DBRS: Cost Control and Wealth Management Drive UBS Strategic Objectives

On October 25, 2018 UBS Group AG (UBS) presented an update of its strategic objectives for the next three years. DBRS considers these updated goals show a continuation of the strategy implemented back in 2011. DBRS rates UBS at A (high) with Positive trend as it considers the Group is well positioned to further benefit from momentum across its core businesses and improve internal capital generation.

Summary highlights of DBRS’s commentary include:

UBS strategic update for 2019-2021 reflects continuation of strategic initiatives initially set in 2011. Key strategic objectives are to improve cost/income ratio in all divisions and maintain current capital ratios. In particular, for the next three years, UBS aims to improve efficiency in all business divisions through a combination of revenue growth and strict cost discipline.

Key objectives for 2019-2021 include strong growth of Global Wealth Management (GWM) businesses and a CHF 800 million reduction in operating costs. Specifically, UBS is focused on growth in the U.S., Asia Pacific (APAC) and Ultra High Net Worth individuals (UHNW). Strong revenue growth to be supported by franchise momentum in GWM and the assumption of a positive global economic backdrop.

DBRS considers the overall reduction in operating costs to be broadly achievable even with continued investment in technology. Partially contributing to the reduction should be the already streamlined franchise following restructuring initiatives taken in the past few years.

The Group aims to improve the return on Common Equity Tier 1 (RoCET1) to 15% in 2019 and an ambitious 17% RoCET1 in 2021, from around 13.7% at end-September 2018. The CET1 capital and CET1 leverage ratios, however, will remain at similar current levels at around 13% and 3.7%, respectively.

For further information see the full commentary titled “DBRS: Cost Control and Wealth Management Drive UBS Strategic Objectives”. The commentary is available at www.dbrs.com.