UBS Third Quarter Results 2001

Transcription

1 Financial Services Group UBS Third Quarter Results November 21 Luqman Arnold, President Mark Branson, Head of Group Communications

2 Caution regarding forward-looking statements This communication contains statements that constitute forward-looking statements, including, without limitation, statements relating to the implementation of strategic initiatives, including the implementation of the new European wealth management strategy, expansion of our corporate finance presence in the US and worldwide, and other statements relating to our future business development and economic performance. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in local and international securities markets, currency exchange rates and interest rates, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit-worthiness of our customers, obligors and counterparties, (6) legislative developments, (7) the impact of the terrorist attacks on the World Trade Center and other sites in the United States on 11 September 21 and subsequent related developments and (8) other key factors that we have indicated could adversely affect our business and financial performance which are contained in our past and future filings and reports, including those with the SEC. More detailed information out those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS s Annual Report on Form 2-F for the year ended 31 December 2. UBS is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise. Financial Services Group 1

3 Weakening environment Fee pools USD bn Q 2Q 3Q 4Q 1Q 1 2Q 1 3Q 1 M&A Debt Financing Equity Financing Source: Freeman & Co analysis, Thomson Financial Securities Data 5% 4% 3% 2% 1% % -1% -2% USA Japan Germany Switzerland UK 2 21E 22E Source: UBS Warburg Economic Research GDP growth Individual Investor Optimism Source: UBS PaineWebber / Gallup Index of Investor Optimism 25% 225% 2% 175% 15% 125% 1% 75% Equity volumes 5% 99 Avg1Q 2Q 3Q 4Q 1Q1 2Q1 SMI DAX-XETRA DJIA NASDAQ FT-SE 1 Source: SWX, Bloomberg & International Federation of Stock Exchanges Financial Services Group 2

4 Group results Financial Services Group

5 Profitility (CHFm) 2Q1 3Q.. vs3q vs2q1 Operating income 8,74 9,881 8,545 2% (12%) Operating expenses 1 7,94 7,683 5,716 24% (8%) Net profit pre goodwill 1 1,227 1,726 2,21. (44%) (29%) Net profit - reported 93 1,385 2,75. (56%) (35%) Notes: 1 Excluding the amortization of goodwill and other intangible assets P&L Invested Assets Asset Quality Capital Financial Services Group 4

6 Net profit (adjusted) CHF m 2,5 2, 1,5 1, 2,364 2,334 2,216 2,27 2,21 2,75 1,9 1,97 1,634 1,579 1,726 1,385 1,251 1, ,227 5 Avg Q 2Q 3Q 4Q 1Q1 2Q1 Net profit after tax Net profit after tax, before goodwill P&L Invested Assets Asset Quality Capital Financial Services Group 5

7 Performance against targets ROE 1 Basic EPS 2 35% 3% 25% 2% 15% 1% 5% % 99 Avg 3M 6M 9M 12M 3M1 6M1 9M1 Cost / Income 2 Private Client Net New Money 3 8% 2 (CHF) Avg 1Q 2Q 3Q 4Q 1Q1 2Q1 6% 4% 2% (CHF bn) % NOTES: 1 Annualized, before goodwill amortization and adjusted for significant financial events 2 Before goodwill amortization and adjusted for significant financial events 3 Private Banking and Private Clients 99 Avg 1Q 2Q 3Q 4Q 1Q1 2Q1 P&L Invested Assets Asset Quality Capital Financial Services Group 6 (5) 99 Avg 1Q 2Q 3Q 4Q 1Q1 2Q1

8 EPS development (CHF) Avg 1Q 2Q 3Q 4Q 1Q1 2Q1 Notes: 1 Before goodwill amortization and adjusted for significant financial events P&L Invested Assets Asset Quality Capital Financial Services Group 7

9 Invested assets UBS CH UBS AM UBSW CHF bn PB PCC Inst. Funds PC Capital Total Total opening ,559 Net New Money Performance & currency (82) (3) (11) (44) (147) - (314) Total closing ,28 NOTES: 1 Excludes interest & dividend income P&L Invested Assets Asset Quality Capital Financial Services Group 8

10 Invested assets - currency effect 5 25 (25) PCC PB Inst. MF PC CHF bn (5) (75) (1) (125) (15) Currency movements Market movements Net new money Acquisition P&L Invested Assets Asset Quality Capital Financial Services Group 9

11 Market movements - 1% 5% % (5%) (1%) (15%) DJIA FT-SE 1 SMI DJ Euro Stoxx MSCI World Bond Index NASDAQ CHF/EUR CHF/USD (2%) (25%) (3%) (35%) (4%) Source: Bloomberg P&L Invested Assets Asset Quality Capital Financial Services Group 1

12 Net new money Private Banking & Private Clients UBS Asset Management CHF bn (5) (1) CHF bn (1) (2) (15) (3) (2) 1Q2Q 3Q4Q 1Q2Q3Q 4Q1Q 2Q3Q (4) Avg 99 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2 21 P&L Invested Assets Asset Quality Capital Financial Services Group 11

13 Revenue trends 12, 1, 8, CHF m 6, 4, 2, 44% 41% 45% 54% 51% 54% 55% (2,) 1Q 2Q 3Q 4Q 1Q1 2Q1 Credit loss Net fee and commission income Net trading income Other income Net interest margin income P&L Invested Assets Asset Quality Capital Financial Services Group 12

14 Revenues by business area - vs 3Q 9, 8,545 (21) (1,277) 1,589 (186) 8,74 8, 691 (16) (313) 16 7,31 7, CHF m 6, 5, 4, 3Q UBS Switz. CIC EQ CIC FI&FX UBS Cap Credit Losses Other ex-pc PC Funding P&L Invested Assets Asset Quality Capital Financial Services Group 13

15 Business unit cost trends CHF m 8, 7, 6, 5, 4, 3, 2, 1, 1Q 2Q 3Q 4Q 1Q1 2Q1 Corporate & Institutional Clients Private Banking Private and Corporate Clients UBS Asset Management UBS Capital Private Clients P&L Invested Assets Asset Quality Capital Financial Services Group 14

16 General and administrative costs 2,5 2, 1,5 CHF mn 1, 5 99 Avg 1Q 2Q 3Q 4Q 1Q1 2Q1 Total excl. Private Clients Private Clients P&L Invested Assets Asset Quality Capital Financial Services Group 15

17 Asset quality development At period end CHF bn % Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep UBS Switzerland loans (gross) C&IC Private Clients NPL% P&L Invested Assets Asset Quality Capital Financial Services Group 16

18 Stle credit quality Credit risk exposure by counterparty rating C&IC loan book PCC (excl. mortgages) % 25% 5% 75% 1% Investment Grade Non-Investment Grade Impaired / Defaulted P&L Invested Assets Asset Quality Capital Financial Services Group 17

19 Share buyback and Tier 1 ratio Shares (m) % 12% 1% 8% 6% 4% 2% Tier 1 ratio 1Q 2Q 3Q 4Q 1Q1 2Q1 % Notes: 1 Quarter to 12 November 21 1st trading line Second trading line P&L Second trading line (cancelled) Tier 1 ratio Invested Assets Asset Quality Capital Financial Services Group 18

20 Business unit results Financial Services Group

21 Balanced business mix Revenues by operating business area (excl. Corporate Center) 3Q: CHF 8.36bn : CHF 8.98bn 8% 2% 21% 7% 19% 15% 21% 28% 26% 12% 41% Domestic Banking Wealth & Asset Mgt Equities Fixed Income Corporate Finance Other PCC PB AM UBSW Financial Services Group 2

22 Continued strong profitility CHF mn Avg 99 1Q 2Q 3Q 4Q 1Q1 2Q1 1,4 1,2 1, CHF mn Net profit before tax Total Operating expenses PCC PB AM UBSW Financial Services Group 21

23 Cost base development Change in Headcount / Branches 1% 95% 9% 85% 8% 75% 7% 65% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Headcount (1Q99=1%) Branches (1Q99=1%) Cost/income ratio (excl. goodwill) 7% 68% 66% 64% 62% 6% 58% 56% Cost / income ratio PCC PB AM UBSW Financial Services Group 22

24 Continued strong, stle gross margin bps FY99 1Q 2Q 3Q 4Q 1Q1 2Q1 Asset & advisory based Transaction based PCC PB AM UBSW Financial Services Group 23

25 Hiring of client advisors on track Potential # of client advisors 1'6 1'4 1'2 1' Dec Mar Jun Sep Oct PCC PB AM UBSW Financial Services Group 24

26 Net new money 1 CHF bn (1) (2) (3) (4) Avg99 1Q 2Q 3Q 4Q 1Q 2Q 2 21 Institutional Mutual Funds 3Q PCC PB AM UBSW Financial Services Group 25

27 Investment fund fees Mitchell Hutchins Transfer CHF mn bps 5 1Q 2Q 3Q 4Q 1Q1 2Q1 Mutual fund fees Gross margin mutual funds PCC PB AM UBSW Financial Services Group 26

28 C&IC: profitility & costs 1,6 9% CHF mn 1, % 7% Avg 99 1Q 2Q 3Q 4Q 1Q1 2Q1 6% Pre-tax profit Cost/income ratio (excl. goodwill) PCC PB AM UBSW Financial Services Group 27

29 C&IC peer headcount development Last 4 years, 1997 = 1% 2% 15% 1% 5% Headcount 1 : UBSW CIC Merrill Lynch CICG Morgan Stanley Lehman Goldman CSFB Annualised revenues Source: Annual & quarterly reports; not adjusted for acquisitions. MS segment headcount data unavaille - entire firm shown PCC PB AM UBSW Financial Services Group 28

30 Strong momentum Market share of global IB fee pool 5% International Equity New Issues % M21 Source: Freeman & Co M21 Source: Capital Data Bondware 2 Fee Pool US & European M21 Source: Freeman & Co. NYSE Autex & Nasdaq Autex Rankings M21 Source: AutEx / BlockDATA PCC PB AM UBSW Financial Services Group 29

31 UBS Capital - operating profit CHF m (4) (12) (2) (43) (112) (28) (36) (282) (351) Avg 99 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2 21 PCC PB AM UBSW Financial Services Group 3

32 UBS PW - resilient recurring fees bps Q1 2Q1 Asset based Transaction based PCC PB AM UBSW Financial Services Group 31

33 UBS PW - headcount development Financial Advisors Other headcount 12% 1% 98% 96% + 2% 12% - 8% 1% 98% 96% 94% 92% 94% 4Q 1Q1 2Q1 9% 4Q 1Q1 2Q1 PCC PB AM UBSW Financial Services Group 32

34 Weakening environment? Fee pools USD bn Q 2Q 3Q 4Q 1Q 1 2Q 1 3Q 1 M&A Debt Financing Equity Financing Source: Freeman & Co analysis, Thomson Financial Securities Data 5% 4% 3% 2% 1% % -1% -2% USA Japan Germany Switzerland UK 2 21E 22E Source: UBS Warburg Economic Research GDP growth Individual Investor Optimism Source: UBS PaineWebber / Gallup Index of Investor Optimism 25% 225% 2% 175% 15% 125% 1% 75% Equity volumes 5% 99 Avg1Q 2Q 3Q 4Q 1Q1 2Q1 SMI DAX-XETRA DJIA NASDAQ FT-SE 1 Source: SWX, Bloomberg & International Federation of Stock Exchanges Financial Services Group 33

35 Financial Services Group UBS Third Quarter Results November 21 Luqman Arnold, President Mark Branson, Head of Group Communications

36 Appendix: Business unit results Financial Services Group

37 Group: total operating income (adjusted) (CHFm) 2Q1 3Q vs3q vs2q1 Net interest income 1,73 1,732 1,831 (6%) (%) Credit loss expense (171) (76) % Net interest income after credit loss expense 1,559 1,656 1,973 (21%) (6%) Net fee and commission income 4,783 5,375 3,865 24% (11%) Net trading income 2,16 2,658 2,368 (9%) (19%) Other income (4%) 5% Total operating income 8,74 9,881 8,545 2% (12%) Financial Services Group 36

38 Group: total operating expenses (adjusted) (CHFm) 2Q1 3Q vs3q vs2q1 Personnel 4'852 5,299 3,863 26% (8%) G&A 1,846 1,974 1,53 23% (6%) Depreciation % (3%) Goodwill amortization % (5%) Total expenses 7,418 8,24 5,842 27% (8%) Financial Services Group 37

39 Asset quality At period end (CHFm) % Total loans (gross) 269, ,672 (5.7%) Impaired loans 1 15,437 16,644 (7.3%) Non-performing loans 9,88 9,811 (7.4%) Impaired loans in % of gross loans NPL s in % of gross loans Allowances as % of impaired loans Allowances as % of NPL s NOTE: 1 Loans with high probility that they will suffer partial or full loss, includes nonperforming loans Financial Services Group 38

40 Private & Corporate Clients (CHFm) 2Q1 3Q vs3q vs2q1 Operating income 1,611 1,716 1,69 % (6%) Operating expenses 1,73 1,19 1,145 (6%) (1)% Pre-tax profit % 2% Cost / income ratio 1 62% 64% 64% KPI s 2Q1 vs2q1 Invested assets (CHFbn) (8%) Net new money NPL ratio (%) 4.9% 5.1% Headcount 2,646 2,73 % NOTE: 1 Pre-goodwill & credit loss expense Financial Services Group 39

41 Private Banking (CHFm) 2Q1 3Q vs3q vs2q1 Operating income 1,59 1,66 1,664 (9%) (6%) Operating expenses % 3% Pre-tax profit (25%) (17%) Cost / income ratio 1 59% 54% 51% KPI s 2Q1 vs2q1 Invested assets (CHFbn) (1%) Net new money Gross margin (bps) (3%) Headcount 9,72 8,865 2% NOTE: 1 Pre-goodwill & credit loss expense Financial Services Group 4

42 UBS Asset Management (CHFm) 2Q1 3Q vs3q vs2q1 Operating income % (1%) Operating expenses % (1%) Pre-tax profit (35%) (4%) Cost / income ratio 1 77% 76% 69% KPI s 2Q1 vs2q1 Institutional assets (3%) Net new money Gross margin IF (bps) (13%) Mutual fund assets (1%) Net new money Gross margin MF (bps) % Headcount 3,267 3,18 3% Note: 1 Pre-goodwill, credit loss expense Financial Services Group 41

43 Corporate & Institutional Clients (CHFm) 2Q1 3Q vs3q vs2q1 Operating income 3,664 4,349 4,266 (14%) (16%) Operating expenses 2,786 3,212 3,56 (9%) (13%) Pre-tax profit 878 1,137 1,21 (27%) (23%) Cost / income ratio 1 75% 73% 7% KPI s 2Q1 Compensation ratio 55% 53% NPL ratio (%) 2.1% 2.3% vs2q1 Average VaR (CHFm) (2%) Headcount 15,715 15,654 % NOTE: 1 Pre-goodwill & credit loss expense Financial Services Group 42

44 UBS Capital (CHFm) 2Q1 3Q vs3q vs2q1 Operating income (81) (294) 79 72% Operating expenses (6%) (46%) Pre-tax profit (112) (351) 46 (68%) KPI s 2Q1 vs2q1 Book value (CHFbn) (8%) Headcount (%) KPI s 2Q1 Value Creation (CHFbn) (.3) (.6) Financial Services Group 43

45 Private Clients 1 (CHFm) 2Q1 3Q 1 vs2q1 Operating income 1,66 1, (13%) Operating expenses 1,598 1, (8%) Pre-tax profit 8 14 (36) (92%) Cost / income ratio 2 99% 94% KPI s 2Q1 vs2q1 Invested assets (CHFbn) (16%) Net new money Recurring fees (CHFm) (2%) Gross margin (bps) (8%) Headcount 2,979 21,355 (2%) Financial advisors 9,3 8,962 1% NOTE: 1 3Q UBS Warburg private clients only 2 Pre-goodwill & credit loss expense Financial Services Group 44

46 Corporate Center (CHFm) 2Q1 3Q. vs3q vs2q1 Income % (65%) Credit loss (expected actual) (21) Operating expenses % 32% Pre-tax profit (291) KPI s 2Q1 vs2q1 Headcount 1,91 1,57 3% Financial Services Group 45