UBS AG (UBS)
Q3 2009 Earnings Call Transcript
November 3, 2009 3:00 a.m. ET

Executives

Philip Higson – Head of Investor Relations
John Cryan – Group Chief Financial Officer

Analysts

Jon Peace – Nomura
Fiona Swaffield – Execution
Kian Abouhossein – JPMorgan]
Huw Van Steenis – Morgan Stanley
Derek de Vries – BofA Merrill Lynch
Christopher Wheeler – MainFirst Bank
Natalie Gratwohl – Handelszeitung
Georg Kanders – WestLB
Daniel Zulauf – Basler Zeitung
Teresa Nielsen – Bank Vontobel
Jacques -Henri Gaulard – Autonomous Research

Presentation

Philip Higson

Good morning and welcome to the UBS Third Quarter ‘09 Results Call. Today’s meeting will have one presentation by Group CFO, John Cryan. This will be followed by the usual Q&A session for our telephone audience.

Before we start, I would just like remind participants that the presentation does contain forward–looking statements, so please take note of the cautionary statement regarding forward–looking statements on slide one of the presentation pack.

I will now hand over to John Cryan.

John Cryan

Thanks, Philip and good morning, everyone. It’s my pleasure to take you through our results for the third quarter of 2009. As you’ll be aware, we’ve scheduled an Investor Day for November 17th, two weeks from today. So, I intend to keep this relatively brief and to focus simply on our achievements in Q3 and our financial results.

We got a fair amount accomplished in the third quarter. This is the first time since the beginning of the crisis when our quarterly results are not materially impacted by losses and write–downs on our residual risk positions.

We’re therefore able to show much improved underlying profitability for the second quarter in a row, despite having achieved considerable further de–risking. I say underlying, because as the credit markets have improved over the course of this year and they’ve increasingly recognized our return to solid financial stability, our credit spreads have continued to contract and we’ve had to charge off own credit gains we’d previously taken.

The big news item for us in the quarter was the settlement of the John Doe summons. It came as a huge relief to everyone at UBS. Finally, we were able to put one of the worst episodes in the history of the firm behind us and could embark on the long haul of restoring our reputation.

I can’t overstate how determined our management is to prevent a situation ever occurring where the actions of a few individuals can bring the whole firm into such discredit. Confidence in UBS since the matter with the U.S. tax authorities was settled, is measurably improved.

We were delighted when the Swiss Government endorsed the efforts we’d made and agreed to return to us our independence. The MCNs, we had issued only in December last year, were converted on August 25 and the resulting shares placed into a receptive market.

Staff morale saw an immediate boost. The whole firm is back to work with a determination and an enthusiasm, we’ve not seen for two years.

There was another event of note in the quarter, we completed on the sale of Pactual. Although this was, of course, entirely expected I’m going to mention it a few times today because it’s had a fairly significant impact on the results for the quarter.

We report pre–tax profits on an underlying basis of 1.6 billion francs. Mainly because of an own credit charge of similar magnitude, we’ve posted an attributable loss under IFRS of 564 million francs. The improvement in our financial performance was driven by significant improvement in fixed income where, for the first time in a couple of years, the business has contributed positive revenues.