UBS Group AG

Ladies and gentlemen, good morning. Welcome to the UBS third quarter 2023 results presentation. The conference must not be recorded for publication or broadcast. You can register for questions at any time by pressing star and 1 on your telephone. Should you need operator assistance, please press star and 0. At this time, it's my pleasure to hand over to Sara 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 filed with our group results today, together with additional disclosures in our SEC filings. On slide two, you can see our agenda for today. It's now my pleasure to hand over to Sergio Amotti, Group CEO.

Thank you, Sarah, and good morning, everyone. During the third quarter and as we speak, we continue to see an evolution of the macroeconomic outlook with opinions, forecasts, and market changing at very rapid pace. In addition, we witness an even further deterioration of the geopolitical landscape as a result of tragic events in the Middle East. Our thoughts are with those who are suffering and have been impacted by this violence, as well as our affected employees. While we have been very busy executing on our integration plans, our top priority is always to stay close to clients, helping them protect their assets and position their portfolios and businesses for future opportunities. Our wealth management clients remain cautious and defensively positioned. And while some of our institutional clients are taking advantage of short-term opportunities, many still remain on the sidelines. Our consistent dedication continues to be rewarded by their confidence and trust in UBS. This was demonstrated by another quarter of strong flows across GWM and PNC. In the third quarter, the first full quarter since the acquisition, we made strong progress and delivered underlying profitability. With respect to the integration of Credit Suisse, we continue to be encouraged by our achievements to date in both our planning and execution. In terms of the lessons learned from the events in March, we welcome the recent reports issued by the Basel Committee on Banking Supervision, the Financial Stability Board, and the Swiss Expert Group on Banking Stability. Their findings confirmed our view that the crisis was not a result of insufficient capital or liquidity requirements. Rather, the reports emphasize sustainable business models, risk-adjusted profitability, and importantly, the critical role of robust risk management cultures and effective governance. We take comfort in these conclusions as they have been and remain core principles of UBS. Today we are positioning UBS to be an even stronger and safer global financial institution. It is for this reason that we remain confident the acquisition will allow us to deliver significant value for all our stakeholders, notwithstanding potential macroeconomic or geopolitical challenges. Briefly summarizing our results this quarter. Our strong underlying performance was driven by positive operating leverage at the group level. GWM, P&C, and asset management all delivered underlying PBT growth. IB performance was impacted by market conditions that were unfavorable to our business model and investments we expect to be accretive in future quarters. Our capital position remains strong with a CT1 ratio of 14.4% and total loss absorbing capacity of nearly $200 billion. We achieved these results while incurring $2 billion in integration related expenses and making good progress running down non-core assets. Despite our reported loss in the quarter, we incurred over $500 million in tax expense, and paid over $200 million in cash taxes in Switzerland. Our confidence in the ability to successfully integrate Credit Suisse and create substantial long-term value is supported by the strong progress we made in the third quarter. We have now stabilized Credit Suisse and continue to grow our franchise through new client acquisition and share of wallet gains. In addition, our client retention and win-back strategy is working. Net new money in GWM was $22 billion, and our strong deposit momentum continued through the quarter. The $33 billion in net new deposits across GWM and P&C also supported our ability to reduce quarterly funding costs by $450 million through the repayment of the public liquidity backstop and the ELA Plus that we announced in August. We are pleased to see strong demand for UBS debt in the wholesale market, with transactions priced at similar levels to where UBS papers stood before the rescue of Credit Suisse. We have finalized the perimeter of non-core and legacy, and our efforts to actively unwind positions resulted in a capital release of around $1 billion. Lastly, we continue to execute our plans to reduce costs in non-core and legacy, restructure Credit Suisse's investment bank, and remove duplications across our operations. We have already delivered around $3 billion in annualized exit rate gross cost savings. We expect to make further progress in the fourth quarter. Slide 6 summarizes well how quickly we have stabilized Credit Suisse and the confidence of clients in UBS. Credit Suisse Wealth Management's quarterly net new money has now turned positive for the first time in a year and a half, with $3 billion in the third quarter. UBS Wealth Management's $18 billion in net new money is the second highest third quarter results in over a decade. In addition, it was satisfying to see that our efforts to win back clients' assets resulted in 22 billion in new deposits from Credit Suisse clients across GWM and P&C. Following our decisions to integrate Credit Suisse-Schweiz, we reached out to our clients to reassure them that we remain committed to delivering the best capabilities of both institutions. In addition, we reiterated that their credit limits across both banks will remain in place. To date, client retentions have been broadly constructive and reaction, sorry, client reaction has been broadly constructive and net new deposits in PNC were positive in both personal and corporate banking client segments. We are particularly pleased that this was also the case in September, the month following our decision to integrate both franchises. In non-core and legacy, we also made a strong progress this quarter. Eighty percent of the sequential reduction in NCL's credit and market risk risk-weighted assets was driven by actively running down positions executed above marks. Non-operational risk-weighted assets have now been reduced by nearly one-third since Q1 23, and the expected natural runoff profile has improved by $3 billion. While we have some credit risk exposure in certain local emerging markets and other more complicated bilateral positions that resulted in CLEs this quarter, the key risks across the portfolio are well understood, actively managed, and in most cases, well hedged. The majority of our credit risk exposure is with high-quality borrowers. Over 75% of the exposure is rated investment grade. This provides us with the comfort to continue to pursue our strategy to accelerate the disposal of these assets in a way that optimizes value for our shareholders while also protecting our clients and counterparties. The finalized perimeter of non-core and legacy contains $30 billion in operational risk-weighted assets. As a function of the natural decay across the portfolio, we expect a reduction of around 50% by the end of 2026. Todd will take you through this in more detail. Returning to the integration, let me reiterate. that the complexity is not just from managing two GC fees banks. Our immediate priority since the transaction was announced and closed had to be on stabilizing and restructuring Credit Suisse. This will continue to be the case until the early part of 2024. At the same time, we are executing on our integration plans at PACE. And on the left side of slide eight, you can see a selection of our recent achievements notably we have established management responsibilities and operating models across business divisions and legal entities including our in our swiss franchise you can also see some of our key priorities through the end of this year and beyond this includes the merger of our significant legal entities client migrations across all all of our business divisions and executing on our technology decommissioning plans. Last but not least, we are also working towards finalizing our three-year strategic plan, which we will present in early February. As we continue to progress our plan, the main focus has been on delivering synergies for the combined group. We remain confident that the 2026 goals that we presented last quarter are achievable. But as I say then, it will not be a straight line journey. We are pleased that the first phase of gross cost savings has already been executed in 2023. But I'm sure we all appreciate the significant cost associated with running and combining two GC fees, one of which is still structurally unprofitable. From an operational standpoint of view, it is clear that 2024 will be a pivotal year. Completing the merger of our significant legal entities before the end of next year is a critical step to enable us to unlock the next phase of our cost, capital, and funding synergies. which we expect to realize in 2025 and 2026. Our enhanced scale, leading client franchises and increased future earnings power will position us for growth. Discipline execution will continue to be an important driver for our performance and we are on track to deliver on our plans. We are optimistic about our future as we build an even stronger and safer version of the UBS that was called upon to stabilize the financial system in March, and one that all of our key stakeholders can be proud of. With that, I hand over to Todd.