Q3 2023 UBS Group AG Earnings Call
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Speaker 2: Ladies and gentlemen, good morning. Welcome to the UBS third quarter 2023 results presentation. The conference must not be recorded for publication or broadcast.
Ladies and gentlemen, good morning, welcome to the UBS third quarter 2023 results presentation.
Conference must not be recorded for publication or per cost.
Speaker 2: You can register for questions at any time by pressing star and one on a telephone.
You can register for questions at any time by pressing star one on your telephone should.
Speaker 2: And yeop, magic! You be asking about some relations. Please go ahead madam.
Should you need operator assistance, Please press star zero.
At this time, it's my pleasure to hand over to Sarah Mackie UBS Investor Relations. Please go ahead Madam.
Speaker 3: Good morning and welcome everyone. Before we start, I would like to draw your attention to our cautionary statement slide at the back of today's results presentation.
Good morning, and welcome everyone.
Before we start I would like to draw your attention to our cautionary statements slide at the back of today's results presentation. Please also refer to the risk factors followed with a great results today together with additional disclosures in our SEC filings.
Speaker 3: Please also refer to the risk factors filed with our group results today, together with additional disclosures in our SEC filings.
Speaker 3: On slide two, you can see our agenda for today.
On slide two you can see our agenda for today.
Speaker 3: It's now my pleasure to hand over to Sergio Amorti, Group CEO .
It's now my pleasure to hand over to saturate multi group C E O.
Speaker 4: Thank you, Sarah. Good morning, everyone. During the third quarter, and as we speak, we continue to see an evolution of the microeconomic outlook with opinions forecast and market changing at very rapid pace.
Thank you Sarah and good morning, everyone.
During the third quarter and as we speak we continue to see an evolution of the macroeconomic outlook opinions forecasts in market changing at a very rapid pace.
Speaker 4: In addition, we witness an even further deterioration of the geopolitical landscape as a result of tragic events in the Middle East.
In addition, we witness and even further deterioration of the geopolitical landscape.
A result of tragic events in the middle East.
Speaker 4: Our thoughts are with those who are suffering and have been impacted by this violence, as well as our affected employees.
Our thoughts are with those who are suffering and haven't been impacted by these violence as well as our affected employees.
Speaker 4: While we have been very busy executing on our integration plans, our top priority is always to stay close to clients, helping them protect their assets and position their portfolios and businesses for future opportunities.
While we have been very busy executing on our integration plans. Our top priority is always to stay close to clients, helping them protect their assets and position their portfolios and businesses for future opportunities.
Speaker 4: Our Wealth Management clients remain cautious and defensively positioned.
Our wealth management clients remain cautious and defensively positioned.
Speaker 4: And while some of our institutional clients are taking advantage of short-term opportunities, many still remain on the sidelines.
And while some of our institutional clients are taking advantage of short term opportunities many still remain on the sidelines.
Speaker 4: Our consistent dedication continues to be rewarded by their confidence and trust in UBS.
Our consistent dedication continues to be rewarded by their confidence and trust in UBS.
Speaker 4: This was demonstrated by another quarter of strong flows across PWM and PNC.
This was demonstrated by another quarter of strong flows across gws and PNC.
Speaker 4: In the third quarter, the first full quarter since the acquisition, we made strong progress and delivered underlying profitability.
In the third quarter, the first full quarter since the acquisition, we made strong progress and delivered underlying profitability.
Speaker 4: With respect to the integration of Credit Suisse, we continue to be encouraged by our achievements to date in both our planning and execution.
With respect to the integration of credit Suisse. We continue to be encouraged by our achievements to date in both our planning and execution.
Speaker 4: In terms of the lessons learned from the events in March, we welcome the recent reports issued by the Basel Committee on Banking Supervision, the Financial Stability Board and the Swiss Expert Group on Banking Stability.
In terms of the lessons learned from the events in March we welcome. The recent reports issued by the Basel Committee on banking supervision, the financial stability Board and the Swiss expert group on banking stability.
Speaker 4: Their findings confirmed our view that the crisis was not a result of insufficient capital or liquidity requirements.
Their findings confirmed our view that the crisis was not a result of insufficient capital or liquidity requirements.
Speaker 4: Rather, the reports emphasize sustainable business models, risk-adjusted profitability, and importantly, the critical role of robust risk management cultures and effective governance.
The reports emphasize sustainable business models risk adjusted profitability and importantly, the critical role of robust risk management cultures and effective governance.
Speaker 4: We take comfort in these conclusions, as they have been and remain core principles of UBS.
We take comfort in these conclusions.
They have been and remain core principles of UBS.
Yeah.
Speaker 4: Today we are positioning UBS to be an even stronger and safer global financial institution.
Today, we are positioning UBS to be an even stronger and safer global financial institution.
Speaker 4: It is for this reason that we remain confident the acquisition will allow us to deliver significant value for all our stakeholders, notwithstanding potential macroeconomic or geopolitical challenges.
It is <unk> reason that we remain confident the acquisition will allow us to deliver significant value for all our stakeholders notwithstanding potential macroeconomic or geopolitical challenges.
Yeah.
Briefly summarizing our results this quarter.
Speaker 4: Our strong underlying performance was driven by positive operating leverage at the group level.
Our strong underlying performance was driven by positive operating leverage at the group level.
Speaker 4: GWM, PNC, and Asset Management all delivered underlying PBT growth.
GW and PNC and asset management, all delivered underlying PBT growth.
Speaker 4: IB performance was impacted by market conditions that were unfavorable to our business model and investments we expect to be accretive in future quarters.
<unk> performance was impacted by market conditions that were unfavorable to our business model and investments, we expect to be accretive in future quarters.
Speaker 4: Our capital position remains strong with a CT1 ratio of 14.4% and total loss-absorbing capacity of nearly $200 billion.
Our capital position remains strong with a CET one ratio of 14, 4%.
And total loss absorbing capacity of nearly 200 billions.
Speaker 4: We achieved these results while incurring $2 billion in integration-related expenses and making good progress running down non-core assets.
We achieved these results while incurring 2 billion in integration related expenses and making good progress running down non core assets.
Speaker 4: Despite our reported loss in the quarter, we incurred over $500 million in tax expense and paid over $200 million in cash taxes in Switzerland.
Despite.
Our reported loss in the quarter, we incurred over 500 million in tax expense and paid over 200 million in cash taxes in Switzerland.
Yeah.
Yeah.
Speaker 4: Our confidence in the ability to successfully integrate Credit Suisse and create substantial long-term value is supported by the strong progress we made in the third quarter.
Our confidence in the ability to successfully integrate credit Suisse and create substantial long term value is supported by the strong progress we made in the third quarter.
Speaker 4: We have now stabilized Credit Suisse and continue to grow our franchise through new client acquisition and share of wallet gains.
We have now stabilized credit Suisse and continue to grow our franchise through new client acquisition and share of wallet gains.
Speaker 4: In addition, our client retention and win-back strategy is working.
In addition, our client retention and win back strategy is working.
Speaker 4: New money in GWM was $22 billion and our strong deposit momentum continued through the quarter.
Net new money GW AUM was 22 billion and our strong deposit momentum continued through the quarter.
The 33 billion in net new deposits across <unk> and P&C also supported our ability to reduce quarterly funding costs by $450 million through the repayment of the public liquidity backstop NDA law, plus that we announced in August.
Speaker 4: The $33 billion in net new deposits across GWM and PNC also supported our ability to reduce quarterly funding costs by $450 million through the repayment of the public liquidity backstop and the ELA Plus that we announced in August .
Speaker 4: We are pleased to see strong demand for UBS debts in the wholesale market with transactions priced at similar levels to where UBS papers stood before the rescue of Credit Suisse.
We are pleased to see strong demand for UBS debts in the wholesale market with transaction surprised at similar levels to where UBS papers stood before the rescue of credit Suisse.
Speaker 4: We have finalized the perimeter of non-current legacy and our efforts to actively unwind positions resulted in a capital release of around $1 billion.
We have finalized the perimeter of noncore and legacy and our efforts to actively unwind positions resulted in a capital release of around 1 billion.
Okay.
Speaker 4: Lastly, we continue to execute our plans to reduce costs in non-current legacy.
Lastly, we continue to execute our plans to reduce costs in noncore and legacy restructure credit Suisse's investment bank and removed duplications across our operations.
Speaker 4: structure Credit Suisse's investment bank and remove duplications across our operations.
Speaker 4: We have already delivered around $3 billion in annualized exit rate gross cost savings. We expect to make further
We have already delivered around 3 billion in annualized exit rate gross cost savings.
We expect to make further progress in the fourth quarter.
Speaker 4: Slide 6 summarizes well how quickly we have stabilized Credit Suisse and the confidence of clients in UBS.
Slide six summarizes well how quickly we have stabilized credit Suisse and the confidence of clients in UBS.
Speaker 4: Credit Suisse Wealth Management's quarterly net new money has now turned positive for the first time in a year and a half, with $3 billion in the third quarter.
Swiss wealth management's quarterly net new money has now turned positive for the first time in a year and a half with $3 billion in the third quarter.
Speaker 4: UBS Welcome Management 18 billion in Nanyumani is the second highest third quarter results in over a decade.
UBS wealth management <unk> 18 billions in menu money is the second highest third quarter results in over a decade.
Okay.
Speaker 4: In addition, it was satisfying to see that our efforts to win back clients' assets resulted in $22 billion in new deposits from Credit Suisse clients across GWM and PNC.
In addition, it was satisfying to see that our efforts to win back lines of assets resulted in 22 billion in net new deposits from credit Suisse clients across <unk> and P&C.
Speaker 4: Following our decisions to integrate Kradius with Schweitz, we reached out to our clients to reassure them that we remain committed to delivering the best capabilities of both institutions.
Following our decision to integrate <unk> switched rights, we reached out to our clients to reassure them that we remain committed to delivering the best capabilities of both institutions.
Speaker 4: In addition, we reiterated that their credit limits across both banks will remain in place.
In addition, we reiterated that their credit limits across both banks will remain in place.
Speaker 4: To date, client retentions have been broadly constructive and
To date client retentions have been broadly constructive and.
Speaker 4: Reaction, sorry. Client reaction has been broadly constructive and net new deposits in PNC were positive in both personal and corporate banking client segments.
Reaction sorry, the client reaction has been broadly constructive and menu a net new deposits in P&C were positive in both personal and corporate banking client segments.
Speaker 4: We are particularly pleased that this was also the case in September , the month following our decision to integrate both franchises.
We are particularly pleased that was also the case in September the month following our decision to integrate both franchises.
Speaker 4: In non-current legacy, we also made a strong progress this quarter. Eighty percent of the sequential reduction in NCL's credit and market risk risk-credit assets was driven by actively running down positions executed above mark.
In non core and legacy we also made a strong progress this quarter, 80% of the sequential reduction in Ncl's credit and market risk risk weighted assets was driven by actively running down positions executed above remarks.
Speaker 4: Non-operational risk-weighted assets have now been reduced by nearly one-third since Q1, 2023, and we expected, and the expected natural runoff profile has improved by 3 billion.
Non operational risk weighted assets has now been reduced by nearly one third since Q1, 'twenty three and we expected and the expected natural runoff profile has improved by 3 billion.
Yeah.
Speaker 4: While we have some credit risk exposure in certain local emerging markets and other more complicated bilateral positions that resulted in CLEs this quarter,
While we have.
While we have some credit risk exposure in certain local emerging markets and other more complicated bilateral positions that resulted in <unk> this quarter.
Speaker 4: The key risks across the portfolio are well understood, actively managed, and in most cases, well ahead.
The key risk across the portfolio are well understood actively manage and in most cases well hedged.
Speaker 4: The majority of our credit risk exposure is with high-quality borrowers.
The majority of our credit risk exposure is with high quality borrowers.
Speaker 4: Over 75% of the exposure is rated investment grade.
Over 75% of the exposure is rated investment grade.
Speaker 4: This provides us with the comfort to continue to pursue our strategy to accelerate the disposal of these assets in a way that optimizes value for our shareholders while also protecting our clients and counterparts.
These provide us with the comfort to continue to pursue our strategy to accelerate the disposal of these assets in a way that optimizes value for our shareholders, while also protecting our clients and counterparties.
Speaker 4: The finalized perimeter of non-core and legacy contains 30 billion in operational risk-weighted assets.
The finalized perimeter of noncore and legacy contains 30 billions in operational risk weighted assets.
Speaker 4: As a function of the natural decay across the portfolio, we expect a reduction of around 50% by the end of 2026. Todd, we'll take.
A function of the natural decay across the portfolio, we expect a reduction of around 50% by the end of 2026.
Todd will take you through this in more detail.
Speaker 4: Returning to the integration, let me reiterate that the complexity is not just from managing to GC fees bank.
Returning to the integration, let me reiterate that the complexity is not just from managing to Gcc's banks.
Speaker 4: Our immediate priorities since the transaction was announced and closed had to be on stabilizing and restructuring Credit Suisse.
Our immediate priority since the transaction was announced and closed add to be on stabilizing and restructuring credit Suisse.
Speaker 4: This will continue to be the case until the early part of 2024.
This will continue to be the case until the early part of 2024.
Speaker 4: At the same time, we are executing on our integration plans at pace. And on the left side of slide 8, you can see a selection of our recent two.
At the same time, we are executing on our integration plans at pace.
And on the left side of slide eight you can see a selection of our recent achievements.
Speaker 4: Notably, we have established management responsibilities and operating models across business divisions and legal entities, including in our Swiss franchise.
Notably, we have established management responsibilities and operating models across business divisions, and legal entities, including our in our Swiss franchise.
Speaker 4: You can also see some of our key priorities through the end of this year and beyond.
You can also see some of our key priorities through the end of this year and beyond.
Speaker 4: It includes the merger of our significant legal entities, client migrations across all of our business divisions, and executing on our technology decommissioning plan. Plan.
This includes the merger of our significant legal entities client migrations across all all of our business vision and executing on our technology the commissioning plant plans.
Speaker 4: Last but not least, we are also working towards finalizing our three-year strategic plan, which we will present in early February .
Last but not least we are also working towards finalizing our three year strategic plan, which we will present in early February.
Speaker 4: As we continue to progress our plan, the main focus has been on delivering synergies for the combined group.
As we continue to progress our plan. The main focus has been on delivering synergies for the combined group.
Speaker 4: We remain confident that the 2026 goals that we presented last quarter are achieved.
We remain confident that the 2026 goals that we presented last quarter are achievable.
Speaker 4: But as I say then, it will not be a straight line journey.
But as I say, then it will not be a straight line journey.
Speaker 4: We are pleased that the first phase of gross cost savings has already been executed in 2023.
We are pleased that the first phase of gross cost savings has already been executed in 2023.
Speaker 4: But I'm sure we all appreciate the significant cost associated with running and combining two GC fees, one of which is still structurally unprofitable.
But I'm sure. We all appreciate the significant cost associated with running and combining two juicy fees, one of which is still structurally unprofitable.
Speaker 4: From an operational standpoint of view, it is clear that 2024 will be a pivotal year.
From an operational standpoint of view it is clear that 2024 will be a pivotal year.
Speaker 4: Completing the merger of our significant legal entities before the end of next year is a critical step to enable us to unlock the next phase of our cost, capital and funding synergies, which we expect to realize in 2025 and 2026.
Completing the merger of our significant legal entities before the end of next year is a critical step to enable us to unlock the next phase of our cost capital and funding synergies, which we expect to realize in 2025 and 2026.
Speaker 4: Power inance, inance of scale, leading client franchises and increased future earnings power will position us for growth.
Power <unk> enhanced scale.
Leading client franchises and increased future earnings power will position us for growth.
Speaker 4: Discipline execution will continue to be an important driver for our performance and we are on track to deliver on our plan.
Disciplined execution will continue to be an important driver for our performance and we are on track to deliver on our plans.
Speaker 4: We are optimistic about our future as we build an even stronger and safer version of the UBS that was called upon to stabilize the financial system in March. And one, that all of our key stakeholders can be proud of. With that, I end over to Todd.
We are optimistic about our future as we build an even stronger and safer version of the UBS that was called upon to stabilize the financial system in March and one that all of our key stakeholders can be proud of.
With that I hand over to Todd.
Thank you and good morning, everyone.
Speaker 5: As Sergio highlighted, we are executing on our plans at pace.
As Sergio highlighted we are executing on our plans at pace.
Speaker 5: In our first full quarter since the Credit Suisse acquisition, we've delivered underlying profitability and maintained strong client momentum with impressive net new money inflows and global wealth management and net new deposit growth in our Swiss franchise.
Our first full quarter since the credit Suisse acquisition, we've delivered underlying profitability and maintain strong client momentum with impressive net new money inflows in global wealth management, and net new deposit growth and our Swiss franchise.
Speaker 5: We also made substantial progress in de-risking our non-core and legacy portfolio, reinforcing our balance sheet for all season.
We also made substantial progress in Derisking, our noncore and legacy portfolio reinforcing our balance sheet for all seasons.
Speaker 5: Before I move on to discussing details of our financial performance, let me describe the reporting changes we implemented this quarter and the ones we expect to introduce soon.
Before I move on to discussing details of our financial performance. Let me describe the reporting changes we implemented this quarter and the ones we expect to introduce soon.
Speaker 5: Today for the first time, we're presenting the results of our performance segments on a combined basis.
Today for the first time, we're presenting the results of our performance segments on a combined basis, reflecting the way, we're managing our businesses and engaging with clients.
Speaker 5: reflecting the way we're managing our businesses and engaging with clients.
Speaker 5: In addition to global wealth management, personal and corporate banking, asset management, and the investment bank, we are now separately reporting non-core and legacy as well as group items, all of which reflect the combined performance of UBS and credit swists under IFRS and in US dollars.
In addition to global wealth management personal and corporate banking asset management and the investment Bank. We are now separately reporting non core and legacy as well as group items, all of which reflect the combined performance of UBS and credit Suisse under I for us and in U S dollars.
Speaker 5: As I said during the second quarter earnings call, our aim is to be clear and forthcoming in explaining the financial reporting of this complex transaction.
As I said during the second quarter earnings call. Our aim is to be clear and forthcoming in explaining the financial reporting of this complex transaction.
Speaker 5: Therefore, we've introduced underlying performance metrics that primarily strip out the PPA-related pull-to-par effects from revenues in our core businesses.
Therefore, we've introduced underlying performance metrics that primarily strip out the PPA related pull to par effects from revenues in our core businesses.
Speaker 5: and adjust for integration-related expenses across all performance segments.
And adjust for integration related expenses across all performance segments.
Yeah.
Speaker 5: Regarding the pull to par effects in NCL, in the quarter we reclassified most of the positions that Credit Suisse's investment bank and capital release unit historically accounted for on an accrual basis.
Regarding the pull to par effects in NCL in the quarter, we reclassified most of the positions that credit Suisse's investment Bank and capital release unit historically accounted for on an accrual basis to fair value through P&L as those positions in NCL are now held for sale.
Speaker 5: to fair value through P&L. As those positions in NCL are now held for sale.
Speaker 5: As a reminder, those positions gave rise to the 3.1 billion in future NCL pull-to-par revenues that we flagged last quarter.
As a reminder, those positions gave rise to the $3 1 billion in future NCL pull to par revenues that we flagged last quarter.
Speaker 5: Given that NCL generates revenues in various ways.
Given that NCL generates revenues in various ways.
Speaker 5: whether from early onwines of positions and other disposals, mark to market on its fair value book, or from...
Whether from early unwind with physicians and other disposals.
Mark to market on its fair value book.
Or from pull to par effects, we don't distinguish among the various accounting classification types.
Speaker 5: We don't distinguish among the various accounting classification types.
Speaker 5: Accordingly, in the quarter and going forward, all sources of NCL income, gain or loss will be treated as part of its underlying performance.
Accordingly in the quarter and going forward all sources of NCL income gain or loss will be treated as part of its underlying performance.
Speaker 5: As last quarter's disclosed IFRS results reflect only one month of Credit Suisse's operating performance.
As last quarter's disclosed I for us results reflect only one month of credit Suisse's operating performance.
Speaker 5: To improve comparability, we've prepared estimated underlying results that reflect all three months of the second quarter.
To improve comparability, we prepared estimated underlying results that reflect all three months of the second quarter.
Speaker 5: As I go through my remarks, unless otherwise stated, I will compare our underlying third quarter results sequentially to this estimated performance in the prior quarter.
As I go through my remarks, unless otherwise stated I will compare our underlying third quarter results sequentially to this estimated performance in the prior quarter.
Speaker 5: We'll focus on sequential developments until the third quarter of 2024, when we'll resume year-over-year commentary. Now.
We will focus on sequential developments until the third quarter of 2024, when we'll resume year over year commentary.
Now onto our plan changes.
Speaker 5: In the fourth quarter, we will expand our global wealth management asset flows disclosure and enhance comparability with US peers.
In the fourth quarter, we will expand our global wealth management asset flows disclosure and enhance comparability with U S peers.
Speaker 5: We will report net new money plus dividends and interest, as well as disclose net new fee generating assets for the combined franchise.
We will report net new money, plus dividends and interest as well as disclosed net new fee generating assets for the combined franchise.
Speaker 5: We intend to introduce a growth target for net new money plus dividends and interest when we present our integration KPIs and targets as part of our fourth quarter results early next year.
We intend to introduce a growth target for net new money plus dividends and interest when we present, our integration kpis and targets as part of our fourth quarter results early next year.
Speaker 5: Additionally, starting from the first quarter of 2024, we expect to push out to our business division.
Additionally, starting from the first quarter of 2024, we expect to push out to our business divisions substantially all balance sheet and P&L items that were previously retained centrally and group items.
Speaker 5: substantially all balance sheet and P&L items that were previously retained centrally in group items.
Speaker 5: The only exceptions will be for group items that are not directly attributable to divisional activities, including deferred tax assets, cash flow hedges, own credit, and their associated P&L effect.
The only exceptions will be for group items that are not directly attributable to divisional activities, including deferred tax assets.
Cash flow hedges, one credit and their associated P&L effects.
Speaker 5: Our business division equity attribution framework will also reflect these changes whereby the average levels of equity across the business divisions will more closely align to our current group capital targets.
Our business Division equity attribution framework will also reflect these changes whereby the average levels of equity across the business divisions will more closely align to our current group capital targets.
Moving on to our financial performance on Slide 12.
Speaker 5: The quarterly profit before tax was $844 million, a $1.4 billion increase from the second quarter as we delivered strong positive operating leverage with $0.6 billion higher revenues and $0.5 billion lower operating expenses.
Our quarterly profit before tax was $844 million or $1 4 billion increase from the second quarter as we delivered strong positive operating leverage with 0.6 billion higher revenues and 0.5 billion lower operating expenses.
Speaker 5: Additional, CLE declined by $0.4 billion sequentially to $0.3 billion, which mainly related to Credit Swiss loans within PNC and NCL, which I cover later in more detail.
Additional cle declined by 0.4 billion sequentially to 0.3 billion, which mainly related to credit Suisse loans within PNC, and NCL, which I'll cover later in more detail.
Speaker 5: By comparison, CLE in the second quarter of $0.7 billion included more than $0.5 billion of charges.
By comparison CLA in the second quarter of 0.7 billion included more than 0.5 billion of charges primarily related to the take on recognition of ECL allowances on credit suisse's lending portfolios.
Speaker 5: primarily related to the take-on recognition of VCL allowances on Credit Suisse's lending portfolios.
Speaker 5: On a reported basis, the third quarter net loss was $785 million, as $526 million in tax expense are rising in profitably.
On a reported basis, the third quarter net loss was $785 million.
$526 million and tax expense arising in profitable entities could not be offset by tax benefits from losses, primarily generated by certain credit Suisse subsidiaries.
Speaker 5: could not be offset by tax benefits from losses primarily generated by certain Credit Suisse subsidiaries.
Speaker 5: We expect our effective tax rate to remain elevated until we merge and restructure our most significant legal entity.
We expect our effective tax rate to remain elevated until we merge and restructure our most significant legal entities.
Speaker 5: After that time, the effective tax rate should gradually return to a level below 25% absent the effects of any remeasurement of deferred tax assets.
After that time, the effective tax rate should gradually returned to a level below 25% absent the effects of any remeasurement of deferred tax assets.
Moving to slide 13.
Speaker 5: Revenues increased by 6% this quarter to $10.7 billion driven by lower funding costs within group items and gains in non-core and legacy as the team accelerated the unwind of certain positions at attractive prices relative to book value.
Revenues increased by 6% this quarter to $10 7 billion driven by lower funding costs within group items and gains in non core and legacy as the team accelerated the unwind certain positions at attractive prices relative to book values.
Speaker 5: Revenues in group items increased sequentially, primarily due to the reduction of around $450 million in centrally-held funding costs from the Credit Suisse-related liquidity measures that were repaid and returned in the middle of the third quarter.
Revenues in group items increased sequentially, primarily due to the reduction of around $450 million in centrally held funding costs from the credit Suisse related liquidity measures that were repaid and return in the middle of the third quarter for.
Speaker 5: For the fourth quarter, we expect an additional $100 million benefit from these actions.
For the fourth quarter, we expect an additional 100 million benefit from these actions.
Speaker 5: It is worth noting that the cost of replacement funding is being absorbed by the core businesses and is reflected in their sequential NII performance and guidance this quarter.
It is worth noting that the cost of replacement funding is being absorbed by the core businesses and is reflected in their sequential NII performance and guidance this quarter.
Total revenues.
Speaker 5: reached 11.7 billion, including 958 million, that we've stripped out of underlying revenue.
Reached 11, 7 billion, including 958 million that we've stripped out of underlying revenues. This amount consisted of $764 million and pull to par effects as well as $194 million of NII in our core businesses benefiting from the merger date of elimination of the unrealized loss balance.
Speaker 5: This amount consisted of 764 million in pull-to-par effects, as well as 194 million of NII in our core businesses, benefiting from the merger-date elimination of the unrealized loss balance associated with Credit Suisse's Cash Flow Heads Program.
<unk> associated with credit Suisse's cash flow hedge program.
Yeah.
Speaker 5: On slide 14, we showed the details of pull-to-par and similar effects that we expect to recognize in future quarters.
On slide 14, we show the details of pull to par and similar effects, we expect to recognize in future quarters.
Speaker 5: The pull-to-par starting balance as the transaction closed was $9.3 billion, excluding the $3.1 billion reclassification in NCL that I described earlier.
The pull to par starting balance as the transaction closed was $9 3 billion, excluding the $3 1 billion reclassification in NCL that I described earlier.
Speaker 5: Considering the pull-to-par accretion of $1.1 billion recognized since the merger date, including $0.8 billion this quarter, the remaining balance that will accrete into income over future quarters is expected to be around $8.2 billion.
Considering the pull to par accretion of $1 1 billion recognized since the merger date, including 0.8 billion. This quarter. The remaining balance that will accrete into income over future quarters is expected to be around $8 2 billion.
Speaker 5: We expect the majority of this balance to accrete into income by the end of 2026, barring the impact of any early unwinds, with $500 million expected next quarter.
We expect the majority of this balance to accrete into income by the end of 2026 barring the impact of any early unwind with 500 million expected next quarter.
Speaker 5: We also expect to recognize around $900 million of additional NII in GWM and PNC relating to the eliminated cash flow hedge item I mentioned a few moments ago, with $150 million expected in 4Q.
We also expect to recognize around $900 million of additional NII in gws and P&C relating to the eliminated cash flow hedge item I mentioned, a few moments ago with $150 million expected in <unk>.
Speaker 5: As a reminder, these effects are stripped out of our underlying revenues, with about half being CET1 capital accreted.
As a reminder, these effects are stripped out of our underlying revenues with about half being CET one capital accretive.
Speaker 5: I would also point out that we continue to expect total pull-to-par revenue.
I would also point out that we continue to expect total pull to par revenues, including the reclassified NCL and post 2026 recognized portions to broadly offset the cost to achieve the greater than $10 billion in gross savings we described last quarter.
Speaker 5: including the reclassified NCL in post-2026 recognized portion.
Speaker 5: to broadly offset the cost to achieve the greater than $10 billion in gross savings we described last quarter.
Speaker 5: Having said this, like in the third quarter, we expect there will be timing mismatches in the recognition of these reported revenues and expenses, resulting in headwinds to our...
<unk> said this like in the third quarter, we expect there will be timing mismatches in the recognition of these reported revenues and expenses, resulting in headwinds to our reported results, particularly in the fourth quarter and throughout 2024.
Speaker 5: Particularly in the fourth quarter and throughout 2024
Speaker 5: Moving to slide 15, operating expenses for the group decreased to $9.6 billion, down 5% as our cost savings initiatives take effect, partially offset by reinvestments to help grow our core business.
Moving to slide 15 operating expenses for the group decreased to nine 6 billion down 5% as our cost savings initiatives take effect, partially offset by reinvestments to help grow our core businesses.
Speaker 5: Progress on our restructuring actions led to $2 billion in integration-related expenses.
Progress on our restructuring actions led to 2 billion and integration related expenses roughly half of these expenses was related to personnel costs, including severance payments salaries of employees fully dedicated to integration matters and the cost of retaining key personnel.
Speaker 5: Roughly half of these expenses was related to personnel costs, including severance payments, salaries of employees fully dedicated to integration matters, and the cost of retaining key personnel.
Speaker 5: The other half was related to non-personnel matters, including real estate impairments and depreciation, onerous contract charges, and consulting and legal.
The other half was related to non personnel matters, including real estate impairments and depreciation onerous contract charges and consulting and legal fees.
Speaker 5: For the fourth quarter, we expect integration-related expenses in excess of $1 billion, although certain additional costs to achieve may arise if we see opportunities to accelerate savings.
So the fourth quarter, we expect integration related expenses in excess of 1 billion, although certain additional cost to achieve may arise, if we see opportunities to accelerate savings.
Speaker 5: While we manage our integration to achieve overall cost reductions without specific headcount targets, I would note that our combined workforce fell by over 4,000 in the quarter, bringing year-to-date reductions to 13,000, or down 9% versus the workforce of both banks as of the end of 2022.
While we manage our integration to achieve overall cost reductions without specific head count targets I would note that our combined workforce fell by over 4000 in the quarter, bringing year to date reductions to 13000 were down 9% versus the workforce of both banks as at the end of 2022.
Speaker 5: Across our cost savings initiatives, we've achieved around $3 billion to date in gross run rate cost saves, with further progress expected in the fourth quarter.
Across our cost savings initiatives, we've achieved around $3 billion to date and gross run rate cost saves with further progress expected in the fourth quarter.
Turning to slide 16.
Speaker 5: In the quarter, we maintained a strong capital position with around $200 billion of TLAC and a CET1 capital ratio of 14.4%, mainly as we reduced RWA from the active rundown in our NCL portfolio, which offset reductions in our CET1 capital in the quarter. Our CET1 leverage ratio increased to 4.9% at the end of the quarter.
In the quarter, we maintained a strong capital position with around 200 billion of T. Lac and a CET one capital ratio of 14, 4%, mainly as we reduced our W way from the active rundown in our NCL portfolio, which offset reductions in our CET one capital in the quarter, our CE tier one leverage ratio increased to <unk>.
Four 9% at the end of the quarter.
Speaker 5: As we previously guided, we expect to maintain a CET-1 capital ratio of around 14% throughout the integration timeline. Even if our reported performance over the coming quarters remains affected by the cost of winding down the NCL units and the work needed to achieve cost synergies in our core
As we previously guided we expect to maintain our CET one capital ratio of around 14% throughout the integration timeline, even if our reported performance over the coming quarters remains affected by the costs of winding down the NCL units and the work needed to achieve cost synergies in our core businesses.
Speaker 5: During the quarter, we issued $4.5 billion of U.S. dollar TLAC, attracting very strong demand, and pricing at pre-acquisition spreads, in a clear sign of fixed income investor confidence in our name.
During the quarter, we issued $4 5 billion of U S. Dollar T Lac attracting very strong demand and pricing at pre acquisition spreads and a clear sign of fixed income investor confidence in our name.
Speaker 5: To further diversify our sources of funding, we successfully placed $3 billion in SEC-registered OPCO and, just after the quarter, $820 million Swiss francs in UBS's inaugural Swiss-covered bond issue, both attractively priced.
To further diversify our sources of funding we successfully placed 3 billion an SEC registered opco and just after the quarter 820 million Swiss francs and UBS his inaugural Swiss covered bond issue.
Both are attractively priced.
Speaker 5: Regarding liquidity, we maintain a prudent profile in the quarter with an LCR of nearly 200%, supported by $33 billion in total deposit inflows.
Regarding liquidity, we maintain a prudent profile in the quarter with an LCR of nearly 200% supported by 33 billion in total deposit inflows.
Speaker 5: I would note that these strong deposit inflows across global wealth management and personal and corporate banking increased our overall deposit coverage ratio.
I would note that these strong deposit inflows across global wealth management, and personal and corporate banking increased our overall deposit coverage ratio.
Speaker 5: Going forward, we expect to continue to operate with a prudent LCR to comply with the revisions to the Swiss Liquidity Ordinance that will come into effect on January 1, 2024.
Going forward, we expect to continue to operate with a prudent LCR to comply with the revisions to the Swiss liquidity ordinance that will come into effect on January one 2024.
Speaker 5: Regarding the Swiss National Bank's recently announced changes to its minimum reserve requirements and site deposit remuneration policies that take effect next month, we expect an annualized reduction of around 80 million Swiss francs to our NII, of which two-thirds will impact PNC and one-third GWM.
Regarding the Swiss National Banks recently announced changes to its minimum reserve requirements and sight deposit remuneration policies that take effect next month.
We expect an annualized reduction of around 80 million Swiss francs to our NII of which two thirds will impact P&C and one third gws.
Speaker 5: Turning to the performance in our businesses, beginning on slide 17. In global wealth management, we continued strong momentum with 22 billion in net new money inflows across all regions.
Turning to the performance in our businesses beginning on slide 17 in global wealth management, We continued strong momentum with 22 billion in net new money inflows across all regions, we saw particularly strong inflows in both APAC and EMEA with 13 8 billion in net new money.
Speaker 5: We saw particularly strong inflows in both APAC and EMEA with $13 and $8 billion in net new money respectively. Importantly, our Credit Suisse wealth management business attracted quarterly net inflows for the first time since the beginning of 2022.
<unk> importantly, our credit Suisse wealth management business attracted quarterly net inflows for the first time since the beginning of 2022.
Speaker 5: In the quarter, we also attracted 25 billion of net new deposits, including 17 billion from the credit Swiss wealth side.
In the quarter. We also attracted 25 billion of net new deposits, including 17 billion from the credit Suisse wealth side.
Speaker 5: These impressive flows are a true testament to the trust our clients continue to place in us.
These impressive flows are a true testament to the trust our clients continued to place in us.
Speaker 5: They also reflect the success of our clear and decisive win back, retention, and client acquisition actions, as well as intensified client engagement levels since the deal's completion.
They also reflect the success of our clear and decisive win back retention and client acquisition actions as well as intensified client engagement levels since the deal's completion.
Speaker 5: We expect to further build on this momentum as the value proposition of the combined firm becomes more tangible to our clients. For instance, all of our clients now have access to the UBS House View from our CIO and our wealth management product and solution offerings are being unified and aligned across the platform.
We expect to further build on this momentum as the value proposition of the combined firm becomes more tangible to our clients for instance, all of our clients now have access to the UBS House view from our CIO.
Our wealth management product and solution offerings are being unified and aligned across the platforms.
Speaker 5: As mentioned, from next quarter we will report net new money plus dividends and interest, as well as net new fee-generating assets for the combined franchise.
As mentioned from next quarter, we will report net new money plus dividends and interest as well as net new fee generating assets for the combined franchise.
Speaker 5: In the third quarter, inflows based on this new definition were $39 billion, and net new fee-generating assets in solely the UBS portion of our wealth business were $21 billion, with positive flows across all regions.
In the third quarter inflows based on this new definition were 39 billion and net new fee generating assets in solely the UBS portion of our wealth business were $21 billion with positive flows across all regions.
Speaker 5: Moving on to GWM's P&L, profit before tax was $1.1 billion, over 40% higher sequentially, driven by a reduction in costs and credit loss expenses with roughly flat revenue.
Moving onto Gws P&L prop.
Profit before tax was $1 1 billion over 40% higher sequentially driven by a reduction in costs and credit loss expenses with roughly flat revenues excluding.
Speaker 5: excluding the impact of CLE, which included a significant acquisition-related ECL charge last quarter, underlying profit before tax increased by around 20 percent, supported by lower underlying operating expenses.
Excluding the impact of C. L E, which included a significant acquisition related ECL charge last quarter underlying profit before tax increased by around 20% supported by a lower underlying operating expenses.
Speaker 5: This quarter, GWM revenues of $5.5 billion were broadly flat as increases in recurring fees were offset by a decline in NII.
This quarter Gws revenues of $5 5 billion were broadly flat as increases in recurring fees were offset by a decline in NII.
Speaker 5: Combined net interest income was down 3% on an underlying basis and excluding FX, reflecting continued deposit mix effects due to rotation into higher yielding deposits and ongoing de-leverage.
Combined net interest income was down 3% on an underlying basis and excluding FX, reflecting continued deposit mix effects due to rotation into higher yielding deposits and ongoing deleveraging.
Speaker 5: This was partially offset by sequentially higher deposit balances that served to close the funding gap in the business and strengthen the structural profile of our balance sheet.
This was partially offset by sequentially higher deposit balances that serve to close the funding gap in the business and strengthened the structural profile of our balance sheet.
Speaker 5: For the fourth quarter, we expect a mid-single digit percentage decline in NII, mainly from continuing deposit-mix shifts.
For the fourth quarter, we expect a mid single digit percentage decline in NII, mainly from continuing deposit mix shifts.
Speaker 5: Credit loss expenses in the quarter across GWM were $2 million.
Credit loss expenses in the quarter across gws were $2 million.
Speaker 5: Operating expenses declined $0.2 billion to $4.4 billion, mainly driven by lower personnel expenses, as reduced headcount levels, which we expect to continue sequentially, began to benefit our underlying earnings.
Operating expenses declined 0.2 billion to $4 4 billion, mainly driven by lower personnel expenses as reduced head count levels, which we expect to continue sequentially.
<unk> to benefit our underlying earnings.
Speaker 5: Although it's early days in terms of synergy realization in GWM, we are already seeing progress from our integration efforts. The division's underlying cost-to-income ratio in the third quarter dropped by around three percentage points to 80%.
Although it's early days in terms of synergy realization and GW and we are already seeing progress from our integration efforts. The division's underlying cost to income ratio in the third quarter dropped by around three percentage points to 80%.
Turning to personal and corporate banking on slide 18.
Speaker 5: Profit before tax increased by $0.1 billion to $773 million, mainly driven by a decrease in credit loss expenses.
Profit before tax increased by 0.1 billion to 773 million Swiss francs, mainly driven by a decrease in credit loss expenses. Excluding C. L. E. Pnc's PBT was up slightly quarter on quarter.
Speaker 5: excluding CLE, PNC's PBT was up slightly quarter on quarter. Revenues increased.
Revenues increased to $2 2 billion.
Speaker 5: With the announcement of the Swiss integration at the end of August , the business is highly focused on client engagement and deposit win back. Early indications are encouraging, as evidenced by the stability of the revenue line, the resilience of business volume, and the commencement of deposit returns.
With the announcement of the Swiss integration at the end of August the business is highly focused on client engagement and deposit went back.
Early indications are encouraging as evidenced by the stability of the revenue line the resilience of business volume and the commencement of deposit returns.
Speaker 5: Managers income decreased by 4% despite the narrowing funding gap from net new deposit inflows, which mainly came from our corporate clients.
Net interest income decreased by 4% despite the narrowing funding gap from net new deposit inflows, which mainly came from our corporate clients are primary.
Speaker 5: A primary driver of the sequential decline this quarter was the additional cost of restoring the structural funding profile of the combined business to UBS's NSFR standard.
Driver of the sequential decline this quarter was the additional cost of restoring the structural funding profile of the combined business do you B S's N S F. Our standards.
Speaker 5: For the fourth quarter, we expect a low single digit percentage decline in NII, mainly due to rotation to higher yielding deposits.
For the fourth quarter, we expect a low single digit percentage decline in NII, mainly due to rotation to higher yielding deposits.
Speaker 5: Credit loss expense in the quarter was 154 million Swiss francs, almost exclusively from two factors related to Credit Suisse's Swiss bank.
Credit loss expense in the quarter was 154 million Swiss francs, almost exclusively from two factors related to credit Suisse's Swiss bank.
Speaker 5: First, we recognize CLE on loans, mainly the corporate counterparties, that were already impaired on the merger date and deteriorated further this quarter, as well as newly defaulted positions.
First we recognized cle of loans, mainly the corporate Counterparties that were already impaired on the merger date and deteriorated further this quarter as well as newly defaulted positions.
Speaker 5: Second, we moved to Stage 2 and provisioned in line with UBS's coverage ratio standards all loans, including those as of the merger date, on Credit Suisse's watch list, as well as those lending exposures that experienced a significant increase in credit risk during the third quarter.
Second we moved to stage two and provisions in line with Ubs's coverage ratio standards, all loans, including those as if the merger date on credit Suisse's watch list as well as those lending exposures that experienced a significant increase in credit risk during the third quarter.
Speaker 5: Underlying operating expenses were roughly unchanged at 1.2 billion on lower personnel and litigation expenses With the underlying cost-income ratio down quarter-on-quarter to 57%
Underlying operating expenses were roughly unchanged at $1 2 billion of lower personnel and litigation expenses with the underlying cost to income ratio down quarter on quarter to 57%.
Moving to slide 19.
Speaker 5: In asset management, the underlying profit before tax increased to $156 million on higher revenues and lower costs.
In asset management, the underlying profit before tax increased to 156 million on higher revenues and lower costs revenues were slightly higher at $755 million with increases in net management fees, driven by market performance and FX and higher performance fees from our hedge fund businesses.
Speaker 5: Revenues were slightly higher at $755 million, with increases in net management fees driven by market performance and FX, and higher performance fees from our hedge fund.
Speaker 5: Operating expenses decreased to $599 million, mainly due to lower personnel expenses.
Operating expenses decreased to 599 million, mainly due to lower personnel expenses.
Speaker 5: Net new money in the quarter was negative one billion driven by credit Swiss outflows, which continued to taper since the acquisition, within flows expected to gradually return from proactive client engaged.
Net new money in the quarter was negative 1 billion driven by credit Suisse outflows, which continue to taper since the acquisition with inflows expected to gradually return from proactive client engagement.
Speaker 5: It's worth noting that the UBS side of the business attracted net new money inflows this quarter in a challenging environment for asset management.
It's worth noting that the UBS side of the business attracted net new money inflows this quarter in a challenging environment for asset managers.
Speaker 5: We saw a strong demand for our money market, SMA, and real estate and private markets solutions. Partly offset by client asset allocation shifts away from China, equities, and hedge funds in the current market dynamic.
We saw strong demand for our money market, SMA and real estate and private markets solutions, partly offset by client asset allocation shifts away from China equities and hedge funds in the current market dynamic.
Speaker 5: Net new money excluding money markets and associates was negative $8.3 billion.
Net new money, excluding money markets and associates was negative $8 3 billion.
Speaker 5: Turning to the investment bank performance on slide 20.
Turning to the investment bank performance on slide 20.
Speaker 5: Since the UBS IB has taken on only select parts of Credit Suisse's investment bank, and the latter saw little activity in the second quarter, we compare the results of the combined IB with standalone performance in the prior year's third quarter.
Since the U B S. IV has taken on only select parts of credit Suisse's investment bank and the ladder saw little activity in the second quarter.
We compare the results of the combined I'd be with Standalone performance in the prior year's third quarter.
Speaker 5: We will continue to offer year-over-year comparisons to stand-alone UBS-IB performance in the quarters ahead, while also providing commentary on sequential developments until the third quarter of 2024, as with the other business divisions.
We will continue to offer year over year comparisons to Standalone UBS I B performance in the quarters ahead, while also providing commentary on sequential developments until the third quarter of 2024 as with the other business divisions.
Speaker 5: The operating loss of $116 million was a result of additional costs related to the retained portion of Credit Suisse's investment bank, which was only partially offset by stand-alone profit before tax in UBS IB, as market conditions remain challenging for our business model.
The operating loss of 116 million was a result of additional costs related to the retained portion of credit Suisse's investment Bank, which was only partially offset by standalone profit before tax and UBS I b as market conditions remain challenging for our business model.
Speaker 5: Underlying revenues, which exclude $251 million of pull-to-par accretion and other effects, declined 6% year-over-year to $1.9 billion amid muted client activity due to ongoing concerns around terminal interest rates and geopolitical events.
Underlying revenues, which exclude $251 million of pull to par accretion and other effects declined 6% year over year to 1.9 billion amid muted client activity due to ongoing concerns around terminal interest rates and geopolitical events.
Speaker 5: Volatility across asset classes declined significantly from a year ago, and global fee pools remain depressed.
Volatility across asset classes declined significantly from a year ago and global fee pools remain depressed.
Speaker 5: Against this backdrop, global banking revenues increased 36%, with particular strength in leveraged capital markets and strong performance in EMEA.
Against this backdrop global banking revenues increased 36% with particular strength in leverage capital markets and strong performance in EMEA.
Speaker 5: Advisory outperformed the global fee pool and was further supported by revenues from the Heritage Credit Suisse franchise.
<unk> outperformed the global fee pool and was further supported by revenues from the Heritage Credit Suisse franchise.
Speaker 5: Global markets revenues decline 15% from a very strong third quarter, reflecting lower revenues across macro products and equity derivatives.
Global markets revenues declined 15% from a very strong third quarter, reflecting lower revenues across macro products and equity derivatives.
This was partly offset by growth in financing supported by increased client balances.
Speaker 5: Overall, revenues generated from the retained portion of Credit Suisse's investment bank were $113 million this quarter, primarily in advisory as well as derivatives and solutions.
Overall revenues generated from the retained portion of credit Suisse's investment bank were $113 million this quarter, primarily in advisory as well as derivatives and solutions.
Speaker 5: Operating expenses rose 27 percent, predominantly from additional personnel costs related to the retained portions of Credit Suisse's investment bank, as well as higher technology costs and FX.
Operating expenses rose, 27% predominantly from additional personnel costs related to the retained portions of credit Suisse's investment bank as well as higher technology costs and FX.
Speaker 5: As we manage the investment bank integration, we remain disciplined in our resource management. RWAs at 23% of the group's resources, excluding NCL, were roughly unchanged sequentially.
As we manage the investment bank integration, we remain disciplined in our resource management RW ways at 23% of the group's resources, excluding NCL were roughly unchanged sequentially.
Speaker 5: Looking ahead, as the majority of the onboarding of our colleagues and positions to UBS IB Systems is planned for completion by the end of the year, we expect revenues to ramp up over the course of 2024. Given this timing, in addition to current market conditions and seasonality, we expect continued pressure on our underlying profitability in the fourth quarter.
Looking ahead as the majority of the Onboarding of our colleagues in positions to UBS I D systems is planned for completion by the end of the year, we expect revenues to ramp up over the course of 2024.
Given this timing in addition to current market conditions and seasonality, we expect continued pressure on our underlying profitability in the fourth quarter.
Speaker 5: Moving to non-core and legacy on slide 21. Excluding integration-related expenses, NCL generated an underlying operating loss of $1 billion.
Moving to non core and legacy on slide 21, excluding.
Integration related expenses NCL generated an underlying operating loss of 1 billion.
Speaker 5: Quarterly revenues of 350 million consisted mainly of gains from the early unwind of loan commitments, while the portion of the NCL portfolio that remained on the accrual method of accounting was left broadly unchanged this quarter, given recovery expectations on the underlying lending positions. Credit law's expense.
Quarterly revenues of $350 million consisted mainly of gains from the early unwind of loan commitments, while the portion of the NCL portfolio that remains on the accrual method of accounting was left broadly unchanged this quarter given recovery expectations on the underlying lending positions.
Credit loss expense was $125 million additional provisions of $71 million reflect application of the same extended credit watch list approach I described earlier in the context of P&C.
Speaker 5: Additional provisions of $71 million reflect application of the same extended credit watch list approach I described earlier in the context of P&C.
Speaker 5: We also saw $54 million of charges from Stage 3 and purchased credit-impaired loans that deteriorated further in the quarter.
We also saw a 54 million of charges from stage, three and purchased credit impaired loans that deteriorated further in the quarter.
Speaker 5: Underlying operating expenses reached $1.2 billion, split roughly equally between personnel and non-personnel costs.
Underlying operating expenses reached $1 2 billion split roughly equally between personnel and non personnel costs.
Speaker 5: Integration-related expenses of $918 million consisted of onerous contract charges, real estate-related expenses, and personnel costs linked to headcount reductions and retention.
Integration related expenses of $918 million consisted of onerous contract charges real estate related expenses and personnel costs linked to head count reductions and retention.
Speaker 5: For the fourth quarter, we expect the underlying cost base in non-Corin legacy to decrease further from additional staff reductions whose costs are directly housed within or allocated to NCL.
For the fourth quarter, we expect the underlying cost base and non core and legacy to decrease further from additional staff reductions whose costs are directly house within or allocated to N C. L.
Speaker 5: As Sergio mentioned, in the quarter we took decisive actions to reduce RWAs. Five of the total $6 billion reduction resulted from active de-risking of exposures across the array of NCL portfolios.
As Sergio mentioned in the quarter, we took decisive actions to reduce <unk> five of the total 6 billion reduction resulted from active derisking of exposures across the array of NCL portfolios.
Speaker 5: LRD was reduced by $52 billion, including $15 billion resulting from lower HQLA requirements and $12 billion from the accounting reclassification of loan commitments from accrual to fair value.
L. R. D was reduced by 52 billion, including 15 billion, resulting from lower HQ olay requirements and $12 billion from the accounting reclassification of loan commitments from accrual to fair value.
Speaker 5: During the quarter, we completed the initial impact assessment on our operational risk RWA from the final Basel III standard, which comes into effect on January 1st, 2025. Based on this initial study, we expect group op risk RWA to remain broadly unchanged at the current level of $145 billion.
During the quarter, we completed the initial impact assessment on our operational risk <unk> from the final Basel III standard which comes into effect on January one 2025.
Just on this initial study we expect group op risk <unk> to remain broadly unchanged at the current level of 145 billion.
Speaker 5: We also determined on the basis of our impact assessment, initial levels of RWA to apportion to each of our business divisions, including NCL. The $30 billion of operational risk RWA assigned to NCL this quarter is expected to diminish over time as a function of two considerations, the rundown of the NCL portfolio and the removal of certain legacy litigation matters given the lapse of time.
We also determined on the basis of our impact assessment initial levels of <unk> to a portion to each of our business divisions, including NCL.
The $30 billion of operational risk our WSI to NCL. This quarter is expected to diminish over time as a function of two considerations. The rundown of the NCL portfolio and the removal of certain legacy litigation matters, given the lapse of time.
Speaker 5: On the basis of natural roll-off in both contexts, we expect operational risk RWA and NCL to decrease to around $14 billion by the end of 2026.
On the basis of natural roll off in both context, we expect operational risk R. W. I N C L to decrease to around $14 billion by the end of 2026.
Speaker 5: As a reminder, we continue to expect a roughly 5% increase from day one effects in 2025 from other final Basel III considerations, mainly FRTB.
As a reminder, we continue to expect a roughly 5% increase from day one effects in 2025 from other final Basel III considerations, mainly F. Our T V.
Speaker 5: As we look ahead to the fourth quarter, we expect many of the drivers of underlying profitability to continue to progress. In particular, we expect underlying operating expenses to decline sequentially as our core businesses realize incremental synergies, and NCL remains focused on actively running down its portfolio to release capital and accelerate cost-saves.
As we look ahead to the fourth quarter, we expect many of the drivers of underlying profitability to continue to progress in particular, we expect underlying operating expenses to decline sequentially as our core businesses realized incremental synergies and NCL remains focused on actively running down its portfolio.
Our release capital and accelerate cost saves.
Speaker 5: In addition to the NII expectations that I described earlier, transactional activity may be affected by seasonal factors, as well as client sentiment in response to the geopolitical landscape.
In addition to the NII expectations that I described earlier transactional activity may be affected by seasonal factors as well as client sentiment in response to the geopolitical landscape.
Speaker 5: Despite these elements, we are executing on our integration plans at pace and remain on track to achieve our goals of around a 15% return on CET1 capital and a cost-income ratio of less than 70% by the end of 2026. With that, let's open for questions.
Despite these elements we are executing on our integration plans at pace and remain on track to achieve our goals of around a 15% return on CET, one capital and a cost income ratio of less than 70% by the end of 2026 with that lets open for questions.
Speaker 2: We will now begin the question and answer session for analysts and investors. Participants are requested to use only handsets while asking a question. Anyone with a question may press star and 1 at this time.
We will now begin the question and answer session for analysts and investors participants are requested to use only handsets by asking a question.
Anyone with a question press star one at this time.
Speaker 2: The first question is from Stefan Stalman from Autonomous Research. Please go ahead.
The first question is from Stefan <unk> from Autonomous Research. Please go ahead.
Speaker 6: Good morning, gentlemen. Thank you very much for the presentation. I have two questions, and they may be linked. The first regarding outstanding SMB funding. I don't think there's any update in the disclosure material on where the number has moved to. I think the last disclosed number was 38 billion Swiss francs at the end of August . Could you provide an update here?
Hi, Yes, good morning, gentlemen, thank you very much for the presentation.
Hi.
Two questions and they may be linked the first regarding outstanding SMB funding I don't think there's any update in the disclosure of material.
Whereas the number has moved to I think the last disclosed number was 38 billion Swiss Springs.
At the end of August.
Could you provide an update here.
And possibly related to this it looks to me looking at SMB data.
Speaker 6: Possibly related to this, it looks to me, looking at S&P data that there has not been a lot.
It has not been a lot further.
Speaker 6: further reduction of S&P funding after August in September .
The reduction of S N b funding.
After August in September.
Speaker 6: Is that a good interpretation of the data? And is there any connection here between your management of the S&B funding and the new liquidity ordinance that will come into place in January ?
Is that he said a good interpretation of the data.
Is there any connection yeah.
Between your administered with <unk> funding.
And the new liquidity ordinance.
Come into place that will come into place in January.
Speaker 6: And is it possible for you to give us a guidance on how your liquidity ratios will look like on the 1st of January under this new liquidity ordinance in Switzerland, please?
And is it possible for you to give us a guidance on where your liquidity ratios will look like on the first of January under this new liquidity orders in Switzerland piece.
Yeah.
Speaker 5: Thanks for your questions. So, in terms of the outstanding S and B funding, I know it's, we, we're still have the.
Hi, Stephen Thanks for your questions. So in terms of the outstanding SMB funding I know, it's we still have the the that funding levels are still unchanged at this stage.
Speaker 5: that funding levels are still uh... unchanged uh... at this stage uh... we are working through our our business plans and as well as our funding plans and we'll consider the uh... the ability to uh... uh... repay some or all that uh... over the course of uh... of the coming months but uh... your read was uh... was correct
We are working through our business plans and as well as our funding plans and will consider the the ability to.
Repay some or all of that over the course of the coming months, but you read was was correct in connection with that funding and the Lick ordinance no I'd say theres no no specific connection with that and we're not maintaining that funding.
Speaker 5: In connection with that funding and the LIC ordinance, no, I'd say there's no specific connection with that, and we're not maintaining that funding, particularly in respect of satisfying the liquidity ordinance per se. That said, the LCR guidance that you're looking for, as we say, will remain prudent, so you can expect it to remain at levels not terribly far away from where we finished 3Q at.
Particularly in respect of of satisfying the liquidity ordinance per se that said.
The LCR guidance that Youre looking for as we say we will remain prudent. So you can expect it to remain.
At levels not terribly far away from where we finished <unk> at.
Great. That's very helpful. Thank you.
Speaker 2: The next question is from Julia Miotto from Morgan Stanley . Please go ahead.
The next question is from Giuliani Alto from Morgan Stanley. Please go ahead.
Yes, hi, good morning, two questions from me the first one on capital distribution I know, it's early I know I guess it wouldn't come until Q4 pattern.
Speaker 3: The first one on capital distribution, I know it's very early and I guess you will comment on Q4, but what are the stepping stones that we should look out for before you can resume a buyback? That's my first question. And then the second question is with respect to costs.
What are the stepping stones that we should look out for before you can resume.
Bank.
This is my first.
And then the second question is with respect to costs.
Speaker 7: In the quarter, there was an excellent delivery on costs, and the $3 billion target by year-end has already been achieved. So basically, where do we go from here? Can we assume that this steady path of cost saves can continue?
In the quarter, there was an extended delivery costs and a 2 billion target.
Yeah, and it has already been achieved so basically where do we go from here and can we assume that these are steady.
And parcel of the cost saves can continue or.
Speaker 7: will there kind of be a pause until there is the legal merger because you have already basically extracted as much as you could of the low-hanging fruit.
Will that kind of be a pause until there is that he got merger because you have already basically.
And as much as you could and all the low hanging fruit.
Thank you.
Speaker 4: Okay, thank you. So in respect of the capital.
Okay and thank you so in respect of the capital.
Speaker 4: distribution plan or capital return plans as you pointed out. You're going to have to be patient. For the time being I just can't reiterate that we are still looking to have a progressive cash dividend policy that will be implemented.
Distribution plan or a capital return plans as you pointed out you're going to have to be patient and say you know is that for the time being I. Just can reiterate that we are still looking to have a a progressive cash dividend policy are that will be implemented.
Speaker 4: and for the rest you need to have what you need to see is the visibility with the plan. So we are finalizing the three-year plan and that will allow us to really calibrate capital returns. I just want to reiterate I still believe at this stage although the plan is not finished that
And for the rest are you you need to have what you need to see is the visibility with the plan. So we are finalizing the three year plan and that will allow us to really calibrate sat at capital returns I just want to reiterate I still believe at this stage, although they're flattish not finished yet.
Speaker 4: capital returns and share buybacks is not a matter of years, in my point of view it could be a matter of quarters, but without having the final plan it's difficult to
Our capital returns and then and then share buybacks is a is not a matter of years in my point of view it could be a matter of quarters, but without having the final plan it's difficult to.
Speaker 4: to really make a final statement. But that will be addressed in February . And somehow it's linked to your second question, because, of course, I'm not so sure I would define the progress we've made so far as low-hanging fruit. But, you know, I think that it takes efforts and time to go through this. I do believe that we still have costs that can be taken out during 2024, regardless of what you are pointing out being the critical issue is the legal entity merger.
Two to really make a final statement, but that will be addressed in February and so I'm always linked to this your second question because of course I'm not so sure I would define the progress we've made so far as low hanging fruit. That's a you know I think that's a it takes effort and time to go through this.
I do believe that we still have that.
<unk> costs that can be taken out during 2020 for regardless of what you are pointing out being the critical issue is the legal entity merger. The legal entity merger is the three are employing that allow us to go to the next level of cost reduction and synergy realization.
Speaker 4: The legal entity merger is the triggering point that allow us.
Speaker 4: go to the next level of cost reduction and synergy realizations from an operational standpoint of view, but also from an IT standpoint of view. So 2024, as Todd mentioned,
So from an operational standpoint of view, but also from an <unk> standpoint of view. So 'twenty 'twenty four as Todd mentioned is the and and I also remarked is a pivotal year.
Speaker 4: is the, and I also remarked, is a pivotal year.
Speaker 4: is probably the one time in which we're going to incur the most cost in order to achieve the synergies that we'll achieve in 2025 and 2026. So you see how the two questions are somehow linked.
That is probably the one tiny which we're gonna incurred the most cost in order to achieve the synergies that we eat.
Achieving 2025 and 2026 so.
So you see how the two questions are somehow linked.
Yeah.
Thank you.
Speaker 2: The next question is from Andrew Combs from Citi. Please go ahead.
The next question is from Andrew Coombs from Citi. Please go ahead.
Okay.
Speaker 8: Good morning. Two questions from me, please. Firstly, on the GWM net interest income trajectory, thank you for the commentary in your pre-prepared remarks. I think you said
Good morning, two questions from me. Please firstly on the <unk> net interest income trajectory. Thank you for the commentary in your prepared remarks, I think he said after a 3% decline in Q3, you expected mid single digit percentage decline in Q4.
Speaker 8: After a 3% decline in Q3, you expect a mid-single-digit percentage decline in Q4, and that was an ongoing deposit mix shift.
And that was one of them getting deposit mix shift.
Speaker 8: So that seems to be accelerating rather than decelerating. So can you give us any indication of how much longer you think that trend could continue for?
That seems to be accelerating around new didn't decelerate King say can you give us any indication of how much longer you think that trend could continue for them.
Speaker 8: Do you think now that we're at peak rates, if anything, that should slow as we go into 2024? And also, if there's any implications from your broader deposit pricing that's also influencing that sequential NII decline?
Do you think now that we're at peak rates, if anything that should slow as we get into 2024 and say if there's any implications from your broader deposit pricing. That's also influencing that sequential decline.
Speaker 8: That's the first question. Second question, there's been quite a lot of media commentary over the past week.
After the past question second question, there's been quite a lot of media commentary as the past week I had to.
Speaker 8: ahead of the too-big-to-fail review coming out in spring next year. I think there's been some explicit discussion around potentially introducing more exit fees or more notice periods around deposits. Is there anything you could say with regards to that and also what that means for your competitive positioning versus international peers? Thank you.
Keep it to bow at lip Bu coming out in spring next year I think there's been some explicit discussion around potentially introducing more exit fees or more nineties periods around deposits. So anything you can say with regards to that.
What that means deal competitive positioning messaging international peers.
Yeah.
Speaker 5: Yeah, thanks. Thanks, Andrew. On on the first in terms of GWM and I trajectory, I think you captured it right in terms of guidance around the mid single digit decline only to deposit make shifts.
Yeah. Thanks, Thanks, Andrew on the on the first in terms of Gws NII trajectory I think you captured it right in terms of our guidance around the mid single digit decline.
Owing to deposit mix shifts and whether that seems like an acceleration I'd comment that you know I think what we're seeing is a bit of a broadening of that dynamic are more across the globe.
Speaker 5: and whether that seems like an acceleration. I'd comment that I think what we're seeing is a bit of a broadening of that dynamic more across the globe. You know, we saw in most of 2023 that dynamic being very significantly driven by moves.
We saw an most of 2023 that dynamic being very significantly driven by moves from sweep deposits into higher yielding deposits in the U S and we.
Speaker 5: from sweep deposits into higher yielding deposits in the U.S.
Speaker 5: And we saw less of that in Europe , in AIPAC, as well as in Switzerland.
We saw less of that in Europe, and APAC as well as in Switzerland.
Speaker 5: And so while we're seeing the U.S. taper now, both in the current quarter and as we look ahead,
And so while we're seeing the U S paper are now both in the current quarter and as we look ahead.
Speaker 5: We're seeing a bit of an expansion of that dynamic in other parts of the globe, and that's what's sort of driving that. As I look out into, you know, 24, we're doing that work now. We'll come back with a view during, you know, during February with a view on full year 2024. I would just conclude on the point saying, no, I don't see pricing having an impact. I mean, this is just.
We're seeing a bit of an expansion of that dynamic in other parts of the globe and that's and that's what's sort of driving that as I look out into 'twenty. Four we're doing that work now will come back with a view during during our February with the view on on <unk>.
Full year 'twenty 'twenty four I would just I would just conclude on the point, saying.
No I don't see pricing are having an impact I mean this is just a response to the current rate environment as our clients are undergoing cash sorting across the across our client base.
Speaker 5: a response to the current rate environment as clients are undergoing cash sorting across our client base.
Yeah.
Speaker 4: So in respect of what you mentioned and, you know, changes in the law or regulations around liquidity, I think I can only say that, you know, it's pretty difficult to track all the rumors, speculations and ideas that are coming up almost daily.
So in respect of what.
You mentioned and the changes in our in the loan or a regulations around liquidity I think I can only say that Sac you know, it's a pretty difficult to track all the rumors speculations at ideas that are coming up that are almost daily.
Speaker 4: on the Swiss media. I think that I can always tell you that at this stage what stands is that even the finance minister took an official stance on the matter. I mean, there's speculation. I don't believe this is going to be part of the package.
The <unk> thing that I can always value that's there.
At this stage at what stands is that even the finance minister to Cook you know an official stance on the on the matter I mean dessert speculation I don't believe this is gonna be part of the package I think that Ah I I, Yeah, I am convinced that says, Switzerland, we'll keep at its standards.
Speaker 9: I'm convinced that Switzerland will...
Speaker 9: keep its standards in terms of allowing, you know, responding to the crisis in March, not only the one in Switzerland, but broadly speaking, with a following of recommendations that will be set by the FSB and other bodies, and in that sense, I don't see us being particularly disadvantaged compared to any other jurisdictions in terms of liquidity or deficiency.
Terms of allowing.
Responding to the crisis in March are not only the one in Switzerland that broadly speaking we they are following a recommendation that it will be set by by the FSB and other bodies and and in that sense, I don't see us being particularly disadvantage compared to any other.
Jurisdictions in terms of our.
Our liquidity our audience so.
Speaker 9: So I guess we will follow up and I think it's going to still take months and months before the full analysis of what happened will translate into concrete action.
I guess set.
We will follow up and I think he is going to still take months and months before the full analysis of what happened that will translate into concrete actions.
Speaker 2: The next question is from Adam Terolak from Mediobanca. Please go ahead.
The next question is from Adam <unk> from Mediobanca. Please go ahead.
Speaker 8: Morning, thank you for the questions. I had a one big picture question on revenues and then a follow up on the operational risk RWA big picture.
Good morning. Thank you for the questions I had one big picture question on revenues and then a follow up on the operational risk ought to be right and big picture.
Speaker 8: Your revenues at the minute are annualising to low £40 billion or so. Clearly your target has a number which is probably £50 billion plus.
Revenues at the minute I annualize into low 40 billions of site clearly a target has a number which is probably $50 billion plus there's one understand how you see the revenue bridge from here to 2027, and what the key moving parts should be particularly in the context of some of your cheek wm and trends, which.
Speaker 8: So I just want to understand how you see the revenue bridge from here through to 2027 and what the key moving parts should be, particularly in the context of some of your GWM trends, which at the minute seem to be down before we go back up.
Seem to be down before we go back up.
Speaker 8: And then secondly, on operational risk, I just want to understand some of the assumptions that are going into your Basel IV guidance there. Clearly, there's some uncertainty around ILM, there's a bit of uncertainty about what losses to use in that standardised calculation. So, what losses from the Credit Suisse business are you having to carry forward and how does that impact your operational risk?
And then secondly on operational risk I, just want to understand some of the assumptions that are getting into your boswell full guidance that clearly, there's some uncertainty around <unk> and.
There's a bit of uncertainty about what losses to use did not standardized calculations what lawsuits from the credit Suisse business are you having to carry forward and how does that impact your operational risk ought to be right and then finally can I just clarify on the Basel III Finalization guide is about 5% ex any move.
Speaker 8: RWA. And then finally, can I just clarify on the Basel 3.1 finalization guide, is that 5% X any moves in operational risk? Thank you.
He is an operational risk thank you.
Speaker 9: Thank you, Adam. So in terms of revenues, you know, I'm not so sure we ever indicated that we have a 50 billion plus revenue. I don't know where this figure is coming from. You know what I remember saying back in August is that our targets, our ambitions for 2026 are not based on blue sky scenarios on revenues. So if anything, I guided to the contrary of that. So we are definitely focused.
Thank you Adam so a in terms of revenues.
So should we ever indicated that we have a 50 billion plus revenue I don't know where to cigarettes are coming from.
Now what I remember, saying.
Saying backing that August is that set our targets our ambitions for 2026 that are not based on blue sky scenarios on revenues. So if anything I guided to the contrary of that so we are definitely focus on costs and we are definitely also focus.
Speaker 4: and we are definitely also focusing on the denominator. So we need to basically focus on managing and utilizing in a better way the resources and the risk-weighted assets that we have right now. You know, I have to go back to the critical point.
On the denominator, so we need to basically.
Our focus on managing and utilizing a better way and the resources and the risk weighted assets that we have right now.
You know I have to go back to the critical point.
Speaker 4: The mission number one we have had in the last six months and in the foreseeable future is to restructure Credit Suisse.
Number one we have had in the last six months and in the foreseeable future is to restructure credit Suisse.
Speaker 4: Okay, and then we're gonna talk about synergies and then we're gonna talk about growth. But before we talk about growth of the top line, we need to restructure and reset the basis.
Okay. And then then we got to talk about synergies and then we go and I talk about growth, but before we talk about growth of the top line, we need to restructure and reset the basis and in that sense a Billy.
Speaker 4: And in that sense, you know, believe me, we are not counting on blue sky scenarios and that figures is not really our figures. Can I ask for a better landing point then?
Believe me, we are not counting on blue sky scenarios and and that figures is not really.
Our figures.
Can I ask for a better landing point in time.
Well the landing point, you will see it in February.
Okay. Thank you.
Speaker 5: Adam, on your second question, in terms of op-risk, RWA, and modeling, as I mentioned, we did an initial impact assessment. It was quite dynamic.
Adam on your on your second question in terms of op risk or to the way in modeling as I mentioned, we did have an initial impact assessment. It was quite a dynamic. We are we've had only initial discussions with our regulator at this point in time naturally ahead of the formal.
Speaker 5: We've had only initial discussions with our regulator at this point in time, naturally, ahead of the formal.
Speaker 5: uh... introduction of uh... of boswell three final four operas for the way they'll be much more extensive interactions with uh... the regulator to agree on
Our introduction of a Basel III final for op risk RW, a there'll be much more extensive interactions with the regulator to agree on.
Speaker 5: The particulars around the ILM, as you say, we made certain modeled assumptions for now, as well as the lost history. We made certain assumptions about the lost history and the roll-off of certain legacy matters.
The particulars around the I L. M. As you say, we made certain modeled assumptions for now as well as the loss history, we made certain certain assumptions about the loss history and the roll off of certain legacy matters.
Speaker 5: So it was a thoughtful analysis a good initial view, but it's going to be one that requires
So it was a thoughtful analysis are good our initial view, but it's going to be one that requires more work and more engagement with our with our regulator over the coming months.
Speaker 5: more work and more engagement with our regulator over the coming months.
Speaker 5: on the uh... five percent uh... uh... actually no it's not ex-op risk it's inclusive but uh... given that uh... op risk we're saying as i said in my remarks we see that as broadly unchanged from now the the maps are the same either way
On the 5%.
Actually no its not ex op risk it is inclusive, but given that our op risk, we're saying as I said in my remarks, we see that is broadly unchanged from now the maths are the same either way.
That's the background.
Speaker 2: Next question is from Flora Bocahute from Jefferies. Please go ahead.
Next question is from Flora <unk> from Jefferies. Please go ahead.
Speaker 10: Yes, good morning. I'd like to talk about the net new money, especially at CES this quarter because
Yes, good morning, and I'd like to talk about the net new money, especially yet he has said this quarter because if I look at extrapolating the quarterly changes in net new money at <unk> that we've seen over the past two quarters. It seems to point to a run rate, where you gain 20 30 billion.
Speaker 10: If I look, you know, at extrapolating the quarterly changes in net new money at CS that we've seen over the past two quarters, it seems to point to a run rate where you gain $20, $30 billion of net new money per quarter, but then if I try and reconcile just the month of September from what you had disclosed, you know, with Q2, it looks like there's been a slowdown actually in net new money at CS with just $2 billion in wealth this month.
And the allows us and as you know when you talk quarter, but any if I try and reconcile just amongst us dependent from what you had disclosed dinner with Q2. It looks like there is going to slow down actually making money at yes, with just $2 billion in west each month.
Speaker 10: So what should I consider as a more normalized level from here, you know, is it going to be still the pace we saw of a quarterly basis or there is a slowdown because the environment is tougher? You probably have visibility there with what happened on October .
And so what should I consider as a more normalized level from here.
It's going to be asking the pace, we saw the quantity babies or that you just feel it out because the environment is tougher.
Probably hadn't you didn't see there was what happened on up to them.
Speaker 10: And the second question is actually following up on this. I know you are going to provide us with the strategic update at the full year, but any hint as to what kind of assumptions you've made in your ROCE T1 target 2 of 26 regarding the AUM level, especially considering the fact that the market effect is turning for the more negative now? Thank you.
The second question is actually following up on <unk> and I know you are going to provide us with just I think he could date that the full year.
But.
As to what kind of assumptions you've made.
Our CET one target towards 26 regarding the E M.
Especially considering the fact that the market is there.
Studying further money gets he's now thank you.
Speaker 5: Hey, Flora, thanks for the question. So on the net new money for Credit Suisse, well.
[noise] before thanks for the question so on the on the net new money for credit Suisse wealth.
Speaker 5: I appreciate you're doing a fair bit of the extrapolation math, but...
I appreciate you're doing a fair bit of the extrapolation math, but a you know a long time in this business tells me that extrapolating net new money trends is probably not necessarily the way the way to go certainly not from them.
Speaker 5: You know, a long time in this business tells me that extrapolating net new money trends is probably not necessarily the way to go, certainly not from a month or so. The point we've made is that we've stabilized the business. We're seeing inflows after massive outflows.
A month or so the point we've made is that we've stabilized the business. We are seeing inflows after massive outflows and that for us as Sergio highlighted was was was really objective number one was to stabilize the business that we've achieved look going forward in any case, we're gonna be reporting these metrics on a combined basis were just giving an indication.
Speaker 5: And that for us, as Sergio highlighted, was really objective. Number one was to stabilize the business, and that we've achieved. Look, going forward, in any case, we're going to be
Speaker 5: These metrics on a combined basis, we're just giving an indication because we, you know, we talked about that in the second quarter. We gave an indication even up to the late publication date towards the end of August .
<unk> because we are you know we talked about that in the second quarter, we gave an indication even up to the.
The late publication date towards the end of August So we surgeon I wanted to fall through on that and offer that perspective, but.
Speaker 5: So we, Serge and I, wanted to follow through on that and offer that perspective. But the expectation going forward in any case is that wealth management, which is how we manage the business, will be providing a combined net new money plus dividend and interest figure going forward.
The expectation going forward in any cases that wealth management, which is how we manage the business we'll be providing.
Providing a combined net new money plus dividend and interest figure are going are going forward.
Speaker 5: And in terms of the ROCT-1 assumptions in terms of AUM levels, we're doing that work now. Naturally, when we developed the landing zone targets that we articulated in the second quarter, we had a view on growth, but now we're validating that in our business planning process, and we'll come back and offer specificity around that in February . Thank you.
And in terms of the RSC T. One assumptions in terms of AUM levels.
Levels, if we're doing that work now naturally when when we develop the landing zone targets that we articulated in the second quarter, we had a view on growth, but we're now we're validating that are in our business planning process and we'll come back.
And an offer specificity around that in February.
Thank you.
Speaker 2: The next question is from Jeremy Sigi from BNP. Please go ahead.
The next question is from Jeremy. Thank you from BNP. Please go ahead.
Speaker 11: Good morning, thank you. I'd like to ask two questions about non-core if I could. The first one on the RWA outlook, you had a great start already reducing that balance down quite effectively. The runoff you show in the slide is effectively the natural runoff with no action, but clearly you are taking action. So is it reasonable for us to expect
Good morning, Thank you.
Thanks, I'll ask two questions about non cool if I could the first one on me at W. E outlook, you had a great start already reducing.
Violence down quite effectively the runoff you're showing this slide is effectively the natural run off with no action, but clearly you are taking action.
So is it reasonable for us to expect.
Speaker 11: that rather than being down 50 percent, it could be down 75 or 100 percent within that sort of three-year time frame. It seems that you're on a more aggressive trajectory than that passive runoff that you're showing in the slide.
Rather than being down 50% it could be down 75, or 100% within that sort of three year timeframe. It seems that you're on a more aggressive trajectory than that passive runoff that you're showing on the slide.
Speaker 11: And then the second question is also about non-core about the P&L. So you're annualizing in this quarter around one billion positive revenues and five billion of costs. I just wonder, is that a representative?
And then the second question is also about known cool about the P&L.
So you're annualizing in this quarter around 1 billion positive revenues and $5 billion of costs. So I just wonder is that a representative.
Speaker 11: starting point for us to sort of model non-core going forward and linked to that how much could that change in 2024? Could we see will we still see positive revenues in 2024 in non-core and how much could we expect the costs to reduce in 2024 in non-core?
Hosting point for us to sort of model non cool going forwards and linked to that how much could that change in 2020 full could we see we still see positive revenues in 2024 and non core.
And how much could we expect the costs to reduce in 2024 and known cool.
Speaker 9: I think that, Todd, I mean, let me start with taking, you know, the.
I think it's a thought I mean, let me start with taking at the.
Uh huh.
Speaker 4: the one on, you know, we are giving as I mentioned last time, we just give you a flavor for the natural decay in order for you to understand it, you know, what would be the leftover in case we do nothing. And as you pointed out, we have been pretty active.
The one on on that.
We are giving as well as we mentioned last time, we just give you a flavor for.
The natural decay in order for you to understand it.
Now what would be the leftover in case, we do nothing and as you've pointed out we have been pretty active having.
Speaker 4: Having said that, I don't think it's reasonable to assume that we're going to take down 100% or 75% to 100% per se because it all depends on at what terms we will do it. The very critical topic here is that we have to do it in a way that creates value and not just headlines.
Having said that I don't think it's reasonable to assume that we're going to take down onto percent until 75 to 100 per cent per se because it all depends on at what terms, we will do it.
The very critical topic here is that we have to do it in a way that creates value and not just deadlines. So we can get rid of probably of many of those positions, but destroying a lot of value and these will be in conflict with capital accretion and the ability for us to return capital to shareholders.
Speaker 4: So we can get rid of probably of many of those positions but destroying a lot of value. And this will be in conflict with capital accretion and the ability for us to return capital to shareholders.
Speaker 4: So I think that it's very clear what is the framework we are using. And I think objecting number one around Encore is not necessarily just to accelerate the wind down of assets, but it's to take down costs.
So I think that it's very clear what is the framework we are using.
And I I think objective number one around oncor is not necessarily just to accelerate the wind down of the assets bodies to take down cost that's the more much more critical of lemon element.
Speaker 4: That's the more much more critical element element of freeing up.
Freeing up capacity and resources.
Speaker 5: And Jeremy, on the P&L question, you know, for sure, on the revenue side, I would not annualize the current quarter's revenues. You know, the revenues are a function of, you know, the market through which we would exit these positions. It depends on the nature of the positions we're talking about. It depends on market conditions.
And Jeremy on the on the P&L question Gil for sure on the revenue side I would not annualize. The current quarter's revenues the revenues are a function of.
<unk>.
The market.
Through which we would exit these positions it depends on the nature of the positions. We're talking about it depends on market conditions will be opportunistic and everything surgery, just said that actually informs the dynamic about the speed the timing the intensity of when we get out of positions is of course, what you know what.
Speaker 5: will be opportunistic and everything surger just said that actually informs the dynamic about the speed the timing the intensity of when we get out of positions is of course what uh... you know what what covered in that respect so i i would put no uh... sort of target or or certain extrapolation certainly no extrapolation to the current quarters revenues in uh... ncl saying well that's a run rate
What governs in that respect so I I would put no.
Sort of target or certain extrapolation, certainly no extrapolation to the current quarter's revenues in NCL, saying, well that's a run rate on the cost side. That's I would I would argue that's different because there youre looking at on the underlying Opex you are looking at at this at this point.
Speaker 5: On the cost side, I would argue that's different because there you're looking at, on the underlying OPEX, you're looking at, at this point, the run rate cost to support the rundown of the business.
Run rate cost to support the rundown of the business. So as that business runs down you would expect that the cost associated the underlying opex supporting the portfolio will also run down now that may not be linear and I wouldn't expect it to be linear.
Speaker 5: So as that business runs down, you would expect that the costs associated, the underlying OPEX supporting.
Speaker 5: portfolio will also run down. Now that may not be linear, I wouldn't expect it to be linear, but it ought to be some way in some way shape or form correlated with the size of the balance sheet as it starts to diminish over time.
But it ought to be somewhere in some way shape or form correlated with the size of the balance sheet as it starts to diminish over time.
Yes.
Okay. Thank you.
Speaker 2: The next question is from Andrew Limb from Societationeral. Please go ahead.
The next question is from Andrew Lim from Societe Generale. Please go ahead.
Hi morning, Thanks for taking my questions. So just tuning into two tax obviously, we saw some nice auto play reduction, but it was negated by the high tax charge.
Speaker 12: So just turning to tax, obviously we saw some nice RWA reduction but it was negated by the high tax charge. But at the same time...
At the same time.
Speaker 12: You're talking about mergers of the divisional structure to enable you to reduce the effective tax rate. I was wondering if you could give us more specificity on when we can expect that to happen. And would that be a gradual process?
You were talking about.
But just of the divisional structure to enable you to reduce the effective tax rate I was wondering if you could give us a more specificity on when.
We can expect that to happen and would that be a gradual process put the reduction in the past our effective tax rate or would that be actually stepped down a change that.
Speaker 12: for the reduction in the effective tax rate, or would that be actually a step-down change there?
Speaker 12: And then my second question is, you've done a good job on costs. Well done there. The exit run rates for the end of the year, I was wondering if you could update us on that.
And then my second question is you've done a good job on costs well done there.
The exit run rates are for the end of the year I was wondering if you could update us on that.
Thanks, Andrew.
Speaker 5: So on the tax question, in terms of timing, as I mentioned in my remarks, certainly the elevated tax rate is a function of the fact that the expenses that are weighing on our pre-tax at the moment, in particular the integration-related expenses, are.
So on the on the tax question in terms of a timing Oh as I mentioned in my remarks certainly.
The elevated tax rate as a function of the fact that are the expenses that are weighing on our pretax are at the moment in particular the integration related expenses are.
Speaker 5: Being incurred in jurisdictions where we're not able to offset even within the jurisdictions necessarily offset
Being incurred in jurisdictions, where we're not able to offset even within the jurisdictions necessarily offset profits and losses in different entities, just given where they fall out so there.
Speaker 5: Profits and losses in different entities just given where they fall out. So
Speaker 5: There could be expenses or losses in one entity that's not tax group with an entity that is generating taxable profits, and that's indeed what's happening really across the globe, because the Credit Suisse entities in particular, as you'll appreciate, under Credit Suisse AG, which is not yet merged with UBS AG, those are separate chains of entities. So therefore, anything happening on the CSAG side.
There could be a expenses or losses in one entity, that's not tax group with an entity.
That is generating a <unk>.
<unk> profits and that's indeed, what's happening really across the globe because the credit Suisse entities in particular as you'll appreciate under credit Suisse. A G, which is not yet merged with U B S. A G. Those are separate chains of entities. So therefore anything happening on the <unk> side that you would otherwise ideally shelter with.
Speaker 5: that you would otherwise ideally shelter with profits of the UBS side isn't happening until we start the mergers. Now once we do that, your question was, is it a step or it's gradual? We'll see both.
Profit of the UBS side isn't happening until we start to mergers and once we do that your question was is it a step or its gradual we'll see both I mean, certainly we will see some immediate benefits by bringing together a certain entities others going to be hard at work and harder planning to <unk>.
Speaker 5: And certainly we'll see some immediate benefits by bringing together certain entities, others going to be harder work and harder planning to unlock some additional tax value and get the rate to a lower level. So you'll see, once the mergers take place over the course of 24, you'll see some step down, but you'll also, as I said, gradually see the rate come back in.
Locke, some additional tax value and get the rate to a lower level. So you'll see once the mergers take place over the course of 24, you'll see some step down but you'll you'll also as I said gradually see the rate come back in in terms of the the update for.
Speaker 5: In terms of the update for year-end, we did say that as of the third quarter, we see the run rate saves in excess of $3 billion and expect to make further progress. We're undertaking actions at present. We haven't quantified that, but you can expect that there will be further progress in the fourth quarter before we exit 2023.
Yearend, we did say that as of the third quarter, we see the run rate saves in excess of $3 billion and expect to make further progress. We were undertaking actions at present, we haven't quantified that but you can expect that there will be further progress in our in the fourth quarter before we exit 2023.
Okay.
That's great. Thank you.
Yeah.
Speaker 2: The next question is from Amit Goyal from Barclays. Please go ahead.
The next question is from Amit <unk> from Barclays. Please go ahead.
Speaker 13: Hi, thank you. Two questions for me. So the first is, I mean, so clearly the legal entity mergers are pretty important in terms of the kind of the costs and the tax and so forth. So do you mind just reminding us exactly the main
Hi, Thank you and two questions for me and so the first is sending say clearly that the legal entity merger is a pretty important in terms of the kind of the cost and the tax say for let's say and do you mind, just reminding us exactly the main and the main pieces intense.
Speaker 13: the main pieces in terms of the timing. So, would you be expecting some of that to happen within the first half of the year or is that kind of second half? Just things that we can monitor to check the progress there. And then secondly, just in terms of the revenue picture just into Q4.
And in terms of the timing say would you be expecting and it's an attack to happen within the first half the year or is that kind of second half.
And it just things that we can monitor to check the progress that.
And then secondly, just in terms of the revenue picture just into Q4 and.
Speaker 13: Obviously, there's the commentary on the transactional income and NII. Just thinking, are you thinking the underlying revenues, Q4, X, NCL, are likely to be in line with what we've seen in Q3 or slightly better or due to seasonality, slightly worse?
Okay. That's the commentary on the transactional income.
NII and just thinking are you thinking the underlying revenues Q4 ex N K L and unlikely to be in line with what we've seen in Q3 or slightly.
Slightly better or teach seasonality finally, lasse and thank you.
Speaker 5: Thanks for the questions, Amit. So, on the legal entities in terms of the main pieces and the timing, you know, the big, obviously the big groups to address are the parent banks that will take place, the two Swiss banks, and then the U.S. IHCs and the subsidiaries below. I mean, I'd say those are.
Thanks for the questions Amit so on a on the legal entities in terms of the main pieces and the timing of the big obviously, the big groups to address or the parent banks that will take place.
The the two Swiss banks, and then the U S IH CS and the subsidiaries below I mean, I'd say those are.
Speaker 5: and in the UK as well, and those are going to be the biggest chunks, of course, across the globe. There's also a lot of undertaking in Europe and in Asia, but the big, you know, I highlighted the big pieces because that's what you were looking for. We are working hard on developing plans for all of those.
And in the UK as well and those are going to be the biggest chunks of course across the globe. There's also a lot of undertaking in Europe and in Asia, but the big you know I I highlighted the big pieces because that's your that's what you were looking for we are working hard on developing plans for all of those I think it's fair to say over the course of.
Speaker 5: I think it's fair to say over the course of 2024, I won't at this stage speculate on exact timing, but we'll provide more updates as we go and as we enter the year and as we go through the year, we'll give you more specificity around timelines.
Of 'twenty 'twenty four I wont at this stage speculate on exact timing, but we'll we'll provide more updates as we go and as we enter the year and as we go through the year, we'll we'll give you more.
Specificity around our around timelines in terms of the revenue picture in the fourth quarter I mean, as you mentioned.
Speaker 5: In terms of the revenue picture in the fourth quarter, I mean, as you mentioned,
Speaker 5: repeating back that I offered some NII guidance for our core businesses in terms of underlying NII.
Repeating back that I offered some NII guidance for our core businesses in terms of underlying NII, we do see the potential for transactional activities I mean the.
Speaker 5: We do see the potential for transactional activities. I mean, the market for transactional activities is a bit clouded at the moment. We are seeing some risk off, even though earlier this month, certainly some of the less hawkish sentiment, coupled with further rate hike.
The market for transactional activities is a bit clouded at the moment, we are seeing some some some risk off even though.
Earlier, this month or certainly some of the less hawkish sentiment.
Coupled with further rate hike pauses.
Speaker 5: You know, and seeing bonds and equities rally more recently, you know, that would suggest perhaps more risk on, but I think that's all counterbalanced as well in our clients' minds.
And seen bonds and equities rallied more recently.
That would suggest perhaps a more risk on but I think that's all counterbalance as well in our clients' minds also about what's happening in the in the Middle East and so we do see the potential for a T Rx in.
Speaker 5: also about what's happening in the Middle East.
Speaker 5: And so we do see the potential for TRX in our asset gathering businesses as well as transactional activity in our IB to potentially be affected by that. And as you mentioned, seasonality will for sure in any event be a factor. So I'd say the revenue picture is a bit clouded, but I at this point wouldn't necessarily expect it to increase.
In our asset gathering businesses as well as transactional activity in our I b to potentially be affected by that and as you mentioned seasonality will for sure in any event B, a b or b a factor so I'd say the revenue picture.
As a bit clouded, but I at this point wouldn't necessarily expect it to.
Increase quarter on quarter, a significantly at this stage.
Speaker 5: quarter on quarter significantly at this stage.
Speaker 13: Got it, thanks. And just on the legal entity piece, so just, sorry, from my understanding, it's like getting the legal work done and getting the regulators to kind of sign off and just in terms of the main things that, you know, obviously have to get done to do the mergers.
Got it thanks, and just on the legal and C piece.
So just sorry, it's my understanding it's not getting the legal work done and getting to the regulators to kind of sign off and just in terms of the main things that obviously has to get done to the matches.
Speaker 5: That's correct. There is a lot of planning to be done. The planning manuals are incredibly extensive and, of course, it needs to be approved by the regulators. And when you think about the parent bank and how many jurisdictions they operate in, you're talking about regulators across the world. So these are not simple transactions by any stretch of the imagination.
Alright, yes.
That's correct. There is a lot of planning to be done the planning the planning manuals are incredibly extensive and of course that it needs to be approved by the regulators and when you think about the parent bank and how many jurisdictions.
They operate in you're talking about regulators across the world. So these are these are not these are not simple transactions by any by any stretch of imagination.
Thank you.
Speaker 2: The next question is from Benjamin Goy from Deutsche Bank. Please go ahead.
The next question is from Benjamin Goy from Deutsche Bank. Please go ahead.
Speaker 14: Hi, good morning. Two questions, please. The first, if you could maybe speak about the profitability of the recovery of funds and assets of Credit Suisse and how it's going, the discussion with clients there. And the second is, it looks like in particular non-core significantly outperformed your expectations, you said in Q2 in the third quarter. So just wondering what does it mean for the budget, so to say, you have to, for an accelerated rundown in Q4 and beyond. Thank you.
Hi, Good morning, two questions. Please the first if you could maybe speak about the profitability of the recovery off and an.
And as a problem credit Suisse, and how theyre going to this customer with with clients here in the second.
It looks like I'm thinking of noncore significantly outperformed your expectations that in Q2 in the third quarter. So just wondering what does it mean, Florida budget. So to say you have to want accelerated rundown in Q4 and beyond thank you.
Speaker 4: I mean, in terms of the non-core, I don't think that's, you know, extrapolating a quarter is meaningful. I do, as Todd mentioned before, you know, we need to look at.
Yeah all of that.
I mean in terms of the noncore I I don't think that's a extrapolating a quarter is meaningful I see I I do.
Todd mentioned before we we need we need to we need to look at that.
Speaker 9: In some cases, we were able to dispose of assets above marks in order that we will need to make an assessment about what we think is the value of those positions.
Some cases, we were able to dispose that sat you know assets are about marks you know others are and we will need to make an assessment about so what we think is the value of those positions that says you know I would pay attention to not to you know to us and the third quarter numbers and extrapolate and colleague is better.
you know, I would pay attention to not to, you know, to use that.
and the third quarter numbers and extrapolate and collate it is better than what we expected because we didn't really give any guidance on that. So, I mean, I think that we are confident that the quality, broadly speaking, of the assets is there. They are non-core assets per se. The vast majority is not problematic and they're free.
Then what we expected because we didn't really give any guidance on that so I mean I.
I think that we are confident that the quality broadly speaking of the assets is there. They are non core assets per se are the vast majority is not problematic and therefore.
I'm not overly concerned about the revenue or the cost to exit.
I'm not overly concerned about.
The revenue or the cost to exit.
As I mentioned before, it's more of a matter of addressing the cost to sustain those assets than it is about managing out the assets themselves. In terms of recovery of the funds, I think
As I mentioned before it's more of a matter of addressing the cost to sustain those assets than it is about managing out.
Yeah, so themselves.
In terms of recovery of the funds.
We see the win-back strategy still in place, it's very focused and probably what I can offer as a comment is as time goes by, we saw it already in the second quarter of the year after the announcement of the transaction and definitely has been confirmed in the third quarter.
We see a we see at a you know the win back strategy steel are in place we have been.
We are is very focused and what probably what I can offer is a comment is that it.
Is that as time goes by we saw it already in the in the in the second quarter of the year. After the announcement of the transaction in and definitely as been confirmed in the third quarter basically.
The third quarter is a year after you started to see departure of assets and client advisor Concreti Suisse, despite the massive outflows that you saw.
The third quarter is that a year. After you started to see departure of assets and client advisor Confetti Suisse does.
Spied the massive outflows that yourself.
the amount of assets that were able to be moved by the people that were serving those assets.
The amount of assets that we're able to be moved by the people that we're serving those assets.
has been within what we expected, on average, no more than 20 percent. So the first big issue is to say we have been able to keep the vast majority of the assets, so it's very difficult.
It's been.
Within that what we expected on average no more than 20%. So the first big AR issues to say, we have been able to keep the vast majority of the assets. So it's very difficult for people that moves out to be able to bring the assets with them.
for people that moves out to be able to bring the assets with them. So if you look at the numbers, it's quite, you know, I can give you maybe a little bit of anecdotal evidence. I mean, we lost around, or Credit Suisse in the last 12 months lost around 500 client advisors.
So.
If you look at our you look at the numbers. It's quite set you know I can give you maybe a little bit of anecdotal evidence I mean are we lost around five are pretty suites in the last 12 months lost around five fund our client advisors.
They moved so far, 20 billion of us.
Are they.
They they moved so far.
20 billions of assets.
So, and let's say that we we're going to lose further assets because some of those people just left more recently and we're going to see some outflows later on, but we are totally convinced that it's not going to be a multiple of that 20 billions, the future outflows. So, and we are working hard to recapture some of.
So.
And let's say that we are we going to lose a further assets because some of those people just are left more recently and are we going to see some outflows related Iran.
We are totally convinced that its not going to be a multiple of that 'twenty billions. The future outflows. So and we are working hard to recapture some of it.
So I think that our strategy now is more focused on regaining the clients that left because of fears of the
So I I think that's our strategy now is more focus on regaining the clients that left because of fears.
The stability of the system.
of the system, and in that sense...
And and in that sense.
If we maintain our ambitions, as we say, most likely we're going to formulate these ambitions, as Todd mentioned, as a combined wealth management business going forward, because, I mean, it's not really an issue any longer, Credit Suisse versus UBS. It's one team. We are working on maximizing the outcome, and so we're going to just outline our menu money growth ambitions in our three-year plan in a way that reflects win-backs and organic growth. Thank you.
We maintain our our our ambitions as we say most likely we're going to formulate these ambitions as Scott mentioned as a combined wealth management business going forward because I mean, it's not really an issue any longer credit Suisse viruses UBS as one team we are working on maximizing the outcome and so we're gonna just outlook.
Our menu Monte girl with ambitions are in our three year plan in a way that reflects win backs and and and and organic growth.
Yeah.
Thank you.
Sure.
The next question is from Christopher Hallam from Goldman Sachs. Please go ahead.
The next question is from Christopher column from Goldman Sachs. Please go ahead.
Yeah, good morning, everyone. Just two for me. So, on profitability, clearly better than expected in the quarter. Previously, you'd guided for positive underlying PBT and H2 and break even in the third quarter. So, given the third quarter is already quite positive, does that change how we should think about Q4? I guess the old guidance implied a sequential improvement in the fourth quarter in terms of PBT. So, just wondering whether that's
Yeah. Good morning, everyone. Just two from me so on profitability clearly better than expected in the quarter previously you'd guided as opposed to underlying PBT in H, two and breakeven in the third quarter. So given the third quarter is already quite positive does that change how we should think about Q4, I guess the old guidance implied a sequential improvements in the fourth quarter in terms of P. P. T. So just wondering.
still the right way to think about that. And then second, and I appreciate it's a bit of a follow-up to some of the earlier questions on CS net new money. You've given the regional disclosure on a combined basis, but I just wanted to check whether the combined regional picture, sort of Asia strong, EMEA strong, Switzerland more balanced, is that consistent across both the CS and UBS world franchises?
Whether that's still the right way to think about that.
And then second and I appreciate it's a bit of a follow up some of the earlier questions on C. S. Not your money you have given the regional disclosure on a combined basis, but I just wanted to check whether the combined regional picture sort of Asia strong EMEA strong, Switzerland, more balanced is that consistent across supposed to see us at UBS wealth franchises.
Yeah.
Thanks, Christopher. Yeah, on the on the second question, it is, it is consistent. You know, obviously, x to x the US, given given CS doesn't have a wealth presence there, but across
Thanks, Christopher Yeah on the on the second question. It is a it is consistent.
You know obviously ex the ex the U S. Given given see us doesn't have a wealth presence there but across.
It is, I would say, the APAC and EMEA proportionality holds, obviously, on the smaller base that we were talking about in terms of the net inflows this quarter.
It is I would say the APAC and EMEA proportionality a.
Holds obviously.
On the on the smaller base that we're talking about in terms of the net inflows this quarter.
compared to the UBS side, but yes, that dynamic does hold.
Compared to the UBS side, but yes that dynamic does hold.
In terms of profitability in the fourth quarter, I would say that we certainly accelerated a bit of what...
In terms of profitability and the and in the fourth quarter I would say that we certainly accelerated a bit of what.
We were forecasting back in August in terms of 3Q, 4Q, where we said roughly break even in 3Q and further progress in 4Q. I think we've seen the progress that we've been able to accelerate, so really.
We're forecasting back in August in terms of <unk>, what we said roughly breakeven in <unk> and further progress in <unk> I think we've seen the progress that.
We've been able to accelerate so really undertaking and executing integration of pace and you see the results of that I'd say for Q and a way standing alone relative to how we saw it back.
undertaking and executing integration of PACE, and you see the results of that. I'd say 4Q, in a way, standing alone relative to how we saw it back in August is still around the same. So, I would look, meaning, I would say we expect 4Q to come in better than breakeven, which is what we said was the case back in August , and I would say balancing.
Back in August is still around the same so I would look meaning a I would say, we expect <unk> to come in better than breakeven.
Which is what we said was that was the case back in August and I would say balancing the execution on the cost side, but also considering some of how we're guiding on the revenue side I think that number you have an idea of where we at this stage expect that number to come in.
The execution on the cost side, but also considering some of how we're guiding on the revenue side. I think that number you have an idea of where, you know, we, we, at this stage, expect that number to come in.
Thanks Todd.
Yeah.
Okay, I think this was the last question. Let me thank you for dialing in.
Okay. Thank this was the last questions a question.
Let me let me thank.
Thank you for dialing in and buy.
By just quickly reiterating, you know, as you can see, we are in full.
By just quickly reiterating.
You can see we are in full.
execution mode but also at the same time we are planning for
Execution modes, but also at the same times, we are planning for the future and you know.
the future and, you know, the next milestones other than the operational one.
The next milestones are other than the operational one I.
I just, or we just described, is to prepare the three-year plan that we will present in
Just Oh are we just described is to prepare to the three year plan that we will present in a in a in February in the meantime, we are very focused really on as I say that on execution and I'm totally convinced that.
in February . In the meantime, we are very focused really on, as I said, on execution, and I'm totally convinced that we are in a good place. And, of course, you know...
We are in a good place and of course Uh Huh.
we in our missions to really create something that will not only be a huge restructuring story but also something that set the base for future growth and ambitions that we have.
We.
In our mission is to really create some things that.
It will not only be a huge restructuring started but also some things that are set the base for future growth and ambitions that we have at <unk>. We look forward to present to you. The three year plan in February and Ah and I'm sure in the meantime, we're gonna be in touch either directly or through my colleague.
You know, we look forward to present you the three-year plan in February and I'm sure in the meantime we're going to be in touch either directly or through my colleagues for the follow-ups of this call. Thank you for calling in and enjoy the rest of the day. Thank you.
So for the follow ups of the skull.
Thank you for calling in and enjoy the rest of the day. Thank you.
Yeah.
Ladies and gentlemen, the webcast and Q&A session for analysts and investors is over. You may disconnect your lines. We will now take a short break and continue with the media Q&A session at 10.45 CET.
Ladies and gentlemen, the webcast and Q&A session for analysts and investors is over you may disconnect. Your lines. We will now take a short break and continue with the media Q&A session at 10 45 C T.
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Yeah.
Okay.
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