 237 192 38 69 17 20 Investment Bank Corporate Center Corporate Center Corporate Center Other Core Non-core Legacy Portfolio Core Functions bu
Slide 38: Legacy Portfolio (31.12.12)
Legacy Portfolio (31.12.12) Total Basel III RWA ~CHF 38 billion, down ~CHF 11 billion QoQ Basel III B/S excl. PRVs (CHF billion) RWA PRVs1 Comments on Basel III RWA: CDOs 9.8 3.1 2.1 Reduced >60% since 30.9.11 Reference-linked notes 5.7 2.4 0.2 Reduced >50% since 30.9.11 Muni swaps & options 4.6 – 5
Slide 39: Basel III phase-in CET1 ratio
Basel III phase-in CET1 ratio Phase-in CET1 Basel III ratio increased to ~15.3% = CET1 capital + loss-absorbing capital ratio ~16.9% = CET1 ratio ~14.8% ~1.4% ~13.7% ~0.2% ~12.3% ~1.2% ~1.6% ~0.6% ~1.4% ~10.7% ~0.5% ~1.4% Low trigger loss-absorbing capital ~10.0% ~1.2% ~4.0% ~3.0% High trigger loss-
Slide 40: Leverage ratios
Leverage ratios Our leverage ratios will improve substantially as we reduce our balance sheet Simple leverage ratio1 FINMA leverage ratio2 2.2 FINMA Basel III leverage ratio3 Funded balance sheet4 6.3% 2.1 1.8 5.4% 5.5% 4.8% 5.2% expected direction based on our plans 4.1% 4.5% 3.6% 1.2 3.9% 2.8% 0.9
Slide 41: FINMA Basel III leverage ratio
FINMA Basel III leverage ratio UBS’s current FINMA Basel III leverage ratio is above minimum requirements • UBS‘s FINMA Basel III leverage ratio of 3.6% on 31.12.12 FINMA Total capital CHF 44.2 billion Phase-in CET1 + loss absorbing capital = CHF 40.0 billion + CHF 4.2 billion Basel III = = 3.6% = l
Slide 42: Effect of the adoption of IAS 19R
Effect of the adoption of IAS 19R Limited impact on pro-forma Basel III CET1 capital Fully applied Basel III CET1 capital IFRS equity Incremental impact based on 31.12.12 data Incremental impact based on 31.12.12 data (3.9) 0.7 1 2 (0.9) (3.4) (1.3) 3.8 (CHF billion) (CHF billion) 0.0 49.8 45.9 1 26
Slide 43: Asset funding (31.12.12)
Asset funding (31.12.12) Assets Liabilities and equity CHF 864 billion CHF 864 billion Due to banks 23 Cash, balances with central Short-term debt issued 32 banks and due from banks 88 Cash collateral & repos 47 Financial investments AFS 66 Trading portfolio liabilities 34 CHF 121 billion collateral
Slide 44: Basel III Liquidity Coverage Ratio & Net Stable Funding Ratio
Basel III Liquidity Coverage Ratio & Net Stable Funding Ratio UBS’s Basel III Liquidity Coverage Ratio and Net Stable Funding Ratio in excess of 100%1 Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR) (CHF billion) 31.12.12 (CHF billion) 31.12.12 Cash outflows under 30-day 260 Available
Slide 45: UBS's equity allocation framework
UBS’s equity allocation framework Average attributed equity Attributed equity – business divisions 45.5 ~42.5 Tangible equity 50% RWA -> Capitalize with 10% Basel III CET1 ratio 15.9 ~8.5 25% assets -> Capitalize with 3.5% Basel III leverage ratio ~13.5 25% RBC1 -> Internal measure of economic risk
Slide 46: IFRS equity attributable to UBS shareholders—QoQ
IFRS equity attributable to UBS shareholders1—QoQ 1 (2,170) 275 33 (1,890) 391 (543) (118) (35) (25) (256) 48,065 CHF 30.9.12 31.12.12 Change 45,895 Book value per share 12.83 12.25 (5%) (CHF million) Tangible book value per share 11.06 10.52 (5%) 30.9.12 Net loss Foreign Financial Cash flow Gains o
Slide 47: IFRS equity attributable to UBS shareholders—YoY
IFRS equity attributable to UBS shareholders1—YoY 1 (2,635) 609 88 126 384 2 (2,511) 14 (457) (379) (511) 48,530 CHF 31.12.11 31.12.12 Change 45,895 Book value per share 12.95 12.25 (5%) (CHF million) Tangible book value per share 10.36 10.52 2% 31.12.11 Net loss Foreign Financial Cash flow Gains on
Slide 48: Wealth Management Americas—Operating income (USD)
Wealth Management Americas—Operating income (USD) YoY +16% QoQ +7% 1,746 1,587 1,631 1,552 1,568 124 1,506 1,504 1,417 1,449 122 119 129 135 136 124 130 127 372 354 332 391 352 394 380 384 400 2 2 978 779 788 798 762 841 835 710 728 (USD million) 1 184 178 197 237 218 218 206 195 230 4Q10 1Q11 2Q11
Slide 49: Wealth Management Americas—Lending balances (USD)
Wealth Management Americas—Lending balances (USD) 1 Net interest income 237 (USD million) 230 215 218 218 206 197 195 184 178 29.6 27.1 28.0 25.5 25.6 3.8 24.7 2.8 3.2 23.5 2.0 2.3 21.4 1.7 3.7 1.4 3.8 3.7 20.3 4.3 3.9 1.0 1.1 4.3 0.9 1.0 0.8 3.7 0.9 3.0 0.9 0.9 1.0 2.7 0.8 0.9 19.6 20.1 21.1 17.5 1
Slide 50: Wealth Management Americas—Financial advisor productivity (USD)
Wealth Management Americas—Financial advisor productivity (USD) Revenue per FA, annualized Invested assets per FA1 1,001 118 119 113 115 114 927 112 902 905 109 108 882 897 869 104 835 851 (USD thousand) (USD million) 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q
Slide 51: Invested assets—QoQ
Invested assets—QoQ Wealth Management Wealth Management Americas 2 12 8 2 (9) (21) 816 1% 821 783 (1%) 772 (CHF billion) (CHF billion) 30.9.12 NNM Market FX / Other 31.12.12 30.9.12 NNM Market FX / Other 31.12.12 Global Asset Management 7 (3) (11) (1%) (CHF billion) 588 581 30.9.12 NNM Market FX / O
Slide 52: Invested assets—YoY
Invested assets—YoY Wealth Management Wealth Management Americas 55 26 60 21 (9) (18) 750 9% 821 9% 772 (CHF billion) 709 (CHF billion) 31.12.11 NNM Market FX / Other 31.12.12 31.12.11 NNM Market FX / Other 31.12.12 Global Asset Management 42 (13) (22) (CHF billion) 574 1% 581 31.12.11 NNM Market FX
Slide 53: Investment Bank—IBD revenues
Investment Bank—IBD revenues Revenues overall up 19% with increases in advisory and capital markets Comparison in USD terms CHF USD 396 372 383 442 436 397 403 479 Advisory +12% 12% 16% – Participated in 3 of the top 10 global transactions 712 658 659 599 616 522 587 557 Equity capital markets +
Slide 54: Investment Bank—Equities revenues
Investment Bank—Equities revenues Solid Cash performance Comparison in USD terms CHF USD Cash +5% (24%) (22%) – Stable client activity and commission 1,091 9 revenues 992 – Trading performance improved 8 299 820 271 783 3 3 Derivatives (71%) 286 641 274 593 16 – Results reflect lower revenues in
Slide 55: Investment Bank—FICC revenues
Investment Bank—FICC revenues Further RWA reduction in 4Q12 and on track Comparison in USD terms CHF USD Macro (25%) (41%) (39%) – Foreign exchange revenues increased 1,651 marginally due to an improved precious 1,501 metals performance 215 196 – Rates revenues reflecting our decision to 1,107 1,1
Slide 56: 4Q12 operating expenses
4Q12 operating expenses 8,816 Significant non-recurring items Of which CHF 3,045 million impairment of goodwill and intangibles 8,044 258 WMA financial advisor compensation1 3,042 580 Contractors, other personnel expenses, 7,207 pension and other post-employment 6,123 701 benefit plans, social secur
Slide 57: New reporting structure—Investment Bank
New reporting structure—Investment Bank Starting 1Q13 Old reporting structure New reporting structure until 4Q12 from 1Q13 56
Slide 58: New reporting structure—Corporate Center
New reporting structure—Corporate Center Starting 1Q13 57
Slide 59: Headcount
Headcount QoQ (1,117) (130) (88) (789) (18) (71) (20) 63,745 62,628 (FTEs) 30.9.12 31.12.12 Wealth Wealth Investment Global Retail & Corporate Management Management Bank Asset Corporate Center Americas Management YoY1 306 (113) 31 (1,141) 64,820 (1,274) (1) 62,628 (FTEs) 31.12.11 31.12.12 (2,192) 1
Slide 60: 4Q12 tax expense
4Q12 tax expense Pre-tax loss (as reported) CHF 1,823 million Net deferred tax benefit with respect CHF (4 million) to recognition of DTAs Other net tax expenses in respect CHF 106 million of 4Q12 taxable profits Tax benefits arising from the release of provisions in respect CHF (36 million) of tax
Slide 61: Deferred tax assets on net operating losses
Deferred tax assets on net operating losses The potential to recognize additional deferred tax assets remains significant as of 31.12.12 Unrecognized potential DTAs on NOLs1,2 Recognized DTAs on NOLs1 23.3 18.1 (CHF billion) 1.7 4.4 0.8 5.9 1.3 2.6 0.1 US Switzerland UK RoW Total • Unrecognized pote
Slide 62: Important information related to numbers shown in this presentation
Important information related to numbers shown in this presentation Use of adjusted numbers Throughout this presentation, unless otherwise indicated, “adjusted” figures exclude each of the following items, to the extent applicable, on a Group and business division level: – Own credit loss on financi