Ubs Group Ag · SIX:UBSG
Ubs — Q1 2020 Earnings Presentation
35 slides from Ubs's earnings presentation, Apr 28, 2020
Slide 1: First quarter 2020 results
First quarter 2020 results April 28, 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: 1Q20 highlights
1Q20 highlights Our response to COVID-19 › Adopted safety measures and enhanced flexibility to support our employees › Provided solutions, advice and liquidity to clients when needed most › Engaged with communities in which we operate to drive positive change Financial performance › Net profit 1.6bn
Slide 4: COVID-19 – Supporting our key stakeholders
COVID-19 – Supporting our key stakeholders Employees Clients Communities Safety, flexibility and support Solutions, advice and liquidity Engagement, leadership and partnership › Early adoption of safety and infection › Intensified engagement with clients, › 30m committed towards global and local pre
Slide 5: Strength and resilience
Strength and resilience Leveraging the successful model and capabilities we built over the years PBT contribution1, 1Q20 7x 4x Attractive business staff logged-in peak daily equity volumes mix with diversified 6% AM in a day remotely managed by IB platforms EMEA 19% 14% by end-March vs. February 1Q2
Slide 6: Supporting the Swiss economy
Supporting the Swiss economy Providing immediate assistance and liquidity while maintaining uninterrupted connectivity Providing funding Facilitating access Supporting communities Corporate clients Digital services Immediate help 2bn +82% › Matching employee donations for Swiss Red Cross of net new
Slide 7: Helping our clients to navigate challenging markets
Helping our clients to navigate challenging markets Timely and valued advice leading to deeper relationships with clients Thought leadership Intensified engagement powering timely advice, expertise and unique solutions thanks to dedicated employees and digital capabilities 95k +163% clients reached
Slide 8: Drop in short-term optimism but investors remain positive long-term
Drop in short-term optimism but investors remain positive long-term UBS Investor Sentiment Survey Sharp drop in short-term optimism (next 12 months) Investors remain positive long-term (next 10 years) optimistic neutral pessimistic optimistic neutral pessimistic 1Q20 1Q20 46% 13% 41% 70% 19% 11% 4Q1
Slide 9: 1Q20 net profit USD 1.6bn, +40%; 17.7% RoCET1
1Q20 net profit USD 1.6bn, +40%; 17.7% RoCET1 6% positive operating leverage Profit before tax m +30% 1,595m 0.43 Net profit 247 Diluted EPS 254 2,008 963 1,546 17.7% 72.3% Return on CET1 Cost / income ratio Operating income Operating expenses +10% +4% 12.8% 3.8%1 CET1 capital ratio CET1 leverage ra
Slide 10: Executing our 2020-2022 priorities
Executing our 2020-2022 priorities From 4Q19 results presentation 9
Slide 11: Global Wealth Management
Global Wealth Management Clients turned to UBS for trusted advice, uninterrupted connectivity and execution throughout the quarter Profit before tax 1Q20 highlights 1,218m Financials Risk and business continuity +41% YoY › 8% positive operating leverage with double-digit › Systems and processes reli
Slide 12: Global Wealth Management
Global Wealth Management Active client engagement and tailored coverage produced growth across all revenue lines Recurring net fee income Net interest income Transaction-based income (11%) 2,635 2,432 2,486 2,502 2,339 Invested assets, 2,315 2,371 2,354 2,434 bn 2,218 1,009 993 1,031 1,113 966 979 7
Slide 13: Global Wealth Management
Global Wealth Management Strong performance with double-digit PBT and advisor productivity growth across regions Americas1 Switzerland EMEA2 APAC › Record PBT and cost/income ratio › High client engagement throughout › Established 3 sub-regions to power › Best quarterly PBT and cost/income › Transac
Slide 14: Personal & Corporate Banking (CHF)
Personal & Corporate Banking (CHF) Solid operating performance; cost/income ratio 58% (16%) 385 389 353 PBT excluding credit loss expense +3% as solid operating 306 322 Profit performance was offset by higher credit loss expense before tax 954 957 914 871 Operating income (9%) with record recurring
Slide 15: Asset Management
Asset Management Strong performance on positive operative leverage; 33bn net new money +52% 180 157 PBT +52% on strong operating leverage, best first quarter Profit 103 124 124 since 2015 before tax 551 514 475 465 Operating income +15% on strong performance with both higher 446 96 36 Performance 23
Slide 16: Investment Bank
Investment Bank Exceptional results from continuously engaged clients and effective risk management +242% 709 Profit Global Markets +44% on significantly higher volumes and volatility before tax 207 427 172 › Equities +18%, mainly driven by increases in Cash and Financing (22) Services revenues › FR
Slide 17: Group Functions
Group Functions 1Q20 results impacted by accounting asymmetries and valuation losses on auction rate securities 1Q20 Profit before tax Group Includes (167m) from accounting asymmetries and hedge accounting m Treasury ineffectiveness (131) › Partly reflects negative own credit valuation adjustments ›
Slide 18: IFRS 9 credit loss expense and allowances
IFRS 9 credit loss expense and allowances Credit loss expense spread across businesses and industries Credit loss expense 1Q20, m 268 Stage 1 and 2: 89m › Macro assumptions: 26m, from scenario updates 122 IB 179 › IB: 48m2, including 26m energy-related exposures and 15m mortgage REITs 53 GWM › GWM:
Slide 19: Comparing credit loss expense and allowances under IFRS and US GAAP
Comparing credit loss expense and allowances under IFRS and US GAAP Total 1Q20 credit loss expense would have been ~80m higher under an all-stage 2 approach akin to US GAAP CECL Expected credit loss allowances Definitions ~80 1,731 268 (16) 31.3.20 Stage 1 ~450 CECL "all- 1,401 stage 2" effect › Up
Slide 20: Loans and advances to customers
Loans and advances to customers High quality loan portfolio, mostly secured by real estate or securities On-balance sheet Off-balance sheet 338bn Mortgages: 174bn, average LTV ~55% › 135bn self-occupied1 (~85% Switzerland) Revocable credit lines: 34bn › 24bn Swiss income-producing › 6bn Swiss commer
Slide 21: Oil and gas exposures
Oil and gas exposures Exposure reduced by 75% since 2015; limited potential loss even in extreme stress scenario Oil and gas net lending exposure1 31.3.20 By geography By division (75%) 6.12 42% 58% 98% 2% North EMEA & Investment Non-core America APAC Bank and Legacy Portfolio By rating By segment 6
Slide 22: Investment Bank loan underwriting commitments
Investment Bank loan underwriting commitments Current exposures mostly related to acquisition financing Gross notional exposure bn 3.5bn de-risked 10.8 10.8 10.8 Other 12% U.K. 15% Diversified / › Mainly acquisition financing for 14% North core corporate clients, with closing Conglomerates 16% Ameri
Slide 23: Corporate lending and credit line utilization
Corporate lending and credit line utilization ~9bn of incremental RWA, or ~40bps on CET1 capital ratio if corporate credit lines were fully drawn in a remote scenario Personal & Corporate Banking1 Investment Bank2 Notional Notional 8 9 Incremental 0 RWA if fully Mainly bridge drawn: ~3bn5 Loan under
Slide 24: Risk-weighted assets
Risk-weighted assets RWA +10% QoQ mostly related to supporting our clients along with elevated market volatility 10 No change 286 18 QoQ (2) 259 1 78 Operational risk 78 › Includes full impact of › ~50% COVID-related › 100% COVID-related 1.8bn from SA-CCR › 8.2bn from new business and › Higher avera
Slide 25: Capital and leverage ratios
Capital and leverage ratios Maintaining capital ratios comfortably above regulatory requirements even without temporary exemptions or relief 32.7% Total loss-absorbing 93.6 Requirements RWA LRD capacity (TLAC) 9.8% Gone concern TLAC 24.4% 14.6% 8.6% loss-absorbing 41.7 capacity 4.4% Going concern 14
Slide 26: Deploying our strengths
Deploying our strengths We entered and are managing this crisis from a position of strength, combining a strong financial position with operational resilience We are open for business, deploying resources, funding and solutions for our clients We are committed to the execution of our plans and strat
Slide 27: Appendix
Appendix 3 UBS
Slide 28: Group results
Group results 1Q19 2Q19 3Q19 4Q19 1Q20 Total operating income 7,218 7,532 7,088 7,052 7,934 of which: credit loss expenses (20) (12) (38) (8) (268) of which: net gains/(losses) from properties held for sale (29) of which: FCT gains/(losses) from the disposal of subsidiaries 10 (46) Total operating e
Slide 29: Tangible book value per share
Tangible book value per share +8% 0.26 14.38 (0.03) 0.42 0.44 13.29 4Q19 Net Cash flow Own Other2 1Q20 profit hedge OCI credit OCI1 Numbers in USD unless otherwise indicated; 1 OCI related to own credit on financial liabilities designated at fair value; 2 Including buybacks, defined benefit plan OCI
Slide 30: Global Wealth Management
Global Wealth Management +41% (4%) Profit before tax 1,218 Mandate volume 824 854 861 903 790 863 874 894 766 bn m +14% +6% Operating income 4,003 4,057 4,142 4,150 4,547 Loans 174 176 176 179 185 m bn (6ppts) (4%) Cost/income ratio 78 78 78 81 72 Invested assets 2,432 2,486 2,502 2,635 2,339 % bn 1
Slide 31: Global Wealth Management – Invested assets composition
Global Wealth Management Invested assets composition 2,635 2,635 Other1 11% Other 11% 2,339 2,339 11% CHF 8% 11% Mutual EUR 10% 8% 30% funds 29% 10% Cash & MM 12% instruments2 15% Bonds 13% 13% USD 70% 71% Equities 34% 32% 31.12.19 31.3.20 31.12.19 31.3.20 Numbers in USDbn unless otherwise indicated
Slide 32: Swiss government-backed SME lending program
Swiss government-backed SME lending program Facility 1 Facility 2 Loans ≤0.5m, 100% state-guaranteed Loans 0.5-20m1, 85% state-guaranteed Other information Documentation: Documentation: Maturity and repayment › 1-page contract › ~7-page loan agreement › 5 years, with a possibility to extend by 2 yea
Slide 33: Results by business division
Results by business division 1 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives; 2 Reflects the net increase in / (release of) provisions for litigation, regulatory and 32 similar matters recognized in the income statement. Refer t
Slide 34: Results by business region
Results by business region Americas Asia Pacific EMEA Switzerland Global Total 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 Operating GWM 2.2 2.4 0.6 0.8 0.9 0.9 0.4 0.4 (0.0) 0.0 4.0 4.5 income P&C - - - - - - 1.0 0.9 - - 1.0 0.9 AM 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 - 0.0 0.4 0.5 IB 0.
Slide 35: 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