Ubs Group Ag · SIX:UBSG
Ubs — Q1 2008 Earnings Presentation
64 slides from Ubs's earnings presentation, May 6, 2008
Slide 1: First Quarter 2008 Results
First Quarter 2008 Results Zurich, 6 May 2008 Marcel Rohner (Chief Executive Officer) Marco Suter (Chief Financial Officer) Jerker Johansson (CEO Investment Bank) Tom Hill (Chief Communication Officer) www.ubs.com 0
Slide 2: Caution regarding forward looking statements
Caution regarding forward looking statements This presentation contains statements that constitute “forward-looking statements”, including but not limited to statements relating to the risks arising from the current market crisis, other risks specific to UBS’s business and the implementation of stra
Slide 3: Marcel Rohner (Chief Executive Officer)
Marcel Rohner (Chief Executive Officer) www.ubs.com 2
Slide 4: Overview
Overview ♦ Q1 actions: – Risk – Balance sheet – Costs – Capital ♦ Long-term measures: – IB – Efficiency – Risks ♦ Q2 drivers 3
Slide 5: Q1 actions: balance sheet and risk weighted asset reduction
Q1 actions: balance sheet and risk weighted asset reduction Group B/S and RWA Group B/S and RWA ♦ Substantial progress in Dec 07 Mar 08 2,500 reduction of balance sheet 2,273 2,231 and risk 428 2,000 444 573 573 ♦ Accelerated reduction required some investment 1,500 (CHF bn) ♦ Including rights issue
Slide 6: Q1 actions: work-out portfolio activity
Q1 actions: work-out portfolio activity ♦ Continuous and active risk reduction for the work-out portfolio ♦ Further risk reductions and alternative hedging strategies are continuously assessed and implemented 5
Slide 7: Q1 actions: operating expenses
Q1 actions: operating expenses 10'000 Supported by favorable currency movements, we achieved significant reductions in all recurring cost categories (1,010) (CHF m) (429) 368 7'500 8,918 7,847 7,479 5'000 4Q07 Personnel G&A, excluding Other expenses, 1Q08 provisions including provisions 6
Slide 8: Long-term measures: efficiency
Long-term measures: efficiency ♦ Efficiency is the highest management priority ♦ The Investment Bank will immediately reduce staff by 2,600 positions ♦ The rest of the Group will increase efficiency largely through attrition and internal labor markets to source front office personnel. We will contin
Slide 9: Long-term measures: underlying profitability
Long-term measures: underlying profitability ♦ Upon completion of its repositioning, we target the IB to deliver CHF 4 billion pre-tax contribution in a normalized market ♦ We will continue to increase operational leverage of our wealth management platform whilst growing our front office ♦ We will c
Slide 10: Q2 drivers
Q2 drivers Q2 devoted to re-construction and re-positioning of our Investment Bank and balance sheet Continued investment in reduction of risk and balance sheet Continued active risk management of the work-out portfolio Decreasing UBS credit spreads will revert own credit adjustment 9
Slide 11: Marco Suter (Chief Financial Officer)
Marco Suter (Chief Financial Officer) www.ubs.com 10
Slide 12: Overview of the changes in presentation
Overview of the changes in presentation ♦ Adoption of new accounting standard – IFRS 2 ♦ Changes to the presentation: – discontinuation of the adjusted expected credit loss concept – Industrial Holdings reported in Corporate Center – new revenue split in the Investment Bank ♦ Implementation of Basel
Slide 13: 1Q08 key figures: as pre-announced on 1st of April and actual
1Q08 key figures: as pre-announced on 1st of April and actual Announcement Actual 1st April Global WM&BB pre-tax profit (CHF m) ~ 2,100 2,152 Global AM pre-tax profit (CHF m) ~ 300 330 Investment Bank pre-tax loss (CHF m) ~ (18,000) (18,228) Corporate Center pre-tax profit (CHF m) 3,500 – 4,000 3,94
Slide 14: Global WM&BB
Global WM&BB 8,000 QoQ: (7%) QoQ: (4%) QoQ: (13%) 100 QoQ: 2.3 pts YoY: (2%) YoY: (3%) YoY: (2%) YoY: (0.4) pts 90 6,316 5,982 5,849 80 6,000 70 63.6 63.2 60.9 (CHF m) 60 (%) 4,000 3,792 3,854 3,697 50 40 2,462 2,190 2,152 30 2,000 20 10 0 0 Revenues Expenses Pre-tax profit Cost / Income 1Q07 4Q07 1
Slide 15: WM International & Switzerland
WM International & Switzerland 5,000 QoQ: (7%) QoQ: (1%) QoQ: (13%) 100 QoQ: 3.3 pts YoY: (1%) YoY: 4% YoY: (5%) YoY: 2.1 pts 90 4,000 80 3,298 70 3,071 3,054 (CHF m) 3,000 60 (%) 53.2 51.1 49.9 50 2,000 40 1,568 1,646 1,625 1,652 1,503 1,429 30 1,000 20 10 0 0 Revenues Expenses Pre-tax profit Cost
Slide 16: Business Banking Switzerland
Business Banking Switzerland 2,000 QoQ: (5%) QoQ: (1%) QoQ: (10%) 100 QoQ: 2.9 pts YoY: (3%) YoY: (5%) YoY: 2% YoY: (2.7) pts 90 80 1,500 1,340 1,301 1,268 70 60.1 (CHF m) 60 57.4 54.5 (%) 1,000 50 769 738 728 40 602 532 540 30 500 20 10 0 0 Revenues Expenses Pre-tax profit Cost / Income 1Q07 4Q07 1
Slide 17: WM US
WM US 2,000 QoQ: (9%) QoQ: (9%) QoQ: (12%) QoQ: 0.4 pts YoY: (5%) YoY: (8%) YoY: 18% YoY: (2.4) pts 1,678 1,610 100 1,527 90.4 1,455 1,470 90 87.6 88.0 1,500 1,344 80 (CHF m) 70 1,000 60 (%) 50 40 500 30 20 208 183 155 10 0 0 Revenues Expenses Pre-tax profit Cost / Income 1Q07 4Q07 1Q08 1Q07 4Q07 1Q
Slide 18: Global Asset Management
Global Asset Management 1,500 QoQ: (27%) QoQ: (22%) QoQ: (32%) 100 QoQ: 3.3 pts YoY: (21%) YoY: (23%) YoY: (16%) YoY: (2.1) pts 90 80 1,077 997 70 1,000 60.4 (CHF m) 58.3 60 55.0 (%) 791 50 602 592 40 461 485 500 395 30 330 20 10 0 0 Revenues Expenses Pre-tax profit Cost / Income 1Q07 4Q07 1Q08 1Q07
Slide 19: Investment Bank
Investment Bank 100 QoQ: N/A QoQ: N/A QoQ: (19%) QoQ: N/A 10,000 YoY: N/A YoY: (27%) YoY: N/A YoY: N/A 90 6,238 4,699 4,208 80 75.1 5,000 3,415 1,539 70 0 (CHF m) 60 (%) 50 (5,000) 40 (10,000) 30 (11,826) 20 (15,000) (14,813) 10 (16,034) N/A N/A (18,228) 0 (20,000) Revenues Expenses Pre-tax profit C
Slide 20: Net new money
Net new money 60 50 40 30 (CHF bn) 20 10 5.6 0 (1.9) (10) (16.5) (20) 2Q07 1Q08 3Q07 4Q07 2Q05 1Q06 3Q06 4Q06 1Q05 3Q05 4Q05 2Q06 1Q07 WM businesses BB CH Global AM 19
Slide 21: Invested assets
Invested assets 3,400 13 3,200 (13) (152) 3,000 (277) 2,800 (CHF bn) (1) 2,600 3,189 2,989 (13%) 2,400 2,759 2,652 2,200 2,125 2,000 2004 2005 2006 2007 Net new Acquisitions Market Currency Other Mar 08 money movements / performance 20
Slide 22: Operating expenses
Operating expenses 10,000 (1,010) 7,500 (15) (46) (CHF m) 5,000 8,918 (12%) 7,847 2,500 0 4Q07 Personnel G&A Other 1Q08 21
Slide 23: Personnel development
Personnel development1 84,300 84,200 84,100 276 84,000 24 83,900 (21) (612) 83,800 (FTEs) 346 83,700 266 83,600 83,500 83,839 279 83,400 83,560 83,300 83,200 WM Int & CH CC2 Mar 08 BB CH Dec 07 Global AM WM US IB 1 Full-time equivalents 2 CC exclude five FTEs from Industrial Holdings 22
Slide 24: General and administrative expenses
(CHF m) 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300 4Q07 2,258 Occupancy (37) Rent and (19) maintenance Telecommunications (8) and postage Administration (59) Marketing and (28) public relations (1%) Travel and General and administrative expenses (85) entertainment Professional fees (118) Outsou
Slide 25: Equity attribution framework
Equity attribution framework Goodwill and Tangible equity Average equity intangible assets allocation on the attributed allocation basis of 50 50 50 45 45 45 40 40 40 35 35 35 30 30 30 (CHF bn) (CHF bn) (CHF bn) 25 25 25 20 20 20 15 15 15 10 10 10 5 5 5 0 0 0 Risk capital RWA Assets GWM&BB IB Global
Slide 26: Balance sheet and RWA development (CHF)
Balance sheet and RWA development (CHF) 600 3,000 7% 1% (2%) 500 17% 2,500 (9%) (2%) 17% 400 2,000 10% (CHF bn) (CHF bn) 333 14% 18 300 1,500 90 200 1'000 225 100 500 0 0 2003 2004 2005 2006 1Q07 2Q07 3Q07 4Q07 1Q08 Basel II IB RWA (lhs) Global AM and CC RWA (lhs) GWM&BB RWA (lhs) Total assets (rhs)
Slide 27: Balance sheet development by product and Business Group
Balance sheet development by product and Business Group Excluding PRVs balance sheet reduced by approx. CHF 550 bn since Jun 07 Balance sheet by products Balance sheet by Business Group 2,540 2'540 2,485 2'485 2,500 2,500 2,273 2,231 2'273 2'231 335 416 2,000 428 2,000 573 958 846 1,500 1,500 (CHF b
Slide 28: RWA and capital ratios
RWA and capital ratios 15.6% Pro-forma 11.9% 11.8% 10.3% 10.7% 400 8.7% 7.1% 6.9% 350 (CHF bn) 372 300 352 333 250 Dec 07 Mar 08 Mar 08 Basel I Basel II RWA Total capital Tier 1 capital 27
Slide 29: Regulatory capital - Group
Regulatory capital - Group Tier 1 BIS Tier 1 Total Total capital RWA ratio capital ratio CHF billion and % 31.12.07 (Basel I) 32.4 372.3 8.7% 44.1 11.9% Net P&L attributable to shareholders (11.5) Net P&L not eligible for capital (5.6) Basel II impact (as per 31.3.08) (2.2) (18.3) MCN impact 13.0 Ot
Slide 30: US residential mortgage related positions and losses in 1Q08
US residential mortgage related positions and losses in 1Q08 Net exposure1 Net exposure1 P&L 1Q08 USD billion 31 Dec 07 31 Mar 08 US sub-prime 27.6 15.6 (7.3) US Alt-A 26.6 17.1 (6.1) Monoline2 3.6 6.3 (1.7) US RLN program3 11.2 8.9 (1.6) US prime 15.3 9.4 (0.9) 1 Net exposure represents market valu
Slide 31: Other risk positions and losses in 1Q08
Other risk positions and losses in 1Q08 Net exposure1 Net exposure1 P&L 1Q08 USD billion as of 31 Dec 07 as of 31 Mar 08 US CRE / CMBS 7.7 6.3 (0.4) Leveraged finance2 11.4 8.6 (0.3) US student loans 7.7 10.4 (1.0) 1 Net exposure represents market value of gross exposure net of short positions and h
Slide 32: Jerker Johansson (CEO Investment Bank)
Jerker Johansson (CEO Investment Bank) www.ubs.com 31
Slide 33: Marcel Rohner (Chief Executive Officer)
Marcel Rohner (Chief Executive Officer) www.ubs.com 32
Slide 34: Closing remarks
Closing remarks ♦ Efficiency ♦ Long-term profitability ♦ Q2 drivers 33
Slide 35: Q&A
Q&A a UBS You & Us Available in two locations: Everywhere, and right next to you. 34
Slide 36: Appendix
Appendix 3 UBS
Slide 37: Business Unit Results
Business Unit Results 3 UBS
Slide 38: Wealth Management Int & CH – NNM and invested assets
Wealth Management Int & CH – NNM and invested assets Net new money CHF 93.7 bn 35 31.3 30 25 (CHF bn) 20 15 10 5 2.5 0 1Q06 2Q06 3Q06 1Q07 2Q07 3Q07 4Q07 1Q08 4Q06 Avg04 Avg05 Avg06 4Q05 Avg07 1Q05 2Q05 3Q05 Invested assets 1,400 3 (71) 1,200 (CHF bn) (93) 1,294 1,000 (12%) 1,133 800 Dec 07 Net new
Slide 39: Wealth Management Int & CH – pre-tax profit
Wealth Management Int & CH – pre-tax profit 1,700 1,578 1,500 1,429 1,300 (CHF m) 1,100 900 700 500 1Q08 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q05 Avg04 Avg05 Avg06 Avg07 WM Global WM US BB CH IB CC Int & CH AM 38
Slide 40: Wealth Management US – NNM and invested assets
Wealth Management US – NNM and invested assets Net new money CHF 18.8 bn 14 12 10 (CHF bn) 8 6.7 6 4 3.1 2 0 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 4Q07 1Q08 3Q07 Avg04 Avg05 Avg06 Avg07 2Q05 3Q05 4Q05 1Q05 Invested assets 900 3 (1) (31) (CHF bn) (102) 700 840 (16%) 709 500 Dec 07 Net new money Acquisitions
Slide 41: Wealth Management US – key figures
(CHF m) 0 (100) 100 200 300 1Q05 2Q05 3Q05 4Q05 Pre-tax profit 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 WM 1Q08 Int & CH 183 Avg04 Avg05 Avg06 WM US Avg07 169 BB CH (CHF m) (%) 80 85 90 95 100 105 400 500 600 700 800 900 1,000 1,100 AM Global 1Q05 1Q05 2Q05 Wealth Management US – key figures 2Q05 3Q0
Slide 42: Business Banking CH – pre-tax profit
Business Banking CH – pre-tax profit 800 700 600 567 540 500 (CHF m) 400 300 200 100 0 1Q08 Avg04 Avg06 Avg07 Avg05 1Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 2Q07 3Q07 4Q07 2Q05 1Q07 WM Global WM US BB CH IB CC Int & CH AM 41
Slide 43: Global Asset Management – pre-tax profit
Global Asset Management – pre-tax profit 500 450 400 364 350 330 300 (CHF m) 250 200 150 100 50 0 Avg04 Avg05 Avg06 Avg07 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 Impact of DRCM restructuring costs on performance before tax WM Global WM US BB CH IB CC Int & CH AM 42
Slide 44: Global AM – NNM, invested assets and gross margin
Global AM – NNM1, invested assets and gross margin Institutional NNM Wholesale intermediary NNM 15 15 10 10 5 5 0 (CHF bn) (CHF bn) 0 (5) (1.1) (5.8) (5) (10) (15) (10) (14.7) (20) (15) (25) (20) (16.8) 4Q07 2Q05 1Q06 3Q06 2Q07 4Q07 Avg04 Avg06 Avg07 1Q07 2Q07 3Q07 1Q08 Avg04 Avg05 Avg06 Avg07 1Q05
Slide 45: Corporate Center – pre-tax profit
Corporate Center – pre-tax profit 4,500 3,947 4,000 3,500 3,000 2,500 (CHF m) 2,000 1,500 1,000 556 500 0 (500) (1,000) 2Q06 3Q06 4Q06 1Q07 1Q06 2Q07 3Q07 4Q07 Avg07 1Q05 1Q08 Avg04 Avg05 Avg06 2Q05 3Q05 4Q05 2Q07: Impact from gain on sale of 20.7% stake in Julius Baer of CHF 1,950 million 1Q08: Imp
Slide 46: Investment Bank – pre-tax profit and revenues
Investment Bank – pre-tax profit and revenues Pre-tax profit Sales and trading 1- Equities revenues 3,000 0 3,000 (3,000) 2,500 2,251 (6,000) (4,167) (CHF m) 1,948 (CHF m) (9,000) 2,000 (12,000) 1,500 (15,000) 1,000 (18,000) (18,228) 500 0 1Q07 4Q07 2Q07 3Q07 1Q08 Avg04 Avg07 Avg05 Avg06 2Q05 2Q06 1
Slide 47: Risk Positions
Risk Positions 3 UBS
Slide 48: US sub-prime residential mortgage exposures and P&L
US sub-prime residential mortgage exposures and P&L Net exposures P&L Other net Net exposures USD billion as of 31.12.071,2 1Q083 changes4 as of 31.03.081,5 Super senior RMBS CDOs 13.3 (5.3) (1.4) 6.6 RMBSs 14.2 (2.1) (3.2) 8.9 Warehouse and retained RMBS CDOs 0.1 0.2 (0.1) 0.1 Total 27.6 (7.3) (4.7
Slide 49: US sub-prime positions – average marks
US sub-prime positions – average marks Average marks Average marks Net exposures Average marks in %; net exposures in USD billion as of 31.12.071 as of 31.03.081 as of 31.03.082 High grade RMBS CDOs 72 34 1.3 Mezzanine RMBS CDOs - 12% protection 72 40 1.1 Mezzanine RMBS CDOs 53 33 4.1 CDOs squared 2
Slide 50: US sub-prime positions - vintages and ratings
US sub-prime positions - vintages and ratings < 2005 2005 2006 2007 Vintages1,2 in % High grade RMBS CDOs 1 20 77 2 Mezzanine RMBS CDOs - 12% protection 7 47 45 1 Mezzanine RMBS CDOs 5 30 58 7 CDOs squared 2 14 58 26 Total super senior RMBS CDOs1 4 31 59 6 Residential mortgage-backed securities (RMB
Slide 51: US Alt-A residential mortgage exposures and P&L
US Alt-A residential mortgage exposures and P&L Net exposures P&L Other net Net exposures USD billion as of 31.12.071,2 1Q083 changes4 as of 31.03.081,5 Super senior RMBS CDOs 0.8 (0.4) (0.1) 0.3 AAA rated RMBSs, 1st lien 21.2 (4.5) (2.2) 14.5 Other RMBSs 4.6 (1.2) (1.1) 2.3 Total 26.6 (6.1) (3.4) 1
Slide 52: US Alt-A positions – average marks
US Alt-A positions – average marks Average marks Average marks Net exposures Net exposures in USD billion; average marks in % as of 31.12.071 as of 31.03.081 as of 31.03.082 Super senior RMBS CDOs 74 30 0.3 AAA rated RMBSs, 1st lien 96 77 14.5 Other RMBSs 60 44 2.3 1 Average marks represent the rati
Slide 53: US Alt-A positions – vintages and ratings
US Alt-A positions – vintages and ratings < 2005 2005 2006 2007 Vintages1,2 in % Super senior RMBS CDOs1 2 30 56 12 AAA rated RMBSs, 1st lien2 7 6 45 42 Other RMBSs2 1 8 50 41 AAA HG Mezz SIG Ratings3 in % Other RMBSs 37 59 0 4 1 Vintage information on super senior CDO positions is based on the weig
Slide 54: US Alt-A positions – ratings by type of loan
US Alt-A positions – ratings1 by type of loan2 % of total AAA HG Mezz SIG Ratings1 in % Option ARM 23 99 1 0 0 Hybrid & ARM 20 77 20 1 2 Fixed rate 50 95 4 1 0 HELOC 7 38 51 11 0 1 Ratings are based on externally sourced data reflecting current ratings from any of the three rating agencies: Moody’s,
Slide 55: US commercial real estate exposures, P&L and ratings
US commercial real estate exposures, P&L and ratings Net exposures P&L Other net Net exposures USD billion as of 31.12.071 1Q08 changes2 as of 31.03.081,3 Super senior CMBS CDOs 1.0 (0.2) 0.0 0.8 US CMBS/CMBX trading positions 2.6 (0.1) (0.1) 2.4 US commercial real estate loans4 4.1 (0.1) (0.9) 3.1
Slide 56: US RLN program exposures and P&L
US RLN program exposures and P&L Net exposures P&L Other net Net exposures USD billion as of 31.12.071,3 1Q08 changes2 as of 31.03.081,3 Sub-prime and Alt-A 3.8 (1.2) 0.2 2.9 CMBSs 3.0 (0.2) (1.0) 1.9 Other ABSs and corporate debt 4.4 (0.2) 0.0 4.2 Total 11.2 (1.6) (0.7) 8.9 1 Net exposure represent
Slide 57: US RLN program exposures
US RLN program exposures 31 Dec 07 31 Mar 08 Credit Net Gross Net USD billion protection Reference pool notional 13.1 16.9 3.8 13.1 Market value 11.2 10.5 1.6 8.9 Sub-prime and Alt-A 3.8 3.2 0.3 2.9 CMBSs 3.0 2.5 0.6 1.9 Other ABSs and corporate debt 4.4 4.8 0.6 4.2 56
Slide 58: US RLN program – ratings and vintages
US RLN program – ratings and vintages AAA HG Mezz SIG Ratings1 in % Sub-prime and Alt-A 28 62 8 2 CMBSs 71 22 12 (4) Other ABS and corporate debt 30 18 40 12 <2005 2005 2006 2007 Vintages2 in % Sub-prime and Alt-A 33 35 36 (4) 1 Ratings are based on externally sourced data reflecting current ratings
Slide 59: Exposure to monoline insurers
Exposure1 to monoline insurers2 Credit Fair value of Fair value of Fair value of Notional valuation underlying CDSs5 prior to CDSs after amount3 CDOs4 CVA adjustment as CVA USD billion of 31.03.08 Credit protection on US RMBS CDOs 11.6 4.4 7.2 2.3 4.8 Of which from monolines rated AAA to A 7.6 2.8 4
Slide 60: Leveraged finance commitments
Leveraged finance commitments1 Average 31.12.07 31.03.08 mark USD billion (%) Old deals 5.6 3.6 90 Funded 3.2 3.3 Unfunded 2.4 0.3 New deals 5.8 5.0 97 Funded 4.2 4.0 Unfunded 1.6 1.0 Total 11.4 8.6 94 Cumulative markdown, gross of fees, USD million 497 647 Fees, USD million 123 125 Cumulative markd
Slide 61: Student loan exposures and P&L
Student loan exposures and P&L Net exposures P&L Other net Net exposures USD billion as of 31.12.071 1Q08 changes2 as of 31.03.081,3 US student loan auction rate certificates4 4.5 (0.8) 5.0 8.7 US student loan variable rate demand obligations 0.2 - (0.1) 0.1 Other US student loan ABSs 3.0 (0.2) (1.3
Slide 62: Other
Other 3 UBS
Slide 63: Rights issue expected timetable
Rights issue expected timetable ♦ 27 May 2008 Ex-date for rights and start of rights trading and exercise period ♦ 9 June 2008 End of rights trading period ♦ 12 June 2008 End of rights exercise period ♦ 13 June 2008 First trading day of new shares ♦ 17 June 2008 Payment and settlement 62
Slide 64: Share count
Share count 4,000 2,074 2,172 2,172 – Max 3,423 2,425 – Max c. 3,750 253 3,500 3,000 Max 1,250 Max 1,250 (Million) 2,500 98 2,000 1,500 1,972 1,972 2,172 2'172 1,000 500 0 102 102 Total ordinary shares issued Total post stock dividend Total post rights issue Total post rights issue and as of 31 Mar