UBS AG's (UBS) CEO Sergio Ermotti on Q1 2014 Results - Earnings Call Transcript

| About: UBS Group (UBS)


Q1 2014 Earnings Call

May 06, 2014 4:00 am ET


Martin Osinga - Product Manager

Sergio P. Ermotti - Group Chief Executive Officer, Member of Group Executive Board and Chairman of Global Community Affairs Steering Committee

Thomas Naratil - Group Chief Financial Officer, Group Chief Operating Officer and Member of Group Executive Board


Alastair Ryan - BofA Merrill Lynch, Research Division

Kinner R. Lakhani - Citigroup Inc, Research Division

Andrew Lim - Societe Generale Cross Asset Research

Fiona Swaffield - RBC Capital Markets, LLC, Research Division

Christopher Wheeler - Mediobanca Securities, Research Division

Jernej Omahen - Goldman Sachs Group Inc., Research Division

Kian Abouhossein - JP Morgan Chase & Co, Research Division

Stefan-Michael Stalmann - Autonomous Research LLP


Ladies and gentlemen, good morning. Welcome to the UBS Investor Update 2014 Conference Call. I'm Stephanie, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to turn over to UBS.

Martin Osinga

Good morning, and welcome to our First Quarter Results and 2014 Investor Update. My name is Martin Osinga, and I am acting Head of Investor Relations for UBS while Caroline Stewart is on maternity leave.

For today's agenda, we'll begin with about 15 minutes dedicated to our first quarter results, including Q&A. We'll permit photography during the presentation of our results but then make a short pause to allow photographers to exit the auditorium before we start taking questions. After the results Q&A and a short break, we will begin the investor update portion of the day. Prior to lunch, you will hear from our Group CEO, Sergio Ermotti; Group CFO and COO, Tom Naratil; and our Chief Risk Officer, Phil Lofts. Then, the three of them will jointly host a 1-hour Q&A session. After a break for lunch, we will open up online again at 2 p.m., Zürich time, for the afternoon session with the CEO of Global Asset Management, Ulrich Koerner, followed by Q&A. For the last session of the day, Bob McCann and Jürg Zeltner will present on our Wealth Management businesses and take your questions.

The webcast will end after Sergio's closing remarks. We'll then host a few breakout sessions for investors here in Zürich.

Before I hand over to Sergio, I would like to draw your attention to our cautionary statements with regards to forward-looking statements.

With that, I hand over to Sergio.

Sergio P. Ermotti

Thank you, Martin. And good morning, everyone.

Having hosted our last 2 investor days in New York and London, I am pleased that we have an opportunity to do it here in Zürich, and I am looking forward for the day. I will keep my remarks on the Q1 fairly shortly, as we have a very busy agenda, as you could see, for the day.

So in the first quarter of 2014, we generated an adjusted profit before tax of CHF 1.5 billion, with solid results across all our businesses. The result includes a 193 million related to provisions for litigation, regulatory and similar matters. Net profit attributable to UBS shareholders was nearly CHF 1.1 billion.

I'm pleased to report that we achieved a major milestone in our capital management. Our fully applied Basel III CET1 ratio reached this quarter a 13.2%. We also made further progress in increasing our fully applied Swiss SRB Basel III leverage ratio, which rose 40 basis points to 3.8% at the end of the quarter.

Wealth Management earned an adjusted profit before tax of CHF 659 million while delivering strong net new money of nearly CHF 11 billion and increased gross margin. Wealth Management in America delivered another record with an adjusted profit before tax of $284 million while attracting $2 billion in net new money. Retail & Corporate delivered strong profitability of CHF 401 million in the first quarter, which was the best first quarter since 2010. Global Asset Management delivered CHF 126 million in adjusted pretax profit and had its best quarter for net new money, excluding money market flows, since the third quarter of 2005 with CHF 13 billion. Despite a more muted seasonal uptick than in prior years, the Investment Bank delivered an adjusted return on attributed equity of 28%, with improved performance across all regions. In the Corporate Center, we reported an adjusted pretax loss of CHF 501 million and continued to make good progress in reducing Non-core and Legacy Portfolio assets.

Before I turn over to Tom, I'd like to emphasize that the first quarter of 2014 was yet another example of UBS strategy working and working in a disciplined manner with intense focus on our clients. As you can see and you will see throughout the day, our message is quite simple: Our strategy is the right one for UBS and can work in a variety of market environments, and we remain committed to it. We're committed to executing at the strategy. And -- but at the same time, most importantly for us is creating value for our clients and our shareholders.

Now I will hand over to Tom Naratil, which walk you through the first quarter presentation.

Thomas Naratil

Thank you, Sergio. And good morning, everyone.

As usual, my commentary will reference adjusted results, unless otherwise stated. This quarter, we excluded an owned credit gain of CHF 88 million, CHF 23 million in gains on sale of real estate and net restructuring charges of CHF 204 million. For the first quarter, we reported an IFRS net profit attributable to shareholders of nearly CHF 1.1 billion on solid performances from all of our businesses.

Wealth Management delivered a pretax profit of CHF 659 million, up 29% quarter-on-quarter. If you exclude provisions for litigation, regulatory and similar matters, this is the best result since the second quarter of 2009. Operating income rose 5% as transaction-based income increased on stronger client activity, more than offsetting lower recurring net fee income. Costs decreased 5% as higher provisions for litigation, regulatory and similar matters were more than offset by a decrease in other general and administrative expenses and lower variable compensation expenses, the latter partly due to elevated charges in the fourth quarter of 2013. Wealth Management delivered CHF 10.9 billion of net new money, with an annualized net new money growth rate of 4.9%.

Net new money was strong in the quarter. The business delivered continued growth in APAC and saw a rebound in emerging markets from a weak fourth quarter. In Switzerland, the business delivered its fifth consecutive quarter of positive net new money as we enjoy strong momentum in our home market. In Europe, net new money was negative, mainly due to a single large outflow which was only partly offset by a 1.7 billion inflow from an asset reclassification from Retail & Corporate. Another asset reclassification contributed 2.9 billion of net new money in Switzerland. Ultra-high-net-worth clients continue to be the main contributor of net new money. However, we're also pleased to see a strong contribution from high-net-worth clients this quarter, reflecting our increased emphasis and efforts in this client segment.

Gross margin increased by 11 basis points to 85 in APAC mainly due to increased client activity. As mentioned in previous quarters, clients in this region are more geared towards trading, and we typically see a spike in activity in the first quarter. Margins were down in Europe and Switzerland but increased slightly in emerging markets on greater client activity.

For Wealth Management as a whole, gross margin increased to 87 basis points from 85 basis points in the prior quarter. The increased levels of client activity drove a CHF 117 million or a 5 basis point increase in transaction-based and other income. This increase was partly offset by lower net interest and recurring net fee income. Net interest income declined on lower treasury-related income and a slight decrease in income from client deposits. These headwinds were partially offset by increased interest income from Lombard loans. Recurring net fee income was down slightly, mainly on lower income from ongoing outflows related to cross-border clients, which more than offset the positive effect of increased penetration in mandates.

For the last 6 quarters, we've seen a peak month gross margin that is 7 to 10 basis points higher than the trough month. Gross margin was 93 basis points in January, dropping to 83 in February and ending with 86 in March. Having delivered a gross margin of 93 basis points in January and in a quarter, where our outlook statement highlighted several headwinds, we continue to believe that our long-term gross margin target of 95 to 105 basis points is achievable.

Wealth Management Americas delivered another record performance earning a pretax profit of $284 million on record revenue and invested assets. Operating income increased 1% as growth in managed accounts fees continued and as the quarter included a credit loss recovery of $19 million compared with the credit loss expense of $9 million in the fourth quarter. These 2 items were mostly offset by lower net interest and other income. Expenses were up 1% to $1.6 billion mostly due to higher charges for litigation, regulatory and similar matters, partly offset by lower Corporate Center shared service costs.

Net new money declined to $2.1 billion from $4.9 billion mostly due to lower flows from net recruited FAs. Net new money from same-store FAs increased quarter-over-quarter. Our FAs continue to be highly productive, maintaining revenue per FA of greater than $1 million annualized and record invested assets per FA of $139 million.

Retail & Corporate delivered a strong performance, with pretax profit up 17% to CHF 401 million, its best first quarter since 2010. Operating income was stable, as increased recurring net fee income and a net credit loss recovery, versus a net credit loss expense in the prior quarter, were offset by lower transaction-based income. Expenses were down 9% to 532 million, as the prior quarter was impacted by higher charges for litigation, regulatory and similar matters.

Beginning with this quarter, we've changed the definition of our net new business volume growth KPI to reflect only our retail clients. We've made this change to better reflect our view on the business. Net new business volume growth for our corporate clients is volatile by nature due to big ticket items, and we believe that this change to the KPI further enhances the insight provided on future business performance. Our annualized net new business volume growth rate for retail clients increased to 4.3%, with helpful seasonal effects contributing to this result. Net new loans were positive but increased, to a lesser extent than client assets, reflecting our strategy to selectively grow the business by focusing on high-quality loans.

Net interest margin decreased 4 basis points to 153 basis points, reflecting lower net interest income on slightly lower average loan volume.

We've seen limited credit loss expenses for this business in recent quarters and have now reversed the vast majority of the collective credit loan loss allowances we had built in the past. The first quarter typically includes a smaller number of credit loss events as credit assessments for corporates generally occur around the third quarter, based on the latest annual financial results. We continue to manage our Swiss loan book prudently, including our Swiss mortgage book, and so far have not seen signs of a fundamental deterioration in the quality of our book nor a noticeable rise in our delinquency ratios.

The business continues to focus on its relationships with its clients. Based on the latest customer survey collected, our net satisfaction score improved to positive 29% last year, up from 0% in 2009. This measurement is calculated by combining the number of clients who responded that they are either extremely satisfied or very satisfied, and subtracting the number of clients who responded they are partly satisfied or dissatisfied with our services. We're pleased that our clients recognize our focus on continuously improving the products and the services that we provide.

Global Asset Management delivered a pretax profit of CHF 126 million, down 12% on lower revenues, only partly offset by lower expenses. Revenues were down mainly due to lower performance fees in O'Connor and A&Q. Expenses were down 4% mainly due to lower variable compensation expenses and lower general and administrative expenses, which decreased despite a CHF 14 million charge for a provision for a possible settlement related to a planned fund liquidation.

Net new money, excluding money markets, was CHF 13 billion, the best quarter since the third quarter of 2005, with robust contributions from third-party channels and our Wealth Management businesses across a variety of products. While we're very pleased with these results, we would not necessarily anticipate such robust performance on a quarterly basis. Investment performance was solid overall, with strong performance versus benchmarks in U.S. large-cap equity strategies and versus peers in multi-asset and alternatives.

The Investment Bank delivered a solid performance reporting a pretax profit of CHF 549 million, with improved performance across all regions. CCS performed well, with strong results in DCM. In ICS, equities delivered a strong performance, while FX, Rates and Credit remained resilient by focusing on efficient resource utilization as the seasonal increase in client activity we typically see in the first quarter was muted compared with prior years.

Expenses were up 11% on increased variable compensation as performance improved, partly offset by a decrease in G&A expenses as the fourth quarter included a CHF 55 million charge for the annual U.K. bank levy. Other general and administrative expenses were also lower in the first quarter.

Corporate Client Solutions delivered a solid performance, as revenues increased 9% to CHF 770 million. Advisory revenues decreased 22% to $172 million from a strong fourth quarter, partially as a result of seasonality as the market fee pool declined 18%. Equity capital markets revenues decreased by 18% to $221 million, as the decrease in the market fee pool was alleviated by the businesses' strong position in EMEA block trading. Debt capital markets revenues increase 48% to $341 million, with strong growth and higher revenues in both investment grade and leveraged finance. Revenues in financing solutions increased 8% to $144 million, mainly in structured financing on a larger number of deals.

Investor Client Services reported revenues of $1.6 billion, with no negative trading days in the quarter. Equities had a strong quarter, delivering revenues of $1.2 billion, up 22%, driven by higher revenues across all sectors and regions. Seasonally higher client activity led to increased revenues in cash and derivatives. Financing services had its best first quarter since 2010, as revenues increased across equity finance, prime brokerage, and clearing and execution.

Revenues from FX, Rates and Credit increased 30% to $429 million amidst challenging market conditions. As this business was redesigned to maximize efficiency and focus on flow, revenues are more directly correlated to market volumes. This quarter, the business improved balance sheet velocity as it met the trading needs of our clients.

Corporate Center - Core Functions recorded a pretax loss of CHF 176 million on a reported basis. Reported income was CHF 51 million, as net treasury income of negative CHF 46 million was offset by an owned credit gain of CHF 88 million and a CHF 23 million gain on sales of real estate. Reported operating expenses were up 14% to CHF 227 million as a result of increased costs related to centrally funded group initiatives and the seasonal effect of untaken vacation accruals.

For the first quarter, Group Treasury allocated CHF 206 million of revenues to our business divisions. The net income retained within Corporate Center - Core Functions for the quarter was negative CHF 46 million. This quarter, Corporate Center experienced a lower impact from accounting asymmetry, which along with other adjustments resulted in income of CHF 23 million compared with a loss of CHF 253 million in the previous quarter. This variance was largely due to CHF 104 million lower losses from cross-currency basis swaps, which are held as economic hedges, as well as the net loss of CHF 75 million related to the buyback of debt in a public tender offer recorded in the fourth quarter. In addition, we realized a gain of CHF 49 million from our macro cash flow hedges compared with a loss of CHF 10 million in the fourth quarter.

We continue to expect retained funding costs to decrease over time, declining slightly for 2014 compared with 2013, to approximately CHF 100 million in 2015 and to a negligible amount in 2016.

Non-core and Legacy Portfolio saw a pretax loss of CHF 216 million. Revenues in Non-core included a negative debit valuation adjustment of CHF 19 million as well as mark-to-market gains on credit positions and lower losses from unwind innovation activity. Revenues in the Legacy Portfolio were CHF 13 million, mainly on gains from real estate assets and gains in the reference-linked notes portfolio.

Expenses declined to CHF 245 million as provisions for litigation, regulatory and similar matters increased, while the fourth quarter included the CHF 68 million charge related to the annual U.K. bank levy.

Non-core assets decreased by CHF 23 billion to CHF 167 billion mainly due to a reduction of 20 billion in PRV from our over-the-counter rates and credit derivatives exposures. RWAs decreased by CHF 4 billion. And we reduced our Swiss SRB leverage ratio denominator by 22 billion or 16%.

Legacy Portfolio assets decreased by approximately CHF 2 billion to CHF 24 billion, with a number of small position reductions in real estate assets and PRV reductions resulting from FX movements. RWAs were relatively flat. And the Swiss SRB leverage ratio denominator decreased by CHF 4 billion to CHF 23 billion.

We ended the first quarter with RWA up slightly to CHF 227 billion. We continued to make progress in reducing our exposures in Non-core and Legacy Portfolio, where we reduced RWA by CHF 4 billion, or CHF 5 billion when excluding operational risk. The decrease in RWA in Non-core and Legacy Portfolio was more than offset by an increase in operational risk RWA across the group.

Our Basel III CET1 ratio improved 40 basis points to 13.2% despite slightly higher RWA. The impact of higher RWA was more than offset by increased CET1 capital.

We continue to make strong progress in our Swiss SRB leverage ratio, which increased to 5% on a phase-in basis and 3.8% on a fully applied basis. The numerator increased largely due to issuance of loss-absorbing capital and from retained earnings. We reduced our fully applied leverage ratio denominator by CHF 32 billion, driven by a reduction of CHF 26 billion in our Non-core and Legacy Portfolio. We remain confident that we'll meet our 2019 leverage ratio requirements early, and we'll cover this topic in more detail later today.

Thank you. And before we begin the Q&A session, I'd like to ask Martin to provide a quick overview on how we'll conduct the Q&A.

Question-and-Answer Session

Martin Osinga

As mentioned, at this point, I'd like to ask all photographers to exit the auditorium. And I'll take this opportunity to remind you of a few things for the Q&A. So at this time, we'll only take questions on our first quarter results. We ask that you save all questions not related to the first quarter performance for the later Q&A sessions. Please wait for the microphone handlers to give you a microphone before asking your question. We also ask that you clearly announce your name and company. We'll take questions from the room first and then, time permitting, also from those on the telephone. In the interest of time, we will limit you to one question and one follow-up during all sessions, and we appreciate your cooperation. We'll now go at with the first question from the room. Alastair?

Alastair Ryan - BofA Merrill Lynch, Research Division

Alastair Ryan with Bank of America Merrill Lynch. Can I just ask about the gross margin in Wealth Management? Tom, you commented there's a degree of positive seasonality in Q1 with the Asian ultra-high-net-worth. Just if you can walk us through your path to the 95 to 105 bps that you mentioned in your comments, whether there's anything that plays out already embedded in the numbers; or whether it's, as markets develop and interest rates change, that we get to the 95 to 105 bps.

Thomas Naratil

Okay, sure. Thanks for the question, Alastair. I think there are a number of things that we see developing on gross margin that make us feel confident. I think the first one is, when we see something that approximates what a normalized transactional activity would be, we see ourselves already hovering at the bottom of that 95 to 105 basis point range. And you've seen, over the course of the past 8 or so quarters, course where we've been -- months where we've been in -- within the range. So first, getting to a more normalized environment, not one that had headwinds like we had this quarter, number one. Number two, we're seeing very good progress. And you see this -- if you look at the recurring fee income line year-over-year, you see the fact that we're increasing our penetration in mandates, and that initiative is having a great degree of progress. And Jürg will cover that more in detail later today. And then finally, we do have some visibility as we look out. Whether you're looking at static rates or whether you're looking at implied forward rates, we can see on the horizon the trough in net interest margin.

Kinner R. Lakhani - Citigroup Inc, Research Division

Kinner Lakhani, Citi. I just wanted to ask a follow-up on that point that you made in terms of the net interest margin outlook. In the very short term, when do you see a bottoming-out in terms of net interest margin? And I'm not just referring to the Wealth Management business, but clearly, we saw further pressure in Retail & Corporate and Wealth Management Americas, so we're trying to get some kind of near-term guidance on how those NIM trends will evolve.

Thomas Naratil

Kinner, the -- when we look at where the trough is, depending on whether you're using implied forward or static rates, it's sometime this year. And the question on timing is just a function of what happens in short-term rates.

Martin Osinga


Andrew Lim - Societe Generale Cross Asset Research

It's Andrew Lim from SocGen. I note that you've got some model changes for your risk-weighted assets, which is a feature that we've seen at other banks. And I was just wondering if you could give guidance on what more we could expect going forward maybe with respect to valuation changes on a Basel III basis, credits and market risk weight inflation potentially. And I also note that you've got a -- again a multiplier change for your Swiss mortgages, which you've had before, so I was just wondering, is that the end of it, or do we have more to come?

Thomas Naratil

Yes, so if you look at the -- there's a helpful slide, Slide 24, in the -- which is in the appendix of the presentation, where we've classified all the methodology or model-driven changes. This quarter, as you noted, there were a few things that kicked in. There was a CHF 2 billion increase on the credit risk RWA related to the FINMA mortgage multiplier. That's the second year of a 5-year phasing, so you should expect that to occur in the first quarter of each of the -- in each of the subsequent 3 years. We also had CHF 3 billion in an increase in operational risks related to the updates on model parameterization on the AMA model. We do that on an annual basis. I think what you saw there was an increase in some of the experience in the industry specifically related to litigation and regulatory matters. And so that provisioning on an industrywide basis is what -- or that experience on an industrywide basis is what caused the uplift in the model. I don't expect -- we don't have a lot of model change activity ongoing that we expect through the rest of this year, but again, as you look at the first quarter, I would keep in mind that, the FINMA multiplier.

Fiona Swaffield - RBC Capital Markets, LLC, Research Division

It's Fiona Swaffield from RBC. Just a quick question on the gross margin again, on the ultra-high-net-worth. I was quite surprised to see it was up on Q1 last year even though Asia was still down Q1 on Q1. Is there something going on in pricing? Or is it loans? I wonder if you could talk about that.

Thomas Naratil

I think, overall, we do have -- we are starting to see some early signs of success in some of the pricing initiatives, Fiona. I think it's probably a little too early to place too much emphasis on a quarter-to-quarter comparison or a year-over-year comparison, but I do believe, and I do think this will be covered later on in the presentations today, that we do have a fair amount of optimism on how we're progressing on that initiative.

Christopher Wheeler - Mediobanca Securities, Research Division

Chris Wheeler from Mediobanca. On your net new money number in Wealth Management, obviously a very strong number. Two questions in one, if I may. The emerging markets, very strong, and I think you have got a strong franchise in Russia. I'm just kind of wondering whether that it was a benefit perhaps of the Ukrainian effects. Or what else you could give me in terms of background on that? And then on the European, I think, when I saw you back in November, there was talk of starting to see inflows again, as well as the outflows. And I just wondered if you could give me some feeling of what perhaps the inflows might have been to offset that CHF 2.2 billion of net outflows.

Thomas Naratil

Sure. So Chris, thanks for those questions. On EM, I think -- trying to tie our performance in the quarter to anything that's going on in Ukraine, I don't think, would be a correct assessment of it. I think that the EM flows that we've seen are more a function of the performance of the business and client advisers in the area, more or less, or -- rather than the macro geopolitical effects. And looking at Europe, if you exclude the 2 large flows that I mentioned, the -- we would end up with a number that is positive on a net basis, not that -- not strongly positive, but we still do see onshore inflows outpacing the offshore outflows.

Jernej Omahen - Goldman Sachs Group Inc., Research Division

It's Jernej here from Goldman Sachs. It's always difficult to ask questions on the quarter when you've got a huge presentation afterwards, but I'll limit myself to 2 very dry technical question aimed at you, Tom. So the first one is on deferred tax assets in the U.S. Crédit Suisse took an impairment in Q1 because the tax rates in New York went down. I was just wondering if you could update us, a, on what the stock of DTAs in the U.S. is. And b, I suspect that, that impairment is coming your way as well at some point. And the second question I have is on Slide 10, on the Investment Bank. And as you point out, you've made great progress, but I have 2 questions here. One, your total assets are up by roughly 10%, but the risk-weighted assets are flat. If you could explain that. And the question -- and question number two is, there seems to be an increase in the total number of front-office staff in your Investment Bank, and I was wondering -- that's somewhat surprising, but I was wondering what that's due to.

Thomas Naratil

Okay. So as we look at the -- those 3 questions, Jernej: DTAs, we'll do a much more extensive presentation on DTAs a little bit later on today. But on your comments specifically on the change in the tax law in New York State, that does not affect us. We do not have the similar effect of that, that some competitors have had. On the balance sheet and RWA distribution, it's just the business mix that we've chosen for this particular quarter. I would comment on the Investment Bank that, as I mentioned, we have a very flow-based model and we increased our balance sheet velocity during the quarter. So I think we had prudent resource utilization, and that's why we were able to deliver what we consider to be a very good adjusted ROA of 28%. Finally, on headcount, one of the things that the Investment Bank and Andrea accomplished last year was creating space for us to have the capacity to hire front-office personnel. And so we had a little excess reduction to create some space for hiring. And I think you saw some of that starting to kick in as you moved into the quarter, on the front-office side. There was also an allocation methodology change in the Corporate Center that shifted about 140 or so headcount as well. That changed the reported headcount numbers, but it was not actual hiring.

Kian Abouhossein - JP Morgan Chase & Co, Research Division

Yes, Kian Abouhossein, JPMorgan. Slide 14, on the treasury side, can you just run us a little bit through the 500 million -- or sorry, I should say, the CHF 100 million run rate? And it looks like it's going to go down further from there. Is this a matter of you need less liquidity? Can you talk about the funding costs? Is this already locked in? How should we think about this going forward?

Thomas Naratil

Sure. Thanks, Kian. On the question on what are we doing to manage down what we call the unsecured funding pool: These are the excess liabilities we moved over from the Investment Bank when we announced the acceleration of our strategy in late 2012. So we're working down that component of the liabilities in a number of different ways. You've seen us execute 2 debt buybacks. As we execute those, we reduced the negative carry that we have in the Group Treasury. It's also executed. We've got the maturities coming through as well, and other debt management exercises that we will complete.

Kian Abouhossein - JP Morgan Chase & Co, Research Division

So this, the funding -- it's not a change of funding. It's a decline of assets. Is that what you...

Thomas Naratil

The best -- actually, it's -- the right way to think about it, Kian, is our outperformance in asset reduction creates a greater overhang that we have to run down. And the question is, how do we balance the management of that rundown of unsecured funding? And at the same time, as we're issuing loss-absorbing capital, we're putting on a lot of long-term funding as well, so we have issuance costs that are also retained by Group Treasury.

Martin Osinga

Any more questions from the room? Do we have a question from the telephone? One question.


The first question from the telephone is from Mr. Stefan Stalmann from Autonomous Research.

Stefan-Michael Stalmann - Autonomous Research LLP

Two very quick questions, please. Could you say how your cost-saving targets would have developed during the first quarter? You said at the end of Q4 that you had achieved CHF 2.2 billion under the old way of measuring your cost-saving targets. Where would this number be in Q1? And the second question, can you tell us what your stressed CET1 ratio would be now?

Thomas Naratil

Stefan, we'll address, actually, both of those questions in more detail in the investor update, so if you don't mind, we'll defer the answers until that time.

Martin Osinga

Any more questions from the room? All right.

Sergio P. Ermotti

Media. Just...

Martin Osinga

Or from the media? Great. No questions.

So we'll take a short break and start with the invested -- investor update portion of the day at 10 past 11.


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