UBS : Transcript (jp morgan european financials conference ubs transcript november 2025)

J.P. Morgan European Financials Conference

20 November 2025

Fireside chat with Sergio P. Ermotti, Group Chief Executive Officer; Moderator: Kian Abouhossein

Transcript. Replay is available at https://www.ubs.com/investors

Kian Abouhossein

Thank you very much for being here. First of all, thanks Conor for the kind introduction and Sergio it's really great to have you here. And maybe I just kick off right away with your view around the global environment for banking, especially in areas that you're operating in, and especially Asia as well, clearly, a lot of interest by the audience, how you see that, more of your top down view overall?

Sergio P. Ermotti

Well, thank you. It's great to be back here. And, well, first of all, I think that the macro picture has changed for the good in many areas, if you go back in Q2 at least the tariffs topic has been somehow addressed, but when I look at inflation and it's quite sticky in the US again and other kind of topics have emerged, which makes me believe that this quarter and next quarter are probably going to be a little bit challenging from a macro standpoint of view, although we see the rest of 2026 and 2027 probably then having a slight recovery.

So, in that sense, when I look at market activity and the situation, I'm very pleased to see that clients are still quite active across the board, also in wealth management, broadly speaking, client activity has been quite solid. When you speak about capital markets the pipeline is building up quite significantly. I think the engagement with clients is very high, not only with strategically, but also with sponsors.

Having said that, if you look at this current quarter, the fee pool is as we - at this moment is down around 5%, 6% year-on-year. So, if you look at leverage capital markets it's down 25%. So, it's fair to say that last year in Q4, we had a quite positive environment, a very untypical for Q4. And, I think that overall, this quarter is going to be a quarter in which it will be challenging to get back into that kind of quarterly results.

Because if you look at, particularly in the US, we lost six weeks of window. So deals are there ready to be executed but there is a delay. So in markets, the environment has been quite constructive in the first few weeks, but again the second half of the year, I don't know exactly what's going to happen, but remember last year we had a very, very exuberant environment in November and December. So overall, still positive but of course, this year the seasonality comparison is not going to be favorable.

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Kian Abouhossein

When we look at Asia, the environment that you see in Asia impacting your wealth business feels extremely good around Asia, but tell us how you feel about Asia generally now and going forward?

Sergio P. Ermotti

Well, in Asia, of course, we have been - in general, I think that the environment is very constructive, you see the amount of IPOs in Hong Kong and the activity is really, really, strong. And for us, IPO and capital markets activity is highly correlated with our net new assets, net new money in wealth management. So, that's really when you really see the nexus of IB and wealth management working well together. You look back at Q3 with almost $40 billion of inflows was quite a testament of that situation, so we still see good momentum.

What I really like about the Asian story right now is not only that we consolidate our position as a leading wealth manager and asset gatherer - we have more than a trillion of assets right now, so $700 billion, $800 billion in wealth and $200 billion in the institutional side, but it's really the diversification of the Asian franchise. I mean, in the last decade or so was a pretty much a China story. Right now, if I look at our growth in Australia, India, I look at Taiwan, Japan, which I was there recently and I've been going to Japan for the last 35 years, and this is the first time, I really saw a level of confidence and positivism and this is the third largest wealth management market in the world.

Kian Abouhossein

Fantastic.

Sergio P. Ermotti

So, and it's plenty of opportunities. So what I like about Asia right now is a much more diversified story.

Kian Abouhossein

Interesting, especially around Japan. And if we then switch over to the integration of Credit Suisse, we are -having done the bulk of the integration it feels, we have one more year to go to really finalize that to some extent. Your return on CET1 exit 2026 is 15%, I guess that's still on track. Tell us about how the integration has progressed in terms of culture, synergies, people.

Sergio P. Ermotti

Well, look, I'm very pleased and I think I'm very also thankful to all the people in the bank for really managing this integration while still delivering for clients. Because at the end of the day, I think that's - and by the way, so in a very changing environment, thinking about what's going to happen in the next five years, so the complication is very high. But of course, the big lessons learned out of this is that, in an integration of this scope and size, you need to be quite clear from the very beginning that perfection is not going to be the best way to address it. So, we went for what we believe was a clear advantage of the operating model of UBS, the

infrastructure of UBS and avoiding the complexity of merging IT systems, but rather taking the chance of migrating clients to one platform, which has proven to be successful and the right decision.

Not to say that Credit Suisse didn't have good infrastructure, but the reality is that the luxury of spending time in assessing the best of them was - would have been quite costly. Well, by the way, things that we believe are good and were good at Credit Suisse, we kept only 10% of the 3,000 applications in IT, right? But some of them are in the fridge, they're going to be taken out as soon as we finish the integration and then deploy them.

So, the second topic is the culture. You mean, I think that was you mentioned the culture because I think it's a very important element. From the very beginning, we made it very clear that we would run the bank as in a matrix organization despite the fact that we still had legal entities and operating banks being separated. And by the end of 2023, all the people at UBS and Credit Suisse, they were on the same HR system for year-end processes in terms of valuations, promotions and compensation end of 2023. That was a very strong signal. We kept it based on meritocracy around 20 to 25% of the second, third level in the organization are former Credit Suisse employees. So the cultural integration and the matrix organization from day one plus the fact that we have been giving significant positions to the Credit Suisse made it clear that we wanted an integration, although it was an acquisition, right.

And the fact that today, the level of satisfaction of UBS employees versus Credit Suisse is at the same level and is 10 points above industry standards. So, this is a huge element of - this is the KPI, I have to tell you I am most proud of. Because at the beginning, there was a big debate on that, are those two cultures going to match? And the truth of the matter is that they are quite successful.

Now the second and managing also the capital stack, the efficiency because, of course, we inherited a bank that was loss making. So, it was not just an integration of two going concern banks that are trying to optimize. One was just gone, right. So restructuring, cost, balance sheet was a big topic. I'm very happy with the non-core trajectory, both in terms of risk weighted assets and cost and now we are completing the journey during the quarter. You saw that we did a big LME program, we bought back $8 billion of debts that was quite expensive debt issued by Credit Suisse. Is going to cost us $0.5 billion in this quarter, that we're going to book in group items, but it's going to be very and 10 basis points of CET1. But it's the most important issue to say try to get as close as we can to the exit rate, so that in 2027, you have a true visibility on what is the power of the underlying core operating bank without legacy issues.

Kian Abouhossein

Yeah, yeah.

Sergio P. Ermotti

So very happy but still it's not over. We still have to migrate 15% of the 1.2 million clients, so around 250,000 clients in Switzerland. It was a very successful migration over the weekend. So we are now at 950,000 clients migrated. But the complexity is going up because we are now migrating the last chunk of wealth management clients, very complex products, but I'm confident we're going to get there.

Kian Abouhossein

And your return on CET1 target of 15% exit 2026, well on track?

Sergio P. Ermotti

We are on track with our targets. I have to say that when I look at - also in terms of cost, so we already achieved $10 billion out of the $13 billion. So the last $3 billion is really all about finishing the 15% because until the last client is out, we can't shut down applications and data centers and IT systems. So, we already took off 50% of the legacy applications and 60% of the servers and then so on, but the last $3 billion are coming late. And clearly, when I look at consensus, I mean, people still don't understand that it's rather in the second half of 2026 that we can shut down the systems because end of Q1 we finish the migration, then you need to all the preparation and then you start to shut down and then you get down to the exit rate.

Kian Abouhossein

Okay.

Sergio P. Ermotti

But I'm still very comfortable that we're going to deliver on our exit rate targets.

Kian Abouhossein

I mean, it is from our perspective, I mean, it's the only two G-SIB merger that we've seen since the GFC and it's from my perspective at least the best integration I've ever seen in terms of mergers. So it's been extremely smooth so far.

Now, taking a different shift, clearly, there's been a lot of regulatory issues coming up as well, so we want to talk more about integration and operational issues, but I think we also need to address for the audience some of the regulatory issues that are coming up. And maybe I can start with the whole issue of ordinance. I just try to understand the ordinance charge of roughly $11 billion DTA, software, PVA, how do you see yourself in a position relative to global peers as a result of this? And how do you think about the timeframe and give us your general view around the ordinance issue?

Sergio P. Ermotti

Well, look, when I look at - the ordinance is part of a package that is going to I mean, we have 25 or plus kind of proposals on changes in the regulatory framework. But when you look at the capital, there are basically two topics. One is the ordinance and one is the one that is mainly addressing the subsidiary and capitalization of the subsidiaries. The ordinance, it's really some things that it - from a competitive standpoint of view is very difficult to understand because if you look at what really happened at Credit Suisse, this has very little to do with what happened at Credit Suisse. Actually, you could argue that many of the proposals have little to do with that, what truly happened at equity Credit Suisse, not what is talked about happened at

Credit Suisse, but what truly happened at Credit Suisse is that software and DTA for sure didn't play any role, and group capital for sure didn't play a role. So, it's very, very difficult to understand a proposal that are so far away from international standards and have so little to do with lessons learned.

So - but, it's not just my opinion. I mean, probably it's your opinion and many other opinion and anybody who is looking at this topic in a very unemotional way comes to the conclusion that these are excessive and not internationally aligned. And if it's not internationally aligned, to answer your question, it means that you are not competitive. So for us, it's really important that to make sure that facts drive the decision on how to potentially improve matters. There are lessons learned out of this crisis. Potentially, you can always improve but, particularly when you go about DTA and software, going too far is definitely not something that is reflecting of the underlying nature of how a bank work and how international regulation works. And we, as UBS and we as Switzerland, we are in competition. We are not operating in our crystal glass, under a crystal bell in which we think that we can do things on our own. Our clients are international. No matter if they are booked in Switzerland or internationally, and therefore, we need to be competitive.

Kian Abouhossein

And if we look at the legislative process, which you could get to roughly $24 billion of capital impact for you, where are we there in the debate and how do you see from your perspective a reasonable outcome? Is there a reasonable outcome really in this respect?

Sergio P. Ermotti

Well, you see the risk in talking about what a reasonable outcome is, is that there is so much subjectivity, depending on how you look at things. For me, reasonable is only something that allow us to be competitive and - but also really being able to be competitive while being a source of stability and strength to the system. So that's the reason why just looking simplistically at capital without, for example, considering that a major element in my point of view and that should be a focus and will be a focus, I hope, of the future regulation in Switzerland is to understand the true recovery and resolution plan of a bank. And how you minimize the risk for taxpayers in that issue. So when you look at a reasonable capital outcome, you need to look at a reasonable understanding for not only experts, but also for people out there, for politicians to understand, is the bank resolvable without creating collateral damages to the economy. And how is then a public liquidity backstop helping avoiding even the risk of a run, and - so you have to create an ecosystem that goes beyond just going down, as we mentioned before, purely discussing about one item ordinance. So, what does it mean?

Kian Abouhossein

And does the...

Sergio P. Ermotti

So that's - the compromise is the ability to really look holistically on how you make the financial system stronger. And the lessons learned from the financial system is that post financial crisis. Take out Credit Suisse, which was a clear, idiosyncratic situation. Big banks, G-SIBs were a safe haven, an anchor of stability during all the crises we had since then. COVID and even the proof points of that, UBS's ability to step in and rescue a

G-SIB within hours and within weeks stabilizing it is the proof point that something is right in the system. Now, we always can learn, but we should do evolutions not revolutions.

Kian Abouhossein

And do you feel they're listening, because from our perspective, I can tell you we have - we get quite a lot of incomings from the treasury, the Fed, the Bank of England, or the ECB, but I have never had a call from the FINMA or the Swiss government to just discuss, okay, how do you guys see it from a market perspective? Do they really understand in your view and what is the balance of discussion at this point? How do you actually prevail your view?

Sergio P. Ermotti

Maybe because they already know everything better.

Kian Abouhossein

We'll see how this will develop. In terms of your perspective, you have said that we are not going to give a piecemeal optimization of the - our potential outcome and how we mitigate potentially some of this. We're going to do it once we're ready. And what has to happen for you to say we are ready at this point to give you a little bit more detail how we think about how UBS will be run going forward?

Sergio P. Ermotti

Is only as you expect me to do, is when I know facts and I can make statements and I can make commitments and in absence of clarity on what it is exactly, it's very difficult for me to go into mitigation discussions or any other item because depending on what it is, you may have different options and starting to discuss about speculating or going through hypotheses, it's really, in my point of view, even more confusing. Of course, we're going to have to take actions.

The current proposals are not acceptable, let's be very clear. I mean, they're not going to work for us. We're going to respect whatever the outcome is, but they're not going to work for us. So, things have to be taken and I can assure you that there is no low-hanging fruit because we have been planning carefully in 2023, 2024 on what needed to be done to make sure that out of such a tragic, unnecessary event, we could do something good for UBS shareholders, for clients, for employees and for the country. But, the issue is that we can't go beyond a certain level of efficiency. There is a point in time in which it's impossible to be. I mentioned that jokingly, but it's quite serious in my point of view. We are not magicians, right? So, I mean, I'm sorry, we can't just go as far as optimizing a situation and then we're going to have to really look at what are other actions we have to take, but at this point in time, I don't really want to speculate about what it is.

Kian Abouhossein

Understood. And clearly, how - one question and I'm going to phrase it a bit differently is, do you really need to be a Swiss bank? I mean, could you be a US bank, could you be a US operation headquartered in a different country from Switzerland, or even Germany? Is there optionality, do you see that actually as an optionality, it's been speculated, I know a lot in the press, but just from a kind of practical perspective, is that actually possible, to move headquarters?

Sergio P. Ermotti

Look, again, talking, anything I say about this topic is going to be instrumentalized and interpreted in ways and almost every day almost everybody is lecturing us on how we should say and what we should say. And, the truth of the matter is that we want to be a Swiss bank. We believe that being a Swiss bank has been good over the last 150, 170 years and for both the bank, the clients, and for Switzerland. So this is the best possible outcome and this is what myself, my Chairman Colm Kelleher, we are working on. This is the only -the rest is BS, so we never, ever threatened to leave the country, this is absurd, right? And even implying that we are doing that is totally in-respectful, it's not true. Having said that, nothing can stop you to ask me the question, right? And so everybody can come to his own conclusion, nothing can stop shareholders to voice their view on what we should do.

But our sole focus right now is to make sure that out of this process, we get something that works for both UBS and for the country.

Kian Abouhossein

It's amazing how operationally you have performed and it's a bit - it's overshadowed by what's happening. I think it sets a big precedent for G-SIB mergers going forward, I think, and also we get questions clearly from clients, will ever somebody buy, for example, Julius Baer, I don't think anybody will touch a Swiss bank after the way you have been treated, frankly. So we will see how this develops and if you have your opinions about that topic, very interested as well.

Sergio P. Ermotti

No, look, I think, I'm hopeful that a reasonable outcome can be reached and reasonable that works for both for shareholders, for clients, because at the end of the day, it's also very important that our clients can bank with somebody that is able to serve at an attractive, not only quality, but also pricing point. There is a level in which you can pay up for a certain service, but another one that you can't. And so for us, it's very important to understand that pricing our services is a outcome of how much capital we need to hold, right.

Kian Abouhossein

Yeah.

Sergio P. Ermotti

And so, I'm hopeful that we can find a solution that combines the right things for UBS shareholders, clients, but also for the country.

Kian Abouhossein

I hope they're listening. So moving back to the operational side and where you're doing extremely well and we maybe start at the US wealth management business, you reached in the third quarter pre-tax of 13% plus, you want to move towards 15%, tell us about the operational side and how you're improving. There's been clearly quite a few changes in the US business, how you're positioning it on the US wealth side. And the end game, really how you see the US wealth business not just to get to 15%, but what is the end game of the US wealth business?

Sergio P. Ermotti

Yeah. Look, no, I'm very pleased with the progress we made in the last 18 months or so, this is a big journey is de-facto a three year journey to get to the 15%, and frankly, it's not going to be a straight line, it may be a little bit bumpy because when you make so many changes like we are doing right now, inevitably you have some collateral consequences. But I'm very pleased with the fact that in terms of, first of all, capabilities, our focus is really to make our client advisors who are the most productive in the industry, very focused on the segment of clients that we are focusing on the ultra-high net worth family offices, even more efficient and successful with their clients by rolling out IT capabilities and enhancing the products we give them, both from assets, but also from a banking stand point of view, banking services credit, deposits. You saw that we filed for the…

Kian Abouhossein

Banking license.

Sergio P. Ermotti

...the banking license in the US. So, I'm very hopeful that we're going to get to the 15%, but the 15% is not the end of the journey, it's the first plateau we need to achieve, right? So - and the goal is really the same to narrow the gap between us and the local players. I'm still convinced, and actually it's a fact that it's going to be very challenging and probably even impossible for us to have the same pre-tax margins of our US peers on a like-for-like basis, considering the nature of their businesses in the US, which allows them to spread fixed cost of the banking infrastructure across different businesses. So as a business segment, you always get a pro rata of the fixed cost of the bank. So, we have only three businesses in the US and therefore we have a natural disadvantage. That's okay. Our US peers have a natural disadvantage with us outside the US. So, they are unlikely to match our margins outside the US in the foreseeable future.

So, we need to look at the US as the biggest market in the world in which we are a big player in a differentiated manner and allowing us to create diversification and value creation for shareholders and not to be too paranoid about having like-for-like comparison. We are paranoid but in the right way, in a balanced way. So, I'm very hopeful that the journey is in the right trajectory, but this is a midterm journey, three years, four years.

Kian Abouhossein

Yeah. Yeah. On a sustainable basis basically.

Sergio P. Ermotti

Yeah.

Kian Abouhossein

Yeah. And you mentioned your other wealth management operation outside of the US and maybe you can talk about a little bit the regional performances that you see, also how you see the - your view around those regions: Asia, Middle East and Europe. We've seen some Lombard lending picking up as well finally, do you see re-leveraging coming back or is it still too early? Do you see any other activity levels where you which you would highlight considering you've done extremely well?

Sergio P. Ermotti

No, we touched on Asia, I would say that I'm also pleased to see something that we don't really talk a lot about but the - also the EMEA franchise has been also developing quite well. It's fair to say that it's not because of wealth creation unfortunately, in Europe, there is little of that but working through the integration, gaining a share of wallet, looking at optimizing our portfolio of what we do, also from a legal entity stand point of view, infrastructure stand point of view has allowed us to improve the profitability in the EMEA, and so, I'm very hopeful that we can also make good progress there.

In terms of re-leveraging, no, I don't see a lot of that happening at this point in time. I do believe that if rates comes down and markets are stabilizing a little bit, I would say you will probably see some things coming back. At this stage, clients are more focused on hedging downside protection and in the next few months, I don't really expect a lot of leverage to come back. I mean, you look at what happened in the last few weeks, I don't really believe this is a moment in which people also from a seasonality stand point of view, it's unlikely people will leverage up before the new year.

Kian Abouhossein

Yeah. Maybe, I have lots of questions and I could keep your time all day, Sergio, but we'll open up maybe for questions on the floor at this point and who would like to ask a question, otherwise, I have lots of questions. There's one in the back there. There are mics on the table, please help yourself.

Audience member

Sir, could you share your views on the domestic retail and commercial business of the bank, as well as your intermediate term vision for this, in particular focusing on the relative importance of this business and the overall banking strategy? Thank you.

Sergio P. Ermotti

Thank you. Actually, that is a very good complementary question because it is a very important part of our business. I mean, if you look at our strategy is centered really towards a comprehensive and competitive offering in the Swiss market and leadership globally on wealth management. And both are complemented by having a focused investment bank in the asset management businesses.

So, the Swiss business is definitely going through at this stage a very challenging environment in terms of top line developments, so with rates now going down to zero, we had big headwinds on NII, but other than that, I'm very pleased to see how we have been able to keep a big chunk of our market share. We lost market share, which was almost inevitable as a consequence of merging the two large banks, but in relative terms, I'm very happy that we have been able to go through the migration which the distraction of the migration and integration in Switzerland, I mean, if it's complicated for the IB and wealth management, you can imagine what it means for the local markets in which we had basically 200 branches in - at UBS, 100 at Credit Suisse, they are small numbers, but it's a small country, right? But still quite challenging to operate.

The fact that the business hasn't really suffered in that sense is quite remarkable.

And that makes me very - makes me look very optimistically to the future because post the integration, people will go back to being able to grow the business and really unlock the full potential of a more, even more comprehensive offer that we can give now to clients. Because the combination of UBS and Credit Suisse in Switzerland is it was not just overlapping all the time, both from a client stand point of view, but also from a capabilities stand point of view. So I think it's - I'm very positive about the fact that we will be able in a normalized cycle to get to our below 50% cost/income ratio and gain back some, in selective areas, some market share.

Kian Abouhossein

And I assume the guidance of exit 50%, below 50% cost/income by year end 2026 in that division should be

- it's still well on track from what you're seeing?

Sergio P. Ermotti

Well on track is a little bit of a stretch because, of course, back then, we had a completely different rates environment.

Kian Abouhossein

That's true. Yeah.

Sergio P. Ermotti

So, but still, we are working hard to get - basically on everything that is alpha, I'm pretty convinced we're going to execute, the beta factor, I mean, the drop in rates is quite substantial. Now, it's fair to say that anything that moves up or down on the rates from here onwards is positive.