Earnings Call: Q4 2019

Jan 21, 2020

Ladies and gentlemen, good morning. Welcome to the UBS 4th Quarter 2019 Presentation. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Martin Ozinga, UBS Investor Relations. Please go ahead, sir. Hi. Thank you. Good morning, and welcome to our full year 2019 results and investor update call. I'd like to draw your attention to our slide regarding forward looking statements at the end of our presentation. It refers to cautionary statements, including in our discussion of risk factors in our latest annual reports. Some of these factors may affect our future results and financial condition. Today, Sergio will take you through our highlights for 2019, strategic priorities and targets. Kirt will then cover our Q4 results followed by the Q and A. Now over to Sergio. Thank you, Martin. Good morning, everyone, and thank you for joining us. Let me start with a brief summary of last year's performance. We closed 2019 on a high note with $1,200,000,000 in adjusted PBT, the best 4th quarter since 2010. For the year, our net profit reached $4,300,000,000 and return on CET1 capital was 12.4%. Clients continue to turn to UBS for high quality advice and solutions to help them achieve their goals. Today, we manage over $3,600,000,000,000 of their assets, up nearly $1,000,000,000,000 in 4 years. Last year, we further improved resource usage and progressed on our strategic initiatives, cut operating expenses by 4%, optimized over $30,000,000,000 in LRD and invested in people and technology. Also, we signed strategic partnerships in Brazil and Japan to further enhance our scale. And as you saw this morning, we announced a strategic combination of our funds platform with Clearstream. Our capital position is very strong with an 80% total payout. We again delivered a very attractive return on our to our shareholders. Obviously, the initial verdict in the French cross border matter was very disappointing to us and to our shareholders. As you know, we have appealed the ruling and are preparing for the trial scheduled in late Q2. Overall, we had solid performance in mixed market conditions and continue to see room for further growth and higher returns going forward. In contrast to consensus expectations from late 2018, we and our clients were impacted by sharp changes in macroeconomic and market conditions during the year. In 2019, interest headwinds intensified, global growth slowed and geopolitical concerns persisted, pushing many of our institutional and private clients to de risk and stay on the market sidelines. Volatility, a key driver of revenues, particularly for our institutional business, remain muted and ended the year near historic lows. There were some positives. Late in the year, recession concerns in the U. S. Abated and investor sentiment improved, supported by progress on global trade discussions and Brexit, while U. S. Equity markets reach all time highs. As we start the year, while the macroeconomic and geopolitical situation remains uncertain, positive market sentiment persists. We also see higher activity from our clients supporting the typical Q1 seasonality. Our aspiration is to deliver returns in line with the best global peers. Our last year's performance was not far off, and we are intensifying efforts to improve it going forward by balancing growth, costs and capital efficiency. For every bank, CET1 is the metric which best reflects the equity it controls and deploys in the business and it is a binding constraint for capital returns. As you can see, we have by far the biggest gap between tangible equity and CET1. For both these reasons, we choose to measure ourselves on return on CET1 capital. Our clients expect to get the best from UBS every day. Our integrated business model is at the core of our strategy and it is how we best deliver to clients. Each of the businesses drives significant value from being part of the group and none of them would be as successful on their own. While we have been very successful in delivering our integrated model, we are further intensifying our one firm approach for the benefit of our clients and shareholders. Our priority for 2022 is to drive higher, superior and superior returns by growing each of our businesses, leveraging our unique integrated and complementary business portfolio and geographic footprint. We are responding to change in business and competitive condition and last but not least, our clients' needs. We know what we have to do. We have the talent, tools and reach to elevate UBS to the next level. For 2020, 2022, it will be all about executing on these priorities, starting with Global Wealth Management. We are a world leading and the only truly global wealth manager with $2,600,000,000,000 in invested assets across the entire wealth spectrum. We are well positioned for future growth. In 2019, we made progress on some of our strategic initiatives, but clearly, we have more to do. As I mentioned before, clients have very high expectations about UBS's quality of services, products and the way they interact with us. All of those needs are constantly evolving, in some cases, even changing rapidly, driven by technology as well as competitive and social developments. I believe UBS is and always will at the forefront of best in class services to clients. For example, our leadership position in the sustainable space is affirmed by the $6,000,000,000 increase in our fully sustainable multi assets mandate. What will continue to make a fundamental difference is the value of Advise. As you can see, Advise is a top priority for over 80% of our clients of all generations. In response to these developments, Iqbal and Tom have been and are actively implementing a series of actions that are aimed to further strengthen our leading position. First, we are amplifying our tailored coverage and offering across our entire client spectrum. We are expanding our global family office coverage, which caters to clients who require the most bespoke, holistic and institutional style coverage. For clients at the lower end of the high net worth and affluent segments, we are developing solution tailored to their specific needs. 2nd, we will be closer to clients. To do so, we are empowering local business units to accelerate decision making, processes and time to market. We are also delivering and simplifying our organization to better capture opportunities within our geographic footprint. 3rd, we are expanding our product offering and increasing efficiency. We will continue to invest in tech solutions and platforms, optimizing processes, supporting our advisors and increasing their productivity. Many of our richest clients have wealth in liquid assets and require help to unlock its potential through lending and liquidity management products. To better cater to their needs and offer more sophisticated solutions, we are expanding acceptable collateral styles by using the IB's capabilities to manage risks. These actions will allow us to deliver on our existing goal of growing loans loan volumes by around $20,000,000,000 a year from 2020 to 2022 without compromising on our risk management and risk reward standards. All these actions will support us in delivering 10% to 15% PBT growth per annum in 2020, 2022, which expand our pre tax profit margins. Another element helping us to achieve our target will be our approach to net new money growth. We have always believed that in this regard, quality beats quantity. Now, we manage the trade off between net new money growth and our PBT will be even more important considering the outlook for euro and Swiss franc interest rates. So as I said in the past, we are not chasing net new money at the expense of our shareholders. Kurt will expand on this later on. Our investment bank brings essential value and expertise to clients requiring more sophisticated solution and 1st class execution. We have a leading position in many areas where we choose to compete and we will continue to invest in our digital, research and banking capabilities to better advise and serve our clients. In terms of profitability, clearly, we cannot be satisfied with our performance in 2019. We took actions and are working hard to improve revenues and profitability. For 2020, we expect to deliver returns of around 11% with further improvement in 2021 2022. Over the next 3 years, we expect DAB to consume up to a third of the group's risk weighted assets and LRD. DIB's cooperation with Global Wealth Management is essential to delivering a truly differentiated client offering, particularly to our GFO and Ultra clients with more sophisticated needs. In the GFO areas, we are leveraging both capital markets and wealth management capabilities to offer unmatched services. And in return, they do more business with us, on average 15% growth in revenues. For that reason, we are expanding the GFO coverage following the resegmentation I mentioned before. We are more than doubling the number of clients in this area, solidifying our position as the house bank for these clients. That makes GFO a meaningful contributor to our profit growth objective. In addition, we are increasing our collaboration around lending by leveraging DIB's risk management capabilities. And on the execution side, we are combining capabilities across the group to enhance our client offering in the middle market segment, which includes large family offices and small hedge funds. I'm very pleased with the progress we made in asset management last year as our investments and efforts are starting to pay off. Going forward, we will continue to build on our areas of strength, particularly in sustainable offerings where we are a clear leader with nearly $40,000,000,000 in sustainability focused invested assets. Also, we are investing and developing our capability in fast growing markets by expanding on our partnerships in the wholesale space and leveraging our expertise in private markets and alternatives. Let me provide an example of the value for both clients and shareholders from deploying asset management capabilities to our U. S. Wealth management business. Separately managed accounts are one of the fastest growing areas in wealth management in the U. S. In order to capture this opportunity, we have eliminated the separate management fees for SMAs managed by asset management. This decision will help us to increase mandate penetration for GWM, generate higher share of wallet and lead to significant inflows for asset management. We have already seen a very positive reaction from our clients and advisors, and we expect this initiative to be accretive to shareholders in few quarters. Our P and C business has generated growth and attractive returns despite severe interest rate headwinds. Yet, we are determined to grow revenues and further improve profitability going forward. Technology plays a key role in this effort, particularly in responding to new market entrants and evolving clients' preferences. We will continue to roll out mobile and platform solutions to improve both individual and corporate clients experience. Enhancements to our digital capabilities are already driving increased engagement and attracting new customers. Technology also helps us streamline and simplify processes and optimize our branch network, reducing them in numbers and evolving their formats to better serve clients. On negative interest rates, we will continue to manage there the impact to protect our profitability. Our Universal Bank in Switzerland with P and C at its core, it's a great example for the rest of the group, showcasing the power of close collaboration, creating value for clients and shareholders. It is also the reason why UBS is the number one bank in Switzerland. Shifting gears to expenses, we have consistently driven our cost base down, reducing costs by $900,000,000 in 20 19 alone. Since 2015, overall operating expenses were reduced by 2,700,000,000 dollars We generated significant saves to lower our cost base while funding investments in growth oriented projects and absorbing higher regulatory requirements. Last year, we spent $3,400,000,000 on technology, which included our investment in transformation to make us more efficient and effective. A few examples are moving processes to the cloud, decommissioning over 400 legacy application and deploying 1100 robots. In Global Wealth Management, we invested over 100,000,000 initiatives, including development of ultrahigh net worth capabilities and increasing our presence in APAC. We remain committed to improving efficiency and productivity in 2020, keeping net cost excluding variable compensation and litigation flat. Maintaining investments in technology and platform is crucial for growth of our franchise and for generating attractive returns in the future. This means that in order to fund all the necessary investments, we have to deliver $1,000,000,000 in gross sales during the year. I already touched on many efficiency initiatives across our business division. This includes, for example, the continued insources of workforce and development of our nearshore centers. We are determined to deliver positive operating leverage and bring our reported cost income ratio within the 75%, seventy 8% range. In the past, I have always underlined our need to realize scale by seeking partnerships with other firms 2019, we made very good progress in this area. Our joint venture with Sumitrans went live earlier this month, while in November, we agreed with Banco DO Brasil to create the biggest investment bank in South America. On the technology side, our partnership with Broadridge, a global Fintech leader, has started to deliver initial releases, which will continue over the next couple of years. This will help support our growth ambitions by building a market leading integrated platform for our advisor that is focused on improving our efficiency and ease of doing business. And finally, today, we announced our partnership with Clearstream to combine our B2B fund distribution platforms to create the world's 2nd largest player with a presence in Europe, Switzerland and Asia. Now let's talk about returns. A testament to the strength of our business model is the amount of capital we generated, dollars 28,000,000,000 since 2011, including $5,000,000,000 last year. We achieved that while absorbing over $10,000,000,000 of mostly legacy litigation charges. During this period and adjusting for dividends, we have grown our tangible book value per share by 6% annually. This puts us in line with the average of American firms and higher than the average of our European peers. Capital strength is one of the pillars of our strategy. We are committed to maintaining a strong position going forward while funding growth initiatives, accruing capital in anticipation of Basel III finalization and delivering attractive capital returns. For 2019 financial year, we intend to propose a dividend of US0.73 dollars per share, up 6% year on year. Going forward, we intend to grow our dividend per share by $0.01 per year. This will give us greater capacity to return more capital through buybacks. Considering our high cash percentage payout and the fact that our stock trades below book value, for me, this is a no brainer. In the first half of twenty twenty, we expect to buy back around $450,000,000 worth of shares completing our CHF2 billion program. In the 2nd part of the year, we will assess further buybacks depending on business outlook and any idiosyncratic developments. So tying all of this together, you can see on the slide our target framework for 2020, 2022. We target between 12% and 15% return on CET1 capital and expect to deliver positive operating leverage as we work towards a target cost income range of 75% to 78%. We have stress test these goals and we are confident they are achievable across a wide variety of macro and market outcomes. Of course, the updated targets do not mean we are any less ambitious, and we are working hard to maximize returns. So to briefly summarize our key points for today, our integrated business model is at the core of our strategy and it is how we deliver our best to clients. We want to grow by leveraging our unique integrated and complementary business portfolio and geographic footprint. We have a clear set of initiatives and 2020 is all about execution. My goal for this year is clear, deliver on our targets and position UBS for an even greater future. Now, Kurt will take you through the 4th quarter results. Thank you, Sergio. Good morning, everyone. As usual, my comments will compare year on year quarters and reference adjusted results in U. S. Dollars unless otherwise stated. Given 4Q 2019 is the last quarter for which we have restructuring expenses related to our legacy cost program, we will no longer disclose adjusted results. From the Q1 of 2020 onwards, we will refer to reported results, while still highlighting items that are not representative of underlying business performance. We expect to incur around $200,000,000 in restructuring, mainly in the first half of twenty twenty, related to additional cost actions across the group, including the changes we announced in Global Wealth Management. This was our best 4th quarter adjusted PBT since 2010. Revenues increased by 4% and expenses decreased by 7%, as 4Q 2018 included large litigation provisions and the market drop backdrop at the end of 2018 was extremely challenging. PBT more than doubled and was up 30% excluding litigation. Net profit also increased significantly to $722,000,000 Moving to our businesses. In Global Wealth Management, excluding litigation from both quarters, PBT was up 3%. We also saw healthy volumes of net new loans, while invested assets and mandate balances both reached new highs, providing good momentum into 1Q 'twenty. Excluding a fee from P and C, operating income increased by 1% on higher transaction based income, offsetting lower recurring fees and net interest income. I'll cover revenues in more detail in a moment. Expenses increased by 3%, excluding litigation, mainly driven by higher tech and regulatory costs, partly offset by our savings initiatives. Costs would have been broadly flat, excluding litigation, and the rise in various regulatory expenses in several non recurring items. As part of our cost management actions, we generated $270,000,000 run rate saves, exceeding the $220,000,000 we previously guided to. In addition, in response to the environment this year, we have been very disciplined on the hiring front, with total headcount down 4%, resulting in a reduction in personnel expenses, excluding FA and variable compensation, while still funding strategic priorities. In terms of net new money, we had $5,000,000,000 net outflows globally, with APAC and Switzerland reporting net inflows. In the Americas, there were 2 large outflows, which contributed to the negative net new money result, although these were very low margin. Full year net new money was particularly strong in APAC with $31,000,000,000 of net inflows or an annualized growth rate of nearly 9%, further highlighting UBS' attractiveness to our clients. We remain confident in our ability to generate net new money growth. However, as Sergio highlighted, we will continue to focus on quality, and more specifically, on the profitability and resource efficiency of existing invested assets and net flows. With euro and Swiss franc rates remaining persistently negative in 2019 and the prospect of rates recovering off the table for the foreseeable future, we will launch a program focused on selected clients with high concentrations of deposits in euro and Swiss franc cash. Specifically, we will offer these clients the option to consolidate their assets with us, invest, reprice or reduce their cash balances. A $1,000,000,000 reduction of such balances has a positive revenue impact of up to $5,000,000 and reduces HQLA frame up capital. This will of course create headwinds to net new money. You may recall that we successfully implemented similar programs in 20 152017. Sequentially, we had $2,000,000,000 net new loans, after the deleveraging in 4Q twenty eighteen and muted inflows in the first half of twenty nineteen. Back to revenues. Recurring fees were down 1%. Fees were impacted by margin pressure from client preferences for mandates and other investments with lower fees, which we noted throughout the year. Recurring fee margin had been stable over the previous three quarters, but declined in 4Q 2019 mostly as we bill our clients and book fees in arrears. We therefore have not yet fully captured the rise in invested assets that we saw during the quarter. The record invested asset base entering the new year gives us good recurring fee momentum into 1Q 'twenty. Net interest income was down 3%, driven by lower revenues from both deposits and loans, partly offset by higher investment of equity income and reduced interest paid to central banks. Transaction based income was up 26 percent, or 14%, excluding a $75,000,000 fee paid by P and C for the shift in business volume following a segmentation review. The 14% increase reflects higher client activity levels in all regions. We saw particularly strong engagement in structured products, with clients turning to us for yield enhancements and protection in response to the persistently low and negative rate environment and to lock in gains from the strong market rally in 2019. Performance in P&C was strong, with PBT up 2% and Swiss francs, despite the fee paid to Global Wealth Management I mentioned earlier. Excluding this and litigation costs in 4Q 2018, PBT would have been up 11%. Full year PBT would have been up 5% on the same basis. For the quarter, net interest income was down 4% as lower investment of equity and higher TLAC funding costs were partly offset by reduced interest paid to central banks. NII was flat sequentially. Non interest income was up 5% excluding the fee paid to GWM, mostly as transaction revenues rose on increased foreign exchange, brokerage and credit card activity and reached a record level for the full year. Credit loss expense improved by $24,000,000 as we saw a net release in 4Q 2019 versus a build in 4Q 2018. Business momentum remains very strong, with 2.8% annualized net new business volume growth in Personal Banking for the quarter and a record 4.7% for the full year. We also onboarded 37,000 net new clients in personal banking during the year and over 1,000 net new clients on our digital corporate bank. Costs decreased 9% or 3% excluding litigation. Asset management had an exceptionally strong quarter, capping off a strong year. 4Q PBT was up nearly 50% to $187,000,000 For the full year, PBT was up 17% to the highest level since 2015. 4Q operating income was up 18%, driven by performance fees, which increased by 2 40%. The significant increase resulted from strong investment performance in equities and hedge fund businesses in a constructive market environment in recognition of full year performance on certain larger mandates under IFRS 15. Management fees were up 4%, reflecting higher average invested assets. Costs rose by 7% due to higher variable compensation related to the increase in revenues. Invested assets were up 5% during the quarter to the highest dollar level we've had. Full year net new money of $18,000,000,000 was led by equities in the wealth management channel and has come in at higher margins in aggregate than our average book of business margins. Our IB PBT was around $250,000,000 excluding litigation, rebounding from a very weak 4Q 2018 on 11% revenue growth and lower costs. Overall, our revenue results were largely in line with our U. S. Competitors. CCS revenues were up 18%, outperforming fee pools globally, with increases in all regions and most products. Advisory revenue increased 25% versus a 25% decline in the M and A fee pool, with outperformance in EMEA and APAC. ECM was up 18% in the cash ECM fee pool. In Debt Capital Markets, investment grade revenues were up more than the market at 58%, while LCM was down 5% against a higher fee pool. Our equities revenues were up 2%, driven by 8% increase in derivatives. Cash was down 6% as client activity was depressed and volatility remained at low levels. FRC was up 41%, excluding the $53,000,000 revenues for rebalancing the group balance sheet to dollars in 4Q 2018, driven by significant increases in rates and credit. FX was down 12% excluding the aforementioned fee for the currency repositioning due to extremely low volatility. In research, we retained our number one position in the 2019 Institutional Investors Global Equity Research Ranking for the 3rd year in a row. ID costs were down 7%, excluding litigation, benefiting from lower personnel expenses. In 4Q 2019, we took a goodwill impairment of $110,000,000 in the IB, which we adjusted for. Risk weighted assets in LRD were both down from the prior quarter and remained below 1 third of the group's resources. I would like to provide further details on our approach to managing efficiency that Sergio commented on earlier. Over the next 3 years, we expect our operating income to grow, supported by the business division and group actions Sergio highlighted. Under an operating income growth scenario, we will manage to flat overall costs to drive positive operating leverage. If we see the environment deteriorating, we will assess and take further actions to reduce our cost to mitigate the impact on the current year, as we did in 2019. The combination of these tactical actions with our strategic initiatives allowed us to take costs down by about $1,000,000,000 on an adjusted basis or 4%, compared with a 4% reduction in operating income. One area where we've been active in driving efficiency is insourcing technology headcount. IT and other services outsourcing costs are down more than $250,000,000 or 19%, partly offset by higher personnel expenses, and we are reducing risk and improving effectiveness. Other areas we brought down during the year are professional fees, marketing and PR costs, and travel and entertainment expenses, down $230,000,000 in aggregate or 13%. In 2020, we expect revenue growth to be supported by positive alpha momentum, offsetting the anticipated more challenging beta environment. From a cost perspective, we're planning to invest around $1,000,000,000 including, for example, progressing our Broadridge partnership in the U. S, continuing with our various digital initiatives across all businesses and investing in our China strategy along with regulatory and compliance priorities. We will fund these investments with $1,000,000,000 in planned phase to maintain flat costs excluding litigation and variable compensation, mostly across our support services, back and middle office function. This includes continuing to in source our technology, operation and finance headcount, integrating our execution platforms across the IB and GWM, deploying robotics and digitizing our front to back processes, along with the reorganization we announced in GWM and the IB. Over the past 2 years, we have been progressively aligning our support functions, such as tech, ops, finance and risk with the business divisions. We now operate the group with the majority of these functions either fully aligned or shared among business divisions, where they have full management responsibility. Only a small residual set of activities are related to group, in line with peers. Later this year, we intend to adopt our reporting to better reflect how we manage the group. Our capital leverage ratios rose to 13.7% and 3.9% at the end of the year, But our current guidance of approximately 13% and 3.7% CET1 capital leverage ratio still holds. RWA was down 2% sequentially. The annual recalibration of the AMA model brought up risk by 3,000,000,000 dollars brought down op risk by $3,000,000,000 and market risk RWA declined partly as a result of the very low prevailing market volatility. In the Q1 of 2020, we anticipate a roughly $3,000,000,000 regulatory related increase in our credit risk RWA, mainly from the implementation of the standardized approach for counterparty credit risk, which became effective on 1 Jan 2020. We have previously guided on the approximate impact of Basel III finalization on RWA. As the implementation has now extended by at least a year, the day 1 impact could be lower than our original guidance, but it's still but there is still too much uncertainty for us to provide an update. To close on the quarter's results, this was the best 4Q adjusted PBT we've had since 2010, capping off a solid 2019 given the mix market environment. We remain focused on executing our strategy, pivoting to growth, scale and efficiency. Sergio outlined our 7 priorities across our businesses, individually and in partnership as one firm, and we're already hard at work using these to benefit our clients and drive higher return on capital. With that, we'll open up to questions. Our first question comes from the line of Jonas Umechan from Goldman Sachs. Please go ahead. Yes. Good morning. I just have one question in a sense. So correct me if I'm wrong, but I think this is the 3rd time in 3 years that UBS has reduced the return target. So I think in 2017, we went from a return on tangible equity target of 15% to a return on tangible as deferred tax assets of 15%. So that was a reduction. Then in 2018, we went to a return on core Tier 1 target of 15%. So that was a reduction and now we've cut to 12% to 15%. And I was just wondering, I mean, how sure are you that this is now the right target range, right? So when you speak to investors and you say we've changed our return target for the 3rd time in 3 years, but this time it's for real, it's staying. I was just wondering how what gives you the confidence that this doesn't shift again? Thank you, Gerard, for the question. So I think that the first change you mentioned is not was not necessarily a change of targets, but a definition on how we measure ourselves, return on tangible equity excluding DTA versus moving to a return on CET1 ratio, which we announced in October 2018. So in that sense, your assessment is off right because the first change was mainly due to that. So the methodology in October 2018, we announced the targets for the 3 years to come with a clear completely you remember September, October, completely different expectations on the macroeconomic outlook and the outlook for interest rates and also that are factors that are for sure determining parts of how we drive growth and business, not necessarily just that, but also very important. So if I look at today, the methodology that we announced today is still the same. What we did this year in the planning cycle was to look at those external factor, macroeconomic factors, reflect those factors into our 3 year plan, which the factor you can see are translated into a reduction from 17% to the 15% top of the range. Now, the question you're asking about how confident we are. For sure, as we as I outlined in my remarks, the 12% to 15% target is a range that has been stressed under different and a variety of market condition assumptions. So you can see the 12% as being the bottom that we believe is achievable even in stressed market condition, while in a more normalized environment over the next 3 years, our goal is to get closer to the 15%. So the range has to be interpreted as a range that takes in consideration different market conditions. So the fact of what I'm saying, in other words, we took down our targets by 2 points on return on CET1 to reflect the change in market conditions. Thanks a lot. The next question comes from Adan Taralak with Mediobanca. Please go ahead. Good morning all. I wanted to get a bit of a read on your cost guidance. You're saying that it's €1,000,000,000 of saves, €1,000,000,000 of investments, so flat underlying. Is that on a reported basis? And if so, does that mean that the adjusted cost base that many of us look at is actually trending up by the maybe €400,000,000 of adjustments that we've had in the 2019 print? And then secondly, on fee margins in GWM, I know what you're saying in terms of the delayed pricing on the U. S. AUM. But on a my numbers, I still have it down 1 basis point Q on Q, which is fairly material pressure. Clearly, you flagged the shift into lower margin mandates. Now is this a long term trend? Should we expect this to come through the numbers in the following quarters years? And where could we really see fee margins going from here? Thank you. Yes. Thank you, Adam. In terms of our cost guidance, as I outlined in my speech, we are going to stop reporting adjusted results, given the fact that we concluded adjusting for our $2,100,000,000 legacy program. So going forward, we'll queue off of reported results, all of our targets on a reported basis. And so therefore, our flat overall total direct costs excluding litigation and variable is on a reported basis, as are we talked about the saves in the investment that all is related to reported results. In terms of your second excuse me? Just to clarify that the $1,000,000,000 of savings has lower restructuring charges and the goodwill impairment in it? That's correct. But at the same time, for example, if you look at the $1,000,000,000 in investment, that includes, I already announced the $200,000,000 in restructuring. So there are trade offs on both sides. But overall, naturally, of course, what you care about, we care about are the reported results and the net profit that we deliver and that drives our returns and our ability, of course, to return capital. I would also note that if you think about the 75% to 78% cost income ratio, that's also reported. And just to highlight, we our cost to income ratio was 80.5%. So that already indicates that we intend to drive positive operating leverage to get to the upper end of the range and then continue to drive positive operating leverage towards that 75%. Now on the margin side, the vast majority of the quarter on quarter reduction, the one basis point you highlight, which is exactly spot on, does relate to technically how we bill for our invested assets. We bill in arrears. And so the 5% increase that you saw in invested assets during the quarter mostly has not showed up in our recurring revenue. Now in addition to that, we did continue to see a bit of impositioning or repositioning into lower risk investments, particularly in the non contracted book where we saw quite a bit of shift out of equities into fixed income, which shouldn't be surprising, and therefore, we saw lower trailing fees. And I think that dynamic is something that will evolve as risk attitudes and risk taking views by our clients also evolves as we go forward. Okay, great. Thank you. The next question comes from Magdalena Stoklosa with Morgan Stanley. Please go ahead. Thank you very much. I've got two questions. 1 about your revenue performance in Wealth and the second one about the share buybacks. So to follow-up from the previous question, Your revenue performance in the Q4 was actually quite robust, and I thought it was quite encouraging to see your NII and your transactional business also holding up. And of course, given that we that in the U. S, you kind of charge differently, you will have that 1Q uplift you've just talked about. But if we look kind of further out into 2020 and we think about the NII side, of course, the rates against loan volumes, We think about your transactional business. You've been quite positive about kind of 1Q trends overall. How do you see the overall revenue progression in Wealth given the building blocks of NII transactions? And of course, the recurring fees that you've talked about a little bit? Because I kind of wonder how you see, particularly the 2020, CBT growth of that 10% to 15%, where is it really coming from revenues versus costs? And of course, it would be very useful for if you could give us any kind of details of the GWM portion of this €200,000,000 restructuring charge kind of within that 2020 context? And my second question is really, how should we think about the assessment of the share buybacks in the second half of the of twenty twenty? And kind of in particular, what would you like the market to appreciate as the kind of French courts consider your appeal in June? Thank you. Thank you, Galina. We so let me take the second question and Kurt will take the first one. So on the share buyback, as we announced, we intend the factor to do half of what we did last year in the first half of the year. And of course, what I think that your question specifically, what I believe has to be well understood is our intention is clearly to depending on mainly on the outcome of the idiosyncratic events, of course, we are referring to the French matter. We believe it's only prudent and pragmatic not to go into any aggressive capital return policy while the finalization of and the verdict of the appeal is likely to come towards the end of Q3 or early part of Q4. In that respect, maybe what I would like the market to understand is once everybody can make their own risk based assessment about the outcome of this trial in different scenarios is, 1st of all, the entry point on January 1 of our capital position. And considering that, as I mentioned and Kurt reiterated, we are still confirming that we see our CET1 ratio being towards the 13% and the 3.7% on leverage ratio. Number 2, take in consideration, well, other than business performance as we continue to generate capital as we did in 2019, our ability to absorb any extraordinary event within a normalized range has to be taken into consideration. Number 3, what we announced this morning with the combination of our fund center capabilities with Clearstream creates capital tailwind. I guess I answered the question. Everybody can assess, including the fact that we always say that we will retain extra capital only if it's necessary to grow our business, fulfill incoming and expecting regulatory requirements, Basel III finalization, and again, as I mentioned before, any idiosyncratic event. So I'm pretty confident that we will continue to deliver over time a very strong capital return to our shareholders? Well, Magda, on your first question, first of all, that was quite a first question. Let me try to take it in the different revenue components. In terms of recurring fees, first of all, naturally, that's going to be a function of invested assets. So the growth that we saw towards the end of the year will help us in the Q1. Naturally, we'll also have some impact overall on the relative mix risk. So it comes down to our clients' attitudes, geopolitical attitudes. And of course, importantly, it's continued mandate penetration. And that remains a clear focus for both Tom and Iqbal. We would still view that compared to competitors in the U. S, for example, we're relatively lower penetrated under contract and we see good opportunities for increasing our penetration. Related to that as well, thematic investing is something we highlighted. We think there's significant opportunities in there. There's tremendous demand around thematic investing, for example, around aging, health, genetics and the like, along with sustainability, and we're leaders in all of those areas. Now in terms of NII, clearly, if we do nothing else, we will see our NII come down just because of the headwinds that are already built into the forward rates. That's clear. So naturally, lending becomes the most important way for us to continue to offset those headwinds. And we talked about the lending momentum we saw in the Q2, the focus on expanding collateral classes, increasing the level of lending we're doing across single stocks. Moving into commercial lending, we're looking at business lending. So there's quite a bit of activity around that lending. And that, of course, importantly leverages the IB capability in terms of how they risk manage the book. Now finally, around our transaction revenue, first of all, we're pretty pleased with the momentum we see. We do believe going forward as clients are currently more active and you saw that in our outlook statement for the Q1. We do think structured products continues to be an opportunity in this environment, continued yield enhancement locking in gains. We've combined our capital markets teams between the IB and Wealth Management, and we're deploying those to be closer to clients. And I would mention just one other area of growth opportunity, and that's GFO. So if you look at Slide 13, the fact that we're increasing our GFO clients to 1500. And you see the compounded annual growth when we onboard a GFO client at 15% a year. So that is one of our highest growth opportunities for wealth management. Thank you. The next question comes from Jeremy Sigee from Exane. Please go ahead. Good morning. Two questions, please. One is on Wealth Management. The cost base ex litigation and ex restructuring, sort of underlying ex everything, was a bit higher in 4Q. It was sort of €3,300,000,000 compared to sort of €3,100,000,000 3,200,000,000 in previous quarters. So I just wondered if you could talk about that increase and whether that's a new sort of run rate going into next year. And then second question on the Investment Bank. I know you've sort of touched on some of this, but could you be a bit more specific about what specific items you see that will get the return on equity from sort of 6% reported, 8.6 percent underlying up to the 11% that you envisage for 2020? What are the specific revenue or cost things that change that will get you there? Yes. Thank you, Jeremy. Just on so on the wealth cost side, I mentioned in my speech that if you exclude in the quarter some areas of spend related to regulatory requirements, for example, we've been building up costs, a portion of which are one time, in order to address the higher bar, the higher regulatory bar for AML KYC requirements. Some of that cost will come down. As we get into particular to the Q2, they'll still remain a little bit elevated in the Q1. And then outside of that, we also had a number of one time items, including some impairment for property and some other related costs that will not repeat themselves. So in aggregate, that total bucket is around $45,000,000 to $50,000,000 We'll see, as I said, a portion of that in the Q1, but that should come down over time. So it's really not representative of the ongoing cost structure of the Wealth Management business. Now in terms of the IB, if you look at the reorganization that we announced, that will allow us to deploy capital and technology in a much more agile way across, for example, the different asset classes within the markets businesses, which we think will give us return upside. In addition to that, the way we've reorganized our global bank and we talked about this to be able to create much more focused teams on the industry globally rather than organizing ourselves on a regional basis. We think that also will give us upside. Plus as well where we've announced as a private markets group, which we launched, we already see very good momentum there. And very importantly for us, it is the investment bank, the partnership and the relationship with GWM. That GFO initiative that we highlighted, a portion of that one bank revenue will also benefit the IB. And so we think with all of that, we're already starting to see some good momentum. In addition to harvesting the investments we made in the Americas, where as you know, we did have a more challenging year in 2019. This should help to give us a better return momentum in the IB. Well, look, maybe let me just complement here. I mean, first of all, I would say that the fact of what we need is another $500,000,000 $600,000,000 of revenues in the IB and to bring us back into that kind of territory. I think that we're going to continue to look at the cost, all the cost in a very challenging and the capital consumption as well. So the allocated capital of DIB will always be further scrutinized and enhanced and improved. So in a sense, what we are saying is that 2019, as I mentioned before, is not an acceptable outcome. I do believe that we will go back more into the last few years' historical pattern. I think that's you saw that in 7, 8 years, we were on average 13.7%. I think that we had 11% in 2017 2016 2017 around. So So we are quite confident that we can go back into that double digit number and from there to start to go for higher returns. So it's not that we are happy with that 11% return, by the way. So I think that while the idea is crucial to make sure that many parts of the organization, not only GFO and what's managed, but also the corporate business in Switzerland remains competitive. EIB has to deliver better results and on its allocated capital. That's for sure. Thank you. The next question comes from Andrew Coombs, Citi. Please go ahead. Good morning. If I could just drill down a bit further into the capital ratios, the capital targets and capital return prospects. I guess kind of 3 components to that. The first of which is your RWA density as a function of your leverage exposure, is it 28.5 percent or 28.5 percent? Your close to peer Credit Suisse has obviously talked about moving towards 35 percent pro form a for RWA inflation, and that's why they felt comfortable reducing their core Tier 1 ratio target to 12%. You're obviously still guiding 13%. So just a bit more clarity on future RWA inflation risks and also your expectation for the quarter one target in that event. Second question, I just want to clarify the comments on the buybacks. Obviously, second half of twenty twenty up for review, you actually go into 2020 with a very strong capital position, 13.7%. You've got Fondcenta coming through in second half of twenty twenty. So when you talk about it being up for review, potentially that's up for review, not just continuation of the buybacks, but potentially to add to the buybacks relative to the first half dependent upon the French tax case outcome? And I guess the final point on that French outcome, can you just comment on the latest upper court ruling that the lower courts need to factor fines and penalties based on the tax evaded or the forwarded rather than on the sum of undeclared money. Does that change how you perceive the cake? Thank you. Thank you, Andrew. I'll take the second and third question and Kurt will take the first one. So I think that's the answer in the second question is very easy because you got it all. So I think exactly what you described is what will happen. We will assess the capital situation and we are entering with a very strong position. We are completing the SIx $2,000,000,000 programs. So buying back half of what we bought back in the first half, So if which I believe our capital position will continue to strengthen into the second half of the year for all the reasons you mentioned, we will then assess the situation. And I'm confident that we will continue to have very attractive capital returns in the future. So difficult to say more. In respect of the French matter, as you may have seen this morning, we published on the web a stakeholder update, basically in preparation for the AGM. We are addressing what I would call the frequently asked questions that we got from many stakeholders, particularly from you, shareholders, in general, analysts, clients and also employees that are relevant to the French matter. I think that is not really appropriate for us at this stage to go into any assessment publicly of what we believe the outcome and the interpretation of any legal precedents may impact our situation. So but I invite you maybe to read our position paper in terms of stakeholder update is available on the website. Yes. If you're looking for it, the Q and A is on ubs.com/investors and then you click shareholder information and you see it on the right hand side. Yes. Inder, in terms of your first question, as you mentioned, our current risk density is 28.5%, which if you look at our guidance around 3.7% and 13%, it's exactly says that we're relatively, if we're going to stick to that, equally bound by both, and we reiterated that guidance. Also, if you reflect on what we guided on previously, in terms of our expected Basel III finalization impact, we said it could be around $33,000,000,000 before any optimization. If you just take that $33,000,000,000 and you overlay it on our current RWA, that would suggest that we would drift off to 32%. So naturally, our view and our risk profile is going to drive what our risk density is. And so that would certainly indicate that, that would likely be a ceiling that 32%. And importantly, of course, with the postponement by 1 year, I mentioned that our assessment of the impact has come down from that $33,000,000,000 Once we have more below below that 32% once we see a final Basel III framework. I would finally note that the natural growth tendency of our business is for risk density to decrease, because our risk, of course, is driven by our wealth management business, our asset gathering businesses, and they have much lower risk density than our investment bank. And if I could just follow-up on that. The quarter one target of 13% plusminus30 basis points, is that set in stone or is the case of how the RWA density moves up with these new regulatory additions that could potentially come under review as well? So we've got it just like all of our targets and guidance is for 2020 to 2022. And since Basel III has already been pushed out a year, we'll update our guidance once we know more for anything further beyond that. Thank you, guys. Thank you, guys. The next question comes from Andrew Stimpson, Bank of America Merrill Lynch. Please go ahead. So firstly, just more of a clarification. We saw in the press a couple of weeks ago, there was some job and cost cuts expected in GWM, but there wasn't any mention of the additional net cost saves here today. So I just want to check your comments here, Kurt, that the restructuring charges you're taking will give you gross cost saves, but that will all be reinvested. And then if revenues do disappoint, then you'd slow some of those investments and that would give a bit of protection for shareholders and profits. I just want to check I've understood that kind of philosophy correctly. And maybe connected to that, you could give some comments around how the growth investments from 2018 2019 have performed and when there might be a payback on those? And then secondly, you mentioned the recurring fee margin pressure. I understand the averaging of the AUM and the delayed charging on the start of the quarter, particularly in the U. S. But you did mention margin pressure as well. Is it right to think of that as all as being cyclical, I. E, it was client risk aversion within the Q4, which you're now highlighting in your then having to match? I just want to understand what kind of elsewhere that you're then having to match. So I just want to understand what kind of margin pressure you're seeing there. Thank you. Yes, Andrew. Thank you for the questions. In terms of the first one, you got it exactly right that as we look at 2020, our anticipation is that we'll generate $1,000,000,000 in saves and that we'll use that to fund $1,000,000,000 in investments that across a range of business priorities, digitization, what we're doing with Broadridge, as well as some additional regulatory and risk requirements that addresses the new requirements that we have with our legal entity structure and the like. Also, as you rightly summarized, if we do see softening of the environment just as we did in 2019, we'll look at tactical measures, which would include postponing some of the investments, slowing down our hiring, getting, of course, much more ruthless around other cost areas of the bank and being leaner for some time. I think Sergio referred to that as a fuel saving mode. And we would bring our cost down rather than just flat and that would help to offset some of the top line impact of softer environment. So that's all correct. In terms of investments and where they're paying off, I mean, I think you see it very clearly, for example, in Asset Management, where we had outstanding performance. You see it in P and C, the investments in digital are solidifying our position as the leading digital bank in Switzerland and certainly have contributed to the growth well above GDP that we've seen for that business. You're seeing in some of the structural saves, Sergio mentioned moving to cloud, deploying 1100 robots. So the gross saves that we delivered, which are far higher than what we outlined on the $2,700,000,000 over the last 4 years, are from some of our investments and are structural in nature and therefore required investments and we're seeing that. So without those investments, our cost structure would have been higher. And now on the recurring fee margin, I think you are right. It's that's mostly reflective of some of the change in preference that we've seen in mandates, so move from discretionary mandates to advisory mandates and that's partly due to the risk environment. Also I mentioned that in the non contracted book, we saw some shift out of equity funds into fixed income. I mean that was a big market structural change that we saw in the Q4. And all of that, we would view as cyclical with the potential to revert if we see changes in attitudes going forward. Perfect. Thank you. The next question comes from Benjamin Goy, Deutsche Bank. Please go ahead. Yes. Hi, good morning. Two questions from my side. First, in ultrahigh net worth, you had a costincome ratio of about 78% in 2019, which is pretty much in line with the whole division. So I was wondering the general perception that, yes, it has a better pretax margin and better efficiency of this business. So when we'll see that coming through? Is it already this year? And what is the benefit you can see out of the investments you have taken over the last years? And then secondly, you talk a lot about collaboration across divisions. And I was wondering whether you could speak a bit more about the incentive structures to actually foster these collaborations and drive results. Thank you. Yes. So on the ultrahighnetworthside, first of all, the margin of the reported global ultrahighnetworthsegment does not reflect a portion of ultra that still sits in the regions. And if you were to aggregate that, then you would actually see a slightly better efficiency ratio than the group overall. And then secondly, 2019 was not our best year for Ultra. They were impacted as you would expect. They're more sophisticated clients by the lower volatility. So we did see slightly less activity. And we also saw quite a bit of deleveraging. So that also impacted a bit the performance of Ultra. I think just in general going forward, we would still expect the Ultra segment to have a better efficiency ratio than the average of Wealth Management overall. So on the second question on how to foster further collaboration. First of all, I have to say that really collaboration, we are already quite advanced and is already part of our DNA in the way the firm works. So of course, now we are moving to further levels up in that sense. But first of all, what we do is that we have collaboration targets somehow embedded in the performance metrics and the goals in the year at Business Division. We have a so called group franchise awards, so where people can submit their request for credit recognition in respect of their involvements in any transaction or any opportunities that was created, like menu money inflows from a client, referrals or a specific transaction with the other counterpart, the receiving counterparty accepting in the system the credit requested. We are also moving into recognizing a business division levels, the so called double counting of revenues. Then of course, my colleagues and I in the Group Executive Board under with Kurt, we're going to then of course eliminate and normalize this issue. But we want to make it clear to the front offices that when they are involved in creating value for clients and shareholders, they do get recognized and this is also reflected in the compensation accrual process. And last but not least, all my colleagues on the Executive Board, the vast majority of or a big chunk of their objectives, financial objectives is driven by the outcome of the bank results and not just their divisional one. So the waiting is far superior there. So top down and going down to group managing directors, everybody is aligned, 1st of all, how to create better value for clients and shareholders as a group. And then of course, they are accountable and responsible for what they do day to day. That's the mechanism. But at the end of the day, it's also a cultural approach, because you don't want to be able to measure every single interaction with dollars. People have to work together and collaborate as a cultural principle and not only because there is a short term reward available to them. Okay, understood. Thank you. The next question comes from Stefan Stalmann, Autonomous Research. Please go ahead. Yes, good morning, gentlemen. Thanks for taking my questions. I have 2, please. The first one on GWM and some of the changes that are taking place there. Could you maybe talk a little bit around the dissolution of IPS as a unit and how that is being replaced and how that is actually making GWM a better business? And potentially related to this, the ambition to originate a lot more loans. Will we see these loans and the revenue and the risk provisions potentially related to these loans and the capital consumption of these loans in the Wealth Management business? Or will there be some sharing with the investment bank? Or is the investment bank just receiving basically a management fee on these loans? And what kind of risk density would you assume to see on these additional loans given that they will be more structured and then tailor made and possibly a bit more risky? Thank you very much. Yes. Thank you, Stefan. Just in terms of your first question, so what Iqbal and Tom have been working quite closely with the IB and with Pero and Rob. What they've agreed is, whereas previously we had some duplication between our execution and our access platforms across IPS and the IV, where now with the investment in technology that we've made, we can actually look to consolidate that to have one platform that supports the IB's execution capabilities and also on the GWM's execution capabilities or requirements. And also the IB is looking to leverage that platform to better serve the middle market where they think there's a growth opportunity. And so that's what you saw as part of this. We collapsed the platform. So the IB now will fully serve GWM across all access and execution needs. In addition to that, we've taken the capital markets teams that used to sit in IPS and we've also integrated them into the IB. And so the IB will deploy capital markets team to provide them with support and advisory around those resources. As well as if you look at some of the other areas of advice, we've collapsed that into our CIO. So it's really it's streamlining, it's providing a much stronger IB, more sophisticated overall capability that we'll deploy directly to our clients across segments. We think with that, we both will have revenue as well as cost efficiency opportunities. Now in terms of your second question, which was around The loans. Yes, the loans. The loans, maybe I'll take it on and then you can complement Kurt. So first of all, as I mentioned in my remarks, the growth of the loans is something that we flagged as a priority back in 2018. So there is nothing really new in respect of our desire and to protect or increase NII or in this environment, I would say now protect NII through expanding our loan portfolio. So very important, 1st of all, we will do that by leveraging the idea risk engines. And secondly, yes, while I don't think that structured business is necessarily more risky. Actually, we will not really make a lot of compromises in respect of return risk return profile. So the density should not be far off in the aggregate numbers. Of course, maybe a little bit going up, but if you take the current stock and you add up $20,000,000,000 a year, dollars 20,000,000,000 is not all going to be structured. So you're going to have also Lombard playing but he line it and mortgages. So I mean, at the end of the day, don't expect a meaningful increase of the risk density out of this exercise. I think that it's just more natural and we see it how the transmission mechanism of a slightly better investor sentiment makes to leverage. I mean, particularly in Asia, as soon as they become a little bit more constructive, they take on leverage. And so I think as a very all the changes that Kurt described together with the ambition really and the determination to capture this opportunity will translate in a more diversified and growing NII or at least neutralizing the negative effects without compromising on our risk reward profile. But Stefan, just in terms of specifically your question around balance sheet and full economics, all of that will sit in GWM. So RWA, LRD, full P and L, including any CLE implications. Great. Thank you very much, Khalid. The next question comes from Kian Abu Hossain, JPMorgan. Please go ahead. Yes. Hi. Thanks for taking my questions. First of all, on the targets and guidelines on the numbers, do you include front center in the numbers, both in the cost income and ROE targets? That's the first question. The second question is on U. S. Wealth Management. Clearly, there are a lot of structural changes happening in the U. S. From the players like Morgan Stanley going more up growing faster, gaining market share looks like, I. E. The large players and then you can see that in the new pretax margin guidance that I'm sure you're aware of and on the electronic side as well as the money centered banks, which are consolidating and changing. I wanted to see where you stand because you're kind of in the middle. And I'm wondering strategically what does that mean for your business, not over the next year or 2, but even longer term out, as the structure of the U. S. Market seems to be changing? And secondly, I have a question regarding the ROE of 12%. You mentioned it is stress test for different macro scenarios. And I'm just wondering if you could tell me what is your 12% macro scenario, I. E. The stress test at the bottom of the RE guideline or guidance in order to realize of what is assumed in this number? Thank you. Thank you, Kian. I guess the second question really is very complementary to the first one or vice versa. So I guess so first of all, of course, we include the target 12% to 15% is not a 2020 target. It's a multiyear target. And the 12% rate to rate, as you just pointed out, is the I would call the low end of a stress scenario, which I will not discuss definitely in public, okay? So that's quite normal. I appreciate that you asked the question, but I'm sure you appreciate that we don't really go through that. But you can expect this to be not a rosy picture on what would happen in financial markets or the economy, when you look at the 12%. Now, of course, because we say that we're going to highlight any extraordinary item, but also during the 3 years in our reported numbers, FundCenter will be part of this year results. You can extrapolate what it means for this year results. What I like to also underline is that the definition of what we believe is extraordinary versus the outcome of a process where we invest over time and then we are able to realize value is also something to be considered because in order to grow and maintain fund center over the years, we have been recurring expenses that were going through the operating line of expenses. And now that we realize value, while continue to create value for shareholders and clients, we will also need to look at what it means from a management point of view, taking actions to optimize our resource allocation. But in any case, to answer your question, 12% to 15% is reported and includes any of those items and the 12% is not a target. 12% is what we believe is an outcome if we have certain more stress market conditions. So I would say, and Kurt, I'm sure can step in with more data points that if you look at our growth trajectory in terms of invested assets in the U. S, they are very similar to the best in the U. S. You are indicating. So of course, they have a better pre tax profit margin, and we know that to some extent, we will are working and we know that to some extent, we will are working on making sure like we did in the last 7, 8 years, where we were losing a couple of 100,000,000 in 2010, 2011, not 7, 8 years, a little bit before. We were losing $150,000,000 a year in our Wealth Management business in the U. S. We got similar questions. By now, we are around $1,500,000,000 We believe this business will drive higher returns going forward because of higher mandate penetration, because we believe we have room to improve penetration of lending. We believe we have the space to grow in the Ultra space. And what I mentioned and Kurt reiterated, the Broadridge technology capabilities that we are rolling out is going to offset some of the scale issues that some of our investors some of our competitors, sorry, are enjoying. Now and last but not least, the quality of the earnings in the U. S, I cannot stop stressing the quality of the earnings in the U. S. From a post tax standpoint of view are absolutely critical and had added value. Through our U. S. Capabilities, we will continue to leverage our franchise as a global as the leading global player and number 2, creating significant shareholder value over the years to come. The next question comes from Andrew Lim, Societe Generale. Please go ahead. Hi, good morning. Thanks for taking my questions. I appreciate your comments for the past quarter. But if we look at the past few years for GWM, despite rising AUM and maybe a slight rise in revenues, pretax profit hasn't really gone anywhere. So it's difficult to see how you can reach your target for GWM pretax product growth going forward. I'm just wondering in my mind what you think are the main key pressure points for why you can't seem to get that growth in pretax profit, whether it's like the change in asset mix being the primary issue here or net interest margin pressure. It seems to be an issue across all your regions, not just in the And what seriously are you going to do about it going forward to try and get same kind of momentum that we see in U. S. Peers such as Morgan Stanley and Bank of America? So that's my first question. And then my second question is a bit more technical in nature. I noticed that you've enjoyed a reduction in your RWAs in part related to Investment Banking Equities having a risk reduction there. You give a bit more color as to what's actually driven that? And is there potential to see that reverse in coming quarters? Thanks. Yes. Thank you, Andrew. So if you look at our Wealth Management business, first of all, if you look at the history in the last number of years, obviously, the largest headwind that we had was regularizing the business and the very significant effort that we went through to address just the cross border compliance of our business. And that resulted in several 1,000,000,000 of total top line that would have been very accretive to our bottom line dilution over that period of time. If you look at just the last couple of years, as we saw that overall program tapering, there was a combination. Actually, our U. S. Business has grown quite well. In fact, it's grown very consistently in line with U. S. Competitors. If you compare more challenge, and I think that's just in general because of the environment. The U. S. Market has performed better. Conversely, we've seen negative rates in Europe as well as in Switzerland, of course. And then on top of that, Asia Pacific has been very volatile and you've seen the drops overall in economic growth in China and that we've seen deleveraging and we've seen therefore that part of our business perform a bit less well. And I think that's very consistent with what we've seen in the overall market environment. Now we still have great confidence in that business in our GW owned business ability to generate the 10% to 15 percent growth that we've outlined. We see very good momentum in the Q1 already, and we've highlighted really all the actions and why we feel that confidence. And we can only emphasize very, very low volatility that we've seen and our bar is extremely lower, particularly our stress bar. And I think that would come we would see actually an increase in market risk RWA in part if we saw a rebound in volatility levels, but that would be a company, of course, with a very nice pickup in revenue. And I would also highlight that we always have options to hedge that, so that that increase doesn't become overly pronounced. Thanks. Can I just follow-up on the U? S. Side? I mean, you're saying that you've got comparable performance with your U. S. Peers. But if I look at the revenues, there is a distinct difference in the growth profile there. And I'm also wondering on the cost side, whether that's a big difference as well. You change your payment grid. I think you tried to make it much more Swiss or orientated rather than U. S. Orientated. So trying to pay your advisers more to bring in more AUM per adviser, But I'm not sure whether that's really worth. If you look at the cost base, it's the same. Your AUM has gone on, but your revenues likewise has been under pressure. So actually your efficiency hasn't improved despite rising AUM. And I appreciate there's other factors involved, but I'm just wondering what basis you're really saying is similar. So let me take it tightly front of the the base we are seeing that we are growing our profitability and our asset based in line with orders. So there seems to be a trend which includes many money and asset growth penetration that is in line with our peers. The cost base is a difference is a combination of scale effects that some of those players have with also what we mentioned before are still outstanding initiatives that we need to deliver on in the next years to come. So that one keeps us confident that the trajectory and also by the way, the headwinds that we have on litigation in Puerto Rico, which you don't see really coming up, but the legal fees the provisions that we had to take is something quite unique that we take on our U. S. Business, which I wouldn't really compare into others. But so over time, we will reduce the cost advantage through Broadridge, as I mentioned before, some of it, and a broader penetration of mandates and the ultra client segment penetration and the NII and the lending space. Frankly, Andrew, I don't know where you are taking this line that we adopted a Swiss based grid in the U. S. This is really I never heard that argumentation. And I will ask my colleagues in Investor Relations to sit down with you and understand exactly what you are talking about and explain you exactly how it works. Sure. No, thanks a lot for your comments there. I was just alluding to the fact that maybe you changed your payment grid to try and pay your most productive advisers more, but hoping also to get more AUM per adviser and then view away more from a high net worth model. But I appreciate your comment. Sorry, sorry. I think the issue and then we move on. The Creed was driven by our desire to incentivize basically people staying longer with us and of course and the productivity, but it's also more of a reflection that we believe and actually if you look at if we look at our numbers, same store client advisor, net new money inflows and growth is picking up as a function of this issue. So we are incentivizing people to stay longer with the firm and rather than having growth coming from recruiting, which is very dilutive to PBT, historically speaking. And this is not an idiosyncratic situation of UBS, it's an industry situation. And I saw and we saw our peers adapting to that model, which is a very U. S. Market centric model, fine tuned to the fact that we are if you look at our financial advisor base, we have the highest level of asset per financial advisor in the industry. We have the highest level of revenue for financial advisor. So there is, of course, a recognition that, that part of our wealth management business, the U. S. One, is converging more and more towards the rest of the world as the preeminent and more ultra franchise in the industry. Thanks. And then sorry, just one last question. How do you square that with the $9,000,000,000 of net new money outflows in the Americas? And is that just like a one off for 1 or 2 clients? And you're saying that the underlying AUM per advisor is actually better than it was before? Yes, it was 2 large clients mostly. We had the highest same store inflows actually at 6,000,000,000 that we've seen and they've been increasing steadily, which is our objective. And it was very low margin in the outflows as well. So it didn't really impact our profitability. Okay. We'll move to the next question. One more question? Amit. The next question comes from Amit Goel, Barclays. Please go ahead. Hi, thank you. Yes, just two questions and maybe a bit more follow-up. But just firstly, again coming back to the targets, just wanted to understand in terms of the 10% to 15% PBT growth expectation in GWM and the 12% to 15% ROCE T1, in terms of the kind of expectation. So I guess as some of the previous people have alluded to, obviously, PBT growth hasn't been at the 10% to 15% level. If we weren't to get to the 10% to 15%, what kind of pressure does that put on the 12% to 15% or is 10% baked into a 12% ROCE T1? Or is it just more flex than that? And then secondly, just I mean, I'm just curious just on the commentary that you're not going to be giving the adjusted kind of results. Obviously, you'll be calling out the items. But are we to take from that, that I guess from your perspective, the kind of broader restructuring, etcetera, is done. And so now it really is a kind of business as usual in terms of how you run, organize the group. And so, the kind of scenario analysis, restructuring, etcetera, is really kind of more of a mute point? Thank you. Yes. Naturally, Amit, the overall growth in GWM is certainly integral to our achievement of the group targets and the progression that we see over the next 3 years. At the same time though, as Sergio mentioned, that we stress test our targets overall. And you can imagine part of that stress test included what happens if GWM is not able to grow at its 10% to 15% level. And Sergio mentioned that under those stress scenario, we still feel comfortable achieving that 12%. So that 10% to 15% helps to push us into the upper end of that 12% to 50% ROCE T1 target. Now on the adjusted side, you might recall that a couple of years back, we indicated that we would continue to adjust for our legacy cost program, and we actually had an accounting convention that allowed us to restructure or where we restructured and adjusted for the cost to achieve that program that tapered off as we went through the end of last year and that's been fully tapered down to 0. So last year was the final year where we had $200,000,000 of restructuring related to that accounting. And so going forward, since we've stopped that overall accounting convention, we'll just have more normal restructuring that we incur in the business And we'll call that out as we indicated like the $200,000,000 I already highlighted and we'll queue off our reported results and give you the transparency.