Ubs Group Ag · SIX:UBSG
Ubs — Q2 2011 Earnings Presentation
36 slides from Ubs's earnings presentation, Jul 26, 2011
Slide 1: Second quarter 2011 results
Second quarter 2011 results Second quarter 2011 results July 26, 2011
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: 2Q11 highlights
2Q11 highlights CHF 1.7 billion pre-tax profit as revenues decreased on lower client activity CHF 1.0 billion net profit attributable to shareholders Profit attributable to non-controlling interests totaled CHF 0.3 billion Diluted EPS CHF 0.26, year-to-date return on equity 12.0% Tangible book value
Slide 4: Market environment
Market environment YoY:1 USD / CHF 23% EUR / CHF 12% FX rates GBP / CHF 16% 3m LIBOR QoQ:1 1.8 USD / CHF 8% 4.0 EUR / CHF 4% 1.6 GBP / CHF 7% 3.5 3.0 1.4 2.5 1.2 2.0 1.5 1.0 1.0 0.8 0.5 0.6 0.0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 USD / CHF EUR / CHF GBP / CHF USD
Slide 5: 2Q11 – performance by business division
2Q11 – performance by business division (CHF million) WM&SB WMA Global AM IB CC UBS Income 2,838 1,285 444 2,615 (2) 7,180 Credit loss (expense) / recovery 2 (1) 15 16 Own credit1 (25) (25) Total operating income 2,840 1,284 444 2,604 (2) 7,171 Personnel expenses 1,217 928 236 1,517 28 3,925 Non-per
Slide 6: Net profit attributable to shareholders – changes 2Q11 vs. 1Q11
Net profit attributable to shareholders – changes 2Q11 vs. 1Q11 (792) 49 (1,294) 112 (261) 1,807 482 13 108 1,015 (CHF million) 1Q11 Operating income Own Credit loss Personnel Non- Tax Non- 2Q11 excluding own credit1 expenses expenses personnel expense / controlling credit and credit expenses (benef
Slide 7: 2Q11 operating expenses
2Q11 operating expenses Decrease in expenses driven by currency effects and lower personnel costs Operating expenses (adjusted)1 11% decrease in personnel costs due 6,180 6,210 to lower revenues and strengthening 5,844 5,991 6,124 of the Swiss franc (10%) 5,521 7% decrease in non-personnel costs
Slide 8: Wealth management businesses: recovered and ready for growth
Wealth management businesses: recovered and ready for growth Management has steered the businesses well in turbulent conditions Invested assets 30.6.11 CHF 1,398 billion UBS WM Americas 650 748 UBS Wealth Management WM + WMA 1H10 1H11 Pre-tax profit Total profits up; WMA executing according to (CH
Slide 9: Wealth Management
Wealth Management Improved performance despite adverse market conditions Operating income and pre-tax profit Operating income down slightly reflecting lower client activity and strengthening of 1,891 1,928 1,867 the Swiss franc – Further allocations of treasury income contributed CHF 21 million to
Slide 10: Wealth Management – invested assets
Wealth Management – invested assets Currency movements had a material impact on invested assets Invested assets Invested assets 30.6.11 vs. 31.3.11 30.6.11 (43) Other 15% USD 6 30% (12) (CHF billion) (37) 791 CHF 748 19% 31.3.11 NNM Market FX 30.6.11 / other GBP Invested assets 30.6.11 vs. 30.6.10 5
Slide 11: Wealth Management – operating income
Wealth Management – operating income 2Q11 income impacted by negative FX development and lower client activity 833 847 825 827 810 Invested assets (CHF billion) 786 787 791 768 2Q11 748 1,903 vs. 1,923 1,845 1,800 1,904 1,891 1,928 1,867 1Q11 1,759 1,803 170 153 146 157 170 178 182 154 209 15% 300 1
Slide 12: Wealth Management – gross margin
Wealth Management – gross margin1 Robust gross margin Interest Fees Trading (0.1) bp (2.7) bps +1.5 bps - 98 97 96 95 93 93 92 89 88 88 (bps) 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Pricing Lending Ongoing pricing realization and price Lending volume increased slightly in the grid realignm
Slide 13: Wealth Management – invested assets and NNM by region
Wealth Management – invested assets and NNM by region1 30.6.11 invested assets 2Q11 NNM 1H11 NNM CHF 748 billion CHF 5.6 billion CHF 16.7 billion Europe2 287 (1.8) (2.9) Asia Pacific 162 3.1 7.1 Switzerland1,3 166 1.5 7.4 Emerging 133 2.8 5.0 markets4 o/w UHNW 303 4.1 11.6 1 Invested assets and net
Slide 14: Retail & Corporate
Retail & Corporate Steady performance, no credit loss expenses Operating income and pre-tax profit Operating income up 1% – Higher fees and other income more than offset 995 lower interest income 965 974 – Income from a divestment and dividends from equity participations contributed CHF 14 million
Slide 15: Retail & Corporate
Retail & Corporate Positive trends in deposits; net interest margin remains under pressure Loans and deposits Net interest margin1 2.04% 138 1.97% 137 136 135 135 136 135 135 136 136 1.83% 1.80% 2.00% 1.69% 1.84% 1.79% 1.75% 1.74% 683 701 117 668 116 628 617 604 609 592 590 112 575 109 106 106 99 10
Slide 16: Wealth Management Americas
Wealth Management Americas Pre-tax profit improved to CHF 140 million, up 39% in USD Operating income and pre-tax profit Reported revenues decreased as strength of the Swiss franc masked underlying improvement 1,485 1,347 – USD revenues grew 4% driven by higher 1,284 recurring fees and interest in
Slide 17: Wealth Management Americas – operating income
Wealth Management Americas – operating income Currency effects offset increase in underlying USD fee & commission income CHF million USD million YoY YoY (14%) QoQ +12% QoQ (5%) +4% 1,485 1,511 1,422 1,448 1,362 1,338 1,379 119 148 1,347 1,350 1,325 1,284 1,285 131 127 127 150 146 118 135 101 142 145
Slide 18: Wealth Management Americas – financial advisor productivity
Wealth Management Americas – financial advisor productivity USD revenue and invested assets per financial advisor at record levels Revenue per FA, annualized (thousand) CHF USD 872 855 884 776 761 781 736 793 790 782 813 838 791 724 689 752 649 655 559 595 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q1
Slide 19: Global Asset Management
Global Asset Management CHF 108 million pre-tax profit Operating income and pre-tax profit Decrease in operating income – Lower performance fees in A&Q 522 – Decrease in net management fees driven by 496 444 the strengthening of the Swiss franc Operating expenses reduced in line with revenues (C
Slide 20: Global Asset Management – invested assets
Global Asset Management – invested assets Currency movements had a material impact on invested assets Invested assets 30.6.111 Invested assets 30.6.11 vs. 31.3.11 Other 11% (33) 1 (1) (33) (CHF billion) USD 569 CHF 536 45% 25% 31.3.11 NNM Market FX 30.6.11 Invested assets 30.6.11 vs. 30.6.10 GBP (33
Slide 21: Investment Bank
Investment Bank CHF 401 million pre-tax profit excluding own credit Operating income excluding own credit1 Pre-tax profit and cost / income ratio 4,136 Cost / income ratio excluding own credit1 Cost / income ratio (as reported) 3,506 3,578 604 124 478 466 2,686 91 2,630 79 86 76 71 102 2,229 410 85
Slide 22: Equities revenues (vs. 2Q10)
Equities revenues (vs. 2Q10) Cash 1,365 – Market share grew globally 1,310 1,255 89 101 – Improved trading performance was more than 49 1,054 offset by lower volumes 231 296 235 945 26 904 Derivatives 239 283 – Derivatives revenues decreased in more 270 459 challenging trading conditions 491 497
Slide 23: FICC revenues (vs. 2Q10)
FICC revenues (vs. 2Q10) Combined macro, credit and emerging markets revenues down 10% 2,165 Macro 258 – Improved results in non-linear rates; declines 1,801 in linear rates on lower client activity 241 1,703 50 – FX: exceptional market volatility of 2Q10 was 206 not repeated 502 1,150 Credit 74
Slide 24: Investment banking revenues (vs. 2Q10)
Investment banking revenues (vs. 2Q10) Combined advisory and capital markets revenues up 10% 910 Advisory – Revenues increased 54% on strong market share gains and improved M&A environment 296 Capital markets 604 466 410 – Fixed income: 10% increase in revenues with 478 422 213 improved leverage
Slide 25: Corporate Center
Corporate Center Pre-tax loss of CHF 63 million The revaluation of UBS’s option to buy the SNB StabFund contributed CHF 13 million in 2Q11 – Option fair value CHF 1.8 billion (USD 2.1 billion) on 30.6.11 Revaluation of UBS’s option to buy the SNB StabFund: contribution to UBS results 293 231 168 1
Slide 26: Capital position
Capital position Our priority remains to further strengthen our capital base through earnings retention 17.9% 18.1% CHF 1.3 billion of core tier 1 capital Basel 2 17.8% accretion in 2Q11 16.4% 16.7% 16.0% 16.1% 15.4% 15.3% 15.6% Basel 2 risk-weighted assets 14.2% increased by CHF 2.9 billion to
Slide 27: Appendix
Appendix 3% UBS
Slide 28: Net profit attributable to non-controlling interests
Net profit attributable to non-controlling interests CHF 263 million of net profits attributed to non-controlling interests in 2Q11 No further attribution of profits to non-controlling interests for preferred securities expected in 2H11 Hybrid tier 1 instruments outstanding Amount Issue date Int
Slide 29: Asset funding – 30 June 2011
Asset funding – 30 June 2011 Assets Liabilities and equity Cash, CBs1, due from banks 35 Due to banks 32 Money market Financial investments paper issued 55 available-for-sale 72 CHF 106 Cash collateral on securities billion lent and repurchase collateral agreements 111 Cash collateral on securities
Slide 30: Balance sheet development
Balance sheet development Total excl. PRVs Assets CHF 902 billion 2,275 428 2,015 160 854 1,341 1,317 1,291 1,237 Positive RVs 774 (CHF billion) 1 146 422 401 359 335 Other assets 312 192 167 157 155 Trading portfolio 584 232 229 236 223 348 220 Collateral trading 180 205 217 328 355 314 315 319 308
Slide 31: Core tier 1 capital and RWAs (Basel 2)
Core tier 1 capital and RWAs (Basel 2) Core tier 1 capital1 0.4 1.0 (0.1) (0.0) (CHF billion) 33.1 31.8 2 31.3.11 Net profit attributable Own Increase in capital FX and other 30.6.11 to shareholders credit directly booked in equity Risk-weighted assets 11.6 1.7 (0.3) (0.4) (9.8) 203.4 206.2 (CHF bil
Slide 32: Capital position – Basel 2.5
Capital position – Basel 2.5 Pro-forma Basel 2.5 tier 1 ratio of 13.2% on 30.6.11 Basel 2.5 RWAs of CHF 278 billion for the Group Basel 2 Basel 2.5 (CHF billion) Change RWAs RWAs Wealth Management & Swiss Bank 41 41 0 Wealth Management Americas 23 25 1 Global Asset Management 3 4 0 Investment Bank
Slide 33: Exposure to monoline insurers
Exposure to monoline insurers1 Fair value of CDS2 after CVA3 of CHF 1.3 billion on 30.6.11 Credit protection on US sub-prime RMBS CDO Reduction in notionals reflect Total Fair value (CHF billion) commutations 30.6.11 of CDS after CVA 1.3 Total notionals CHF 12.0 billion 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Slide 34: Student loan auction rate securities
Student loan auction rate securities Inventory + buyback commitment 1Q09 – 2Q11 19.6 19.4 18.7 SL ARS buyback commitment (par value) 18.1 SL ARS inventory (carrying value) 16.2 11.3 10.9 9.8 9.7 9.5 (USD billion) 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 The sale of a portfolio of student
Slide 35: WM&SB residential mortgage portfolio
WM&SB residential mortgage portfolio Loans secured by residential property (30.6.11) Actual loss by year of default1 Distribution of loans along LTV 140 0.14% <1% 5% 120 0.12% > 90% > 80% - 90% > 60% - 80% 100 0.10% 48% < 60% > 90% of 80 0.08% loans with LTV < 80% 60 0.06% 46% 40 0.04% 20 0.02% WM
Slide 36: Reclassified assets
Reclassified assets Ratio of Notional Carrying carrying to Fair value value value notional 30.6.11 (CHF billion) value US student loan and municipal auction rate securities 4.5 3.8 4.0 89% Monoline protected assets 5.7 5.3 5.0 87% Leveraged finance 0.5 0.4 0.4 76% US reference linked notes 0.3 0.2 0