Slide 1: Third quarter 2013 results
Third quarter 2013 results October 29, 2013
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: Successfully executing our strategy
Successfully executing our strategy Capital strength is the foundation of our success Basel III CET1 ratio Basel III RWA Balance sheet (fully applied) (fully applied) (IFRS) (318) 11.9% 11.5% ~301 <250 1,367 ~9.3% 219 1,049 (CHF billion) (CHF billion) 481 307 +260 bps (27%) 886 742 30.9.12 30.9.13 2
Slide 4: Increased profits and well diversified business mix
Increased profits and well diversified business mix WM / WMA combined Retail & Corporate NNM Pre-tax profit Pre-tax profit (adjusted) (adjusted) 36.4 43.3 2,574 391 395 395 390 417 (CHF million) (CHF million) 2,106 362 362 (CHF billion) +22% 9M12 9M13 9M12 9M13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Lar
Slide 5: 3Q13 results
3Q13 results Group • Profit before tax (PBT) CHF 356 million, adjusted PBT CHF 484 million - Including provisions for litigation, regulatory and similar matters of CHF 586 million • Net profit attributable to UBS shareholders CHF 577 million, diluted EPS CHF 0.15, RoE 4.9%1 - Tax benefit of CHF 222
Slide 6: Group results
Group results1 (CHF million, except where indicated) 3Q12 2Q13 3Q13 Total operating income 6,290 7,389 6,261 Total operating expenses2 8,816 6,369 5,906 Profit before tax as reported (2,526) 1,020 356 Own credit gain / (loss) (863) 138 (147) Gains on sales of real estate 1 19 207 3 Net restructuring
Slide 7: Wealth Management
Wealth Management Resilient recurring income in a seasonally slow quarter Operating income and profit before tax Operating income (6%) Transaction-related income decreased 18% to CHF 423 million on lower client activity across all 1,953 1,789 1,837 regions, particularly in Asia Pacific Resilient
Slide 8: Wealth Management—by business area
Wealth Management—by business area1 Europe Asia Pacific Switzerland Emerging Markets o/w UHNW 15.4 Net new money growth rate 11.2 11.2 11.3 11.8 (%) 9.3 9.5 8.3 8.3 8.1 6.7 5.5 5.7 6.4 5.2 4.6 2.4 3.1 2.1 1.8 0.7 1.3 0.1 (1.1) Gross margin (5.5) (bps) 102 98 98 96 92 91 92 95 95 88 85 89 90 86 89 90
Slide 9: Wealth Management—Gross margin trends
Wealth Management—Gross margin trends Gross margin at 85 bps on lower transaction-related income 1,926 1,952 1,837 1,789 1,747 Income (CHF million) Wealth 89 85 91 90 85 Gross margin (bps) Management Recurring income share1 75% 76% 71% 74% 77% 3Q12 4Q12 1Q13 2Q13 3Q13 Invested assets (CHF billion) 8
Slide 10: Wealth Management Americas (USD)
Wealth Management Americas (USD) Strong underlying performance, record recurring income Operating income and profit before tax1 Operating income (2%) Recurring income increased 5%, offset by lower 1,780 1,748 transaction-based fees on lower client activity 1,565 USD 20 million trading loss and a
Slide 11: Investment Bank
Investment Bank 17% adjusted RoaE1, adjusted pre-tax profit of CHF 335 million Operating income and profit before tax 2,250 Operating income down 24% 1,833 Lower revenues in a seasonally slow quarter, both 1,707 market fee pool and client activity declined (CHF million) 775 806 16% increase YoY
Slide 12: Corporate Client Solutions (CCS)
Corporate Client Solutions (CCS) Advisor on the largest global M&A transaction in the last decade Operating income Comparison in USD terms (3Q13 vs. 2Q13) CHF USD Advisory (28%) Lower revenues due to reduced participation (35%) (33%) in private transactions and a declining market 816 fee pool 771
Slide 13: Investor Client Services (ICS)
Investor Client Services (ICS) Best third quarter for Equities since 2010 Operating income Comparison in USD terms (3Q13 vs. 2Q13) CHF USD Equities (18%) (19%) (16%) #1 globally1, lower cash revenues on reduced market activity 1,475 1,560 Good performance in derivatives on 1,307 1,142 362 1,202
Slide 14: Global Asset Management
Global Asset Management Adjusted 9M13 pre-tax profit up 16% YoY Operating income and profit before tax Operating income (9%) Net management fees decreased 7% mainly on 468 489 changes in the asset mix and lower average 447 invested assets Increased performance fees in O'Connor more than offset b
Slide 15: Retail & Corporate
Retail & Corporate Highest adjusted pre-tax profit since 3Q10 Operating income and profit before tax Slight increase in operating income CHF 16 million gain from the partial divestment of 932 948 958 a participation A release from collective loan loss allowances more than offsetting net new cred
Slide 16: Retail & Corporate: growth in usage of e-channels
Retail & Corporate1 Rapid growth in usage of our award winning e-channels E-Banking Mobile Banking UBS E-Banking clients UBS Mobile Banking clients Rating of UBS app2 in App Store™,3 1,238 1,278 135 1,150 124 127 108 113 117 120 85% 101 90 93 13% 1% (thousand) (thousand) +11% 42 ~+5% per month 0% 0%
Slide 17: Corporate Center—Core Functions
Corporate Center—Core Functions Adjusted pre-tax loss of CHF 540 million Operating income and profit before tax1 Adjusted operating income negative (CHF million) 3Q12 2Q13 3Q13 CHF 257 million mainly due to Operating income (as reported) (702) (5) (197) Treasury income Own credit gain / (loss) (863)
Slide 18: Corporate Center—Non-core and Legacy Portfolio
Corporate Center—Non-core and Legacy Portfolio Decreased losses on lower litigation provisions Operating income and profit before tax (CHF million) 3Q12 2Q13 3Q13 Adjusted operating income Non-core 363 (57) (120) negative CHF 100 million of which: Debit valuation adjustments (69) (21) (47) Non-cor
Slide 19: Corporate Center—Non-core
Corporate Center—Non-core1 Continued reduction in balance sheet and RWA RWA Funded assets4 down 31%, mainly due to trade unwinds and ongoing exit of cash positions 64.5 PRV down 14%, mainly due to a combination of 10.4 unwinds, 3rd party novations and trade compressions 47.6 Cash positions RWA
Slide 20: Corporate Center—Legacy Portfolio
Corporate Center—Legacy Portfolio1 Exercise of SNB StabFund option will add de minimis RWA RWA Funded assets4 reduced to CHF 16.4 billion with decreases in most categories 38.0 PRV decreased to CHF 13.5 billion, mainly due to a 3.8 combination of unwinds and yield curve movements 30.0 29.9 RWA
Slide 21: Adjusted operating expenses and headcount
Adjusted operating expenses and headcount Run-rate cost reductions of CHF 2.2 billion achieved Adjusted operating expenses 2.0 0.5 0.4 (2.2) (CHF billion) 23.3 Personnel variable CHF (1.3) billion 24.0 Salaries and other personnel CHF (1.0) billion Other costs CHF 0.1 billion 1H11 Cost FX movements
Slide 22: Breakdown of changes in Group RWA (fully applied)
Breakdown of changes in Group RWA (fully applied) 1 (4) • ~CHF 0.6 billion increase from • CHF 9 billion lower OTC derivatives risks not in VaR recalibration RWA (counterparty credit risk / CVA • ~CHF 0.6 billion increase from charge) through hedging, trade (18) 239 compressions and reduced exposure
Slide 23: RWA reduction (fully applied, pro-forma)
RWA reduction (fully applied, pro-forma) 45% reduction SNB StabFund1 Legacy Portfolio (until 4Q12) Non-core (from 1Q13) and Legacy Portfolio Investment Bank ~400 ~21 WM / WMA / R&C / Global AM / Corporate Center – Core Functions Operational risk add-on (effective 1 October 2013), ~80 to be reviewed
Slide 24: Basel III capital (pro-forma)
Basel III capital (pro-forma) BIS Basel III (phase-in1) BIS Basel III (fully applied1) Low-trigger loss absorbing capital 4Q13 operational risk RWA add-on High-trigger loss absorbing capital3 and SNB StabFund option exercise2 Common equity 17.5% 16.6% ~15.3% 16.2% ~13.6% 13.0% 11.2% 11.9% 11.6% 11.5
Slide 25: Leverage ratio
Leverage ratio Swiss SRB Basel III leverage ratio (phase-in) 4.2% at quarter-end Swiss SRB Basel III leverage ratio Phase-in Swiss SRB leverage ratio (30.9.13) 4.4% Total capital (Phase-in CET1 + loss absorbing capital) CHF 44.2 billion 4.2% 3.9% = = 4.2% 3.8% Total exposure CHF 1,063 billion ~3.6%1
Slide 26: UBS—An unrivaled franchise with compelling growth prospects
UBS—An unrivaled franchise with compelling growth prospects Wealth management businesses Retail & Corporate • Largest and fastest growing large-scale wealth manager in the • Leading universal bank in Switzerland with strong momentum world1; leading HNW and UHNW franchise with unrivaled • "Best bank
Slide 27: Appendix
Appendix 3k UBS
Slide 28: Wealth Management Americas—Lending balances
Wealth Management Americas—Lending balances1 Net interest income2 Credit loss (expense) / recovery (USD million) (USD million) 258 221 228 229 231 215 214 213 212 (1) (5) 0 (1) 2 (16) 0 0 (21) 36.8 37.6 34.1 34.5 31.2 32.3 5.2 5.9 28.9 29.7 29.8 3.8 4.4 2.8 3.3 3.6 3.2 1.8 2.0 2.4 3.6 3.6 3.4 1.1 1.
Slide 29: Leverage ratios (phase-in)
Leverage ratios (phase-in) Our leverage ratios should improve materially as we reduce our balance sheet Simple leverage ratio1 3Q13 pro-forma FINMA leverage ratio (until 4Q12)2 (incl. SNB StabFund exercise) Swiss SRB3 Basel III leverage ratio, phase-in (from 1Q13) 6.3% Funded assets4 6.1% 6.4% 6.4%
Slide 30: Our balance sheet, funding and liquidity positions are strong
Our balance sheet, funding and liquidity positions are strong Our balance sheet structure has many characteristics of a AA-rated bank Funding by product1 Strong and significantly reduced balance sheet Due to banks – Funded assets2 down >50% from peak in 2007 Short-term debt issued – Phase-in Swiss
Slide 31: Changes in funded assets
Changes in funded assets1 (5) (1) 2 0 (10) (8) (0) 765 (2) (CHF billion) 742 30.6.13 Non-core Legacy Core IB WM WMA R&C Global 30.9.13 Portfolio Functions AM Corporate Center FX movements contributed approximately CHF 16 billion to the decrease in funded assets1, primarily from USD depreciation ag
Slide 32: Balance sheet
Balance sheet Total assets CHF 1,049 billion or CHF 742 billion excluding PRV and OTC margin 30.9.13 316 4 to be exited 246 232 225 68 21 6 312 196 211 (CHF billion) 172 31 18 14 1 10 16 Investment Other Corporate Center Corporate Center Corporate Center Bank business divisions Core Functions Non-co
Slide 33: Deferred tax assets on net operating losses
Deferred tax assets on net operating losses The potential to recognize additional deferred tax assets remains significant as of 30.9.13 Unrecognized potential DTAs on NOLs1,2 Recognized DTAs on NOLs1 22.9 17.8 (CHF billion) 2.1 3.9 0.7 5.7 1.7 2.2 0.1 US Switzerland UK RoW Total Unrecognized poten
Slide 34: Tax benefit
Tax benefit 3Q13 net tax benefit of CHF 222 million Pre-tax profit (as reported) CHF 356 million Net deferred tax benefit with respect to recognition of DTAs CHF (384 million) Amortization of deferred tax assets previously recognized CHF 125 million in relation to Swiss tax losses carried forward Ot
Slide 35: Important information related to numbers shown in this presentation
Important information related to numbers shown in this presentation Use of adjusted numbers Unless otherwise indicated, “adjusted” figures exclude each of the following items, to the extent applicable, on a Group and business division level: – Own credit loss on financial liabilities designated at f