About Us Press Release
2020 Investor Update
- Planning significant investments to deliver on our growth ambitions:
- Investment priorities for Wealth Management-related businesses: expand coverage base, enhance client offering, drive business growth
- Investment priorities for global investment banking businesses: drive Global Trading Solutions (GTS), expand Investment Bank offering, invest in M&A
- Infrastructure investments: enhance IT platforms, invest in cloud and automation, drive regulatory agenda
- Sustainability ambitions:
- Establish new Sustainability Advisory Committee at the Board of Directors level
- Commit to develop Science Based Targets within the next 24 months, including our commitment to align our operations and financing to net zero emissions over the coming decades
- Align our financing with the Paris Agreement objective of limiting global warming to 1.5° C
- Reposition our portfolio to mobilize capital towards our clients’ transitions
- Financial ambitions:
- Increase Wealth Management-related pre-tax income from CHF 4.0 billion in 9M20 LTM, on an adjusted basis and excluding significant items*, to CHF 5.0 billion to CHF 5.5 billion in 2023
- Reconfirm medium-term ambition of a Return on Tangible Equity (RoTE) of 10% to 12%
- Operate with a CET1 ratio of at least 12.5% for at least the first half of 2021 given the ongoing COVID-19 pandemic
- Continue to accrue for at least 5% dividend growth per annum, including with respect to the planned 2020 dividend compared to CHF 0.2776 per share paid this year
- Intend to restart share buybacks in January 2021 of up to CHF 1.5 billion, with at least CHF 1.0 billion, for the full year, subject to market and economic conditions
We will today update investors and analysts on the progress we have made in 2020, and outline how we intend to drive and accelerate growth across key strategic business areas in 2021 and beyond. We will also detail how we intend to continue supporting our clients by striving for excellence through our leading franchises, across all geographies, and how we expect to continue to deliver value for our shareholders.
SUMMARY – 2020 ACHIEVEMENTS
In 9M20, our strategy as a leading Wealth Manager with strong global Investment Banking capabilities enabled us to deliver resilient results. In Wealth Management, we continued to apply a balanced approach between Mature and Emerging Markets, amplifying our position as the ‘Bank for Entrepreneurs’ focusing on the UHNWI segment, as a core strength, and building out our regional Wealth Management model with continued proximity to our clients. In the Investment Bank, we built on the strong momentum of our newly integrated global division, which is more diversified, more balanced and less volatile, and further strengthened our connectivity to Wealth Management.
Despite absorbing provision for credit losses of CHF 958 million and significant foreign exchange headwinds, we recorded pre-tax income of CHF 3.6 billion in 9M20, up 1% year on year, and net income attributable to shareholders of CHF 3.0 billion, up 18%, with continued underlying momentum in our Wealth Management businesses, as well as a strong performance in our global investment banking businesses. Net revenues were CHF 17.2 billion, up 5% year on year, while total operating expenses of CHF 12.7 billion remained flat, reinvigorating operating leverage. On an adjusted basis, excluding significant items*, pre-tax income was CHF 3.5 billion, up 10% year on year, driven by higher adjusted net revenues, excluding significant items*, of CHF 16.8 billion, up 6%, and lower adjusted* total operating expenses of CHF 12.3 billion, down 2%.
Our RoTE for 9M20 was 9.8% and our capital position at the end of 3Q20 remained strong, with a CET1 ratio of 13.0% compared to 12.5% at the end of 2Q20. Our Tier 1 leverage ratio was 6.3%1 at the end of 3Q20, up from 6.2%2 at the end of 2Q20.
With regard to 4Q20, we would note that business performance so far has followed similar year-on-year trends to the third quarter. In our Wealth Management businesses, stronger year-on-year transactional activity, particularly in Asia, is partly offsetting the adverse FX translational impact resulting from the strengthening of the Swiss Franc and some pressure on net interest income. Our Investment Bank continues to perform well, with revenues ahead of 4Q19, in both USD and CHF terms. Results for the current quarter will also be impacted by the expected impairment relating to York Capital Management and the updated assessment of RMBS-related provisions that we have previously disclosed.
In a year that has been significantly impacted by the global COVID-19 pandemic, we have managed our businesses carefully with the aim of continuing to deliver value for all of our stakeholders. Our key achievements in 9M20 include, but are not limited to:
- More than 90% of employees feel well-supported and informed by management’s response to the COVID-19 pandemic3, which included free antibody testing to employees and extended paid family leave in locations with closed schools
- Leadership in the design and execution of the COVID-19 program sponsored by the Swiss government that ultimately provided CHF 17 billion in financing to Swiss SMEs until its expiration end-July 2020
- Market share gains across various private banking and investment banking products
- Leveraged technology for client engagement, supporting clients’ increasing financing needs and developing innovative Private Markets and Sustainability products
- Successful execution of key strategic initiatives with expected gross savings of approximately CHF 400 million to CHF 450 million from 2022 onwards
- Managed leadership transition and announced Chairman designate, António Horta-Osório, to be proposed for election at the next Annual General Meeting on April 30, 2021
- Paid full 2019 dividend, accruing for 2020 dividend and confirming our 2021 dividend and share buyback plan