Slide 1: Second quarter 2020 results
Second quarter 2020 results July 21, 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: 2Q20 highlights
2Q20 highlights Deploying our strengths while executing on our priorities › We continue to operate from a position of strength with a clear strategy, operational resilience and a balance sheet for all seasons › We are delivering for our clients by deploying resources, providing advice and solutions
Slide 4: 1H20 net profit 2.8bn and 15.4% RoCET1
1H20 net profit 2.8bn and 15.4% RoCET1 Positive operating leverage, improved cost/income ratio and 3.6bn capital generated1; >70bn NNM Profit before tax m +24% excl. CLE +9% 2,827m 0.76 (507) net profit diluted EPS 1,094 +12% YoY (302) 3,591 3,305 15.4% 3.6bn Income +7% Operating expenses return on
Slide 5: Delivering competitive returns
Delivering competitive returns Balancing growth, cost and capital efficiency to deliver attractive returns on deployable equity Return on CET1 capital UBS MS GS BoA JPM Citi 15.4% 15.6% 14.1% 13.5% 14.2% 13.3% 11.6% 11.0% 1H20 9.0% 8.1% 1Q18-2Q20 7.2% 4.8% RoTE1 11.2% 9.8% 13.9% 13.5% 9.0% 11.5% 8.0
Slide 6: Strength and resilience
Strength and resilience Leveraging the successful business model and capabilities we have built over the years PBT contribution1, 1H20 4x +41% Attractive business 7% peak daily equity volumes online account AM mix with diversified EMEA 19% 13% managed by IB platforms openings P&C 1H20 peak vs. FY19
Slide 7: Switzerland: strong home market
Switzerland: strong home market Attractive fundamentals and resilient economy Structurally resilient Effective crisis management 2020 GDP growth forecast2 › Sound economic fundamentals and › Swift and effective response by China fiscal discipline government and health authorities Australia › Resilie
Slide 8: UBS Investor Sentiment Survey
UBS Investor Sentiment Survey Investors remain cautious; US election may spur reallocations Short-term optimism up slightly (next 12 months) Investors remain positive long-term (next 10 years) optimistic neutral pessimistic optimistic neutral pessimistic 2Q20 2Q20 52% 14% 34% 73% 16% 11% 1Q20 1Q20 4
Slide 9: Uniquely positioned to provide advice and solutions to our clients
Uniquely positioned to provide advice and solutions to our clients Thought leadership powering timely advice, expertise and unique solutions What’s on our clients’ minds Portfolio Geopolitical Extending our leadership in Access to liquidity Sustainable repositioning uncertainty Sustainable Finance a
Slide 10: Adapting and accelerating the pace of change
Adapting and accelerating the pace of change Building on our strengths and momentum in a rapidly evolving environment Digital client experience and Automation and technology Workforce management and enhanced product offering enablement real estate footprint › Digital delivery and front-end › Cloud m
Slide 11: 2Q20 net profit USD 1.2bn; 13.2% RoCET1
2Q20 net profit USD 1.2bn; 13.2% RoCET1 Positive operating leverage and 1.9bn capital generated1 Profit before tax m +5% excl. CLE (10%) 1,232m 0.33 1,759 131 (260) Net profit Diluted EPS 1,582 (48) Income Operating expenses 13.2% 1.9bn +2% +1% Return on capital CET1 capital generation1 13.3% 3.92%
Slide 12: Global Wealth Management
Global Wealth Management Strong performance with positive operating leverage and good momentum across growth drivers 2Q20 highlights Profit before tax Financials Risk and business continuity 880m › PBT +1% despite increased CLE and recurring fee › Margin shortfalls back at pre-crisis levels since mi
Slide 13: Global Wealth Management
Global Wealth Management Strong NII and transaction-based income performance more than offset by lower recurring fee income Recurring net fee income Net interest income Transaction-based income 11% 2,635 2,590 Invested 2,486 2,502 2,339 assets, bn 2,315 2,371 2,354 2,434 2,128 993 1,031 1,023 1,113
Slide 14: Global Wealth Management
Global Wealth Management Strong and diversified profit contribution with record 2Q PBT in APAC, offsetting headwinds in the Americas Americas1 Switzerland EMEA2 APAC › Lower PBT vs. very strong 2Q19 on › PBT +3%, excl. CLE +12%, on › PBT +16%, reflecting strong › Record 2Q PBT with 11ppts lower bill
Slide 15: Personal & Corporate Banking (CHF)
Personal & Corporate Banking (CHF) PBT down on higher CLE and decrease in credit card-related revenues; strong business growth (41%) 389 353 Profit 306 322 PBT (15%) excl. CLE 229 before tax Excl. CLE Operating income (17%), or (7%) excl. CLE, as transaction-based income decreased on ~60m lower cred
Slide 16: Asset Management
Asset Management 5th consecutive quarter of YoY PBT growth, up 27%; 19bn net new money, 52bn year-to-date +27% 180 157 157 PBT +27% on 6% positive operating leverage; YTD +38% Profit 124 124 before tax Operating income +10% on strong performance fees; management 551 514 524 fees marginally down refl
Slide 17: Investment Bank
Investment Bank Excellent 1H20 with PBT more than doubling YoY and 21% return on attributed equity +43% 709 Global Markets +25% Profit before tax 427 612 › Increases across Execution & Platform, Derivatives & Solutions, 172 (22) and Financing Excl. CLE › FRC +118%; best quarter for Credit since 2012
Slide 18: Investment Bank
Investment Bank Maintaining our focus on capital efficiency and delivering strong risk-adjusted returns Revenues1 / VaR2 RoAE3 m 1Q20 2Q20 1H20 250 25.6% 21.4% 21.1% 200 18.4% 16.1% 15.4% 150 100 50 n/a UBS Peer A Peer B Peer C Peer D Peer E Peer A Peer D UBS Peer C Peer E Peer B VaR2 m UBS 1Q20 2Q2
Slide 19: Group Functions
Group Functions Maintaining our guidance of ~200m loss per quarter, excluding accounting asymmetries, litigation and one-offs 2Q20 Profit before tax m Group Includes ~(90m) from higher retained costs from COVID-19-related (192) Treasury liquidity actions (69) Non-core and Includes 20m CLE on a singl
Slide 20: IFRS 9 credit loss expenses
IFRS 9 credit loss expenses 2Q20 credit loss expenses largely driven by stage 1 & 2 positions Credit loss expenses m 1Q20 2Q20 268 272 70 IB IB 179 75 GWM GWM 127 P&C 63 P&C 26 GF2 GF2 Stage 1 & 2 Stage 1 & 2 Stage 3 Credit loss Stage 1 & 2 Stage 1 & 2 Stage 3 Credit loss (change in macro (Overlays
Slide 21: IFRS 9 credit loss expenses model parameters and scenarios
IFRS 9 credit loss expenses model parameters and scenarios Scenario weighting unchanged with updates to new macroeconomic assumptions Scenario weighting and 70% Updated baseline scenario parameters weight 2020 2021 Real GDP growth United States (6.4) 4.5 (annual, % change, annual avg.) Eurozone (8.2
Slide 22: Risk-weighted assets
Risk-weighted assets RWAs flat QoQ 286.3 1.2 No change 2.7 286.4 QoQ (3.1) (0.6) 77.5 77.5 Operational risk ▪ IB: (5.3bn) on loan distributions, lower ▪ IB: (2.1bn) on lower client activity open margin calls and client exposures and volatility 15.1 ▪ GWM: +3.1bn mainly driven ▪ +1.5bn in net regulat
Slide 23: Capital and leverage ratios
Capital and leverage ratios Maintaining capital ratio comfortably above regulatory requirements even without temporary exemptions Total loss-absorbing 93.6 32.7% 9.6% capacity (TLAC) Requirements RWA LRD Gone concern loss-absorbing 40.0 TLAC 24.4% 14.0% 4.1% 8.6% capacity AT1 15.4 5.4% 1.6%2 Going c
Slide 24: Deploying our strengths while executing on our priorities
Deploying our strengths while executing on our priorities We continue to operate from a position of strength with a clear strategy, operational resilience and a balance sheet for all seasons We are delivering for our clients by deploying resources, providing advice and solutions to meet their needs
Slide 25: Appendix
Appendix 6 UBS
Slide 26: Group results
Group results 1H19 1H20 2Q19 3Q19 4Q19 1Q20 2Q20 Total operating income 14,750 15,337 7,532 7,088 7,052 7,934 7,403 of which: credit loss expenses (33) (540) (12) (38) (8) (268) (272) of which: net gains/(losses) from properties held for sale (29) of which: FCT gains/(losses) from the disposal of su
Slide 27: Global Wealth Management
Global Wealth Management 4% 1% Profit before tax 1,218 Mandate volume 854 861 903 790 887 m 874 894 766 880 bn Excl. CLE 7% (3%) Operating income 4,057 4,142 4,150 4,547 3,942 Loans 176 176 179 185 189 m bn (2ppts) 4% Cost/income ratio 78 78 81 72 76 Invested assets 2,486 2,502 2,635 2,339 2,590 % b
Slide 28: Tangible book value per share
Tangible book value per share 0.44 0.02 0.78 14.11 (0.42) 13.29 Of which (0.365) from dividend payment in May 2020 31.12.19 30.6.20 0.34 0.03 14.38 (0.24) 14.11 (0.40) Of which (0.365) from dividend payment in May 2020 31.3.20 Net Cash flow Own Other2 30.6.20 profit hedge OCI credit OCI1 Numbers in
Slide 29: Accounting for credit loss expenses under IFRS and US GAAP
Accounting for credit loss expenses under IFRS and US GAAP IFRS 9 categorizes financial instruments into three stages based on credit risk, these stages determine how expected credit losses are measured US GAAP accounting Initial Significant increase in Credit-impaired (e.g. › Under US GAAP, there i
Slide 30: Comparing credit loss expenses and allowances under IFRS and US GAAP
Comparing credit loss expenses and allowances under IFRS and US GAAP Expected credit loss allowances ~400 2,339 272 “All stage 2” effect; ~850 would have <10bps 1,731 (65) impact on CET1 ratio2 “All stage 2” effect, akin to US GAAP as of 31.3.20 ~450 636 Stage 1 & 2 Stage 1 & 2 429 1,489m 1,282m 30.
Slide 31: Loans and advances to customers
Loans and advances to customers On-balance sheet Off-balance sheet 345bn Loan commitments3: 40bn Mortgages: 178bn, average LTV ~55% › 138bn self-occupied1 (~85% Switzerland) › 23bn large corporates › 24bn Swiss income-producing › 2bn Swiss SMEs › 6bn Swiss commercial, retail and office › Remainder m
Slide 32: Corporate lending and credit line utilization
Corporate lending and credit line utilization Personal & Corporate Banking1 Investment Bank2 RWA sensitivity Notional Notional 39 33 9 › Draw-downs6: ~10bn of incremental 32 RWA (~40bps CET1 capital ratio) if 8 26 corporate credit lines were fully drawn 9 0 in a remote scenario 133 20 21 93 0 11 0 ›
Slide 33: Investment Bank loan underwriting commitments
Investment Bank loan underwriting commitments Gross notional exposure bn (>50%) 10.8 › Mainly acquisition financing for core corporate clients, with closing due later this year › 1H20: 95m of write-downs in LCM, corporate lending and real estate finance portfolios more than offset by 121m gains on c
Slide 34: Oil and gas exposures
Oil and gas exposures Oil and gas net lending exposure1 30.6.20 (>75%) 6.12 By geography By division 37% 63% 99% 1% North EMEA & Investment Non-core America APAC Bank and Legacy Portfolio By rating By segment (7%) 70% 30% 55% 25% 1.53 1.43 Investment Sub-investment Integrated Exploration grade grade
Slide 35: Swiss mortgage book
Swiss mortgage book Swiss real estate market UBS's Swiss mortgage book1 148bn We manage our mortgage book prudently Prices have stabilized at high levels in recent years; no material 110bn residential self-occupied › Sticking to our LTV caps downward price pressure in 1H20 › Average LTV 55% › String
Slide 36: Swiss credit cards
Swiss credit cards Credit cards in Switzerland UBS’s Swiss credit card business Stringent consumer credit laws #1 credit card business in Switzerland limit debt through credit cards, including thorough client solvency checks Aggregate credit balances as of 30.6.20 0.2% 0.1% delinquency ratio3 actual
Slide 37: Swiss government-backed SME lending program
Swiss government-backed SME lending program UBS, 30.6.20 Facility 1 Loans ≤0.5m, 100% state-guaranteed Interest rate: 0% p.a., guaranteed for next 12 months 3.2bn 46% Number of net loan requests, weekly 23.3.20 - 5.7.20 Facility 2 credit lines outstanding of credit lines drawn o/w 2.7bn Facility 1 L
Slide 38: Quarterly results by business division
Quarterly 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 37 similar matters recognized in the income statemen
Slide 39: YTD results by business division
YTD 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 38 similar matters recognized in the income statement. Ref
Slide 40: Quarterly results by region
Quarterly results by region Americas Asia Pacific EMEA Switzerland Global Total 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 Operating GWM 2.3 2.0 0.6 0.7 0.8 0.9 0.4 0.4 (0.0) 0.0 4.1 3.9 income P&C - - - - - - 1.0 0.8 - - 1.0 0.8 AM 0.1 0.2 0.1 0.1 0.1 0.1 0.2 0.2 (0.0) 0.0 0.5 0.5
Slide 41: YTD results by region
YTD results by region Americas Asia Pacific EMEA Switzerland Global Total 1H19 1H20 1H19 1H20 1H19 1H20 1H19 1H20 1H19 1H20 1H19 1H20 Operating GWM 4.4 4.4 1.1 1.5 1.7 1.8 0.8 0.8 (0.0) 0.0 8.1 8.5 income P&C - - - - - - 1.9 1.7 - - 1.9 1.7 AM 0.2 0.3 0.2 0.2 0.2 0.2 0.3 0.3 (0.0) 0.0 0.9 1.0 IB 1.3
Slide 42: 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