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: November 8, 2023
UBS Group AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Credit Suisse AG
(Registrant's Name)
Paradeplatz 8, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-33434
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
☒
☐
This Form 6-K consists of the transcripts of the 3Q23 Earnings call remarks and Analyst Q&A, which
appear immediately following this page.
1
Third quarter 2023 results
7 November 2023
Speeches by
Sergio P. Ermotti
, Group Chief Executive Officer, and
Todd Tuckner
,
Group Chief Financial Officer
Including analyst Q&A session
Transcript.
Numbers for slides refer to the third quarter 2023 results presentation. Materials and a webcast
replay are available at
www.ubs.com/investors
Sergio P. Ermotti
Slide 3 – 3Q23 key achievements
Thank you, Sarah and good morning, everyone. During the third quarter and as we speak, we continue to see
an evolution of the macroeconomic outlook with opinions, forecasts and markets changing at a very rapid pace.
In addition, we witnessed an even further deterioration of the geopolitical landscape as a result of tragic events
in the Middle East. Our thoughts are with those who are suffering and have been impacted by this violence, as
well as our affected employees.
While we have been very busy executing on our integration plans, our top priority is always to stay close to
clients, helping them protect their assets and position their portfolios and businesses for future opportunities.
Our wealth management clients remain cautious and defensively positioned. And while some of our institutional
clients are taking advantage of short-term opportunities, many still remain on the sidelines.
Our consistent dedication continues to be rewarded by their confidence and trust in UBS. This was
demonstrated by another quarter of strong flows across GWM and P&C. In the third quarter, the first full
quarter since the acquisition, we made strong progress and delivered underlying profitability.
With respect to the integration of Credit Suisse, we continue to be encouraged by our achievements to date in
both our planning and execution.
In terms of the lessons learned from the events in March, we welcome the recent reports issued by the Basel
Committee on Banking Supervision, the Financial Stability Board and the Swiss Expert Group on Banking
Stability. Their findings confirmed our view that the crisis was not a result of insufficient capital or liquidity
requirements.
Rather, the reports emphasized sustainable business models, risk-adjusted profitability, and importantly, the
critical role of robust risk management cultures and effective governance. We take comfort in these conclusions,
as they have been and remain core principles of UBS. Today, we are positioning UBS to be an even stronger
and safer global financial institution. It is for this reason that we remain confident the acquisition will allow us
to deliver significant value for all of our stakeholders, notwithstanding potential macroeconomic or geopolitical
challenges.
2
Slide 4 – Strong progress amid challenging market conditions
Briefly summarizing our results this quarter. Our strong underlying performance was driven by positive operating
leverage at the Group level. GWM, P&C and Asset Management all delivered underlying PBT growth. IB
performance was impacted by market conditions that were unfavorable to our business model and investments
we expect to be accretive in future quarters.
Our capital position remained strong with a CET1 ratio of 14.4% and total loss-absorbing capacity of nearly
200 billion. We achieved this result while incurring 2 billion in integration-related expenses and making good
progress running down non-core assets.
Despite our reported loss in the quarter, we incurred over 500 million in tax expense, and paid over 200 million
in cash taxes in Switzerland.
Slide 5 – Delivering on integration priorities
Our confidence in the ability to successfully integrate Credit Suisse and create substantial long-term value is
supported by the strong progress we made in the third quarter.
We have now stabilized Credit Suisse and continued to grow our franchise through new client acquisition and
share-of-wallet gains. In addition, our client retention and win-back strategy is working. Net new money in
GWM was 22 billion and our strong deposit momentum continued through the quarter.
The 33 billion in net new deposits across GWM and P&C also supported our ability to reduce quarterly funding
costs by 450 million through the repayment of the Public Liquidity Backstop and the ELA+ that we announced
in August.
We are pleased to see strong demand for UBS debt in the wholesale markets with transactions priced at similar
levels to where UBS paper stood before the rescue of Credit Suisse.
We have finalized the perimeter of Non-core and Legacy, and our efforts to actively unwind positions resulted
in a capital release of around 1 billion.
Lastly, we continued to execute our plans to reduce costs in Non-core and Legacy, restructure Credit Suisse’s
Investment Bank and remove duplications across our operations. We have already delivered around 3 billion in
annualized exit-rate gross cost savings. We expect to make further progress in the fourth quarter.
Slide 6 - Client trust and confidence demonstrated by strong flows in GWM and P&C
Slide 6 summarizes well how quickly we have stabilized Credit Suisse, and the confidence of clients in UBS.
Credit Suisse Wealth Management’s quarterly net new money has now turned positive for the first time in a
year and a half, with 3 billion in the third quarter. UBS Wealth Management’s 18 billion in net new money is
the second highest third-quarter result in over a decade.
In addition, it was satisfying to see that our efforts to win back client assets resulted in 22 billion in net new
deposits from Credit Suisse clients across GWM and P&C.
Following our decision to integrate Credit Suisse Schweiz, we reached out to our clients to re-assure them that
we remain committed to delivering the best capabilities of both institutions. In addition, we reiterated that their
credit limits across both banks will remain in place.
To date, client reactions have been broadly constructive and net new deposits in P&C were positive in both
Personal and Corporate banking client segments. We are particularly pleased that this was also the case in
September, the month following our decision to integrate both franchises.
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Slide 7 – Accelerating the run-down of Non-core and Legacy assets
In Non-core and Legacy, we also made strong progress this quarter. 80% of the sequential reduction in NCL’s
credit and market risk risk weighted assets was driven by actively running down positions, executed above
marks. Non-operational risk weighted assets have now been reduced by nearly one-third since 1Q23 and the
expected natural run-off profile has improved by 3 billion.
While we have some credit risk exposure in certain local emerging markets and other more complicated bilateral
positions that resulted in CLEs this quarter, the key risks across the portfolio are well understood, actively
managed and in most cases, well hedged.
The majority of our credit risk exposure is with high-quality borrowers. Over 75% of the exposure is rated
investment grade. This provides us with the comfort to continue to pursue our strategy to accelerate the disposal
of these assets in a way that optimizes value for our shareholders, while also protecting our clients and
counterparties.
The finalized perimeter of Non-core and Legacy contains 30 billion in operational risk weighted assets. As a
function of the natural decay across the portfolio, we expect a reduction of around 50% by the end of 2026.
Todd will take you through this in more detail.
Slide 8 – Integration planning and execution well underway
Returning to the integration, let me reiterate that the complexity is not just from managing two G-SIFI banks.
Our immediate priority since the transaction was announced and closed had to be on stabilizing and
restructuring Credit Suisse. This will continue to be the case until the early part of 2024.
At the same time, we are executing on our integration plans at pace, and on the left side of slide 8, you can
see a selection of our recent achievements. Notably, we have established management responsibilities and
operating models across business divisions and legal entities, including in our Swiss franchise.
You can also see some of our key priorities through the end of this year and beyond. This includes the merger
of our significant legal entities, client migrations across all of our business divisions and executing on our
technology decommissioning plans.
Last but not least, we are also working toward finalizing our 3-year strategic plan, which we will present in
early February.
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Slide 9 – Working towards ~15% RoCET1
As we continue to progress our plan, the main focus has been on delivering synergies for the combined Group.
We remain confident that the 2026 goals that we presented last quarter are achievable. But, as | said then, it
will not be a straight-line journey.
We are pleased that the first phase of gross cost savings has already been executed in 2023. But I am sure we
all appreciate the significant costs associated with running and combining two G-SIFIs, one of which is still
structurally unprofitable.
From an operational standpoint of view, it is clear that 2024 will be a pivotal year. Completing the merger of
our significant legal entities before the end of next year is a critical step to enable us to unlock the next phase
of our cost, capital and funding synergies, which we expect to realize in 2025 and 2026.
Our enhanced scale, leading client franchises and increased future earnings power will position us for growth.
Disciplined execution will continue to be an important driver for our performance and we are on track to deliver
on our plans. We are optimistic about our future as we build an even stronger and safer version of the UBS that
was called upon to stabilize the financial system in March, and one that all of our key stakeholders can be proud
of.
With that, I hand over to Todd.
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Todd Tuckner
Slide 11 – Update on reporting charges
Thank you and good morning everyone. As Sergio highlighted, we are executing on our plans at pace. In our
first full quarter since the Credit Suisse acquisition, we’ve delivered underlying profitability and maintained
strong client momentum with impressive net new money inflows in Global Wealth Management and net new
deposit growth in our Swiss franchise.
We also made substantial progress in de-risking our Non-core and Legacy portfolio, reinforcing our balance
sheet for all seasons.
Before I move on to discussing details of our financial performance, let me describe the reporting changes we
implemented this quarter and the ones we expect to introduce soon.
Today, for the first time we’re presenting the results of our performance segments on a combined basis,
reflecting the way we’re managing our businesses and engaging with clients. In addition to Global Wealth
Management, Personal & Corporate Banking, Asset Management and the Investment Bank, we are now
separately reporting Non-Core and Legacy as well as Group Items, all of which reflect the combined
performance of UBS and Credit Suisse under IFRS and in US dollars.
As I said during the second quarter earnings call, our aim is to be clear and forthcoming in explaining the
financial reporting of this complex transaction. Therefore, we’ve introduced underlying performance metrics
that primarily strip out the PPA -related pull-to-par effects from revenues in our core businesses and adjust for
integration-related expenses across all performance segments.
Regarding the pull-to-par effects in NCL, in the quarter we reclassified most of the positions that Credit Suisse’s
Investment Bank and Capital Release Unit historically accounted for on an accrual basis to fair value through
P&L, as those positions in NCL are now held for sale. As a reminder, those positions gave rise to the 3.1 billion
in future NCL pull-to-par revenues that we flagged last quarter. Given that NCL generates revenues in various
ways, whether from early unwinds of positions and other disposals, mark-to-market on its fair value book, or
from pull-to-par effects, we don’t distinguish among the various accounting classification types. Accordingly,
in the quarter and going forward, all sources of NCL income, gain or loss will be treated as part of its underlying
performance.
As last quarter’s disclosed IFRS results reflect only one month of Credit Suisse’s operating performance, to
improve comparability, we’ve prepared estimated underlying results that reflect all three months of the second
quarter. As I go through my remarks, unless otherwise stated, I will compare our underlying third quarter results
sequentially to this estimated performance in the prior quarter. We’ll focus on sequential developments until
the third quarter of 2024, when we’ll resume year-over-year commentary.
Now, on to our planned changes. In the fourth quarter we will expand our Global Wealth Management asset
flows disclosure and enhance comparability with US peers. We will report net new money plus dividends and
interest, as well as disclose net new fee generating assets for the combined franchise. We intend to introduce
a growth target for net new money, plus dividends and interest, when we present our integration KPIs and
targets as part of our fourth quarter results early next year.
Additionally, starting from the first quarter of 2024, we expect to push out to our business divisions substantially
all balance sheet and P&L items that were previously retained centrally in Group Items. The only exceptions will
be for group items that are not directly attributable to divisional activities, including deferred tax assets, cash
flow hedges, own credit and their associated P&L effects. Our business division equity attribution framework
will also reflect these changes whereby the average levels of equity across the business divisions will more closely
align to our current Group capital targets.
6
Slide 12 – 3Q23 underlying PBT of 0.8bn, higher revenues and lower costs QoQ
Moving on to our financial performance on Slide 12. The quarterly profit before tax was 844 million, a 1.4
billion increase from the second quarter as we delivered strong positive operating leverage with 0.6 billion
higher revenues and 0.5 billion lower operating expenses.
Additionally, CLE declined by 0.4 billion sequentially to 0.3 billion, which mainly related to Credit Suisse loans
within P&C and NCL, which I cover later in more detail. By comparison, CLE in the second quarter of 0.7 billion
included more than 0.5 billion of charges primarily related to the take-on recognition of ECL allowances on
Credit Suisse’s lending portfolios.
On a reported basis, the third quarter net loss was 785 million, as 526 million in tax expense arising in profitable
entities, could not be offset by tax benefits from losses primarily generated by certain Credit Suisse subsidiaries.
We expect our effective tax rate to remain elevated until we merge and restructure our most significant legal
entities. After that time, the effective tax rate should gradually return to a level below 25%, absent the effects
of any remeasurement of deferred tax assets.
Slide 13 – 3Q23 underlying total revenues 10.7bn, up 6% QoQ
Moving to Slide 13. Revenues increased by 6% this quarter to 10.7 billion driven by lower funding costs within
Group Items and gains in Non-Core and Legacy as the team accelerated the unwind of certain positions at
attractive prices relative to book values.
Revenues in Group Items increased sequentially primarily due to the reduction of around 450 million in centrally-
held funding costs from the Credit Suisse-related liquidity measures that were repaid and returned in the middle
of the third quarter. For the fourth quarter we expect an additional 100 million benefit from these actions. It is
worth noting that the cost of replacement funding is being absorbed by the core businesses and is reflected in
their sequential NII performance and guidance this quarter.
Total revenues reached 11.7 billion, including 958 million that we’ve stripped out of underlying revenues. This
amount consisted of 764 million in pull-to-par effects as well as 194 million of NII in our core businesses
benefitting from the merger date elimination of the unrealized loss balance associated with Credit Suisse’s cash
flow hedge program.
Slide 14 – Pull to par overview and revenue recognition
On Slide 14 we show the details of pull-to-par and similar effects that we expect to recognize in future quarters.
The pull-to-par starting balance as of transaction close was 9.3 billion, excluding the 3.1 billion reclassification
in NCL that I described earlier. Considering the pull-to-par accretion of 1.1 billion recognized since the merger
date, including 0.8 billion this quarter, the remaining balance that will accrete into income over future quarters
is expected to be around 8.2 billion.
We expect the majority of this balance to accrete into income by the end of 2026, barring the impact of any
early unwinds, with 500 million expected next quarter. We also expect to recognize around 900 million of
additional NII in GWM and P&C relating to the eliminated cash flow hedge item I mentioned a few moments
ago, with 150 million expected in 4Q.
As a reminder, these effects are stripped out of our underlying revenues with about half being CET1 capital
accretive. I would also point out that we continue to expect total pull-to-par revenues, including the reclassified
NCL and post-2026 recognized portions, to broadly offset the costs to achieve the greater than 10 billion in
gross savings we described last quarter. Having said this, like in the third quarter, we expect there will be timing
mismatches in the recognition of these reported revenues and expenses, resulting in headwinds to our reported
results, particularly in the fourth quarter and throughout 2024.
7
Slide 15 – 3Q23 underlying operating expenses 9.6bn, down 5% QoQ
Moving to Slide 15. Operating expenses for the Group decreased to 9.6 billion, down 5% as our cost savings
initiatives take effect, partially offset by reinvestments to help grow our core businesses.
Progress on our restructuring actions led to 2 billion in integration-related expenses. Roughly half of these
expenses was related to personnel costs, including severance payments, salaries of employees fully dedicated
to integration matters, and the costs of retaining key personnel. The other half was related to non-personnel
matters, including real estate impairments and depreciation, onerous contract charges, and consulting and legal
fees.
For the fourth quarter, we expect integration-related expenses in excess of 1 billion, although certain additional
costs to achieve may arise if we see opportunities to accelerate savings.
While we manage our integration to achieve overall cost reductions without specific headcount targets, I would
note that our combined workforce fell by over 4 thousand in the quarter, bringing year-to-date reductions to
13 thousand, or down 9% versus the workforce of both banks as of the end of 2022. Across our cost-savings
initiatives, we’ve achieved around 3 billion to date in gross run-rate cost saves with further progress expected
in the fourth quarter.
Slide 16 – Diversifying sources of funding and maintaining a strong liquidity position
Turning to Slide 16. In the quarter we maintained a strong capital position with around 200 billion of TLAC and
a CET1 capital ratio of 14.4% mainly as we reduced RWA from the active run-down in our NCL portfolio, which
offset reductions in our CET1 capital in the quarter. Our CET1 leverage ratio increased to 4.9% at the end of
the quarter.
As we previously guided, we expect to maintain a CET1 capital ratio of around 14% throughout the integration
timeline, even if our reported performance over the coming quarters remains affected by the costs of winding
down the NCL unit and the work needed to achieve cost synergies in our core businesses.
During the quarter we issued 4.5 billion of US dollar TLAC attracting very strong demand, and pricing at pre-
acquisition spreads, in a clear sign of fixed income investor confidence in our name. To further diversify our
sources of funding, we successfully placed 3 billion in SEC-registered OpCo and, just after the quarter, 820
million Swiss francs in UBS’s inaugural Swiss covered bond issue, both attractively priced.
Regarding liquidity, we maintained a prudent profile in the quarter with an LCR of nearly 200%, supported by
33 billion in total deposit inflows. I would note that these strong deposit inflows across Global Wealth
Management and Personal & Corporate Banking increased our overall deposit coverage ratio.
Going forward, we expect to continue to operate with a prudent LCR to comply with the revisions to the Swiss
Liquidity Ordinance that will come into effect on January 1, 2024.
Regarding the Swiss National Bank’s recently announced changes to its minimum reserve requirements and
sight deposit remuneration policies that take effect next month, we expect an annualized reduction of around
80 million Swiss francs to our NII, of which two-thirds will impact P&C and one-third GWM.
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Slide 17 – Global Wealth Management
Turning to the performance in our businesses, beginning on slide 17. In Global Wealth Management we
continued strong momentum with 22 billion in net new money inflows across all regions. We saw particularly
strong inflows in both APAC and EMEA, with 13 and 8 billion in net new money, respectively. Importantly, our
Credit Suisse Wealth Management business attracted quarterly net inflows for the first time since the beginning
of 2022. In the quarter, we also attracted 25 billion of net new deposits, including 17 billion from the Credit
Suisse wealth side.
These impressive flows are a true testament to the trust our clients continue to place in us. They also reflect the
success of our clear and decisive win-back, retention, and client-acquisition actions, as well as intensified client
engagement levels since the deal’s completion. We expect to further build on this momentum as the value
proposition of the combined firm becomes more tangible to our clients. For instance, all of our clients now have
access to the UBS House View from our CIO, and our wealth management product and solution offerings are
being unified and aligned across the platforms.
As mentioned, from next quarter we will report net new money plus dividends and interest, as well as net new
fee generating assets for the combined franchise. In the third quarter, inflows based on this new definition
were 39 billion, and net new fee generating assets in solely the UBS portion of our wealth business were 21
billion, with positive flows across all regions.
Moving on to GWM’s P&L. Profit before tax was 1.1 billion, over 40% higher sequentially, driven by a reduction
in costs and credit loss expenses with roughly flat revenues. Excluding the impact of CLE, which included a
significant acquisition-related ECL charge last quarter, underlying profit before tax increased by around 20%,
supported by lower underlying operating expenses.
This quarter GWM revenues of 5.5 billion were broadly flat as increases in recurring fees were offset by a decline
in NII. Combined net interest income was down 3%, on an underlying basis and excluding FX, reflecting
continued deposit mix effects due to rotation into higher-yielding deposits, and ongoing deleveraging. This was
partially offset by sequentially higher deposit balances that serve to close the funding gap in the business and
strengthen the structural profile of our balance sheet. For the fourth quarter we expect a mid-single-digit
percentage decline in NII mainly from continuing deposit mix shifts.
Credit loss expenses in the quarter across GWM were 2 million.
Operating expenses declined by 0.2 billion to 4.4 billion mainly driven by lower personnel expenses as reduced
headcount levels, which we expect to continue sequentially, began to benefit our underlying earnings.
Although it’s early days in terms of synergy realization in GWM, we are already seeing progress from our
integration efforts. The division’s underlying cost/income ratio in the third quarter dropped by around 3
percentage points to 80%.
Slide 18 – Personal & Corporate Banking (CHF)
Turning to Personal & Corporate Banking on slide 18. Profit before tax increased by 0.1 billion to 773 million
Swiss francs, mainly driven by a decrease in credit loss expenses. Excluding CLE, P&C’s PBT was up slightly
quarter on quarter.
9
Revenues increased to 2.2 billion. With the announcement of the Swiss integration at the end of August, the
business is highly focused on client engagement and deposit win-back. Early indications are encouraging as
evidenced by the stability of the revenue line, the resilience of business volume and the commencement of
deposit returns.
Net interest income decreased by 4% despite the narrowing funding gap from net new deposit inflows, which
mainly came from our corporate clients. A primary driver of the sequential decline this quarter was the additional
cost of restoring the structural funding profile of the combined business to UBS’s NSFR standards.
For the fourth quarter, we expect a low single digit percentage decline in NII mainly due to rotation to higher
yielding deposits.
Credit loss expense in the quarter was 154 million Swiss francs almost exclusively from two factors related to
Credit Suisse’s Swiss Bank. First, we recognized CLE on [Edit: for credit-impaired] loans, mainly to corporate
counterparties that were already impaired on the merger date and deteriorated further this quarter, as well as
newly defaulted positions. Second, we moved to Stage 2, and provisioned in line with UBS’s coverage ratio
standards, all loans including those as of the merger date on Credit Suisse’s watchlist as well as those lending
exposures that experienced a significant increase in credit risk during the third quarter.
Underlying operating expenses were roughly unchanged at 1.2 billion on lower personnel and litigation
expenses, with the underlying cost/income ratio down quarter on quarter to 57%.
Slide 19 – Asset Management
Moving to slide 19. In Asset Management the underlying profit before tax increased to 156 million on higher
revenues and lower costs. Revenues were slightly higher at 755 million, with increases in net management fees
driven by market performance and FX, and higher performance fees from our hedge fund businesses.
Operating expenses decreased to 599 million mainly due to lower personnel expenses.
Net new money in the quarter was negative 1 billion driven by Credit Suisse outflows, which continue to taper
since the acquisition, with inflows expected to gradually return from proactive client engagement. It’s worth
noting that the UBS side of the business attracted net new money inflows this quarter in a challenging
environment for asset managers. We saw strong demand for our Money Market, SMA and Real Estate & Private
Markets solutions, partly offset by client asset allocation shifts away from China, Equities, and Hedge Funds in
the current market dynamic.
Net new money excluding money markets and associates was negative 8.3 billion.
Slide 20 – Investment Bank
Turning to the Investment Bank performance on slide 20. Since the UBS IB has taken on only select parts of
Credit Suisse’s investment bank and the latter saw little activity in the second quarter, we compare the results
of the combined IB with standalone performance in the prior year’s third quarter.
We will continue to offer year-over-year comparisons to standalone UBS IB performance in the quarters ahead
while also providing commentary on sequential developments until the third quarter of 2024, as with the other
business divisions.
The operating loss of 116 million was a result of additional costs related to the retained portion of Credit Suisse’s
Investment Bank, which was only partially offset by standalone profit before tax in UBS IB, as market conditions
remain challenging for our business model.
10
Underlying revenues, which exclude 251 million of pull-to-par accretion and other effects, declined 6% year-
over-year to 1.9 billion amid muted client activity due to ongoing concerns around terminal interest rates and
geopolitical events. Volatility across asset classes declined significantly from a year ago and global fee pools
remained depressed.
Against this backdrop, Global Banking revenues increased 36% with particular strength in leveraged capital
markets and strong performance in EMEA. Advisory outperformed the global fee pool, and was further
supported by revenues from the heritage Credit Suisse franchise.
Global Markets revenues declined 15% from a very strong third quarter, reflecting lower revenues across macro
products and equity derivatives. This was partly offset by growth in Financing supported by increased client
balances.
Overall, revenues generated from the retained portion of Credit Suisse’s investment bank were 113 [edit: 131]
million this quarter, primarily in Advisory as well as Derivatives and Solutions.
Operating expenses rose 27%, predominantly from additional personnel costs related to the retained portions
of Credit Suisse’s Investment Bank, as well as higher technology costs and FX.
As we manage the Investment Bank integration, we remain disciplined in our resource management. RWAs at
23% of the Group’s resources excluding NCL were roughly unchanged sequentially.
Looking ahead, as the majority of the onboarding of our colleagues and positions to UBS IB systems is planned
for completion by the end of the year, we expect revenues to ramp up over the course of 2024. Given this
timing, in addition to current market conditions and seasonality, we expect continued pressure on our
underlying profitability in the fourth quarter.
Slide 21 – Non-core and Legacy
Moving to Non-Core and Legacy on Slide 21. Excluding integration-related expenses, NCL generated an
underlying operating loss of 1 billion.
Quarterly revenues of 350 million consisted mainly of gains from the early unwind of loan commitments while
the portion of the NCL portfolio that remains on the accrual method of accounting was left broadly unchanged
this quarter given recovery expectations on the underlying lending positions.
Credit loss expense was 125 million. Additional provisions of 71 million reflect application of the same extended
credit watchlist approach I described earlier in the context of P&C. We also saw 54 million of charges from
Stage 3 and purchased credit-impaired loans that deteriorated further in the quarter.
Underlying operating expenses reached 1.2 billion, split roughly equally between personnel and non-personnel
costs. Integration-related expenses of 918 million consisted of onerous contract charges, real estate-related
expenses, and personnel costs linked to headcount reductions and retention.
For the fourth quarter, we expect the underlying cost base in Non-Core and Legacy to decrease further from
additional staff reductions whose costs are directly housed within, or allocated to, NCL.
As Sergio mentioned, in the quarter we took decisive actions to reduce RWAs. 5 of the total 6 billion reduction
resulted from active de-risking of exposures across the array of NCL portfolios. LRD was reduced by 52 billion,
including 15 billion resulting from lower HQLA requirements and 12 billion from the accounting reclassification
of loan commitments from accrual to fair value.
11
During the quarter, we completed the initial impact assessment on our operational risk RWA from the final
Basel 3 standard, which comes into effect on January 1, 2025. Based on this initial study, we expect Group op
risk RWA to remain broadly unchanged at the current level of 145 billion.
We also determined on the basis of our impact assessment initial levels of RWA to apportion to each of our
business divisions, including NCL. The 30 billion of operational risk RWA assigned to NCL this quarter is expected
to diminish over time as a function of two considerations: the run-down of the NCL portfolio and the removal
of certain legacy litigation matters given the lapse of time. On the basis of natural roll-off in both contexts, we
expect operational risk RWA in NCL to decrease to around 14 billion by the end of 2026.
As a reminder, we continue to expect a roughly 5% increase from day-1 effects in 2025 from other final Basel
3 considerations, mainly FRTB.
Slide 22 – On track to deliver on our integration goals
As we look ahead to the fourth quarter, we expect many of the drivers of underlying profitability to continue
to progress. In particular, we expect underlying operating expenses to decline sequentially as our core businesses
realize incremental synergies, and NCL remains focused on actively running down its portfolio to release capital
and accelerate cost saves.
In addition to the NII expectations that I described earlier, transactional activity may be affected by seasonal
factors as well as client sentiment in response to the geopolitical landscape.
Despite these elements, we are executing on our integration plans at pace and remain on track to achieve our
goals of around a 15% return on CET1 capital and a cost/income ratio of less than 70% by the end of 2026.
With that, let’s open for questions.
12
Analyst Q&A (CEO and CFO)
Stefan Stalmann, Autonomous Research
Yes. Good morning, gentlemen. Thank you very much for the presentation. I have two questions and they
may be linked. The first regarding the outstanding SNB funding. I don't think there's any update in the
disclosure material on where the number has moved to. I think the last disclosed number was CHF 38 billion
at the end of August. Could you provide an update here?
And possibly related to this, it looks to me looking at SNB data that there has not been a lot further reduction
of SNB funding after August, in September. Is that a good interpretation of the data? And is there any
connection here between your management of the SNB funding and the new Liquidity Ordinance that has
come into play – that will come into place in January? And is it possible for you to give us a guidance on how
your liquidity ratios will look like on the 1st of January under this new Liquidity Ordinance in Switzerland,
please? Thank you.
Todd Tuckner
Hi, Stefan. Thanks for your questions. So, in terms of the outstanding SNB funding, no, it's – we still have the
– that funding levels are still unchanged at this stage. We are working through our business plans and as well
as our funding plans. And we'll consider the ability to repay some or all of that over the course of the coming
months, but your read was correct.
In connection with that funding and the Liq. Ordinance, no. I'd say there's no specific connection with that.
And we're not maintaining that funding, particularly in respect of satisfying the Liquidity Ordinance per se.
That said, the LCR guidance that you're looking for, as we say, will remain prudent. So you can expect it to
remain at levels not terribly far away from where we finished 3Q at.
Stefan Stalmann, Autonomous Research
Great that’s very helpful, thank you.
Giulia Miotto, Morgan Stanley
Yes. Hi. Good morning. Two questions from me. The first one on capital distribution. I know it's very early and
I guess you will comment on Q4, but what are the stepping stones that we should look out for before you can
resume a buyback? That's my first question.
And then, the second question is with respect to costs. In the quarter, there was an excellent delivery on costs
and the USD 3 billion target by year end has already been achieved. So basically, where do we go from here?
Can we assume that this steady path of cost saves can continue? Or will there kind of be a pause until there is
the legal merger because you have already basically extracted as much as you could of the low hanging fruit?
Thank you.
Sergio P. Ermotti
Okay. Thank you. So in respect of the capital distribution plan or capital return plans, as you pointed out,
you're going to have to be patient. You know, is for the time being I just can reiterate that we are still looking
to have a progressive cash dividend policy that will be implemented. And for the rest, you need to have –
what you need to see is the visibility with the plan. So we are finalizing the three-year plan and that will allow
us to really calibrate capital returns.
13
I just want to reiterate, I still believe at this stage, although the plan is not finished, that capital returns and
share buybacks is not a matter of years. In my point of view, it could be a matter of quarters. But without
having the final plan, it's difficult to really make a final statement. But that will be addressed in February.
And somehow, it's linked to your second question because, of course, I'm not so sure, I would define the
progress we've made so far as low hanging fruit. But I think that it takes efforts and time to go through this. I
do believe that we still have costs that can be taken out during 2024, regardless of what you are pointing out
being the critical issue is the legal entity merger. The legal entity merger is the triggering point that allow us
to go to the next level of cost reduction and synergy realizations from an operational standpoint of view, but
also from an IT stand point of view.
So 2024, as Todd mentioned, is the – and I also remarked, is a pivotal year, is probably the one time in which
we're going to incur the most costs in order to achieve the synergies that we'll achieve in 2025 and 2026. So,
you see how the two questions are somehow linked.
Giulia Miotto, Morgan Stanley
Thank you.
Andrew Coombs, Citigroup
Good morning. Two questions from me, please. Firstly, on the GWM net interest income trajectory. Thank
you for the commentary in your prepared remarks. I think you said after a 3% decline in Q3, you expected
mid-single-digit percentage decline in Q4 and that there's an ongoing deposit mix shift. So that seems to be
accelerating rather than decelerating. So can you give us any indication of how much longer you think that
trend could continue for? Do you think now that we're at peak rates, if anything, that should slow as we go
into 2024? And also, if there's any implications from your broader deposit pricing that's also influencing that
sequential NII decline. That's the first question.
Second question, there's been quite a lot of media commentary over the past week ahead of the Too Big To
Fail review coming out in spring next year. I think there's been some explicit discussion around potentially
introducing more exit fees or more notice periods around deposits. So, anything you could say with regards to
that and also what that means for your competitive positioning versus international peers? Thank you.
Todd Tuckner
Yeah. Thanks, Andrew. On the first in terms of GWM NII trajectory, I think you captured it right in terms of
guidance around a mid-single digit decline owing to deposit mix shifts and whether that seems like an
acceleration. I'd comment that I think what we're seeing is a bit of a broadening of that dynamic more across
the globe.
We saw in most of 2023 that dynamic being very significantly driven by moves from sweep deposits into
higher yielding deposits in the US. And we saw less of that in Europe and APAC, as well as in Switzerland.
And so while we're seeing the US taper now, both in the current quarter and as we look ahead, we're seeing
a bit of an expansion of that dynamic in other parts of the globe, and that's what's sort of driving that.
As I look out into 2024, we're doing that work now. We'll come back with a view during February with a view
on full year 2024. I would just conclude on the point saying, no, I don't see pricing having an impact. I mean,
this is just a response to the current rate environment as clients are undergoing cash sorting across our client
base.
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Sergio P. Ermotti
So in respect of what you mentioned and changes in the law or regulations around liquidity. I think I can only
say that it's pretty difficult to track all the rumors, speculations and ideas that are coming up, almost daily.
On the Swiss media, I think that I can only tell you that, that at this stage what stands is that even the Finance
Minister took an official stance on the matter. I mean, those are speculations. I don't believe this is going to be
part of the package. I think that - I'm convinced that Switzerland will keep its standards in terms of allowing –
or responding to the crisis in March, not only the one in Switzerland, but broadly speaking, with following the
recommendation that it will be set by the FSB and other bodies. And in that sense, I don't see us being
particularly disadvantaged compared to any other jurisdictions in terms of a Liquidity Ordinance. So, I guess
that we will follow up and I think it's going to still take months and months before the full analysis of what
happened will translate into concrete actions.
Adam Terelak, Mediobanca
Good morning. Thanks for the questions. I had a one big picture question on revenues and then a follow-up
on the operational risk RWA. Big picture, your revenues at the minute are annualizing to low-40 billions or so.
Clearly, your target has a number, which is probably USD 50 billion-plus. Just want to understand how you
see the revenue bridge from here through to 2027 and what the key moving parts should be, particularly in
the context of some of your GWM trends, which at the minute seem to be down before we go back up.
And then, secondly, on operational risk, I just want to understand some of the assumptions that are going into
your Basel IV guidance there. Clearly there's some uncertainty around ILM. There's a bit of uncertainty about
what losses to use in that standardized calculation. So what losses from the Credit Suisse business are you
having to carry forward and how does that impact your operational risk RWA? And then, finally, can I just clarify
on the Basel 3.1 finalization guidance, is that 5% ex. any moves in operational risk? Thank you.
Sergio P. Ermotti
Thank you, Adam. So in terms of revenues, I'm not so sure we ever indicated that we have a USD 50 billion
plus revenue. I don't know where this figure is coming from. What I remember saying back in August is that
our targets, our ambitions for 2026 are not based on blue sky scenarios on revenues. So, if anything, I guided
to the contrary of that.
So we are definitely focused on costs and we are definitely also focusing on the denominator. So we need to
basically focus on managing and utilizing in a better way the resources and the risk-weighted assets that we
have right now.
I have to go back to the critical point. Mission number one we have had in the last six months and in the
foreseeable future is to restructure Credit Suisse, okay? And then we're going to talk about synergies and then
we're going to talk about growth. But, before we talk about growth of the top line, we need to restructure
and reset the basis. And in that sense, believe me, we are not counting on blue sky scenarios and that figure is
not really our figure.
Adam Terelak, Mediobanca
Can I ask for a better landing point then?
Sergio P. Ermotti
Well, the landing point you will see it in February.
15
Adam Terelak, Mediobanca
Okay. Thank you.
Todd Tuckner
Adam, on your second question in terms of op risk RWA and modeling, as I mentioned, we did an initial
impact assessment. It was quite dynamic. We've had only initial discussions with our regulator at this point in
time, naturally ahead of the formal introduction of Basel III final for op risk RWA, there'll be much more
extensive interactions with the regulator to agree on the particulars around the ILM, as you say.
We made certain modeled assumptions for now, as well as the loss history. We made certain assumptions
about the loss history and the roll off of certain legacy matters. So, it was a thoughtful analysis, a good initial
view, but it's going to be one that requires more work and more engagement with our regulator over the
coming months.
On the 5%, actually, no, it's not ex-op risk, it's inclusive. But given that, op risk we're saying, as I said in my
remarks, we see that as broadly unchanged from now. The maths are the same either way.
Adam Terelak, Mediobanca
Perfect. Thank you very much.
Flora Bocahut, Jefferies
Yes. Good morning. I'd like to talk about the net new money, especially at CS this quarter, because if I look
at extrapolating the quarterly changes in net new money at CS that we've seen over the past two quarters, it
seems to point to a run rate where you gain USD 20 to USD 30 billion of net new money per quarter. But
then, if I try and reconcile just the month of September from what you had disclosed with Q2, it looks like
there's been a slowdown actually in net new money at CS with just USD 2 billion in Wealth this month. So
what should I consider as a more normalized level from here? Is it going to be still the pace we saw over
quarterly basis or there is a slowdown because the environment is tougher. You probably have visibility there
with what happened in October.
And the second question is actually following up on this. I know you are going to provide us with the strategic
update at the full year, but any hint as to what kind of assumptions you've made in your RoCET1 target towards
2026 regarding the AUM level, especially considering the fact that the market effect is starting for the more
negative now. Thank you.
Todd Tuckner
Hi, Flora. Thanks for the questions. So, on the net new money for Credit Suisse Wealth, I appreciate your
doing a fair bit of the extrapolation math but a long time in this business tells me that extrapolating net new
money trends is probably not necessarily the way to go, certainly not from you know, a month or so.
The point we've made is that we've stabilized the business. We're seeing inflows after massive outflows and
that for us, as Sergio highlighted, was really objective number one, was to stabilize the business and that
we've achieved.
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Look, going forward in any case, we're going to be reporting these metrics on a combined basis. We're just
giving an indication because we talked about that in the second quarter. We gave an indication even up to
the late publication date towards the end of August. So, we, Sergio and I, wanted to follow through on that
and offer that perspective, but the expectation going forward in any case is that Wealth Management, which
is how we manage the business, will be providing a combined net new money plus dividend and interest
figure going forward.
And in terms of the RoCET1 assumptions in terms of AUM levels, we're doing that work now. Naturally, when
we develop the landing zone targets that we articulated in the second quarter, we had a view on growth, but
now we're validating that in our business planning process and we'll come back and offer specificity around
that in February.
Flora Bocahut
Thank you.
Jeremy Sigee, Exane BNP Paribas
Good morning. Thank you. I'd like to ask two questions about non-core, if I could. The first one on the RWA
outlook, you've had a great start already reducing that balance down quite effectively. The runoff you show
in the slide is effectively the natural runoff with no action, but clearly you are taking action. So, is it
reasonable for us to expect that rather than being down 50%, it could be down 75% or 100% within that
sort of three-year timeframe? It seems that you're on a more aggressive trajectory than that passive runoff
that you're showing in the slide.
And then, the second question is also about non-core, about the P&L. So you're annualizing in this quarter
around USD 1 billion positive revenues and USD 5 billion of costs. I just wonder is that a representative starting
point for us to sort of model non-core going forward? And linked to that, how much could that change in
2024? Could we see – will we still see positive revenues in 2024 in non-core? And how much could we expect
the costs to reduce in 2024 in non-core?
Sergio P. Ermotti
I think, Todd, I mean, let me start with taking the one on – you know we are giving as we mentioned last
time, we just give you a flavor for the natural decay in order for you to understand that, what will be the
leftover in case we do nothing. And as you pointed out, we have been pretty active.
Having said that, I don't think it's reasonable to assume that we're going to take down 100% or 75% to
100% per se because it all depends on at what terms we will do it. The very critical topic here is that we have
to do it in a way that creates value and not just headlines. So, we can get rid of probably many of those
positions, but destroying a lot of value. And this will be in conflict with capital accretion and the ability for us
to return capital to shareholders.
So, I think that it's very clear what is the framework we are using and I think objective number one around non-
core is not necessarily just to accelerate the wind down of assets, but it's to take down cost. That's the much
more critical element of freeing up capacity and resources.
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Todd Tuckner
And Jeremy, on the P&L question, for sure, on the revenue side, I would not annualize the current quarter's
revenues. The revenues are a function of – the market through which we would exit these positions. It
depends on the nature of the positions we're talking about. It depends on market conditions. We'll be
opportunistic and everything, Sergio just said that actually informs the dynamic about the speed, the timing,
the intensity of when we get out of positions is, of course, what governs in that respect. So, I would put no
sort of target or certain extrapolation. Certainly, no extrapolation to the current quarter's revenues in NCL is
saying, well that's a run rate.
On the cost side, I would argue that's different because there you're looking at – on the underlying OpEx,
you're looking at, at this point, the run rate cost to support the rundown of the business. So, as that business
runs down, you would expect that the costs associated, the underlying OpEx supporting the portfolio will also
run down. Now, that may not be linear and I wouldn't expect it to be linear, but it ought to be somewhere in
some way, shape or form correlated with the size of the balance sheet as it starts to diminish over time.
Jeremy Sigee, Exane BNP Paribas
Okay. Thank you.
Andrew Lim, Société Générale
Hi. Morning. Thanks for taking my questions. So just turning to tax. Obviously, we saw some nice RWA
reduction, but it was negated by the high tax charge. But at the same time, you're talking about mergers of
the divisional structure to enable you to reduce the effective tax rate. I was wondering if you could give us
more specificity on when we can expect that to happen. And would that be a gradual process for the
reduction in the effective tax rate, or would that be actually a step-down change there?
And then, my second question is, you've done a good job on costs, well done there. The exit run rates for the
end of the year, I was wondering if you could update us on that.
Todd Tuckner
Thanks, Andrew. So, on the tax question, in terms of timing. As I mentioned in my remarks, certainly the
elevated tax rate is a function of the fact that the expenses that are weighing on our pre-tax at the moment,
in particular, the integration related expenses are being incurred in jurisdictions where we're not able to offset
– even within the jurisdictions - necessarily offset profits and losses in different entities just given where they
fall out.
So there could be expenses or losses in one entity that's not tax grouped with an entity that is generating
taxable profits. And that's indeed what's happening really across the globe because the Credit Suisse entities
in particular, as you'll appreciate under Credit Suisse AG, which is not yet merged with UBS AG, those are
separate chains of entities. So, therefore, anything happening on the CS AG side that you would otherwise
ideally shelter with profits of the UBS side, isn't happening until we start the mergers.
Now, once we do that, your question was, is it a step or it's gradual? We'll see both. I mean, certainly we'll see
some immediate benefits by bringing together certain entities. Others are going to be harder work and harder
planning to unlock some additional tax value and get the rate to a lower level. So you’ll see once the mergers
take place over the course of 2024, you'll see some step down. But you'll also, as I said, gradually see the rate
come back in.
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In terms of the update for year end, we did say that as of the third quarter, we see the run rate saves in excess
of USD 3 billion and expect to make further progress. We're undertaking actions at present. We haven't
quantified that, but you can expect that there will be further progress in the fourth quarter before we exit 2023.
Andrew Lim, Société Générale
That’s great. Thank you.
Amit Goel, Barclays
Hi. Thank you. Two questions from me. So, the first is, I mean, so clearly the legal entity merger is pretty
important in terms of the kind of the costs and the tax and so forth. So, do you mind just reminding us
exactly the main pieces and in terms of the timing? So, would you be expecting some of that to happen
within the first half of the year or is that kind of second half? And just things that we can monitor to check
the progress there.
And then, secondly, just in terms of the revenue picture, just into Q4, obviously, there's the commentary on
the transactional income and NII. Just thinking – are you thinking the underlying revenues Q4 ex-NCL are likely
to be in line with what we've seen in Q3 or slightly better or due to seasonality, slightly worse? Thank you.
Todd Tuckner
Thanks for the questions, Amit. So, on the legal entities, in terms of the main pieces and the timing,
obviously, the big groups to address are the parent banks that will take place, the two Swiss banks and then
the US IHCs and the subsidiaries below. I mean, I'd say those are – and in the UK as well. And those are going
to be the biggest chunks.
Of course, across the globe, there's also a lot of undertaking in Europe and in Asia. But the big – I highlighted
the big pieces because that's what you were looking for. We are working hard on developing plans for all of
those. I think it's fair to say over the course of 2024, I won’t at this stage, speculate on exact timing, but we'll
provide more updates as we go and as we enter the year and as we go through the year, we'll give you more
specificity around timelines.
In terms of the revenue picture in the fourth quarter, I mean, as you mentioned, repeating back that I offered
some NII guidance for our core businesses in terms of underlying NII. We do see the potential for transactional
activities. I mean, the market for transactional activities is a bit clouded at the moment.
We are seeing some risk off even though, earlier this month certainly some of the less hawkish sentiment,
coupled with further rate hike pauses, and seeing bonds and equities rally more recently, that would suggest
perhaps more risk on. But I think that's all counterbalanced as well in our clients' minds also about what's
happening in the Middle East.
And so we do see the potential for TRX in our asset gathering businesses as well as transactional activity in our
IB to potentially be affected by that. And as you mentioned, seasonality will for sure, in any event, be a factor.
So I'd say the revenue picture is a bit clouded, but I, at this point, wouldn't necessarily expect it to increase
quarter-on-quarter significantly at this stage.
19
Amit Goel, Barclays
Got it. Thanks. And just on the legal entity piece, so just sorry for my understanding, it's like getting the legal
work done and getting the regulators to kind of sign off. And just in terms of the main things that you,
obviously, have to get done to do the mergers, is that right?
Todd Tuckner
Yes. That's correct. There is a lot of planning to be done. The planning manuals are incredibly extensive. And
of course, it needs to be approved by the regulators. And when you think about the parent bank and how
many jurisdictions they operate in, you're talking about regulators across the world. So these are not simple
transactions by any stretch of the imagination.
Amit Goel, Barclays
Okay. Thank you.
Benjamin Goy, Deutsche Bank
Hi. Good morning. Two questions, please. The first, if you could maybe speak about the profitability of the
recovery of funds and assets of Credit Suisse and how that's going, the discussion with clients there. And the
second is, it looks like, in particular, non-core significantly outperformed your expectation you set in Q2 in the
third quarter. So just wondering, what does it mean for the budget, so to say, you have to, for an accelerated
rundown in Q4 and beyond. Thank you.
Sergio P. Ermotti
Yes. I mean, in terms of the non-core, I don't think that extrapolating a quarter is meaningful. I do – as Todd
mentioned before, we need to look at – in some cases, we were able to dispose assets above marks. In others,
we will need to make an assessment about what we think is the value of those positions.
But I would pay attention to not to use the third quarter numbers and extrapolate and call it is better than what
we expected because we didn't really give any guidance on that. So, I mean, I think that we are confident that
the quality, broadly speaking, of the assets is there. They are non-core assets per se. The vast majority is not
problematic and therefore I'm not overly concerned about the revenue or the cost to exit. As I mentioned
before, it's more of a matter of addressing the cost to sustain those assets than it is about managing out the
assets themselves.
In terms of recovery of the funds, we see a – the win-back strategy is still in place. We have been – we are –
very focused. And probably what I can offer as a comment is that as time goes by we saw it already in the
second quarter of the year after the announcement of the transaction, and definitely, has been confirmed in
the third quarter. Basically, the third quarter is a year after you started to see departure of assets and client
advisors from Credit Suisse. Despite the massive outflows that you saw, the amount of assets that were able to
be moved by the people that were serving those assets has been within what we expected, on average no more
than 20%. So the first big issue, as I said, we have been able to keep the vast majority of the assets. So it's very
difficult for people that move out to be able to bring the assets with them.
So if you look at the numbers, it's quite – I can give you maybe a little bit of anecdotal evidence. I mean, we
lost around – or Credit Suisse in the last 12 months lost around 500 client advisors. They moved so far USD
20 billions of assets. So – and let's say that we we're going to lose further assets because some of those
people just left more recently, and we're going to see some outflows later on, but we are totally convinced
that it's not going to be a multiple of that USD 20 billions, the future outflows. And we are working hard to
recapture some of it.
20
So, I think that our strategy now is more focused on regaining the clients that left because of fears of the
instability of the system. And in that sense, we maintain our ambitions, as we say. Most likely, we're going to
formulate these ambitions, as Todd mentioned, as a combined wealth management business going forward
because, I mean, it's not really an issue any longer, Credit Suisse versus UBS, it’s one team. We are working on
maximizing the outcome. And so we're going to just outline our net new money growth ambitions in our three-
year plan in a way that reflects win-backs and organic growth.
Benjamin Goy, Deutsche Bank
Good. Thank you.
Chris Hallam, Goldman Sachs
Yeah. Good morning, everyone. Just two from me. So, on profitability, clearly better than expected in the
quarter. Previously, you'd guided for positive underlying PBT in H2 and breakeven in the third quarter. So,
given the third quarter is already quite positive, does that change how we should think about Q4? I guess the
old guidance implied a sequential improvement in the fourth quarter in terms of PBT. So just wondering
whether that's still the right way to think about that.
And then, second, and I appreciate it's a bit of a follow-up to some of the earlier questions on CS net new
money. You've given the regional disclosure on a combined basis, but I just wanted to check whether the
combined regional picture, sort of Asia strong, EMEA strong, Switzerland more balanced. Is that consistent
across both the CS and UBS Wealth franchises?
Todd Tuckner
Thanks, Christopher. Yeah. On the second question, it is consistent, obviously ex the US given CS doesn't
have a wealth presence there, but across, it is. I would say the APAC and EMEA proportionality holds
obviously on the smaller base that we were talking in terms of the net inflows this quarter compared to the
UBS side. But yes, that dynamic does hold.
In terms of profitability in the fourth quarter, I would say that we certainly accelerated a bit of what we were
forecasting back in August in terms of 3Q, 4Q where we said roughly breakeven in 3Q and further progress in
4Q. I think we've seen the progress that we've been able to accelerate. So really undertaking and executing
integration at pace. And you see the results of that.
I'd say 4Q in a way standing alone relative to how we saw it back in August is still around the same. So I would
look – meaning I would say we expect 4Q to come in better than breakeven, which is what we said was the
case back in August. And I would say balancing the execution on the cost side, but also considering some of
how we're guiding on the revenue side I think that number you have an idea of where we, at this stage expect
that number to come in.
Chris Hallam, Goldman Sachs
Thanks, Todd. Helpful.
Sergio P. Ermotti
Okay. I think this was the last question. Let me thank you for dialing in and by just quickly reiterating, as you
can see, we are in full execution mode, but also at the same time we are planning for the future. And the next
milestones, other than the operational one I just or we just described, is to prepare the three-year plan that we
will present in February.
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In the meantime, we are very focused really on, as I said, on execution. And I'm totally convinced that we are
in a good place and of course, in our mission to really create some things that will not only be a huge
restructuring story, but also something that has set the base for future growth and ambitions that we have. I
mean, we look forward to present you the three-year plan in February. And I'm sure in the meantime, we're
going to be in touch either directly or through my colleagues for the follow-ups of this call.
Thank you for calling in and enjoy the rest of the day. Thank you.
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with sanctions in a timely manner 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, including as a result of its acquisition of Credit
Suisse, as well as the amount of capital available for return to shareholders; (xiii) the effects on UBS’s business, in particular cross-border banking, of
sanctions, tax or regulatory developments and of possible changes in UBS’s policies and practices; (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 both nation states and non-nation-state actors targeting financial institutions; (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 for UBS to achieve goals relating to climate, environmental and social
matters, as well as the evolving nature of underlying science and industry and the possibility of conflict between different governmental standards and
regulatory regimes; (xxii) the ability of UBS to access capital markets; (xxiii) the ability of UBS to successfully recover from a disaster or other business
continuity problem due to a hurricane, flood, earthquake, terrorist attack, war, conflict (e.g., the Russia–Ukraine war), pandemic, security breach,
cyberattack, power loss, telecommunications failure or other natural or man-made event, including the ability to function remotely during long-term
disruptions such as the COVID-19 (coronavirus) pandemic; (xxiv) the level of success in the absorption of Credit Suisse, in the integration of the two groups
and their businesses, and in the execution of the planned strategy regarding cost reduction and divestment of any non-core assets, the existing assets and
liabilities currently existing in the Credit Suisse Group, the level of resulting impairments and write-downs, the effect of the consummation of the integration
on the operational results, share price and credit rating of UBS – delays, difficulties, or failure in closing the transaction may cause market disruption and
challenges for UBS to maintain business, contractual and operational relationships; and (xxv) the effect that these or other factors or unanticipated events,
including media reports and speculations, 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 the Annual Report on Form 20-F for the year ended 31 December 2022. 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.
23
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
Credit Suisse AG
By: /s/ Ulrich Körner
_____
Name: Ulrich Körner
Title: Chief Executive Officer
By: /s/ Simon Grimwood
_
Name: Simon Grimwood
Title: Chief Financial Officer
Date: November 8, 2023