So, we are not talking about 15% to 18%. I believe that we are well positioned to be sustainably in the high-teens going forward. I don’t think there is a level of being conservative five years ahead. We need to really work out the execution of the phase and understand what is the potential, and over time, we will fine-tune short-term ambitions.
Todd Tuckner: Anke, on the net new fee generating assets in the quarter, as you mentioned, they were negative. Just to unpack that a bit, we saw good NNFGA on the UBS platform. What you see a bit is more the Credit Suisse dynamic in terms of mandates on the Credit Suisse platform, and the fact that there was a net outflow of mandates that also could be as well from relationship managers who have left. We are countering that by virtue of having now have an aligned CIO view and aligned solutions and offerings that we’re bringing out on both platforms. So we expect going forward that the CS mandates that perhaps we were seeing a bit less of than ideal, we should be able to stem that issue a bit going forward from an NNFGA perspective.
Anke Reingen: Thank you.
Sarah Mackey: Thanks, Anke. And our next caller is Alastair Ryan from Bank of America.
Alastair Ryan: Thank you. Good morning. And can I ask, net new assets, the $100 billion guide that feels like about interest in dividends and — am I…
Sergio Ermotti: No. It’s not…
Alastair Ryan: So, Sarah, I was looking at you holding something up. Is that the thing?
Sergio Ermotti: Yeah. Is that…
Sarah Mackey: Right.
Sergio Ermotti: Yeah. We are losing the connection now.
Sarah Mackey: Yeah. Sorry about that.
Sergio Ermotti: Yeah. It’s better you switch the video, so…
Sarah Mackey: Yeah.
Sergio Ermotti: …should be better.
Alastair Ryan: Okay.
Sergio Ermotti: Thank you.
Alastair Ryan: Sorry, try that.
Sergio Ermotti: Yeah.
Sarah Mackey: That’s better.
Alastair Ryan: Yeah. Okay. Apologies. Technology is not my specialty. $100 billion net new assets in 2024 and 2025. That feels like about dividends and interest, given the shape of the balance sheet you provide in the slides. So, could you just talk, just expand a little bit on what else, the underlying outflow assumptions you’re making, perhaps, on some of the relationships you took over with Credit Suisse, whether that’s the case. And secondly, cash now 18% of the balance sheet. Very, very high liquidity coverage ratio. Is that something that’s just the new run rate or can you bring that down as you complete the complex legal entity restructuring? Thank you.
Todd Tuckner: Hey, Alastair. I’ll take those. So on — first on net new assets, the $100 billion over the next two years just reflects the fact that, to the point that I think we’ve been making, that while we’re going to continue to grow the asset base, I mean, $100 billion is still $100 billion over the next — each of the next two years, $200 billion by the end of 2025 and that’s a focus of the team. The — in terms of where we think the appropriate ambition would be normally when we’re just in growth — full growth mode and not looking to also ensure that appropriate hygiene on the balance sheet, there — that’s reflecting that discount in there a bit. We still think it’s a strong number. It’s still growing the asset base.
It’s still providing a basis to grow revenues, as I highlighted in my comments. But it is reflecting the fact that, in addition to growing client relationships and bringing more and more aligned products and solutions to our clients, there are going to be situations, as we both highlighted, where, perhaps, we see potential outflows because of decisions we’ve made around, given service, for example, trying to up-price a loan potentially unsuccessfully and then seeing that roll off and then potentially, the collateral moving out of the bank as a result. So it’s just appropriate to, price in some of that as we do this, good and necessary work to ensure ultimately stronger return on RWA and sustainably higher returns in the long run. In terms of cash or the HQLA that we have?
Yeah, you could assume going forward that that is structurally our run rate for now just given the new Swiss liquidity ordinance requirements that we’re complying with. So you can assume that that’s right. Naturally, we’re focusing on winning back deposits and diversify — continuing to diversify sources of funding, not least given the structural funding gap we’ve inherited from the Credit Suisse subsidiary in Switzerland. So we’re taking steps in our funding plan to narrow that, but in the end, you can assume that, for now, that level of liquidity is sort of run rate level.
Alastair Ryan: Thank you.
Sarah Mackey: Thanks, Alastair. And the next caller is Giulia Miotto from Morgan Stanley. Good morning, Giulia. We can see you. Please do go ahead.
Giulia Miotto: Hi. Good morning. Can you hear me well?
Sarah Mackey: We can. Yes.
Giulia Miotto: Okay. Perfect. So my first question goes to GWM Americas and I think the target is low-teens until 2026 and then up to mid-teens PBT margin. So what strategic actions are you taking to structurally lift profitability in this division? I think I heard basically rebuilding the banking platform in-house, but if you can give us more color on that. So that’s my first longer distance question. Whereas on the short-term, in terms of transaction margins, those that are being subdued for a while especially in Asia, what evidence are you seeing or are you seeing any evidence of that coming back? Thank you.
Todd Tuckner: Yeah. Hi, Giulia. So on — in terms of the sorts of investments we’re making, as you mentioned, we think the core banking infrastructure work is critical because that effectively institutionalizes clients much more effectively in doing that. The more that you have a broader suite of products and capabilities to offer clients, the more, in effect, it becomes — they become stickier. The clients and the advisors become stickier. We know that playbook. We run that playbook in every part of the world outside the U.S. and so it’s something that for us is quite fundamental and so we’re going to continue to do that and continue to invest in digital capabilities to make being both a client and an advisor of the U.S. business of GWM better.
There are also some other things that we’re doing to bring that profit margin up. Sergio mentioned in his comments, a lot of it’s also about products and capabilities and we’re seeing that start to hit through, and that’s just in terms of, again, borrowing a page from the playbook that we use outside the U.S. It’s — the Global Markets approach. So it’s having a more joint GWM Investment Bank approach to serving clients from a transactional perspective, especially clients with more sophisticated needs. Also from a lending perspective as well, having more of a focus on lending solutions as we’ve done outside the U.S. as well. So I think doing all that is where we think, just doing the sort of good blocking and tackling will — should support a profit margin in mid-teens over the next two years to three years.
In terms of transaction margins in APAC? Yeah, I think, we are seeing — we actually saw some good performance in the fourth quarter from a TRX perspective in particular on the UBS platform, which is encouraging. So we’re — and also in APAC, we’re — again, given just our diversification in the region, we’re not just limited to one location potentially underperforming from an equity markets perspective and we actually saw good performance in the region. In particular, we saw good performance in transactions in Japan this quarter and so we have the good diversified approach to ensure that even if one — as I said, one particular part of the region isn’t generating the sorts of margins that are ideal for us that we’re able to compensate.
Giulia Miotto: Thanks.
Sarah Mackey: Thank you. And our next caller is Stefan Stalmann from Autonomous. Good morning, Stefan.
Stefan Stalmann: Yes. Good morning, everyone. Thanks for the presentation and for taking my questions. I hope you can hear me well. I want to first ask on the share buyback restart this year. I was a bit surprised that you make this link between the legal entity merger of the parent banks and the ability to restart the share buyback. Do you see actually a direct link there between Group payout capacity and what happens to the parent bank merger or is it just a short form for you to say, if the merger works, that’s a good indication that the integration is online and that’s why I can go back to share buybacks? And the second question is on capital requirements, you have obviously presented the plan very much on the basis of the rules as they currently stand.
But we also have an upcoming review by the government and we don’t know how that looks like. On a confidence scale of 1 to 10, where do you think the outcome will be? Do you think your numbers will still be proven fine after this review or do you think it could change? Thank you.
