In respect of $1 billion. So, I think that’s — at this stage, the only constraint we have right now is the waiting until the parent bank merger is executed. We expect this to be at the end of May. And if everything goes through successfully pending the regulatory approvals that we need, we intend to restart the share buyback with up to $1 billion for 2024.
Jeremy Sigee: Very helpful. Thank you.
Operator: The next question is from Andy Coombs from Citigroup. Please go ahead.
Andy Coombs : Good morning, two questions, please, and a follow-up. Firstly, on the non-core result. Obviously, a tremendous result both in terms of the RWA rundown, but also the gains that you booked during the quarter. Thank you for the revised guidance for the full year. I just wanted to better understand the source of those gains in Q1. I think you said conduit and corporate loan books and longevity portfolio, but you then don’t expect that to repeat going forward. Is that because the low-hanging fruit has already been achieved or because you’re now selling a different type of assets or anything you can elaborate there would be helpful? And then the second question. Thank you for the opening remarks, Sergio, on the parent bank capital.
I just wanted to check the $9 billion you referenced. Is that in relation to a 400% risk weight on foreign subsidiaries? Or is it a 300% as it currently is phased? And then more broadly, a question to both of you. In the event that the risk weight on foreign subsidiary does go up, to what extent do you think you can mitigate that through the fungibility of capital dividend, you have capital, so forth?
Todd Tuckner: Andrew, I’ll address the first question. I mean in terms of the source of the gains, I think as you mentioned and as, of course, I highlighted, it came from a number of the sort of sectors within NCL, conduit and corporate loans, longevity, securitized products. We’re also seeing strength in credit and equities and macro as well. And the team has been doing a great job in unwinding these complex, longer-dated transactions, and that continues to be what they’re going to be focused on doing. So, the source of the gains comes from the ability to add a lot of value to these complex transactions. And to be able to get the transactions closed out at levels that are above book value. As I highlighted, that’s not an expectation that people should continue to have, not least just given that sometimes we’re going to make decisions to get out of positions where we know there’s significant cost takeout or there’s suboptimal capital at the moment.
It’s very suboptimal from a capital efficiency perspective and so getting out will release that. So, there are going to be a number of factors that — which is why we don’t see 1Q repeating.
Sergio Ermotti: So, if I can add on that one before I touch on the second question. I think that first of all, there is definitely no low-hanging fruit. And if you look at our natural decay profile change, it shows you that we are not really going for easy to sell, but rather complex transaction that also helps in many cases to unwind cost, because priority number one in non-core is to take down cost and not necessarily to take down risk-weighted assets and market or credit risk-weighted assets. So, in that sense, it’s very important that in many cases, we are able, thanks the good work the team is doing in managing these unwinds, to leverage the fact that we are not a forced seller. We are only going to dispose assets when they create value to shareholders.
And that is a completely different position to be in because our capital is strong. We can allow some delays or some time to elapse between the two. Now on the $9 billion, there are two factors and the elimination of the filter, of the regulatory filter that Credit Suisse had. The two combined account for $9 billion.
Andy Coombs: And the ability to mitigate any increase in the foreign subsidiaries going forward? I assume it’s something you’re already working on given the already base increase to what extent you think you could accelerate that?
Sergio Ermotti: No, the mitigation — look, the mitigation I go back to — I mean, I have to — it’s like a replay, push the button again and replay what I told you — what I said before. We cannot speculate or respond to speculation or do analysis on things that we don’t know. What we know is that we’re going to hold as a consequence of the Credit Suisse acquisition, $9 billion plus $10 billion. So almost $20 billion of additional capital in an already very strong capital position UBS has. That’s the fact. The rest, I don’t know. And we will comment when we know more.
Operator: The next question is from Anke Reingen from RBC. Please go ahead.
Anke Reingen : Thank you, very much for taking my question. I’m sorry to follow up, just one thing. I mean, is it fair to say that a result of the uncertainty, you are not really changing any step in your strategy and execution of the merger? And specifically, with Q4 results, you mentioned the potential amortization of additional detail, just confirming this on the current stage, this is going ahead. And then on the net new assets, the $17 billion in Q1, I’d be running below, if I was thinking about $100 billion for this year. Should be rather than $100 billion this year? Is it more like the $200 billion over the year — two years and more back-end loan loaded towards the 2025 to reach the $200 billion? And has the decline in relationship managers had any impact on the net new asset growth in Q1?
In the past, you gave us some numbers about the parting relationship managers and the assets they have taken with them. Is that still the case as being relatively low? Thank you, very much.
Sergio Ermotti: I’ll take the first question. I think that’s — Anke, I think this is a very complex integration, and we cannot afford to be distracted in the execution of it. So, we are sticking to our strategy. We are sticking to our plan. We need to do that and at the same time, staying close to our clients. And so that’s the reason why engaging in hypothetical change of strategy or methodology we use in assess our — anything that goes around capital would be absolutely very distracting and not in the best interest of any stakeholders because what we want to have is a successful completion of this integration. And so, we stay focused on the existing strategy and our approach.
Todd Tuckner: Yes, on the second question in terms of net new assets in GWM, I would just reiterate that the trajectory that we highlighted over the next two years is, among other things, a function of the financial resource optimization and balance sheet initiatives that the team is hard at work and undertaking. So, $27 billion in the quarter is a strong result. We’re on track to deliver on our ambitions, which we said was $200 billion over the course of two years. So, I would continue to think — continue to think about that in those terms. In terms of the RMs who have left, you mentioned that we had given some numbers in the past. Yes, I mean, that has continued just to taper as an impact, just given the number of RMs who have left has become sort of a non-topic at this point in time in terms of any current period.
And in terms of the assets that they’ve taken with them, it is a very small percentage ultimately of given — especially given the fact that the RM workforce in Credit Suisse is down 40% from the end of 2022 levels. And we’ve been able to retain the lion’s share of the assets. So, we consider that to be sort of a story not terribly worth following. And in the end, we stay focused on our plans and our commitments.
Anke Reingen: Can I just ask on the DTA, please? Are you reiterating that you expect to convert the $2 billion and the $500 million you talked about with Q4 results?
Todd Tuckner: Yes, there’s no change in terms of our approach to DTAs at the current time, Anke.
Operator: The next question is from Benjamin Goy from Deutsche Bank. Please go ahead.
Ben Goy : Good morning. Two questions, please. One on the favorite topic, capital. Just conceptually trying to understand because when in the press it is reported or the Ministry of Finance for capital, we naturally assume it’s CET1 capital. But do you think it could also partially include efficiency on capital which might make a bit more manageable for you? And then secondly, on your Wealth Management, the net new loans in the quarter, another decline is very similar to the Q4 decline. Just trying to reconcile that with your risk appetite returning statement, being conscious of the yields are still favorable, but wondering that is also more of a risk alignment still going on in the background, which is why your spending remains negative?
Sergio Ermotti: Benjamin, the first one is very short. As I said, we don’t speculate or respond to speculation in respect of any numbers that has been flagged out there. So, it’s not — we are not in a position to understand where all those numbers are calculated. Therefore, we refrain from doing that.
Todd Tuckner: Yes. Benjamin, on the GWM net new lending side, we are seeing continued deleveraging. Some of that is market-driven and some of that, i.e., rates driven and some of that is as a function of the resource optimization work that we’re doing. So that’s an outcome that we’re managing. To the extent it is the latter, we are looking to drive higher revenues. And therefore, I’m looking for the NIM to sort of hold up in that respect because we’re improving the revenue over RWA consideration. But obviously, in the current rates environment, too, we’re seeing either the ends of deleveraging and still yet some reticence to relever in some of our regions. So, I expect that we won’t have a lot of momentum on relevering in the current rates environment until we start to see rates come down over the — assuming they do over the next, say, 12 months to 18 months. So that external factor won’t be, to me, a big driver in terms of releverage.
