UBS Group (UBS) Q3 2016 Earnings Call

posted in: Earnings, Earnings Call, Notes | 0

Sergio Ermotti – Group CEO

New money is flowing in

“Net new money was positive in all regions except emerging markets where it was almost flat, and we remain disciplined with respect to attracting assets that are expected to drive long-term profitability. Year to date, we have attracted nearly CHF50 billion of net new money despite ongoing cross-border outflows and client deleveraging in wealth management.”

Reducing the level of risk

“Profits in the investment bank declined year-on-year, mainly as a result of lower client activity and our business and geographic mix, which is more skewed towards Europe and APAC than US. Consistent with our strategy we did not increase the level of risk or resource deployment to offset the difficult environment. In fact, we reduced the leverage ratio denominator by CHF 21 billion.”

Significant headwinds ahead call for caution

“Given headwinds such as subdued market conditions, negative interest rates, elevated litigation expenses and that we are still awaiting finalization of Basel III, also known as Basel IV, visibility is still limited and our outlook remains prudently cautious.”

Declining transaction revenues

“Transaction revenues decreased to the lowest level we’ve seen since 2008, reflecting clients’ reaction to the continued uncertain environment and seasonality factors.”

Kirt Gardner – Group CFO

Declining transaction revenues

“Transaction revenues decreased to the lowest level we’ve seen since 2008, reflecting clients’ reaction to the continued uncertain environment and seasonality factors.”

…with widening spreads

“…general market conditions have resulted in widening spreads for banks since 2014. In combination, all of these factors will increase the annual run rate of our funding cost by several hundred million..”