Ubs Group Ag · SIX:UBSG
Ubs — Q4 2014 Earnings Presentation
47 slides from Ubs's earnings presentation, Feb 10, 2015
Slide 1: Fourth quarter 2014 results
Fourth quarter 2014 results February 10, 2015
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: 4Q14 – highlights
4Q14 – highlights Net profit attributable to UBS Group AG shareholders of ~CHF 1 billion Group Net profit attributable to UBS Group AG shareholders CHF 963 million, diluted EPS CHF 0.26 – Including net upward revaluation of deferred tax assets of CHF 685 million Reported profit before tax (PBT) CHF
Slide 4: FY14 – strong net profit growth
FY14 – strong net profit growth Net profit attributable to UBS Group AG shareholders up 13% to CHF 3.6 billion Wealth Wealth Retail & Global Asset Investment Management Management Corporate Management Bank Americas Profit before tax +4% Achieved more than Profit before tax +4% Turnaround in
Slide 5: The world's largest wealth manager
The world's largest wealth manager Superior growth prospects, a strong track record and a unique global footprint Operating income Profit before tax Invested assets adjusted, CHF billion adjusted, CHF billion CHF trillion +7% CAGR +14% CAGR +12% CAGR 14.9 3.3 3.5 2.0 14.1 12.9 1.8 2.7 1.6 7.9 1.0 7.
Slide 6: The world's largest wealth manager
The world's largest wealth manager Successfully targeting the fastest growing wealth segments and high quality revenues Growth in target segments Improving recurring revenues Increased asset base Strong growth in target segments Mandates CHF trillion Invested assets by client wealth segment1, 31.12.
Slide 7: Completed our strategic transformation
Completed our strategic transformation Achieved strategic targets announced in 2011/2012 Reduced Achieved our Transformed our risk-weighted assets capital targets Investment Bank Basel III RWA (fully applied), CHF billion Basel III CET1 ratio (fully applied) Investment Bank pre-tax RoAE1 +670 bps (4
Slide 8: Delivering attractive returns to our shareholders
Delivering attractive returns to our shareholders Proposed ordinary dividend and accrued one-time supplementary capital return in 2014 Total capital return per share CHF per share One-time supplementary 0.25 capital return 0.50 following • 31.12.14 Basel III fully applied + squeeze-out CET1 ratio of
Slide 9: 2015 and beyond: unlocking UBS's full potential
2015 and beyond: unlocking UBS's full potential Continuing to execute a clear and consistent strategy 2011 2012 2013 2014 2015 and beyond Implement and execute Unlock full potential • Wealth management businesses at the core of our strategy • Capital strength • Strategic commitment to be the lea
Slide 10: UBS – a unique and attractive investment proposition
UBS – a unique and attractive investment proposition UBS is the world's largest wealth manager1 • Unique global footprint provides exposure to both the world's largest and fastest growing global wealth pools • Leading position across the attractive HNW and UHNW client segments The world's leading •
Slide 11: UBS Group AG results (consolidated)
UBS Group AG results (consolidated) CHF million FY13 FY14 FY14 4Q13 3Q14 4Q14 4Q14 Total operating income 27,732 28,027 6,307 6,876 6,746 Total operating expenses 24,461 25,433 5,858 7,430 6,208 Profit before tax as reported 3,272 2,595 449 (554) 538 of which: own credit on financial liabilities des
Slide 12: Wealth Management
Wealth Management Highest adjusted fourth quarter PBT since 2008 on solid recurring income growth Operating income and profit before tax Operating income down 1% CHF million Recurring income up 1% to CHF 1,569 million on both higher recurring net fee income and higher net 4Q13 1Q14 2Q14 3Q14 4Q14
Slide 13: Wealth Management – revenue by source
Wealth Management – revenue by source Sustained growth in recurring income more than offset by lower transactional revenues 4Q13 1Q14 2Q14 3Q14 4Q14 1,859 1,943 1,919 2,031 2,008 Income (CHF million) Gross margin (bps) Wealth 85 87 84 86 82 Management Recurring income as a % of income 77% 72% 75% 76
Slide 14: Wealth Management – by region
Wealth Management – by region Europe Asia Pacific Switzerland Emerging Markets of which: UHNW 13.3 16.0 13.1 11.0 9.2 7.8 8.7 8.4 7.1 9.1 Net new 5.3 5.1 5.9 money 1.1 0.8 0.9 0.2 0.3 0.8 1.8 growth rate % (1.6) (2.5) (0.7) (1.7) (0.5) 8.9 9.6 7.8 8.5 7.0 7.4 7.1 5.0 5.0 5.7 4.4 3.3 2.2 Net new 1.0
Slide 15: Wealth Management Americas
Wealth Management Americas Record operating income, record FA productivity and FY14 PBT of USD 1 billion Operating income and profit before tax Record operating income USD million Net interest income increased to USD 280 million, mainly due to continued growth in lending balances 4Q13 1Q14 2Q14 3Q
Slide 16: Wealth Management Americas – FA productivity and lending
Wealth Management Americas – FA productivity and lending Record invested assets and FA productivity Invested assets and FA productivity Net interest income and lending1 Annualized revenue per FA (USD k) Net interest income2 (USD million) Invested assets per FA (USD million) Credit loss (expense)/rec
Slide 17: Retail & Corporate
Retail & Corporate PBT of CHF 356 million, achieved all 2014 targets Operating income and profit before tax Operating income down 5% CHF million Net interest income declined marginally, mainly due to lower deposit margins 4Q13 1Q14 2Q14 3Q14 4Q14 Transaction-based income increased, mainly due to
Slide 18: Global Asset Management
Global Asset Management Operating income increased to CHF 497 million on higher performance fees Operating income and profit before tax Operating income up 2% CHF million Net management fees of CHF 463 million in-line with previous quarter of CHF 462 million 4Q13 1Q14 2Q14 3Q14 4Q14 Performance
Slide 19: Investment Bank
Investment Bank Solid Equities and CCS performance; RoAE of 23% on adjusted PBT of CHF 426 million Operating income and profit before tax Adjusted operating income increased 4% YoY CHF million CCS revenues of CHF 712 million with strong Advisory and Equity capital markets revenues, driven by healt
Slide 20: Corporate Center
Corporate Center FY14 reported PBT improved CHF 1.5 billion YoY Core Functions1,2 CHF million, as reported 4Q13 3Q14 4Q14 FY13 FY14 Operating income of negative CHF 117 million: Operating income (365) 5 (117) (1,007) (39) decrease of CHF 122 million mainly due to higher negative treasury income re
Slide 21: Corporate Center reporting structure – from 1Q15
Corporate Center reporting structure – from 1Q15 Corporate Center (CC) will be comprised of three segments CC – Services includes central functions and operations servicing the business divisions CC – Group Asset and Liability Management has been segregated from Group Treasury We will continue
Slide 22: Corporate Center cost reductions
Corporate Center cost reductions ~CHF 300 million of net cost reductions achieved FY14 vs. FY13 Core Functions: Non-core and Legacy Portfolio: CHF 1.0 billion net cost reduction target by 20151 CHF 0.4 billion net cost reduction target by 20151 Adjusted operating expenses before allocations to busin
Slide 23: Swiss SRB Basel III capital and ratios
Swiss SRB Basel III capital and ratios Fully applied Phase-in 25.5% 22.2% 0.9% T2 Other 4.7% T2 Low-trigger 18.9% 18.9% T2 High-trigger 4.8% T2 Low-trigger 0.4% 15.4% (DCCP) T2 High-trigger AT1 High-trigger 0.4% - (DCCP) (DCCP) Ratio 11.4% AT1 High-trigger 0.2% (DCCP) 18.5% 19.5% 19.5% CET1 13.4% 13
Slide 24: Swiss SRB leverage ratio
Swiss SRB leverage ratio Fully applied Phase-in 5.4% 1.0% T2 Low-trigger 4.7% 4.1% T2 High-trigger 0.1% (DCCP) 1.0% T2 Low-trigger ~3.6% 3.4% - AT1 High-trigger T2 High-trigger (DCCP) 0.1% (DCCP) Ratio ~2.4% AT1 High-trigger 0.05% (DCCP) 4.3% 4.3% CET1 4.1% 2.8% 2.9% 2.9% CET1 31.12.121 31.12.13 31.
Slide 25: Capital – foreign currency translation effect
Capital – foreign currency translation effect Pro-forma foreign currency translation effect on Group capital metrics1 Basel III CET1 capital (fully applied) Swiss SRB LRD (fully applied) CHF billion CHF billion 13.4% ~13.6% ~4.2% 4.1% Ratio Ratio 31.12.14 reported 31.12.14 reported and pro-forma bas
Slide 26: Capital – combined effects including lower interest rates
Capital – combined effects including lower interest rates Overview of main factors affecting Group capital ratios post the SNB announcement1 Basel BaselIII III CET1 capital CET1 capital RWA RWA LRD Swiss SRB LRD DTA DTA Decrease due to direct FX Significant decrease due Significant decrease du
Slide 27: Earnings – illustration of FX translation impact
Earnings – illustration of FX translation impact Illustrative foreign currency translation impact on consensus Group PBT Group indicative FX distribution FX translation impact vs. FY15 consensus PBT of CHF 5.0 billion2,3,4 % of total for 20151 CHF billion, adjusted, % change relative to consensus da
Slide 28: Earnings – overview of combined effects including lower interest rates
Earnings – overview of combined effects including lower interest rates Overview of main factors affecting earnings post SNB announcement1 Illustrative impact on Group earnings post SNB announcement on 15.1.15 Net profit attributable to UBS Group AG shareholders, run-rate, Illustrative Short-term imp
Slide 29: Updated performance targets − from 1Q15
Updated performance targets − from 1Q15 Our strategy is durable and we are growing our core businesses profitably Durable strategy Changes to Group targets, KPIs and guidance1,2 Our strategy and performance targets have served us well in many environments Target: Group • 2015: adjusted RoTE3 aroun
Slide 30: Our franchise is unrivaled with compelling growth prospects
Our franchise is unrivaled with compelling growth prospects Our businesses Our objectives World’s leader in HNW and Further expand our world-leading wealth management franchise Wealth UHNW banking with Gain market share in established markets, grow domestic Europe management unrivaled scope and
Slide 31: Appendix
Appendix a UBS
Slide 32: 2014 – highlights
2014 – highlights Net profit attributable to UBS Group AG shareholders up 13% to CHF 3.6 billion Group Net profit attributable to UBS Group AG shareholders CHF 3,571 million up 13%, diluted EPS of CHF 0.94 Basel III fully applied CET1 ratio up 60 bps to 13.4%, fully applied Swiss SRB leverage ratio
Slide 33: Group and business division targets – from 1Q15
Group and business division targets – from 1Q15 Ranges for sustainable performance over the cycle Business divisions Net new money growth rate 3-5% Wealth Management Adjusted cost/income ratio 55-65% 10-15% annual adjusted pre-tax profit growth Wealth Management Net new money growth rate 2-4% for co
Slide 34: Swiss SRB capital and leverage ratios
Swiss SRB capital and leverage ratios Fully applied CET1 capital ratio of 13.4% and leverage ratio of 4.1% Swiss SRB RWA and capital ratios Swiss SRB LRD and leverage ratio CHF billion CHF billion Total capital ratio (fully applied) Leverage ratio (phase-in) 18.7% 18.9% CET1 capital ratio (fully app
Slide 35: IFRS equity attributable to UBS Group AG shareholders
IFRS equity attributable to UBS Group AG shareholders Equity attributable to UBS Group AG shareholders remained above CHF 50 billion QoQ movement CHF millions, except for per share figures in CHF 30.9.14 31.12.14 Total book value per share: 13.54 +3.2% 13.97 Tangible book value per share: 11.78 +3.3
Slide 36: Breakdown of changes in Group RWA
Breakdown of changes in Group RWA By type By business division CHF billion CHF billion 219 30.9.14 219 30.9.14 Non-core and Legacy Portfolio2 • CHF 2.0 billion reduction in credit risk RWA due to the sale of Methodology/model-driven student loan auction rate securities and collateralized debt • CHF
Slide 37: Capital strength is the foundation of our success
Capital strength is the foundation of our success We have the highest Basel III fully applied CET1 capital ratio among large global banks Swiss SRB Basel III fully applied capital Basel III fully applied capital – large global banks 31.12.14 Based on latest available disclosure2 European1,2 US2,3 18
Slide 38: Strong balance sheet, funding and liquidity position
Strong balance sheet, funding and liquidity position Our balance sheet structure has many characteristics of a AA-rated bank Asset funding1 31.12.14, CHF billion Due to banks (10), Short-term debt issued (27), Trading Cash, balances with central 117 portfolio liabilities (28), and banks and due from
Slide 39: Regional performance – 4Q14
Regional performance – 4Q141 Corporate Center CHF billion Americas Asia Pacific EMEA² Switzerland Total and global³ 3Q14 4Q14 3Q14 4Q14 3Q14 4Q14 3Q14 4Q14 3Q14 4Q14 3Q14 4Q14 WM 0.1 0.1 0.5 0.5 1.0 1.0 0.4 0.4 (0.0) (0.0) 2.0 2.0 WMA 1.8 1.9 - - - - - - - - 1.8 1.9 R&C - - - - - - 1.0 0.9 - - 1.0 0
Slide 40: Regional performance – FY14
Regional performance – FY141 Corporate Center CHF billion Americas Asia Pacific EMEA² Switzerland Total and global³ 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 WM 0.4 0.5 1.7 1.9 3.9 4.0 1.5 1.5 0.1 0.0 7.6 7.9 WMA 6.5 7.0 - - - - - - - - 6.5 7.0 R&C - - - - - - 3.8 3.7 - - 3.8 3.7 O
Slide 41: Net tax benefit and deferred tax assets
Net tax benefit and deferred tax assets 4Q14 included a net increase in DTAs for the group of CHF 685 million 4Q14 net tax benefit of CHF 493 million Tax loss DTAs1 CHF million CHF billion Profit before tax (as reported) 538 Net deferred tax benefit with respect to Unrecognized recognition of DTAs (
Slide 42: Retained Treasury income in Corporate Center – Core Functions
Retained Treasury income in Corporate Center – Core Functions We continue to expect retained funding costs to decline in the medium term Treasury income retained in Corporate Center – Core Functions CHF million FY13 1Q14 2Q14 3Q14 4Q14 Credit spread compression Gross results (excluding accounting dr
Slide 43: Variable compensation expenses
Variable compensation expenses IFRS expense down 20% since 2011 IFRS expense down 6% YoY IFRS expense 3.5 IFRS expense IFRS expense 3.0 IFRS expense 3.0 2.8 1.7 0.7 0.6 1.3 2.3 2.2 CHF billion 1.8 1.7 2011 2012 2013 2014 Awards expensed for Amortization of awards performance year from prior years1 E
Slide 44: Deferred compensation
Deferred compensation Expected amortization Annual of awards from prior years1 awards Amortized granted 0.7 0.8 ~0.7 Unrecognized Forfeited Unrecognized Awards to be Awards to be amortized 0.1 amortized¹ ² Including awards 1.6 to be granted in 1Q15 1.6 ~0.5 for the performance CHF billion year 2014
Slide 45: Corporate Center adjusted operating expenses before service allocation
Corporate Center adjusted operating expenses before service allocation CC - Core Functions - adjusted expenses before service allocation 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 FY13 FY14 to business divisions and CC - Non-core and Legacy Portfolio CHF million Personnel expenses 1,101 1,006 955 1,007
Slide 46: Adjusted results
Adjusted results Adjus ting items Bus ines s divis ion / Corporate Center 4Q13 3Q14 4Q14 FY13 FY14 CHF million Operating income as reported (Group) 6,307 6,876 6,746 27,732 28,027 Of which: Own credit on financial liabilities designated at fair value Corporate Center - Core Functions (94) 61 70 (283
Slide 47: Important information related to this presentation
Important information related to this presentation Use of adjusted numbers Unless otherwise indicated, “adjusted” figures exclude the adjustment items listed on the previous slide, to the extent applicable, on a Group and business division level. Adjusted results are a non-GAAP financial measure as