Good morning, everyone. Of course, I'm delighted to have Ralph Hamers with us at the financials conference, of course, the CEO of UBS. We're going to start our fireside chat with a polling question just to kind of see what the audience kind of think would be the most important driver for share price over the next 12-24 months. I'm not going to kind of read the answers, we've got 10 seconds to vote, please. Okay.
Hi.
I think, we're gonna cover pretty much all of this in our conversation. Thank you very much. Ralph, let's start kind of top down. You know, what are kind of your thoughts on the, on the current global backdrop, but of course also on the events in the U.S., from kind of last week? Maybe let's address what you see as the impact on the industry and impact on UBS.
Yeah. Well, I think the developments are very unfortunate, right? Let's start with that. In times like this, I think you have to pay a lot of attention as to what is truly happening, what is the root cause of what's happening, and what effect does it have. For us, basically, the first thing is, how do our clients kind of react to this, right? For us it is really important as such a client-focused institution to be very close to your clients, make sure that they have the latest information, that they know what to do and advise them going through. Since we're a very large wealth manager in the U.S., where basically a lot of this is happening, it's been really important for us to stay very close to our clients, which we have done.
Now, what we see there is that. What we saw already in the fourth quarter and coming through in the first two months here as well, is that you see a continuation of what we would call the mix shift.
Mm-hmm.
from deposits into money markets, T-bills, all within our own kind of platform. But that's basically. It shows the sophisticatedness of our, of our clientele, right? That's a clear indicator as to the sophisticatedness. We don't see that changing now either. I mean, that continues. The last couple of days, as you may expect, there is we've seen inflows, right? But, you know, I mean, you can't really draw conclusions from that in my view. It's a reaction at first. It's clearly a flight to safety from that perspective. But, I think three days don't make a trend. But yeah, I mean, that's a normal reaction I think of the market to come to places like ourselves.
Again, you know, the underlying clientele stays the same clientele, so you can expect a very rational behavior as to how they kind of deal with that to go further. Clearly from our own particular bank situation, I mean, you know, our LCR is 164%. Our Net Stable Funding Ratio is 119%. We have a highly liquid HQLA portfolio, where cash is an asset. Highly invested in cash, $170 billion of cash in our HQLA. Very prudent.
Perfect. You've touched upon it a little bit, but let's talk about the client sentiment, kind of in general. I know the last couple of days, kind of providing a little bit more volatility. Of course, you know, 2022 has been an incredibly uncertain year. Of course, we had war in Ukraine. We've got rising energy prices. Of course, we had, you know, the inflation going up very significantly. How do you see kind of clients navigating 2023 or kind of, you know, the end of 2022 beginning of 2023?
No. I think it's a very good question. I think what you saw in 22 started out very positively, right? We all remember that, a year back, just before the war, everything was very positive whatsoever. A lot of uncertainty came. The markets reacted heavily on it. The market moved from what we call the micro, which is equities, to more fixed income in the second half and all that. Our clients were more in a wait and see patterns towards the second half. Nevertheless, if you stay close to your clients and you show that, you know, you have to advise them and guide them through also more difficult times really, that, you saw that, you know, our flows were very strong.
Okay.
Net new fee-generating assets of $60 billion on the wealth management side. Also on the asset management side, $25 billion of net new money coming through for the year. Strong flows for being very well connected with your clients. We had a record year in markets last year as well.
Yeah.
We outperformed on the banking side, although that was not kind of the best banking year, but we outperformed there as well. Very much on the advisory side as well. 2022 was a very good year, although clearly towards the end, very much a wait and see pattern with our clients. Maybe towards the last part of it, you got some more positive news coming from Asia, China opening up. That basically showed then the markets to kind of return a bit, going up again, equity markets. That we have seen. Not really continuing. In the beginning of January, we saw a continuing rally, but if you look at where we are right now, markets are up a bit from the beginning of the year.
Yep, yep.
What we expect going forward, the U.S. will have a difficult year. You know, economically a difficult year. Inflation coming through higher rates, you know, industries, sectors having getting used to higher rates in leveraged businesses. On the Asia Pacific side, we actually do continue more positive momentum and sentiment. We will hear more, I expect, in the China Development Forum that is happening in two weeks' time there as well as to what kind of impulse that can give on the Asian side as well. An important business for us is of course, Switzerland as well, where, you know, Switzerland is kind of the one that seems to always be able to manage things in a more stable way.
Yeah.
Rates still low, although we expect rate hikes, but still low. If I then kind of project it to this, to kind of translate this to business activity, markets where we play like Asia Pacific and EMEA, the market, the flows.
Mm-hmm.
-are in the markets 25%-30% down from last year.
Okay. Yeah.
In the U.S., 10%, we're overweight, EMEA, APAC. That's where you see markets, having lower activity coming through. On Asia Pacific, we think this will kind of give More rise to more activity, transaction activity, more in the second half...
Mm-hmm.
-of the year. Also from a wealth management perspective, if you look at, NII, also because of the rates movements-
Mm-hmm.
Also the mix shift, we stand by our guidance for the first quarter, but on the lower end of single-digit growth versus the fourth quarter on NII. Clearly Switzerland underlying still profiting from raising rates. In the U.S. the mix shift, and is having its impact. In line with our guidance, but on the lower end of that guidance. We still see flows coming in. That should... You know, also in terms of net new fee-generating assets, we see that coming through, so the 5% over the cycle. We also feel that for this year, that, you know, that is achievable. We don't see that necessarily hampering.
You know, it's, it's, it doesn't look easy, let me put it that way, right? I think that industries are challenged. Things are unclear. Clients are in a wait and still.
Yeah. No, absolutely. Let's maybe kind of take it a little bit more with a kind of regional lens. You've talked about kind of APAC, the transactional activity potentially returning in the second half of the year. If we look at it just a little bit more kind of structurally, you are the largest wealth manager in APAC, of course. You know, how do you think about building on that scale? How, you know, how much of an advantage can that scale give you, particularly in wealth? Of course, also let's augment the conversation with the investment banking franchise because it is very strong.
Also on top of that, you know, it provides a kind of extra layer, from a perspective of potential growth of the business overall.
Yeah. In Asia, clearly, I think we have doubled the investment assets in comparison to the next player, right? We are a very large player. We are top quality brands. We have a very good client franchise.
Mm-hmm.
High net worth, but even more ultra-high net worth. And we have a strong investment bank, as you said, you know, number one in equity capital markets last year. Best investment bank in Asia and Australia, Australasia, last year as well. Number one in cash equities or strong cash equities franchise as well. The reason why I'm mentioning that is that the interplay between wealth management and investment banking is probably even more important in Asia than anywhere in the world.
That is by virtue of the sort of clients, the sort of wealth that is being created there, where, if you look across the different regions, you see specifically also in Southeast Asia, a lot of family offices on the back of companies growing very fast because of demographic development, therefore, wealth being created very quickly over time. However, those families not necessarily having the right family infrastructure, looking for liquidity in the stakes they have. That's where the interplay with the investment bank comes either on the financing side, but also, just as an example, you know, families that are looking for selling a minority stake, where basically we get the manage for through on the banking side and actually bring another family in. You know that families like to support families.
Mm-hmm.
That's the interplay that is important there. If you then take a step back as to more strategic, China is of course, very important to us, having been there-For 40 years, the go-to investment bank in China, as we are, with now owning 67% of our securities business there. That will, you know, with the market coming back, that will be a very good position to have. The continuation of the build-up of a middle class in China, through the common prosperity policy, will be good in general for asset managers.
Mm-hmm
Because all of that money have to be invested for not only the rich, because basically the wealth built up in Asia, we expect to move from a pyramid or in China, I should say, from a pyramid to more towards an oval.
Yeah.
With that, it is more widely spread and therefore a professional asset management services are important for China as well. On the wealth side, active already on the offshore side, also on the onshore, the offshore is more active for us than in the onshore. We just launched a more digital play in UBS key4. That is more longer term. On Southeast Asia, where we were, as I just alluded to, there's a lot of wealth creation on the back of entrepreneurial wealth, where, you know, there is many liquidity moments or the partial liquidity moments in order to reinvest in new initiatives. That's where we are basically focusing on growth through close relationships with these families. Our.
what we call Global Family and Institutional Wealth approaches, family office competence centers that we basically develop and helping families setting up those family offices. How does it work? We have platforms where we connect different players. That's the way we go about Asia. We're very confident about the potential of Asia. Yeah.
Perfect. Well, thank you very much for that. Now, let's move on to Switzerland. We talked a little bit about it as this kind of very, kind of stable, high return generator, for you. Of course, kind of looking forward, where's growth there?
Yeah. That's a good question because if you just look at who we are in Switzerland, right? We bank about one-third of the households, 90% of the multinationals. Clearly, we are not the only bank with them, right? There's more banks as well. That is good. We have a very stable base, a very strong market share there as well. We've been called the best bank in Switzerland by Euromoney, you know, for eight years since 2012 or something like that. A very good base and, but I do think it can further be improved.
Yeah.
That's not only because of the rate movements, right? That our revenues can improve, but literally, I mean, so our team there is doing a really good job focusing on pockets of growth.
Mm-hmm.
For example, in a more consumer area.
Mm-hmm
... where we see we can grow more in pension business, in mortgages, in sustainable finance.
Mm-hmm.
We expect to be able to also improve our digital offering. We are already kind of the digital leader. One may expect from me that I think this is very important to build out that leadership, where we have seen that with some small changes over the last couple of years, we have now 61% active mobile users and 30% mobile users that have that only use mobile, right? Mobile only users.
Yeah
... through the launch of Key4, which is very successful just last year, gaining 37,000 new consumer clients as well, not only through Key4 in general because of our positioning. There is growth there. On the other side, digital also helps with keeping customer control.
Yeah.
I think that's what the team is doing effectively as well. That was the first area where we introduced Agile two years ago already. They have gone through the adjustment, change is coming smoother, faster, cheaper, et cetera, et cetera, et cetera. I think the Swiss franchise is a very important franchise for us. It is the foundation of what we have built also globally. It is a very healthy franchise. We do see prospects for growth, literally growth, not only revenue growth on the back of NII.
Sure.
Also, being able to keep customer control by continuous digitalization of services.
Perfect. Of course, you know, none of those conversations would have been complete without, of course, the Americas, because you've got, you know, I mean, huge business for you, $ 1.5 trillion in invested assets, of course, also a bigger revenue contributor to the group. How do you capture the opportunity from here? Maybe also, you know, how do you assess your competitive positioning in the U.S.?
Yeah. Clearly, we are a very specific player in the U.S., right?
Yeah.
If you just look at who we are, we are I guess the challenger, right, in the U.S. The number three or four player in the U.S. with 6,400 FAs, very much focused on high net worth and ultra-high net worth. Those are the segments that we also go, you know, we do well in globally, right?
Yeah.
That's also where our global experience, our global products, our global approaches, find fertile ground.
Mm-hmm.
in the U.S. market, right? The global connection really helps us on that as well. If you see what we have been able to pull off over the last couple of years in the U.S., just over the last five years, our invested assets have grown 30%..
Mm-hmm.
Our profit before tax has grown 35%, right? And our FAs have gone down by 9%. You see an amazing improvement in FA productivity and profitability as well. Point now is where do we go from here, as you said. Where do we think we can continue, and how can we continue to grow in the US? First, the market will continue to grow. The U.S. wealth pool, specifically in the two wealth bands that we play in, we expect to continue to grow between 9%-11% until this annual growth until 2026. We're already playing in the geography where growth is highest and in the wealth bands where we expect most growth. That's one. That helps us anyway.
That's the tailwind, so to say. The question is, how do you make sure that, you know, you benefit from that tailwind? There, our focus on what we call Global Family and Institutional Wealth. The whole setting that we have developed so successfully in Asia now also implemented in Europe, but also now bringing it to the U.S., that should help us really at the top end, where the combination of some of the investment banking services into the wealth business, into those really big clients, I think that's a winner. That's an absolute winner. We're doing that as we speak. You have the army of Financial Advisors, right? The ones that really know our clients well, and these are absolutely crucial for us, these ambassadors.
How do you support them better than before? First you do that through ensuring that the way they work is as smooth and as good and as digital in the end as possible, because they should really not lose time on operational issues, but they should really spend their time with their clients in advice. We launched a new FA workstation last year that has landed well. We have an adoption rate of 95%, which is quite high because the FAs really know what they want, so they don't just accept things that you release. I mean, you know, they really know what they want.
We also have to make sure that all the functionalities that we need to release on that platform, that comes smoothly as well. That's why we're changing also in the U.S. to Agile, which basically moves away from waterfall big releases to small releases, de-risking the releases, making sure that we do it in a safe and a cheaper way as well. That's one initiative in order to support the FAs. The second one is more global product. You've seen that we're very successful on the SMA side, growing very fast, now over $125 million, which is an asset management product sold through the FAs. The more structured products, that we feel there is opportunity there as well. Supporting them the way they work, supporting them with more sophisticated products.
The third element of growth there is how can we help them do more banking business? We launched our banking services a couple of years ago. We now have $48 billion of deposits, $41 billion of loans, in distributed through our FAs. We need further a new product.
Mm-hmm.
Also there, we have now moved to the Agile way to deliver products as well. New products on the banking side does not only help them to have a more strategic conversation sometimes with their clients, makes the client base also a little bit more sticky for them to be able to kind of develop that relationship as well. It's also good for us on the balance sheet business.
Yeah. Right?
So those are the real growth factors. Clearly also there we are looking at how to align some of the investment banking business that we have in order to support that. How do we further align the asset manager, already done really successfully through SMAs and some of the alternatives products in order to support our wealth business there.
Kind of gave me a really nice kind of, intro to my, to my next question. I wanted to ask you about the ways of monetization between, of course, wealth, investment bank and asset management. You gave me some of the-
Mm-hmm.
you know, some of the examples, SMAs in the U.S. have been very successful for years for you. you know, what do those division effectively bring? We talked a little bit about Asia, but what do those division bring to wealth, and how are those opportunities in your mind kind of evolving?
Yeah. Well, actually, this goes back to what we really see ourselves, right? like, so, we feel ourselves, we see ourselves as the leading global wealth manager. For that, you have to be a very strong investment bank as well. not in everything-
Mm-hmm.
in the particular products, that are important. That's why, you know, we're happy to be top five in equities and the top three in FX because these products are very important for our wealth businesses as well. If we are not excellent in the investment bank in these markets activities, then we have nothing to offer to our wealth clients, because you can't be second-rate investment bank in offering our sort of wealth clients.
Yeah.
You've got to be one of the best. That's just what it is. Otherwise, we should not do it, right? That's one. Second, also for our investment banking business, we still feel that they should also stand on their own feet in terms of that they have to make their returns, right? Over the last three years, they have been really good at making the returns, every year again, even with a weaker quarter last year, in the fourth quarter. They're making their returns on capital, which is really important to us. They are incredibly, in the way Rob runs the investment bank, is incredibly flexible as to the capital allocation that we have there. You know, we basically want to be a capital light business overall.
Therefore, also the investment bank is capital light and in order to be capital light and being competitive, you've got to be very flexible in the way you use your capital. You see that coming through in the revenue over Risk-Weighted Assets, which is the highest in comparison to all peers. Doing a really good job there. In terms of product, what is particularly important coming from the investment bank there is that the first one is direct market access.
Mm-hmm.
Our clients, certainly more on what we call the GFIW clients, the Global Family Institutional Wealth clients. I mean, they are institutional clients, semi-institutional clients. They want direct market access. It is product solutions, very specific product solutions which are close to also institutional products, the first derivative for a smaller client.
Mm-hmm.
Portfolio solutions, portfolio analysis that we develop algorithms in the investment bank for the institutional clients, and that we can also use the derivative of those for smaller portfolios in order to detect anomalies in investment portfolios for our wealth clients and see how we can further optimize that as well. Quantitative investment strategies that we develop on the, on the investment banking side as well. Financing, banking, all of that as well. You see that the whole product range of the investment bank is crucial for our wealth manager there. On the asset management side, it goes maybe even a step further. One third of our asset management products is basically distributed through our own wealth manager, right?
We are open architecture, so these must be damn good products, because otherwise, you know, we can't just distribute our own product. That's not what we believe in. We distribute our own product, but if we feel this is best in class, right? The asset manager, we manage on one side for scale in those areas where scale makes a difference. On the other side, the asset manager really looks at what is it that is needed in the market. Therefore, you's see that, for example, on the specialties for them, which is sustainable, sustainability. We have $170 billion of invested assets.
Mm-hmm.
in our asset management. On alternatives, $150 billion. SMAs, as it was just, separately managed accounts, as we call them in the U.S., $125 billion.
Sure.
Money markets, $120 billion. You see that it's very, very specific and very focused business there, making sure that we have really good and best-in-class products and services there that we can also distribute to our own clients, so. That is basically what we want from the asset manager as well within our portfolio of capabilities, as I call it, not so much divisions. Because, yeah, we have to run the business in divisions.
Mm-hmm.
What we need for our clients is capabilities.
Yeah.
The way we organize the capabilities is in the divisions.
Okay. I'll stop. Yeah, exactly. I'll stop here and kind of and take some questions. Maybe the gentleman at the back.
Yeah. Hi. Good morning. Your main competitor is literally collapsing today again. I can imagine that the Swiss National Bank has already had conversations with you for potential s-scenarios, no? I would like to understand if you have any red lines, any areas of interest in a potential breakup or in a potential rescue or in a potential, you know, whatever are the key scenarios there. I can imagine, you know, a disorderly collapse of your main competitor would be very bad for the Swiss economy. What is your view on the current situation?
I think we have many competitors, by the way. And I think what is important for you is that, you know, we're truly focused on our own strategy, which is an organic strategy. That's what we do. You know, I can't kind of answer hypothetical questions. It's I've always learned in my trainings not to go into hypothetical questions, right? Yeah, we are focused on ourselves, and that's what is really important at this moment in time, I think as well.
Fair enough. Do we have more questions from the audience? Right up front.
Hello. Can you talk about the stickiness of your deposit, especially given the specificity of the wealth management business?
We have a very diverse deposit base, right? In Switzerland alone, we have CHF 180 in P&C and CHF 50 additional... Is it CHF 180 plus CHF 50 in Switzerland alone, right? Our deposit base is highly diverse across the globe. With a large part, I think CHF 540 billion and then CHF 180 in the consumer bank in Switzerland, another CHF 50 billion in the wealth manager in Switzerland there as well. It's pretty sticky. Having said that, what is important is that, you know, you manage your liquidity rates as well. As I said, you know, our HQLAs investment in cash alone is CHF 170 billion as well.
It's, we see cash as a asset class there. And in the way we replicate our deposits, we have a bit of a barbell as well, where we are very much on the short end and a bit on the back end. It's. That's what I can say about that.
Yeah.
Thank you very much.
Clearly, I mean, given the high net worth individuals, we have a bit of a higher deposit beta normally, right? It's on that side, not so much in the Swiss business, in the consumer business.
Any more questions from the audience? I think I'll have time to be back. A couple of more things which I think we cannot just not touch. One is, of course, capital. Year after year, you generate very substantial-
Yeah.
organic capital. Of course, you're trading above book value. Two things. How do you see your kind of current share buyback kind of program? You know, is there a potential for an kind of upside in that one? Also, at what point would you consider M&A to be more attractive versus the capital returns or organic growth?
First go back to the way we manage capital. We are highly capital generative, as you said. Reason for that being is the type of business that we do, but also the fact that we have a very high discipline in not using too much capital for the business that we want, right? That's one. Second, the way we go about the allocation of our capital first is to ensure that we have a very safe balance sheet. We have a high, high CT1. We strive to have a balance sheet that is there for all weather circumstances, and therefore, you know, we always want to manage it around the 13%. We're currently at 14.2%.
That's the first allocation of capital generation that we have, is ensuring that we have a strong balance sheet also going forward. Second is, if we can grow or we wanna grow, and if it needs a bit of capital, we don't mind giving it a bit of capital. But you know, we wanna be disciplined in the use of capital for our growth. That's also where the comparison with if there is inorganic growth, inorganic growth opportunity, you would want to compare it to that side, right? Where, you know, if you would normally grow organically versus inorganically, that's the comparison that we would make there. The third one is, clearly we want to pay an attractive dividend, which is progressive over time.
Mm-hmm.
Whatever is left and what we feel, if we feel that we are still attractively valued to do share buybacks, which we feel.
Yeah.
we think that we have some upside in our share price. We continue buybacks, right? Just last year, we generated CHF 7.6 billion of net profit. We paid out CHF 7.3 billion in a combination of dividends and a share buyback of-
Mm-hmm.
$5.6 billion. Now, for this year, we have guided our share buyback to be, over $5 billion.
Yeah.
We are currently at 0.8, so $800 million for debt purposes and $600 million for hedging purposes on the personnel side. So we are progressing in our buyback. Yeah, we will see how the year comes, whether we can give updates there.
As it comes. Okay. All right. I'm gonna look at the audience. Any more... Okay. Let's, let's have a, let's... You know, the last things we haven't kind of talked about is the costs. Because of course, you know, you've controlled costs or kind of, particularly over kind of 2022. There are no doubt quite kind of large inflationary pressures we're all kind of dealing with. Could you tell us about the areas you're most focused on to kind of keep up that kind of cost discipline?
Yeah. maybe going back, when I started, one of the first things we did is looking at the cost opportunity, right?
Mm-hmm.
Then we came out with this $1 billion of savings program in order to To the extent we would expect the returns to come from it as well, our own growth. That's what we have been doing. That's why we have been able to keep our costs under control while growing. With that, you know, generating a cost-income ratio of just over 72% last year. Now, we are basically performing under that $1 billion cost program. We have even increased that cost savings program to $1.1 billion in terms of the opportunity that we see.
If you then kind of translate that to what it is that we are guiding in terms of cost growth for this year, it is 2%-3% ex-foreign exchange and litigation, right. The way we go about cost is truly that, you know, if the revenues are there, we would allow a little bit more spending and investment.
Yeah.
If the revenues are not there, we will look at how we can maintain our cost base. That's. We try and we literally separate the two, right? We just don't manage on cost-income ratio and hope it will end there. We have also in our KPIs, and you can see that also in the annual report, we separate revenues from costs. The cost is a separate target from the revenues. However, if the revenues are better, we would allow a bit more. If the revenues are a bit less, then we would look for further cost measures as well. That's the way we as a team have agreed to continue our discipline on cost.
Okay. Let's maybe talk about kind of margins as well, because we've talked about various kind of various revenue kind of potential. How do you think about defending your revenue margins, particularly in wealth? Maybe let's.
Yeah. I think there's a couple of things. First, the first thing is where do you really grow, right? I think the first thing for us is if you wanna grow, where do you wanna grow? And we wanna grow in those areas where we also have the most tailwind, right? Which is Asia and the US. The U.S. is expected to grow between 9%-11% until 2026, CAGR. That's a CAGR and I think in Asia, the CAGR is like 7% until 2026. Having exposure to those two regions helps you at least in the growth and with that, also your margins, because the margins are also a matter of cost versus revenues, right? And if you grow and you then you gain in scale as well.
That's one. The second element there is, do you grow in what one could call a more affluent businesses, for which you need even more scale, or do you grow in what we are very good at, is high net worth and ultra-high net worth, right? Where you may not need perfect scale, certainly in the top. You also know in at the top, the margins are sometimes a little bit smaller.
Yeah.
The way it has, by the way, now been developing for us over the last five years is that we've actually been able to improve our margin. We have a net margin improvement. Whereas the gross margin has decreased...
Yeah
... by 4 basis points, the cost margin has improved by nine, overall seven, so seven. The net margin has improved by three from 14 to 17. That is because of the cost side of things as well.
Yeah.
Right? That is more in what you do, looking at the cost discipline, looking at further digitalization, and the efficiency. There is always an element of scale as well.
Mm-hmm.
Exposure to growth helps always in margins in general because it is a scale effect. Then, the type of clients that you're after, where scale is relatively more or less important, or where you can have specific specific volumes coming through, and then is managing your margin. That's the recipe also going forward, and see how we can defend it.
Exactly. One last chance before I, before we wrap up. Okay. I still have a couple of minutes. My last one. No, because you know what? It's.
You're very up to here.
Good. Let's talk about the technology because I, you know, it's one of the topics that you are quite vocal about. Of course, you know, there's been a kind of shift from the perspective of the technology stack at UBS. Of course, whenever we talk about cost, whenever we talk about scale, whenever we talk about efficiency, there is this kind of technology angle to it. Could you kind of tell us what has changed or kind of what the biggest changes you saw to that, you've experienced as an organization over the last kind of three years and the value it's bringing?
Yeah. Well, I think we're still in that change, right? That change will never stop anyway. I do think that, you know, the biggest change for us is not looking at technology as an enabler...
Mm-hmm
... but as a differentiator, right? If you manage a business, you wanna look at your resources, and you have balance sheet resources, capital resources, you have people resources, and then technology is also a resource. Business people have to be more involved in deploying technology as a resource to do a better business rather than thinking, "Okay, yeah. Okay, I can play with the balance sheet and the capital, and I can play with my people, and a bit of product development, and that's the way I manage my business.
The rest is for the technology guy." That may have been good in the past, but we know that there is just no industry in the world that is not touched by the importance of technology, not only in terms of efficiency, but in terms of how you deliver to your clients. Therefore, now it is a resource that needs to be managed by the business and owned by the business. That's a big change in terms of looking at technology as a differentiator rather than only an enabler. That's one.
Second, what we have been doing since is that while we kept the budget more or less stable, we have been able, through the agile way of working front to back, where we now have more than 18,500 people working that way, we have been able to be much more productive with the dollars going into the investments. That. How do you do that? You move away from waterfall delivery, which are big projects with big mistakes and big tickets, to Agile delivery, which is quarterly planning and two-week sprints. Every two weeks, checking, are we still going in the right direction? Is it still worth continuing to do investment, et cetera, et cetera, et cetera?
That's how you de-risk it, that's how you make it more effective, and that's also how you can test whether things are literally having the effect that you had assumed would be the effect, either in terms of efficiency, in terms of a client experience or whatsoever. Third, it is about bringing in an engineering culture. If in all of this you see technology as a resource, you should also have your own engineers.
Mm.
Not necessarily see this as a cost, but you see it as a capability that you want to develop yourself because you want to influence what you do. With that, we have been able to also clean up our technology stack in terms of, you know, just last year, we decommissioned 600 applications. We're now 64% on the cloud.
Yeah.
of which 6% on public cloud. You see that the underlying technology, we're also just kind of renewing.
Mm.
and improving and making more efficient and more flexible. It is those three elements that are important.
A huge value, ultimately.
Sorry?
A huge value ultimately.
Exactly.
to the entire organization.
Exactly.
Superb. Ralph, thank you very much.
You're welcome.
here, with us today. Thank you. Yeah. Thanks everyone for listening. Thank you.