Investor Day 2005 Wealth Management & Business Banking Friday 13 May, 2005 Marcel Rohner, Chairman & CEO You & Us
The Making of UBS-WM&BB Merger of two separate divisions into one powerful business group Universal Bank in Switzerland Global Wealth Management UBS Wealth Management & Business Banking ] H U W LQ D Ã0 K Ã7 W R R K 3 Capturing synergies and eliminating redundancy 1
Wealth Management
Wealth Management Position in 2000 Strengths Global leader in WM Longstanding client relationships Geographic breadth Product & services breadth Innovative e-services Weaknesses Reactive approach Inconsistent service Spillover from merger Limited European on-shore presence Under-developed Asia Pacific penetration USA void Minimal alternative exposure Limited NNM growth 3
Key strategic initiatives 2000-2004 Four-step advisory experience Aggressively grow client advisor force globally European Wealth Management Initiative Asia expansion Bolt-on acquisitions Alternative product development and marketing Build-up WM product positioning framework E-banking strategy Development of a new IT platform 4
Wealth Management Results
Wealth Management - Invested assets Invested assets under management USD bn 1,000 878 800 Wealth Management USA 600 496 400 341 200 257 249 201 192 157 147 136 0 UBS WM 1 Credit Suisse Citigroup Merrill Lynch HSBC Bank of America JP Morgan Morgan Stanley Wachovia Deutsche Bank Source: Wealth Partnership Review April 2005 and company reporting. 1 The survey is based on invested assets at private banks and fee-based assets at US brokerage houses, UBS WM includes UBS WM USA fee-based invested assets (USD 233 bn). 6
Wealth Management - Financial development A strong improvement in the NNM intake made up for the asset decrease due to the USD fall Net new money CHF bn Invested assets CHF bn 50 40 42 800 750 778 30 20 700 10 650 0 2000 2001 2002 2003 2004 600 2000 2001 2002 2003 2004 Income Pre-tax profit & cost/income ratio CHF bn CHF bn % 8.0 7.7 4 3.4 65 7.5 3 56% 60 7.0 2 55 6.5 1 50 6.0 0 45 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 Profit Cost / Income-ratio 7
Wealth Management Action Steps
Four-Step Advisory Experience Perfecting our client experience Intense client focus! 9
Business goals and business priorities All activities are geared to promote our key value drivers and hence support the achievement of our strategic goals Business Priorities Strategic Goals Value Drivers 1 Perfecting our client experience "Clients first" Return on Assets Total Invested assets Return on Assets 2 103 bps Invested assets CHF918 bn Income CHF12.7 bn 4-Step advisory experience Net New Money Loans CHF181 bn Profit before Tax CHF5.5 bn Industry leadership in efficiency Loans Cost / Income Ratio Personnel expenses CHF4.5 bn Other expenses CHF2.7 bn Total expenses CHF7.2 bn 1 Numbers show WM&BB FY04 figures 2 Only WM 10
Wealth Management Client advisor growth Since 1999, we strongly invested into our client advisor force, while keeping non-client-facing functions very lean Headcount 7,000 6,000 + 5% 6,350 5,000 4,000 3,744 3,000 + 53% 2,000 1,000 0 2000 2001 2002 2003 2004 Client Advisors (CA) Non-CA Headcount 11
Wealth Management - Client segmentation We have strongly increased our asset share in the highgrowth ultra-rich segment 2002 2004 > CHF 10 m 34% < CHF 1 mn 19% > CHF 10 m 41% < CHF 1 m 18% 10% CHF 5-10 m 37% CHF 1-5 m 12% CHF 5-10 m 29% CHF 1-5 m 12
Product mix change supports gross margin The shift into value-added services has resulted in a gross margin increase Invested assets by asset classes 2000 2004 Money Market 10% Fiduciary 12% 3% Others Money Market Fiduciary 13% 10% 12% Others Equities 26% 27% Equities 18% Bonds 22% Bonds 22% 25% Mutual Funds Mutual Funds Gross margin bps 100 80 60 40 20 0 104 96 97 101 103 26 26 30 27 70 71 71 76 2000 2001 2002 2003 2004 Recurring Non-recurring 13
Wealth Management Acquisitions The string of first-rate firms which we bought their wealth management operation shows our success in that business Total acquired assets: CHF 50 bn Etra SIM S.p.A Dresdner Latin America Julius Bär North America Sauerborn Trust Amex Luxembourg Scott Goodman Harris Laing & Cruickshank Merrill Lynch (Germany) Lloyds (France) Bank of Amercia (Int. PB) Standard Chartered (Int. PB) UBS Wealth Management 1996 1998 2003 2004 2005 14
Wealth Management - Build-up European presence In the last four years we almost trebled the number of European domestic locations Locations 2000: 15 Locations 2004: 42 France UK France +7 Italy +5 Paris Germany Berlin Düsseldorf Frankfurt Hamburg München Offenbach Stuttgart London Bordeaux Cannes Lille Lyon Marseille Nantes Strasbourg Germany +3 Brescia Firenze Napoli Padova Torino Spain +2 Sevilla Valencia Italy Bologna Milano Roma Spain Barcelona Madrid Marbella Locations in 2000 New locations Bad Homburg Bielefeld Köln Light Versions +2 Austria (Vienna) Belgium (Brussels) UK +8 Birmingham Bury St Edmunds Eastbourne Edinburgh Manchester Newcastle Taunton Worthing 15
European Wealth Management Development Since 2000, we have continued to hire qualified client advisers, which lead to a sustainable, significantly increased asset base Client advisors 1,000 800 CAGR 1 : 47% 838 Net new money CHF bn 15 Total: CHF 38 bn 13.7 600 10 400 200 5 0 2000 2001 2002 2003 2004 0 na 2 2000 2001 2002 2003 2004 Invested assets CHF bn 100 80 60 40 CAGR: 65% 82 Income CHF m 500 437 400 300 200 CAGR: 46% 20 0 2000 2001 2002 2003 2004 1 CAGR = Compound Annual Growth Rate 2 EWM was launched in spring 2001 100 0 na 2 2000 2001 2002 2003 2004 16
Asia Pacific Wealth Management Development In Asia Pacific, we have achieved the market leader position in wealth management UBS' Asia Pacific WM Locations Client advisors 400 300 CAGR: 23% 403 200 100 0 2000 2001 2002 2003 2004 Invested assets bn CAGR: 10% CAGR: 21% 80 79 69 Onshore booking Japan (Tokyo) China (Beijing) Taiwan (Taipei) Hong Kong Singapore Australia (Sydney & Melbourne) 60 40 20 0 2000 2001 2002 2003 2004 CHF USD 17
Wealth Management Vision 2010
Wealth Management Asset development The global wealth management market is expected to strongly grow in the next years Invested assets - Global wealth management market 1 60,000 CHF bn CAGR's 61,000 43,000 MEA: 5.0% 40,000 Americas: 6.0% 20,000 APAC: 5.7% Europe: 6.1% 0 2004 2010 Europe Asia Pacific Americas Middle East / Africa 1 Source: UBS internal estimate 19
Wealth Management Capturing growth Optimal Client Segmentation Exploit growth opportunities in selected client segments Focusing on customised solutions Geographic Expansion Asia Pacific Europe Existing Franchise Market share Share of wallet Growth DH/CA Product Innovation Market development Client needs 20
Wealth Management Way forward to 2010 Given WM's operating leverage, it is important to focus on growing revenues Hire and retain top client advisors Growth in Asia Pacific Further growth in Europe Refine product mix Use synergies through one-firm approach Continued cost discipline 21
Business Banking Switzerland
Business Banking - Position in 2000 Business Banking is the market leader in Swiss retail and commercial banking Strengths Service provider to all divisions in Switzerland Comprehensive multi-channel offering New client-oriented structure Successful revenue enhancement initiatives Weaknesses Redundancy in IT, business and logistic processes Expensive physical distribution network Saturated market, limited potential to grow above GDP Market leader in Switzerland with 25-35% market share 23
Business Banking Improved credit portfolio The share of mortgages in our credit portfolio has been strongly increased over the last years 2000 2004 Commercial Credits 15% Recovery Portfolio 10% Commercial Credits 16% Recovery Portfolio 3% 75% Mortgages 81% Mortgages 24
Business Banking Improved credit portfolio Credit exposure of recovery portfolio has been reduced consistently over the last seven years CHF bn 30 Inflow into Recovery 20-85% 2004 2003 2002 2001 10 0 1997 1998 1999 2000 2001 2002 2003 2004 4.4 2000 1999 1998 1997 and before 25
Business Banking Development Reductions in the branch network and headcount led to a strongly improved cost / income ratio CHF bn % 2.5 70 CAGR: 11% 2.0 2.0 66 1.5 60% 62 1.0 58 0.5 54 0 2000 2001 2002 2003 2004 Profit Cost / income ratio 50 26
Business Banking Way forward to 2010 Cost discipline Strict focus - growth in home market, no geographic expansion Keep market share of 25-35% and increase for certain areas 27
Excellence takes place when people are committed Wherever in the world clients will enter a UBS office... You & Us they will be offered a completely consistent, high quality and truly differentiated UBS client experience 28
Investor Day 2005 Wealth Management & Business Banking Friday 13 May, 2005 Marcel Rohner, Chairman & CEO You & Us