Strategy remains unchanged as the firm builds on its unique business model, strong market position and capital strength to drive growth

Continues to target an adjusted return on equity of greater than 15%1 and remains committed to a capital return payout ratio of at least 50% of net profit

Wealth management businesses aspire to deliver combined adjusted annual pre-tax profit growth of 10–15% over the cycle

Global Asset Management targets CHF 1 billion adjusted annual pre-tax profit2

Targets CHF 2.1 billion net cost reduction versus FY133

Lowers the cost/income ratio target ranges for Wealth Management and Wealth Management Americas; narrows the target range for the Investment Bank

Sets Swiss SRB leverage ratio denominator target of CHF 900 billion by 20164

Reduces Basel III RWA target for Non-core and Legacy Portfolio to ~CHF 40 billion from ~CHF 55 billion by 2015

Zurich/Basel, 6 May 2014 – Today, UBS is providing an update on the execution of its strategy and steps to further unlock the bank’s potential. With its unique business model and long-standing presence in key regions, UBS continues to build on its strong market position, global breadth and capital strength to drive growth. With a business mix focused on cashflow-generative and capital-efficient businesses with attractive risk/reward profiles, UBS can continue to deliver high-quality and predictable earnings.

UBS aims to sustain its position as the world's pre-eminent wealth manager by providing clients with a broad scope of products and services, cutting-edge capabilities and superior investment and wealth management advice. Its wealth management businesses will strive to achieve growth of 10-15% in their combined adjusted annual pre-tax profit by investing for growth and delivering the entire bank to clients.

UBS seeks to maintain its position as the leading universal bank in Switzerland and sustain its strong momentum in its home market. Retail & Corporate is a leading innovator in online and mobile banking services and differentiates itself through the high degree of integration it has with the other UBS businesses.

Global Asset Management seeks to strengthen its role as a trusted partner for its clients and, drawing on the full breadth of the firm's capabilities, deliver high-quality solutions. Through a combination of favorable industry fundamentals and strategic initiatives, it targets an adjusted annual pre-tax profit of CHF 1 billion in the medium term.

The Investment Bank aims to strengthen its position in the target segments advisory, research, equities, foreign exchange and precious metals, and to continue to deliver focused, high-quality rates and credit capabilities. Operating within its limits including CHF 70 billion in Basel III fully applied risk-weighted assets (RWA) and CHF 200 billion in funded assets, the Investment Bank will continue to target an adjusted annual pre-tax return on attributed equity of greater than 15%.

Group Chief Executive Officer Sergio P. Ermotti said, "Over the past three years we have transformed UBS, building capital, reducing costs and increasing returns to shareholders. We are fully committed to our strategy and we will continue to execute with discipline for the benefit of clients and shareholders."

UBS is firmly committed to return capital to its shareholders

Having achieved its 2014 fully applied common equity tier 1 (CET1) ratio target of 13%, UBS is committed to also achieving its post-stress fully applied CET1 ratio target of 10% this year. On achievement of these goals, UBS intends to pay out at least 50% of net profits in capital returns to shareholders while still investing for growth.

Sergio P. Ermotti said, "As we continue to efficiently utilize resources, we will dedicate the necessary capital to support and grow our businesses and fulfill regulatory requirements without compromising our capital return targets."

UBS targets CHF 2.1 billion net cost reduction versus FY133

UBS aims to further increase cost efficiency and has strengthened cost management and transparency. 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. The cost/income ratio target ranges for Wealth Management, Wealth Management Americas and the Investment Bank have been adjusted to reflect the intent to reduce Corporate Center allocated costs and enhance front-office efficiency. This will allow for continued investments in profitable growth while maximizing cost efficiency. The Group's adjusted cost/income ratio target from 2015 remains unchanged at 60–70%.

UBS remains a significant employer with about 60,000 employees. The Group estimates that it generates more than 90,000 jobs worldwide and that UBS, despite a reduction in its reported headcount, has maintained employment globally via outsourcing through select external partners. While cost reduction programs will affect headcount, UBS will no longer provide estimates of expected future staffing levels.

Group Chief Financial Officer and Chief Operating Officer Tom Naratil said, "We are intensifying our efforts to reduce Corporate Center costs and further increase cost efficiency in all of our business divisions. We believe these initiatives will improve the way we serve clients, allow for incremental investment in growth and increase profitability."

Targeting a Swiss SRB leverage ratio denominator of CHF 900 billion by 20164

UBS achieved its 13% fully applied CET1 ratio target in the first quarter of 2014 and will maintain this ratio as the core measure of its capital strength – the foundation of its overall strategy. 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.

Managing down the Non-core and Legacy Portfolio

UBS continues to make strong progress in the reduction of its Non-core and Legacy Portfolio. RWA excluding operational risk have been reduced by nearly 60% over the last 5 quarters, well ahead of plan. While this process will incur some costs during the run-down, and does consume capital, its risks are well understood. The 2015 Basel III RWA target for Non-core and Legacy Portfolio has been reduced to ~CHF 40 billion from ~CHF 55 billion, reflecting progress to date and expected future reductions.

Group Chief Risk Officer Philip J. Lofts said, "The risks in the portfolio are well understood, tightly managed, actively hedged and continue to decline. Our counterparty risks are largely collateralized or with good quality credits. We have the right people, a good track record, and plan to continue to execute efficiently the run-down of the Non-core and Legacy Portfolio to maximize value for shareholders."

Annual performance targets

Complete list of UBS Group and business division annual external performance targets, which supersedes previous targets. Performance targets assume constant FX rates.

Group

  • Basel III fully applied CET1 ratio: 13%
  • Basel III RWA: <CHF 215 billion by 31.12.15 (previously <CHF 225 billion)
  • Basel III RWA: <CHF 200 billion by 31.12.17
  • Swiss SRB leverage ratio denominator of CHF 900 billion by 20164(new target)
  • Adjusted cost/income ratio: 60–70% from 2015
  • Adjusted return on equity: >15% from 20151

Wealth Management

  • Net new money growth rate: 3–5%
  • Gross margin: 95–105 bps
  • Adjusted cost/income ratio: 55–65% from 2015 (remains 60–70% for 2014)

Wealth Management Americas

  • Net new money growth rate: 2–4%
  • Gross margin: 75–85 bps
  • Adjusted cost/income ratio: 75–85% from 2015 (remains 80-90% for 2014)

Retail & Corporate

  • Net new business volume growth for retail business: 1-4%
  • Net interest margin: 140–180 bps
  • Adjusted cost/income ratio: 50–60%

Global Asset Management

  • Net new money growth rate: 3–5% excluding money market (previously including money market)
  • Gross margin: 32–38 bps
  • Adjusted cost/income ratio: 60–70%
  • Adjusted annual profit before tax: CHF 1 billion in the medium term (new target)

Investment Bank

  • Adjusted annual pre-tax return on attributed equity: >15%
  • Adjusted cost/income ratio: 70–80% from 2015 (remains 65–85% for 2014)
  • Basel III RWA limit of CHF 70 billion
  • Funded assets limit of CHF 200 billion

Corporate Center – Core Functions

  • CHF 1.0 billion annual net cost reduction by year-end 20155,6

Corporate Center – Non-core and Legacy Portfolio

  • Basel III RWA: ~CHF 40 billion by 31.12.15 (previously ~CHF 55 billion)
  • Basel III RWA: ~CHF 25 billion by 31.12.17
  • CHF 0.4 billion annual net cost reduction by year-end 20155
  • CHF 0.7 billion additional annual net cost reduction after 20157

1 While we continue to target a Group return on equity of greater than 15% in 2015, given elevated operational risk RWA, we may not achieve that until 2016.
2 In the medium term.
3 In the Corporate Center.
4 Based on the rules applicable today.
5 Measured by 2015 year-end exit rate versus FY13 adjusted operating expenses, net of changes in charges for provisions for litigation, regulatory and similar matters.
6 Measured net of FX movements and changes in regulatory demand of temporary nature.
7 Reduction in annual adjusted operating expenses versus FY13.

UBS's media release and slide presentations for the Investor Update 2014 will be available from 06.45 CEST on Tuesday 6 May 2014 at www.ubs.com/investors.

UBS will hold a presentation of its first quarter 2014 results followed by an Investor Update on Tuesday 6 May 2014. The results will be presented by Sergio P. Ermotti, Group Chief Executive Officer, Tom Naratil, Group Chief Financial Officer and Group Chief Operating Officer, Martin Osinga, Global Head of Investor Relations (ad interim), and Hubertus Kuelps, Group Head of Communications & Branding.

Results presentation (followed by analyst Q&A and media Q&A) time:

10.00 – 10.55 (CEST) / 09.00 – 09.55 (BST) / 04.00 – 04.55 (US EDT)

Investor Update time:

11.10 – 15.45 (CEST) / 10.10 – 14.45 (BST) / 05.10 – 09.45 (US EDT)

Video webcast

All presentations and Q&A sessions (first quarter 2014 results and Investor Update) can be followed live via video webcast on www.ubs.com/investors.

An archived version of the video webcast of the results presentation will be available on www.ubs.com/investors.

Audio

6 May 2014, 10.00 – 15.45 CEST

Dial-in numbers:

+41 (0)58 310 50 00 (CH/Europe)
+44 (0)203 059 58 62 (UK)
+1 (1)631 570 5613 (USA)
+41 (0)58 310 50 00 (other locations)

Please dial in 15 minutes in advance.

UBS AG

Investor contact
Switzerland: +41-44-234 41 00

Media contact
Switzerland: +41-44-234 85 00
UK: +44-207-567 47 14
Americas: +1-212-882 58 57
APAC: +852-297-1 82 00

www.ubs.com

Cautionary Statement Regarding Forward-Looking Statements
This document contains statements that constitute “forward-looking statements”, including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. These factors include, but are not limited to: (i) the degree to which UBS is successful in executing its announced strategic plans, including its efficiency initiatives and its planned further reduction in its Basel III risk-weighted assets (RWA) and leverage ratio denominator; (ii) developments in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, currency exchange rates and interest rates and the effect of economic conditions and market developments on the financial position or creditworthiness of UBS’s clients and counterparties; (iii) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings, or arising from requirements for bail-in debt or loss-absorbing capital; (iv) changes in or the implementation of financial legislation and regulation in Switzerland, the US, the UK and other financial centers that may impose more stringent capital (including leverage ratio), liquidity and funding requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration or other measures; (v) uncertainty as to when and to what degree the Swiss Financial Market Supervisory Authority (FINMA) will approve reductions to the incremental RWA resulting from the supplemental operational risk-capital analysis mutually agreed to by UBS and FINMA effective 31 December 2013, or will approve a limited reduction of capital requirements due to measures to reduce resolvability risk; (vi) the degree to which UBS is successful in executing the announced creation of a new Swiss banking subsidiary, a holding company for the UBS Group, a US intermediate holding company, changes in the operating model of UBS Limited and other changes which UBS may make in its legal entity structure and operating model, including, the possible consequences of such changes, and the potential need to make other changes to the legal structure or booking model of UBS Group in response to legal and regulatory requirements, including capital requirements, resolvability requirements and the pending Swiss parliamentary proposals and proposals in other countries for mandatory structural reform of banks; (vii) changes in UBS’s competitive position, including whether differences in regulatory capital and other requirements among the major financial centers will adversely affect UBS’s ability to compete in certain lines of business; (viii) the liability to which UBS may be exposed, or possible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claims and regulatory investigations; (ix) the effects on UBS’s cross-border banking business of tax or regulatory developments and of possible changes in UBS’s policies and practices relating to this business; (x) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses, which may be affected by competitive factors including differences in compensation practices; (xi) changes in accounting or tax standards or policies, and determinations or interpretations affecting the recognition of gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters; (xii) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (xiii) whether UBS will be successful in keeping pace with competitors in updating its technology, particularly in trading businesses; (xiv) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures; and (xv) the effect that these or other factors or unanticipated events may have on our reputation and the additional consequences that this may have on our business and performance. The sequence in which the factors above are presented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. Our business and financial performance could be affected by other factors identified in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the year ended 31 December 2013. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.

Rounding
Numbers presented throughout this report may not add up precisely to the totals provided in the tables and text. Percentages and percent changes are calculated based on rounded figures displayed in the tables and text and may not precisely reflect the percentages and percent changes that would be derived based on figures that are not rounded.