UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Date: October 30, 2012
Commission File Number: 1-15060
UBS AG
(Registrants Name)
Bahnhofstrasse 45, Zurich, Switzerland, and
Aeschenvorstadt 1, Basel, Switzerland
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
This Form 6-K consists of the presentation materials related to the Third Quarter 2012 Results and Strategy Update of UBS AG, which appear immediately following this page.
Third Quarter 2012 Results & Strategy Update
October 30, 2012
Cautionary statement regarding forward-looking statements
This presentation contains statements that constitute forward-looking statements, including but not limited to managements outlook for UBSs financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBSs business and future development. While these forward-looking statements represent UBSs judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBSs expectations. Additional information about those factors is set forth in documents furnished or filed by UBS with the US Securities and Exchange Commission, including UBSs financial report for third quarter 2012 and UBSs Annual Report on Form 20-F for the year ended 31 December 2011. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
Important information related to numbers shown in this presentation
Use of adjusted numbers
Throughout this presentation, unless otherwise indicated, adjusted figures exclude each of the following items, to the extent applicable, on a Group and business division level:
Own credit loss on financial liabilities designated at fair value for the Group CHF 863 million in 3Q12 (CHF 239 million gain in 2Q12, CHF 1,765 million gain 3Q11)
Net restructuring provision release CHF 22 million for the Group in 3Q12 (net charge of CHF 9 million in 2Q12, net charge of CHF 387 million in 3Q11)
CHF 3,064 million charge related to impairment testing of goodwill and other assets in 3Q12 in the Investment Bank
Credit to personnel expenses related to changes to a US retiree medical and life insurance benefit plan (CHF 84 million for the Group in 2Q12)
Gain on the sale of strategic investment portfolio (SIPF) of CHF 433 million in Wealth Management and CHF 289 million in Retail & Corporate in 3Q11
Unauthorized trading incident loss of CHF 1,849 million in equities in the Investment Bank in 3Q11
Pro-forma Basel III RWAs, Basel III capital ratios and Basel III liquidity ratios
The calculation of our pro-forma Basel III risk-weighted assets combines existing Basel 2.5 risk-weighted assets, a revised treatment for low-rated securitization exposures which are no longer deducted from capital but are risk-weighted at 1250%, and new model-based capital charges. Some of these new models still require regulatory approval and therefore our pro-forma calculations include estimates of the effect of these new capital charges which will be refined as models and the associated systems are enhanced. Our pro-forma Basel III liquidity ratios include estimates of the impact of the rules and interpretation and will be refined as regulatory interpretations evolve and as new models and the associated systems are enhanced.
Currency translation
Monthly income statement items of foreign operations with a functional currency other than Swiss francs are translated with month-end rates into Swiss francs. Refer to Note 20 Currency translation rates in UBSs 3Q12 report for more information.
1
Agenda
Topic Speaker
Introduction C. Stewart
Overview of strategy update announced today S. Ermotti
3Q12 Key messages S. Ermotti
3Q12 Results T. Naratil
Strategy update S. Ermotti
Strategy update financial implications T. Naratil
Q&A S. Ermotti / T. Naratil
2
Key messages
Our franchise is unrivaled with compelling industry growth prospects; we are prepared for the future and are committed to deliver highly attractive returns
We have built the foundation for our long-term success industry leading capital ratios, strong funding and liquidity, lower costs and reduced RWAs
We are accelerating our transformation from a position of strength
Our Investment Bank will focus on its traditional strengths and will operate with Basel III RWAs of less than CHF 70 billion
Targeting a ~30% reduction in our funded balance sheet by 2015
Further extensive measures to improve our long-term efficiency, annual cost savings target increased by ~CHF 3.4 billion to ~CHF 5.4 billion in 2015
We are firmly committed to delivering attractive and sustainable capital returns to shareholders targeting:
Basel III fully applied CET1 ratio of 13% in 2014
Return on equity of at least 15% from 2015
A total payout ratio of more than 50% after we reach our capital targets
Refer to slide Group targets for more details about targets.
3 |
3Q12 results
3Q12Key messages
CHF 1.4 billion adjusted pre-tax profit; net loss attributable to shareholders of CHF 2.2 billion; diluted earnings per share of CHF (0.58)
CHF 0.9 billion own credit loss
Industry leading capital position: Basel III fully applied CET1 ratio of 9.3% with Basel III RWAs of CHF 301 billion at 30.9.12, down by CHF 4 billion QoQ
We are accelerating our transformation from a position of strength
CHF 3.1 billion goodwill & other asset impairments as we accelerate the transformation of the IB
Best quarterly adjusted pre-tax profit in 2012 for Wealth Management, Wealth Management Americas and Retail & Corporate
Wealth Management adjusted pre-tax profit up 18% QoQ to CHF 596 million
Third consecutive record adjusted pre-tax profit for Wealth Management Americas at USD 231 million
Retail & Corporate adjusted pre-tax profits increased 4% QoQ to 409 million
Adjusted pre-tax profit of CHF 178 million in the Investment Bank
CHF 14 billion NNM inflows in our asset gathering businesses; very strong net new business volume growth including CHF 7 billion increase in client deposits in Retail & Corporate
Highest third quarter NNM in our wealth management businesses in 5 years
7.2% annualized net new business volume growth in Retail & Corporate
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
5 |
3Q12 results
(CHF million) WM WMA IB Global AM R&C CC Group
Income 1,789 1,559 2,273 468 946 244 7,280
Credit loss (expense) / recovery 0 2 3 0(13)(122)(129)
Own credit gain / (loss)(863)(863)
Total operating income 1,789 1,561 2,277 468 932(740) 6,287
Personnel expenses 799 1,093 1,251 236 342 67 3,789
of which restructuring charges / (provision releases)(2) 0(14) 0 0(2)(18)
Non-personnel expenses 390 248 3,896 108 181 190 5,013
of which restructuring charges / (provision releases)(2) 1(2) 0 0(1)(4)
of which effect related to impairment testing of goodwill
and other assets 3,064 3,064
Total operating expenses 1,189 1,342 5,147 344 523 258 8,803
Adjusted pre-tax profit / (loss)
(Excluding own credit, restructuring charges and effect related to 596 220 178 124 409(138) 1,389
impairment testing of goodwill and other assets)
% of Group adjusted pre-tax profit 43% 16% 13% 9% 29%(10%) 100%
Pre-tax profit / (loss) as reported 600 219(2,870) 124 409(998)(2,516)
Tax (expense) / benefit 345
Net profit attributable to non-controlling interests(1)
Net profit attributable to UBS shareholders(2,172)
Diluted EPS (CHF)(0.58)
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
6 |
3Q12 goodwill impairment testing results
Goodwill and other asset impairments resulted from analysis of newly approved Investment Bank business plan
Pre-impairment Impairment Post impairment
CHF million 30.9.12 balance sheet 3Q12 income statement 30.9.12 balance sheet
Goodwill 9,119 3,030 6,088
Intangible assets 559 15 544
Total goodwill and 9,678 3,045 6,632
intangible assets1
Property and equipment 5,928 19 5,909
Total 3,064
Our Basel 2.5 and Basel III CET1 ratios are not affected by the impairment of goodwill and intangible assets
1 Goodwill and intangible assets in the Investment Bank post impairment are zero and CHF 100 million, respectively
7
Basel 2.5Capital ratios
Further increased industry-leading Basel 2.5 tier 1 capital ratio to 20.2%
Basel 2.5 risk-weighted assets decreased CHF 4 billion to CHF 210 billion
Basel 2.5 tier 1 capital increased by CHF 1.2 billion to CHF 42.4 billion
8
18.7% 19.2% 20.2%
15.9%
~12.7% 12.6% 13.2% 13.2% 16.7% 17.2% 18.1%
14.1%
11.0% 11.7% 11.7%
~9.1%
2 36.7 37.5 38.4 39.6 41.2 4.3 42.4 4.3
~34.3 35. 4.3 4.3 4.4 4.3
4.9 4.6
29.4 30.6 32.4 33.2 34.0 35.3 36.9 38.0
billion)
(CHF
31.12.10 31.3.11 30.6.11 30.9.11 31.12.11 31.3.12 30.6.12 30.9.12
Hybrid tier 1 capital Tier 1 ratio (%)
Core tier 1 capital Core tier 1 ratio (%)
Our wealth management businesses are unrivaled
We are well positioned for growth in the most attractive markets
Invested assets of CHF 1.6 trillion on 30.9.12 managed by over 11,100 advisors
720
WM Americas
783
816
Wealth Management
Adjusted pre-tax profit1
Net new money
(combined result)
(combined result)
Quarterly average
Quarterly average
717
816
12.3
million)
602
billion)
8.9
(CHF
(CHF
(4.6)
2010
2011
3Q12
2010
2011
3Q12
1 Excluding restructuring charges and provision releases, reduction in personnel expenses related to changes to UBSs Swiss pension plan in 2012 (WM), gains from the 9 sale of the strategic investment portfolio in 2011 (WM) and a provision related to an arbitration matter in 2010 (WMA)
Wealth Management
Adjusted pre-tax profit up 18%; highest third quarter NNM in 5 years
Operating income and pre-tax profit
1,745 1,734 1,789
888
million) 540 502 503 600 596
(CHF
3Q11 2Q12 3Q12
Operating income (adjusted)
Pre-tax profit (as reported)
Pre-tax profit (adjusted)
Higher activity levels and increased invested assets led to 3% increase in operating income
Adjusted cost / income ratio at 67%, within target range
Operating expenses down 3% on lower provisions
3.9% net new money growth, within target range
Positive net new money in all regions
Strong contribution from APAC, EM and UHNW
Continued strong growth in mortgages
Net new money and Lombard lending
10
11.1 9.5
7.7
billion) 5.6 6.7
3.8 3.1
(CHF 1.0 0.0
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
Wealth ManagementOperating income and gross margin
Gross margin1 stable at 89 bps; modest increase in client activity levels largely offset by an increase in the invested asset base
assets 772 783 816 772 783 816
billion) 750 750
Invested (CHF 720 720
1,7452 1,769 1,734 1,789 97 2 91 93 89
1,673 89
186 194 9.6 9.7
229 243 11.8 12.2
income(bps)
million) 812 843 margin 41.8 42.2
Operating (CHF 497 495 Gross 25.6 24.8
3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12
Interest (excl. SIPF) SIPF interest Recurring fees Transaction-based fees3 Trading3 Other income Credit loss (expense) / recovery
Invested assets up 4% QoQ, mainly due to positive market performance and strong net new money
Trading and transaction-based fee margin contribution up 0.5 bps as revenues increased on slightly higher client activity especially towards the end of the quarter
Recurring fees gross margin contribution up by 0.4 bps as recurring revenues increased on higher average invested assets
Net interest income broadly flat
1 Operating income before credit loss (expense) or recovery (annualized) / average invested assets; gross margin excludes a realized gain due to a partial repayment of
fund shares of CHF 2 million in 3Q12 and CHF 5 million in 4Q11, as well as a negative valuation adjustments on a property fund of CHF 27 million in 3Q11 11
2 Excludes gain of CHF 433 million on the sale of strategic investment portfolio (SIPF); including this gain gross margin was 120 bps
3 Net fee and commission and net trading income in 3Q11 adjusted for revenue shifts related to Investment Products & Services unit
Wealth Management Americas (USD)
Our YTD pre-tax profit already represents a record for full year profits
Operating income and pre-tax profit
1,552
1,587
1,631
million) 170 183 211 208 230 231
(USD
3Q11 2Q12 3Q12
Operating income
Pre-tax profit (as reported)
Pre-tax profit (adjusted)
Net new money
NNM excl. dividends & interest NNM incl. dividends & interest
9.3 9.7
8.5 7.9
billion) 4.7 5.0
3.5 3.9 3.0
(USD 0.3
Record USD revenues for WMA; increased 3% on stronger transaction- based revenues; gains on AFS sales stable
Adjusted cost / income ratio at 86%, within target range
Financial advisor headcount broadly stable; attrition rates remain low
Record revenue / FA and invested assets / FA
USD 4.8 billion net new money with strong same store1 NNM
Annualized NNM growth of 2.4%, within target range
USD 9.8 billion NNM including dividends and interest
8.6 |
9.3 9.0 9.8 |
4.6 |
3.8 4.8 |
2.1
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
1 |
Financial advisors with UBS for more than 12 months |
12 |
Investment Bank
Improved revenues and continued disciplined approach to RWA reduction
Operating income
CHF USD
31% 29%
2,277 2,387
2,131 403
383
1,773 1,736 263 1,853
215 397
372
1,107 1,107 1,161
925
1,099 1,164
630 783 759 820
(million) 247(million) 272
3Q11 2Q12 3Q12 3Q11 2Q12 3Q12
Equities FICC IBD Credit loss (expense) / recovery
Revenues increased in all business areas
Adjusted cost / income ratio fell to 92%
Basel III RWAs reduced by CHF 8 billion to CHF 162 billion
Average VaR at historical low; reduced to CHF 26 million
Adjusted pre-tax profit
178
million)(14)(178)
(CHF
3Q11 2Q12 3Q12
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
13
Investment Bank highlights1
IBD
263 403
397
221 257
206
144
222 183
240
129 175
(160)
(342)(213)
3Q11 2Q12 3Q12
EQUITIES
759 820
3
286
300
272
121 238
291
347 292
132
(10)(83)
(67)
2
3Q11 2Q12 3Q12
FICC
1,107 1,164 1,161
113
113
397 510
425
868 750 767
(117)(123)
(42)(230)
Significant market share improvement in Advisory and Debt Capital Markets
Advisory improved market share and rank; participated in 2 of the top 6 deals
ECM participated in 6 of top 8 ECM deals; 2Q12 included revenue from a number of private structured transactions
Fixed income capital markets increased market share; participated in 10 of the top 20 deals
Other increased mark-to-market losses on loan portfolio hedges and lower fees
Equities performed well
Cash strong performance on improved client trading against a global decline in turnover (lowest market turnover since 2005)
Derivatives improved on gains from tightening funding spreads, offsetting weaker revenues in EMEA; APAC and the Americas held up in challenging markets; 2Q12 impacted by changes in own credit methodology and corrections related to prior periods
Prime services steady performance as improved funding revenues offset lower revenues in securities lending
Solid result with improved revenues in Credit and Macro up 9% QoQ
Macro strong revenue growth in FX e-trading on increased customer volumes, more than offset by impact of subdued FX markets; improved results in long-end and non-linear interest rates??Credit strong improvement in flow trading across all regions; solid performance in structured credit??Emerging Markets improved performance in Latin America while EMEA continued to lag
3Q11 2Q12 3Q12
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
1 All figures are revenues in USD million and comparisons are quarter on quarter in USD terms; for operating income in CHF see Appendix14
2 |
Unauthorized trading incident loss of CHF 1,849 million in equities in the Investment Bank in 3Q11 |
Global Asset Management
Adjusted pre-tax profit up 17% QoQ as performance fees more than doubled
Operating income and pre-tax profit
446 468
399
million) 79 91 118 106 124 124
(CHF
3Q11 2Q12 3Q12
Operating income
Pre-tax profit (as reported)
Pre-tax profit (adjusted)
Operating income increased 5%
Performance fees more than doubled, driven by A&Q
Net management fees broadly stable
Operating expenses broadly flat
Gross margin of 32 bps, within target range
Strong investment performance for A&Q and most traditional strategies
NNM by channel excluding money market
Quarterly average WM businesses
Third party
billion) 4.1 3.1 3.4 Total
2.1 2.3 1.2
(CHF 0.3 0.3
(0.8)(1.0)(0.7)
(2.0)(2.9) (2.6)(2.2)
FY10 FY11 1Q12 2Q12 3Q12
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
15
Retail & Corporate
Adjusted pre-tax profit up 4% QoQ with strong NNBV growth
Operating income and pre-tax profit
929 927 932
683
1
418 399 395 409 409
million)
(CHF
3Q11 2Q12 3Q12
Operating income (adjusted)
Pre-tax profit (as reported)
Pre-tax profit (adjusted)
Net new business volume growth rate
(annualized)
8.5%
6.4% 6.2% 7.2%
4.2% 3.3%
2.4%
(0.2%) (0.8%)
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Operating income increased mostly on increased trading income
Modest reduction in interest income despite the historically low interest environment
Adjusted cost / income ratio 55%, within target range
Net new business volume growth above target range with sizable contribution from corporates
Net interest margin within target range
Net interest margin
1.83% |
1.69% 1.67% 1.61% |
1.75% |
1.74% 1.75% 1.59% 1.59% |
million) 592 617 590 575 595 567 539 547 545
(CHF
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Net interest income Net interest margin (%)
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
16
Corporate Center
CHF 998 million pre-tax loss including own credit losses of CHF 863 million
Corporate Center Core Functions
1,819 Operating income (excl. own credit) ? Corporate Center Core Functions:
Own credit gains / (losses) CHF 936 million pre-tax loss
Pre-tax profit Own credit losses of CHF 863 million
Adjusted operating income of CHF 12 million
million) included a CHF 106 million hedge ineffectiveness
(19) gain partially offset by liquidity portfolio costs
(CHF(936) Operating expenses decreased CHF 34 million
mainly on personnel-related accrual releases
3Q11 2Q12 3Q12
Legacy Portfolio ? Legacy Portfolio:
CHF 62 million pre-tax loss
CHF 263 million gain on the revaluation of our
million) option to acquire the equity of the SNB StabFund1
(119)
(CHF(62) of Negative CHF 34 operating million income from legacy positions
SNB StabFund option1 income
Legacy Portfolio excl. SNB StabFund Option Net credit loss expenses of CHF 122 million, mainly
(527) income due to student loan ARS sold or to be sold in 4Q12
Pre-tax profit Operating expenses rose on higher provisions and
3Q11 2Q12 3Q12 legal fees
1 Option fair value CHF 2,068 million (USD 2,199 million) on 30.9.12
17
Strong liquidity and stable funding profile
UBSs Basel III Liquidity Coverage Ratio and Net Stable Funding Ratio in excess of 100%1
Liquidity Coverage Ratio (LCR)
??25% of our funded balance sheet assets
are in the form of available liquidity2(CHF billion) 30.9.12
Cash outflows under 30-day 282
Funded balance sheet (30.9.12) Cash inflows stress scenario4 136
Liabilities Net cash outflows 147
Assets & equity Liquidity asset buffer5 165
Short-term debt
issued ~5% Regulatory LCR ( = 165 / 147) 113%
Due to banks3 ~4%
Additional contingent funding sources6 69
Available Other Other Management LCR ( = (165 + 69) / 147) 160%
contingent
funding Long-term debt Net Stable Funding Ratio (NSFR)
sources / 25% issued ~18%
cash(CHF billion) 30.9.12
reserves CHF 91 Available stable funding7 366
billion
Loans surplus Customer deposits Required stable funding8 342
NSFR ( = 366 / 342) 107%
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
1 |
Pro-forma: Based on current regulatory guidance; 100% = future requirement under the Basel III Liquidity Framework |
2 Dedicated liquidity reserves including excess cash at major central banks and unutilized collateralized borrowing capacity
3 Interbank liabilities only. Interbank liabilities net of interbank assets are ~0.1% of funded balance sheet as of 30.9.12
4 |
Out- and in-flows up to 30 days under severe general market and firm-specific stress |
5 Assets eligible in Basel III LCR framework including dedicated group liquidity reserve, excess cash at major central banks, unencumbered collateral pledged to central banks
6 Additional contingent funding sources including dedicated local liquidity reserves and additional unutilized borrowing capacity
7 |
Consists mainly of client deposits from our wealth management businesses, long term debt issued and capital |
8 |
Residential mortgages and other loans are the main consumers of stable funding |
18
Basel IIIRisk-weighted assets
Continued reduction in the Investment Bank and the Legacy Portfolio
(99)
~400
~380
~21 ~20 ~350
~80 ~62 ~21 ~305 ~301
~59
~53 ~49
~220 ~212
~191 ~170 ~162
billion)
(CHF ~79 ~86 ~79 ~82 ~90
30.9.11 31.12.11 31.3.12 30.6.12 30.9.12
Sales and reduced exposures contributed ~85% of RWA reduction in the Investment Bank and the Legacy Portfolio since 30.9.11
Quarter on quarter changes:
Legacy Portfolio: ~CHF 4 billion decrease
~CHF 2 billion on sales and reduced exposure
~CHF 2 billion on model changes
Investment Bank: ~CHF 8 billion decrease
~CHF 2 billion on reduced exposure
~CHF 6 billion on model changes
Other businesses: ~CHF 8 billion increase, mainly on model changes
~CHF 5 billion in Retail & Corporate
~CHF 2 billion in Wealth Management
Wealth Management / Wealth Management Americas / Retail & Corporate / Global Asset Management / CC-Core Functions
Investment Bank Legacy Portfolio SNB StabFund1
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
1 RWAs associated with UBSs option to purchase the SNB StabFunds equity. Treated as a participation with full deduction to CET1 capital from 2Q12
19
Industry-leading Basel III capital ratios
~9.3% CET1 ratio on a fully applied basis
Basel III Basel III
~ phase-in 2019 rules fully applied
+480 bps +440 bps
~1.2%
~0.6%
~0.5% ~13.1% ~13.6%
~11.8%
~10.7% ~1.3%
~10.0% ~0.6%
~9.3%
~0.5% ~8.8%
~7.5%
~6.2% ~6.7%
~6.2%
30.9.11 31.12.11 31.3.12 30.6.12 30.9.12 30.9.11 31.12.11 31.3.12 30.6.12 30.9.12
Loss-absorbing capital
Common equity
We expect a limited incremental impact from IAS 19R
(~40 bps decrease to fully applied CET1 ratio)
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
20
Strategy update
Key messages
Our franchise is unrivaled with compelling industry growth prospects; we are prepared for the future and are committed to deliver highly attractive returns
We have built the foundation for our long-term success industry leading capital ratios, strong funding and liquidity, lower costs and reduced RWAs
We are accelerating our transformation from a position of strength
Our Investment Bank will focus on its traditional strengths and will operate with Basel III RWAs of less than CHF 70 billion
Targeting a ~30% reduction in our funded balance sheet by 2015
Further extensive measures to improve our long-term efficiency, annual cost savings target increased by ~CHF 3.4 billion to ~CHF 5.4 billion in 2015
We are firmly committed to delivering attractive and sustainable capital returns to shareholders targeting:
Basel III fully applied CET1 ratio of 13% in 2014
Return on equity of at least 15% from 2015
A total payout ratio of more than 50% after we reach our capital targets
Refer to slide Group targets for more details about targets
22
UBSThe bank of the future
An unrivaled franchise with compelling growth prospects
WM businesses Retail & Corporate Investment Bank Global AM
Worlds leading HNW and Leading Leading Equities franchise, Well-diversified across
UHNW wealth manager; universal bank Top FX house, strong investment capabilities,
unrivaled scope and scale in Switzerland advisory and solutions regions and distribution
capabilities channels
Wealth generation New client assets growth faster Attractive opportunities in Savings / pensions growth
growth rates 2x GDP than Swiss GDP capital-light businesses faster than GDP
Prepared for the future
Clear Solid financial Long term efficiency Track record
strategy foundation measures of execution
Committed to deliver highly attractive returns
Return on equity of at least 15% from 2015 Attractive capital return policy
Refer to slide Group targets for more details about targets
23
Successful execution of our key strategic priorities over the last 12 months
Basel III RWAs
Reduce billion) ~400(25%)
RWAs ~301
(CHF
30.9.11 |
30.9.12 |
Basel III CET1 fully applied ratio
Build capital 6.2% +310bps ~9.3%
strength ~6.2%
30.9.11 |
30.9.12 |
Adjusted operating expenses
23.3(1.4)
Reduce billion) 21.9
costs(CHF
1H11 9M12
annualized1 annualized
adjusted for FX
Focused and disciplined execution of Basel III RWA reduction
2012 RWA targets achieved ahead of schedule
Consistent execution against our non- dilutive capital objectives
Basel III fully applied CET1 ratio 9.3% up 310 bps since 30.9.11; phase-in Basel III CET1 ratio 13.6%
Execution of CHF 2 billion cost elimination program on track
Adjusted annualized cost reduction of CHF 1.4 billion compared to 1H11 excluding adverse currency movements of ~CHF 0.6 billion
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation 24
1 |
1H11 costs run rate represents the starting point for CHF 2 billion cost elimination program announced in 3Q11 |
Our journeyThe transformation of UBS
We are taking action from a position of strength
Implement Unlock
Accelerate
and execute full potential
[Graphic Appears Here]
Build capital strength
Reduce costs
Reduce operational risk
2012
Transform the
Investment Bank Operational efficiency
Reduce balance sheet Profitable growth
Implement long-term Attractive returns on
efficiency and productivity capital
measures
2013/2014 2015 and beyond
to maximize value for our clients, employees and shareholders
25
Accelerating the transformation of the Investment Bank
Considerations Benefits
Capitalizing
Needs of wealth on our Ability to concentrate
management and resources to maintain and
traditional
core external clients grow core businesses
strengths
Expected returns Invest in quality content,
Competitive position industry-leading talent and
best-in-class execution
Revenue / earnings Substantial cost reduction
volatility potential
Operational complexity while exiting Significant capital returns
Interdependencies balance sheet and over time
Expected market capital intensive Reduced size and
developments businesses complexity
Regulatory developments Reduced operational risk
26
Investment Bank
Our Investment Bank is a source of competitive advantage for UBS
Capitalizing on our traditional strengths
Strong advisory Leading Top FX
and solutions capabilities Equities franchise and Precious metals house
Global footprint with presence in Consistently highly ranked in Highly ranked across FX products
all major financial markets Global Equities #1 Dealer Gold Spot and
Consistently leading in APAC Top-ranked research Options, Silver Spot and Forwards
Our clients will continue to benefit from best-in-class expertise, solutions-led advisory, intellectual capital and global execution capabilities
Ideal partnership with other business divisionsthe skills and strengths of these businesses enable us to meet the needs of our clients in wealth management businesses, Retail & Corporate and Global AM
Highly capital-efficient businesses, with attractive returns for our shareholders
A unique and attractive proposition to our employees:
A rewarding, intellectually rich environment and a career with a best-in-class global bank
The ability to build deep relationships and facilitate the best outcomes for clients
To be part of an expert advisory and solutions team with a unique position in the market
Clear accountability for results
27
Creating a profitable and competitive Investment Bank
Corporate Client Solutions Investor Client Services
Our Advisory and solutions, origination and Distribution, sales and trading
structuring, IBD, Leveraged Finance, Special
businesses Solutions Group Equities, FX, Precious Metals, Flow rates
Our clients Corporate, FIG, sponsor clients WM and Prime brokerage clients, market
counterparties
Professionals with extensive experience in advisory/capital markets providing unbiased advice
Our
relationships Patient cultivation of long-term advisory relationships and high quality client coverage
Thought leadership with deep insights into markets and governments
High speed trade execution and robust clearing platform
Provider of liquidity and financing
Our platform Leading low latency execution platforms for equities and FX
Leading portfolio management and risk assessment tools
Client-centric and solutions oriented
Our culture Talent rich, team-based, diverse people
Clear accountability for results
Expected: ~1/3 of total revenues Expected: ~2/3 of total revenues
~15% of Basel III RWAs ~85% of Basel III RWAs
Financials
Targeting a pre-tax return on attributed equity of more than 15%,
cost / income ratio of 65-85% and overall Basel III RWAs of less than CHF 70 billion
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
28
Businesses and positions to be exited and transferred to Corporate Center
Our strong capital position allows us to effectively balance speed of execution and exit costs
Exiting some businesses that are not expected to deliver adequate risk-adjusted returns given the regulatory and economic outlook
Substantial cost savings potential by elimination of front-to-back costs
Significant reduction in operational risk and complexity
Rigorous control and governance procedures in line with existing Legacy Portfolio
We have appointed an experienced team dedicated to manage the portfolio
We will exit these businesses over an extended period to minimize impact on results
Positions to be exited:
Total Basel III RWA ~CHF 90 billion
FICC / FICC-related Basel III RWAs
~CHF 110 billion on 30.9.12
~CHF 80 billion FICC / FICC-related
~CHF 10 billion operational risk
[Graphic Appears Here]
Significant reduction in FICC / FICC-related businesses:
RWA from ~CHF 110 to ~CHF 30 billion
RWA reductions from positions to be exited
Funded assets from ~CHF 330 billion to ~CHF 70 billion Target RWA for businesses we are maintaining
We will manage businesses and positions to be exited in the most value accretive way
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
29
Investing in businesses with more attractive returns
Our operational efficiency plans will free up more resources to support growth in areas with the most attractive returns
Total gross cost reductions of CHF 5.4 billion p.a. by 2015
CHF 3.3 billion of restructuring charges for incremental savings
Group headcount to be ~54,000 in the future
~23.3
Adjusted operating expenses
Total cost reductions Investment
CHF 5.4 billion for growth
~0.6
~(1.4) Currency ~22.5 ~1.5
moves
~(4.0)
Investments of CHF 1.5 billion over the next 3 years to support organic growth across all business divisions and strategic growth initiatives
~20.0
billion)
(CHF
1H11 9M12 2015
annualized1 annualized
1 1H11 costs run rate represents the starting point for CHF 2 billion cost elimination program announced in 3Q11
30
Group targets1
Balance sheet
excl. PRVs
(CHF trillion)
0.9
(0.3)
0.6
30.9.12
31.12.15
Basel III RWAs
fully applied
(CHF billion)
~301
<250
<200
30.9.12
31.12.13
31.12.17
Basel III CET1 ratio
fully applied
(%)
11.5%
13.0%
9.3%
30.9.12
2013
2014
Cost / income ratio
(%)
79%
60-70%
9M12
from
annualized
2015
Return on equity2
(%)
>15%
~8%
9M12
from
annualized
2015
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
1 Excluding own credit and significant non-recurring items (e.g., restructuring costs) unless otherwise stated; targets assume constant FX rates
31
2 RoE as reported is expected to average in the mid-single digits in 2013-2014
Reducing capital needs, while strengthening the business mix
We will improve the quality and consistency of our earnings
Attributed equity Expected pre-tax profit contribution1
to business divisions1
~20%
~35% WM businesses, R&C, Global AM
~65%
Investment Bank
~65% ~80%
~35%
3Q12 2013
pro forma2
Adjusted pre-tax profit WM businesses, R&C, Global AM
1.3 |
1.3 1.3 1.3 |
1.2 |
1.1 1.2 Annual average |
CHF 5.0 billion
(CHF billion)
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
1 |
Excluding Corporate Center 32 |
2 Pro-forma for shift of attributed equity related to Paine Webber goodwill and intangible assets to the Corporate Center
We are firmly committed to return capital to shareholders
Our business mix supports an attractive capital returns program
Progressive capital returns as we work towards our capital targets; thereafter attractive capital returns
Future dividend policy illustrative example (% of profits)
Baseline dividend: sustainable payment that is affordable with respect to UBSs long-term
profitability
Supplementary returns: special capital return (e.g., dividends above the baseline, buybacks)
Reinvestments: in existing businesses or strategic investments from time to time, but
only when clearly accretive
Management countercyclical consideration of other factors, i.e., economic environment, outlook
capital buffer:
We are targeting a total payout ratio of more than 50% which combines a baseline dividend and flexible supplementary returns
33
Our vision for the UBS of the future
An unrivaled Leading positions in all business divisions
franchise
Positioned for
growth Compelling industry growth prospects
Prepared for the Clear strategy, solid financial foundation, long-term efficiency measures
future and track record of execution
Attractive returns
Targeted return on equity of at least 15% from 2015 Attractive capital return policy
A unique and valuable proposition to our clients, our employees and our shareholders
34
Strategy Capital and Funding
Financial strength is the foundation of our success
Our business model will be less capital intensive in the future
Basel III CET 1 ratio targets of 11.5% in 2013 and 13% in 2014 on a fully applied basis
Group Basel III RWA target of <CHF 250 billion by 2013, <CHF 225 billion by 2015 and <CHF 200 billion by 2017
Our total capital requirements are expected to fall to 17.5% reflecting the planned decrease in RWAs and balance sheet1
Our strong liquidity and funding will be further enhanced
We will reduce our funded balance sheet by ~30%, a reduction of ~CHF 300 billion
Our leverage ratios will substantially improve as we reduce our balance sheet
The proportion of deposits as a funding source will increase
Lower funding requirements will allow us to buy back debt
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
1 Total capital requirement of 17.5% does not take into account potential rebate subject to measures taken to improve resolvability 36
Basel IIICapital ratios
Targeting a 13% fully-applied CET1 ratio in 2014
Basel III Basel III
~ phase-in 2019 rules fully applied
~13.1% ~13.6% 13.0%
~11.8% 11.5%
~10.0% ~10.7%
~8.8% ~9.3%
~7.5%
~6.2% ~6.7%
~6.2%
30.9.11 31.12.11 31.3.12 30.6.12 30.9.12 30.9.11 31.12.11 31.3.12 30.6.12 30.9.12 2013 2014
target target
Loss-absorbing capital
Common equity
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
37
Our funded balance sheet1 will be reduced by a further ~30%
Funded assets
30.9.12
CHF 0.9 trillion
Other assets including net
replacement values(~30%)
Cash, balances with central
banks and due from banks
2015 target
Financial investments AFS ~CHF 0.6 trillion
Cash collateral on securities
borrowed & reverse repo
agreements
Trading portfolio assets
Loans Loans
30% ~40%
Funding liabilities
30.9.12
CHF 0.9 trillion
Due to banks
Short-term debt issued(~30%)
Cash collateral on securities
lent and repo agreements
Trading portfolio liabilities
2015 target
Long-term ~CHF 0.6 trillion
debt issued UBSs wholesale
funding needs will
be significantly
Other liabilities reduced
Customer deposits
Customer Customer will provide an
deposits deposits even greater
40% > 50% proportion of
funding
Equity Equity
Lower funding requirements will allow us to buy back debt
1 Funded balance sheet defined as total assets minus replacement values
38
Leverage ratios
Our leverage ratios will improve substantially as we reduce our balance sheet
Simple leverage ratio1
FINMA leverage ratio2
2.2 |
FINMA Basel III leverage ratio3 |
Funded balance sheet4
2.1 |
6.1% |
5.7%
1.8
5.1% |
5.7% |
5.4% |
expected direction |
4.5% |
based on our plans |
4.4%
1.2 |
3.9% 3.4% |
2.8%
0.9 |
0.9 0.9 0.9 |
2.5%
2.0%
2.5% |
0.6 |
trillion)
(CHF
4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 3Q12 2015
target
1 |
IFRS equity attributable to UBS shareholders / (total IFRS assetspositive replacement values) |
2 FINMA tier 1 capital / total adjusted assets; refer to page 63 of UBSs 3Q12 report for more information on UBSs FINMA leverage ratio 39
3 (Basel III phase-in CET1 capital + loss absorbing capital) / (total IFRS assets + adjustments); refer to slide 52 for more information about UBSs FINMA Basel III leverage ratio
4 |
Total IFRS assetspositive replacement values |
FINMA Basel III total capital requirements for large Swiss banks1
UBSs total capital requirement will be a function of total exposure, market share in Switzerland and a possible capital rebate
Capital UBS target
requirements capital structure
for large Swiss based on
banks our plans A. Total exposure: assuming ~1.5% add-on
19% Based on size of balance sheet + adjustments2
17.5%
Low-trigger loss- B. Market share in Switzerland: assuming ~3% add-on
absorbing capital absorbing Low-trigger capital loss- Based on higher of (i) market share of domestic lending and
~6.0%(ii) market share of domestic deposit-taking
~4.5%
3% base case assumes 20% market share
High-trigger
loss-absorbing capital
3% C. Capital rebate: assuming no rebate
Common Capital rebate is possible subject to measures taken to
Common equity improve resolvability
equity capital
capital 13%
10%
Our total capital requirements are expected to fall to 17.5% reflecting the planned decrease in RWAs and balance sheet
1 Based on Swiss capital adequacy ordinance 40
2 Balance sheet exposures net of specific provisions, derivative exposure netting and repurchase agreements; adjustments for OTC derivatives, off-balance sheet
commitments and contingent liabilities
Basel IIIRisk-weighted assets
We aim to reduce Group RWAs to below CHF 200 billion by 2017
~400(25%)
~21 ~380
~20 ~350(50%)
~80 ~21
~62 ~305 ~301
~59
~53 ~49 <250
<225
~85 <200
~220 ~212 ~55 ~25
~191 ~170 ~162
<70 <70 <70
billion)
(CHF ~79 ~86 ~79 ~82 ~90 ~95 ~100 ~105
30.9.11 31.12.11 31.3.12 30.6.12 30.9.12 Previous 31.12.13 31.12.15 31.12.17
31.12.13 target2 target2 target2
Estimated pro-forma target
Investment Bank WM / WMA / R&C / Global AM / Corporate Center Core Functions
SNB StabFund1 Legacy Portfolio including businesses and positions to be exited
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
1 RWAs associated with UBSs option to purchase the SNB StabFunds equity. Treated as a participation with full deduction to CET1 capital from 2Q12 41
2 Targets assume constant FX rates
Basel IIIInvestment Bank & Legacy RWAs
Investment Bank and Legacy RWAs to be reduced ~CHF 120 billion by 2017
Basel III RWAs (CHF billion)
Legacy Portfolio including businesses
and positions to be exited
~49 ~49 Investment Bank
Transfer to CC ~90 ~85
~55
~162 ~25
<70 <70 <70 <70
Of which
~CHF 15-18 billion
operational risk
30.9.12 30.9.12 31.12.13 31.12.15 31.12.17
as reported estimated target1 target1 target1
pro-forma
Businesses and positions to be exited will be managed within a robust governance and control framework similar to that supporting the successful execution of RWA reduction in the Legacy Portfolio so far
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation 42
1 Targets assume constant FX rates
Legacy Portfolio(30.9.12)
Total Basel III RWAs ~CHF 49 billion
Basel III B/S excl. PRVs
(CHF billion) RWAs PRVs1 Comments on Basel III RWAs:
CDOs 9.2 3.1 2.6 Reduced > 60% YoY
Auction rate securities 8.42 8.7 Reduced > 50% YoY
Muni swaps & options 8.1 5.4 Including CHF 3.6 billion CVAs3
Monolines 7.6 1.0 Including CHF 5.8 billion CVAs
Reference-linked notes 5.1 2.9 Reduced > 50% YoY
Real estate assets 3.1 0.4 2.3 Reduced > 50% YoY
Blackrock loan 0.9 3.7 Loan balance USD 3.8 billion4 (down 22% YoY), LTV <80%
Other 3.3 4.1 6.7 No single position > CHF 1 billion
Operational risk 3.3 Operational risk RWAs allocated to the Legacy Portfolio
Total5 49.0 22.9 18.0
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
1 Positive replacement values
2 Of which CHF 7.4 billion attributable to student loan ARS (30.9.12 carrying value CHF 5.1 billion). We expect a reduction of approximately CHF 5 billion of Basel III
RWAs in 4Q12 related to sales and expected sales of certain student loan ARS
3 Credit valuation adjustments 43
4 Including amounts held in escrow
5 Excluding option to acquire the equity of the SNB StabFund (CHF 2.1 billion directly deducted from equity on 30.9.12)
Businesses and positions to be exited (30.9.12)
Total Basel III RWAs ~CHF 90 billion
Basel III RWAs
Basel III B/S excl. B/S incl.(excluding operational risk)
RWAs PRVs PRVs
(CHF billion) Cash positions expected exit schedule
Businesses within Credit ~30 ~20 ~38
~28
~20
Businesses within Rates ~40 ~120 billion) ~15
Other ~10 ~120(CHF 0 0
Sep 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Subtotal ~80 ~260
OTC positions natural decay
Operational risk ~10 ~44
~37
~32
Total ~90 ~260 ~560 ~27
~22
billion) ~17
(CHF
Level 3 assets are less than 3% of total assets
Sep 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
We will manage businesses and positions to be exited
in the most value accretive way
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
44
UBSs equity allocation framework
Attributed equity business divisions
Tangible equity
50% RWAs -> Capitalize with 10% Basel III CET1 ratio
25% assets -> Capitalize with 3.5% Basel III leverage ratio
25% RBC1 -> Internal measure of economic risk
+
Goodwill and intangible assets
+
Management adjustments
Resources not under the direct control of the business divisions and allocated to the Corporate Center (central items) include:
Equity in excess of 10% of Basel III CET1 capital with regard to RWA driver
Deferred tax assets
Prepaid pension expenses
Effective 1.1.13, attributed equity related to CHF 3.9 billion of goodwill and intangible assets associated with the PaineWebber acquisition will be held in the Corporate Center
Average attributed equity
47.6
5.3 ~42.5
8.4 ~8.5
~13.5
21.9
~7.0
1.9 ~2.0
billion) 4.3 ~4.5
(CHF 3. 2.7 ~3.0
1 ~4.0
3Q12 pro-forma2 2015 projected
Corporate Center Legacy Portfolio
Corporate Center Core Functions
Investment Bank
Global Asset Management
Retail & Corporate
Wealth Management Americas
Wealth Management
1 Risk-based capital
2 Pro-forma for shift of attributed equity related to Paine Webber goodwill and intangible assets to the Corporate Center 45
Implementing long-term efficiency measures and reducing costs
4Q12 2013 2014 2015
Initiatives Expected gross savings development
IB efficiency
Org. effectiveness
Hubbing
Lean front-back
Independent buying entity
2Q11 program
3Q12 program
program ~CHF 5.4 billion
Cost savings 2Q11 ~CHF 3.2 billion ~CHF 4.0 billion
per annum ~CHF 1.4 billion1 ~1.2 ~2.0 ~3.4
~2.0 ~2.0 ~2.0
Expected
restructuring costs ~CHF 0.5 billion ~CHF 1.1 billion ~CHF 0.9 billion ~CHF 0.8 billion
CHF 3.3 billion
1 Based on 9M12 annualized we have materialized ~CHF 1.4 billion out of ~CHF 2.0 billion cost reduction program
46
Business division targets1
Ranges of sustainable performance in our businesses
Wealth Wealth Management Retail &
Management Americas Corporate
NNM growth rate 3-5% NNM growth rate 2-4% NNBV growth2 1-4%
Gross margin 95-105 bps Gross margin 75-85 bps Net interest margin 140-180 bps
Cost / income ratio 60-70% Cost / income ratio 80-90% Cost / income ratio 50-60%
Global Asset Investment Bank Legacy Portfolio
Management effective from 1.1.2013 including businesses and positions
to be exitedBasel III RWA
NNM growth rate 3-5% Pre-tax RoAE2 >15% 31.12.13 ~CHF 85 billion
Gross margin 32-38 bps Basel III RWAs < CHF 70 billion 31.12.15 ~CHF 55 billion
Cost / income ratio 60-70% Cost / income ratio 65-85% 31.12.17 ~CHF 25 billion
Group RoE expected to average in the mid-single digits in 2013-20143, with a target of at least 15% from 20151
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
1 Excluding own credit and significant non-recurring items (e.g., restructuring costs) unless otherwise stated; target assumes constant FX rates
2 NNBV = net new business volume; RoAE=return on attributed equity 47
3 As reported
UBSA unique and attractive investment proposition
Unrivaled franchise with clear strategic direction and strong track record on execution
UBSs franchise is unrivaled
Compelling industry growth prospects
Prepared for the future and committed to deliver highly attractive returns
Clear strategy and well diversified business profile both by business and geography
Decisive action to further transform the Investment Bank and improve long-term efficiency
Proven track record of focused and disciplined execution of strategic priorities
Firmly committed to return capital to shareholders
Our business mix supports attractive capital return program after we reach our capital targets
Solid financial foundation which will be strengthened further as UBS accelerates its transformation
Industry-leading capital ratios and consistent non-dilutive capital objectives
Basel III fully applied CET1 ratio of 9.3%, up 310 bps YoY
13% fully applied CET1 ratio target, highest in the industry
Substantial excess liquidity
Large multi-currency portfolio of unencumbered high-quality assets
Basel III Liquidity Coverage Ratio of 113%
Solid funding structure
Broadly diversified funding portfolio by product, currency and geography
Significant deposit / loan overhang at 133%
Significant customer deposit base represents a cost-efficient and reliable funding source
Basel III Net Stable Funding Ratio of 107%
48
Appendix
Basel III fully applied CET1 ratio
Fully applied CET1 Basel III ratio increased to ~9.3%
CET1 capital + loss-absorbing capital ratio
CET1 ratio
~10.6%
13% ~9.4%
~8.0% ~1.3% 13.0%
~0.6% 11.5%
~6.7% ~0.5% ~9.3% Target
~6.2% ~8.8% common
~6.7% ~7.5% equity
~6.2% capital
~6.2% ~6.7% ~7.5% ~8.8% ~9.3% 11.5% 13.0%
30.9.11 31.12.11 31.3.12 30.6.12 30.9.12 2013 2014
(CHF billion) +1.3 target target
CET1
capital 24.6 25.3 26.1 26.7 28.0 Common equity
Loss-absorbing capital
Pro-forma ~400 ~380 ~350 ~305 ~301
RWAs
(~4)
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
50
Basel III phase-in CET1 ratio
Phase-in CET1 Basel III ratio increased to ~13.6%
CET1 capital + loss-absorbing capital ratio
CET1 ratio
~13.7%
~12.3% ~0.6%
~0.5%
~10.7% ~1.4%
~10.0% ~1.2%
~1.1% ~3.0%
1 ~1.1% ~3.2%
2 ~2.8% ~3.0%
~6.1% ~6.6% ~7.4% ~8.6%
~10.0% ~10.7% ~11.8% ~13.1%
30.9.11 31.12.11 31.3.12 30.6.12
(CHF billion)
CET1
capital 40.4 41.0 41.8 40.4
Pro-forma
RWAs ~403 ~383 ~354 ~309
1 Goodwill / intangible assets covered by hybrids
~9.2% 2 Capital deduction items
~13.6%
30.9.12
+0.9
41.5
~305
(~4)
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation
51
FINMA Basel III leverage ratio
UBSs current FINMA Basel III leverage ratio is above minimum requirements
UBSs FINMA Basel III leverage ratio of 3.4% on 30.9.12
Total capital
(Phase-in CET1 + loss absorbing capital) CHF 45.3 billion
= = 3.4%
Total exposure1 CHF 1,335 billion
(Total IFRS assets + adjustments)
The minimum leverage ratio is defined as the total capital requirements x 24%
Total capital requirement 16.0% 16.5% 17.0% 17.5% 18.0% 18.5% 19.0%
x 24%
Minimum leverage ratio 3.84% 3.96% 4.08% 4.20% 4.32% 4.44% 4.56%
FINMA Basel III minimum leverage ratio illustrative examples
Based on 17.5% total capital requirement
Based on 19.0% total capital requirement 4.3% 4.2% 4.6%
3.7% 3.7% 4.0% 4.0%
3.0% 3.2% 3.4%
2.5% 2.7%
2.0% 2.0%
2013 2014 2015 2016 2017 2018 2019
1 3-month average. Total IFRS assets exclude derivatives, securities financing transactions and repurchase agreements covered by eligible netting agreements under
the Basel II framework. Adjustments represent adjustments for OTC derivatives, off-balance sheet commitments and contingent liabilities. As agreed with FINMA, 52
the FINMA Basel III leverage ratio denominator temporarily excludes forward starting repos, securities lending indemnifications and current exposure method (CEM)
add-ons for ETDs (proprietary and agency transactions) until the Basel III definition will have been finalized
Deferred tax assets on net operating losses
The potential to recognize additional deferred tax assets remains significant
as of 30.9.12
Unrecognized potential DTAs on NOLs1,2
Recognized DTAs on NOLs1
24.6
18.8
billion) 2.4
(CHF 1.7 3.6 2.6 0.8 5.3
0.1
US Switzerland UK RoW Total
Unrecognized potential DTAs on NOLs1,2 of CHF 24.6 billion on 30.9.12
Tax losses have a remaining average life of approximately 16 years in the US; indefinite life in the UK
Profitability assumptions over a 5-year time horizon form the basis of the recognition of DTAs
DTAs have been remeasured in 3Q12 to reflect updated profitability assumptions, taking into account changes in the Investment Bank
1 Net operating losses. In addition, there are recognized deferred tax assets of CHF 2.1 billion for deductible temporary differences
2 Equals the potential tax savings associated with unrecognized tax loss carry forwards 53
IFRS equity attributable to UBS shareholders1
1
(2,267)
196
65 348
(2,172)(24)
(233)
54,716(448)
CHF 30.6.12 30.9.12 Change
Book value per share 14.60 14.00(4%) 52,449
million) Tangible book value per share 12.00 12.23 2%
(CHF
30.6.12 Net profit Foreign Financial Cash flow Treasury Tax Employee share 30.9.12
currency investments hedges shares recognized and share
translation available-for-(OCI)2 in share option plans
(OCI)2 sale premium(share premium)
(OCI)2
1 Tangible book value increased by CHF 855 million from CHF 44,962 million on 30.6.12 to CHF 45,817 on 30.9.12; 30.9.12 IFRS deferred tax assets on net operating losses
CHF 5,348 million and deferred pension expenses of CHF 3,778 million; 4Q12 will include the effect of early adoption of IAS19R, which was estimated to be CHF 4.6
billion at 30.9.12 54
2 Net of tax. Total income tax expense recognized in OCI was CHF 168 million in 3Q12
Basel IIIInvestment Bank & Legacy RWAs reduction since 30.9.11
~85% of RWAs reduction since 30.9.11 through sales and exposure reductions
Investment Bank
(47)
(11)
(24) 4
(17)(8)(2)
~220 ~209
~162
billion)
(CHF
30.9.11 Allocation 30.9.11 Market OTC Loans, commitments Other¹ FX and 30.9.12
of adjusted risk derivative, and other banking ratings
CVA VaR CVA and book exposures migration
(2Q12) hedging
Legacy Portfolio
(42)
11(12) 1
billion) ~80 ~91(15)(5)
(CHF(11) ~49
30.9.11 Allocation 30.9.11 Student Sales / liquid. Sales and Other¹ FX and 30.9.12
of adjusted loan of assets optimization ratings
CVA VaR ARS related to of other migration
(2Q12) MBIA exposures
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation 55
1 Other includes operational risk, reporting improvements, reversal of certain Basel III uplift-component for securitization which only becomes effective from 31.12.13,
other model and methodology changes and rounding
Basel IIICommon equity tier 1 capital
Phase-in Basel III CET1 capital QoQ change
0.9 3.0
(2.2)(0.6)
billion) 40.4 41.5
(CHF
30.6.12 Net profit attributable Own credit1 Goodwill impairment Other 30.9.12
to shareholders
Fully applied Basel III CET1 capital QoQ change
3.0
0.9
(0.4)
billion)(2.2)
26.7 28.0
(CHF
30.6.12 Net profit attributable Own credit1 Goodwill impairment Other 30.9.12
to shareholders
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation 56
1 Basel 2.5 own credit adjustments relate to own credit on financial liabilities designated at fair value, whereas Basel III also includes own credit on derivatives (DVAs)
Wealth Management3Q12 by business area1
Net new money growth in all regions; strong contributions from APAC, EM and UHNW
Asia Emerging o/w o/w
Europe Switzerland
Pacific Markets UHNW GFO2
347 352
Invested billion) 190
assets 146 125
CHF 816 billion(CHF 41
8% 8% 6%
Annualized NNM 1% 3%
growth rate3
3.9%
(8%)
88 102 91
81
Gross 4
54 34
margin 89bps(bps)
1,630
Client 961 790 8105
658
advisors 4,111(FTEs) N/M
Based on the Wealth Management business area structure, and excluding minor functions with 72 client advisors, and CHF 8 billion of invested assets, and CHF 0.2 billion of NNM outflows which are mainly attributable to the employee share and option plan service provided to corporate clients and their employees
Global Family Office: Joint venture between WM and the IB. Since June 2012, GFO is reported as a sub-segment of UHNW and is included in the UHNW figures
Computed from 30.6.12 figures, which are restated as if the Global Family Office were a sub-segment of UHNW
4 Gross margin includes income booked in the IB. Gross margin only based on income booked in WM is 18 basis points 57
5 Dedicated UHNW units: 591 client advisors. Non-dedicated UHNW units: 219 client advisors
Wealth Management AmericasOperating income (USD)
YoY +5%
QoQ +3%
1,552 1,568 1,587 1,631
1,449 1,506 1,504
1,321 1,417 119 129 135 136 124 122
130 127
144 380 354 332 391 352 394
384 400
321
779 788 798 2 762 841 835
667 710 728
million)
(USD 169 184 178 197 237 1 218 218 206 195
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Interest Recurring fees Transaction-based fees
Trading Other income Credit loss (expense) / recovery
1 As reported; includes a USD 22 million (CHF 20 million) upward adjustment from OCI relating to mortgage-backed securities in our AFS portfolio 58
2 4Q11 includes USD 48 million related to a change to an accrual-based accounting estimate for certain mutual fund fees
Wealth Management AmericasLending balances (USD)
2371
215 218 218
Net interest income 206
(USD million) 197 195
184 178
169 28.0
27.1
24.7 25.5 25.7 2.8 3.2
23.5 1.7 2.0 2.3
20.3 21.4 1.4 3.8 3.7
19.4 1.1 3.7 4.3 4.3 3.9 0.9 1.0
0.6 2. 0. 7 8 3.0 0.9 0.9 1.0 0.9
2.8 0.9 0.8 0.9
15.2 16.0 16.4 17.5 17.8 18.2 18.5 19.6 20.1
billion)
(USD
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
QoQ +3%
YoY +13%
Credit lines (HNW / UHNW clients) Credit lines (other) Mortgages Margin loans
1 As reported; includes an upward adjustment reclassifying USD 22 million (CHF 20 million) from other comprehensive income relating to mortgage-backed securities in 59
our AFS portfolio. The adjustment resulted from properly reflecting estimated future cash flows under the effective interest method, which gave rise to an increase in
interest income and a decrease in unrealized gains in other comprehensive income
Wealth Management AmericasFinancial advisor productivity (USD)
Revenue per FA, annualized Invested assets per FA
927 118
882 902 869 897 905 112 113 115 114
835 851 109 108
104 104
780
thousand) million)
(USD(USD
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
60
Invested assets
Wealth Management Wealth Management Americas
8 26 5 29
(0)(7)
783 4% 816 757 3% 783
billion) billion)
(CHF(CHF
30.6.12 NNM Market FX / Other 30.9.12 30.6.12 NNM Market FX / Other 30.9.12
Global Asset Management
2 19
(2)
3%
billion) 569 588
(CHF
30.6.12 NNM Market FX / Other 30.9.12
61
Investment BankIBD revenues
Significant market share improvement in Advisory and Debt Capital Markets
CHF USD Comparison in USD terms
215 372 383 263 397 403 ? Advisory +36%
12% 11% Improved rank and market share despite a
587 605 616 17% decline in global fee pool
503 522 557 Participated in 2 of top 6 transactions
182 245 221 206 257 ? Equity capital markets (18%)
194 Participated in 6 of the top 8 deals
144 2Q12 included revenue from a number
120 174 222 183 private structured transactions
206
240 ? Fixed income capital markets
(million) 201 122 167(million) 129 175 Significant increase in DCM market
Participated in 10 of the top 20 deals,
bookrunner
(150)(160)
(204)(213)
(288)(342) ? Other (33%)
Increased mark-to-market losses on
3Q11 2Q12 3Q12 3Q11 2Q12 3Q12 portfolio hedges and lower fees
Advisory Equity capital markets Fixed income capital markets Other
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
62
Investment BankEquities revenues
Equities performed well
CHF USD
217% 201%
783 759 820 3
3
630 286
274 300
251 272
247
227 121 238
99
274 291
347
(million) 291 280(million) 292
125 132
(11) (89)(10)(83)
(62)(67)
3Q11 2Q12 3Q12 3Q11 2Q12 3Q12
Cash Derivatives Prime services Other
Comparison in USD terms
Cash (n/m)
Strong performance on improved client trading against a global decline in turnover (lowest market turnover since 2005)
Derivatives +80%
Improved on gains from tightening funding spreads, offsetting weaker revenues in EMEA
APAC and the Americas held up in challenging markets
2Q12 was impacted by changes in own credit methodology and corrections related to prior periods
Prime services (2%)
Steady performance as improved funding revenues offset lower revenues in securities lending
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
63
Investment BankFICC revenues
Solid result with improved revenues in Credit and Macro up 9% QoQ
CHF USD
1% 0%
1,161
1,107 1,164
1,099 107 1,107 113
113
925 106
397 510
336 396 483 425
868
745 710 731 750 767
(million)(million)
(116)(113)(117)(123)
(214)(230)
(40)(42)
3Q11 2Q12 3Q12 3Q11 2Q12 3Q12
Macro Credit Emerging Markets Other
Comparison in USD terms
Macro +2%
Strong revenue growth in FX e-trading on increased customer volumes, more than offset by impact of subdued FX markets
Improved results in long-end and non- linear interest rates
Credit +20%
Strong improvement in flow trading across all regions
Solid performance in structured credit
Emerging markets 0%
Improved performance in Latin America while EMEA continued to lag
Refer to slide 1 for details about adjusted numbers, Basel III pro-forma estimates and FX rates in this presentation
64
3Q12 operating expenses
6,110
507
5,516 5,432 5,381
473 387 524 5,221 5,457
5,616 478 527 554
717 5,049 5,054 4,978
4,846
135 604 4,567 643 623
496 602
131 528 153 160
402 129 281 142 241 322
818 569 213 244 690 302
510
8,803
Of which CHF 3,045 million impairment
of goodwill and intangibles
3,042
Significant non-recurring items
WMA financial advisor compensation1
579
5,181 Contractors, other personnel expenses,
pension and other post-employment
benefit plans, social security2
WMA commitments and advances related
to recruited FAs2
Amortization of prior year awards
(discretionary bonus and other variable
1,696 1,745 1,623 compensation)2
1,739 1,747 1,646 1,738 Total variable compensation expense for
the respective performance year2
million) 1,712 1,596 1,539 1,882 1,591 1,826 1,954 Salaries2
(CHF Non-personnel expenses2
(359)(75)
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Refer to slide 1 for details about adjusted numbers, pro-forma Basel III estimates and FX rates in this presentation 65
1 Grid-based financial advisor (FA) compensation and other formulaic FA compensation
2 Excluding significant non-recurring items (restructuring charges and provision releases, 1Q12 Swiss pension fund credit and 2Q12 US retiree benefit plan credit)
Exposure to eurozone countries rated lower than AAA / Aaa1
Our direct exposures are limited and we continue to manage them carefully
30.9.12 Sovereigns2 Local Banks Other3 Total
(CHF million) governments
Before Net of Before Net of Before Net of Before Net of Before Net of
hedges4 hedges hedges4 hedges hedges4 hedges hedges4 hedges hedges4 hedges5
France 3,016 2,807 12 12 2,298 2,298 4,283 3,163 9, 608 8,280
Italy 2,601 1,273 115 115 911 911 2,342 1,755 5,969 4,053
Spain 174 174 51 51 3,0578 3,057 1,144 342 4,426 3,624
Austria 1,254 1,087 5 5 477 477 194 194 1,931 1,764
Ireland6 84 84 0 0 490 490 1,082 1,082 1,655 1,655
Belgium 921 906 0 0 146 146 103 103 1,169 1,154
Portugal 30 30 3 3 23 23 108 11 163 66
Greece 32 32 0 0 1 1 7 7 39 39
Other7 190 190
The majority of our net exposure relates to counterparty risk from derivatives and securities financing (26%) and trading inventory (35%) which are carried at fair market value
1 By at least one of the major rating agencies. Refer to pages 48 to 49 of UBSs 3Q12 report for more information
2 Includes central governments, agencies and central banks
3 Includes corporates, insurance companies and funds
4 Banking products: includes loans, loan commitments and guarantees. Traded products: after master netting agreements and net of collateral. Trading inventory: net long per issuer
5 Not deducted from the Net exposures are total allowances and provisions of CHF 27 million (of which: Austria CHF 14 million and France CHF 7 million)
6 The majority of the Ireland exposures relates to funds and foreign bank subsidiaries
66
7 Includes Andorra, Cyprus, Estonia, Malta, Monaco, Montenegro, San Marino, Slovakia and Slovenia. Split by counterparty type not disclosed
8 The majority of the banking products exposure shown to Spanish banks relates to secured facilities that are collateralized by non-European sovereign debt securities
Tax expense
3Q12 net tax benefit of CHF 345 million
Pre-tax loss (as reported) CHF 2,516 million
Net deferred tax benefit with respect to recognition of CHF (355 million)
DTAs
Other net tax expenses in respect CHF 85 million
of 3Q12 taxable profits
Tax benefits arising from the release of provisions in respect
of tax positions that had previously been uncertain CHF (75 million)
3Q12 net tax benefit CHF (345 million)
3Q12 effective tax rate 13.7%
67
Headcount
QoQ1
225
223 80
896 50 16
(1,041)
63,520 63,745
(FTEs)
30.6.12 30.9.12
Wealth Wealth Investment Global Retail & Corporate
Management Management Bank Asset Corporate Center
Americas Management
YoY1 96
(64) 14
(967) 10
65,921(1,266)
63,745
(FTEs)
30.9.11 30.9.12
(2,176)
1 3Q12 personnel allocations have increased by approximately 800 in Wealth Management, 250 in the Investment Bank and 50 in Global Asset Management, with a
corresponding decrease of 1,100 in Retail & Corporate. Refer to page 8 of UBSs 3Q12 report for more information 68
This Form 6-K is hereby incorporated by reference into (1) each of the registration statements of UBS AG on Form F-3 (Registration Number 333-178960) and Form S-8 (Registration Numbers 333-49210; 333-49212; 333-127183; 333-127184; 333-162798; 333-162799; 333-162800; 333-178539; 333-178540; 333-178541; and 333-178543) and into each prospectus outstanding under any of the foregoing registration statements, (2) any outstanding offering circular or similar document issued or authorized by UBS AG that incorporates by reference any Form 6-Ks of UBS AG that are incorporated into its registration statements filed with the SEC, and (3) the base prospectus of Corporate Asset Backed Corporation (CABCO) dated June 23, 2004 (Registration Number 333-111572), the Form 8-K of CABCO filed and dated June 23, 2004 (SEC File Number 001-13444), and the Prospectus Supplements relating to the CABCO Series 2004-101 Trust dated May 10, 2004 and May 17, 2004 (Registration Number 033-91744 and 033-91744-05).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UBS AG | ||
By: | /s/ Louis Eber | |
Name: | Louis Eber | |
Title: | Group Managing Director | |
By: | /s/ Sarah M. Starkweather | |
Name: | Sarah M. Starkweather | |
Title: | Director |
Date: October 30, 2012
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