Piers Brown

Piers Brown asked if the strong FRC performance was driven by business mix, such as strength in FX, or by market share gains. He also requested an update on the progress of capital repatriations from subsidiaries like the IHC.

Answer

Todd Tuckner, Group Chief Financial Officer, attributed the strong FRC result to the bank's concentration in FX, which performed well, while being under-concentrated in weaker areas like rates and credit. He confirmed that UBS is progressing with regulators to repatriate excess capital from UK and US subsidiaries as legacy portfolios are wound down.

Piers Brown of HSBC asked for commentary on client risk appetite and releveraging trends, given mixed signals in the quarter. He also questioned why the final Basel III implementation had a neutral CET1 impact, an improvement from the previously guided 30 basis point hit.

Answer

CFO Todd Tuckner explained the neutral Basel III impact was due to excellent preparation, including infrastructure improvements, model alignments, and risk reduction. On client appetite, he noted that higher-for-longer U.S. rates are helpful for deposit margins but could have a "chilling effect" on the pace of releveraging in the wealth business.

Piers Brown of HSBC asked for an update on current Lombard loan demand and whether the loan book was still shrinking. He also inquired about the criteria for booking new treasury assets as either OCI or amortized cost, and why not all new purchases are booked at amortized cost.

Answer

CFO Evie Kostakis noted that the pace of deleveraging slowed in the second quarter and that the credit pipeline, particularly in Asia, is now looking healthy. She explained that while the firm will continue to use amortized cost accounting, it will not move the entire portfolio that way due to the limited ability to sell those assets if needed.