UBS AG Earnings Call Nuggets: Dividends Outlook and Wealth Management
Huw van Steenis – Morgan Stanley: Thanks for an extremely helpful presentation. Can I just get back to question on dividend? I think you’ve done such a good job running off the Non-Core/Legacy assets, you’re talking about a potential for increasing dividend in ’14. Is there any sort of (book ends) you could give around that comment? Number two, in terms of the rundown of the StabFund, would you expect that by Christmas or beyond there’ll be a much bigger reduction in RWAs, so that you achieve – have a much lower balance (than anybody) end of 2014 or 2015.
Sergio P. Ermotti – Group CEO: On dividend, I think that we are consistent with what we announced before. I think we will not really change our dividend policy until we reach our 13% target, which is (irrespective to our pending) 2014. For the time being, we will continue with a progressive dividend policy and we’ll assess exactly how to implement that policy at year-end once we know exactly how we end up. Tom, maybe you can take…
Tom Naratil – Group CFO: Sure. Huw, on the rundown, at this point in time we expect the RWA option exercise would be CHF3 billion to CHF7 billion, upon exercise when securities moved into the Bank’s portfolio, that will move right into our legacy portfolio Group and I think, as you’ve seen, they’ve demonstrated quite an expertise in reducing RWAs relatively quickly.
Huw van Steenis – Morgan Stanley: There is no further litigation or other issues which might make it a slightly more stubborn set of assets to clear, you – we should just amortize it over a relatively swift period of time?
Tom Naratil – Group CFO: There is nothing particularly unique about those assets.
Jon Peace – Nomura: I had a question about gross margins in Wealth Management, I apologize I just missed the start of the call, but some of your peers have been quite optimistic about the direction of travelers transaction related income in particular, I just wondered how you saw the gross margin developing absence an interest rate rise?
Tom Naratil – Group CFO: So, Jon, on gross margin, first, I think in order to get a really good picture across the industry, I think these data quarter-to-quarter is a little volatile to the way different firms treat different revenue lines. So, I think looking back half on half, year-on-year is probably the best way to look at those comparisons. One of the things that we’ve noted in our client flows is the big volatility month-to-month in gross margin and we saw similar volatility in this quarter to what we saw last quarter. We had a month where we were just at the very bottom or just under the very bottom of our target range of 95 to 105 basis points. We had double-digit high to lows in terms of the gross margin during the quarter and we finished the quarter at 88 basis points below the average. I think anyone that has or think they have very good visibility on gross margin, I think that’s good for them. We just don’t see that. I also think it’s important to think about cash. During our quarter, our cash balances and our Wealth Management business went up. In our investor survey and Wealth Management Americas, our clients have sighted roughly stable to a touch higher cash balances and great comfort with those cash balances despite being a bit more optimistic about both the economy and the equity market. So we continue to be cautious at our outlook and think that gross margin will remain a little tricky here.
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