What we are aiming for – today and beyond

Our vision and strategy

Sustainable performance is only possible with a long-term strategy. We’re the clear leader in global wealth management and in Switzerland, with the most sophisticated capabilities. The global wealth management market is forecast to grow at twice GDP and as the firm with the most diversified geographic footprint, we are in the best position to benefit from this development.

Letter to Shareholders, UBS Annual Report 2017

Our vision: We want to be recognized for creating long-term positive impact for our clients, employees, investors and society. Our ambition is to stand out as a winner in our industry: for our expertise, advice and execution, our contribution to society, our work environment and our business success.

Our strategy: Our strategy is centered on our leading Global Wealth Management business and our premier universal bank in Switzerland, which are enhanced by Asset Management and the Investment Bank. We focus on businesses that have a strong competitive position in their targeted markets, are capital efficient and have an attractive long-term structural growth or profitability outlook. We are the world’s largest and only truly global wealth manager. We have a strong presence in the largest market, the United States, and a leading position in the fastest-growing regions, including Asia Pacific and the other emerging markets.

Our wealth management business benefits from significant scale in an industry with attractive growth prospects and increasingly high barriers to entry, and from its leading position across the attractive high net worth and ultra high net worth client segments. We are the preeminent universal bank in Switzerland, the only country where we operate in all of our business lines: wealth management, personal & corporate banking, asset management and investment banking. Our leading position in our home market is central to UBS’s global brand and profit stability. The partnership between our wealth management business and our other business divisions is a key differentiating factor and a source of competitive advantage.

Our strategic priorities

We have defined four strategic priorities for the Group

1. Drive profitable growth in Global Wealth Management

In Global Wealth Management, we target 10–15% adjusted profit before tax growth annually over the cycle, while growing net new money at 2–4% per annum and aiming to operate within an adjusted cost / income ratio range of 65–75%. The creation of the integrated business division on 1 February 2018 aims to further enhance the client experience and our product offering in line with an increasingly global client base. We expect to more effectively capture the purchasing power of Global Wealth Management’s CHF 2.3 trillion invested asset base and generate greater synergies across technology, innovation and other areas of investment. Regional variations in the client service model will be maintained, while middle- and back-office functions will be more closely aligned and integrated.

2. Maintain focused leadership and grow profits in Asset Management, Investment Bank and Personal & ­Corporate Banking

Our strength in Global Wealth Management also relies on the stand alone strength of our other businesses. Together, they make a significant contribution to earnings, diversify revenues and generate high-quality returns.

3. Enhance diversification by capturing superior growth in Asia Pacific and the Americas, leverage our Europe, Middle East and Africa capabilities and reinforce our leadership position in Switzerland

From a geographic standpoint, we aim to grow in the Americas and to reinforce leadership in our home market in Switzerland. In Europe, Middle East and Africa, we want to leverage our capabilities to grow our market share during likely consolidation. Asia Pacific, and particularly China, presents a significant growth opportunity, given the economic expansion and rate of increase in the number of billionaires. UBS’s competitive position in Asia Pacific is strong and we are well positioned to capture opportunities in the region across our businesses.

4. Invest in technology with a focus on superior client ­experience, product capabilities, efficiency and effectiveness

We will continue to invest in technology to drive growth, better serve our clients and improve efficiency and effectiveness. We intend to secure our position as a leader in the digital age by maintaining expenditure on technology of at least 10% of the Group’s revenues for the foreseeable future.

 

Did you know that

  • our fully applied CET1 ratios are comfortably above the 2020 requirements?
  • we have increased our loss-absorbing capacity by around CHF 50 billion to almost CHF 80 billion since 2012?
  • we are the world’s largest wealth manager with invested assets of ~CHF 2000bn?

Management priorities – business divisions

Global Wealth Management

  • Continue unifying UHNW to better deliver the firm to clients seeking a more global, sophisticated and institutional offering
  • Enhance delivery of banking products and services for HNW clients and utilization of global product suite
  • Leverage technology and digital advice to access ­attractive core affluent product pools without increasing advisors
  • Capture market share by providing seamless access to all global booking centers
  • Deliver front-to-back synergies in the new business ­division, improving efficiency and effectiveness

Personal & Corporate

  • Offer the best client experience as digital leader in Switzerland by focusing on end-to-end digital client journeys and optimized multi-channel distribution
  • Collaborate cross-divisionally supporting our position as the premier Universal Bank in Switzerland
  • Drive profitable and high-quality growth through ­existing client relationships as well as expanding the client base

Asset Management

  • Further build Passive and Alternative Beta (sustainability, impact investing and investment solutions)
  • Expand unique B2B platform solutions offering
  • Build leading onshore asset management platform in China to expand footprint

Investment Bank

  • Continue to improve geographic mix, with particular focus on leveraging China and the US
  • Capitalize on research and execution capabilities post MiFID II
  • Manage resources in a disciplined manner to maintain attractive returns as industry evolves

The three keys to UBS's success

Our three keys to success provide the signposts toward making our vision a reality. That is why superior value creation for clients, shareholders and employees at UBS is closely connected to our three keys – our Pillars, Principles and Behaviors.

Key 1 – the Pillars underpin our strategy. They are the foundation for everything we do. Here is what they are – and why they are important.    Pillars

Capital strength

Capital strength is the foundation of our strategy and provides another competitive advantage. Our capital-accretive and capital-efficient business model helps us adapt to changes in regulatory requirements, while pursuing growth opportunities without the need for significant earnings retention. We believe that our business model can generate an adjusted return on tangible equity (excluding deferred tax expense / benefit and deferred tax assets) of around 15% in normal market conditions.

Efficiency and effectiveness

Despite having completed our cost savings program delivering CHF 2.1 billion in net savings, efficiency remains high on the agenda. We have set quite demanding internal targets for our business divisions and Corporate Center to drive positive operating leverage – so to increase revenues while reducing costs. We are also targeting a cost/income ratio of below 75% for the Group.

Risk management

Risks are part of our business, so risk management is about striking the right balance between risk and reward. We promote risk awareness and appropriate behavior by aligning every decision we make with UBS’s strategy, Principles and risk appetite. This includes everything from business planning and execution to performance measurement and compensation.

Key 2 – the Principles define what we stand for as a firm and help us prioritize when making decisions. Here is what they are – and what they mean:    Principles

Client focus

We demonstrate an unrivaled client focus at every level of our business, building relationships that make us stand out from our peers.

Excellence

We strive for excellence in everything we do, from the people we employ, to the products and services we offer to our clients.

Sustainable performance

We focus on the long term and work continuously to strengthen our reputation as a rock-solid firm providing consistent returns to our stakeholders.

Key 3 – the Behaviors define what we stand for individually and bring our Principles to life every day. This is the kind of behavior we want to see – and will reward – in our employees:    Behaviors

Integrity

  • I am responsible and accountable for what I say and do and for UBS’s reputation
  • I care about our clients, our investors and my colleagues
  • I act as a role model by treating others the way I would like to be treated

Collaboration

  • I put the benefits of our clients and the firm before my own or those of my business
  • I work across the firm
  • I respect and value diverse perspectives

Challenge

  • I encourage myself and others to constructively question the status quo
  • I learn from past mistakes and experiences
  • I speak up if I see something that does not exemplify our high standards

Our targets

Our performance targets, expectations and ambitions

The table below shows our performance targets and capital guidance for the Group and the business divisions for the 2018–2020 period. The targets and guidance reflect what we believe can be achieved in normal market conditions. All targets are measured on an annual basis, except our adjusted profit before tax growth targets for Global Wealth Management and Asset Management, which represent the average annual growth we aim to deliver over the cycle.

We are strongly committed to being – and remaining – a leader in the field of sustainability. Our cross-divisional organization UBS and Society focuses the firm on this direction.

Letter to Shareholders, UBS Annual Report 2017

Beyond financial performance

We intend to make sustainable performance the standard across our firm and part of every client conversation. We work with a long-term focus on providing appropriate returns to all of our stakeholders in a responsible manner.

We provide transparent targets and report on progress made against them wherever possible. To this end, we assess our progress against the following aims.