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: April 26, 2022
UBS Group AG
Commission File Number: 1-36764
UBS AG
Commission File Number: 1-15060
(Registrants'
Names)
Bahnhofstrasse 45, Zurich, Switzerland
Aeschenvorstadt 1, Basel, Switzerland
(Address of principal executive offices)
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 x Form
40-F o
This
Form 6-K consists of the presentation
materials related to the First Quarter 2022 Results of UBS Group AG and UBS AG,
and the related speaker notes and Q&A session, which appear immediately
following this page.
First quarter 2022 results
26 April 2022
Speeches by Ralph Hamers, Group Chief Executive
Officer, and Kirt Gardner, Group Chief Financial Officer
Including analyst Q&A session
Transcript.
Numbers for
slides refer to the fourth quarter 2021 results presentation. Materials and
a webcast replay are available at www.ubs.com/investors
Ralph Hamers
Slide
3 – Key messages
Thank
you Sarah. Good morning everyone.
The
first quarter of 2022 was dominated by extraordinary geopolitical and macro
events as a result of Russia’s invasion of Ukraine. And during these turbulent
times, we’ve remained focused on three key priorities: executing our strategic
plans, serving our clients, and managing risk.
We
once again proved the benefits of our global scale and the power of our
ecosystem for investing. And we’re working hard to enhance them every day.
Our clients had to navigate a challenging and complex environment, as you can
well understand, so our focus was to really stay close to them and advise them
on their portfolios and risk management. At the same time, we prudently
managed our own risks. By working together across the businesses and the
control functions, we further reduced our exposures to Russia.
Our
focus on clients and risk management resulted in another strong quarter
financially. And it highlighted the resilience of our diversified business.
Slide
4 – We are executing our strategy to drive growth and efficiency
We
have and will continue to execute on our strategy regardless of the market
volatility. On slide 4, you can see some of the milestones that we have
achieved so far this year.
In
an environment of higher rates, higher inflation, higher volatility, it’s more
important than ever to ensure that portfolios are well diversified, including
exposure to alternatives. And during the last quarter, our wealth management
clients committed 8 billion to private markets.
Our
US clients continue to value our seamless offering for Separately Managed
Accounts. We saw another 7 and a half billion of inflows in the first quarter.
Sustainability,
as you can well imagine, remains an important for our clients, and for us as
well. And this quarter, we launched a number of sustainable finance products.
For example, a new climate transition fund in collaboration with Aon. And in
Switzerland we now also offer mortgages with preferential interest rates if the
proceeds are used to improve the energy efficiency of buildings.
Our
clients are at the center of our strategy, so we’re particularly proud to have
been named number one in client satisfaction across US wealth management firms
in the J.D. Power survey. But also, in the latest Euromoney Private Banking
Survey we received 192 awards, including Best Wealth Manager in Asia Pacific
and Best Wealth Manager in Western Europe, as well as the Best Wealth Manager
in Sustainable Investing globally. And we were awarded currency derivatives
house of the year in the 2022 Risk Awards. So, accolades from many different
institutions for how we are doing.
We
are also continuously evolving our mobile applications, making it even easier
for our clients to stay connected with us. More than half of our personal
clients in Switzerland are active on mobile banking, now. We process more than
three times as many mobile logins as we do desktop logins. So you see also that
trend here moving away from desktop to mobile.
To
make us even better in delivering our client promise, we are driving culture
change across the firm. Earlier this month, ten thousand colleagues became
part of Agile@UBS, our agile way of working. We are removing silos and
bringing different types of expertise together in teams.
We
continue also to support hybrid working. For example, in the US we launched an
industry-leading approach to flexible working that will provide employees in
eligible roles with the opportunity to work 100% remotely. And that’s in
addition to the two thirds of employees who we’ve already enabled to work in hybrid
models.
Now,
in short, we’re continuing to focus on our strategic imperatives as you can
see.
Slide
5 – Sustainability is core to our purpose and ecosystem
One
of those is also Sustainability, core to our ecosystem, part of our purpose, strategic
focus as well, especially in these volatile times where we should not forget
about this, and you see an update on this on slide 5.
On
the People side, we are supporting the people in Ukraine and those who have
fled the country. Clients and employees can donate towards relief efforts
through the Optimus foundation. Together with XTX Markets, we have committed
to match those donations. So far, the total amount of around 30 million is
raised. And with our goal to reach up to 50 million, so still going to a
higher number here, but we have 30 million raised up to now. We also advanced
on our priority to address wealth inequality. For example, we introduced an
Inclusive Investing Group in the US, and that team specializes in helping
clients promote diversity and inclusive growth through their investments.
On
the Planet side, as you may well remember we had our AGM earlier this month,
our shareholders voted in favor of our climate roadmap across the different
scopes. We’ve also received valuable feedback there. So we will stay engaged
with shareholders as we further evolve our targets and methodologies that we
apply. One way in which we’ll evolve our climate reporting is by disclosing
emissions based on the Partnership for Carbon Accounting Financials - PCAF in
short. This standard should also help us expand our Scope 3 disclosures over
time. We also became a founding member of Carbonplace, an innovative trading
platform being developed to create a truly scalable voluntary carbon market.
And we joined the Green Software Foundation as a steering member to help us
achieve net zero emissions from our own operations.
So
you see, it’s been another important quarter also from a sustainability agenda
perspective.
Slide
6 – Helping our clients navigate challenging markets
Now,
as mentioned before, the market backdrop was dominated by the war in Ukraine
and subsequent sanctions against Russia. But even before the war, markets were
volatile. Lower growth expectations dampened investor sentiment, especially in
China, inflation was already fueling fears of tighter monetary policy. And in
this environment, our ecosystem continued to grow and you can see that on slide
6.
Our
clients turned to us for advice, execution and liquidity. And this is a true
reflection of their confidence in our stability, our global reach and our
knowledge, our local knowledge, our sector knowledge.
We
intensified our client engagement and provided more insights through our Chief
Investment Office research that covered topics ranging from the war, to
inflation to interest rates and more. Just to give you a bit of an idea as to
how close we stayed to our clients. Our CIO hosted over 1,000 dedicated
events, reaching more than 100,000 clients and prospects, advising as to how to
deal with the current situation.
And
that proactive outreach, research, and advice gave our clients guidance in
their investment decisions. We saw 19 billion inflows into fee-generating
assets, and that’s a 5% annualized growth rate. And the bulk of these were in
mandates. In addition, we saw strong inflows into our Asset Management
capabilities, we continued to see growth across our Hedge Fund businesses, as
well as passive products, separately managed accounts and sustainable
investments, with net new money excluding money markets at 14 billion. Our
personal banking clients in Switzerland also continued to put their money to
work in investment products. Inflows were 1 billion in the quarter, and that’s
a 16% annualized growth rate and the majority of these inflows were into
mandates, where sustainable investing is a major driver of growth.
Our
institutional clients had many opportunities to trade as well. Volatile
markets drove trading volumes, especially in EMEA. Our clients were
particularly active in equity derivatives and foreign exchange, where we were
able to facilitate high volumes, manage risk and provide access to liquidity.
And all this resulted in the highest Global Markets revenues on record.
So,
to conclude, throughout these complex times, our clients continued to put their
trust in us.
Slide
7 – We reduced Russian exposures early and actively…
And
one of the reasons is that they value us is for being a source of stability,
and see our strong capital position and our strong control environment, they
see this as an important assets to work with us.
And
on slide 7, we give you an update on Russia. So being a strong partner for our
clients also means managing our own risks proactively. And as you can see on
the right-hand side here, we significantly reduced our already-low exposure to
Russia during this quarter. We’re focused on complying with all applicable
sanctions as the situation rapidly evolves.
Slide
8 – …and delivered strong firm-wide results
Now,
this diligent risk management, combined with our global diversification, made
us more resilient. Our clients turned, as indicated, for advice through these
challenging times. And these times present challenge but also opportunities.
We remained disciplined on costs. And this led to the strong firm-wide
financial results as you can see on slide 8.
Operating
income was up 8% vs. a year ago, making this the 7th consecutive quarter of
year-on-year growth. Positive operating leverage meant pre-tax profit was up
19% and net profit was up 17%.
Return
on CET1 capital reached 19%, and our cost/income ratio decreased over 3
percentage points to 70.7%. We also repurchased 1.7 billion of shares in the
quarter, and we’re well on track to buy back around 5 billion by the end of the
year.
So
we’re capturing opportunities to drive growth on both the top and bottom lines.
And as we do that, we’re executing our strategic plans as well as our vision to
convene THE global ecosystem for investing.
And
with that, I’ll hand over to Kirt, who will take you through our numbers before
we get into Q&A.
Kirt Gardner
Slide 10 – 1Q22
net profit USD 2.1bn; 19.0% RoCET1
Thank
you, Ralph. Good morning everyone.
At
2.1 billion, we delivered the best net profit for a first quarter since 2007.
This translates to a 19.0% return on CET1 capital, and a 16.0% return on
tangible equity. PBT was 2.7 billion, up 19%.
Net
credit loss expenses were 18 million. We made some updates to our scenarios
and weightings to reflect the current environment, and we continued to apply a
management overlay given ongoing macroeconomic uncertainty. As of March, the
total overlay was 204 million, a 20 million reduction from 4Q21.
Turning
to expenses. We remained disciplined in the quarter, managing to keep our
expenses – excluding variable and FA compensation, currency effects and
litigation – in line with our full-year guidance of increasing around 2%. This
helped us to deliver a cost-to-income ratio of 70.7%, which we achieved while
continuing to invest for growth and while absorbing some inflationary pressure,
notably on salaries.
Slide 11 –
Global Wealth Management
Moving
to our businesses. GWM PBT was down 7% to 1.3 billion, despite double-digit
growth in EMEA and Switzerland. Positive top-line contributions from all
regions outside of APAC supported 1% higher operating income that was more than
offset by higher operating expenses.
Revenue
growth in the US led to higher financial advisory [edit: advisor]
compensation, which, together with an increase in litigation provisions, drove
costs higher by 5%.
Net
new fee-generating assets were 19 billion in the quarter, an annualized growth
rate of more than 5%. All regions contributed positively, with the highest net
inflows from the Americas. This quarter’s net new fee-generating assets were
mostly driven by net mandate sales of 21 billion. We also saw continued strong
momentum in private markets, where clients committed 8 billion in the first
quarter, as Ralph mentioned earlier.
Net
new lending in the quarter was 0.5 billion, as continued positive momentum in
the Americas and Switzerland, was partially offset by deleveraging in APAC and
EMEA.
Slide 12 –
Global Wealth Management [income slide]
Moving
to income. Recurring net fee income grew 7% year-on-year, mostly driven by net
new fee-generating asset momentum over the last year, notably from our SMA
initiative in the US and from discretionary mandates in the other regions,
along with inflows into alternatives.
Sequentially,
recurring fee income was down 3% as the effect of negative market performance
and the lower day count more than offset revenue tailwind from NNFGA. As a
reminder, client billing on mandates is calculated based on average daily
balances in the Americas, and based on prior month-end balances in other
regions.
Net
interest income increased 14% year-over-year, with higher deposit margins and
volumes, as well as growth in lending balances. Sequentially, NII was up 2%,
in line with our guidance.
Transaction-based
income decreased 19% versus an exceptional 1Q21. These results were reflective
of the challenging geopolitical and macro backdrop that Ralph already
described, which affected risk-taking, especially in APAC where transaction
revenues decreased by around 40%. Despite these factors, we saw continued very
strong momentum in alternatives and private markets. Entering the second
quarter, clients have generally remained cautious with activity levels
reflective of continuing geopolitical and macro uncertainty.
Looking
ahead, we anticipate this to persist, especially in Asia given the added
effects of COVID-related lockdowns. This will likely affect both transaction
and recurring revenues. Given that the market is now factoring in additional
rate hikes in the US, we expect to more than offset these headwinds – assuming
markets remain flattish – with higher NII over the course of the year. For the
remainder of 2022, we anticipate an increase of around 1 billion NII
year-on-year, based on current forward rate curves and quarter-end balance
sheet. The majority of this increase will materialize in the second half of
2022.
In
the second quarter, we could see around 15% growth sequentially.
Slide 13 –
Personal & Corporate Banking (CHF)
We
continue to see very strong business momentum in P&C and good cost control,
driving PBT up 10% to 395 million Swiss francs.
Operating
income increased 3%, with a 112 million increase from transaction, recurring,
and net interest income. This was partly offset by a 16 million valuation loss
compared with a 26 million gain in 1Q21 along with credit loss expenses of 21
million compared with 22 million credit loss releases in 1Q21.
Costs
were down 1%, benefiting from branch closures in 1Q21, partly offset by
increased tech costs as we continue to execute our digital strategy. The
cost-to-income ratio was 58%, a 5 percentage-point improvement year-on-year.
Transaction-based
income increased 25% to a record level on higher revenues from credit card and
foreign exchange transactions, also reflecting an increase in travel and
leisure spending by clients.
Recurring
net fee income was up 15% to an all-time high, primarily on higher revenues
from mandate, investment fund, and account fees. Continued momentum in
recurring fees was helped by 2.8 billion of net new investment product inflows
over the past 12 months. NII increased by 5% year-on-year, mostly as a result
of deposit optimization measures.
For
the quarter, Personal Banking net new investment product flows was a record 1
billion, an annualized growth rate of 16%.
Slide 14 –
Asset Management
In
Asset Management, PBT was down 23% from a particularly strong 1Q21.
Net
management fees were up 3%, as flows over the last twelve months supported
continued net-new run-rate fee momentum. Performance fees were down, against
an exceptionally good 1Q21.
Invested
assets were 5% lower sequentially, reflecting lower market performance and
adverse currency effects. Net new money excluding money markets was 14 billion
dollars for the quarter, including 2 billion in alternatives, with inflows
across all distribution channels.
Costs
were down 2%, helping to keep Asset Management’s cost-to-income ratio just
below 70% for the quarter.
Slide 15 –
Investment Bank
The
IB’s PBT increased to 929 million, delivering a return on attributed equity of
28%.
Global
Markets delivered its highest quarter on record, up 59% year-on-year.
Excluding the loss on the default of a prime brokerage client in 1Q21, Global
Markets revenues increased by 4%, primarily driven by higher income from equity
derivatives, rates and foreign exchange products.
Global
Banking revenues were down 30% to 550 million in the first quarter,
outperforming the global fee pools across Advisory, ECM, DCM and LCM. Concerns
about Inflation and the monetary policy response, along with Russia’s invasion
of Ukraine, weighed on investor sentiment. Capital markets revenues decreased
41% on subdued issuance and deal flow, especially in equity capital markets.
Advisory income was 3% lower versus a very strong 1Q21.
Operating
expenses were up 6%, as variable compensation increased as a result of higher revenues.
The cost-to-income ratio was 68%.
Slide 16 –
Capital and leverage ratios
As
of end-March, our CET1 capital ratio was 14.3% and our CET1 leverage ratio was
4.16%.
RWA
increased by 10 billion sequentially. Credit and counterparty credit risk increased
due to higher client activity and market-driven movements in derivatives in the
IB and GWM, as well as higher lending activities in GWM and P&C.
Market
risk RWA increased by 3 billion on higher average regulatory and stressed VaR
from market moves across asset classes.
Operational
risk RWA increased by 2.1 billion in the quarter, reflecting the court decision
in the French cross-border matter in December last year. A further 2.0 billion
will be reflected in the second quarter of 2022, bringing the op. risk RWA
increase related to this matter to 4.1 billion.
We
continue to aim to buy back around 5 billion during 2022. As of the 22nd of
April, we have repurchased 2.1 billion in shares, of which 1.7 billion in the
first quarter. Together with around 400 million dividend accruals, this
represents almost 100% of our 1Q net profit.
Before we
move to Q&A, I would like to sincerely thank everyone here at UBS, our
shareholders and analysts, my colleagues at the Group Executive Board and the
Board of Directors. It has been a great privilege to be UBS’s CFO for 26
quarters.
Ralph Hamers
And maybe I can add to that, Kirt. On behalf of all the colleagues
here at UBS and also the audience here today, I think, still open for questions
later, but I'd like to thank you for what you have done for UBS as the CFO,
what you have done here in these quarterly result meetings as well, making sure
that we were all very well-prepared, that we could give the answers, they can
ask, and be very disciplined, make sure that there's a real discipline there.
And thank you for your support over the last almost two years to me, as a real
wingman. So, I'm sure there is going to be – there is a smooth transition in
place already with Sarah, but we’ll miss you. So, thank you very much, Kirt.
Kirt Gardner
Thank you, Ralph.
Analyst Q&A (CEO and CFO)
Kian
Abouhossein, JPMorgan
Yes. Thank
you very much for taking my question. And first of all, thank you for all your
support, Kirt, and all the best in your future endeavors.
So coming
to the question, the first question is regarding wealth management. In
regarding, in respect to Asia Pacific, can you talk a little bit about the
ongoing trends - you mentioned continued slowdown, this lockdown, etcetera. Can
you talk a little bit about the trends that you're seeing on the revenue line,
unwinding, net new money flows, transactions? How should we think about that
through the year? And in that context, you clearly talk about the offsets
through the 1 billion NII. Can you talk about the deposit beta and how we
should think about that progression on a relative basis? You mentioned second half
mainly but also through the second quarter, if I may.
The second
question relates to more around the issue of cost. I just wanted to see if you
could reiterate the guidance on cost ex-variable if that still stands
considering the environment that you operate in terms of inflation? Thanks.
Ralph
Hamers
Okay. Thank
you, Kian. I'm sure Kirt is going to fill in on a couple of things. I'll take
the first one on cost there as your last question, but it is an important
factor that you all feel comfortable around that. So, on the cost side, clearly
there's inflation. There is some upward pressure that we see as well coming
through. More in the US, a bit in Asia. And across the investment bank, we see
cost pressure coming up around salaries. But, you know, I think the – one of
the good things about UBS is that we are globally very well diversified, with a
large part of our cost base actually here in Switzerland, which for once helps
us from that perspective. It's probably not the cheapest place to operate a
bank from, but it is certainly a place where inflation is low and is manageable
at this moment in time as well. And that's what we expect to continue. So, that
helps us in terms of managing our costs globally.
Secondly,
as you know, we launched a year and a half ago already a cost savings program
of a billion. We delivered 200 million of it last year. We are planning and on
our way to execute, to deliver 400 million here as well. So, we feel
comfortable with still guiding a 2% cost increase ex-litigation, ex-foreign
exchange and ex-variable comp depending on the market how the market develops.
And we are committed to the cost-to-income ratio of 70% to 73% there. So,
that's the one on cost.
On
Asia-Pacific, on the number side, Kirt can give you more. What we see is
actually a similar sentiment with clients from last quarter. So, muted appetite
to invest, a bit of a “wait-and-see” pattern in terms of active investments.
Positive net new fee-generating assets also this quarter. So, basically, UBS,
as a firm, the stability, the quality of our advice does attract money also
with Asian clients and so we still see the inflows.
We have
seen certainly also continuous deleveraging as well, third quarter in a row.
So, those are kind of the patterns. And clearly there's so many factors in the
world at this moment that make investors sideline some of the ammunition for it
to come back quickly into the market.
So, that I
truly think that the moment China opens up and there is less strict lockdowns,
that there is going to be more confidence and money of that will come back.
Furthermore, for the numbers, specific numbers maybe, Kirt, you can add?
Kirt
Gardner
Yeah. Thank
you, Ralph. So, Kian, I would just add, apart from the transaction revenue just
related to client sentiment and also just recall that overall Asian markets, of
course, have performed poorly relative to other regions and we started to see,
of course, declines, particularly in China equities last year in the third
quarter with the launch of common prosperity. So, also we're seeing impacts on
recurring revenue and clearly that's going to continue depending on the
movements that we see going forward overall in Asian markets.
Regarding
the 1 billion in NII progression: in terms of the pattern of beta, it wouldn't
be surprising to you what we expect is betas overall – our beta overall will be
lower as we see the front end of the increases in interest rates. And as this
progresses, and we start to get into particularly 2023, we would expect our
beta to rise and we've obviously built that into the outlook around the 1
billion that we mentioned that we expect in the upcoming three quarters.
I would
also highlight, since it was part of your Asian question, clearly we will see
that benefit in Asia-Pacific, although as well that will be partly offset by
the fact that we've now seen deleveraging three quarters in a row. So, clearly
that impacts our lending revenue in APAC.
Kian
Abouhossein, JPMorgan
Thank you.
Operator
The next
question is from Andrew Coombs from Citi. Please go ahead.
Andrew
Coombs, Citigroup
Good
morning. Two questions. Just staying on the same themes, I guess. And also echo
the comments to Kirt as well all the best for the future. First question just
on Asia deleveraging. I know you talked about Asia investors still being a bit
in “wait-and-see” mode, but do you think the bulk of the deleveraging is now
done? Just in here would you expect Asia GWM to turn the Asian part of GWM to
turn back to loan growth?
And then
the second question on interest rate sensitivity. Previously you gave guidance
based on the NII uplift on the forward curves; forward curves obviously
continue to steepen. So, any additional commentary you can provide there based
on 2022 and also 2023 in terms of implications for net interest income? Thank
you.
Ralph
Hamers
Okay. And
maybe on deleveraging. So, what we see in deleveraging in Asia is basically
actively managing together with our clients the lending facilities that we have
in order to support our investments. So, how the market develops with the
development of the markets, you may either see maybe more leverage again coming
– or going forward or less leverage, it's more or less determined by the
markets and how we ensure that the loan to values in there – in our facilities
stay managed.
On top of
that, I do think that if you look at our strategy for growth for growth in
Asia, one of those initiatives called, you know, the Global Family and
Institutional Wealth approach is one that is certainly also focused on the real
higher-end of the wealth band, family offices in Asia. So, you could expect
some more leverage being extended in that segment, but in small steps, because
clearly, I think we should also make sure that we stay prudent in what we do.
So,
leverage is more driven by markets and our prudent risk management together
with our clients, and clearly – if the markets go back up, you could see the
leverage going back up as well. And on top of that, then the Global Family and
Institutional Wealth Initiative at over time will provide – is expected to
provide more leverage also into the Asian region. Kirt?
Kirt
Gardner
Yeah. Thank
you. Just one other comment related to lending APAC, I think as you know that's
the region where we have the highest leverage penetration. So, our Asian
clients do tend to like to use leverage as part of their investment strategy,
but also, you see actually therefore sharper deleveraging when they turn
negative, but you also see sharper pickup when they turn positive. And that's
the pattern we would expect to see going forward.
Now,
overall, on – in interest,– I'm not sure I got completely your question, but
just we guided the last quarter that we expected around 750: 700 actually
pertaining to GWM, 50 million into P&C. We indicated now that we're at just
around 1 billion. There's another roughly around 100 million in P&C. So,
you've also seen, of course, an increase in the P&C effects as forward
curves have moved on from when we last guided.
And also,
as we mentioned, this is based on static balance sheet. So, any movements you
might see in terms of balance sheet inflows or outflows, both of the lending
and the deposit side, of course, will have an impact overall on what we expect.
You
mentioned guidance around 2023. We haven't provided any. But I think just if
rates hold, obviously what you would expect is quarter-on-quarter as we get
into the first quarter next year and the second quarter, you should see
increases just because of the pattern of rates and what we expect to see
through the course of this year.
Andrew
Coombs, Citigroup
Very clear.
Thank you, guys.
Operator
The next
question is from Magdalena Stoklosa from Morgan Stanley. Please go ahead.
Magdalena
Stoklosa, Morgan Stanley
Thank you
very much, and good morning. I think, of course, before the questions, well,
Kirt, also from us well thank you very much for our partnership over the years
and for bearing with us, you know, at times and all the best of luck in
whatever the future brings.
I've got
two questions for you this morning. One is about the net new money because, of
course, I'm sorry, net new fee-generating assets. We've got a very strong
inflows this quarter. And I just wondered if you could give us a sense of kind
of what's driving the inflows? I assume they are kind of much more advisor led
from the perspective of the channel, you know, whether they're existing
accounts or new accounts. Could you just kind of give us a sense, you know,
where the – how the 19 billion got generated.
And my
second question I supposed is on the – going back to the NII. Because you've
given us the $1 billion guidance, and you kind of slightly avoided the topic of
the deposit betas and whether by any chance that number - or what would have to
happen for that number to be slightly higher, particularly when we look at your
kind of 100 basis points kind of parallel shift disclosure? Thanks very much.
Ralph
Hamers
Thank you,
Magda. Yeah. So, on the net new fee-generating assets, I think that's – actually
it's more or less existing clients where we do see a further demand for
mandates. So, you see that the large part of the net new fee-generating assets
is moving into the mandate business, which is what we advise. So, that's good.
If you look at the more geographic developments, we still saw positive net new
fee-generating assets in Asia-Pacific. But the largest growth continues to be
in the Americas there. And then maybe as to specific products, as we have
indicated, the alternative product is a very important product there. There's
still demand for sustainability with clients coming through as well. So, that's
– those are basically the flavors that do quite well at this moment in time.
Kirt
Gardner
Yeah. And
maybe I could add a couple comments. I think within that you saw the continued
momentum in SMAs. And there we do believe that we're certainly taking share
overall in SMAs since we – we implemented and executed that initiative. And
also, in terms of some of the patterns, like if you look at alternatives,
there's been movement into credit, as well as real estate, and as you might
expect, there's also been movement, more movement into fixed income versus
equities overall, if you look at the patterns of investment across mandates
funds in alternatives.
On the NII
side, I'm not exactly sure, you do mention our 100 basis points math that we
put out in our report. I would just highlight of course you've seen that number
come down and that'll continue to come down as interest rates go up, because
you do see a compression in the upside as we see higher interest rates. And so,
that should give you a little bit of an idea of incremental sensitivity if we
were to see interest rates increase, as there I think there's a couple of
factors, the higher the interest rates, the more of the time, of course, we
generally see higher betas, but also we also see our outflows from deposits and
movements into money markets and into other opportunities with at least some
level of interest.
Magdalena
Stoklosa, Morgan Stanley
Thanks very
much for that actually. Thank you. And then, can I just follow up on the – on
the alternative side, when you – when you see, because, of course, you've also
see – you've also kind of shown almost 8 billion of the commitments. How do you
assess your kind of capabilities, internal versus partnerships within your
broad alternatives business?
Ralph
Hamers
Yeah.
That's a good question. Clearly, we have our own capabilities as well within
asset management. We have O’Connor as you know, developing specific funds. We
have real estate capabilities and asset management as well, multi-asset
capabilities as well. But for more private equity-like businesses, we clearly
also look at external partners, that – like Magda – that's the whole concept of
the ecosystem, right? So, for us very important that the market sees that we
are the largest market for private money globally. And that we are very
attractive as an ecosystem for also third parties to come to and distribute
their products. And therefore, we're open. We're open to a third-party products
there as well. So, whoever has – whoever is a player that we can curate onto
the platform and have attractive opportunities for us to advise to our clients,
we do so. And on the private equity side, there is many steps to be taken there
also to join forces with actual parties.
Magdalena
Stoklosa, Morgan Stanley
Great.
Thank
you very much.
Operator
The next
question is from Stefan Stalmann from Autonomous Research. Please go ahead.
Stefan
Stalmann, Autonomous
Yes. Good
morning. And also from my side, Kirt, thank you very much for the help over the
years and all the best going forward.
I have two
questions, please. The first relates to Russia and Russian clients. I was
wondering if you could tell us how much of your invested assets actually relate
to Russian clients. I saw what you write on page 4 of the Q1 report, the 0.7%.
But I'm not sure if that captures all the Russian clients or only a subset.
And the
second question on the investment bank. So, $2.7 billion, almost $2.7 billion
of global markets revenue. It's obviously quite impressive. I was wondering if
you can give us a rough sense of how that was distributed month by month. In
particular, how much of it is actually come in March? And maybe also whether
the months-on-months spread during the first quarter this year was very
different from what it would have been typically in a normal first quarter.
Thank you very much.
Kirt
Gardner
Yeah. Yeah.
So, just maybe the Russian client question, so we did and you're right, Stefan.
I think there's a lot of confusion around scope of Russian clients when people
come out with disclosures. And so, we wanted to ensure that we were very, very
clear on how we derive this.
Firstly,
what we did is we took the total clients that are in scope of the European and
the Swiss ordinance regarding maximum overall deposit in outflows and inflows
of 100,000. We actually think that that is a very, very broad scope to start
with. And on that basis, we looked at the total invested assets that those
clients hold with us and that led to the 0.7%. And, of course, the conclusion
there, is well as the largest global wealth manager, naturally, we have a
Russian business, but you think about this in the context of our overall wealth
manager business, it is not significant at all. It doesn't impact at all our
ability to generate growth momentum and also to meet the targets that we've
laid out, what we see going forward.
Then turning
to the IB overall in the markets revenue, I would say that this quarter was a
bit unusual. Usually in a typical first quarter, seasonality would actually
drive January as substantially the best month of the quarter and often one of
our best months of the year and we saw some of that play in, but it was unusual
because we actually more broader geopolitical and market factors were in play
as we went throughout the quarter. And I would say we saw a pretty good even
distribution throughout the three months in terms of our overall generation of
markets revenue. And as we've highlighted, certainly equities, equities
derivatives in particular, along with rates and FX were what drove the very
good quarter that we had.
Stefan
Stalmann, Autonomous
Great.
Could I maybe just follow up on the Russian aspect, please? So, if I understand
you correctly, you're saying that the EEA and Swiss rules are very
all-encompassing. So, that would also include sanctions imposed by the US and
the UK?
Kirt
Gardner
Yeah. Absolutely,
it would include a far greater population than just where sanctions were
imposed. In fact, when you look at that population and we would identify within
that, there still are certain client segments that might be susceptible to
further sanctions. But also, there's a large part of that population where we
don't believe that there's any likely sanction exposure. So, it's a pretty
broad definition.
Stefan
Stalmann, Autonomous
Right.
Okay. Thank you.
Ralph
Hamers
So, it's a
small part of our total invested assets and we've been pretty conservative at
applying the definitions here. And the EU and the Swiss are the most strict in
their approach to this.
Kirt
Gardner
And we've
also been very proactive in how we've actually looked to reduce our overall business,
not just with clients already sanctioned, but also, we've looked at populations
that have higher risk. We've been proactive with those populations.
Stefan
Stalmann, Autonomous
Thank you
very much.
Operator
The next
question is from Jeremy Sigee from BNP Paribas. Please go ahead.
Jeremy
Sigee, Exane BNP Paribas
Morning.
Thank you and thanks and best wishes to Kirt from me as well.
Two
questions, please. One on capital. Thank you for slide 23 which is which is
very helpful. I just wanted to ask how some of those factors play forward. You
know you've obviously told us that there's more op risk coming. I just wondered
if you expect more RWA inflation in sort of the near term from some of the
other drivers for market risks or from credit risk modeling. I don't know how
your models work whether there's a lag effect and there's more inflations still
to come through. And I guess sort of wrapping that up as well, whether you're I
guess still comfortable with the 370 billion 2024 RWA guidance. So, any help on
that would be great.
And then my
second question is really just to raise more questions just on the timing of
flows. The net new money flows in the quarter, was that a fairly steady pace?
And I guess what I'm really asking is kind of the exit rate. You know, are we
in an environment where the kind of flow run rate continues, or are we in
something more subdued given the uncertainties in the world?
Kirt
Gardner
Yes. Thank
you, Jeremy. In terms of RWA, as we already guided on op risk, also for the
remainder of the year for the additional three quarters, we do expect further
increases that are known in terms of model changes that have been encouraged by
FINMA, shall we say. And we expect those to be around 8 billion for the
remainder of the year. Away from that, obviously it's going to be driven by
business volumes. If you look at the market risk, RWA increase we saw. So,
think of as a reg and stress VaR. Certainly, if market volatility subsides, we
would expect to see a reduction in that 3 billion that I referenced.
Now, I
wasn't sure about your 2024 question. But what we did, we updated our guidance
in the fourth quarter. So, perhaps you're referring to the impact of adopting
Basel III finalization of 20 billion. There's no effect there. That still would
be our estimate that 20 billion and still what we would expect, subject, of
course, very importantly to any FINMA discretion.
Jeremy
Sigee, Exane BNP Paribas
The 24
numbers, the combination of the strategy and the growth, we anticipated plus
Basel.
Kirt Gardner
Oh. Yeah.
Plus Basel . So we would still be in line with the guidance.
Ralph
Hamers
Yeah.
Exactly. No change there.
Kirt
Gardner
There's no
change there.
Ralph
Hamers
No change
there. Yeah.
Jeremy
Sigee, Exane BNP Paribas
So the 370
million is fine. That is what really what I was asking. Yeah.
Ralph
Hamers
Yes.
Kirt
Gardner
Oh. And
then your second question on flows actually the overall net new fee-generating
asset flows up in the three months where we're pretty well equally distributed.
And so we continued to see good positive flows in March.
Jeremy
Sigee, Exane BNP Paribas
Okay. Thank
you for that.
Operator
The next
question is from Amit Goel from Barclays. Please go ahead.
Amit Goel,
Barclays
Hi. Thank
you. And also [indiscernible] and thanks for the help you provided and good
luck for the future.
So two
questions. One, a further follow-up on the Russia, the other on lending.
On Russia,
I just wanted to get a sense on the 100 million kind of firmwide, you know,
impact just how to think about that in terms of what drives that? And I guess I
know it seems like about 5 billion is reclassification of fee generating assets
relating to Russia but just trying to get a sense of how to think about that
going forwards?
And then
secondly, with regards to the lending, I'm also just curious in terms of the
lending margins. So what you're seeing there and whether the margins have been
stable or steady or whether there has been a little bit of contraction in
particular in APAC with the declining volumes? Thank you.
Kirt
Gardner
Yes, Amit.
Thank you. So the 100 million there - and this is a little bit of a line which
you see with the 0.6 billion and the 0.4 billion - the 100 million overall is
mostly related to derivate and settlements that were impacted and interfered
with, from the sanctions and where we have either taken wind down costs or we
taken the provisions in terms of remaining exposures or receivables we might
have, for example, with our nostro banks. There's a very small portion of that
that was CLE related and therefore the vast majority is in the IB.
I think, in
terms of the net new fee-generating assets, what we mentioned is our – that the
19.4 billion excludes some outflow that we saw with Russian clients as a
consequence of the sanctions. We haven't mentioned what that number is, but you
could just – just to ensure that you're aware that there was some adjustments
and we can't say what that impact might be going forward. It's a bit unknown.
It really just depends on, of course, the direction of any future new sanctions
that we might see.
Now,
regarding lending margins, our margins overall and in our wealth management
business have held up reasonably well. And I think what you see in Asia Pacific
with the de-leveraging, there's really not – there's not any pressure on
margins just because of the supply-demand dynamics. Now, there is an exception.
We are seeing pressure on mortgage margins in Switzerland, and particularly
from the cantonal banks where there is – there's an awful lot of pressure to continue
to lend and get exposure, particularly to long-duration interest rates, given
the fact that deposits have grown quite a bit. So, that is an area that we're
monitoring closely. And you've seen us in the past, we will actually give up
market share and volume in favor of margin. And so, we'll continue to manage
that in a responsible way but that is a scenario we're watching closely.
Ralph
Hamers
The
pressure in Switzerland, which is the new production pressure, it is not
tainting our book, the margin in the book. So, from a revenue projection
perspective, it is not meaningful.
Kirt
Gardner
Yeah,
absolutely. And didn’t affect the first quarter.
Amit Goel,
Barclays
Got it.
Thank you. Just to check, on the kind of Russian-related outflow, the derivation
I get was just the 68 billion AUM change, the 19.4 net new money and the 82.3
billion other reduction which is how I got that net. So, is there potentially
other changes as well?
Kirt
Gardner
Yeah. So, I
think in addition to that, you also have – you have market moves, you have
foreign currency translation which also was adverse during the quarter, and
then you had the net new fee-generating assets. And away from that, there's
also a net new money impact which you could assume was greater than net new
fee-generating. So, you have to factor that in as well. And then, you have the
reclass.
Amit Goel,
Barclays
Okay. Thank
you.
Operator
The next
question is from Adam Terelak from Mediobanca. Please go ahead.
Adam
Terelak, Mediobanca
Morning.
Thanks for the questions and all the best to Kirt.
I will sort
of return to NII. On the guidance of 1 billion, I just want to make sure we've
got apples with apples here because in the full-year guide, I think you were
talking about some balance sheet impacts, clearly, I think FX has reduced the
loan book. So, are we saying that sensitivities probably or the delta on
sensitivity to rate is probably slightly higher than the difference between the
two numbers given – and the balance sheet slightly smaller and actually adjust
for that. And then on top of that 1 billion, do we then have to layer through
any additional balance sheet growth? So, it stacked together Q1 balance sheet.
And then on
the other side of that on deposits and the cost of deposits. I heard you saying
on deposit re-pricing and the pass-through. Is there a threat now or has the
threat from terming out and clients moving to term deposits increased given the
sudden move with having rates clearly one year dollar rate were up about 2%? I think
that's the level when in previous cycles we saw a bit of terming out holding
back NII sensitivity. So, could you talk to rather than the pass through that
you can control, whether clients are thinking about shifting to term and
whether that can slant the NII development not this quarter, but in the next
few quarters? Thank you.
Kirt
Gardner
Yeah. So,
maybe just to restate what the 1 billion is. And this is exactly consistent
with how we always guide. We basically take the forwards as close to our disclosures
as possible. Then we take the balance sheet as of the end of the quarter. And
we did the same when we mentioned the 750 million around fourth quarter. And we
apply the forwards. And so – and within that, of course, we determine our view
on beta and what we expect. And we apply the math. But you're exactly right. It
does not include any effect, positive or negative, of any flow generation over
the remainder of the year. And as I said, that's apples to apples to compare
the 750 million that we guided at the end, of 750 million. And it is for 2Q
through 4Q. So, it's for the remainder of the year. And naturally there was
some positive impact that we saw in the first quarter, it's roughly around 170
million, and as we said before, we expect of course the impact to continue to
increase fairly significantly quarter for quarter, hence the 15% guidance
quarter-on-quarter in the second quarter, and then you can expect to see a
larger impacts as we go third and fourth quarter.
Now, in
terms of deposit repricing, you're exactly right in terms of the dynamics. And
as we manage our overall book and of course, noting that versus a very large
consumer franchise, our clients do tend to be more rate sensitive. And so,
therefore, we manage that accordingly. So, we – we of course, have current
accounts, but we also have savings accounts. And the savings accounts for us
are stable source of funding. We want to make sure that we price that in a way
that we manage that funding source. And as well, we will look at clients as
they think about terming out, and we will think about CD and term deposit
programs accordingly. And also, as I mentioned, there was some outflows into
money markets and we would expect that to continue as well.
Adam
Terelak, Mediobanca
And in
terms of the assumption on terming out, is that similar to previous cycles or,
any kind of comment on the speed we might see that this time around?
Kirt
Gardner
Well, I
would just say, as – as the – the interest rate increase has steepened,
obviously, the – you would expect to see clients more prone to look into
term-out, and we would – we would adjust our modeling accordingly.
Adam
Terelak, Mediobanca
Right.
Thank you.
Operator
The next
question is Anke Reingen from RBC. Please go ahead.
Anke
Reingen, RBC
Hi. Thank
you very much for taking my question, and as well, thank you, Kirt, and all the
best.
Two
questions, please. The first is a follow-up question on capital, the 10-bps hit
you saw in Q1 for – in the OCI, should we expect, I mean, corresponding to your
NII guidance, a further hit to capital in Q2 based on the current forward
curve?
And then
secondly, on the fee-generating asset margin that hold up quite well and into
Q1 versus Q4, and I just wanted to understand ex-NII moves, should we expect
some more margin pressure I guess when you talk about shifts into more fixed
income versus equities, or do you think that trend underlying this has got
pressure given also the strong flows in SMA? Thank you very much.
Kirt
Gardner
Yes. In
terms of the capital impact, so where that's derived from, it's high-quality
liquid assets by and large that we're holding in the US, in our banking
subsidiary. It's around 9 billion and it's a mix of treasuries and
mortgage-backed securities and it gets – it impacts capital to the extent that
we have life-to-date overall losses that flow through CET1. Having said that,
if we were to reduce that portfolio or we saw interest rates reverse, we
actually would see that impact also reversed.
So, going
forward, we continue to be exposed to interest rate increases. So, if we saw
further moves in the curve, and this is mostly longer dated curves. Just
because of the structure, our weighted average maturities is around five years.
And just to note as well that the average overall rating of those assets are at
the upper end of AA. So, they're very, very high quality.
Now, in
terms of fee-generating assets and margins overall, I think as you observed,
you have seen some stability in that margin over the last couple of quarters.
But just to note that going forward, that margin is going to continue to be
impacted by overall mix of products and investments that we placed with our
clients as well as the trends that we've talked about before in terms of any
further move into more ultra mix versus high net worth. And then, we have our
SMA initiative which has also had an impact on margin.
But
importantly, we don't manage the business for margin. We manage the business
for PBT growth. So, for us, what's critical is we continue to see very positive
run rate momentum from all the net new fee-generating asset inflows that we
see.
Anke
Reingen, RBC
Okay. Thank
you.
Operator
The next
question is from Flora Bocahut from Jefferies. Please go ahead.
Flora
Bocahut, Jefferies
Yes. Thank
you. Good morning. First of all, all the best, of course, to Kirt for the
future from my side as well.
Two
questions I wanted to ask you. The first is regarding the RWA move that we saw
this quarter, so going back to capital here. The slide you provided at the end
of the presentation is very useful. I just wanted to get back to the 7.7
billion dollar increase in RWA this quarter from the asset side and other
movements. This is obviously a lot more than what we normally see. So, I just
wanted, you know, to see if you could elaborate on this. What's in the driver?
Is it mainly business growth? And how much of this do you think could be
reversed in the coming quarters, say, if volatility would reduce in markets,
for example?
The second
question is regarding the client behavior excluding APAC, so really focusing
here on the US and Europe, what you saw in April, whatever you can tell us,
whether you are seeing also some kind of slowdown in the willingness of your US
and European customers to invest, to borrow but I mean post-Q1 so in the month
that just finished if that’s possible? Thank you.
Ralph
Hamers
Maybe I can
start with the last one, Flora, which is it's really hard to comment on a month
that we're still running, honestly.
So, let's
not get ahead of ourselves because that would only be kind of two and a half
weeks or three weeks in a month, which you can't extrapolate anyway. So, I
don't think there is a lot of value in commenting on what we have seen in the
last two or three weeks.
I think the
most important thing here is what we see and what we can indicate to you is
that our most recent checks in terms of investor sentiment globally has not
really changed from a quarter ago. It's a mix of positivism of coming out of
the COVID situation, combined with, you know, the cautiousness around
inflation, news this year around the war and that is basically muting the
investor demand specifically. But that is not different from the numbers that
we saw at the end of the fourth quarter.
And that is
basically those are the recent numbers that we have where we see actually in
all regions, including Asia, by the way, similar sentiments around our clients
and investors. So similar from a quarter ago in terms of the balance between
being optimistic or neutral or pessimistic, we haven't seen that. Only
Switzerland is a little bit more pessimistic around the sentiment, but globally
it's the same numbers like a quarter ago.
Kirt
Gardner
Yeah. And
in terms of the RWA question, there's – there's a combination of factors that I
already highlighted. It is partly due to increase lending that we were doing
during the quarter. Obviously, all of that is positive for us and consistent
with our strategy, and also consistent with our plan, when we reference where
we expect to be by 2024.
And in
addition to that, that there was also an increase due to derivatives
activities. So, when you reflect on our markets revenue and the fact that we
were up and, a lot of that increased was from our equities derivatives, our FX
derivatives in our rates derivatives businesses, all of that resulted in higher
overall asset levels that correspond, of course, with the very good performance
we saw from the deployment of those assets.
Then
there's a bit there related to model updates which we highlighted of 1.6
billion, and we referenced that we expect some more of that going forward. As
to the increases or the reductions going forward, a lot of that will depend on
the business environment, and also the continued execution of our strategy.
Flora
Bocahut, Jefferies
Okay. Very
useful. Thank you.
Operator
The next
question is from Nicolas Payen from Kepler Cheuvreux. Please go ahead.
Nicolas
Payen, Kepler Cheuvreux
Yes. Good
morning. Thanks for taking my question. And Kirt, thank you very much and good
luck for the future.
I have two
questions. First – the first one is just in follow-up on Russia, and just I
wanted to make sure I understood that well, that the 100 million impact for the
P&L was for Q1. And if that was the case, do you expect further impacts for
the rest of the year?
And the
second question would be on the payout and capital distribution, as you said,
you reached 100% payout ratio for the quarter. And I wanted to ask if it is
something that we should get in mind for the rest of the year? And in parallel
to that, could we expect you to increase the share buyback above 5 billion at
some point if the capital development is positive or earnings development is
positive or is it a hard ceiling? Thank you very much.
Ralph
Hamers
Nicolas, on
the first one, nobody knows how the world will develop. But what we can say is
that when we managed this situation in the beginning, and we were pretty early
in de-risking even before the war actually started, clearly the risk calls are
generally coming from, as Kirt has already indicated, some counterparty risk as
well as some failed settlements basically or blocked settlements or frozen
settlements, whatever you want to call it because counterparties can perform
money-wise but sanctions forbid us to collect the money or then to pay the
money.
And that's
where we have taken a view as to how to provision for that. And this is
basically in a period in which we did a lot of de-risking. A lot of de-risking.
And as you've also seen that the direct risk exposure to Russia has decreased
to 400 million which basically now constitutes of a bit of nostro, some
counterparty, but a lot of trade exposure which is basically exposure that will
self-liquidate with trades being performing.
Again,
nobody knows where the world is going, but I think – and you should expect from
us – that we have prudently taken a look at what is the provision or the risk
cost that we should take for the quarter on the total.
Kirt
Gardner
Yes. And
Nicolas, in terms of a payout, so we'll just go back and as you know, we don't
guide on payout. So, what we've indicated is progressive cash dividend. You saw
when we highlighted the 400 million in the first quarter. We also indicated
we're going to repurchase, we said before, “up to”; now, we said, “around” 5
billion, and so that is stronger, more confident language. And so, when you
look at the remainder of the year, you can assume that we're going to stick
with a progressive dividend and that we're going to follow through on
repurchasing up to [edit: around] 5 billion. And then, the payout ratio
will be what it will be.
Nicolas
Payen, Kepler Cheuvreux
Thank you
very much.
A
Thank you.
Operator
The next
question is from Andrew Lim from Société Générale. Please go ahead.
Andrew Lim,
Société Générale
Hi. Good
morning. Thanks for taking my questions. So, I've got two questions. Firstly on
GWM, if we look regionally, the US sticks out a bit in terms of having strong
revenues like some of the other regions except for Asia. But also, for the US,
more than offset by cost inflation. So, I guess, we're seeing pretax profit
fall. And I'm wondering there whether that's symptomatic of structural
inflation that we're seeing in the US or whether there's more of a one-off
element to that.
And then
secondly, on litigation, I know you can't talk about this in too much detail,
but I was wondering if you could confirm or not whether US regulators have made
inquiries to yourself about your block trading activities.
And then
finally, best wishes from myself, Kirt, and good luck for the future.
Kirt
Gardner
Yeah. So,
in terms of the Americas and GWM, so what happened in the quarter, as you said,
we have 6% top line growth, but then, also we highlighted the fact that we also
had a litigation, of course increase year-on-year, plus we have FA comp
increase year-on-year. And also, I would note, that last year in the first
quarter, we had a one-time overall compensation effect that caused for lower
levels of variable compensation. So, all of that went into the increase in
costs. So, it's not something that we would certainly expect going forward,
except for obviously, FA comp - FA comp will depend on compensable revenue.
But having
said that, also, I would note that if you think about increases in NII, in
general, our payout ratio on NII is far lower than other revenue sources, so
that should be positive and accretive to pre-tax margin.
Ralph
Hamers
Yeah. And
on the last question, as you can well understand, we never actually comment on
our interactions with authorities or regulators. So, also, in this case, we
won't do that, Andrew. Thank you.
Andrew Lim,
Société Générale
Okay.
That's great. Thanks.
Ralph
Hamers
Okay, good.
Hey, thanks, that gets us to, to the end of the session. As you know, our
Investor Relations team is always ready to pick up the phone and answer further
questions that you may have while diving into the numbers.
At this
moment, I just want to conclude by saying that, you know, focusing on
delivering our strategy, staying close to your clients, managing risk
adequately led to a very strong quarter for us. A strong quarter in terms of
continuous commercial momentum with clients, strong quarter in terms of
P&L also a quarter in which we feel that, you know, the share buyback is
showing confidence in terms of our capital position as well. And with that, I
would maybe reiterate my thanks to Kirt.
Thanks a
lot, Kirt, for all you've done and let's close the call. Thank you.
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developments, and 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
changes in UBS’s credit spreads and ratings, as well as availability and cost
of funding to meet requirements for debt eligible for total loss-absorbing
capacity (TLAC); (vi) changes in central bank policies or the implementation of
financial legislation and regulation in Switzerland, the US, the UK, the
European Union 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
Group in response to legal and regulatory requirements, or other external
developments; (viii) UBS’s ability to maintain and improve its systems and
controls for complying with sanctions 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, as well as the
amount of capital available for return to shareholders; (xiii) the effects on
UBS’s cross-border banking business of sanctions, tax or regulatory
developments and of possible changes in UBS’s policies and practices relating
to this business; (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 nation states and while COVID-19 control measures require large
portions of the staff of both UBS and its service providers to work remotely;
(xix) restrictions on the ability of UBS Group 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 to achieve goals relating to climate, environmental
and social matters, as well as the evolving nature of underlying science and
industry and governmental standards; and (xxii) the effect that these or other
factors or unanticipated events 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 UBS’s Annual Report on Form 20-F for the year ended
31 December 2021. 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
Date: April 26, 2022
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