Q4 2021 UBS Group AG Earnings and Strategy Update Presentation

Good morning, and welcome everyone.

I always thought I'd 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 2020 annual report together with additional disclosures in our SEC filings.

So on slide two you can see our agenda for today.

I'm joined by group C I, well, Thomas and all groups, if I cut Gardner.

And before we welcome Ralph on stage, we have a short video for you.

Okay.

[music].

Our clients needs and expectations are changing at pace.

We need to adjust and fit into their lives not the other way around.

By leveraging the scale and strong network effects that our business offers UBS is uniquely positioned to be the orchestrator of a global ecosystem for investing.

Our thought leadership is impactful people and ideas are connected and opportunities are brought to life.

Our ecosystem is a powerful gateway, providing seamless access to the breadth of our solution.

Complementary products and services from our network of curated partners.

And the community of Likeminded participants and contributors that created unique marketplace.

Utilizing our leading content advice capability and personalized solutions, we not only attract prospective clients, but also become more appealing to external partners.

This self reinforcing dynamic strengthens our value proposition accelerates growth and allows us to reinvest in our core capabilities.

Our private credit funds business is just one example of the power of our ecosystem and how we collaborate seamlessly across the firm to create value for our clients.

We developed bespoke financing solutions for entrepreneurs with very specific and often complex financing needs.

We make this possible by matching them to wealth management clients and institutional investors with an appetite for alternative asset classes.

This makes UBS increasingly relevant for entrepreneur, who want to raise capital from a wide range of sources beyond public capital markets.

This is all part of living and breathing our purpose.

It's how we're re imagining the power of investing and connecting people for a better world.

Okay.

Yeah.

Yeah.

Okay.

Okay.

Hello, and good morning, everyone I'm pleased to be here today with you and to give you an update on our strategy and our ambitions.

2021 was another very strong year for us and we will carry that momentum forward as we continue to focus on growth.

We're expanding into new client Shuchman's to open new avenues of growth with a much broader set of clients and will continue to be vigilant when it comes to risk.

As we're intensifying our discipline as well now this will give us the financial capacity to invest strategically across our franchise, especially in technology.

As we ride UBS next chapter, we're aiming to create value sustainable value for our clients for our shareholders for our employees and society at large.

Before we go into our plans, let me start with a recap of our purpose and our vision.

Last April we presented our strategic framework by sharing our purpose and our strategy on a page and you can see here on the screen now.

We're starting with them today as well because everything we do here is guided by one common purpose.

Re imagining the power of vesting.

Connecting people for a better world.

As you've just seen in the video.

Oh fishing is to convene the global ecosystem for a fasting were thought leadership is impactful and people and ideas are connected and opportunities are brought to life.

And do you have the ecosystem depicted here on slide six it's about connecting our clients with people and ideas, it's about helping them realize their goals, it's about delivering them to offer the best we have to offer.

This can be from within our firm.

But also from other contributors.

Now we already August trader of this ecosystem and that Leverages, our scale and Leverages, our relationships and we do this by Curating offering.

On one side of matching clients and control, but just on the auto side.

Now the value of our ecosystem increases which kept that.

That's what makes growth so important for our story and that's what makes US a key theme across all of our plants.

Now, let's start with sustainability, which is core to delivering our purpose and it's not so secret that sustainability has always been a part of our story certainly for the last decades.

Last year, we chose to focus our efforts on three defined areas to maximize our impact.

And these areas are planet people and partnership.

We're already making progress on all three.

Let's first talk about planet here last year, we made a commitment to achieve net zero emissions across all of our operations by 2050.

That commitment includes scope, one two and three emissions and that's underpinned by science based targets and interim milestones.

We've made a pledge to lead by example, here and when you look at our own footprint. It's clear that we're building on our strong track record.

For example, last year, we reduced our scope one and two emissions by an order of 75%.

And we've also finalized our climate road map and we're putting it forward for an advisory shareholder vote at our AGM in April .

The next area here is people in this space, we're helping clients maximize dara impact through philanthropy.

We're also engaging our employees, who make us who are helping us to make a difference in our local communities. The communities, where we are active as UBS.

And we're also seeing tangible progress if it is about diversity equity and inclusion targets that we have set for ourselves today women make up 27% of our workforce at senior ranks and we aim to bring us up to 30% by 2025.

Now the third area that you see here is partnership and we have a long history of working with clients, which communities with thought leaders and standards sets us to shape the industry's direction. If it comes to sustainable Finance. This goes all the way back to 1992, when we joined the UN environment program financing issue.

This.

And we stayed at the forefront ever since.

Yeah.

We recently became founding members of the net zero banking Alliance and then that zero asset managers initiative as well.

Clearly clients benefit from our expertise and our extensive sustainability offerings and that has led to a sustainable investing being a major growth driver for us over the last few years already.

Throughout 2021, we've been implementing our strategy and building our Gogo global ecosystem. So let me take you through some of those highlights that we see in the last year.

On slide nine as you can see clients continue to put their trust in us they turned to us for our content fraud voice for our solutions and that resulted in over $150 billion in long term inflows during 2021.

207 billion of these were new fee generating assets in wealth management.

And during the year. We also extended 28 billion of net new loans to wealth management and personal banking clients and that helps them to finance their businesses their homes, Amit what our liquidity needs. They may have.

We're now managing over four and a half trillions of dollars in assets on behalf of our clients.

Now on the right hand side of this slide you can see that some of our fastest growing investment offerings of last year have really really performed very well first private markets, that's a big opportunity for our clients.

For us as well and by the end of the year, our clients had a 150 billion of draw commitments invested in private markets.

Secondly, as amaze.

The continued growth we see here speaks to the demand for customization.

It shows what a seamless offering can do for our clients, but also to us.

Last year, our wealth management clients drove 27 billion of inflows into these strategies.

Third.

Sustainable investing.

Invested assets in sustainability focused and impact strategies increased by 78% to 251 billion during 2021.

And lastly.

Assets in UBS manage as you can see here they grew to $214 billion.

They're our flagship managed solutions, which are linked to our CIO content My way as you can see here our model mandate interface continued contributed to this growth as well.

No actually you can see we consistently invest and innovate in ways to anticipate both the needs of our clients, but also to play to trends.

That we see an industry.

Now in addition to investing in lending transaction advice and execution are also key value drivers for our businesses.

On Slide 10, you can actually see an overview of our performance right here.

We're increasing delivery.

And of our whole firm to our clients and that has resulted in high levels of activity across all client segments in 2021.

The momentum across our businesses led to the highest revenue since 2006.

And at the same time, we've been exercising cost discipline and will continue to do so and that combination resulted in another year of positive operating leverage.

Which excluding the provision for $740 million, we took for the French court case in the fourth quarter.

Turning to slide 11.

You can see how our commercial momentum and our financial performance and our operating levers have translated into a very good picture here, we had the highest profit in 15 years.

But before tax or after tax and that resulted in our CET. One a return of CET one capital of 17, 5%.

And a 14% return on tangible equity.

We maintained our cost to income ratio of just under 74%.

Now to conclude this is the second consecutive year in which we exceeded all of our targets with strong contributions from all businesses.

All regions and all different divisions.

So we can see we are operating from a position of strength here.

We have the momentum now.

Now, let's take a look at how we're building all of that to write the next chapter for UBS.

Yeah.

Now our strategy always starts with our clients.

On Slide 13, you can see on how our clients landscape is actually changing.

Originally most of the wealth will be created in the U S and in Asia Pacific.

And most of the industry revenue growth is expected to come from affluent clients and entrepreneurs.

Also a big trend is that women are increasingly gathering wealth and they tend to be underserved in the industry.

And we see a shift in needs and priorities as well as passing down through the generations.

Now in terms of products, we expect continued growth in the alternative.

And also ESG investments.

And you've heard me say this already our client expectations are changing and we need to adapt.

Everything convenience is key.

Personalization is expected.

Everything has to be aligned to personal values.

And at the same time.

This won't experiences that are seamless and that are supported by technology.

And that's why we're taking action, we're taking actions to deliver a more personalized relevant on time and seamless experience for our clients.

So this is where we're seeing the firm.

To be ready for these trends and to benefit from them.

The first thing we're doing is further evolving the way, we serve and interact with our clients to help them meet their needs.

Our clients will choose how they prefer to interact with us.

They will choose.

And based on that we will serve them through three different coverage levels and Thats, what you see here on slide 14.

On one side of the spectrum, we have an increasing number of clients who prefer to interact with us digitally.

And for them, while launching a digital offering in the U S with the acquisition of wells from that we just announced last week.

Our planning similar models in the rest of world.

Although lower cost of service.

That this model brings will mean that we kind of ex <expletive> our client base to those clients, who wish to invest smaller by months.

But it will all of those help us to retain existing clients and serve them in a more cost efficient way.

Now the core of our franchise however is.

Delivering personal advice.

And that we do through our advisors.

Here it will be critical for us to add more digital capabilities, which will enable our advisors to be more productive.

More efficient and how to serve our clients.

And then on the auto side of our copper spectrum, we have our family offices and our institutional wealth clients now.

Now these clients have sophisticated institutional like needs we.

We serve them through a unified one UBS approach.

That will make it even easier for them to get access to relevant products and services.

All the expertise that we have across all of our businesses.

Oh and that thing is important as part of that offering to our clients and then all of our future model will.

The profitability of our clients on a relationship level and not all of product level for this segment.

This will make us more effective and offering unique lending solutions.

No. The overarching objective of all of this is.

To provide our clients with more choice in how they want to interact with us and benefit from our ecosystem and our capabilities.

That's what I said before it's very important that they choose how to interact with us we should not forced them one way only and that is a big change here.

Now with that I'll now go through our growth plans by region.

Starting with Humira, because the largest wealth pool in the world. So first as you have seen our momentum is really strong in our business in the U S and our scale and our content and our solutions will really help us to build on this.

Mentum with.

We will focus on delivering the whole of our ecosystem to our clients to deepen relationships and drive growth through.

Second we aim to provide a more holistic banking service to more to more of our clients were widely values for our investment capabilities.

We're not often recognized for our lending and deposit taking abilities in the U S.

And that is what we're going to change.

And third we're rolling out a digital service offering to servers to serve a much broader set of clients in the U S.

And as I mentioned before we're a REIT.

Really excited to accelerate this journey by joining forces with wealth funds.

On slide 16, you can see that wealth front is an industry, leading digital only wealth management provider.

They serve 470000 clients and managed 27 billion in assets.

This acquisition will help us to significantly increase distribution help us to improve our scale.

And our capabilities.

Our digitally customized coverage model.

That will give us a boost in the U S and through what we learn here, we'll be able to advance our progress also in all the regions.

And while we found a partner that shares our vision, our values, our culture and I'm truly looking forward to welcoming our new colleagues to the UBS UBS family here.

There are engineering culture will help us in how we deliver our services both through waffles current proposition, but also for new propositions to come.

Working together, we'll have ample opportunity for long term value creation.

And I'm also looking forward to what our ecosystem at four well France clients for example.

Our remote advice or our products.

Just two examples of how we can enrich their clients with our experience and what we bring to the table.

Now in the near term already wealth funds clients will have access to our industry leading.

Investment insights and our research.

And we will be able to offer our workplace wealth clients and attractive investment platform for the <unk> assets.

So this transaction represents a great opportunity to deploy capital in a way that enhances our long term ambitions. It will help us deliver a scalable digital lab solution for fluent investors and it was seamlessly complement our core adviser.

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Turning to the other growth region Asia Pacific.

Now on slide 17.

We've been committed to Asia Pacific and have had a strong presence there for decades, we are by far the largest wealth manager in Asia Pacific. We're the number one equities, where the largest asset manager of our global clients investing in China, we have a truly unique franchise here.

For the coming years, we've defined five key priorities that will help us strengthen our position here first our onshore business in China.

Over the past years, we've built one of the most established platforms.

Foreign peers here.

We're expanding our licensed portfolio, now and and establishing a presence across the segments.

Our years of investments are bearing fruit already and our clients look to UBS as the go to house for China.

And as the Chinese market continues to open up we will build on this strong foundation to accelerate our growth.

We're moving towards a more integrated model with a country wide strategy and a dedicated leadership here.

And at the same time, we'll explore partnerships for access for scale and for complementary capabilities that we need to be successful in that country.

Second our second focus in Asia Pacific will be southeast Asia here, well is being created very fast.

And the region is attracting foreign investment as well, Singapore status as a global finance hub.

Disputed with over 50% of wealth inflows now going into Singapore.

From outside Southeast Asia.

Our strategy here is to let our clients benefit from the intersection of our investment banking capabilities and our wealth management capabilities.

And we do that with a particular focus on technology firms entrepreneurs are family offices.

And that's also why our therapy or two years to expand our capabilities for these clients specifically the ones in the new economy sectors.

Under that initiative, we're building dedicated teams across banking and wealth management.

And we're planning to work closely with venture capital companies in our ecosystem.

In order to identify the right opportunities for us.

The hiring experts already to fast forward that initiative.

Now our fourth priority is.

Asia Pacific.

As sustainability in Asia Pacific.

We've seen interest in ESG increased dramatically in the region and to remain the leader in this area. We will invest in is the research investment and corporate advisory capabilities.

And lastly, with.

We're building a new integrated structure.

Products platform, because our clients value advice and solutions.

This will give our clients and our advisor easier.

Easier access.

And faster access as well to opportunities that may be there. So as you can see we're expanding our footprint we're building on our capabilities across the whole Asia Pacific region here.

Now moving to our next region EMEA.

I'm, taking you through to through Slide 18, now now.

As you can see EMEA continues to be a core region for us. It is important to our global footprint is also home to a number of valuable franchises across both private and institutional clients.

It's also a diverse market and that requires a differentiated strategy. Therefore, one of our priorities is to optimize our footprint and.

And while we do this right it will help a self fund our growth initiatives and allow us for a much sharper focus here.

We're already we've already exited domestic wealth management markets in Spain, and Austria, I will continue to review our footprint across.

Europe .

Just to make sure that we have the scale and that we play in the places where we come in.

On top of that we're targeting auto efficiency matches as well and those are also part of our cost base.

But there is also growth opportunities and also growth one of the biggest growth opportunities. We see is offering the whole of UBS two mid market corporates and their owners.

Gross entrepreneurs as well and to capture these opportunities we're setting up dedicated coverage teams 40 sectors in hiring experienced bankers and advisers very targeted.

The survey will invest as of Sept in other places where we can win.

Which is not necessarily Europe , but also damia perspective.

For talking about places, where we have the scale to win that brings us right to Switzerland.

And Switzerland ill cover briefly you'll see that on slide 19, and a reason why it will coverage briefly is because we already shared.

Our plants in October and this one and we already have some more time to discuss this with you.

But we're well on our way to deliver on the plan that we discussed that.

Just as a reminder, we're targeting revenue growth in attractive areas, such as mortgages pension and retirement sustainable financing, we're setting up a a hybrid SME approach and all of that we will build on our.

<unk> as a digital leader in Switzerland already.

That will improve our customer experience, which is really important to attract new customers and make sure that customers really stay with us and always also helps us to continue to grow and deliver on the efficiency gains that we need here now talking about efficiency is a testament to this last year our <unk>.

Cost income ratio already improved by four percentage points in this region and that is when we exclude our provision for France.

Lastly in this in this region, we're transforming our teams to become faster more efficient a more relevant.

True up for our clients.

Now I've covered the growth plans more from a regional perspective.

But we call deliver any of these plans and we cant build our ecosystem.

If we don't also invest in our asset management and investment banking capabilities to success of these strategies really require a further look at these capabilities and I'll cover does next.

Starting with asset management capabilities Slide 20.

Having an in house investment engine is a clear advantage for our ecosystem for investing so it's no coincidence that the fastest growing areas in wealth management.

Closely aligned to our flagship asset management capabilities first custom portfolios like separately managed accounts.

We're top five SMA provider in the U S and we have proven capabilities.

Yes.

Second alternatives, our real estate fund management capability.

Top 10 globally.

We have a broad multi manager offering across public and private markets and we have a standalone 11 billion hedge fund UBS O'connor.

These Meg is one of the worlds largest alternative managers.

Third.

But we're really known for also is sustainability, we are committed to helping our clients to invest in line with our goals specifically in this area.

As of the end of 2021 sustainability focus on invested assets had reached $172 billion.

Just from an asset management perspective, and that was a 77 increase first as last year.

Now our fourth flagship asset management capability is investing in the Asia Pacific region, notably China.

We can provide our clients with compelling investment.

Opportunities in this region, because we already have 25 years of experience investing in China across all of the different asset classes.

And we also manage one of the largest China equity funds in the world.

Moving to investment banking capabilities and on slide 21 across our regions our investment banking capabilities are vital to how we deliver our whole firm to our clients.

For wealth management clients in particular, we want to provide more investment banking products and specific solutions, there as well and we'll provide these capabilities while remaining disciplined on capital.

When it comes to our market activities, our ongoing investments in technology data analytics have truly created a competitive edge.

That contribute.

Contributed to actual market share gains in both cash equities.

FX during 2021 we traded record daily volumes in cash equities, and we maintained our number two ranking and foreign exchange.

So in global markets, the clear priority will be to continue the pace of digital innovation, we're good at it.

Second in banking, we just had our best year on record and here, we will focus our coverage and deepen our capabilities across the growth segments.

Sectors and regions.

More related to the story it was already telling in the regions.

Making them part of the strategic growth initiatives there now.

Third our research and investment banking capabilities will be more closely aligned for the benefit of our clients and fourth we're targeting to offer more of our sophisticated banking services to our wealth management clients.

For example, our private markets ecosystem provides entrepreneurs and their companies access to capital.

But at the same time, specifically that generates a different shaded investment opportunities for other clients.

And that's why it is such a beautiful ecosystem.

We'll also continue to expand our trading financing and lending capabilities for global families.

And institutional wealth clients now across all of these priorities, we're adding capabilities to support our clients in order to continue to be successful.

And aligning imperative at all of our story is technology.

We've been talking technology already a quarter as well.

We've taken up action to level of technology and you can see some of the progress right here.

We're well underway with our plans to use technology to drive growth.

A differentiated experience and efficiency.

Now as of last week, we manage 7 billion of invested assets in my way just as an example, we bought we acquired restaurants also last week.

We launched UBS circle, one and that is an app that connects investors two ideas within the global curated ecosystem, so basically UBS and yep.

What we're launching.

But also our AI data centers.

We have put together and with that we bring together scientists and experts from across the bank to help us create a more personalized and more relevant experience for our clients.

Now we are investing in these things and more by first what are you prioritizing so making sure that everything we do is really geared towards strategy.

By freeing our budget and our cost base and making sure that from some areas, where we safe we can actually invest in technology.

And we do it by delivering with battery engineers.

Now over the past years, we've maintained our technology has been around 10% of revenues as you can see now.

Now that means that we have actually invested more as revenues grew.

But within that we've also increased our strategic tech spend.

That will allow us to invest more in projects that have a direct impact on our clients and business.

Maybe also to give you an update on our cost plans. So let's spend a few minutes on the broader cost picture here.

And that's shown on slide 23.

We've laid out our ambitious growth plans.

And we've also indicated that we think we can save 1 billion gross by 20th century. So basically we are committed to self funding. All of these plants are June 2021 we've already made progress progress on that.

For example, we closed 53 legal entities, which is 14% of all of our legal entities, we have reduced our corporate policies by 23% just this year already.

We refocused our European footprint as I discussed earlier.

Fees up a lot of money in order to go fast.

But also we have introduced.

AGL wave working we're now 10000 of our employees are transitioning into.

Our actions in 2021 already resulted in a 200 million gross savings.

And we are on track.

To save 1 billion per year by 2023.

Now with this phase we can continue to invest in growth without meaningfully increasing our costs.

So how do our efforts to grow our ecosystem create value for our stakeholders.

And that's what I'll talk about next.

Slide 25 defies all on how we define success.

First it's about Society society at large.

We're committing to building a better world through our sustainability focus we're committing to net zero emissions, resulting from our own operations by 2025 that scope, one and scope two active scope. Three we're also committing to our line 235 billion of invested assets as party as asset manager to net <unk>.

ROE by 2030.

Order commitments.

E related to helping our clients do good for example by raising $1 billion in philanthropy assets to reach 25 million beneficiaries.

I will also targeting 400 billion of sustainable in vessels by 2025.

Second.

And for the benefit of all of our clients.

Seth on how we're doing through commercial aspirations.

Net new fee generating assets averaged already 6% since we started recording the metric at the beginning of 2020 and.

And with our current offering and our strategic agenda. We are optimistic that we can maintain growth rates of 5% and up going forward.

And as a result, we aspire to achieve five and then six trillion of invested assets.

And third.

We are targeting a 15% to 18% return on CET, one capital and that's significantly higher than our previous target and reflects the progress that we have made in the last two years.

Now in order to consistently achieve that return target will have to operate at a lower cost income ratio and that's why we're moving.

Our target range cost income ratio to 70% to 73%.

And as the growth, we expect to be able to continue to grow profits in global wealth management by 10% to 15% per annum, but through the cycle.

Our plans for C. A more profitable UBS that delivers higher returns over the coming years.

So I.

I should also give you a bit more background on our capital management and you see that on slide 26.

So as you would expect our first priority will always be to maintain a strong balance sheet, we need our balance sheet for all seasons.

Our second priority is to continue to look for opportunities to invest to grow and clearly you know our default is to grow organically, but there maybe inorganic opportunities as well.

Either way that will have to accelerate our strategy and help us to grow.

The remainder will be returned to shareholders in the form of dividends or buybacks.

Now, reflecting the step up in profitability for the financial year 2021, we're proposing to increase our dividend to <unk> 50 per share up to steadily progress thereafter.

And additional excess capital will be used to buyback our own shares and we expect this to be up to $5 billion. This year.

Which brings me to all of our strategic update.

To recap.

UBS is in a better shape than ever.

We have tremendous momentum with our clients as you can also see with our Q4 results.

And that allows us to move forward with confidence to act on the opportunities ahead of us.

We're opening up new avenues for growth with our existing clients with new clients and new segments.

Our strategy will also depend on successful deploying technology in a differentiated way.

And I'm truly excited about this opportunity that we have here at UBS and looking forward to giving you regular updates on our progress now with that.

And over to Curt to cover our financial results Kurt Welcome Ralph Thank you.

Good morning, everyone.

For 2021, we delivered seven 5 billion net profit is Ralph highlighted it a little earlier the highest since 2006.

Translated into a 17, 5% return on CE tier one capital.

14, 1% return on tangible equity.

Now following the verdict by the French Court of appeal in December we increased our litigation provisions by 650 million euros to $1 1 billion euros in connection with this matter.

The incremental provision translates to $741 million split between <unk> and P&C.

Total litigation provisions for the quarter were $826 million.

For group <unk>, and P&C I will talk about results, both including and excluding the French provision given the materiality.

Full year 2021, PBT of $9 5 billion was up 16%, excluding the French provision PBT would have been up 25%.

Driven by operating leverage of three percentage points with all business divisions and regions contributing to underlying growth and delivering positive operating leverage.

During the year, we generated $7 7 billion in CE tier one capital.

Now turning to expenses.

We maintain our expense discipline throughout the year managing to keep our expenses, excluding variable and FAA compensation currency effects.

Restructuring and litigation broadly stable.

And we did this while investing in the business addressing regulatory requirements absorbing inflation and growing our operating income by 10%.

This helped us to deliver a cost to income ratio of just below 74% or below 72% before the French provision.

Now looking ahead, we're on track to deliver the around 1 billion and gross in year cost saves by 2023 that Ralph just reviewed.

For 2022, we currently expect our operating expenses excluding variable.

FAA compensation currency tax and litigation to be up around 2% year over year. After absorbing the increase investment spend along with higher personnel costs related to increased competition and higher TNT as COVID-19 restrictions ease.

Our restructuring costs should be around $200 million in 2022.

Also we would expect group functions to post a quarterly loss of around $100 million on average per quarter in 2022, excluding accounting asymmetries and call out items.

Now turning to the quarter with $1 3 billion and net profit. We delivered 11, 9% return on CET, One capital Pvt was $1 7 billion down 13% or up 24%, excluding the French provision.

Our <unk> results included net credit loss releases of $27 million.

Now macro factors were not materially different in the third quarter and.

And we continued to apply a management overlay given ongoing macroeconomic uncertainty.

As of December the total overlay was $224 million or $5 million increase from <unk>.

Now before we turn to the business performance.

I'd like to spend a minute on interest rate sensitivity.

We've done our analysis using mid January forward rate curves and taken the balance sheet as of December 31.

Which of course includes 2021 deposit and lending volume growth.

Based on that we would expect to see increases in net interest income of around $700 million and GW AUM and around $50 million in P&C when compared to full year 2021, with the majority occurring in the second half of the year.

Moving to our businesses.

Gws PBT was up 41% to $1 2 billion, excluding the share.

Its share of the French provision of $657 million.

The Americas and APAC delivered record profits for both the fourth quarter and also the full year with the Americas 2021 pvt above 2 billion for the first time.

Operating income increased 13% on good business momentum recurring net fee income grew 17% on higher average fee generating assets, which was driven by both market performance and over 100 billion of net new fee generating assets.

Inflows during the year.

Net interest income increased 10% year on year.

With increases in volumes driving both loan and deposit NII higher sequentially NII was broadly flat in line with our guidance last quarter.

For the first quarter, we expect NII to increase slightly compared with the fourth quarter. Despite the lower day count by two days.

Transaction based income rose, 4% supported by higher client engagement in alternative investments and structured products, partly offset by clients being cautious on Chinese stocks. Following the recent policy developments in China, and the rapid spread of army crop.

Now in January we saw lower transactional activity levels compared with a very strong January 2021 , particularly in APAC, where clients remained on the sidelines in response to challenging market conditions and geopolitical concerns.

Cost increased by 25%, mainly driven by the French provision.

Without that cost would have been up 6% with gws delivering positive operating leverage of seven percentage points and our cost to income ratio of below 75%.

Net new fee generating assets were 27 billion in the quarter, an annualized growth rate of 8%, helping bring the fee generating asset balance to nearly one five trillion as of year end.

All regions were positive with the highest net inflows coming from the Americas.

Net new lending in <unk> was 4 billion.

Mainly on continued strong momentum in the Americas.

APAC saw some deleveraging with our Asian clients being more cautious in the current uncertain environment as I just mentioned for.

For the full year Gws generated net new loans of 25 billion.

Our 12% growth while remaining disciplined on risk.

We continue to see strong business momentum in P&C, driving PBT up by 5% to 335 million Swiss francs, despite including 76 million Swiss francs of the French provision.

Without this PBT would have been up 29%.

Operating income increased 11% with net interest transaction and recurring income all up year on year.

Credit loss releases in the quarter were $9 million the cost to income ratio in the quarter was 59% before the French provision.

Net interest income increased by 9% year on year, mostly as a result of various deposit optimization measures and further helped by $2.2 billion of net new loans in personal banking for the full year.

Transaction based income increased 18% on higher revenues from credit card and foreign exchange transaction, reflecting an increase in travel and leisure spending by clients.

Recurring net fee income was up 16% to an all time high.

Primarily on higher investment fund custody and mandate fees.

Continued momentum in recurring fees was helped by $300 million of net new investment product flows.

As we engage with clients to provide alternatives to cash deposits for.

For the full year net new investment product flows were $2 7 billion a growth rate of 14%.

In asset management, PBT was down 17% from a particularly strong <unk> 'twenty.

Full year PBT was $1 billion up 12%, excluding the gains from the sale of <unk> Center, and <unk> 20, and <unk> 21.

Net management fees were up 21% helped by over 100 million net new run rate fees over the past 12 months and market performance.

Looking back over the last two years, we've added a quarter of a 1 billion net new run rate fees.

Highlighting the strong volume and high quality of our net new money flows.

Performance fees were down as a return to more normal levels from an exceptionally good <unk> 'twenty.

Investment assets rose to over 1.2 trillion for the first time net.

Net new money was $15 billion for the quarter and 45 billion for the full year with positive flows across all regions excluding.

Excluding the gain for the sale of fund center.

<unk> cost to income ratio was 61% for the full year 2021 down one seven percentage points year on year and down 11 percentage points from 2019.

The IV delivered a 35% increase in PBT to $713 million on record for <unk> com.

The return on attributed equity was 22% for the quarter and 20% for the full year.

Global banking revenues were up 4% to $696 million and for Q.

This was the sixth consecutive quarter above $650 million in the full year was above 3 billion for the first time as Ralph highlighted.

Capital markets revenues increased 5%, primarily reflecting the increase in leverage capital markets Advisory revenues rose, 3% on higher M&A revenues.

Global markets revenues increased 6%, primarily driven by higher revenues from foreign exchange finance and equities products.

Operating expenses were up 3% driven by higher litigation and technology expenses.

Cost to income ratio was 69%.

During the quarter, we generated $1 6 billion in CET, one capital contributed to our CET, one capital ratio of 15% and a CE tier one leverage ratio of 4.24%.

We provided some guidance on our expected <unk> trajectory in the appendix and.

And we expect to have more visibility on the timing and impact of Basel III implementation between the end of this year and early next year.

As Ralph already said, we intend to propose a dividend of 50 U S cents per share for 2021 Rep.

Representing a total accrual of $1 7 billion.

And we completed $2 6 billion of buybacks.

This amounted to a total payout ratio of 58% in 2021.

Looking ahead, well resume buybacks tomorrow and expect to continue purchases throughout the remainder of the year.

This should allow us to buy back up to $5 billion.

Of shares this year.

With that we can open up for questions.

Thank you Kat.

And then of course, we also joined on stage with Ralph again.

I'm opening up and I think that we have a fast cooler and this is Dan Jeremy <unk> from Exane.

Hatefully Jeremy.

Morning, we can see a hopefully you can hear us FX and we can hear you say please go ahead.

Great. Thank you.

Thanks for all the details here and much appreciated.

<unk>.

Two questions really firstly on the digital wealth management projects that you've talked about on slide 16 could you talk bit more about the expected timing of that project. I think you said you've got the wealth front acquisition closing in the second half of this year.

Much time do you think you need for integration work before or after that or developing a new combined offering if that's the plan. So basically what will be life Wayne if you could just talk through the timeline and then my second question on a different topic is about the share buybacks I'm just trying to get a sense of how likely you ought to do the full $5 billion in 'twenty.

'twenty two.

So could you talk a bit about how you will calibrate the pace of buybacks in each period through the year, what metrics that will be based on.

Will you have blackout periods like last year, when you have big variations between quarters like last year that'd be great. Thank you.

Thanks, Jeremy I'll take the first question and Kirt will take the second one so well from clarity for us we need to get.

All of the different approvals that will needs.

Working with the teams, making sure it's smooth.

Transition to to actually close the transaction so that stage number one in SaaS.

We expect this to more to happen more towards the.

While in the second half of this of this year now from their own Theres a couple of things we will do so.

We will it will.

Will work as a standalone operation for a long time because.

They are successful they are growing fast.

Having a unique proposition.

Don't want to interfere too much on the country you have to look at okay. What are some of the kind of.

The easy wins here. So for example, the easy wins is that they have they are not only a wealth manager. They also provide banking services.

They have a cash sweep arrangement, we can look at the cash rep arrangement for one.

So that would be an opportunity right there.

We have $2 million of workplace wealth clients, while at a half million in retirement services and a half a million in equity plans.

And introducing a.

Digital wealth offering to them after there.

Shares are vested and Theyre sold the shares for example.

<unk> will actually keep the money in house, but for that we don't really have to do a full integration. We just have to make sure that there was a good connection between our workplace wealth services too and then for wealth front to be introduced so those are kind of the ones that you can do easily for which you don't even need integration.

The second opportunity.

Is the one for these engineers, who are very good engineers and they really wanted to join UBS. Because we are a wealth manager that's what they were looking for because they believe a wealth management to see whether they can actually help UBS also developing further propositions unless you may remember when we discussed.

About the digital opportunity in the U S. We actually felt that there was a an opportunity there for a digital player with remote advice now clearly that will be the next proposition for them to develop where are basically very unique proposition. The way. They go about their user experience. We can then combine with our.

Wealth advice centers, and then look beyond the current segments that they're focusing on their currently focusing on different segments from the reactive.

<unk>.

We can actually also tap on when we have remote advice. So it will be in stages now clearly from the beginning we will ensure that there is compliant with whatever regulation there is etcetera etcetera etcetera.

It will not be an integration, but it will at least be we'd have to make sure that they conform to some of our standards. There if it comes to to that but we want to manage them as much as possible as a separate unit.

And develop that digital proposition and built so thats, a little bit where I see it.

Yes, Jeremy in terms of your second question I think firstly and very importantly, we actually don't intend to have any pauses for the remainder of the year. Unlike last quarters, when we advise on a quarter by quarter basis. In this case, we're actually giving you advice on what we intend to do for the remainder of the year without pause.

Now obviously still the overall volume we can repurchase will depend on the actual volume of shares traded in the liquidity on sex.

Our calculation of up to $5 billion is based on what we've seen in terms of volumes in the past and so we think that that's within rich reach but clearly it's going to be dependent on how much liquidity and how much volume is actually traded in our shares on sex.

Great. Thank you.

Great. Thanks, Thanks, Jeremy.

And we can move onto our next caller, who I think is flora <unk> from Jefferies.

Good morning Flora.

Good morning, Thank you for taking my question.

The first question I wanted to ask you regarding the use of excess capital.

He on the buyback target when you say closed I think the question that Jeremy just aspects forgiveness basically in.

Suffice to him of buybacks for 'twenty two.

The lower limit at should I understand that each will be dependent on your M&A plans, meaning provided you do not do additional acquisitions. This year than you would intend to distribute as much as 5 billion via buybacks and therefore, maybe can you tell us more regarding your M&A plans and how we go out.

I need to make the decision between.

M&A and buybacks and then the second question is also regarding <unk> and <unk>.

SG&A will add to the strategy question, who would make sense.

You mentioned that this is expected to be marginally EPS accretive can you tell us maybe a bit more and then getting the final choice.

<unk> potential you would expect from that yield a return on investment of synergy potential.

And from that and maybe just also on west phones, if I may.

Obviously, you plan to target.

Our client reach that is a bit below your usual target client base in terms of our flash.

But if I understand correctly. This is expected to be 20, <unk> range and net of UBS Bank.

Thank you.

Okay. Thank you so the way I think about M&A. So if it comes to the capital generation that we have every year right. So we have a business that generates a lot of capital, but in the organic growth doesn't use a lot of capital clearly we are we do lending we have an investment banking activities.

They all use capital but.

The growth of the use of capital is not foreseen to needing all of the capital that we generate on our country. So there will always be quite a lot of capital left over to to support first growth is set well first is make sure that we have a good balance sheet second.

Sort of growth and in the growth then the opportunity for M&A. The default I just want to make sure the default is truly.

Hey.

Organic growth because we think we have all the engines in place generally to do organic growth now if it goes through inorganic growth I am not going to kind of manage timing here.

If the opportunity is there just like well front, we'll have to work on that opportunity I can't just say well why don't you wait for next year, because we have we are at.

May destroy our capital return plan, that's what we do but we have ample capital to return. So it will not impact necessarily quick dv the share of the share buyback programs per se critical can elaborate on that but if it comes to M&A just to give you a couple of ideas here. So it will be about <unk>.

On it would be then on capabilities on scale.

On reaching a settlement that orbis.

Our business model that we don't.

That we want to develop organically, but we can accelerate through the acquisition, that's a little bit the type of bolt on.

We're not necessarily looking.

If it comes it comes.

We are focused on organic growth a focus on making well from the success of our focus on making sure that we perform on the on the share buyback. So maybe on that one yes, maybe just add a couple of points to amplify what what Ralph highlighted and as Ralph mentioned, we're very capital generative and you saw in 2021, we actually generated.

Seven 7 billion of capital and so as we look at this year and also we've included on slide 53, the <unk> trajectory.

We feel we have ample capital to be able to invest firstly, our first priority of course is business growth achieving any regulatory requirements.

To accrue our cash dividend, we indicated will be progressive in our cash dividend our cash dividend accrual was one 7 billion for the 50.

2021 , but it does give us good confidence and comfort that we can actually repurchase.

Up to $5 billion and still have ample flexibility to address other priorities as and when they come up.

Okay, and then your questions on wealth front.

That was kind of.

There are many questions in one question.

I'm not going to kind of <unk>.

Also this answer to answer every little bit that wasn't the question, but so in general what I found is a fast growing.

Scaleup, let me put it that way, it's a scale up.

It has 470000 clients, it's got 27 billion of assets under management.

It is a segment that you referred to is one that is lower than our normally normal wealth segment that we cover that is true and it is not true. It is certainly true if it comes to the segments that we cover through personal device with advisors.

But as I was referring to the fact that we also had $2 million of customers in the U S alone.

Workplace wealth.

And they are actually within that bandwidth they are colors the upper affluent.

Wealth clients that we need to have a more digital offering for and that's why our wealth front is an attractive proposition for them and therefore with us as well in order to ensure that we keep them as clients going forward.

The way we.

We developed a wealth from please just look at this as a growth engine for the moment is to scale up so we're not going to run it for P&L.

But now we're going to run it for growth number of clients assets under management and using their technology later on we'll start managing it for P&L, but for the moment that needs to continue to grow.

Create value and deliver that value to us as well and then on the brand all asleep.

We're not there yet we are at the same time working on how we want to kind of develop the UBS brand from here.

And see how some of these initiatives that may not be straight of a rally.

Our hour.

Normal Ali let me put it that way what are we should go over time under a separate brand ordinary UBS brand or a linked UBS brand. So we're not there yet.

Okay. Thank you. Thank you flora so I think we're going to move on now to our next caller I think case and Stefan <unk> from autonomous.

Hi, Stephanie.

Your online.

Yes, Hey, good morning, everyone.

Thank you very much for the presentation.

I wanted to follow up first on.

The return on CET one target please.

So I think if we take out the French provisions you have generated about 19% return in 2021.

Targeting 15 to 18.

The denominator will probably not grow a lot.

So it seems that you're implying with these targets declining profits.

I was wondering what conceptually what cost profits to decline and also how.

Chives with explicit target of 10% to 15% profit growth.

And our wealth management business.

And a.

Second aspect of our financial targets.

Past you have explicitly limited.

Capital consumption of the investment bank.

To the third of the group.

And I think that that target is gone.

Is there anything that we should read into that or is it just kind of a cleanup effort.

I will talk with you needed anymore.

Thanks very much.

I'll take the second one.

It takes the first one.

So it's exactly what you say so we're very disciplined in managing our capital within the investment bank.

It has been really useful for us to really have that target out there as well but.

But we manage it in a very disciplined way and we will continue.

When is it done in a disciplined disciplined way. So nothing has changed there. It's just that we don't kind of repeated as a target per se, but nothing has changed to the way we deal with the capital allocation to the investment bank.

So it's kind of it's kind of a target that was always there that we always kind of made and therefore it doesn't serve a purpose anymore, but be assured we will continue with the same discipline there.

With that Curt returns Ctr, yes, just to comment on return on <unk>. Firstly, Indeed, we do need to accommodate the increase in our Wi I think again, if you if I just referenced slide 53, you can see there's 40 billion of additional <unk> in order to invest in the business and to achieve our.

Aspirations. In addition to that we've got another 11 billion related to regulatory requirements and right now we're anticipating around $20 billion in order to address our Basel III finalization subject to send money from some final decisions I think the other factor if you look at our performance in 2021 of course, we actually add.

A net provision release.

And when we model and we look at our provisioning going forward.

I'd say, we model that conservatively, but that overall target does contemplate some level of overall CET one built that.

You would expect and of course, we are leaving some flexibility just to make sure that we can deliver against our targets.

And all kinds of different market environments.

Great. Thank you very much for that.

Alright, Thank you Stefan and so with that we'll move on to our fourth Cola.

I believe it's Alastair Ryan from Bank of America.

Alastair.

Thank you Sarah Good morning first question, then just to be clear on wealth from.

What you need to achieve your stated strategy goes in the U S. As it stands today.

Are we sort of long of further deals to get you there.

Second I think Ron just on the <unk> question.

Sticking with a third of the group in the investment Bank I just want to reconfirm, that's absolutely still the case.

And then how am I going to manage on the investment bank is wrong, how am I going to.

Sure.

Trench the increased alignment between the hours.

J W.

The issues with that in the past.

Still good because you don't provide the numbers how am I going to check that please thank you.

Yeah, So alastair.

Cinema, which you may have to trust us.

Rather than to be able to track as well.

<unk>.

Yeah.

I'd go with the last question first.

Yes, I mean, you should basically start seeing that in.

And basically what we did already this year, we're if it comes through the banking.

The activities in the sectors that we cover.

And the way, we collaborate with the with the wealth business.

You can you can see it in some of the deals coming through.

You can see it in some of the wealth that is created by some of the deals also coming through in the wealth business.

But in order to be more successful in that one.

I think thats, an even more important move there is is to focus on what we call the global family.

To show wealth segments, that's truly where the strength of the investment bank and the wealth management.

Activities come together, that's what we truly want to manage as as one.

Under one leadership with one risk management.

Area to focus on it.

With allocated resources.

To it in order to make sure that we have a very smooth.

Supportive.

Our offering for our clients there. So that's that's where you will see that's where you will see us coming together.

And that is that is a pretty important part of our growth plans.

In terms of income.

In that segment. So that's one.

On the.

The capital discipline for the investment Bank I can reiterate I just did it.

That nothing has changed there.

Back to wealth front.

Well, we need more acquisitions to make the U S work work, yes, or no in order to continue to to make it more efficient and to create more scale.

It's clear that in the U S. We have.

Discuss that two quarters ago, we have a plan.

Beyond.

The digital.

<unk> focused.

Part of the plan.

The first part of our plan is to make sure that the current personally advised.

The proposition that we get even more efficiency there so.

This has to do with our plan our platform that we're developing called <unk>.

Wealth management Americas platform, we map.

That should serve as our financial advisers faster and better.

<unk> in what we call Ada so analytics data.

Artificial intelligence in order to ensure that our financial advisers get more productive to come with the right opportunities for our clients.

So all of these initiatives should help to scale and then on top of that as just through us or remind you of the more broad attention that we gave to the U S. In the past is that we are developing our banking services.

Two our wealth clients as well as.

MIT company's services, so companies that are close to being sold.

Close to being so are merged.

Emerged where there is going to be so wealth creation for the owner because that is what we do at four in the banking services. We are working on developing near our lending services. So we have seen quite some pickup on mortgages in the wealth space there.

Cash management services.

Well deposit taking services.

We are developing.

So the banking service is also a very important element in order to support our financial advisors to build an even more holistic relationship with our clients there.

Two two.

Trying to that relationship and make sure that we basically.

Get more of their business as well. So there is more to do in the U S and just buying.

Well, France now if again if a.

A bold all in one of these areas could accelerate this plan. This plan a lot of different plan, but this plan.

We could look at it but for the moment as organic growth is developing our own bank. There is developing our wealth management platform and as a digital that offerings through the acquisition of wells from that's what we do.

Thank you great.

Alright, Thank you Alastair.

So I think we have anything to you Nathan and I think our next caller is a matter Elena stock laser good morning, I planar.

So you have the condoning Sarah thanks, Thanks, very much good morning, Ralph Good morning, Kurt.

Really two quick questions from me.

Of course.

On strategy, while investments in to one of your kind of commercial aspiration. So the first one.

You sound financing your investments in the medium term.

That's quite impressive and you've shown us on slide 23, where your savings are coming from could.

Could you tell us kind of from here.

On the kind of marginal dollar level, where are your kind of strategic.

Investments.

Likely to be so that's question number one and question number two really on the commercial kind of aspiration could you help us actually due to that above 5% net.

<unk> kind of fee generating assets growth from a perspective of the region, maybe also products to <unk>.

Any other initiatives that you think we should be aware of on that kind of medium. The medium term in terms of growth that thank you very much sure.

I'll take the first question and ill take the second question. So if you look at where we generate the savings.

Literally we will generate savings across the whole for first right. So the rules dedicated areas like the footprint optimization.

The.

Some other activities.

That we may look at Downscaling, but in general we're also looking at efficiency measures across the whole company.

That is driven by the efficiency that digital can bring it is driven by the decreased.

Layers of reporting that the agile way of working brings.

It is delivered by the efficiency that the agile a productivity issue if you're if you may that the ICL way of working will bring as well. So that is basically a saving across the firm wherever we introduced agile you can expect savings to come out, but we will reinvest.

Often reinvest in the business itself.

As well or reinvest somewhere else. So you may not see it in the P&L, but I'm just trying to describe.

Just trying to describe to you where the pockets of savings.

<unk> are coming from now.

There is another big saving that we are anticipating or at least.

A way to increase productivity, which is on the technology front.

How we technology, how we rent technology, how we prioritize technology, but also on further leveraging up as what we call the quality of our engineers. So that's also were quite some.

Some some budget is freed up to invest now the areas of investment are.

In technology itself.

But from a regional perspective, you can expect us to invest over the next couple of years, some $200 million to $250 million for example in the U S right. So the U S.

You can expect that the vessels go where we have set the growth will be so the U S. We will invest.

Asia Pacific.

We will grow as well we will invest in just growing the teams.

Aligning banking with the wealth management proposition getting the right specialist in order to to reap the benefits for you the new economy.

The opportunity that we see there invest in China.

To develop.

<unk> brought in.

And basically across the one UBS activities in China. So that's so you can expect from a retail perspective to go to.

The Americas and Asia Pacific clearly, we are investing in Switzerland, as well because next to the fact that we will be more efficient here and we will keep cost flattish over the next couple of years, we do see areas for growth, where we invest and the same goes for EMEA, we do see opportunities to decrease cost, but part of.

The savings that we make there we also invest in growing areas.

And on the wealth side or coverage in order to reap the opportunity to deal with the mid corporate opportunity and their owners and some of the geographies that we feel are strategic as part of EMEA, So thats, a little bit because the picture as to where the money will be going.

Maybe you can add to that as well by the way. So go ahead.

I think that you covered it all very well just to address the.

The question on net new fee generating assets over I think firstly and importantly, one of the reasons. We came back with this as a target versus net new money is because of course fee generating assets is far more strategic and at higher quality and its where we really drive that recurring.

Revenue momentum also very importantly, it's what the business is focused on so we have more confidence because the business is very very much addressing this from how we look at product development, leveraging our CIO insight, how we connect that to our clients and our product development.

Now in terms of products overall of course within fee generating assets. The main focus is around mandates in our advisory products and you saw that on slide nine our managed solutions, which are our mandates that are most.

Most closely linked to our CIO overall content. In addition from the professional client side. There is the professional market access product, which has been one where we've seen a lot of inflows and that's more for the global family and institutional clients that are trying to get.

Direct access to our trading and then obviously.

Private markets and alternatives is a key focus for us and I would say overall, you will see higher growth and sustainability. The non sustainability now from a regional perspective, I wouldn't emphasize one region over the other and really that's the advantage of diversification we.

Might see one corner, where APAC is down but the Americas is up and so therefore, we would expect to benefit from that diversification, but just to give you the insight into what happened with 107 billion of net new fee generating assets in 2021, Americas 64 billion, 8% growth EMEA 19 billion.

6% growth APAC 14 billion, 13% growth starting from a smaller base in Switzerland, $11 billion with 10% growth.

Thank you.

Great. Thanks, Magdalena and so with that I think we now move to our next caller.

U S as in Teradata from Mediobanca.

How you have the floor.

Good morning. Thank you for the questions I had one on the cost income target and another on capital return.

Midterm, if I look at your.

<unk> kind of always have you any guidance the $3 $70 billion. It looks like you don't need to maintain much capital totaled $3 nine to 25, you've obviously got <unk> benefits that kind of question your capital generation.

It could theoretically payout ratios.

Pretty high going forward and how should we think about that in terms of buybacks beyond 2020, given you've kind of mentioned some.

Limitations on ATV.

Somebody you'd need to kind of further up the dividend and so to manage that capital and excess capital going forwards.

And then secondly on cost income.

The target is just a very conservative to me.

Just for edification, NII upside, which should drop straight to the bottom line I'm getting to low seventeens already.

You've got a billion of cost savings, we can reinvest in growth.

Marginal cost of credit should be low I mean, what why 70 to 70 free while helping to lower than that.

So.

To start with your buyback question overall on your Adam Your statement was absolutely correct I think if you if you look at what we indicated this year.

$5 billion and then you take the 1.7 billion progressively on cash dividend that gets you to around $7 billion on top of that of course will deploy $1 4 billion and the acquisition that we're making the wealth fund acquisition in the second half of the year you just compare that to.

Our net profit in 'twenty.

'twenty, one and you can easily get to a payout ratio, that's greater than 100%, which is logical because we're starting at 15% overall CET one ratio and then I think also as you do the math you think about the $7 7 billion again.

Capital generation and you start to look at what that could mean for 2023 and 2024, while we haven't specifically guided I think the math is pretty straightforward. It shows that indeed, we can continue to generate.

Substantial capital and also have very very high payout ratio is still manage to our overall capital ratio, while addressing Basel III and the.

The capital that's required to grow the business.

So now turning to your cost income question.

Again, I'll provide really a similar answer to the one I provided before it's just as we look at the business as we think about the investments that we're looking to make while we intend to to continue to be have positive operating leverage overall as we go through the next couple of years still when we look at.

What that means in terms of what we're going to deliver how that aligns to our return target of 70% to 30 actually aligns quite well to the 15% to 18% and naturally we're leaving ourselves. Some degree of buffer just so we can manage with any kind of volatility that might come in I mean I would also then maybe just close.

My comments on that point is last year. The results that we generated where when we probably saw the best primary banking market that we've ever seen and also when we had our markets environment that was very very constructive and I don't think any of US believe that we're going to see that repeat itself in 2022. So we have to accommodate the fact that.

We're going to see different a different market environment.

Exactly.

Great. Thank you thanks Adam.

We're now going to move on to our next caller and I think it's kian.

<unk>, obviously seen from J P. Morgan.

Yes, thanks for taking my questions.

First question is regarding the trials coming back to your comments on cost you mentioned.

Potentially flat costs and I just wanted to clarify I think you mentioned that because I don't know what context it was exactly.

But if I look at your cost guidance right now plus two plus minus variable expenses can we assume that's a good guide for the next few years, considering you still have $400 million of savings to come in 'twenty three and as a result is that an indication of that.

Can use that going forward in your plan based on what you know today.

That's the first question and the second question comes true well front you used to have sustained cost smart wells and you close sat down and quietly and I just wanted to see what is the difference between Valspar and smartphone smart smart valve story looks very similar to me.

To what you just acquired.

And in that context can you talk a little bit what are your long term ambition on this business that you just acquired I mean is it U S is it global.

And.

What does that mean for the future how should we think about your digital robo investing in the affluent sector five years from now or 6%.

Okay I'll start with the second question.

I will lead into the first question and I'm sure. It takes over and the first question as well.

So you mentioned smart wealth riots are smart wealth for the once who who don't know it was a.

A wealth management proposition digital wealth management.

The proposition that we once had.

We are we close it down and there were a couple of learnings from that one.

Those are the learnings that we took to heart when considering to go with digital approaches in wealth management again with digital only once.

<unk>.

If you look at the.

The learnings that we saw in well and smart wealth. They were really around the fact that it was not a separate unit.

It was not a protected birch at that was allocated.

It didn't really have a marketing angle to it it was not focused on user experience.

And it was.

We focused too much on P&L from the beginning.

And honestly, if you want to build a business you have to separate it you have to protect it for a while you have to have it grow and if you expect P&L to come from a business like that in the first five years.

Basically you are setting it up for failure, because there's not going to it's not going to happen because.

Even if it is digital you need scale and scale you can only have with clients and the clients only come if you do marketing and you have a cost of acquisition now if you start cutting back on cost of acquisitions. The clients don't come as the clients don't come the money doesn't come if the money doesn't come you will not.

Create the scale that you need so.

That's those are kind of the the high level learnings that we have before for smart well then that's why my answer on wealth.

It was also.

It's a separate unit and we want to maintain it.

As a separate unit, but there's like a grown up and as the scale up and scale up needs to be protected as well.

So that's an important one now how do we think about developing similar models.

Across the globe. It is not a global approach let me.

Put that one.

Very clear because even in a digital world you need to make sure that you can create the scale and banking why do we like it or not or is it a couple of things that will always determine.

Scale from a more domestic perspective. So if you go into a market you will have local regulations local tax.

Last as you are by by investment products are geared towards that as well.

So it was a quite a large component of your offering that are always dependent on local scale and therefore, you can also on digital on the digital front. If you look at the core engine.

Looking at the backend order from <unk>, which is the user experience you can replicate that as much as you want but the core the products the delivery of the value is generally more locally driven and therefore you need local scale. So also digital.

Offerings need local scale, and therefore need to be in large economies large wealth pools and therefore, if you. If you. If you would if you can expect us to move in other countries, where the model like this it will be in large wealth countries.

<unk>.

Back to your cost question.

I was talking about where do we see cost of where do we see reinvestment in.

The answer and then I mentioned that.

Specifically in Switzerland. The plan is to manage that at a flattish cost line, because whatever we generate and efficiencies we reinvest in the digital proposition and we reinvest in growth, but it will be over time more or less a flat cost line in Switzerland now.

Now the 2% is for UBS as a whole.

And that is what we're guiding for 2022 as we speak.

And you can maybe give a peek into the years thereafter, yes, so firstly to clarify when I referenced the fact that we were down slightly year on year and 2021, it referred to Ttc's.

Excluding FX excluding litigation.

<unk> restructuring, we were down around 20 basis points now that was versus our guidance of being up a couple hundred million dollars. So we actually outperformed our guidance.

And as we look at 2022 again, we're guiding on that same PDC. However, we're excluding restructuring because we're acknowledging listen we're going to have restructuring each year and so we're not going to look at that as part of what we want to exclude when we think about our cost base because that no longer for us makes any sense and so we met.

We expect about $200 million of restructuring next year, we saw a $168 million. This year. So it will be slightly up or restructure but that's included in that 2% up now as we look at 2023.

Clearly the fact that we're generating additional in fact, the highest level of actual and your cost save the additional $600 million will occur in 2023 now we'll also use at the time and pace our investments.

But you can expect us to in a similar way to have a rather flattish overall TTC trajectory on that definition.

Very helpful. Thank you.

Great. Thank you. Thanks, Ken I said navigating these to our next caller, who is on Andrew Lim from sub 10.

See you Andrew Please go ahead.

Great. Thank you.

Taking my questions.

So just a bit more involved from an immediate ann's question.

I guess the walk from acquisition in itself, it's quite expensive.

5%.

So.

I know you said, you think sleep well frontload.

Hum.

The other way in the sense that you were able to use it.

LNG and trying to push outs walkman masses sooner rather than later and what is a certainty about that technology.

Has.

That makes it so attractive to pay such a high price for the acquisition.

And then secondly, you mentioned as part of your strategy.

In some markets.

All of these.

How material are these markets are there any other financials that we should be aware of that could influence the group financials and rule.

Sure. Thank you so.

So in wealth funds again.

I'm not sure I said I leave them alone.

We said, we'd keep it as a stand alone <unk>.

Entity as well as our scale up.

And what makes it so unique.

Is it a couple of things.

First they are really driven by the same culture the same value.

They have a route through engineering culture.

Their technology is proprietary.

It has opened a weekend connected we can reuse it in parts.

It will accelerate our own engineering culture as well as good to have that the second thing is.

Well, France is not a robo adviser.

I know people talk about it that way, but it is it's a digital wealth management offering.

It also offers banking services.

It's also offers investment services of course, and it has two unique capabilities here. One is the tax loss harvesting technology that they have in models that they have as well as the direct indexing capabilities the half as well. So there is capability there have there that.

Our.

Sought after and that we like as well.

Then.

We will want.

Them to grow and the synergies that we see even if it is a standalone entity are truly in what I was just indicating which is that they have a.

Banking services.

And part of that can come to us.

We have 2 million wealth.

Pushed wealth clients.

At this moment, we don't have a real good offering for but that we will have so we will actually make.

See synergies there as well for them to grow on the back of the clients that we refer.

We will later on be able to introduce other UBS products too dire clientele as well like like mortgages.

And then and that was in a later stage. We can also look at how they do custody clearing et cetera, et cetera, et cetera, but that would be at a later stage right. There and then the synergies would be more on the.

On the operating.

On the operational side, but that will be later.

So there was a lot of.

The reasons why we think that what we paid for it is certainly worth the money.

Maybe I could just add just from a pure financial standpoint, firstly, when we complete the acquisition. We expect that we indicate there is to have about a negative 40 basis point drag overall on our capital we expect it to be marginally EPS accretive we do not expect to be to be dilutive overall to our returns.

When we look at the total enterprise value, we expect to create including some of the synergies that Ralph mentioned, we do expect it over time.

To be accretive to our returns.

We're very comfortable with the acquisition overall from a financial standpoint, and as Ralph has mentioned several times, we're actually delighted with the acquisition from a strategy perspective.

Maybe I can just comment on the market exits I think you've already seen we.

We exited we sold we sold our wealth management business first in Australia, We've announced Spain will close that this year, we've also announced our SFA business and in general we look at businesses. We're in and I think Ralph has clearly articulated this from a strategic standpoint that we just cannot.

<unk> the right level of sustainable advantage in returns and in general when we exit its overall accretive to our cost structure and efficiency. We are and we're in the process of exiting other markets South I'll give you. An example, I think you saw in the press that we exited the IV exited Mexico. So it was on.

Sure Mexican business again, we just couldnt see the competitive advantage, we're going to continue to serve our clients our offshore our Mexican clients. So we're not abandoning our clients are still part of our ecosystem, but it just made sense for us to exit the onshore part of that business.

Yes.

Alright. Thank you. Thank you andriy.

And so we're going to now move on to the line of Nicholas pain from Kepler.

Good morning. Please do go ahead good morning.

Yes, thanks for taking my question.

Two please the first one sorry to come back on the wealth front again, but just in terms of.

Acquisition costs, because you just said that you are not managing it for the P&L accused EMEA, Ken I wanted to know what does it mean for accretion cost do you see higher acquisition costs, especially in the U S and what does that mean in terms of competitive landscape. There where are you where are your edge versus competition there.

And the second question.

You just disclose something very useful I think which is your change of bank versus run the bank.

Spending breakdown and I want you to know what do you expect in terms of allocation going forwards between those two items. Thank you.

Well I'll start with the second one first I think this is a little bit worried will be in terms of allocation.

So clearly you have the strategic bucket and you have to book it as to what we call a license to operate and we come from a.

From a period here with UBS, where we needed to invest a lot.

Around.

Making sure that we were compliant with new laws, new expectations, our regulatory requirements et cetera.

Quite some programs to ensure that we would always be in compliance.

In compliance with some of those with all of those.

It did.

As for our heavy investments in both of these programs have been brought to a very good and at our close in and that gave us the opportunity to increase within the total.

<unk>.

The percentage of strategic spend as we call it but then within the strategic expense.

We have moved on from everybody to determine what is strategic expense within their own domain and their own business unit and their own group function to now basically the top basically together the executive team the deciding okay. No no no no. We collectively decide on what is strategic and not the business Division.

So basically with that we have crowded out some.

Less strategic projects that were may be seen by the division itself.

Strategic but on a higher level.

Would be seen as marginally strategic as one or for which we could actually accelerate some of the other projects that are just more remunerative are more important to us and auto divisions and that is a process that we went through in terms of first quantifying all the projects then taking British away from some of them.

And reallocated into two others and accelerating order projects with that and we now have a quarterly review of all of our projects in the executive team. So it's not delegated to the business divisions in the group function anymore. No. We do this really at the highest level now.

As a bank just to be sure in our managed expectations, we will always have license to operate cost.

Which basically means if new regulations come in we have to make sure that our systems can deal with whatever data request whatever.

Requirements, we need for example in <unk> AML.

Yes.

Whatever it needs to come from from a LIBOR transaction transition needs of system changes for that as well. So so some market changes regulatory changes law changes always have an impact on your technology spend then you also have to maintain your technology you have to make sure that you.

Don't run out.

Out of the of the economic lifetime.

Technology, so you'll have to make sure that you upgrade your technology or your decommission your technology, which is often.

Taken away in the budget because decommissioning generally.

Costing you, but doesn't safe you directly it faced by decreasing the complexity of the technology in the future, but from a short term perspective.

It's the easiest one to cut but we should not because we should you should always wants to have a state of the art technology environment and therefore, you will have to invest also in your license to operate if it comes to D.

The state of the art and is of your technology. So that that is what we see as part of license to operate and the strategic component is more on the businesses.

That was your second question.

First question was on.

On the wealth front.

So.

If you look at how most of these digital.

Unit businesses are.

Our.

[noise] positioned in the market, let me put it that way they each have their own value proposition. So that each have their proposition if it comes to which clientele, which sort of clientele thereafter, which kind of clients with what kind of needs. They want to service and therefore, you know the market is so big.

So there is quite a lot of room to work on that now.

Well certainly in.

An offer for young professional it's enough for four.

The engineering like types as well.

And what we and they are successful in that and some orders could be focusing on orders, while we want to build our two is the segment that we call the reactive which already.

Or the fastest or the reactors.

Which are.

<unk> clients of ours, all clients potential clients out there in the market that do have actually investment advice needs with adult wanted to have 100% coverage by a financial adviser.

However, they also don't feel secure enough to just run it through a digital offer oney and is that combination of the digital offer and the remote advice that we're so good at.

That can actually tackle that chocolate so whether the increase of cost of acquisition not per se, but just going after a different segment.

So.

So that's where I want to leave it there.

Cost of acquisition is different per ship segment.

In the market.

Okay.

Great. Thank you Nicholas and so now we're moving to a net.

Who is anecdotal from Barclays.

Good morning, we can see you. Please do go ahead.

Alright, thank you.

And thanks for taking my questions two questions.

The first one again just following on on the wealth front acquisition and but just trying to understand I was just thinking about how you see the longer term outlook for margins in the U S.

Say I appreciate these are different customer segments.

Yes, well from customers will have more access to eds product.

It looks like a charge about 25 basis points.

Again, just wondering how youre thinking about that longer term.

And the second question and so many different relates to the trajectory and just curious if you can go into a bit more detail into the $40 billion business great. How are you.

Do you see that in terms of.

Lending structured product Ivy related.

And so forth in terms of what you were looking to see.

Each of the EIS that 40 billion. Thank you.

Okay.

I'll take the first one it takes the second one so.

On.

Well again, so on the margins. So the current offering that <unk> has has that 25 basis points fee.

But there are.

They're not just <unk>.

<unk> engine or robo advice, they are broadening their services to become more and more like an overall bank. So also the cash of the clients is with them. So they have.

Cash.

Under management assets under management, as well and the cash makes money as well so they get income from that as well.

And that is only for that is for the digital only serves that gets to 25 basis points and then they make all accelerating services that make more money as well. So clearly if you are going to go in with a additional proposition. The Walnut for example would give you access to remote advice.

You would charge different.

Different fees, so it's not like.

This is the pricing of wealth and therefore, if we have an additional.

Proposition, we keep to that no no for the clients that want the current service and the current experience.

And the current choice. This is what it is this is what well managed is really really really well, but if you could give further value added services. We can also.

Price up a bit and I do think that the market is very well aware that that also needs to be done in those cases and you can just go through the comparison with all the other players and then you get.

An idea as to what what would be a normal margin in the market.

Maybe just to give you a bit of a profile of the 40 billion Zika. Firstly the majority of that is going to continue to be allocated to lending and I think you saw of course this year as I highlighted we generated 28 billion in net new loans across wealth management and <unk>.

E&C that focus is going to continue in addition to that when we highlighted the fact that we're looking to really scale and grow further the global family and institutional client segment. There. They do require more sophisticated loans. They have slightly higher risk density and we do plan on seeing growth in allocation.

Of RW way to that segment overall, which is a wealth management segment, but then in addition to that they do require investment banking capabilities, including structured overall derivatives and they also require a prime brokerage services. So there will be some IP related overall our wm.

Two to serve and support that.

Segment.

And then overall as we've indicated several times, we're still looking to keep the same guidance that we have in terms of our overall CET one ratio leverage ratio and also the use of capital by the IV.

Got it thank you and if I just follow up on just one point on the margins.

Just some sense because I think closer to the point you made earlier was that time as a customer acquisition cost.

Trying to put it into that context.

Let's say your ability to scale up the pricing.

Relative to trying to grow that customer base.

How do you think about that tradeoff.

Again, it has to do with what you provide to your customers their customers.

We say.

Are willing to pay up if they regard as a better service.

And for us on the.

Clearly the the.

The pool of customers, we already have too.

To offer wealth funds services too, we don't have to acquire anymore.

Just have to generate deletes towards well and make sure that our customers are happy with what well for adult for them. So that would be a pretty low cost of acquisition for from a well from perspective, let me put it that way all new.

For our customers to be acquired outside of that scheme is a market theme, which is the cost of marketing.

Through social media et cetera, et cetera, et cetera, which depending on how fast you want to grow you have to you have to kind of increase.

And you have to do it.

To me, that's the way we approach it and wealth solstice approaches as well.

You have to look at your customer lifetime value and you see that the customers of wealth fund have a very long lifetime and therefore their lifetime value is actually very high and then you can afford also to do more of the customer acquisition cost. If you get the same profile. So that's pretty long tenured <unk>.

Since there are very have a very loyal client base and every new client seems to have the same profile there.

Alright, Thanks, Amit.

I think with that we'll move on to our <unk>.

Next caller.

Andrew Coombs from Citigroup.

Hi, Andrea Please go ahead.

Hi, Good morning, Thanks for taking my questions. Two from me. Please one on costs one on the M&A strategy.

Some costs.

Betsy you've been very explicit.

On your <unk> guidance are costs.

Excluding compensation or should take variable compensation and integration.

If I duplicate compensation companions, keybanc key topic coming out of U S.

For example.

If I look at your variable.

Compensation costs drop.

Yeah.

If you adjust for the 2021 offs relating to the deferred award et cetera.

Thinking about just expert NDA.

EMEA and that compares to $3 2 billion in revenue growth. So you look at.

Our marginal cost income 75% Matt.

<unk>, that's a good proxy going forward.

To module based compensation costs.

So that would be my first question.

Second question just on the M&A strategy.

Some interesting acquisition.

You talked about organic being a diesel strategy, but when you count towards our ultimate M&A and clearly in the U S launch advisory vantage I assume that will now be mowed into wealth from any chunk of capacity.

If I try and think of a northern factory aimed at similar prospect that you have outside of the U S. It would be my way.

I don't know, how many $7 billion of assets would that be an obvious areas you consider bolt on M&A to accelerate that strategy.

Yeah. So.

Let's go let's go back to.

Sure.

You have.

Yes.

<unk> digital wealth managers like wealth front.

And then you have.

One of them does as well, which is UBS advantages.

You're referring to.

Which plays in a higher wealth segment actually.

It's a nice.

A digital wealth manager in the U S but.

But it plays into higher segment.

But again its digital only.

My way is a way to digitalize the mandate business.

So it is one in which you get a completely different client experience, where the client feels that he or she is much closer to <unk>.

Other kading portfolios two sectors regions.

Different asset categories.

And then leave it.

Two UBS to manage within the boundaries that you set for my way.

And it helps the engagement of our customers then yes. These customers would still want to have the personal advisor side by side to make sure that they are doing.

The right thing and therefore, our case is also for a higher wealth segment.

But it is a digital approach to improve our client experience and thereafter is also digital approach operating that platform and therefore, it is a much more efficient way to do so so these.

These are two different proposition space. It is one is how does digitalize the world of the financial adviser to make the financial adviser much more.

Those two declines have a good way to discuss with declines, but then have a digital support so that the financial adviser or the client advisor does not have to go into paperwork and a lot of documentation et cetera, et cetera, et cetera, but we can really go to the next client so better customer experience seamless execution.

And productivity increase so that my way I would see much more a much more as a digital.

Improvement in what we call the personal advisor segment and UBS.

UBS advantage.

Milestone are much more ended digital Additionally, customized segment.

And that's that's how you can compare them, but clearly we are trying more and more of this as I also related to in my presentation. We've also launched in.

In Asia.

And App called Circle, one and circa one is actually the hull of UBS.

And the App.

Were you could kind of subscriber you don't even have subscribed download it.

There's content coming to you and sort of content, we know your preferences.

The content do you also see who else is on the App that you could actually start discussing with in order to deepen to content.

Once you are so into the content that you would actually want to transact.

On the back of a sector theme or whatsoever.

If you were a UBS client you can actually get into UBS UBS world and transact if youre not you won't have to become a new client. So it's both creating of a open ecosystem for non clients, but clearly it is also an ecosystem that generates new clients for us as well so it is different.

Experiments, let me put it that way at all.

Different approaches in order to see how we can digitalize the world of wealth.

So maybe I'll take your compensation question and first of all I Didnt completely follow your math. So we can follow up on that.

However, we're very consistent in terms of how we accrue compensation variable compensation for Fas It really get back can almost be looked at as the Fas total compensation because of course, it's they're higher payout, but salaries are quite de minimis.

That overall payout depends on the grades the grades are pretty public. It also depends on mix, which is aligned with the grid. So the more lending we do more NII the actual overall less payout and therefore the percentage of payout to revenue. The marginal payout is lower now in terms of how we accrue for all.

The other business divisions, obviously with the IBD the largest in terms of the total accrual that we have for variable compensation.

Consistently is based on what we call S curves and we also accrue after so we accrue against economic profit. So we always look at the equity allocation to the various different types of revenue and also the cost to generate that revenue before we take any accrual for variable compensation and that approach.

Is not going to change going forward.

Great. Thank you very much thanks, Andrzej and say, we're going to move on to our next caller is anchor ranking from RBC.

Thanks for bearing with us and you have the I have the floor.

Thank you.

Yes.

Yes. Thank you very much for taking my question I have two remaining ones fastest on.

What steps are you taking on initiatives to change.

Change the mindset and like incentivize staff took a local agile structure cooperation.

And I know you mentioned you have quarterly.

Yes.

My budget, but what other sort of like leave us. So you just pull it up more agile.

That's what I, that's more larger cooperation.

The second is on your own.

ESG and sustainability initiatives. Thank you.

A lot of banks are talking about it but is it like a net.

And that's positive for you you gave us a number 400 billion of.

Invested assets in comparison to the 250 billion.

Probably not all of this as a net positive but do you think net net you are one of the Windows and then that's probably a sense given your business mix and where do you think you all and yes, Johnny is to under 50 lives to Stifel and opinion of what indication. Thank you.

Yes so.

So I'll start with the last one and for the first one.

So on ESG.

Youre talking about the sustainability.

Impact investment category, where we have grown to $251 billion this year of which.

H $172 billion is within the asset manager and we actually see inflows coming across literally across.

New clients coming in specifically for is offering existing clients moving part of their mandate as part of our business into that offering so I would certainly see given our reputation on giving the effort we put in.

And being the leader being a thought leader on the ESG side as well.

Why we centralized all of our activities outside of the business divisions, because I want to get this consistent across everything we do.

And that will further increase our reputation attract new money. So in that growth is absolutely new money and we see ourselves as a relative winter for a moment, but with all the plans we have for sure. We will continue to be at the forefront there as a thought leader not only for us as a company but also.

In terms of the products that we deliver and making sure that we continue to cater for more specific needs. Because this can be as general as okay. I want to have a portfolio with high ESG rated companies. It could also be I would want to invest in.

Water purification technology.

Only or in whatever new technology, there is that can help.

The climate for example, so we certainly see yourself there as a relative winter. It is one of our strengths.

And the asset management business. It is certainly also one of our strengths now if it comes to.

If it comes to our CIO.

Our strategies.

We have since then.

September 21.

<unk> already.

<unk> indicated that sustainable sustainable investments are the preferreds categories, So where we would advise clients to go into our into.

If I sort of categories that are more sustainable in order. So you see the trends really in our business you see it in our advice and you see it in our products and therefore, I do expect us to be a relative winter also going forward as well.

The second question.

Which was your first question is on agile and how do you guys kind of get everybody to be motivated to go agile.

It's a combination of many things. So there is a couple of characteristics and agile that you need to that you would need to get right and the first one is.

You need to make sure that people see.

Collaboration is an important element.

And that teamwork is an important element rather than individual contribution is an important element. So for example, we changed two things here and we started at the top.

Already in the beginning of last year, we changed our culture components.

That we actually can actually.

Detect and the behavior of people.

For example, the first one is I take accountability with integrity and the second one is around collaboration.

And the third one is around innovation and those are behavioral components that we basically launched as part of the three keys program that has been very successful for the last 10 years and we tweaked some of those on the cultural and behavioral side and these are part of peoples appraisal.

And therefore, they are also part of peoples remuneration.

Collaboration is a very important one is one of the three.

One of the three components and individual accountability, which basically means I think action.

When I see something needs to be done.

It is also a very important component of the behaviors and that part of your appraisal and was that part of your remuneration. That's one element and that goes through the whole organization, whether you're already working on the second one is that at the top level as it was just alluding to.

We basically do everything now as a team and therefore, the financial Kpis for all of our executive team are the same.

So nobody has financial Kpis for their specific division or area.

We as an executive team have won.

Standard Kpis set if it comes to financial.

<unk> I know, there's also showing to the organization that we want to manage this is team it's about UBS, it's about bringing the whole of UBS two to market to our clients.

And it is about teamwork there as well so those are two kind of high level things that really help when you start start to introduce agile deeper into the organization, where basically you create these self steering teams, we call them parts multifunctional teams that have to collaborate together that basically are empowered to deliver every two weeks.

As to what they need to deliver.

They already have.

They are always already surrounded by some of these.

Key behavioral components that we subscribe to are that we have.

Launch as well as incentive components linked to that is right. There already. So so these are pre conditions before you even start to talk about the actual I'd say.

Great. Thank you. Thank you anchor and now we're just getting to a final quota anyways and paste brown from HSBC.

And we can see you pass the please go ahead.

Yeah, Good morning, everybody and thanks for taking a couple of final questions.

Just on the coming.

Coming back to the wealth Americas business I guess, if we go back a few years, we used to have fee.

Pre tax margin target is 25%.

And that's what I think more recently, we've seen some of your peers in that market pushing the bar a bit higher and I'm looking for.

Margins above 30% given the configuration of the business currently where I think you are still sub 20% on.

Pre tax margin is that a realistic range to think about over the medium term.

And the second question is on the interest income sensitivity.

Guidance, you've given on slide 32.

For for the for the current forward curve for $800 million.

Of NII upside.

I don't know if you can give any figures beyond full year 'twenty two does not figure grow or is it an accumulation of gains on the current forward curve.

Once you start thinking about reinvestment.

Further on beyond full year 'twenty two.

Thanks very much.

Right Yeah. So on your first question. If you look at the performance of wealth management Americas, you've actually seen.

A very positive trajectory overall and our efficiency ratio as you would expect.

We have come down from 87%.

This year full year, we were a bit above 80%, we actually had our first quarter below 80% and in the third quarter.

So the trajectory is moving in the right direction and we expect that that's going to continue and it's also helped by of course, our lending given the fact that the payout ratios are in London, and that's something I, just address and that's very very accretive to our margins. So as we increase the banking.

Volumes and actually catch up where we have a bit of a gap versus competitors. We should continue to see positive trajectory overall in our efficiency ratio in the U S. Also very importantly, I would I would note that we've doubled the pvt from the business. So we've gone from from from $1 billion. We're now over.

But we had just over $2 billion this year and we've done that over the last five years and we're on a run rate above $1 billion overall now.

Now in terms of the interest income guidance.

Frankly.

I find it.

Almost meaningless to give you a multiple year guidance on on interest income, yes, we can model it but the fact is there's so many developments that are going to take place in terms of our overall banking book, our asset our liability structure and we know that interest rates are going to move <unk> forward curve.

They're going to move so.

I mean I find it more useful to give you the one year guidance, which is something that we're reasonably comfortable providing but then to extrapolate that into 2023 and 2024.

Frankly don't feel it's it's very useful.

Great. Thank you. Thank you pass on that and so all of our questions for today. So I just handing back to Ralph for a few final words, okay. Thank you Sarah.

Yes by the way.

I thought it was a very good to see you all strain.

Because for the last five quarters at least that I've been here.

We've been on.

On dial on telephone.

So much better to see you actually and to engage with you and although you heard the screen is there in my cameras here, that's kind of sometimes confuses us as well, but there was so much better to see you all screens. So thanks for making that possible on your end as well.

It just gets us to a much more lively conversation at least that's the way it felt on this side of.

The screens I guess.

So.

We're closing this session we are happy.

That we had another strong quarter too and they absolutely record year.

That demonstrates the value that we add to our clients.

I hope that our plans the way we laid them out today and summarized all of them and we have given them piecemeal to you that that's a clear to you and for US. We see that this is just the beginning there is much more to come for our clients for our shareholders.

So for now I'd like to thank you for watching and I really look forward to see you soon.

Thank you bye.