UBS Investor Day 2004 Global Equities. Alan Hodson, Global Head of Equities

Transcription

1 UBS Investor Day 2004 Global Equities Alan Hodson, Global Head of Equities

2 Contents Section 1 Global equities Section 2 Regional and functional overview Section 3 Summary and 2004 focus 1

3 2 Global equities SECTION 1

4 Market position: global scale, unique approach #1 Global market share in Secondary Cash #1 Equity Derivatives (Euromoney) #1 Global Research (Institutional Investor) Canada US Global Trading Locations Local Trading Locations Mexico Chile Sales / S-Trading / Research Scandinavia Netherlands UK France Portugal Spain Brazil Argentina #1 Global Sales (Institutional Investor) Germany Switzerland Italy Israel Russia India South Africa #1 European Research, Sales & Trading (Institutional Investor) Korea Japan China Taiwan Hong Kong Philippines Indonesia Singapore #1 Australian Equity House (Euromoney) Australia #1 Asian Research, Sales & Trading (Institutional Investor) New Zealand 3

5 UBS global equities Broadly defined institutional equities business Research Distribution Trading Equity Finance & Clearing Equity Capital Markets Corporate Global, Local, Specialist Client Facilitation Proprietary Prime brokerage Origination & structuring Sector Economic Client Execution Services Stock borrow & loan Syndication Strategy Portfolio trading Sales Trading & Execution Electronic Execution ETD clearing Institutional Clients Hedge Funds Private Clients (via UBS WM) Corporate Clients & Governments Cash equity & listed derivatives, equity-linked, and structured products 4

6 Equities revenues Quarterly average revenues 3,000 2,500 Revenues CHF m 2,000 1,500 1, Q1 04 5

7 Competitor revenue estimates 1Q04 primary & secondary equities 1,800 1, % +121% Secondary Primary Percentages show increases vs. Q1/2003 1, % Revenues USD m 1,200 1, % +32% +67% +45% +56% +133% +13% GS UBS MS DB MER CSFB C JPM LEH BSC Source: Notes: UBS estimates (note GS, MS, LEH, BS end their quarter in Feb Primary includes 100% share. Secondary includes Clearing (GS + BS). Deutsche figures converted at daily average spot rates. 6

8 Market environment WT ZFBS BHP Activity drivers (improving?) Global economy moderate recovery under way investors & corporates less hesitant Interest rates Market volumes primary, M&A activity signs of recovery secondary turnover - significant improvements Competition increasing minimal consolidation among middle / smaller firms specialised firms competing in a number of areas Market optimism? share price recovery has faltered. is it over? Retail activity increasing Structural drivers (static?) Regulatory uncertainty public and regulators have raised standards and level of scrutiny research independence, hedge funds, bundling, softing, NYSE Asset allocation Uncertainty about traditional risk/return assumptions Margins margins continue to be under pressure Focus on derivatives and hedge funds for higher margins Technological change efficiency gains facilitating consolidation clients still looking to cut costs 7

9 Secondary markets Steady price recovery through December Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Re-based (March 11, 2003 = 100) Nov-03 Dec-03 S&P 500 Nasdaq FTSE Nikkei DJ Eurostoxx

10 S&P 500 Nasdaq FTSE Nikkei DJ Eurostoxx 01-Jan Jan Jan Jan Jan Feb Feb Feb Feb Mar Mar Mar Mar Apr Apr Apr Apr Apr-04 Re-based (March 11, 2003 = 100) markets begin to slow Secondary markets 06-May May-04 9

11 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Secondary market volumes Turnover starting to decrease but varies by region Nasdaq NYSE London Tokyo Source: FIBV (local currency turnover values, rebased to 100 at January 2000).

12 Primary volumes Volume (USD bn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Source: UBS estimates Equity-Linked Equity Follow-On Equity IPO 11

13 Structural changes have driven volume explosion UBS volumes experience significant growth from 2001 present 300 Cash OTC ETD Daily transactions (Jan 2001 = 100) 50 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04

14 UBS equity revenues by product 2003 Solid performance across the board 140% 120% 100% 80% 60% 40% 20% 0% Cash Derivatives Eq. Linked Eq. Finance Total 2003 as % of

15 UBS equity revenues by product 1Q04 Derivative, equity-linked and cash products driving revenues 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% Cash Derivatives Eq. Linked Eq. Finance Total 1Q04 as % of 2003 avg. 14

16 UBS commissions vs. exchange turnover Are Q1 commissions keeping pace with turnover? Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 UBS Commissions Nasdaq NYSE London Euronext Source: FIBV, Consol (commissions exclude ETD revenues) 15

17 UBS commissions vs. exchange turnover Source: FIBV, Consol (commissions exclude ETD revenues) 16 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 Commissions rebound during Q UBS Commissions Nasdaq NYSE London Euronext

18 Equity business: #1 and gaining share Global secondary equity commission pool and UBS market share % % Global revenue pool (US$bn) % 10% 8% 6% 4% Market share 0.5 2% 0.0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 0% Revenue Pool UBS share Average of next two Source: Independent survey 17

19 Equity capital markets 1Q04 regional breakdown; Deal flow starting to increase in Asia 1Q03 1Q04 APAC 16% Europe 36% APAC 23% Europe 18% Americas 48% Americas 59% Q global ECMG volume rankings Rank Bookrunner Value $m Deals Vol. Share UBS moved to 4 th with 7.7% share; up from 8 th with 4.6% share in 1Q 03 Source: Dealogic 1 Morgan Stanley % 2 Goldman Sachs % 3 Citigroup % 4 UBS % 5 Merrill Lynch % 6 Deutsche Bank % 7 Lehman Brothers % 8 JP Morgan % 9 CSFB % 10 Nomura % 18

20 19 Regional and functional overview SECTION 2

21 20 Asia Pacific

22 Asia-Pacific financials Quarterly revenues (USD m) Q04 1Q04 revenue by business (USD m) 1Q04 revenue by region (USD m) Comms Primary Trading Japan Aus Asia 21

23 Outstanding achievements 2nd 2004 Institutional Investor - Japan 2004 Institutional Investor All Asia Research Survey (Asia and Australia ex-japan) 2003 IFR Australian Equity House of the Year UBS ranked #1 global house, #2 overall (#5 in 2003) just behind Nomura in this year's II Japan survey #1 3 years in a row #1 7 years in a row Nomura UBS Daiwa Deutsche GS Nikko Citi MS ML Mizuho Mitsubishi 22

24 The China opportunity Extensive product offerings Direct participation ELN Martin Currie A-share fund Bank of China - $1.89bn China Telecom - $1.73bn ab Industry leading A-Share research A-share coverage to expand to companies by year-end Strong team of research analysts located in Shanghai #1 II ranked China research team, 3 rd year running QFII First to qualify and largest facility currently First to qualify and largest facility currently First foreign broker to place a trade in the A-share market Awarded quota of US $600m out of total pool of US $1.7bn 23

25 24 Americas

26 Americas financials 1Q Quarterly revenues (USD m) Q04 1Q04 revenue by business (USD m) 1Q04 revenue by region (USD m) Primary LatAm Canada Comms Trading US 25

27 Momentum building US equities Previous Recent highlights Cash #8 (2003 Greenwich Survey) #8 (2002 Institutional Investor) #7 (2003 industry survey, Global clients) #6 (2003 WSJ) #4 Overall Research Franchise (2004 Greenwich Survey) #5 All-America Research team (2003 Institutional Investor) #5 US Listed market share (2003 industry survey, Global clients) #2 Best on the Street (2004 WSJ) Converts #8 Issuance (2003 Freeman& Co) +5 #3 Issuance in 1Q04 (Freeman& Co) Primary.8% market share (Equidesk Q4 2000) % market share (New Issuance Activity - Equidesk Q YTD) Q1 up 50% YOY Derivatives #5 SPY (AutEx 2002) +4 #1 or #2 mkt share in QQQ s & SPY s for 2 yrs (AutEx) ETD Commissions up 25% 26

28 27 Europe

29 EMEA financials Quarterly revenues (USD m) Q04 1Q04 revenue by business (USD m) 1Q04 revenue by product (USD m) Primary Comms Derivatives Trading Equity Linked Cash 28

30 Overall - our position in Europe We are dominant in all areas # # 1 # 1 # 1 # 1 # 1 # 1 # 2 % share Research Sales Trading Client Comms Extel Institutional Investor Autex Eutop300 Source: Extel(2003)/II (2004) surveys, Autex (Dec 03 YTD), leading survey (Q4 03), IRAG (2003) 29

31 Maintaining #1 Plan to stay on top by. Cash Roll out client profitability framework to drive resource allocation Increase intensity of client coverage. Derivatives Trading Expand AIS product range and distribution to key markets. Increase focus on flow derivatives/etd Bloomberg Alliance. Increase capability of Risk Management platform to support growth of Product. Continued investment in client connectivity, STP via liquidity pool. Emerging Markets Increase penetration to Global/Hedge Fund accounts. Leverage research for developed funds and make more accessible to generalist Sales. 30

32 31 Equity finance

33 Equity finance & clearing revenues USD m Q104 Equity Finance ETD Clearing Equity finance represented 4% of 2000 equities revenues and is expected to represent 12% in

34 UBS Hedge Fund Services A formidable player in the prime brokerage marketplace UBS had a well-known brand, global scale, and robust equities platform Acquisition of ABN AMRO s prime brokerage group Added the #1 ranked PB for funds <$100MM Increased our market share, ranking us among the top 5 PBs in the world Doubled client base Filled product gaps Integrated portfolio management technology platform Integrated trading platform with real-time P&L Turn-key office space solutions, locations in major cities across the country 30+ year history of successfully helping new hedge funds launch and grow US$ billion Long / short balances ABN acquisition Jan- 03 Feb- 03 Mar- 03 Apr- 03 May- 03 Jun- 03 Jul-03 Aug- 03 Sep- 03 Oct- 03 Nov- 03 Dec- 03 Jan- 04 Feb

35 UBS Hedge Fund Services Why we are winning business in the US We offer a full range of products and services that meet the needs of hedge funds at all stages of their life cycle. Start-ups Turnkey real estate, technology and telecom solutions in NY, Boston, Dallas, Atlanta and San Francisco Recognized consistently as top ranked PB for ;da]fl K]jna[]$ Gh]jYlagfk Kmhhgjl$ L][`fgdg_q$ K][mjala]k D]f\af_$ >afyf[af_, and J]hgjlaf_ for funds in the start-up sector Proprietary technology recognized as among the best in the industry Experienced Capital Introductions Mature funds Sophisticated swaps team, FX, ETDs, and Fixed Income PB platforms UBS impressive balance sheet and global scope offers unique leverage solutions and access to all world markets UBS offers one of the most powerful securities lending pools in the industry 34

36 35 Research

37 Consistently #1 Innovative products, breakthrough ideas and speed to market Global Sectors Asia Europe Lat Am Japan US European II Extel Euromoney Top All-Europe Research Team (February 2004) Most Independent Research Most Useful Research Most Improved International House Best Brokerage Firm for Equity Research (2003) Best Equity House (September 2003) 36

38 Focus for 2004 Client Produce the best content on the street Only firm ranked in the top 5 of every major survey 1,050 research people globally with 475 analysts, strategists and economists 2,900 companies covered (approximately 80% of world market cap) Prediction - Accuracy of Calls & Ratings Global Leverage US$ Produced the most accurate estimates of company results in the first quarter (Financial Times) Awarded best Independent Evaluator of Research for UK stocks in 2003 (Starmine) #2 firm at analysing which recommendations generated the best returns (WSJ Best on the Street) Corporate Access - Connect Corporates & Clients Europe 166 roadshows in 03 APAC 272 events in 03 US 320 roadshows in 03 Product - Landmark Notes Niche Markets Thematic 191 single stock Landmark notes published in 2003 Q Series 37

39 38 Our Clients

40 Key client segments... By size of client account Other 30% 42% Top 75 Focus on the largest investors has been key to growing market share and profitability 28% Rest of Top 250 By nationality of client UK By market of security Japan Japan Other 3% Other 8% US Cont Europe 3% 13% 29% US 27% 45% 24% 8% UK Asia Pacific 6% Cont Europe 18% (ex Jap) 16% Asia Pacific (ex Jap) 39

41 Broker reviews Clients recognize UBS efforts; scores improve in most regions 0 Average Client Rankings Pan Euro Consistent service #1 market share Global Steady results #1 market share Asia (excl Aus/Japan) Adjustments being made #1 market share US Clients starting to recognise superior levels of service #5 market share Japan highest scores to date #2 market share 2002 FY 4Q03 40

42 Radar/CRM platform drives client service Global platform Full visibility & transparency of all products and delivery channels Updated, real-time & cross product coverage Client One portal integrating all Business applications including Telephony One global database: contacts, Clients Available in all offices All delivery channels integrated: , VM, BVM,... UBS IB Increases UBS staff productivity Distribution engine Leverages information You don't have to ask the same question twice 41

43 42 Summary and 2004 Focus SECTION 3

44 1Q04 Summary 1Q04 results Exceptional results due to strong performance across all business areas and regions; particularly APAC resurgence Is this sustainable? Markets Steady recovery during Q1 Market has corrected significantly vs 02 Business Areas Cash and derivatives both performing well Hedge fund growth; ABN integration has exceeded expectations Competition Intensifying More differentiation between leading firms 43

45 Global Equities: value proposition Differentiated Global Equities Platform means Global Scale Reach 3,450 equity client facing staff in over 60 local offices Exceptional Service Menu Research driven Consistently recognised for excellence across all categories Unique Approach Coordination Seamless integration across time zones and products Execution 82 exchange/ecn memberships in 31 countries Derivatives Solutions for private, institutional and corporate clients Technology Powerful innovation in client connectivity and e-commerce Liquidity Leading trading share across every major market Hedge Fund Services Delivering UBS natural strengths to alternative asset managers Diverse team Blended heritage of many firms; many countries Strength UBS $26 billion capital base and top credit rating Primary Consistently bringing high quality deals to the market Multi-local model Local expertise communicated into global framework 44

46 Focus for 2004 We continue to invest in resources, technology and growing business areas to offer best in class products and services for our clients. Automation Client Profitability Cash and Derivatives Content led technology enabled business Equity Finance US Equities 45

47 46