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: May 8, 2024
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
 
Credit Suisse AG
(Registrant's Name)
Paradeplatz 8, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-33434
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
 
☒
 
Form 40-F
 
☐
This Form 6-K consists of the transcripts of the 1Q24 Earnings call remarks
 
and Analyst Q&A, which
appear immediately following this page.
 
1
First quarter 2024 results
 
7 May 2024
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
 
first quarter 2024 results presentation. Materials and a
 
webcast
replay are available at
www.ubs.com/investors
 
 
 
2
Sergio P.
 
Ermotti
Slide 3 – Key messages
 
Thank you, Sarah and good morning,
 
everyone.
 
A little over a
 
year ago, we were
 
asked to play a
 
critical role in stabilizing
 
the Swiss and global
 
financial systems
through the acquisition of Credit Suisse and we are delivering on our
 
commitments.
 
This quarter marks the return to reported net
 
profits and capital accretion – a testament to the strength of
 
our
client franchises and significant progress on our integration
 
plans.
 
Reported net profit was 1.8
 
billion, with underlying PBT
 
of 2.6 billion and an
 
underlying return on CET1
 
capital
of 9.6%.
 
Our commitment to
 
stay close to
 
clients supported healthy
 
revenue growth
 
in our
 
core businesses
 
and flows
across
 
our
 
asset gathering
 
franchises. Meanwhile,
 
we are
 
executing
 
on
 
our
 
restructuring
 
plans at
 
pace
 
and
actively winding down Non-core and Legacy assets.
 
We also achieved another 1 billion in annualized run-rate gross cost
 
savings during the quarter as we progress
towards our 13 billion target.
 
As for the next significant
 
integration milestones, we
 
remain on track with our
 
plans to simplify our
 
legal entity
structure. The
 
merger of
 
our parent
 
banks is
 
expected by
 
the end
 
of May
 
and the
 
transition to
 
a single
 
U.S.
intermediate holding company is expected to occur
 
shortly thereafter. The merger of our Swiss bank entities is
set to take place before the end of the third quarter. All of this is subject to final regulatory approvals.
These critical milestones will facilitate
 
the migration of clients onto
 
UBS platforms beginning later this
 
year and
unlock the next phase
 
of the cost, capital,
 
funding and tax benefits
 
from the second half of
 
2024, and more so
by the end of 2025 and into 2026.
 
Lastly, improvements in our CET1 capital ratio was supported by our optimization
 
of risk weighted assets. As a
consequence, we remain well positioned to deliver
 
on our capital return targets this year.
 
Slide 4 – Strong financial performance in 1Q24 with
 
significant operating leverage
 
Our underlying financial performance was
 
driven by significant positive
 
operating leverage at the
 
Group level
with 15% revenue
 
growth alongside a
 
5% reduction in
 
operating expenses compared
 
to the fourth
 
quarter.
Compared to a year ago, we reduced operating
 
expenses by around 12%.
 
We had
 
excellent performance in
 
Global Wealth Management
 
as underlying PBT
 
doubled sequentially to
 
1.3
billion. Personal &
 
Corporate Banking delivered
 
underlying profit growth
 
quarter on quarter
 
driven by higher
revenues and
 
lower credit
 
loss expenses.
 
Meanwhile, Asset
 
Management posted
 
solid results
 
thanks to
 
cost
discipline.
 
As a result of the restructuring efforts we have undertaken
 
over the last nine months, I am particularly
 
pleased
that Credit Suisse’s Wealth Management, Swiss Bank
 
and Asset Management franchises are now
 
all profitable
and contributed to our financial performance.
The
 
Investment
 
Bank
 
delivered
 
a
 
double-digit
 
underlying
 
return
 
on
 
attributed
 
equity
 
supported
 
by
 
lower
operating expenses compared to Q4, and another strong
 
quarter in Global Banking revenues.
Lastly, we had a positive revenue
 
contribution from Non-core
 
and Legacy as
 
we accelerated position
 
exits while
further reducing costs.
 
 
 
 
3
Slide 5 – Continued franchise strength and client
 
momentum
 
While
 
we continue
 
to deliver
 
on
 
the integration,
 
helping our
 
clients manage,
 
grow
 
and
 
protect their
 
assets
remains our top priority.
 
We
 
maintained
 
our
 
momentum
 
with
 
clients
 
in
 
GWM.
 
Invested
 
assets
 
have
 
now
 
surpassed
 
4
 
trillion
 
as
 
we
generated 27 billion of net new assets.
 
Though
 
geopolitical
 
volatility
 
and
 
macroeconomic
 
uncertainty
 
continued
 
to
 
weigh
 
on
 
client
 
sentiment,
 
we
observed an improvement in risk appetite and activity.
 
We also saw an improvement in client activity within
 
P&C, particularly among corporates.
 
In
 
Asset
 
Management,
 
our
 
clients
 
continue
 
to
 
value
 
our
 
Separately
 
Managed
 
Account
 
and
 
Sustainability
offerings. We generated 21 billion in net new money
 
during the quarter.
 
In
 
Global
 
Banking,
 
we
 
outperformed the
 
fee
 
pools
 
in
 
all
 
regions,
 
but
 
most
 
notably
 
in
 
the
 
U.S.,
 
where
 
the
integration of Credit Suisse teams is progressing well and our pipeline
 
continues to build.
 
Slide 6 – Accelerated cost and balance sheet
 
reductions in Non-core and Legacy
 
Let’s move to Non-core and Legacy.
 
As I
 
said before,
 
and you
 
can see
 
on this
 
slide, we
 
are making
 
good progress
 
in taking
 
out costs
 
and streamlining
our operations as we run down the portfolio.
 
We accelerated the
 
wind-down of
 
several complex
 
and longer-dated positions
 
this quarter, supporting a
 
capital
release of around 2 billion and a material improvement in our natural
 
run-off profile.
 
We are well
 
positioned to achieve our target
 
to reduce NCL risk
 
weighted assets to around 5%
 
of the Group
by the
 
end of
 
2026 and
 
we remain
 
focused on
 
accelerating position
 
exits in
 
a manner
 
that continues
 
to optimize
value.
 
Slide 7 – Reinforcing our balance sheet for all seasons
 
through active management
 
Turning
 
to
 
capital.
 
As
 
you
 
can
 
see,
 
the
 
combination
 
of
 
our
 
highly
 
capital
 
generative
 
business
 
and
 
the
restructuring
 
and
 
active
 
management of
 
financial resources
 
has
 
further reinforced
 
our
 
balance sheet
 
for all
seasons.
 
This permits us to follow through on our capital return plans for 2024.
 
During the quarter, we began accruing
for a mid-teen percentage year-on-year increase in our dividend. And, as previously communicated,
 
we expect
to resume share repurchases following the completion of the parent bank merger, targeting up to 1 billion.
Our ambition is to continue repurchases in
 
2025 and for our capital returns in 2026 to
 
exceed pre-acquisition
levels.
 
Of
 
course,
 
all
 
of
 
this
 
is
 
now
 
subject
 
to
 
our
 
assessment
 
of
 
any
 
proposed
 
requirements
 
related
 
to
Switzerland’s ongoing review of its regulatory regime.
 
In this respect, I’d like to address the recent proposals in Switzerland
 
to strengthen the too-big-to-fail regime.
 
It is clear
 
both to us
 
and several
 
expert groups that
 
too-low capital requirements
 
were not why
 
Credit Suisse
needed rescuing.
However,
 
we agree with the Swiss Federal Council’s view that capital and
 
liquidity requirements on their own
are not sufficient to ensure the resilience and stability of a systemically
 
important bank.
4
In addition to having a strong
 
capital position, it is key to
 
maintain a sustainable business model centered
 
around
risk-adjusted
 
profitability
 
and a robust
 
risk management
 
framework.
 
All of these
 
are core principles
 
for UBS.
 
For over
 
ten years,
 
this approach
 
has served
 
our clients,
 
employees, investors and
 
the Swiss
 
economy well.
 
It is
what allowed
 
UBS to
 
respond to
 
the Swiss
 
government’s request
 
in March
 
2023 to
 
be part
 
of the
 
solutions to
stabilize the financial system.
 
While
 
some
 
modifications
 
to
 
the
 
regulatory
 
regime
 
may
 
be
 
necessary
 
-
 
and
 
we
 
have
 
endorsed
 
many
 
-
 
the
discussion around
 
capital should be based
 
on facts. That includes
 
a full and transparent account
 
of what led to
the idiosyncratic
 
failures of
 
Credit Suisse.
 
The ultimate
 
and crucial
 
objective of
 
the too-big-to-fail
 
regime must
 
be to
 
credibly demonstrate
 
that a
 
systemically
important
 
bank could
 
be saved
 
in a crisis
 
largely through
 
its own financial
 
resources.
 
We believe UBS
 
has and will
 
continue to
 
demonstrate
 
its resolvability
 
from both an operational
 
and capital
 
point
of view. With around 200
 
billion in total loss
 
absorbing capacity, our
 
shareholders
 
and structurally
 
subordinated
bondholders bear
 
the significant
 
costs and
 
risks to
 
ensure taxpayers
 
would not
 
suffer in
 
the highly
 
unlikely scenario
that a major systemic event affects UBS.
We appreciate that
 
many of you
 
would like a
 
quantification of the
 
potential impact of
 
any new capital
 
regime,
but it is too soon to jump to conclusions. It would be inappropriate for us to speculate
 
or respond to speculation
on the
 
potential impact.
 
We were
 
not involved
 
in the
 
consultation process
 
leading to
 
the publication
 
of the
 
Federal
Council’s
 
report, and
 
do not have
 
clarity on
 
any proposed
 
changes
 
and how
 
they would
 
be implemented.
Nonetheless,
 
one point on which
 
we may offer some
 
clarification
 
is the topic of
 
parent bank capital.
 
Our parent
bank was already well
 
capitalized in both absolute and relative terms and
 
is in
 
a position today to
 
absorb the
removal of
 
substantial
 
regulatory
 
concessions
 
granted to
 
Credit Suisse.
 
By fully aligning
 
the treatment
 
of capital at
 
Credit Suisse
 
to our more rigorous
 
approach, UBS has
 
to provide the
additional
 
capital
 
required
 
for
 
the
 
phase-in
 
of risk-weighted
 
assets
 
for
 
Credit
 
Suisse
 
participations.
 
UBS
 
had
 
already
done
 
this
 
for
 
its
 
subsidiaries
 
when
 
the
 
rules
 
were
 
introduced
 
in 2017.
 
Further, UBS
 
will
 
not
 
rely
 
upon
 
the
 
regulatory
filter historically
 
applied to Credit
 
Suisse. Overall,
 
this requires additional
 
capital in the
 
amount of about
 
9 billion
dollars.
When applied
 
consistently
 
and coherently, the
 
Basel 3
 
rules that
 
UBS and
 
its global
 
peers must
 
follow are
 
robust.
They too, are being significantly tightened. In addition, the phasing-in of progressive capital add-ons will already
lead to
 
substantially
 
higher capital
 
requirements
 
for UBS’s
 
parent bank,
 
about another
 
10 billion.
 
So overall, we
 
are adding almost 20
 
billion in additional capital which, of course, was
 
already reflected in our
previously communicated capital and financial targets.
 
In our view, all of this must
 
be considered when
 
new requirements
 
are discussed,
 
defined and
 
calibrated.
 
In this
respect, we will be constructively contributing
 
our views to the relevant authorities and various
 
policymakers.
 
As
 
the third-largest private
 
employer,
 
one of
 
the country’s largest
 
taxpayers and
 
as importantly,
 
a
 
significant
provider of credit to households and
 
businesses in Switzerland, we believe it
 
is also our responsibility to share
 
our
perspectives with the wider public.
 
This is
 
an important
 
discussion
 
for the
 
country
 
and I remain
 
hopeful for
 
a proportionate
 
outcome.
In the meantime, in addition to executing on our integration plans, we will remain focused on what
 
we are able
to control –
 
serving our
 
clients, following
 
through on
 
our strategy, investing
 
in our people
 
and remaining
 
a pillar
of economic support in the communities where
 
we live and work.
 
With that,
 
I hand over
 
to Todd.
 
 
5
Todd
 
Tuckner
Slide 9 – Return to reported profitability of 1.8bn with
 
underlying PBT 2.6bn
Thank you Sergio, and good morning
 
everyone.
Before I
 
begin, I would
 
offer a
 
reminder that
 
the first quarter
 
financial report published
 
today includes select
inter-divisional changes
 
we signaled
 
last year. We shifted
 
the Swiss
 
high-net worth
 
segment from
 
P&C to
 
GWM,
and
 
pushed-out
 
residual,
 
centrally-held
 
costs
 
and
 
financial
 
resources
 
to
 
our
 
business
 
divisions,
 
ultimately
increasing the equity we allocate to them.
These divisional shifts
 
support continued
 
resource discipline and
 
accountability. They also align with
 
interests of
shareholders by
 
reflecting Group
 
performance as
 
a whole
 
through the
 
reporting lens
 
of the
 
respective individual
businesses.
In my
 
remarks today,
 
I will
 
refer to
 
underlying numbers in
 
US dollars and
 
compare them to
 
our performance
last quarter, unless stated otherwise.
As illustrated on Slide 9, our financial performance this quarter reflects strength in our core
 
businesses as well
as
 
excellent
 
progress
 
across
 
our
 
integration
 
workstreams,
 
resulting
 
in
 
substantial
 
reductions
 
in
 
operating
expenses and risk-weighted assets.
Profit before tax increased significantly to 2.6 billion from strong operating leverage quarter-on-quarter driven
by higher revenues and lower costs, both of which I
 
will cover in more detail shortly.
Net credit loss expenses declined by 30 million this
 
quarter to 106 million.
 
On
 
a
 
reported
 
basis, the
 
first quarter
 
net profit
 
was
 
1.8 billion,
 
including a
 
tax expense
 
of 0.6
 
billion.
 
The
effective
 
tax
 
rate
 
for
 
the
 
quarter
 
was
 
26%,
 
lower
 
than
 
previously
 
guided,
 
primarily
 
due
 
to
 
the
 
strong
performance in Non-core and Legacy that reduced the
 
level of losses in select Credit Suisse legal entities.
 
We expect the effective tax rate
 
in the second quarter to return
 
to more elevated levels from higher forecasted
losses in these entities
 
before the first of the
 
planned mergers takes
 
place later this month.
 
We then expect the
Group’s effective tax rate
 
in the second
 
half of 2024 to
 
continue to normalize,
 
ultimately falling to
 
its structural
level of 23% by 2026, driven by further legal
 
entity optimization and cost elimination.
 
Slide 10 – Strong underlying revenues, up 15% QoQ
Total
 
revenues,
 
on
 
slide
 
10,
 
increased
 
by
 
15%
 
to
 
12
 
billion
 
with
 
strong
 
sequential
 
gains
 
in
 
Global
 
Wealth
Management, the Investment
 
Bank and Non-core and Legacy.
 
The latter included a
 
gain from the close-out of
the main
 
aspects of
 
the transaction relating
 
to the
 
former Credit
 
Suisse Securitized Products
 
business, which
was announced earlier in the quarter.
Partially offsetting our top line performance was a decline of 446 million in Group
 
Items, driven primarily from
hedging P&L reflecting higher interest rates and widening
 
currency basis spreads in the quarter.
Total
 
reported
 
revenues
 
reached
 
12.7
 
billion,
 
which
 
included
 
0.8
 
billion
 
from
 
purchase
 
price
 
allocation
adjustments in
 
our
 
core
 
businesses.
 
Since
 
the Credit
 
Suisse
 
acquisition, these
 
adjustments total
 
3.1 billion,
excluding the effects in
 
NCL, and mainly relate
 
to loans that will
 
pull-to-par if held to
 
maturity.
 
We continue
to expect to report additional revenues of
 
around 7.4 billion through the end
 
of 2028 from these acquisition-
related effects, of which 0.6 billion is expected in the second quarter.
 
 
6
Slide 11 – Executing on cost ambitions with operating
 
expenses down 5% QoQ
Moving to slide 11. Operating expenses for the Group decreased by 5% quarter-on-quarter to 9.2 billion with
the largest reductions in Non-core and Legacy, Global Wealth Management, and the Investment Bank.
Personnel costs
 
excluding variable
 
and Financial
 
Advisor compensation
 
decreased by around
 
120 million,
 
or 3%
quarter-on-quarter.
 
Variable and FA
 
compensation expenses were up 11% sequentially on the
 
back of higher
revenues. Overall, personnel expenses increased by 2%.
There were
 
almost 2 thousand
 
fewer total staff
 
at the end
 
of the first
 
quarter when compared
 
to the end
 
of
the fourth quarter of 2023,
 
and over 19 thousand fewer
 
versus the end of 2022, down
 
12.5% over the past 5
quarters.
 
Non-personnel
 
expenses
 
were
 
down
 
0.6
 
billion
 
quarter-on-quarter,
 
driven
 
by
 
lower
 
real
 
estate
 
expenses
combined with a reduction in third party spend.
 
Additionally, the fourth quarter contained charges for the
 
UK
bank levy and the US FDIC special assessment
 
that were not present in our first quarter performance.
 
Integration-related expenses in
 
the first
 
quarter were
 
1 billion,
 
split roughly
 
half-half between personnel
 
and
non-personnel costs, resulting in reported operating expenses
 
of 10.3 billion.
Slide 12 – Cost plans on track with 50% of
 
targeted saves expected by 2024 exit
 
rate
On slide 12,
 
we report on
 
the progress
 
against our cost ambitions
 
as described during the
 
investor update in
February.
 
Exiting the first quarter, we realized an
 
additional 1 billion
 
in gross cost saves when
 
compared to the
2023 exit rate.
 
Since the end of
 
2022, we have achieved
 
5 billion in gross
 
saves, or nearly 40%
 
of our 2026
exit-rate ambition of 13 billion.
As I highlighted in February, we expect our
 
integration work to intensify
 
over the next several, pivotal
 
quarters.
 
This will require appropriate staff levels to ensure efficient, effective and well-controlled execution.
 
Accordingly,
 
the pace of gross cost saves is likely to decelerate from the run rate savings output achieved over
the last 5 quarters, with another 1.5 billion in gross cost saves
 
expected by the end of the year.
 
Following this
intensive phase, we continue to expect the pace
 
of gross saves to pick up again in 2025.
Integration-related expenses
 
linked
 
to our
 
cost-saving actions
 
reached
 
a
 
total
 
of 5.5
 
billion
 
since the
 
Credit
Suisse acquisition, including the 1 billion
 
incurred in the first quarter.
 
As previously
 
mentioned, we expect
 
to incur
 
around 13
 
billion of
 
integration-related expenses by
 
the end
 
of
2026, or
 
a ratio of
 
about 1-to-1
 
between costs-to-achieve
 
and gross saves.
 
As these
 
integration charges
 
enable
and unlock future cost
 
reductions, we expect them
 
to outpace gross saves
 
through the rest
 
of 2024, totaling
3.5 billion, of which we estimate 1.3 billion in
 
the second quarter.
Of course,
 
what matters
 
is turning
 
gross saves
 
into clear
 
progress in
 
our underlying
 
opex performance.
 
Our
1Q24
 
underlying
 
operating
 
expenses
 
of
 
9.2
 
billion
 
signal
 
a
 
significant
 
improvement
 
against
 
our
 
2022
benchmark,
 
meaning
 
a
 
majority
 
of
 
the
 
gross
 
cost
 
saves
 
we’ve
 
realized
 
to
 
date
 
have
 
translated
 
into
 
net
reductions in our underlying opex.
 
Thus far,
 
most of these life-to-date net
 
saves benefit Non-core and
 
Legacy.
 
I highlighted in February
 
that we
expect around
 
half of
 
the Group’s
 
planned gross
 
cost saves,
 
and a
 
considerable majority
 
of net
 
saves, to
 
be
achieved from
 
running down NCL’s
 
book as
 
well as
 
eliminating expenses associated
 
with maintaining Credit
Suisse’s many legal entities and branches.
 
We are seeing this dynamic reflected in our cost performance.
 
We
also expect NCL to benefit further from
 
the upcoming legal entity mergers and from
 
continued position exits,
working towards a 2026 opex exit rate of less than
 
1 billion.
 
 
7
Finally, in our core businesses, we expect to realize a
 
significant portion of
 
integration cost synergies
 
beginning
in 2025
 
when client
 
accounts and
 
positions are
 
moved to
 
UBS platforms
 
and applications, and
 
Credit Suisse
infrastructure is shut down.
 
Slide 13 – Global Wealth Management
Moving on
 
to the
 
quarterly performance
 
of our
 
business divisions
 
and starting
 
with Global
 
Wealth Management
on
 
slide
 
13.
 
In
 
the
 
quarter,
 
GWM’s
 
pre-tax
 
profit
 
doubled
 
to
 
1.3
 
billion
 
on
 
stronger
 
revenues
 
and
 
lower
operating expenses.
 
Notably,
 
on a
 
combined basis, PBT
 
increased by
 
around 20%
 
year-over-year,
 
with the Credit
 
Suisse platform
returning firmly to profitability.
 
Overall,
 
we
 
see
 
very
 
good
 
client
 
momentum
 
across
 
GWM,
 
with
 
net
 
new
 
assets
 
of
 
27
 
billion
 
and
 
strong
contributions from the
 
Americas, Switzerland, and
 
APAC.
 
Net new
 
fee generating assets
 
reached almost 18
billion from healthy net inflows to SMAs in the
 
US and discretionary mandates in EMEA and Switzerland.
The business achieved this flow performance while focusing
 
on financial resource efficiency and balance sheet
management, seeking
 
to reprice
 
loans with
 
sub-hurdle returns
 
or to
 
otherwise exit
 
such positions.
 
This ongoing
work mitigates some of
 
the headwinds from
 
inherited Credit Suisse
 
risk models and led
 
to a decline
 
in credit
and counterparty risk RWAs
 
of 4 billion
 
in the quarter.
 
We’ve also begun
 
to see progress
 
in GWM’s revenue-
over-RWA metric, particularly on the Credit Suisse platform.
 
GWM
 
also
 
attracted
 
8
 
billion
 
in
 
net
 
new
 
deposits
 
in
 
the
 
quarter
 
while
 
our
 
pricing
 
increasingly
 
reflects
 
the
Group’s strong liquidity profile and tighter funding spreads.
I would note that we estimate seasonal tax-related outflows in
 
our US business in the mid-to-high single-digit
billions as a headwind to divisional net new asset
 
performance in the second quarter.
Now, onto GWM’s financials.
 
Revenues increased by 10% sequentially
 
with improvements across all lines,
 
driven by higher client activity
 
and
increased
 
average-asset
 
levels.
 
Revenue
 
performance
 
related
 
to
 
client
 
transactional
 
activity
 
was
 
particularly
strong across the business.
NII increased by 4% sequentially to 1.6 billion, as higher revenues from re-investments as well as increased US
dollar deposit rates and volumes offset the effects of tapering
 
deposit mix shifts and client deleveraging.
In the second quarter,
 
we expect a low-to-mid, single-digit percentage decline in GWM NII due to moderately
lower lending
 
and deposit
 
volumes, and
 
lower interest
 
rates in Switzerland,
 
partly offset
 
by additional
 
revenues,
primarily from higher US dollar rates combined with
 
our repricing efforts.
For the full
 
year 2024, we
 
expect NII in
 
GWM to be
 
roughly flat versus
 
4Q23 annualized. Specifically,
 
we see
NII
 
and
 
margins
 
holding
 
broadly
 
steady
 
in
 
2H24,
 
and
 
after
 
the
 
second
 
quarter
 
broadly
 
reverses
 
out
 
the
sequential gains we realized this quarter.
 
This outcome, which models three US dollar rate cuts, is helped by lower
 
funding costs as well as our balance
sheet initiatives.
 
Recurring net fee income
 
increased by 4% to 3 billion
 
in the quarter from higher
 
client balances and inflows
 
in
net new
 
fee-generating assets.
 
This
 
was partly
 
offset by
 
margin
 
compression from
 
more
 
of the
 
back
 
book
reflecting greater penetration into lower margin mandates
 
across higher wealth bands.
 
8
Transaction-based
 
income increased
 
by
 
a
 
third
 
sequentially to
 
1.2 billion,
 
driven by
 
higher trading
 
volumes,
particularly in structured
 
products, partly
 
due to
 
the seasonal increase
 
in client
 
activity levels, with
 
significant
improvements across all regions.
 
Combined transaction revenues were also 9% higher year-over-year.
 
Our APAC franchise had a particularly impressive transaction
 
revenue quarter, doubling from 4Q with strength
demonstrated across all
 
product classes, despite
 
the economic uncertainties
 
weighing on sentiment
 
for most of
the first quarter.
 
We also
 
saw positive momentum in
 
the Americas, where
 
the introduction of
 
our international model of
 
joint
coverage of GWM clients
 
with the IB, led to
 
transaction-based revenue gains
 
of 11% quarter-on-quarter
 
and a
mid-teens increase year-on-year.
 
Expenses for
 
the
 
quarter were
 
down
 
3%
 
sequentially,
 
mainly from
 
decreases
 
in
 
salaries
 
and
 
non-personnel
costs, and
 
with non-recurring
 
items in
 
the fourth
 
quarter falling
 
away,
 
outweighing increases
 
this quarter
 
in
variable and Financial Advisor compensation.
 
Slide 14 – Personal & Corporate Banking (CHF)
Turning
 
to Personal
 
and Corporate
 
Banking on
 
slide 14.
 
With good
 
momentum and
 
the front
 
office teams
now more closely aligned to strengthen client engagement, P&C
 
increased pre-tax profit by 11%
 
sequentially
to 774 million Swiss francs, its highest
 
PBT since before the Credit Suisse acquisition.
Revenues were up by 4% with gains across each
 
significant revenue line, further supported by a 47% decline
in credit loss expense quarter-on-quarter.
Deposit balances in Swiss franc terms remained roughly stable, with inflows in personal banking largely offset
by outflows
 
in corporate
 
balances with
 
lower liquidity
 
value.
 
This was
 
a strong
 
outcome considering
 
the current
rates environment in Switzerland and the ongoing
 
work in the business to gain share of wallet
 
and to improve
balance sheet efficiency, supporting our net interest margin in 1Q.
 
NII
 
increased
 
by
 
3% sequentially
 
to 1.1
 
billion,
 
principally as
 
higher re
 
-investment income
 
more
 
than
 
offset
declines in revenue from lower lending volumes and ongoing
 
deposit mix shifts.
 
In the
 
second quarter, we expect
 
a mid-to-high
 
single-digit percentage
 
decrease in
 
P&C’s NII
 
in US dollars,
 
more
than offsetting the
 
first quarter’s sequential gains,
 
especially as the effects
 
of the Swiss
 
central bank’s March
interest rate cut hit through for a full quarter.
 
For the
 
full year
 
2024, we
 
likewise expect
 
a mid-to-high
 
single-digit percentage
 
decline in
 
P&C’s NII
 
versus 4Q23
annualized.
 
We see
 
NII
 
holding broadly
 
steady in
 
US dollar
 
terms in
 
2H24, as
 
P&C’s balance
 
sheet management
efforts to
 
improve loan margins
 
help to
 
mitigate lower
 
loan and
 
deposit volumes,
 
as well
 
as the
 
modeled effects
of
 
two
 
further
 
25
 
basis-point
 
rate
 
cuts
 
in
 
Switzerland.
 
The
 
outlook
 
also
 
includes
 
a
 
50
 
million
 
annualized
headwind from the effects of higher minimum reserve requirements at the Swiss
 
central bank.
 
Transaction-based
 
revenues
 
were
 
up
 
9%
 
in
 
the
 
quarter
 
principally
 
on
 
strong
 
corporate
 
client
 
engagement.
 
Recurring net fee
 
income gained 5%
 
sequentially on higher
 
client asset balances
 
supported by net
 
new inflows
in the quarter.
 
Credit
 
loss
 
expense
 
was
 
39
 
million
 
as
 
PPA
 
adjustments
 
offset
 
a
 
similar
 
level
 
of
 
charges
 
on
 
impaired
 
loans
acquired from Credit Suisse.
Operating expenses were up 4% quarter-on-quarter, principally due
 
to higher staff costs in Switzerland and a
lease accounting credit recorded in the comparable quarter..
 
 
 
9
Slide 15 – Asset Management
As illustrated
 
on slide
 
15, underlying
 
PBT in
 
Asset Management
 
decreased by
 
2% quarter-on-quarter to
 
182
million, as lower revenues were only partially offset by reduced operating expenses.
While net management
 
fees were steady quarter-on
 
quarter, the sequential drop in the top
 
line is explained by
fourth quarter
 
revenues, which
 
included the
 
gain from
 
the sale
 
of an
 
investment stake, as
 
well as
 
seasonally
higher performance fees.
 
Net new money
 
in the quarter
 
was 21 billion due
 
to several big-ticket
 
inflows in mainly
 
passive equity and
 
fixed
income
 
funds,
 
including
 
money
 
markets.
 
We
 
also
 
continue
 
to
 
see
 
client
 
demand
 
for
 
SMA,
 
sustainable
investments and our Private Markets capabilities.
 
Opex
 
decreased
 
by
 
7%
 
to
 
594
 
million,
 
mainly
 
from
 
lower
 
personnel, technology
 
and
 
litigation
 
costs.
 
As
 
I
highlighted during
 
the investor
 
update in
 
February, we aim
 
to improve
 
operating leverage
 
in Asset
 
Management
by focusing
 
on cost
 
optimization across
 
the entire division
 
and realizing synergies
 
from migration
 
of clients
 
onto
UBS infrastructure over the course of 2025.
Slide 16 – Investment Bank
On to
 
our Investment
 
Bank’s performance
 
on slide
 
16.
 
As in
 
prior quarters,
 
we compare
 
the results
 
of the
combined IB with standalone UBS performance
 
on a year-on-year basis.
Operating
 
profit
 
was
 
404
 
million,
 
marking
 
the
 
IB’s
 
first
 
profitable
 
quarter
 
since
 
the
 
acquisition,
 
and
 
broad
completion of the
 
restructuring of the
 
parts of Credit
 
Suisse’s IB that
 
are core to our
 
own.
 
Return on
 
attributed
equity also turned positive and reached 10% for
 
the quarter.
Underlying revenues increased by 4%
 
to 2.5 billion.
 
Underscoring our efforts to increase the
 
IB’s market share
in the US, the IB’s top line increased by 29% in the region.
 
Banking maintained
 
its strong
 
momentum with
 
overall revenues
 
up by
 
52%.
 
Notably, we also
 
increased market
share in the US,
 
where Banking now
 
contributes a third
 
of total IB
 
revenues, up from
 
less than 20%
 
a year ago.
We continue
 
to be
 
pleased with our
 
performance in Capital
 
Markets, up 85%
 
year-over-year,
 
as LCM,
 
DCM
and ECM all saw increased activity levels, building
 
on the momentum we saw in the fourth
 
quarter.
 
Advisory revenues increased by 11% as we continue to outperform the global fee pool.
 
The recovery in M&A
is continuing, particularly in
 
the US, albeit with more subdued
 
client sentiment and activity
 
in APAC, where we
have a large share of the market.
 
With our Banking
 
coverage teams now
 
fully integrated, our
 
pipeline offers
 
encouraging revenue potential
 
in
the second half of 2024 and into 2025.
 
Revenues
 
in
 
Markets
 
declined 5%
 
to
 
1.9
 
billion, but
 
were
 
up
 
6%
 
year-over-year
 
in
 
the Americas.
 
Equities
revenues, driven
 
by Cash
 
Equities, were
 
up 3%.
 
FRC, where
 
we remain
 
underweight by
 
design, was
 
down
21% with both Rates and FX affected by lower volatility
 
and decreased client activity.
Operating expenses rose
 
8%, predominantly from additional
 
costs related to personnel
 
onboarded from Credit
Suisse’s investment
 
bank, but,
 
importantly,
 
dropped 4%
 
sequentially,
 
while revenues
 
were up
 
32% quarter-
on-quarter.
 
 
 
10
Slide 17 – Non-core and Legacy
Moving to Slide 17. Non-core
 
and Legacy’s pre-tax profit in the quarter
 
was 197 million, supported
 
by 1 billion
in revenues principally from gains on position exits.
 
In addition to the securitized products transaction I mentioned
 
earlier,
 
the business recognized proceeds from
the close-out of
 
several complex
 
and longer-dated positions above
 
their book carrying
 
amounts, including
 
in its
conduit and corporate loan books and within
 
its longevity portfolio.
 
Despite the strong revenue performance in the
 
first quarter, we continue to expect the NCL book to ultimately
close out across its various positions at more or less their current carrying values, meaning it is still appropriate
to assume revenues of nil going forward, net of hedging
 
and funding costs.
 
It is also
 
important to reiterate
 
that, in pursuit
 
of our priorities
 
in NCL, we
 
may at times
 
sacrifice P&L on
 
position
exits to eliminate costs and release sub-optimally deployed
 
capital.
Nevertheless, given the strong revenue performance in 1Q along with the significant progress
 
we’ve made on
costs, we now
 
expect NCL’s
 
full-year 2024 underlying
 
PBT to be
 
a loss of
 
around 2.5 billion
 
versus the expected
4 billion loss we signaled in Februar
y.
As Sergio highlighted, we
 
made substantial progress
 
in reducing the
 
NCL portfolio in
 
the quarter,
 
decreasing
RWAs by
 
16 billion,
 
principally in
 
credit and
 
market risk.
 
In just
 
nine months, we’ve
 
run down
 
28 billion,
 
or
almost a third, of NCL’s risk weighted assets.
From an LRD perspective, the overall portfolio is down by roughly half from 2Q23, after a further reduction of
49 billion in the first quarter.
As I covered earlier, a significant portion of the Group’s
 
overall opex decline this quarter
 
was delivered by NCL,
which saw
 
a 26%
 
sequential drop
 
in underlying
 
costs to
 
769 million,
 
primarily due
 
to lower
 
third party,
 
real
estate, and technology costs.
 
Slide 18 – Significant progress in reducing financial resource consumption
Moving to capital and financial resources on slide 18.
 
CET1 capital was broadly flat in the quarter with profits
generated in 1Q offsetting our dividend accruals and
 
1.3 billion in negative currency translation effects.
As we’ve
 
highlighted, we
 
made significant
 
progress
 
this quarter
 
in reducing
 
financial resource
 
consumption
across the bank from both the active run-down of NCL as well as balance sheet management
 
initiatives across
the core businesses.
 
This resulted in a 4% sequential decline in RWA and a 6% reduction in
 
LRD.
 
Credit and counterparty risk RWAs dropped
 
by 11 billion from position sales and roll
 
-offs, as well as from risk
model
 
mitigation,
 
with
 
currency
 
effects
 
contributing
 
another
 
11
 
billion
 
to
 
the
 
quarter-on-quarter
 
decline.
 
Market risk RWAs increased by 3 billion as asset-size decreases were
 
more than offset by the effects of model
updates from the integration of time decay into
 
our VaR calculations.
Slide 19 – Confidence in our balance sheet for
 
all seasons enables efficient funding
Slide 19 illustrates our strong capital position with a
 
CET1 capital ratio of 14.8%, increasing by 40 basis
 
points
over the course of 1Q.
 
As previously highlighted,
 
a surplus above
 
our CET1 capital
 
ratio target of
 
around 14% is necessary
 
to cater for
expected volatility in our reported profitability as we execute
 
on the various phases of the integration.
 
11
Our LCR at quarter end was 220%, reflecting
 
ample levels of liquidity to remain compliant
 
with the new Swiss
liquidity ordinance that went live at the start of the year.
We
 
remain
 
focused on
 
raising
 
stable
 
deposits
 
with
 
tenors,
 
products
 
and
 
counterparty selection
 
resulting
 
in
higher liquidity value.
 
And, we continue to apply discipline on pricing.
Strong
 
investor demand
 
for
 
our
 
name
 
in
 
capital markets
 
and
 
improving
 
conditions allowed
 
us
 
to
 
complete
nearly
 
half
 
of
 
our
 
full-year
 
funding
 
plan
 
during
 
the
 
first
 
quarter.
 
We
 
successfully
 
placed
 
over
 
5
 
billion
 
in
attractively-priced HoldCo in
 
January, and 1.5 billion in AT1 across two transactions in February
 
at spreads that
were around 100 basis points inside our heavily subscribed
 
November placement.
 
Similarly,
 
secondary market
 
spreads
 
continued to
 
tighten post-acquisition,
 
having now
 
dropped
 
to February
2023 levels, and
 
together with ongoing
 
diversification of
 
our funding sources,
 
are supporting our
 
plan to lower
funding costs by around 1 billion by 2026.
As part
 
of the
 
broadening out
 
of our
 
funding sources,
 
we structured
 
two first-of-their-kind
 
transactions for
UBS, including an
 
issue of 1
 
billion in euro
 
-denominated covered bonds, and
 
a private placement
 
for size via
repo of a portion of our portfolio of Swiss franc-denominated
 
covered bonds.
 
I would highlight
 
that these trades
 
were priced below
 
the spread on
 
the outstanding ELA line
 
with the Swiss
central bank.
 
As to
 
ELA,
 
we have
 
now repaid
 
29 billion
 
of this
 
line extended
 
to Credit
 
Suisse pre-acquisition,
 
including 9
billion Swiss francs just yesterday.
 
We expect to repay the remaining 9 billion in the coming months.
 
Overall,
 
our
 
balance
 
sheet
 
management
 
initiatives,
 
together
 
with
 
actions
 
on
 
the
 
funding
 
side
 
that
 
I
 
just
described, improved
 
our loan
 
to deposit
 
ratio this
 
quarter and
 
narrowed the
 
funding gap
 
we inherited
 
from
Credit
 
Suisse.
 
Importantly,
 
our
 
efforts
 
are
 
helping
 
us
 
to
 
offset
 
NII
 
headwinds,
 
and
 
are
 
contributing
 
to
 
the
strength of our overall liquidity and funding profile.
With that, let’s open for questions.
12
Analyst Q&A (CEO
 
and CFO)
Alastair Ryan, Bank of America
Yeah. Thank you. Good morning. A billion dollar beat in the quarter. I never did quite get the hang of
forecasting lark. Just on that then -- so non-core, very strong performance
 
and appreciate the updated runoff
profile you give us on slide 6. Is there any reason that you're just reverting to natural
 
runoff or can we expect
continued sales if markets stay favorable because
 
clearly there's quite a meaningful driver of the
 
very
favorable capital ratio and the interactions of all
 
of those.
And then secondly, the project to improve the revenue to risk-weighted assets in wealth management, are
presumably, you wouldn't represent the Q1 performances kind of the payoff of that project is? It's too early
but just what's the profile of that project? How long is
 
that repricing sitting on the net new asset generation
and has it started? Thank you.
Sergio P.
 
Ermotti
Alastair, before I pass to Todd,
 
I wanted to -- you were the first to ask the question
 
not by coincidence since I
understand it's your last day at the office, so.
 
Alastair Ryan, Bank of America
Yes, yes. Thank you, Sergio.
Sergio P.
 
Ermotti
Well, enjoy -- enjoy your time off going forward. So, I'll pass it over to
 
Todd. Thank you.
Todd
 
Tuckner
Hey, Alastair.
 
Thanks for the questions. So on NCL,
 
I mean first reverting to natural runoff. I mean, we've
been consistent in just reflecting the natural runoff profile. What
 
I think the slide 6 really does indicate is, it
really narrows that, that delta between where we started, you know, as you can see where we set
 
our
ambition is to reduce to 5% and, you know, that the natural runoff profile has really come
 
in.
You see that the delta between the natural runoff profile and where we, our ambition is narrowed. So that
should, eliminate whatever uncertainty
 
was considered, but I do think that it's appropriate still to
 
reflect it
that way in terms of, you know, whether we can do more of course we're going
 
to continue to do what we
can.
We'll try to position -- we'll try to exit positions, at
 
or above their, their book values wherever possible. But,
you know, it's appropriate to continue to stick with our guidance on NCL,
 
in terms of, you know, our
approach, and in terms of our expectations around revenues.
On GWM in terms of revenue over the RWA, I mentioned that we're starting
 
to see progress, which of course
does suggest you asked, has it started and it has.
 
In fact, it started at the end of last year and
 
the business is
quite active in it.
And, and so, we would expect that we're going to
 
continue to make progress on driving up RWA efficiency
with respect to revenues in that respect over the course of the
 
next couple of years. You asked how long that
will impact. How long will it go? How long will
 
it impact net new assets? We said, it's going to
 
take the better
part of two years which is why we guided net
 
new assets of around 200 billion over that two-year
 
timeframe.
And we think that's the appropriate guidance still.
13
Alastair Ryan, Bank of America
Okay. Thank you. And Sergio, thank you.
Sergio P.
 
Ermotti
Sure. Pleasure.
Chris Hallam, Goldman Sachs
Yeah. So two for me, by the end of the year, I guess, you'll be effectively halfway through the integration
process in terms of gross savings. So as you get through that process, are you starting
 
to get a better picture
of what you could expect for the net savings
 
figure in relation to the 13 billion? Todd, I think you mentioned
the majority earlier. And does that change at all the phasing of the multi-year return
 
on core tier 1 path you
laid out the full year?
And then second question. Sergio, you referenced earlier that
 
insufficient capital didn't cause the collapse of
CS and I guess, in the final instance, what
 
we really saw was a crisis in client confidence that
 
drove that
liquidity shortfall. So when we talk about
 
capital distribution, it's sort of automatic to
 
assume that higher or
earlier capital distribution, results in lower capital
 
ratios, which in turn, reduces resilience.
But when you talk to clients, how important is
 
that distribution ambition as an indicator
 
and driver of
confidence in the business i.e,. like could you
 
argue that ultimately aligning your distribution
 
strategy more
closely with the distribution policies we see
 
elsewhere in European financials, actually increases client
confidence in the business and improves resilience. There's a
 
big perception difference basically between the
firm that’s buying back stock versus a firm
 
that’s issuing stock?
Todd
 
Tuckner
Yeah. Hey Chris, I’ll take the first so on, on whether the opex progress that we saw, sort of informs a better
view on the net that we’ll get to. Look, you
 
know I think we're quite pleased with that 1Q operating
 
expense
performance.
We did highlight that we expect gross saves to be halfway
 
to our 13 billion ambitions at the end of
 
the year
which is a bit better than we highlighted in February
 
in large part because of the 1Q performance
 
that we
saw. But look, we still -- our ambition is a cost-to-income ratio of less than
 
70% at the end of 2026. That's
what we're really focused on to manage to and so how
 
we pace any investments, which we'll continue
 
to
make in, for example, the resilience of our infrastructure,
 
the organic growth in our core businesses, how we
pace that will be a function of the revenue environment.
 
So it is still -- it is still way too early to change
 
that
perspective. But of course, we are pleased with the
 
opex performance we saw in 1Q.
As to how that impacts on the return on CET1
 
path that you mentioned, I would say that
 
coupled with the
updated NCL full-year PBT guidance I gave, would
 
have roughly 100 to - slightly above basis point
 
impact on
the return on CET1, but I would still say mid single-digits
 
is the right way to think about the full year
 
ROCET1,
even with the 1Q performance that we produced.
Sergio P.
 
Ermotti
Yes, Chris, first of all, of course, you know, having a strong capital position and a balance sheet for all
seasons, as we call it, having a strict risk
 
management approach and policies and being very
 
disciplined in a
way we consume and manage all our resources is the pillar number
 
one of our strategy. And I think it's
almost a prerequisite to create the trust that clients need to have
 
in any bank or any organization.
14
So in that sense, I would only add that another
 
very important indicator, which sometimes is in conflict with
clients is your funding cost. Of course, our
 
clients would like to have always a higher
 
returns on the deposits
and the investment they place with us. But on the
 
other hand, when they see our
 
funding cost being as
competitive as we have now, they have the ultimate confirmation of
 
the strength and the solidity of our
franchise.
So ultimately, at the end of the day,
 
it's always a trade-off between different dynamics by, I would say,
emotional and psychological dynamics. But I can
 
only tell you that, of course, last but
 
not least, having a full
alignment of client trust and satisfaction,
 
having shareholders being happy, and having your employees being
happy is the ultimate way to create sustainable value
 
and trust in any bank. And this is our philosophy.
So of course, having an ability to compete in
 
terms of growth and our global ambitions, but
 
at the same time,
being able to deliver attractive returns to shareholders,
 
it's very important to influence the three stakeholders
 
I
mentioned.
Chris Hallam, Goldman Sachs
Right. Thank you.
Kian Abouhossein, JP Morgan
Yes. Thank you for taking my question. I have a lot of detailed questions, but
 
I wanted to ask two questions
actually to Sergio, if I may. The first one is Sergio, your first comment on the call today
 
were, we were asked
to do a critical role in Switzerland. And -- the key here
 
is you were asked to buy a distressed asset, a G-SIB
asset and when you buy something, which you
 
are asked to buy, you clearly are in control of the process.
And I would assume just like you do in an
 
M&A transaction, you know that better
 
than me, you have a MAC
clause and in this instance, I would assume
 
after all the financial crisis issues that
 
we had in 2012-2013 with
mergers by regulators, there would have been an agreement
 
that there's not over-regulation for UBS post the
NewCo transaction. And I wanted to see if there's
 
anything like this.
The second question I
 
have is Sergio you
 
also comment that the
 
assessment of capital will
 
be based on
 
what
the final outcome is once we better know the outcome of these regulations. And one option is also to look at
your legal entities and maybe
 
close some of the legal
 
entities or exit, and clearly
 
a lot of capital is tied
 
up in the
US. They make lower
 
returns if I look at
 
US wealth ex-LatAm as well
 
as the US IB,
 
I assume its lower returns.
 
So
one option would be
 
a restructuring or
 
exiting of markets to
 
rather than reducing
 
capital return. I
 
wanted to
see if that is also an alternative. Thank
 
you.
Sergio P.
 
Ermotti
Thank you. Yeah, very good question. Yeah, I think that -- let me put it that way that some of the conditions
that were discussed and agreed at over that weekend
 
that were clearly, defined and communicated for
example, the one in respect of the antitrust and the competitive
 
nature in our local markets that has been
very well defined and agreed. Others, I would say, were also discussed and agreed.
Let me put it that way. I'm not so sure we can talk about a MAC clause but as I mentioned
 
in my opening
remarks, we are delivering on our commitments. So I
 
probably stop here.
And in respect of the amount of capital and I think
 
it's clearly too early to speculate or
 
respond to
speculations around the capital. I just want to underline
 
that when we talk about our parent company, you
know, UBS had already up for -- one of the best in class capitalization, the quality
 
of our capital in the parent
company was very strong. What I mentioned that is already
 
embedded in our plan. We are absorbing USD 9
billion of concession granted to Credit Suisse. We are absorbing the
 
progressive buffers that will come in as a
consequence of market share and size. And we believe
 
this is feasible and is part of the plan.
15
So, before we speculate about what we would
 
do to respond to any other changes in regulatory
requirements, we need to understand what they are, because, believe
 
me, we have not been consulted.
 
We
don't know what they are. And so, we need to
 
have the full picture before we respond to this kind of
situations.
But let me just say
 
that having a global
 
franchise, being competitive
 
globally, is what makes us a very attractive
bank to our clients. Shrinking
 
back to greatness is not
 
a strategy and is not what
 
will serve, not only our
 
clients
and our shareholders well,
 
but I'm also convinced
 
is not going to
 
serve well, Switzerland and
 
its ambitions to
be one of the leading financial center in the
 
world. That's pretty clear to me.
Kian Abouhossein, JP Morgan
Thank you.
Giulia Aurora Miotto, Morgan Stanley
Yeah. Hi. Good morning. So two questions from me as well. The first one just going
 
back on the capital
proposal again. And you said, you were not consulted on
 
this document and you need to see what the
 
final
proposal looks like. So looking forward, what are the next steps? Do
 
we need to wait until June or are you
now part of the discussion, do we expect to have
 
more clarity throughout the year? That's the first question.
And then
 
the second
 
question more
 
related to
 
the quarter,
 
there was
 
some performance in
 
transaction fees
better than I expected
 
in wealth. I'm wondering,
 
is this just a transitory
 
Q1 thing or is this
 
continuing and what
should we expect there? Thank you.
Sergio P.
 
Ermotti
I pick up the first one, and then I'll pass it to
 
Todd
 
for the second. I mean, the reason - we are not yet clear if
we're going to be formally part of any consultation
 
or any discussions, of course, as I mentioned
 
in my
remarks, we will make sure that our considerations are heard by the regulatory bodies
 
and policymakers and
so that we can contribute to fact-based discussions.
 
And of course, we also
 
hope that the report
 
of the investigating commission of the parliaments
 
will highlight
some of the
 
reasons why Credit
 
Suisse failed,
 
and that should
 
be a crucial
 
element in
 
contributing to
 
fact-based
discussions on
 
future regulations.
 
So, June,
 
as you
 
mentioned, June, June
 
is not
 
a credible
 
date because
 
the
commission is not expected to report before the end of
 
the year. I also think that..
Giulia Miotto, Morgan Stanley
June 2025 I meant, sorry.
Sergio P.
 
Ermotti
That one is, I don't know about June 2025. I
 
think that it's very unlikely that we're going to
 
have more clarity
about this matter in terms of what it means before year end or the early -- or even the early part of next year.
So in the meantime, we have to accept some
 
level of uncertainty around this topic.
Todd
 
Tuckner
Yeah, hi Giulia, on the second question about TRX in GWM. So yeah, very strong
 
1Q. In terms of how we --
how one should think about it, overall in going
 
forward, I'd say a few things. I mean, naturally, the
environment needs to be conducive to strong transactional flows
 
– and 1Q was, but I would really highlight
that it wasn’t so much just beta.
16
But actually, it’s an environment where you started to see risks come on, you saw some uncertainty, and it’s
an environment that plays to our strengths, where we were able to advise
 
in particular, across our regions in
more complex, structured products where we saw significant volume up, so
 
really played to our strengths and
then also, I think structurally reflects a couple of things
 
in addition that I would say it gives us confidence
 
as
we look out forward.
One is that the align product shelf, so across Credit Suisse and UBS
 
coming together, and the way we've
approached clients from that sense. And on the US side, as
 
I highlighted, just really borrowing from the
playbook outside the US, inside the US to really approach clients
 
more jointly with the investment bank is also
paying off.
So we see there
 
are some structural things
 
that bode well as
 
we look out. Of
 
course, the environment needs
 
to
be conducive, but also in an environment like the
 
current one is one that plays to our
 
strengths as mentioned
and really allows us to drive transactional flows higher.
Giulia Miotto, Morgan Stanley
Thanks.
Jeremy Sigee, BNP Paribas Exane
Thank you. Good morning. Two questions, please. One is, you talked about the
 
Investment Bank and the core
businesses that you've retained from Credit Suisse and the
 
people you've brought over. I just wanted to – are
they now fully productive in revenue terms? Or is there some lag still
 
to come through, as those people ramp
up? Are they up to speed already at this point?
And then my second question is sort of, again,
 
on the capital theme. I saw in the report, you
 
reiterate your
intention to do the 1 billion of buybacks in the
 
second half of this year. I guess, that's a small enough amount
that you can do it pretty much regardless of the new capital proposals. But
 
I just wanted to hear your
thoughts on that.
Sergio P.
 
Ermotti
Well, let me take the first question is very – you know, of course everybody
 
is now up and running and
productive. And – but when you look at Banking, as
 
you know, what does it mean being productive?
 
It does,
you know, there is a phase of going out and pitching and winning mandates
 
and then it takes time until they
get executed. So, in a sense if you are asking me
 
if they are productive in pitching and being engaged with
clients, they are. Everybody is full speed. The momentum
 
in winning mandates is great. You could see it in the
fourth quarter. In the first quarter,
 
we have executed many of them. And
 
we are very comfortable that the
investments and the trajectory of growth that we
 
see going forward, if market conditions stay there to allow
the execution of those mandates, are very promising.
In respect of the billion, so I think that you know, at this stage, the only
 
constraints we have right now is the
waiting until the parent bank merger is executed. We expect
 
this to be in at the end of May and if
 
everything
goes through successfully, pending the regulatory approvals that we need, we intend to restart the share
buybacks with up to a billion dollars for 2024.
Jeremy Sigee, BNP Paribas Exane
Very helpful, thank you.
17
Andrew Coombs, Citigroup
Good morning. Two questions please, basic follow ups. Firstly on the Non-core result, obviously
 
a tremendous
result both in terms of the RWA run-down but also the gains that you've
 
booked during the quarter. Thank
you for the revised guidance for the full year. I just wanted to better understand the source of those
 
gains in
Q1, I think you said conduit and corporate
 
loan books and longevity portfolio. You then don't expect that to
repeat going forward. Is that because the low hanging
 
fruit has already been achieved or because you're now
selling a different type of asset, or anything you can elaborate
 
there will be helpful.
And then the second question, thank you for
 
the opening remarks, Sergio. On the parent bank capital,
 
I just
wanted to check, the 9 billon you referenced, is that in relation to a
 
400% risk-weight on foreign subsidiaries,
or is it the 300% as it currently is phased? And then
 
more broadly, a question to the both of you, in the event
that the risk weight on foreign subsidiaries does
 
go up, to what extent do you think you can
 
mitigate that
through the fungibility of capital, dividend, trapped
 
capital and so forth? Thank you.
Todd
 
Tuckner
Hi, Andrew. I'll address the first question. I mean, in terms of the source of the gains, I think
 
as, you know, as
you mentioned, and as of course I highlighted,
 
it came from a number of the sort of sectors
 
within NCL,
Conduit, and Corporate Loans, Longevity, Securitized Products. We're also seeing, you know, strength in
Credit and Equities and Macro as well. And, you know, the team has been doing
 
a great job in unwinding
these complex, longer dated transactions.
 
And that continues to be what they're going to
 
be focused on
doing. So the source of the gains comes from, you know, the ability to add a
 
lot of value to these complex
transactions. And you know, to be able to get the transactions closed
 
out at levels that are above book value.
And as I highlighted, that's not an expectation
 
that people should continue to have, not
 
least just given that
sometimes we're going to make decisions to get out
 
of positions where we know there's significant cost
takeout or there's suboptimal capital at the moment,
 
it's very suboptimal from a capital efficiency perspective,
and so getting out would release that. So they're going
 
to be a number of factors that – which is why, you
know, we don't see 1Q repeating.
Sergio P.
 
Ermotti
So if I can add on that one, before I touch on the
 
second question. I think that's the – first of
 
all, there is
definitely no low hanging fruit and if you look
 
at our natural decay profile change, it shows you
 
that we are
not really going for easy to sell but rather complex transactions
 
that also helps in many cases to unwind costs,
because priority number one in Non-core is to take
 
down cost, and not necessarily to take down
 
risk
weighted assets and market or credit risk weighted
 
assets.
 
So, in that sense, it's very important that in many
 
cases we are able, thanks to the good work the
 
team is
doing in managing these unwinds, to leverage
 
the fact that we are not a forced seller. We are only going to
dispose assets when they create value to shareholders.
 
And that's a – is a completely different position to be
in because our capital is strong. We can allow some delays
 
or some time to elapse between the two.
Now on the 9 billion, so there are two factors actually; one
 
is the 250% risk weightings and 400% for
 
foreign
companies and the elimination of the filter –
 
of the regulatory filter that Credit Suisse had. The two combined
account for 9 billion.
Andrew Coombs, Citigroup
And the ability to mitigate any increase in the foreign subsidiaries
 
going forward? Assume it’s something
you're already working on given the already base increase, to what extent
 
you think you could accelerate
that.
18
Sergio P.
 
Ermotti
No the mitigation – look the mitigation I go
 
back to is – I mean, I have to – it’s like
 
replay,
 
push the button
again and replay what I told you or what I said before, we
 
cannot speculate or respond to speculation or do
analysis on things that we don't know. What we know is that we're
 
going to hold, as a consequence of the
Credit Suisse acquisition, 9 plus 10 billion, so almost
 
20 billion of additional capital on an already very
 
strong
capital position UBS had. That's the fact.
 
The rest, I don't know and we will comment when we
 
know more.
Andrew Coombs, Citigroup
Brilliant, very clear. Thank you for that.
Anke Reingen, RBC
Yeah, thank you very much for taking my question. I'm just – I'm sorry to follow up, just
 
one thing. I mean, is
it fair to say that a result of the uncertainty and not
 
really changing any step in your strategy and execution
 
of
the merger and specifically, with Q4 results, you mentioned, the potential amortization of
 
additional DTA, just
confirming this – at the current stage, this is going ahead.
And then on the net new assets, the 17 billion
 
[edit: 27 billion] in Q1, that’d be running
 
below, if I were
thinking about $100 billion for this year – should
 
it be rather than 100 billion this year, is it more like the 200
billion over the years – or two years – and more backend
 
loaded towards the 2025 to reach the 200 billion?
And has the decline in relationship managers had
 
any impact on the net new assets
 
growth in Q1? In the
past, you gave us some numbers about departed
 
relationship managers and the assets they have
 
taken with
them. Is that the case, as being relatively low? Thank
 
you very much.
Sergio P.
 
Ermotti
Thank you, I’ll take the first question. I think
 
that, Anke, I think – this is a very complex
 
integration, and we
cannot afford to be distracted in the execution of it. So
 
we are sticking to our strategy. We are sticking to our
plan. We need to do that and at the same time, stay
 
close to our clients. And so that's
 
the reason why
engaging in hypothetical change of strategy
 
or methodology we use in assess our –
 
anything that goes
around capital – would be absolutely very distracting
 
and not in the best interest of any stakeholders, because
what we want to have is a successful completion
 
of this integration. And so we stay
 
focused on the existing
strategy and our approach.
Todd
 
Tuckner
Yeah Anke, on the second question, in terms of net new assets in GWM. I would
 
just reiterate that the
trajectory that we highlighted over the next
 
two years is, among other things, a function
 
of the financial
resource optimization and balance sheet initiatives that the
 
team is hard at work in undertaking. So 27 billion
in the quarter is a strong result, we're on track to deliver on our
 
ambitions, which we said was 200 billion
over the course of two years. So I would continue
 
to think about that in those terms.
In terms of the RMs who have left, you mentioned
 
that we had given some numbers in the
 
past. Yeah, I
mean, that has continued just to taper. As an impact, just given the number of RMs
 
who have left, has
become sort of a non-topic at this point
 
in time. In terms of any current period, and in terms
 
of the assets
that they’ve taken with them, it is a very small
 
percentage, ultimately, of the given – especially given the fact
that the RM workforce in Credit Suisse is down 40% from the end
 
of 2022 levels, and we've been able to
retain the lion share of the assets. So, we consider that
 
to be sort of a story not terribly worth following,
 
and
in the end, we stay focused on our plans
 
and our commitments.
19
Anke Reingen, RBC
Thank you. Can I just ask on the DTA please? Are you reiterating that we expect to convert
 
that 2 billion and
the 500 million you talked about with Q4 results?
Todd
 
Tuckner
Yeah. There's no change in terms of our approach to DTAs at the current time, Anke.
Anke Reingen, RBC
Thank you very much. Thank you.
Benjamin Goy, Deutsche Bank
Hi. Good morning. Two questions, please. One on your favorite topic, capital. Just
 
conceptually, trying to
understand, because when the press it’s reported, or the
 
Minister of Finance speaks, about capital,
 
and we
naturally assume it’s CET1 capital, but do you
 
think it could also partially include additional
 
tier 1 capital,
which might make it more manageable for you?
And then secondly, on your Global Wealth Management net new loans in the quarter, another decline, it’s
very similar to the Q4 decline. Just trying to
 
reconcile that with your risk appetite returning statement
 
– being
conscious of the yield curve’s still not favorable
 
but wondering if it's also more of a risk alignment
 
still going
on in the background, which is why your outstanding
 
remains negative? Thank you very much.
Sergio P.
 
Ermotti
Benjamin, the first one is very short. As
 
I say, we don’t speculate or respond to speculation in respect of any
numbers that has been flagged out there. So it’s
 
not – we are not in a position to understand where and how
those numbers are calculated, therefore we refrain from doing that.
Todd
 
Tuckner
Yeah, and Benjamin hi. On the GWM net new lending side, we are seeing continued deleveraging,
 
some of
that is market driven and some of that – i.e.
 
rates driven, and some of that is as a
 
function of the resource
optimization work that we're doing. So, that's an outcome
 
that we're managing, to the extent it is the latter,
we are looking to drive higher revenues. And therefore, I’m looking for the
 
NIM to sort of hold up in that
respect, because we're improving the revenue over RWA consideration.
But obviously, in the current rates environment, too, we're seeing either the ends of deleveraging and
 
still yet
some reticence to re-lever in some of our regions. So I expect that
 
we won't have a lot of momentum on re-
levering in the current rates environment until we start to
 
see rates come down, over – if, assuming they do
 
–
over the next, say 12 to 18 months, so that external
 
factor won't be, to me, a big driver in
 
terms of
releverage.
Benjamin Goy, Deutsche Bank
Understood. Thank you very much.
20
Piers Brown, HSBC
Yeah. Good morning. Thanks for the questions. Just two from me, just coming
 
back on the cost issue, and
the costs take out in the quarter in the NCL unit.
 
I mean, it's quite impressive, you're down 26% quarter-on-
quarter. And the cost takeout seems to be tracking more or less in line with the asset
 
reduction. Just, I mean,
the question is, should we expect that sort
 
of linear relationship to continue or was it something
 
particular in
terms of frontloading costs takeout in the first quarter
 
in NCL?
And then the second question is back to regulation,
 
not on capital but just wondering if there's anything
 
in
any of the remarks, comments, reports, published by the Competition
 
Commission that we need to be
mindful of, just in terms of the domestic
 
market shares of the new group. Thanks.
Todd
 
Tuckner
Hey Piers. In terms of the first question on
 
the NCL cost takeout. There isn't a linear relationship, I would
 
say.
It's, it could be, the relationship really doesn't have to
 
flow linearly. And that's because, the cost takeout will
often come as a result of taking out a portfolio that
 
sits on a given system or supported by a
 
given
infrastructure or application that we’re able to shut down.
 
But there is of course, a relationship between the
asset takeout and the cost takeout. I wouldn't
 
say it's linear because you can have, you can be
 
taking out
portions of a portfolio that still needs at least
 
a large share of the headcount supporting that, whether
 
it's the
front office or mid or back, that's still supporting the
 
broader portfolio. And if you're not really able to
decommission the associated technology, you may not get the saves there. So not
 
linear, but for sure, it's
something we watch very carefully and we're pleased to
 
see that it is moving with a reasonably high-degree
of correlation.
Sergio P.
 
Ermotti
Now on the competitive position. Let's
 
forget for a second that we have a crystal
 
clear agreement on that
topic. Even if you go down to the substance,
 
which is, I think, is relevant for us, for consumers,
 
for clients, or
everybody to understand. When you look at
 
facts, it's quite clear that we have no dominant
 
position in
Switzerland, in banking. So I think that no
 
matter if you look at deposits, at loans
 
and mortgages, you look at
branch – number of branches; in any dimension,
 
UBS is not the largest bank in Switzerland in
 
that sense. I
think we are the leading bank in Switzerland because
 
of our capabilities, but that should not be confused
with market share and size. So in that sense, we are fairly comfortable
 
that both the agreement and the facts
support our position that our plan is the right one
 
to pursue.
Piers Brown, HSBC
Thank you.
Tom
 
Hallett, KBW
Hi. Morning. So just a quick one on Wealth
 
Management NII, I think you were baking in three US rate
 
cuts for
this year in your guidance. If that was zero, what would
 
that – or how would that alter your guidance?
And then secondly, on the treatment of software intangibles, I suppose it's fair to say it gets a bit more of
 
a
benefit relative to your European peers. I mean, if you
 
were to align the rules with Europe, what sort of
impact would that have on your capital?
 
Thank you.
Sergio P.
 
Ermotti
So, on the second question, as I said before, we are not
 
speculating on any change in our regulatory
framework. The only thing I can say is that
 
both in absolute global terms, but also
 
vis-à-vis the European
peers, we have a pretty strong capital position, not only in
 
absolute terms, but also the quality of
 
our capital
base.
21
Todd
 
Tuckner
Hey Tom,
 
on GWM NII, yes, we modeled in as mentioned
 
three US dollar rate cuts. If there were fewer than
those – and Sergio even commented earlier that
 
there is some upside, but of course, in our NII, but of
 
course
that depends on client behavior. It depends on how the balance sheet, you know, behaves. So statically, yes,
that would be corrected to be upside. If there were no rate cuts, you
 
probably have some uptick of a point or
two on the NII. But of course, you know, we need to consider the
 
dynamic relationship between client
behavior and our balance sheet. So it's difficult to predict,
 
but yes, I would just take away that – likely
 
to be
some degree of upside, all other things equal.
Tom
 
Hallett, KBW
Okay. Thank you.
Sarah Mackey
Thank you. I
 
think there are
 
no further questions.
 
So with that
 
we can close
 
the call. And
 
thank you, Sergio
 
and
Todd
 
for joining us today. We look forward to speaking to everyone again with our 2Q results.
 
22
Cautionary
 
statement
 
regarding
 
forward-looking
 
statements
 
|
 
This
 
document
 
contains
 
statements
 
that
 
constitute
 
“forward-looking
statements,” including
 
but not
 
limited to
 
management’s outlook
 
for UBS’s
 
financial performance,
 
statements relating
 
to the
 
anticipated
effect
 
of
 
transactions
 
and
 
strategic
 
initiatives
 
on
 
UBS’s
 
business
 
and
 
future
 
development
 
and
 
goals
 
or
 
intentions
 
to
 
achieve
 
climate,
sustainability and other social objectives. While these forward-looking statements represent UBS’s
 
judgments, expectations and objectives
concerning the matters described, a number
 
of risks, uncertainties and other important factors
 
could cause actual developments and results
to differ materially from UBS’s expectations. In
 
particular, terrorist activity and conflicts in the Middle
 
East, as well as the continuing
 
Russia–
Ukraine war, may have significant impacts on
 
global markets, exacerbate
 
global inflationary pressures, and slow
 
global growth. In addition,
the ongoing
 
conflicts may
 
continue to
 
cause significant
 
population displacement,
 
and lead
 
to shortages
 
of
 
vital commodities,
 
including
energy
 
shortages and
 
food
 
insecurity outside
 
the
 
areas
 
immediately involved
 
in
 
armed
 
conflict. Governmental
 
responses
 
to
 
the
 
armed
conflicts, including, with respect to the
 
Russia–Ukraine war, coordinated successive sets of sanctions on
 
Russia and Belarus, and Russian
 
and
Belarusian entities and nationals, and
 
the uncertainty as to
 
whether the ongoing conflicts will
 
widen and intensify,
 
may continue to have
significant adverse effects on the market and macroeconomic conditions, including in ways that cannot be anticipated. UBS’s acquisition of
the
 
Credit
 
Suisse
 
Group
 
has
 
materially
 
changed
 
our
 
outlook
 
and
 
strategic
 
direction
 
and
 
introduced
 
new
 
operational
 
challenges.
 
The
integration of the
 
Credit Suisse entities
 
into the UBS
 
structure is expected
 
to take between
 
three and five years
 
and presents significant
 
risks,
including the risks
 
that UBS Group
 
AG may be
 
unable to achieve
 
the cost reductions
 
and other benefits
 
contemplated by
 
the transaction. This
creates significantly greater
 
uncertainty about forward-looking
 
statements. Other factors
 
that may
 
affect our
 
performance and ability
 
to
achieve our plans, outlook
 
and other objectives also
 
include, but are not limited
 
to: (i) the degree to which
 
UBS is successful in the
 
execution
of its strategic plans, including its cost reduction and efficiency initiatives and its ability to manage its levels of risk-weighted assets (RWA)
and leverage ratio denominator (LRD), liquidity coverage
 
ratio and other financial resources, including changes in RWA assets and liabilities
arising from higher market volatility
 
and the size of the
 
combined Group; (ii) the degree
 
to which UBS is successful
 
in implementing changes
to its businesses
 
to meet changing
 
market, regulatory and
 
other conditions,
 
including as
 
a result of
 
the acquisition
 
of the Credit
 
Suisse Group;
(iii) increased inflation and interest
 
rate volatility in major markets; (iv)
 
developments in the macroeconomic climate and in
 
the markets in
which UBS operates or to which it is exposed, including movements in securities prices
 
or liquidity, credit spreads, currency exchange rates,
deterioration or slow
 
recovery in
 
residential and
 
commercial real
 
estate markets, the
 
effects of
 
economic conditions, including increasing
inflationary pressures,
 
market developments,
 
increasing geopolitical
 
tensions, and
 
changes to
 
national trade
 
policies on
 
the financial position
or creditworthiness of UBS’s clients and counterparties, as
 
well as on client sentiment and levels
 
of activity; (v) changes in the availability
 
of
capital
 
and
 
funding,
 
including
 
any
 
adverse
 
changes
 
in
 
UBS’s
 
credit
 
spreads
 
and
 
credit
 
ratings
 
of
 
UBS,
 
Credit
 
Suisse,
 
sovereign
 
issuers,
structured credit products or credit-related exposures, as well as availability and cost
 
of funding to meet requirements for debt eligible for
total loss-absorbing capacity (TLAC), in particular in light of
 
the acquisition of the Credit Suisse Group;
 
(vi) changes in central bank policies
or the implementation of
 
financial legislation and regulation
 
in Switzerland, the US,
 
the UK, the
 
EU and other
 
financial centers that have
imposed, or resulted in, or may
 
do so in the future,
 
more stringent or entity-specific capital, TLAC, leverage ratio, net
 
stable funding ratio,
liquidity
 
and
 
funding
 
requirements,
 
heightened
 
operational
 
resilience
 
requirements,
 
incremental
 
tax
 
requirements,
 
additional
 
levies,
limitations on permitted activities, constraints on remuneration, constraints on transfers of capital and liquidity and sharing of operational
costs across
 
the Group
 
or other
 
measures, and
 
the effect
 
these will
 
or would
 
have on
 
UBS’s business activities;
 
(vii) UBS’s ability
 
to successfully
implement resolvability
 
and related
 
regulatory requirements
 
and the
 
potential need
 
to make
 
further changes
 
to the
 
legal structure
 
or booking
model of UBS in response to
 
legal and regulatory requirements and any
 
additional requirements due to its acquisition of
 
the Credit Suisse
Group, or other developments; (viii) UBS’s ability to maintain and improve its systems and controls for
 
complying with sanctions in a timely
manner and for the
 
detection and prevention
 
of money laundering
 
to meet evolving
 
regulatory requirements and expectations,
 
in particular
in current geopolitical
 
turmoil; (ix)
 
the uncertainty
 
arising from
 
domestic stresses
 
in certain
 
major economies;
 
(x) changes
 
in UBS’s competitive
position, including
 
whether differences
 
in regulatory
 
capital and
 
other requirements
 
among the
 
major financial
 
centers adversely
 
affect UBS’s
ability to compete
 
in certain lines of
 
business; (xi) changes
 
in the standards of
 
conduct applicable
 
to our businesses
 
that may result from
 
new
regulations
 
or
 
new
 
enforcement of
 
existing standards,
 
including measures
 
to
 
impose new
 
and
 
enhanced duties
 
when
 
interacting with
customers and
 
in the execution
 
and handling
 
of customer transactions;
 
(xii) the liability
 
to which UBS
 
may be exposed,
 
or possible constraints
or sanctions that regulatory authorities might impose on UBS, due
 
to litigation, contractual claims and regulatory investigations, including
the potential for disqualification
 
from certain businesses,
 
potentially large fines
 
or monetary penalties,
 
or the loss of licenses
 
or privileges as
a result
 
of regulatory
 
or other
 
governmental sanctions,
 
as well
 
as the
 
effect that
 
litigation, regulatory
 
and similar
 
matters have
 
on the
operational risk component of our RWA, including as
 
a result of its acquisition of the Credit
 
Suisse Group, as well as the amount of
 
capital
available for return to
 
shareholders; (xiii) the effects
 
on UBS’s
 
business, in particular cross-border
 
banking, of sanctions, tax
 
or regulatory
developments and of
 
possible changes in
 
UBS’s policies
 
and practices; (xiv)
 
UBS’s
 
ability to retain
 
and attract the
 
employees necessary to
generate
 
revenues
 
and
 
to
 
manage,
 
support
 
and
 
control
 
its
 
businesses,
 
which
 
may
 
be
 
affected
 
by
 
competitive
 
factors;
 
(xv)
 
changes
 
in
accounting or
 
tax standards
 
or policies,
 
and determinations
 
or interpretations
 
affecting the
 
recognition of
 
gain or
 
loss, the
 
valuation of
goodwill, the recognition
 
of deferred tax assets
 
and other matters;
 
(xvi) UBS’s ability to implement
 
new technologies and
 
business methods,
including digital services and technologies, and
 
ability to successfully compete with
 
both existing and new financial service providers,
 
some
of which may not be regulated
 
to the same extent; (xvii) limitations on the
 
effectiveness of UBS’s internal processes for
 
risk management,
risk control,
 
measurement and
 
modeling, and
 
of financial
 
models generally;
 
(xviii) the
 
occurrence of
 
operational failures,
 
such as
 
fraud,
misconduct, unauthorized
 
trading,
 
financial
 
crime,
 
cyberattacks, data
 
leakage and
 
systems failures,
 
the
 
risk
 
of
 
which
 
is
 
increased
 
with
cyberattack threats from
 
both nation states
 
and non-nation-state
 
actors targeting
 
financial institutions;
 
(xix) restrictions
 
on the ability
 
of UBS
Group AG
 
and UBS AG
 
to make payments
 
or distributions, including
 
due to restrictions
 
on the ability
 
of its
 
subsidiaries to make
 
loans or
distributions, directly or indirectly, or, in the case of financial difficulties,
 
due to the exercise by FINMA
 
or the regulators of UBS’s operations
in other
 
countries of
 
their broad
 
statutory powers
 
in relation
 
to protective
 
measures, restructuring
 
and liquidation proceedings;
 
(xx) the
degree to
 
which changes in
 
regulation, capital or
 
legal structure, financial
 
results or other
 
factors may affect
 
UBS’s
 
ability to maintain
 
its
stated capital return objective; (xxi) uncertainty over the scope of actions
 
that may be required by UBS, governments and others for UBS to
achieve goals relating to
 
climate, environmental and social matters, as
 
well as the evolving nature
 
of underlying science and industry
 
and
the
 
possibility of
 
conflict between
 
different
 
governmental standards
 
and
 
regulatory
 
regimes;
 
(xxii)
 
the
 
ability of
 
UBS
 
to
 
access
 
capital
markets; (xxiii)
 
the ability
 
of UBS
 
to successfully
 
recover from
 
a disaster
 
or other
 
business continuity problem
 
due to
 
a hurricane,
 
flood,
earthquake,
 
terrorist
 
attack,
 
war,
 
conflict
 
(e.g.,
 
the
 
Russia–Ukraine
 
war),
 
pandemic,
 
security
 
breach,
 
cyberattack,
 
power
 
loss,
telecommunications failure
 
or other natural
 
or man-made event,
 
including the ability
 
to function remotely
 
during long-term
 
disruptions such
as the COVID-19 (coronavirus) pandemic; (xxiv) the level of success in
 
the absorption of Credit Suisse, in the
 
integration of the two groups
and their
 
businesses, and
 
in the
 
execution of
 
the planned
 
strategy regarding
 
cost reduction
 
and divestment
 
of any
 
non-core assets,
 
the
existing assets and
 
liabilities of Credit
 
Suisse, the level
 
of resulting impairments
 
and write-downs, the
 
effect of the
 
consummation of the
integration on
 
the operational
 
results, share price
 
and credit rating
 
of UBS –
 
delays, difficulties,
 
or failure in
 
closing the
 
transaction may
 
cause
market disruption and challenges for UBS to maintain
 
business, contractual and operational relationships; and (xxv)
 
the effect that these or
other factors
 
or unanticipated
 
events, including
 
media reports
 
and speculations,
 
may have
 
on our
 
reputation and
 
the additional
 
consequences
that this
 
may have
 
on our
 
business and
 
performance. The
 
sequence in
 
which the
 
factors above
 
are presented
 
is not
 
indicative of
 
their
likelihood of
 
occurrence or
 
the potential
 
magnitude of
 
their consequences. Our
 
business and
 
financial performance
 
could be
 
affected by
other factors identified
 
in our past and future
 
filings and reports, including
 
those filed with the
 
US Securities and Exchange
 
Commission (the
SEC). More
 
detailed information
 
about those
 
factors is
 
set forth
 
in documents
 
furnished by
 
UBS and
 
filings made
 
by UBS
 
with the
 
SEC,
including the
 
UBS Group AG
 
and UBS AG
 
Annual Reports
 
on Form 20-
 
F for the
 
year ended 31
 
December 2023.
 
UBS is not
 
under any obligation
to (and expressly disclaims
 
any obligation to)
 
update or alter its
 
forward-looking statements,
 
whether as a result of
 
new information, future
events, or otherwise.
 
 
 
 
 
 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
 
registrants have duly
caused this report to be signed on their behalf by the undersigned, thereunto
 
duly authorized.
UBS Group AG
By:
 
/s/ David Kelly
 
_
Name:
 
David Kelly
Title:
 
Managing Director
 
By:
 
/s/ Ella Campi
 
_
Name:
 
Ella Campi
Title:
 
Executive Director
UBS AG
By:
 
/s/ David Kelly
 
_
Name:
 
David Kelly
Title:
 
Managing Director
 
By:
 
/s/ Ella Campi
 
_
Name:
 
Ella Campi
Title:
 
Executive Director
Credit Suisse AG
By:
 
/s/ Ulrich Körner
 
_____
Name:
 
Ulrich Körner
Title:
 
Chief Executive Officer
By:
 
/s/
 
Simon Grimwood
 
_
Name:
 
Simon Grimwood
Title:
 
Chief Financial Officer
Date:
 
May 8, 2024
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