UBS Investor Presentation. First-quarter 1999 Results

Transcription

1 UBS Investor Presentation First-quarter 1999 Results

2 UBS vision Highly profitable globalfinancialinstitu tion positioned as leading Asset Gathering House in Eu rope and leading Universalbank in Switzerland Unique business mix - asset gathering and advisory, private banking and institutional asset management Drawing on capacity ofdivisions: Private Banking offshore and onshore, especially in domestic Europe standardized asset gathering products in Private and Corporate Clients leading institutional asset management capability (UBS Brinson) Investment Banking - client focus, risk management, financial services provider Private Equity - strength in Europe and US Major bet on Eu rope Commitment to substantial technology investment 1

3 Integrated business model Integrated modelfocused on clients and standard processes Standardized requirements Corporates, Financial Institutions and Sovereigns Branch network UBS 24-hr banking Research, sales and trading Corporate Finance Private & Corp. Clients Warburg Dillon Read Private clients Distribution channels UBS Capital Distribution channels Institutional clients External asset managers Private Banking Brinson Client Relations Consultants Customized needs Institutional investors 2

4 Cross-divisional synergies C ross-divisionalrevenu es C H F 3.0bi lion Cost-sharing C HF 2.8 bi lion Foreign Exchange Securities: - primary - secondary Treasury products Corporate Finance Investment funds Warburg Dillon Read Private Banking Investment funds Fiduciary deposits UBS Capital Equity capital UBS Brinson Asset management Private & Corporate Clients Loan products Insurance products Standardized products 3

5 Aspirations and 2002 targets Clear leadership aspiration Demanding financial targets Return on equity 15% - 20% Earnings per share CHF 45 Cost/income ratio approx. 60% Tier 1 ratio 8.5% - 9% 4

6 First-quarter 1999 Group Headline results Pre-tax profit CHF 2.1 billion (+19%). Net income CHF 1.6 billion (+21%). Basic EPS CHF 7.72 (+21%). Annualized return on equity 21.2% Operating income 3%. Operating expenses (3%) maintained, and in some cases enhanced, client franchise and revenue-generating ability Merger on track over 50% of Swiss client data (1.4 million clients) transferred to common IT platform 76 branches of planned 150 closed Total assets under management CHF 1,639 billion (+4.3%) Tier 1 ratio 9.4% (vs. 9.8% in 1998), 1% Own Shares bought back by 22 April 5

7 Impact of special items First-quarter 1999 figures include a C HF 90 mi lion post-tax gain from the sale of Julius Baer registered shares First-quarter 1999 figures exclude proceeds from the sale of UBS stake in Swiss Life / Rentenanstalt and GlobalTrade Finance Bank ofamerica s internationalprivate banking franchise was acquired during the first quarter, but will be reflected in results later in the year First-half 1998 figures for Private Banking include pre-tax CHF 1,197 bi lion (1) relating to divestments and pre-tax CHF 3 08 mi lion (2) relating to client shift from PB to P CC First-half 1998 results include pre-tax C HF 544 mi lion provision for the US settlem ent Notes: (1) Proceeds from BSI and Adler sale: CHF 1,058 million. Operating revenues and costs relating to disposals: CHF 260 million and CHF 121 million respectively (2) Client transfers: Operating income CHF 625 million, operating PG&A costs CHF 283 million, depreciation and amortisation CHF 34 million 6

8 First-quarter 1999 UBS Group Results (CHF mn) % change Operating income 6,918 6,703 3% 22,328 Operating expenses 4,804 4,929 (3%) 18,258 Profit before tax 2,114 1,774 19% 4,070 Net profit 1,621 1,344 21% 3,030 7

9 Performance Indicators ROE (%) (annualized) Basic EPS (CHF) Cost/income ratio (%) (1) (1) (1) 03/99 03/98 12/98 03/99 03/98 12/98 03/99 03/98 12/98 Note: (1) Full year 8

10 UBS merger integration update Division Statu s Personnel Restr.Prov. vs.end Q 1999 (%) (CHF mn) Private Banking On track Warburg Dillon Read Done (2.7) 223 Private and Corporate Clients On track UBS Brinson Done (0.7) 4 UBS Capital Done (9.0) 6 Corporate Center Done (6.7) 129 1Q 1999 Grou p Total On track 0 (1) 517 Grou p total1998 4,027 Total usage to-date 4,544 Total provision 7,000 Fu tu re u tilization 2,456 Note: (1) 1Q 1999 total increase of 20 employees since end of Full-year 1998 employees total decreased 13%, or 7,165 employees relative to

11 Year 2000 quantitative progress assessment for UBS (1) P hase O rganisation p lans A ctu alstatu s Forecast (as of1 0/98) (as of4/99) (as of3/99) Developing a strategic approach Creating organisational awareness Assessing actions and developing detailed plans Renovating systems, applications and equipment Validating renovation through testing Implementing tested, compliant systems Note: (1) Mission critical systems 10

12 UBS Management Accounts 1Q 1999 pre-tax profit (CHF mn) , Private Banking Warburg Dillon Read Private & Corporate Clients UBS Brinson UBS Capital Corporate Center Group 11

13 Private Banking 4% AuM growth despite difficult conditions Client migration near completion Purchase of Bank of America s international private banking activities in Europe and Asia Good progress on domestic business outside Switzerland (CHF mn) 1Q (1) Operating income 1,386 7,197 Operating expenses 677 2,861 Pre-tax profit 709 4,336 Net profit 588 3,599 AuM (CHF bn) Cost/income ratio 49% 46% (2) Notes: (1) Including divestments: CHF 1,000 mn after-tax gain on sale; CHF 268 mn operating income, CHF 125 mn operating expenses, CHF 119 mn after-tax impact (2) Excluding BSI gain on sale 12

14 Integrated Wealth Management Corporate Finance Estate Advisory Portfolio Management Global Custody Professional Wealth Manager (Client Advisor) Trust Business Financial Planning Art Banking Real Estate Management Credit 13

15 E-banking products for Private Banking clients Produ ct Booking Center Target Clients Channel Lead/O wnership UBS C onnect ExternalAsset Managers Extranet Private Banking Telebanking Self-directed Internet (secu re) Private & Corp orate Clients (cooperation) UBS Quotes A l(self-directed) Internet Private & Corp orate Clients (cooperation) New Product Affluent, Private Banking Software, Extranet Private & Corp orate Clients (cooperation) Internet Private Banking Internet Private Banking Optimus Online Private Banking Internet (protected) Private Banking Research Private Banking Extranet Private Banking A ctive A dvisory Team 14

16 Warburg Dillon Read Strong results based on 75% of both pre-merger personnel and average allocated regulatory equity Risk appetite and capital allocation now in line with other leading global investment banks 1998 refocusing led to high-quality earnings and client-driven core businesses Successful introduction of Euro and well-positioned for Y2K (CHF mn) 1Q Operating income 3,311 6,487 Operating expenses 2,528 7,508 Pre-tax profit 783 (1,021) Net profit 561 (706) Cost/income ratio 75% 107% Reg. equity used (ave.) 10.7 bn 13.3 bn 15

17 Clearly focused investment bank Narrowly-defined investment banking business at WDR: Treasury Products Equities and Fixed Income Corporate Finance Integral to UBS AG: institutional and corporate franchise manager product provider to asset gatherers execution engine transaction processor Broader, asset gathering investment bank in UBS Group: Private Banking Institutional Asset Management, UBS Brinson Private Equity, UBS Capital Asset Gathering, UBS PB and UBS P&CC 16

18 Leading investment bank: 1998 awards Corporate Finance M agazine Top Banks ofthe Year: Investment Bank of the Year Equity-Linked House of the Year Deals ofthe Year: Equity-Linked Deal of the Year Equity-Linked Offering of the Year Equity Offering (Privatisation) of the Year Syndicate Loan Deal of the Year Buyout of the Year GlobalInvestor FX Su rvey: No.1 Best Advice on Spot Trading No.1 Best Sales Coverage InternationalFinancing Review Asia Review ofthe Year: Australian Equity House of the Year Australian Domestic Bond House of the Year Eu romoney Po lofpo ls: No.1 Underwriting No.1 Trading No.1 Advisory Awards for Exce lence: Best Eurobond Trading House (4th yr) Best Securities Firm in Western Europe (5th yr) Best Securities Firm in the UK (2nd yr) Best Securities Firm in Switzerland (4th yr) Best Foreign Securities Firm in US (2nd yr) Deals ofthe Year: Best International Euro Issue Best Equity Linked Issue Best High Grade Corporate Issue Best IPO Best Financial Institution Issues Best International Syndicated Loan 17

19 Private and Corporate Clients Significant improvement in profitability Merger on track over 50% client data (1.4 million) transferred to single IT platform 76 of planned 150 branches closed Very good progress in Internet banking (CHF mn) 1Q Operating income 1,624 5,855 Operating expenses 1,242 4,947 Pre-tax profit Net profit AuM (CHF bn) Cost/income ratio 65% 70% 18

20 UBS Telebanking (Internet & Videotex) 1Q 1999 vs.1q 1998 Total Telebanking users % Internet only (introduction Jan 98) Number of stock exchange transactions Number of payments made 3.7 mn 21% 175' ' ' '000 Jan May Sept Jan May Sept Jan Mar

21 UBS Brinson Challenging first-quarter 1999 some expected loss of revenue from merger sale of Alfi Gestion changes in interdivisional pricing 3% growth in AuM, driven by investment funds Brinson in line with expectations short-term underperformance in U.S. equity portfolios Phillips & Drew underperformance in core portfolios (CHF mn) 1Q Operating income 263 1,163 Operating expenses Pre-tax profit Net profit AuM (CHF bn) Institutional assets Investment funds Cost/income ratio 74% 61% 20

22 UBS Capital Performance in line with expectations Completed several small successful exits Revenues are deal dependent - quarterly comparison less meaningful Current portfolio s aging profile will offer fewer divestment opportunities in 1999 Portfolio growing in line with expectations (CHF mn) 1Q Operating income Operating expenses Pre-tax profit Net profit Book value portfolio 1,900 1,800 Market value portfolio n.a. 2,700 Cost/income ratio 36% 27% 21

23 Risk under Control VAR Current limit CHF 600 million with first-quarter 1999 average VAR (10 day, 99%) of CHF 220 million Market stress loss limits CHF 1.3 billion Non-performing loan coverage Coverage of 96% Counterparty risk International counterparty risk substantially reduced (by ca. CHF 130 billion since 31 March 1998) EURO and Y2K EURO smooth introduction in all divisions. Y2K 85% preparations complete 22

24 Asset quality 96% of NPLs covered CHF 15 billion reduction in loan book, mostly WDR Slight change in composition of country risk provisions (CHF bn) 31 Mar Dec 1998 Total loans (gross) NPLs Allowances & Provisions (1) NPLs/Total loans 4.9% 4.7% Provisions/NPLs 96.1% 95.3% Note: (1) Of which CHF 1.5 billion relates to country risk provisions (year-end 1998: CHF 1.5 billion) 23

25 Principles for equity management Effective use of equity for value creation 1% of stock bought back in 1Q investment in our own stock acceptable alternative in absence of strategic acquisition targets Target range for equity management: Tier 1 ratio 8.5% - 9.0% Active management of treasury stock for equity amounts exceeding target range 24

26 Outlook 1999 Confident that for the full-year, significantly higher result than 1998 and approaching target of ca % ROE Domestic integration issues on track as planned Challenging financial market perspectives Investment banking on course 25

27 Market capitalization as of 25 May (US$ bn) Citigroup Bank America HSBC Lloyds TSB Group Banc One Chase UBS Bank of BNP & Tokyo/ SG Paribas Mitsubishi ING Source: Bloomberg 26