UBS Group AG · SIX:UBSG
UBS — Q3 2015 Earnings Presentation
65 slides from UBS's earnings presentation, Nov 3, 2015
Slide 1: Form 6-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 Date: November 3, 2015 UBS Group AG Commission File Number: 1-36764 UBS AG Commission File N
Slide 2: Form 6-K presentation materials note
This Form 6-K consists of the presentation materials related to the Third Quarter 2015 Results of UBS Group AG and UBS AG, and the related speaker notes, which appear immediately following this page.
Slide 3: Third quarter 2015 results
x UBS Confidential Third quarter 2015 results November 3, 2015
Slide 4: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This report 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 trensactions and strategic in
Slide 5: 3Q15 highlights — Group
3Q15 highlights — Group Net profit attributable to UBS Group AG shareholders of CHF 2.1 billion Group results e Net profit attributable to shareholders CHF 2,068 million, diluted EPS CHF 0.54 e Reported profit before tax (PBT) CHF 788 million, adjusted PBT CHF 979 million e Achieved CHF 1.0 billion
Slide 6: 3Q15 highlights — Business divisions
3Q15 highlights — Business divisions Solid performance and good risk management in an extremely challenging environment Wealth Management: PBT CHF 698 million and adjusted NNM CHF 3.5 billion! — Continued recurring income growth; mandate penetration up 70 bps QoQ to 27.0% Wealth Management Americas:
Slide 7: Updated capital and key performance metrics
Updated capital and key performance metrics Basel III CET1 ratio RWA BIS LRD Fully applied, % Fully applied, CHF billion Fully applied, CHF billion 991 949 14.3% 936 ~950 128% 13.4% >13% 225 6 2162 4Q13 4Q14 3Q15 Target 4Q13 4014 3Q15 Short to 1Q15 2Q15 3Q15 Short to medium term medium term expectat
Slide 8: UBS Group AG results (consolidated)
UBS Group AG results (consolidated) CHF million 3Q14 4Q14 1Q15 2Q15 3Q15 Total operating income 6,876 6,746 8,841 7,818 7,170 Total operating expenses 7,430 6,342 6,134 6,059 6,382 Profit before tax as reported (554) 404 2,708 1,759 788 of which: own credit on financial liabilities designated at fai
Slide 9: The world's leading wealth management franchise
The world's leading wealth management franchise UBS is the world's largest and fastest growing wealth manager! Invested assets Operating income Profit before tax CHF trillion CHF billion CHF billion +6% CAGR +7% CAGR +14% cacr| = 1.9 11.6 3.1 1.9 jog 11.0 16" 9.6 1.0 09 5.9 6.1 7] 5 wa fosy p22 af]
Slide 10: Wealth Management
Wealth Management PBT CHF 698 million, resilient performance against a backdrop of high market volatility Operating income Recurring income Operating expenses Profit before tax Ci ratio 3% UBS 3 5A2 is ss ¢ Net interest income increased, mainly due to higher lending and deposit revenues 4,837 1,859
Slide 11: Wealth Management
Wealth Management Mandate penetration up 70 bps to 27.0% 5.8% Net new 4.9% 4.8% money = « Adjusted NNM" CHF 3.5 billion, 1.5% growth ‘Annualized rate, with inflows in all regions, despite growth rate deleveraging in Asia Pacific caused by high market volatility CHF billion DOODODOOOEe « Reported NNM
Slide 12: Wealth Management
Wealth Management Adjusted NNM' positive in all regions, high and improving quality of NNM Europe Switzerland Emerging markets of which: UHNW © = Adjusted NNM" Net new money 13.1% 12.2% Annualized he 65% 5.4% wth rate 3.3% 1% -— 3.0% 3.6% growth rate: 1.1% I 21% 8% 18% 0.9% 0.2% Im [14 = 02 13% (1.7
Slide 13: Wealth Management Americas
Wealth Management Americas PBT up 24% to USD 287 million on record recurring income Operating income Recurring income Operating expenses Profit before tax Ci ratio a UBS Adjusted numbers unless otherwise indicated, refer to slide 40 for details about adjusted numbers, Basel Ill numbers and FX rates
Slide 14: Wealth Management Americas
Wealth Management Americas Improved NNM and net margin Net new money Annualized growth rate (0.3%) (1.0%) (7) = Excluding withdrawals associated with seasonal income tax payments USD billion GOOOQOOGOO@Q Invested a19 970 987 1,017 1,016 1,032 1,050 1.045 992 assets . USD billion . Loans USD billion
Slide 15: Wealth Management Americas
Wealth Management Americas Industry-leading productivity per advisor for revenue and invested assets Invested assets and FA productivity Net interest income and lending i Annualized revenue per FA (USD thousand) iP Net interest income (USD million) 4b Invested assets per FA (USD million) © Credit lo
Slide 16: Retail & Corporate
Retail & Corporate PBT CHF 428 million, all KPIs within target range and best first nine month PBT since 2010 Operating income Operating expenses Profit before tax Ci ratio a UBS Adjusted numbers unless otherwise indicated, refer to slide 40 for details about adjusted numbers, Basel Ill numbers and
Slide 17: Asset Management
Asset Management PBT CHF 137 million, strong net management fees Operating income Operating expenses Profit before tax Ci ratio Net new money ex. MM 502 476 482 45, 465 489 497 511 1) Performance fees I Net management fees 317 339 325 357 338 373 35, 342 365 ta 118 gos 111 123 Gq, 110119 6 69 % 61 9
Slide 18: Investment Bank
Investment Bank PBT CHF 614 million, strong performance in all areas Operating income’ Operating expenses Profit before tax Ci ratio UB 2,657 2,200 2,225 soy 2.344 1,969 1,919 | 779 | 55) 7,088 : 3 721 0 acs 402 W445 314 [1.0208 ges | 90 1,156 911,128) 944 — Corporate Client Solutions [Bl Investor C
Slide 19: Investment Bank
Investment Bank Continued efficient and disciplined resource utilization driving strong returns Return on RWA Revenue per unit of VaR CHE billion, % CHE million 218 16% 16% 201 am 13% qq, 12% 4% 14% 12% 12% 15% 13% 181 154 160 163 172 182 452 152 15 1 14 69 68 gy 6s «3 68 g2 67 64 63 68 oo 1 Bon 4 8
Slide 20: Corporate Center
Corporate Center Non-core and Legacy Portfolio LRD! now ~20% of 4Q12 balance 3Q14 4Q14 1Q15 2Q15 3Q15 Profit before tax (1,164) (1.174) Corporate Center total (CHF million) . Corporate Center results by unit (CHF million) Services Operating income 9 ® (4) (41) (38) « Operating expenses before alloca
Slide 21: Corporate Center cost reductions
Corporate Center cost reductions ~CHF 1.0 billion net cost reductions based on September 2015 annualized exit rate Cumulative annualized net cost reduction’? CHE billion CHF 1.4 billion CHF 1.4 billion CHF 1.0 billion (71%) achieved of CHF 0.9 billion (64%) achieved CHF 1.4 billion your-caaRaract of
Slide 22: Net tax benefit and deferred tax assets
20 Net tax benefit and deferred tax assets 3Q15 included net additional recognized deferred tax assets of CHF 1,513 million 3Q15 net tax benefit of CHF 1,295 million Tax loss DTAs?:2:3.4 CHF million CHF billion, 30.9.15 Profit before tax (as reported) 788 _ Unrecognized I Recognized Net deferred tax
Slide 23: Capital and leverage ratios
Capital and leverage ratios Achieved 5.0% Swiss SRB leverage ratio Basel III CET1 capital ratio Swiss SRB, fully applied, CHF billion Leverage ratio Fully applied, CHF billion 13.7% 14.4% 14.3% 1Q15 2Q15 3Q15 cert 296 30.3 30.9 capital RWA 216-210-216 a UB Refer to slide 40 for details about adjuste
Slide 24: Capital requirements under revised Swiss TBTF proposal
22 Capital requirements under revised Swiss TBTF proposal Effective end-2019, with a four-year transitional period starting 1.1.16 Gone concern 14.3% ~ Going concern 3% UBS wx) Gone concern capital (TLAC) 5.7% © Overall requirement mirrors the going concern requirement Libject toa potenti * To be me
Slide 25: Capital requirements under revised Swiss TBTF proposal
Capital requirements under revised Swiss TBTF proposal We will be compliant from the inception of the new requirements UBS leverage capital ratio balances vs. revised TBTF proposal Meeting the 2019 requirements UBS position as of 30.9.15' Phase-i leverage ratio requirements? oncern (TLAC) Gone conce
Slide 26: RoTE — implications of revised TBTF proposal
24 RoTE — implications of revised TBTF proposal RoTE impact of ~3% from carrying additional CET1 and loss-absorbing capital RoTE impact of revised TBTF (fully applied) Adjusted RoTE, illustrative RoTE impact of new TBTF regulation 15% © Denominator: additional tangible equity as more CET1 is require
Slide 27: Impact of regulation on RWA
Impact of regulation on RWA Our usable RWA are unchanged, but the calibration of regulatory metrics is moving Group RWA of which: Investment Bank RWA Basel II/ fully applied RWA, CHF billion Basel I!| fully applied RWA, CHF billion -30 ~250 ~20 <200 15 ~85 Previous Operational Regulatory — Short to.
Slide 28: Updated capital and key performance metrics
Updated capital and key performance metrics Basel II] CET1 ratio (rully applied, %) RWA (Fully applied, CHF billion) BIS LRD (Fully applied, CHF billion) 991 9a9 936 © ~950 14.3% 13.49 « 12.8% % >13% 25 216 ©0216 «= 280 E Short to Short to 4Q13 4Q14-3Q15,, Snore 1Q15 | 2Q15-3Q15 Se em ‘expectation 4
Slide 29: Executing our strategy ...
Executing our strategy ... What we have delivered Management priorities Y Execution of the Deliver transformation of UBS our performance targets Made substantial progress WA in reducing costs and achieving operational efficiency Improve effectiveness and efficiency Solidified position WA as the worl
Slide 30: Appendix
28 Appendix UBS
Slide 31: Group and business division targets and expectations
Group and business division targets and expectations Ranges for sustainable performance over the cycle! Net new money growth rate 35% WS MOUSGUGIE Adiusted cost/income ratio 55-65% ; ; 10-15% annual adjusted pre-tax profit growth for combined businesses through the cycle Wealth Management Net new mo
Slide 32: IFRS equity attributable to UBS Group AG shareholders
30 IFRS equity attributable to UBS Group AG shareholders Equity attributable to UBS Group AG shareholders CHF 54.1 billion QoQ movement CHF million, except per share figures in CHF 30.6.15 30.9.15 Total book value per share: 13.71 +5.1% 14.41 Tangible book value per share: 12.04 12.69 1,199 844 61 4
Slide 33: Swiss SRB Basel III capital and ratios
Swiss SRB Basel Ill capital and ratios 5Q15 fully applied Basel III CET1 capital ratio 14.3% Fully applied Phase-in 25.9% 25.0% 20.6% 21.2% 22.0% 2 Low-trigger ATI Low-trigger {014% | 12 High-trigger Ratio AT1 High-trigger cen 1Q15 2Q15 3Q15 CHF billion Other! Low-trigger Deductions? Total AT1 Total
Slide 34: Swiss SRB leverage ratio
Swiss SRB leverage ratio 5Q15 fully applied Swiss SRB leverage ratio 5.0% Fully applied Phase-in 5.6% 5.0% y 4.7% F 4.6% 1.1% 12 Low-trigger AT1 Low-trigger 1.2% [ied att 12 High-trigger Ratio AT1 High-trigger cen cen CHF billion T Hig! Total T2 2 Leas shseettng capital 29 18 1.9 CHF 14.8 billion ig
Slide 35: Breakdown of changes in RWA
Breakdown of changes in RWA By type By business division CHF billion CHF billion 30.6.15 30.6.15 Re ry add-ons, meth ry driven ct Investment Bank © CHF 1.1 billion increase in credit risk RWA due to the higher © CHF 3.8 billion increase in market risk RWA due to an increase in internal ratings-based
Slide 36: Breakdown of changes in Swiss SRB LRD
34 Breakdown of changes in Swiss SRB LRD By CHF billion, fully applied, three month average By business division CHF billion, fully applied, three month average 22 (20) 30.6.15 Currency effects? + CHF 23 billion increase in total on-balance sheet assets * CHF 4 billion decrease in LRD netting of der
Slide 37: Breakdown of changes in BIS LRD
Breakdown of changes in BIS LRD By pe CHF billion, fully applied, spot By business division CHF billion, fully applied, spot 30.6.15 Currency effects" + CHF 14 billion increase in on-balance sheet assets excluding derivatives and securities financing 26 * CHF 6 billion increase in derivative exposur
Slide 38: Corporate Center — Non-core and Legacy Portfolio
36 Corporate Center — Non-core and Legacy Portfolio Non-core and Legacy Portfolio Swiss SRB LRD down CHF 12 billion in the quarter RWA reduced by ~70% since 4Q12 ~65% of residual LRD in Rates products’ CHE billion CHF billion, Swiss SRB LRD (average, fully applied), 30.9.15 103 Operational risk ” Ra
Slide 39: Retained funding cost
Retained funding cost We continue to expect retained funding costs to decline in the mid term Treasury income retained in Corporate Center - Group ALM CHF million 2015 3Q15 Gross results (excluding accounting asymmetry and other adjustments) 161 150 Allocations to business divisions (191) (207) Net
Slide 40: Corporate Center cost reductions
38 Corporate Center cost reductions ~CHF 1.0 billion net cost reduction as per September 2015 exit rate Services & 79 Group ALM Temporary MUOZEH Nomatzaton regulatory demand? 0.2 O-D (0.1) (0.3) inc. seasonality (0.1) Al (0.1) 01 7A Residual ‘operating expenses | yy 75 FVIZ. Netcot FX VAA—Netcost_ «
Slide 41: Regional performance — 3Q15
Regional performance — 3Q15! CHF billion Americas Asia Pacific EMEA? Switzerland Global? Total 2Q15 3Q15 2015 «93915 «42015 43Q15 2015 3Q15 2015 39015 2Q15 3Q15 wm. a 0.1 0.6 0.5 0.9 09 0.4 04 0.0 0.0 2.0 1.9 wMa 18 19 ~ = = > - : 2 = 18 19 R&C : : - - : : 1.0 1.0 : - 1.0 1.0 AM 0.2 0.2 on O14 0.1 0
Slide 42: Adjusted results
40 Adjusted results Adjusting items 1013 2013 3013 4013 1014 2014 3014 4014 1015 2015-3015 CHE milion ‘Operating income as reported (Group) 7,775 7,389 6,261 6307 7,258 7,147 6876 6,746 8,841 7,818 7,170 Of which: Gain on sale of a subsidiary Wealth Management iat Gain on sale of the Belgian domesti
Slide 43: 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
Slide 44: UBS Third Quarter 2015 Earnings Call Remarks
UBS Third Quarter 2015 Earnings Call Remarks November 3, 2015 Sergio P. Ermotti (Group CEO): Opening remarks SLIDE 2 – 3Q15 highlights - Group Thank you, Caroline. Good morning everyone. For the quarter, we reported a net profit attributable to UBS shareholders of 2.1 billion francs, which included
Slide 45: Speaker notes: capital and business divisions
We remain the best capitalized large global bank, with a Basel 3 fully applied CET1 ratio of 14.3%. Our fully applied Swiss SRB leverage ratio increased to 5% and our BIS fully applied leverage ratio increased to 3.9%. Achieving a 5% leverage ratio under the current rules equates broadly to the requ
Slide 46: Speaker notes: wealth management and retail
the impacts of the severe market volatility. At UBS, wealth management is not just a business that we are in; it's part of our DNA. As the only truly global wealth manager in the world, we are benefitting from the strong long-term fundamentals of this business and will seek opportunities and continu
Slide 47: Speaker notes: capital and key performance metrics
SLIDE 4 - Updated capital and key performance metrics The Swiss Federal Council recently proposed stricter capital rules for global systemically important banks, making the Swiss regime by far the most demanding in the world on a relative basis. Tom will take you through the details of the proposals
Slide 48: Speaker notes: LRD and capital allocation
The Group's LRD is likely to trend around 950 billion, providing modest additional capacity for our businesses. This may seem like a counter-intuitive reaction to higher leverage requirements, but as the rules are now more clearly defined. So this is now simply reflecting those and other minor adjus
Slide 49: Speaker notes: walk-through of the quarter
Tom Naratil (Group CFO & Group COO): Walk-through of the quarter SLIDE 5 – UBS Group AG results (consolidated) As usual, my commentary will reference adjusted results unless otherwise stated. This quarter, we excluded an own credit gain of 32 million Swiss francs, a gain of 81 million related to our
Slide 50: Speaker notes: Wealth Management
The cost/income ratio was 64%, within our target range of 55 to 65%. Slide 8 - Wealth Management We're pleased with the quality of the net new money we've delivered so far this year. Internally, we measure our performance using return-adjusted net new money. On this measure, we've seen an improving
Slide 51: Speaker notes: Wealth Management Americas
deposit balances. Operating expenses decreased by 4%, mainly due to lower net charges for provisions for litigation, regulatory and other matters, as well as lower legal fees. Slide 11 - Wealth Management Americas Net new money was half a billion dollars, driven by inflows from advisors who've been
Slide 52: Speaker notes: Retail & Corporate
Slide 13 - Retail & Corporate Retail and Corporate delivered another strong quarter with profit before tax up 3% to 428 million, and all KPIs within their target ranges. Year-to-date, the business has delivered 1.3 billion in profit before tax, the highest since 2010. Operating income increased 1%,
Slide 53: Speaker notes: Asset Management
Slide 14 - Asset Management In Asset Management, operating income increased by 5% to 502 million, on higher net management fees, with increases in traditional investments and Global Real Estate. Performance fees increased slightly to 23 million, as investment performance continued to be subdued in O
Slide 54: Speaker notes: Investment Bank
Corporate Client Solutions revenues declined by 4%, as strong performances from DCM and ECM were more than offset by lower revenues from Financing Solutions, Advisory and Risk Management. We performed better than the market fee pool across our capital markets businesses. Operating expenses decreased
Slide 55: Speaker notes: Corporate Center
Operating income of negative 126 million included valuation losses of 20 million, and higher losses, primarily in rates, from ongoing novation and unwind activity in addition to re-hedging costs. Operating expenses increased by 510 million, as net charges for provisions for litigation, regulatory an
Slide 56: Speaker notes: deferred tax assets and leverage
As a reminder, the recognition of tax loss DTAs does not immediately affect fully applied CET1 capital, since higher tax loss DTA recognition in the P&L is offset by an equivalent deduction in the capital account. However, the utilization of tax losses against taxable income over time, leads to redu
Slide 57: Speaker notes: TBTF gone concern requirement
The gone concern requirement mirrors the going concern requirement, at 5% of LRD and 14.3% of RWA, which is to be met with bail-in eligible instruments. This amount may be reduced by up to 2% of LRD and 5.7% of RWA, depending on a bank's progress in implementing measures to improve its resilience an
Slide 58: Speaker notes: TLAC and RoTE implications
this maturing UBS AG debt. We expect to absorb the TLAC requirements without the need to increase the overall funding for the Group. Slide 23 - ROTE – implications of revised TBTF proposal We estimate the new proposals to have a combined ROTE drag of approximately 270 basis points, reflecting higher
Slide 59: Speaker notes: LRD and RWA mix
Our expected LRD and RWA mix among our business divisions remains the same, and the Investment Bank is expected to have RWA of around 85 billion and LRD around 325 billion in the short to medium term. As for the Non-core and Legacy Portfolio, since its inception, we've reduced LRD by around 80% and
Slide 60: Closing remarks: executing our strategy
Sergio P. Ermotti (Group CEO): Closing remarks SLIDE 26 – Executing our strategy… Thank you Tom The strategic change we initiated 4 years ago was driven by our desire to focus on our strength and by expectations of more demanding regulation. So having completed our transformation we have the right b
Slide 61: Closing remarks
Back to our results. We reported another set of solid numbers, which once again demonstrated strong risk control and discipline. For the past four years, we have demonstrated that our business model works for our clients and investors, and we will continue with the same determination to execute our
Slide 62: 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 str
Slide 63: Disclaimer
Disclaimer: This presentation and the information contained herein are provided solely for information purposes, and are not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No inve
Slide 64: Form 6-K incorporation by reference
This Form 6-K is hereby incorporated by reference into each of (1) the registration statement of UBS AG on Form F-3 (Registration Number 333-204908) and (2) the registration statements of UBS Group AG on Form S-8 (Registration Numbers 333- 200634; 333-200635; 333-200641; and 333-200665), and into ea
Slide 65: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UBS Group AG By: _/s/ David Kelly______________ Name: David Kelly Title: Managing Director By: _/s/ Sar