UBS Group AG

Ladies and gentlemen, good morning. Welcome to the second quarter 2021 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, UBS Investor Relations. Please go ahead, sir.

Good morning. Welcome everyone. I'll now draw your attention to our cautionary statements slide at the back of today's presentation. Also, please refer to the risk factors in our 2020 annual report together with additional disclosures in our SEC filings. Our agenda for today is on slide two, and it's now my pleasure to hand over to Ralph.

Thank you, Martin. Good morning to all of you in this call today. It's a good day at UBS. Momentum, as you can see from the results, is strong across the firm. And we're proud to support our clients as they navigate today's environment with news every day. At the same time, we're focused on growth, evolving our portfolio of strategic initiatives, executing also the ones already in flight, and working on others to make sure we consistently deliver on the growth and the return potential of our business. Our sustained business momentum drove strong financial performance across our businesses in the second quarter, as you can see from the headlines. The net profit reached $2 billion, and the return on CT1 capital was nearly 20%. The second quarter, and it's slide four IM right now, the second quarter was characterized by a further improved economic backdrop, really supporting momentum across. Investors are wrestling with the conundrum of the highest U.S. inflation in 30 years. Equity markets are at or near all-time highs. 10-year U.S. bond yields back below 1.3%. There's a lot of things happening at the same time. Our house view on this one, though, is that we are constructive on risk assets, and we see value in appropriate diversification in portfolio construction. In this environment, we seized the opportunity, as you can see by the results, to drive value for our clients. We delivered growth across the firm. Our growth is underpinned by the trust of our clients that continue to be in place in our people and in our firm. Net fee generating assets in wealth management were 25 billion, as you can see, and positive in all regions. So you see the momentum literally everywhere. Now, the strength in net fee generating assets this year was driven by an acceleration in mandate inflows, which here today were already 40% higher than the whole of 2020. And consistent with our advice, over two-thirds of the inflow in discretionary mandates have been in the flagship sustainable investing mandate where it is available. The low interest rate environment makes it attractive for our clients to finance their homes, their businesses, or create a liquidity buffer for unforeseen events. And this drove $7 billion of net new loans with private wealth clients, mostly collateralized by securities. And that's in the wealth management area. The hunt for yield meant that clients continued to be actively engaged in structured products and alternatives. We're seeing this across our client base and across regions as well. And that contributed, and you can see that here, to a 16% increase in transaction-based In asset management, we recorded 2 billion of net new money, 9 billion if we exclude the money markets, as some of our clients rotated out of U.S. money markets. On the institutional side, revenues and equities increased by 23%, with increases in both cash equities, a real good quarter, and equity derivatives. In cash equities in particular, we benefited from higher volumes in Asia Pacific and market share gains in EMEA. On the FRC side, revenues declined by 56%, and you can well remember the same quarter last year when we really performed well in that. Specifically in FX, we had an extraordinary quarter last year. And that makes for a tough comparison to this quarter. But we have gained from a market share. We have benefited from a market share gain that we built up during 2020 and continues to go. But spreads and volumes have declined. Revenues and rates and credits also reverted to a more normalized level, as you know, but remained at higher levels than before the pandemic. We had a Also a good quarter in prime brokerage. We grew balances against last quarter with every element of prudence, I must say. As you'd expected, as market leader, we've had opportunities to take on new clients and have even deeper relationships with some of the existing clients. On the corporate side, our clients are dealing with industry changes coming out of the pandemic. Scale for most industries has become even more important, as is sustainability. And of course, many companies have come to realize that the digitalization trend has only accelerated during the pandemic. So they're all looking at digitalizing their business models. At the same time, funding markets are favorable. Management teams are optimistic. And that's a fertile ground for M&A. And we're supporting our corporate clients as a strategic position for this post-pandemic world. Now, as a result, Our advisory revenues were the highest on record. Capital markets revenues were the highest since 2014, up more than a third against last year. Lastly, Switzerland. In Switzerland, more and more of our personal clients are putting their money to work in investments. Just last quarter, we saw another nearly 900 million of Swiss francs flowing into investment products, and that's an analyzed growth rate of 16%. We've also been able to continue the steady growth of our loan book. This quarter, we extended 600 million of mortgages to personal clients in the Swiss business. The dedication and energy of our teams this quarter has really stood out. They worked tirelessly to provide clients with the best possible advice and execution. As I said, the conundrums that are there, they have to make the right decisions, and no other firm like UBS can advise clients in all areas of investment opportunities. In my client meetings, I'm regularly complimented on the effort that our colleagues put in in providing the ideas and also giving that advice. Turning to slide five, on the evolution of our strategic initiatives to strengthen our ecosystem for investing. Just to discuss a couple here, starting with private markets, expanding our private market and alternatives offering is a priority for us in building the ecosystem and making sure we have literally all providers possible in order to match with the demand of our clients. We see that our clients are still hunting for yield, and that actually accelerated the investments in this asset class for private markets. But our early focus also allowed us to really answer this explosive demand in this area. This year, we made further progress. For example, we expanded our collaboration with Partners Group here in Switzerland, and In June, we raised over $1 billion for a single secondary fund from another top-tier partner and a player or provider to our ecosystem. And direct and co-investments for Ultra and GFO clients tripled compared to the first half of last year. Through these initiatives, our private clients benefit from our large scale and our sourcing capabilities for the right product and get institutional level access and pricing. And issuers benefit from our distribution network as well. It's literally platform economics 101, I would say, at the basis for our ecosystem. So the more providers we have in our platform, the more clients will be interested to join us. The more clients we have, the more providers want to join our ecosystem. And we're in the middle of that. So I think that's exactly what we're trying to build that strategic imperative. Number one, if you remember from our presentation last quarter. So just to sum it up on this one, during the first half year, we facilitated more than 18 billion of investments into private markets from private and institutional investors. Secondly, our integrated separately management accounts offering between asset management and global wealth management in the U.S. also continues to attract inflows, another $17 billion over the last six months. In fact, and the total invested assets in SMAs now passed $110 billion mark in the second quarter. So you see, you know, offering the one UBS and making sure that we really look at the capabilities that we have in-house in order to support our clients is also successful. Thirdly, the topic of sustainability. It's truly an ever increasing important topic for our clients and for us clearly as an institution, but also as an advisor. And that's why we have been focused on this over the last couple of years. And it's a true opportunity for the future. Just to provides you some more context. Another paper came out by the International Energy Agency, and they actually estimate that the cumulative clean energy investments that are needed in order to reach carbon neutrality by 2050 are well over $100 trillion. So plenty of room for us to play in that field there. As an investment firm and at the forefront of climate-related investing, We want to be the go-to institution to invest in energy transition. I think with the role we play and the position that we have, we can really accelerate that and support our clients in that. And the numbers that I just mentioned, they show the potential that is there for us to seize. Now, moving on, our managed SI mandates, Sustainable Investment Management and Global Wealth Management, attracted another $8 billion on the back of all of this in the first half year, and that's also already more than the whole of 2020. Meanwhile, invested assets for the sustainability or impact-focused in asset management increased by a third to $129 billion year-to-date. And with this, our climate-aware strategies reached 20 billion within that portfolio. So you really see fast growth on the sustainability side, whether in the wealth management sphere or the asset management sphere, a lot of money going into that direction. And we are the perfect vehicle to make sure that that is going to the right projects or invested into by our clients. Next one is MyWay. The mandate infos in MyWay have also picked up speed. Just to maybe give you a bit of background behind MyWay again, I think MyWay is part of our future. It is all about making the investment service personalized. relevant, on time, and seamless. It is personalized. It is basically a dashboard that the clients and their client advisors can use to change the portfolio, and they see real-time adjustments to their expected return and risk. So with that, they can actually put their portfolio together as they want. So therefore, it is completely personalized, And it's super easy to use. And it gives full transparency on performance and cost. Invested assets on this platform now tripled to $4 billion, to over $4 billion actually, $4.2 billion to date. And that's across more than 3,000 clients. And we're planning to roll it out in additional regions in the coming quarter. Lastly, scalability, operating leverage. The scalability of our investment platform enables us to grow efficiently. You can understand with all this volume and these clients coming through and client advice coming through, that scalability is an important factor for us to grow. And you see that here at work, with roughly the same number of advisors, we have accelerated the conversion into fee-generating assets. and compared with the first half of 2020, the net new fee generating assets more than tripled for our clients. At the same time, we also have seen significant growth in loans and transactions, and this points to significant productivity gains across our platform as well. And as you can see, you know, if you just take this slide, and there's one slide that summarizes how some of the initiatives that we have taken, strategic initiatives that we've taken, how they are actually kind of developing, and you see that we're making real progress in maintaining and accelerating the current growth. At the same time, as said also last time, we do see opportunities for greater efficiency and improvement of processes from further simplification in our activities, from further digitalization in our activities as well. So you can expect this to continue to focus on growth on one side, but on efficiency as well, and to continue to invest in these. How did the regions do? Because in the regions, that's where the one UBS comes together. And as you know, our strategy is really to deliver the best of UBS, regardless of the business division, regardless of where the client sits versus the capability sits. And if you bring that well together, you see very strong results. And therefore, we also take the regional perspective to show you. So in each of our regions, We are focused on that, bringing it together. And you see that no matter where we are on the globe, all regions are doing really well. Half of our profits are generated in Europe and in Switzerland, and the other half in the Americas and Asia Pacific. And that shows also the diversification benefit that we have in the portfolio. And over the last couple of years, that has really helped us as well. Within our global portfolio, though, as we indicated three months ago, we are really looking at accelerating our growth in the U.S. and in Asia Pacific because we expect the wealth pools to grow there the fastest, and that's what we want to kind of benefit from. So that's where we will make most of our investments. Although the growth is to expected from these two regions, Clearly, we will also be focused on improving profitability and the client experience in our European franchises because they're important to us as well. As our second quarter results show, we are on the right track. In all regions, we recorded the highest profits in over five years. Our profit margins increased in each region as well. Now, the summary then from my side, and then Kurt will go into more detail, and then we'll turn to questions and Q&A. You see that our business momentum, our focus on growth, relentless execution, the evolution of our strategic initiatives, all of this has led to another strong financial quarter, as you can see in this overview slide seven. Operating income was up 21% in the second quarter, with all regions and all businesses contributing to the increase that drove a 63% increase in net profit and a more than 19% return on CT1 capital because the income ratio decreased by four percentage points to just below 72%. We grew tangible book value per share by 40 cents or 3% sequentially. And to summarize, the momentum is on our side. We have no intention of letting go of this. We are focused on our clients and we're focused on developing our strategic choices and implementing them. We're eager to make the most of our future to unlock the full potential of UBS. With that, Curt.