UBS Executive Earnings Insights: Deleveraging, Private and Investment Bank Guidance

On Wednesday, UBS AG (NYSE:UBS) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.


Huw van Steenis – Morgan Stanley: Congratulations on your results. Just a quick question on your deleveraging. Two (down effects). First, I was wondering what opportunity there is to pay an early dividend, and how you’re thinking about accruing your dividend for this year or (relative) to the future years? Then secondly, as you reflect on the current market opportunity and your business plan, do you think you want to go even further in reducing risk-weighted assets in the future, and how would you think about making that position?

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Sergio P. Ermotti – Group CEO: Thank you, Huw. I will split your question in two parts. In terms of our plan in risk-weighted assets reductions, I think that’s – as you know, these processes are quite lumpy, not predictable, we are very confident that we can achieve our targets. We will use any opportunity to accelerate our plans. We are in negotiations on different fronts but at the end of the day, we will use the luxury of our very strong start in position to get the best out of this negotiation for our shareholders, in respect of the outcome for about dividend accruals and the rest, I’ll pass it to Tom.

Tom Naratil – Group CFO: Okay, thanks Sergio. On the dividend we did accrue for a dividend this quarter. However, our thoughts on what that should be really depend on how our results look over the course of the remainder of this year. We won’t make – management won’t make the recommendation to the Board until after the year is complete, and at this point, I’d prefer not to speculate.

Private and Investment Bank Guidance

Jon Peace – Nomura: Three quick questions please. Firstly, on the private bank with the indication that the gross margin in March was 96 basis points that you might be already in that 95 to 105 range on a sustainable basis. So, do we really need to see improved market to (as you said) to stay in that range? The second question is just in the Investment Bank, was there any significant revenue loss associated with your sharp risk weighted asset reduction and how is that informed you thinking about what revenues might be lost through to the target of 2013, as you continue to reduce risk weighted assets? Finally, just a technical one. On the part of three roll forward on Slide 25, I just wondered if you could explain to me Note 1, where you talk about the impact of IAS 19R.

Sergio P. Ermotti – Group CEO: Yes, I will take the first one and Tom will take number two and three. When you look at basically March performance was within the range I think the year start is lower, very low, I think the level of cash with our clients is very high. In addition to that they are not really using leverage at this point to the extent that we saw in the past. So we are making – we are advising clients, we are very close to clients in terms of creating the foundation, when market conditions get better to get the return of those investments, but I think that this quarter and due to next foreseeable, for the next foreseeable time is difficult to talk about the range without taking in consideration that we see those ranges as indication. We maybe – we’ll be outside on the low-end or on the high-end depending on market condition. The visibility we have right now, is not really ideal. But we are confident that we are creating the foundation to be in the range in the foreseeable future.

Tom Naratil – Group CFO: John, on your question about the footnote 1 on Slide 25. What it says is that it does not take into account any effects of IAS 19R, because IAS 19R is not effective yet and we’re not showing you a simulation going forward. We’re showing you our current ratios. We’ll likely review simulations as we began our annual business planning process, which begins in the summer. John, on your question there. De minimis losses on reducing the risk positions in the Investment Bank, we have previously given guidance of CHF500 million in lost revenue at Investor Day based on the restructuring of the businesses and we wouldn’t change that guidance.