UBS Investor Presentation · 3 Cross-divisional synergies Cross- divisional revenues CHF 3. 0 bill...
-
Upload
truongdang -
Category
Documents
-
view
226 -
download
0
Transcript of UBS Investor Presentation · 3 Cross-divisional synergies Cross- divisional revenues CHF 3. 0 bill...
First-quarter 1999 Results
UBS Investor Presentation
1
UBS visionHighly p rofitable global financial institu tion p ositioned as leadingA sset G athering Hou se in Eu rop e and leading Universal bankin Sw itzerland
♦ Uniq u e bu siness m ix - asset gathering and advisory,private banking and institutional asset management
♦ Drawing on cap acity of divisions:— Private Banking offshore and onshore, especially in
domestic Europe— standardized asset gathering products in Private and
Corporate Clients— leading institutional asset management capability
(UBS Brinson)— Investment Banking - client focus, risk management, financial services
provider— Private Equity - strength in Europe and US
♦ Major bet on Eu rop e
♦ Commitment to substantial technology investment
2
Integrated business modelIntegrated m odel focu sed on clients and standard p rocesses
Private clients
Institutional clients
Distributionchannels
Distributionchannels Consultants
Rese
arch
,sa
les
and
trad
ing
CorporateFinance
UBS
24-
hrba
nkin
g
External assetmanagers
Branchnetwork
ClientRelations
PrivateBanking
WarburgDillonRead
Brinson
Stan
dard
ized
re
quir
emen
tsCo
rpor
ates
,Fi
nanc
ial
Inst
itut
ions
and
Sove
reig
ns
Customized
needsInstitutionalinvestors
UBSCapital
Private & Corp. Clients
3
Cross-divisional synergiesC ross-divisional revenu es C HF 3 .0 billionC ost-sharing C HF 2 .8 billion
Warburg Dillon Read
Private &Corporate Clients
UBS Brinson
UBS Capital
PrivateBanking
Foreign ExchangeSecurities: - primary - secondaryTreasury productsCorporate FinanceInvestment funds
Loan products Insurance productsStandardized products
Asset management
Equity capital
Investment funds Fiduciary deposits
4
Aspirations and 2002 targets
♦ Clear leadership aspiration
♦ Demanding financial targets
Return on equity 15% - 20%
Earnings per share CHF 45
Cost/income ratio approx. 60%
Tier 1 ratio 8.5% - 9%
5
First-quarter 1999 Group Headline results
♦ Pre-tax profit CHF 2.1 billion (+19%). Net income CHF 1.6 billion(+21%). Basic EPS CHF 7.72 (+21%). Annualized return onequity 21.2%
♦ Operating income 3%. Operating expenses (3%)
— maintained, and in some cases enhanced, client franchise andrevenue-generating ability
♦ Merger on track
— over 50% of Swiss client data (1.4 million clients) transferredto common IT platform
— 76 branches of planned 150 closed
♦ Total assets under management CHF 1,639 billion (+4.3%)
♦ Tier 1 ratio 9.4% (vs. 9.8% in 1998), 1% Own Shares bought backby 22 April
6
Impact of special items
♦ First-quarter 1999 figures inclu de a C HF 90 m illion p ost-tax gain fromthe sale of Ju liu s B aer registered shares
♦ First-quarter 1999 figures exclu de proceeds from the sale of UBS’ stakein Sw iss Life / Rentenanstalt and G lobal Trade Finance
♦ B ank of A m erica’s international p rivate banking franchise wasacquired during the first quarter, but will be reflected in resu lts laterin the year
Notes:(1) Proceeds from BSI and Adler sale: CHF 1,058 million. Operating revenues and costs relating to disposals:
CHF 260 million and CHF 121 million respectively(2) Client transfers: Operating income CHF 625 million, operating PG&A costs CHF 283 million, depreciation and
amortisation CHF 34 million
♦ First-half 1998 figures for Private Banking include pre-tax C HF 1 ,1 97 billion(1) relating to divestm ents and pre-tax C HF 3 08 m illion(2) relating to client shift from P B to P C C
♦ First-half 1998 results include pre-tax C HF 544 m illion provision for theUS settlem ent
7
First-quarter 1999 UBS Group Results
3 1 .3 .1 998 % 3 1 .1 2 .1 998(CHF mn) change
Operating income 6,703 3% 22,328
Operating expenses 4,929 (3%) 18,258
Profit before tax 1,774 19% 4,070
Net profit 1,344 21% 3,030
3 1 .3 .1 999
6,918
4,804
2,114
1,621
8
Performance Indicators
03/99
21.2
ROE (%)(annualized)
03/98
17.7
12/98
10.3(1)
03/99
7.72
Basic EPS(CHF)
03/98
6.38
12/98
14.31(1)
03/98
70.6
03/99
66.5
Cost/income ratio(%)
12/98
78.4(1)
Note:(1) Full year
9
UBS merger integration updateD ivision Statu s P ersonnel Restr. P rov.
vs. end 1 998 1 Q 1 999(% ) (C HF m n)
Private Banking On track 3.6 11
Warburg Dillon Read Done (2.7) 223
Private and Corporate Clients On track 0.9 144
UBS Brinson Done (0.7) 4
UBS Capital Done (9.0) 6
Corporate Center Done (6.7) 1291 Q 1 999 G rou p Total O n track 0(1 ) 51 7
G rou p total 1 998 4,02 7Total usage to-date 4,544Total provision 7,000
Fu tu re u tilization 2 ,456
Note:(1) 1Q 1999 total increase of 20 employees since end of 1998 . Full-year 1998 employees total decreased
13%, or 7,165 employees relative to 1997
10
Year 2000 quantitative progress assessment for UBS (1)
P hase O rganisation p lans A ctu al statu s Forecast (as of 1 0/98) (as of 4/99) (as of 3 /99)
1 2 .98 1 .99 2 .99 3 .99 4.99 5.99 6 .99 1 2 .98 1 .99 2 .99 3 .99 4.99 4.99 5.99 6 .99 9.99
Note:(1) Mission critical systems
Developing a strategic approach 100 100
Creating organisationalawareness 100 100
Assessing actions anddeveloping detailedplans 99 99 100 98 98 99 100
Renovating systems,applications andequipment 95 98 99 99 99 100 87 89 93 96 98 98 99 100
Validating renovationthrough testing 88 92 93 96 98 99 100 68 72 76 85 89 91 97 99 100
Implementing tested,compliant systems 79 85 89 92 96 98 100 61 65 69 79 85 87 94 98 100
11
UBS Management Accounts1 Q 1 999 p re-tax p rofit
(C HF m n)
PrivateBanking
709
WarburgDillonRead
783
Private &Corporate
Clients
382
UBSBrinson
68
UBSCapital
48
CorporateCenter
124
Group
2,114
12
♦ 4% AuM growth despitedifficult conditions
♦ Client migration nearcompletion
♦ Purchase of Bank ofAmerica’s internationalprivate banking activitiesin Europe and Asia
♦ Good progress ondomestic business outsideSwitzerland
Private Banking
(C HF m n) 1 998(1)
Operating income 7,197
Operating expenses 2,861
Pre-tax profit 4,336
Net profit 3,599
AuM (CHF bn) 607
Cost/income ratio 46%(2)
1 Q 1 999
1,386
677
709
588
633
49%
Notes:(1) Including divestments: CHF 1,000 mn after-tax gain on sale;
CHF 268 mn operating income, CHF 125 mn operatingexpenses, CHF 119 mn after-tax impact
(2) Excluding BSI gain on sale
13
Integrated Wealth Management
Professional WealthManager
(Client Advisor)
Credit
CorporateFinance
PortfolioManagement
GlobalCustody
Art Banking
EstateAdvisory
TrustBusiness
FinancialPlanning
Real EstateManagement
14
E-banking products for Private Banking clients
UB S C onnect
Telebanking
UB S Q u otes
N ew P rodu ct
Internet
O p tim u sO nline
Research
P rodu ct B ooking C enter Lead/O w nershipP rivate B anking
P rivate & C orp orateC lients(coop eration)P rivate & C orp orateC lients(coop eration)P rivate & C orp orateC lients(coop eration)P rivate B anking
P rivate B anking
Target C lientsExternal A ssetM anagers
Self-directed
A ll (self-directed)
A fflu ent,P rivate B anking
P rivate B anking
P rivate B anking
P rivate B anking P rivate B anking A ctiveA dvisory Team
C hannel
Extranet
Internet (secu re)
Internet
Softw are, Extranet
Internet
Internet(p rotected)
Extranet
15
(CHF mn) 1998
Operating income 6,487
Operating expenses 7,508
Pre-tax profit (1,021)
Net profit (706)
Cost/income ratio 107%
Reg. equity used (ave.) 13.3 bn
♦ Strong results based on75% of both pre-mergerpersonnel and averageallocated regulatoryequity
♦ Risk appetite and capitalallocation now in linewith other leading globalinvestment banks
♦ 1998 refocusing led tohigh-quality earnings andclient-driven corebusinesses
♦ Successful introduction ofEuro and well-positionedfor Y2K
Warburg Dillon Read
1 Q 1 999
3,311
2,528
783
561
75%
10.7 bn
16
Clearly focused investment bank
♦ Narrowly-defined investmentbanking business at WDR:
— Treasury Products
— Equities and Fixed Income
— Corporate Finance
♦ Broader, asset gathering“investment bank” in UBSGroup:
— Private Banking
— Institutional AssetManagement, UBS Brinson
— Private Equity, UBS Capital
— Asset Gathering, UBS PB andUBS P&CC
♦ Integral to UBS AG:
— institutional andcorporate franchisemanager
— product provider toasset gatherers
— execution engine
— transaction processor
17
Leading investment bank: 1998 awardsC orp orate Finance M agazine
Top B anks of the Year:Investment Bank of the YearEquity-Linked House of the Year
D eals of the Year:Equity-Linked Deal of the YearEquity-Linked Offering of the YearEquity Offering (Privatisation) of the YearSyndicate Loan Deal of the YearBuyout of the Year
G lobal Investor
FX Su rvey:No.1 Best Advice on Spot TradingNo.1 Best Sales Coverage
International Financing Review A sia
Review of the Year:Australian Equity House of the YearAustralian Domestic Bond House of the Year
Eu rom oney
P oll of P olls:No.1 UnderwritingNo.1 TradingNo.1 Advisory
A w ards for Excellence:Best Eurobond Trading House (4th yr)Best Securities Firm in Western Europe (5th yr)Best Securities Firm in the UK (2nd yr)Best Securities Firm in Switzerland (4th yr)Best Foreign Securities Firm in US (2nd yr)
D eals of the Year:Best International Euro IssueBest Equity Linked IssueBest High Grade Corporate IssueBest IPOBest Financial Institution IssuesBest International Syndicated Loan
18
Private and Corporate Clients
(C HF m n) 1 998
Operating income 5,855
Operating expenses 4,947
Pre-tax profit 908
Net profit 754
AuM (CHF bn) 434
Cost/income ratio 70%
1 Q 1 999
1,624
1,242
382
313
461
65%
♦ Significant improvementin profitability
♦ Merger on track
— over 50% client data(1.4 million) trans-ferred to single ITplatform
— 76 of planned 150branches closed
♦ Very good progress inInternet banking
19
UBS Telebanking (Internet & Videotex)
120'000
140'000
160'000
Jan May Sept Jan May Sept Jan1 997 1 998 1 999
175'000
Mar
Total Telebanking users 178’000 42%Internet only (introduction Jan 98) 55’000
Number of stock exchange transactions 54’000Number of payments made 3.7 mn 21%
1 Q 1 999 vs. 1 Q 1 9981 Q 1 999 vs. 1 Q 1 9981 Q 1 999 vs. 1 Q 1 998
20
UBS Brinson
(C HF m n) 1 998
Operating income 1,163
Operating expenses 715
Pre-tax profit 448
Net profit 320
AuM (CHF bn) 531
Institutional assets 360
Investment funds 171
Cost/income ratio 61%
♦ Challenging first-quarter 1999— some expected loss of
revenue from merger— sale of Alfi Gestion— changes in interdivisional
pricing♦ 3% growth in AuM, driven
by investment funds♦ Brinson in line with
expectations— short-term under-
performance in U.S.equity portfolios
♦ Phillips & Drew under-performance in coreportfolios
1 Q 1 999
263
195
68
49
545
364
181
74%
21
♦ Performance in line withexpectations
♦ Completed several smallsuccessful exits
♦ Revenues are dealdependent - quarterlycomparison lessmeaningful
♦ Current portfolio’s agingprofile will offer fewerdivestment opportunitiesin 1999
♦ Portfolio growing in linewith expectations
UBS Capital
(C HF m n) 1 998
Operating income 585
Operating expenses 157
Pre-tax profit 428
Net profit 413
Book value portfolio 1,800
Market value portfolio 2,700
Cost/income ratio 27%
1 Q 1 999
75
27
48
43
1,900
n.a.
36%
22
Risk under Control
VAR Current limit CHF 600 million with first-quarter 1999average VAR (10 day, 99%) of CHF 220 million
Market stressloss limits
CHF 1.3 billion
Non-performingloan coverage
Coverage of 96%
Counterparty risk International counterparty risk substantially reduced(by ca. CHF 130 billion since 31 March 1998)
EURO and Y2K EURO smooth introduction in all divisions.Y2K 85% preparations complete
23
Asset quality
♦ 96% of NPLs covered
♦ CHF 15 billionreduction in loan book,mostly WDR
♦ Slight change incomposition of countryrisk provisions
(C HF bn) 3 1 D ec 1 998
Total loans (gross) 331
NPLs 15.7
Allowances & 15.0Provisions(1)
NPLs/Total loans 4.7%
Provisions/NPLs 95.3%
Note:(1) Of which CHF 1.5 billion relates to country risk provisions
(year-end 1998: CHF 1.5 billion)
3 1 M ar1 999
316
15.4
14.8
4.9%
96.1%
24
Principles for equity management
♦ Effective use of equity for value creation
♦ 1% of stock bought back in 1Q 1999 - investment in our ownstock acceptable alternative in absence of strategicacquisition targets
♦ Target range for equity management: Tier 1 ratio8.5% - 9.0%
♦ Active management of treasury stock for equity amountsexceeding target range
25
Outlook 1999
♦ Confident that for the full-year, significantly higher result than1998 and approaching target of ca. 15-20% ROE
♦ Domestic integration issues on track as planned
♦ Challenging financial market perspectives
♦ Investment banking on course
26
Market capitalization as of 25 May 1999
0
20
40
60
80
100
120
140
160(U
S$ b
n)
Source: Bloomberg
Citigroup BankAmerica
HSBC LloydsTSB
Group
ChaseBancOne
Bank ofTokyo/
Mitsubishi
BNP &SG Paribas
ING
146.7
114.5
100.9
75.369.1
64.1 59.5 57.0 53.9
UB S
6 2 .8