We are committed to providing our clients with superior financial advice and solutions while generating attractive and sustainable returns for shareholders. Our strategy centers on our Wealth Management and Wealth Management Americas businesses and our leading universal bank in Switzerland, complemented by our Global Asset Management business and our Investment Bank. These businesses share three key characteristics: they benefit from a strong competitive position in their targeted markets, are capital-efficient, and offer a superior structural growth and profitability outlook. Our strategy therefore builds on the strengths of all of our businesses and focuses our efforts on areas in which we excel, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which we operate. Capital strength is the foundation of our success.
Successfully executing our strategic transformation
We set our strategy in 2011 and accelerated the implementation in 2012. Since then we have successfully transformed our Investment Bank, focusing it on its traditional strengths in advisory, research, equities, foreign exchange and precious metals. At our Investor Update in May 2014 we confirmed that our strategy remains unchanged as we build on our unique business model, strong market position and capital strength to drive growth. UBS is firmly committed to returning capital to shareholders.
We have made substantial progress in improving our already strong capital position and reducing Basel III risk-weighted assets (RWA), leverage ratio denominator and costs, while simultaneously growing our business and enhancing our competitive positioning since announcing our strategy in November 2011. We achieved our 13% fully applied CET1 ratio target in the first quarter of 2014. Capital and balance sheet will continue to be managed in a three-pronged approach which balances CET1, CET1 post-stress and the Swiss SRB leverage ratio.
We are aiming to further increase cost efficiency and have strengthened cost management. Compared with 2013, the bank is targeting a CHF 1.4 billion reduction in Corporate Center operating expenses by year-end 2015. After that, UBS expects further cost reductions of CHF 0.7 billion in Non-core and Legacy Portfolio as it fully exits the portfolio. This will allow for continued investments in profitable growth while maximizing cost efficiency.
Delivering attractive shareholder returns
We will continue to execute our plans to further unlock UBS's potential for our shareholders. We target an adjusted return on equity of greater than 15% for 2015. We may, however, not achieve it until 2016, given elevated operational risk RWA.
We are firmly committed to returning capital to our shareholders. At our Investor Update in May 2014 we reaffirmed our commitment to a total payout ratio of at least 50%, consisting of a baseline dividend and supplementary returns, after reaching our capital ratio targets of a fully applied CET1 ratio of 13% and a 10% post-stress CET1 ratio, based on our internal stress tests.
For the latest complete list of UBS’s targets and additional information on our strategy please refer to our press release and presentations for the 2014 Investor Update (6 May 2014), on www.ubs.com/investors.
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