Ubs Group Ag · SIX:UBSG
Ubs — Debt Investor Presentation (March 2017)
43 slides from Ubs's debt investor presentation, Mar 10, 2017
Slide 1: Fourth quarter 2016 results
Fourth quarter 2016 results Fixed income investor presentation March 10, 2017
Slide 2: 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 transactions and strategic in
Slide 3: 4Q16 results
4Q16 results Adjusted profit before tax CHF 1.0 billion, up 33% YoY Group Net profit attributable to shareholders CHF 636 million, diluted EPS CHF 0.17 Reported profit before tax (PBT) CHF 746 million, adjusted PBT CHF 1,003 million 7.3% annualized adjusted return on tangible equity Fully applied CE
Slide 4: 2016 results
2016 results Solid performance driven by balanced business mix and disciplined resource management Solid financial performance Adjusted profit before tax CHF 5.3 billion Adjusted return on tangible equity 9.0%, 11.1% excluding DTA impact1 Net profit attributable to shareholders CHF 3.2 billion
Slide 5: UBS Group AG results (consolidated)
UBS Group AG results (consolidated) CHF million, except where indicated FY15 FY16 4Q15 3Q16 4Q16 Total operating income 30,605 28,320 6,775 7,029 7,055 Total operating expenses 25,116 24,230 6,541 6,152 6,308 Profit before tax as reported 5,489 4,090 234 877 746 of which: net restructuring expenses
Slide 6: Wealth Management
Wealth Management 9% YoY decrease in costs, offsetting revenue headwinds Operating income CHF 1,782 million Operating 2,004 2,106 2,024 1,943 1,897 1,885 1,817 1,809 1,782 Transaction-based income down YoY as 4Q15 income 436 589 459 366 364 402 347 334 314 included a CHF 45 million fee received fo
Slide 7: Wealth Management
Wealth Management Invested assets up CHF 10 billion QoQ, NNM driven by cross-border outflows 6.5% Net new 5.8% 4.0% NNM outflows CHF 4.1 billion driven by money1 3.5% 2.6% CHF 7.4 billion of cross-border outflows, mainly in 1.2% 1.5% Annualized emerging markets and APAC growth rate Full-year NNM
Slide 8: Wealth Management
Wealth Management Net new money outflows driven by emerging markets Europe Asia Pacific Switzerland Emerging markets of which: UHNW Net new 12.9% 10.5% money 10.2% 7.5% 6.3% 5.1% 4.6% 2.8% 2.1% 2.5% 1.8% 3.8% 5.2% Annualized 0.1% 0.5% 1.8% 1.8% 1.9% growth rate (0.6%) (0.8%) (0.3%) (2.4%) (6.1%) (9.
Slide 9: Wealth Management Americas
Wealth Management Americas Strong results, PBT USD 358 million with 9% YoY revenue growth to record levels Operating income USD 2,049 million Operating 1,924 1,901 1,947 1,931 1,874 1,899 1,924 1,988 2,049 369 372 372 Transaction-based income down slightly YoY income 448 432 425 381 376 361 280 27
Slide 10: Wealth Management Americas
Wealth Management Americas Net margin 13 bps and invested assets USD 1.1 trillion 6.8% Net new 5.3% NNM outflows USD 1.3 billion as net inflows from money financial advisors employed with UBS for more than one 2.2% 1.9% ~2.1% ~1.2% year were more than offset by net outflows from net Annualized 0.2
Slide 11: Wealth Management Americas
Wealth Management Americas Industry-leading revenue and invested assets per advisor Invested assets and FA productivity Net interest income and lending Annualized revenue per FA (USD thousand) Net interest income (USD million) Invested assets per FA (USD million) Credit loss (expense)/recovery (USD
Slide 12: Wealth Management Americas
Wealth Management Americas Record full-year PBT with strong underlying trends Operating income Profit before tax USD million USD million +4% CAGR +8% CAGR1 7,606 7,653 7,861 1,2082 1,2302 1,3462 7,075 1,0272 of which: +8% 6,010 6,364 991 1,030 1,250 recurring 5,122 5,733 CAGR 874 income 2013 2014 20
Slide 13: Personal & Corporate Banking
Personal & Corporate Banking PBT CHF 395 million, solid 4Q despite persistent headwinds from negative interest rates 913 979 983 974 Operating income CHF 941 million Operating 952 964 9151 963 941 income 273 284 241 238 196 244 254 274 256 Transaction-based income up YoY mainly as 4Q15 included a
Slide 14: Personal & Corporate Banking
Personal & Corporate Banking Best full-year PBT since 2008, with record net new client acquisition Operating income Operating expenses Profit before tax CHF million CHF million CHF million +1% CAGR (2%) CAGR +5% CAGR 3,756 3,741 3,811 3,861 2,244 2,171 2,130 2,107 1,681 1,754 1,512 1,570 2013 2014 2
Slide 15: Asset Management
Asset Management PBT CHF 156 million, up 3% YoY excluding Alternative Fund Services (AFS) Operating 497 511 476 502 512 468 483 481 499 Operating income CHF 499 million 34 68 20 23 44 23 24 44 31 income Performance fees down YoY mainly in Equities, Multi Asset & O'Connor CHF million 463 443 456 47
Slide 16: Investment Bank
Investment Bank PBT up 54% YoY with highest 4Q revenues since 2012, driven by CCS and Equities 2,657 Operating income CHF 1,936 million Operating 2,344 2,088 CCS revenues up 9% YoY with the increase mainly in income 1,919 779 1,721 1,879 2,000 1,796 1,936 822 DCM, and to a lesser extent Advisory a
Slide 17: Investment Bank
Investment Bank Effective resource management to absorb headwinds and drive returns RWA Fully applied, CHF billion RWA increase primarily Of which: CHF 2.4 billion Of which: CHF 3.5 billion increase related to revised driven by regulatory increase in market risk RWA operational risk RWA from low l
Slide 18: Cost reduction
Cost reduction Achieved CHF 1.6 billion net cost reductions despite higher permanent regulatory expenses Cost base and net cost reductions CHF billion Corporate Center Corporate Center and CHF 1.6 billion net cost reductions achieved within scope of the business divisions within based on Dec-16 annu
Slide 19: Going concern capital and leverage ratios
Going concern capital and leverage ratios 13.8% fully applied CET1 ratio and 3.53% fully applied CET1 leverage ratio Capital ratio1,2 Leverage ratio2 Fully applied, CHF billion CHF billion AT1 Phase-in3 Fully applied, rules as of 1.1.20 CET1 (AT1 + T2) AT1 1.1.20 Going concern requirement (CET1 + AT
Slide 20: Robust liquidity profile and stable funding
Robust liquidity profile and stable funding Liquidity coverage ratio (LCR)1 Pro-forma net stable funding ratio (NSFR) (CHF billion) Average 4Q16 (CHF billion) 31.12.16 High-quality liquid assets2 196 Available stable funding (ASF) 442 Net cash outflows 148 Required stable funding (RSF) 381 LCR 132%
Slide 21: Capital requirements under Swiss SRB
Capital requirements under Swiss SRB UBS leverage ratio balances vs. Swiss SRB requirements Leverage ratio1 Requirements Meeting 1.1.20 requirements TLAC-eligible debt • 2.09% (CHF 18.2 billion) existing UBS Group AG TLAC bonds3 • 3.04% (CHF 26.4 billion) long-term debt not counted in total 3.04% lo
Slide 22: Long-term debt – contractual maturity profile
Long-term debt – contractual maturity profile Amount of long-term debt maturing by period of maturity CHF billion, 31.12.16 11.2 10.5 9.5 0.8 0.4 0.8 7.8 2.0 0.8 7.2 6.7 6.4 5.8 4.0 5.4 0.8 1.0 0.5 0.7 3.6 1.1 2.4 0.5 8.7 1.2 1.6 2.5 8.0 7.8 6.4 2.8 0.8 1.0 0.3 3.9 4.6 4.1 0.9 3.4 2.1 2.5 1.5 1.0 20
Slide 23: The legal structure of UBS Group
The legal structure of UBS Group The chart below provides an overview of certain significant subsidiaries During the fourth quarter we merged UBS of UBS Group AG and UBS AG as of 31 December 2016. The subsidiaries Deutschland AG and our Wealth Management within the UBS Group AG (consolidated) an
Slide 24: Debt and capital instrument issuance
Debt and capital instrument issuance Status quo To date, UBS Group AG has been the issuer of all UBS additional tier 1 UBS Group AG AT1 (AT1) capital instruments and UBS Group Funding (Jersey) Ltd. has been the issuer of all UBS's total loss-absorbing capacity (TLAC) eligible senior unsecured debt
Slide 25: Funding model
Funding model UBS Group AG is the holding company meeting Single AT1 Point of Entry requirements and allows for the issuance UBS Group of total loss-absorbing capacity (TLAC) eligible senior UBS Group AG Funding (Switzerland) AG1 unsecured debt and all capital instruments TLAC UBS Group Funding
Slide 26: Overview of resolution strategy (FINMA)
Overview of resolution strategy (FINMA) Switzerland's preferred resolution strategy for its big banks is a FINMA-led recapitalization of the failing entity through the parent company, that is, a so-called a single point of entry bail-in of creditors PONV1 Post-resolution Resolution Liquidation Rebui
Slide 27: Write down trigger levels
Write down trigger levels Loss Absorption along the CET1 / RWA ratio Common equity Tier 1 10%1 Write-down Trigger DCCP GEB Article 48 BIO-FINMA provides Common equity Tier 1 guidance with respect to bail-in-able debt: i. sufficient debt needs to be converted 7%1 Write-down Trigger High-trigger AT1 c
Slide 28: Substantial capital cushion to a 7% trigger threshold
Substantial capital cushion to a 7% trigger threshold Swiss SRB Basel III phase in CET1 Capital Ratio Swiss SRB Basel III phase-in CET1 capital 19.4% 19.0% 18.4% 16.8% 15.3% 27.4bn 25.7bn 26.2bn 22.1bn 21.7bn 7.0% threshold 31.12.12 31.12.13 31.12.14 31.12.15 31.12.16 Reported Swiss SRB Basel III –
Slide 29: Appendix
Appendix st UBS
Slide 30: Our performance targets, expectations and ambitions
Our performance targets, expectations and ambitions Objectives for sustainable business performance over the cycle Net new money growth rate 3-5% Wealth Management Adjusted cost/income ratio 55-65% 10-15% annual adjusted pre-tax profit growth for combined businesses over the cycle Wealth Management
Slide 31: Corporate Center
Corporate Center Profit before tax Corporate Center total (CHF million) Corporate Center results by unit (CHF million) Services Operating income (54) (55) (42) (66) (59) Services operating expenses before Operating expenses 272 156 170 148 216 allocations decreased YoY due to our cost reduction pr
Slide 32: Group ALM operating income
Group ALM operating income Business division-aligned risk management includes managing the interest rate risk in the banking book on behalf of Wealth 1 Management and Personal & 2 Corporate Banking and high-quality 3 liquid asset (HQLA) portfolios on behalf of specific business divisions Capital inv
Slide 33: Equity attribution framework
Equity attribution framework Revised framework reflects evolved regulatory requirements Attributed business division equity (from 1Q17) 4Q16 average attributed equity Current Revised CHF billion framework framework2 Business division Conversion to CET1 Weighting WM 3.4 6.0 resources WMA 2.6 6.7 RWA1
Slide 34: Net tax expense and deferred tax assets (DTAs)
Net tax expense and deferred tax assets (DTAs) Net tax expense Tax loss DTAs1,2 CHF million CHF billion, 31.12.16 4Q16 FY16 Net deferred tax expense/(benefit) US UK CH Other Total (166) (582) with respect to net additional DTAs Recognized 7.9 0.1 0.1 0.1 8.2 8.2 of which: US (136) (817) of which: UK
Slide 35: CHF strengthening: FX translation impact on earnings
Earnings – illustration of FX translation impact Indicative FX mix of revenues/expenses FX translation impact vs. FY17 consensus PBT of 6.6 billion2,3,4 % of total for 20171 CHF billion, adjusted, % change relative to consensus dated 10.1.17 EUR/CHF Operating income 1.20 1.10 1.00 4% CHF strengtheni
Slide 36: Interest rate sensitivity and funding costs
Interest rate sensitivity and funding costs Estimated annual net interest income (NII) impact CHF billion, assuming static balance sheet, constant FX rates and no management action Implied forwards1,2 2017 2018 2019 Years 2017-19 Implied rise in USD vs. 2016 cumulative interest rates would more th
Slide 37: Corporate Center – Non-core and Legacy Portfolio
Corporate Center – Non-core and Legacy Portfolio RWA LRD2 and RWA by category CHF billion CHF billion, 31.12.16 103 Operational risk Rates 11.4 3.4 14 Credit and market risk Credit 2.2 0.5 Securitizations 1.5 2.5 31 32 31 APS/ARS 2.5 0.7 88 22 22 19 19 Muni swaps and options 1.7 0.4 21 10 10 Other 3
Slide 38: Credit ratings – UBS Group AG and UBS AG
Credit ratings – UBS Group AG and UBS AG Each of these ratings reflects only the view of the applicable rating agency at the time the rating was issued, and any explanation of the significance of a rating 37 may be obtained only from the rating agency
Slide 39: Credit ratings – other UBS subsidiaries
Credit ratings – other UBS subsidiaries Each of these ratings reflects only the view of the applicable rating agency at the time the rating was issued, and any explanation of the significance of a rating may be obtained only from the rating agency 38
Slide 40: Regional performance – 4Q16
Regional performance – 4Q16 CHF billion Americas Asia Pacific EMEA Switzerland Global Total 4Q15 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 4Q16 Wealth Management 0.1 0.1 0.5 0.5 0.9 0.8 0.4 0.4 0.0 (0.0) 1.9 1.8 Wealth Management Americas 1.9 2.1 - - - - - - - - 1.9 2.1 Personal & Corporate
Slide 41: Regional performance – FY16
Regional performance – FY16 CHF billion Americas Asia Pacific EMEA Switzerland Global Total 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 Wealth Management 0.5 0.4 2.1 2.0 3.8 3.4 1.6 1.5 0.0 (0.0) 8.0 7.3 Wealth Management Americas 7.4 7.8 - - - - - - - - 7.4 7.8 Personal & Corporate
Slide 42: Adjusted results
Adjusted results Adjusting items FY15 FY16 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 CHF million Operating income as reported (Group) 30,605 28,320 6,746 8,841 7,818 7,170 6,775 6,833 7,404 7,029 7,055 of which: WM 21 21 WMA 10 10 Gains on sale of financial assets available for sale P&C 102 102 I
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