UBS Group AG

Ladies and gentlemen, good morning. Welcome to the fourth quarter 2022 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 Sarah Mackey, UBS Investor Relations. Please go ahead, madam.

Good morning and welcome, everyone. Before we start, I would like to draw your attention to our cautionary statement slide at the back of today's results presentation. Please also refer to the risk factors in our annual report, together with disclosures in our SEC filings. On slide two, you can see our agenda for today. It's now my pleasure to hand over to Ralph Harmer, Group CEO.

Ralph Harmer, Group CEO, Thank you, Sarah. Good morning, everyone. Great that you're all on the call. I will take you through the results like I used to. In 2020, we delivered for our clients and shareholders, and that was in challenging market conditions. We provided sound advice to our clients, partnered with them to help achieve their goals. Our strategy and what differentiates UBS is clear, and it's shown on this slide three here. We are globally diversified with leading positions across the U.S., Asia Pacific, EMEA, and Switzerland. We have outstanding client franchises, and they're underpinned by a balance sheet for all seasons, a strong risk culture, and an intensified focus on cost. As you know, our business model is highly cap regenerative and supports both strong returns on capital as well as return off capital. If you then move to slide four, you get basically a full year of hard work on one slide. Good financial results in 2020. We achieved our group financial targets for the full year, net profits of $7.6 billion, and our return on CD1 capital was 17 percent, and our cost income ratio was 72.1 percent. Turning to slide five, throughout 2020, we were a source of strength for our clients, and we relentlessly focused on their needs while delivering for them across our platform. And you see the proof points here laid out across the different areas, invested assets, deposits, loans, the global market activities. Across our $4 trillion in invested assets, we provided advice, bespoke services, seamless solutions. We helped our clients to reposition their portfolios in a world that was changing quickly, take advantage of longer-term opportunities as well. Net new fee generating asset flows were 23 billion for the fourth quarter, representing a growth rate of 8%. This resulted in 60 billion of flows for the full year, which translates to a solid 4% growth rate in the context of a global equity market declines. We continue to capture our clients' demand for high yielding products through our savings Our certificates of deposits, our money market funds, money market inflows in asset management were $16 billion for the quarter, and three quarters of that came from GWM clients. And this brought asset management total net new money to $25 billion for the year. Net new deposits turned positive in the fourth quarter, driven by Switzerland and Asia Pacific. And for the full year, we delivered 17% net interest income growth in wealth management and P&C. In the Americas and Switzerland, we delivered positive net new lending in every quarter without relaxing our strict underwriting standards. And this result more than offset the continuing deleverage activity that we see in Asia Pacific. For our institutional clients, 2020 was a tale of two halves, really. The first half of the year was driven by strong equity market activities. with foreign exchange and rates then taking spotlight in the second half. And through a wide range of market conditions, our diversified product mix in global markets, and our agile way of allocating capital and resources where it needs to go, that allowed us to provide comprehensive services to our clients. Record performance in our equities franchise and second-best FRC performance on record helped offset the impact of industry-wide slowdowns in activity across global banking. As a leading global wealth manager, our diversified footprint empowers us to execute our strategy across regions to drive growth and efficiency. And you see an overview of the regional performance here on slide six. The regional picture is very important. That's where the business comes together for our clients. Just starting in the Americas, where our clients continue to turn to us for advice and solutions, client demand for our separately managed account offering remains strong, with another $4 billion in flows in the fourth quarter. Net new money in SMAs totaled $21 billion for the full year. We also saw continued interest in alternatives, leading to $10 billion in net private market commitments for the year. In the U.S., we already have over 20% of the Barron's top 100 private wealth management teams, and we continue to recruit high-quality advisors in the second half of the year to support our industry-leading advisors' productivity. Our recruiting efforts also supported $4 billion in net new fee-generating assets added in the fourth quarter and $17 billion for the full year. Our economists are projecting the $23 billion will be a challenging year for the U.S. economy as inflation and higher interest rates create headwinds for economic growth. Nevertheless, our priority for the region is to drive organic growth and build on our scale with our core wealth and GFIW clients. We will leverage our investment banking and asset management capabilities to deliver the whole of UBS to these clients. We will continue to invest in our digital capabilities to improve client connectivity to our advisors and we will look to become the primary bank for our core clients by improving our banking capabilities. At the same time, our efforts to simplify processes and invest in infrastructure and controls will be complemented by strategic and tactical actions on cost to support improvements in our cost-income ratio. Now moving to our home market, Switzerland. The stability of the economy and our number one position continues to support a record level of deposit and loan volumes, strong profitability, and growth. Net new fee-generating assets flows were 5 billion in the fourth quarter, 9 billion for the full year, and that's a growth rate of 7%. We also saw 8 billion in net new deposits in the fourth quarter and 9 billion for the full year. For 2023, our focus in Switzerland is to deliver above-market growth. We will continue to invest in our strategic technology initiatives, and support our clients' transition to mobile banking while remaining disciplined on expenses. In EMEA, we maintained our momentum with clients in the fourth quarter as well. With $11 billion in net new fee-generating assets for the quarter, we brought in $20 billion for the full year, and that's a 6% growth rate. That's supported by strong flows in the Middle East. In the investment bank, we had our best year on record for both revenue and profit before tax, supported by a record in global markets and outperformance in global banking as well. Elevated and volatile energy prices continue to have a significant impact on macroeconomic activity, although our economies are becoming more and more optimistic about the downturn being shallow. Our optimized EMEA footprint positions as well in the current macroeconomic environment. And this forces the ability to be focused on targeted growth opportunities across Europe and the Middle East. So a strong year for EMEA. And lastly, Asia Pacific. The residual impact of the pandemic and concerns over economic growth consistently weighed on investor sentiment throughout the year. However, our clients' trust in our advice and capabilities led to 12% growth in net new fee-generating assets for the year. In EIB, we moved up five spots to claim the number one position in equity capital markets for non-domestic banks for the full year. We delivered the best M&A on record. And we were recently named the best investment bank in Asia and Australia by Finance Asia. Now, the easing of COVID-related restrictions in China has led to a more optimistic outlook for 2023. We believe 5% economic growth is back on the table for China. and an acceleration of the growth beginning in the next few months. While client sentiment has improved, they are taking a wait and see approach so far. We remain well positioned to support our clients both onshore and offshore in China and the rest of Asia Pacific as activity resumes. Longer term, we remain focused on executing our strategy to capture growth. In October, we launched We.UBS, the first digital wealth management platform from a global wealth manager in China. And in Southeast Asia, we're focusing on expanding our GFIW business to serve family offices, entrepreneurs, Asian technology firms to drive growth. And as you can see, technology is key to many of our achievements this year, and next year will be no different. So I'd like to take you through our technology delivery on the next slide. You can see some examples here on slide seven, how we are investing our $4 billion technology budget to make technology differentiator through simplification, automation, and by improving our clients' experience. And this transition also directly contributes to the bottom line with approximately 200 million in cost savings for 2023, and our plan is to continue to reinvest this. Let me give you some examples of how we're driving this. We now have 18,500 employees operating in Agile. In technology, 68% of these are engineers, and that compares to 55% when we started Agile. So basically you see a 13% point increase, which is a 20% productivity improvement. And next to the efficiencies and the productivity improvement that this brings, it also delivers a faster delivery of technology change. So quicker time to market of improvements. We've also decommissioned 600 applications in 2020 too. and we have now 65% of our computing power on the cloud. As you can see in the next slide, we remain very well positioned for the current environment and maintain a balance sheet for all seasons. In 22, we generated $7.5 billion of capital, of which we distributed $7.3 billion, including a $5.6 billion share repurchase. Our capital liquidity ratios are strong. Our balance sheet is healthy. Our strong balance sheet and risk management discipline allows us to support our clients, meet regulatory requirements, and deliver attractive and sustainable capital returns to shareholders. On slide nine, you can see our progress on sustainability. As you know, sustainability is a core part of our strategy. We reduced our greenhouse gas emissions our own greenhouse gas emissions by another 11%, as we upgrade buildings and continue to source 100% renewable electricity globally as well. We're proud of the progress that we're making on our objective to better reflect the diversity of our workforce in leadership positions, and we expanded our sustainable product offering. And we're proud to maintain our industry-leading ESG ratings here as well. The summary of the financial results, you see that on slide 10. I've already mentioned the good performance for the full year. For the quarter, we had strong flows and we managed the discipline. We had solid results considering seasonality and the macroeconomic backdrop, which enabled us to wrap up the year comfortably within our targets. Slide 11. which is more or less looking forward, we leave our financial targets unchanged. For 2023, we're confident in our ability to deliver 15% to 18% return on CT1 capital and to stay within the range of 70% to 73% of cost-income ratio. Our capital guidance is also unchanged. At our current capital levels, we are in a strong position to fund business growth and a progressive dividend. while returning excess capital to shareholders via some share repurchases. During the first four weeks of this year, we bought back $500 million worth of shares, and we are targeting at least $5 billion for 2023. With that, let me hand over to Sarah. Sarah?