UBS AG (UBS)

Q2 2010 Earnings Call

July 27, 2010 08:00 am ET

Executives

Caroline Stewart - Head, IR

Oswald Grübel - CEO

John Cryan - CFO

Analysts

Jon Peace - Nomura

Kian Abouhossein - JPMorgan

Huw van Steenis - Morgan Stanley

Fiona Swaffield - Execution

Jernej Omahen - Goldman Sachs

Kinner Lakhani - Citi

Derek De Vries - Bank of America/Merill Lynch

Teresa Nielsen - Vontobel

Torsten Riecke - Germany’s Business Daily Handelsblatt

Presentation

Caroline Stewart

Good morning everyone and welcome to our second quarter results presentation. My name is Caroline Stewart and I'm the Head of Investor Relations here at UBS.

This morning our CEO, Ossie Grübel will present the highlights of the second quarter results and then John Cryan, our Chief Financial Officer will present the results to you in detail.

After that, we would be very happy to take your questions and this morning we are going to take questions first from the telephone and then from the audience here in the room in Zurich. After that we will have a short break, and we’ll resume for another session in German.

Before handing over to Ossie, I’d like to draw your attention to this slide which contains our cautionary statement with regards to forward-looking statements and I’d ask you to read it in detail.

With that I’d like to hand over to Ossie.

Oswald Grübel

Thank you, Caroline. Good morning ladies and gentlemen. I know there are few here, but most of you are probably on the phone or on the internet. Because it’s a busy day, we are not the only bank publishing today, but we are very happy in showing you our second quarter.

And we think our employees did a very good job actually in the second quarter. Actually so good, that most of the analysts already asked if the results are mainly due to proprietary trading. There I unfortunately have to disappoint you because we are not as good as that yet in proprietary trading.

But if we look back in the first-half of this year, we had a pretax profit of $5.4 billion and revenues of $18.2 billion which is a major improvement and as we told you in the last couple of quarters, we are moving ahead with our plan and are on track actually to continue to improve the results of the banks in the future.

Now most of you keep asking also about net new assets clearly because that is still one of the weak points because we are not yet growing net new assets, we had some asset outflow as well. But much smaller and at least coming down to numbers which are smaller surrounding you can say in our case. We need to tell you before that we believe that during the course of this year we hope and are pretty confident that we can stop any asset outflow, but also the asset reduction had something to do clearly with the resizing of our wealth management and of certain operations in there and also with our US situation as you know.

And in the last quarter, one of the more important decisions in our favor happened in Berlin where the Swiss and the US government agreed on the agreement or ratified the agreements they made before and that should lead to the final settlement for us by the latest we think October this year in the US case.

And then we are happy if that finally is finished because then we can concentrate more again on our normal business. But back to the last quarter, the last quarter was quite remarkable and eventful scenario. Not too long ago, everybody was forecasting the imminent demise of the euro. As usual, since then the euro has improved and in state of one-to-one dollar at once early this morning and probably most likely will go on improving during the course of the year I think.

Now where did we make our money and in that turbulent time we had especially made, it was actually in the flow business as we told you and as we said before, we want to increase our flow business and there we would use the best results in cash equity trading, in foreign exchange trading and so, not unfortunately in proprietary trading, we still have to work on that one. But therefore, we think the results, especially in comparison and relative to our peers, they look reasonably good and I think we are very happy about it.

In the investment banking, we made good progress across all our strategic initiatives and the rebuilding of our fixed income is nearly completed and the focus is now on execution and how can we increase revenue and client business. One strong focus remaining is the emerging markets. You might have read that we are reentering Brazil and we bought small companies there mainly to get the licenses and now surely you’ve questions on why did we sell our Brazil operation in the first place, but I think we answered that question already last year.

It was a time where we had asset priorities and had to act quickly and we also said that’s the time that we are not very happy about set transaction. We do believe that emerging markets especially for our global business and focus where we will generate substantial revenues in the coming years.

We also aligned our security business across equities and fixed income research and in prime services and what is altogether gratifying, it looks like we gained market share in equity in the second, third quarter.

In Wealth Management Americas, we are delivering on our strategies there. We improved profitability and are slowing FA attrition, but the focus there is really on maintaining and building a high quality financial advisor population and which is where we want to differentiate us from our competition.

In Wealth Management in Swiss banking, so we were in the last 12 months really occupied with improving substantially our compliance all around and resizing certain businesses as we said before. It looks like the numbers of client advisors have bottomed out in mid year and has potential to gradually grow again.

Read the rest of this transcript for free on seekingalpha.com

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