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Investor Day 2005Wealth Management USA
New York, 13th May 2005Mark Sutton, Chairman & CEO
You & Us
1
Business Overview
2
PaineWebber to UBS
1999 (PaineWebber) Today (WM-USA) Benefits
US-centric broker firmGlobal products andservices capabilities
Attracting globalinvestors & cache as WMleader
Product limitations incertain areas
Broader range of wealthmanagement productsand services
Tangible business growthin HNW & UHNW sectors
Limited balance sheetand lending capabilities(credit rating: BBB+)
Credit rating: S & P AA+Moody’s Aa2, Fitch AA+
Lower cost of capital,improved credibility withclients
Growing cost base incertain areas (e.g.research, regulations,etc.)
Steadily decreasing cost /income ratio
Integrated businessmodel benefits
Sub-scale investmentbank and assetmanagement
Access to globalinvestment bank and assetmanager with rapidlygrowing US presence
Leveraging specialties:structured products,global asset allocation
3
Wealth Management USA vs “Old PaineWebber”PaineWebberJanuary 2000
PrivateClientGroup
CapitalMarkets
Non-USPrivateClients
MitchellHutchins
PrivateClients
Fixed Income:♦ Mortgage-
Backed♦ Asset-Backed
& CommercialReal Estate
EquitiesResearch, Sales& Trading
InvestmentBanking
PrimeBrokerage
InvestmentBank
Global AM WealthManagement
WealthManagementUSA - Today
In 1999, percent ofPaineWebber’spre-tax profits:♦ appr. 52% of private
client businesses and♦ appr. 48% from
institutional businesses
June 2003: Correspondent Services Corp. divested
4
New products and solutions
♦ Enhanced products:— Separately managed accounts
— Multi-asset portfolio management
♦ Portfolio advisory— UBS Global Asset Management asset allocation models
— Global investment expertise and research
♦ Lending capabilities through UBS Bank USA
♦ Structured products
♦ Increased syndicate offerings
♦ Broader municipal capabilities and products
♦ Alternative investments
Synergies between UBS’ core businesses provide newsolutions to meet client needs:
5
States 1 – 5 offices
States 6 – 10 offices
States 11+ offices
WA
MT
ORID
WY
NV
CA
UT
AZ NM
TX
ND
SD
NE
KS
OK
CO
MN
IA
MO
WI
ILIN
LA
AR
KY
TN
MSAL GA
MI
OH
PA
FL
SC
NC
NY
WV
MEVT
NH
MA
RI
CT
NJ
DE
MD
Wealth Management USA — profile
In addition:- Puerto Rico- Hawaii- Alaska
Key Figures
Western Central Eastern
Client relationships ~2 million
Employees1 17,351
Financial advisors1 7,403
Invested assets (USD)1 557bn
Revenues (USD)2 4.3bnexcl. acquisition costs
1 As of 1Q052 Rolling 12 months at 1Q05
6
Integrated business model
Wealth Management USA
Investment Bank Global Asset Management
Example:
♦ Order flow /global execution
♦ Corporate financeleads
♦ UBS Bank USAportfolio mgmt.advice
♦ Management fees
♦ Structuredproducts
♦ Syndicate
♦ Global research
♦ Executive accounts
♦ Mutual fundsdistribution
♦ MAPS/Access
♦ Hedge funds
7
Key Developments / Accomplishments
8
Highlights
UBS Bank USA launched in 2003, deposits USD 14.9bn2
Invested assets USD 561bn2, up 22% since 2001
2004 operating profit1 highest since acquisition
Financial advisor productivity at 115% of average vs. 102% in 20013
2004 market share 15.6% vs. 13.8% in 20013
2004 recurring income 47% of total revenues vs. 41% in 2001
1 Based on the USD result excluding acquisition costs2 As of Dec-043 Based on compensable production among full service firms according to a leading industry survey (includes UBS, Smith Barney, Merrill Lynch, Morgan
Stanley, Wachovia, AGE Edwards)
9
Momentum and growth…
Sources: company reports and a leading industry survey
+1.8pp
Market share1 Productivity as % of industryaverage1
(measured in terms of compensable revenues)
+13.2pp
13.8
14.915.2
15.6
10
12
14
16
2001 2002 2003 2004
%
102
111
115 115
95
100
105
110
115
120
2001 2002 2003 2004
%
1 Based on compensable products among full service firms
10
P&L key performance indicators1
0
1,000
2,000
3,000
4,000
5,0004,048 3,856 3,933
4,266
2001 2002 2003 2004
Operating income(excl. acquisition costs)
Performance(before tax and acquisition costs)
Cost / income ratio
89.9%
2001
89.3%
2002
88.7%
2003
86.9%
2004
USD m
410 410 443
559
0
100
200
300
400
500
600
700
2001 2002 2003 2004
USD m+8.5% +26.2%
1 Numbers prior to 2003 have not been restatedAverage rate (CHF / USD): 2001: 1.69 2002: 1.54 2003: 1.34 2004: 1.24Spot rate (CHF / USD): 2001: 1.67 2002: 1.38 2003: 1.24 2004: 1.14
11
Invested assets / recurring income1
Invested assets Recurring income
460
423
511
561
300
350
400
450
500
550
600
2001 2002 2003 2004
1,000
1,200
1,400
1,600
1,800
2,000
2,200
1,646 1,6181679
2,006
2001 2002 2003 2004
USD mUSD bn+19.5%+9.8%
1 Numbers prior to 2003 have not been restatedAverage rate (CHF / USD): 2001: 1.69 2002: 1.54 2003: 1.34 2004: 1.24Spot rate (CHF / USD): 2001: 1.67 2002: 1.38 2003: 1.24 2004: 1.14
12
UBS Bank USA1
One of the top 50 banks in the US…2
USD 17.6bnAssets
Loans USD 7.2bn
Deposits USD 14.9bn
1 Figures as of Dec-042 Source: American Banker April 2005 (rating based on deposits as of Dec-04)
13
Opportunities and Challenges
14
0
50
100
150
200
250
300
350
Below 45 45 to 64 years 65 and older
Increasefrom 1990
1995 2000 20051990
188
81
40
2010
309
+29%
+76%
+11%
US Population (in millions)
Opportunities
Large and growing market Capitalizing on demographic trends
Annual projected rollovers into IRAs
Long term outlook for the business is strong and our strategyexploits powerful market trends
36,759
Our clients need advice
Source: Advice-Seeking Behavior of U.S. HNW Households (1997 vs.2003) VIP Forum
Source: Federal Reserve Bank, ICI, Source: US Census
Source: Financial Research Corporation, IRA Rollover Trends, 2003
0
10,000
20,000
30,000
40,000
1980 1985 1990 1995 2000 2001 2002 2003 2004
US households financial assets (USDbn)
100
200
300
400
500
2004 2006 2008
409
2010
USD bn
Fully Dependent Opinion-Seeking Self-Directed
%
0
20
40
60
80
100
1997 2000
38%
53%
9%
2003
15
Challenge to deliver the wealth management model
Traditional Wealth Management Model
Trust PrivateBank
BrokerageInsurance
Client
Holistic Wealth Management Model
♦ Investment management♦ Financial planning♦ Cash flow optimization♦ Retirement planning♦ Liquidity / restricted stock♦ Risk / liability management♦ Insurance
“Proponents of [a holistic wealth management] model expect that taking amore comprehensive approach will allow them to boost revenue by
capturing a greater share of their clients’ financial holdings”1
No competitor has yet executed in scale
♦ Personal and businesslending
♦ Trust and estates♦ Wealth transfers♦ Philanthropy / charitable
giving♦ Business succession
planning
1 VIP Forum (9/04 Report)Source: VIP Forum research
16
Wealth Management USA
♦ Global platform of wealth management tools, servicesand solutions
♦ Sharing “best practices”, client successes andpersonnel
Global presenceand capabilities
Strong brand♦ Increasing brand recognition: Ranked #452
♦ “You & Us” initiative♦ Building our brand in our communities
Financialstrength
♦ Standard & Poor’s AA+, Moody’s Aa2 and Fitch AA+1
♦ Credibility
Excellentproducts &
services
♦ Holistic consultative wealth management approach♦ Integrated business model♦ Ability to offer customized solutions
How we differentiate ourselves…
1 Long-term rating2 Business Week, September 6, 2004
17
Challenge to further improve profitabilityCompetitors with lower cost / income ratio enjoy the benefitsof greater scale
Key drivers to improve profitability
Increase scale♦ Drive FA growth♦ Increase asset base♦ Acquisition
Develop highermargin products
and services
Foster furtherintegration
18
2005 and beyond
Strategic responsesTrends
Increasinglysophisticatedclient needs
♦ Deliver customized products andservices for each client segment
♦ Leveraging UBS platform
♦ Foster holistic advisory process todeliver client experience
Blur offinancialservices
♦ Focus on introducing higher margin“banking type” products andservices
♦ Differentiate and demonstrate valueadded services
Pricingpressure
♦ Deliver robust Wealth Managementplatform to drive financial advisorsuccess and growth
Competitionfor talent
Initiatives
Client Accounts /Card Program
MunicipalInitiatives
Small Business
Estate Planning
RetirementInitiative
Private WealthManagement
Continued organic growth on existing business supported bynew initiatives
19
Products & services - Growth opportunitiesSix major initiatives currently in progress to expand ourproduct offerings and to capitalize on market trends
Provide ultra-wealthy individuals with specialized advice andservices♦ Gain market share
Private WealthManagement
Extend the Wealth Management model and provide small businesslending to our business clients♦ Gathering NNM and grow our lending business
Small Business
Estate Planning
RetirementInitiative
Municipal Initiative
Client Account /Card Program
Expand the Municipal Securities franchise♦ Further expand securitization business
Integrate life insurance into a FAs standard business practice♦ Increase number of FAs who use life insurance
Position Wealth Management USA to capture net new money fromtrillion dollar rollover of retirement assets♦ Increase assets in retirement accounts
Relaunch of RMA account in combination with a Dual-Card Program(announcement made on April 18, 2005)♦ Grow card business and increase share of active cards
Investor Day 2005Wealth Management USA
New York, 13th May 2005Mark Sutton, Chairman & CEO
You & Us