UBS Group AG(NYSE:UBS) 
UBS Group AG, together with its subsidiaries, provides financial advice and solutions to private, institutional, and corporate clients worldwide. It operates through four divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management, and Investment Bank. The Global Wealth Manag...
Website: http://www.ubs.com
Founded: 1998
Full Time Employees: 71,230
Sector: Financial Services
Industry: Banks-Diversified
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At a glance:
- Integration of Credit Suisse Remains the Key Strategic Focus: UBS’s near-term performance and risk profile are heavily influenced by the pace and execution of Credit Suisse integration, including cost synergies, operational consolidation, and reduction of non-core exposures.
- Capital Strength and Regulatory Requirements Drive Balance Sheet Decisions: Capital ratios, leverage constraints, and evolving Swiss/global regulatory expectations shape UBS’s capital allocation priorities, including balance sheet optimization and retention of earnings versus distributions.
- Wealth Management Flows and Client Sentiment Are Central Earnings Drivers: Net new money trends, client risk appetite, and market levels materially affect recurring fee income and transactional revenue, making wealth management momentum a key indicator for overall results.
- Investment Bank Risk-Weighted Assets and Market Conditions Influence Volatility: Trading activity, underwriting pipelines, and risk-weighted asset management affect revenue variability; UBS’s posture on risk and market conditions can meaningfully swing quarterly performance.
- Litigation, Conduct, and Legacy Asset Run-Off Can Create Headline Risk: While strategic de-risking continues, any remaining legacy positions, legal matters, or operational incidents can impact provisions, capital, and investor perception during the integration period.
Bull Thesis:
- Successful Credit Suisse Integration & Synergies: The successful integration of Credit Suisse is expected to unlock significant cost synergies, enhance market share, particularly in wealth management and Swiss banking, and create a more dominant global financial institution. This could lead to substantial long-term value creation.
- Global Wealth Management Leadership: UBS maintains its position as a leading global wealth manager. This segment is characterized by stable, recurring revenue, high margins, and benefits from long-term trends in global wealth creation, providing a resilient core earnings driver.
- Robust Capital Position and Shareholder Returns: UBS typically maintains a strong capital buffer, providing resilience against economic downturns and regulatory changes. This robust financial position supports potential for attractive shareholder returns through dividends and share buybacks once integration risks subside.
- Strategic Focus on Growth Markets: The bank's strategic focus on expanding its presence in key growth regions, such as the Americas and Asia-Pacific, particularly within its wealth management division, positions it to capture new client segments and drive future revenue growth.
Bear Thesis:
- Credit Suisse Integration Execution Risks: The integration of Credit Suisse is a massive and complex undertaking, carrying significant execution risks. Potential challenges include client attrition, cultural clashes, unexpected integration costs, and difficulties in harmonizing IT systems, which could negatively impact earnings and market perception.
- Heightened Regulatory Scrutiny and Litigation Risks: As a larger, more systemically important bank post-acquisition, UBS faces increased regulatory scrutiny globally. Furthermore, it has inherited a substantial number of ongoing and potential litigation cases from Credit Suisse, which could lead to significant financial liabilities and reputational damage.
- Macroeconomic Headwinds and Market Volatility: A global economic slowdown or recession could negatively impact client activity in wealth management and investment banking, reduce asset valuations, and potentially increase credit losses. Persistent market volatility could also depress trading revenues and M&A activity.
- Intense Competition in Wealth Management: Despite its leadership, UBS faces intense competition in the wealth management sector from other global banks, regional players, and increasingly from fintech firms. This competition could put pressure on fees, margins, and client retention, especially for high-net-worth individuals.
Main Competitors:
- JPMorgan Chase & Co. ($JPM) (J.P. Morgan Private Bank, Corporate & Investment Bank, Asset & Wealth Management), Competes directly across all major segments, particularly in global wealth management for ultra-high-net-worth individuals, institutional asset management, and investment banking services (M&A advisory, capital markets, sales & trading). JPM's extensive global network and strong balance sheet make it a formidable rival.
- Morgan Stanley ($MS) (Wealth Management, Institutional Securities (Investment Banking, Sales & Trading), Investment Management), A primary competitor in global wealth management, where it serves high-net-worth and ultra-high-net-worth clients, a segment central to UBS's strategy. Also a top-tier investment bank, vying for M&A advisory, equity and debt capital markets mandates, and institutional trading business.
- The Goldman Sachs Group, Inc. ($GS) (Global Banking & Markets (Investment Banking, Global Markets), Asset & Wealth Management), Competes intensely in high-margin investment banking activities, including M&A advisory and capital markets, where both firms target complex, large-scale transactions. Also a significant rival in private wealth management for affluent and ultra-high-net-worth clients, and in institutional asset management.
- Bank of America Corporation ($BAC) (Merrill Lynch Wealth Management, Global Banking & Markets, Bank of America Private Bank), Through its Merrill Lynch division, Bank of America is a major competitor in wealth management, serving a broad spectrum of affluent and high-net-worth clients. Its Global Banking & Markets unit also competes with UBS's investment bank for corporate clients and capital markets activities globally.
Moat:
UBS Group AG operates in a highly competitive global financial services landscape, primarily deriving its moat from its leading position in global wealth management, particularly for ultra-high-net-worth individuals. Its competitive advantages include a strong global brand, extensive international network, deep expertise in complex financial planning, and a robust balance sheet. However, it faces intense competition from a diverse set of players: bulge bracket banks offering integrated wealth management, investment banking, and asset management services; specialized boutique firms; and increasingly, technology-driven financial platforms. The industry is characterized by pressure on fees, high regulatory costs, and a constant battle for top talent and client mandates, requiring continuous innovation and efficient execution to maintain market share and profitability.
Income Statements:
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Balance Sheets:
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| Unit: USD | 2017-12-31 |
|---|---|
michel demaré, vice chairman | 2,017 |
david sidwell, senior independent director | 2,017 |
reto francioni, member | 2,017 |
ann f. godbehere, member | 2,017 |
william g. parrett, member | 2,017 |
julie g. richardson, member2 | 2,017 |
isabelle romy, member | 2,017 |
robert w. scully, member | 2,017 |
beatrice weder di mauro, member | 2,017 |
dieter wemmer, member | 2,017 |
joseph yam, former member2 | 2,017 |
total | 2,017 |
1 includes blocked and unblocked shares held by bod members, including those held by related parties. no options were granted in 2017 and 2016. 2 julie g. richardson was newly elected and joseph yam stepped down from the bod at the agm on 4 may 2017. | |
share and option ownership / entitlements of geb members1 | |
name, function | |
sergio p. ermotti, group chief executive officer | 2,017 |
martin blessing, co-president global wealth management | 2,017 |
christian bluhm, group chief risk officer | 2,017 |
markus u. diethelm, group general counsel | 2,017 |
kirt gardner, group chief financial officer | 2,017 |
sabine keller-busse, group chief operating officer | 2,017 |
ulrich körner, president asset management and president ubs emea | 2,017 |
axel p. lehmann, president personal & corporate banking and president ubs switzerland | 2,017 |
tom naratil, co-president global wealth management and president ubs americas | 2,017 |
andrea orcel, president investment bank | 2,017 |
kathryn shih, president ubs asia pacific | 2,017 |
jürg zeltner, former president wealth management | 2,017 |
1 includes all vested and unvested shares and options of geb members, including those held by related parties. 2 includes shares granted under variable compensation plans with forfeiture provisions. the actual number of shares vesting in the future will be calculated under the terms of the plans. refer to the “our deferred variable compensation plans for 2017” section of this report for more information on the plans. 3 refer to “note 27 employee benefits: variable compensation” in the “consolidated financial statements” section of this report for more information. 4 no conversion rights outstanding. | |
chf million | |
payables due to the members of the geb | |
of which: deferred contingent capital plan | |
of which: other deferred compensation plans |
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| Unit: USD |
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