UBS Group AG (UBS) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 26, 2022 3:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good morning. Welcome to the UBS Second Quarter 2022 Results Presentation. The conference must not be recorded for publication or broadcast. [Operator Instructions].

At this time, it's my pleasure to hand over to Sarah Mackey, UBS Investor Relations. Please go ahead, madam.

Sarah Mackey

Good morning, and welcome, everyone. Before we start, I would like to draw your attention to our cautionary statement slide at the back of today's results presentation. Please also refer to the risk factors in our 2021 annual report, together with disclosures in our SEC filings.

So on Slide 2, you can see our agenda for today. And it's now my pleasure to hand over to Ralph Hamers, Group CEO.

Ralph Hamers

Thank you, Sarah. Good morning, everyone. I think going through, you will see that the second quarter has been one of the most challenging periods for investors in the last 10 years. It has not been an asset class that has been immune to the effects of the challenging global macroeconomic environment.

In these uncertain times, our clients rely on our powerful ecosystem to navigate markets and invest for the long term. And our headline numbers for the quarter were strong and a return on CET1 capital was 19%. And those numbers included a gain from the sale of our stake in the joint venture in Japan.

This gain aside, our underlying performance reflected good result in a more challenging environment with lower asset levels, higher volatility and increasing rates. And we're navigating this environment staying close to our clients, keeping strong risk and credit discipline and our continued focus on cost.

Going to the next slide, basically, you see that the market sell-off accelerated in the second quarter, and that was the case in both equities as well as fixed income. Inflation continues to be high. The war in Ukraine is ongoing, strict COVID policies are still part of the life in Asia, and all of these have led to further declines in economic growth outlook. And with significant drop in markets, our client portfolios lost value resulting in lower client assets across our franchise.

Just to put a couple of numbers to that, the MSCI world index was down 70%. And Investment-grade bonds were down 5% on average. High-yield bonds were down 12%. So it's no wonder that our private clients stayed on the sidelines this quarter. Net new fee-generating assets were flat for the group, but positive for Asia Pacific and also positive for Switzerland. Transaction-based revenues with these clients declined by 17%. We also saw €12 billion of net outflows in asset management, mostly out of equities.