UBS Group AG

Ladies and gentlemen, good morning. Welcome to the fourth quarter 2020 results presentation. The conference must not be recorded for publication or broadcast. You can register for questions at any time by pressing star and one on your telephone. Should you need operator assistance, please press star and zero. At this time, it's my pleasure to hand over to Mr. Martin Ozinga, UPS Investor Relations. Please go ahead, sir.

Thank you. Good morning and welcome, everyone. As usual, I will draw your attention to our cautionary statement at the back of today's presentation. Please also refer to the risk factors in our 2019 annual report, together with additional disclosures in our quarterly reports and related SEC filings. On slide two, you can see our agenda for today. It's now my pleasure to hand over to Ralph Hammers, Group CEO.

Hey, thank you, Martin. Good morning, everyone. Welcome to the full year results. I'd like to start by saying that all of us at UBS clearly hope that you, your friends, your families, you're all in good health and that you're all safe. It's a strange world out there. The pandemic is still there. Most of us are in strict lockdowns. Please, you know, stay healthy. It's important. Let me start with the key messages that we have on slide three, take you through a little bit. It kind of summarizes the whole presentation. Clearly, 2020 was a tough year all around for our clients, employees, our communities. If you really look what's behind that, it is our colleagues and the way our colleagues basically rose to the occasion day in, day out. And that made us, as UBS, stand for stability, for confidence. We were able to maintain connectivity with our clients, provided the advice and the solutions that the clients needed in these uncertain times. And you can see that connectivity, that reach out coming back in the more than $100 billion in that new money that clients invested with us across wealth management and asset management. And this has contributed to a record in invested assets in both businesses. So together, we're now over $4 trillion in total. We achieved, on the back of this commercial success, our highest net profit in a decade, with every region delivering over $1.5 billion profit before tax. As a result, we hit or exceeded each of our targets for growth, but also for returns. while we delivered on the strategic priorities that we laid out at the beginning of last year. Now, reflecting these 2020 results and our solid capital position, we will propose to pay a $0.37 dividend per share at the upcoming AGM. In addition, we're planning to resume buybacks, targeting up to $1.1 billion in the remainder of the first quarter. Now, turning to the next slide, slide four, well, basically, I mean, this slide tells it all. You know, it's momentum across all different dimensions. When we look back at 2020, you can basically look back with a sense of pride, supporting the clients through the challenges they faced. $4 trillion of invested assets across wealth and asset management, as clients turned to us, To help them to achieve their investment goals, 80 billion of net new money generated in asset management alone, of this around half, was directly related to providing our wealth management clients better access to separately managed accounts. We also saw strong demand for Chinese equities for sustainable investment products, both confirming the strategic priorities being the right ones. Also, on this slide, you see the $26 billion in net new loans for wealth management clients, another strategic priority. On the transaction side, we build on our strength to identify and execute on trading opportunities for our clients. On the back of that, global markets income grew by nearly a third during Wellacross products on higher client activities. Transaction-based income in the wealth manager increased by 17%, reflecting enhanced product capabilities for leveraging investment bank. You see that both on the asset management side as well as the investment bank are really looking as to how we can support the global wealth management focus that we have, and you see the first signs of true success there. We have really endeavored to make it simpler for clients to transact with us as well on the investment banking side. We were there for our corporate clients too, guiding them through the primary markets, Throughout the difficult year, we helped over 500 corporate clients raise debt and equity in the capital markets. Last but not least, an important segment for us as well, the family office clients, clearly the ones with the most sophisticated and complex needs. As you know, we introduced an integrated cover model. in order to service them better, ensuring that they would get the broad range of capabilities across wealth management and the investment bank as one UBS. And working as one bank, for our clients, we grew our revenues here by 29%. So quite a success from the commercial front, seeing first signs of the move towards ensuring capabilities in the investment bank and the asset manager and the wealth manager alliance serves our clients as one right there. Turning to the next slide, specifically on sustainable finance. It's clearly an area on which we have been focusing for years. 2020, therefore, was no exception. We became the first major global financial institution to recommend sustainable investments over traditional investments. That mandate has attracted $7 billion of inflows over the year. In asset management, we rolled out climate-aware strategies across additional asset classes. Invested assets in these strategies increased nearly fivefold to $15 billion last year, contributing to sustainability-focused assets now more than doubling to nearly $100 billion. But you can't just go out there and recommend that that is the right thing to do if you as a company, if you're not there. So it's also important what achievement UBS itself does on the sustainability side and how we are recognized in that area as well. And therefore, we're proud that we are on the CDP's climate A list of companies that lead the way against climate change. And we've been a global industry leader in the Dow Jones Sustainability Index for six years running. And we're rated AA by MSCI. So you see, we were a kind of a early party to sustainability in what we do ourselves, but also what we recommend to our clients. We see that this is becoming more and more mainstream. Our clients are truly interested in it. They want to have good returns and do good investments, investments for the good. And through this, we can truly help them on their journey. So where does this position us? I'm now in slide six. I believe the future of financing belongs to firms that have scale where it matters. leverage that skill for our clients and leverage that skill also for shareholders for shareholders of candidates and that's basically what you see here you see here those areas that you know that we really are our top player in whether it's on the wealth management side now with more than three trillion um invested assets so clients really show their trust in us on the asset management side close to 1.1 trillion in invested assets, also showing that we're doing the right thing there. We're the largest bank in Switzerland. We're the largest wealth manager in Asia Pacific. In investment banking, we're top five in equities. We're top three in FX trading. We're having strong momentum on both sides. Shows good diversification there as well, and that's a good basis to build on. The positions as well in the competitive landscape, where winner takes most, if not all, uh and and we know that skill benefits uh should in the end also go towards the clients and the shareholders and that's what we're certainly focusing on which gets me to how we have done versus our targets in 2020 um and that's a nice summary right there on slide seven it's actually a demonstration of our scale across um And the page speaks for the breadth of our business, the strength of our business and our client franchise. Revenue is up 12%, leading to an earnings per share of $1.79. Return on CT1 capital of 17.6%. Our success was broadly based and really across all business lines and all geographies. You see, asset-guarding business comprised of the wealth and asset management, recording double-digit profit growth there as well. Our IB achieved almost a 20% return on equity. Super performance right there. Originally, profits in Asia Pacific and the Americas grew by over a billion dollars for the year. A billion more profit in Asia and in the Americas. Our Swiss personal and corporate bank, which is most directly affected by the crisis, did well too. Earned a return well above cost of capital still, even in a difficult economy, managing through the pandemic, supporting SMEs and mid-corps and corps and households, doing that really well. What we can do is the role that we play here in Switzerland, standing by the Swiss corporate sector, providing that liquidity and support of the economy throughout this crisis. And all of that we have been able to do while staying disciplined on cost and delivering on operating leverage. The expenses were up 4%. I'll give you that. But if you look into it, and Kurt will show you, That is really driven by foreign exchange as well as variable comp. The top line at the same time increased by 12%. So there you see very strong positive jaws improving our operating leverage. Now clearly, if you have a good year, you generate a lot of capital contributing to stronger capital ratios. They continue to be strong. And that's after offering the attractive returns to the shareholders. We delivered on our $2.6 million dividend commitment for 2019, bought back 350 million francs of shares earlier in the year. We accrued another $1.3 billion for the 2020 dividend, and we set aside $2 billion for share buybacks. Turning to slide eight then, if you then have a return on CT1 capital of 18%, close to 18%, positive operating leverage, it basically shows you our true potential. As we focus on our clients, as we care for society, support our employees, I am also convinced that we can achieve leading shareholder returns. That's what you see here. And I think also going forward, we can achieve good and attractive leading shareholder returns. But what we're doing here is really mobilizing the entire UBS team to unlock our full potential. I'm asking the questions like, how can we grow in capital in a capital cost-efficient manner? How can we think further? How can we become fitter? How can we act faster? So we're thinking about ways to make UBS an even better bank for our clients, for our employees, and for our shareholders. And that actually brings me to my first impressions. I know you've all been expecting these, and I can also tell you that you will not get a full strategic update today, but I want to take you along in my first impressions, now some five months with UBS, and giving you some of the things that I see that really impressed me, as well as some of the opportunities I see going forward to unlock our tomorrow. So, clearly, when I joined, before I joined, UBS had a superb reputation for its strong, stable franchise, for its premium brand, symbolizing quality. Now, after having been with the company five months, Having spoke to many clients, many employees, investors, stakeholders, I can only say there is much more that impresses me. And here you see a couple of these areas. So impressed by the quality of our thought leadership, our leading equity research, for example, the CIO house view, the insights that we offer on the most relevant topics such as sustainability, how we use this to advise and then guide our clients through uncertain times. I'm impressed by the breadth of our capabilities that allow us to support our clients no matter their return objective or risk appetite. I'm impressed by the strength of the client franchise with the relationships that were often forged over many, many years. But behind all of this is what really showed me the true value of UBS, and that's our people. And then that strong reputation at Ruby to UBS, I would say we fully live up to it. If there's one thing that we're uniformly recognized for, it's this. We're a global wealth manager that is absolutely unique in terms of its global scale and reach. It's supported by a world-class investment bank, strong asset management capabilities, leading universal bank in Switzerland. So that's where we are, strategically unique, and that's where we bring a clear advantage. And that's where our biggest growth opportunities lie as well. Clearly, you know, if you look back on last year, joining the bank, I was also impressed by the strength of the balance sheet, the risk management rigor, the operational resilience that we have shown in the midst of the crisis with lots of activities coming through our our engine our execution engine and as you can say and see as well the stability and the first creation of the revenues and the capital generation but and there is always a but right there's always a but and and you have to look forward and the past is the past it gives you a position but there's no guarantee for the future and and that's why you know we have to look at the future and get a sense for what's coming at us. And there's a couple of things that are coming at us. The first thing is that it's clear that this pandemic has accelerated the client's digital expectations and the need for technology investments. And I think that need has been accelerated by at least three, if not five years. And that requires far greater investment by financial firms. And those that have the scale will benefit from it the most. The other thing that's still out there and that will not go away is the persistent low and negative rate environment. We know it's a challenge for banks, but there are also opportunities for investment firms. So for us, this has two sides. So on the banking side, on the NII side, clearly it is a point to reckon with, but it gives you opportunities. also where we can actually advise clients to invest in other means than in depositing their money with us. So it's also an opportunity. We know that the $18 trillion of negative yielding debt that pension funds are looking for advice and asset allocation and compelling investment opportunities. They're looking for those. The other trend is the trend of climate change. COP26 estimates that private finance, including pension funds, will provide 3.5 trillion needed annually for investments. We can certainly play a role there. We can play a leading role there. We can play an advising role there. We can play a management role there. We can play a structuring role there. So quite an area of opportunity. But there is a lot of uncertainty that will continue to be there. Increased competition from non-traditional providers, as you know. Complex geopolitical environment. Continued regulatory change coming at us. We have to stay ahead of that. And each of these trends requires to change, to adapt. And for those who get it right, there's quite some opportunity in those changes as well. And that leads me to the focus areas. And I know these are pretty general, but they're the focus points as we are working on our strategy. So am I giving you the strategy here? No, I'm not. Am I giving you the focus points that we are discussing all the time here in further developing our strategy going forward? Yes, these are the ones. So these are the things that management team and I are concentrating on for our strategy and working on these for the next years. We're not wasting time. We have launched quite some work streams in all of these directions to get a lot of bottom up input as well from our people who are very close to the client, who are very close to the execution of our activities, who know what clients want, who know where we can improve on client service, who know where we can improve on efficiency. So it's very important that this is not some kind of a, I don't know, a kind of a top-down strategy that we developed. It's truly a combination of top-down in terms of direction and areas where we see the trends and bottom-up in terms of how to fill these trends in and how to make sure that we're effectively coping with these trends. We want to get it right, and that's why we need the details. And when we're ready, we will certainly be updating you on our strategic plans and opportunities as we go. But to take you through these focus areas, first and foremost, Being laser-focused on supporting our clients, building on the positive momentum that we have in 2020, it would be a waste if we lose that. So we'll have to keep delivering on the trust the clients put in us and in our brand. I think UBS, like many firms, but here there's quite some upside opportunity if we truly work all together, if we truly work seamlessly together and seamlessly deliver the whole firm to our clients. When we focus on their needs and their experience, and we look at how to fulfill those needs, regardless of which business division has the right solution, that is where we can make the difference. We hear this from many clients, and we can improve on that, and that's what we're working on. And that's probably the number one priority for us is, you know, how can we be one UBS? Now, UBS also has a strong culture, but we also need to evolve this culture to be more flexible, to be more agile, and that will first benefit our clients, but it will also help us to respond to change faster as well. In order to be more flexible and agile, I think we have to operate in a more simple form. We have to be a little bit more pragmatic, take decisions faster, We'll need to empower people and make them more accountable as well. Then on the efficiency side, it's clear that self-funding investments for growth has become a necessity for any bank to be successful today. For that, we'll have to operate even more efficiently going forward. That means driving operating leverage and making optimal use of our scale, being relentless when it comes to discipline around costs will have to be critical in what we invest in. will have to systemically crowd out the investments that are not delivering or that are just not good enough or just not strategic enough. So that's where I think we can further improve. I'm keen on building our edge in sustainable finance. It's a strength. It's a super opportunity. It's something we firmly believe in across the whole firm. So I think that's what we have to work on. And clearly, technology today already plays a central role here at UBS, and I see some real good practices in that, in the technology area itself, but also in applying technology, for example, in our investment bank, clearly at the front of some of these developments there. But we have to, and I think we're able to take advantage of the consistent investments that we made to date, will have to meet these benefits. We should and have to be a winner in the digital recovery and the only way to do that is if we turn technology from an enabler, something that is at the end of the decision-making process, to making technology differentiator which is at the beginning of the decision-making process and at the beginning of how we improve our services to our clients. Now lastly, As you may know, I'm a strong believer in purpose-led organizations. So the first thing I've picked up here, literally in my first week, is, okay, guys, where are we on purpose? Where is our true DNA? Why do we come to work? What is behind how we do things here? Why we do the things we do here? It's truly important to get that sense, to get that up. It's a big project that we're working on. And I'm sure once we get it, it will really guide us and give us direction as an organization for the future. Now, if we get these things right and convinced, we can consistently deliver on leading shareholder returns. Now, to close, I'd like to, since this is also the end of the year, I guess, and not the easiest of years, I'd like to thank everybody at UBS for their dedication and work over the past 12 months. I know some of them in difficult personal circumstances. Our employees went out of their way to serve our clients, support each other, support their communities while managing the firm's risk, liquidity, capital to maintain our financial strength. 2021 is already shaping up and it's already shaping up to become quite an eventful year with what we see across the globe. But I'm convinced that also this year we can positively differentiate ourselves. With this, let me hand over to Kurt to take you through some more details before we get to Q&A.