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Ralph Hamers, UBS's CEO said:
"Our strong 2020 results clearly demonstrate the true strength
of our franchise and the commitment of our employees. It was a
challenging year for our clients, for our colleagues, and for our
communities alike, which makes these results even more
gratifying.
We stood for stability, maintained connectivity, and provided
the advice and solutions our clients needed. And, in turn, they
entrusted us with their business -- with over a hundred billion
dollars in net new money. Additionally, invested assets across
asset and wealth management reached record levels, now at 4.1
trillion dollars, Group revenues were up 12%, and we generated a
strong return on CET1 capital at 17.6%. We met or exceeded every
single one of our growth and returns targets.
As significant to me, though, is that every single business
division and region played a role in this success. Global Wealth
Management and Asset Management recorded double-digit profit before
tax growth, while the Investment Bank achieved a 20% return on
attributed equity. Regionally, profit before tax in the Americas
and Asia Pacific increased by over 1 billion each. Our universal
bank in Switzerland benefited from a resilient economy, supported
by effective government-backed lending programs in partnership with
the banks. It is this broad-based strength that has allowed us to
stand by our clients, our team and those in need throughout the
pandemic.
We worked across the firm to deliver the best of UBS to our
clients and grow our leadership in specific areas like
sustainability. In 2020, we became the first major global financial
institution to recommend sustainable over traditional investments
for Global Wealth Management clients and rolled out Climate Aware
strategies across additional asset classes in Asset Management.
All this said, there is one thing I know we can count on: change
is constant and we need to stay flexible and make UBS even more fit
for the future. Many of the things that attracted me to UBS -- the
client franchise, strong brand, clear focus on being the world's
leading wealth manager complemented by focused investment bank and
asset management businesses, just to name a few -- are the
strengths we'll build on as we focus our efforts on defining our
strategic priorities to unlock our full potential."
2020 financial performance -- selected highlights
Group
Return on CET1 capital 17.6% Target: 12--15%
Return on tangible equity 12.9%
Cost/income ratio 73.0% Target: 75--78%
Net profit attributable to
shareholders USD 6.6bn
Diluted earnings per share USD 1.79
CET1 capital ratio 13.8% Guidance: 13%
CET1 leverage ratio 3.85% Guidance: >3.7%
Tangible book value per share USD 14.93
Global Wealth Management
Profit before tax USD 4.1bn
Target: 10--15% over the
PBT growth 20.4% cycle
Invested assets USD 3.0trn
Personal & Corporate Banking
Profit before tax CHF 1.2bn
Return on attributed equity
(CHF) 14.1%
Net new business volume growth
for Personal Banking (CHF) 6.9%
Asset Management
Profit before tax USD 1.5bn
Invested assets USD 1.1trn
Investment Bank
Profit before tax USD 2.5bn
Return on attributed equity 19.7%
RWA and LRD vs. Group 33% / 30% Guidance: up to 1/3
Capital returns to shareholders
The second tranche of the 2019 dividend (USD 0.365 per share)
was paid on 27 November 2020 following shareholder approval at an
extraordinary general meeting on 19 November 2020.
For 2020, the Board of Directors intends to propose a dividend
to UBS Group AG shareholders of USD 0.37 per share. Subject to
approval by shareholders at the Annual General Meeting scheduled
for 8 April 2021, the dividend will be paid on 15 April 2021 to
shareholders of record on 14 April 2021. The ex-dividend date will
be 13 April 2021.
The balance between cash dividends and share repurchases has
been adjusted from 2020 onward, with a greater weight toward share
repurchases as compared with prior years' returns. We remain
committed to returning excess capital to our shareholders and
delivering total capital returns consistent with our previous
levels.
Before COVID-related restrictions on share repurchases were
introduced, we repurchased CHF 350 million (USD 364 million) of our
shares in the first quarter of 2020. During the fourth quarter of
2020, we also increased our capital reserve for future share
repurchases from USD 1.5 billion to USD 2.0 billion. We will resume
repurchasing shares shortly after the publication of our fourth
quarter 2020 report.
In the first quarter of 2021, we intend to repurchase the
remaining CHF 100 million of the existing three-year share
repurchase program, while launching a new three-year program of up
to CHF 4 billion, of which up to USD 1 billion is to be executed in
the first quarter of 2021.
Outlook
Investor sentiment improved in the fourth quarter of 2020,
largely on the basis of the strong rebound in economic activity
seen through the third quarter, combined with greater optimism
regarding the availability and effective distribution of COVID-19
vaccines, as well as continued fiscal and monetary stimulus that
contributed to generally more positive views on the timing and
extent of a sustainable economic recovery.
However, recent developments, including economic and political
situations in some large economies and geopolitical tensions, have
again raised questions around the shape and pace of the recovery.
The growing numbers of COVID-19 infections and hospitalizations as
well as lockdowns and similar measures imposed to control the
pandemic add to existing concerns about the shape of the overall
recovery and the severity and duration of the effects of the
pandemic in certain economic sectors.
In these uncertain times, our clients particularly value expert
guidance and we remain focused on supporting them with advice and
solutions. We expect our revenues in the first quarter of 2021 to
be positively influenced by seasonal factors such as higher client
activity, compared with the fourth quarter of 2020. Higher asset
prices should have a positive effect on recurring fee income in our
asset gathering businesses. However, the continued uncertainty in
the environment could affect both asset prices and client activity.
While supporting market sentiment, low and persistently negative
interest rates and expectations of continuing easy monetary policy
will remain headwinds to net interest income sequentially.
With its balance sheet for all seasons and its diversified
business model, UBS (NYSE:UBS) (SWX:UBSN) remains well positioned
to drive sustainable long-term value for our clients and
shareholders.
Fourth quarter 2020 performance overview
Group PBT USD 2,057m, +122% YoY
Group PBT was USD 2,057m (up 122% YoY), including net credit
loss expenses of USD 66m. The cost/income ratio was 74.1%, a 12.7
percentage point improvement YoY, as income (before credit loss
expense) increased by 16% and total operating expenses decreased by
1%. Net profit attributable to shareholders was USD 1,708m (up 137%
YoY), with diluted earnings per share of USD 0.46. Return on CET1
capital(2) was 17.5%.
Global Wealth Management (GWM) PBT USD 936m, +22% YoY
GWM delivered PBT growth in all regions. Recurring net fee
income increased 5%, reflecting higher average invested assets,
partly offset by lower margins. Net interest income rose by 2%, as
higher revenues from lending more than offset the ongoing pressure
from lower USD interest rates on deposits. Transaction-based income
decreased 2%, with the increase from continued high client activity
more than offset by a USD 75m fee paid by P&C in 4Q19 related
to a shift of business. Net credit loss releases were USD 7m. The
cost/income ratio improved to 78.2%, down 3.1 percentage points
YoY, as income increased by 3% and operating expenses reduced by
1%. Loans grew by 6% QoQ to USD 213bn, with over USD 8bn of net new
loans. Invested assets rose to an all-time high of USD 3,016bn, up
10% sequentially. Net new money was USD 21.1bn, supported by
inflows in all regions.
Personal & Corporate Banking (P&C) PBT CHF 318m, +4%
YoY
The main driver of the 3% YoY increase in operating income was
higher transaction-based income, primarily as a result of a CHF 73m
fee booked in 4Q19 for a shift of business from GWM. Excluding this
fee in the prior year, lower credit card fees and revenues from
foreign exchange transactions were the main driver of a decrease in
transaction-based income, reflecting the effects of the COVID-19
pandemic on travel and leisure spending by clients. Lower deposit
revenues related to the ongoing low interest rate environment
mainly drove the 8% decrease in net interest income. Recurring net
fee income rose 8%. Net credit loss releases were CHF 20m. The
cost/income ratio was 66.0%, an increase of 0.7 percentage points
YoY, as income increased by 2% and operating expenses increased by
3%. Net new business volume growth for Personal Banking was
4.8%.
Asset Management (AM) PBT USD 401m, +123% YoY
Operating income increased by 40% YoY with 167% higher
performance fees, while net management fees rose 14%. The increase
in performance fees was mainly driven by increases in our Hedge
Fund Businesses, reflecting both strong investment performance in a
constructive market environment and annual performance fee
recognition for certain products. The cost/income ratio was 48.1%,
a 19.2 percentage point improvement YoY, with 40% income growth and
flat operating expenses (up USD 1m). Invested assets increased 11%
QoQ to USD 1,092bn, above the USD 1trn mark for the first time. Net
new money was USD 22.2bn (USD 38.0bn excluding money market
flows).
Investment Bank (IB) PBT USD 529m, compared with USD (22)m in
4Q19
Nearly all businesses delivered a double-digit increase in
revenues YoY. Global Markets revenue increased by 21% or USD 248m,
primarily driven by higher client activity levels, particularly
across equity derivatives, cash equities and credit product lines.
Global Banking was up 33% or USD 167m, with a significant increase
in Equity Capital Markets and Advisory. Credit loss expenses were
USD 91m. The cost/income ratio was 70.5%, an improvement from over
100% in 4Q19, as income grew by 25% and operating expenses
decreased by 13%. Expenses in the prior-year quarter included USD
110m of restructuring expenses and a USD 110m impairment of
goodwill, without which, operating expenses would have been flat
YoY (down USD 1m). Annualized return on attributed equity was
16.8%.
Group Functions PBT USD (161)m, compared with USD (306)m in
4Q19
Full year 2020 performance overview
Group PBT USD 8,226m, +47% YoY
Group PBT was USD 8,226m (up 47% YoY), including net credit loss
expenses of USD 694m. The cost/income ratio was 73.0%, a 7.4
percentage point improvement YoY, as income (before credit loss
expense) increased by 14% and total operating expenses increased by
4%. Net profit attributable to shareholders was USD 6,629m (up 54%
YoY), with diluted earnings per share of USD 1.79. Return on CET1
capital(2) was 17.6%.
Global Wealth Management (GWM) PBT USD 4,091m, +20% YoY
GWM delivered PBT growth in all regions. Operating income grew
by 4% on high levels of client engagement throughout the year and
greater market volatility that led to a 17% improvement in
transaction-based income. Net interest income increased by 2%, as
higher revenues from lending more than offset pressure from lower
USD interest rates. Recurring net fee income increased 1%, with
shifts in invested assets into lower-margin funds and advisory
mandates offsetting the effect from higher average invested assets.
Credit loss expenses were USD 88m. The cost/income ratio improved
to 75.6%, down 3.5 percentage points YoY, as income increased by 5%
and operating expenses were flat. Loans grew by 19% YoY to USD
213bn, with USD 26bn of net new loans and growth in all regions.
Invested assets rose to an all-time high of USD 3,016bn, up 14%
YoY. Net new money was USD 43.3bn, mainly from APAC and EMEA.
Personal & Corporate Banking (P&C) PBT CHF 1,175m, (18%)
YoY
The main driver of the reduction in PBT was CHF 243m of credit
loss expenses. Stage 3 credit loss expenses were CHF 120m,
including expenses of CHF 54m related to a case of fraud at a
commodity trade finance counterparty. Continued headwinds from
persistenly low and negative interest rates led to a 3% YoY
reduction in net interest income. Lower credit card fees and
revenues from foreign exchange transactions were the main driver of
a decrease in transaction-based income, reflecting the effects of
the COVID-19 pandemic on travel and leisure spending by clients.
Recurring net fee income increased by 7%, largely reflecting
increased custody and mandate revenues due to higher client asset
levels. The cost/income ratio was 61.2%, a 0.3 percentage point
increase YoY, as income reduced by 2% and operating expenses
decreased by 1%. Net new business volume growth for Personal
Banking was 6.9%.
Asset Management (AM) PBT USD 1,455m, +174% YoY
AM's PBT, excluding the USD 571m gain on sale of a majority
stake in Fondcenter in 3Q20, was up 66% to USD 884m. On the same
basis, operating income increased by 24% on nearly USD 300m higher
performance fees, while net management fees rose 10%. The
cost/income ratio excluding the Fondcenter sale was 63.2%, a 9.4
percentage point improvement YoY, as 24% income growth outstripped
the 8% increase in operating expenses. Invested assets increased
21% YoY to USD 1,092bn, above the USD 1trn mark for the first time.
Net new money was USD 80.1bn (USD 87.5bn excluding money market
flows).
Investment Bank (IB) PBT USD 2,482m, +217% YoY
Most businesses delivered a double-digit increase in revenues
YoY. Global Markets revenue increased by 33% or USD 1,779m, due to
higher client activity levels, resulting from market conditions,
particularly across foreign exchange, rates, equity derivatives,
cash equities and credit product lines, reflecting the effects of
the COVID-19 pandemic on financial markets and ensuing client
transactions. Global Banking was up 23% or USD 441m, reflecting
higher revenues in Capital Markets, partly offset by lower revenues
in Advisory. Credit loss expenses were USD 305m. The cost/income
ratio was 70.7%, an 18.1 percentage point improvement YoY, as 30%
income growth outstripped the 4% increase in operating expenses.
Return on attributed equity was 19.7%.
Group Functions PBT USD (1,060)m, compared with USD (577)m in
2019
Our response to COVID-19
The COVID-19 pandemic caused an unprecedented situation for UBS
and its employees in 2020. It has required our ongoing focus on
safeguarding the well-being of our employees and their families,
serving our clients and ensuring operational continuity.
In response to the pandemic, governments have taken measures to
severely constrain movement, limiting public gatherings, requiring
working from home where possible, and closing down or restricting
non-essential retail and business activity. These measures resulted
in a significantly adverse effect on global economic activity and
the most severe downturn in global GDP since World War II, followed
by an uneven rebound in economic activity.
Governmental measures to support the economy
Governments and central banks offered and continue to offer
significant fiscal and monetary support intended to help firms and
employees to remain solvent through the COVID-19 pandemic, while
financial services firms were provided with exceptional access to
liquidity in the first phase of the pandemic. In addition, a number
of regulatory and supervisory measures have been temporarily
introduced, seeking to provide banks with increased flexibility in
deploying capital and liquidity resources to support economies.
Our support for clients and the economies in which we
operate
Throughout 2020, we actively engaged in lending activities
across our businesses to support our clients and the real economy.
As the pandemic intensified and market liquidity became limited, we
experienced higher drawdowns on committed credit facilities by
corporate clients in the Investment Bank and in Personal &
Corporate Banking.
The program established by the Swiss Federal Council in March
2020 to support small and medium-sized entities (SMEs) by granting
loans closed on 31 July 2020. As of that date, we had committed CHF
2.7 billion of loans up to CHF 0.5 million, which are 100%
guaranteed by the Swiss government, and CHF 0.6 billion of loans
between CHF 0.5 million and CHF 20 million, which are 85%
government-guaranteed. The total amount drawn on our loan
commitments under the program was CHF 1.8 billion on 31 December
2020. We intend to donate any potential profits from this program
to COVID-19 relief efforts, although no such profits were made in
2020.
In the US, we are supporting the lending programs created under
the CARES Act for small businesses. Working with a partner, we made
up to USD 2 billion available under the Paycheck Protection Program
during 2020 and provided loans under the program in the amount of
USD 656 million as of 31 December 2020. We donated around USD 2
million of fees earned on such loans in 2020 to COVID-19 relief
efforts.
Our previous investments in technology enabled us to maintain
facilitated connectivity within and across our businesses and
support functions. Leveraging existing and newly integrated tools,
this resulted in new ways of digitally interacting with
clients.
Across our business divisions, we continued to support our
clients with advice needed to manage their assets, along with
investment solutions and global insights to help them navigate the
significant market volatility and uncertain economic outlook. Our
dynamic risk management enabled our business and our clients to
successfully navigate the volatile market conditions.
Our support for communities
Recognizing the strain and hardship the current situation is
causing across our communities, we have committed USD 30 million to
various COVID-related aid projects that provide support across the
communities in which we operate. A part of this amount is used to
match the USD 15 million raised by our clients and our employees
for the UBS Optimus Foundation's COVID-19 Response Fund, which
supports various organizations, including healthcare organizations
that facilitate testing and increase capacity for emergency
treatments.
Our support for employees
Our employees' response to the pandemic has been remarkable;
they have demonstrated resilience, dedication and client focus
through an unrelenting year. More than 95% of internal and external
staff are able to work concurrently on a remote basis and our
employees have been working from home to a significant degree since
the first quarter. We continue to monitor country- and
location-specific developments, as well as governmental
requirements, and adapt our plans for the return of employees to
our offices accordingly, prioritizing the health of our employees
and clients.
Recognizing the additional pressure placed on employees by
shuttered workplaces and schools, restricted activities and varying
degrees of lockdown, we introduced a range of measures throughout
2020 to help employees adapt. For example, we offered extra
flexibility to care for children and introduced a variety of tools
and resources to support employees' physical, mental, financial and
social well-being.
As a sign of appreciation for their contribution throughout this
challenging year, and acknowledging that the pandemic may have
resulted in unforeseen expenses, the Group Executive Board awarded
UBS's employees at less senior ranks a one-time cash payment
equivalent to one week's salary.
In the third quarter of 2020, we modified the forfeiture
conditions of certain outstanding deferred compensation awards for
eligible employees in order to provide additional career
flexibility during this time of uncertainty. Outstanding deferred
compensation awards granted to Group Executive Board members, those
granted under the Long-Term Incentive Plan, as well as those
granted to financial advisors in the US, are not affected by these
changes.
Operational resilience
With the bulk of our workforce working outside of our offices
since late March 2020, we face new challenges and operational
risks, including maintenance of supervisory and surveillance
controls, as well as increased fraud and data security risks. The
existing resilience built into our operations and the effectiveness
of our business continuity management and operational risk
procedures have been critical in handling the ongoing pandemic and
circumstances related to it, and have enabled us to continue to
serve our stakeholders without material negative impact.
As a result of our prior investments in infrastructure and
execution of our established business continuity management
frameworks, we have managed the record transaction volumes
experienced in March 2020 along with extreme spikes in volatility
and limited liquidity in some markets without material disruption
in our service to clients.
Effects of the COVID-19 pandemic on our financial and capital
position
Despite the uncertainties caused by the pandemic, the negative
effects of the COVID-related crisis on our financial and capital
positions were limited in 2020.
Although we experienced an increase in credit loss expenses
under IFRS 9 in 2020, we maintained a strong capital and liquidity
position in the face of the adverse economic developments, the
sharp decline in market valuations and the increased levels of
volatility.
In the fourth quarter of 2020, credit loss expenses were at
lower levels than those seen in prior quarters of 2020.
Overall, we expect elevated credit loss expenses to persist for
at least as long as the COVID-19 containment measures continue,
although at levels lower than in the first half of 2020. Due to the
credit quality of our portfolio, we remain confident in our ability
to maintain our overall strength and stability and to continue to
support our clients.
Commitment to sustainable performance
UBS is committed to creating long-term positive value for its
clients, employees, investors and society and the firm made
substantial progress on this commitment in 2020. This is
illustrated by recognition UBS has received throughout the year for
its commitment to improving performance under ESG criteria and for
its efforts in offering clients sustainable finance products and
services.
Recognized leader in sustainability
UBS extended its leading position in sustainability after being
ranked number one globally for the sixth consecutive year in the
Diversified Financial Services and Capital Markets Industry of the
Dow Jones Sustainability Index (DJSI). This is the most widely
recognized corporate sustainability rating, and the confirmation of
the firm's leading position rewards its continuous commitment to
being at the vanguard of these developments for over 20 years. UBS
is among the top-ranked companies across a wide range of criteria
including Sustainable Finance, Risk & Crisis Management,
Operational Eco-Efficiency, Climate Strategy, Talent Attraction
& Retention, Corporate Citizenship & Philanthropy, and
Human Rights.
In addition, UBS has been recognized for leadership in corporate
sustainability by global environmental non-profit CDP. UBS is one
of only 5% of the 5,800+ companies scored that are A-listed for
environmental transparency and action to cut emissions, mitigate
climate risks and develop the low-carbon economy.
UBS has also become a founding member of the "Net Zero Asset
Managers initiative" bringing together a group of 30 international
asset management firms committed to support investing aligned with
the goal of net zero greenhouse gas emissions by 2050 or
sooner.
Strengthening the focus on sustainable finance
Sustainable finance has long been a firm-wide priority. UBS
continues to help its clients respond to growing interest in
navigating the risks and opportunities from climate change and a
range of 21st century risks.
For instance, UBS saw net sales in Global Wealth Management of
USD 7bn for Global Wealth Management and Personal & Corporate
Banking's 100% SI multi-asset mandate, with invested assets now at
USD 20bn, compared with just over USD 1bn roughly three years ago.
Sustainable investments are now the firm's preferred solution for
private clients investing globally, and UBS was the first major
global financial institution to make this recommendation in 2020.
In Asset Management, sustainability focused assets similarly
enjoyed very strong growth, with assets more than doubling during
the year to USD 97bn. UBS is committed to offering choice to its
clients to mobilize capital and manage risks.
Extended certification for equal pay practices
UBS takes pay equity seriously and takes clear steps to make
sure that employees with similar roles, performance and experience
are rewarded equally and fairly. The firm has long embedded pay
equity into its compensation policies and practices and regularly
engages independent third-parties to analyze compensation data.
After becoming one of the first banks certified by the Swiss
foundation EQUAL-SALARY in April 2020 for its equal pay practices
in Switzerland, UBS is proud to announce that it is now also
certified as an EQUAL-SALARY employer in the United Kingdom, United
States of America, Singapore and Hong Kong. This confirms UBS's
ongoing global commitment to this important topic. In order to get
certified, UBS underwent a multi-faceted audit including an
in-depth statistical analysis on pay, an HR policy review and
interviews with employees, management and HR.
Information in this news release is presented for UBS Group AG
on a consolidated basis unless otherwise specified. Financial
information for UBS AG (consolidated) does not differ materially
from UBS Group AG (consolidated) and a comparison between UBS Group
AG (consolidated) and UBS AG (consolidated) is provided at the end
of this news release.
(1) Loans and advances to customers (on-balance sheet) and guarantees and loan
commitments (off-balance sheet) included within Banking products in the table
"Banking and traded products exposure in our business divisions and Group
Functions" in the Risk management and control section of the fourth quarter
2020 report.
(2) Return on CET1 capital is calculated as annualized net profit attributable
to shareholders divided by average common equity tier 1 capital.
(3) Shareholders whose shares are held through SIX (ISIN CH0244767585) will
receive dividends in Swiss francs, based on a published exchange rate
calculated to five decimal places immediately before the ex-dividend date.
Shareholders holding shares through DTC (ISIN: CH0244767585; CUSIP: H42097107)
will be paid dividends in US dollars.
(4) Subject to approval by shareholders at the Annual General Meeting
scheduled for 8 April 2021, the dividend will be paid on 15 April 2021 to
shareholders of record as of 14 April 2021. The ex-dividend date will be 13
April 2021. In accordance with Swiss tax law, 50% of the dividend will be paid
out of retained earnings and the balance will be paid out of capital
contribution reserves. Dividends paid out of capital contribution reserves are
not subject to Swiss withholding tax. The portion of the dividend paid out of
retained earnings will be subject to a 35% Swiss withholding tax. For US
federal income tax purposes, we expect that the dividend will be paid out of
current or accumulated earnings and profits.
Performance of our business divisions and Group Functions(1)
For the quarter ended 31.12.20
Personal
Global & Asset
Wealth Corporate Manage- Investment Group
USD million Management Banking ment Bank Functions Total
Operating
income 4,277 992 774 2,011 63 8,117
of which:
valuation gain
on auction
rate
securities 134 134
Operating
expenses 3,341 640 372 1,482 225 6,060
of which:
impairment of
internally
generated
software(2) 67 67
Operating
profit /
(loss) before
tax 936 353 401 529 (161) 2,057
For the quarter ended 31.12.19
Personal
Global & Asset
Wealth Corporate Manage- Investment Group
USD million Management Banking ment Bank Functions Total
Operating
income 4,150 881 551 1,681 (211) 7,052
of which: net
gains /
(losses) from
properties
held for sale (29) (29)
Operating
expenses 3,384 571 371 1,703 95 6,124
of which:
impairment of
goodwill 110 110
of which: net
restructuring
expenses(3) 21 3 7 110 4 146
Operating
profit /
(loss) before
tax 766 310 180 (22) (306) 928
1 The components of operating income and operating expenses disclosed in this
table are items that are not recurring or necessarily representative of the
underlying business performance for the reporting period specified. 2 Relates
to impairment of internally generated software resulting from a decision in
the fourth quarter of 2020 to not proceed with an internal business transfer
from UBS Switzerland AG to UBS AG. 3 Includes restructuring expenses related
to legacy cost programs.
Performance of our business divisions and Group Functions(1)
For the year ended 31.12.20
Personal
Global & Asset
Wealth Corporate Manage- Investment Group
USD million Management Banking ment Bank Functions Total
Operating
income 17,045 3,651 2,974 9,214 (494) 32,390
of which: net
gain from the
sale of a
majority stake
in Fondcenter
AG 60 571 631
of which: gain
on the sale of
intellectual
property
rights 215 215
of which: net
gains from
properties
sold or held
for sale 64 64
of which:
valuation gain
on auction
rate
securities 134 134
of which: gain
related to
investment in
associates 6 19 26
of which: gain
on the sale of
equity
investment
measured at
fair value
through profit
or loss 4 18 22
Operating
expenses 12,955 2,392 1,519 6,732 567 24,163
of which:
acceleration
of expenses in
relation to
outstanding
deferred
compensation
awards 46 3 22 229 58 359
of which:
expenses
associated
with
terminated
real estate
leases 72 72
of which:
impairment of
internally
generated
software(2) 67 67
of which: net
restructuring
expenses(3) 72 5 6 24 0 107
Operating
profit /
(loss) before
tax 4,091 1,259 1,455 2,482 (1,060) 8,226
For the year ended 31.12.19
Personal
Global & Asset
Wealth Corporate Manage- Investment Group
USD million Management Banking ment Bank Functions Total
Operating
income 16,353 3,715 1,938 7,269 (385) 28,889
of which: net
foreign
currency
translations
losses(4) (35) (35)
of which: net
losses from
properties
held for sale (29) (29)
Operating
expenses 12,955 2,274 1,406 6,485 192 23,312
of which:
impairment of
goodwill 110 110
of which: net
restructuring
expenses(3) 68 17 33 168 (2) 284
Operating
profit /
(loss) before
tax 3,397 1,441 532 784 (577) 5,577
1 The components of operating income and operating expenses disclosed in this
table are items that are not recurring or necessarily representative of the
underlying business performance for the reporting period specified. 2 Relates
to impairment of internally generated software resulting from a decision in
the fourth quarter of 2020 to not proceed with an internal business transfer
from UBS Switzerland AG to UBS AG. 3 Reflects expenses for new restructuring
initiatives. Prior-year comparative figures also include restructuring
expenses related to legacy cost programs. 4 Related to the disposal or closure
of foreign operations.
Our key figures
As of As of
or for the or for the
quarter ended year ended
USD million, except
where indicated 31.12.20 30.9.20 31.12.19 31.12.20 31.12.19
Group results
Operating income 8,117 8,935 7,052 32,390 28,889
Operating expenses 6,060 6,357 6,124 24,163 23,312
Operating profit / (loss)
before tax 2,057 2,578 928 8,226 5,577
Net profit / (loss)
attributable to
shareholders 1,708 2,093 722 6,629 4,304
Diluted earnings per
share (USD)(1) 0.46 0.56 0.19 1.79 1.14
Profitability and
growth(2)
Return on equity (%) 11.5 14.4 5.2 11.5 7.9
Return on tangible equity
(%) 12.9 16.2 5.9 12.9 9.0
Return on common equity
tier 1 capital (%) 17.5 21.9 8.2 17.6 12.4
Return on risk-weighted
assets, gross (%) 11.4 12.7 10.8 11.7 11.0
Return on leverage ratio
denominator, gross
(%)(3) 3.2 3.7 3.1 3.4 3.2
Cost / income ratio (%) 74.1 70.4 86.8 73.0 80.5
Effective tax rate (%) 16.6 18.8 21.6 19.2 22.7
Net profit growth (%) 136.6 99.5 129.4 54.0 (4.7)
Resources(2)
Total assets 1,125,765 1,065,153 972,194 1,125,765 972,194
Equity attributable to
shareholders 59,517 59,451 54,501 59,517 54,501
Common equity tier 1
capital(4) 39,966 38,197 35,535 39,966 35,535
Risk-weighted assets(4) 289,101 283,133 259,208 289,101 259,208
Common equity tier 1
capital ratio (%)(4) 13.8 13.5 13.7 13.8 13.7
Going concern capital
ratio (%)(4) 19.5 19.2 20.0 19.5 20.0
Total loss-absorbing
capacity ratio (%)(4) 35.2 34.5 34.6 35.2 34.6
Leverage ratio
denominator(4) 1,037,150 994,366 911,322 1,037,150 911,322
Leverage ratio
denominator (with
temporary FINMA
exemption)(5) 944,323 907,181 944,323
Common equity tier 1
leverage ratio (%)(4) 3.85 3.84 3.90 3.85 3.90
Common equity tier 1
leverage ratio (%) (with
temporary FINMA
exemption)(5) 4.23 4.21 4.23
Going concern leverage
ratio (%)(4) 5.4 5.5 5.7 5.4 5.7
Going concern leverage
ratio (%) (with
temporary FINMA
exemption)(5) 6.0 6.0 6.0
Total loss-absorbing
capacity leverage ratio
(%)(4) 9.8 9.8 9.8 9.8 9.8
Liquidity coverage ratio
(%)(6) 152 154 134 152 134
Other
Invested assets (USD
billion)(7) 4,187 3,807 3,607 4,187 3,607
Personnel (full-time
equivalents) 71,551 71,230 68,601 71,551 68,601
Market capitalization(8) 50,013 40,113 45,661 50,013 45,661
Total book value per
share (USD)(8) 16.76 16.57 15.07 16.76 15.07
Total book value per
share (CHF)(8) 14.84 15.27 14.59 14.84 14.59
Tangible book value per
share (USD)(8) 14.93 14.78 13.28 14.93 13.28
Tangible book value per
share (CHF)(8) 13.22 13.61 12.86 13.22 12.86
1 Refer to "Earnings per share (EPS) and shares outstanding" in the
"Consolidated financial information" section of the UBS Group fourth quarter
2020 report for more information. 2 Refer to the "Performance targets and
measurement" section of our Annual Report 2019 for more information about our
performance targets. 3 The leverage ratio denominators used for the return
calculations relating to the respective periods in 2020 do not reflect the
effects of the temporary exemption that has been granted by FINMA in
connection with COVID-19. Refer to the "Recent developments" section of the
UBS Group second quarter 2020 report for more information. 4 Based on the
Swiss systemically relevant bank framework as of 1 January 2020. Refer to the
"Capital management" section of the UBS Group fourth quarter 2020 report for
more information. 5 Refer to the "Recent developments" section of the UBS
Group second quarter 2020 report and the "Capital management" section of the
UBS Group fourth quarter 2020 report for further details about the temporary
FINMA exemption. 6 Refer to the "Balance sheet, liquidity and funding
management" section of the UBS Group fourth quarter 2020 report for more
information. 7 Includes invested assets for Global Wealth Management, Asset
Management and Personal & Corporate Banking. 8 Refer to "UBS shares" in the
"Capital management" section of the UBS Group fourth quarter 2020 report for
more information.
Income statement
For the quarter % change For the year
ended from ended
USD million 31.12.20 30.9.20 31.12.19 3Q20 4Q19 31.12.20 31.12.19
Net interest
income 1,622 1,517 1,262 7 29 5,862 4,501
Other net income
from financial
instruments
measured at fair
value through
profit or loss 1,453 1,769 1,381 (18) 5 6,960 6,842
Credit loss
(expense) /
release (66) (89) (8) (26) 765 (694) (78)
Fee and
commission
income 5,543 5,211 4,856 6 14 20,961 19,110
Fee and
commission
expense (459) (440) (458) 4 0 (1,775) (1,696)
Net fee and
commission
income 5,084 4,771 4,398 7 16 19,186 17,413
Other income 24 967 19 (97) 30 1,076 212
Total operating
income 8,117 8,935 7,052 (9) 15 32,390 28,889
Personnel
expenses 3,989 4,631 3,902 (14) 2 17,224 16,084
General and
administrative
expenses 1,444 1,173 1,618 23 (11) 4,813 5,288
Depreciation and
impairment of
property,
equipment and
software 617 538 480 15 29 2,069 1,765
Amortization and
impairment of
goodwill and
intangible
assets 10 15 125 (33) (92) 57 175
Total operating
expenses 6,060 6,357 6,124 (5) (1) 24,163 23,312
Operating profit
/ (loss) before
tax 2,057 2,578 928 (20) 122 8,226 5,577
Tax expense /
(benefit) 341 485 200 (30) 70 1,583 1,267
Net profit /
(loss) 1,717 2,094 727 (18) 136 6,644 4,310
Net profit /
(loss)
attributable to
non-controlling
interests 9 0 6 52 15 6
Net profit /
(loss)
attributable to
shareholders 1,708 2,093 722 (18) 137 6,629 4,304
Comprehensive
income
Total
comprehensive
income 1,799 2,180 (1,567) (17) 8,384 5,091
Total
comprehensive
income
attributable to
non-controlling
interests 27 7 10 299 175 36 2
Total
comprehensive
income
attributable to
shareholders 1,773 2,173 (1,577) (18) 8,348 5,089
Comparison between UBS Group AG consolidated and UBS AG consolidated
As of As of As of
or for the or for the or for the
quarter ended quarter ended quarter ended
31.12.20 30.9.20 31.12.19
USD million,
except where UBS Group AG UBS AG Difference UBS Group AG UBS AG Difference UBS Group AG UBS AG Difference
indicated consolidated consolidated (absolute) consolidated consolidated (absolute) consolidated consolidated (absolute)
Income statement
Operating income 8,117 8,220 (103) 8,935 9,038 (103) 7,052 7,145 (93)
Operating
expenses 6,060 6,252 (192) 6,357 6,560 (203) 6,124 6,332 (207)
Operating profit
/ (loss) before
tax 2,057 1,968 89 2,578 2,478 100 928 814 114
of which: Global
Wealth
Management 936 926 9 1,057 1,042 14 766 754 12
of which:
Personal &
Corporate
Banking 353 353 (1) 335 335 0 310 311 (1)
of which: Asset
Management 401 401 0 739 739 0 180 180 0
of which:
Investment Bank 529 528 1 632 623 9 (22) (18) (4)
of which: Group
Functions (161) (241) 79 (184) (261) 77 (306) (413) 107
Net profit /
(loss) 1,717 1,644 73 2,094 2,018 76 727 628 100
of which: net
profit / (loss)
attributable to
shareholders 1,708 1,635 73 2,093 2,018 76 722 622 100
of which: net
profit / (loss)
attributable to
non-controlling
interests 9 9 0 0 0 0 6 6 0
Statement of
comprehensive
income
Other
comprehensive
income 83 54 29 86 70 16 (2,295) (1,475) (819)
of which:
attributable to
shareholders 65 36 29 80 64 16 (2,299) (1,479) (819)
of which:
attributable to
non-controlling
interests 18 18 0 6 6 0 4 4 0
Total
comprehensive
income 1,799 1,697 102 2,180 2,088 92 (1,567) (847) (720)
of which:
attributable to
shareholders 1,773 1,671 102 2,173 2,081 92 (1,577) (857) (720)
of which:
attributable to
non-controlling
interests 27 27 0 7 7 0 10 10 0
Balance sheet
Total assets 1,125,765 1,125,327 438 1,065,153 1,064,621 532 972,194 971,927 267
Total liabilities 1,065,928 1,067,182 (1,254) 1,005,409 1,006,868 (1,459) 917,519 918,031 (512)
Total equity 59,836 58,145 1,691 59,744 57,753 1,991 54,675 53,896 779
of which: equity
attributable to
shareholders 59,517 57,825 1,691 59,451 57,461 1,991 54,501 53,722 779
of which: equity
attributable to
non-controlling
interests 319 319 0 293 293 0 174 174 0
Capital
information
Common equity
tier 1 capital 39,966 38,192 1,773 38,197 38,652 (454) 35,535 35,233 302
Going concern
capital 56,254 52,622 3,632 54,396 53,004 1,392 51,842 47,191 4,650
Risk-weighted
assets 289,101 286,743 2,358 283,133 281,442 1,691 259,208 257,831 1,376
Common equity
tier 1 capital
ratio (%) 13.8 13.3 0.5 13.5 13.7 (0.2) 13.7 13.7 0.0
Going concern
capital ratio
(%) 19.5 18.4 1.1 19.2 18.8 0.4 20.0 18.3 1.7
Total
loss-absorbing
capacity ratio
(%) 35.2 34.2 1.0 34.5 34.2 0.3 34.6 33.9 0.7
Leverage ratio
denominator 1,037,150 1,036,771 379 994,366 994,015 352 911,322 911,228 94
Leverage ratio
denominator
(with temporary
FINMA
exemption)(1) 944,323 969,396 (25,073) 907,181 931,978 (24,797)
Common equity
tier 1 leverage
ratio (%) 3.85 3.68 0.17 3.84 3.89 (0.05) 3.90 3.87 0.03
Common equity
tier 1 leverage
ratio (%) (with
temporary FINMA
exemption)(1) 4.23 3.94 0.29 4.21 4.15 0.06
Going concern
leverage ratio
(%) 5.4 5.1 0.3 5.5 5.3 0.1 5.7 5.2 0.5
Going concern
leverage ratio
(%) (with
temporary FINMA
exemption)(1) 6.0 5.4 0.5 6.0 5.7 0.3
Total
loss-absorbing
capacity
leverage ratio
(%) 9.8 9.5 0.3 9.8 9.7 0.1 9.8 9.6 0.2
1 Refer to the "Recent developments" section of the UBS Group second quarter
2020 report and the "Capital management" section of the UBS Group fourth
quarter 2020 report for further details about the temporary FINMA exemption.
Information about results materials and the earnings call
UBS's fourth quarter 2020 report, news release and slide
presentation are available from 06:45 CET on Tuesday, 26 January
2021, at ubs.com/quarterlyreporting.
UBS will hold a presentation of its fourth quarter 2020 results
on Tuesday, 26 January 2021. The results will be presented by Ralph
Hamers (Group Chief Executive Officer), Kirt Gardner (Group Chief
Financial Officer), Martin Osinga (Investor Relations), and Marsha
Askins (Head Communications & Branding).
Time
09:00--11:00 CET
08:00--10:00 GMT
03:00--05:00 US EST
Audio webcast
The presentation for analysts can be followed live on
ubs.com/quarterlyreporting with a simultaneous slide show.
Webcast playback
An audio playback of the results presentation will be made
available at ubs.com/investors later in the day.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains statements that constitute
"forward-looking statements," including but not limited to
management's outlook for UBS's financial performance and statements
relating to the anticipated effect of transactions and strategic
initiatives on UBS's business and future development. While these
forward-looking statements represent UBS's judgments and
expectations 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. The outbreak of COVID-19 and the measures being taken
in response to the pandemic have had and may continue to have a
significant adverse effect on global economic activity, and an
adverse effect on the credit profile of some of our clients and
other market participants, which has resulted in and may continue
to increase credit loss expense and credit impairments. In
addition, we face heightened operational risks due to remote
working arrangements, including risks to supervisory and
surveillance controls, as well as increased fraud and data security
risks. The unprecedented scale of the measures to respond to the
pandemic creates significantly greater uncertainty about
forward-looking statements in addition to the factors that
generally affect our businesses, which include, but are not limited
to: (i) the degree to which UBS is successful in the ongoing
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 other changes related to the COVID-19 pandemic; (ii)
the degree to which UBS is successful in implementing changes to
its businesses to meet changing market, regulatory and other
conditions; (iii) the continuing low or negative interest rate
environment in Switzerland and other jurisdictions; (iv)
developments (including as a result of the COVID-19 pandemic) 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, and currency exchange rates, and the
effects of economic conditions, market developments, and
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
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) the degree to which
UBS is successful in implementing further changes to its legal
structure to improve its resolvability and meet 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, proposals in Switzerland and other
jurisdictions for mandatory structural reform of banks or
systemically important institutions or to other external
developments, and the extent to which such changes will have the
intended effects; (viii) UBS's ability to maintain and improve its
systems and controls for the detection and prevention of money
laundering and compliance with sanctions to meet evolving
regulatory requirements and expectations, in particular in the US;
(ix) the uncertainty arising from the UK's exit from the EU; (x)
changes in UBS's competitive position, including whether
differences in regulatory capital and other requirements among the
major financial centers will 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 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 and systems failures, the risk of which is increased
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; and (xxi) 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 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 2019 and UBS's First
Quarter 2020 Report on Form 6K. 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.
Rounding
Numbers presented throughout this news release may not add up
precisely to the totals provided in the tables and text.
Percentages and percent changes are calculated on the basis of
unrounded figures. Information about absolute changes between
reporting periods, which is provided in text and which can be
derived from figures displayed in the tables, is calculated on a
rounded basis.
Tables
Within tables, blank fields generally indicate that the field is
not applicable or not meaningful, or that information is not
available as of the relevant date or for the relevant period. Zero
values generally indicate that the respective figure is zero on an
actual or rounded basis. Percentage changes are presented as a
mathematical calculation of the change between periods.
Alternative Performance Measures
In addition to reporting results in accordance with
International Financial Reporting Standards (IFRS), UBS reports
certain measures that may qualify as Alternative Performance
Measures as defined in the SIX Exchange Directive on Alternative
Performance Measures, under the guidelines published the European
Securities Market Authority (ESMA), or defined as Non-GAAP
financial measures in regulations promulgated by the US Securities
and Exchange Commission (SEC). Please refer to "Alternative
Performance Measures" in the appendix of UBS's Quarterly Report for
the fourth quarter of 2020 for a list of all measures UBS uses that
may qualify as APMs.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20210125005933/en/
CONTACT: UBS Group AG and UBS AG
Investor contact
Switzerland: +41 44 234 41 00
Americas: +1 212 882 57 34
Media contact
Switzerland: +41 44 234 85 00
UK: +44 207 567 47 14
Americas: +1 212 882 58 58
APAC: +852 297 1 82 00
ubs.com
SOURCE: UBS
Copyright Business Wire 2021
(END) Dow Jones Newswires
January 26, 2021 01:00 ET (06:00 GMT)
