Ubs Group Ag · SIX:UBSG
Ubs — Q4 2010 Earnings Presentation
35 slides from Ubs's earnings presentation, Feb 8, 2011
Slide 1: Fourth quarter 2010 results
Fourth quarter 2010 results Fourth quarter 2010 results February 8, 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: 2010 highlights
2010 highlights CHF 7.2 billion net profit attributable to UBS shareholders / FY09: CHF 2.7 billion loss – Diluted EPS CHF 1.87 – Return on equity 15.9% – CHF 5.7 billion of equity capital accretion in 2010 Revenues excluding own credit1 of CHF 32.6 billion, +23% YoY – 55% of revenues excluding own
Slide 4: 4Q10 highlights
4Q10 highlights CHF 1.3 billion net profit attributable to shareholders, diluted EPS CHF 0.33 Pre-tax profit of CHF 1.2 billion includes own credit1 charges of CHF 0.5 billion Operating income up 7% on increased client activity levels, partly offset by higher credit loss expenses Operating expenses
Slide 5: 4Q10 – performance by business division
4Q10 – performance by business division (CHF million) WM&SB WMA Global AM IB CC1 UBS Income 2,790 1,380 542 2,775 308 7,795 Credit loss (expense) / recovery (56) (1) (108) (164) 2 Own credit (509) (509) Total operating income 2,734 1,379 542 2,158 308 7,122 Personnel expenses 1,207 1,003 286 1,262 9
Slide 6: Net profit attributable to shareholders 4Q10 vs. 3Q10
Net profit attributable to shareholders 4Q10 vs. 3Q10 (374) (122) (194) 126 (248) 780 (676) (42) 1,664 1,290 (CHF million) 3Q10 Operating Own Credit loss Personnel Non- Tax Non- 4Q10 income credit1 expenses expenses personnel expense / controlling excl. own expenses (benefit) interests credit and cr
Slide 7: 4Q10 operating expenses
4Q10 operating expenses Higher litigation provisions more than offset reduced personnel expenses Operating expenses (adjusted)1 6,180 6,210 6,025 • Adjusted 4Q10 personnel expenses1 5,844 decreased 2% • Adjusted 4Q10 non-personnel expenses1 increased 14%, mainly 4,411 (2%) 3,906 4,500 3,978 due to h
Slide 8: FY10 personnel expenses
FY10 personnel expenses The bonus pool for 2010 was CHF 4,319 million, down 10% from 20091 Bridge from bonus pool to IFRS charge 2010 personnel expenses 16,994 Contractors 232 Other personnel expenses 1,047 84 Pension and other post- employment benefit plans 724 PVTR and Amortization Social security
Slide 9: FY10 operating expenses
FY10 operating expenses We achieved our fixed cost target of less than CHF 20 billion in 2010 25.2 24.6 Significant non- 0.3 recurring items 1.9 0.2 0.3 1.5 0.2 Social security and other 2.6 2.7 add-ons on bonuses Amortization of 20.2 19.8 prior year awards 2.4 2.7 Bonus expense for the respective p
Slide 10: Wealth Management – revenues
Wealth Management – revenues Increased revenues on improved client trading activity, partly offset by further strengthening of the Swiss franc 847 833 827 825 810 786 787 768 4Q10 vs 1,958 1,892 1,903 1,892 3Q10 1,819 1,758 45 1,756 1,795 11 1 18% 425 457 439 450 461 463 362 428 971 984 (3%) 994 994
Slide 11: Wealth Management
Wealth Management Pre-tax profit up 7% excluding one-off cost item Operating income and pre-tax profit Operating expenses 1,904 (3%) 1,891 1,759 1,803 FY09: 5,191 FY10: 5,023 1,381 1,416 1,268 1,267 1,315 1,208 1,232 1,127 (CHF million) (CHF million) 696 658 492 488 1Q10 2Q10 3Q10 4Q10 1Q09 2Q09 3Q0
Slide 12: Wealth Management – gross margin
Wealth Management – gross margin1 Non-recurring Trading & brokerage Recurring Fees +2 bps excluding 99 95 Interest brokerage 91 93 89 +½ bps +½ bps 92 23 26 22 26 21 25 76 69 67 69 68 67 (bps) Avg. 08 Avg. 09 1Q10 2Q10 3Q10 4Q10 Pricing Lending Pricing realization and price grid Slight increase in l
Slide 13: Wealth Management – client advisors and invested assets
Wealth Management – client advisors and invested assets 200 192 191 190 184 4,286 4,138 4,112 4,148 4,172 825 827 786 787 768 4Q09 1Q10 2Q10 3Q10 4Q10 Invested assets (CHF billion) Client advisors (FTE) IA per CA (CHF million) • Medium-term target remains 4,700 client advisors 12
Slide 14: Retail & Corporate
Retail & Corporate Higher interest and trading income; higher credit losses Operating income and pre-tax profit Operating expenses 978 995 (8%) 966 931 FY09: 2,289 FY10: 2,098 602 607 547 533 522 520 544 512 465 473 446 (CHF million) (CHF million) 387 1Q10 2Q10 3Q10 4Q10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q1
Slide 15: Wealth Management Americas
Wealth Management Americas Higher revenues offset by increased litigation expenses Operating income and pre-tax profit • CHF 33 million pre-tax loss as increase in 1,486 litigation provisions offset increase in revenues 1,361 1,338 1,379 – Revenues up 3% (7% in USD terms) on higher 551 managed accou
Slide 16: Global Asset Management
Global Asset Management 18% increase in pre-tax profit, mainly due to higher performance fees Operating income and pre-tax profit 521 522 542 • Increase in revenues across all business lines 473 – Higher performance fees, mainly in A&Q • Expenses up on higher personnel expenses, in the context of hi
Slide 17: Investment Bank – pre-tax performance 4Q10 vs. 3Q10
Investment Bank – pre-tax performance 4Q10 vs. 3Q10 Improvement in Investment Banking revenues and cost reduction partly offset by higher own credit1 charges and credit loss expenses 481 (122) (67) 232 75 (143) 488 (CHF million) (406) 51 41 3Q10 Equities FICC Investment Own Credit Personnel Non- 4Q1
Slide 18: Equities revenues
Equities revenues Cash and derivatives revenues up on increased client activity > 1,750 • Cash: higher commission income across all regions 1,365 • Derivatives: 1,255 49 89 – Derivatives revenues improved with an increase 231 296 945 in new business activity 904 239 – Equity-linked revenues were bro
Slide 19: FICC revenues
FICC revenues Improved revenues driven by FX; credit and emerging markets weaker in more challenging market conditions • Macro: – FX revenues rose on improved customer activity 2,165 >2,000 – Rates revenues were largely in line with the 258 prior quarter as gains in non-linear interest rates 241 1,7
Slide 20: Investment banking revenues
Investment banking revenues Stronger performance led by equity capital markets • Advisory: 19% increase in revenues as the quarter included several large transactions 910 >1,000 • Capital markets: – Equities: revenues increased fivefold, reflecting 296 stronger deal activity across all regions and 6
Slide 21: Capital position
Capital position 17.7% 16.4% 16.7% 15.4% 16.0% 15.3% 14.2% 12.5% 13.0% 11.0% 11.9% 8.5% 33.2 31.8 33.4 33.7 34.8 35.3 (CHF billion) 7.4 7.2 7.0 5.2 4.9 7.2 25.8 24.6 26.2 26.7 29.6 30.4 4Q08 4Q09 1Q10 2Q10 3Q10 4Q10 Core tier 1 capital Hybrid tier 1 capital Core tier 1 ratio (%) Tier 1 ratio (%) • B
Slide 22: Movements in IFRS equity
Movements in IFRS equity of which of which attributable to IFRS equity Total attributable to non-controlling UBS shareholders interests (CHF million) 30.9.10 53,291 47,713 5,578 Net profit 1,310 1,290 21 Foreign currency translation of foreign operations (OCI) (550) (280) (271) Financial investments
Slide 23: Funding
Funding We continue to benefit from ready access to diversified funding sources • Over CHF 15 billion equivalent of public benchmark bonds raised in 2010 – Average maturity of 5.5 years – This exceeded the CHF 11 billion of long-term straight debt (CHF 6 billion of which public) that matured during
Slide 24: Appendix
Appendix 3% UBS
Slide 25: FY10 – performance by business division
FY10 – performance by business division (CHF million) WM&SB WMA Global AM IB CC1 UBS Income 11,291 5,565 2,058 12,539 1,135 32,588 Credit loss (expense) / recovery (64) (1) 0 (66) 2 Own credit (548) (548) Total operating income 11,226 5,564 2,058 11,991 1,135 31,975 Personnel expenses 4,792 4,226 1,
Slide 26: Pre-tax profit from continuing operations – FY10 vs. FY09
Pre-tax profit from continuing operations – FY10 vs. FY09 7,402 As reported 3,910 4,106 (CHF million) 2,172 438 503 753 32 (131) (860) FY09 FY10 (2,561) (6,081) WM&SB WMA Global AM IB CC1 Group Excluding significant non-recurring items2 8,263 4,232 4,104 (CHF million) 2,885 1,376 677 504 740 203 31
Slide 27: Headcount
Headcount 22 20 (146) 139 0 64,583 34 64,617 FTEs 1 Sep 10 WM&SB WMA Global AM IB CC Dec 10 1 Treasury activities and other corporate items 26
Slide 28: Invested assets
Invested assets Wealth Management Retail & Corporate 0 13 (32) (CHF billion) (CHF billion) 787 (2%) 768 2% 3 1 133 (1) 136 Sep 10 NNM Market FX / Other Dec 10 Sep 10 NNM Market FX / Other Dec 10 Wealth Management Americas Global Asset Management 3 27 1 12 (35) (21) (CHF billion) (CHF billion) 693 68
Slide 29: BIS regulatory capital (Basel 2)
BIS regulatory capital (Basel 2) Core Core BIS Tier 1 Tier 1 tier 1 tier 1 RWA capital ratio (CHF billion) capital ratio 30.9.10 208.3 29.6 14.2% 34.8 16.7% Net P&L attributable to shareholders 1.3 1.3 Own credit (not eligible for capital) 0.5 0.5 1 2 FX / other (1.0) (1.3) Change in RWAs (9.4) 31.1
Slide 30: Asset funding – December 2010
Asset funding – 31 December 2010 Assets Liabilities and equity Cash, CBs, due from banks 44 Due to banks 41 Financial investments Money market available-for-sale 75 paper issued 56 Cash collateral on securities lent CHF 124 billion and repurchase agreements 81 Cash collateral on securities collatera
Slide 31: Balance sheet development
Balance sheet development Assets Total excl. PRVs 2,275 CHF 916 billion 428 2,015 160 854 1,458 1,461 1,341 1,356 1,317 774 504 517 422 419 401 (CHF billion) 146 Positive RVs 312 192 185 176 173 167 1 229 224 246 229 Other assets 584 348 232 180 188 199 211 205 Trading portfolio 328 355 314 336 355
Slide 32: Exposure to monoline insurers, by rating
Exposure1 to monoline insurers, by rating Credit Fair value Fair value valuation Fair value Notional of of CDSs4 adjustment of CDSs amount3 underlying prior to as of after CVA assets CVA (USD billion) 31.12.10 Credit protection on US sub-prime RMBS CDOs2 0.8 0.2 0.5 0.4 0.2 of which: from monolines
Slide 33: Student loan auction rate securities
Student loan auction rate securities Inventory Client holdings Par value Par value of maximum of maximum Carrying value Carrying value required required as of 31.12.10 as of 30.9.10 purchase purchase (USD million) as of 31.12.10 as of 30.9.10 US student loan auction rate securities 9,7841 10,769 63
Slide 34: Reclassified assets
Reclassified assets Ratio of Notional Carrying carrying to Fair value value value notional 31.12.10 (CHF billion) value US student loan and municipal auction rate securities 5.1 4.4 4.5 88% Monoline protected assets 6.1 5.4 5.3 86% Leveraged finance 0.5 0.4 0.4 75% CMBS / CRE (excl. interest-only st
Slide 35: Sovereign exposures to selected European countries
Sovereign exposures to selected European countries • Our gross sovereign exposures to Greece, Ireland, Portugal and Spain are immaterial, and our gross sovereign exposure to Italy, while larger, is commensurate with its rating and the size of its economy • On a net basis, our sovereign exposures to