WEBVTT - Sergio Ermotti Talks UBS Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news bumper results from UBS.

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<v Speaker 1>The share is currently up seven point eight percent, this

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<v Speaker 1>after the Zurich based Lander return to profit after two

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<v Speaker 1>loss making quarters. The robust set of results will be

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<v Speaker 1>abuse for the CEO, Sergio er Mootti, as he grapples

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<v Speaker 1>with a tightening regulatory outlook in Switzerland, and he's been

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<v Speaker 1>speaking to Bloomberg TV's Francine Laqua and Motty began by

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<v Speaker 1>highlighting the strength recently in the bank's performance.

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<v Speaker 2>Well, very please with the governmentum we start the year.

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<v Speaker 2>I think that first of all, we are making very

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<v Speaker 2>good progress on our integration plans, but also it was

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<v Speaker 2>great to see a very strong return on the profitability,

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<v Speaker 2>both on a reported basis but also a very strong

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<v Speaker 2>underlying profits. We also see good momentum with clients with

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<v Speaker 2>inflows across our businesses, and our capital is strong, so

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<v Speaker 2>allowing us to continue to pursue our.

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<v Speaker 3>Capital return plans.

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<v Speaker 4>And also the investment bank was actually quite strong, better

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<v Speaker 4>than expected. Again, what does it tell you about you know,

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<v Speaker 4>what you can see in the future. Is it a

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<v Speaker 4>one off or actually is a path ahead better?

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<v Speaker 2>Actually, it's a good momentum. You May remember in the

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<v Speaker 2>four quarter we also had a very strong performance in banking.

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<v Speaker 2>As we integrate a new colleagues from credits Wich on

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<v Speaker 2>our platform, we start to see the pipeline developing we

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<v Speaker 2>are able to execute and so it's very much aligned

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<v Speaker 2>with our expectations of improving the mix between our markets

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<v Speaker 2>business and our banking business in the investment bank.

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<v Speaker 4>So in the investment bank where you see the bigges strength.

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<v Speaker 4>I know we also heard about possible you know job

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<v Speaker 4>losses in Asia. Is Asia at the moment weaker than

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<v Speaker 4>for example, parts of the US and investment bank.

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<v Speaker 2>No, I think that we reinforced our franchises globally. I

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<v Speaker 2>think that, of course we are still going through across

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<v Speaker 2>the entire bank. We are still a lot of work

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<v Speaker 2>to be done to restructure the businesses and to bring

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<v Speaker 2>them back into even stronger profitability.

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<v Speaker 3>So I think that is a good momentum.

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<v Speaker 2>We achieve almost a ten percent return on CIT one,

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<v Speaker 2>which is still a third or fifty percent away from

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<v Speaker 2>our final targets, so still work to be done. We

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<v Speaker 2>always say that twenty twenty four is an important year,

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<v Speaker 2>and as we now approach the end of May, we're

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<v Speaker 2>going to execute on our legal entity mergers, which allow

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<v Speaker 2>us to unlock in the future further cost savings.

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<v Speaker 4>An important year twenty twenty four, because it's also more

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<v Speaker 4>difficult year to twenty twenty three.

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<v Speaker 3>No, because is.

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<v Speaker 2>More First of all, we have two huge milestones, the

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<v Speaker 2>merger of our legal entities and the second one we

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<v Speaker 2>start to do the migration of clients from the credit

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<v Speaker 2>switch platforms into the UBS platforms. So this is very technical,

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<v Speaker 2>still requires a lot of support and people to do that.

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<v Speaker 2>But as we start to do that, we can unlock

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<v Speaker 2>some cost savings, but also unlock capital savings, funding savings,

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<v Speaker 2>and therefore you know, achieving our final targets to achieve

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<v Speaker 2>thirteen billions of savings by the end of twenty twenty

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<v Speaker 2>six forty.

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<v Speaker 3>This year we do.

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<v Speaker 2>Expect half of that being achieved, so six and a

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<v Speaker 2>half billions.

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<v Speaker 4>So when you look at global wealth, I mean the

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<v Speaker 4>outlook talks about interest rate cuts. Again, how do you

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<v Speaker 4>worry about, you know, things that are outside your control, well.

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<v Speaker 3>Things that aretside our control. You know, we always need

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<v Speaker 3>to wonder what can.

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<v Speaker 2>Happen on the geopolitical front, what can happen on any

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<v Speaker 2>sudden change in the macroeconomic pictures.

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<v Speaker 3>So I think that.

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<v Speaker 2>We do indeed a factor in our outlook for NII.

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<v Speaker 2>For example, three rate cuts in the US cup, two

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<v Speaker 2>rate cuts in Switzerland.

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<v Speaker 3>This can change.

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<v Speaker 2>If it changes, may be beneficiary to our NII, but

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<v Speaker 2>maybe the underlying macroeconomic event is not so positive. So

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<v Speaker 2>you know, we need to always assess well, we are

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<v Speaker 2>prepared for any scenario.

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<v Speaker 3>We stay focused on executing on our plan.

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<v Speaker 2>But also we have you know, a balance sheet for

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<v Speaker 2>all seasons, allowing us to really manage any any unexpected event.

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<v Speaker 4>So when you look at market volatility, it's a little

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<v Speaker 4>bit unusual to see as much market volatility or even

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<v Speaker 4>pricing on the fact how do you describe.

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<v Speaker 2>The markets, Well, it's a kind of market volatility around

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<v Speaker 2>bonds and ten years. But if I look on effects,

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<v Speaker 2>I look at equities many other anset classes, the volatility

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<v Speaker 2>is not there.

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<v Speaker 3>It's more subdute. We saw more client.

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<v Speaker 2>Activity, but let's not forget that there is a little

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<v Speaker 2>bit of seasonality factor in the first quarter, so we

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<v Speaker 2>need to really see how in the next quarter things

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<v Speaker 2>are going to play out. We have to remember that

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<v Speaker 2>we are still facing in the in the in the

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<v Speaker 2>foreseable future, big elections coming, and how this is going

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<v Speaker 2>to then play out into the sentiment of clients.

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<v Speaker 3>Still still open and that will be very regionally.

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<v Speaker 4>Again, if you look at pipelines you see a difference.

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<v Speaker 2>Yeah, very originally, but you know nowadays things in every

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<v Speaker 2>region can affect others, so I think that.

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<v Speaker 3>Things are quite fluid.

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<v Speaker 4>Is Europe weaker than the rest of the world.

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<v Speaker 3>Well, Europe is still not growing.

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<v Speaker 2>If I look at our businesses, of course, it's still

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<v Speaker 2>somehow clear that the real growth is mainly driven by

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<v Speaker 2>the US, and and and Asia. I'm also very pleased

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<v Speaker 2>with our performance in Switzerland. But when I look at

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<v Speaker 2>Europe in general, is still not so constructive.

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<v Speaker 4>I mean there you know, talks about possible of course

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<v Speaker 4>integration or em and A of banks in Spain. I

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<v Speaker 4>don't know whether you see yourself as kind of like

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<v Speaker 4>the original M and A for different reasons. What are

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<v Speaker 4>you expecting of a consolidation wave.

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<v Speaker 3>I continue to.

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<v Speaker 2>Think that it's over time, is going to be is

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<v Speaker 2>necessary to see more consolidation in the European banking We

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<v Speaker 2>may be seen as a playbook or a reference point

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<v Speaker 2>going forward on how to merge two larger banks. But

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<v Speaker 2>eventually what we've see right now in Spain at least

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<v Speaker 2>is a scenario which you go through first mainly domestic consolidation,

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<v Speaker 2>and this is a prerequisite later on maybe to expand

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<v Speaker 2>this into a more European framework. Now, in order to

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<v Speaker 2>do that, you need to have a banking union model.

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<v Speaker 2>You need also some regulatory and it's not even regulatory,

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<v Speaker 2>I would say, it's political decisions about how Europe wants

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<v Speaker 2>to see its financial markets and banking.

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<v Speaker 3>Markets being managed.

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<v Speaker 2>But over time, in order to stay competitive visa VI,

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<v Speaker 2>non banking financial institutions, to stay competitive visa VI, new

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<v Speaker 2>entrants that are not necessarily just banks, banks do need

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<v Speaker 2>to create economy of skills so that they can invest

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<v Speaker 2>and stay relevant to their clients.

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<v Speaker 1>So that was the CEO of UBS, Sergio or Maati,

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<v Speaker 1>speaking there to Bloomberg's Francin Laqua after the bank's latest

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<v Speaker 1>results out this morning showing that return to profit after

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<v Speaker 1>two loss making quarters.

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<v Speaker 4>They discussed there, of course the strength and the wealth

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<v Speaker 4>managements and the investment bank. This as the bank has

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<v Speaker 4>been signaling that it has another one point three billion

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<v Speaker 4>dollars worth of costs linked to the integration of credit

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<v Speaker 4>Suite in the second quarter,