Ubs AG 6-K, filed Feb 5, 2025
Ubs AG (AMUB)
6-K
2025-02-05
For: 2025-02-04
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Added on
April 06, 2026
About this 6-K
Ubs AG filed this 6-K on February 5, 2025.
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: February 5, 2025
UBS Group AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Indicate by check mark whether the registrants file or will file annual reports under cover of Form
20-F or Form 40-
F.
Form 20-F
☒
☐
This Form 6-K consists of the transcripts of the 4Q24 Earnings call remarks and Analyst Q&A, which
appear immediately following this page.
1
Fourth quarter 2024 results
4 February 2025
Speeches by
Sergio P. Ermotti
, Group Chief Executive Officer, and
Todd Tuckner
,
Group Chief Financial Officer
Including analyst Q&A session
Transcript.
Numbers for slides refer to the fourth quarter 2024 results presentation. Materials and a webcast
replay are available at
www.ubs.com/investors
Sergio P. Ermotti
Slide 3 – Key messages
Thank you, Sarah and good morning, everyone.
Before we provide an update on how we are delivering on our priorities to meet our 2026 commitments, let me
share some highlights for 2024.
Strong fourth-quarter results contributed to even stronger full-year financial performance, as we rebuilt profitability
across our businesses. Our full-year net profit of 5.1 billion and underlying return on CET1 capital of 8.7% reflect
our unwavering commitment to serving our clients, our diversified global franchise and the disciplined progress we
have made on our integration plans.
Throughout 2024, we maintained robust momentum as we captured growth across our global asset-gathering
platform and gained market share in the Investment Bank in the areas where we have made strategic investments.
With over 70 billion Swiss francs of loans granted or renewed during the year, and outstanding balance of 350
billion, we also maintained our commitment as a reliable partner for the Swiss economy, supporting families and
businesses to achieve their goals.
We delivered on all of our key integration milestones in 2024, including all major legal entity mergers, and the
successful completion of our client account migrations in Luxembourg, Hong Kong, Singapore and Japan in the
fourth quarter.
This builds upon the successful integration of our key operating entities, the optimization of our balance sheet and
the reduction of costs and risk-weighted assets in Non-core and Legacy. Combined, these milestones have
significantly reduced the execution risk of the Credit Suisse acquisition.
As a result, we remain confident in our ability to substantially complete the integration and deliver on our financial
targets by the end of 2026.
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Our capital position remains robust as we ended the year with a CET1 capital ratio of 14.3%. For the financial year
2024, we intend to propose a dividend of 90 cents, representing a 29% increase year-on-year. This is in line with
our intention to calibrate the proportion of cash dividends and share repurchases.
As we execute on our business and integration plans, we are building additional capacity to invest in our people
and to enhance our products and capabilities. This will allow us to better serve our clients and position UBS for
future success.
That includes the Americas, a region that remains a core component of both our asset-gathering foundation and
our capital-efficient business model.
In 2024, we started to make changes across the business to introduce new capabilities that will help increase the
operating leverage of our platform, improve profitability and drive sustainable growth.
Across all of our businesses and supporting functions, we continue to invest in technology, leveraging our strong
foundation to improve the client experience and enhance how we operate.
Now, I hand over to Todd who will cover the fourth-quarter results.
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Todd Tuckner
Slide 4 – Continued positive operating leverage in 4Q24 on higher revenues and lower costs
Thank you Sergio, and good morning everyone.
Throughout my remarks, I’ll refer to underlying results in US dollars and make year-over-year comparisons, unless
stated otherwise.
For the fourth quarter, profit before tax tripled to 1.8 billion. Revenue momentum in our core franchises and cost
synergies across the Group drove a 12-point improvement in operating leverage. Our EPS for the quarter was 23
cents with a 7.2% underlying return on CET1 capital. Our underlying cost-income ratio was 82%.
Slide 5 – 4Q24 net profit at 0.8bn, with integration continuing at pace
Looking at the drivers of our fourth quarter Group performance on slide 5. Total revenues rose by 6% to 11 billion,
driven mainly by strong top-line growth in Global Wealth Management and the Investment Bank, powered by our
capabilities and advice in supportive market conditions.
Operating expenses declined by 6% year-over-year to 9.1 billion, and were 1% lower sequentially as progress on
synergies and a stronger US dollar more than offset the expected 4Q tick-up in non-personnel expenses. This
achievement was supported by a lower overall employee count, which fell sequentially by another 2%, to below
129 thousand. The total staff count is down 27 thousand, or 17%, from our 2022 baseline.
Excluding litigation, variable compensation and currency effects, operating expenses decreased by 9% year-over-
year. The 4% quarter-over-quarter increase was caused by seasonally higher charges, including the UK bank levy
and increased marketing expenditures.
Our reported profit before tax for the quarter included 0.7 billion of revenue adjustments relating to PPA effects, a
remeasurement loss of 0.1 billion on an investment in an associate, and 1.3 billion of integration-related expenses.
Reported net profit was 0.8 billion in the quarter on an effective tax rate of 26%. We expect a similar tax rate in
the first quarter.
Slide 6 – Global Wealth Management
Turning to our business divisions, and starting with Global Wealth Management on slide 6.
GWM’s pre -tax profit was 1.1 billion, an increase of over 80% as revenues grew by 10%. Excluding litigation
charges, PBT rose to 1.2 billion.
Net new assets reached 18 billion and net new fee-generating assets were 13 billion, fueled by sales of mandates
and separately managed accounts. Flow performance this quarter reflects the maturity of over 50 billion of fixed-
term deposits associated with our 2023 win-back campaign. Like in previous quarters, we managed to retain over
85% on our platform, including converting over 20% into more profitable solutions, including mandates.
For the full year 2024, we acquired net new assets of 97 billion, representing a 2.5% growth rate. As I’ve
highlighted in the past, our net new asset achievement this year reflects several challenges that we successfully
navigated over the course of 2024.
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This includes retaining the vast majority of Credit Suisse invested assets despite significant levels of relationship
manager attrition, keeping the bulk of maturing fixed-term deposits as just mentioned in the context of 4Q, and
increasing profitability on sub-hurdle lending relationships from our balance sheet optimization efforts.
Collectively, while these factors weighed down flows by around 30 billion, importantly they’ve contributed to
enhanced profitability and returns. This is evidenced by the 3 percentage point year-over-year increase in revenues
over RWA.
Recurring net fee income increased by 12% to 3.3 billion as our invested assets grew sequentially to 4.2 trillion,
absorbing roughly 80 billion in FX headwinds. Client traction with mandates remained strong with around 5 billion
in net new mandates globally, mainly driven by sales of our differentiated discretionary solutions and supported by
continued momentum in SMAs in the US.
Margins held up sequentially and are expected to remain around these levels, especially as recently migrated clients
and those remaining on the Credit Suisse platform now have access to the full breadth of our CIO value-chain-led
offering.
This quarter we once again demonstrated the benefits of combining our leading markets solutions and capabilities
with our CIO’s investment calls. This drove a 12% increase in transaction-based revenues in an environment that
saw broad re-risking after the US elections.
Structured products, equities, and alternatives all recorded double-digit transaction revenue increases. Our
investments in capabilities, solutions, and unified teams support the durability of this revenue line and fuel our
ability to capture wallet-share in all climates.
Year-on-year transaction revenue growth was led by APAC and the Americas, up by 30% and 13%, respectively.
Net interest income at 1.7 billion was up 4% sequentially, reflecting improvements in both lending and deposit
margins. While fixed term deposit balances decreased in the quarter, we saw inflows into sweeps and current
accounts across our platform as our clients increased transactional balances in a constructive trading environment.
I would note that the planned sweep deposit pricing changes I mentioned previously went into effect for our US
advisory accounts in early December. Our 2025 outlook as a result of introducing these rate adjustments remains
unchanged.
Turning to our NII outlook for GWM. Since I offered an initial view on 2025 last quarter, we’ve seen a significant
divergence in rates expectations between the US dollar, on the one hand, and the Swiss franc and Euro on the
other.
This distinction is important for GWM. While our US business is effectively operated entirely in US dollars, in GWM’s
businesses outside the US, half of all deposits, and the majority of loans and low-beta transactional account
balances, are denominated in currencies other than the US dollar.
Looking at the rates outlook, the Federal Reserve is now expected to cut US dollar rates more gradually. Meanwhile,
both the Swiss and the European central banks are expected to continue to more actively cut.
Based on this, in the first quarter, we expect to see headwinds from lower rates, particularly in the Swiss franc and
Euro, and lower balances from deployment of sweep and transactional account balances, partially offset by higher
margins from balance sheet optimization. Combined with a lower day count effect, this is expected to result in a
low-to-mid single-digit-percentage sequential decrease in GWM’s NII.
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Looking further out, lower Swiss franc and Euro rates will remain a headwind to deposit margins, partially offset
by the benefits of continued balance sheet optimization, particularly on the deposit side. Net new loan growth
should also help. I should note that if we do see a more hawkish US dollar rates policy, while helpful to deposit
margins, this is likely to moderate the extent of re-leveraging, particularly in Lombard lending.
For full year 2025 compared to 2024, we expect a low single digit percentage decrease in NII, inflecting by 2Q,
with the second half of the year broadly flat versus 2H24.
Underlying operating expenses were unchanged from last year at 4.8 billion, with lower personnel and support
costs offset by higher variable compensation tied to revenues and increased litigation provisions. To offer a look-
through comparison, excluding litigation, variable compensation, FX, and last year’s FDIC special assessment, costs
were down 5% year-over-year.
Slide 7 – Personal & Corporate Banking (CHF)
Turning to Personal and Corporate Banking on slide 7.
P&C delivered fourth quarter pre-tax profit of 572 million Swiss francs, down 18%, primarily from lower interest
rates affecting net interest income, down 8%, and elevated credit loss expense.
Recurring net fee income increased by 8% driven by higher volumes of investment products and gross margin
expansion. Transaction-based revenues were up 13%, also on higher client activity.
Sequentially, NII decreased slightly by 1%. We offset some of the effects of the SNB’s third 25-basis point rate cut
from late September by moderately decreasing deposit rates and pricing loans to appropriately reflect risk and
capital costs.
After the 50 basis point cut by the SNB in December there is a reasonable likelihood that we’ll see interest rates
drop to zero by mid-2025.
The impact of near-zero rates will drive down deposit margins both sequentially and for the full year 2025.
Additional headwinds in 1Q are expected from the sequential day count effect and lower rates in US dollar and
Euro affecting deposit margins on transactional accounts.
Hence, for P&C’s Swiss franc NII, we currently expect a roughly 10% sequential decline in the first quarter. For full
year 2025, the drop will be somewhat more pronounced versus 2024, with NII expected to trough in the second
quarter and plateau thereafter.
From there, any move in interest rates, whether negative or positive, should be constructive to our NII and net
interest margin in P&C.
Credit loss expense was 155 million Swiss francs, a 25-basis point cost of risk on an average loan portfolio of 243
billion. The quarterly result was driven by Stage 3 charges, predominantly from new-venture financings and loans
to corporates in the metals and automotive industries, which have shown financial vulnerability in a challenging
market environment across Europe.
These exposures, by and large, are on the Credit Suisse platform, reflecting lending practices and underwriting
standards from the pre-acquisition period.
We expect CLE to remain elevated at around 350 million Swiss francs in 2025 as we continue to build allowances
for pre-acquisition Credit Suisse portfolios, with many exposures still having more than a year until maturity. In the
first quarter, we may see lower CLE versus the implied quarterly average due to seasonal factors.
6
Operating expenses in P&C were 1.1 billion Swiss francs, up 2%, and flat sequentially, as the business offset
increased investments in building up support functions related to its larger footprint through cost reduction
initiatives and synergy realization.
Slide 8 – Asset Management
Moving to Asset Management, on slide 8. Pre-tax profit increased by 20% to 224 million as strong cost discipline
more than offset lower revenues.
Overall revenues were down 7%, or 6% excluding gains on asset sales.
Net management fees declined by 5%, mainly from continuing shifts out of active equities compressing top-line
margins.
Performance fees were 44 million, compared to 52 million in the prior year quarter, with improvement in hedge
fund solutions more than offset by decreases across other products, including Fixed Income funds.
Net new money in the quarter was positive 33 billion, led by a large institutional inflow in passive Equities and net
flows into money market funds. For the full-year 2024, net new money was 45 billion, a strong result in light of
flow dis-synergies we were expecting from integrating Credit Suisse Asset Management.
Operating expenses were 15% lower, both year-over-year and sequentially, as the business is demonstrating good
progress in transforming its operating model and driving cost saves.
Slide 9 – Investment Bank
On to slide 9 and the Investment Bank. Pre-tax profit of 452 million was driven by strong revenue performance,
up 37% year-on-year.
Banking revenues increased by 19% to 675 million, with advisory, up 36%, and LCM, which more than doubled
its revenues, the main drivers of growth. Regionally, we saw particular strength in the Americas, up 33%.
Markets revenues increased by 44% to 1.9 billion with increased client activity on higher cash volumes and
supportive volatility across equities and FX. This led to our best fourth quarter Markets revenue on record with
particular strength in financing supported by all-time-high client balances.
For Markets, regional revenues in the Americas and APAC surged by around 50%, and grew by about a third in
EMEA, driven by broad-based increases across both equities and FRC.
Operating expenses were down 4% on lower personnel costs.
Slide 10 – Non-core and Legacy
On slide 10, Non-core and Legacy’s pre-tax loss in the quarter was 606 million. Revenues were negative 58 million,
mainly reflecting funding costs that, unlike in prior quarters, were not offset by gains on exits or the carry in our
now much smaller credit book.
Operating expenses were down by nearly 50% year-on-year and 5% sequentially, as we continue to make good
progress in driving out costs.
NCL risk-weighted assets were 41 billion, down 3 billion sequentially, mainly from position exits. LRD was down
15 billion, or 22% quarter-on-quarter.
7
Slide 11 – A balance sheet for all seasons as a key pillar of our strategy
Turning to our capital and balance sheet position on slide 11. As of the end of the fourth quarter, our balance
sheet for all seasons consisted of 1.6 trillion in total assets, including around 600 billion in end-of-period loans and
750 billion in end-of-period deposits.
Our loan portfolio reflected credit-impaired exposures of 1%, up sequentially by 4 basis points. The cost of risk in
the quarter increased to 15 basis points, as credit loss expense in our Swiss business drove this measure higher.
We ended the year with a sequentially unchanged CET1 capital ratio of 14.3%, as a decline in CET1 capital of 2.8
billion was offset by a proportionate decrease in risk weighted assets of 21 billion. CET1 capital was mainly affected
by the stronger US dollar as well as by higher cash taxes and dividend accruals, more than offsetting quarterly
profits. RWA likewise was lower on currency effects as well as asset size reductions, mainly in the IB and NCL.
Slide 12 – Strong execution in 2024, delivering ahead of plan
To summarize, our fourth quarter performance caps off a strong 2024 in which our Non-core and Legacy team
successfully ran down balance sheet and costs and our core franchises demonstrated strength and scale in delivering
for our clients, even while absorbing substantial costs associated with the integration.
With that, I hand back to Sergio for the investor update.
8
Sergio P. Ermotti
Slide 14: Executing on our proven strategy to deliver for all stakeholders
Thank you, Todd.
For over a decade, UBS has been a source of strength and stability for all of our stakeholders thanks to the consistent
execution of our capital-generative strategy and a commitment to maintaining a balance sheet for all seasons.
Our global capabilities empower strong collaboration across our businesses to deliver the best of UBS to our clients,
and our disciplined focus on risk and efficiency is at the forefront of our culture. This is why our clients continue to
extend their trust and confidence in UBS, and our employees are proud to work here. It is how we generate
significant value for our shareholders while remaining a consistent and reliable economic partner in the communities
where we operate. And it has also allowed us to be a source of financial stability for Switzerland and the wider
financial system in March of 2023.
The same principles guide us as we build an even stronger, safer and more efficient firm, and position UBS for
sustainably higher returns and long-term growth.
Slide 15: Unique globally diversified model focused on asset gathering businesses
Our unique business model, with our asset gathering businesses generating around 60% of our revenues, provides
us with an attractive risk and return profile that continues to stand out among our global peers.
We are the largest truly global wealth manager, and the leading universal bank in Switzerland.
These two key pillars of our strategy are enhanced by a portfolio of best-in-class capabilities across Asset
Management and our competitive, but capital-light Investment Bank.
With leading franchises in the world’s largest and fastest-growing markets, our regional diversification is a strategic
advantage and also provides us unique value for both our clients and investors.
Slide 16: On track to substantially complete the integration by the end of 2026
Turning to the integration.
As I highlighted earlier, we are on track with our plans thanks to the successful delivery of our key objectives in
2024, having completed over 4,000 milestones during the year.
Following the merger of our Parent Banks, we have now migrated over 90% of client accounts outside of
Switzerland onto UBS platforms. In addition, the integration of the Investment Bank is now complete, and in Asset
Management, we made good progress migrating portfolios onto our infrastructure and rationalizing our fund shelf.
We also continue to follow our technology decommissioning roadmap. To date, we have removed over 40% of
Non-core and Legacy’s applications, worked through 16 petabytes of data and reduced the number of legacy
servers by over 40%.
9
Thanks to our restructuring efforts and the active wind-down of NCL, we have captured almost 60% of our targeted
13 billion gross cost savings.
We will look to maintain this momentum in 2025 as our focus shifts to migrating the majority of client accounts in
Switzerland, and decommissioning over twelve hundred Credit Suisse models and applications.
We have always said that our progress on the integration of Credit Suisse will not be a straight line. Our
performance in 2025 will continue to reflect significant restructuring work necessary to integrate our businesses
and right-size our cost base.
Having said that, our progress to date supports an incremental improvement in our returns this year compared to
our previous guidance.
We remain confident in our ability to substantially complete the integration and deliver on our targets and ambitions
by the end of 2026. At the same time, we will continue to invest to drive sustainable growth and long-term value
beyond the integration.
Slide 17: Continuing to invest in technology to drive business outcomes
for the future.
We continue to invest in our best-in-class Cloud infrastructure with over 70% in the public and private Cloud. This
is a key facilitator of our integration progress, allowing us to reduce complexity and costs as we remove legacy
applications, while maintaining our compliance and security standards.
It is also an important catalyst for innovation as we continue to invest in tools to enhance our client offering and
increase efficiency and effectiveness.
A good example is our roll-out of 50,000 Microsoft Copilot licenses to our employees in the largest deployment
within the global financial services industry to date.
We are also seeing strong benefits from our proprietary generative A.I. solutions. One example is in the U.S., where
our advanced analytics platform supported our financial advisors with over 13 million automated insights and
actionable opportunities. Solutions like this improve productivity and our ability to deliver tailored solutions to our
clients.
Slide 18: On track to deliver on our cost and profitability ambitions in our core businesses
We are on track to deliver on our 2026 exit rate ambitions across our core businesses. While we are encouraged
by our progress to date, this slide also reflects the significant work that lies ahead to achieve our objectives.
In GWM, we remain focused on leveraging our enhanced capabilities and solutions to maintain client momentum.
At the same time, we aim to capture the benefits of integration-related synergies and improve advisor productivity.
With the client account migrations achieved in APAC, we are even better placed to leverage our number-one
position in the region to drive market-leading growth.
10
In the Americas, we are making targeted investments to deepen relationships with our ultra-high net worth clients,
accelerate growth in the high net worth and core affluent segments and expand our loan and deposit offering.
These growth initiatives will be supported by actions we have already taken to enhance our technology offering,
simplify our organizational structure and improve execution.
I am confident in our ability to deliver mid-teen PBT margins as we exit 2026. Then, the business will be better
positioned to further expand profit margins and capture long-term growth. Todd will take you through our plans
in more detail.
In P&C, as we have said previously, declining Swiss franc rates are expected to continue to affect revenues. We are
still de-facto operating two separate banks, including branches, staff, and technology, but we are well positioned
to start delivering cost synergies later this year and into 2026 as we unite those platforms.
Unfortunately, as we reported previously, this will lead to certain role reductions in Switzerland. We plan to mitigate
the impact of these as much as possible through natural attrition, early retirement and other measures.
For those impacted we will provide proactive support in helping to find a new job, and a comprehensive social plan
that combines the strongest components of the prior UBS and Credit Suisse plans. I am also especially proud of
efforts to prioritize the hiring of internal candidates: over two-thirds of open positions in Switzerland were filled
this way in 2024.
In Asset Management, we remain focused on continuing to capture opportunities where we have a differentiated
and scalable offering.
This includes our newly launched Unified Global Alternatives unit, which makes us the fifth-largest Limited Partner
in Alternatives with promising growth prospects. At the same time, we will remain focused on realizing cost
synergies and structural efficiencies to create capacity for investments and improve profitability.
In the Investment Bank, I am encouraged by the progress our fully integrated teams are making to deliver for clients
as we seize market share gains in our areas of strategic importance.
As we continue to deploy our products and services across our broader institutional client base and increase
connectivity to GWM and P&C to deliver on our return ambitions, we will maintain our well-established risk and
capital discipline.
Slide 19: Well placed to balance resiliency, growth and attractive capital returns
We continue to target a CET1 capital ratio of around 14%. At this level, we will be able to go through the
integration period and beyond with a strong capital buffer relative to minimum requirements. This will allow us to
remain a source of stability while we self-fund growth and deliver attractive capital returns to our shareholders.
For the 2025 financial year, we plan to accrue for an increase in our dividend of around 10 percent. We also plan
to repurchase another 1 billion dollars of shares in the first half of this year, and up to an additional 2 billion in the
second half. As in the past, our share repurchases will be consistent with delivering on our financial plans and
maintaining our CET1 capital ratio target of around 14%, and assuming no material, immediate changes to the
current capital regime.
11
Our ambition for capital returns to exceed pre-acquisition levels in 2026 remains unchanged.
Now, following the publication of the Parliamentary Investigation Commission’s report in December, we expect
further developments in the ongoing review of the capital regime in Switzerland. Based on the latest public
communication from the State Secretariat for International Finance, the public consultation on the proposal is
expected to begin in May. Therefore, at this time, we are not in a position to offer any new information.
As we have said in the past, we support the vast majority of proposals from the Swiss Federal Council on how to
enhance the regulatory framework in Switzerland. In our discussions with Swiss authorities, we continue to maintain
our view that the Swiss capital regime is one of the strongest when consistently and coherently applied. While it is
also crystal clear that the overall quality of our capital is of a much higher standard than Credit Suisse’s, we accept
that some adjustments and clarifications to the current regime may be necessary.
However, a disproportionate outcome in terms of requirements at the Parent Bank level would drive our capital at
the Group level to overshoot the current requirements. Therefore, we believe that any significant change is
unjustified. Offsetting the consequences of higher requirements would make us uncompetitive domestically and
abroad, hamper our ability to help clients grow and, importantly, make banking services more expensive for Swiss
families and enterprises in the long run. It will also damage the nation’s standing as an attractive global financial
center and ultimately hurt our position as the third-largest private employer in Switzerland.
Of course, this would have an impact on our returns on capital. But even more importantly it would impede our
ability to compete for capital in the global marketplace, particularly in a moment of financial stress. As a reminder,
our current ambitions are based on a 14% CET1 capital ratio.
I’ve been reading some recent reports. So, let me be very clear. There are no easy fixes in terms of repatriation of
capital from foreign subsidiaries or balance sheet optimization that are not already included in our plans.
Therefore, while I am extremely confident in our capital generation capacity under any outcome, our shareholder
returns and returns on capital would be affected. Todd will provide more detail later.
We want to continue to be a source of strength for our clients, employees, shareholders and Switzerland.
For that reason, it is very important that a comprehensive cost/benefit analysis on the consequences of any material
changes of capital requirements is carried out. We remain hopeful that any potential changes will be proportionate,
targeted, internationally aligned and coherent with the strategic objectives set out by the Swiss Federal Council.
Slide 20: Rebuilding profitability and positioning for sustainable growth post-integration
As I mentioned before, we have substantially de-risked the integration across many dimensions.
This is reflected in our return profile, which has significantly improved compared to a year ago.
Our goal is to continue to rebuild profitability in 2025 as we further progress our integration plan and capture the
benefits of our enhanced scale and capabilities across our businesses.
We remain well positioned to deliver on our 15% return on CET1 capital target by the end 2026. We will then look
to achieve UBS’s pre-acquisition levels of profitability and deliver on our 2028 ambitions.
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We have achieved so much over the last two years, and I am proud of the immense effort of all of my colleagues.
But there is no room for complacency, and we remain focused on serving our clients, delivering on the next phase
of the integration and fulfilling our growth initiatives as we position UBS for a successful future.
With that, I hand back to Todd for more details on our plans.
Todd Tuckner
Slide 21 – Growth in core business profitability to drive returns
Thanks again, Sergio. I will now offer a more detailed perspective on our financial outlook for 2025 and the
trajectory towards our exit-2026 targets and ambitions, starting on slide 21.
With each of our core businesses well positioned to drive sustainable growth, in 2025 we expect to generate an
underlying return on CET1 capital of around 10% versus 8.7% in 2024. This year-on-year increase reflects our
expectation that Non-core and Legacy will weigh on our financial performance more significantly than last year.
Importantly, this also means that our core businesses are expected to be the main drivers of year-on-year growth
in returns despite continuing to absorb, together with NCL, the costs associated with restructuring and integrating
the businesses, legal entities, infrastructure and teams inherited with the acquisition.
For full-year 2025, we expect an effective tax rate of around 20%, as we aim to implement tax planning later in
the year, mainly related to the combination of legal entities in the US.
The acceleration we expect in 2026, when our in-year return on CET1 should be low teens and our exit-rate around
15%, will be driven predominantly by the benefits from more than three years of extensive integration, restructuring
and transformation effort.
As I’ve highlighted in the past, we continue to expect more significant cost reductions across the core businesses
as we retire legacy infrastructure and create further staff capacity.
Revenues should also receive an uplift as we complete the integration and play more on our front foot with no
distractions, generating alpha across our core franchises.
Moreover, most of the headwinds to returns we see in 2025 are expected to dissipate by the end of 2026. These
include NII and credit loss expenses in Switzerland, with the latter, starting next year, expected to reflect a
substantial conversion towards P&C’s historical average cost of risk as a result of increased allowances and legacy
Credit Suisse loan maturities.
Additionally, as we exit 2026, we expect to see better profitability in our US wealth business, and further reductions
to our Non-core and Legacy portfolio, decreasing its drag on resources and profits.
As I’ve mentioned before, the plans underpinning our ambitions are largely determined by factors within our
control. While we expect to continue to invest for growth, we retain the necessary optionality and operating
flexibility to support our profitability and returns ambitions, regardless of market conditions.
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Slide 22 – Achieved 58% of gross cost saves ambition, on track to ~13bn by year-end 2026
Turning to costs on Slide 22. As of year-end, we‘ve delivered 7.5 billion of cumulative gross run-rate cost saves, of
which 3.4 billion in 2024, putting us well on track towards achieving our goal of around 13 billion by the end of
2026.
Of the cumulative gross saves achieved to date, 4 billion contributed to net cost reductions, with much of this
progress driven by NCL.
Importantly, while the overall cost base decreased by 10% from its 2022 base line, if we exclude litigation and
variable compensation linked to revenues, we delivered a 17% net reduction in underlying expenses on this look-
through basis.
Looking out over the next two years, we expect around 5 and a half billion of additional gross cost saves across
technology, third party spend, real estate and from unlocking additional staff capacity.
As we’ve highlighted previously, while we remain continuously focused on driving cost savings by reducing
duplication and streamlining wherever possible, we do not expect our sequential cost reduction to be linear.
The impact on our cost base varies each quarter, depending on the timing of large-scale integration initiatives that
drive efficiencies across infrastructure, real estate and workforce optimization.
Over the next two years, the most meaningful driver of cost reductions will be the decommissioning of legacy
infrastructure, with the most prominent example the retirement of the Swiss platform, which will only happen after
the client account migration is finalized next year.
At that point, we’ll decommission the associated hardware, data centers and software applications, including
systems in the middle and back office that are linked to client facing platforms.
The continued run-down of NCL and further rationalization of our real estate footprint and legal entity structure
will also support our realizing cost synergies over the next two years as we work towards our exit-2026 cost/income
ratio target of less than 70%.
Moreover, with almost 60% of our gross cost save ambition achieved through the end of 2024, we now have a
clearer line of sight as to the costs to achieve the successful completion of our integration plans.
We now expect cumulative integration-related expenses to total around 14 billion. The 1 billion in incremental
spend largely compensates for lower-than-anticipated staff attrition levels and accelerated real estate exits. It also
accounts for investments in new opportunities to unlock long-term value creation in connection with select Credit
Suisse businesses.
Slide 23 – GWM – Unrivaled scale with interconnected global franchises
Turning to our business divisions and starting with Global Wealth Management, on slide 23.
With over 4 trillion in invested assets, our scale, global connectivity, innovation and CIO-led advice and solutions
uniquely position us to capture wallet and seize growth opportunities across our global footprint.
GWM Americas, which comprises our US, Canada and Latin America wealth businesses is a leading wealth
management provider, with 2.1 trillion of assets served by nearly 6 thousand financial advisors.
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In Switzerland and EMEA, we’re the number one player, combining our global offering with regional adaptations
and client proximity.
And, in APAC, with a broad and well-diversified footprint, we’re the number one wealth manager, twice as large
as our next closest competitor.
Slide 24 – GWM – Capitalizing on integration and growing the platform
Moving to slide 24. In 2024, GWM recorded an underlying pre-tax profit of almost 5 billion and an underlying
cost/income ratio of 80%, while restoring its capital efficiency to levels similar to those before the acquisition.
In 2025, returns are expected to grow year-over-year as we continue to capitalize on our enduring competitive
advantages, underpinned by secular tailwinds.
The industry trends we see accelerating across our global family, ultra and high net worth client segments, including
legacy and longevity-based planning needs, geographic wealth migration and multi-disciplinary client solutions,
play right to our strengths. We expect these dynamics to drive revenue growth in 2025.
Moreover, our teams of advisors, investment managers and solution specialists are leveraging our client account
migration efforts as a unique opportunity to review and rebalance client portfolios, while supporting our clients
during their transition to the UBS platform. This work supports our outlook of continued, increasing mandate
penetration and gross margin stability.
Also, GWM’s costs are expected to decrease over the course of 2025, principally as we decommission platforms
following the first wave of client account migration work completed last year.
As in 2024, GWM’s net new asset ambition will continue to reflect the actions and other dynamics I’ve highlighted
that support higher pre-tax margins and returns on attributed equity, but, at times, come at the expense of flows.
While in Switzerland, EMEA and APAC, the impact on flows is expected to soften over the course of the year, in
the US, our efforts to align financial advisor incentives with our strategic priorities may result in a short-term increase
in FA attrition, creating an additional headwind for net new assets in the coming months. We therefore maintain
our net new asset ambition of around 100 billion for 2025.
Yet, in 2026, with the integration behind us, and flow headwinds fully addressed, we expect GWM net new assets
to begin to accelerate towards our ambition of 200 billion per annum and over 5 trillion in invested assets by 2028.
Moreover, the improvement in ECM activity we’re starting to observe across the globe should ultimately play to our
asset-gathering strengths. This coincides with increasing levels of monetization among wealth management clients,
which is expected to translate into greater opportunities to intensify engagement, capture share of wallet, and
deliver advice and solutions.
Slide 25 – GWM Americas – Strong franchise with upside on profitability
Moving to the Americas on slide 25.
Our Americas wealth business, our foothold into the world’s largest wealth pool, is a key pillar of our long-term
growth strategy and value proposition to clients.
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In addition to accounting for around 50% of our total asset base, it also contributes a similar proportion to GWM’s
global revenues. Given the strategic importance of the Americas business, we recognize that improving its financial
performance is both a necessity and a priority.
Since 2019, we’ve grown the region’s invested assets and revenues at a CAGR of 8% and 4%, respectively, and
delivered profit margins averaging mid-teens. After reaching a record pre-tax margin of 19% in 2021, we’ve seen
profitability retreat to its current level of around 10%.
While our revenues have grown, expenses have grown faster.
With a business model mostly geared towards the most financially sophisticated ultra and family clients, the post-
pandemic market dynamics of rising equity prices and soaring interest rates caused a shift in our revenue mix that
drove up variable compensation levels and compressed profit margins.
At the same time, technology costs were increasing as part of our efforts to improve and modernize the digital
experience for our clients and advisors, but also to address past investments in large programs where delivery had
been suboptimal. On top of this, the cost of recruiting advisors, back office spend and litigation charges all grew.
To address these challenges, we’re changing how we operate to improve profitability and position the business for
more efficient and sustainable growth.
Since the end of last year, we’ve already taken actions to streamline our organizational structure, improve cost
discipline and align the incentives of our financial advisors to our strategic objectives. As these changes take hold,
and given our intention to fund incremental strategic investments, we expect our pre-tax margin in 2025 to remain
at broadly current levels. We then expect to make more material progress and steadily improve towards mid-teens
by 2027.
At that point, the business will be better positioned to further expand its profitability and help the global wealth
franchise deliver beyond its end-2026 target of a greater than 30% underlying pre-tax margin.
Let me highlight the key changes we’re implementing on slide 26.
Slide 26 – GWM Americas – Working to deliver ~15% PBT margin by 2027 (1/2)
First, on service models. Our strong track record in serving sophisticated clients demonstrates the effectiveness of
close collaboration across the organization. This is clearly reflected in the 21% year-over-year increase in Americas’
transactional revenues after we introduced joint coverage of GWM clients with IB markets specialists.
Moreover, our experience tells us that the use of one or more of our specialized capabilities has a meaningful
multiplier effect on revenue generation. We’re building a regionally-aligned, multi-disciplinary team approach, and
extending this offering to a broader population of our existing ultra-high net worth clients to accelerate revenue
growth. We’re rolling out this set-up immediately, and scaling it over the course of 2025.
Second, on client mix. Going forward we intend to better balance our client base across wealth bands by increasing
investment and penetration in the high net worth and core affluent segments to drive scale and profitability.
To that end, we’re streamlining and automating product and content distribution and developing more tailored
segment-specific solutions, leveraging our CIO and National Sales capabilities.
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In addition, we’re investing in our digitally-led advice model in the Wealth Advice Center to make it a more
meaningful contributor to organic growth and to lower our cost to serve. By more than doubling our Advice Center
staff, we aim to create further capacity to acquire and serve more clients and increase wallet with existing ones. In
addition, the Wealth Advice Center becomes an effective pipeline for future FAs and a more cost-efficient way to
scale our business.
Another key aspect of our rebalancing efforts relates to enhancing our feeder channels. We intend to expand
sources of asset acquisition by revising our referral and incentive structures while centralizing and investing in digital
marketing. We’re also developing a comprehensive, integrated workplace wealth solution across equity and
retirement plans, and financial planning and wellness. We believe a signature workplace wealth offering with state-
of-the-art digital capabilities will serve as a highly effective client-lead generator, aligning with our priority to
improve penetration across wealth bands.
Third. On the capabilities side, we’re taking critical steps to build out a full suite of banking capabilities to enhance
our ability to serve our clients and their business interests. This will help us expand our access to deposits, better
balance our revenue mix, deepen client relationships, and, importantly, foster enduring engagement and
connectivity between our clients and UBS.
Expanding and enhancing our banking product offering requires that we obtain a National Charter, a multi-year
process that is presently in full swing.
Slide 27 – GWM Americas – Working to deliver ~15% PBT margin by 2027 (2/2)
Now moving to slide 27.
Underpinning these initiatives and their success is a necessary operational re-alignment of the structure,
performance culture and tech strategy in our Americas wealth franchise.
So, fourth, effective January first, we simplified the organizational structure to drive greater collaboration, reduce
duplication and create synergies, thereby contributing to improved productivity and efficiency. This includes
regionally aligning our client-facing teams, reducing management layers and fostering clear accountability and
faster decision-making.
Recently, we also announced changes to our financial advisor compensation model. We aim to better align FA
incentives with the strategic goals of the firm by rewarding net new money, new client acquisition and the
broadening of existing client relationships, with a specific incentive for NII growth.
While we designed these changes to incentivize greater production and ultimately higher compensation levels for
advisors in full sync with our strategy, we may see a short-term rise in FA attrition, which is reflected in our pre-tax
margin expectation for 2025.
And finally, we’re implementing a strategic re-set in terms of how we invest and modernize our technology
infrastructure. We’re now delivering new and advanced digital capabilities in a dynamic, modular fashion that make
it easier for our clients and advisors to do business with, and on behalf of, UBS.
This approach will enable more efficient execution of our technology roadmap with improved payback, which,
together with an expanded tech budget, will create additional capacity to fund innovative solutions to improve
advisor productivity and drive growth.
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We believe these actions, which are being decisively executed by our new leadership team, will drive margins to a
mid-teens level by 2027, while positioning the Americas wealth business for long-term growth.
A final word on providing more visibility to track our performance going forward. While the ultimate measure of
our progress in the Americas is improvement in our regional pre -tax margin, beginning in 1Q, we’ll enhance our
regional disclosure by breaking out revenue across the various categories and including prior period comparatives.
Slide 28 – P&C – A core pillar of our strategy and reliable partner to the Swiss economy
Turning to slide 26 and onto our Swiss business. As the leading bank for corporate and private clients in the country,
our Swiss universal bank, with P&C at its core, showcases the power of close collaboration, creating value for
clients.
Even while absorbing NII and CLE headwinds, optimizing its balance sheet, and preparing for the client account
migration, P&C alone contributed over one third of the Group’s 2024 underlying pre-tax profits.
As we expect the headwinds I highlighted earlier to weigh on P&C’s returns in 2025, we aim to partially mitigate
the effects of these challenges by growing non-NII revenues, while also striving to minimize client and asset outflows
during the migration process.
Moreover, the completion of the client account migration work will allow us to realize cost synergies and further
invest in digital capabilities improving the client experience and efficiency of our platform.
By 2026, we intend to fully capitalize on growth opportunities with no distractions. Our Swiss business will be
uniquely positioned to offer exceptional value throughout the client lifecycle by delivering a comprehensive suite
of services spanning wealth management, asset management and investment banking.
Our primary focus will be on reinforcing our standing as the go-to bank for large corporates, entrepreneurs and
emerging affluent clients with leading financing, asset servicing and wealth advice capabilities.
This positioning, coupled with a more streamlined cost base, give us confidence in our ability to grow the P&C
business at least as fast as Swiss GDP, while delivering a cost/income ratio of less than 50% and a pre-tax return
on equity of near 20% by the end of 2026.
Slide 29 – AM – Driving focused growth and improving operating leverage
I now turn to Asset Management on slide 29.
Our strategic positioning, expanded product offering and enhanced regional scale in select markets are already
supporting healthy momentum in Asset Management. Despite the impact of the integration, we saw 45 billion in
net new money enter our platform in 2024 while we remain focused on continuing to capture opportunities where
we have a differentiated and scalable offering.
This includes our recently launched Unified Global Alternatives unit, which, with nearly 300 billion in invested assets,
makes us a leading global player and top-5 limited partner. By combining our leading manager selection franchises
across GWM and Asset Management, we can now offer our wealth management and institutional clients access
to exclusive investment opportunities, while providing GPs with a single point of access to the full distribution power
of UBS.
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Overall, with a focus on alternatives, improved traditional investment performance and customized client solutions
at scale, we continue to expect positive net new money growth in 2025 while completing our fund shelf transition
and platform consolidation.
At the same time, we’re investing in our existing platform to build-out key capabilities, create cost efficiencies and
support our AI strategy.
We’ll also remain focused on realizing cost synergies from the integration and driving structural operational
efficiencies from our strategic cost program. Together with further exits of non-strategic businesses, these efforts
are expected to improve our profit margin in Asset Management to above 30% by the end of 2026.
Slide 30 – IB - Integration complete, unlocking opportunities for long-term value
Now moving to the Investment Bank, on slide 30.
Over the last twelve months, we’ve generated more than half a billion of incremental underlying revenue in Global
Banking and delivered record performance in Global Markets, including reaching record market share in Cash
Equities.
Looking forward, with favorable market conditions, the completion of the Credit Suisse integration, and earlier
investments starting to pay off, we aim to enhance our IB’s returns in 2025.
In Banking, we remain encouraged by our pipeline in M&A and LCM and our improved position in the Americas,
which together are expected to support year-on-year revenue growth in 2025.
I should note that, while there continues to be broad-based positive sentiment around the market backdrop, global
fee pools in January were off by more than 20% year-on-year. Additionally, despite greater market activity in
equity capital markets, productivity improvement visible in our own ECM business is more likely to yield meaningful
revenue growth later in 2025 and into 2026, considering the timeline of our pipeline build.
This said, with market share in the Americas over two times pre-acquisition levels, we remain confident in our ability
to double Banking revenues in 2026 compared to our 2022 baseline.
It’s also worth highlighting that our Investment Bank will be the only major player in the US and Europe
implementing final Basel III regulations, and in particular FRTB. Upholding our capital-light business model despite
this additional cost of capital, the IB remains committed to achieve its pre-tax return on equity ambition of 15%
through the cycle while continuing to consume no more than 25% of the Group’s risk weighted assets.
Slide 31 – NCL – Run-down well ahead of schedule
Turning to Non-core and Legacy on slide 31.
The performance delivered by the Non-core and Legacy team in 2024 contributed to a significant acceleration in
our de-risking, cost saving and capital release plans.
In particular, what we achieved during the last 6 quarters has fundamentally altered NCL’s balance sheet and risk
position entering 2025, with RWA from its Credit, Securitized Products, Equities and Macro books reduced by over
70%.
In addition to now being much smaller, and yielding less net carry, these books are broadly hedged against market
moves, thereby effectively mitigating risks but also limiting revenue upside.
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Additionally, a significant portion of the funding costs associated with the overall portfolio relates to long-dated
Holdco and Opco debt that Credit Suisse issued during its crisis. These instruments are prohibitively expensive to
redeem prior to maturity, making them a sticky component of NCL’s costs, irrespective of funding needs.
As a result, for full year 2025, we estimate NCL’s top line at around negative 500 million, mainly from funding
costs, with revenues from remaining fair value positions and continued exits expected around zero. Excluded from
this estimate is a gain of around 100 million expected in the first quarter from closing the sale of Credit Suisse’s US
mortgage servicing company that we announced last year.
We also anticipate NCL’s underlying operating expenses ex-litigation to continue to reduce over the course of 2025,
averaging around 450 million per quarter.
Accordingly, in 2025, NCL’s underlying pre-tax loss excluding litigation is expected to be around 2.2 billion, albeit
with sequential improvements as expenses and consumption-based funding costs decrease.
This compares to an underlying pre-tax loss in 2024 of around 800 million, inclusive of litigation releases. 2024’s
performance benefitted from net carry income and our exiting positions at prices above book value, neither of
which is expected to repeat at similar levels. Consequently, in 2025, NCL is expected to substantially weigh on
returns year-over-year.
Looking further out, we expect NCL to exit 2026 with less than 5% of Group RWA, consisting of less than 10 billion
of market and credit risk. We also expect to exit 2026 with pre-tax loss of under 1 billion as the business continues
its strong cost reduction trajectory. This is anticipated to consist of annualized operating expenses of around 750
million and annualized net funding costs of around 200 million.
We then intend to run down NCL’s legacy operating expenses to a level below 250 million by the end of 2028 with
funding costs tapering over an extended timeframe as legacy Credit Suisse funding matures. By the end of 2028,
we forecast around 100 million of legacy funding costs per annum, fully running down by 2033.
Our outlook for the run-off of NCL’s operational risk RWA for now remains in line with the trajectory we modeled
under our internal method and disclosed previously. This reflects the fact that, unlike what is expected to eventually
apply in the US, UK and across Europe, the 2025 Swiss implementation of the standardized approach imposes an
internal loss multiplier well above 1, thereby resulting in significant RWA primarily for losses and matters we
inherited from Credit Suisse.
Slide 32 – Disciplined management of capital, liquidity and funding
Picking up on my earlier comments, slide 32 showcases our strong financial position at year-end 2024 and related
regulatory measures. Our balance sheet for all seasons underpins our ability to consistently deliver for our clients
and shareholders, while we ourselves maintain resilience through disciplined risk management and strong capital
and liquidity levels.
At the end of 2024, our Group total loss-absorbing capacity stood at 185 billion, with a going concern capital ratio
of 17.6%, and, as mentioned, a CET1 capital ratio of 14.3%.
We closed 2024 with AT1 capital at 3.3% of RWA. During the year, we successfully issued 3.5 billion in AT1 as we
build towards our ambition and regulatory allowance of 4.3% of RWA. Given our progress to date and based on
our projected 2025 funding needs, we expect our AT1 capital to remain at current levels through 2025 with new
issuance offsetting potential calls.
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Gone-concern capital at year-end was 98 billion. As a reminder, while this is around 40 billion above the Group
regulatory minimum, our binding constraint is UBS AG’s standalone requirement. Looking ahead, we’re targeting
to bring down Group HoldCo to around 90 billion by the end of 2025 while still retaining resilient buffers over
regulatory minimums. This target, which is expected to contribute substantial savings in funding costs, is based on
the expectation that UBS AG standalone requirements will decrease as a result of further balance sheet reductions
and the reorganization of remaining former Credit Suisse operating companies.
UBS AG’s standalone CET1 capital ratio at year-end is estimated to be 13.5%. For the foreseeable future, we expect
UBS AG to operate with a standalone CET1 capital ratio in the range of 12.5% to 13%, around 2 and a half points
above the current regulatory minimum on a fully applied basis.
This guidance factors in the effects of our ongoing integration efforts and also considers the prospect of settling
Credit Suisse legacy litigation matters that could result in charges to the parent bank despite coverage at the Group
level from PPA reserves established on the acquisition date. This target capital level also accounts for planned
dividends and capital from subsidiaries.
During the fourth quarter, 13 billion of capital was repatriated to the parent bank from its subsidiaries in the UK
and the US.
Of the total, 6 billion was paid up from UBS Americas Holding. The UK subsidiary, Credit Suisse International,
repatriated 7 billion, with around 5 billion of additional distributions expected as we continue to unwind or transfer
its positions, subject to customary regulatory approval.
As Sergio mentioned, it’s important to note that we’ve planned for this distribution of capital from subsidiaries
since the acquisition. As such, it forms part of our capital return ambitions while maintaining our target capital
ratios at both the Group level and the parent bank.
Therefore, broadly speaking, new capital requirements from Too Big To Fail imposed at the parent bank level would
need to be funded by a higher retention of profits, consequently leading to an overshooting of capital at the Group
level and resulting in a lower overall return on CET1 capital, all other things being equal.
On to liquidity and funding. As we aim to balance efficiency with resiliency and safety, over the past 18 months,
we’ve been maintaining our LCR above pre-acquisition levels. This approach was necessary to facilitate the phase-
in of the more stringent Swiss liquidity requirements, which has now been completed, and to sustain a conservative
liquidity profile during the initial stages of our balance sheet stabilization and integration process.
Going forward, we expect to operate with an LCR below our 4Q24 level of 188%, reflecting continued efforts to
manage towards a more efficient funding structure and reduced uncertainties associated with execution risk.
Overall, our current funding strategy focuses on enhancing the quality of our liability portfolios while delivering
cost efficiencies. This involves the right-sizing of our AT1 and TLAC stacks, disciplined deposit pricing, and active
management of our liabilities across tenors and products to ensure a robust, diversified, and resilient funding profile.
Coupled with significant balance sheet reductions achieved in 2024 and tighter spreads, these measures have
already generated annual funding cost savings of 650 million, with an additional 350 million expected by 2026.
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Slide 33 – Balance sheet optimization funds profitable growth
Turning to slide 33 on RWA and starting with an update on the implementation of the final Basel III reforms, which
in Switzerland took effect on January 1st.
We intend to report a day-1 impact of around 1 billion of incremental RWA, broadly neutral to our CET1 capital
ratio, a result reflective of many months of intense, diligent preparation. This amount of RWA includes increases
related to FRTB of 9 billion, decreases from credit-risk related adjustments of 1 billion, and a reduction in operational
risk of 7 billion.
Looking at our expectations through 2026. Over the next two years, we expect our Group RWA to increase by
around 2 percent at constant FX from our 1 January 2025 pro-forma levels. This reflects around 15 billion higher
RWA from business growth in the core businesses, with the offset driven by the ongoing run-off in NCL.
Summing this up, we get to the same expected RWA level at the end of 2026 as we guided a year ago. However,
with faster NCL reductions than foreseen, a lower than expected headwind from Basel III finalization, and
accelerated benefits from our balance sheet optimization efforts, we increased capacity to support additional RWA
growth in our core businesses to drive incremental revenues.
Slide 34 – Reiterating our financial targets and long-term ambitions
In conclusion, we’re pleased with the progress and achievement made in 2024. And as we move forward, we’re
confident in our ability to successfully deliver on our integration plans, meet our financial targets and drive long-
term value creation for our shareholders.
With that, let’s open up for questions.
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Analyst Q&A (CEO and CFO)
Chris Hallam, Goldman Sachs
Yeah. Good morning, everybody. So on integration, on the one hand, you ran ahead of plan in 2024, clearly,
the RoCET1 has ended up much better than expected, but on the other hand, you're also guiding to around an
extra 1 billion in cumulative integration cost by year end 2026 with an unchanged exit rate on returns. So, I
guess, to what extent can we characterize this? Is it essentially the easy part of the integration has now come
to an end and now the hard work on decommissioning and data integration begins, i.e., have we seen, have
we sort of front loaded the integration tailwinds or is there still scope to outperform here over the next couple
of years?
And then second, on capital, you have the caveats on the buyback target that this is on the basis of no material
and immediate change in the current capital regime. What's your assessment of the likelihood that such
changes could be both material and immediate, versus the potential for them being material, but with a long
phase in or smaller than expected, but with immediate applicability? And what is your best sense on when we
might get final clarity and resolution on this topic? Sergio, I think you mentioned earlier that the public
consultation begins in May. Thank you.
Sergio P. Ermotti
Let me pick up the second question and then I'll pass it to Todd. So, I think in terms of, you know, the
caveating on our capital returns is quite consistent with previous language. You know, being, you know,
staying at 14%, delivering on our financial plans, but also reducing the risk of the execution of the integration.
So in that sense, you know, I just want to remind that the massive migration of data we're going to go through
in 2025 creates potential operational risk. So we have to be prudent about how we also look at share
buybacks. Having said that, I'm still confident that we will be able to do that.
Now, you know, I have no more visibility than you have in respect of how things are going to develop other
than what is publicly presented. I have, you know, I can continue to say that it is for us not appropriate to
speculate on any outcome. And, you know, so we will engage till the last minutes to make sure that whatever
proposal is put on the place is reflecting of the concerns and topics that I raised in my remarks.
Todd Tuckner
And Chris, on the first one, just to point out a few things that no, it's not – the change is not reflective of what
we consider to be more, more complex versus less complex. Important to note that, you know, when we
developed this view a year back, this was seen as a very low multiplier when you look at 13 billion of cost to
achieve versus the gross cost saves that we anticipated. And we're still even with 14 billion at a very low
multiplier.
And so it should be seen in that light, but it's important to highlight that the changes were invited by certain
assumptions we modeled a year ago and we saw changes which I highlighted in my comments earlier. But also
importantly, we've identified incremental opportunities as we've worked through the integration to unlock
additional shareholder value, and that's taken some incremental cost to achieve that.
Chris Hallam, Goldman Sachs
Okay. Thanks very much.
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Anke Reingen, RBC
Sorry. Yeah. Thank you much for taking my question. Two questions, please. On the first one coming back to
the too big to fail was, I mean, you stressed a few times the potential impact on your return currently, on your
current assumptions based on 14%. I know there's a lot of uncertainty, but do you think considering
depending on the outcome, you will have room to offset your ROE dilution for more capital requirements? And
then thank you on the US wealth management operation, a few details here. I'm just wondering obviously you
talked about improving the performance of the US operations a few times before. So what will be different this
time that this will work out? Thank you very much.
Sergio P. Ermotti
Thank you, Anke. Unfortunately, as I mentioned before, there is no easy fixes and there is no potential offset
on the table that is not already planned and communicated. So no easy fixes, no low hanging fruits. Whatever
comes is on top of our plans, and it will be dilutive. Todd?
Todd Tuckner
Hi, Anke. You know, look, in terms of what's different, we wanted to highlight the things that we're doing
now and demonstrate the initiatives we're undertaking and the plans that we have that will help us chip away.
You know, we're being realistic in terms of what we think the margins can be over the mid-term, and we have
a very comprehensive way at that. There is no silver bullet where there's one thing where you say that's going
to effectively transform the pre-tax margin. But what I think you heard me say, and Sergio alluded to in his
opening, is that we're very focused to actually across these various levers. We're implementing them all. And
they're, you know, in the collective, we're going to contribute to improving the efficiency of the business. So
I'd say that's our focus and that's where we look, that's the outcome we're looking to drive.
Anke Reingen, RBC
Thank you.
Jeremy Sigee, BNP Paribas
Yeah. Morning. Thank you. Two questions, please. Firstly, just to sort of revenue in the quarter, the capital
markets growth. So ECM and DCM was a bit less than some of the peer groups, 11% year-on-year. I just
wondered if there's any mix reasons for that or if there's any sort of delay still in Credit Suisse teams becoming
fully productive. So just a question on capital markets revenues.
And then second question is on the foreign subsidiaries topic. It sounds like you've reduced the UBS Americas
CET1 ratio to around 20% from the previous 27%. In the past, you've run that anywhere from 14% to 22%. Is
it realistic to think about going back into the mid to high teens in that subsidiary on a, say, five-year view?
Todd Tuckner
Hi, Jeremy. Just on the second one. So we are targeting and as you acknowledge from the capital repatriation,
the CET1, capital in the IHC has come down significantly. We are targeting a lower CET1 capital ratio, say, in
the upper teens level, but on a like-for-like basis under the Swiss standards, that's more in line with the 13% to
15% CET1 capital ratio. So that addresses that.
On the IB question, I'll – just to point out on DCM, clearly, we're underweight versus peers. So you're seeing
that manifest in the, in our performance. In ECM, as I highlighted, you know, we're building, but the timing of
our pipeline build is likely to yield more payback later in 2025 into 2026.
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Jeremy Sigee, BNP Paribas
Okay. Thank you.
Kian Abouhossein, JPMorgan
Yes, thanks for taking my question. I really only have question regarding the key slide 32. Sergio, I get the
message: don't get overexcited in terms of how capital would be repatriated and solve potentially a capital
issue. But if I look at slide 32 and I got very excited when I saw the 13 billion, but clearly, it hasn't ended up in
the parent bank. It has been further upstreamed. It looks like it. And I'm just trying to understand the rationale
of the upstream and also trying to understand if there's room to downstream again, if necessary.
And in that context and also trying to understand how much more capital is there in CS International? It should
be something like 5 billion to 6 billion from what I calculate. And if there's any other subsidiaries that you
would highlight, where there's room for potential further upstreaming into the parent going forward? So really
just trying to square the process. I'm a little bit confused in that sense and if you could help me, I would really
appreciate it.
Sergio P. Ermotti
Thank you, Kian. I'm sorry, and I really appreciate your enthusiasm. And I'm sorry that you started with an
enthusiasm and then you ended up being confused. So in that sense, I can only reiterate that we don't really
have some, so much low-hanging fruits here. There is no short fixes. There are technicalities that I think that
Todd can explain you now, but that's essentially the situation. So we have been quite coherent and consistent
in saying and planning for capital, you know, well ahead of the curve when we started to plan for the 2026
targets.
Kian Abouhossein, JPMorgan
Sergio, just to add. I'm a bank analyst. I can get excited very quickly so just to put in context.
Sergio P. Ermotti
Well don’t tell me.
Todd Tuckner
Kian, I think it's worth just pointing out that, remember, when we acquired Credit Suisse and the capital ratios
at the parent bank were, you know, distressed relative to what the UBS AG's fully applied capital ratio was and
the strength and resilience of our capital on the UBS side. Also to consider, you know, the equity double
leverage that was there on the Credit Suisse side. And as we inherited that, the pressure it put, you know, on
our own, just given what we had to address and pushing up that double leverage.
So, you know, taking out the capital and rebalancing the capital from former Credit Suisse subsidiaries in, say,
the UK and the US, you know, up to the parent and fundamentally at group level, as you say, has been part of
the plan, but also helps to alleviate the pressure in the equity double leverage. And I think that's an important
point to mention. And that's why we made the comment that, you know, if there's going to be onerous capital
imposed on the parent bank, it's going to be funded with the retention of future profits.
25
Kian Abouhossein, JPMorgan
And just on double leverage, how much of the 13 billion do you actually require for double leverage and how
much do you allocate for payback to shareholders? So we just get an idea how much is potentially excess in the
holding, if there's any.
Todd Tuckner
It's a – look, of that amount that we have repatriated, there's a significant part of it that is used to support
moving to a more normalized level of equity double leverage level, a significant portion of it. Thank you, Kian.
Kian Abouhossein, JPMorgan
Thank you. Okay. And just on the 6 billion in the CS International, roughly 5 to 6 billion, is that correct, that's
what's remaining?
Todd Tuckner
Yes, I highlighted that in my comments as well that that's what we see. You know, naturally, it's a function of
timing and ensuring that we continue to run down the positions in that entity and get the support from the
regulator to repatriate the remaining capital in that entity as we transfer our positions, as I mentioned. And,
you know, there could be leakage between now and then if we have losses in the entity. So, you know,
conservatively, I mentioned around 5 billion that would come from CSI from here.
Kian Abouhossein, JPMorgan
Thank you.
Giulia Miotto, Morgan Stanley
Yes. Hi. Good morning. Thank you for taking my questions. I have two. Going back to slide 31 on the Non-core
deleveraging, how is it possible that, if I exclude op risk, which I understand is driven by a formula, that's fine.
But on credit and market risk, capital risk came down by 42 billion since Q2 2023, and now you only plan to
cut 7 billion in 2025. Why wouldn't we expect a faster deleveraging there given the market is still very
supportive? And then secondly, thanks for all the additional detail on the GWM in the US. On the NII discussion
in that division, which I look forward to the disclosure in Q1 - I guess having operating under a national charter
other than Utah would help. But how quickly do you expect to get that license, please? Thank you.
Todd Tuckner
Giulia. So on the credit and market risk ambition in terms of the levels taking it down, you know, I think this
goes really to the point I highlighted in my comments in the context of the underlying PBT we see in 2025
versus 2024. I made comments that, you know, the positions at this point are much smaller than we've seen.
They're hedged at times. They could be – could have transfer restrictions associated with them. We have to
ensure the counterparty is willing to terminate. There could be exotic security types with bespoke features that
limit potential buyers.
So there are a lot of issues as you get down into the portfolio and you have much smaller positions in these
books, that's going to take, you know, extensive amount of work to see, you know, chip away at progress. So
a lot of the, you know, the big rocks and larger positions that generated significant RWA reduction, but also
invited an ability to exit at levels above book value, you know, we're going to become further and farther and
less likely as we move forward. So I think it's just important to understand that in the context as well of the
RWA rundown.
26
In terms of your second question on the national charter and the timing, look, we're working on moving
forward with getting the application in. There's a lot of work being done. And we're going to work as quickly
as we can to get that rolled out and to enhance our banking product offering. I mean, we're not standing still
at the moment. We're doing a lot of work in that respect now also to, you know, go live. But certainly, having
that license will unlock certain product capabilities that just aren't possible until we have it.
Giulia Miotto, Morgan Stanley
Got it. But is it fair to expect that, you know, three years longer, shorter?
Todd Tuckner
Giulia, I think that's just something we'll continue to update you on. I don't want to predict the process
because we're working obviously also with supervisors to get that, get the license approved. So the timeline is
something we're working actively on, but we'll keep you updated.
Giulia Miotto, Morgan Stanley
Understood. Thank you.
Sergio P. Ermotti
And maybe just to add on, on Non-core, we always said that at the end of the day, of course, if we really want
to take down market and credit risk overnight, we could probably find a price at which to do it. But now if that
price is well in excess of our cost of capital and expected return, that would be a stupid trade. So we are
constantly looking to optimize shareholder interest as we wind down this asset. So it doesn't really make sense
to create new capital at a cost that is well above, how we expect to deliver in terms of returns.
Giulia Miotto, Morgan Stanley
Got it. Thank you.
Stefan Stalmann, Autonomous Research
Hi. Yes, good morning. Thank you very much for taking my questions. I wanted to ask about the US wealth
management plans, please. It looks like you're tilting away the business mix from the high end of the market
towards more affluent and lower wealth brackets, which is pretty much the opposite of what you've been
trying to achieve over the last 20 years, I would say. What has changed? Why are you coming to this different
assessment of the relative attractiveness of different wealth brackets in the US?
And the second question, I just wanted to make sure that I understood this correctly. The share buyback plans
and aims that you outlined, they are not yet accrued and deducted from CET1 capital at the year end, isn't it?
Thank you very much.
Todd Tuckner
Hi, Stefan. The – yeah, with respect to the 2 billion [
Edit: 3 billion
] that we aim to buy back, you know, based
on the conditionality that Sergio described, that is correct. On the US wealth side, I think it's just important to
point out that it's not a shift in strategy. What we said was we're looking to rebalance more into the high net
worth and affluent client segments. And the reality there is that one where we're quite overweight in ultra,
which is, of course, you know, our strength.
27
But it's also important to point out that the return on assets in that segment versus as you move down client
segments is, of course, lower, and so the profitability as you move down segments is higher. And so what
we're trying to do is rebalance so to stay obviously very, to stay very penetrated in ultra, but to increase our
penetration in high net worth and affluent sort of to create a better balance in line, more in line with the
market, a bit more in line, although of course, we want to stay more overweight at the top end because as I
said, that's our strength and our what we bring to – the strength that we bring to the table.
But it is really important to emphasize that, yes, that versus the market, you could see that as we have on slide
26, that, you know, we're looking just to shift and rebalance, you know, more into high net worth and affluent
where the profitability is improved. And yeah, the point is that...
Stefan Stalmann, Autonomous Research
Thank you
Todd Tuckner
...it's a – It's a rebalancing as opposed to a strategy change.
Stefan Stalmann, Autonomous Research
Okay. Yeah. Just to quickly follow up on the first part of the question. Is the 1 billion share buyback plan also
not deducted from CET1 capital or is it?
Todd Tuckner
That's in
[Edit: the CET1 capital i.e. not deducted]
.
Stefan Stalmann, Autonomous Research
It’s in. Okay. Thank you very much.
Andrew Coombs, Citi
Good morning. One follow-up on GWM Americas and then perhaps I can touch on P&C, NII. On the GWM
Americas, you highlighted a couple of times how you are adjusting the FA incentives to align them better with
your strategic goals around net new money, sign acquisition and NII growth. I bet if you can just elaborate a bit
more there on exactly what changes you are making, how you think those changes compare to your US peer
group, especially given your comment in the near term it might lead some FA attrition and lower net new
money? That's the first question.
Second question on the P&C NII, it obviously has been of your biggest headwinds. You're guiding to, I think
that was, well a much more pronounced drop this year than last year. But you're still expecting it to plateau
after the second quarter. So if I just ask, what are your rate assumptions? Take the SNB rate. And I think you
made a comment that it should plateau regardless of where the rate trajectory is thereafter. So perhaps if you
could elaborate on that. And then also what your loan assumptions, given that your loan balances shrunk by
another couple of billion this quarter. Thank you.
Todd Tuckner
So first, on your first question in respect to the FA comp changes, you know, I think the changes that I
highlighted that aligned better with our strategy also are more aligned to what we believe or observe are the
comp models at our competitors as well. We had certain features we think that were perhaps off market and
we are looking more to align with what our peers do.
28
But I think the more important point though is that, you know, in discussing this with, you know, many
financial and getting their take on these changes, it's clear that those who are very aligned with our strategy of
bringing value to their clients and growing their books of business and, you know, as I said, bringing more
solutions to their clients from essentially across what we can offer, those FAs will benefit in this model, and
they'll get paid more. And I think that's the key point.
My comment about FA attrition is just that those who may have benefited from features that we have
eliminated may decide that it – that they would be better off trading away and we have to cater for that
prospect in our in our modeling and so that's why I mentioned that. But, you know, it's important to keep in
mind that the changes we're making are really not intended to reduce compensation, but to increase it as long
as it's being done in ways that are very aligned with our strategy. And I think that's the most important point.
On P&C, net interest income, you had several questions. I mean, in terms of rate assumptions, well, first of all,
you know, the current rates are at 50 basis points, having come down 125 basis points over the last three
quarters of 2024. There's an expectation, if you look at implied forwards, that the rate curve will approach
near-zero. So there is really a lack of deposit margin room for maneuver as we look out, which is why, you
know, we think that the full year 2025 NII, especially if rates move down further, will be even more
pronounced than the Q1 guidance.
I talked about plateauing, you know, once we inflect because if you look at the yield curve, it's actually quite
flat if not even inverted, but it's certainly flat. And as such, you know, we don't see movements in it. So
therefore, you know, if it's effectively hitting a trough, I see it plateauing. And then I commented that, which
was your other question, you know, if rates move, obviously, if they move up, it gives us a bit more deposit
margin room for maneuver. If they move down into negative territory, that is also helpful because we can
typically charge certain clients and also drive greater lending NIM as well.
As far as the expectation around loan balances, we have a stable outlook for lending in P&C and also a stable
outlook for deposits in P&C. So we're quite focused continuing to do balance optimization, ensure that the
pricing reflects the appropriate cost of risk and capital. And on the deposit side, we've been very thoughtful in
how we have moved pricing down in relation to the central bank dropping rates in order to retain deposits
where possible.
Stefan Stalmann, Autonomous Research
Very helpful. Thank you very much.
Amit Goel, Mediobanca
Hi. Thank you and thank you for the clarifications on the capital. I've got just a couple of questions again on
the US business. And so I guess, one, I was just wanted to understand a bit better, you know, as you get to the
15% PBT margin in 2027, you know, what is the kind of plan or thought process in terms of getting to kind of
peer levels or 25%, 30% operating margin in the future or do you, I don't know if you think peers are
overearning? But what the step is there? And if, you know, building out the more comprehensive banking
offering and delivery model is part of that, but what cost is involved in that?
And then secondly, also just curious, in terms of the PBT margin that you're targeting to sustain in 2027, I think
previously you were talking about mid-teens in 2026. So just to check, is that slightly later or is it the same
basic expectation? Thank you.
29
Todd Tuckner
Yeah. So in terms of the expectations, we haven't really articulated that other than I've said in the past that
expected mid-teens in the midterm. We talked about the business and Sergio and I've been doing this. So I
don't think it's inconsistent. But where we're talking over the next couple of years to continue to build and we
think by 2027, we'll be at that at the mid-teens level.
I mean, as far as comparing to peers and we don't – this isn't a comparison to peers for us or sorry, narrowing.
It's not about effectively catching peers, but it's more about narrowing the gap. That's what we've said
consistently, in order to, you know, to improve the overall cost-to-income ratio for the business overall. And in
the US, to put us in a position where we're contributing significantly more to the overall profitability of Global
Wealth Management.
In terms of the banking capabilities and the other capabilities I talked about, those investments are catered for
in my comments. I did say that we're making incremental technology investments and also investments in our
capabilities and in the collective, you know, that's also being priced into our 2025 pre-tax margin expectation.
But also as we, you know, as we guided looking out to 2027 as well.
Amit Goel, Mediobanca
Thank you. Can I just follow up just in terms of that investment and in terms of points of operating margin,
would that be kind of 2, 3 or 5 percentage points of operating margin that you're investing in those years or
just to think about thereafter, how much could potentially drop out or how much is just ongoing investment?
Todd Tuckner
I'd just say the investments that we're making, we already – we've been investing in the business. So it's
important to keep that in mind. But we are making, now we're ensuring that the investments that we make in
technology are done in a way where the payback is improved, as I mentioned, improved ROI. We’re also
funding incremental investments, as I say, and that is captured in the pre-tax margin expectation for 2025 and
as we grow it. So, you know, I wouldn't model it falling out. I mean, this will be technology investments we're
going to continue to make for the business to help it grow.
Amit Goel, Mediobanca
Thank you.
Antonio Reale, Bank of America
Good morning. It's Antonio from Bank of America. Two questions for me, please. Actually, it's two follow-ups,
really. One on capital and one on the P&C. So you've repatriated the 13 billion capital at the parent company
this quarter. And despite that, your CET1 ratio at the AG level was only up 20 bps or so Q-on-Q to 13.5% now.
Could you please explain why that was the case and maybe talk us through the moving parts? I'm sorry if it's a
repetition, but I think it's important.
And the second question is, again, a follow-up on your Swiss business. You've talked about your NII guidance.
Can you just remind us your sensitivity to rates and hedging structure in Switzerland? And more in general,
what flexibility would you have to mitigate some of this trend on NII with the rest for the P&L? You've alluded
to more cost synergies. So if you can share a little bit more about the moving parts of the P&L, that would be
that would be super helpful. Thank you.
30
Todd Tuckner
So in terms of the mitigants a bit to the headwinds, you know, we're definitely focusing on driving as you saw
in 4Q continuing to drive where possible, non-NII revenue growth improve on recurring revenue and P&C and
also on transaction revenues. That will be a focus to partially offset the headwinds that we see in P&C.
I mean as far as abilities to effectively hedge or extend duration, I mean that's just not when the rates are this
low and with the flat yield curve, you know, extending duration, for example, on non-maturing deposits
doesn't offer much of an advantage at all. In fact, it could lock in funding costs and rather than allow us to
benefit from future rate cuts, including if they go below zero and also creates some mismatched risk, mismatch
risk as well. So, you know, if the rates are going to near zero, as I said, we have very limited room for
maneuverability, and we just have to wait until we see some daylight in terms of changes in that yield curve.
On the capital question you had in terms of what you're missing, I think in terms of the CET1 capital ratio at
UBS AG after it received the capital from the subsidiaries, you know, we are accruing a dividend to the parent
to address the point that I made before in response to Kian's question. So it's a dividend accrual that will serve
as an offset to the – sorry, dividend accrual to group. To be clear, to offset the capital repatriated to AG, its first
tier subsidiary.
Antonio Reale, Bank of America
Thank you very much.
Piers Brown, HSBC
Yes, good morning, everybody. I just got two follow-ups. One, I just wanted to make sure on if I got the
message correct on client risk appetite. I mean, you've talked about the move into sweep accounts and
obviously the fourth quarter NII was much better than we anticipated. But then on the transaction side, you're
little bit below street expectations. When I look at the loan number, that's still declining. So just appetite for re-
leveraging and sort of look forward on the client activity into the first quarter. Can you comment that, please?
And then just a technical question maybe on the Basel III final outcome. I mean, I said it's basically no change
to CET1. I think you had guided to a 30 basis points impact originally. So what's moved in your favor on
implementation of Basel III final that's caused a delta? Thanks.
Todd Tuckner
Hi Piers, so on – I'll just take your second question first. So in terms of the Basel III, look, I guided down last
quarter to a lower level than I had been guiding. You know, as we started to get more visibility and make
progress, the team has done an excellent job at ensuring that we were able to mitigate where we can in some
of the aspects that were at work or infrastructure improvements, model alignments, also exiting positions and
running down risks. So all of those things contributed to our ability to be able to, you know, ultimately print
the day-one level that's far inside where we had guided.
In terms of re-leveraging opportunities, you know, for sure in Global Wealth Management with rates, you
know, potentially higher, you know, we're not or not going, coming down as quickly as perhaps we
anticipated a quarter ago or certainly two quarters ago. You know, that's going to be helpful. That's going to
be helpful for deposit margins as I mentioned, but probably, we'll have a little bit of a chilling effect on re-
leveraging, which is something that with rates coming down, we expect to see both in, you know, in all parts
of the of the wealth business, which involves really where we have US dollar exposure in the US business
naturally, but also in our APAC part of the business.
31
And so we, you know, if rates sort of back up, then we'll have positive effects on deposit margins, but the
extent of re-leveraging that we're pricing into the outlook, you know, we may see that come in less
aggressively.
Piers Brown, HSBC
That's perfect. Thanks. Just on global banking, you mentioned a 20% change in pipeline, was it up or down? I
didn't catch that.
Sergio P. Ermotti
What we mentioned, it's not our pipeline. What we said is that according to market data. So the industry is
down 26% year-to-date [
Edit: 21%
], so for the first month. So our pipeline is building up. We are very
confident about the ability to generate new business and build up our market share. But you know, if you look
at according to market data, January, on January, you know, the amount of fees and activity is down 26%
[
Edit: 21%
] if I remember correctly.
Todd Tuckner
So yeah, it came in – the final number came in, yes, sorry, Piers, I got your question. The fee pool is down
around 21 percentage for January.
Piers Brown, HSBC
21, okay. So in any case, to handle in front so...
Todd Tuckner
Exactly.
Sergio P. Ermotti
So that's industry and not UBS. Just to be clear.
Piers Brown, HSBC
Ok, Thanks very much
Sergio P. Ermotti
Okay. So there are no more questions. There are no more questions. So thank you for calling in and for your
questions. So I'll touch base next quarter. Thank you.
32
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