Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

 

 

 

 

 

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 6-K

REPORT OF FOREIGN PRIVATE

 

ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

Date: May 8, 2024

UBS Group AG

(Registrant's Name)

Bahnhofstrasse 45, 8001 Zurich, Switzerland

(Address of principal executive office)

Commission File Number: 1-36764

UBS AG

(Registrant's Name)

Bahnhofstrasse 45, 8001 Zurich, Switzerland

Aeschenvorstadt 1, 4051 Basel, Switzerland

 

(Address of principal executive offices)

Commission File Number: 1-15060

 

Credit Suisse AG

(Registrant's Name)

Paradeplatz 8, 8001 Zurich, Switzerland

(Address of principal executive office)

Commission File Number: 1-33434

Indicate by check mark whether the registrants file or will file annual

 

reports under cover of Form

20-F or Form 40-

F.

Form 20-F

 

☒

 

Form 40-F

 

☐

This Form 6-K consists of the transcripts of the 1Q24 Earnings call remarks

 

and Analyst Q&A, which

appear immediately following this page.

 

1

First quarter 2024 results

 

7 May 2024

Speeches by

Sergio P.

 

Ermotti

, Group Chief Executive Officer,

 

and

Todd

 

Tuckner

,

Group Chief Financial

 

Officer

Including analyst

 

Q&A session

Transcript.

Numbers for slides refer to the

 

first quarter 2024 results presentation. Materials and a

 

webcast

replay are available at

www.ubs.com/investors

 

 

 

2

Sergio P.

 

Ermotti

Slide 3 – Key messages

 

Thank you, Sarah and good morning,

 

everyone.

 

A little over a

 

year ago, we were

 

asked to play a

 

critical role in stabilizing

 

the Swiss and global

 

financial systems

through the acquisition of Credit Suisse and we are delivering on our

 

commitments.

 

This quarter marks the return to reported net

 

profits and capital accretion – a testament to the strength of

 

our

client franchises and significant progress on our integration

 

plans.

 

Reported net profit was 1.8

 

billion, with underlying PBT

 

of 2.6 billion and an

 

underlying return on CET1

 

capital

of 9.6%.

 

Our commitment to

 

stay close to

 

clients supported healthy

 

revenue growth

 

in our

 

core businesses

 

and flows

across

 

our

 

asset gathering

 

franchises. Meanwhile,

 

we are

 

executing

 

on

 

our

 

restructuring

 

plans at

 

pace

 

and

actively winding down Non-core and Legacy assets.

 

We also achieved another 1 billion in annualized run-rate gross cost

 

savings during the quarter as we progress

towards our 13 billion target.

 

As for the next significant

 

integration milestones, we

 

remain on track with our

 

plans to simplify our

 

legal entity

structure. The

 

merger of

 

our parent

 

banks is

 

expected by

 

the end

 

of May

 

and the

 

transition to

 

a single

 

U.S.

intermediate holding company is expected to occur

 

shortly thereafter. The merger of our Swiss bank entities is

set to take place before the end of the third quarter. All of this is subject to final regulatory approvals.

These critical milestones will facilitate

 

the migration of clients onto

 

UBS platforms beginning later this

 

year and

unlock the next phase

 

of the cost, capital,

 

funding and tax benefits

 

from the second half of

 

2024, and more so

by the end of 2025 and into 2026.

 

Lastly, improvements in our CET1 capital ratio was supported by our optimization

 

of risk weighted assets. As a

consequence, we remain well positioned to deliver

 

on our capital return targets this year.

 

Slide 4 – Strong financial performance in 1Q24 with

 

significant operating leverage

 

Our underlying financial performance was

 

driven by significant positive

 

operating leverage at the

 

Group level

with 15% revenue

 

growth alongside a

 

5% reduction in

 

operating expenses compared

 

to the fourth

 

quarter.

Compared to a year ago, we reduced operating

 

expenses by around 12%.

 

We had

 

excellent performance in

 

Global Wealth Management

 

as underlying PBT

 

doubled sequentially to

 

1.3

billion. Personal &

 

Corporate Banking delivered

 

underlying profit growth

 

quarter on quarter

 

driven by higher

revenues and

 

lower credit

 

loss expenses.

 

Meanwhile, Asset

 

Management posted

 

solid results

 

thanks to

 

cost

discipline.

 

As a result of the restructuring efforts we have undertaken

 

over the last nine months, I am particularly

 

pleased

that Credit Suisse’s Wealth Management, Swiss Bank

 

and Asset Management franchises are now

 

all profitable

and contributed to our financial performance.

The

 

Investment

 

Bank

 

delivered

 

a

 

double-digit

 

underlying

 

return

 

on

 

attributed

 

equity

 

supported

 

by

 

lower

operating expenses compared to Q4, and another strong

 

quarter in Global Banking revenues.

Lastly, we had a positive revenue

 

contribution from Non-core

 

and Legacy as

 

we accelerated position

 

exits while

further reducing costs.

 

 

 

 

3

Slide 5 – Continued franchise strength and client

 

momentum

 

While

 

we continue

 

to deliver

 

on

 

the integration,

 

helping our

 

clients manage,

 

grow

 

and

 

protect their

 

assets

remains our top priority.

 

We

 

maintained

 

our

 

momentum

 

with

 

clients

 

in

 

GWM.

 

Invested

 

assets

 

have

 

now

 

surpassed

 

4

 

trillion

 

as

 

we

generated 27 billion of net new assets.

 

Though

 

geopolitical

 

volatility

 

and

 

macroeconomic

 

uncertainty

 

continued

 

to

 

weigh

 

on

 

client

 

sentiment,

 

we

observed an improvement in risk appetite and activity.

 

We also saw an improvement in client activity within

 

P&C, particularly among corporates.

 

In

 

Asset

 

Management,

 

our

 

clients

 

continue

 

to

 

value

 

our

 

Separately

 

Managed

 

Account

 

and

 

Sustainability

offerings. We generated 21 billion in net new money

 

during the quarter.

 

In

 

Global

 

Banking,

 

we

 

outperformed the

 

fee

 

pools

 

in

 

all

 

regions,

 

but

 

most

 

notably

 

in

 

the

 

U.S.,

 

where

 

the

integration of Credit Suisse teams is progressing well and our pipeline

 

continues to build.

 

Slide 6 – Accelerated cost and balance sheet

 

reductions in Non-core and Legacy

 

Let’s move to Non-core and Legacy.

 

As I

 

said before,

 

and you

 

can see

 

on this

 

slide, we

 

are making

 

good progress

 

in taking

 

out costs

 

and streamlining

our operations as we run down the portfolio.

 

We accelerated the

 

wind-down of

 

several complex

 

and longer-dated positions

 

this quarter, supporting a

 

capital

release of around 2 billion and a material improvement in our natural

 

run-off profile.

 

We are well

 

positioned to achieve our target

 

to reduce NCL risk

 

weighted assets to around 5%

 

of the Group

by the

 

end of

 

2026 and

 

we remain

 

focused on

 

accelerating position

 

exits in

 

a manner

 

that continues

 

to optimize

value.

 

Slide 7 – Reinforcing our balance sheet for all seasons

 

through active management

 

Turning

 

to

 

capital.

 

As

 

you

 

can

 

see,

 

the

 

combination

 

of

 

our

 

highly

 

capital

 

generative

 

business

 

and

 

the

restructuring

 

and

 

active

 

management of

 

financial resources

 

has

 

further reinforced

 

our

 

balance sheet

 

for all

seasons.

 

This permits us to follow through on our capital return plans for 2024.

 

During the quarter, we began accruing

for a mid-teen percentage year-on-year increase in our dividend. And, as previously communicated,

 

we expect

to resume share repurchases following the completion of the parent bank merger, targeting up to 1 billion.

Our ambition is to continue repurchases in

 

2025 and for our capital returns in 2026 to

 

exceed pre-acquisition

levels.

 

Of

 

course,

 

all

 

of

 

this

 

is

 

now

 

subject

 

to

 

our

 

assessment

 

of

 

any

 

proposed

 

requirements

 

related

 

to

Switzerland’s ongoing review of its regulatory regime.

 

In this respect, I’d like to address the recent proposals in Switzerland

 

to strengthen the too-big-to-fail regime.

 

It is clear

 

both to us

 

and several

 

expert groups that

 

too-low capital requirements

 

were not why

 

Credit Suisse

needed rescuing.

However,

 

we agree with the Swiss Federal Council’s view that capital and

 

liquidity requirements on their own

are not sufficient to ensure the resilience and stability of a systemically

 

important bank.

4

In addition to having a strong

 

capital position, it is key to

 

maintain a sustainable business model centered

 

around

risk-adjusted

 

profitability

 

and a robust

 

risk management

 

framework.

 

All of these

 

are core principles

 

for UBS.

 

For over

 

ten years,

 

this approach

 

has served

 

our clients,

 

employees, investors and

 

the Swiss

 

economy well.

 

It is

what allowed

 

UBS to

 

respond to

 

the Swiss

 

government’s request

 

in March

 

2023 to

 

be part

 

of the

 

solutions to

stabilize the financial system.

 

While

 

some

 

modifications

 

to

 

the

 

regulatory

 

regime

 

may

 

be

 

necessary

 

-

 

and

 

we

 

have

 

endorsed

 

many

 

-

 

the

discussion around

 

capital should be based

 

on facts. That includes

 

a full and transparent account

 

of what led to

the idiosyncratic

 

failures of

 

Credit Suisse.

 

The ultimate

 

and crucial

 

objective of

 

the too-big-to-fail

 

regime must

 

be to

 

credibly demonstrate

 

that a

 

systemically

important

 

bank could

 

be saved

 

in a crisis

 

largely through

 

its own financial

 

resources.

 

We believe UBS

 

has and will

 

continue to

 

demonstrate

 

its resolvability

 

from both an operational

 

and capital

 

point

of view. With around 200

 

billion in total loss

 

absorbing capacity, our

 

shareholders

 

and structurally

 

subordinated

bondholders bear

 

the significant

 

costs and

 

risks to

 

ensure taxpayers

 

would not

 

suffer in

 

the highly

 

unlikely scenario

that a major systemic event affects UBS.

We appreciate that

 

many of you

 

would like a

 

quantification of the

 

potential impact of

 

any new capital

 

regime,

but it is too soon to jump to conclusions. It would be inappropriate for us to speculate

 

or respond to speculation

on the

 

potential impact.

 

We were

 

not involved

 

in the

 

consultation process

 

leading to

 

the publication

 

of the

 

Federal

Council’s

 

report, and

 

do not have

 

clarity on

 

any proposed

 

changes

 

and how

 

they would

 

be implemented.

Nonetheless,

 

one point on which

 

we may offer some

 

clarification

 

is the topic of

 

parent bank capital.

 

Our parent

bank was already well

 

capitalized in both absolute and relative terms and

 

is in

 

a position today to

 

absorb the

removal of

 

substantial

 

regulatory

 

concessions

 

granted to

 

Credit Suisse.

 

By fully aligning

 

the treatment

 

of capital at

 

Credit Suisse

 

to our more rigorous

 

approach, UBS has

 

to provide the

additional

 

capital

 

required

 

for

 

the

 

phase-in

 

of risk-weighted

 

assets

 

for

 

Credit

 

Suisse

 

participations.

 

UBS

 

had

 

already

done

 

this

 

for

 

its

 

subsidiaries

 

when

 

the

 

rules

 

were

 

introduced

 

in 2017.

 

Further, UBS

 

will

 

not

 

rely

 

upon

 

the

 

regulatory

filter historically

 

applied to Credit

 

Suisse. Overall,

 

this requires additional

 

capital in the

 

amount of about

 

9 billion

dollars.

When applied

 

consistently

 

and coherently, the

 

Basel 3

 

rules that

 

UBS and

 

its global

 

peers must

 

follow are

 

robust.

They too, are being significantly tightened. In addition, the phasing-in of progressive capital add-ons will already

lead to

 

substantially

 

higher capital

 

requirements

 

for UBS’s

 

parent bank,

 

about another

 

10 billion.

 

So overall, we

 

are adding almost 20

 

billion in additional capital which, of course, was

 

already reflected in our

previously communicated capital and financial targets.

 

In our view, all of this must

 

be considered when

 

new requirements

 

are discussed,

 

defined and

 

calibrated.

 

In this

respect, we will be constructively contributing

 

our views to the relevant authorities and various

 

policymakers.

 

As

 

the third-largest private

 

employer,

 

one of

 

the country’s largest

 

taxpayers and

 

as importantly,

 

a

 

significant

provider of credit to households and

 

businesses in Switzerland, we believe it

 

is also our responsibility to share

 

our

perspectives with the wider public.

 

This is

 

an important

 

discussion

 

for the

 

country

 

and I remain

 

hopeful for

 

a proportionate

 

outcome.

In the meantime, in addition to executing on our integration plans, we will remain focused on what

 

we are able

to control –

 

serving our

 

clients, following

 

through on

 

our strategy, investing

 

in our people

 

and remaining

 

a pillar

of economic support in the communities where

 

we live and work.

 

With that,

 

I hand over

 

to Todd.

 

 

5

Todd

 

Tuckner

Slide 9 – Return to reported profitability of 1.8bn with

 

underlying PBT 2.6bn

Thank you Sergio, and good morning

 

everyone.

Before I

 

begin, I would

 

offer a

 

reminder that

 

the first quarter

 

financial report published

 

today includes select

inter-divisional changes

 

we signaled

 

last year. We shifted

 

the Swiss

 

high-net worth

 

segment from

 

P&C to

 

GWM,

and

 

pushed-out

 

residual,

 

centrally-held

 

costs

 

and

 

financial

 

resources

 

to

 

our

 

business

 

divisions,

 

ultimately

increasing the equity we allocate to them.

These divisional shifts

 

support continued

 

resource discipline and

 

accountability. They also align with

 

interests of

shareholders by

 

reflecting Group

 

performance as

 

a whole

 

through the

 

reporting lens

 

of the

 

respective individual

businesses.

In my

 

remarks today,

 

I will

 

refer to

 

underlying numbers in

 

US dollars and

 

compare them to

 

our performance

last quarter, unless stated otherwise.

As illustrated on Slide 9, our financial performance this quarter reflects strength in our core

 

businesses as well

as

 

excellent

 

progress

 

across

 

our

 

integration

 

workstreams,

 

resulting

 

in

 

substantial

 

reductions

 

in

 

operating

expenses and risk-weighted assets.

Profit before tax increased significantly to 2.6 billion from strong operating leverage quarter-on-quarter driven

by higher revenues and lower costs, both of which I

 

will cover in more detail shortly.

Net credit loss expenses declined by 30 million this

 

quarter to 106 million.

 

On

 

a

 

reported

 

basis, the

 

first quarter

 

net profit

 

was

 

1.8 billion,

 

including a

 

tax expense

 

of 0.6

 

billion.

 

The

effective

 

tax

 

rate

 

for

 

the

 

quarter

 

was

 

26%,

 

lower

 

than

 

previously

 

guided,

 

primarily

 

due

 

to

 

the

 

strong

performance in Non-core and Legacy that reduced the

 

level of losses in select Credit Suisse legal entities.

 

We expect the effective tax rate

 

in the second quarter to return

 

to more elevated levels from higher forecasted

losses in these entities

 

before the first of the

 

planned mergers takes

 

place later this month.

 

We then expect the

Group’s effective tax rate

 

in the second

 

half of 2024 to

 

continue to normalize,

 

ultimately falling to

 

its structural

level of 23% by 2026, driven by further legal

 

entity optimization and cost elimination.

 

Slide 10 – Strong underlying revenues, up 15% QoQ

Total

 

revenues,

 

on

 

slide

 

10,

 

increased

 

by

 

15%

 

to

 

12

 

billion

 

with

 

strong

 

sequential

 

gains

 

in

 

Global

 

Wealth

Management, the Investment

 

Bank and Non-core and Legacy.

 

The latter included a

 

gain from the close-out of

the main

 

aspects of

 

the transaction relating

 

to the

 

former Credit

 

Suisse Securitized Products

 

business, which

was announced earlier in the quarter.

Partially offsetting our top line performance was a decline of 446 million in Group

 

Items, driven primarily from

hedging P&L reflecting higher interest rates and widening

 

currency basis spreads in the quarter.

Total

 

reported

 

revenues

 

reached

 

12.7

 

billion,

 

which

 

included

 

0.8

 

billion

 

from

 

purchase

 

price

 

allocation

adjustments in

 

our

 

core

 

businesses.

 

Since

 

the Credit

 

Suisse

 

acquisition, these

 

adjustments total

 

3.1 billion,

excluding the effects in

 

NCL, and mainly relate

 

to loans that will

 

pull-to-par if held to

 

maturity.

 

We continue

to expect to report additional revenues of

 

around 7.4 billion through the end

 

of 2028 from these acquisition-

related effects, of which 0.6 billion is expected in the second quarter.

 

 

6

Slide 11 – Executing on cost ambitions with operating

 

expenses down 5% QoQ

Moving to slide 11. Operating expenses for the Group decreased by 5% quarter-on-quarter to 9.2 billion with

the largest reductions in Non-core and Legacy, Global Wealth Management, and the Investment Bank.

Personnel costs

 

excluding variable

 

and Financial

 

Advisor compensation

 

decreased by around

 

120 million,

 

or 3%

quarter-on-quarter.

 

Variable and FA

 

compensation expenses were up 11% sequentially on the

 

back of higher

revenues. Overall, personnel expenses increased by 2%.

There were

 

almost 2 thousand

 

fewer total staff

 

at the end

 

of the first

 

quarter when compared

 

to the end

 

of

the fourth quarter of 2023,

 

and over 19 thousand fewer

 

versus the end of 2022, down

 

12.5% over the past 5

quarters.

 

Non-personnel

 

expenses

 

were

 

down

 

0.6

 

billion

 

quarter-on-quarter,

 

driven

 

by

 

lower

 

real

 

estate

 

expenses

combined with a reduction in third party spend.

 

Additionally, the fourth quarter contained charges for the

 

UK

bank levy and the US FDIC special assessment

 

that were not present in our first quarter performance.

 

Integration-related expenses in

 

the first

 

quarter were

 

1 billion,

 

split roughly

 

half-half between personnel

 

and

non-personnel costs, resulting in reported operating expenses

 

of 10.3 billion.

Slide 12 – Cost plans on track with 50% of

 

targeted saves expected by 2024 exit

 

rate

On slide 12,

 

we report on

 

the progress

 

against our cost ambitions

 

as described during the

 

investor update in

February.

 

Exiting the first quarter, we realized an

 

additional 1 billion

 

in gross cost saves when

 

compared to the

2023 exit rate.

 

Since the end of

 

2022, we have achieved

 

5 billion in gross

 

saves, or nearly 40%

 

of our 2026

exit-rate ambition of 13 billion.

As I highlighted in February, we expect our

 

integration work to intensify

 

over the next several, pivotal

 

quarters.

 

This will require appropriate staff levels to ensure efficient, effective and well-controlled execution.

 

Accordingly,

 

the pace of gross cost saves is likely to decelerate from the run rate savings output achieved over

the last 5 quarters, with another 1.5 billion in gross cost saves

 

expected by the end of the year.

 

Following this

intensive phase, we continue to expect the pace

 

of gross saves to pick up again in 2025.

Integration-related expenses

 

linked

 

to our

 

cost-saving actions

 

reached

 

a

 

total

 

of 5.5

 

billion

 

since the

 

Credit

Suisse acquisition, including the 1 billion

 

incurred in the first quarter.

 

As previously

 

mentioned, we expect

 

to incur

 

around 13

 

billion of

 

integration-related expenses by

 

the end

 

of

2026, or

 

a ratio of

 

about 1-to-1

 

between costs-to-achieve

 

and gross saves.

 

As these

 

integration charges

 

enable

and unlock future cost

 

reductions, we expect them

 

to outpace gross saves

 

through the rest

 

of 2024, totaling

3.5 billion, of which we estimate 1.3 billion in

 

the second quarter.

Of course,

 

what matters

 

is turning

 

gross saves

 

into clear

 

progress in

 

our underlying

 

opex performance.

 

Our

1Q24

 

underlying

 

operating

 

expenses

 

of

 

9.2

 

billion

 

signal

 

a

 

significant

 

improvement

 

against

 

our

 

2022

benchmark,

 

meaning

 

a

 

majority

 

of

 

the

 

gross

 

cost

 

saves

 

we’ve

 

realized

 

to

 

date

 

have

 

translated

 

into

 

net

reductions in our underlying opex.

 

Thus far,

 

most of these life-to-date net

 

saves benefit Non-core and

 

Legacy.

 

I highlighted in February

 

that we

expect around

 

half of

 

the Group’s

 

planned gross

 

cost saves,

 

and a

 

considerable majority

 

of net

 

saves, to

 

be

achieved from

 

running down NCL’s

 

book as

 

well as

 

eliminating expenses associated

 

with maintaining Credit

Suisse’s many legal entities and branches.

 

We are seeing this dynamic reflected in our cost performance.

 

We

also expect NCL to benefit further from

 

the upcoming legal entity mergers and from

 

continued position exits,

working towards a 2026 opex exit rate of less than

 

1 billion.

 

 

7

Finally, in our core businesses, we expect to realize a

 

significant portion of

 

integration cost synergies

 

beginning

in 2025

 

when client

 

accounts and

 

positions are

 

moved to

 

UBS platforms

 

and applications, and

 

Credit Suisse

infrastructure is shut down.

 

Slide 13 – Global Wealth Management

Moving on

 

to the

 

quarterly performance

 

of our

 

business divisions

 

and starting

 

with Global

 

Wealth Management

on

 

slide

 

13.

 

In

 

the

 

quarter,

 

GWM’s

 

pre-tax

 

profit

 

doubled

 

to

 

1.3

 

billion

 

on

 

stronger

 

revenues

 

and

 

lower

operating expenses.

 

Notably,

 

on a

 

combined basis, PBT

 

increased by

 

around 20%

 

year-over-year,

 

with the Credit

 

Suisse platform

returning firmly to profitability.

 

Overall,

 

we

 

see

 

very

 

good

 

client

 

momentum

 

across

 

GWM,

 

with

 

net

 

new

 

assets

 

of

 

27

 

billion

 

and

 

strong

contributions from the

 

Americas, Switzerland, and

 

APAC.

 

Net new

 

fee generating assets

 

reached almost 18

billion from healthy net inflows to SMAs in the

 

US and discretionary mandates in EMEA and Switzerland.

The business achieved this flow performance while focusing

 

on financial resource efficiency and balance sheet

management, seeking

 

to reprice

 

loans with

 

sub-hurdle returns

 

or to

 

otherwise exit

 

such positions.

 

This ongoing

work mitigates some of

 

the headwinds from

 

inherited Credit Suisse

 

risk models and led

 

to a decline

 

in credit

and counterparty risk RWAs

 

of 4 billion

 

in the quarter.

 

We’ve also begun

 

to see progress

 

in GWM’s revenue-

over-RWA metric, particularly on the Credit Suisse platform.

 

GWM

 

also

 

attracted

 

8

 

billion

 

in

 

net

 

new

 

deposits

 

in

 

the

 

quarter

 

while

 

our

 

pricing

 

increasingly

 

reflects

 

the

Group’s strong liquidity profile and tighter funding spreads.

I would note that we estimate seasonal tax-related outflows in

 

our US business in the mid-to-high single-digit

billions as a headwind to divisional net new asset

 

performance in the second quarter.

Now, onto GWM’s financials.

 

Revenues increased by 10% sequentially

 

with improvements across all lines,

 

driven by higher client activity

 

and

increased

 

average-asset

 

levels.

 

Revenue

 

performance

 

related

 

to

 

client

 

transactional

 

activity

 

was

 

particularly

strong across the business.

NII increased by 4% sequentially to 1.6 billion, as higher revenues from re-investments as well as increased US

dollar deposit rates and volumes offset the effects of tapering

 

deposit mix shifts and client deleveraging.

In the second quarter,

 

we expect a low-to-mid, single-digit percentage decline in GWM NII due to moderately

lower lending

 

and deposit

 

volumes, and

 

lower interest

 

rates in Switzerland,

 

partly offset

 

by additional

 

revenues,

primarily from higher US dollar rates combined with

 

our repricing efforts.

For the full

 

year 2024, we

 

expect NII in

 

GWM to be

 

roughly flat versus

 

4Q23 annualized. Specifically,

 

we see

NII

 

and

 

margins

 

holding

 

broadly

 

steady

 

in

 

2H24,

 

and

 

after

 

the

 

second

 

quarter

 

broadly

 

reverses

 

out

 

the

sequential gains we realized this quarter.

 

This outcome, which models three US dollar rate cuts, is helped by lower

 

funding costs as well as our balance

sheet initiatives.

 

Recurring net fee income

 

increased by 4% to 3 billion

 

in the quarter from higher

 

client balances and inflows

 

in

net new

 

fee-generating assets.

 

This

 

was partly

 

offset by

 

margin

 

compression from

 

more

 

of the

 

back

 

book

reflecting greater penetration into lower margin mandates

 

across higher wealth bands.

 

8

Transaction-based

 

income increased

 

by

 

a

 

third

 

sequentially to

 

1.2 billion,

 

driven by

 

higher trading

 

volumes,

particularly in structured

 

products, partly

 

due to

 

the seasonal increase

 

in client

 

activity levels, with

 

significant

improvements across all regions.

 

Combined transaction revenues were also 9% higher year-over-year.

 

Our APAC franchise had a particularly impressive transaction

 

revenue quarter, doubling from 4Q with strength

demonstrated across all

 

product classes, despite

 

the economic uncertainties

 

weighing on sentiment

 

for most of

the first quarter.

 

We also

 

saw positive momentum in

 

the Americas, where

 

the introduction of

 

our international model of

 

joint

coverage of GWM clients

 

with the IB, led to

 

transaction-based revenue gains

 

of 11% quarter-on-quarter

 

and a

mid-teens increase year-on-year.

 

Expenses for

 

the

 

quarter were

 

down

 

3%

 

sequentially,

 

mainly from

 

decreases

 

in

 

salaries

 

and

 

non-personnel

costs, and

 

with non-recurring

 

items in

 

the fourth

 

quarter falling

 

away,

 

outweighing increases

 

this quarter

 

in

variable and Financial Advisor compensation.

 

Slide 14 – Personal & Corporate Banking (CHF)

Turning

 

to Personal

 

and Corporate

 

Banking on

 

slide 14.

 

With good

 

momentum and

 

the front

 

office teams

now more closely aligned to strengthen client engagement, P&C

 

increased pre-tax profit by 11%

 

sequentially

to 774 million Swiss francs, its highest

 

PBT since before the Credit Suisse acquisition.

Revenues were up by 4% with gains across each

 

significant revenue line, further supported by a 47% decline

in credit loss expense quarter-on-quarter.

Deposit balances in Swiss franc terms remained roughly stable, with inflows in personal banking largely offset

by outflows

 

in corporate

 

balances with

 

lower liquidity

 

value.

 

This was

 

a strong

 

outcome considering

 

the current

rates environment in Switzerland and the ongoing

 

work in the business to gain share of wallet

 

and to improve

balance sheet efficiency, supporting our net interest margin in 1Q.

 

NII

 

increased

 

by

 

3% sequentially

 

to 1.1

 

billion,

 

principally as

 

higher re

 

-investment income

 

more

 

than

 

offset

declines in revenue from lower lending volumes and ongoing

 

deposit mix shifts.

 

In the

 

second quarter, we expect

 

a mid-to-high

 

single-digit percentage

 

decrease in

 

P&C’s NII

 

in US dollars,

 

more

than offsetting the

 

first quarter’s sequential gains,

 

especially as the effects

 

of the Swiss

 

central bank’s March

interest rate cut hit through for a full quarter.

 

For the

 

full year

 

2024, we

 

likewise expect

 

a mid-to-high

 

single-digit percentage

 

decline in

 

P&C’s NII

 

versus 4Q23

annualized.

 

We see

 

NII

 

holding broadly

 

steady in

 

US dollar

 

terms in

 

2H24, as

 

P&C’s balance

 

sheet management

efforts to

 

improve loan margins

 

help to

 

mitigate lower

 

loan and

 

deposit volumes,

 

as well

 

as the

 

modeled effects

of

 

two

 

further

 

25

 

basis-point

 

rate

 

cuts

 

in

 

Switzerland.

 

The

 

outlook

 

also

 

includes

 

a

 

50

 

million

 

annualized

headwind from the effects of higher minimum reserve requirements at the Swiss

 

central bank.

 

Transaction-based

 

revenues

 

were

 

up

 

9%

 

in

 

the

 

quarter

 

principally

 

on

 

strong

 

corporate

 

client

 

engagement.

 

Recurring net fee

 

income gained 5%

 

sequentially on higher

 

client asset balances

 

supported by net

 

new inflows

in the quarter.

 

Credit

 

loss

 

expense

 

was

 

39

 

million

 

as

 

PPA

 

adjustments

 

offset

 

a

 

similar

 

level

 

of

 

charges

 

on

 

impaired

 

loans

acquired from Credit Suisse.

Operating expenses were up 4% quarter-on-quarter, principally due

 

to higher staff costs in Switzerland and a

lease accounting credit recorded in the comparable quarter..

 

 

 

9

Slide 15 – Asset Management

As illustrated

 

on slide

 

15, underlying

 

PBT in

 

Asset Management

 

decreased by

 

2% quarter-on-quarter to

 

182

million, as lower revenues were only partially offset by reduced operating expenses.

While net management

 

fees were steady quarter-on

 

quarter, the sequential drop in the top

 

line is explained by

fourth quarter

 

revenues, which

 

included the

 

gain from

 

the sale

 

of an

 

investment stake, as

 

well as

 

seasonally

higher performance fees.

 

Net new money

 

in the quarter

 

was 21 billion due

 

to several big-ticket

 

inflows in mainly

 

passive equity and

 

fixed

income

 

funds,

 

including

 

money

 

markets.

 

We

 

also

 

continue

 

to

 

see

 

client

 

demand

 

for

 

SMA,

 

sustainable

investments and our Private Markets capabilities.

 

Opex

 

decreased

 

by

 

7%

 

to

 

594

 

million,

 

mainly

 

from

 

lower

 

personnel, technology

 

and

 

litigation

 

costs.

 

As

 

I

highlighted during

 

the investor

 

update in

 

February, we aim

 

to improve

 

operating leverage

 

in Asset

 

Management

by focusing

 

on cost

 

optimization across

 

the entire division

 

and realizing synergies

 

from migration

 

of clients

 

onto

UBS infrastructure over the course of 2025.

Slide 16 – Investment Bank

On to

 

our Investment

 

Bank’s performance

 

on slide

 

16.

 

As in

 

prior quarters,

 

we compare

 

the results

 

of the

combined IB with standalone UBS performance

 

on a year-on-year basis.

Operating

 

profit

 

was

 

404

 

million,

 

marking

 

the

 

IB’s

 

first

 

profitable

 

quarter

 

since

 

the

 

acquisition,

 

and

 

broad

completion of the

 

restructuring of the

 

parts of Credit

 

Suisse’s IB that

 

are core to our

 

own.

 

Return on

 

attributed

equity also turned positive and reached 10% for

 

the quarter.

Underlying revenues increased by 4%

 

to 2.5 billion.

 

Underscoring our efforts to increase the

 

IB’s market share

in the US, the IB’s top line increased by 29% in the region.

 

Banking maintained

 

its strong

 

momentum with

 

overall revenues

 

up by

 

52%.

 

Notably, we also

 

increased market

share in the US,

 

where Banking now

 

contributes a third

 

of total IB

 

revenues, up from

 

less than 20%

 

a year ago.

We continue

 

to be

 

pleased with our

 

performance in Capital

 

Markets, up 85%

 

year-over-year,

 

as LCM,

 

DCM

and ECM all saw increased activity levels, building

 

on the momentum we saw in the fourth

 

quarter.

 

Advisory revenues increased by 11% as we continue to outperform the global fee pool.

 

The recovery in M&A

is continuing, particularly in

 

the US, albeit with more subdued

 

client sentiment and activity

 

in APAC, where we

have a large share of the market.

 

With our Banking

 

coverage teams now

 

fully integrated, our

 

pipeline offers

 

encouraging revenue potential

 

in

the second half of 2024 and into 2025.

 

Revenues

 

in

 

Markets

 

declined 5%

 

to

 

1.9

 

billion, but

 

were

 

up

 

6%

 

year-over-year

 

in

 

the Americas.

 

Equities

revenues, driven

 

by Cash

 

Equities, were

 

up 3%.

 

FRC, where

 

we remain

 

underweight by

 

design, was

 

down

21% with both Rates and FX affected by lower volatility

 

and decreased client activity.

Operating expenses rose

 

8%, predominantly from additional

 

costs related to personnel

 

onboarded from Credit

Suisse’s investment

 

bank, but,

 

importantly,

 

dropped 4%

 

sequentially,

 

while revenues

 

were up

 

32% quarter-

on-quarter.

 

 

 

10

Slide 17 – Non-core and Legacy

Moving to Slide 17. Non-core

 

and Legacy’s pre-tax profit in the quarter

 

was 197 million, supported

 

by 1 billion

in revenues principally from gains on position exits.

 

In addition to the securitized products transaction I mentioned

 

earlier,

 

the business recognized proceeds from

the close-out of

 

several complex

 

and longer-dated positions above

 

their book carrying

 

amounts, including

 

in its

conduit and corporate loan books and within

 

its longevity portfolio.

 

Despite the strong revenue performance in the

 

first quarter, we continue to expect the NCL book to ultimately

close out across its various positions at more or less their current carrying values, meaning it is still appropriate

to assume revenues of nil going forward, net of hedging

 

and funding costs.

 

It is also

 

important to reiterate

 

that, in pursuit

 

of our priorities

 

in NCL, we

 

may at times

 

sacrifice P&L on

 

position

exits to eliminate costs and release sub-optimally deployed

 

capital.

Nevertheless, given the strong revenue performance in 1Q along with the significant progress

 

we’ve made on

costs, we now

 

expect NCL’s

 

full-year 2024 underlying

 

PBT to be

 

a loss of

 

around 2.5 billion

 

versus the expected

4 billion loss we signaled in Februar

y.

As Sergio highlighted, we

 

made substantial progress

 

in reducing the

 

NCL portfolio in

 

the quarter,

 

decreasing

RWAs by

 

16 billion,

 

principally in

 

credit and

 

market risk.

 

In just

 

nine months, we’ve

 

run down

 

28 billion,

 

or

almost a third, of NCL’s risk weighted assets.

From an LRD perspective, the overall portfolio is down by roughly half from 2Q23, after a further reduction of

49 billion in the first quarter.

As I covered earlier, a significant portion of the Group’s

 

overall opex decline this quarter

 

was delivered by NCL,

which saw

 

a 26%

 

sequential drop

 

in underlying

 

costs to

 

769 million,

 

primarily due

 

to lower

 

third party,

 

real

estate, and technology costs.

 

Slide 18 – Significant progress in reducing financial resource consumption

Moving to capital and financial resources on slide 18.

 

CET1 capital was broadly flat in the quarter with profits

generated in 1Q offsetting our dividend accruals and

 

1.3 billion in negative currency translation effects.

As we’ve

 

highlighted, we

 

made significant

 

progress

 

this quarter

 

in reducing

 

financial resource

 

consumption

across the bank from both the active run-down of NCL as well as balance sheet management

 

initiatives across

the core businesses.

 

This resulted in a 4% sequential decline in RWA and a 6% reduction in

 

LRD.

 

Credit and counterparty risk RWAs dropped

 

by 11 billion from position sales and roll

 

-offs, as well as from risk

model

 

mitigation,

 

with

 

currency

 

effects

 

contributing

 

another

 

11

 

billion

 

to

 

the

 

quarter-on-quarter

 

decline.

 

Market risk RWAs increased by 3 billion as asset-size decreases were

 

more than offset by the effects of model

updates from the integration of time decay into

 

our VaR calculations.

Slide 19 – Confidence in our balance sheet for

 

all seasons enables efficient funding

Slide 19 illustrates our strong capital position with a

 

CET1 capital ratio of 14.8%, increasing by 40 basis

 

points

over the course of 1Q.

 

As previously highlighted,

 

a surplus above

 

our CET1 capital

 

ratio target of

 

around 14% is necessary

 

to cater for

expected volatility in our reported profitability as we execute

 

on the various phases of the integration.

 

11

Our LCR at quarter end was 220%, reflecting

 

ample levels of liquidity to remain compliant

 

with the new Swiss

liquidity ordinance that went live at the start of the year.

We

 

remain

 

focused on

 

raising

 

stable

 

deposits

 

with

 

tenors,

 

products

 

and

 

counterparty selection

 

resulting

 

in

higher liquidity value.

 

And, we continue to apply discipline on pricing.

Strong

 

investor demand

 

for

 

our

 

name

 

in

 

capital markets

 

and

 

improving

 

conditions allowed

 

us

 

to

 

complete

nearly

 

half

 

of

 

our

 

full-year

 

funding

 

plan

 

during

 

the

 

first

 

quarter.

 

We

 

successfully

 

placed

 

over

 

5

 

billion

 

in

attractively-priced HoldCo in

 

January, and 1.5 billion in AT1 across two transactions in February

 

at spreads that

were around 100 basis points inside our heavily subscribed

 

November placement.

 

Similarly,

 

secondary market

 

spreads

 

continued to

 

tighten post-acquisition,

 

having now

 

dropped

 

to February

2023 levels, and

 

together with ongoing

 

diversification of

 

our funding sources,

 

are supporting our

 

plan to lower

funding costs by around 1 billion by 2026.

As part

 

of the

 

broadening out

 

of our

 

funding sources,

 

we structured

 

two first-of-their-kind

 

transactions for

UBS, including an

 

issue of 1

 

billion in euro

 

-denominated covered bonds, and

 

a private placement

 

for size via

repo of a portion of our portfolio of Swiss franc-denominated

 

covered bonds.

 

I would highlight

 

that these trades

 

were priced below

 

the spread on

 

the outstanding ELA line

 

with the Swiss

central bank.

 

As to

 

ELA,

 

we have

 

now repaid

 

29 billion

 

of this

 

line extended

 

to Credit

 

Suisse pre-acquisition,

 

including 9

billion Swiss francs just yesterday.

 

We expect to repay the remaining 9 billion in the coming months.

 

Overall,

 

our

 

balance

 

sheet

 

management

 

initiatives,

 

together

 

with

 

actions

 

on

 

the

 

funding

 

side

 

that

 

I

 

just

described, improved

 

our loan

 

to deposit

 

ratio this

 

quarter and

 

narrowed the

 

funding gap

 

we inherited

 

from

Credit

 

Suisse.

 

Importantly,

 

our

 

efforts

 

are

 

helping

 

us

 

to

 

offset

 

NII

 

headwinds,

 

and

 

are

 

contributing

 

to

 

the

strength of our overall liquidity and funding profile.

With that, let’s open for questions.

12

Analyst Q&A (CEO

 

and CFO)

Alastair Ryan, Bank of America

Yeah. Thank you. Good morning. A billion dollar beat in the quarter. I never did quite get the hang of

forecasting lark. Just on that then -- so non-core, very strong performance

 

and appreciate the updated runoff

profile you give us on slide 6. Is there any reason that you're just reverting to natural

 

runoff or can we expect

continued sales if markets stay favorable because

 

clearly there's quite a meaningful driver of the

 

very

favorable capital ratio and the interactions of all

 

of those.

And then secondly, the project to improve the revenue to risk-weighted assets in wealth management, are

presumably, you wouldn't represent the Q1 performances kind of the payoff of that project is? It's too early

but just what's the profile of that project? How long is

 

that repricing sitting on the net new asset generation

and has it started? Thank you.

Sergio P.

 

Ermotti

Alastair, before I pass to Todd,

 

I wanted to -- you were the first to ask the question

 

not by coincidence since I

understand it's your last day at the office, so.

 

Alastair Ryan, Bank of America

Yes, yes. Thank you, Sergio.

Sergio P.

 

Ermotti

Well, enjoy -- enjoy your time off going forward. So, I'll pass it over to

 

Todd. Thank you.

Todd

 

Tuckner

Hey, Alastair.

 

Thanks for the questions. So on NCL,

 

I mean first reverting to natural runoff. I mean, we've

been consistent in just reflecting the natural runoff profile. What

 

I think the slide 6 really does indicate is, it

really narrows that, that delta between where we started, you know, as you can see where we set

 

our

ambition is to reduce to 5% and, you know, that the natural runoff profile has really come

 

in.

You see that the delta between the natural runoff profile and where we, our ambition is narrowed. So that

should, eliminate whatever uncertainty

 

was considered, but I do think that it's appropriate still to

 

reflect it

that way in terms of, you know, whether we can do more of course we're going

 

to continue to do what we

can.

We'll try to position -- we'll try to exit positions, at

 

or above their, their book values wherever possible. But,

you know, it's appropriate to continue to stick with our guidance on NCL,

 

in terms of, you know, our

approach, and in terms of our expectations around revenues.

On GWM in terms of revenue over the RWA, I mentioned that we're starting

 

to see progress, which of course

does suggest you asked, has it started and it has.

 

In fact, it started at the end of last year and

 

the business is

quite active in it.

And, and so, we would expect that we're going to

 

continue to make progress on driving up RWA efficiency

with respect to revenues in that respect over the course of the

 

next couple of years. You asked how long that

will impact. How long will it go? How long will

 

it impact net new assets? We said, it's going to

 

take the better

part of two years which is why we guided net

 

new assets of around 200 billion over that two-year

 

timeframe.

And we think that's the appropriate guidance still.

13

Alastair Ryan, Bank of America

Okay. Thank you. And Sergio, thank you.

Sergio P.

 

Ermotti

Sure. Pleasure.

Chris Hallam, Goldman Sachs

Yeah. So two for me, by the end of the year, I guess, you'll be effectively halfway through the integration

process in terms of gross savings. So as you get through that process, are you starting

 

to get a better picture

of what you could expect for the net savings

 

figure in relation to the 13 billion? Todd, I think you mentioned

the majority earlier. And does that change at all the phasing of the multi-year return

 

on core tier 1 path you

laid out the full year?

And then second question. Sergio, you referenced earlier that

 

insufficient capital didn't cause the collapse of

CS and I guess, in the final instance, what

 

we really saw was a crisis in client confidence that

 

drove that

liquidity shortfall. So when we talk about

 

capital distribution, it's sort of automatic to

 

assume that higher or

earlier capital distribution, results in lower capital

 

ratios, which in turn, reduces resilience.

But when you talk to clients, how important is

 

that distribution ambition as an indicator

 

and driver of

confidence in the business i.e,. like could you

 

argue that ultimately aligning your distribution

 

strategy more

closely with the distribution policies we see

 

elsewhere in European financials, actually increases client

confidence in the business and improves resilience. There's a

 

big perception difference basically between the

firm that’s buying back stock versus a firm

 

that’s issuing stock?

Todd

 

Tuckner

Yeah. Hey Chris, I’ll take the first so on, on whether the opex progress that we saw, sort of informs a better

view on the net that we’ll get to. Look, you

 

know I think we're quite pleased with that 1Q operating

 

expense

performance.

We did highlight that we expect gross saves to be halfway

 

to our 13 billion ambitions at the end of

 

the year

which is a bit better than we highlighted in February

 

in large part because of the 1Q performance

 

that we

saw. But look, we still -- our ambition is a cost-to-income ratio of less than

 

70% at the end of 2026. That's

what we're really focused on to manage to and so how

 

we pace any investments, which we'll continue

 

to

make in, for example, the resilience of our infrastructure,

 

the organic growth in our core businesses, how we

pace that will be a function of the revenue environment.

 

So it is still -- it is still way too early to change

 

that

perspective. But of course, we are pleased with the

 

opex performance we saw in 1Q.

As to how that impacts on the return on CET1

 

path that you mentioned, I would say that

 

coupled with the

updated NCL full-year PBT guidance I gave, would

 

have roughly 100 to - slightly above basis point

 

impact on

the return on CET1, but I would still say mid single-digits

 

is the right way to think about the full year

 

ROCET1,

even with the 1Q performance that we produced.

Sergio P.

 

Ermotti

Yes, Chris, first of all, of course, you know, having a strong capital position and a balance sheet for all

seasons, as we call it, having a strict risk

 

management approach and policies and being very

 

disciplined in a

way we consume and manage all our resources is the pillar number

 

one of our strategy. And I think it's

almost a prerequisite to create the trust that clients need to have

 

in any bank or any organization.

14

So in that sense, I would only add that another

 

very important indicator, which sometimes is in conflict with

clients is your funding cost. Of course, our

 

clients would like to have always a higher

 

returns on the deposits

and the investment they place with us. But on the

 

other hand, when they see our

 

funding cost being as

competitive as we have now, they have the ultimate confirmation of

 

the strength and the solidity of our

franchise.

So ultimately, at the end of the day,

 

it's always a trade-off between different dynamics by, I would say,

emotional and psychological dynamics. But I can

 

only tell you that, of course, last but

 

not least, having a full

alignment of client trust and satisfaction,

 

having shareholders being happy, and having your employees being

happy is the ultimate way to create sustainable value

 

and trust in any bank. And this is our philosophy.

So of course, having an ability to compete in

 

terms of growth and our global ambitions, but

 

at the same time,

being able to deliver attractive returns to shareholders,

 

it's very important to influence the three stakeholders

 

I

mentioned.

Chris Hallam, Goldman Sachs

Right. Thank you.

Kian Abouhossein, JP Morgan

Yes. Thank you for taking my question. I have a lot of detailed questions, but

 

I wanted to ask two questions

actually to Sergio, if I may. The first one is Sergio, your first comment on the call today

 

were, we were asked

to do a critical role in Switzerland. And -- the key here

 

is you were asked to buy a distressed asset, a G-SIB

asset and when you buy something, which you

 

are asked to buy, you clearly are in control of the process.

And I would assume just like you do in an

 

M&A transaction, you know that better

 

than me, you have a MAC

clause and in this instance, I would assume

 

after all the financial crisis issues that

 

we had in 2012-2013 with

mergers by regulators, there would have been an agreement

 

that there's not over-regulation for UBS post the

NewCo transaction. And I wanted to see if there's

 

anything like this.

The second question I

 

have is Sergio you

 

also comment that the

 

assessment of capital will

 

be based on

 

what

the final outcome is once we better know the outcome of these regulations. And one option is also to look at

your legal entities and maybe

 

close some of the legal

 

entities or exit, and clearly

 

a lot of capital is tied

 

up in the

US. They make lower

 

returns if I look at

 

US wealth ex-LatAm as well

 

as the US IB,

 

I assume its lower returns.

 

So

one option would be

 

a restructuring or

 

exiting of markets to

 

rather than reducing

 

capital return. I

 

wanted to

see if that is also an alternative. Thank

 

you.

Sergio P.

 

Ermotti

Thank you. Yeah, very good question. Yeah, I think that -- let me put it that way that some of the conditions

that were discussed and agreed at over that weekend

 

that were clearly, defined and communicated for

example, the one in respect of the antitrust and the competitive

 

nature in our local markets that has been

very well defined and agreed. Others, I would say, were also discussed and agreed.

Let me put it that way. I'm not so sure we can talk about a MAC clause but as I mentioned

 

in my opening

remarks, we are delivering on our commitments. So I

 

probably stop here.

And in respect of the amount of capital and I think

 

it's clearly too early to speculate or

 

respond to

speculations around the capital. I just want to underline

 

that when we talk about our parent company, you

know, UBS had already up for -- one of the best in class capitalization, the quality

 

of our capital in the parent

company was very strong. What I mentioned that is already

 

embedded in our plan. We are absorbing USD 9

billion of concession granted to Credit Suisse. We are absorbing the

 

progressive buffers that will come in as a

consequence of market share and size. And we believe

 

this is feasible and is part of the plan.

15

So, before we speculate about what we would

 

do to respond to any other changes in regulatory

requirements, we need to understand what they are, because, believe

 

me, we have not been consulted.

 

We

don't know what they are. And so, we need to

 

have the full picture before we respond to this kind of

situations.

But let me just say

 

that having a global

 

franchise, being competitive

 

globally, is what makes us a very attractive

bank to our clients. Shrinking

 

back to greatness is not

 

a strategy and is not what

 

will serve, not only our

 

clients

and our shareholders well,

 

but I'm also convinced

 

is not going to

 

serve well, Switzerland and

 

its ambitions to

be one of the leading financial center in the

 

world. That's pretty clear to me.

Kian Abouhossein, JP Morgan

Thank you.

Giulia Aurora Miotto, Morgan Stanley

Yeah. Hi. Good morning. So two questions from me as well. The first one just going

 

back on the capital

proposal again. And you said, you were not consulted on

 

this document and you need to see what the

 

final

proposal looks like. So looking forward, what are the next steps? Do

 

we need to wait until June or are you

now part of the discussion, do we expect to have

 

more clarity throughout the year? That's the first question.

And then

 

the second

 

question more

 

related to

 

the quarter,

 

there was

 

some performance in

 

transaction fees

better than I expected

 

in wealth. I'm wondering,

 

is this just a transitory

 

Q1 thing or is this

 

continuing and what

should we expect there? Thank you.

Sergio P.

 

Ermotti

I pick up the first one, and then I'll pass it to

 

Todd

 

for the second. I mean, the reason - we are not yet clear if

we're going to be formally part of any consultation

 

or any discussions, of course, as I mentioned

 

in my

remarks, we will make sure that our considerations are heard by the regulatory bodies

 

and policymakers and

so that we can contribute to fact-based discussions.

 

And of course, we also

 

hope that the report

 

of the investigating commission of the parliaments

 

will highlight

some of the

 

reasons why Credit

 

Suisse failed,

 

and that should

 

be a crucial

 

element in

 

contributing to

 

fact-based

discussions on

 

future regulations.

 

So, June,

 

as you

 

mentioned, June, June

 

is not

 

a credible

 

date because

 

the

commission is not expected to report before the end of

 

the year. I also think that..

Giulia Miotto, Morgan Stanley

June 2025 I meant, sorry.

Sergio P.

 

Ermotti

That one is, I don't know about June 2025. I

 

think that it's very unlikely that we're going to

 

have more clarity

about this matter in terms of what it means before year end or the early -- or even the early part of next year.

So in the meantime, we have to accept some

 

level of uncertainty around this topic.

Todd

 

Tuckner

Yeah, hi Giulia, on the second question about TRX in GWM. So yeah, very strong

 

1Q. In terms of how we --

how one should think about it, overall in going

 

forward, I'd say a few things. I mean, naturally, the

environment needs to be conducive to strong transactional flows

 

– and 1Q was, but I would really highlight

that it wasn’t so much just beta.

16

But actually, it’s an environment where you started to see risks come on, you saw some uncertainty, and it’s

an environment that plays to our strengths, where we were able to advise

 

in particular, across our regions in

more complex, structured products where we saw significant volume up, so

 

really played to our strengths and

then also, I think structurally reflects a couple of things

 

in addition that I would say it gives us confidence

 

as

we look out forward.

One is that the align product shelf, so across Credit Suisse and UBS

 

coming together, and the way we've

approached clients from that sense. And on the US side, as

 

I highlighted, just really borrowing from the

playbook outside the US, inside the US to really approach clients

 

more jointly with the investment bank is also

paying off.

So we see there

 

are some structural things

 

that bode well as

 

we look out. Of

 

course, the environment needs

 

to

be conducive, but also in an environment like the

 

current one is one that plays to our

 

strengths as mentioned

and really allows us to drive transactional flows higher.

Giulia Miotto, Morgan Stanley

Thanks.

Jeremy Sigee, BNP Paribas Exane

Thank you. Good morning. Two questions, please. One is, you talked about the

 

Investment Bank and the core

businesses that you've retained from Credit Suisse and the

 

people you've brought over. I just wanted to – are

they now fully productive in revenue terms? Or is there some lag still

 

to come through, as those people ramp

up? Are they up to speed already at this point?

And then my second question is sort of, again,

 

on the capital theme. I saw in the report, you

 

reiterate your

intention to do the 1 billion of buybacks in the

 

second half of this year. I guess, that's a small enough amount

that you can do it pretty much regardless of the new capital proposals. But

 

I just wanted to hear your

thoughts on that.

Sergio P.

 

Ermotti

Well, let me take the first question is very – you know, of course everybody

 

is now up and running and

productive. And – but when you look at Banking, as

 

you know, what does it mean being productive?

 

It does,

you know, there is a phase of going out and pitching and winning mandates

 

and then it takes time until they

get executed. So, in a sense if you are asking me

 

if they are productive in pitching and being engaged with

clients, they are. Everybody is full speed. The momentum

 

in winning mandates is great. You could see it in the

fourth quarter. In the first quarter,

 

we have executed many of them. And

 

we are very comfortable that the

investments and the trajectory of growth that we

 

see going forward, if market conditions stay there to allow

the execution of those mandates, are very promising.

In respect of the billion, so I think that you know, at this stage, the only

 

constraints we have right now is the

waiting until the parent bank merger is executed. We expect

 

this to be in at the end of May and if

 

everything

goes through successfully, pending the regulatory approvals that we need, we intend to restart the share

buybacks with up to a billion dollars for 2024.

Jeremy Sigee, BNP Paribas Exane

Very helpful, thank you.

17

Andrew Coombs, Citigroup

Good morning. Two questions please, basic follow ups. Firstly on the Non-core result, obviously

 

a tremendous

result both in terms of the RWA run-down but also the gains that you've

 

booked during the quarter. Thank

you for the revised guidance for the full year. I just wanted to better understand the source of those

 

gains in

Q1, I think you said conduit and corporate

 

loan books and longevity portfolio. You then don't expect that to

repeat going forward. Is that because the low hanging

 

fruit has already been achieved or because you're now

selling a different type of asset, or anything you can elaborate

 

there will be helpful.

And then the second question, thank you for

 

the opening remarks, Sergio. On the parent bank capital,

 

I just

wanted to check, the 9 billon you referenced, is that in relation to a

 

400% risk-weight on foreign subsidiaries,

or is it the 300% as it currently is phased? And then

 

more broadly, a question to the both of you, in the event

that the risk weight on foreign subsidiaries does

 

go up, to what extent do you think you can

 

mitigate that

through the fungibility of capital, dividend, trapped

 

capital and so forth? Thank you.

Todd

 

Tuckner

Hi, Andrew. I'll address the first question. I mean, in terms of the source of the gains, I think

 

as, you know, as

you mentioned, and as of course I highlighted,

 

it came from a number of the sort of sectors

 

within NCL,

Conduit, and Corporate Loans, Longevity, Securitized Products. We're also seeing, you know, strength in

Credit and Equities and Macro as well. And, you know, the team has been doing

 

a great job in unwinding

these complex, longer dated transactions.

 

And that continues to be what they're going to

 

be focused on

doing. So the source of the gains comes from, you know, the ability to add a

 

lot of value to these complex

transactions. And you know, to be able to get the transactions closed

 

out at levels that are above book value.

And as I highlighted, that's not an expectation

 

that people should continue to have, not

 

least just given that

sometimes we're going to make decisions to get out

 

of positions where we know there's significant cost

takeout or there's suboptimal capital at the moment,

 

it's very suboptimal from a capital efficiency perspective,

and so getting out would release that. So they're going

 

to be a number of factors that – which is why, you

know, we don't see 1Q repeating.

Sergio P.

 

Ermotti

So if I can add on that one, before I touch on the

 

second question. I think that's the – first of

 

all, there is

definitely no low hanging fruit and if you look

 

at our natural decay profile change, it shows you

 

that we are

not really going for easy to sell but rather complex transactions

 

that also helps in many cases to unwind costs,

because priority number one in Non-core is to take

 

down cost, and not necessarily to take down

 

risk

weighted assets and market or credit risk weighted

 

assets.

 

So, in that sense, it's very important that in many

 

cases we are able, thanks to the good work the

 

team is

doing in managing these unwinds, to leverage

 

the fact that we are not a forced seller. We are only going to

dispose assets when they create value to shareholders.

 

And that's a – is a completely different position to be

in because our capital is strong. We can allow some delays

 

or some time to elapse between the two.

Now on the 9 billion, so there are two factors actually; one

 

is the 250% risk weightings and 400% for

 

foreign

companies and the elimination of the filter –

 

of the regulatory filter that Credit Suisse had. The two combined

account for 9 billion.

Andrew Coombs, Citigroup

And the ability to mitigate any increase in the foreign subsidiaries

 

going forward? Assume it’s something

you're already working on given the already base increase, to what extent

 

you think you could accelerate

that.

18

Sergio P.

 

Ermotti

No the mitigation – look the mitigation I go

 

back to is – I mean, I have to – it’s like

 

replay,

 

push the button

again and replay what I told you or what I said before, we

 

cannot speculate or respond to speculation or do

analysis on things that we don't know. What we know is that we're

 

going to hold, as a consequence of the

Credit Suisse acquisition, 9 plus 10 billion, so almost

 

20 billion of additional capital on an already very

 

strong

capital position UBS had. That's the fact.

 

The rest, I don't know and we will comment when we

 

know more.

Andrew Coombs, Citigroup

Brilliant, very clear. Thank you for that.

Anke Reingen, RBC

Yeah, thank you very much for taking my question. I'm just – I'm sorry to follow up, just

 

one thing. I mean, is

it fair to say that a result of the uncertainty and not

 

really changing any step in your strategy and execution

 

of

the merger and specifically, with Q4 results, you mentioned, the potential amortization of

 

additional DTA, just

confirming this – at the current stage, this is going ahead.

And then on the net new assets, the 17 billion

 

[edit: 27 billion] in Q1, that’d be running

 

below, if I were

thinking about $100 billion for this year – should

 

it be rather than 100 billion this year, is it more like the 200

billion over the years – or two years – and more backend

 

loaded towards the 2025 to reach the 200 billion?

And has the decline in relationship managers had

 

any impact on the net new assets

 

growth in Q1? In the

past, you gave us some numbers about departed

 

relationship managers and the assets they have

 

taken with

them. Is that the case, as being relatively low? Thank

 

you very much.

Sergio P.

 

Ermotti

Thank you, I’ll take the first question. I think

 

that, Anke, I think – this is a very complex

 

integration, and we

cannot afford to be distracted in the execution of it. So

 

we are sticking to our strategy. We are sticking to our

plan. We need to do that and at the same time, stay

 

close to our clients. And so that's

 

the reason why

engaging in hypothetical change of strategy

 

or methodology we use in assess our –

 

anything that goes

around capital – would be absolutely very distracting

 

and not in the best interest of any stakeholders, because

what we want to have is a successful completion

 

of this integration. And so we stay

 

focused on the existing

strategy and our approach.

Todd

 

Tuckner

Yeah Anke, on the second question, in terms of net new assets in GWM. I would

 

just reiterate that the

trajectory that we highlighted over the next

 

two years is, among other things, a function

 

of the financial

resource optimization and balance sheet initiatives that the

 

team is hard at work in undertaking. So 27 billion

in the quarter is a strong result, we're on track to deliver on our

 

ambitions, which we said was 200 billion

over the course of two years. So I would continue

 

to think about that in those terms.

In terms of the RMs who have left, you mentioned

 

that we had given some numbers in the

 

past. Yeah, I

mean, that has continued just to taper. As an impact, just given the number of RMs

 

who have left, has

become sort of a non-topic at this point

 

in time. In terms of any current period, and in terms

 

of the assets

that they’ve taken with them, it is a very small

 

percentage, ultimately, of the given – especially given the fact

that the RM workforce in Credit Suisse is down 40% from the end

 

of 2022 levels, and we've been able to

retain the lion share of the assets. So, we consider that

 

to be sort of a story not terribly worth following,

 

and

in the end, we stay focused on our plans

 

and our commitments.

19

Anke Reingen, RBC

Thank you. Can I just ask on the DTA please? Are you reiterating that we expect to convert

 

that 2 billion and

the 500 million you talked about with Q4 results?

Todd

 

Tuckner

Yeah. There's no change in terms of our approach to DTAs at the current time, Anke.

Anke Reingen, RBC

Thank you very much. Thank you.

Benjamin Goy, Deutsche Bank

Hi. Good morning. Two questions, please. One on your favorite topic, capital. Just

 

conceptually, trying to

understand, because when the press it’s reported, or the

 

Minister of Finance speaks, about capital,

 

and we

naturally assume it’s CET1 capital, but do you

 

think it could also partially include additional

 

tier 1 capital,

which might make it more manageable for you?

And then secondly, on your Global Wealth Management net new loans in the quarter, another decline, it’s

very similar to the Q4 decline. Just trying to

 

reconcile that with your risk appetite returning statement

 

– being

conscious of the yield curve’s still not favorable

 

but wondering if it's also more of a risk alignment

 

still going

on in the background, which is why your outstanding

 

remains negative? Thank you very much.

Sergio P.

 

Ermotti

Benjamin, the first one is very short. As

 

I say, we don’t speculate or respond to speculation in respect of any

numbers that has been flagged out there. So it’s

 

not – we are not in a position to understand where and how

those numbers are calculated, therefore we refrain from doing that.

Todd

 

Tuckner

Yeah, and Benjamin hi. On the GWM net new lending side, we are seeing continued deleveraging,

 

some of

that is market driven and some of that – i.e.

 

rates driven, and some of that is as a

 

function of the resource

optimization work that we're doing. So, that's an outcome

 

that we're managing, to the extent it is the latter,

we are looking to drive higher revenues. And therefore, I’m looking for the

 

NIM to sort of hold up in that

respect, because we're improving the revenue over RWA consideration.

But obviously, in the current rates environment, too, we're seeing either the ends of deleveraging and

 

still yet

some reticence to re-lever in some of our regions. So I expect that

 

we won't have a lot of momentum on re-

levering in the current rates environment until we start to

 

see rates come down, over – if, assuming they do

 

–

over the next, say 12 to 18 months, so that external

 

factor won't be, to me, a big driver in

 

terms of

releverage.

Benjamin Goy, Deutsche Bank

Understood. Thank you very much.

20

Piers Brown, HSBC

Yeah. Good morning. Thanks for the questions. Just two from me, just coming

 

back on the cost issue, and

the costs take out in the quarter in the NCL unit.

 

I mean, it's quite impressive, you're down 26% quarter-on-

quarter. And the cost takeout seems to be tracking more or less in line with the asset

 

reduction. Just, I mean,

the question is, should we expect that sort

 

of linear relationship to continue or was it something

 

particular in

terms of frontloading costs takeout in the first quarter

 

in NCL?

And then the second question is back to regulation,

 

not on capital but just wondering if there's anything

 

in

any of the remarks, comments, reports, published by the Competition

 

Commission that we need to be

mindful of, just in terms of the domestic

 

market shares of the new group. Thanks.

Todd

 

Tuckner

Hey Piers. In terms of the first question on

 

the NCL cost takeout. There isn't a linear relationship, I would

 

say.

It's, it could be, the relationship really doesn't have to

 

flow linearly. And that's because, the cost takeout will

often come as a result of taking out a portfolio that

 

sits on a given system or supported by a

 

given

infrastructure or application that we’re able to shut down.

 

But there is of course, a relationship between the

asset takeout and the cost takeout. I wouldn't

 

say it's linear because you can have, you can be

 

taking out

portions of a portfolio that still needs at least

 

a large share of the headcount supporting that, whether

 

it's the

front office or mid or back, that's still supporting the

 

broader portfolio. And if you're not really able to

decommission the associated technology, you may not get the saves there. So not

 

linear, but for sure, it's

something we watch very carefully and we're pleased to

 

see that it is moving with a reasonably high-degree

of correlation.

Sergio P.

 

Ermotti

Now on the competitive position. Let's

 

forget for a second that we have a crystal

 

clear agreement on that

topic. Even if you go down to the substance,

 

which is, I think, is relevant for us, for consumers,

 

for clients, or

everybody to understand. When you look at

 

facts, it's quite clear that we have no dominant

 

position in

Switzerland, in banking. So I think that no

 

matter if you look at deposits, at loans

 

and mortgages, you look at

branch – number of branches; in any dimension,

 

UBS is not the largest bank in Switzerland in

 

that sense. I

think we are the leading bank in Switzerland because

 

of our capabilities, but that should not be confused

with market share and size. So in that sense, we are fairly comfortable

 

that both the agreement and the facts

support our position that our plan is the right one

 

to pursue.

Piers Brown, HSBC

Thank you.

Tom

 

Hallett, KBW

Hi. Morning. So just a quick one on Wealth

 

Management NII, I think you were baking in three US rate

 

cuts for

this year in your guidance. If that was zero, what would

 

that – or how would that alter your guidance?

And then secondly, on the treatment of software intangibles, I suppose it's fair to say it gets a bit more of

 

a

benefit relative to your European peers. I mean, if you

 

were to align the rules with Europe, what sort of

impact would that have on your capital?

 

Thank you.

Sergio P.

 

Ermotti

So, on the second question, as I said before, we are not

 

speculating on any change in our regulatory

framework. The only thing I can say is that

 

both in absolute global terms, but also

 

vis-à-vis the European

peers, we have a pretty strong capital position, not only in

 

absolute terms, but also the quality of

 

our capital

base.

21

Todd

 

Tuckner

Hey Tom,

 

on GWM NII, yes, we modeled in as mentioned

 

three US dollar rate cuts. If there were fewer than

those – and Sergio even commented earlier that

 

there is some upside, but of course, in our NII, but of

 

course

that depends on client behavior. It depends on how the balance sheet, you know, behaves. So statically, yes,

that would be corrected to be upside. If there were no rate cuts, you

 

probably have some uptick of a point or

two on the NII. But of course, you know, we need to consider the

 

dynamic relationship between client

behavior and our balance sheet. So it's difficult to predict,

 

but yes, I would just take away that – likely

 

to be

some degree of upside, all other things equal.

Tom

 

Hallett, KBW

Okay. Thank you.

Sarah Mackey

Thank you. I

 

think there are

 

no further questions.

 

So with that

 

we can close

 

the call. And

 

thank you, Sergio

 

and

Todd

 

for joining us today. We look forward to speaking to everyone again with our 2Q results.

 

22

Cautionary

 

statement

 

regarding

 

forward-looking

 

statements

 

|

 

This

 

document

 

contains

 

statements

 

that

 

constitute

 

“forward-looking

statements,” including

 

but not

 

limited to

 

management’s outlook

 

for UBS’s

 

financial performance,

 

statements relating

 

to the

 

anticipated

effect

 

of

 

transactions

 

and

 

strategic

 

initiatives

 

on

 

UBS’s

 

business

 

and

 

future

 

development

 

and

 

goals

 

or

 

intentions

 

to

 

achieve

 

climate,

sustainability and other social objectives. While these forward-looking statements represent UBS’s

 

judgments, expectations and objectives

concerning the matters described, a number

 

of risks, uncertainties and other important factors

 

could cause actual developments and results

to differ materially from UBS’s expectations. In

 

particular, terrorist activity and conflicts in the Middle

 

East, as well as the continuing

 

Russia–

Ukraine war, may have significant impacts on

 

global markets, exacerbate

 

global inflationary pressures, and slow

 

global growth. In addition,

the ongoing

 

conflicts may

 

continue to

 

cause significant

 

population displacement,

 

and lead

 

to shortages

 

of

 

vital commodities,

 

including

energy

 

shortages and

 

food

 

insecurity outside

 

the

 

areas

 

immediately involved

 

in

 

armed

 

conflict. Governmental

 

responses

 

to

 

the

 

armed

conflicts, including, with respect to the

 

Russia–Ukraine war, coordinated successive sets of sanctions on

 

Russia and Belarus, and Russian

 

and

Belarusian entities and nationals, and

 

the uncertainty as to

 

whether the ongoing conflicts will

 

widen and intensify,

 

may continue to have

significant adverse effects on the market and macroeconomic conditions, including in ways that cannot be anticipated. UBS’s acquisition of

the

 

Credit

 

Suisse

 

Group

 

has

 

materially

 

changed

 

our

 

outlook

 

and

 

strategic

 

direction

 

and

 

introduced

 

new

 

operational

 

challenges.

 

The

integration of the

 

Credit Suisse entities

 

into the UBS

 

structure is expected

 

to take between

 

three and five years

 

and presents significant

 

risks,

including the risks

 

that UBS Group

 

AG may be

 

unable to achieve

 

the cost reductions

 

and other benefits

 

contemplated by

 

the transaction. This

creates significantly greater

 

uncertainty about forward-looking

 

statements. Other factors

 

that may

 

affect our

 

performance and ability

 

to

achieve our plans, outlook

 

and other objectives also

 

include, but are not limited

 

to: (i) the degree to which

 

UBS is successful in the

 

execution

of its strategic plans, including its cost reduction and efficiency initiatives and its ability to manage its levels of risk-weighted assets (RWA)

and leverage ratio denominator (LRD), liquidity coverage

 

ratio and other financial resources, including changes in RWA assets and liabilities

arising from higher market volatility

 

and the size of the

 

combined Group; (ii) the degree

 

to which UBS is successful

 

in implementing changes

to its businesses

 

to meet changing

 

market, regulatory and

 

other conditions,

 

including as

 

a result of

 

the acquisition

 

of the Credit

 

Suisse Group;

(iii) increased inflation and interest

 

rate volatility in major markets; (iv)

 

developments in the macroeconomic climate and in

 

the markets in

which UBS operates or to which it is exposed, including movements in securities prices

 

or liquidity, credit spreads, currency exchange rates,

deterioration or slow

 

recovery in

 

residential and

 

commercial real

 

estate markets, the

 

effects of

 

economic conditions, including increasing

inflationary pressures,

 

market developments,

 

increasing geopolitical

 

tensions, and

 

changes to

 

national trade

 

policies on

 

the financial position

or creditworthiness of UBS’s clients and counterparties, as

 

well as on client sentiment and levels

 

of activity; (v) changes in the availability

 

of

capital

 

and

 

funding,

 

including

 

any

 

adverse

 

changes

 

in

 

UBS’s

 

credit

 

spreads

 

and

 

credit

 

ratings

 

of

 

UBS,

 

Credit

 

Suisse,

 

sovereign

 

issuers,

structured credit products or credit-related exposures, as well as availability and cost

 

of funding to meet requirements for debt eligible for

total loss-absorbing capacity (TLAC), in particular in light of

 

the acquisition of the Credit Suisse Group;

 

(vi) changes in central bank policies

or the implementation of

 

financial legislation and regulation

 

in Switzerland, the US,

 

the UK, the

 

EU and other

 

financial centers that have

imposed, or resulted in, or may

 

do so in the future,

 

more stringent or entity-specific capital, TLAC, leverage ratio, net

 

stable funding ratio,

liquidity

 

and

 

funding

 

requirements,

 

heightened

 

operational

 

resilience

 

requirements,

 

incremental

 

tax

 

requirements,

 

additional

 

levies,

limitations on permitted activities, constraints on remuneration, constraints on transfers of capital and liquidity and sharing of operational

costs across

 

the Group

 

or other

 

measures, and

 

the effect

 

these will

 

or would

 

have on

 

UBS’s business activities;

 

(vii) UBS’s ability

 

to successfully

implement resolvability

 

and related

 

regulatory requirements

 

and the

 

potential need

 

to make

 

further changes

 

to the

 

legal structure

 

or booking

model of UBS in response to

 

legal and regulatory requirements and any

 

additional requirements due to its acquisition of

 

the Credit Suisse

Group, or other developments; (viii) UBS’s ability to maintain and improve its systems and controls for

 

complying with sanctions in a timely

manner and for the

 

detection and prevention

 

of money laundering

 

to meet evolving

 

regulatory requirements and expectations,

 

in particular

in current geopolitical

 

turmoil; (ix)

 

the uncertainty

 

arising from

 

domestic stresses

 

in certain

 

major economies;

 

(x) changes

 

in UBS’s competitive

position, including

 

whether differences

 

in regulatory

 

capital and

 

other requirements

 

among the

 

major financial

 

centers adversely

 

affect UBS’s

ability to compete

 

in certain lines of

 

business; (xi) changes

 

in the standards of

 

conduct applicable

 

to our businesses

 

that may result from

 

new

regulations

 

or

 

new

 

enforcement of

 

existing standards,

 

including measures

 

to

 

impose new

 

and

 

enhanced duties

 

when

 

interacting with

customers and

 

in the execution

 

and handling

 

of customer transactions;

 

(xii) the liability

 

to which UBS

 

may be exposed,

 

or possible constraints

or sanctions that regulatory authorities might impose on UBS, due

 

to litigation, contractual claims and regulatory investigations, including

the potential for disqualification

 

from certain businesses,

 

potentially large fines

 

or monetary penalties,

 

or the loss of licenses

 

or privileges as

a result

 

of regulatory

 

or other

 

governmental sanctions,

 

as well

 

as the

 

effect that

 

litigation, regulatory

 

and similar

 

matters have

 

on the

operational risk component of our RWA, including as

 

a result of its acquisition of the Credit

 

Suisse Group, as well as the amount of

 

capital

available for return to

 

shareholders; (xiii) the effects

 

on UBS’s

 

business, in particular cross-border

 

banking, of sanctions, tax

 

or regulatory

developments and of

 

possible changes in

 

UBS’s policies

 

and practices; (xiv)

 

UBS’s

 

ability to retain

 

and attract the

 

employees necessary to

generate

 

revenues

 

and

 

to

 

manage,

 

support

 

and

 

control

 

its

 

businesses,

 

which

 

may

 

be

 

affected

 

by

 

competitive

 

factors;

 

(xv)

 

changes

 

in

accounting or

 

tax standards

 

or policies,

 

and determinations

 

or interpretations

 

affecting the

 

recognition of

 

gain or

 

loss, the

 

valuation of

goodwill, the recognition

 

of deferred tax assets

 

and other matters;

 

(xvi) UBS’s ability to implement

 

new technologies and

 

business methods,

including digital services and technologies, and

 

ability to successfully compete with

 

both existing and new financial service providers,

 

some

of which may not be regulated

 

to the same extent; (xvii) limitations on the

 

effectiveness of UBS’s internal processes for

 

risk management,

risk control,

 

measurement and

 

modeling, and

 

of financial

 

models generally;

 

(xviii) the

 

occurrence of

 

operational failures,

 

such as

 

fraud,

misconduct, unauthorized

 

trading,

 

financial

 

crime,

 

cyberattacks, data

 

leakage and

 

systems failures,

 

the

 

risk

 

of

 

which

 

is

 

increased

 

with

cyberattack threats from

 

both nation states

 

and non-nation-state

 

actors targeting

 

financial institutions;

 

(xix) restrictions

 

on the ability

 

of UBS

Group AG

 

and UBS AG

 

to make payments

 

or distributions, including

 

due to restrictions

 

on the ability

 

of its

 

subsidiaries to make

 

loans or

distributions, directly or indirectly, or, in the case of financial difficulties,

 

due to the exercise by FINMA

 

or the regulators of UBS’s operations

in other

 

countries of

 

their broad

 

statutory powers

 

in relation

 

to protective

 

measures, restructuring

 

and liquidation proceedings;

 

(xx) the

degree to

 

which changes in

 

regulation, capital or

 

legal structure, financial

 

results or other

 

factors may affect

 

UBS’s

 

ability to maintain

 

its

stated capital return objective; (xxi) uncertainty over the scope of actions

 

that may be required by UBS, governments and others for UBS to

achieve goals relating to

 

climate, environmental and social matters, as

 

well as the evolving nature

 

of underlying science and industry

 

and

the

 

possibility of

 

conflict between

 

different

 

governmental standards

 

and

 

regulatory

 

regimes;

 

(xxii)

 

the

 

ability of

 

UBS

 

to

 

access

 

capital

markets; (xxiii)

 

the ability

 

of UBS

 

to successfully

 

recover from

 

a disaster

 

or other

 

business continuity problem

 

due to

 

a hurricane,

 

flood,

earthquake,

 

terrorist

 

attack,

 

war,

 

conflict

 

(e.g.,

 

the

 

Russia–Ukraine

 

war),

 

pandemic,

 

security

 

breach,

 

cyberattack,

 

power

 

loss,

telecommunications failure

 

or other natural

 

or man-made event,

 

including the ability

 

to function remotely

 

during long-term

 

disruptions such

as the COVID-19 (coronavirus) pandemic; (xxiv) the level of success in

 

the absorption of Credit Suisse, in the

 

integration of the two groups

and their

 

businesses, and

 

in the

 

execution of

 

the planned

 

strategy regarding

 

cost reduction

 

and divestment

 

of any

 

non-core assets,

 

the

existing assets and

 

liabilities of Credit

 

Suisse, the level

 

of resulting impairments

 

and write-downs, the

 

effect of the

 

consummation of the

integration on

 

the operational

 

results, share price

 

and credit rating

 

of UBS –

 

delays, difficulties,

 

or failure in

 

closing the

 

transaction may

 

cause

market disruption and challenges for UBS to maintain

 

business, contractual and operational relationships; and (xxv)

 

the effect that these or

other factors

 

or unanticipated

 

events, including

 

media reports

 

and speculations,

 

may have

 

on our

 

reputation and

 

the additional

 

consequences

that this

 

may have

 

on our

 

business and

 

performance. The

 

sequence in

 

which the

 

factors above

 

are presented

 

is not

 

indicative of

 

their

likelihood of

 

occurrence or

 

the potential

 

magnitude of

 

their consequences. Our

 

business and

 

financial performance

 

could be

 

affected by

other factors identified

 

in our past and future

 

filings and reports, including

 

those filed with the

 

US Securities and Exchange

 

Commission (the

SEC). More

 

detailed information

 

about those

 

factors is

 

set forth

 

in documents

 

furnished by

 

UBS and

 

filings made

 

by UBS

 

with the

 

SEC,

including the

 

UBS Group AG

 

and UBS AG

 

Annual Reports

 

on Form 20-

 

F for the

 

year ended 31

 

December 2023.

 

UBS is not

 

under any obligation

to (and expressly disclaims

 

any obligation to)

 

update or alter its

 

forward-looking statements,

 

whether as a result of

 

new information, future

events, or otherwise.

 

 

 

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the

 

registrants have duly

caused this report to be signed on their behalf by the undersigned, thereunto

 

duly authorized.

UBS Group AG

By:

 

/s/ David Kelly

 

_

Name:

 

David Kelly

Title:

 

Managing Director

 

By:

 

/s/ Ella Campi

 

_

Name:

 

Ella Campi

Title:

 

Executive Director

UBS AG

By:

 

/s/ David Kelly

 

_

Name:

 

David Kelly

Title:

 

Managing Director

 

By:

 

/s/ Ella Campi

 

_

Name:

 

Ella Campi

Title:

 

Executive Director

Credit Suisse AG

By:

 

/s/ Ulrich Körner

 

_____

Name:

 

Ulrich Körner

Title:

 

Chief Executive Officer

By:

 

/s/

 

Simon Grimwood

 

_

Name:

 

Simon Grimwood

Title:

 

Chief Financial Officer

Date:

 

May 8, 2024

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